United States District Court, E.D. North Carolina, Western Division
EARL BRITT, SENIOR U.S. DISTRICT JUDGE
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.)
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.)
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
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.
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.)
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.
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.)
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.)
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.)
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.)
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.
Subject Matter Jurisdiction
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 ...