Myndfull Care Management California v. Becerra

• Court: District Court, S.D. California
• Decided: December 30, 2024
• Docket: 3:24-cv-01623
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MYNDFULL CARE MANAGEMENT Case No.: 24-cv-1623-DMS-KSC CALIFORNIA, 12 ORDER GRANTING DEFENDANT’S Plaintiff, 13 MOTION TO DISMISS AND v. DENYING PLAINTIFF’S MOTION 14 FOR SUMMARY JUDGMENT XAVIER BECERRA, Secretary of Health 15 and Human Services, 16 Defendant. 17 18 19 Pending before the Court are Plaintiff’s Motion for Summary Judgment, (Plaintiff’s 20 Motion (“MSJ Mot.”), ECF No. 6), and Defendant’s Motion to Dismiss, (Defendant’s 21 Motion (“MTD Mot.”), ECF No. 8). Both parties filed Opposition and Reply briefs. (ECF 22 Nos. 8–9, 11). For the following reasons, the Court GRANTS Defendant’s Motion to 23 Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). As a result, Plaintiff’s 24 Motion for Summary Judgment is DENIED as moot. 25 I. BACKGROUND 26 Plaintiff Myndfull Care Management California seeks to enjoin the Secretary of 27 Health and Human Services (“Secretary”) from collecting $6,337,693.00 in payment for 28 overdue Medicare costs. (Plaintiff’s Complaint (“Compl.”), ECF No. 1). This payment 1 allegedly resulted from the determination of Qlarant Integrity Solutions, LLC (“Qlarant”), 2 a company that “perform[s] retroactive reviews of previously paid Medicare claims to 3 determine whether services billed by healthcare providers” satisfy Medicare’s 4 requirements. (Id. at 1). Plaintiff alleges that on July 15, 2024, Qlarant told Plaintiff that 5 it “may be billing inappropriately for services . . . rendered to Medicare beneficiaries”. (Id. 6 at 2, 5). Within the relevant time period—December 1, 2022 through February 27, 2024— 7 Plaintiff alleges that Qlarant reviewed only a small sample of Plaintiff’s Medicare claims. 8 (Id. at 2). It then allegedly and unilaterally extrapolated from its findings in the sample to 9 all claims paid during the period, finding a total overpayment of $6,337,693.00. (Id.). 10 According to Plaintiff, Qlarant’s actions violate 42 U.S.C. § 1395ddd(f)(3), which 11 prohibits extrapolation unless the Secretary “determines that there is a sustained or high 12 level of payment error, or documented education intervention has failed to correct the 13 payment error.” (Id.). Because Qlarant allegedly decided to extrapolate, not the Secretary, 14 Plaintiff requests that this Court enjoin “the Secretary and his agents, including Qlarant[,] 15 . . . from using the extrapolated sum at issue as the amount to be recouped from” Plaintiff. 16 (Id. at 8). Plaintiff also requests mandamus relief “to enforce the mandatory provisions of 17 the controlling statute and the constitutional requirements at issue.” (Id.). 18 II. LEGAL STANDARD 19 A federal court is a court of limited jurisdiction and possesses “only the power that 20 is authorized by Article III of the Constitution and the statutes enacted by Congress 21 pursuant thereto.” Bender v. Williamsport Area Sch. Dist., 475 U.S. 535, 541 (1986). 22 Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss for lack of 23 subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). When ruling on such a motion, a 24 court may consider extrinsic evidence beyond the face of the complaint. See Wolfe v. 25 Strankman, 392 F.3d 358, 362 (9th Cir. 2004). A challenge for lack of subject matter 26 jurisdiction “may be raised by a party, or by a court on its own initiative, at any stage in 27 the litigation, even after trial and the entry of judgment.” Arbaugh v. Y&H Corp., 546 U.S. 28 1 500, 506 (2006). A federal court must dismiss an action if it “determines at any time that 2 it lacks subject-matter jurisdiction.” Fed. R. Civ. P. 12(h)(3). 3 When a court grants a motion to dismiss, it must then decide whether to grant leave 4 to amend. Leave to amend “shall be freely given when justice so requires”. Fed. R. Civ. 5 P. 15(a). “[T]his policy is to be applied with extreme liberality.” Morongo Band of Mission 6 Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). A court should grant leave to amend 7 where there is no (1) “undue delay”, (2) “bad faith or dilatory motive”, (3) “undue prejudice 8 to the opposing party” if amendment were allowed, or (4) “futility” in allowing 9 amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). Dismissal without leave to amend 10 is proper only if it is clear that “the complaint could not be saved by any amendment.” 11 Intri-Plex Techs. v. Crest Grp., Inc., 499 F.3d 1048, 1056 (9th Cir. 2007). 12 III. DISCUSSION 13 A. Jurisdiction Under the Medicare Act 14 42 U.S.C. § 405(g), “to the exclusion of 28 U.S.C. § 1331,” provides for judicial 15 review of all claims arising under the Medicare Act. Heckler v. Ringer, 466 U.S. 602, 615 16 (1984) (“§ 405(g) . . . is the sole avenue for judicial review for all ‘claim[s] arising under’ 17 the Medicare Act.”) (internal citation omitted); 42 U.S.C. § 1395ff(b)(1)(A) (“[A]ny 18 individual dissatisfied . . . shall be entitled . . . to judicial review of the Secretary’s final 19 decision . . . as is provided in section 405(g) of this title.”). The Supreme Court has 20 interpreted “the ‘claim arising under’ language quite broadly”. Ringer, 466 U.S. at 615. 21 “A claim ‘arises under’ the Medicare Act if the Act provides ‘both the standing and the 22 substantive basis’ for the claim, or if the claim is ‘inextricably intertwined with a claim for 23 benefits.’” Ramtin Massoudi MD Inc. v. Azar, 2018 WL 1940398, at *5 (C.D. Cal. Apr. 24 23, 2018) (quoting Ringer, 466 U.S. at 614–15). 25 Under 42 U.S.C. § 405(g), 26 [a]ny individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in 27 controversy, may obtain a review of such decision by a civil action commenced 28 1 within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow. 2 3 42 U.S.C. § 405(g) (emphasis added). The “final decision” requirement is “central to the 4 requisite grant of subject-matter jurisdiction”. Weinberger v. Salfi, 422 U.S. 749, 764 5 (1975). It consists of two elements: a waivable element “that the administrative remedies 6 prescribed by the Secretary be exhausted” and a nonwaivable element “that a claim for 7 benefits shall have been presented to the Secretary.” Mathews v. Eldridge, 424 U.S. 319, 8 328 (1976). The nonwaivable element, called presentment, is a “crucial prerequisite” that 9 must be considered first. Id. at 329–30 (“As the nonwaivable jurisdictional element was 10 satisfied, we next consider the waivable element.”). 11 Plaintiff argues that it has satisfied presentment, and that waiver of exhaustion of 12 remedies is appropriate. (MSJ Mot. 10–11). Defendant disputes both arguments, 13 responding that Plaintiff has met neither the presentment element nor the requirements for 14 waiver. (MTD Mot. 19).1 The Court will address these arguments below. 15 a. Nonwaivable Element—Presentment 16 Plaintiff alleges that it has presented its claims to the Secretary because Plaintiff is 17 currently pursuing an appeal. (MSJ Mot. 14); (see also Plaintiff’s Supplement (“MSJ Mot. 18 Supp.”), ECF No. 7) (“MyndFull did, in fact, present its specific claim to the Secretary in 19 its August 28, 2024 request for redetermination[.]”). Defendant contends that Plaintiff has 20 not “presented its claims challenging the recoupment to the Secretary”, and that its 21 redetermination request is insufficient. (MTD Mot. 18). The Court agrees with Plaintiff. 22 Presentment is “purely jurisdictional”. Eldridge, 424 U.S. at 328. It “assure[s] the 23 agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes 24 without possibly premature interference by different individual courts applying ‘ripeness’ 25 and ‘exhaustion’ exceptions.” Haro v. Sebelius, 747 F.3d 1099, 1113 (9th Cir. 2014). 26 Here, Plaintiff, in its August 28, 2024 redetermination request, challenged the extrapolation 27 1 The parties agree that Plaintiff has not exhausted administrative remedies. (See MSJ Mot. 10); (MTD 28 1 as legally invalid. (Compl. Exhibit 4) (“The extrapolation here is therefore unlawful and 2 set aside. Any recoupment based on such improper extrapolation should be suspended[.]”). 3 Parts of Plaintiff’s Complaint, in fact, are copies of the redetermination request. (See id.) 4 (explanations of relevant statutory provisions and caselaw are same). Accordingly, the 5 Court is satisfied that Plaintiff has presented its claims to the Secretary. 6 b. Waivable Element—Exhaustion 7 The parties dispute whether Plaintiff meets all three parts of the Ninth Circuit’s test 8 for waiver. (MSJ Mot. 7, 11); (MSJ Mot. Supp. 4); (MTD Mot. 19–21). This test is 9 stringent, since “[t]he Medicare Act severely restricts the authority of federal courts by 10 requiring [that] virtually all legal attacks under the Act be brought through the agency.” 11 Baron & Baron Med. Corp. v. Hargan, 2018 WL 3532915, at *2 (S.D. Cal. July 23, 2018) 12 (quoting Physician Hosps. of Am. v. Sebelius, 691 F.3d 649, 653 (5th Cir. 2012)) (internal 13 quotation marks omitted). For waiver of the exhaustion requirement to apply, “[t]he claim 14 must be (1) collateral to a substantive claim of entitlement (collaterality), (2) colorable in 15 its showing that denial of relief sought will cause irreparable harm (irreparability), and (3) 16 one whose resolution would not serve the purposes of exhaustion (futility).” Kaiser v. Blue 17 Cross of Cal., 347 F.3d 1107, 1115 (9th Cir. 2003). Because Plaintiff has not made an 18 adequate showing of irreparability, the Court need not address collaterality or futility. 19 To meet the element of irreparability, there must be “at least a colorable claim” that 20 exhaustion of administrative remedies will cause irreparable injury. Eldridge, 424 U.S. at 21 331; Johnson, 2 F.3d at 922. “A colorable claim of irreparable harm is one that is not 22 wholly insubstantial, immaterial, or frivolous.” Kildare v. Saenz, 325 F.3d 1078, 1083 (9th 23 Cir. 2003) (quoting Johnson, 2 F.3d at 922) (internal quotation mark omitted). It is “present 24 where ‘back payments cannot erase either the experience or the entire effect of’ the 25 purported injury.” Davis v. Astrue, 513 F.Supp.2d 1137, 1146 (N.D. Cal. 2007) (quoting 26 Kildare, 325 F.3d at 1083). “Ninth Circuit authority holds that monetary injury is normally 27 not considered irreparable”. Ramtin, 2018 WL 1940398, at *7 (citing L.A. Mem’l Coliseum 28 Comm’n v. Nat’l Football League, 634 F.2d 1197, 1202 (9th Cir. 1980)); see also People 1 of State of Cal. ex rel. Van De Kamp v. Tahoe Reg’l Plan. Agency, 766 F.2d 1316, 1319 2 (9th Cir. 1985) (“Mere financial injury will not constitute irreparable harm if adequate 3 compensatory relief will be available in the course of litigation.”); Baron & Baron Med. 4 Corp., 2018 WL 3532915, at *3. 5 Here, “[P]laintiff provides no . . . evidence demonstrating why its alleged irreparable 6 harm is not compensable through money damages.” Ramtin, 2018 WL 1940398, at *7. 7 Plaintiff alleges it will suffer irreparable harm because it will be unable to “stay in 8 business”, which will cause termination of professionals’ employment and deprivation of 9 medical services to patients. (MSJ Mot. 14–15). This Court and sister courts, however, 10 have found substantially similar allegations insufficient. In Ramtin, for instance, the 11 plaintiff, who sought an injunction “to prevent [the] defendants from recouping 12 approximately $1.1 million as a result of a billing dispute”, alleged irreparability because 13 it had “already closed two offices and fired two of eight employees”. Ramtin, 2018 WL 14 1940398, at *1, *6. The court held that the “plaintiff’s asserted delay-related hardship does 15 not . . . rise to the level of irreparable harm.” Id. at *7; see also Baron & Baron Med. Corp., 16 2018 WL 3532915, at *3 (dismissing case for lack of jurisdiction because plaintiff’s 17 allegation that denial of injunctive relief would result in its “economic destruction” did not 18 amount to irreparable harm); see also Pac. Surgical Inst. of Pain Mgmt., Inc. v. Becerra, 19 2023 WL 6130810, at *4 (S.D. Cal. Sept. 19, 2023), aff’d, 2024 WL 2862121 (9th Cir. 20 June 6, 2024) (coming to same conclusion when plaintiff alleged that delayed payments 21 would result in “possible insolvency”). So too here. 22 Further, Plaintiff’s allegation that patients will be irreparably harmed is conclusory. 23 (MSJ Mot. 15); Pac. Surgical Inst., 2023 WL 6130810, at *4 (finding plaintiff’s argument 24 that non-payment would result in lack of medical services to “vulnerable patient 25 population” conclusory). “Therefore, the Court finds that Plaintiff has not established a 26 colorable claim of irreparable harm.” Id. Because Plaintiff has not exhausted its 27 administrative remedies, the Court cannot exercise jurisdiction under 42 U.S.C. § 405(g). 28 1 B. Mandamus Jurisdiction 2 Plaintiff argues that there is mandamus jurisdiction under 28 U.S.C. § 1361. (Compl. 3 3). The statute provides that “district courts shall have original jurisdiction of any action 4 in the nature of mandamus to compel an officer or employee of the United States or any 5 agency thereof to perform a duty owed to the plaintiff.” 28 U.S.C. § 1361. The Ninth 6 Circuit has held that mandamus is an “extraordinary remedy” and appropriate only when 7 “(1) the individual’s claim is clear and certain; (2) the official’s duty is nondiscretionary, 8 ministerial, and so plainly prescribed as to be free from doubt[;] and (3) no other adequate 9 remedy is available.” Kildare, 325 F.3d at 1084 (quoting Patel v. Reno, 134 F.3d 929, 931 10 (9th Cir. 1998)) (internal quotation marks omitted). Further, a plaintiff must “ha[ve] 11 exhausted all other avenues of relief”. Ringer, 466 U.S. at 616; Hironymous v. Bowen, 800 12 F.2d 888, 893 (9th Cir. 1986) (“The review procedure under [42 U.S.C. §] 405(g) is thus 13 the exclusive avenue for reviewing Hironymous’s claim. Because it is exclusive, unless it 14 is exhausted, jurisdiction under the Mandamus Act is unavailable.”); Acedo v. Cnty. of San 15 Diego, 2021 WL 5412401, at *1 (9th Cir. Nov. 19, 2021) (“The district court properly 16 dismissed for lack of subject matter jurisdiction Acedo’s mandamus claim because Acedo 17 failed to allege facts sufficient to show that he had exhausted his administrative remedies 18 before filing suit.”). Even if these requirements are satisfied, whether to grant mandamus 19 is within this Court’s discretion. Or. Nat. Res. Council v. Harrell, 52 F.3d 1499, 1508 (9th 20 Cir. 1995). 21 Here, Plaintiff does not make a compelling case for mandamus relief. First, it has 22 failed to exhaust administrative remedies. (See MSJ Mot. 6–7, 10–11) (“MyndFull is 23 currently pursuing a request for redetermination of the ‘initial determination’ assessing the 24 overpayments at issue.”); (MSJ Mot. Supp. 4). Second, and relatedly, Plaintiff has an 25 alternative remedy through the four-step administrative review process. 42 U.S.C. § 26 405(g); 42 C.F.R. §§ 405.940, 405.960, 405.379(f), 405.1002, 405.1016, 405.1100. “The 27 time required to exhaust an administrative remedy does not ‘make it an inadequate 28 remedy.’” Pac. Surgical Inst., 2023 WL 6130810, at *6 (quoting Moreno v. Bureau of 1 Citizenship & Immigration Servs., 185 F.App’x 688, 689 (9th Cir. 2006)). Thus, the Court 2 lacks jurisdiction to grant mandamus relief under 28 U.S.C. § 1361. 3 C. “No Review at All” Exception 4 Finally, Plaintiff would like this Court to exercise subject matter jurisdiction based 5 on the “no review at all” exception to the exhaustion requirement articulated in Illinois 6 Council. (Plaintiff’s Opposition to Defendant’s Motion to Dismiss (“Opp’n”), ECF No. 7 9). Defendant argues that the “no review at all” exception is inapplicable because 8 Plaintiff—through administrative procedures—“has ample access to review”. (MTD Mot. 9 22). The Court agrees with Defendant. 10 In Illinois Council, the Supreme Court “held that where an administrative appeal 11 process would amount to ‘no review at all’ of [a] claim, this process may be bypassed and 12 28 U.S.C. § 1331 may be invoked.” Ramtin, 2018 WL 1940398, at *9. This exception is 13 “narrowly circumscribed”; it “applies only when channeling a claim through the agency 14 would result in the ‘complete preclusion of judicial review.’” Baron & Baron Med. Corp., 15 2018 WL 3532915, at *3 (quoting Shalala v. Illinois Council on Long Term Care, Inc., 529 16 U.S. 1, 23 (2000)). There is a distinction between “total preclusion of review and 17 postponement of review.” Illinois Council, 529 U.S. at 19. “[A] plaintiff [cannot] avoid 18 § 405(h) with a mere showing that postponement of judicial review would mean 19 inconvenience or cost to the plaintiff.” Baron & Baron Med. Corp., 2018 WL 3532915, at 20 *3 (internal citations omitted). 21 The “no review at all” exception is inapplicable here. Plaintiff has the option of a 22 four-step administrative review process. In fact, Plaintiff is currently in administrative 23 appeal proceedings, having filed a redetermination request on August 28, 2024. (MSJ Mot. 24 6, 10); (Compl. Exhibit 4). It is unclear to the Court how Gentiva—on which Plaintiff 25 heavily relies—is on point, given that it does not discuss the “no review at all” exception 26 and involves a plaintiff who completed the administrative review process that Plaintiff 27 seeks to circumvent here. Gentiva Healthcare Corp. v. Sebelius, 723 F.3d 292, 294 (D.C. 28 Cir. 2013). Plaintiff has shown nothing more than frustration at the postponement of 1 |/review. As a result, the Court will not exercise jurisdiction under 28 U.S.C. § 1331 2 || pursuant to the “no review at all” exception. 3 IV. CONCLUSION AND ORDER 4 For the foregoing reasons, the Court GRANTS Defendant’s Motion to Dismiss and 5 || DENIES Plaintiff's Motion for Summary Judgment. The Court lacks jurisdiction over the 6 || present action. The action is therefore DISMISSED without prejudice. 7 IT IS SO ORDERED. 8 Dated: December 30, 2024 2» < | J \ 9 rr Yn . 10 Hon. Dana M. Sabraw, Chief Judge ll United States District Court 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28