St. Francis Hosp. v. Sebelius
| Decision Date | 23 July 2014 |
| Docket Number | No. 09 CV 1528DRHAKT.,09 CV 1528DRHAKT. |
| Parties | ST. FRANCIS HOSPITAL, Plaintiff, v. Kathleen SEBELIUS, in her official capacity as Secretary, United States Department of Health and Human Services, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Verrill Dana, LLP, by: Rachel Wertheimer, Esq., Portland, ME, for Plaintiff.
Loretta E. Lynch, United States Attorney, Eastern District of New York, by: Robert B. Kambic, Esq., Central Islip, NY, for Defendant.
Plaintiff, St. Francis Hospital (“St. Francis” or “Plaintiff”), brings this action for judicial review of certain administrative determinations issued by defendant in her official capacity as Secretary of Health and Human Services (the “Secretary”), which resulted in the recoupment of approximately $1.2 million in Medicare reimbursements from Plaintiff. Presently before the Court is the Secretary's second motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(1) and 12(h)(3) for lack of subject matter jurisdiction, or in the alternative, for judgment on the pleadings pursuant to Rule 12(c). For the reasons stated below, the Secretary's motion for judgment on the pleadings is granted.
The background of this case is fully set forth in the Court's June 5, 2012 Memorandum and Order, 874 F.Supp.2d 127 (E.D.N.Y.2012) (“June 2012 Order”), familiarity with which is assumed. The Secretary presently asserts that while 15 of Plaintiff's 225 claims were pending administrative appeal when the Complaint was filed and at the time the Court issued its June 2012 Order, those 15 claims have since been overturned in Plaintiff's favor. As a result, none of Plaintiff's 225 claims are pending administrative review.
A case may properly be dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). “In contrast to the standard for a motion to dismiss for failure to state a claim under Rule 12(b)(6), a ‘plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.’ ” Mac Pherson v. State St. Bank & Trust Co., 452 F.Supp.2d 133, 136 (E.D.N.Y.2006) (quoting Reserve Solutions Inc. v. Vernaglia, 438 F.Supp.2d 280, 286 (S.D.N.Y.2006) ), aff'd, 273 Fed.Appx. 61 (2008) ; accord Tomaino v. United States, 2010 WL 1005896, at *1 (E.D.N.Y. Mar. 16, 2010). “On a Rule 12(b)(1) motion, the court may consider matters outside the pleadings, including affidavits, documents, and testimony if necessary.” Tsanganea v. City Univ. of N.Y., 2008 WL 4054426, at *3 (S.D.N.Y. Aug. 28, 2008) (citing Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986) ), report and recommendation adopted, 2008 WL 4548857 (S.D.N.Y. Oct. 8, 2008).
The Complaint cites 42 U.S.C. §§ 405(g) and 1395ff(b)(1)(A) of the Medicare Act as a basis for federal subject matter jurisdiction to hear this case. (Compl. ¶ 4.) Section 1395ff(b)(1)(A) incorporates the judicial review provisions of section 405(g) of the Social Security Act, which empowers federal district courts to review administrative decisions only where there has been a “final decision ... made after a hearing.” 42 U.S.C. § 405(g) ; see also Pavano v. Shalala, 95 F.3d 147, 150 (2d Cir.1996) ().
The Secretary argued upon her first motion to dismiss under Rule 12(b)(1) that the Court lacked subject matter jurisdiction to hear Plaintiff's claims because Plaintiff had failed to obtain a final administrative decision following a hearing, as required by 42 U.S.C. § 405(g). (See June 2012 Order, 874 F.Supp.2d at 130–31.) In opposition, Plaintiff argued that the “Court should exercise jurisdiction under the Medicare Act by waiving the administrative exhaustion requirement.” (Id. ) The Court held in its June 2012 Order that “judicial waiver of the administrative exhaustion requirement [wa]s appropriate in this case,” and, accordingly, determined that it had subject matter jurisdiction over this case. (Id. at 134.)
However, the Secretary now argues that, since “there no longer are any claims for which exhaustion of administrative remedies could be waived, ... the Medicare statute cannot support jurisdiction.” (Def.'s Mem. at 1.)1 The Secretary is mistaken. The Court's determination that it had subject matter jurisdiction under the Medicare Act to review all of Plaintiff's claims without first requiring Plaintiff to exhaust all administrative remedies was premised, inter alia, upon the fact that exhaustion of administrative remedies would be futile because of the agency's apparent unwillingness to review challenges to reopenings upon appeal. (See June 2012 Order, 874 F.Supp.2d at 133.) Nowhere in the June 2012 Order did the Court limit its decision to the 15 claims pending disposition by the Administrative Law Judge.
The Secretary cites Dietsch v. Schweiker, 700 F.2d 865, 867 (2d Cir.1983) for the proposition that “the dismissal of a hearing request for untimely filing ... is [not] reviewable under the Medicare Act because there is no final decision of the Secretary made after a hearing.” (Def.'s Mem. at 9 (citations and internal quotation marks omitted).) However, Dietsch also recognizes that, “[i]n certain limited circumstances, ... federal courts have taken jurisdiction of social security cases where the exhaustion requirement has not been met,” because the constitutional challenges asserted were beyond the Secretary's “competence to decide.” 700 F.2d at 867–68 (citations and internal quotation marks omitted). Indeed, “the Supreme Court held it could review a plaintiff's constitutional challenge to a denial of a pretermination hearing although the claim had not been presented to the Secretary.”Id. (citing Mathews v. Eldridge, 424 U.S. 319, 330–32, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) ). Thus, as the Court recognized in its June 2012 Order, “much of [P]laintiff's claims here hinge on questions of constitutional due process, and the constitutionality of a statute or regulation is generally considered ‘a matter [ ] beyond [the Secretary's] jurisdiction to determine.’ ” (June 2012 Order, 874 F.Supp.2d at 133 (quoting Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975) ).)
Assuming arguendo that the Court does not have subject matter jurisdiction under the Medicare Act to hear Plaintiff's claims, the Court nevertheless has federal question jurisdiction to hear Plaintiff's challenges to the validity of the reopening regulations, as discussed below.
The Complaint also alleges that the Court has federal question jurisdiction under 28 U.S.C. § 1331. (Compl. ¶ 5.) “Federal question jurisdiction provides district courts with jurisdiction of all civil actions ‘arising under the Constitution, laws, or treaties of the United States.’ ” Ameropan Oil Corp. v. Wittich, 2006 WL 1582150, at *2 (E.D.N.Y. June 5, 2006) (quoting 28 U.S.C. § 1331 ). According to Plaintiff, two federal questions exist in this case, namely, “(i) whether the intermediary's decision to reopen the 225 claims was unlawful/invalid under the Medicare Act and regulations (42 U.S.C. § 1395ff, 42 C.F.R. [§ ]405.980(b)); and (2) whether the review-insulating regulation (42 C.F.R. [§ ]405.980(a)(5)) is constitutional.”2 , 3 (Pl.'s Mem. in Opp'n at 10.)
The Secretary opposes this basis of subject matter jurisdiction, arguing that 42 U.S.C. § 405(h), which is incorporated in the Medicare Act by 42 U.S.C. § 1395ii, expressly bars federal question jurisdiction over “any claim arising under” the Medicare Act, including “all of Plaintiff's allegations and claims.” (Def.'s Mem. at 12; Def.'s Reply at 4.) Section 405(h) provides:
42 U.S.C. § 405(h).
The Secretary also cites Your Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449, 119 S.Ct. 930, 142 L.Ed.2d 919 (1999), in which the Supreme Court denied review of a contractor's refusal to reopen on the basis of a lack of subject matter jurisdiction, reasoning that the “[p]etitioner's claim ar[ose] under the Medicare Act within the meaning of [section 405(h) ] because both the standing and the substantive basis for the presentation of the claim [we]re the Medicare Act.” Id. at 456, 119 S.Ct. 930 (citation and internal quotation marks omitted).
In response, Plaintiff argues that the Supreme Court's decisions in Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 19, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000) and Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 680, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986), establish that 42 U.S.C. § 405(h) does not bar federal question jurisdiction over claims that arise under the Medicare Act where judicial review would be completely precluded by application of the jurisdictional bar. (Pl.'s Mem. in Opp'n at 10–11.) According to Plaintiff, “[t]his case falls within the exception created by Michigan Academy and recognized in Illinois Council, ” because 42 C.F.R. § 405.980(a)(5), which provides that “[t]he contractor's, QIC's, ALJ's, or MAC's decision on whether to...
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