Fortner v. Burwell et al

Filing 20

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendant's motion to dismiss for lack of subject matter jurisdiction (#16) is GRANTED. Signed by District Judge Stephen N. Limbaugh, Jr on 3/30/2017. (JMC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
NIKKCO L. FORTNER,

)
)
Plaintiff,
)
)
v.
)
)
THOMAS E. PRICE, SECRETARY,
)
U.S. DEPT. OF HEALTH AND HUMAN )
SERVICES, et al.,
)
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Defendants.
)

Case No. 1:16-CV-279 SNLJ

MEMORANDUM AND ORDER
This case comes before the Court on defendant United States Department of
Health and Human Services’ motion to dismiss under Federal Rule of Civil Procedure
12(b)(1) (#16). Plaintiff responded, to which defendant replied. The issues are briefed
and ripe for disposition.
I.

Factual Background

Plaintiff was involved in a motor vehicle accident, during which she sustained
bodily injuries and damages. Treatment for plaintiff’s bodily injuries was provided by
defendants Missouri Delta Medical Center and Dr. Sanders and the costs for that
treatment were covered by defendants United States Department of Health & Human
Services (“Medicare”) and Missouri Department of Social Services – MO Healthnet
Division (“Medicaid”). Plaintiff hired a law firm to pursue her claim for damages
resulting from the motor vehicle accident against a tortfeasor. The insurance carrier
providing coverage for the tortfeasor tendered the policy limit for its liability coverage

“for it to pay as and for the injuries sustained by the plaintiff” in the accident in the
amount of $51,000. All of the defendants and plaintiff’s lawyers have liens against the
insurance proceeds.
Plaintiff filed this complaint in this Court, allegedly under this Court’s federal
question jurisdiction, and asks this Court to distribute the insurance proceeds by reducing
and or apportioning the lien claims of the defendants because the claims against the
insurance proceeds exceed the total amount of insurance proceeds available by
approximately $40,000. Defendant Medicare filed its motion to dismiss and argues that
this Court lacks subject matter jurisdiction over plaintiff’s complaint because plaintiff
failed to comply with the requirements of the Medicare Act. Plaintiff opposes
defendant’s motion and although not disputing the existence of Medicare’s lien, argues
that the Medicare Act does not apply under the facts of this case.
II.

Legal Standard

Federal Rule of Civil Procedure 12(b)(1) requires dismissal if the court lacks
subject matter jurisdiction over the claim. “Federal jurisdiction is limited by Article III
of the Constitution to cases or controversies; if a plaintiff lacks standing to sue, the
district court has no subject-matter jurisdiction.” ABF Freight System, Inc. v.
International Broth. Of Teamsters, 645 F.3d 954, 958 (8th Cir. 2011) (citing Faibisch v.
Univ. of Minn., 304 F.3d 797, 801 (8th Cir. 2002)). Thus, a claim by a party that lacks
standing is properly dismissed pursuant to Rule 12(b)(1). Cook v. ACS State & Local
Solutions, Inc., 756 F. Supp. 2d 1104, 1106 (W.D. Mo. 2010), aff'd, 663 F.3d 989 (8th
Cir.2011).
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In determining whether a plaintiff lacks standing to sue, a Rule 12(b)(1) motion
may challenge the complaint on its face or on the factual truthfulness of its assertions.
Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). Here, the defendant factually attacks
the complaint, meaning at issue is this Court’s jurisdiction, “its very power to hear the
case.” Osborn v. United States, 918 F.2d 724, 730 (8th Cir. 1990). In ruling on a Rule
12(b)(1) motion that attacks the existence of subject matter jurisdiction in fact, “[t]he
district court has the authority to consider matters outside the pleadings” Drevlow v.
Lutheran Church, Missouri Synod, 991 F.2d 468, 470 (8th Cir. 1993). Further, “no
presumptive truthfulness attaches to the plaintiff's allegations, and the existence of
disputed material facts will not preclude the trial court from evaluating for itself the
merits of jurisdictional claims.” Osborn, 918 F.2d at 730. In defending a factual attack,
the plaintiff carries the burden of proof that jurisdiction exists. Id.
Plaintiff alleges this Court has federal question jurisdiction under 28 U.S.C. §
1331 because “Medicare Secondary Payer [“MSP”] issues are exclusively within the
province of federal courts.” The MSP provisions, 42 U.S.C. § 1395y(b), require that
Medicare be reimbursed for medical expenses that Medicare has paid on behalf of the
injured party. Medicare is a secondary source of payment and may make a “conditional
payment . . . if a primary plan . . . has not made or cannot reasonably be expected to make
payment . . . promptly . . . .” 42 U.S.C. § 1395y(b)(2)(B)(i). “Any such payment by the
Secretary shall be conditioned on reimbursement to the appropriate Trust Fund . . . .” Id.
“Thus, Medicare becomes obligated as a secondary payer only when a ‘primary plan’ has
not or cannot promptly pay a claim and expressly reserves the right to reimbursement
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from ‘a primary plan, and [from] an entity that receives payment from a primary plan.’”
In re Petition of Korff, Case No. 16-cv-12984 PDB, 2016 WL 4537815 at *4 (E.D. Mich.
Aug. 31, 2016) (citing 42 U.S.C. § 1395y(b)(2) & (b)(2)(B)(ii)) (emphasis in original).
“A tortfeasor against whom a judgment is rendered or settlement obtained . . . is
considered a ‘primary payer’ under the MSP.” Id. (citing Hadden v. United States, 661
F.3d 298, 300 (6th Cir. 2011)). See 42 C.F.R. 411.22. Thus, a successful plaintiff in a
civil action that received a settlement or judgment from the tortfeasor is “an entity that
receives payment from a primary plan,” e.g. the tortfeasor. Id. After Medicare makes a
conditional payment and the plaintiff receives a settlement from a tortfeasor, Medicare is
entitled to reimbursement for all costs rendered to the plaintiff under the MSP and
Medicare Act. This is not to say that Medicare will always pursue or receive the return of
all of its costs. Medicare may reduce or even waive its recovery under the Medicare Act.
See, e.g., 42 U.S.C. § 1395y(b)(2)(B)(v); 42 U.S.C. § 1395gg(c). Judicial review, as
compared to Medicare’s own review and decision, is not available to a party who seeks to
bypass the statutory requirements of the Medicare Act. A plaintiff must “first have to
request that the agency exercise its discretion to waive its right to collect from the
proceeds of [her] tort suit the medical expenses it had paid on her behalf.” Walters v.
Leavitt, 376 F. Supp. 2d 746, 756 (E.D. Mich. 2005) (internal citation omitted).
Congress expressly limited judicial review of Medicare disputes, including the
MSP provisions, to the internal statutory review mechanism, stating “‘no action against
the United States, the [Secretary] or any officer or employee thereof, shall be brought
under § 1331 . . . to recover on any claim arising under’ the Medicare Act. 42 U.S.C. §
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405(h) (incorporated into 42 U.S.C. § 1395(ii).” Self v. Leavitt, Case. No. 3:06-CV-167
GTE, 2007 WL 1214898 at *3 (Apr. 24, 2007). A case arises under the Medicare Act
when “both the standing and substantive basis for the . . . claim are the Medicare Act.”
Your Home Visiting Nurse Services, Inc. v. Shalala, 525 U.S. 449, 456 (1999). When a
case arises under the Medicare Act, § 405(h) “precludes judicial review under § 1331 and
requires channeling virtually all legal claims through the agency’s administrative process
before such claims can be heard in federal court.” Great Rivers Home Care, Inc. v.
Thompson, 170 F. Supp. 2d 900, 904 (E.D. Mo. 2001) (citing Shalala v. Illinois Council
on Long Term Care, 529 U.S. 1, 13-14 (2000)) (emphasis added). Only after there has
been a final decision by the Secretary, through the internal administrative review process,
may a party seek judicial review. 42 U.S.C. § 405(g) & (h).
A final decision by the secretary may only be made under § 405(g) after there has
been a (1) presentment of any claim to the Secretary and (2) exhaustion of all
administrative remedies under the Act. Heckler v. Ringer, 466 U.S. 602, 617 (1984).
The Secretary has the discretion to waive the latter requirement. Great Rivers Home
Care, Inc., 170 F. Supp. 2d at 905. However, the former is “nonwaivable and
nonexcusable,” meaning “[a]t a minimum . . . the matter must be presented to the agency
prior to review in a federal court.” Illinois Council, 529 U.S. at 15, 24. “Ultimately,
judicial review is available in this Court if [the plaintiff is] dissatisfied with the relief [she
receives] at the agency level.” In re Petition of Korff, 2016 WL 4537815 at *7.
III.

Lack of Subject Matter Jurisdiction

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Plaintiff has the burden of proving subject matter jurisdiction. To establish
jurisdiction, plaintiff stated “Medicare Secondary Payer issues are exclusively within the
province of the federal courts.” This is true, albeit incomplete. Additionally, plaintiff
cited Bradly v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) for the proposition that “the
amount that Defendant Medicare is paid out of the settlement proceeds can be determined
by the Court.” However, this Court only has jurisdiction in this action after the Secretary
has (1) been presented with a claim arising under the Medicare Act and (2) after
exhaustion of all administrative remedies. See 42 U.S.C. § 405(g) & (h). Plaintiff
presents no evidence that she complied with either requirement. Furthermore, the
Bradley case is inapposite because the petitioners in in that case complied with the two
requirements of the Medicare Act before seeking judicial review. See 621 F.3d at 1334.
Plaintiff claims that defendant Medicare’s reliance on § 405 and related case law
is mistaken because the plaintiff is not disputing or challenging the Medicare lien at issue
in this case. Instead, plaintiff seeks an order from this Court to determine the rights and
claims of the defendants and plaintiff’s attorneys because the amount of the lien claims
held by the same exceed the total amount of settlement money. Because of this, plaintiff
argues, § 405 is not applicable.
Plaintiff’s argument is at odds with the Medicare Act and related case law.
Plaintiff’s claim arises under the Medicare Act because “both the standing and
substantive basis for [her] . . . claim [is] the Medicare Act.” Your Home Visiting Nurse
Services, Inc., 525 U.S. at 456. Plaintiff explicitly claims that the MSP provisions
provide this Court with subject matter jurisdiction. Further, plaintiff’s claim necessarily
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asks for this Court to alter, reduce, or eliminate Medicare’s lien on plaintiff’s settlement
money. Thus, the Medicare Act provides the substantive basis for plaintiff’s complaint.
Plaintiff may not allege to challenge the existence of Medicare’s lien, but she clearly
challenges the amount of that lien.
IV.

Conclusion

This Court does not have subject matter jurisdiction over this case because
plaintiff has wholly failed to comply with the requirements of the Medicare Act. Plaintiff
must proceed through the administrative agency in order to present her arguments and
theories and then exhaust her administrative remedies. Only after these requirements are
met may the plaintiff seek judicial review in this Court.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss for lack of
subject matter jurisdiction (#16) is GRANTED.
So ordered this 30th day of March, 2017.

STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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