Tenet Healthsystem GB, Inc. v. Care Improvement Plus S. Cent. Ins. Co., 16-11176
Decision Date | 18 August 2017 |
Docket Number | No. 16-11176,16-11176 |
Citation | 875 F.3d 584 |
Parties | TENET HEALTHSYSTEM GB, INC., d.b.a. Atlanta Medical Center d.b.a. Atlanta Medical Center South Campus, North Fulton Medical Center, Inc., d.b.a. North Fulton Regional Hospital, Tenet Healthsystem Spalding, Inc., d.b.a. Spalding Regional Medical Center, Tenet Healthsystem SGH, Inc., d.b.a. Sylvan Grove Hospital, Coastal Carolina Medical Center, Inc., d.b.a. Coastal Carolina Hospital, East Cooper Community Hospital Inc., d.b.a. East Cooper Medical Center, Hilton Head Health System, LP., d.b.a. Hilton Head Hospital, Amisub of South Carolina, Inc., d.b.a. Piedmont Medical Center, Tenet Healthsystem DI, Inc., d.b.a. Des Peres Hospital, Tenet Healthsystem SL, Inc., d.b.a. Saint Louis University Hospital, Amisub (SFH), Inc., d.b.a. Saint Francis Hospital, Plaintiffs–Appellants, v. CARE IMPROVEMENT PLUS SOUTH CENTRAL INSURANCE COMPANY, Defendant–Appellee. |
Court | U.S. Court of Appeals — Eleventh Circuit |
Justin C. Fineberg, Alan D. Lash, Greg Jason Weintraub, Lorelei J. Van Wey, Lash & Goldberg, LLP, Miami, FL, James E. Gilson, Glenn Christopher Tornillo, Casey Gilson, PC, Atlanta, GA, for Plaintiffs–Appellants.
Jeffrey Lee Poston, Kate Molony Growley, Rachel Lee Talbot, Crowell & Moring, LLP, Washington, DC, David F. Cooper, Kitchens Kelley Gaynes, PC, Atlanta, GA, for Defendant–Appellee.
Before MARCUS, DUBINA, and WALKER,* Circuit Judges.
Plaintiffs-appellants are eleven hospitals (the "Plaintiff Hospitals" or "the Hospitals") who provided medical care to Medicare Part C enrollees after being authorized to do so by the defendant-appellee, Care Improvement Plus ("CIP"). BB 4-5. CIP is a Medicare Advantage Organization ("MAO"), which is a private insurance company that manages the Medicare benefits of Part C enrollees. CIP initially reimbursed the Hospitals in full, but several years later it recouped a substantial portion of these payments through offsets, claiming they were not authorized under Part C of the Medicare Act (the "Act"), 42 U.S.C. §§ 1395w-21 to 1395w-29. The Hospitals then filed this lawsuit to recover the recoupments. The district court dismissed the claims for lack of jurisdiction, holding that the Hospitals failed to exhaust their administrative remedies before bringing suit in federal court.
This case requires us to determine whether under the Medicare Act the Plaintiff Hospitals must exhaust their administrative remedies before bringing suit for underpayment by the MAO that manages enrollee benefits. To decide this case it is necessary to understand the relationship of the parties within the statutory context of the pertinent provisions of the Medicare Act.
Under Medicare Part C, Pub. L. No. 105-33, § 4001, 111 Stat. 251 (1997) ( ), MAOs, which are private sector insurers, contract with the Centers for Medicare and Medicaid Services ("CMS"), the branch of the United States Department of Health and Human Services ("HHS") responsible for administering Medicare, to provide medical treatment to Medicare enrollees. CMS pays MAOs a pre-negotiated lump sum for one year (known as a "capitated payment") for each enrollee that the MAO agrees to cover. In exchange, the MAO assumes all of the financial risk for treating that enrollee. See 42 U.S.C. §§ 1395w–24 - 25 ; see also RB 4; BB 5. If the cost of treatment exceeds the amount that the MAO was paid, the federal government is not liable for the cost overruns—the MAO bears the loss. Appx. F at *2. Under Medicare Part C, MAOs provide the same benefits that an enrollee would receive through the traditional, government-administered, fee-for-service programs under Medicare Parts A and B, as well as additional benefits. Appx. F at *2.
As the organizations responsible for administering benefits, MAOs make determinations as to whether a certain type of treatment is covered under the Medicare regulations, and if so at what rate an enrollee may be reimbursed. 42 U.S.C. § 1395w-22(g)(1)(A). When a dispute with an enrollee arises on one of these issues, it is adjudicated according to CMS regulations. The MAO's initial decision regarding coverage is classified as an "organization determination," which the Medicare Act defines as a decision "regarding whether an individual enrolled with the plan of the organization under this part is entitled to receive a health service under this section and the amount (if any) that the individual is required to pay with respect to such service." § 1395w-22(g)(1)(A). Organization determinations also include decisions by an MAO to not cover, reimburse, or provide for a treatment that "the enrollee believes" is covered by Medicare.1 HHS's regulations define potential parties to an "organization determination" as an "enrollee," the "assignee of an enrollee," the "legal representative of a deceased enrollee's estate," or "[a]ny other provider or entity (other than the MA organization) determined to have an appealable interest in the proceeding." 42 C.F.R. § 422.574.
If any one of the foregoing parties wishes to challenge any aspect of an organization determination, that party must exhaust its administrative remedies by following a specific procedure for administrative appeal prescribed by the Medicare Act and its implementing regulations. See 42 U.S.C. § 1395w–22(g) ; 42 C.F.R. §§ 422.560 – 422.622. A party may only bring suit in an Article III court to challenge an organization determination once all of the administrative remedies provided by the Act and its regulations have been exhausted. See 42 U.S.C. § 405(g) ( ); 42 U.S.C. 1395w-22(g)(5) ( ); see also Heckler v. Ringer , 466 U.S. 602, 617, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984) ( ). This is the sole pathway through which a party can obtain judicial review of any claim "arising under" the Medicare Act. 42 U.S.C. § 405(h) ; 42 U.S.C. § 1395ii (applying 42 U.S.C. § 405(h) to Medicare Part C); see also Ringer , 466 U.S. at 614-15, 104 S.Ct. 2013 ( ).
MAOs pay third-party healthcare providers to treat enrollees. This can be done in one of two ways. One option is for the MAO to enter into an express, written contract with a third-party provider, whereby it agrees to pay certain rates for certain categories of treatments. See 42 U.S.C. § 1395w-25(b)(4). The Medicare Act permits these types of contracts, and provides very few limitations on how they can be drafted. See, e.g. , 42 C.F.R. § 422.520(b) ( ). The third-party providers that are parties to these agreements are called "contract providers." The second option is for a healthcare provider that is outside of an MAO's network of contract providers to provide treatment to a Medicare Part C enrollee, and then seek reimbursement from the MAO at a later date. These out-of-network providers are called "noncontract providers."
The Plaintiff Hospitals in this case are noncontract providers. Appx. F at *2-3. According to their Complaint, the Hospitals agreed to provide treatment to certain enrollees that were covered by CIP. Before delivering treatment, the Hospitals contacted CIP and received both authorization to provide the services at issue and a guarantee that CIP would reimburse the Hospitals for the services provided. Appx. F at *3. In exchange for CIP's guarantees, the Hospitals signed waivers holding the enrollees financially harmless for any costs of care and delivered the agreed-upon treatment. Appx. F at *3. The Hospitals were then paid in full for their services. Years later, after conducting an internal audit, CIP determined that it had overpaid the Plaintiff Hospitals for their services. Appx. F at *3. CIP recouped what it determined to be the amount of its overpayment by offsetting subsequent payments. Appx. F at *3.
Following CIP's recoupment, the Hospitals brought the instant action in the district court for the Northern District of Georgia on May 28, 2015, asserting claims sounding in unjust enrichment and quantum meruit for the recouped payments. BB 7. On February 11, 2016, the district court dismissed the Hospitals' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. The district court held that because the Hospitals' claims were inextricably intertwined with the Medicare Act Appx. F at *13, the Hospitals were required to exhaust their administrative remedies before bringing suit in federal court, which they had not done. BB 8-9.
The Hospitals now timely appeal the district court's dismissal.
We review a district court's grant of a motion to dismiss de novo . Zelaya v. United States , 781 F.3d 1315, 1321 (11th Cir. 2015). The sole issue on appeal is whether the Hospitals, who are challenging CIP's recoupment decision, are parties to an "organization determination" who are subject to the administrative exhaustion requirements of the Medicare Act. We hold that they are, and therefore affirm the district court's dismissal.
CIP argues that its recoupment decision is an "organization determination" because the Medicare regulations define that term to include a dispute regarding coverage between an MAO and the assignee of a Medicare enrollee's claims.2 RB 23-26. Because the Hospitals agreed to treat the enrollees and to hold them financially harmless in exchange for a right to recover their reimbursements, CIP argues that the...
To continue reading
Request your trial-
Sarene Servs., Inc. v. Empire Blue Cross/Blue Shield, an Anthem Co.
...paid, the federal government is not liable for the cost overruns - the MAO bears the loss." Tenet Healthsystem GB, Inc. v. Care Improvement Plus South Central Ins. Co., 875 F.3d 584 (11th Cir. 2017) (internal citations omitted). The MAO pays third-party providers to treat its enrollees.This......
-
Sarasota Cnty. Pub. Hosp. Bd. v. Blue Cross & Blue Shield of Fla., Inc.
...court.4 Lifestar Ambulance Serv., Inc. v. HHS , 365 F.3d 1293, 1296 (11th Cir. 2004) ; Tenet Healthsystem GB, Inc. v. Care Improvement Plus S. Cent. Ins. Co. , 875 F.3d 584, 587 (11th Cir. 2017). A state law claim "aris[es] under" Medicare "if (1) the standing and substantive basis for pres......
- Lucio-Rayos v. Sessions
-
MSPA Claims 1, LLC v. Covington Specialty Ins. Co.
...administrative appeal prescribed by the Medicare Act and its implementing regulations." Tenet Healthsystem GB, Inc. v. Care Improvement Plus S. Cent. Ins. Co. , 875 F.3d 584, 587 (11th Cir. 2017) (citing 42 U.S.C. § 1395w–22(g) ; 42 C.F.R. §§ 422.560 – 422.622 ). Since Covington failed to d......