Triple A Home Care Agency, Inc. v. Burwell

Filing 40

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant Sylvia Burwells Motion to Dismiss the Amended Complaint (ECF No. 30) is GRANTED, and Plaintiffs First Amended Complaint is DISMISSED. An appropriate Order of Dismissal will accompany this Memorandum and Order. Signed by District Judge Jean C. Hamilton on 02/24/2016. (CLK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
TRIPLE A HOME CARE AGENCY, INC.,
Plaintiff,
v.
SYLVIA BURWELL, Secretary, U.S.
Department of Health and Human Services,
Defendant.

)
)
)
)
)
)
)

No. 4:15CV668 JCH

)
)

MEMORANDUM AND ORDER
This matter is before the Court on the Motion of Defendant Sylvia Burwell, Secretary of
the United States Department of Health and Human Services (“HHS”) to Dismiss Plaintiff’s First
Amended Complaint, filed October 28, 2015. (ECF No. 30). The motion is fully briefed and
ready for disposition.
BACKGROUND1
Plaintiff Triple A Home Care Agency, Inc. is a provider of home healthcare services to
Medicare beneficiaries.

(Plaintiff’s First Amended Complaint (“FAC”), ¶ 1).

Defendant

Burwell, the Secretary of HHS, administers the Medicare program through the Centers for
Medicare and Medicaid Services (“CMS”). Palomar Medical Center v. Sebelius, 693 F.3d 1151,
1153 (9th Cir. 2012). CMS originally reimbursed Plaintiff’s claims for services. In 2010,
however, a Medicare contractor notified Plaintiff that it was reopening thirty therapy claims, for
therapy provided in 2007, 2008, 2009 and 2010. (FAC, ¶ 6).2 In a letter bearing the CMS logo

1 Portions of the Court’s background section are taken from Plaintiff’s First Amended
Complaint, to which Defendant has not filed an Answer.
2 The audit was performed as part of the Recovery Audit Contractor program, enacted to
“supplement CMS’s efforts to protect the fiscal integrity of the Medicare program,” by
“identify[ing] underpayments and overpayments and recoup[ing] overpayments under the
-1-

dated February 7, 2014, CGS Administrators, LLC, made a demand upon Plaintiff for repayment
of $1,397,353.00. (Id., ¶ 8).
There are four levels of appeal from an adverse HHS/CMS decision, and Plaintiff alleges
that it has exhausted the first two levels. (See 42 U.S.C. § 1395ff; FAC, ¶ 9).3 Plaintiff initiated
the third level of review, requesting a hearing before a neutral Administrative Law Judge
(“ALJ”), in approximately October, 2014. (FAC, ¶ 9; see also 42 U.S.C. § 1395ff(d)(1)).
Without awaiting a hearing, however, Plaintiff filed its original Verified Complaint in this Court
on April 22, 2015. (ECF No. 1).4
On June 29, 2015, Defendant Burwell moved to dismiss Plaintiff’s original Complaint.
(ECF No. 8). On September 28, 2015, former United States Magistrate Judge Thomas C.
Mummert, III,5 ordered Plaintiff to file an amended complaint. (ECF No. 25). Plaintiff filed its
First Amended Complaint, the subject of the instant motion, on October 4, 2015 (ECF No. 26),

medicare program.” Palomar Medical Center, 693 F.3d at 1153, 1156 (internal quotations and
citation omitted).
3 Specifically, Plaintiff maintains it presented the denied claims to the Medicare Administrative
Contractor (“MAC”) for redetermination by someone not involved in making the original
determination, pursuant to 42 U.S.C. § 1395ff(a)(3), and appealed the MAC’s decision to a
Qualified Independent Contractor for reconsideration pursuant to 42 U.S.C. § 1395ff(c).
(Plaintiff’s Verified Complaint (“Compl.”), ¶¶ 18, 24, 50).
4 Plaintiff’s original Complaint was brought in two counts. Count I, a mandamus claim, asked
that the Court “issue an order compelling HHS to show cause why HHS should not: forthwith
provide Plaintiff a hearing before an ALJ and ALJ decision required by law in its claim appeals
pending at the DAB for ninety days or more; forthwith provide Plaintiff the resolution required
by law in its claim appeals pending at the DAB for ninety days or more; and otherwise comply
with its statutory obligations in administering the appeals process for all providers.” (Compl., ¶
68). Count II, an Administrative Procedure Act claim, asked that the Court “order that HHS and
CMS show cause why a preliminary injunction and permanent injunction should [not] be issued
to enjoin HHS and CMS from initiating recoupment before Plaintiff has a hearing before an ALJ
and decision from said ALJ.” (Id., ¶ 76).
5 Upon the retirement of Judge Mummert, this case was transferred to United States Magistrate
Judge Patricia L. Cohen. (ECF No. 37). Judge Cohen did not receive full consent to jurisdiction
by a Magistrate Judge, however, and the case was reassigned to the undersigned on February 10,
2016. (ECF No. 39).
-2-

and Judge Mummert denied Defendant’s first Motion to Dismiss as moot on October 5, 2015.
(ECF No. 27).6
DISCUSSION
In its First Amended Complaint, Plaintiff asserts this Court has jurisdiction in this case
pursuant to 28 U.S.C. § 1331. (FAC, ¶ 3). Defendant counters this Court does not have subject
matter jurisdiction over Plaintiff’s claims, as they arise under the Medicare program.
To determine this question, the Court turns to 42 U.S.C.§ 405(h)7, which provides as
follows:
The findings and decision of the Commissioner of Social Security after a hearing
shall be binding upon all individuals who were parties to such hearing. No
findings of fact or decision of the Commissioner of Social Security shall be
reviewed by any person, tribunal, or governmental agency except as herein
provided. No action against the United States, the Commissioner of Social
Security, or any officer or employee thereof shall be brought under section 1331
or 1346 of Title 28 to recover on any claim arising under this subchapter.
The Eighth Circuit has explained that although section 405(h) appears to be a conclusive bar of
jurisdiction over Medicare claims, “section 405(g), after requiring exhaustion of administrative
avenues of relief, limits the preclusive effect of section 405(h).” Clarinda Home Health, 100
F.3d at 529. Section 405(g) in turn states in relevant part as follows:
Any individual, after any final decision of the Commissioner of Social Security
made after a hearing to which he was a party, irrespective of the amount in
controversy, may obtain a review of such decision by a civil action commenced
within sixty days after the mailing to him of notice of such decision or within
such further time as the Commissioner of Social Security may allow….The court
shall have power to enter, upon the pleadings and transcript of the record, a

6 While the nature of the relief sought in Plaintiff’s First Amended Complaint is not entirely
clear, as the Court construes the pleading Plaintiff asks this Court to waive the Medicare statute’s
exhaustion requirement, and proceed to a determination of the merits of its appeal.
7 42 U.S.C. § 405(h) is part of the Social Security Act, but is incorporated into the Medicare Act
by 42 U.S.C. § 1395ii. Clarinda Home Health v. Shalala, 100 F.3d 526, 529 (8th Cir. 1996). In
applying 42 U.S.C. § 405(h) to the Medicare Act, references to the Commissioner of Social
Security are considered references to the Secretary of the Department of Health and Human
Services. See 42 U.S.C. § 1395ii.
-3-

judgment affirming, modifying, or reversing the decision of the Commissioner of
Social Security, with or without remanding the cause for a rehearing.
Taken together, 42 U.S.C.§§ 405(g) and (h) thus provide that judicial review of claims arising
under the Medicare Act is precluded under § 1331, and may only be had under §405(g) after
there has been a final decision by the Secretary. Great Rivers Home Care, Inc. v. Thompson, 170
F.Supp.2d 900, 903-004 (E.D. Mo. 2001).
Although the statutory framework does not provide relief to Plaintiff, as it admittedly has
not exhausted its administrative remedies, the Eighth Circuit previously has recognized a
constitutional exception to the statutory exhaustion requirement. Clarinda Home Health, 100
F.3d at 530. “This exception applies where the litigant: (1) raises a colorable constitutional
claim collateral to his substantive claim of entitlement; (2) shows that irreparable harm would
result from exhaustion; and (3) shows that the purposes of exhaustion would not be served by
requiring further administrative procedures.” Id. at 530-31 (internal quotations and citations
omitted).

See also Great Rivers Home Care, 170 F.Supp.2d at 905 (citations omitted)

(“Specifically, courts must weigh the following factors in determining if waiver of the
requirement of administrative exhaustion is appropriate: 1) whether the claim is collateral to a
demand for benefits; 2) whether exhaustion would be futile; and 3) whether the plaintiff would
suffer irreparable harm if required to exhaust its administrative remedies before obtaining
relief.”).
Upon consideration, the Court finds Plaintiff here fails to establish entitlement to the
statutory exhaustion exception, for several reasons. First, the Court agrees with Defendant that
Plaintiff’s claims are not collateral to its substantive claim of entitlement; rather, Plaintiff seeks
review of the Medicare contractor’s determination that it overbilled the program, relief
“‘inextricably intertwined’ with [Plaintiff’s] claims for benefits.” Heckler v. Ringer, 466 U.S.
602, 614, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). See also Great Rivers Home Care, 170
-4-

F.Supp.2d at 905 (“Further, the Court disagrees with plaintiff’s characterization of its request to
enjoin the recoupment process pending appeal of the overpayment decisions as being merely
collateral to a claim for benefits.”).
Second, the Court finds Plaintiff fails to show that irreparable harm would result from
exhaustion, as the Medicare statute itself provides an escalation remedy designed to provide
either an expeditious resolution of claims or access to judicial review in a timely manner. For
example, 42 U.S.C. § 1395ff(d)(1)(A) requires the ALJ to render a decision within ninety days of
the date the request for hearing is timely filed. If the ALJ fails to render such decision, “the
party requesting the hearing may request a review by the Departmental Appeals Board of the
Department of Health and Human Services, notwithstanding any requirements for a hearing for
purposes of the party’s right to such a review.” 42 U.S.C. § 1395ff(d)(3)(A). Furthermore, the
Departmental Appeals Board is required to make a decision or remand the case to the ALJ for
reconsideration within ninety days of the date a request for review is timely filed, see 42 U.S.C.
§ 1395ff(d)(2)(A), and if it fails to do so, “the party requesting the hearing may seek judicial
review, notwithstanding any requirements for a hearing for purposes of the party’s right to such
judicial review.” 42 U.S.C. § 1395ff(d)(3)(B).8
Finally, Plaintiff fails to show “that the purposes of exhaustion would not be served by
requiring further administrative procedures,” Clarinda Home Health, 100 F.3d at 531, as it is
entirely possible that the Departmental Appeals Board would reverse prior decisions and rule in
Plaintiff’s favor. Under these circumstances, Plaintiff is required to exhaust its administrative
remedies, and Defendant’s Motion to Dismiss must be granted. See Schoolcraft v. Sullivan, 971

8 When deciding an appeal that was escalated from the ALJ, the Departmental Appeals Board
has 180 days within which to “issue a final decision or dismissal order or remand the case to the
ALJ.” See 42 C.F.R. § 405.1100(d).
-5-

F.2d 81, 85 (8th Cir. 1992) (waiver of administrative remedies is the exception to the general
rule, warranted only under exceptional circumstances), cert. denied, 114 S.Ct. 902 (1994).9
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Sylvia Burwell’s Motion to Dismiss the
Amended Complaint (ECF No. 30) is GRANTED, and Plaintiff’s First Amended Complaint is
DISMISSED. An appropriate Order of Dismissal will accompany this Memorandum and Order.

Dated this 24th Day of February, 2016.

/s/ Jean C. Hamilton
UNITED STATES DISTRICT JUDGE

9 In light of the above ruling, the Court need not consider Defendant’s assertion that Plaintiff’s
claims fail on the merits.
-6-