Edwards v. Burwell et al

Filing 17

Memorandum Opinion and Order granting 12 MOTION to Dismiss for Lack of Jurisdiction. Plaintiff's claims are dismissed. (Ordered by Judge Jane J Boyle on 7/8/2015) (jrr)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DR. DRALVES GENE EDWARDS,
Plaintiff,
v.
SYLVIA MATHEWS BURWELL,
Secretary, UNITED STATES
DEPARTMENT OF HEALTH AND
HUMAN SERVICES and HER
UNKNOWN FEDERAL CENTRAL
AND REGIONAL OFFICER AGENTS
FOR THE TITLE XVIII MEDICARE
PROGRAM,
Defendants.

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§ CIVIL ACTION NO. 3:14-CV-3124-B
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MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction
and for Failure to State a Claim (doc. 12), filed on March 9, 2015. For the reasons that follow, the
Court concludes that Defendants’ Motion should be and hereby is GRANTED.
I.
BACKGROUND1
A.

Factual Background
Plaintiff Dr. Dralves Gene Edwards, a physician, maintained a medical practice from 1997

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The Court draws its factual account from the allegations contained in Plaintiff’s First Amended
Complaint (doc. 9) and from the attachments and documents incorporated therein by reference. Wolcott v.
Sebelius, 635 F.3d 757, 763 (5th Cir. 2011).

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to 2001, through which he provided health care services to Medicare beneficiaries under the federal
Medicare program, as established by the Medicare Act, 42 U.S.C. § 1395 et seq. See doc. 9, Am.
Compl. He brings this lawsuit to challenge the manner in which his Medicare claims were processed
and reviewed. Id. at ¶¶ 1–4. Plaintiff asserts that the Secretary of Health and Human Services and
her unknown agents (collectively, “Defendants”) used the Medicare claims review process to engage
in targeted attacks on certain health care providers, including Plaintiff. Id. at ¶ 13. According to
Plaintiff, these targeted attacks included “economical assaults” and “unmerited criminal assaults,”
which were intentionally directed at minority providers and at providers who rendered services in
geographic areas primarily consisting of “low-income medically underserved individuals.” Id. at ¶¶
27–28, 47.
Plaintiff avers that these discriminatory practices were brought to light in 2014, when the
Wall Street Journal released previously unavailable Medicare claims data, which revealed a disparity
in Defendants’ handling and processing of certain claims. Id. at ¶¶ 27, 52. Regarding the alleged
injuries he personally experienced, Plaintiff indicates that Defendants denied nearly all of his
Medicare claims, and he notes that the discriminatory nature of the review process is illustrated by
the fact that these denials were subsequently reversed at a rate in excess of 90%. Id. at ¶ 52; see also
doc. 14, Pl.’s Resp. 6. Despite his success in having most of the denials overturned, Plaintiff maintains
that the span of time between the denial of a claim and its eventual reversal often creates cash flow
problems, which can jeopardize a provider’s practice. Id. at ¶ 52. Plaintiff thus contends that
Defendants’ unconstitutional and discriminatory “bulk” denial of claims forced him to close his
medical practice in 2001. Id. at ¶ 46.
Plaintiff alleges that through these acts, Defendants violated the Equal Protection Clause and
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the Due Process Clause of the Fifth Amendment to the U.S. Constitution. Id. at ¶ 54. He thus asserts
claims under 42 U.S.C. §§ 1981, 1983 and Title VI of the Civil Rights Act of 1964, as well as a
Bivens claim. Id. at ¶¶ 23, 54–55. Plaintiff seeks compensatory damages, a declaratory judgment, a
restraining order, and attorney’s fees. Id. at ¶ 59.
B.

Procedural Background
Plaintiff filed this lawsuit on August 30, 2014 on behalf of himself and other similarly situated

health care providers who render services under the Medicare program. See doc. 1, Orig. Compl; Am.
Compl. ¶ 50. Plaintiff subsequently amended his complaint on February 19, 2015. See Am. Compl.
On March 9, 2015, Defendants filed the present Motion to Dismiss Plaintiff’s claims under Federal
Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) for
failure to state a claim. Doc. 12, Mot. to Dismiss (“Defs.’ Mot.”). Plaintiff submitted his Response
to Defendants’ Motion on March 23, 2015. Doc. 14, Pl.’s Resp. On April 6, 2015, Defendants filed
their Reply, which was followed by Plaintiff’s Sur-reply, filed on April 22, 2015. Docs. 15, Defs.’
Reply; 16, Pl.’s Sur-reply. As such, Defendants’ Motion to Dismiss is ripe for the Court’s review.
II.
LEGAL STANDARD
A.

Rule 12(b)(1)
A court must dismiss a case for lack of subject matter jurisdiction under Rule 12(b)(1) where

it lacks the statutory or constitutional power to adjudicate the case. Home Builders Ass’n of Miss., Inc.
v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998). In ruling on a motion to dismiss for
lack of subject matter jurisdiction, a court may evaluate “(1) the complaint alone, (2) the complaint
supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by
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undisputed facts plus the court’s resolution of disputed facts.” Den Norske Stats Oljeselskap As v.
HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001); see also Williamson v. Tucker, 645 F.2d 404, 412
(5th Cir. 1981). To the extent the court relies on the complaint alone, however, the court must
accept all factual allegations as true. Id. “Ultimately, a motion to dismiss for lack of subject matter
jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts
in support of his claim that would entitle plaintiff to relief.” Ramming v. United States, 281 F.3d 158,
161 (5th Cir. 2001). If the jurisdictional allegations in the complaint are sufficient, then the
complaint stands. Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1983).
B.

Rule 12(b)(6)
Rule 12(b)(6) authorizes the court to dismiss a plaintiff’s complaint for “failure to state a

claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In considering a Rule 12(b)(6)
motion to dismiss, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most
favorable to the plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)
(quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)).
The court will “not look beyond the face of the pleadings to determine whether relief should be
granted based on the alleged facts.” Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert.
denied, 530 U.S. 1229 (2000).
To survive a motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
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liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
When well-pleaded facts fail to achieve this plausibility standard, “the complaint has alleged—but
it has not shown—that the pleader is entitled to relief.” Id. at 679 (internal quotations and
alterations omitted).
III.
ANALYSIS
Defendants seek the dismissal of Plaintiff’s lawsuit for lack of subject matter jurisdiction or,
in the alternative, for failure to state a claim upon which relief can be granted. See Defs.’ Mot. In
moving to dismiss this lawsuit for lack of subject matter jurisdiction, Defendants argue that Plaintiff’s
claims arise under the Medicare Act and are thus barred by 42 U.S.C. §§ 405(g) and 405(h), because
Plaintiff can only seek judicial review of his Medicare claims after receiving an adverse final decision
from the Secretary of Health and Human Services pursuant to an administrative review process. Id.
at 4. Defendants further assert that the Court lacks subject matter jurisdiction because Defendants
are protected from Plaintiff’s lawsuit by sovereign immunity, and they note that Plaintiff has failed
to establish that a waiver of such immunity applies. Id. at 6–8. Moreover, Defendants argue that
Plaintiff fails to state a Bivens claim. Id. at 8. Lastly, Defendants contend that the Court’s lack of
jurisdiction over these claims prevents Plaintiff from seeking a declaratory judgment. Id. at 9. The
Court thus considers the parties’ respective arguments as to these issues, in turn, below.
A.

42 U.S.C. §§ 405(g), 405(h)
In moving to dismiss this lawsuit for lack of subject matter jurisdiction, Defendants argue that

Plaintiff’s claims are barred by 42 U.S.C. §§ 405(g) and 405(h), as he may only seek judicial review
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of his Medicare claims after following the appropriate administrative procedures and receiving a final
decision on his claims from the Secretary of Health and Human Services (“HHS”). Defs.’ Mot. 4–5.
Section 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii (and accordingly
understood to refer to the HHS Secretary), provides that
[t]he 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.
42 U.S.C. § 405(h); Physician Hosps. of Am. v. Sebelius, 691 F.3d 649, 653 (5th Cir. 2012). The Fifth
Circuit has made clear that “[t]he Medicare Act severely restricts the authority of federal courts,”
as it requires that “‘virtually all legal attacks’ under the Act be brought through the agency.”
Physician Hosps., 691 F.3d at 653 (quoting Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S.
1, 13 (2000)). Thus, judicial review of claims arising under the Medicare Act “is available only after
a party first presents the claim to the [HHS] Secretary and receives a final decision,” in the manner
provided by 42 U.S.C. § 405(g). Id.
In their Motion to Dismiss, Defendants argue that Plaintiff’s claims arise under the Medicare
Act and thus are subject to the judicial review requirements established by Sections 405(g) and
405(h). Defs.’ Mot. 6. Defendants next contend that, because Plaintiff’s claims arise under the Act,
he is unable to seek judicial review, as he has already appealed the denial of his benefits through the
administrative process and has obtained a favorable outcome on most of them. Doc. 15, Defs.’ Reply
3. Because one cannot recover on a claim after it has been successfully litigated, Defendants assert

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that no recovery is available to Plaintiff through this lawsuit, and that the Court thus lacks subject
matter jurisdiction. Id.
In response to Defendants’ arguments, Plaintiff asserts that 42 U.S.C. § 405(h) is not
applicable because the present case is focused on the racial profiling in which Defendants allegedly
engaged when initially denying his claims, which Plaintiff maintains is distinct from claims arising
under the Medicare Act. Pl.’s Resp. 6–7.
When addressing a dispute related to Medicare coverage, the Court must first consider
whether the asserted claim falls under the Medicare Act and therefore calls for application of 42
U.S.C. § 405(h). Heckler v. Ringer, 466 U.S. 602, 615 (1984) (“Thus, to be true to the language of
the statute, the inquiry in determining whether 405(h) bars federal-question jurisdiction must be
whether the claim ‘arises under’ the Act.”) (citing Matthews v. Eldridge, 424 U.S. 319, 328 (1976)).
The Supreme Court has established that a claim arises under the Medicare Act if the Act “provides
both the standing and the substantive basis” for the asserted action. Weinberger v. Salfi, 422 U.S. 749,
760–61 (1975). A claim also arises under the Act if it is “inextricably intertwined” with a claim for
Medicare benefits and would require the court to review the Medicare claim determinations in
resolving the matter. Marsaw v. Thompson, 133 F. App’x 946, 948 (5th Cir. 2005).
In this case, the Medicare Act provides the “substantive basis” for Plaintiff’s allegations,
because exercising jurisdiction over this lawsuit would require the Court to revisit Plaintiff’s Medicare
claims and make determinations regarding the appropriateness of the original denial of such claims.
Weinberger, 422 U.S. at 761; see also Marsaw, 133 F. App’x at 948 (concluding that a claim arose
under the Medicare Act where “a court would necessarily have to review the propriety of thousands
of [a Medicare contractor’s] Medicare claims determinations and the decisions of its hearing
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officers”).
Although Plaintiff argues that this action is focused solely on his constitutional claim that
Defendants engaged in “Racial Medical Provider Profiling,” which he states has no connection to
the policy or procedure guiding the review of Medicare claims, the Supreme Court has established
that the constitutional nature of a claim does not exempt a plaintiff from the requirements set forth
in 42 U.S.C. § 405(h). Salfi, 422 U.S. at 760–61; see also Physician Hosps., 691 F.3d at 656; Pl.’s Resp.
6. The Fifth Circuit applied this reasoning in Affiliated Professional Home Health Care Agency v.
Shalala, where the plaintiff, a health care agency, alleged that the HHS Secretary violated its due
process and equal protection rights by “improperly and arbitrarily enforcing various Medicare rules
and regulations based solely on the fact that [plaintiff] is an African-American owned enterprise.”
164 F.3d 282, 284 (5th Cir. 1999). The court, however, concluded that this claim was not collateral
to the claim for entitlement under the Medicare Act, noting that resolving the constitutional issues
would require the court “to immerse itself in [Medicare] regulations and make a factual
determination” on the issues underlying plaintiff’s Medicare claims. Id. at 285–86. The same
reasoning applies to the present case, as Plaintiff’s allegations—although presented in constitutional
terms—are based on his complaint that his Medicare claims were improperly rejected when initially
submitted. Therefore, the Court concludes that Plaintiff’s allegations are not collateral to the original
request for Medicare entitlements, but rather arise under the Medicare Act and are subject to the
requirements of Sections 405(g) and 405(h).
Because Plaintiff’s claims arise under the Medicare Act, Sections 405(g) and 405(h) require
that he first exhaust Medicare’s administrative appeals process and receive a “final decision” from
the Secretary before seeking judicial review of the decision. Eldridge, 424 U.S. at 327. As stated in
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his complaint, Plaintiff’s pursuit of the administrative appeals process ultimately led to his claim
denials being “reversed at levels in excess of 90%.” Am. Compl. ¶ 52. Plaintiff does not clearly
indicate whether he fully exhausted the entire administrative appeals process established by Section
405(g). See id. However, even accepting that Plaintiff did exhaust his administrative remedies in
obtaining the reversal of the denials, Plaintiff would be precluded from bringing the present claim
before this Court; in addition to the pursuit of administrative remedies, “[a] condition for jurisdiction
under § 405(g) is that the Medicare system has made a determination adverse to the claimant.”
Marsaw, 133 F. App’x at 948 (citing Weinberger, 422 U.S. at 758 n.6). The fact that more than 90%
of the denials of Plaintiff’s claims were ultimately reversed demonstrates that the outcome of this
administrative review process was not adverse. Because Plaintiff was successful in obtaining a reversal
of most of his denials, the Medicare Act precludes any additional relief for these claims. Id.(“Because
[the plaintiff] has now received precisely the Medicare payments he claims were wrongfully denied,
and the statute entitles him to no other relief, his case is moot.”). With respect to any remaining
denials that were not reversed through the administrative review process, Plaintiff’s complaint
contains neither allegations requesting their review nor other facts indicating their status, as he
instead focuses on Defendants’ alleged racial profiling in initially denying the claims.
For the reasons stated above, the Court concludes that it lacks subject matter jurisdiction
over Plaintiff’s claims based on the denial of his Medicare benefits, and accordingly GRANTS
Defendants’ Motion on this issue.
B.

Sovereign Immunity
As an additional basis for dismissal due to lack of subject matter jurisdiction, Defendants

assert that they are entitled to sovereign immunity. They note that Plaintiff brings this suit on the
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ground that Defendants “engaged in intentional discriminatory acts and actions” against his delivery
of health care services under the Medicare program. Defs.’ Mot. 6; Am. Compl. ¶ 10. However,
Defendants insist that they are protected from such claims by sovereign immunity and that Plaintiff
has failed to show that a waiver of such immunity applies. Defs.’ Mot. 7. Defendants draw a
comparison to Peterson v. Weinberger, where the Fifth Circuit found that the defendants—the
Secretary and individual employees of the Department of Health, Education and Welfare—were
protected by sovereign immunity from an action concerning Medicare claims. 508 F.2d 45, 50–51
(5th Cir. 1975); Defs.’ Mot. 7.
In response to Defendants’ arguments, Plaintiff lists possible exceptions to the application of
sovereign immunity—that the official’s authority to act is unconstitutional and that the official acted
beyond the powers conferred to him or her by statute—but offers no allegations, in either his briefing
or his complaint, indicating how Defendants’ actions fall into these exceptions. Doc. 16, Pl.’s Surreply 5 (citing Unimex, Inc. v. U.S. Dep’t of Hous. & Urban Dev., 594 F.2d 1060, 1062 (5th Cir.
1979).2
Based on the filings, it appears that the HHS Secretary and employees were acting within the
scope of their official duties in administering the Medicare Act and are therefore entitled to sovereign
immunity. Marsaw, 133 F. App’x at 949. Plaintiff fails to present factual allegations indicating how
Defendants acted beyond the powers conferred to them, and the Court is likewise unable to identify
any allegations suggesting a waiver of immunity. Therefore, the Court concludes that Defendants are

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In addition, Plaintiff asserts that Defendants’ liability under Bivens removes the protection of
sovereign immunity. Pl.’s Sur-reply 6. Because the Court concludes that Plaintiff’s Bivens claim is without
basis, as detailed below, it need not address this argument further.

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protected by sovereign immunity and accordingly GRANTS Defendants’ Motion on this matter.
C.

Bivens Claim
Defendants further seek the dismissal of Plaintiff’s Bivens claim, which is based on the

allegation that Defendants violated Plaintiff’s constitutional rights by using the Medicare claims
review process to cause economic injury to Plaintiff’s medical practice. Am. Compl. ¶ 52.
After reviewing Plaintiff’s allegations, the Court concludes that he has failed to allege a Bivens
claim. As the Fifth Circuit has stated when addressing this issue, courts “will not imply a Bivens
remedy for an alleged constitutional violation in the denial of Medicare Act reimbursements, because
Congress has created a comprehensive statutory administrative review mechanism, which was
intended fully to address the problems created by wrongful denial of Medicare reimbursements.”
Marsaw, 133 F. App’x at 948; see also Home Health Licensing Specialists Inc. v. Leavitt, No. 3:07-CV2150-B, 2008 WL 4830543, at *7 (N.D. Tex. Nov. 7, 2008). Although Plaintiff insists that “there
is nothing that would support that a review by the secretary of the Department would address or
rectify the Constitutional violations” he has asserted, he neglects to offer any argument or authority
to support his request for relief. Pl.’s Resp. 9. Accordingly, the Court concludes that Plaintiff has
failed to state a Bivens claim and therefore GRANTS Defendants’ Motion on this issue.3
D.

Declaratory Judgment
Lastly, Defendants seek the dismissal of Plaintiff’s request for a declaratory judgment. Defs.’

Mot. 9. Because the Court dismisses all of Plaintiff’s underlying claims, his request for declaratory

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Because the Court concludes that Plaintiff has failed to state a Bivens claim, it need not address the
parties’ arguments regarding the applicability of the discovery rule to the running of the statute of limitations
as to this claim. See Pl.’s Resp. 10–11; Defs.’ Reply 4.

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relief cannot stand alone and cannot provide an independent basis for subject matter jurisdiction.
Skelly Oil Co. v. Phillips Co., 339 U.S. 667, 671–72 (1950). Accordingly, the Court GRANTS
Defendants’ Motion to Dismiss Plaintiff’s request for declaratory judgment.
IV.
CONCLUSION
For the aforementioned reasons, the Court GRANTS Defendants’ Motion to Dismiss for
Lack of Subject Matter Jurisdiction and for Failure to State a Claim. Doc. 12. Plaintiff’s claims are
therefore DISMISSED.

SO ORDERED.
Dated: July 8, 2015.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE

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