RICU LLC v. United States Department of Health and Human Services

• Decision Date: 18 January 2022
• Docket Number: No. 21-5186,21-5186
• Citation: 22 F.4th 1031
• Parties: RICU LLC, Appellant v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

22 F.4th 1031

RICU LLC, Appellant

v.UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Appellees

No. 21-5186

United States Court of Appeals, District of Columbia Circuit.

Argued December 13, 2021

Decided January 18, 2022

Jesse Panuccio argued the cause for appellant. With him on the briefs were David Boies and Scott E. Gant.

Jennifer L. Utrecht, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Abby C. Wright, Attorney, Janice L. Hoffman, Associate General Counsel, U.S. Department of Health and Human Services, Susan Maxson Lyons, Deputy Associate General Counsel for Litigation, and Bridgette Lynn Kaiser, Attorney.

Before: Srinivasan, Chief Judge, Rogers and Jackson, Circuit Judges.

Rogers, Circuit Judge:

On appeal from the dismissal of its complaint, RICU LLC seeks to avoid well-settled authority requiring administrative exhaustion under the Medicare Act by presenting a concrete claim for payment of rendered services to the U.S. Department of Health and Human Services for decision. Instead, RICU LLC relies on its efforts to engage Department officials in a generalized consideration of the reimbursement potential for telehealth services provided by contract physicians located outside of the United States. Alternatively, RICU LLC invokes an exception to the "channeling" requirement where no other path for judicial review exists. For the following reasons, we affirm the dismissal of the complaint for lack of subject matter jurisdiction and do not address RICU LLC's request for a preliminary injunction to reverse the Department's generalized eligibility determination.

I.

According to the complaint, RICU LLC "is one of the largest inpatient telehealth companies in the United States," specializing in remote critical care services. Compl. ¶ 26. RICU LLC currently contracts with approximately 60 intensive care physicians who live and work abroad but were trained in the United States and hold U.S. board certifications and licenses. See id. ¶¶ 27–30. These physicians provide critical care telehealth services to "more than 250 hospitals located in 34 states, accessible to more than 35 million Americans," id. ¶ 33, through service contracts between RICU LLC and hospitals or third-party intermediaries, id. ¶ 34. RICU LLC's client hospitals pay hourly for critical care telehealth services provided by RICU LLC's intensive care physicians. Id.

Since its enactment in 1965, the Medicare Act, 42 U.S.C. § 1395 et seq. , Part A of Title XVIII of the Social Security Act, established a federal health insurance program for the elderly and disabled and barred Medicare reimbursement for "any expenses incurred for items or services ... which are not provided within the United States," subject to limited exceptions.¹ Indeed, prior to 1999, Medicare did not reimburse for telehealth services.² That changed in 2000 when Congress expanded Medicare to cover certain telehealth services, specifically, those that physicians provided through a telecommunications system to an eligible telehealth individual, "notwithstanding that the individual physician or practitioner providing the telehealth service is not at the same location as the beneficiary."³ An "eligible telehealth individual" is a Medicare Part B enrollee who "receives a telehealth service furnished at an originating site," which is a hospital, clinic, physician's office, or other medical facility where the patient "is located at the time the service is furnished." Reimbursement was authorized for "professional consultations, office visits, and office psychiatry services," and the Secretary of the Department could designate "any additional service."⁴

By final rule, the Department provided for reimbursements according to its annually-updated Physician Fee Schedule in each of 112 geographic localities in the United States. The site of service is the location of the physician or practitioner, not the patient's location.⁵ To qualify for reimbursement, a telehealth service must be on the telehealth list, and before 2020, critical care telehealth services typically provided in a hospital's intensive care unit were not on the telehealth list and therefore were ineligible.⁶ In response to the COVID-19 pandemic, however, Congress authorized the Department "to temporarily waive or modify the application of" Medicare requirements governing telehealth services furnished during the public health emergency.⁷ In early April 2020, the Department adopted an interim final rule adding critical care telehealth services to the telehealth list. The final rule, effective in December 2020, made critical care telehealth services reimbursable through the end of the calendar year in which the COVID public health emergency ends.⁸

On April 22, 2020, RICU LLC sought "urgent clarification" by the Department of whether the emergency eligibility of critical care telehealth services meant that Medicare would reimburse for those services provided by physicians located outside the United States. Email Seth Rabinowitz, Pres., RICU LLC, to Brian R. Pabst, Tech. Adv'r, Centers for Medicare and Medicaid Services ("CMS") (Apr. 22, 2020). By letter of June 20, 2020, the Acting Director of CMS’ Chronic Care Policy Group responded that, after "an exhaustive review of the statute and regulations," CMS had determined that Medicare could not reimburse any telehealth services furnished by medical providers outside the United States because the Medicare Act's ban on foreign payments "remains in effect during a public health emergency and is not affected by telehealth flexibilities for the COVID-19 pandemic." Ltr. Jason Bennett, Act. Dir., Chron. Care Pol'y Grp., CMS (June 1, 2020) at 1. Seeking to overturn this ineligibility determination, RICU LLC contacted increasingly senior CMS officials. See Compl. ¶¶ 78–79. In July 2020, CMS advised RICU LLC that its "senior Medicare team and General Counsel's Office" agreed with the determination in the June 2020 letter. Email Kimberly Brandt, Princ. Dep. Adm'r, CMS (July 9, 2020). CMS again confirmed its position on October 28, 2020, following RICU LLC's meeting with high-level CMS officials. Ltr. Demetrios L. Kouzoukas, Princ. Dep. Adm'r & Dir., Ctr. for Medicare (Oct. 28, 2020) at 1.

In February 2021, RICU LLC filed a complaint in the district court, alleging that the Department's determination that critical care telehealth services provided by physicians who are outside of the United States are ineligible for Medicare reimbursement was contrary to law and arbitrary and capricious, in violation of the Administrative Procedure Act. Compl. ¶¶ 86–108. RICU LLC also moved for a preliminary injunction preventing the Department from denying Medicare reimbursement for telehealth services provided by physicians located outside of the United States. The Department moved to dismiss the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(1), because RICU LLC had not presented a concrete claim for payment to the Department as required by the Medicare Act's channeling procedure in order to obtain judicial review. The district court granted the Department's motion after a hearing and dismissed the complaint for lack of subject matter jurisdiction and denied RICU LLC's motion for a preliminary injunction. RICU LLC v. U.S. Dep't of Health & Hum. Servs. , No. 21-cv-452, 2021 WL 3709736, at *9 (D.D.C. Aug. 20, 2021).

RICU LLC appeals and filed an unopposed motion for expedition pursuant to 28 U.S.C. § 1657 in view of the shortage of internal critical care physicians during the ongoing COVID-19 pandemic that RICU LLC's telehealth services may alleviate. The court granted expedition. The court reviews the dismissal of the complaint for lack of subject matter jurisdiction de novo , Am. Hosp. Ass'n v. Azar , 895 F.3d 822, 825 (D.C. Cir. 2018), assuming the truth of all well-pled material factual allegations in the complaint and granting the plaintiff the benefit of all reasonable inferences from the alleged facts, Am. Nat. Ins. Co. v. FDIC , 642 F.3d 1137, 1139 (D.C. Cir. 2011) (citing Thomas v. Principi , 394 F.3d 970, 972 (D.C. Cir. 2005) ).

II.

On appeal, RICU LLC contends that it satisfied the Medicare Act's presentment requirement when it sought an eligibility determination from the Department under its interim final rule for payment of critical care telehealth services by physicians located abroad. Alternatively, RICU LLC relies on an exception to presentment recognized by the Supreme Court to show that the district court had subject matter jurisdiction over RICU LLC's complaint. Neither contention is persuasive in view of judicial precedent.

A.

Beginning in April 2020, RICU LLC had requested Department guidance on how the interim final rule applied to RICU LLC's services abroad, not resolution of a specific claim for reimbursement. The contention that it nonetheless satisfied the Medicare Act's presentment requirement is foreclosed by Supreme Court and circuit precedent. The Supreme Court has rejected the argument that district court review is available prior to submission of a specific reimbursement claim to the Department, in view of the presentment and exhaustion requirements under the Medicare Act, Heckler v. Ringer , 466 U.S. 602, 620–22, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), and circuit precedent eliminates any doubt RICU LLC's complaint was properly dismissed by the district court.

By its plain terms, the Medicare Act, 42 U.S.C. § 405(h), strips the court of jurisdiction under 28 U.S.C. § 1331 and § 1346 over "any claim arising under" Title II of the Social Security Act, and prevents review of any decision of the Commissioner of Social Security, "except as herein provided." Section 405(g) provides an exception for a civil action filed by an individual challenging "any final decision of the Commissioner of Social Security made after a hearing to which [the plaintiff] was a party," who is...