Opinion
CIVIL ACTION NO. 99-3389 SECTION "T" (1).
November 30, 1999
This cause came for hearing on a previous date upon the motion of the Plaintiff for preliminary injunctive relief. The Court, having heard the arguments of counsel, and having studied the legal memoranda and exhibits submitted by the parties, the record, and the applicable law, is fully advised on the premises and ready to rule.
ORDER AND REASONS
I. Background
The Plaintiff, E. Ward Sudderth, M.D., is a physician duly licensed to practice medicine in the State of Louisiana and has been doing so since 1969. Sudderth conducts his medical practice as an employee of the Westbank Medical Clinic, Inc., and at the present time, Medicare and Medicaid payments account for approximately 85% of the clinic's gross income. Sudderth estimates that he is responsible for as much as 35% to 40% of the clinic's total income.
By letter dated March 6, 1996, Blue Cross/Blue Shield of Arkansas ("Blue Cross"), which serves as the Medicare Intermediary for the State of Louisiana, requested that Sudderth provide medical records on fifteen patients who were treated by Sudderth between January 1, 1994, and December 31, 1995. The letter stated that Sudderth was chosen for the "comprehensive medical review because computer generated utilization data show[ed] that [he was] a higher utilizer" of certain treatment codes. [Plaintiff's Memorandum in Support, Exhibit A, p. 1]. Sudderth complied with the request, and by letter dated May 28, 1998, he was informed that the Department of Health and Human Services ("DHHS") intended to exclude Sudderth from the Medicare, Medicaid, and other federal health care programs for a period of three years. According to that letter, Sudderth was to be excluded from those programs because he allegedly furnished or ordered multiple laboratory services substantially in excess of the needs of patients.
The notice of proposed exclusion dated May 28, 1998, offered Sudderth an opportunity to meet with an official of DHHS in order to present evidence as to why Sudderth should not be excluded from such programs. On July 13, 1998, Sudderth and his legal counsel met with a DHHS official and presented the entire medical record on each patient who was the subject of the review. Sudderth also prepared an explanation of why each test performed was medically necessary, and included medical literature to support his explanation.
However, on November 1, 1999, Sudderth received a letter dated October 25, 1999, from DHHS stating that the additional information provided by Sudderth had been reviewed, but that despite this information, grounds still existed to exclude Sudderth from Medicare, Medicaid, and other federal health care programs for a period of three years. The letter states that the exclusion will take effect twenty days from the date of the letter, on November 15, 1999.
In this action, Sudderth asks the Court to prohibit the Defendants, Donna Shalala, the Secretary of DHHS, and the United States of America acting through DHHS (hereinafter collectively "DHHS"), from excluding the Plaintiff as a provider of medical services under the Social Security Act ("Act") or excluding the Plaintiff from participation in the Medicare, Medicaid and other federal health care programs defined in § 1128(B)(f) of the Act pending Sudderth's administrative appeals.
Sudderth argues that such exclusion and notification thereof will cause irreparable harm to his reputation since the notice of exclusion will be published in the community in which he practices medicine, and that such exclusion and notification thereof also will cause him to suffer irreparable financial injury.
II. Legal Analysis
A. Law on Preliminary Injunctions
In order to obtain a preliminary injunction, a plaintiff must establish (1) that there is a substantial likelihood of success on the merits; (2) that there is a substantial threat that failure to grant the preliminary injunction would result in irreparable harm or injury to the plaintiff; (3) that the threatened harm or injury to the plaintiff outweighs any potential damage the injunction might cause to the opposing party; and (4) that the injunction will not undermine or disserve the public interest. See Harris County, Texas v. Carmax Auto Superstores Inc., 177 F.3d 306, 312 (5th Cir. 1999) (citingCherokee Pump Equip., Inc. v. Aurora Pump, 38 F.3d 246, 249 (5th Cir. 1994)); and Ingebretsen v. Jackson Pub. School Dist., 88 F.3d 274, 278 (5th Cir.), cert. denied sub. nom., Moore v. Ingrebretsen, 519 U.S. 965 (1996). A preliminary injunction is an extraordinary equitable remedy that may be granted only if the plaintiff establishes each of the above four elements. Sunbeam Products, Inc. v. West Bend Co., 123 F.3d 246, 250 (5th Cir. 1997), cert. denied, ___ U.S. ___, 118 S.Ct. 1795 (1998).
Assuming that a plaintiff establishes each of the above four elements, a preliminary injunction may be issued. In the case at hand however, this Court does not have to look beyond the first element above.
B. Judicial Review of a Medicare Exclusion Claim
With regard to a permissive exclusion of an individual or entity from participating in Medicare, "any individual or entity that is excluded . . . is entitled to reasonable notice and opportunity for a hearing thereon by the Secretary . . ., and to judicial review of the Secretary's final decision after such hearing as is provided in section 405(g) of this title." 42 U.S.C. § 1320a-7(f)(1) (emphasis added). That section provides that
[a]ny individual, after any final decision of the [Secretary of the Department of Health and Human Services] made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such 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. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia. . . . The judgment of the court shall be final except that it shall be subject to review in the same manner as a judgment in other civil actions.42 U.S.C. § 405(g) (emphasis added). Therefore, a provider may seek judicial review in federal district court only after he has exhausted all of his administrative remedies.
The Plaintiff readily admits that he has available to him an administrative review process in which he can seek reversal of the exclusion from Medicare, Medicaid and the other federal health care programs, but argues that his case satisfies "three exceptions to the exhaustion of administrative remedies requirements." [Plaintiff's Memorandum in Support, p. 9].
C. Exceptions to the Exhaustion of Administrative Remedies Requirement
"[C]ases may arise where a claimant's interest in having a particular issue resolved promptly is so great that deference to the agency's judgment is inappropriate." Mathews v. Eldridge, 424 U.S. 319, 330 (1976) (emphasis added). The Supreme Court has held that judicial waiver of the exhaustion of administrative remedies requirement found in 42 U.S.C. § 405(g) is appropriate where (1) a plaintiff's legal claims are collateral to the demand for benefits; (2) exhaustion would be futile; and (3) the harm suffered pending exhaustion would be irrevocable. See id. at 330-32.
In the case at hand, the Plaintiff further argues that in order to avoid the exhaustion of administrative remedies requirement, not all three of the above-mentioned exceptions need be satisfied. In support of this claim, he cites a recent case in which the Fifth Circuit stated that the issue "is whether the facts of [a] case give rise to a sufficient threat of irreparable harm so as to justify waiver of the administrative exhaustion requirement." Affiliated Professional Home Health Care Agency v. Shalala, 164 F.3d 282, 286 (5th Cir. 1999).
As the Plaintiff correctly points out, the Fifth Circuit discussed the issue of irreparable harm, implying that that element alone could satisfy the exception to the rule requiring the exhaustion of administrative remedies. However, the appellate court said nothing of the other two requirements regarding judicial waiver of the exhaustion requirement.
In an attempt to argue that his administrative remedies need not be exhausted, Sudderth states that a colorable claim collateral to his substantive administrative claim has been raised, and that said claim is also constitutional in dimension. The Plaintiff argues that his exclusion "results from a substantive due process violation because he is being excluded as a result of the retroactive application of policies and procedures [regarding the necessity of documentation as to why particular tests were ordered] that did not exist at the time he ordered the laboratory tests at issue." [Plaintiff's Memorandum in Support, p. 12].
In short, the Plaintiff is claiming that DHHS "is attempting to hold [him] accountable for failure to provide certain documentation that was not then required of physicians." Id. at 14. Sudderth argues that this exclusion violates his rights under the Due Process Clause of the United States Constitution.
However, this Court finds that before such a claim can be made, a constitutional right or a recognized liberty interest must be either threatened or violated. Although the Plaintiff cites three cases from other circuits holding that a physician excluded from Medicare is deprived of a liberty interest, no Fifth Circuit precedent is cited regarding such an alleged interest. Furthermore, this Court is unable to find any such authority.
D. Alleged Liberty Interest
In 1986, the Fourth Circuit held, without discussion, that a physician's "expectation of continued participation in the medicare program is a property interest protected by the due process clause of the fifth amendment." Ram v. Heckler, 792 F.2d 444, 447 (4th Cir. 1986) (emphasis added) (citing Bowens v. North Carolina Dept. of Human Resources, 710 F.2d 1015, 1018 (4th Cir. 1983)).
In that same year, the Tenth Circuit held that "[r]eputational damage alone, no matter how egregious, is insufficient to support a claim of liberty deprivation." Koerpel v. Heckler, 797 F.2d 858, 865 (10th Cir. 1986) (citations omitted). "Some other tangible interest such as employment must also be involved."Id. The court stated that there is a "three-prong test — [1] publication of [2] false information [3] which is stigmatizing — which must be satisfied before a liberty interest is implicated."Id.
The Ninth Circuit stated that
[a]s the Supreme Court noted in Roth, to have a property interest in a benefit, a person must have "a legitimate claim of entitlement to it." 408 U.S. at 577, 92 S.Ct. at 2709. "Entitlements are created by `rules or understandings' from independent sources, such as statutes, regulations, and ordinances, or express or implied contracts." Orloff v. Cleland, 708 F.2d 372, 377 (9th Cir. 1983) (quoting Roth, 408 U.S. at 577, 92 S.Ct. at 2709). As the Secretary [of Health and Human Services] argues, however, plaintiffs can show no entitlement to continued participation in the [Medicare] programs.Erickson v. United States ex rel. Dept. of Health and Human Servs., 67 F.3d 858, 862 (9th Cir. 1995) (emphasis added).
In that case however, the Ninth Circuit did find that a liberty interest existed. Id. at 863.
Under Vanelli, then, plaintiffs would have a protectable liberty interest if their exclusion is made in connection with the "alteration of some right or status recognized by law." See 667 F.2d at 778. In that regard, the proposed exclusion is made in connection with the plaintiffs' "status" as participating health care providers under Medicare. Thus, contrary to the Secretary's assertions, we conclude that plaintiffs have a protectable liberty interest at stake.Id. It is important to note, however, that although the court held that a liberty interest did exist,
[a]s this Court noted in Cassim, the government has a "compelling" interest in preventing, among other things, the waste of public resources caused by improper acts by physicians under Medicare. 824 F.2d at 797. "Requiring full-blown predeprivation hearings would frustrate Congress' intent and impede the Secretary's ability to act quickly. It would also impose significant administrative costs." Id. (footnote omitted).Id.
This Court finds that with regard to the existence of a liberty interest, the three above-mentioned cases are interesting but unpersuasive. No Fifth Circuit authority exists for the proposition that physicians have a protectable liberty interest in their status as participating health care providers under Medicare. This Court refuses to so hold.
As an aside, it seems to this Court that the individual or individuals having a right to oppose such an exclusion would be the patients who are the beneficiaries of the Medicare programs, and not the doctors who merely collect fees from those programs. It should be noted that the case in which the Plaintiff puts so much hope, Mathews v. Eldridge, 424 U.S. 319 (1976), dealt with a recipient of social security disability benefits, not a provider of services intended to be covered thereunder.
The Plaintiff has failed to show "a substantial likelihood of success on the merits" of his claim. It is this Court's opinion that the Plaintiff has failed to prove that his is a case satisfying the requirements for judicial waiver of the administrative exhaustion requirement. Sudderth has an administrative remedy available to him, and any damages he would potentially suffer through a finding of wrongful exclusion are monetary in nature and therefore are compensable.
III. Conclusion
As the Supreme Court has stated,
[i]n the best of all worlds, immediate judicial access for all of these parties might be desirable. But Congress, in § 405(g) and § 405(h), struck a different balance, refusing declaratory relief and requiring that administrative remedies be exhausted before judicial review of the Secretary's decisions takes place. Congress must have felt that cases of individual hardship resulting from delays in the administrative process had to be balanced against the potential for overly casual or premature judicial intervention in an administrative system that processes literally millions of claims every year. If the balance is to be struck anew, the decision must come from Congress and not from this Court.Heckler v. Ringer, 466 U.S. 602, 627 (1984) (footnote omitted).
In short, this Court holds that the case at hand is not one in which the claimant's interest in having the issue resolved promptly is so great that deference to the agency's judgment is inappropriate.
Accordingly,
IT IS ORDERED that the Plaintiff's Motion for Preliminary Injunctive Relief, be, and the same is hereby DENIED.