Marin v. HEW, Health Care Financing Agency, s. 83-2272
| Decision Date | 22 August 1985 |
| Docket Number | 84-1532,Nos. 83-2272,s. 83-2272 |
| Citation | 769 F.2d 590 |
| Parties | , Medicare&Medicaid Gu 34,884 Joseph W. MARIN; Doreen C. Marin; Elesa L. Beale; and Home Medical Services, Inc., a California corporation, Plaintiffs-Appellants, v. HEW, HEALTH CARE FINANCING AGENCY Philip Nathanson; Richard Pace; Gene Chin; Blue Cross of Northern California; Mary Jane Higgins; John O'Hara; Margaret Kelley; Vince Rosellini; Dan Smith; and George Thompson, Defendants- Appellees. HOME MEDICAL SERVICES, INC., a California corporation, Plaintiff-Appellant, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES; Margaret Heckler, Health Care Financing Agency, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Gregory F. Gilbert, Sacramento, Cal., for plaintiffs-appellants.
Dennis Mulshine, San Francisco, Cal., for defendants-appellees.
Consolidated Appeals from the United States District Court for the Eastern District of California.
Before GOODWIN, POOLE and BOOCHEVER, Circuit Judges.
Health care providers who have been unable to collect sums claimed to be due for services they provided to medicare beneficiaries sued in the district court to recover damages from a number of individuals and entities. These consolidated appeals challenge the dismissal for want of subject matter jurisdiction in one action and the granting of summary judgment in another action. We affirm both judgments.
Joseph Marin, Doreen C. Marin, Elesa L. Beale and Home Medical Services, Inc. (Marin) provide home health services to individuals qualified to receive such services under Title XVIII of the Social Security Act, 42 U.S.C. Secs. 1395, et seq. (the Medicare Act). Marin operates as part of the Medicare Program under a reimbursement agreement with appellees, various United States agencies and officials and Blue Cross of Northern California, Inc. (the government). Blue Cross contracts with the United States as an intermediary to perform administrative services including the review and processing of Medicare reimbursement claims.
Since at least 1981 Marin has been displeased with the reimbursement services provided to him by Blue Cross and has filed a series of claims alleging jurisdiction under the Medicare Act and under the Federal Tort Claims Act, 28 U.S.C. Sec. 2671, et seq. and 28 U.S.C. Sec. 1346. We must decide whether federal jurisdiction over these claims exists exclusively under the Medicare Act and whether the doctrine of res judicata prevents litigation of claims the trial court has already declined to hear.
The Medicare Act establishes the Provider Reimbursement Review Board (P.R.R.B.) as an administrative channel through which health care providers can seek redress for dissatisfaction with the reimbursement process. 42 U.S.C. Sec. 1395oo. The statute authorizes judicial review of P.R.R.B. decisions on the merits of a provider's complaints and on P.R.R.B.'s own authority to hear claims. 42 U.S.C. Sec. 1395oo(f). The statute also incorporates and applies to Sec. 1395oo the following limitation of 42 U.S.C. Sec. 405(h): "No 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." See 42 U.S.C. Sec. 1395ii.
Marin's attempt to imbue his claims with jurisdiction under the Federal Tort Claims Act, 28 U.S.C. Sec. 1346, cannot surmount the bar of Sec. 405(h). Marin argues that while his entitlement to be reimbursed is created by the Medicare Act, his claims for damages caused by negligent failure to process his cost reports are not. Therefore, he argues, they do not "arise under" the Act. But Congress envisioned just this type of claim and provided an administrative remedy for it. 42 U.S.C. Sec. 1395oo(a) states that
Any provider of services which has filed a cost report ... may obtain a hearing with respect to such cost report by a [P.R.R.B] ... if--
(1) such provider--
....
(B) has not received [a] final determination from [its] intermediary on a timely basis ...
(2) the amount in controversy is $10,000 or more, and
(3) such provider files a request for a hearing ... within 180 days after notice of such determination would have been received if such determination had been made on a timely basis.
Subsection (f)(1) stipulates that the Secretary on his own motion may review the Board's decision within 60 days. The provider may commence a civil action within 60 days to review the Board's decision, or the Secretary's if he has chosen to make one. Subsection (f)(2) provides that interest on the disputed amount be awarded for the period during this hearing and appeal process.
From this, it is apparent that Marin's claims for tardy processing "arise under" the Medicare provisions. The substantive cause of action he presses is anticipated by the statute. His demand for greater damages than the statute provides would render meaningless the jurisdiction restriction of Sec. 405(h).
The P.R.R.B. denied jurisdiction over nine of Marin's ten claims on February 3, 1983. Marin filed two appeals from the Board's decision. The first was timely filed on April 4, 1983, as the original complaint in D.C. No. Civ-S 83-329. The second was filed on April 22, 1983, in the form of a second amended complaint attempting to change the basis for subject matter jurisdiction in an already pending action, D.C. No. Civ-S 82-463. On June 22, 1983, the trial judge in 82-463, not informed by either party of the existence of 83-329, denied with prejudice the implied request for leave to file the second amended complaint because it was not timely as an appeal from the P.R.R.B. decision. A different trial judge hearing 83-329 subsequently invoked the doctrine of res judicata and granted summary judgment against Marin, based on the claimed preclusive effect of the denial of leave to amend in 82-463.
"Under res judicata, a final judgment on the merits bars further claims by parties or their privies based on the same cause of action." Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979). Our comparison of the claims made in the second amended complaint in 82-463 and in the complaint in 83-329 leads us to agree with the conclusion of the trial judge hearing 83-329 that the causes of action in each complaint were substantially the same. The more difficult question in this case is whether denial of the motion to amend constitutes a final judgment on the merits of Marin's appeal from the decision of the P.R.R.B. We hold that under the unusual circumstances of this case it does.
An initial complication arises because the denial of leave to amend the complaint should not be confused with dismissal of the action in its entirety for lack of subject matter jurisdiction. In this case, however, where the denial and the dismissal coincided, where both were with prejudice, and where amendment, if allowed, would have reinstated the alleged cause of action, the two decisions are functionally analogous. Our consideration of the res judicata effect of this denial with prejudice is therefore guided by principles which apply to dismissals with prejudice.
Application of res judicata is further complicated here because the denial of leave to file the second amended complaint was based on a statutory time bar rather than based on the merits of Marin's case. Because the decision was compelled by the time limits established in 42 U.S.C. Sec. 1395oo(f), it was with prejudice. Even without a determination which is literally on the merits, a denial with prejudice may be a final judgment with a res judicata effect as long as the result is not unfair. See Young Engineers v. U.S. Intern'l Trade Comm'n., 721 F.2d 1305, 1314 (Fed.Cir.1983).
Young Engineers demonstrates that some final judgments have a preclusive effect even if there has been no litigation of the issues. This is perfectly consonant with Fed.R.Civ.P. 41(b) which provides that involuntary dismissals operate as "adjudication on the merits," with exceptions for "lack of jurisdiction, for improper venue or for failure to join a party under Rule 19."
The Supreme Court has given a broad reading to the jurisdiction exception set forth in Rule 41(b), holding
It is too narrow a reading of the exception to relate the concept of jurisdiction embodied there to the fundamental jurisdictional defects which render a judgment void and subject to collateral attack, such as lack of jurisdiction over the person or subject matter. We regard the exception as encompassing those dismissals which are based on a plaintiff's failure to comply with a precondition requisite to the [c]ourt's going forward to determine the merits of [the] substantive claim.
Costello v. United States, 365 U.S. 265, 285, 81 S.Ct. 534, 544, 5 L.Ed.2d 551 (1961). The exception is not broad enough, however, to embrace failure to timely file an amended complaint. This was not simply "failure to comply with a precondition requisite to the [c]ourt's going forward" Id. Marin's right to sue was created by statute. The same statute required that he file within a certain time limit. The point of the trial court's decision to deny with prejudice leave to file a late amendment was that when Marin failed to amend his complaint on time, Marin did not simply fail to comply with the statute; he lost his right to proceed.
The application of res judicata in this situation may appear to be harsh, but it is not unfair. Presumably, had the trial judge in 83-463 been informed that the same claims had been timely filed in another action before another judge (as is required under Local Rule 101(a) of the District Court for the Eastern District of California) the judge might have denied leave to amend without prejudice and dismissed the redundant action without prejudice. In that way, Marin could have saved...
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