Southern Rehabilitation Group v. Sebelius

874 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 185567, 2012 WL 2833072
CourtDistrict Court, E.D. Tennessee
DecidedJuly 2, 2012
DocketNo. 2:09-CV-226
StatusPublished
Cited by3 cases

This text of 874 F. Supp. 2d 733 (Southern Rehabilitation Group v. Sebelius) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Rehabilitation Group v. Sebelius, 874 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 185567, 2012 WL 2833072 (E.D. Tenn. 2012).

Opinion

ORDER

J. RONNIE GREER, District Judge.

On May 21, 2012, the Court provided the parties notice that it intended to convert defendants’ Motion to Dismiss Amended Complaint in Part into a Motion for Summary Judgment. [Doc. 63]. A copy of the Proposed Order was attached to this notice. [Doc. 63-1]. Plaintiffs were given fourteen (14) days to show cause why summary judgment was not warranted and to provide evidence creating a genuine issue of material fact. Plaintiffs timely responded by filing a brief and requesting oral argument,1 but submitted no additional evidence. [Doc. 64]. Defendants subsequently filed a reply. [Doc. 65]. The matter is now ripe for adjudication.

After carefully reviewing plaintiffs’ brief in response, the Court finds that it is essentially a reiteration of arguments previously made on brief. Having already considered and addressed such arguments in the Proposed Order of May 21, 2012, the Court sees no reason to retreat from the Proposed Order. Consequently, the Court hereby ADOPTS its Proposed Order of May 21, 2012. [Doc. 63-1]. Accordingly, defendants’ Motion to Dismiss Amended Complaint in Part [Doc. 23], as converted by the Court into a Motion for Summary Judgement, is hereby GRANTED, and the Amended Complaint is hereby DISMISSED.

Plaintiffs Southern Rehabilitation Group (“SRG”) and James P. Little, M.D., bring this action against defendants Kathleen Sebelius (“the Secretary”), Cigna Government Services, LLC (“Cigna”), Computer Sciences Corporation, and Q2 Administrators, LLC, alleging fraud and other wrongful misconduct in the processing of their claims to reimbursements under Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq. (“Medicare Act” or “Act”). Pursuant to Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, defendants move the Court for an Order dismissing the Amended Complaint, in part, for lack of subject matter jurisdiction and/or for failure to state a claim upon which relief can be granted [Doc. 23].

I. FACTUAL AND PROCEDURAL HISTORY

Since June 2001, plaintiffs have provided inpatient rehabilitation healthcare services at Healthsouth Rehabilitation Hospital in Kingsport, Tennessee. Approximately 70% of plaintiffs’ patients are covered by Medicare, and plaintiffs generate approximately 10,000 Medicare claims per year. Plaintiffs billed the services at issue to Part B Medicare contractor/fiscal intermediary Cigna. In their Amended Complaint, plaintiffs take issue with the way Cigna and the other defendants handled certain groups of claims, claiming that such claims were fraudulently and/or im[736]*736properly downcoded1 or denied. Plaintiffs identify four separate groups of claims in which this downcoding and/or denial occurred. “Group 1” encompasses up to 8,900 claims totaling approximately $365,000 in outstanding Medicare allowable services, with dates of service between 2001 and 2002, that plaintiffs allegedly appealed to Cigna on September 6, 2002. To date, plaintiffs claim they have not heard back regarding the outcome of this appeal. “Group 2,” “Group 3,” and “Group 4” claims are comprised of Medicare allowable services totaling $107,171.07. With respect to Groups 3 and 4, plaintiffs claim that a final decision which was not fully favorable was rendered by the Medicare Appeals Council on August 14, 2009, but that it should be overturned because it was not based on substantial evidence. Plaintiffs claim that the Group 2 claims were appealed along with, and under the same administrative appeal number, as the Group 3 and 4 claims-however, plaintiffs claim that neither the administrative law judge nor the Medicare Appeals Council addressed these claims in their final decisions.

Plaintiffs assert a number of Counts in their Amended Complaint. Count I alleges that the Secretary’s factual findings were not based on substantial evidence and must be overturned; Count II alleges statutory violations; Count III alleges defendants violated the constitutional rights of plaintiffs; and Counts IV-IX allege negligence and various other state law causes of action. In addition to seeking reimbursement for services rendered, Plaintiffs seek interest on the unreimbursed claims, as well as injunctive relief and consequential damages in the amount of $1,963,990.00.

On October 13, 2011, the Secretary filed a Motion for Partial Remand [Doc. 46] on Counts I and II pursuant to sentence six of § 405(g) of the Social Security Act, 42 U.S.C. § 405(g), which provides, “The court may, on motion of the Commissioner for good cause shown ... remand the case to the Commissioner for further action by the Commissioner.... ” The plaintiffs argued that the Court should deny such motion on the grounds that it was nothing more than a ploy to pay them as little as possible so as to get the case dismissed [See Doc. 49]. By Order dated October 18, 2011 [Doc. 47], the Court granted the Secretary’s Motion for Partial Remand. On March 6, 2012, the Secretary notified the Court that, on remand, the defendants agreed to pay the plaintiffs the full amount in dispute for those claims in Group 2, Group 3, and Group 4. This amount, totaling $107,171.07, was paid to Plaintiffs on February 24, 2012 [See Doc. 62], In light of the foregoing, it is now defendants’ position that the plaintiffs have received everything they could possibly be entitled to under the Medicare Act [Doc. 61 at 2], The plaintiffs disagree, arguing that they are entitled to further relief [Doc. 49 at 3]. In light of the Secretary’s recent notice filing, and in the interest of judicial economy, the Court sua sponte converts the instant Motion to Dismiss in Part into a motion for summary judgment.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is proper where “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and [737]*737all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat’l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Id.

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874 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 185567, 2012 WL 2833072, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-rehabilitation-group-v-sebelius-tned-2012.