Padda v. Becerra
| Decision Date | 11 May 2021 |
| Docket Number | Case No. 4:21-cv-00492-SEP |
| Parties | GURPREET S. PADDA, et al., Plaintiffs, v. XAVIER BECERRA, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Before the Court is a Motion for Temporary Order and Preliminary Injunction by Plaintiffs Gurpreet S. Padda and the Interventional Center for Pain Management, P.C. Doc. [3]. The Court held a hearing on May 6, 2021, and issued an oral ruling denying the Motion the following day. This Memorandum and Order follow.
This case arises from a dispute between a healthcare provider and the Department of Health and Human Services (HHS) over the procedure for evaluating and collecting overpayments for services rendered to Medicare patients. Plaintiff Gurpreet S. Padda is board-certified in anesthesiology, pain management, and addiction medicine. Doc. [1] ¶ 11. He is the sole owner of Plaintiff Interventional Center for Pain Management, P.C., a clinic operating in St. Louis, Missouri. Doc. [1] ¶ 11.
Plaintiffs bring this action against Xavier Becerra, in his official capacity as Secretary of HHS; Elizabeth Richter, in her official capacity as Acting Administrator for the Centers for Medicare and Medicaid Services; and the Wisconsin Physician Service Insurance Corporation. Doc. [1] ¶¶ 14-17. Plaintiffs seek to enjoin Defendants from collecting payments or withholding future remuneration to recoup alleged overpayments of $5.6 million. Doc. [3-1] at 2, 4. Plaintiffs bring three causes of action against Defendants: Count I for violations of procedural due process; Count II for violations of substantive due process; and Count III for injunctive relief under the APA.
Defendants oppose injunctive relief and move for dismissal under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Doc. [12-1].
As a threshold matter, the Court finds that it does have subject matter jurisdiction over this action.1 The Medicare Act vests district courts with authority to review final decisions of the Secretary of HHS to the same extent provided in the Social Security Act. 42 U.S.C. § 1395ff(b)(1)(A) (incorporating 42 U.S.C. § 405(g)). Section 405(g) allows for judicial review if two elements are satisfied: First, "that a claim . . . shall have been presented to the Secretary" and second, "that the administrative remedies prescribed by the Secretary be exhausted." Mathews v. Eldridge, 424 U.S. 319, 328 (1976).
While presentment of the underlying substantive claim to the agency is a nonwaivable—and, as such, "purely 'jurisdictional,'" id.—prerequisite for judicial review under § 405(g), a party is not required to have raised with the Secretary a constitutional claim that "[t]he Secretary would not be required even to consider." Id. at 329. Plaintiffs' due process claim here appears to be just such a claim. Thus, Plaintiffs have satisfied § 405(g)'s presentment requirement here, as Eldridge himself had. Id. at 329-30.
Unlike presentment, § 405(g)'s exhaustion requirement is waivable. Thus, this Court may have authority to review Plaintiffs' due process claim under § 405(g) if either Plaintiffs exhausted their administrative remedies or the Court determines that the exhaustion requirement should be waived. "Exhaustion is generally required as a matter of preventing interference with agency processes, so that the agency may function efficiently and so that it may have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review." Degnan v. Burwell, 765 F.3d 805, 808 (8th Cir. 2014) (quoting Weinberger v. Salfi, 422 U.S. 749, 765 (1975)). Plaintiffs here do not claim to have exhausted their administrative remedies, but the Court may waive exhaustion if Plaintiffs demonstrate: "(1) their claims to the districtcourt are collateral to their claim of benefits; (2) that irreparable injury will follow; and (3) that exhaustion will otherwise be futile." Id. (quoting Titus v. Sullivan, 4 F.3d 590, 592 (8th Cir. 1993)).
Plaintiffs ask this Court to enjoin Defendants' recoupment of overpaid funds because allowing such recoupment before their claims are reviewed by an administrative law judge would violate their constitutional right to due process. Characterizing an objection to agency action as a violation of due process does not guarantee an exemption from the exhaustion requirement. See, e.g., Taransky v. Sec'y of U.S. Dep't of Health and Hum. Servs., 760 F.3d 307, 321 (3d Cir. 2014) (). Rather, in order to be excused from exhaustion, Plaintiffs must first show that their due process claim is "collateral" to their claims before the agency. That is, it "must not require the court to 'immerse itself' in the substance of the underlying Medicare claim or demand a 'factual determination' as to the application of the Medicare Act." Family Rehab., Inc. v. Azar, 886 F.3d 496, 501 (5th Cir. 2018) (quoting Affiliated Pro. Home Health Care Agency v. Shalala, 164 F.3d 282, 285-86 (5th Cir. 1999)).
Defendants argue that Plaintiffs' due process claims are not collateral to their claims before the agency, pointing to Plaintiffs' repeated discussion of the merits of those underlying claims—namely, that the services rendered were compensable and the statistical sample is too small to pass muster. Doc. [12-1] at 12-13. Neither of those arguments has any bearing on whether Plaintiffs have the right to a hearing before an administrative law judge before recoupment. Because the Court need not consider those arguments to determine Plaintiffs' right to a hearing, Plaintiffs' due process claims are collateral to Plaintiffs' claims before the agency.
Next, the Court must consider whether "irreparable injury will follow" from exhaustion. Degnan, 765 F.3d at 808. Courts should "be especially sensitive to irreparable injury where the Government seeks to require claimants to exhaust administrative remedies merely to enable them to receive the rights that they should have been afforded in the first place." Family Rehab., 886 F.3d at 504 (citing Bowen v. City of New York, 476 U.S. 467, 484 (1986)) (cleaned up). Plaintiffs alleged that immediate recoupment will "cause irreparable harm in the form of financial ruin, forced termination of employees, and certain closure of Dr. Padda's medicalpractice." Doc. [1] ¶ 8. Additionally, Plaintiff Padda submitted a declaration stating that he would expect to have to close his business within one month if recoupment commences.
Whether Plaintiffs' modest evidentiary showing is sufficient to support irreparable harm for the purpose of establishing this Court's jurisdiction over the request for emergency injunctive relief is a close question. "Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages. Gen. Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009). But the threat of closing a business can constitute irreparable harm. See Doran v. Salem Inn, Inc., 422 U.S. 922, 932 (1975) (). On the other hand, Plaintiffs arguably assumed the risk of recoupment when they "voluntarily signed up for Medicare program and structured [their] business in the way [they] did." Compassus OP of Missouri, LLC v. Azar, 2018 WL 6179533, at *3 (E.D. Mo. Nov. 27, 2018) (). Still, for the purposes of reviewing the motion to dismiss, the Court assumes Plaintiffs' allegations relating to irreparable harm to be true and finds them sufficient to satisfy the Mathews standard for an exemption from § 405(g)'s exhaustion requirement. See Family Rehab., 886 F.3d at 504.
Last, Plaintiffs must show that exhaustion would be futile. The exhaustion exception in Mathews "is grounded in the futility of making a constitutional challenge before an agency and in the absence of available alternative grounds for a decision." Jensen v. Schweiker, 709 F.2d 1227, 1229 (8th Cir. 1983) (citing Mathews, 424 U.S. at 329). Defendants contend that Plaintiffs have conceded that exhaustion is not futile by arguing that they are likely to prevail on the merits of their claims before the administrative law judge. Doc. [12-1] at 19. That argument misses the mark. Plaintiffs will present claims about the calculation of alleged overpayments to the administrative law judge, not their claim that the agency's failure to meet the 90-day deadline for a hearing violates their constitutional rights. As a matter of fact, if Plaintiffs were to try to exhaust the administrative process before seeking judicial review of their due process claim, they would suffer the alleged deprivation of their due process rights without ever having had the opportunity to challenge the agency's failure to meet its statutory obligation. See Mathews, 424 U.S. at 329. Thus, as to their due process claim, exhaustion would be futile.
Because Plaintiffs' due process claim qualifies for Mathews's exemption from § 405(g)'s exhaustion requirement, the Court does have the authority to review Plaintiffs' Motion. See Family Rehab., 886 F.3d at 504.
Injunctive relief is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Nat. Res. Def. Council, 555 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam)). In determining whether to issue a TRO, the Court must consider four factors: (1) the threat of irreparable harm to the movant; (2) the balance between...
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