1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 Maka Hospice, ) Case No. CV 19-7065 DDP ) 12 Plaintiff, ) ORDER GRANTING DEFENDANT’S MOTION ) TO DISMISS 13 v. ) ) 14 Alex Azar, Secretary of ) Department of Health and ) 15 Human Services. ) ) 16 Defendant. 17 18 Presently before the court is defendant Alex Azar’s Motion to 19 Dismiss. Having considered the submissions of the parties and 20 heard oral argument, the court grants the motion and adopts the 21 following Order. 22 I. Background 23 The Medicare program covers certain hospice services. 42 24 U.S.C. § 1395(c); 42 U.S.C. § 1395x(dd). Plaintiff Maka Hospice is 25 a licensed and qualified hospice facility. (Compl. ¶ 6.) The 26 Centers for Medicare Services (“CMS”) can suspend payments to a 27 Medicare provider “in whole or in part,” when CMS determines that 28 “a credible allegation of fraud exists against a provider or 1 suspend payment without prior notice to the service provider. 42 2 C.F.R. § 405.372(a)(3). 3 On November 14, 2018, Defendant’s agent, Qlarant Integrity 4 Solutions, LLC (“Qlarant”), conducted a surprise audit of Maka 5 Hospice’s facilities. (Compl. ¶ 9.) Following this audit, some 6 months later “Qlarant concluded that there were ‘credible 7 allegations of fraud’ and . . . imposed a unilateral suspension of 8 Medicare payments due to [Maka Hospice].” (Compl. ¶ 9.) On May 9, 9 2019, CMS ceased making payments to Plaintiff and sent Plaintiff a 10 letter indicating that CMS was suspending payments without prior 11 notice because “giving prior notice would place additional Medicare 12 funds at risk and hinder [CMS’] ability to recover any determined 13 overpayment.” (Compl. Ex. 1, at 1.) 14 When CMS suspends payments to a service provider, CMS must 15 provide the provider an opportunity to submit a rebuttal statement 16 as to why CMS should end the suspension. 42 C.F.R. §§ 17 405.373(a)(2), 405.374. This determination is not appealable and 18 “is not an initial determination” for purposes of the Medicare 19 Act’s administrative process. 42 C.F.R. § 405.375(c); cf. 42 C.F.R. 20 § 405.924. On May 21, 2019, Maka Hospice sent a rebuttal letter 21 challenging the suspension of Medicare payments. (Compl. Ex. 2.) 22 On August 13, 2019, Plaintiff filed the instant Complaint. 23 The Complaint seeks, among other relief, an order enjoining CMS 24 from suspending payments to Plaintiff and compelling “immediate 25 payment” for all hospice services provided. (Compl. ¶¶ 24, 34.) 26 Defendant now moves to dismiss the Complaint for lack of subject 27 matter jurisdiction. 28 II. Legal Standard 1 A motion under Rule 12(b) (1) may challenge the court’s 2 Jurisdiction facially, based on the legal sufficiency of the claim, 3 or factually, based on the legal sufficiency of the jurisdictional facts. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (citing 2 James Wm. Moore et al., Moore’s Federal Practice 12.30[4], at 12-38 to 12-41 (3d ed.1999)). Where the motion attacks the 7! complaint on its face, the court considers the complaint’s allegations to be true, and draws all reasonable inferences in the 9} plaintiff’s favor. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 10} 2009). A factual attack, however, need not presume the 11] truthfulness of the allegations in the complaint, and may look beyond the complaint to matters of public record. White, 227 F.3d 13}}at 1242. 14 III. Discussion 15 This court has jurisdiction to review “any final decision of 16] the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy ... □□ 18] 42 U.S.C. $ 405(g); see also 42 U.S.C. § 405(h). Indeed, Section 405(g) is the “sole avenue for judicial review for all claims arising under the Medicare Act.” Heckler v. Ringer, 466 U.S. 602, 615 (1984) (internal quotation and alteration omitted). A decision 22]/on a Medicare claim is not “final” unless and until the claimant exhausts all administrative remedies. Id. at 606. Such remedies include initial reconsideration of a denied claim, a hearing before an administrative law judge, and review by the Appeals Council. Id. Only if the Appeals Council denies a claim exceeding $1,000 27 can a claimant then seek judicial review. Id. (citing 42 U.S.C. □□ 28 || 1395ff (bo) (1) (C), (bo) (2); 42 CFR §§ 405.701 (c), 405.720, 405.724).
1 Plaintiff does not dispute that its claims arise under the 2 Medicare Act, and concedes that “42 U.S.C. § 405(g) requires that 3 Plaintiff first exhaust its administrative remedies and obtain 4 ‘final decision’ that the agency ‘made after a hearing’ prior to 5 suing the government.” Opposition at 3:18-20. Nevertheless, 6 Plaintiff suggests that this court has jurisdiction because “the 7 agency circumvented any hearing before reaching its decision and it 8 has not given any of the safeguards required under the Medicare 9 Act.” Opp. at 3:21-22. 10 Plaintiff’s position is not clear to the court. A 11 determination that a temporary suspension of payments should or 12 should not continue is not an “initial determination” subject to 13 administrative appeal. 42 CFR § 405.375(c); see also Clarinda Home 14 Health v. Shalala, 100 F.3d 526, 530 (8th Cir. 1996) (“The 15 [suspension of Medicare payments] is nothing more than a temporary 16 measure necessary to maintain the status quo while the necessary 17 facts are gathered and evaluated.”).1 This is not to say, however, 18 that CMS can simply impose an indefinite suspension of payments. 19 Rather, CMS must re-evaluate a temporary suspension after 180 days 20 and seek a certification from the Office of Inspector General, or 21 another law enforcement agency, that an ongoing investigation 22 23 1 At argument, Plaintiff argued that Clarinda is distinguishable because there, unlike here, an FBI investigation 24 was underway. Although Plaintiff is correct that in Clarinda, an FBI investigation yielded “reliable evidence” of fraud, Plaintiff 25 provides no authority for the proposition that a temporary suspension of payments can only be imposed if the FBI is 26 investigating the service provider. Clarinda, 100 F.3d at 527-28. Indeed, in cases of suspected fraud, CMS need only determine that a 27 “credible allegation of fraud exists,” and need only consult with the Department of Justice “as appropriate.” 42 C.F.R. § 28 405.371(a)(2). 1 warrants a continuation of the suspension. 42 C.F.R § 2 405.371(b)(2).
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1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 Maka Hospice, ) Case No. CV 19-7065 DDP ) 12 Plaintiff, ) ORDER GRANTING DEFENDANT’S MOTION ) TO DISMISS 13 v. ) ) 14 Alex Azar, Secretary of ) Department of Health and ) 15 Human Services. ) ) 16 Defendant. 17 18 Presently before the court is defendant Alex Azar’s Motion to 19 Dismiss. Having considered the submissions of the parties and 20 heard oral argument, the court grants the motion and adopts the 21 following Order. 22 I. Background 23 The Medicare program covers certain hospice services. 42 24 U.S.C. § 1395(c); 42 U.S.C. § 1395x(dd). Plaintiff Maka Hospice is 25 a licensed and qualified hospice facility. (Compl. ¶ 6.) The 26 Centers for Medicare Services (“CMS”) can suspend payments to a 27 Medicare provider “in whole or in part,” when CMS determines that 28 “a credible allegation of fraud exists against a provider or 1 suspend payment without prior notice to the service provider. 42 2 C.F.R. § 405.372(a)(3). 3 On November 14, 2018, Defendant’s agent, Qlarant Integrity 4 Solutions, LLC (“Qlarant”), conducted a surprise audit of Maka 5 Hospice’s facilities. (Compl. ¶ 9.) Following this audit, some 6 months later “Qlarant concluded that there were ‘credible 7 allegations of fraud’ and . . . imposed a unilateral suspension of 8 Medicare payments due to [Maka Hospice].” (Compl. ¶ 9.) On May 9, 9 2019, CMS ceased making payments to Plaintiff and sent Plaintiff a 10 letter indicating that CMS was suspending payments without prior 11 notice because “giving prior notice would place additional Medicare 12 funds at risk and hinder [CMS’] ability to recover any determined 13 overpayment.” (Compl. Ex. 1, at 1.) 14 When CMS suspends payments to a service provider, CMS must 15 provide the provider an opportunity to submit a rebuttal statement 16 as to why CMS should end the suspension. 42 C.F.R. §§ 17 405.373(a)(2), 405.374. This determination is not appealable and 18 “is not an initial determination” for purposes of the Medicare 19 Act’s administrative process. 42 C.F.R. § 405.375(c); cf. 42 C.F.R. 20 § 405.924. On May 21, 2019, Maka Hospice sent a rebuttal letter 21 challenging the suspension of Medicare payments. (Compl. Ex. 2.) 22 On August 13, 2019, Plaintiff filed the instant Complaint. 23 The Complaint seeks, among other relief, an order enjoining CMS 24 from suspending payments to Plaintiff and compelling “immediate 25 payment” for all hospice services provided. (Compl. ¶¶ 24, 34.) 26 Defendant now moves to dismiss the Complaint for lack of subject 27 matter jurisdiction. 28 II. Legal Standard 1 A motion under Rule 12(b) (1) may challenge the court’s 2 Jurisdiction facially, based on the legal sufficiency of the claim, 3 or factually, based on the legal sufficiency of the jurisdictional facts. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (citing 2 James Wm. Moore et al., Moore’s Federal Practice 12.30[4], at 12-38 to 12-41 (3d ed.1999)). Where the motion attacks the 7! complaint on its face, the court considers the complaint’s allegations to be true, and draws all reasonable inferences in the 9} plaintiff’s favor. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 10} 2009). A factual attack, however, need not presume the 11] truthfulness of the allegations in the complaint, and may look beyond the complaint to matters of public record. White, 227 F.3d 13}}at 1242. 14 III. Discussion 15 This court has jurisdiction to review “any final decision of 16] the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy ... □□ 18] 42 U.S.C. $ 405(g); see also 42 U.S.C. § 405(h). Indeed, Section 405(g) is the “sole avenue for judicial review for all claims arising under the Medicare Act.” Heckler v. Ringer, 466 U.S. 602, 615 (1984) (internal quotation and alteration omitted). A decision 22]/on a Medicare claim is not “final” unless and until the claimant exhausts all administrative remedies. Id. at 606. Such remedies include initial reconsideration of a denied claim, a hearing before an administrative law judge, and review by the Appeals Council. Id. Only if the Appeals Council denies a claim exceeding $1,000 27 can a claimant then seek judicial review. Id. (citing 42 U.S.C. □□ 28 || 1395ff (bo) (1) (C), (bo) (2); 42 CFR §§ 405.701 (c), 405.720, 405.724).
1 Plaintiff does not dispute that its claims arise under the 2 Medicare Act, and concedes that “42 U.S.C. § 405(g) requires that 3 Plaintiff first exhaust its administrative remedies and obtain 4 ‘final decision’ that the agency ‘made after a hearing’ prior to 5 suing the government.” Opposition at 3:18-20. Nevertheless, 6 Plaintiff suggests that this court has jurisdiction because “the 7 agency circumvented any hearing before reaching its decision and it 8 has not given any of the safeguards required under the Medicare 9 Act.” Opp. at 3:21-22. 10 Plaintiff’s position is not clear to the court. A 11 determination that a temporary suspension of payments should or 12 should not continue is not an “initial determination” subject to 13 administrative appeal. 42 CFR § 405.375(c); see also Clarinda Home 14 Health v. Shalala, 100 F.3d 526, 530 (8th Cir. 1996) (“The 15 [suspension of Medicare payments] is nothing more than a temporary 16 measure necessary to maintain the status quo while the necessary 17 facts are gathered and evaluated.”).1 This is not to say, however, 18 that CMS can simply impose an indefinite suspension of payments. 19 Rather, CMS must re-evaluate a temporary suspension after 180 days 20 and seek a certification from the Office of Inspector General, or 21 another law enforcement agency, that an ongoing investigation 22 23 1 At argument, Plaintiff argued that Clarinda is distinguishable because there, unlike here, an FBI investigation 24 was underway. Although Plaintiff is correct that in Clarinda, an FBI investigation yielded “reliable evidence” of fraud, Plaintiff 25 provides no authority for the proposition that a temporary suspension of payments can only be imposed if the FBI is 26 investigating the service provider. Clarinda, 100 F.3d at 527-28. Indeed, in cases of suspected fraud, CMS need only determine that a 27 “credible allegation of fraud exists,” and need only consult with the Department of Justice “as appropriate.” 42 C.F.R. § 28 405.371(a)(2). 1 warrants a continuation of the suspension. 42 C.F.R § 2 405.371(b)(2). If the investigation has not been resolved within 3 eighteen months, CMS must find that there is good cause not to 4 continue the suspension, unless the case has been referred to OIG 5 for administrative action or the Department of Justice indicates, 6 in writing, that a civil or criminal action is anticipated or 7 pending. 42 C.F.R § 405.371(b)(3). 8 Nowhere in Plaintiff’s Complaint, response to Order to Show 9 Cause, or Opposition to the instant motion is there any allegation 10 or contention that CMS has not complied with these regulatory 11 requirements. Instead, Plaintiff’s Opposition asserts that 12 “Plaintiff is in the process of amending the Complaint to include 13 the claim for the violations of Fifth Amendment and the Ninth 14 Amendments to the United States Constitution, which it anticipates 15 filing by December 6, 2019.” As an initial matter, Plaintiff has 16 filed no such amended complaint. Furthermore, it appears that any 17 such amendment would be futile. As the Supreme Court has 18 explained, the fact that a claim involves constitutional issues 19 does not necessarily remove it from the ambit of 42 U.S.C. § 20 405(g). Heckler, 466 U.S. at 615 (discussing Weinberger v. Salfi, 21 422 U.S. at 760-61 (1975)). So long as “both the standing and the 22 substantive basis for the presentation” of any amended claims sound 23 in the Medicare Act, those claims, constitutional or otherwise, 24 “arise under” the Medicare Act, and therefore must be 25 administratively exhausted.2 26 2 This is not to say that Plaintiff could not, at some point, 27 allege that exhaustion would be futile. See Heckler, 466 U.S. at 617. Plaintiff has not, however, made any such allegation, nor is 28 (continued...) 1 IV. Conclusion 2 For the reasons stated above, Defendant’s Motion to Dismiss is 3 GRANTED. Plaintiff’s Complaint is DISMISSED, with prejudice. 4 5 6 IT IS SO ORDERED. 7 8 9 Dated: July 24, 2020 DEAN D. PREGERSON 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2(...continued) 28 there any indication that it could plausibly do so at present.