D&G Holdings, LLC v. Burwell

• Decision Date: 12 January 2016
• Docket Number: CIVIL ACTION NO.: 15-2624
• Citation: 156 F.Supp.3d 798
• Court: U.S. District Court — Western District of Louisiana
• Parties: D&G Holdings, LLC t/a Doctors Lab v. Sylvia Mathews Burwell, et al.

156 F.Supp.3d 798

D&G Holdings, LLC t/a Doctors Lab

v.Sylvia Mathews Burwell, et al.

CIVIL ACTION NO.: 15-2624

United States District Court, W.D. Louisiana, Shreveport Division .

Signed January 12, 2016

Bobby Joseph Delise, Delise & Hall, New Orleans, LA, Alton J. Hall, Jr., Delise & Hall, Covington, LA, Ray M. Shepard, Shepard Law Firm, Glen Burnie, MD, for D&G Holdings, LLC t/a Doctors Lab.

Joseph P. Landreneau, US Attorneys Office, Shreveport, LA, William Scott Hastings, Locke Lord, Dallas, TX, for Sylvia Mathews Burwell, et al.

MEMORANDUM RULING

ELIZABETH ERNY, FOOTE UNITED STATES DISTRICT JUDGE

Now before the Court is a Motion To Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)

filed by Defendants Sylvia Mathews Burwell, the Secretary of the Department of Health & Human Services (“the Secretary”), and Andy Slavitt, the Acting Administrator of the Centers for Medicare & Medicaid Services (“CMS”). Record Document 13. Defendant Novitas Solutions, Inc., the Medicare Administrative Contractor (“MAC”), has adopted the Motion. Record Document 14.

Plaintiff, D&G Holdings, LLC, t/a Doctors Lab, is an independent medical laboratory that receives Medicare funds for providing services to residents of nursing homes and to other homebound persons in central and northwestern Louisiana. Record Document 1, p. 5. The parties are currently disputing through Medicare's administrative appeals process whether, and to what degree, overpayments were made by Medicare to Plaintiff. Id. at 2-5.

But the action that has precipitated this suit is CMS's withholding of money admittedly owed to Plaintiff for ongoing services in order to compensate CMS for the alleged overpayments. The recoupment began prior to the exhaustion of the administrative process and even prior to a hearing before a neutral Administrative Law Judge (“ALJ”). Record Documents 13-1, pp. 1-2; 18, p. 2; 16, p. 7. Plaintiff has filed suit seeking the following: (1) an injunction barring Defendants from withholding Medicare payments otherwise payable to Plaintiff on the basis of the alleged overpayments while the administrative appeals process remains ongoing; (2) an injunction requiring Defendants to provide Plaintiff with a hearing before and a decision from an ALJ within 90 days from October 14, 2015; and (3) a writ of mandamus requiring the Secretary to grant Plaintiff a hearing with an ALJ within 90 days from October 14, 2015.¹ Record Document 1, pp. 37- 38, 41, 43-44. Plaintiff has asserted the following grounds for the Court to issue an injunction preserving the status quo: (1) procedural due process; (2) substantive due process; (3) an ultra vires action; and (4) a “preservation of rights” under 5 U.S.C. § 705

. Id. at 39-43.

Defendants ask the Court to dismiss Plaintiff's suit for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)

or, alternatively, to dismiss Plaintiff's claim for a writ of mandamus for failure to state a claim upon which relief can be granted under Rule 12(b)(6). Record Document 13. Plaintiff opposes the Motion To Dismiss, arguing that this Court has subject matter jurisdiction to both (1) provide the injunctive relief sought and (2) issue a writ of mandamus to compel the Secretary to grant Plaintiff an oral, evidentiary hearing before recoupment takes place. Record Document 16.

As to the grounds upon which Plaintiff has asserted subject matter jurisdiction, this Court holds as follows:

(1) 28 U.S.C. § 1331

does not grant the Court subject matter jurisdiction in this case because channeling Plaintiff's claims through the administrative appeals process would not mean the claims received “no review at all.” Shalala v. Ill. Council on Long Term Care, Inc. , 529 U.S. 1, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000) ;

(2) Plaintiff's claims do not satisfy the requirements for issuing injunctive relief pursuant to the All Writs Act, 28 U.S.C. § 1651(a) ;

(3) 5 U.S.C. § 705 is not applicable in this case and thus does not bestow subject matter jurisdiction on this Court to issue the injunctions sought;

(4) This Court has subject matter jurisdiction to issue a writ of mandamus compelling an officer or employee of the United States to perform a nondiscretionary duty owed to Plaintiff under 28 U.S.C. § 1361, but this Court does not have the power under 28 U.S.C. § 1361 to grant the injunctive relief Plaintiff seeks; and,

(5) This Court has subject matter jurisdiction to decide Plaintiff's procedural due process claim and theoretically Plaintiff's ultra vires action based on a waiver of 42 U.S.C. § 405(g)'s administrative exhaustion requirement because (a) those claims are collateral to the substantive claim for Medicare benefits and (b) a colorable claim of irreparable harm has been shown if exhaustion is not waived. As to the Plaintiff's other claims, there is no waiver of 42 U.S.C. § 405(g)'s administrative exhaustion requirements.

In summary, Plaintiff has identified sources of this Court's subject matter jurisdiction for only Plaintiff's writ of mandamus request, procedural due process claim, and ultra vires action. However, turning to the Defendants' Rule 12(b)(6)

motion, despite this Court having subject matter jurisdiction to issue a writ of mandamus when appropriate, Plaintiff has not identified a non-discretionary duty owed to it by any Defendant and has thus failed state a claim upon which relief can be granted. Accordingly, Defendants' Motion To Dismiss [Record Documents 13 and 14] is:

(1) GRANTED IN PART to DISMISS WITHOUT PREJUDICE Plaintiff's substantive due process claim under Federal Rule of Civil Procedure 12(b)(1)

for lack of subject matter jurisdiction;

(2) GRANTED IN PART to DISMISS WITH PREJUDICE Plaintiff's “preservation of rights” claim under Federal Rule of Civil Procedure 12(b)(1) because the Court lacks subject matter jurisdiction under 5 U.S.C. § 705 to issue the injunctions Plaintiff seeks;

(3) GRANTED IN PART to DISMISS WITHOUT PREJUDICE Plaintiff's writ of mandamus claim under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted; and,

(4) DENIED IN PART because the Court has subject matter jurisdiction over Plaintiff's procedural due process claim and ultra vires action.

(5) Plaintiff's ultra vires action, as currently set forth in its Complaint, is not one upon which relief can be granted. Plaintiff is ORDERED to submit an amended complaint elucidating an ultra vires action by Tuesday, February 12, 9, 2016 if sua sponte dismissal of Plaintiff's ultra vires action is to be avoided.

I. Factual and Procedural Background

Plaintiff and Defendants are involved in a dispute over overpayments Defendants allege Medicare made to Plaintiff. Record Document 13-1, pp. 1-2. As stated above, Defendants are Sylvia Mathews Burwell, the Secretary of the Department of Health & Human Services; Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services; and Novitas Solutions, Inc., the Medicare Administrative Contractor for Louisiana. As Plaintiff's claims involve payments by Medicare and decisions by contractors for the Secretary, it is important to grasp the administrative process by which Medicare claims are reviewed and in the shadow of which Plaintiff's claims have emerged.

Medicare is a federal program providing health insurance to the elderly and disabled. See 42 U.S.C. §§ 1395

-1395lll. Plaintiff participates as a health care provider in the federal Medicare program. While Medicare is funded by the federal government and overseen by the Secretary, CMS administers the Medicare program and contracts with private companies to help administer the Medicare program. See 42 U.S.C. § 1395h ; 42 U.S.C. § 1395u ; 42 C.F.R. §§ 421.1 -421.404. CMS contracts with MACs to determine which Medicare claims may be reimbursed and the appropriate amount of reimbursement. See 42 C.F.R. §§ 421.200, 421.400 -421.404. CMS contracts also with Zone Program Integrity Contractors (“ZPICs”) who are tasked with performing “medical and utilization review and fraud review functions for benefit integrity purposes.” 42 C.F.R. §§ 421.300 -421.421.316.

Between 2011 and 2014, NCI AdvanceMed, a ZPIC, conducted a review of Plaintiff's facility. Record Document 1, p. 23. On December 19, 2014, NCI AdvanceMed alleged that Medicare had overpaid Plaintiff $8,329,967.03 because Plaintiff had failed to prorate mileage properly. Record Document 1-9. Defendant Novitas Solutions, Inc., is a MAC for Louisiana and is the Medicare contractor pursuing the alleged overpayment. See Record Document 1-11. Plaintiff is currently stalled in Medicare's administrative appeals process, appealing the overpayment determination being pursued by Novitas Solutions, Inc. Record Document 13-1, pp. 1-2.

Under Medicare's regulations, if a Medicare contractor determines an overpayment was made to a provider, that contractor may recoup the alleged overpayments from Medicare payments the provider would otherwise have received. See 42 C.F.R. § 405.371(a)(3)

. The provider may ask CMS or the contractor recouping payments not to begin recoupment, but the regulations prohibit that provider from appealing a recoupment decision to another administrative or judicial entity while the provider's claim on the merits proceeds through the Secretary's administrative appeals process. 42 C.F.R. § 405.375(c).

After an initial determination is made on the merits by a CMS contractor, the provider may appeal that determination, but must weather the Medicare appeals process. There are five levels of appeal for a provider challenging an initial determination by a CMS contractor:

1. A redetermination by the MAC of the initial determination (42 C.F.R. §§ 405.940

-405.958 );

2. A reconsideration by a Qualified Independent Contractor (“QIC”) of the decision on redetermination (42 C.F.R. §§ 405.960 -405.978 );

3. A hearing before an ALJ (42 C.F.R. §§ 405.1000 -405.1054 );

4. Review by the Medicare Appeals Council (42 C.F.R. §§ 405.1100...