Sunshine Haven Nursing Operations, LLC v. U.S. Dep't of Health & Human Servs.

• Decision Date: 14 February 2014
• Docket Number: No. 12–9557.,12–9557.
• Citation: 742 F.3d 1239
• Parties: SUNSHINE HAVEN NURSING OPERATIONS, LLC, d/b/a Sunshine Haven Lordsburg, Petitioner, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, CENTERS FOR MEDICARE & MEDICAID SERVICES, Respondent.
• Court: U.S. Court of Appeals — Tenth Circuit

742 F.3d 1239

SUNSHINE HAVEN NURSING OPERATIONS, LLC, d/b/a Sunshine Haven Lordsburg, Petitioner,

v.UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, CENTERS FOR MEDICARE & MEDICAID SERVICES, Respondent.

No. 12–9557.

United States Court of Appeals, Tenth Circuit.

Feb. 14, 2014.

Submitted on the briefs.^*Jennifer L. Stone and Thomas A. Outler, of Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, New Mexico, for Petitioner.

William B. Schultz, General Counsel, Delores “Dee” Thompson, Chief Counsel, Region VI, Nigel F. Gant, Assistant Regional Counsel, United States Department of Health and Human Services, Dallas, Texas for Respondent.

Before MATHESON, Circuit Judge, PORFILIO, Senior Circuit Judge, and O'BRIEN, Circuit Judge.

MATHESON, Circuit Judge.

Petitioner Sunshine Haven Nursing Operations LLC (Sunshine) operates a 67–bed nursing home in Lordsburg, New Mexico. It petitions for review of the United States Department of Health and Human Services (HHS) Departmental Appeals Board's (DAB) decision affirming an administrative law judge's (ALJ) decision upholding mandatory and discretionary “remedies” (penalties) imposed on Sunshine by the Centers for Medicare and Medicaid Services (CMS). CMS remedies are commonly characterized as imposed by the Secretary of HHS.

We have jurisdiction under 42 U.S.C. §§ 1395i–3(h)(2)(B)(ii) and 1320a–7a(e) over Sunshine's challenges to the Secretary's imposition of four fines, known as civil monetary penalties (CMPs), for four instances of noncompliance with federal regulations. We lack jurisdiction, however, over Sunshine's request to overturn the other remedies resulting from the Secretary's determinations that the Sunshine facility was not in substantial compliance with federal regulations. 42 U.S.C. §§ 1395cc(h)(1)(A) and 405(g) place jurisdiction for initial judicial review of such matters in the federal district court.

We affirm the four CMPs and transfer the other issues to the United States District Court for the District of New Mexico under the federal transfer statute, 28 U.S.C. § 1631.

I. BACKGROUND

A. Legal Background

“Established in 1965 under Title XVIII of the Social Security Act, ..., Medicare is a federally funded health insurance program for the elderly and disabled.” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 506, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994); see generally42 U.S.C. §§ 1395 to 1395kkk–1. “The Secretary of Health and Human Services ... is charged by Congress with administering the Medicare statute.” Almy v. Sebelius, 679 F.3d 297, 299 (4th Cir.2012) (citing 42 U.S.C. § 1395ff(a)(1)). The Secretary administers Medicare through CMS.¹Hughes v. McCarthy, 734 F.3d 473, 475 (6th Cir.2013). Medicare Part A, 42 U.S.C. §§ 1395c to 1395i–5, provides coverage to eligible persons for hospital services, including those provided by skilled nursing facilities (SNFs), such as Sunshine. See42 U.S.C. §§ 1395c, 1395i–3.²

An SNF is eligible to enter into a “provider agreement” with CMS to participate in the Medicare program and receive reimbursements for providing covered services. See id.§ 1395cc(a), (b). Federal law requires that “[a] skilled nursing facility must operate and provide services in compliance with all applicable Federal, State, and local laws and regulations ... and with accepted professional standards and principles which apply to professionals providing services in such a facility.” Id.§ 1395i–3(d)(4)(A).³ “Substantial compliance” is “a level of compliance with the requirements of participation such that any identified deficiencies pose no greater risk to resident health or safety than the potential for causing minimal harm.” 42 C.F.R. § 488.301 ¶ 19; see also Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 7, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000) (citing 42 U.S.C. § 1395i–3(h); 42 C.F.R. § 488.301). By contrast, “[n]oncompliance means any deficiency that causes a facility to not be in substantial compliance.” 42 C.F.R. § 488.301 ¶ 11. A “deficiency” is a violation of a statutory or regulatory participation requirement. Id. ¶ 3.

CMS is charged with overseeing compliance with Medicare's conditions of participation. See Palomar Med. Ctr. v. Sebelius, 693 F.3d 1151, 1153 (9th Cir.2012); Massachusetts v. Sebelius, 638 F.3d 24, 30 (1st Cir.2011) (citing 42 C.F.R. § 400.200 ¶ 2). Compliance is verified through unannounced inspections, called “surveys,” conducted on behalf of CMS by state survey agencies (SAs). See, e.g.,42 U.S.C. §§ 1395i–3(g)(2)(A), (g)(2)(E)(i), 1395aa(a). If a participating provider is found to be out of substantial compliance, the SA presents a “Statement of Deficiencies” (SOD) to the facility. 42 C.F.R. § 488.110(j), (k). To the extent CMS concurs with the identified deficiencies, CMS may, and sometimes must, impose remedies against the provider. See Ill. Council, 529 U.S. at 6, 120 S.Ct. 1084 (citing 42 U.S.C. § 1395i–3). Remedies may include suspension of payment for new services, 42 U.S.C. § 1395i–3(h)(2)(B)(i), fines (CMPs), id. § 1395i–3(h)(2)(B)(ii), termination of a facility's provider agreement, id. §§ 1395i–3(h)(2)(A)(i), (h)(4), 1395cc(b)(2)(A), and disapproval for two years of a facility's nurse aide training and competency evaluation program (NATCEP), id. § 1395i–3(f)(2)(B)(iii)(I). If CMS imposes remedies, a provider may request a hearing before an ALJ and administrative review of the ALJ's decision by the DAB. See, e.g.,42 C.F.R. § 498.5(b), (c).

B. Compliance Enforcement Against Sunshine

Sunshine contracted with CMS to provide Medicare services. In 2008, CMS received a complaint from a family member of a resident that Sunshine was not bathing her often enough. In response, CMS arranged for the New Mexico Department of Health, the SA for facilities in New Mexico, to conduct a survey of Sunshine. The SA conducted surveys on November 5 and 19, 2008, and on January 21, February 3, February 5, and April 2, 2009.⁴ The SA found instances of noncompliance in each survey and concluded that Sunshine was not in substantial compliance with conditions of participation.

As a result of the SA's reports, CMS issued Sunshine a denial of payment for new admissions (DPNA) on February 5, 2009, based on a finding of three months' continuous noncompliance beginning on November 5, 2008. See42 U.S.C. § 1395i–3(h)(2)(B)(i), (h)(2)(D). CMS also terminated Sunshine's Medicare provider agreement on May 6, 2009, based on a finding of six months' continuous noncompliance beginning on November 5, 2008. See id., § 1395i–3(h)(2)(C). CMS also imposed four per-instance CMPs totaling $14,000, including two $5,000 CMPs from the February 5, 2009 survey, and two $2,000 CMPs from the April 2, 2009 survey. The four deficiencies were determined to “immediately jeopardize the health or safety of [Sunshine's] residents.” See id. § 1395i–3(h)(1)(A), (2)(A)(i), (2)(B)(ii). CMS also withdrew its approval for Sunshine's NATCEP for two years based on the DPNA, the termination of its provider agreement, and/or a CMP of not less than $5,000. See id. § 1395i–3(f)(2)(B)(iii)(I).

Sunshine sought administrative review of CMS's actions. After receiving briefing on the issues and holding a hearing, the ALJ found that Sunshine was not in continuous substantial compliance with conditions of participation for the six months from November 5, 2008, until May 6, 2009. The ALJ concluded that the Medicare statutes required the issuance of the DPNA, the termination of Sunshine's provider agreement, and the disapproval of Sunshine's NATCEP. The ALJ also concluded that the four per-instance CMPs were supported and reasonable. Sunshine sought review by the DAB, which determined that the ALJ's findings were supported by substantial evidence. The DAB's decision is the final agency decision and is subject to judicial review. 42 U.S.C. § 1395ff(f)(2)(A)(iv). Sunshine filed its petition for judicial review in this court.

II. JURISDICTION

“Federal courts are ‘courts of limited jurisdiction,’ possessing ‘only that power authorized by Constitution and statute.’ ” Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1201 (10th Cir.2012) (quoting Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005)). As an Article III court, we have authority to determine our subject matter jurisdiction under the statutes Congress has enacted. Latu v. Ashcroft, 375 F.3d 1012, 1017 (10th Cir.2004).

Federal court jurisdiction under the Medicare program is complicated. Multiple statutes confer jurisdiction for judicial review of various Medicare determinations, including: 42 U.S.C. § 1320a–7a(e) (authorizing judicial review of CMPs imposed on an SNF due to noncompliance, on account of a cross-reference in § 1395i–3(h)(2)(B)(ii)(I)); § 1395cc(h)(1)(A) (authorizing judicial review “as is provided in section 405(g)” of determinations that a provider was not in substantial compliance); § 1395ff(b)(1)(A) (authorizing judicial review of Medicare Part A benefits determinations); and § 139500(f)(1) (authorizing judicial review of provider reimbursement decisions).

Sunshine originally asserted that we have jurisdiction under 42 U.S.C. §§ 1320a–7a(e) and 1395cc(h)(1)(A) over the issues presented in its petition for review. Pet'r's Opening Br. at 1. Because § 1395cc(h)(1)(A) authorizes initial judicial review of some of Sunshine's challenges only in the district court, whereas § 1320a–7a(e) and § 1395i–3(h)(2)(B)(ii) authorize initial judicial review of the CMPs in the circuit court, we requested supplemental briefing from the parties on our subject matter jurisdiction.

Both Sunshine and the government argue in their supplemental briefs that we have jurisdiction over all issues in the petition for review. After further consideration, however, we conclude that we have jurisdiction under § 1320a–7a(e) to decide Sunshine's challenges to the four per-instance CMPs, but we do not have jurisdiction over its challenges to the...