Lifestar Ambulance Service, Inc. v. U.S.

• Decision Date: 16 April 2004
• Docket Number: No. 03-11392.,03-11392.
• Citation: 365 F.3d 1293
• Parties: LIFESTAR AMBULANCE SERVICE, INC., a Georgia corporation, individually and on behalf of a class of all entities similarly situated, Coastal Medical Transport, Inc., a North Carolina corporation, individually and on behalf of a class of all entities similarly situated, Ambulance Services, Inc., a Tennessee corporation, individually and on behalf of a class of all entities similarly situated, Plaintiffs-Appellees, v. UNITED STATES of America, Department of Health and Human Services, Tommy Thompson, in his official capacity as Secretary/Director of D.H.H.S., Health Care Financing Administration (Centers for Medicare & Medicaid Services), Thomas A. Scully, in his official capacity as Secretary/Director of H.C.F.A./C.M.S., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

365 F.3d 1293

LIFESTAR AMBULANCE SERVICE, INC., a Georgia corporation, individually and on behalf of a class of all entities similarly situated, Coastal Medical Transport, Inc., a North Carolina corporation, individually and on behalf of a class of all entities similarly situated, Ambulance Services, Inc., a Tennessee corporation, individually and on behalf of a class of all entities similarly situated, Plaintiffs-Appellees, v. UNITED STATES of America, Department of Health and Human Services, Tommy Thompson, in his official capacity as Secretary/Director of D.H.H.S., Health Care Financing Administration (Centers for Medicare & Medicaid Services), Thomas A. Scully, in his official capacity as Secretary/Director of H.C.F.A./C.M.S., Defendants-Appellants.

No. 03-11392.

United States Court of Appeals, Eleventh Circuit.

April 16, 2004.

Jeffrey A. Clair, Washington, DC, for Defendants-Appellants.

James E. Butler, Jr., Dustin Thomas Brown, Jason L. Crawford, James Clay Fuller, Butler, Wooten, Overby & Cheeley, Columbus, GA, G. Christopher Kelly, Atlanta, GA, for Plaintiffs-Appellees.

Appeal from the United States District Court for the Middle District of Georgia.

Before ANDERSON, BLACK and HILL, Circuit Judges.

HILL, Circuit Judge:

This case arises from a dispute over the Medicare reimbursement rates for ambulance service suppliers. The district court denied defendants' motion to dismiss for want of mandamus jurisdiction, entered summary judgment on the merits for plaintiffs, and certified them as a class. Defendants timely filed this appeal.

I.

Plaintiffs are ambulance suppliers based in Georgia, North Carolina, and Tennessee, who provide ambulance services to Medicare recipients. They seek to bring a class action against the Department of Health and Human Services ("DHHS"), the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), and individuals associated with those entities. Plaintiffs allege that the federal defendants failed to comply with the Balanced Budget Act of 1997 ("BBA"), requiring them to establish by January 1, 2000, a national fee schedule for payment of ambulance services. Pub.L. No. 105-33, § 4531(b), 111 Stat. 451 (1997), codified at 42 U.S.C. § 1395m(1). They also allege that DHHS has failed to timely implement certain mileage fee schedules as required by the Medicare, Medicaid and SCHIOP Benefits Improvement and Protection Act of 2000 ("BIPA"). Plaintiffs seek injunctive relief in the form of a writ of mandamus ordering DHHS to adopt fee schedules that comply with those mandates, and to apply them retroactively to services provided from January 1, 2000 forward.¹

The federal defendants moved to dismiss this action on the basis that plaintiffs failed to exhaust their administrative remedies as required by the Medicare Act. See 42 U.S.C. § 1395ff(b) and 42 U.S.C. § 1395ii. Both parties also filed cross-motions for summary judgment on the merits.

The district court denied the motion to dismiss, holding that the mandamus jurisdiction invoked by plaintiffs under 28 U.S.C. § 1361 is both available and appropriate in this case, thereby obviating the necessity for them to exhaust their claims administratively. The court then entered summary judgment for plaintiffs on the merits of their claim, issuing a writ of mandamus to the Secretary of Health and Human Services (the "Secretary") to implement a fee schedule for the relevant time period, and certifying a class of ambulance providers.²

The threshold issue we must decide is whether the district court correctly assumed mandamus jurisdiction over this action, since, in the absence of subject-matter jurisdiction, we may not proceed. We review the district court's determination that it had mandamus jurisdiction under 28 U.S.C. § 1361 de novo. Cash v. Barnhart, 327 F.3d 1252, 1255 n. 4 (11th Cir.2003).

II.

Mandamus jurisdiction is appropriate³ only where (1) the defendant owes a clear nondiscretionary duty to the plaintiff and (2) the plaintiff has exhausted all other avenues of relief. Heckler v. Ringer, 466 U.S. 602, 615, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). The district court held that plaintiffs satisfied both of these preconditions for invoking mandamus jurisdiction under Section 1361. We disagree.

Plaintiffs cannot invoke the extraordinary remedy of mandamus because they have an alternative "avenue of relief." Mallard v. U.S. District Court, 490 U.S. 296, 309, 109 S.Ct. 1814, 104 L.Ed.2d 318 (1989). The Medicare Act establishes a comprehensive remedial scheme, providing both administrative hearing rights for aggrieved providers, such as plaintiffs, and judicial review of the Secretary's final decisions. Ringer, 466 U.S. at 605-06 and n. 1, 104 S.Ct. 2013 (quoting 42 U.S.C. § 405(g)). The Supreme Court has made clear that "[o]rdinarily mandamus may not be resorted to as a mode of review where a statutory method of appeal has been prescribed." Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 27-28, 63 S.Ct. 938, 87 L.Ed. 1185 (1943).

It is undisputed that plaintiffs did not resort to these administrative remedies. They filed no claim with DHHS for payment under the fee schedule required by the BBA and BIPA. Plaintiffs contend, however, and the district court agreed, that Medicare's administrative remedies were "realistically [un]available" to plaintiffs because "the relief sought by the Plaintiffs in this case could not be secured in the administrative process."⁴ The government's suggestion to the contrary, the court concluded, "ignores reality."

The reality, however, is that the Medicare statute "demands the `channeling' of virtually all legal attacks through the [DHHS]" before a health care provider may seek judicial review of a claim arising under the Medicare statute. Shalala v. Illinois Council on Long Term Care, 529 U.S. 1, 13, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000).⁵ This "nearly absolute channeling requirement" serves important governmental interests in administrative efficiency and judicial economy, and "assures the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes." Id. at 2, 120 S.Ct. 1084.

Nor is Medicare's statutory exhaustion requirement subject to judge-made exceptions on a case by case basis when a particular court might find the requirement too burdensome or futile. Id. at 2, 120 S.Ct. 1084 (405[h]'s bar "reaches beyond ordinary administrative law principles of `ripeness' and `exhaustion of administrative remedies' ... by preventing the application of exceptions to those doctrines"). As we noted in Cochran v. U.S. Health Care Financing Admin., 291 F.3d 775, 780 (11th Cir.2002):

It is true that in some contexts, administrative exhaustion requirements are tempered by judge-made exceptions, chief among which are that exhaustion of administrative remedies sometimes is not required if resort to them would be futile, or if the remedy they offer is inadequate. Those judge-made exceptions do not apply, however, to a statutorily-mandated exhaustion requirement like [Medicare's].

See also Alexander v. Hawk, 159 F.3d 1321, 1326 (11th Cir.1998) ("Mandatory exhaustion is not satisfied by a judicial conclusion that the requirement need not apply").

Ultimately, the issue in this case is whether the claim of mandamus jurisdiction accomplishes the nullification of Medicare's exhaustion requirement by permitting plaintiffs to argue that they have no other avenue of relief because resort to administrative remedies is "futile." Thus, under the authority of mandamus, the doctrine of judge-made exceptions to administrative exhaustion is resurrected.⁶

Plaintiffs' view of the propriety of mandamus jurisdiction is that it is directly related to the likelihood that they will prevail administratively. In their view, as the likelihood that they will prevail before the administrative hearing officer goes down, the requirement that they appear before him also diminishes. Because no hearing officer could compel the Secretary to issue new fee schedule regulations or declare invalid the regulations in effect now, plaintiffs characterize their chances for administrative relief as "hopeless." This leads them to conclude that their administrative remedies are "inadequate," thus entitling them to invoke the district court's mandamus jurisdiction. It is not the availability of the administrative avenue of relief that figures prominently in their calculation of its impact on mandamus jurisdiction, but rather the attractiveness of it in comparison to mandamus jurisdiction.⁷

This calculus was rejected by the Supreme Court twenty years ago when it held that mandamus jurisdiction does not lie merely because resort to the administrative process appears futile. Ringer, 466 U.S. at 616-17, 104 S.Ct. 2013. In Ringer, the Secretary had issued a formal ruling holding that a particular surgical procedure was still experimental and thus could not be covered by Medicare. This ruling was binding upon the administrative hearing officers, and, thus, the Ringer plaintiffs contended that administratively contesting the denial of coverage was futile. They concluded that mandamus relief was, therefore, permissible because they had no "alternative avenue of relief."

The Court rejected this argument, holding that alleged limitations on the remedial powers of the hearing officers does not render Medicare's administrative remedies a nullity. Id. at 616-17. The Court held that the plaintiffs there "clearly have an adequate remedy" under Medicare, including administrative hearing and juridical review of any adverse final decision rendered for whatever reason. Id. The Court concluded that no writ of mandamus could properly issue because mandamus "is intended to provide a remedy for a plaintiff only if he has exhausted all other avenues of relief." Id. at 616.

The Supreme Court has recently reaffirmed the immunity of Medicare's exhaustion requirement to the allegation of futility. Illinois...