Livingston Care Center, Inc. v. United States

934 F.2d 719, 1991 U.S. App. LEXIS 10904, 1991 WL 88420
CourtCourt of Appeals for the Sixth Circuit
DecidedMay 31, 1991
DocketNo. 90-1804
StatusPublished
Cited by7 cases

This text of 934 F.2d 719 (Livingston Care Center, Inc. v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Livingston Care Center, Inc. v. United States, 934 F.2d 719, 1991 U.S. App. LEXIS 10904, 1991 WL 88420 (6th Cir. 1991).

Opinion

BOYCE F. MARTIN, Jr., Circuit Judge.

Livingston Care Center, Inc. and Care Centers of Michigan, Inc., operators of a nursing home in Howell, Michigan, appeal the district court’s dismissal of their claims for damages resulting from their termination as a Medicare provider. We are presented with the question of whether claims based on the wrongful termination of a Medicare provider agreement by the Secretary of Health and Human Services “arise under” the Medicare Act, see 42 U.S.C. § 1395 et seq., and if so, does Congress’ limitation in 42 U.S.C. § 1395Ü, concerning the ability to bring a claim arising under the Constitution, violate due process rights? Livingston Care asserts its claims arise under the United States Constitution and the Federal Tort Claims Act. The district court dismissed these claims under Fed.R.Civ.P. 12(b)(6) on the basis that Livingston Care had failed to exhaust statutory administrative remedies. We affirm but on other grounds. We believe the district court lacked jurisdiction to hear these claims because they do “arise under” the Medicare Act. We also find no denial of constitutional due process under the statute.

We assume all material facts alleged in the Livingston Care’s complaint are true and construe the complaint liberally, giving them the benefit of any doubt. Meador v. Cabinet for Human Resources, 902 F.2d 474, 475 (6th Cir.), cert. denied, — U.S. -, 111 S.Ct. 182, 112 L.Ed.2d 145 (1990). Livingston Care Centers, Inc., operates its nursing home facility in Howell, Michigan and it is owned by Care Centers of Michigan, Inc. On September 8, 1986, the United States Department of Health and Human Services determined that Livingston Care and Care Centers had failed to substantially comply with the provisions of their Medicare provider agreement, see 42 U.S.C. § 1395cc, and terminated their participation in the Medicare program effective October 2, 1986. This determination was based on the investigation and recommendation of the Michigan Department of Public Health. The Secretary of Health and Human Services’s termination of the plaintiffs’ Medicare certification automatically triggered termination of plaintiffs’ Medicaid certification as well. Medicaid patients provided Livingston Care with their primary source of income, and it filed bankruptcy proceedings because of these lost revenues.

On August 11, 1988, Livingston Care filed an administrative claim with the United States Department of Health and Human Services. The plaintiffs alleged that the Department of Health and Human Services and Robert Spain, the federal employee who evaluated the Michigan Department of Public Health recommendation, negligently terminated their participation in the Medicare program. The Secretary of Health and Human Services denied this claim, but on June 30, 1989, an administrative law judge, after a hearing on the merits of the change, found that the plaintiffs had substantially complied with the requirements of the Social Security Act and that the Michigan Department of Public Health had wrongfully recommended their decertification. There are no further administrative remedies available to the plaintiffs, who timely filed this suit in the United States District Court for the Eastern District of Michigan.

Plaintiffs first cause of action alleges that the defendants negligently terminated their certification as a provider of Medicare services. They also allege that they were denied their due process rights in the termination proceedings. Jurisdiction is asserted under the provisions of the Federal Tort Claims Act, codified at 28 U.S.C. §§ 1346(b), 2671-2680, and the statutory grant of jurisdiction over federal questions, codified at 28 U.S.C. § 1331, which includes those questions arising under the Constitution of the United States.

We begin by noting that participation in the Medicare program is a voluntary undertaking. Baptist Hospital v. Secretary of Health & Human Services, 802 [721]*721F.2d 860, 869 (6th Cir.1986). Providers of health care who choose to participate in the federally sponsored program for the aged and disabled do so with no guarantee of solvency. See id. at 869-870. Just as those who choose to serve individuals not covered by Medicare assume the risks of the private market, those who opt to participate in Medicare are not assured of revenues. As is evident here, participation in Medicare involves a degree of risk which increases directly with the percentage of patient services paid for with government funds; the economic rule which instructs that diversification decreases risk does not stop working just because the government becomes involved.

To clarify the nature of the issues in this case, we detail the provisions of the Medicare Act under which the Secretary acted and judicial review of the Secretary’s actions is prescribed.

The Secretary’s power to terminate a Medicare agreement with a provider participating in the program is set out at 42 U.S.C. § 1395ec(b)(2) which provides, in pertinent part:

The Secretary may refuse to enter into an agreement under this section.or, upon such reasonable notice to the provider and the public as may be specified in regulations, may refuse to renew or may terminate such an agreement after the Secretary—
(A) has determined that the provider fails to comply substantially with the provisions of the agreement, with the provisions of this subchapter and regulations thereunder, or with a corrective action required under section 1395ww(f)(2)(B) of this title....

The Medicare Act allows for providers, such as the plaintiffs in this case, to receive administrative and judicial review of the Secretary’s decision to terminate:

[A]n institution or agency dissatisfied with a determination by the Secretary that it is not a provider of services or with a determination described in subsection (b)(2) of this section shall be entitled to a hearing thereon by the Secretary (after reasonable notice) to the same extent as is provided in section 405(b) of this title, and to judicial review of the Secretary’s final decision after such hearing as is provided in section 405(g) of this title.

42 U.S.C. § 1395cc(h)(l). This review procedure is not plenary. Section 405(h) of Title II of the Social Security Act has been statutorily incorporated into the Medicare Act “to the same extent” that it applies to Title II. 42 U.S.C. § 1395Ü. Section 405(h) provides:

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

Related

DMC-Memphis, Inc. v. Mutual of Omaha Insurance
105 F. App'x 671 (Sixth Circuit, 2004)
BP Care, Inc. v. Thompson
337 F. Supp. 2d 1021 (S.D. Ohio, 2003)
Queen City Home Health Care Co. v. Sullivan
978 F.3d 236 (Sixth Circuit, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
934 F.2d 719, 1991 U.S. App. LEXIS 10904, 1991 WL 88420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/livingston-care-center-inc-v-united-states-ca6-1991.