Mouradian v. U.S. Gov't, CIVIL ACTION NO. 17-10091-PBS

• Decision Date: 30 August 2018
• Docket Number: CIVIL ACTION NO. 17-10091-PBS
• Parties: RAYMOND R. MOURADIAN, Plaintiff, v. U.S. GOVERNMENT; MEDICARE; CMS; IRS and ITS EMPLOYEES; JEFF SESSIONS, U.S. ATTORNEY GENERAL; SELMA VERNA, DIRECTOR, MEDICARE, CMS; and JOHN KOSKINEN, COMMISSIONER INTERNAL REVENUE SERVICE, Defendants.
• Court: U.S. District Court — District of Massachusetts

RAYMOND R. MOURADIAN, Plaintiff,
v.
U.S. GOVERNMENT; MEDICARE; CMS; IRS and ITS EMPLOYEES;
JEFF SESSIONS, U.S. ATTORNEY GENERAL; SELMA VERNA, DIRECTOR, MEDICARE, CMS;
and JOHN KOSKINEN, COMMISSIONER INTERNAL REVENUE SERVICE, Defendants.

CIVIL ACTION NO. 17-10091-PBS

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

August 30, 2018

REPORT AND RECOMMENDATION RE: DEFENDANTS' MOTION TO DISMISS (DOCKET ENTRY # 39); PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 28); PLAINTIFF'S MOTION FOR A DECLARATORY JUDGMENT (DOCKET ENTRY # 37); PLAINTIFF'S MOTION FOR A DEFAULT JUDGMENT (DOCKET ENTRY # 45)

BOWLER, U.S.M.J.

Plaintiff Raymond R. Mouradian ("plaintiff") filed this action asserting a denial of due process and equal protection because defendants Medicare and/or the Centers for Medicare and Medicaid Services ("CMS") sought reimbursement for certain costs of his medical care resulting from an automobile accident. (Docket Entry # 1). When he refused to comply with one or more reimbursement requests, the Bureau of the Fiscal Service of the

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United States Department of the Treasury ("the Bureau of Fiscal Service") informed him it would withhold 15% from his monthly social security payments thus leading plaintiff to amend the complaint to add the Internal Revenue Service ("IRS"), its employees, and IRS Commissioner John Koskinen ("Koskinen") as defendants. (Docket Entry ## 15, 15-1, 15-2).

As set out in the amended complaint, plaintiff alleges that defendants the United States government; Medicare; CMS; the IRS and its employees; Jeff Sessions ("Sessions"), the attorney general of the United States; Seema Verna ("Verna"), administrator of the Centers for Medicare and Medicaid Services ("CMS");¹ and Koskinen violated the Due Process Clause of the

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Fourteenth Amendment,² denied him equal protection, and violated the Fourth and Seventh Amendments by using threatening, intimidating, and coercive means to collect the requested payments from him. (Docket Entry # 15). The amended complaint asserts that the manner in which CMS collected the medical payments from plaintiff, i.e., without a warrant and without notice and due process, was unconstitutional. (Docket Entry # 15, p. 2). As stated in the amended complaint, plaintiff paid for uninsured motorist coverage under his insurance policy but still had to pay Medicare for his own medical expenses even though he was not at fault for the accident. (Docket Entry # 15, p. 2). The amended complaint characterizes the statutory basis under which defendants sought repayment, 42 U.S.C. § 1395y(b)(2) ("section 1395y(b)(2)"), as unconstitutional and that a jury must determine the medical expenses and any repayment plaintiff is obligated to make.³ (Docket Entry # 15).

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Defendants move to dismiss the amended complaint for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) ("Rule 12(b)(1)") because: (1) the claims are moot in light of a repayment of the funds offset from plaintiff's social security benefit payments; (2) plaintiff failed to exhaust his administrative remedies under the Social Security Act, 42 U.S.C. § 405(g) ("section 405(g)"), which the Medicare Act incorporates under 42 U.S.C. § 1395ff(b) ("section 1395ff(b)"); and (3) the jurisdictional bases cited in the amended complaint, namely, 28 U.S.C. §§ 240(b), 671, and 1346(b), as well as the First Amendment, do not provide subject matter jurisdiction. (Docket Entry ## 39, 40). Defendants additionally seek a dismissal under Fed. R. Civ. P. 12(b)(6) ("Rule 12(b)(6)") because neither the Seventh Amendment nor the Fourteenth Amendment provide a basis for relief. (Docket Entry ## 39, 40).

In seeking summary judgment and opposing the motion to dismiss, plaintiff argues that the Fourth Amendment requires a warrant from a judge to seize his social security payments and his income tax refund. (Docket Entry ## 28, 54). He asserts that section 1395y(b) does not afford due process or equal protection and is therefore unconstitutional. (Docket Entry ## 28, 54). In filing the summary judgment motion before defendants moved to dismiss the amended complaint and before the due date of an answer or responsive pleading, plaintiff further argues that

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defendants fail to defend themselves by responding to the complaint under Fed. R. Civ. P. 8 or Rule 12. (Docket Entry # 28). Plaintiff raises similar arguments in a motion for a default judgment under Fed. R. Civ. P. 55 ("Rule 55").⁴ (Docket Entry # 45). In addition to the foregoing motions (Docket Entry ## 28, 39, 45), a two-sentence motion for a declaratory judgment under 28 U.S.C. § 2201 is also pending before this court (Docket Entry # 37).

After conducting a hearing on May 8, 2018, this court took the motions (Docket Entry ## 28, 37, 39, 45) under advisement. It is appropriate to consider the issue of subject matter jurisdiction before adjudicating the other motions. See Godin v. Schencks, 629 F.3d 79, 83 (1st Cir. 2010) ("court has an obligation to inquire sua sponte into its subject matter jurisdiction, and to proceed no further if such jurisdiction is wanting"); Bonano v. E. Caribbean Airline Corp., 365 F.3d 81, 83 (1st Cir. 2004). Accordingly, this court turns to the motion to dismiss under Rule 12(b)(1). (Docket Entry # 39).

I. Motion to Dismiss

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In reviewing a Rule 12(b)(1) motion, a court must credit the plaintiff's well-pled factual allegations and draw all reasonable inferences in the plaintiff's favor. Sanchez ex rel. D.R.-S. v. U.S., 671 F.3d 86, 92 (1st Cir. 2012) ("credit[ing] the plaintiff's well-pled factual allegations and draw[ing] all reasonable inferences in the plaintiff's favor" under Rule 12(b)(1)); Merlonghi v. United States, 620 F.3d 50, 54 (1st Cir. 2010) (citing Valentin v. Hospital Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001)). Equivalent to a Rule 12(b)(6) standard, a motion to dismiss under Rule 12(b)(1) "is appropriate only when the facts adumbrated in the plaintiff's complaint, taken at face value, fail to bring the case within the court's subject-matter jurisdiction." Gordo-Gonzalez v. United States, 873 F.3d 32, 35 (1st Cir. 2017). "The district court may also 'consider whatever evidence has been submitted, such as the depositions and exhibits submitted.'" Merlonghi v. United States, 620 F.3d at 54 (quoting Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996)). When a defendant challenges subject matter jurisdiction, the plaintiff bears the burden of proving jurisdiction. Johansen v. United States, 506 F.3d 65, 68 (1st Cir. 2007). "The part[ies] raising a mootness defense," i.e., defendants in the case at bar, however, have "the burden of establishing the facts necessary to sustain that defense." Ramirez v. Sanchez Ramos, 438 F.3d 92, 100 (1st Cir. 2006). To succeed, defendants "must show that,

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after the case's commencement, intervening events have blotted out the alleged injury and established that the conduct complained of cannot reasonably be expected to recur." Id.

Prior to recounting the facts, an understanding of the statutory framework under which Medicare operates as a secondary payer of health insurance for injuries sustained in an automobile accident is helpful. Section 1395y(b)(2) of the Medicare Secondary Payer Act ("MSP Act"), 42 U.S.C. § 1395y, "designates Medicare as a 'secondary payer' of medical benefits, and" thereby "precludes the program from providing such benefits when a 'primary plan' could be expected to pay." Taransky v. Secretary of United States Dept. of Health and Human Services, 760 F.3d 307, 310 (3rd Cir. 2014) (quoting section 1395y(b)(2)(A)). A "primary plan" encompasses "an automobile or liability insurance policy or plan." 42 U.S.C. § 1395y(b)(2)(A); see also United States v. Rhode Island Insurers' Insolvency Fund, 80 F.3d 616, 621 n.3 (1st Cir. 1996). When the primary plan "has not made or cannot reasonably be expected to make a payment . . . promptly" of a Medicare "beneficiary's medical expenses, however, Medicare makes conditional payments to ensure that the beneficiary receives timely care." Taransky v. Secretary of United States Dept. of Health and Human Services, 760 F.3d at 310 (emphasis added); 42 U.S.C. § 1395y(b)(2)(B)(i). The United States is then subrogated for these conditional payments made to the Medicare

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beneficiary. See 42 U.S.C. § 1395y(b)(2)(B)(iv).

Notably, the MSP Act, as amended in 2003, mandates that, "A primary plan, and an entity that receives payment from a primary plan, shall reimburse" Medicare for such conditional payments in the event the "primary plan has or reasonably had a responsibility to make payment with respect to" the medical services at issue. 42 U.S.C. § 1395y(b)(2)(B)(ii). "A primary payer's responsibility for payment may be demonstrated by" a settlement. 42 C.F.R. § 411.22(b)(3). In accordance with the statute's enabling regulations, CMS may seek recovery of its payments from a Medicare beneficiary who received a payment from the primary plan. See 42 C.F.R. § 411.24(g) ("CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, . . . or private insurer that has received a primary payment"); Haro v. Sebelius, 747 F.3d 1099, 1115 (9th Cir. 2014) (Secretary of Health and Human Services interprets undefined term "entity" to include Medicare beneficiary's attorney who receives settlement proceeds for beneficiary); see also Stalley v. Catholic Health Initiatives, 509 F.3d 517, 524 (8th Cir. 2007) ("government can also sue anyone that received payment from the...