Nmc Homecare, Inc. v. Shalala

• Citation: 970 F.Supp. 377
• Decision Date: 18 July 1997
• Docket Number: Civil Action No. 3:cv-95-1922.
• Parties: NMC HOMECARE, INC., Plaintiff, v. Donna E. SHALALA, et al, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

970 F.Supp. 377

NMC HOMECARE, INC., Plaintiff, v. Donna E. SHALALA, et al, Defendants.

Civil Action No. 3:cv-95-1922.

United States District Court, M.D. Pennsylvania.

July 18, 1997.

Ronald L. Castle, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, for Plaintiff.

Sanjay M. Bhambhani, Dept. of Justice, Washignton, DC, for Defendants.

CORRECTING MEMORANDUM AND ORDER¹

CONABOY, District Judge.

Presently before the Court is the Report and Recommendation of Magistrate Judge Thomas M. Blewitt. (Doc. 35). The Magistrate Judge recommends that the Defendant's Motion to Dismiss for lack of subject matter jurisdiction (Doc. 8) be granted and that the Plaintiff's complaint be dismissed for lack of subject matter jurisdiction. As the Plaintiff has filed objections to the Magistrate Judge's recommended disposition, we shall review the matter de novo. See Cipollone v. Liggett Group, Inc., 822 F.2d 335, 340, (3d Cir.) cert. denied, 484 U.S. 976, 108 S.Ct. 487, 98 L.Ed.2d 485 (1987); Henderson v. Carlson, 812 F.2d 874, 878 (3d Cir.1987), cert. denied, 484 U.S. 837, 108 S.Ct. 120, 98 L.Ed.2d 79 (3d Cir.1987). After a thorough reexamination of the record and carefully reviewing the matter de novo, we shall adopt the Magistrate Judge's Report and Recommendation (Doc. 35), grant the Defendant's Motion to Dismiss for lack of subject matter jurisdiction and shall dismiss the Plaintiff's complaint. We shall also deem the Plaintiff's pending motion for summary judgment (Doc. 17) moot.

FACTUAL AND PROCEDURAL BACKGROUND

The Plaintiff, NMC Homecare, Inc. (hereinafter "NMC Homecare"), initiated this complaint pursuant to the Declaratory Judgments Act, 28 U.S.C. §§ 2201 and 2202, the Administrative Procedures Act, 5 U.S.C. §§ 701 et seq., and the Medicare Act, 42 U.S.C. §§ 1395k(a)(2)(B) and (hh). NMC "seeks to declare invalid as a matter of law a rule implemented by the Secretary, through her agent the Health Care Finance Administration (`HCFA'), in and after 1993 with respect to reimbursements under the Medicare Act for certain medical services known as intradialytic parenteral nutrition therapy (hereinafter `IDPN')." (Doc. 1 pp. 1-2 ¶ 2) (emphasis added). In addition, NMC Homecare seeks to enjoin the Secretary from applying these rules.

While NMC Homecare is seeking to establish federal jurisdiction within this Court pursuant to several federal statutes, the defendant argues that this Court is without jurisdiction in this matter, as "reliance upon the federal question statute for subject matter jurisdiction over claims arising under the Medicare Act ... is foreclosed by 42 U.S.C. § 405(h)." (Doc. 9, p. 11).

A. STATUTORY HISTORY GERMANE TO THIS ACTION

The Medicare Program, established in 1965 by Title XVIII of the Social Security Act, is under the control of the Department of Health and Human Services and is administered by the Health Care Financing Administration. The Medicare Program consists of two (2) Parts; part A and part B. 42 U.S.C. § 1395 et seq. "Part A provides hospital insurance benefits and is funded by Social Security Taxes. Part B provides optional supplemental insurance benefits covering physicians services, durable medical equipment, and other medical and health services to eligible individuals for a monthly premium." (Doc. 35, p. 2) (internal quotations and citations omitted). The Health Care Financing Administration designates certain carriers who act on its behalf in determining and making Medicare payments for Part A or Part B benefits and performing other related functions. (Id., citing 42 U.S.C. § 1395u). NMC Homecare is such a provider, and claims that the Health Care Finance Administration has failed to reimburse it for Part B medical services. It is the "assignee of more than 12,000 claims of Medicare beneficiaries relating to intradialytic parenteral nutrition therapy treatment and services that were submitted for reimbursement after 1993 but have been denied by the Health Care Finance Administration." (Doc. 1, p. 5 ¶ 17).

Up to this point in the factual and procedural background, all seems, fairly simple. The difficulty arises-and the parties disagree-at the juncture of how Part A and Part B claims receive judicial review from the Secretary's determination.

1. Judicial Review of Medicare Claims Prior to the 1986 Amendments

Prior to 1986, the year in which the Medicare Act was substantially amended, Part A claims were afforded both administrative and judicial review the same way other claims were brought under Title II of the Social Security Act:

(1) Any individual dissatisfied with any determination under subsection (a) of this section as to —

(C) the amount of benefits under Part A ... of this subchapter (including a determination where such amount is determined to be zero) ... shall be entitled to a hearing thereon by the Secretary to the same extent as is provided in section 405(b) of this title and to judicial review of the Secretary's final decision after such a hearing as is provided in section 405(g) of this title.

Abbey v. Sullivan, 978 F.2d 37, 42 (2d Cir. 1992) (citing 42 U.S.C. § 1395ff(b) (1982) (amended effective January 1, 1987)).

A review of 42 U.S.C. §§ 405(b) and 405(g) reveals that federal judicial review could only be entertained once the administrative review of the Secretary's final decision has occurred. "[B]y channeling Part A claims to the appellate mill established under Title II of the Social Security Act, Congress foreclosed judicial review of Part A claims pursuant to federal question jurisdiction." Id. Accord, Weinberger v. Salfi, 422 U.S. 749, 763, 95 S.Ct. 2457, 2465-66, 45 L.Ed.2d 522 (1975); Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976).

However, prior to the 1986 Amendments, judicial review for Part B claimants was substantially different and curtailed. Part B claimants first would make their claim to the carrier, who would then make a determination and notify the claimant of its determination. If the Part B claimant was dissatisfied with the result, he could request a review determination by a different carrier. 42 C.F.R. §§ 405.807, 405.810 (1996). If the claimant was still dissatisfied and the claim was in excess of a certain amount, the claimant could go one step further, seeking further review by way of a "fair hearing" in front of a carrier designated hearing officer. 42 C.F.R. § 405.820 (1996). But this was the end of review for Part B claimants. Any further administrative or judicial review was foreclosed by federal statute. Abbey, 978 F.2d at 42; United States v. Erika, Inc., 456 U.S. 201, 206-07, 102 S.Ct. 1650, 1653-54, 72 L.Ed.2d 12 (1982). This more importantly meant that any matters which a carrier could not decide such as "`challenges to the validity of the Secretary's instructions and regulations'[were] not insulated from review under the Medicare Act." St. Francis Medical Center v. Shalala, 32 F.3d 805, 811 (3d Cir.1994), cert. denied, 514 U.S. 1016, 115 S.Ct. 1357, 131 L.Ed.2d 215 (1995) (quoting Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 668, 106 S.Ct. 2133, 2140, 90 L.Ed.2d 623 (1986)). However, judicial review must follow a final decision by the Secretary.

2. Judicial Review of Medicare Claims After the 1986 Amendments

In 1986, the Medicare Act was amended, and these amendments became effective on January 1, 1987. In essence, the 1986 amendments extended to Part B claimants' judicial review which is similar to Part A claimants' judicial review:

The determination of whether an individual is entitled to benefits under Part A or Part B of this subchapter, and the determination of the amount of benefits under Part A or Part B of this subchapter, and any other determination with respect to a claim for benefits under Part A of this subchapter or a claim for benefits with respect to home health services under Part B of this subchapter shall be made by the Secretary in accordance with regulations prescribed by him.

42 U.S.C. § 1395ff(a) (emphasis added).

If dissatisfied with the Secretary's determination, the claimant could then seek further review pursuant to § 405(b) of the Social Security Act and judicial review of the Secretary's final decision pursuant to § 405(g) of the Social Security Act. See 42 U.S.C. § 1395ff(b)(1). Section 405(g) states in relevant part: "Any individual, after final decision of the Commissioner of Social Security made after a hearing to which he was a party ... may obtain a review of such decision by a civil action...." Even more importantly, § 405(h) states:

The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Commissioner of Social Security, 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.

(emphasis added).

Thus, "[p]art B claims are now reviewed in the same manner as Part A claims so that the Social Security Act provides the exclusive authority for exercising jurisdiction over Part B disputes." Abbey, 978 F.2d at 43 (quoting Heckler v. Ringer, 466 U.S. 602, 605, 104 S.Ct. 2013, 2016, 80 L.Ed.2d 622 (1984)).

B. NMC HOMECARE, INC.

As previously stated, NMC Homecare is the assignee of "more than 12,000 claims of Medicare beneficiaries relating to [certain] treatments and services that were submitted for reimbursement to the Health Care Finance Administration after 1993 but that have been denied by the Health Care Finance Administration...." (Doc. 2, p. 5 ¶ 17). NMC Homecare contends that, although it is bringing the action pursuant to, inter alia, the Medicare Act, it is not seeking outright reimbursement for the Part B services it rendered to certain...