Sexton v. Medicare

Filing 19

ORDER. For the reasons discussed in the annexed memorandum and order, plaintiff's complaint is dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) for lack of jurisdiction. The Clerk of Court is respectfully directed to enter judgment in favor of defendant, close the case, and serve a copy of the annexed memorandum and order on the pro se plaintiff at his last known address. Ordered by Judge Kiyo A. Matsumoto on 7/11/2016. (Jacobson, Jonathan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------X
KEVIN SEXTON,
MEMORANDUM & ORDER
15-CV-2313(KAM)(LB)

Plaintiff,
-againstMEDICARE,
Defendant.
---------------------------------X
MATSUMOTO, United States District Judge:

Plaintiff Kevin Sexton (“plaintiff”) seeks to prevent
the Secretary of the United States Department of Health and Human
Services

(“HHS”

or

“defendant”) 1

from

pursuing

reimbursement

directly against plaintiff for payments Medicare made on his behalf
to medical providers after he suffered an accident. Pending before
the court is defendant’s motion to dismiss for lack of subject
matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). Because
the

court

lacks

subject

matter

jurisdiction

over

plaintiff’s

claim, defendant’s motion to dismiss is GRANTED.

1

In his complaint, plaintiff named “Medicare” as the sole defendant in
this action. (See Compl. at ¶ I-B.) The Secretary of HHS, however, is
the real party in interest. See, e.g., Schwartz v. Medicare, 832 F. Supp.
782, 783 n.1 (D.N.J. 1993) (“Although the named defendant in this case
is Medicare, pursuant to 42 C.F.R. § 421.5(b), the United States is the
real party in interest in any matter involving the administration of the
Medicare Program.”); Wright v. Sebelius, 818 F. Supp. 2d 1153, 1155 (D.
Neb. 2011) (substituting HHS secretary for named defendant where named
defendant was a private contractor collecting secondary payment
reimbursements on behalf of Medicare).

BACKGROUND
The

following

facts

derive

principally

from

the

complaint and an affidavit submitted on behalf of defendant by an
HHS administrator. 2 On December 6, 2014, plaintiff was struck by
a distracted driver in the Bronx. (See ECF No. 2, Complaint
(“Compl.”) ¶¶ III-A-C.) According to the complaint and an attached
police report, the driver of the other car was a licensed taxi or
limousine driver insured by American Transit Insurance Company. 3
(Id. ¶ III-C, Ex. 1.) Plaintiff alleges that he suffered injuries
including fractures of his tibia and fibula as a result of the
accident, and had a rod placed in his leg. (Id. ¶ IV.)
Because plaintiff was a Medicare beneficiary, Medicare
paid certain medical expenses — related to the December 6, 2014
accident — for plaintiff’s treatment in December 2014 and March
2015. (Id. ¶¶ III-C, V; ECF No. 12-3, Declaration of Victoria Abril

2

“In resolving a motion to dismiss under Rule 12(b)(1), the district
court must take all uncontroverted facts in the complaint (or petition)
as true, and draw all reasonable inferences in favor of the party
asserting jurisdiction.” Tandon v. Captain’s Cove Marina of Bridgeport,
Inc., 752 F.3d 239, 243 (2d Cir. 2014). Where subject matter jurisdiction
is disputed, however, a court may look beyond the pleadings. See Ray
Legal Consulting Grp. v. Gray, 37 F. Supp. 3d 689, 696 (S.D.N.Y. 2014)
(“[W]here subject matter jurisdiction is contested a district court is
permitted to consider evidence outside the pleadings, such as affidavits
and exhibits.”).
3 “Under New York’s Comprehensive Motor Vehicle Insurance Reparations
Act, every car owner must carry automobile insurance, which will
compensate injured parties for basic economic loss occasioned by the use
or operation of that vehicle in New York State, irrespective of fault.”
Watson-Tobah v. Royal Moving & Storage, Inc., No. 13-CV-7483, 2014 WL
6865713, at *10 (S.D.N.Y. Dec. 5, 2014) (internal quotation marks,
citations, and alterations omitted).

2

(“Abril Decl.”) at ¶¶ 5, 8; Abril Decl., Exs. A-B; ECF No. 18.) On
February 3, 2015, the Centers for Medicare and Medicaid Services
(“CMS”),

which

administers

Medicare

on

behalf

of

HHS,

sent

plaintiff and his attorney a letter notifying him that Medicare
had

conditionally

paid

medical

expenses

totaling

$678.60

for

treatment of his accident-related injuries. (Abril Decl., Ex. A.)
The February 3, 2015 letter stated that plaintiff “may be required
to reimburse Medicare for medical expenses.” (Id.) The letter was
clear, however, that plaintiff was not yet being billed. The letter
provided, in bold type: “THIS IS NOT A BILL. DO NOT SEND PAYMENT
AT THIS TIME.” 4 (Id.)
Following his receipt of CMS’s February 3, 2015 letter,
plaintiff filed the instant action seeking to compel Medicare “to
recover the funds from American Transit Ins. Co. or from the
providers that Medicare knowingly paid by mistake instead of from”
plaintiff. (Compl. at ¶ V.) Defendant subsequently served a motion
to dismiss on plaintiff, which plaintiff did not timely oppose.
(See ECF No. 10; ECF No. 12-2, Defendant’s Memorandum in Support
of Motion to Dismiss (“Def. Mem.”).) After defendant’s motion was
filed, the court provided plaintiff with additional time to file
an opposition. (Docket Entry dated 9/22/2015.) When plaintiff

4

On June 10, 2015, CMS sent a fundamentally identical letter to plaintiff
and his attorney identifying $25,262.15 in additional, conditional
payments for medical expenses arising from plaintiff’s December 6, 2014
accident. (Abril Decl., Ex. B.) Further payments have since been made
by Medicare on plaintiff’s behalf. (See ECF No. 18.)

3

again failed to respond to defendant’s motion, the court deemed
the motion fully briefed. (Docket Entry dated 10/07/2015; see also
ECF No. 15.)
Defendant has moved to dismiss this action on two bases.
First, defendant argues that plaintiff’s claim is not ripe for
judicial review because plaintiff has not suffered an actual or
imminent injury where defendant’s right to collect any purported
Medicare overpayments from plaintiff rests on contingent, future
events that may not occur. (Def. Mem. at 8-10.) Second, defendant
contends that plaintiff failed to avail himself of and exhaust
administrative

remedies

and

satisfy

the

prerequisites

to

defendant’s waiver of sovereign immunity and, thus, the action
must be dismissed. (Id. at 10-14.) Before addressing defendant’s
arguments, the court will provide necessary background on the
Medicare Secondary Payer Act.
DISCUSSION
I.

The Medicare Secondary Payer Act
“Medicare

is

a

federally

funded

medical

insurance

program for the elderly and disabled.” Fischer v. United States,
529 U.S. 667, 671 (2000). “When first enacted, Medicare paid its
beneficiaries’

medical

expenses,

even

if

beneficiaries

could

recoup them from other sources, such as private health insurance.”
Taransky v. Sec’y of U.S. Dep’t of Health & Human Servs., 760 F.3d
307, 310 (3d Cir. 2014). To address rising costs, however, Congress
4

enacted the Medicare Secondary Payer Act (the “MSP Act”) in 1980.
See Manning v. Utilities Mut. Ins. Co., 254 F.3d 387, 396 (2d Cir.
2001) (describing history of the MSP Act); see also Bio-Med.
Applications of Tennessee, Inc. v. Cent. States Se. & Sw. Areas
Health & Welfare Fund, 656 F.3d 277, 278 (6th Cir. 2011) (same).
Under the MSP Act, Medicare serves as the secondary payer when a
beneficiary has primary insurance coverage through, for example,
a group health plan, a worker’s compensation carrier, or no-fault
insurance.

See

42

U.S.C.

§

1395y(b)(2)(A);

42

C.F.R.

§ 411.20(a)(2)(i)-(iii); Manning, 254 F.3d at 391.
Where “payment has been made, or can reasonably be
expected to be made” for medical expenses under a primary plan,
Medicare generally will not pay the medical expenses. 42 U.S.C.
§ 1395y(b)(2)(A); see also Woods v. Empire Health Choice, Inc.,
574 F.3d 92, 95 (2d Cir. 2009). If a primary plan “has not made or
cannot reasonably be expected to make payment . . . promptly,”
however, Medicare may conditionally pay for medical expenses. 42
U.S.C. § 1395y(b)(2)(B)(i). Medicare may later seek reimbursement
from a primary plan or an entity that received a payment from a
primary plan. See Bird v. Thompson, 315 F. Supp. 2d 369, 371
(S.D.N.Y. 2003); see also 42 U.S.C. § 1395y(b)(2)(B)(ii) (“[A]
primary plan, and an entity that receives payment from a primary
plan, shall reimburse [Medicare for medical expenses] . . . if it
is demonstrated that such primary plan has or had a responsibility
5

to make payment . . . .”); 42 C.F.R. § 411.24(b). 5 “A primary
plan’s responsibility for such payment may be demonstrated by a
judgment, a payment conditioned upon the recipient’s compromise,
waiver, or release (whether or not there is a determination or
admission of liability) of payment for items or services included
in a claim against the primary plan or the primary plan’s insured,
or by other means.” 42 U.S.C. § 1395y(b)(2)(B)(ii).
As

relevant

here,

the

government’s

right

to

recoup

overpayments permits it to recover directly from beneficiaries who
receive primary payments. See 42 C.F.R. § 411.24(g) (“CMS has a
right of action to recover its payments from any entity, including
a beneficiary, . . . that has received a primary payment.”). If
CMS

determines

that

it

has

a

right

of

recovery

against

a

beneficiary, the agency will issue an “initial determination”
identifying the “recovery claim against a . . . beneficiary for
services or items [for which Medicare] already paid.” 42 C.F.R.
§ 405.924(b)(14). CMS’s initial determination is administratively
appealable.

42

C.F.R.

§§ 405.940-978;

see

also

42

C.F.R.

§§ 405.1000-1054, 405.1100-1140. After exhausting administrative
appeals, a dissatisfied beneficiary may seek judicial review of
the Secretary’s “final decision.” See 42 U.S.C. § 405(g); 42 U.S.C.

5

In addition, the government is “‘subrogated (to the extent of payment
made [by Medicare but required to be paid by a primary plan]) to any
right under [the MSP] of an individual . . . to payment . . . under a
primary plan.’” Woods, 574 F.3d at 95 (alterations in original) (quoting
42 U.S.C. § 1395y(b)(2)(B)(iv)).

6

§ 1395ff(b)(1)(A). “Judicial review of claims arising under the
Medicare Act is available only after the Secretary renders a ‘final
decision’ on the claim . . . .” Heckler v. Ringer, 466 U.S. 602,
605 (1984).
II.

Plaintiff Lacks a Claim That is Ripe for Adjudication
Defendant first argues that the court lacks subject

matter jurisdiction over plaintiff’s action because plaintiff has
not suffered an “actual or imminent” injury. (Def. Mem. at 8-10.)
Defendant contends that Medicare’s claim for reimbursement has not
yet accrued because no event has triggered a primary insurer’s
obligation and plaintiff has not been requested to reimburse the
program.

Because

Medicare

may

never

become

entitled

to

reimbursement from plaintiff, defendant posits, there is no live
dispute between the parties. (Id.)
Article III, § 2, of the Constitution limits federal
jurisdiction to “Cases” and “Controversies.” Genesis Healthcare
Corp.

v.

Symczyk,

133

S.

Ct.

1523,

1528

(2013);

see

also

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 341 (2006) (“[N]o
principle is more fundamental to the judiciary’s proper role in
our system of government than the constitutional limitation of
federal-court

jurisdiction

to

actual

cases

or

controversies.”

(internal quotation marks and citations omitted)). The
irreducible constitutional minimum of standing requires:
(1) that the plaintiff[s] have suffered an “injury in
fact” — an invasion of a judicially cognizable interest
7

which is (a) concrete and particularized and (b) actual
or imminent, not conjectural or hypothetical; (2) that
there be a causal connection between the injury and the
conduct complained of — the injury must be fairly
traceable to the challenged action of the defendant, and
not the result of the independent action of some third
party not before the court; and (3) that it be likely,
as opposed to merely speculative, that the injury will
be redressed by a favorable decision.
Bennett

v.

Spear,

520

U.S.

154,

167

(1997)

(emphasis

added)

(citation omitted); see also Clapper v. Amnesty Int’l USA, 133 S.
Ct. 1138, 1147 (2013) (“To establish Article III standing, an
injury must be concrete, particularized, and actual or imminent;
fairly traceable to the challenged action; and redressable by a
favorable

ruling.”

(internal

quotation

marks

and

citation

omitted)). Standing must be established at the time the action is
filed.

Azim

v.

Vance,

530

F.

App’x

44,

45

(2d

Cir.

2013)

(“[S]tanding is to be determined as of the commencement of suit.”);
accord Comer v. Cisneros, 37 F.3d 775, 791 (2d Cir. 1994). Events
that occur after an action is instituted are irrelevant to the
standing analysis if standing cannot be established at the outset.
The

principal

standing

issue

in

the

instant

action

concerns the first standing requirement: an “injury in fact.” To
satisfy Article III, an “injury in fact” “must be concrete and
particularized

and

actual

or

imminent,

not

conjectural

or

hypothetical.” Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334,
2341 (2014) (internal quotation marks and citations omitted).
“Although imminence is concededly a somewhat elastic concept, it
8

cannot be stretched beyond its purpose, which is to ensure that
the alleged injury is not too speculative for Article III purposes
— that the injury is certainly impending.” Lujan v. Defs. of
Wildlife, 504 U.S. 555, 564 n.2 (1992) (internal quotation marks
and citation omitted). “It has been stretched beyond the breaking
point when . . . the plaintiff alleges only an injury at some
indefinite

future

time . . . .”

Id.

The

imminence

requirement

“ensure[s] that the court avoids deciding a purely hypothetical
case in which the projected harm may ultimately fail to occur.”
Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 343 n.19 (2d
Cir. 2009) (internal quotation marks and citation omitted), rev’d
on other grounds, 564 U.S. 410 (2011); see also Brito v. Mukasey,
521 F.3d 160, 168 (2d Cir. 2008) (“Because [the plaintiff] alleges
only a potential for [injury] that has not yet occurred and because
that

potential

is

born

of

nothing

more

than

hypothesis

and

conjecture, [the plaintiff] lacks standing . . . .”).
Turning to the MSP Act, although CMS’s right of action
to recover overpayments against primary insurers accrues “as soon
as it learns that payment has been made or could be made under
workers’ compensation, any liability or no-fault insurance, or an
employer

group

health

plan,”

42

C.F.R.

§ 411.24(b)

(emphasis

added); see also 42 U.S.C. § 1395y(b)(2)(B)(iii), CMS’s right of
action against beneficiaries only accrues after the beneficiary
has received a primary payment. See 42 C.F.R. § 411.24(g) (“CMS
9

has a right of action to recover its payments from any entity,
including a beneficiary, provider, supplier, physician, attorney,
State

agency

payment.”

or

private

(emphasis

insurer

added));

that
see

has

received

also

42

a

primary

U.S.C.

§

1395y(b)(2)(B)(iii) (“[T]he United States may recover under this
clause from any entity that has received payment from a primary
plan or from the proceeds of a primary plan’s payment to any
entity.” (emphasis added)).
Plaintiff contends that Medicare has improperly sought
to recover purported overpayments directly from him, rather than
from the insurer of the driver of the vehicle that struck him.
(Compl. at ¶¶ III.C, V.) The February 3, 2015 letter CMS sent to
plaintiff stated explicitly, however, that it “IS NOT A BILL” and
that plaintiff should “NOT SEND PAYMENT AT THIS TIME.” (Abril
Decl., Ex. A.) The letter merely explained that plaintiff “may be
required to reimburse Medicare for medical expenses related to
[his] . . . liability claim.” (Id.) Further, the affidavit from
CMS

regional

administrator

Victoria

Abril

establishes

that

plaintiff has not received payment from a primary plan. (Abril
Aff. at ¶¶ 6-12.) Abril affirms that “[u]nless and until there is
a settlement, judgment, award or other payment demonstrating a
primary payer’s responsibility for Medicare conditional payments
made for items or services provided to [plaintiff], CMS does not

10

have

a

recovery

claim

under

the

MSP

Act

with

respect

to

[plaintiff’s] liability claim.” (Id. at ¶ 12.)
Medicare may eventually determine that a primary insurer
is

responsible

for

covering

medical

expenses

related

to

plaintiff’s injuries. In that case, it may seek reimbursement
against
payment,

the

primary

against

1395y(b)(2)(B)(iii).

insurer

or,

plaintiff
If

a

if

plaintiff

himself.

primary

insurer

See

has

received

a

42

U.S.C.

§

directly

reimburses

Medicare for all of the purported overpayments, Medicare would not
seek repayment from plaintiff himself. Alternatively, Medicare may
determine that there was no overpayment. As the above hypotheticals
illustrate, plaintiff’s alleged injury is purely conjectural. See
Am. Elec. Power Co., 582 F.3d at 343 n.19. Because he “alleges
only a potential for [injury] that has not yet occurred and because
that

potential

is

born

of

nothing

more

than

hypothesis

and

conjecture,” plaintiff lacks standing to sue. Brito, 521 F.3d at
168. 6

6

There is significant analytical overlap between the imminence
requirement (in standing jurisprudence) and ripeness doctrine. See
Butler v. Obama, 814 F. Supp. 2d 230, 242 n.8 (E.D.N.Y. 2011) (“It is
well settled that, where the issue is whether the injury is imminent or
immediate enough to confer standing, the ripeness and standing analysis
converge and apply interchangeably.”); see also Driehaus, 134 S. Ct. at
2341 n.5 (“As the parties acknowledge, the Article III standing and
ripeness issues in this case boil down to the same question. . . . [W]e
use the term ‘standing’ in this opinion.” (internal quotation marks and
citations omitted)); Warth v. Seldin, 422 U.S. 490, 499 n.10 (1975) (“The
standing question thus bears close affinity to questions of ripeness —
whether the harm asserted has matured sufficiently to warrant judicial
intervention . . . .”); 13B Charles Alan Wright & Arthur R. Miller,

11

As noted above, on June 10, 2015, plaintiff received a
nearly

identical

letter

identifying

additional

conditional

payments made by Medicare on plaintiff’s behalf. (Abril Decl., Ex.
B.) The June 10, 2015 letter, like the February 3, 2015 letter,
provided that plaintiff “may be required to reimburse Medicare.”
(Id. (emphasis added)) It did not establish Medicare’s right of
recovery

against

plaintiff.

Additionally,

on

June

27,

2016,

defendant filed a letter with the court explaining that further
conditional payments had been made by Medicare on plaintiff’s
behalf. (ECF No. 18.) The letter, however, explained: “HHS is not
aware of any events at this time that would give rise to a claim
for recovery against Plaintiff under the Medicare Act.” (Id.) Even
if events since the filing of the complaint had demonstrated
Medicare’s right to recover overpayments, plaintiff was obligated
to establish his standing to sue at the outset of the litigation.
See Azim, 530 F. App’x at 45 (“[S]tanding is to be determined as
of the commencement of suit.”).
Because the court lacks subject matter jurisdiction to
hear plaintiff’s claim against defendant, the court need not
address defendant’s alternative arguments. See Mohamed v. U.S.
Postal Serv., No. 08-CV-895, 2009 WL 2208578, at *1 (N.D.N.Y. July

Federal Practice and Procedure § 3532.1 (3d ed.). Defendant’s briefing
commingles ripeness and standing language. While ripeness would provide
an analogous ground for dismissal of plaintiff’s claim, the court uses
the term “standing,” as the Supreme Court did in Driehaus, 134 S. Ct.
at 2341 n.5.

12

22, 2009) (“Because the court finds that it lacks jurisdiction
over Plaintiff’s claim it need not address the issue of proper
service.”); In re JJF Associates LLC, No. 01-CV-2624, 2001 WL
1512616, at *2 n.3 (S.D.N.Y. Nov. 28, 2001) (“Because I find that
this Court lacks jurisdiction to consider this appeal . . . , I
need not address the Creditors’ remaining arguments in favor of
dismissal.”).
CONCLUSION
For

the

foregoing

reasons,

plaintiff’s

complaint

is

dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) for
lack of jurisdiction. The Clerk of Court is respectfully directed
to enter judgment in favor of defendant and close the case.
SO ORDERED.
Dated:

July 11, 2016
Brooklyn, New York
_________/s/_________________
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

13