Maka Hospice, Inc. v. Alex M. Azar, II

Opinion

O Maka Hospice, ) Case No. CV 19-7065 DDP ) Plaintiff, ) ORDER GRANTING DEFENDANT’S MOTION ) TO DISMISS v. ) ) Alex Azar, Secretary of ) Department of Health and ) Human Services. ) ) Defendant. Presently before the court is defendant Alex Azar’s Motion to Dismiss. Having considered the submissions of the parties and heard oral argument, the court grants the motion and adopts the following Order. I. Background The Medicare program covers certain hospice services. 42 U.S.C. § 1395(c); 42 U.S.C. § 1395x(dd). Plaintiff Maka Hospice is a licensed and qualified hospice facility. (Compl. ¶ 6.) The Centers for Medicare Services (“CMS”) can suspend payments to a Medicare provider “in whole or in part,” when CMS determines that “a credible allegation of fraud exists against a provider or suspend payment without prior notice to the service provider. 42 C.F.R. § 405.372(a)(3). On November 14, 2018, Defendant’s agent, Qlarant Integrity Solutions, LLC (“Qlarant”), conducted a surprise audit of Maka Hospice’s facilities. (Compl. ¶ 9.) Following this audit, some months later “Qlarant concluded that there were ‘credible allegations of fraud’ and . . . imposed a unilateral suspension of Medicare payments due to [Maka Hospice].” (Compl. ¶ 9.) On May 9, 2019, CMS ceased making payments to Plaintiff and sent Plaintiff a letter indicating that CMS was suspending payments without prior notice because “giving prior notice would place additional Medicare funds at risk and hinder [CMS’] ability to recover any determined overpayment.” (Compl. Ex. 1, at 1.) When CMS suspends payments to a service provider, CMS must provide the provider an opportunity to submit a rebuttal statement as to why CMS should end the suspension. 42 C.F.R. §§ 405.373(a)(2), 405.374. This determination is not appealable and “is not an initial determination” for purposes of the Medicare Act’s administrative process. 42 C.F.R. § 405.375(c); cf. 42 C.F.R. § 405.924. On May 21, 2019, Maka Hospice sent a rebuttal letter challenging the suspension of Medicare payments. (Compl. Ex. 2.) On August 13, 2019, Plaintiff filed the instant Complaint. The Complaint seeks, among other relief, an order enjoining CMS from suspending payments to Plaintiff and compelling “immediate payment” for all hospice services provided. (Compl. ¶¶ 24, 34.) Defendant now moves to dismiss the Complaint for lack of subject matter jurisdiction. II. Legal Standard A motion under Rule 12(b) (1) may challenge the court’s Jurisdiction facially, based on the legal sufficiency of the claim, 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. III. Discussion 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 can a claimant then seek judicial review. Id. (citing 42 U.S.C. □□ 1395ff (bo) (1) (C), (bo) (2); 42 CFR §§ 405.701 (c), 405.720, 405.724).

Plaintiff does not dispute that its claims arise under the Medicare Act, and concedes that “42 U.S.C. § 405(g) requires that Plaintiff first exhaust its administrative remedies and obtain ‘final decision’ that the agency ‘made after a hearing’ prior to suing the government.” Opposition at 3:18-20. Nevertheless, Plaintiff suggests that this court has jurisdiction because “the agency circumvented any hearing before reaching its decision and it has not given any of the safeguards required under the Medicare Act.” Opp. at 3:21-22. Plaintiff’s position is not clear to the court. A determination that a temporary suspension of payments should or should not continue is not an “initial determination” subject to administrative appeal. 42 CFR § 405.375(c); see also Clarinda Home Health v. Shalala, 100 F.3d 526, 530 (8th Cir. 1996) (“The [suspension of Medicare payments] is nothing more than a temporary measure necessary to maintain the status quo while the necessary facts are gathered and evaluated.”).1 This is not to say, however, that CMS can simply impose an indefinite suspension of payments. Rather, CMS must re-evaluate a temporary suspension after 180 days and seek a certification from the Office of Inspector General, or another law enforcement agency, that an ongoing investigation 1 At argument, Plaintiff argued that Clarinda is distinguishable because there, unlike here, an FBI investigation was underway. Although Plaintiff is correct that in Clarinda, an FBI investigation yielded “reliable evidence” of fraud, Plaintiff provides no authority for the proposition that a temporary suspension of payments can only be imposed if the FBI is investigating the service provider. Clarinda, 100 F.3d at 527-28. Indeed, in cases of suspected fraud, CMS need only determine that a “credible allegation of fraud exists,” and need only consult with the Department of Justice “as appropriate.” 42 C.F.R. § 405.371(a)(2). warrants a continuation of the suspension. 42 C.F.R § 405.371(b)(2). If the investigation has not been resolved within eighteen months, CMS must find that there is good cause not to continue the suspension, unless the case has been referred to OIG for administrative action or the Department of Justice indicates, in writing, that a civil or criminal action is anticipated or pending. 42 C.F.R § 405.371(b)(3). Nowhere in Plaintiff’s Complaint, response to Order to Show Cause, or Opposition to the instant motion is there any allegation or contention that CMS has not complied with these regulatory requirements. Instead, Plaintiff’s Opposition asserts that “Plaintiff is in the process of amending the Complaint to include the claim for the violations of Fifth Amendment and the Ninth Amendments to the United States Constitution, which it anticipates filing by December 6, 2019.” As an initial matter, Plaintiff has filed no such amended complaint. Furthermore, it appears that any such amendment would be futile. As the Supreme Court has explained, the fact that a claim involves constitutional issues does not necessarily remove it from the ambit of 42 U.S.C. § 405(g). Heckler, 466 U.S. at 615 (discussing Weinberger v. Salfi, 422 U.S. at 760-61 (1975)). So long as “both the standing and the substantive basis for the presentation” of any amended claims sound in the Medicare Act, those claims, constitutional or otherwise, “arise under” the Medicare Act, and therefore must be administratively exhausted.2 2 This is not to say that Plaintiff could not, at some point, allege that exhaustion would be futile. See Heckler, 466 U.S. at 617. Plaintiff has not, however, made any such allegation, nor is (continued...) IV. Conclusion For the reasons stated above, Defendant’s Motion to Dismiss is GRANTED. Plaintiff’s Complaint is DISMISSED, with prejudice. Dated: July 24, 2020 DEAN D. PREGERSON United States District Judge 2(...continued) there any indication that it could plausibly do so at present.