NATIONWIDE AMBULANCE SERVICES, INC. v. SAFEGUARD SERVICES, L.L.C.
Filing
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OPINION. Signed by Judge Dennis M. Cavanaugh on 10/7/11. (dc, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
_________________________________
NATIONWIDE AMBULANCE
:
SERVICES, INC.,
:
:
Plaintiff,
:
Hon. Dennis M. Cavanaugh
:
v.
:
OPINION
:
:
Civil Action No. 11-cv-5213 (DMC)(MF)
SAFEGUARD SERVICES, LLC,
:
:
Defendants.
:
_________________________________ :
DENNIS M. CAVANAUGH, U.S.D.J.:
Nationwide Ambulance Services, Inc.’s (“Plaintiff,” alternatively “Nationwide”) commenced this
cause of action for a preliminary injunction by way of an Application for Emergency Relief
(“Application”) against SafeGuard Services, LLC (“Defendant,” alternatively “SafeGuard”) under
L.Civ.R. 65.1. In response, Defendant filed a Motion Opposing the preliminary injunction and further
Cross-moved for Summary Judgment and to Dismiss Plaintiff’s Complaint. Arguments for and opposing
the Application were heard in this Court on October 6th, 2011 at nine o’clock A.M. After considering
all of the arguments and based upon the following reasons, it is the decision of this Court, for the reasons
herein expressed, that Plaintiff’s Application is denied. Defendant is hereby granted leave to renew and
resubmit the cross-motion to dismiss and for summary judgment.
I.
BACKGROUND
1. Relationship between Nationwide and SafeGuard
Nationwide is a New Jersey ambulance service provider headquartered in Cranford, New
Jersey. (Pl.’s V. Compl. 1, Sept. 9, 2011, ECF No. 1). SafeGuard is a Delaware Limited Liability
Company and Medicare contractor headquartered in Miramar, Florida. Id. Nationwide renders nonemergency, scheduled, repetitive ambulance services to dialysis patients for transportation between
their residences and the nearest dialysis center for dialysis therapy. Initial payments for services
under Medicare are ordinarily made as long as the claim contains no irregularities on its face.
SafeGuard is a designated Program Safeguard Contractor (“PSC”) specifically contracted to review
and investigate claims with a focus on preventing fraudulent claims or claims resulting from errors in
processing. (Def.’s Mot. Opp. 10, Sept. 26, 2011, ECF No. 12). SafeGuard serves as an intermediary
between a service provider, such as Nationwide, and a Medicare Administrative Contractor (“MAC”)
such as Highmark Medicare Services (“Highmark”). Id. at 16. Highmark determines overpayments
and underpayments to suppliers and is the party who actually makes payments on claims. Id. at 11.
Nationwide argues that SafeGuard interfered with their right to receive Medicare payments from
Highmark. (Pl.’s V. Compl. at 10).
2. Pre-payment audits by SafeGuard
Nationwide had, at points, been receiving reimbursement payments regularly from Highmark
under the Medicare program. On January 13th, 2011, CMS notified Nationwide that “the PSC for
New York and New Jersey” would be conducting a “pre-payment process. . . to ensure that all
payments made by the Medicare program are appropriate and consistent with Medicare policy” (the
“pre-payment audit”). (Pl.’s V. Compl. Ex. A). As of September 20, 2011, 950 claims had been
reviewed by SafeGuard as part of the pre-payment audit. (Ilg Cert. ¶ 15, Sept.13, 2011; Baldwin
Cert. ¶ 35, Sept. 26, 2011). Of 950 claims, 875 had been denied (92.1%) by Highmark based on
SafeGuard’s recommendation. Id.
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Previously, in 2008, Nationwide underwent a pre-payment audit resulting in denial of claims
for want of evidence beyond a physician’s Certificate of Medical Necessity (“CMN”).
3. Engagement in the Appeals Process
The appeals process for denial of Medicare claims involves four levels: (1) a request for
“redetermination” of an initial determination by a Medicare carrier; (2) “reconsideration” by another
Medicare contractor called a “Qualified Independent Contractor” (“QIC”); (3) hearing before an
Administrative Law Judge (“ALJ”); and, (4) appeal to the Medicare Appeals Council (“Council”) for
a final decision. Once the fourth level is reached, review of the Council’s final decision may be
sought in Federal District Court. Determinations; appeals, 42 U.S.C. § 1395ff(b)(1) (1997).
Plaintiff has appealed the instant claims through the QIC level. (Pl.’s App. 8, Sept. 13, 2011,
ECF No. 5-1). Plaintiff has received decisions from an ALJ in some, but not all, cases. Id. Plaintiff
conceded during oral argument on October 6th, 2011 that the matter has not reached the final level of
appeal before the Medical Appeals Council. Plaintiff noted that the ALJ has handed down several
decisions in its favor.
Plaintiff concedes that administrative remedies have not been exhausted while simultaneously
contending that this Court need not “interpret Medicare law.” (Pl.’s App. 21). Plaintiff characterizes
the emergent nature of this Application as “simply a [potential inability] to survive the long and
winding road imposed on it to obtain an adjudication by...[the Medicare appeals process].” (Pl.’s
App. 26). During oral argument, Plaintiff contended that SafeGuard’s interference arose to the level
of a long, unreasonable and unfounded delay in their receipt of payment due.
Plaintiff seeks a preliminary injunction restraining SafeGuard from continuing its pre-payment
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audit of Nationwide’s Medicare, Part B claims that are based on the provision of scheduled,
repetitive, non-emergency ambulance transportation to patients for continuing dialysis treatments.
(Order to Show Cause 2, Sept. 16, 2011, ECF No. 9). Further, Plaintiff seeks restraints against
SafeGuard’s recommendation that any claims be denied for processing and reimbursement once
Nationwide has provided a valid and timely CMN within sixty days preceding the transportation. Id.
II.
ISSUE
Plaintiff attempts to isolate the issue to SafeGuard’s interference with the orderly and timely
processing of its Medicare claims. SafeGuard interferes in the processing of claims to investigate
whether or not payments are reimbursing services actually covered under the statute. To confront the
issue of whether SafeGuard’s interference was reasonable or, as Plaintiff argues, “far outside any
legitimate purpose of its contract with [the Centers for Medicare & Medicaid Services],” this Court
would have to interpret the requirements for coverage under the Medicare statute, including
particularly the evidentiary requirement for proving “medical necessity” under 42 C.F.R. § 410.40
(2000). (Pl.’s Reply 15, Sept. 30, 2011). Moreover, this Court would have to weigh evidence as to
the condition of beneficiaries provided with such services. This Court is precluded from reaching
that issue for want of subject matter jurisdiction.
III.
ANALYSIS
This Court has allowed the parties to submit and oppose Plaintiff’s Application for a
preliminary injunction on the basis of Plaintiff’s contention that emergency relief is needed.
Considering those arguments here, this Court finds that issuance of a preliminary injunction is not
appropriate in this case.
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Defendant states that this Court is without jurisdiction to interpret the statute because this
Court lacks the power of judicial review until administrative remedies are exhausted. The inquiry
into SafeGuard’s alleged interference hinges on the evidentiary requirement for coverage, if any,
beyond a physician’s CMN. Plaintiff seeks a determination from this Court that a physician’s CMN
is sufficient to prove coverage under the Medicare statute. Defendant, counters that a physician’s
CMN is necessary but not sufficient. Indeed, discerning the evidentiary standard for coverage
requires an interpretation of the Medicare statute, a task which this Court has the authority to
undertake only in certain, limited circumstances. The power of judicial review over a matter arising
under the Medicare statute is conferred upon this Court once Plaintiff exhausts the available
administrative remedies pursuant to 42 U.S.C. § 405(g). Determinations; appeals, 42 U.S.C.
1395ff(f)(3) (2003). The Medicare program involves numerous regulations and a robust
administrative system established by Congress to carry out the intended purpose. Without a final
judgment of the Medicare Appeals Council, Plaintiff has not exhausted the administrative remedies
Congress has made available. Consequently, this Court lacks the authority to review.
1. Application for Emergency Relief in the form of a Preliminary Injunction
To issue a preliminary injunction this Court must consider the following four factors: (1) the
likelihood that the moving party will succeed on the merits; (2) the extent to which the moving party
will suffer irreparable harm without injunctive relief; (3) the extent to which the nonmoving party will
suffer irreparable harm if the injunction is issued; and, (4) the public interest in the matter. Liberty
Lincoln-Mercury, Inc. v. Ford Motor Co., 562 F.3d 553, 556 (3d Cir. 2009). A preliminary injunction
is an “extraordinary remedy that may only be awarded upon a clear showing that plaintiff is entitled to
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such relief.” Winter v. Natural Res. Def. Council, Inc., 129 S.Ct. 365, 375 (2008) (citing Mazurek v.
Armstrong, 520 U.S. 968, 972 (2008)). Further, in the Third Circuit, the irreparable harm
requirement is not met if a Plaintiff demonstrates a significant risk that he or she will experience
harm, but that harm can adequately be compensated after the fact by monetary damages. Adams v.
Freedom Forge Corp., 204 F.3d 475, 484-5 (3d Cir. 2000).
Plaintiff here is seeking a preliminary injunction against SafeGuard’s investigation of claims
and recommendation that claims be denied. The first factor of the preliminary injunction analysis
involves a determination of the Plaintiff’s likelihood of success on the merits. Plaintiff seeks to
enjoin SafeGuard from investigating the basis Plaintiff sets out for the coverage entitlement because it
unduly delays payment of allegedly rightful claims. It is clear that success on the merits depends on
whether or not beneficiaries of Nationwide’s services are covered by the Medicare statute. For the
reasons discussed herein, his Court does not have the authority to reach the merits that underlie this
claim.
Investigating the basis Plaintiff sets out for coverage is the exact function of a PSC. See,
Medicare Integrity Program, 42 U.S.C. § 1395ddd (2010). As a PSC, SafeGuard is specifically
designated to investigate, for example, whether evidence of a beneficiary’s condition proves that
ambulance transport is a medical necessity. The regulations clearly grant this specific authority at 42
U.S.C. § 1395ddd(f)(7) (2010), the provision which guides and explains “payment audits,” and at 42
C.F.R. § 421.500 (2008), the provision which explains the contractual relationship between a CMS
and a PSC. In fact, it is clear from the pleadings that the initiation of the pre-payment audit came
directly from CMS. See, Pl.’s V. Compl. Ex. A. Plaintiff has not pleaded sufficient evidence before
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this Court to show either that SafeGuard wrongfully initiated or carried out its pre-payment process
beyond its entitlement as a PSC.
Regarding the second factor of the preliminary injunction analysis, in oral argument before
this Court on October 6th, 2011, it became clear that Plaintiff’s claim of irreparable harm boils down
to the loss of business to competitors and an “extremely perilous financial...situation.” (Pl.’s App. 2).
The Supreme Court’s holding in Samson v. Murray particularly guides this Court’s consideration of
irreparable harm in the instant matter:
The key word in this consideration is irreparable. Mere injuries, however substantial, in terms
of money, time and energy necessarily expended in the absence of a stay, are not enough. The
possibility that adequate compensatory or other corrective relief will be available at a later
date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.
Samson v. Murray, 94, S.Ct. 937, 953 (1974) (citing Virginia Petroleum Jobbers Ass’n v. Fed.
Power Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958)) (emphasis added).
This thinking has echoed through Third Circuit jurisprudence. See, Instant Air Freight, Co. v. C.F. Air
Freight, Inc., 882 F.2d 797 (3d Cir. 1989) (finding loss of business, employees, jobs, goodwill and
reputation to be compensable with money damages rather than equitable relief); Caplan v. Fellheimer,
68 F.3d 828 (3d Cir. 1995) (finding the harm to be self-inflicted and therefore not qualifying as
irreparable harm under preliminary injunction analysis). Though this Court is sympathetic to
Nationwide’s financial dependence on Medicare payments, it cannot properly grant an extraordinary
remedy in this case where it is plain that the harm resulting from Defendant’s alleged interference
cannot be construed as anything other than monetary.
The public interest factor weighs heavily in favor of Defendant. SafeGuard is a contractor of
the government entrusted to perform anti-fraud duties to assure that Medicare payments are properly
determined and paid out. Further, public interest weighs against having this Court interpret the
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Medicare statute before administrative remedies have been exhausted. This Court must heed the
advice of the Supreme Court in looking out for the particular contexts where the “contribution to
effective government” could outweigh the “potential harm to individual citizens.” Westfall v. Erwin,
108 S.Ct. 580, 585 (1988) (superseded by statute on other grounds) (citing Doe v. McMillan, 412
U.S. 306, 320 (1973)). Congress intended that the discretion to determine Medicare coverage lie with
the Secretary of HHS. See, Heckler v. Ringer, 466 U.S. 602 (1984). Plaintiff must adhere to the
administrative procedure which Congress has established for adjudicating their Medicare claims.
Heckler, 466 U.S. at 619. This Court finds that in this particular context, Congress has a significant
interest in ensuring that the Medicare program carry out its own interpretation of its regulations.
The irreparable harm and public interest factors weigh overwhelmingly in favor of the
Defendant. Further, without reaching the merits that underlie Plaintiff’s claim regarding coverage
under an interpretation of the Medicare statute, it is clear that SafeGuard has the authority to initiate a
pre-payment audit and Plaintiff is not likely to succeed on the merits. The Court finds that the final
factor, considering harm to the nonmoving party, has nominal effect on weighting the preliminary
injunction analysis and is rather inapplicable here since SafeGuard is a government contractor
carrying out a program integrity system rather than the payor itself.
2. Subject Matter Jurisdiction
Congress put into place an exhaustive set of regulations to guide the Medicare program,
coverage and payment process. The appeals process consists of four levels: (1) redetermination; (2)
reconsideration; (3) hearing before an ALJ; and finally, (4) judgment of the Medicare Appeals
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Council (“Council”). Plaintiff has reached, and has not completed, the third level of this process.1
The Council was formed as part of the administrative fabric set up to interpret the Medicare statutes
Congress enacted. The Council provides the appropriate place for Plaintiff’s grievance with
SafeGuard. This Court will defer to that administrative process in the instant case.
For the foregoing reasons, this Court does not have jurisdiction to reach the merits of this
matter and will defer to the appeals process that Congress put into place for grievances related to
Medicare coverage issues.
IV.
CONCLUSION
Plaintiff’s Application for a preliminary injunction is denied.
s/ Dennis M. Cavanaugh
Dennis M. Cavanaugh, U.S.D.J.
Date:
Orig.:
cc:
October 7, 2011
Clerk
All Counsel of Record
Mark Falk, U.S.M.J.
1
This Court is aware that an ALJ has handed down decisions favorable to the Plaintiff,
however, the Medicare Appeals Council is the appropriate place to raise the ultimate issue in the
instant matter which requires interpretation of the Medicare statute. Prohibition against any
Federal interference, 42 U.S.C. § 1395 (1965); see also, Determinations, appeals, 42 U.S.C. §
1395ff (2003).
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