Kostenko v. U.S. Department of Health & Human Services

916 F. Supp. 2d 661, 2013 WL 76302, 2013 U.S. Dist. LEXIS 1243
CourtDistrict Court, S.D. West Virginia
DecidedJanuary 4, 2013
DocketCivil Action No. 5:12-cv-01882
StatusPublished
Cited by3 cases

This text of 916 F. Supp. 2d 661 (Kostenko v. U.S. Department of Health & Human Services) is published on Counsel Stack Legal Research, covering District Court, S.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kostenko v. U.S. Department of Health & Human Services, 916 F. Supp. 2d 661, 2013 WL 76302, 2013 U.S. Dist. LEXIS 1243 (S.D.W. Va. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

IRENE C. BERGER, District Judge.

The Court has reviewed the Motion of the United States of America to Dismiss for Lack of Subject Matter Jurisdiction (Document 4) and supporting memorandum (Document 5), Plaintiffs response in opposition (Document 8) and Defendant’s reply (Document 9), together with Plaintiffs Petition (Document 1). After careful review, the Court grants Defendant’s motion.

I. FACTUAL BACKGROUND

Plaintiff is a physician who received a scholarship from the National Health Services Corp (“NHSC”) Scholarship Program, 42 U.S.C. § 2541, in 1980 to finance his medical education. (Document 5 at 1-2); (Document 1 at 1). The NHSC Scholarship Program “provides funding for medical students in return for service in communities under served by health services.” U.S. v. Baker, 2012 WL 3612273 (M.D.Fla. August 21, 2012). Under the NHSC Act at the time, if the scholarship recipient breaches his contract “ ‘by failing (for any reason ...) either to begin such individual’s service obligation ... or to complete such service obligation,’ the United States is entitled to recover three times the amount of scholarship funds awarded, plus interest.” United States v. Vanhorn, 20 F.3d 104, 107 (4th Cir.1994) (citing 42 U.S.C. § 2540(b)(1)(A) (1988)).

On June 2, 1994, this Court found that Plaintiff failed to meet his service obligation, and thus, granted the Government’s motion for summary judgment and ordered that “the Government is entitled to all damages calculated pursuant to 42 U.S.C. § 254o (b)(1).” U.S. v. Kostenko, Civil Action No. 5:92-cv-1025 (S.D.W.Va. June 2, 1994) (Hallanan, E). On March 22, 1995, the Fourth Circuit Court of Appeals affirmed “on the reasoning of the district court.” U.S. v. Kostenko, 50 F.3d 8, 1995 WL 120682 (4th Cir.1995) (per curiam).

By letter dated August 20, 1997, the Department of Health and Human Services (“HHS”) notified Plaintiff that if he did not negotiate a Repayment Agreement with the Department of Justice (“DOJ”) within sixty (60) days or establish an offset agreement to have his Medicare and/or Medicaid reimbursements directly applied to his account, then his case would be immediately referred to the Office of Inspector General (“OIG”) to initiate exclusion proceedings against him. (Document 4-3 at 2). The letter further stated that his “program exclusion will remain in effect until [his] entire debt has been paid.” (Id.).

By letter dated January 30, 1998, the OIG notified Plaintiff that because of his failure to pay his debt or to enter a repayment plan, he was “being excluded from participation in the Medicare program pursuant to [S]ection 1892 of the Social Security Act ... [and was] also being excluded from participation in the Medicare, Medicaid, and all Federal health care programs as defined in section 1128B(f) of the Act.” (Document 4-4 at 2) (emphasis in original). The letter further noted that “[t]hese exclusions are effective 20 days from the date of this letter and will remain in effect until [his] debt has been completely satisfied.” (Id.). Furthermore, “[a] detailed explanation of the authority for this exclusion, its effect, the right to waiver, and [his] appeal rights [was] enclosed and [663]*663[was] incorporated as part of this notice by specific reference.” (Id.). The enclosure detailed his right to and procedure for appeal in accordance with 42 CFR 1001.2007. (Id. at 4). It stated that “[a request for a hearing before an administrative law judge] must be made in writing within 60 days of [his] receiving the OIG’s letter of exclusion.” (Id.). Plaintiff did not respond.

In July 2001, Plaintiff entered into a Settlement Agreement with the DOJ and OIG. (Document 4-5 at 2), (Document 1 at 2). The Settlement Agreement stated that “[a]s of July 6, 2001, the total amount owed under the Judgment ... is $956,680.13, which includes the principal, accrued interest and late payment charges, if any.” (Document 4-5 at 2). Plaintiff agreed “to make an initial payment of $10,000.00 upon signing this Agreement and to make payments of at least $10,000.00 per month ... until notified otherwise by amendment to this Agreement issued by the U.S. Department of Justice.” (Id. at 3). In consideration of Plaintiffs agreement to satisfy his debt, the OIG “agree[d] to stay the effect of the exclusion on [Plaintiffs] eligibility to receive reimbursement from Medicare, and further agree[d] to notify the appropriate Federal and State agencies that [Plaintiff] is eligible to receive payment under any Federal health care program, as defined in 42 U.S.C. § 1320a-7b(f).” (Id.). The agreement also provided that Plaintiff “remains excluded ‘until such time as the entire past-due obligation has been repaid,’ and that this Agreement provides for a stay of the effect of the exclusion only while [Plaintiff] is in full compliance with its terms.” (Id.). Furthermore, Plaintiffs failure to comply with the payment terms would “result in the OIG rescinding the stay of exclusion from participation in Medicare, Medicaid, and all other Federal health care programs until the entire Judgment amount and accrued interest ... have been paid in full to the satisfaction of the PSC [Program Support Center] and the OIG [Office of the Inspector General].” (Id.). The Settlement Agreement stipulated that “[s]hould a default on the Agreement occur, [Plaintiff] waives all procedural rights including but not limited to notice, hearing, appeal, and administrative and judicial review, with respect to the immediate reimposition of the exclusion under 42 U.S.C. §§ 1320a-7b(f) and 1395ccc(a)(3).” (Id.)

By letter dated July 26, 2001, the OIG notified Plaintiff that “[e]ffective with the date of this letter, [his] exclusion from participation in Medicare, Medicaid, and all Federal health care programs has been stayed.” (Document 4-6 at 2). The letter further advised Plaintiff that “[fjailure to adhere to the terms of the repayment agreement will result in the stay being lifted and the exclusion going back into effect in accordance with the terms outlined in our January 30, 1998 letter to [him].” (Id.)

In his Petition, Plaintiff states that he “had to cease repayment under the terms he had previously agreed to, on or about February 22, 2005.” (Document 1 at 3). He alleges that “[d]uring this time of economic and professional hardship, it was not possible for [him] to resume the $10,000/ month payments on the loan and penalties he had previously agreed to, and that amount rapidly grew to over $1,000,000.” (Id. at 4).

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916 F. Supp. 2d 661, 2013 WL 76302, 2013 U.S. Dist. LEXIS 1243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kostenko-v-us-department-of-health-human-services-wvsd-2013.