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Brier Creek Integrated Pain & Spine PLLC v. United States Department of Health & Human Services

United States District Court, E.D. North Carolina, Western Division

September 5, 2019

BRIER CREEK INTEGRATED PAIN & SPINE PLLC, Plaintiff,
v.
UNITED STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, et al., Defendants.

          ORDER

          W. EARL BRITT, SENIOR U.S. DISTRICT JUDGE

         This matter is before the court on Brier Creek Integrated Pain & Spine PLLC's (“plaintiff”) motion for temporary restraining order and preliminary injunction. (DE # 6.) The United States Department of Health and Human Services (“DHHS”); Alex M. Azar, II, in his official capacity as the Secretary of DHHS; the Centers for Medicare & Medicaid Services (“CMS”); Seema Verma, in her official capacity as the Administrator of CMS; the United States Department of the Treasury; and Steve Mnuchin, in his official capacity as the Secretary of the Treasury (collectively “Defendants”), filed a response in opposition. (DE # 9.) Thereafter, plaintiff filed a reply. (DE # 10.)

         I. BACKGROUND

         This action arises over plaintiff's recoupment payments to the Federal health insurance program Medicare. Plaintiff “is a comprehensive pain management center with ten (10) locations located primarily in Eastern North Carolina.” (Verified Compl., DE # 1 ¶ 10.) As a medical provider, plaintiff “is one of the largest chronic pain and opiate addiction centers in the State of North Carolina.” (Id. ¶ 11.) “[M]any of [plaintiff's] patients are Medicare beneficiaries, ” for which plaintiff receives Medicare reimbursements. (Id. ¶¶ 12, 14.)

         As such, plaintiff is subject to post-payment audits by Medicare Zone Program Integrity Contractors (“ZPIC”). See Cumberland Cty. Hosp. Sys., Inc. v. Burwell, 816 F.3d 48, 53 (4th Cir. 2016). If a health care provider is “dissatisfied” with an audit, there is a four-step administrative appeals process. Id.

First, the provider presents its claim to the MAC [Medicare Administrative Contractor] for a “redetermination.” Id. (citing 42 U.S.C. § 1395ff(a)(3)(A), (a)(3)(C)(ii)). If the MAC denies the “redetermination, ” the provider can seek “reconsideration” by a Qualified Independent Contractor (“QIC”). 42 U.S.C. § 1395ff(c). Both of these review processes are overseen by CMS. Burwell, 812 F.3d at 185. “If the provider remains unsatisfied, and if its claim exceeds $150, it may continue to the third stage: de novo review by an administrative law judge [“ALJ”], including a hearing.” Id. (citations omitted). “This stage of the process is overseen by the Office of Medicare Hearings and Appeals [“OMHA”], which houses ALJs and their support staff, and which is funded by a separate appropriation.” Id. at 185-86 (citations omitted). The final administrative appeal stage involves de novo review by the Medicare Appeals Council, which is a division of the Departmental Appeals Board (“DAB”). Id. at 186. “Although the DAB has authority to hold a hearing, it does so only if there is an extraordinary question of law/policy/fact.” Id. (quotation omitted). Only after a party exhausts these administrative appeals may it seek judicial review in federal court.
In order to streamline the appeals process, there are statutory time frames for each step of the process. Redetermination by the MACs shall be conducted within sixty days. 42 U.S.C. § 1395ff(a)(3)(C)(ii). QICs shall conduct and decide reconsiderations within sixty days. Id. § 1395ff(c)(3)(C)(i). ALJs “shall conduct and conclude a hearing . . . and render a decision within ninety days, ” though the appealing provider may waive this deadline. Id. § 1395ff(d)(1)(A), (B). Finally, the DAB must make a decision or remand the case to the ALJ for reconsideration within ninety days. Id. § 1395ff(d)(2)(A). If these time periods are complied with, appeals will proceed through the administrative process within approximately a year. The statutory scheme does, however, prescribe consequences for failure to meet several of the deadlines. “In a process commonly referred to as escalation, a provider that has been waiting for longer than the statutory time limit may advance its appeal to the next stage.” Burwell, 812 F.3d at 186 (internal quotation marks omitted).

Accident, Injury & Rehab., PC v. Azar, No. 4:18-CV-02173-DCC, 2018 WL 4625791, at *2 (D.S.C. Sept. 27, 2018). Medicare's statutes also provide for the government's power to recoup a health care provider's overpayment, see 42 U.S.C. § 1395gg, providing that such recoupment will not begin until the third stage of administrative appellate review, see 42 U.S.C. § 1395ddd(f)(2).

         In May 2013, plaintiff was subject to its first post-payment audit by the ZPIC AdvanceMed. (Verified Compl., DE # 1 ¶¶ 16-19; Resp. Opp'n, DE # 9, at 8.) As a result, AdvanceMed initially concluded that plaintiff received an overpayment of $11, 339, 726, 10 and informed plaintiff that its Medicare payments were being suspended. (Verified Compl., DE # 1 ¶¶ 20, 21.) Plaintiff submitted a rebuttal statement challenging the overpayment, to which AdvanceMed notified plaintiff the overpayment, and suspension of Medicare payments, would stay in place. (Id. ¶ 21.) Continuing with its audit, AdvanceMed requested more medical records from plaintiff and determined a second overpayment of $294, 020.07. (Id. ¶¶ 23, 24.) As such, plaintiff's Medicare overpayments totaled $11, 645, 201.49. (Id. ¶ 25.) AdvanceMed sent five letters to plaintiff seeking repayment. (Id. ¶ 26.) Plaintiff responded to each of AdvanceMed's letters and sought a redetermination. (Id.)

         As a result, three Redetermination Decisions were issued by the MAC Palmetto GBA, LLC (“Palmetto”). (Id. ¶ 27.) The first, dated 26 February 2016, was “Partially Favorable, ” concluding “that an overpayment was made in the amount of $11, 131, 477.64.” (Id. ¶ 28.) The second, dated 7 March 2016, was “Unfavorable, but nevertheless purported to reduce the alleged overpayment determination from $11, 455.12 to $11, 264.98.” (Id. ¶ 29.) The third, dated 15 March 2016, was “Unfavorable and affirmed an overpayment determination of $294, 020.27.” (Id. ¶ 30.) Plaintiff appealed all three Redetermination Decisions.

         In response to plaintiff's appeal, the QIC C2C Solutions, Inc., (“C2C”) issued three “Unfavorable” Reconsideration Decisions, two dated 14 July 2016 and one 15 July 2016. (Id. ¶ 32.) In response, plaintiff sent three requests, one for each Reconsideration Decision, for a hearing before an ALJ. (Id. ¶ 34.) OMHA acknowledged receipt of these requests on 12 September 2016. (Id. ¶ 35.) However, no hearing date has been set due to the high volume of ALJ hearing requests. (Id. ¶ 36; Resp. Opp'n, DE # 9, at 9.) While review is pending, the overpayment amount associated with all three Reconsideration Decisions has been paid, or “recouped.” (Verified Compl., DE # 1 ¶ 37.)

         Additionally, in November 2015, AdvanceMed conduced another post-payment audit, determining that plaintiff had received another overpayment of $7, 751, 564.28. (Id. ¶ 40.) Plaintiff followed the same appeals process, first sending a rebuttal statement to AdvanceMed, (id. ¶ 41), then a Redetermination Request to Palmetto, (id. ¶ 43), followed by a Reconsideration Request to C2C, (id. ¶ 45). C2C returned a “Partially Favorable” Reconsideration Decision on 5 June 2017, and on 7 June 2017, Palmetto informed plaintiff of its reduced overpayment of $5, 796, 266.21. (Id. ¶ 47.) Plaintiff appealed the Reconsideration Decision, of which OMHA acknowledged receipt on 1 August 2017. (Id. ¶¶ 48, 49.) A hearing before the ALJ has not yet been set. (Resp. Opp'n, DE # 9, at 9.) Approximately $3, 828, 788.61 of the overpayment has been recouped as of May 2019. (Verified Compl., DE # 1 ¶ 51.)

         In 2018, plaintiff's revenues dropped from $14, 754, 490.21 to $7, 809, 734.39. (Id. ¶ 57.) Prior to 2014, approximately 48.5% of plaintiff's revenue came from Medicare reimbursements, but in 2018, this reduced to 29%. (Id. ¶ 58.) From 2014 to 19 July 2019, plaintiff reduced its staff from 92 employees to 51 employees. (Id. ¶ 59.) In addition, “payroll expenses for wages decrease[d] from $6, 007, 185.41 in 2014 to $3, 685, 006.01 in 2018[, ]” (id.), and a staff physician agreed to a temporary $175, 000 salary reduction, (id. ¶ 60). Further, “Dr. [Robert Dale] Wadley [(“Wadley”)] and his wife personally advanced another $85, 753.37 to [plaintiff] in order to keep it afloat[.]” (Id. ¶ 62.)

         Plaintiff filed this action for denial of procedural due process, and for relief under the Ultra Vires Act and the Administrative Procedures Act. (Id. at 12-14.) As a remedy, plaintiff requests a temporary restraining order (“TRO”) and injunction, a security waiver, and a judgment in its favor. (Id. at 16.)

         Plaintiff now contends that with its Medicare recoupment payments it “will be unable to keep its door open and will have to file bankruptcy.” (Id. ¶ 64.) As such, plaintiff requests temporary and preliminary “relief from the recoupment procedures and payments” while it waits for an ALJ hearing, (id. ¶ 71), under a theory of denial of procedural due process, (Mem. Supp. Prelim. Inj. & TRO, DE # 7, at 11). The parties dispute both the subject matter jurisdiction of this court to rule on plaintiff's motion and the merits of the motion.

         II. DISCUSSION

         A. Subject Matter Jurisdiction

         Plaintiff contends this court has jurisdiction pursuant to the “collateral-claim exception” to 42 U.S.C. § 405(g). (Id. at 11.) Defendants contend that jurisdiction over Medicare matters is very limited and that even if the court can consider plaintiff's collateral claim, plaintiff cannot show that it has a substantial likelihood to prevail on that claim. (Resp. Opp'n, DE # 9, at 10, 12.)

Under 42 U.S.C. § 405(g) and (h), federal courts are vested with jurisdiction over only a ‘final decision' of HHS when dealing with claims ‘arising under' the Medicaid Act. Ordinarily, this means that a provider may come to district court only after either (1) satisfying all four stages of administrative appeal, i.e., after the Council has rendered a decision, or (2) after the provider has escalated the claim to the Council ...

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