my name is mark kennedy i represent sahara health care appellant in this case we are here today to s this court to reverse the trial be six dismissals of the claims alleged in our case and them in the case to the trial  the provider within ninety days as required by statute the provider has waited one and a half years and may wait as long as five years for a hearing but couldn't your client have gone r it could have escalated the case to step four but it could not have obtained the trial type hearing that is required by statute at the rd stage of the administrative process and that is the essence  alleged violation of due process that we contend we're not contending that the process is constitutionally inadequate we are contending that the failure to provide a trial type hearing required by congress that is essential to the administrative process was denied to this provider and that escalation does not protect the procedural interests that are available in  of so what with the escalation it would have just been the escalation is a procedural push right but what would have happened at the if you say it would be a trial ten would have advanced the case to the  stage of the administrative process the medicare appeals counsel medicare appeals counsel most likely would consider the case and remained it for a trial type proceeding before n it doesn't portray it must be done in fourteen days or something and could've eleanor's if you were in a desperate situation as you indicate your client was going there to that tribunal could have given some relief couldn't it have actually it would not provide any relief our experience when moving cases to the th stage to the medicare appeals council the delay is as substantial as the delay before the hearing and ordinarily what happens at that level is that the medicare appeals council considers and remains the case for process contemplated is one in which the government actually may join as a party it didn't join as a party in this case but it can join as a party and the provider has an opportunity to cross think the government has not joined in as a party then there's no one to cross examine if you can't subpoena bring witnesses so how are you denied due process because the rules themselves would not have allowed to this trial type hearing that we who are very experienced in trials contemplated well the fact that there may not be any witness to cross examine does not demean that this is a trial type error it is still alive hearing before a federal administrative law judge the most crucial step in this particular administrative process understand that this reverse it doesn't work in that you have administrative proceeding as in the pre hearing stage and that makes redundant unable to hearing it actually makes it more important to have a a hearing because to deny the later stages of the administrative process is really to deny the provider the administrative remedy that congress prescribed  a question about whether there is a property interest i don't believe you addressed our decision in personal care products versus hawkins which held that provider lacks a property interest in its present reimbursement claims suggested that we were alleging in interest in overpaid claims we are not we're alleging an interest in the earned medicare payments that are being confiscated by the government through recoupment recoupment is a process of collection it collects the earned medicaid payment medicare payments and it applies those to the debt to liquidate the dead samus cash contend that we have a property interest in the earned medicare payments that property interest was recognized in family rehab mid cert adams infinity in fact this court has recognized in a different context that a party has a property interest in earned money in the case it's a new authority that we became aware of that with respect to the earlier medicare payments that there is a legitimate claim of entitlement to money earned as recognized by family rehab med cert adams and infinity and again and i apologize to the government in the no against king case it's distinguishable from the personal care products case personal cal products was a medicaid case and it analyzed payment hold as opposed to medicare recoupment payment hold is an authority that is available to the state unique to the state of texas that allows aim the government to withhold future medicaid reimbursement because current payments are tainted by fraud and because the payments are tainted by fraud there is not a legitimate claim of entitle it to the future reimbursement but it is unique and distinguishable from recoupment where the provider has a legitimate claim of entitlement in the current payments that are being applied to actually liquidate the liability same as cash it's the providers cast it's being confiscated and apply against the debt to liquidated the debt actually is reduced by recruitment suppose your client had a contract not to participate in the medicare program but had a contract to provide services to the government provide the services to the government the government owes you a one million dollars and then instead of paying it one million dollars the government says we don't want to pay you the one million dollars we're going to stand on our sovereign immunity and you can try to sue us if you want to the way that would normally work into the tucker act if you have to go t of federal claims and there's a whole process that the statute has established that you could sue for breach of contract but it strikes me that under your theory of a property interest if the government repealed the tucker act and said you know what we're not going to pay you this is a risk of you doing business with the government we can stand on sovereign immunity and you have no remedy at all you would say that violates the due process clause and would i think the distinction there as i understood it is that we are seeking to enjoin temporarily the recoupment authority if the government has to confiscate or medicare payments please understand that the debt that we are talking about is an alleged dead it's a overpayment that is not final and this is a pretty dead collection tool which raises the term i think one of the points i wanted to address the government has not adequate lee explained or explained at all to of an authority that it is conceived is unconstitutional in fact of the government has not alleged that it has any proper authority to collect pre debt monies that was the authority that it had that concept that congress provided however the government has conceded in texas v united states that it is not constitutional we contend for that reason alone it improperly is recouping money we would also contend that the recoupment that is being imposed under triple the is an illicit recoupment that is under a much harsher scheme than contemplated by congress every trial court that considered this issue made a similar determination that congress did not countenance that a provider might be subject to recruitment for five years when the government denies it  opportunity to contest the debt that is being liquidated in other words the government's collecting a debt that we can't challenge in accordance with the  but the record includes the providers motion for two for a temporary restraining order that was supported by a declaration that made allegations that  would be forced to shut down the declaration of your client that's correct but i have to advise the court that since this appeal was filed and as we made clear to the court that initially the federal government denied our client a repayment plan we requested a three hundred dollars rip a month repayment plan and the government countered with a sixty month repayment plan  that was one that we could not pay under that sense has approved a repayment plan a graduated repayment plan that has requires temp one thousand dollar a month payments that we are presently paying and desperately trying to continue to pay however it's a graduated plan and on to one hundred and twenty one dollars the ten thousand dollars payments will become seventy five thousand dollars payments and they will be graduated the year after that to ninety five thousand dollars in the following year to one hundred and ten thousand and a nine five percent interest our client is at a point that it's going to default on that plan it cannot continue under this arrangement much longer and once it does one hundred percent recoup that will be imposed and we have the very problems that we've been arguing about throughout the duration of this case and it's not so this doesn't do any way meet your case because you you believe that recruitment scheme is the recruitment scheme anyway and constitutional and ultra vires and so many of the things  is financially and able to continue paying under a plan for five years when it's being denied the administrative process and in particular the trial type hearing that congress prescribe and that is critical and every judge has considered this precise issue has found that to be the case are you still in the queue yes we are still at the a l j level and i mean yes so you're still we're in labeling and doing all of this you're not you've not lost your place in the law you know not to my knowledge and i certainly hope that that's not the case that we by asserting a constitutional right would lose our constitutional right to thank you your honor and may please the court joshua salzman on behalf of h h s at the outset i just want to clear up a couple of key points st i just want to emphasize at the beginning that we're here on a constitutional claim alleging procedural due process and therefore it is it a relevant inquiry whether plaintiff has received all of the process contemplated by the medicare statute as this court in the supreme court have repeatedly recognized not every statutory violation rises to the  a constitutional violation when of failure to provide process is alleged all that matters is whether a plaintiff has received notice and a meaningful opportunity to be heard that's the constitutional standard and i'll walk through american hospital association under which the backlog has to be completely resolved by the end of two thousand and twenty two and there are targets that the agency has been required to meet and has been meeting the middle or the beginning because they have to get if he's correct they need to be helped by two thousand and twenty one in february i don't think i have access to the information to know exactly  where i don't think there's a precise projection of of when their case is is likely to be heard as these things are resolved as as your honor said on a st in st out basis the other thing i want to emphasize at the outset here is i want to walk payment now the way this works is this is sort of like an open an open ended contract where the plaintiff is the vendor where and the vendor submit facially valid claims to the government and the government pays them without going in and closely investigating but the statute and regulations are very clear that in order to protect the medicare trust funds on the back end we're going to come in sometimes an audit and then the burden is on the plaintiffs to come on the provider to have the records to back up that claim now once that happens here plaintiff was paid but with the understanding there could be recruitment later on an auditor came found a substantial overpayment and then plaintiff was required to come through with the documents that showed that in fact those payments were justified and the regulations say at that st levels administrative review the plaintiffs can put in any evidence any argument it wants to build that record and then the plaintiffs did so  that st level reviewer who had no financial stake in the outcome took a look and reduce the overpayment part then there's a nd level of administrative review again the plaintiff had the opportunity to correct any deficiencies to come forward with more documents come forward with expert testimony if they wanted to put in any documents any argument they wanted to put in a recent a written presentation and again an impartial educator took a close look at that and further reduce the overpayment is the united states not have a position on whether there's a property interest at issue in this case so what we've said is that you can assume that there's at least a sufficient property interest to get you into the three part mackey's versus eldridge test but we think whatever property interest is here is limited and therefore under the st of the three eldritch factors that certainly something that should be taken into account in light of this court's precedent in personal care products in light of the fact that the statute is quite that payments are contingent on subsequent possible recoupment and the nature of the relationship so it's it is not the united states position that there is no property interest right so we are not asking you to reject  at the threshold we're not we're not saying rule that there is no property interest here and don't even do the eldritch balancing but because the balancing includes consideration of the nature of the property interest what we're saying is that that interest is quite slight ok well what do you say about the a c l u argument you know the court room just down the hall the government said the a cia is unconstitutional and inseparable that that's absolutely right your honor but there  problems with the argument but there are two easy reasons that this court can reject it one is it was raised for the st time in a reply brief in this court normally doesn't consider arguments like that the other problem with that argument hold the government to its position not us you're taking it's one of these ones where the i think both have been touched on already today one is the escalation mechanism to be extent that they cannot wait they have the ability to skip to the th level overview and then potentially straight to judicial review and us as to what is not available or is still in compare three and four short so three is a hearing before an administrative law judge they can put on live testimony however those things are normally about an hour and a half there conducted telephonically and as your honor correctly recognized earlier they have no power to compel the government to participate the government has a right to intervene as a party but it doesn't have to and if the government doesn't choose to do that there is no subpoena power of the in practice it is very seldom i don't want to mislead the court it very seldom exercises the power to conduct a live here and in practice it performs record review and then following that either if they get a decision from that th level overview or or if they wait too long for the th level overview or to act they still have that power to escalate again and to go directly to district court and if you go to district court and you haven't yet had a live hearing  district court order a live hearing or is it one of these situations where you have to take the records from the agency as it is i think the court would have theoretical power to expand the record it is it is a record review but i don't think that's really a problem because the key documents here are that there are documents that are supposed to substantiate that these services were provided and that these services were reasonable or necessary they should have had all of those materials and they should have already put them in the record they were under a statutory duty by the time the nd weapon overview was completed to put those materials into the record so this isn't a case where they've been denied the opportunity to shape the necessary record here if you what that case says is you look at the statutory regulatory scheme in a in a program that was medicaid not medicare but that bears a lot of resemblance is to hear to understand how much of the vested interest in the property the provider has so in a similar way if you look to the statute if you look to the regulations that they were operating under they had ample warning that there was a potential for recruitment here ok assuming our new window that there were not a man dam against the agency in this respect ordering this to be done cleaned up if h h s were to announce that because we have a surplus of appeals and we won't get to them for five years or a decade or whatever we're going to hear by just cancel off future step three and step four because it's an elusive procedure i didn't say riotous and procedure and you can just go immediately to judicial review after step t would that be ultra vires would be ultra virus i don't think it would violate due process id i think in terms of virus i'm not really sure there i guess there would be a statute saying that the agency should be performing these so to the extent that the agency has any adjudicative capacity then it should be using that capacity that it has if congress defunded that the relevant programs then i think the agency would be under no no choice but a couple of points your honor call in the court again to the the reason we are here and that is to look at the twelve b six motion that was granted and dismissed the claim the trial court exceeded the authority of it ball and went beyond looking to see whether there was a plausible claim it was exposed there was an explicitly pleaded property interest that the government concedes is a property a property of interest yet the trial court went further and determined that there was no valid property interest in determined the merits and whitby on what is required in surviving a motion to dismiss on the s i would go further this case really goes to whether the government has authority for its position they have not cited any authority that supports denying a trial type hearing required by statute under a scheme promulgated by congress nothing supports denying the problem the trial type hearing that is required at the rd stage and that is essentially what the government is doing and more lowest level analysis by administrative folks that if you get a decision you shouldn't be able to challenge it before a federal judge that is trying to adjudicate these types of more complex issues that are not resolved at the lower stages so rather than the rd stage becoming redundant and the necessary becomes crucial and a violation of due process to deny it to a provider as is the government and by imposing a recoupment under a scheme that is a licit and harsher than what congress contemplated every trial court that is considered this issue has said that they said congress did not contemplate that a provider would have to undergo repair it for five years while it awaits a hearing to determine the very debt that's being collected is a valid debt furthermore this particular issue of recoupment they have conceded that recoupment is unconstitutional i take issue with the government's position that that thirteen ninety five dollars triple d in the recoupment authority a pre debt collection tool was not promulgated under the act our research on westlaw suggests and it shows it's unconstitutional it's red line it's red flag we believe clearly that is a part and parcel of the a cia finally just sum this up it's a simple equation the government's failure to adhere to the current the congressionally promulgated administrative process interest not as the trial court mis characterized the interest and interest in earned medicare payments that are actually being confiscated to liquidate and pay off a debt that we cannot challenge that is unconstitutional and we contend that the court should reverse the trial court and remain in this case for further proceedings thank you very much