Adams EMS, Inc. v. Azar

Filing 89

MEMORANDUM AND ORDER entered: Adams's statutory, due process, and ultra vires claims fail as a matter of law. The court grants Azar's motion for summary judgment, (Docket Entry No. 64), and denies Adams's motion for summary judgment, (Docket Entry No. 65). Fina judgment to be entered by separate order. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)

Case 4:18-cv-01443 Document 89 Filed on 01/06/21 in TXSD Page 1 of 5
United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ADAMS EMS, INC.,
Plaintiff,
VS.
ALEX M. AZAR, II, SECRETARY,
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Defendant.

§
§
§
§
§
§
§
§
§
§
§
§
§

January 06, 2021
Nathan Ochsner, Clerk

CIVIL ACTION NO. H-18-1443

MEMORANDUM AND ORDER
I.

Background
This is a Medicare overpayment case. The plaintiff, Adams EMS, is an ambulance

company participating in the Medicare program as a supplier. The defendant is Alex M. Azar II,
Secretary of the Department of Health and Human Services, in his official capacity. The premise
of the lawsuit is that the Department’s contractors wrongfully calculated the Medicare
overpayments Adams EMS received. The Department sought repayment of $418,035; Adams
argued that the amount of overpayment was just under $15,000. Adams tried to obtain a hearing
before an agency administrative law judge, but faced a multi-year delay due to case backlog. The
Department threatened to recoup the $418,035 extrapolated Medicare overpayment. Adams sued
Secretary Azar for violating due process, violating the Medicare Act, violating the statutory
limitation on recoupment, and acting ultra vires.

Adams sought a declaratory judgment,

mandamus relief, and an injunction prohibiting the Department from recouping the alleged
overpayment while Adams waits for a hearing before an administrative law judge.

Case 4:18-cv-01443 Document 89 Filed on 01/06/21 in TXSD Page 2 of 5

This court dismissed Adams’s mandamus claims and granted a TRO and a preliminary
injunction restraining the Department from withholding any Medicare receivables pending an
administrative-law-judge hearing. (Docket Entry Nos. 21, 48, 49). The court found, in the absence
of Fifth Circuit authority, that Adams was likely to show that it had a property interest in receiving
and retaining the Medicare payments it earned, and that the government violated that interest by
failing to timely adjudicate Adams’s administrative appeal. (Docket Entry No. 48 at 19–20). The
parties cross-moved for summary judgment. (Docket Entry Nos. 64, 65). The parties responded
and Adams replied. (Docket Entry Nos. , 66, 67, 68). Before Azar replied to the response, the
court stayed the case pending the Fifth Circuit’s decision in Sahara Health Health Care, Inc. v.
Azar, 975 F.3d 523, 533 (5th Cir. 2020).
In Sahara Health, the Fifth Circuit considered very similar due process and ultra vires
claims by a healthcare provider and rejected them. Adams and Azar provided supplemental
briefing on the Sahara Health decision. (Docket Entry Nos. 85, 88). The court now considers the
motions for summary judgment under the law announced in Sahara Health.
II.

Summary Judgment Standard
“Summary judgment is appropriate only if there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.” Vann v. City of Southaven, Miss.,
884 F.3d 307, 309 (5th Cir. 2018) (per curiam) (internal quotation marks omitted); Fed. R. Civ. P.
56(a). “A genuine dispute of material fact exists when the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Burrell v. Prudential Ins. Co. of Am., 820 F.3d
132, 136 (5th Cir. 2016) (internal quotation marks omitted).

2

Case 4:18-cv-01443 Document 89 Filed on 01/06/21 in TXSD Page 3 of 5

III.

Analysis
Like the plaintiff in Sahara Health, Adams completed step two of the four-step

administrative review process and faced recoupment while mired in a three-to-five year waiting
period for an administrative-law-judge hearing. See Sahara Health, 975 F.3d at 526; (Docket
Entry No. 1 at ¶ 3). And, like the Sahara Health plaintiff, Adams declined to exercise its option
to escalate its appeal directly from step two to step four, which would be review by the Department
of Health and Human Services’ Appeals Board. See Sahara Health, 975 F.3d at 532; (Docket
Entry No. 64 at 4). Like the Sahara Health plaintiff, Adams alleged that the Department violated
statutory and constitutional due process rights and acted ultra vires when it began recouping the
Medicare overpayment amount it alleged without first providing a hearing before an administrative
law judge within 90 days. See Sahara Health, 975 F.3d at 525; (Docket Entry No. 1 at ¶ 1).
The Sahara Health court acknowledged that, as in this case, the Medicare recoupments
would likely cause the plaintiff to go out of business. See Sahara Health, 975 F.3d at 530; (Docket
Entry No. 48 at 22). The Sahara Health court found that the plaintiff’s private interest in avoiding
recoupment outweighed the government’s interest under the Mathews v. Eldridge balancing test.
975 F.3d at 529 (quoting Mathews v. Eldridge, 424 U.S. 319 (1976)). But the court found that the
plaintiff had received all the process it was due. Sahara Health, 975 F.3d at 533. The court also
found that the Department had not acted outside the bounds of the authority that it had under the
Medicare Act, 42 U.S.C. § 1395ff, by failing to make the administrative appeal available before
recoupment. Id. at 533. And, in Sahara Health, the Fifth Circuit found that the plaintiff had failed
to demonstrate the additional value of the live hearing: the plaintiff did not argue that it could
demonstrate good cause to present additional evidence, and it did not “identify a single point of

3

Case 4:18-cv-01443 Document 89 Filed on 01/06/21 in TXSD Page 4 of 5

inquiry it would pursue or a single dispute of material fact that it would address if given the
opportunity to cross-examine the government's witnesses.” Sahara Health, 975 F.3d at 531.
Adams argues that its claims are distinguishable from those in Sahara Health because it
seeks to present live testimony to challenge the overpayment calculation that would not be allowed
before the Appeals Board. (Docket Entry No. 88 at 4). Adams presented some evidence about the
value of a hearing, but, under Sahara Health, Adams has not demonstrated how the hearing before
the administrative law judge would meaningfully differ from the review available through the
escalation process. Adams does not argue that it can show good cause to present additional
evidence at a live hearing. And, “even if [Adams] received the hearing that it requests, it is
unlikely that it would even receive the opportunity to cross-examine a witness,” because crossexamination is available only if the Department chooses to make the witness available. Sahara
Health, 975 F.3d at 531 (emphasis in original). Adams might still be able to present live testimony
to the Appeals Board, which may decide to conduct a hearing when it determines that it is
necessary. 42 C.F.R. § 405.1108(d).
Considering claims and facts similar to those before this court, the Sahara Health court
found that the plaintiff received adequate process under the Constitution and the Medicare Act,
and that the Department acted within its statutory authority. Sahara Health, 975 F.3d at 525. The
same result applies here.
IV.

Conclusion
Adams’s statutory, due process, and ultra vires claims fail as a matter of law. The court

grants Azar’s motion for summary judgment, (Docket Entry No. 64), and denies Adams’s motion
for summary judgment, (Docket Entry No. 65).

4

Case 4:18-cv-01443 Document 89 Filed on 01/06/21 in TXSD Page 5 of 5

Final judgment is separately entered.
SIGNED on January 6, 2021, at Houston, Texas.
_______________________________
Lee H. Rosenthal
Chief United States District Judge

5