Long Island Ambulance, Inc. v. Thompson

• Decision Date: 12 September 2002
• Docket Number: No. 01 CV 2083(ADS)(WDW).,01 CV 2083(ADS)(WDW).
• Parties: LONG ISLAND AMBULANCE, INC., Daniel J. Roberts and Jeffrey M. Roberts as Assignees of Interest, Plaintiffs, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, Defendant.
• Court: U.S. District Court — Eastern District of New York

220 F.Supp.2d 150

LONG ISLAND AMBULANCE, INC., Daniel J. Roberts and Jeffrey M. Roberts as Assignees of Interest, Plaintiffs, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, Defendant.

No. 01 CV 2083(ADS)(WDW).

United States District Court, E.D. New York.

September 12, 2002.

Jeffrey M. Roberts, Esq., Hauppauge, NY, Plaintiff Pro se and Attorney for Plaintiff Long Island Ambulance, Inc.

Daniel J. Roberts, Henderson, NV, Plaintiff Pro Se.

Roslynn R. Mauskopf, United States Attorney Eastern District of New York, By Gail A. Matthews, Assistant United States Attorney, Central Islip, NY, Attorney for Defendant Tommy G. Thompson, Secretary of the United States Department of Health and Human Services.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

On April 3, 2001, Daniel J. Roberts ("Daniel Roberts"), Jeffrey M. Roberts ("Jeffrey Roberts") (collectively, the "Roberts" or the "individual plaintiffs"), and Long Island Ambulance, Inc. ("LIA") (collectively, the "plaintiffs") commenced this action by filing a complaint alleging that Tommy G. Thompson, Secretary of the United States Department of Health and Human Services ("HHS" or the "defendant") deprived them of their constitutional right to due process by failing to afford them an opportunity to challenge the decision by HHS to suspend Medicare payments to LIA. The plaintiffs seek a writ of mandamus directing HHS to: (1) commence a criminal and/or civil action against LIA; or (2) pay the plaintiffs the sum of $545,702.23, which sum represents the suspended Medicare payments. Presently before the Court is a motion by HHS to dismiss the complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P.") for lack of subject matter jurisdiction.

I. BACKGROUND

Initially, the Court notes that when deciding a motion to dismiss for lack of subject matter jurisdiction, it "must accept as true all material factual allegations in the complaint." Shipping Financial Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir.1998). In addition, the Court may consider materials outside the pleadings, such as affidavits and testimony, to resolve disputed jurisdictional fact issues. See Robinson v. Government of Malaysia, 269 F.3d 133, 141-42 (2d Cir.2001); Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). Accordingly, the following factual allegations are taken from the complaint and the exhibits attached to it; the Declaration of Jean Stone, who is the Program Integrity Senior Specialist for the Centers for Medicare and Medicaid, submitted in support of HHS's motion to dismiss the complaint; the exhibits attached to Jean Stone's declaration; and the Medicare statute and regulations.

A. Statutory and Regulatory Framework

Medicare, the federal medical insurance program for the aged and disabled, is governed by Title XVIII of the Social Security Act (the "Act"), 42 U.S.C. §§ 1395-1395gg. The Centers for Medicare & Medicaid Services ("CMS"), formerly the Health Care Financing Administration ("HCFA"), see 66 Fed.Reg. 35437 (July 5, 2001), is responsible for administering the Medicare Program. Part A of the Medicare Program ("Hospital Insurance Benefits") authorizes payment for primary institutional care, including hospitals, skilled nursing facilities, and home health care. See 42 U.S.C. § 1395c, et. seq. Part B of the Medicare Program ("Supplementary Medical Insurance") authorizes payment for various medical and other health services and supplies, including outpatient services. See 42 U.S.C. § 1395j, et. seq. This case involves Part B of the Medicare Program because the services at issue are outpatient ambulance services provided to nonhospitalized beneficiaries.

HHS contracts with private insurance carriers to perform various functions necessary for the efficient administration of Part B of the Medicare Program. See 42 U.S.C. § 1395u. These functions include determining whether claimed services are medically necessary, calculating the amounts of any Part B payments due, and paying claims out of the Medicare Trust Funds. See 42 U.S.C. § 1395u(a)(1); 42 C.F.R. Part 405, Subpart E; 42 C.F.R. Part 414; 42 C.F.R. §§ 421.5, 421.200. Empire Medicare Services ("Empire") is the carrier responsible for processing and paying the Part B claims at issue in this case.

Medicare Part B reimburses a supplier for ambulance services if the following conditions are met: (1) the supplier meets applicable vehicle, staff, billing, and reporting requirements; (2) the services meet the medical necessity, origin, and destination requirements set forth in the regulations; and (3) Medicare Part A payments are not made directly or indirectly for the services. 42 C.F.R. § 410.40. The vehicle requirements provide, among other things, that an ambulance "comply with all State and local laws governing an emergency transportation vehicle." 42 C.F.R. § 410.41(a)(1). During the time period relevant to this case, New York state law required an ambulance service to possess a valid ambulance certificate or registration statement. See N.Y. Pub. Health L. § 3005. In addition, ambulance certificates are not transferable unless the transfer is reviewed and approved by the New York State Department of Health ("DOH"). See N.Y. Pub. Health L. § 3010(2). The billing and reporting requirements that an ambulance services supplier must meet in order to receive Medicare reimbursement mandate that, upon a carrier's request, the supplier must "provide the Medicare carrier with documentation of compliance with emergency vehicle and staff licensure and certification requirements in accordance with State and local laws." 42 C.F.R. § 410.42(c)(2).

Medicare regulations authorize the suspension of payments to a provider such as LIA when "the intermediary, or the carrier possesses reliable information that an overpayment or fraud or willful misrepresentation exists." 42 C.F.R. § 405.371(a)(1). A "suspension" is a "withholding of payment by an intermediary or carrier of an approved Medicare payment amount." 42 C.F.R. § 405.370. The preamble to the regulations states, "[t]he purpose of suspending payment is to verify whether, and how much, payment was actually due the provider for past claims and to ensure that, if a provider or supplier was overpaid, sufficient funds are available to recover the overpayment. These actions are clearly necessary to protect the Trust Funds from loss." 61 Fed.Reg. at 63742-63743. A suspension is limited to 180 days. 42 C.F.R. 405.372(d)(1). CMS may extend the suspension of payment for up to an additional 180 days in cases of fraud and misrepresentation where the carrier, the Office of the Inspector General ("OIG"), or law enforcement agency is unable to complete its examination of the information or investigation. 42 C.F.R. § 405.372(d)(2). In certain circumstances, CMS may grant an additional extension of time "if the Department of Justice submits a written request to CMS that the suspension of payment be continued based on the ongoing investigation and anticipated filing of criminal and/or civil actions." 42 C.F.R. § 405.372(d)(3)(ii).

If the intended suspension of payments involves fraud or misrepresentation, prior notice of an intent to suspend payments is not required. See 42 C.F.R. § 405.372(a)(4). However, if "a suspension of payment is put into effect without prior notice ... the ... carrier must, once the suspension is in effect, give the provider or supplier an opportunity to submit a rebuttal statement as to why the suspension should be removed." 42 C.F.R. §§ 405.372(a)(2), 405.374. If the provider rebuts the suspension, CMS or the carrier must, within 15 days from the date of the rebuttal statement, consider its contents together with any other material bearing on the case, and determine whether the facts justify the suspension. 42 C.F.R. § 405.375(a). The carrier then must send written notice of its determination to the provider. 42 C.F.R. § 405.375(b). A determination that a suspension of Medicare payments is justified is not an initial determination and is not appealable. 42 C.F.R. § 405.375(c).

After a suspension has taken effect, the carrier or CMS must act in a timely manner to obtain the additional evidence it needs to determine whether an overpayment exists. 42 C.F.R. § 405.372(c). As soon as the carrier or CMS makes a determination, the carrier must inform the provider of the decision, rescind the suspension if appropriate, and dispose of the suspended funds in accordance with the determination. 42 C.F.R. § 405.372(c). Suspended payments are first applied to reduce or eliminate any overpayments determined by the intermediary, carrier, or [CMS] ... and then applied to reduce any other obligation to CMS or to HHS. In the absence of a legal requirement that the excess be paid to another entity, the excess is released to the provider or supplier. 42 C.F.R. § 405.372(e).

B. LIA Purchases Gosline Ambulance Service, Inc.

The Roberts are the sole shareholders of LIA, which the complaint alleges is a corporation authorized to provide ambulance services in New York. On August 29, 1996, LIA entered into an agreement to purchase the assets of Gosline Ambulance Service, Inc. ("Gosline") from three individuals who are not parties to this lawsuit. The asset purchase agreement states that the sale would close on or about November 15, 1996.

In papers dated November 8, 1996, LIA submitted an application to Empire for enrollment in the Medicare program so that it could be reimbursed for ambulance transportation services provided to Medicare beneficiaries. The application did not mention that LIA had agreed to acquire Gosline on or about November 15, 1996. The Medicare Enrollment Application requires ambulance supplier applicants to attach a copy of a valid operating ambulance service certificate issued by the relevant state's DOH. LIA attached a copy of an ambulance services certificate, Certificate No. 5006,...