Hall v. Sebelius

• Decision Date: 29 September 2009
• Docket Number: Civil Action No. 08-1715 (RMC).
• Citation: 689 F. Supp.2d 10
• Parties: Brian HALL, et al., Plaintiffs, v. Kathleen SEBELIUS, Secretary, Department of Health & Human Services, et al., Defendants.
• Court: U.S. District Court — District of Columbia

689 F.Supp.2d 10

Brian HALL, et al., Plaintiffs, v. Kathleen SEBELIUS,¹ Secretary, Department of Health & Human Services, et al., Defendants.

Civil Action No. 08-1715 (RMC).

United States District Court, District of Columbia.

September 29, 2009.

Frank M. Northam, Webster, Chamberlain & Bean, Washington, DC, Kent Masterson Brown, Law Offices of Kent Masterson Brown, Lexington, KY, for Plaintiffs.

Peter Bryce, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

ROSEMARY M. COLLYER, District Judge.

Brian Hall, Lewis Randall, Norman Rogers, John J. Kraus, and Richard K. Armey are retirees who "do not want to apply for, or want to disenroll from Medicare, Parts A and B ... but do want to apply for and/or be paid their monthly Social Security benefits to which they are entitled." Am. Compl. Dkt. # 4 ¶ 11. They have filed this lawsuit pursuant to the Medicare Act, 42 U.S.C. § 1395 et seq., the Social Security Act, 42 U.S.C. § 401 et seq., and the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq., alleging that the Social Security Administration's ("SSA") regulations regarding Medicare Part A, as set forth in the SSA's Program Operations Manual System ("POMS") are invalid and operate either to deprive Plaintiffs of their right to Social Security benefits or to force them to "enroll in" Medicare Part A against their will. Defendants Kathleen Sebelius, Secretary of the Department of Health and Human Services ("HHS")—of which the SSA is a part—and Michael J. Astrue, Commissioner of the SSA, move to dismiss. Dkt. # 12.

I. FACTS

Pursuant to the relevant provisions of the Social Security Act, "every individual who has attained age 65 and is entitled to monthly insurance benefits ... shall be entitled to hospital insurance benefits under Part A of the Medicare Act." 42 U.S.C. § 426(a). Plaintiff retirees "do not want to apply for, or want to disenroll from Medicare, Parts A and B ... but do want to apply for and/or be paid their monthly Social Security benefits to which they are entitled." Am. Compl. ¶ 11. When Plaintiffs filed their Amended Complaint in December 2008, three of the five plaintiffs—Mr. Hall, Mr. Kraus, and Mr. Armey—had been receiving monthly Social Security benefits for several years. See id. ¶¶ 3, 6-7. Mr. Kraus and Mr. Armey were also participants in the Medicare Part A insurance program, and Mr. Hall would be required to accept Medicare Part A beginning in January 2009. Id. The remaining plaintiffs, Mr. Randall and Mr. Rogers, were eligible for monthly Social Security benefits at the time the Amended Complaint was filed but had not applied for them, apparently to avoid being required to accept Medicare Part A. See id. ¶¶ 4-5. All Plaintiffs argue that the SSA's policies, as set forth in the POMS, "are patently contrary to the Social Security Act" in that they require Plaintiffs to accept Medicare Part A as a condition of receipt of their monthly Social Security benefits. See id. ¶ 34.

The POMS is internal guidance for SSA employees, and interprets the Social Security Act and other relevant statutes. See SSA's Policy Information Site—About POMS, https://secure.ssa.gov/apps10/poms. nsf/aboutpoms (last visited September 28, 2009). According to a "Disclaimer" on the SSA's website,

The POMS states only internal SSA guidance. It is not intended to, does not, and may not be relied upon to create any rights enforceable at law by any party in a civil or criminal action. Further, by posting the POMS, SSA is not thereby limited from exercising its otherwise lawful prerogatives. If the content of the POMS conflicts with the Social Security Act, another relevant statute, SSA regulations, or Social Security Rulings, those authorities have priority over the POMS.

Id. The POMS contains several provisions relating to Medicare Part A (a.k.a. "Health Insurance" or "HI"). The three challenged herein—POMS HI 00801.002, POMS HI 00801.034, and POMS GN 00206.020—all state that a claimant who is entitled to monthly benefits may withdraw from Medicare Part A by withdrawing his application for monthly benefits, but he may not withdraw only from Medicare Part A while retaining his monthly benefits. For example, POMS 00801.002 states, under the heading "Policy," "Individuals entitled to monthly benefits which confer eligibility for HI may not waive HI Entitlement. The only way to avoid HI Entitlement is through withdrawal of the monthly benefit application. Withdrawal requires repayment of all RSDI and HI benefit payments." SSA—POMS: HI 00801.002—Waiver of HI Entitlement by Monthly Beneficiary—08/30/92, https://secure.ssa.gov/apps10/poms.nsf/lnx/XXXXXXXXXX!opendocument (last visited September 28, 2009) (emphasis in original). In other words, one must be receiving Social Security benefits to be "entitled" to Medicare Part A but one cannot escape Medicare Part A without repaying all benefits received and forgoing Social Security. The other POMS provisions at issue contain similar language.

Plaintiffs challenge the POMS on the ground that it is the SSA's policy, as expressed in the POMS, and not the Social Security Act that prevents Plaintiffs from withdrawing from Medicare Part A while still receiving Social Security. Defendants have moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that Plaintiffs' understanding of the POMS and its relation to the statute is flawed and, furthermore, that Plaintiffs lack standing to bring this claim, have failed to exhaust their administrative remedies, and have identified no final agency action subject to judicial review. See Defs.' Mem. In Supp. of Mot. to Dismiss ("Defs.' Mem.") Dkt. # 12 at 1-2.

II. LEGAL STANDARDS

A. Motion to Dismiss

A defendant moving to dismiss pursuant to Rule 12(b)(1) argues that the court lacks subject matter jurisdiction over a plaintiff's claims. Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938). No action of the parties can confer subject matter jurisdiction on a federal court because subject matter jurisdiction is an Article III and a statutory requirement. Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C.Cir.2003). The party claiming subject matter jurisdiction bears the burden of demonstrating that such jurisdiction exists. Khadr v. United States, 529 F.3d 1112, 1115 (D.C.Cir.2008).

A motion to dismiss pursuant to Rule 12(b)(6) challenges the adequacy of a complaint on its face, testing whether a plaintiff has properly stated a claim. A sufficient complaint "contains a short and plain statement of the claim showing that the pleader is entitled to relief" enough "to give a defendant fair notice of the claims against him." Ciralsky v. CIA, 355 F.3d 661, 668-70 (D.C.Cir.2004) (citing Fed. R.Civ.P. 8(a)). Although a complaint need not include detailed factual allegations, a plaintiff's obligation to provide the grounds for his entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). The facts alleged "must be enough to raise a right to relief above the speculative level," id., and a court need not accept as true inferences unsupported by facts set out in the complaint or legal conclusions cast as factual allegations. Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans, Inc., 525 F.3d 8, 16 n. 4 (D.C.Cir. 2008).

For both a Rule 12(b)(1) and a Rule 12(b)(6) motion, the Court must treat the complaint's factual allegations—including mixed questions of law and fact—as true, drawing all reasonable inferences in the plaintiff's favor. Macharia v. United States, 334 F.3d 61, 64, 67 (D.C.Cir.2003). In deciding a Rule 12(b)(6) motion, the Court may consider only "the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice." Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C.2002) (citation omitted). In deciding a Rule 12(b)(1) motion, however, a court may consider materials outside the pleadings. Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir.1992).

B. "Final Agency Action" and Exhaustion of Administrative Remedies Under the APA

The APA allows courts to review agency actions and to set aside those actions that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706. Courts may not, however, review non-final agency actions. Fund for Animals, Inc. v. United States BLM, 460 F.3d 13, 18 (D.C.Cir.2006). A final agency action "1) marks the consummation of the agency's decision making process—it must not be of a merely tentative or interlocutory nature, and 2) the action must be one by which rights or obligations have been determined or from which legal consequences will flow." Bennett v. Spear, 520 U.S. 154, 177, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997); Domestic Secs. v. SEC, 333 F.3d 239, 246 (D.C.Cir.2003). Therefore, prior to reaching the merits of a plaintiff's claims, a court must consider whether the agency's position is definitive and whether it has a "direct and immediate effect" on the parties. Indep. Petroleum Ass'n v. Babbitt, 235 F.3d 588, 595-96 (D.C.Cir.2001).

Furthermore, even where there is final agency action, the Court must consider "the waivable element . . . that the administrative remedies prescribed by the agency be exhausted." Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). The Social Security Act provides:

Any individual, after any final decision of the Commissioner of Social

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