Ctr. for Dermatology & Skin Cancer, Ltd. v. Burwell
| Decision Date | 21 October 2014 |
| Docket Number | No. 14–1934.,14–1934. |
| Citation | 770 F.3d 586 |
| Parties | CENTER FOR DERMATOLOGY AND SKIN CANCER, LTD., et al., Plaintiffs–Appellants, v. Sylvia Mathews BURWELL, Secretary of Health and Human Services, et al., Defendants–Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
David A. Golin, Arnstein & Lehr LLP, Chicago, IL, for Plaintiffs–Appellants.
Lucy C. Lisiecki, Department of Health and Human Services, Office of the Chief Counsel, Region V, Chicago, IL, Abigail L. Peluso, Office of the United States Attorney, Chicago, IL, for Defendants–Appellees.
Before BAUER, MANION, and KANNE, Circuit Judges.
Robert V. Kolbusz, M.D., is a practicing dermatologist who was indicted for Medicare fraud. After the indictment was returned, the Secretary for the Department of Health and Human Services ceased automatically processing his claims for Medicare reimbursement. During the pretrial preparation of his defense in the criminal proceeding, Dr. Kolbusz brought this mandamus action on behalf of himself, his medical corporation, and three patients, seeking to compel the Secretary to process claims submitted for reimbursement. In response, the Secretary filed a motion to dismiss for lack of subject-matter jurisdiction, arguing that Dr. Kolbusz failed to exhaust his administrative remedies before proceeding with his mandamus action. The district court agreed with the Secretary and dismissed this case for lack of subject-matter jurisdiction. Dr. Kolbusz appealed and we affirm.
Robert V. Kolbusz, M.D., owns and operates the Center for Dermatology and Skin Cancer, Ltd., in northern Illinois. He was a participating provider of Medicare from 1993 until December 2012. Because he was a participating provider, Dr. Kolbusz received payment for services rendered to patients directly from Medicare. On October 3, 2012 he was indicted by a federal grand jury for Medicare fraud. See United States v. Kolbusz, No. 12 CR 782 (N.D.Ill.) (Lee, J.).1 As a consequence of the indictment, the Secretary's designees imposed fraud prevention procedures on Dr. Kolbusz's practice, including payment suspension, resulting in his ultimate withdrawal from the Medicare program.2
In July 2013, Dr. Kolbusz filed suit against the Secretary of the Department of Health and Human Services (the “Secretary”) and her contractors, asserting three bases for subject matter jurisdiction: (1) federal question jurisdiction, 28 U.S.C. § 1331 ; (2) the Medicare Act, 42 U.S.C. § 1395 et seq.; and (3) mandamus, 28 U.S.C. § 1361.3 The suit was directed at the Secretary's acts or omissions regarding two distinct batches of Medicare claims submitted for reimbursement and sought to compel her to process those claims. Dr. Kolbusz allegedly sought initial determination of a batch of Medicare reimbursement claims covering October 4, 2012 through December 31, 2012. Of the 783 claims he submitted, 55 were denied. Dr. Kolbusz timely sought a redetermination of the 55 denied claims, which was granted, but denied on the merits. Dr. Kolbusz alleges that he appealed these decisions to the second level of administrative review (reconsideration), but that he has yet to receive a response regarding the qualified independent contractor's (“QIC”) reconsideration.
Dr. Kolbusz's second batch of claims was allegedly submitted after he withdrew as a participating provider in the Medicare program on January 1, 2013. Dr. Kolbusz alleges that of the “approximately 2300” claims submitted after January 1, 2013, including those filed by co-plaintiff patients, “most” have not yet received initial determinations. He alleges that “approximately 250” of the claims were denied through initial determinations, and then denied again on appeal through reconsideration, Dr. Kolbusz alleges that these 250 claims are currently pending review before an ALJ. In his complaint, he sought to compel the Secretary to process all of these claims.
In March 2014, the district court granted the Secretary's motion to dismiss for lack of subject-matter jurisdiction. See Fed.R.Civ.P. 12(b)(1). Dr. Kolbusz appeals.
Motions to dismiss under Rule 12(b)(1) are meant to test the sufficiency of the complaint, not to decide the merits of the case. See Weiler v. Household Fin. Corp., 101 F.3d 519, 524 n. 1 (7th Cir.1996). “In the context of a motion to dismiss for lack of subject matter jurisdiction, we accept as true the well pleaded factual allegations, drawing all reasonable inferences in favor of the plaintiff,” Iddir v. INS, 301 F.3d 492, 496 (7th Cir.2002), but a plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met. See Kontos v. U.S. Dep't Labor, 826 F.2d 573, 576 (7th Cir.1987). Although “[w]e review a dismissal for lack of subject matter jurisdiction de novo, ” Doctors Nursing & Rehab. Ctr. v. Sebelius, 613 F.3d 672, 676 (7th Cir.2010), “we review the district court's resolution of jurisdictional factual issues for abuse of discretion.” Sapperstein v. Hager, 188 F.3d 852, 856 (7th Cir.1999).
The Secretary has implemented a four-step administrative process to review and adjudicate challenges to determinations rendered on claims for Medicare reimbursement. 42 C.F.R. § 405.904. First, where a Medicare contractor makes an initial adverse determination on a claim, the claimant may request redetermination by the contractor. 42 C.F.R. §§ 405.904, 405.940 –958. Second, if the claimant is dissatisfied with the redetermination decision, he may request a reconsideration of the claim by a QIC. 42 C.F.R. §§ 405.904, 405.960 –966. Third, if the claimant is dissatisfied with the QIC's reconsideration, or if the QIC has surpassed its 60–day deadline to issue its decision, the claimant may request a hearing before an ALJ, for which the party must also meet the amount-in-controversy requirement. 42 C.F.R. §§ 405.904, 405.970, 405.1000. Fourth, if the claimant is dissatisfied with the decision of the ALJ, or if the ALJ does not issue a decision within the regulation's time frame, the claimant may request that the Medicare Appeals Council (“MAC”) review the case. 42 C.F.R. §§ 405.1048, 405.1100, 405.1104. Once the MAC issues a decision, or if the MAC fails to review the ALJ's decision within the applicable adjudication period, the claimant may then file suit in federal district court. 42 C.F.R. §§ 405.1130, 405.1132.
Title 28 U.S.C. § 1361 provides that “district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.” The Supreme Court has emphasized that “[t]he common-law writ of mandamus, as codified in 28 U.S.C. § 1361, is intended to provide a remedy for a plaintiff only if he has exhausted all other avenues of relief and only if the defendant owes him a clear nondiscretionary duty.” Heckler v. Ringer, 466 U.S. 602, 616, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). If a plaintiff's allegations survive Ringer's jurisdictional threshold, three elements must be met in order for the court to issue a writ: “(1) a clear right in the plaintiff to the relief sought; (2) a plainly defined and peremptory duty on the part of the defendant to do the act in question; (3) no other adequate remedy available.” Burnett v. Bowen, 830 F.2d 731, 739 (7th Cir.1987).
Critically, Dr. Kolbusz's amended complaint concedes that the furthest step his claims have proceeded to is the third level of administrative review. Am. Compl. ¶ 46. Thus, he did not exhaust the administrative appeals process before he sought mandamus. In support of his decision to forego exhausting the administrative appeals process, Dr. Kolbusz argues that mandamus jurisdiction extends over his claims because he does not seek an adjudication or review of the merits of the Medicare claims, but rather to challenge the Secretary's “procedures” for processing claims. See Appellant Br. 23. In support of this argument, Dr. Kolbusz relies on Burnett, where, citing other circuits, we stated that “the mandamus statute provides jurisdiction in cases challenging the procedures used in administering Social Security benefits but unrelated to the merits.” 830 F.2d at 737, and our subsequent decision in Michael Reese Hosp. and Med. Ctr. v. Thompson, 427 F.3d 436, 441 (7th Cir.2005), where we cited Burnett for the proposition “that mandamus relief is available for Medicare claims that are procedural rather than substantive in nature.” We now turn to these contentions.
We previously applied Ringer 's holding to the precise question of the availability of mandamus relief in the context of Medicare reimbursement claims. See Burnett, 830 F.2d at 736–40. On that occasion, we joined a number of other circuits in concluding that mandamus relief is indeed available for Medicare claims that are procedural rather than substantive in nature. Id. at 738. Yet, when subsequently confronted with a case that posed the “procedural” or “substantive” question in Michael Reese, we did not decide it because “[t]he Supreme Court has recognized that mandamus relief is available only if a plaintiff ‘has exhausted all other avenues of relief and only if the defendant owes him a clear and nondiscretionary duty,’ ” and the plaintiff had not satisfied the exhaustion requirement. Michael Reese, 427 F.3d at 441 (quoting Ringer, 466 U.S. at 616, 104 S.Ct. 2013 ). Accordingly, “[b]ecause exhaustion of administrative remedies is a prerequisite of subject matter jurisdiction under ... mandamus theories ... and [plaintiff] failed to exhaust the review process ... the district court properly rejected that basis for subject matter jurisdiction.” Id. at 443. In short, the exhaustion requirement is still applicable to procedural challenges.
Today this case arrives to us in the same...
To continue reading
Request your trial