Reg'l Home Health Care, Inc. v. Azar
| Decision Date | 21 September 2020 |
| Docket Number | Case No. 4:19-cv-00067-SMR-CFB |
| Citation | 488 F.Supp.3d 827 |
| Parties | REGIONAL HOME HEALTH CARE, INC., Plaintiff, v. Alex M. AZAR, II, Secretary of the United States Department of Health and Human Services; NCI Information Systems, Inc. d/b/a AdvanceMed, an NCI Company, and Does 1 through 10, inclusive, Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Michael Cassin Burt, Des Moines, IA, pro se.
ORDER ON DEFENDANTS' MOTION TO DISMISS
This case arises from an initial overpayment determination by the United States Department of Health and Human Services ("HHS") against Plaintiff Regional Home Health Care, Inc. ("Regional"), which resulted in a temporary suspension of payments to the healthcare services provider under the Medicare Act, 42 U.S.C. § 1395 et seq. (2020) (the "Act"). Regional unsuccessfully contested the temporary suspension through the agency's rebuttal process but did not challenge the final overpayment determination or otherwise pursue administrative remedies provided by statute. Instead, Regional closed its business and filed this lawsuit in federal court for damages, declaratory relief, and attorney's fees. See [ECF No. 1].
Defendants moved to dismiss for failure to state a claim and lack of subject matter jurisdiction. [ECF No. 27]; see Fed. R. Civ. P. 12(b)(1), (6). Defendants contend Regional does not state a viable claim for damages against the federal administrative agency and that the Medicare Act's channeling provision, 42 U.S.C. § 405(h), deprives the Court of jurisdiction to hear the provider's due process claims. The Court agrees for the additional reason that the relief Regional claims to seek—a declaratory judgment that the agency's temporary suspension procedure violated its right to procedural and substantive due process—requests retroactive relief that does not present a justiciable case or controversy under the Declaratory Judgment Act and Article III of the United States Constitution. Consequently, Defendants' Motion to Dismiss is GRANTED.1
Regional was a certified provider of home health care services under the Medicare Act, 42 U.S.C. § 1395 et seq. , in Donnellson, Iowa, before it went out of business in May 2018. See [ECF No. 1 ¶¶ 1, 50]. Regional had been a certified provider since 1996 and derived approximately 97% of its revenue from Medicare patients in rural Lee County. Id. ¶¶ 35–36.
Medicare reimbursement for certified service providers is administered by the Secretary of HHS through its operational division, the Centers for Medicare & Medicaid Services ("CMS"). Id. ¶ 3. CMS contracts with private Medicare Administrative Contractors ("MACs") to administer, process, and pay valid claims to qualified providers and with Unified Program Integrity Contractors ("UPICs") to review, investigate, and audit payments made on behalf of the federal government. Id. ¶¶ 4–6; see generally 42 U.S.C. §§ 1395kk-1(a), 1395ddd(a) – (b). Under rules promulgated to protect federal funds and promote the integrity of the Medicare program, CMS and its contractors are authorized to temporarily suspend Medicare payments to certified providers upon "reliable information that an overpayment exists or that the payments to be made may not be correct." 42 C.F.R. § 405.371(a). Suspensions are authorized for 180 days unless an extension is sought and granted. Id. § 405.372(d). If the agency finds an overpayment to exist, the agency will make a final overpayment determination and is authorized to issue a demand for the funds, in some cases withholding payments to recover the balance. See 42 U.S.C. § 1395ddd(f) ; 42 C.F.R. §§ 405.371(a)(3), 405.373, 405.377(a). The sums from any payments withheld during the suspension period are first applied to reduce or eliminate the overpayment debt. 42 C.F.R. § 405.372(e).
On January 31, 2018, CMS, through its program integrity contractor NCI Information Systems, Inc., d/b/a AdvanceMed, an NCI Company ("AdvanceMed"), informed Regional that the agency was suspending Medicare payments to the facility "based on reliable information that an overpayment exist[ed] or that payments to be made may not [have been] correct," citing a non-exhaustive list of five claims for payments Regional had submitted but were found to not comply with Medicare eligibility criteria. [ECF No. 1 ¶ 40]; see also [ECF No. 27-2 at 2] .2 The suspension was effective that same day. Regional had previously supplied AdvanceMed with medical documentation in June 2017 related to fifteen Medicare claims for five patients in response to CMS's representation that those claims for payment were being reopened for good cause. [ECF No. 1 ¶ 37]. CMS is generally required to give providers notice before a suspension is put in place unless the agency determines "that the Medicare Trust Funds would be harmed by giving prior notice" because "giving prior notice would hinder the possibility of recovering the money." 42 C.F.R. § 405.372(a)(1), (3). Nevertheless, HHS regulations require CMS to give the provider an opportunity to rebut the suspension and provide reasons why the suspension should be removed. Id. § 405.372(b)(2).
Regional submitted a rebuttal statement and 148 pages of supporting medical documentation to AdvanceMed on February 6, 2018, where it addressed issues with the five claims raised by the agency in the initial suspension letter and notified the intermediary of the financial hardship it was suffering as a result of its suspension of Medicare payments. [ECF No. 1 ¶¶ 42–43]. In a letter dated February 22, 2018, AdvanceMed promptly informed Regional that CMS had reviewed Regional's submissions and concluded the suspension was still warranted. Id. ¶ 44; see also [ECF No. 27-2 at 4–6] ; cf. 42 C.F.R. § 405.375(a) (). Though it reversed its initial determination in part, fully approving one claim and partially approving another based on Regional's rebuttal materials, CMS affirmed its denial of the remaining three for a lack of documentary support and reiterated that the five claims listed in the initial suspension letter were not exhaustive of its finding that Regional had been overpaid. [ECF No. 1 ¶¶ 44–45]. The agency's response stated that an additional ten claims also failed to comply with Medicare eligibility requirements. [ECF No. 27-2 at 5]. Accordingly, Regional did not receive any Medicare payments on previously submitted patient claims or claims filed during the suspension period while CMS and AdvanceMed continued their review. [ECF No. 1 ¶ 48].
The payment suspension was lifted less than six months later on July 18, 2018, when AdvanceMed informed Regional its investigation had revealed a $1,267,801.00 overpayment. See [ECF No. 27-2 at 7–8] ; id. at 9–21 . Regional claims that by that time, however, it had been forced to close its facility due to lack of payments coming from its Medicare-heavy home health business; after finding substitute home health care services for its patients, Regional states it closed on May 1, 2018. See id. ¶ 50. CMS issued a demand letter for the overpayment balance on August 1, 2018. Id. at 22–28 .
Medicare providers must follow a four-level administrative appeals process to challenge a final overpayment determination. See generally 42 U.S.C. § 1395ff ; 42 C.F.R. § 405.904.
First, [a provider] may submit to the MAC a claim for redetermination of the overpayment. 42 U.S.C. § 1395ff(a)(3)(A). Second, it may ask for reconsideration from a Qualified Independent Contractor ("QIC") hired by CMS for that purpose. Id. § 1395ff(c), (g) ; 42 C.F.R. § 405.904(a)(2).... Third, the provider may request de novo review before an [Administrative Law Judge] within the Office of Medicare Hearings and Appeals (OMHA), an agency independent of CMS. 42 U.S.C. § 1395ff(d) ; 42 C.F.R. § 405.1000(d).... Fourth, the provider may appeal to the Medicare Appeals Council ("Council"), an organization independent of both CMS and OMHA. 42 C.F.R. § 405.1100.
Family Rehabilitation, Inc. v. Azar , 886 F.3d 496, 499 (5th Cir. 2018). Finally, an aggrieved provider may seek judicial review of the Secretary's final decision under the exclusive procedures provided in 42 U.S.C. § 405(g). 42 U.S.C. §§ 1395ff(b)(1)(A), 1395ii (incorporating 42 U.S.C. 405(h) into the Medicare Act). However, there is no administrative process for challenging a temporary suspension of Medicare payments while an overpayment investigation is ongoing; in effect, temporary suspensions are not appealable. 42 C.F.R. § 405.375(c).
Rather than challenge the final overpayment determination through the agency, Regional filed this action in federal court. Regional is express about what it is challenging in this lawsuit: the Medicare provider "does not challenge the underlying billing dispute," nor does it argue that "any subsequent denial of claims and overpayment determination was or would be wrongful"; it asserts only that "CMS's decision to suspend Regional's Medicare payments on claims already approved by the MAC, and any future approved claims while the suspension [was] in effect, without notice or opportunity to appeal, robbed Regional of its constitutionally protected due process rights." Id. ¶¶ 7–8, 52. Counts I and II allege procedural and substantive due process violations, respectively, while Count III seeks damages under 42 U.S.C. § 1983. Defendants moved to dismiss for a lack of jurisdiction and failure to state a claim. [ECF No. 27].
Subject matter jurisdiction presents "a question of justiciability" and considers "the constitutional power of a federal court to resolve a dispute and the wisdom...
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