Bodimetric Health Services, Inc. v. Aetna Life & Casualty

903 F.2d 480, 1990 U.S. App. LEXIS 8647
CourtCourt of Appeals for the Seventh Circuit
DecidedMay 25, 1990
DocketNos. 89-1428, 89-1570
StatusPublished
Cited by19 cases

This text of 903 F.2d 480 (Bodimetric Health Services, Inc. v. Aetna Life & Casualty) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bodimetric Health Services, Inc. v. Aetna Life & Casualty, 903 F.2d 480, 1990 U.S. App. LEXIS 8647 (7th Cir. 1990).

Opinion

CUDAHY, Circuit Judge.

Bodimetric Health Services (“Bodime-tric”) 1 brought suit against Aetna Life & Casualty (“Aetna”) for improperly denying reimbursement claims made under the Medicare Act, 42 U.S.C.A. section 1395 et seq. (West Supp.1990). Aetna defended itself with a motion to dismiss for lack of subject matter jurisdiction, alleging that the exclusive review mechanisms of the Medicare Act barred Bodimetric from pursuing its challenge in federal court. The district court granted Aetna’s motion. The question on appeal is whether the allegedly improper application of “exclusive” review [482]*482mechanisms to Bodimetric’s claim is actionable in the district court. We affirm.

I.

The facts of this case — as well as the underlying statutory provisions — are ably recited in the district court opinion. Bodimetric Health Servs. v. Aetna Life & Casualty, 706 F.Supp. 619 (N.D.Ill.1989). We pause here only to note some of the more pertinent details involved in this appeal.

Bodimetric owned and operated fifteen home health agencies (“HHAs”) that provided in-home medical services as an alternative to institutional treatment. All fifteen of these HHAs were certified as Medicare providers. Under Part A of the Medicare Act,2 these HHAs generally are reimbursed for the lesser of their reasonable costs (in providing treatment) or customary charges for rendering services. 42 U.S.C. § 1395f(b) (1982). To obtain reimbursement from so-called “fiscal intermediaries,” 3 section 1395f(a)(2)(C) requires a physician to certify that services are necessary, that the individual is confined to the home and that a plan of treatment has been developed. 42 U.S.C.A. § 1396f(a)(2)(C) (West Supp.1990). Before 1984, the Health Care Financing Administration’s Office of Direct Reimbursement (“ODR”) acted as fiscal intermediary to Bodimetric by processing Bodimetric’s claims under these provisions of the Act; apparently, ODR rarely denied any of Bodimetric’s claims.

In 1984, the Health Care Financing Administration determined that ODR could no longer serve as Bodimetric’s fiscal intermediary. In this situation, the provisions of file Medicare Act permit an HHA to nominate a public or private agency to act as fiscal intermediary. 42 U.S.C.A. § 1395h (West Supp.1990). Bodimetric relied upon these provisions to nominate Aetna as its fiscal intermediary. Aetna, at first, provided reimbursement for virtually all of Bodi-metric’s claims. In early 1985, however, Bodimetric alleges that the Department of Health and Human Services released a contractor evaluation critical of Aetna’s performance as a fiscal intermediary. Because of this evaluation, Bodimetric charges, Aetna adopted a more restrictive approach that led to the denial of a substantial number of HHA claims. Plaintiffs’ Complaint TT1T 23-24. “The purpose of Aet-na’s [new approach] was to raise its denial rate, and hence improve its contract performance evaluation, so that it could retain its contract with HCFA as a fiscal intermediary.” Appellants’ Brief at 8-9.

Officials of Aetna agreed to meet with officials of Bodimetric to discuss the denial of the claims. Bodimetric alleges that Aet-na used these meetings to lull Bodimetric into believing that the denials were atypical while it continued to deny thousands of claims without regard to their underlying substance. In support of this charge, Bodi-metric asserts that administrative law judges have reversed almost all of Aetna’s denials where Bodimetric has entered an appearance and argued for reversal. Bodimetric, 706 F.Supp. at 623.

Aetna’s arbitrary campaign of denials, according to Bodimetric, led to the closing of Bodimetric’s HHAs and, as a result, caused Bodimetric to lose more than 8 mil[483]*483lion dollars. Consequently, Bodimetric filed suit in district court seeking damages due to Aetna’s alleged fraud, fraudulent concealment, negligent misrepresentation, breach of contractual relationship, breach of third-party beneficiary relationship, tor-tious breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, liability for intended consequences, intentional harm to property interest and violations of civil RICO. Aetna successfully moved for dismissal, noting that the district court did not have subject matter jurisdiction to consider the case.

II.

A. The Underlying Regulatory and Statutory System of Review

Congress provided elaborate review provisions to be used by parties dissatisfied with the initial disposition of their Medicare claims. See 42 U.S.C.A. §§ 405(h), 1395ff (1982 & West Supp.1990). If a fiscal intermediary determines that certain HHA provided services are not “reasonable and necessary for the diagnosis or treatment of illness or injury,” or otherwise are not covered by Medicare, the affected HHA may request reconsideration by the fiscal intermediary. 42 C.F.R. §§ 405.710(b), 405.711 (1988). Should this avenue prove unsuccessful, the provider (assuming the claim exceeds $100) may argue its case to an administrative law judge, 42 C.F.R. § 405.720 (1988), and may request an additional review by the Appeals Council. 42 C.F.R. § 405.724 (1988). Should the disputed amount exceed $1000, the HHA may seek judicial review of the final decision in federal district court. 42 C.F.R. § 405.730 (1988). Congress, as noted by Judge Moran, “intended the remedies provided by these review procedures to be exclusive.” 706 F.Supp. at 621; see S.Rep. No. 404, 89th Cong., 1st Sess., reprinted in 1965 U.S.Code Cong. & Admin.News 1943, 1995.

The exclusive nature of these remedies is reflected in the statutory structure of the Medicare Act: after exhausting the provisions outlined in the regulations promulgated under 42 U.S.C. section 1395ff, many claimants, under the Medicare statutes, simply do not have recourse to the federal courts:

The findings and decision of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under this sub-chapter.

42 U.S.C. § 405(h) (1982). Put simply, “42 U.S.C. section 405(h) (as applied to Medicare by 42 U.S.C.A. section 1395Ü) provides that any ‘claim arising under’ the Medicare program must be brought exclusively under section 405(g),” Wilkins v. Sullivan,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Southern Rehabilitation Group v. Sebelius
874 F. Supp. 2d 733 (E.D. Tennessee, 2012)
O'Neal v. Aetna, Inc.
23 Pa. D. & C.5th 314 (Philadelphia County Court of Common Pleas, 2011)
Edwards v. Blue Cross Blue Shield of Texas
273 S.W.3d 461 (Court of Appeals of Texas, 2009)
Regional Medical Transport, Inc. v. Highmark, Inc.
541 F. Supp. 2d 718 (E.D. Pennsylvania, 2008)
D & J Master Clean, Inc. v. ServiceMaster Co.
181 F. Supp. 2d 821 (S.D. Ohio, 2002)
McCall v. PacifiCare of California, Inc.
21 P.3d 1189 (California Supreme Court, 2001)
Illinois Council on Long Term Care Inc. v. Shalala
143 F.3d 1072 (Seventh Circuit, 1998)
In Re St. Johns Home Health Agency, Inc.
173 B.R. 238 (S.D. Florida, 1994)
Binghamton General Hospital v. Shalala
856 F. Supp. 786 (S.D. New York, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
903 F.2d 480, 1990 U.S. App. LEXIS 8647, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bodimetric-health-services-inc-v-aetna-life-casualty-ca7-1990.