Acute Care Ambulance Serv. v. Azar, CIVIL ACTION NO. 7:20-cv-00217

CourtUnited States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
PartiesACUTE CARE AMBULANCE SERVICE, L.L.C., Plaintiff, v. ALEX M. AZAR II, Secretary of the United States Department of Health and Human Services, Defendant.
Docket NumberCIVIL ACTION NO. 7:20-cv-00217
Decision Date03 December 2020

The Court now considers "Plaintiff's Motion for Preliminary Injunction,"1 and its supporting memorandum of law,2 Defendant's response,3 and Plaintiff's reply.4 The Court also considers "Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction,"5 Plaintiff's response,6 and Defendant's reply.7 After considering the briefing, record, and relevant authorities, the Court GRANTS Defendant's motion to dismiss, DENIES AS MOOT Plaintiff's motion for preliminary injunction, and dismisses this case.


This is a Medicare payment dispute. Plaintiff Acute Care Ambulance Service, L.L.C. provides ambulance transportation services "to Medicare beneficiaries when the use of other methods of transportation is contraindicated," such as when the patient's health would bejeopardized by another mode of transportation.8 Plaintiff must comply with numerous federal regulations to receive taxpayer-funded Medicare payments for its services.9 On July 24, 2020, Defendant Alex M. Azar II, the Secretary of the United States Department of Health and Human Services, or his designees suspended Plaintiff's Medicare payments after determining "that a credible allegation of fraud exists against" Plaintiff.10 Plaintiff alleges Defendant Secretary made this determination only upon a single incidence of deficient documentation.11 As a result of the Medicare payment suspension, from which Plaintiff derives over 90% of its revenues, Plaintiff alleges its business is threatened and its patients cannot access ambulance transport services during the COVID-19 pandemic, which Plaintiff argues constitutes an abuse of Defendant's discretion and a violation of constitutional due process for both Plaintiff and the patients Plaintiff serves.12 Plaintiff brings claims for a violation of procedural due process for itself and its patients, a claim that Defendant's suspension of payments is arbitrary and capricious, an ultra vires claim, and a request for declaratory relief and attorneys' fees and costs.13

Plaintiff commenced this action on August 7, 2020,14 and subsequently acquired summons for the Defendant on August 18th.15 Plaintiff served process, and such service was acknowledged, on August 21st.16 Plaintiff moved for a preliminary injunction on October 2nd17 and Defendant moved to dismiss on October 20th.18 Both motions are briefed and ripe for consideration. The Court turns to the analysis.


Although Plaintiff's motion for a preliminary injunction was filed earlier in time,19 the Court first turns to Defendant's motion to dismiss because it attacks the Court's jurisdiction. Motions under Federal Rule of Civil Procedure 12(b)(1) are to be considered first, before addressing any attack on the merits,20 because the Court cannot exercise any "judicial action" other than dismissal when the Court lacks jurisdiction.21

a. Legal Standard

It is a "well-settled principle that litigants can never consent to federal subject matter jurisdiction, and the lack of subject matter jurisdiction is a defense that cannot be waived."22 Federal Rule of Civil Procedure 12(b)(1) permits motions to dismiss for "lack of subject-matter jurisdiction." "Under Rule 12(b)(1), a claim is 'properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate' the claim,"23 because federal courts only have jurisdiction to decide controversies as conferred by the United States Constitution or by statute.24 While the Court has jurisdiction to determine its jurisdiction,25 it cannot exercise any "judicial action" other than dismissal when the Court lacks jurisdiction.26 If any party attacks the Court's jurisdiction, "the party asserting jurisdiction bears the burden of proof on a 12(b)(1) motion to dismiss."27 In assessing the Court's jurisdiction, "the district courtis to accept as true the allegations and facts set forth in the complaint,"28 and may "dismiss for lack of subject matter jurisdiction on any one of three separate bases: (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."29 Accordingly, the Court may consider evidence outside the pleadings to determine subject matter jurisdiction.30 Ultimately, "[a] motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to relief."31

b. Analysis

Defendant Secretary argues that "[t]his Court should dismiss Plaintiff's action because Plaintiff cannot establish that this Court has subject-matter jurisdiction, cannot establish standing for its patients' actions, and cannot state a claim upon which relief can be granted."32 Defendant urges the Court join an evidently growing consensus of district courts in Texas that have dismissed complaints like this one.33 Plaintiff responds that this Court has jurisdiction under any one of four statutes: 28 U.S.C. § 1331 or 42 U.S.C. §§ 405(g), 1395ff, or 1395ii.34

Ordinarily, this Court has jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States."35 But Medicare is an exception. The United States Supreme Court held that federal courts lack jurisdiction over any claim "arising under theMedicare laws" until the plaintiff proceeds "through the special review channel that the Medicare statutes create" and becomes entitled to judicial review if dissatisfied with the final special review results.36 "A claim arises under the Medicare Act if both the standing and the substantive basis for the presentation of the claim is the Medicare Act, or if the claim is inextricably intertwined with a claim for Medicare benefits."37 The requirement to proceed through the special Medicare review channel is equally applicable to constitutional claims "when that claim is 'inextricably intertwined' with a substantive claim of administrative entitlement."38

When a plaintiff brings a Medicare claim, one particular statute, 42 U.S.C. § 405(g), "to the exclusion of 28 U.S.C. § 1331, is the sole avenue for judicial review for all claims arising under the Medicare Act."39 Section 405(g) ostensibly applies only to social security determinations, but 42 U.S.C. § 1395ii makes section 405(g) applicable to Medicare.40 Federal court "jurisdiction under section 405(g) is determined under a two prong test. First, there must have been a presentment to the Secretary. This element can never be waived and no decision of any type can be rendered if this requirement is not satisfied. Second, the claimant must have exhausted his administrative review."41 The presentment element is "nonwaivable andnonexcusable"42 and requires the channeling of "virtually all legal attacks" including all claims through the agency before bringing them in federal court.43 However, the second element of exhaustion is waivable. "Three narrow exceptions excuse exhaustion: (1) the Eldridge collateral-claim exception under § 405(g); (2) the preclusion-of-judicial-review exception under 28 U.S.C. § 1331; and (3) mandamus jurisdiction under 28 U.S.C. § 1361."44 Under the collateral claim exception, "jurisdiction may lie over claims (a) that are ' entirely collateral' to a substantive agency decision and (b) for which 'full relief cannot be obtained at a postdeprivation hearing.'"45 The Fifth Circuit recently elaborated:

For a claim to be collateral, it must not require the court to immerse itself in the substance of the underlying Medicare claim or demand a factual determination as to the application of the Medicare Act. Nor can the claim request relief that would be administrative, i.e., the substantive, permanent relief that the plaintiff seeks or should seek through the agency appeals process. Instead, the claim must seek some form of relief that would be unavailable through the administrative process.46

The Court finds that Plaintiff met the nonwaivable presentment element under the first prong of § 405(g) jurisdiction. There is a low bar to find presentment: "The Eldridge court held that the plaintiff beneficiary met the presentment requirement because he 'presented' a claim simply by answering a questionnaire as to whether his benefits should be terminated, even when there was no prior decision as to his eligibility."47 Here, Plaintiff alleged it presented its constitutional claim on August 3, 2020,48 four days before filing suit. Plaintiff filed documentsdemonstrating that it presented its claims to Defendant's contractor.49 Defendant's contractor responded on September 9, 2020, denying Plaintiff's claim and declining to stay or terminate the suspension of Medicare payments.50 Defendant does not challenge Plaintiff's presentment argument.51 This Court finds Plaintiff met the presentment requirement under 42 U.S.C. § 405(g) as interpreted by the Supreme Court.52

The Court also finds that Plaintiff meets the collateral claim exception under the second prong of § 405(g) jurisdiction. Plaintiff argues its claims fall under the collateral claim exception to the ordinary requisite of administrative exhaustion.53 Defendant argues that Plaintiff's claim cannot avail of this collateral exception because "an action that seeks to stop the Secretary's payment suspension is not an action that is collateral to the underlying dispute—it is a direct challenge to the Secretary's decision to suspend."54 As support, Defendant cites to a nonbinding55 district court case dealing with "Medicare...

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