Opinion
Civil Action No. 04-3155, Section "N" (1).
April 12, 2005
ORDER AND REASONS
Before the Court is the Motion to Dismiss for Lack of Subject Matter Jurisdiction, filed by Defendant Michael O. Leavitt, Secretary of the United States Department of Health and Human Services ("DHHS"). (Rec. Doc. No. 4). For the reasons the follow, the Defendant's Motion is GRANTED.
I. BACKGROUND
Sometime prior to April 4, 1995, Plaintiff Edna Norah, a Medicare beneficiary, received medical care that she alleged was negligently provided and resulted in surgery to correct that medical care. Complaint, ¶¶ VII, IX (Rec. Doc. No. 1). Ms. Norah filed a malpractice claim against the allegedly negligent parties, id. at ¶ IV, and all parties subsequently reached a settlement. Id. at ¶ VI. According to the complaint, Medicare paid on behalf of Ms. Norah all or a portion of the medical charges associated with the treatment. Id. at ¶ VIII.
At a time not specified in the Complaint, Plaintiffs Katherine Ward and Louise Spahr, also Medicare beneficiaries, filed a legal malpractice action against their former counsel and their insurers based on counsel's alleged actions and/or inactions in allowing a default judgment to be taken against Ms. Ward and Ms. Spahr. Complaint, ¶¶ VI and VII. In the legal malpractice action, Ms. Ward and Ms. Spahr sought to recover damages, including those for depression and other mental disorders, allegedly resulting from the default judgment being taken. Id. at ¶¶ VII and VIII. The parties subsequently settled the legal malpractice claim. Id. at ¶¶ VI. According to the complaint, Medicare paid on behalf of Ms. Ward and Ms. Spahr at least a portion of the charges for the treatment of the depression and other medical disorders. Id. at ¶ VIII.
On November 18, 2004, Plaintiffs filed a complaint in this Court, in which Plaintiffs prayed that the Court enter a declaratory judgment that DHHS and Medicare are not entitled to recover, as reimbursement or through a lien, any of the amounts received by the Plaintiffs in their respective settlements because any such rights conferred DHHS by the Medicare Secondary Payer Act have prescribed. See Complaint, ¶ XII. Alternatively, Plaintiffs pray that the Court enter a declaratory judgment of the amount owed DHHS and Medicare by each Plaintiff as reimbursement. Id. In their Complaint, Plaintiffs alleged that jurisdiction is proper under 28 U.S.C. § 1331(a), 42 U.S.C. § 1395y(b), and 42 U.S.C. § 2651. See Complaint, ¶ IV.
On February 14, 2005, the Defendant filed the Motion to Dismiss that is now before the Court. Specifically, the Defendant argues this Court lacks subject matter jurisdiction over Plaintiffs' claims because 42 U.S.C. § 405(g) is the sole grant of jurisdiction here, and Plaintiffs have failed to satisfy that statute's jurisdictional prerequisites of presentment and exhaustion.
Plaintiffs oppose the motion in part. Specifically, Plaintiffs Edna Norah and Louise Spahr are satisfied that the Secretary of DHHS, acting through the Administrator of the Centers for Medicare Medicaid Services ("CMS"), is moving to resolve their claims, and they concede to a dismissal of their claims without prejudice. See Plaintiffs' Brief Opposing In Part Motion to Dismiss, pp. 1-2 (Rec. Doc. No. 7). On the other hand, Plaintiff Katherine Ward opposes a dismissal of her claim. Ward states that she has presented her claim to CMS on four separate occasions (the first on October 8, 2003 and the last on March 16, 2005), but that CMS has repeatedly refused to respond. According to Ward, she is unable to comply with the administrative procedures. Ward asks the Court to find that, based on CMS's failure to act, the administrative process is futile and that the Defendant has waived the exhaustion requirement.
II. LAW AND ANALYSIS
A. Rule 12(b)(1) Standard
Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to challenge the subject matter jurisdiction of the district court to hear a case. Fed.R.Civ.P. 12(b)(1). Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996).
The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. Ramming v. United States, 281 F.3d 158, 160 (5th Cir. 2001). Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980).
B. Subject Matter Jurisdiction
The crux of the Defendant's argument is that since Plaintiff Katherine Ward has not received a final decision on the reimbursement issue, Ward is jurisdictionally barred from filing suit in federal court.
Because Plaintiffs Edna Norah and Louise Spahr have conceded to a dismissal without prejudice of their claims, the Court will consider the Defendant's Motion to Dismiss, only insofar as Defendant seeks dismissal of the claims of Plaintiff Katherine Ward.
Title 42 U.S.C. § 405(g) is the sole avenue for judicial review of all claims arising under the Medicare Act. See Heckler v. Ringer, 466 U.S. 602, 605, 104 S.Ct. 2013, 2016-17, 80 L.Ed.2d 622 (1985). This fact is evidenced by the plain text of 42 U.S.C. 405(h), which states:
The findings and decision of the [Secretary] after a hearing shall be binding upon all individuals who were parties to such a hearing. No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as provided herein. No action against the United States, the [Secretary], 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.Id. Thus, as has been construed by the Supreme Court, the third and final sentence of section 405(h) precludes federal question jurisdiction over claims "arising under" the Medicare Act and instead renders section 405(g) as the exclusive remedy for any such claims.
Section 405(g) provides in pertinent part as follows:
Any individual, after any final decision of the [Secretary] made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of 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 [Secretary] may allow.Id. The "final decision" of the Secretary consists of two elements: (1) the "jurisdictional" nonwaivable requirement that a presentment claim for benefits shall have been presented to the Secretary (presentment); and (2) the "waivable" requirement that the administrative remedies prescribed by the Secretary be pursued fully by the claimant (exhaustion). Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899 (1976). See also Heckler, 466 U.S. at 617, 104 S.Ct. 2023.
The threshold determination here is whether this lawsuit falls within the parameters of 42 U.S.C. § 405(h). It is the finding of this Court that the allegations of Plaintiff's complaint do in fact constitute claims arising under the Medicare Act. See Maresh v. Thompson, 290 F.Supp.2d 737, 738 (N.D.Tex. 2003) (action challenging Secretary's invocation of the Medicare Secondary Payer Act to recover Medicare payments from proceeds of lawsuit "arises under" the Medicare Act), aff'd 2004 WL 2712508 (5th Cir. Nov. 30, 2004). See also Baughan v. Thompson, 2003 WL 22295354 (W.D.Va. Sept. 30, 2003) (action seeking a declaratory judgment that the Secretary was not entitled to proceeds of plaintiff's personal injury settlement was one arising under the Medicare Act). Fundamentally, the underlying issue presented to this Court concerns whether the Plaintiff should be required to reimburse Medicare for the conditional benefits she received at the time of her treatment for depression and other mental disorders. Pursuant to 42 C.F.R. § 405.704(b)(13), any issue "having a present or potential effect on the amount of benefits to be paid under Part A of Medicare, including a determination as to whether there has been an overpayment or underpayment of benefits paid under Part A," is committed to the Secretary for initial determination. 42 C.F.R. § 405.704(b)(13). Accordingly, the instant case arises under the Medicare Act such that section 1331 jurisdiction is precluded. Thus, this Court has no subject matter jurisdiction over this case unless the Plaintiff has engaged the administrative process, as required by 42 U.S.C. § 405(g). Thus, the Court must consider whether the Plaintiff has satisfied the jurisdictional prerequisites of presentment and exhaustion.
In addition to 28 U.S.C. § 1331(a), Plaintiff also states in her Complaint that this Court has jurisdiction pursuant to 42 U.S.C. § 1395y(b) and 42 U.S.C. § 2651. See Complaint, ¶ IV. Those statutes, however, do not confer jurisdiction over the claims at issue herein. Title 42 U.S.C. § 1395y(b) references the Medicare Secondary Payer Statute, which does not contain a grant of jurisdiction. Title 42 U.S.C. § 2651, known as the Federal Medical Care Recovery Act, is typically used by Medicare to recover costs for veterans' hospitals and Indian Health service hospitals. It too does not include a grant of jurisdiction.
In the instant matter, the Court will assume solely for the purposes of this motion that the Plaintiff has presented her claim to the Secretary for review. Accordingly, the Court must determine whether the Plaintiff has exhausted all administrative remedies available to her. In the matter at hand, it is evident that the Plaintiff has not met the exhaustion requirement, as no "final decision" has been rendered by the Secretary. Indeed, Plaintiff does not contest this issue. Rather, Plaintiff urges the Court to judicially waive exhaustion as the Fifth Circuit did in Elison v. Califano, 546 F.2d 1162 (5th Cir. 1977) (concluding that, in case where the only issue was the constitutionality of a statutory requirement, exhaustion of administrative remedies was not required).
Under Mathews v. Eldridge, supra (one of the cases relied upon by the Elison Court for waiver), the claimant must satisfy a three-part test in order for the Court to find that exhaustion is not necessary. The claim at issue must be (1) collateral to a substantive claim of entitlement; (2) colorable in its showing that refusal of the relief sought will cause an injury which retroactive payments cannot remedy; and (3) one whose resolution would not serve the purpose of exhaustion (futility). 424 U.S. at 330-32, 96 S.Ct. 900-01.
1. Collateral to substantive claim
In Mathews v. Eldridge, the Supreme Court held that the plaintiff's claim that a pre-deprivation hearing was constitutionally required was "entirely collateral" to his substantive claim of entitlement. 424 U.S. at 330-32, 96 S.Ct. 900-01. There, the individual's constitutional claim regarding his procedural rights involved an analysis of the Supreme Court's jurisprudence on the Due Process Clause, which involved completely separate issues from his challenge to the Secretary's decision to terminate benefits.
In this case, Katherine Ward's claim does not fall into the "entirely collateral" exception. Indeed, Plaintiff has not even characterized her challenge as a constitutional claim. Rather, a review of the Plaintiff's complaint demonstrates that Plaintiff has alleged a purely substantive claim. At its core, Plaintiff's claim is a request that the Court calculate the overpayments and/or reimbursements and also determine whether the Secretary's entitlement to such is time-barred. In order to determine the validity of any reimbursement or overpayment determination and/or the amount which Plaintiff owes DHHS, the Court would necessarily have to immerse itself in Medicare regulations. Such determinations are clearly administrative in nature. Accordingly, since Plaintiff's claim is not collateral to its substantive claim, the Court finds that exhaustion is required here under the Mathews v. Eldridge test.
Even if Plaintiff had characterized her claim as a constitutional one, this Court would be compelled to conclude that such would be so "inextricably intertwined" with the substantive claim, and that the exhaustion requirement would therefore apply. See Heckler, 466 U.S. at 614, 104 S.Ct. at 2021.
The Court does not reach the merits of prongs two and three of the Mathews test. See Affiliated Professional Home Health Care Agency v. Shalala, 164 F.3d 282, 285-86 (5th Cir. 1999) (per curiam) (finding the Mathews test was not satisfied when the "collateral" test was not met and not discussing the "colorable" or the "futility" prongs).
2. Irreparable Harm
In Affiliated Professional Home Health Care Agency v. Shalala, 164 F.3d 282 (5th Cir. 1999) (per curiam), the Fifth Circuit suggested that a finding of irreparable harm alone could justify judicial waiver of exhaustion. Id. at 296 ("A more difficult issue, however, is whether the facts of this case give rise to a sufficient threat of irreparable harm so as to justify waiver of the administrative exhaustion requirement.").
Plaintiff has not shown that such a threat exists here. Here, Plaintiff argues that the Defendant's failure to respond constitutes a waiver of the administrative exhaustion requirement. This, however, is a generic argument that could be made in most Medicare reimbursement cases. Ignoring the exhaustion requirement based on this argument would create an entirely new exception to the exhaustion requirement which would swallow the rule of exhaustion whole. Further, as stated by the Supreme Court, the reasoning behind the application of section 405(h) is that:
it assures the agency a greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts applying "ripeness and exhaustion" exceptions case by case . . . but this assurance comes with a price, namely occasional individual, delay-related hardship.Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 13, 120 S.Ct. 1084, 1093, 146 L.Ed.2d 1 (2000) (recognizing a difference between total preclusion of review and postponement of review). See also Heckler, 466 U.S. at 627, 104 S.Ct. 2013 (explaining that Congress requires exhaustion even though there might be "cases of individual hardship resulting from delays in the administrative process"). Plaintiff's individual delay-related hardship does not convince the Court to waive the exhaustion requirement in this instance.
In this matter, a prerequisite to the subject matter jurisdiction of this Court is a final decision rendered by the Secretary of the Department of Health and Human Services. 42 U.S.C. § 405(g). While the exhaustion of administrative remedies may be waived in exceptional circumstances, the Court has not found the existence of such circumstances herein. Thus, because no final decision has been rendered by the Secretary, the Court is compelled to conclude that it lacks subject matter jurisdiction over the case.
III. CONCLUSION
For all the foregoing reasons, IT IS ORDERED that the Motion to Dismiss for Lack of Subject Matter Jurisdiction, filed by Defendant Michael O. Leavitt, Secretary of the United States Department of Health Human Services is GRANTED.