Trostle v. Ctrs. for Medicare & Medicaid Servs.
| Decision Date | 17 October 2016 |
| Docket Number | CASE NO. 1:16-CV-156 |
| Parties | GLORIA L. TROSTLE, Individually and as Administratrix of the ESTATE OF DAVID A TROSTLE, deceased, Plaintiffs v. CENTERS FOR MEDICARE AND MEDICAID SERVICES, Defendant |
| Court | U.S. District Court — Middle District of Pennsylvania |
On January 29, 2016, Gloria L. Trostle, individually and as administratrix of the estate of David A. Trostle ("Plaintiffs"), filed a complaint alleging that Defendant, Centers for Medicare and Medicaid Services ("CMS"), unfairly and unjustly increased the amount Mr. Trostle owed Medicare following the settlement of a tort liability lawsuit. (Doc. 1). Plaintiffs assert that CMS's actions should be equitably estopped, that CMS would be unjustly enriched if Plaintiffs were to pay the increased amount claimed ($53,295.14), that CMS waived its right to the increased amount based on prior communications, and that Plaintiffs' complaint is an appeal from an administrative body. (Id. ¶¶ 24-46). CMS moved to dismiss the complaint on multiple grounds under Federal Rule of Civil Procedure 12(b). (Doc. 7). For the following reasons, the court will grant CMS's motion and will dismiss Plaintiffs' claims with prejudice.
On July 8, 2011, Bloomfield Pharmacy ("Bloomfield") incorrectly filled a prescription for David Trostle, giving him Lithium Carbonate instead of his prescribed Fosrenal. (Doc. 1 ¶ 6). As a result, Mr. Trostle fell seriously ill and was hospitalized for lithium toxicity, spending sixty-six days in various medical facilities for treatment. (Id. ¶¶ 6-7). One of Mr. Trostle's health insurers, Medicare, helped to cover a substantial portion of the nearly $100,000 worth of medical expenses incurred for these medical and rehabilitative treatments. (Id. ¶ 8).
Mr. Trostle brought a personal injury claim grounded in negligence against Bloomfield, and reported this tort claim to CMS on March 28, 2013. (Doc. 1 at 12; Doc. 11-3). CMS, through its Medicare Secondary Payer Recovery Contractor ("MSPRC"), initially asserted a lien of $725.17 against any recovery Mr. Trostle might obtain from his personal injury claim. (Doc. 1 ¶ 9; Doc. 11-1 at 1). Approximately one year later, CMS increased this lien amount to $1,212.32, and on May 22, 2014, informed Mr. Trostle and his attorney of the increase. (Doc. 1 ¶ 11; Doc. 11-2 at 1, 7).
Believing that $1,212.32 was an accurate statement of the lien owed to CMS, Mr. Trostle settled his personal injury claim with Bloomfield for $225,000 on July 9, 2014. (Doc. 1 ¶ 14; Doc. 11-5 at 2). After the settlement was consummated, Mr. Trostle's attorney notified CMS and offered to reimburse CMS the lien amount of $1,212.32. (Doc. 1 ¶ 15; Doc. 11-5 at 2). On August 14, 2014, CMS informed Mr. Trostle that the lien amount had increased to $53,295.14. (Id. ¶ 16; Doc. 11-4 at 1).
In a letter to CMS dated August 26, 2014, counsel for Mr. Trostle appealed the lien determination of $53,295.14, claiming that Mr. Trostle had relied on the May 22, 2014 lien figure of $1,212.32 when he agreed to settle his personal injury claim for $225,000, and therefore he did "not have a legal obligation to pay [CMS] $53,295.14." (Doc. 1 at 12; Doc. 11-5). On October 15, 2014, in what appears to be a stock denial letter2 (officially titled a "redetermination notice"), CMS denied Mr. Trostle's appeal and upheld its lien claim of $53,295.14. (Doc. 11-6 at 1). In this October 15, 2014 redetermination notice, CMS also explained that within 180 days of its decision, Mr. Trostle could request a "reconsideration," whereby a "new and impartial review" would be performed by a Qualified Independent Contractor ("QIC"). (Id. at 1-2). The redetermination notice further explained how to request a QIC reconsideration, and included a blank request form. (Id. at 2, 4).
Mr. Trostle's counsel requested QIC reconsideration by filling out the request form, attaching a typewritten appeal, and sending the request to the appropriate CMS contractor—Maximus Federal Services ("Maximus"). (Doc. 11-7). This request was dated June 10, 2015, and marked by Maximus with a "received" date of June 22, 2015. (Id. at 1, 4).
On August 24, 2015, CMS, through Maximus, informed Mr. Trostle and his attorney that because the request for QIC reconsideration had been received well after the 180-day filing deadline (calculated by CMS as April 18, 2015), the request for QIC reconsideration was dismissed pursuant to the relevant Code of Federal Regulations provisions that govern the appeal process and timing. (Doc. 11-8 at 2). This August 24,2015 CMS dismissal also included instructions on how to seek an extension for late filing of a reconsideration request for good cause, or how to appeal a dismissal through an Administrative Law Judge if a claimant believed the dismissal to be incorrect. (Id. at 2-3). Neither appears to have been done.
At some point Mr. Trostle passed away, and Mrs. Trostle—both in her individual capacity and as the administratrix of Mr. Trostle's estate—filed the instant complaint on January 29, 2016. CMS now moves to dismiss Plaintiffs' claims pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6).
When a Rule 12 motion is based on more than one ground, "the court should consider the Rule 12(b)(1) challenge first, because if the court must dismiss the complaint for lack of subject-matter jurisdiction, all other defenses and objections become moot." In re Corestates Trust Fee Litig., 837 F. Supp. 104, 105 (E.D. Pa. 1993), aff'd, 39 F.3d 61 (3d Cir. 1994). On a motion to dismiss for lack of subject matter jurisdiction, the plaintiff ordinarily bears the burden of persuasion that jurisdiction exists. Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
A dismissal under Federal Rule of Civil Procedure 12(b)(1) is not a judgment on the merits of a case; rather, it is a determination that the court lacks the power to hear a case. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A Rule 12(b)(1) motion may be treated in one of two ways: "either as a facial or a factual challenge to the court's subject matter jurisdiction." John G. v. Northeastern Educ. Intermediate Unit 19, 490 F. Supp. 2d 565, 575 (M.D. Pa. 2007) (citing Gould Elecs., Inc., 220 F.3d at 178).
Should the motion be presented or construed as a facial attack, the court may only consider "the allegations contained in the complaint," exhibits attached thereto, "matters of public record . . . , and 'indisputably authentic' documents which the plaintiff has identified as a basis of his claims and which the defendant has attached as exhibits to his motion to dismiss." Id. (citation omitted). The facial attack "offers a safeguard to the plaintiff similar to a 12(b)(6) motion; the allegations of the complaint are considered to be true." Mortensen, 549 F.2d at 891.
The second type of Rule 12(b)(1) motion—the factual attack—permits the defendant to submit, and the court to consider, "evidence that controverts the plaintiff's allegations." Gould Elecs., Inc., 220 F.3d at 178. If the motion factually challenges the court's subject matter jurisdiction, no presumption of truthfulness attaches to the allegations in the plaintiff's complaint, and the plaintiff bears the burden of establishing jurisdiction. Mortensen, 549 F.2d at 891. In such a case, the plaintiff must be permitted to respond to the defendant's evidence with his or her own evidence supporting jurisdiction. Id. Only when it is clear from the record that the plaintiff is unable to prove the existence of subject matter jurisdiction may a court properly dismiss the claim pursuant to a Rule 12(b)(1) factual attack. Id.
In the instant case, CMS has submitted substantial evidence with its motion to dismiss to establish that Plaintiffs have failed to exhaust their administrative remedies, and that such failure is fatal to Plaintiffs' ability to prove subject matter jurisdiction. Accordingly, the court will treat CMS's Rule 12(b)(1) motion to dismiss as a factual attack on subject matter jurisdiction.
CMS asserts that this court does not have subject matter jurisdiction over Plaintiffs' claims for several interrelated reasons. First, CMS maintains that Congress has provided for very limited federal judicial review (i.e., subject matter jurisdiction) over claims "arising under" the Medicare Act, requiring a claimant to fully exhaust his administrative remedies and receive a final decision from the Secretary of Health and Human Services ("Secretary") before taking his claim to the district court. (See Doc. 11 at 17-22). Second, if a claim arises under the Medicare Act, Congress has specifically mandated that such a claim cannot be brought in federal court under federal question jurisdiction, 28 U.S.C. § 1331. (Id. at 14-17). Finally, CMS insists that even if Plaintiffs' equitable claims were found not to arise under the Medicare Act, Plaintiffs have failed to show that the federal government waived sovereign immunity to allow such claims to be brought against one of its agencies.3 (Id. at 12-14).
Plaintiffs counter that subject matter jurisdiction exists because the United States has expressly waived sovereign immunity over final decisions of CMS under the Medicare Act, and Mr. Trostle's dismissal by Maximus operates as a "final decision." (Doc. 12 at 6-7). Alternatively, Plaintiffs maintain that because their equitable claims are not "arising under" the Medicare Act but rather are grounded in contract law, subjectmatter jurisdiction exists because Plaintiffs are suing "a federal governmental entity." (Id. at 7-9; Doc. 1 ¶ 2).
In 42 U.S.C. § 405(g), Congress set out how claims or disputes regarding Medicare may reach the federal district courts. Although the language concerns the Social Security Act, it is made applicable to the Medicare Act via 42 U.S.C. § 1395ii. See Heckler v....
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