Padda v. Becerra, Case No. 4:21-cv-00492-SEP
| Decision Date | 16 July 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 Renewed Motion for Preliminary Injunction by Plaintiffs Gurpreet S. Padda and the Interventional Center for Pain Management, P.C. Doc. [20]. The Motion is fully briefed and ready for disposition. For the reasons set forth below, the Motion is denied.
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 Interventional Center for Pain Management, P.C., and its sole owner, Plaintiff Gurpreet S. Padda, 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.
The Complaint sets forth three causes of action: Count I asserts a violation of procedural due process, Count II asserts a violation of substantive due process, and Count III purports to be a "preservation of status of rights under the APA." Doc. [1] at 16-20. Initially, Plaintiffs sought to immediately restrain Defendants from collecting payments or withholding future remuneration to recoup alleged overpayments of $5.6 million. Doc. [3-1] at 2, 4. In response, Defendants argued that this Court lacked subject matter jurisdiction and that Plaintiffs had not met the standard for injunctive relief. The Court found that it had subject matter jurisdiction to consider the alleged due process violation but denied the temporary restraining order on the grounds that Plaintiffs had not sufficiently demonstrated that they were likely to succeed on the merits of their due process claims or that they would suffer irreparable harm without an injunction.
Plaintiffs now move for a preliminary injunction, Doc. [20], attaching a new affidavit from Plaintiff Padda, Doc. [20-1]. Defendants renew their opposition and request again that this matter be dismissed for lack of subject matter jurisdiction. Doc. [24]. Both parties have referred to earlier briefing to support their positions, and the Court relies on those filings as appropriate.
Defendants argue that the Court does not have jurisdiction because Plaintiffs have not exhausted the administrative process. Plaintiffs concede that fact but argue that the exhaustion requirement should be waived under Mathews v. Eldridge, 424 U.S. 319, 321 (1976), which exempts from the exhaustion requirement colorable constitutional claims that are collateral to the substantive claims under administrative review. On consideration of similar due process claims, the Fourth Circuit and Fifth Circuit Courts of Appeals both found subject matter jurisdiction. See Family Rehab., Inc. v. Azar, 886 F.3d 496, 504 (5th Cir. 2018) (applying Mathews factors); Accident, Injury and Rehab., PC v. Azar, 943 F.3d 195, 200-01 (4th Cir. 2019) (). In denying the temporary injunction, this Court followed Family Rehabilitation, finding jurisdiction over the procedural due process claim.1 Doc. [19] at 5.
In response to the instant Motion, Defendants argue that this Court should reconsider its finding that exhaustion should be waived under Mathews because Plaintiffs' constitutional claims are not colorable.2 Doc. [24] at 2 (citing Anderson v. Sullivan, 959 F.2d 690, 693 (8th Cir. 1992)). The Court disagrees. The Eighth Circuit has distinguished between claims that are "clearly meritless" and those that are "so patently frivolous as to fail to confer jurisdiction."Boock v. Shalala, 48 F.3d 348, 353 (8th Cir. 1995) (citing Bell v. Hood, 327 U.S. 678, 682-85 (1946)). In Boock, the government notified Boock that it denied his claim for disability benefits. Id. at 349. Boock contended that the notice was constitutionally deficient because it did not inform him that the decision would be final if not appealed. Id. at 352. The notice stated: "If you want this reconsideration, you must request it not later than 60 days." Id. The Eighth Circuit found that the claim was sufficiently colorable to confer jurisdiction, although it was clearly meritless. Id. at 353. Plaintiffs' procedural due process claim is likewise not "so patently frivolous as to fail to confer jurisdiction." Id.
The Mathews exemption does not support jurisdiction over all three counts, however. For a due process claim to be considered collateral to the substantive claims before the agency, 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., 886 F.3d at 501. Count II, Plaintiffs' substantive due process claim, challenges the expertise of the auditors, the auditors' failure to review supplemental information, the sample size relied upon to determine the overpayment, and the process of extrapolating from that sample size. Doc. [1] ¶ 80. Plaintiffs argued in their earlier motion for a temporary restraining order that they were entitled to injunctive relief for three reasons: (1) the underlying claims were medically necessary and properly documented; (2) an independent statistician identified errors in the calculation of overpayment, and (3) the extrapolation method is invalid. Doc. [3-1] at 11-12. Resolving those challenges would require the Court to go far beyond considering whether Plaintiffs have a right to a hearing before recoupment commences; the Court would have to "immerse itself" in the same claims proceeding in the administrative process and to make a "'factual determination' as to the application of the Medicare Act." See Family Rehab., 886 F.3d at 501. Because Count II is not collateral, this Court has no jurisdiction until Plaintiffs have exhausted their administrative remedies.
Count III requests injunctive relief pursuant to the Administrative Procedure Act. Doc. [1] at 19-20. The APA does not independently grant subject matter jurisdiction. Stanley v. Astrue, 298 Fed. App'x 537, 541 (8th Cir. 2008) (citing Califano v. Sanders, 430 U.S. 99, 104-07 (1977)). Therefore, Count III is also dismissed for lack of jurisdiction.
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)). For the Court to issue a preliminary injunction, the moving party must show four things: "(1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on the parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest." Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013) (quoting Dataphase Sys., Inc. v. CL Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc)). The probability-of-success factor is the most significant. Id. Accordingly, as it did with respect to the motion for a temporary restraining order, the Court will begin its analysis with the third factor.
In the instant Motion, Plaintiffs summarize their due process claim as follows: "[N]otwithstanding any language in their opening brief to the contrary, Plaintiffs [sic] due process claim is based on CMS' failure to provide an ALJ hearing within 90 days, as required by federal law, while at the same time engaging in the self-help remedy of recoupment while they wade through the multi-year backlog." Doc. [20] at 2. "To demonstrate a procedural-due-process violation, [Plaintiffs] must show a deprivation of life, liberty, or property without sufficient process." Hughes v. City of Cedar Rapids, 840 F.3d 987, 994 (8th Cir. 2016) (citing Clark v. Kan. City Mo. Sch. Dist., 375 F.3d 698, 701 (8th Cir. 2004)). The Court must balance three factors to determine what kind of process is due: "(1) the nature and weight of the private interest affected by the challenged official action; (2) the risk of an erroneous deprivation of such interest as a result of the summary procedures used; and (3) the governmental function involved and state interests served by such procedures, as well as the administrative and fiscal burdens, if any, that would result from the substitute procedures sought." Booker v. City of St. Paul, 762 F.3d 730, 734 (8th Cir. 2014) (quoting Coleman v. Watt, 40 F.3d 255, 260 (8th Cir. 1994)).
When reviewing the TRO request, the Court was not persuaded that Plaintiffs are likely to succeed on the merits of the procedural due process claim. Doc. [19] at 7. In reaching that conclusion, the Court, exercising its discretion, considered the argument presented for the firsttime in Plaintiffs' Reply Brief in Support of Motion for a Temporary Restraining Order and Preliminary Injunction. See Doc. [15] at 8 (citing Hospice Savannah, Inc. v. Burwell, 2015 WL 8488432, *1-2 (S.D. Ga. Sept. 21, 2015)). Plaintiffs now urge the Court to reconsider their likelihood to succeed on the due process claim in light of two cases they cited without explanation in that Reply. Doc. [20] at 2. Neither case alters the Court's conclusion that Plaintiffs are not likely to succeed on the merits. See Adams EMS, Inc. v. Azar, 2018 WL 5264244 (S.D. Tex. Oct. 23, 2018) (preliminary injunction granted), perm. injunction denied, ...
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