Citadel Healthcare Serv. Inc v. Sebelius
| Decision Date | 08 December 2010 |
| Docket Number | Civil Action No. 3:10-CV-1077-BH |
| Parties | CITADEL HEALTHCARE SERVICES INC., Plaintiff, v. KATHLEEN SEBELIUS, SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Pursuant to the order filed September 15, 2010, and the consent of the parties, this matter was transferred for the conduct of all further proceedings. Before the Court is Defendant's Motion to Dismiss, filed August 3, 2010 (doc. 8). Based on the relevant filings, evidence, and applicable law, the motion is GRANTED in part.
Plaintiff Citadel Healthcare Services, Inc., is a home health agency providing services in the Medicare program. Health Integrity, LLC, is a Medicare contractor handling details of Part A reimbursements. On September 1, 2009, Health Integrity, LLC, notified Plaintiff that its records would be reviewed to ensure that Medicare claims had been billed and paid appropriately in relation to services provided between July 1, 2007, and June 3, 2009. On May 4, 2010, after Plaintiff had produced the requested records, Health Integrity, LLC, notified Plaintiff by letter that it was suspending all Medicare payments owed to it. The letter explained that the suspension was based on reliable information that an overpayment or fraud or willful misrepresentation existed, or that the payments to be made might not be correct. From a random sample of Medicare claims involving 36 beneficiaries and 55 home health episodes, the letter identified 5 beneficiaries that were not homebound during the sample episodes and 5 out of 5 beneficiaries that did not meet Medicare requirements for skilled care during the sample episode.
On May 14, 2010, Health Integrity, LLC, received a rebuttal statement from Plaintiff requesting termination of the suspension. Plaintiff argued that the suspension notice failed to provide specific reasons for the suspension, only recited grounds set out in the suspension regulation, and failed to provide prior notice of suspension as required by the regulations. Health Integrity, LLC, clarified that it had not completed its review, but that based on five interviews, it had found reliable information that an overpayment or misrepresentation might exist. It explained that medical records would be requested from Plaintiff to review the additional 48 episodes in the random sample of claims to determine if they met the guidelines for homebound status, and that prior notice was not required because of the suspected fraud.
On May 28, 2010, Plaintiff filed suit alleging that Defendant had failed to issue an overpayment notice and had failed to extend appeal rights within a reasonable time, even though Health Integrity, LLC, had completed its audit and notified Plaintiff of its non-compliance findings. Plaintiff also alleged that Defendant and unknown officials, employees, and agents were improperly suspending Medicare payments under a clandestine policy designed to reduce the overall number of home health agencies and that the policy circumvented the statutory prohibition against recoupment set forth in 42 U.S.C. § 1395ddd. Plaintiff claimed violations of constitutional due process rights, the Medicare Act and the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et. seq. It sought a declaratory judgment, a writ of mandamus compelling Defendant to issue a notice of overpayment and extend appeal rights to Plaintiff, and injunctive relief preventing Defendant from suspending and recouping its Medicare payments and ordering restoration of all recouped payments to Plaintiff. Plaintiff invoked federal question jurisdiction under 28 U.S.C. § 1331, mandamus jurisdiction under 28 U.S.C. § 1361, and jurisdiction under 42 U.S.C. § 405(g) and the APA.
On August 3, 2010, Defendant moved to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. The motions are now ripe for determination.
The Medicare program, established under Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., and commonly known as the Medicare Act, pays for covered medical care to eligible elderly and disabled persons. Medicare Part A, relevant here, provides for payment on behalf of eligible beneficiaries for in-patient hospital services and certain post-hospital services that include home health services furnished by a home health agency. 42 U.S.C. §§ 1395(d) and 1395(b). The Department of Health and Human Services, through the Secretary ("Defendant"), administers the Medicare program and has delegated this function to the Center for Medicare and Medicaid Services ("CMS"). Routine administration of Medicare Part A, such as auditing and reimbursement activities, is handled by Medicare contractors that serve as fiscal intermediaries between CMS and service providers.
CMS or its contractor may suspend a provider's payments when there is reliable information that an overpayment or fraud or willful misrepresentation exists, or when the payments to be made may not be correct, although additional evidence may be needed for a determination. 42 C.F.R. § 405.371(a)(1). If it is determined that a suspension should be put into effect, CMS or its contractor must notify the provider of its intention to suspend payments and the reasons for making the suspension. 42 C.F.R. § 405.372(a)(1). Prior notice of intent is not required if the Medicare Trust fund would be harmed by such notice or if the intended suspension involves suspected fraud or misrepresentation. 42 C.F.R. § 405.372(a)(3) & (4). The duration of a suspension is limited initially to 180 days and may be extended under certain conditions. 42 C.F.R. § 405.372(d). Suspension is defined as the withholding of payment by a contractor from a provider "before a determination of the amount of the overpayment exists." 42 C.F.R. § 405.70. If after obtaining additional evidence, the contractor determines there is no overpayment, it rescinds the suspension. 42 C.F.R. 405.372(c). If it determines that an overpayment exists, it can recover or recoup the overpayment from the withheld amounts. Id.
Defendant first moves to dismiss this action for lack of subject matter jurisdiction. (Mot. Br. at 7.)
A motion to dismiss for lack of subject-matter jurisdiction is properly brought under Rule 12(b)(1) of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 12(b)(1). Federal courts are courts of limited jurisdiction; without jurisdiction conferred by the Constitution and statute, they lack the power to adjudicate claims. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). They "must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum." Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001).
"When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (per curiam). Considering Rule 12(b)(1) motions first "prevents a court without jurisdiction from prematurely dismissing a case with prejudice." Id. When a court dismisses for lack of subject matter jurisdiction, that dismissal "is not a determination of the merits and does not prevent the plaintiff from pursuing a claim in a court that does have proper jurisdiction." Id.
The district court may dismiss for lack of subject matter jurisdiction based on (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). A motion to dismiss based on the complaint alone presents a "facial attack" that requires the court to merely decide whether the allegations in the complaint, which are presumed to be true, sufficiently state a basis for subject matter jurisdiction. See Paterson v. Weinberger, 644 F. 2d 521, 523 (5th Cir. 1998). "If sufficient, those allegations alone provide jurisdiction." Id. Facial attacks are usually made early in the proceedings. Id. Where the defendant supports the motion with evidence, then the attack is "factual" and "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Williamson, 645 F.2d at 413. A factual attack may occur at any stage of the proceedings. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980). Regardless of the nature of attack, the party asserting jurisdiction constantly carries the burden of proof to establish that jurisdiction does exist. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (per curiam).
Here, Defendant's motion presents a factual attack because it is supported by evidence. However, the Court, is not required to resolve any disputed facts.
Defendant argues that federal question jurisdiction under 28 U.S.C. § 1331 is precluded in this case by 42 U.S.C. §§ 405(h) and 1395ii. (Mot. Br. at 7-9.)
Section 405(h) of the Social Security Act precludes federal question jurisdiction of all claims arising under the Social Security Act. 42 U.S.C. § 405(h). Section 1395ii of the Medicare Act in turn incorporates § 405(h) to preclude federal question jurisdiction of all claims arising under the Medicare Act. 42 U.S.C. § 1395ii; Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 5 (2000); Weinberger v. Salfi, 422 U.S. 749, 761 (1975). "A claim arises under the Medicare Ac...
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