Integrity Soc. Work Servs., LCSW, LLC v. Azar
| Decision Date | 11 June 2020 |
| Docket Number | Civil Action No. 20-cv-118 (BAH) |
| Parties | INTEGRITY SOCIAL WORK SERVICES, LCSW, LLC, Plaintiff, v. ALEX M. AZAR II, Secretary, U.S. Department of Health and Human Services, et al. Defendants. |
| Court | U.S. District Court — District of Columbia |
MEMORANDUM OPINION
Plaintiff, Integrity Social Work Services LCSW, LLC ("ISWS"), initiated this suit against defendants U.S. Department of Health and Human Services ("HHS"), HHS' Secretary, and Safeguard Services, LLC ("Safeguard"), for violation of plaintiff's due process rights under the Fifth Amendment of the United States Constitution, seeking "the temporary suspension" of the process for recoupment of Medicare overpayments and "reinstatement of Medicare payments until ISWS is provided with a hearing" to review defendants' Medicare overpayment determination under Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., ("Medicare Act"). Compl. "Prayer for Relief," ¶ 2, ECF No. 1. Defendants now move to dismiss or, in the alternative, transfer plaintiff's complaint, pursuant to Federal Rule of Civil Procedure 12(b)(3), on grounds that plaintiff has failed to comply with the Medicare Act's venue requirements. Defs.' Mot. to Dismiss for Improper Venue or, in the Alternative, to Transfer Venue ( ), ECF No. 7. For the reasons explained below, venue is improper in this district, but rather than dismissal, this case will be transferred to a judicial district where venue is proper.
Plaintiff, a New York professional services limited liability company operating in Richmond County in the State of New York, provides clinical social work and psychotherapy services to homebound Medicare beneficiaries in New York City. Compl. ¶¶ 2, 10. "[I]ts entire revenue stream derives from Medicare reimbursements." Pl.'s Mem. Pts. & Auth. In Opp'n To Defs.' Mot. ("Pl.'s Opp'n") at 5, ECF No. 8 .
In late February of 2018, Safeguard, which is a private company contracted under the Medicare Integrity Program, 42 U.S.C. § 1395ddd, as a Unified Program Integrity Contractor ("UPIC") to investigate suspected fraud, waste and abuse in Medicare, began a post-payment review of claims for psychotherapy services submitted by plaintiff between January 1, 2017 and February 28, 2018. Compl. ¶ 34. In response to successive requests from Safeguard, plaintiff submitted the medical records associated with 101 claims paid during this period to enable Safeguard to compile a statistically-valid random sample for analysis. Id. ¶ 35. After analyzing this sample, Safeguard determined that "100% of [plaintiff's] claims should have been denied," id. ¶ 37, and that plaintiff had been overpaid on these 101 claims in the amount of $35,946.88, id. Extrapolating from the sample, Safeguard then determined "a total overpayment amount of $979,040.40" for all the claims under post-payment review. Id.
Plaintiff appealed this overpayment determination through the first two of four levels of administrative review, and the overpayment determination was upheld. Id. ¶¶ 8, 39-40.1 Upon reaching the third level, which provides for a hearing before an administrative law judge("ALJ"), plaintiff was informed that the earliest available hearing date was "approximately three years from the date of ISWS's request," which means "ISWS effectively cannot obtain an ALJ hearing." Id. ¶ 8; see id. ¶ 41 (). This delay presents existential consequences for plaintiff. According to plaintiff, the recoupment process on the overpayment amount, which has already begun, "will result in ISWS permanently closing its business before ISWS can be heard before an ALJ." Id. ¶ 41.
On January 15, 2020, while still awaiting an ALJ hearing, plaintiff filed this lawsuit asserting two procedural and substantive due process claims based on allegations that defendants deprived plaintiff of property and liberty interests in violation of the Fifth Amendment. Id. ¶¶ 50-59. Defendants filed the pending motion to dismiss on March 17, 2020, which motion is now ripe for review.
Under Federal Rule of Civil Procedure 12(b)(3), a party may file a motion to dismiss for improper venue. See FED. R. CIV. P. 12(b)(3). Similarly, the federal venue statute, 28 U.S.C. § 1406(a), requires that a district court "dismiss, or if it be in the interest of justice, transfer" a case, which is filed "in the wrong division or district." 28 U.S.C. § 1406(a). Together, "Section 1406(a) and Rule 12(b)(3) allow dismissal only when venue is 'wrong' or 'improper'. . . in the forum in which [the case] was brought." Atl. Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 55 (2013). The Supreme Court has explained that "[w]hether venue is 'wrong' or 'improper' depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws." Id.
To prevail on a motion to dismiss for improper venue, "the defendant must present facts that will defeat the plaintiff's assertion of venue," Lemon v. Kramer, 270 F. Supp. 3d 125, 138 (D.D.C. 2017) (quoting Ananiev v. Wells Fargo Bank, N.A., 968 F. Supp. 2d 123, 129 (D.D.C. 2013)), and must provide "sufficient specificity to put the plaintiff on notice of the defect," 14D CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3826 (4th ed. 2020). Nevertheless, the burden remains on the plaintiff to establish that venue is proper since it is "the plaintiff's obligation to institute the action in a permissible forum." Williams v. GEICO Corp., 792 F. Supp. 2d 58, 62 (D.D.C. 2011) (quoting Freeman v. Fallin, 254 F. Supp. 2d 52, 56 (D.D.C. 2003)); see also WRIGHT ET AL., supra, § 3826 ().
In reviewing a motion for improper venue, the court "accepts the plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable inferences from those allegations in the plaintiff's favor and resolves any factual conflicts in the plaintiff's favor." McCain v. Bank of Am., 13 F. Supp. 3d 45, 51 (D.D.C. 2014) (quoting Wilson v. Obama, 770 F. Supp. 2d 188, 190 (D.D.C. 2011)). The court may resolve the motion on the basis of the complaint alone, or, as necessary, examine facts outside the complaint that are presented by the parties, while drawing reasonable inferences in favor of the plaintiff. Herbert v. Sebelius, 925 F. Supp. 2d 13, 17-18 (D.D.C. 2013); see also Artis v. Greenspan, 223 F. Supp. 2d 149, 152 (D.D.C. 2002) (citing Land v. Dollar, 330 U.S. 731, 735 n.4 (1947)). "The court need not, however, accept a plaintiff's legal conclusions as true." Lemon, 270 F. Supp. 3d at 139 (citing 2215 Fifth St. Assocs. v. U-Haul Int'l, Inc., 148 F. Supp. 2d 50, 54 (D.D.C. 2001)).
Plaintiff cites as bases for the exercise of jurisdiction 28 U.S.C. §§ 1331 (federal question jurisdiction) and 1332 (diversity jurisdiction), Compl. ¶¶ 13-17, and asserts that venue "is proper" here, pursuant to the general venue provisions of 28 U.S.C. § 1391(b) and (e), and 5 U.S.C. § 703, id. ¶ 18.2 Defendants correctly point out that these general venue provisions "do not apply when excluded by law or special statutory review." Defs.' Mem. Pts. & Auth. Supp. Defs.' Mot. ( ) at 9, ECF No. 7-1 (citing Michener v. Saul, No. 18-cv-1657, 2019 WL 3238582, at *3 (D.D.C. July 18, 2019)); see also Save Our Cumberland Mountains, Inc. v. Lujan, 963 F.2d 1541, 1551 (D.C. Cir. 1992) (finding that special forum requirement in the Surface Mining Control and Reclamation Act excluded alternate, more general bases for establishing venue and explaining, "'a statute which vests jurisdiction in a particular court cuts off original jurisdiction in other courts in all cases covered by that statute.'" (quoting Telecommunications Research and Action Center v. FCC, 750 F.2d 70, 77 (D.C. Cir. 1984)).
Defendants contend that none of the jurisdictional bases relied upon by plaintiff applies because "the only possible basis for jurisdiction is 42 U.S.C. § 405(g)," Defs.' Mem. at 1, the statute governing judicial review of benefits determinations under the Medicare Act. Plaintiff disputes application of the venue requirement of Section 405(g) since the claims allege constitutional violations rather than entitlement to benefits. Pl.'s Opp'n at 2-3. Even if the claims do "arise under" the Medicare Act, plaintiff further argues that the requirements of Section 405(g) should be waived under either the "collateral claim" or "'no review'exception[s]." Id. at 8. As explained below, resolution of this dispute is dictated by binding precedent favoring defendants' better arguments.
Plaintiff vigorously contests that the Medicare Act's venue provision applies since no claim "challenge[s] the Secretary's determination of ISWS's entitlement to Medicare benefits." Id. at 7. Instead, both claims arise under the Fifth Amendment and seek procedural protection for plaintiff's "protected property and liberty interests in maintaining its business and earning a living," predicated on allegations that defendants "deprived ISWS of that right by forcing it out of business before it can access available administrative remedies." Id. In other words, plaintiff describes this lawsuit as a Fifth Amendment challenge to the administrative review process surrounding a Medicare overpayment determination, not a statutory challenge under the Medicare Act to the...
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