Great Rivers Home Care, Inc. v. Thompson, 4:01-CV-90 CEJ.

• Decision Date: 28 September 2001
• Docket Number: No. 4:01-CV-90 CEJ.,4:01-CV-90 CEJ.
• Citation: 170 F.Supp.2d 900
• Parties: GREAT RIVERS HOME CARE, INC., Plaintiff, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

170 F.Supp.2d 900

GREAT RIVERS HOME CARE, INC., Plaintiff, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, et al., Defendants.

No. 4:01-CV-90 CEJ.

United States District Court, E.D. Missouri, Eastern Division.

September 28, 2001.

David M. Harris, Scott J. Golde, Greensfelder and Hemker, St. Louis, MO, Charles F. MacKelvie, Mark I. Fishbein, MacKelvie and Associates, P.C., Chicago, IL, for plaintiff.

Joseph M. Landolt, Assist. U.S. Atty., Suzanne J. Gau, Office of U.S. Atty., St. Louis, MO, for defendants.

MEMORANDUM AND ORDER

JACKSON, District Judge.

This matter is before the Court on defendants' motion to dismiss for lack of subject matter jurisdiction. See Fed. R.Civ.P. 12(b)(1). Plaintiff has filed a response in opposition and the issues have been fully briefed.

I. Background

Plaintiff, Great Rivers Home Care, Inc. ("Great Rivers"), is a provider of home health services to Medicare beneficiaries. Defendant Tommy G. Thompson is the Secretary of the United States Department of Health and Human Services ("DHHS"). Defendant Michael McMullan is the Acting Deputy Administrator of the Centers for Medicare & Medicaid Services ("CMMS"), formerly known as the Health Care Financing Administration ("HCFA"). Defendant Blue Cross and Blue Shield Association is chief fiscal intermediary of the Medicare program. Defendant Cahaba Government Benefit Administrators ("Cahaba") serves as plaintiff's fiscal intermediary. Plaintiff brings this action before this Court seeking injunctive relief from defendants' attempts to recoup alleged Medicare overpayments.

Medicare, the federal medical insurance program for the aged and disabled, is governed by Title XVIII of the Social Security Act. 42 U.S.C. §§ 1395-1395ggg. The Medicare program is administered by CMMS, a component of DHHS. Determinations of Medicare home health care service payments are made by private insurance entities, known as fiscal intermediaries, under contract to DHHS. See 42 U.S.C. § 1395h.

Medicare reimburses its participating home health care providers through interim payments. 42 U.S.C. § 1395g(a). These interim payments are made periodically, but not less than monthly. Id. The payments are based on the provider's estimated reimbursable costs. The fiscal intermediary makes estimated payments throughout the year based on the provider's submissions, and then reconciles these estimated interim payments after the fact with the actual reasonable costs incurred by means of an annual cost report that the provider is required to submit at the conclusion of the fiscal year. 42 C.F.R. §§ 413.20, 413.60, 413.64; see also 42 C.F.R. § 413.24. The fiscal intermediary conducts an audit as soon as the cost report is received and makes an initial retroactive adjustment to the provider's account, known as a tentative final settlement. 42 C.F.R. § 413.64(f)(2). Eventually, the fiscal intermediary completes its full audit of the provider's cost report and issues a Notice of Program Reimbursement ("NPR"). The NPR identifies any adjustments to the tentative settlement and states the amounts of any Medicare overpayment, the amount of reimbursement owed to the Medicare program and the reasons for the determination. 42 C.F.R. § 405.1803(a), (b). The regulations state that a fiscal intermediary must issue the NPR within "a reasonable period of time", which "may take as long as one year" See 42 C.F.R. § 405.1803(a); Medicare Provider Reimbursement Manual, Part I, § 2905.1.

If a provider is dissatisfied with the fiscal intermediary's final determination as to the amount of reimbursement due and the amount in controversy is $10,000 or more, as reflected in the NPR, the provider may appeal to the Provider Reimbursement Review Board ("PRRB"). 42 U.S.C. § 1395oo(a); 42 C.F.R. § 405.1835.

Federal law requires the fiscal intermediary to immediately initiate the process of recouping any overpayment by making adjustments to payments currently due the provider. 42 C.F.R. §§ 405 .1803(c), 413.64(f); see also 42 U.S.C. § 1395g(a); 42 C.F.R. § 405.371. Recoupment is the recovery of overpayments by reducing present or future Medicare payments and applying the amounts withheld to the indebtedness. 42 C.F.R. § 405.371(a). Such recoupments are made notwithstanding any request for hearing challenging the overpayment determination. 42 C.F.R. § 405.1803(c).

When a provider claims reimbursement for costs that are similar to costs that were disallowed in the previous fiscal year's NPR, the Medicare Provider Reimbursement Manual ("PRM") requires fiscal intermediaries to deduct the portion of such costs from the tentative final adjustment. PRM, Part I, § 2408.2. This "audit adjustment factor" ensures that costs determined to be unallowable during a prior year's audit are not reimbursed in a tentative final settlement on subsequent cost reports.

On December 1, 1997 plaintiff submitted its cost report for the 1997 fiscal year ("FY 97"). On December 18, 1997 defendant Cahaba issued its tentative final settlement. At the time of the tentative final settlement, Cahaba paid plaintiff over $69,000 in addition to the interim payments received by plaintiff during FY 97. On August 18, 2000, after performing a field audit, Cahaba issued the NPR for FY 97, disallowing approximately $280,000 of plaintiff's claimed costs. Plaintiff appealed the NPR to the PRRB. This matter is scheduled for hearing before the PRRB in March 2002. Cahaba immediately initiated recoupment of the amount it determined Medicare had overpaid plaintiff in FY 97.

On November 11, 1998 plaintiff submitted its cost report for the 1998 fiscal year ("FY 98"). Based upon the costs that were disallowed in FY 97, Cahaba applied an audit adjustment factor and disallowed approximately $380,000 of the claimed costs for FY 98. Cahaba immediately initiated recoupment of the amount it determined Medicare had overpaid plaintiff in FY 98. Cahaba has not yet issued an NPR for FY 98.

On November 23, 1999 plaintiff submitted its cost report for the 1999 fiscal year ("FY 99"). Again, based upon the costs that were disallowed in FY 97, Cahaba applied an audit adjustment factor and disallowed approximately $100,000 of the claimed costs for FY 99. Cahaba immediately initiated recoupment of the amount it determined Medicare had overpaid plaintiff in FY 99. Again, Cahaba has not yet issued an NPR for FY 99.

On November 29, 2000 plaintiff submitted its cost report for the 2000 fiscal year ("FY 00"). Again, based upon the costs that were disallowed in FY 97, Cahaba applied an audit adjustment factor and disallowed approximately $125,000 of the claimed costs for FY 00. Cahaba immediately initiated recoupment of the amount it determined Medicare had overpaid plaintiff in FY 00. Again Cahaba has not yet issued an NPR for FY 00.

Cahaba, in conjunction with CMMS, has allowed plaintiff to repay the Medicare funds it has determined to have been overpaid in FY 97 through FY 00 by means of an Extended Repayment Plan ("ERP"). An ERP allows a provider to repay overpayments over an extended period of time. Currently, approximately $24,000 is being deducted from plaintiff's Medicare reimbursement billing on a monthly basis.

Plaintiff brought this action against defendants seeking a preliminary injunction to enjoin defendants from collecting alleged Medicare overpayments until plaintiff could fully exhaust its administrative remedies within DHHS. In its complaint, plaintiff also requested removal of defendant Cahaba from its position as plaintiff's fiscal intermediary. However, in its response to defendants' motion to dismiss, plaintiff states that it is only seeking preliminary injunctive relief.

II. Discussion

Plaintiff asserts that this Court has jurisdiction pursuant to 28 U.S.C. § 1331 because the action arises under the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq., Title XVIII of the Social Security Act ("Medicare Act"), the Due Process Clause of the Fifth Amendment to the United States Constitution, and the All Writs Act, 28 U.S.C. § 1651. The plaintiff also invokes the Court's original jurisdiction over mandamus actions against federal agencies, pursuant to 28 U.S.C. § 1361.

Defendants argue that this Court lacks jurisdiction over plaintiff's claims because they arise under the Medicare program. Defendants assert that 42 U.S.C. § 405(g) alone governs judicial review of claims arising under the Medicare Act, and that this statute requires plaintiff to fully exhaust its administrative remedies before presenting an action in federal court.

Section 405(g) provides, in relevant part:

Any individual, after any final decision of the [Secretary] made after a hearing to which he was a party ... may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as [the Secretary] may allow.

Section 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii, provides, in part, that "[n]o action against the United States, the [Secretary], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter [i.e., the Medicare Act]." 42 U.S.C. § 405(h).

The Supreme Court has held that a "claim arises under the Medicare Act ... [when] both the standing and substantive basis for the ... claim are the Medicare Act." Your Home Visiting Nurse Services, Inc. v. Shalala, 525 U.S. 449, 456, 119 S.Ct. 930, 142 L.Ed.2d 919 (1999). The Supreme Court further interpreted this issue in the recent case of Shalala v. Illinois Council on Long Term Care. 529 U.S. 1, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000). In Illinois Council the Court held that § 405(h) precludes judicial review under § 1331 and requires channeling virtually all legal claims through the agency's administrative process before such claims can be heard in federal court. 529 U.S. at...