* Pursuant to 5 T H C IR

. R. 47.5, the court has determined that th i s

opinion s h ould not be published and is not precedent except under the limited

circumstances set forth in 5 TH C IR

. R. 47.5.4. United States Court of Appeals

Fifth Circuit



## FILED

May 18, 2005

Charles R. Fulbruge III

Clerk UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 04-20394

_______________________

TROY MARSAW; LOVING CARE PHYSICAL MEDICINE, INC.;

LOVING CARE PHYSICAL MEDICINE OF BRENHAM INC.,

doing business as Brenham Rehab Clinic;

LOVING CARE PHYSICAL MEDICINE OF BRYAN, INC.,

doing business as Bryan Rehab Clinic,

Plaintiffs - Appellants,

versus

TOMMY THOMPSON, SECRETARY,

DEPARTMENT OF HEALTH & HUMAN SERVICES;

TRAILBLAZER HEALTH ENTERPRISES, LLC,

Defendants - Appellees.

Appeal from the United States District Court

For the Southern District of Texas

No. 4:03-CV-1197

Before REAVLEY, JONES and GARZA, Circuit Judges.

EDITH H. JONES, Circuit Judge: *

Troy Marsa w and his rehabilitation clinics appeal from

the district court’s dismissal for lack of subject matter

jurisdiction of his constitutional, civil rights, and state law

damages claims stemming from the denial of Medicare reimbursements.

For the following reasons, we AFFIRM.2 This is the second case brought by Troy Marsaw, the owner

of several Medicare provi ders, and his clinics (collectively

“Marsaw”) against the Secretary of the United States Department of

Health and Human Services (“the Secretary” or “HHS”) and the

Medicare contractor, Trailblazer Health Enterprises, L.L.C.

(“Trailblazer”). In October 2001, Marsaw filed his first action

against Trailblazer and the Secretar y. Marsaw, an AfricanAmerican, alleged that Trailblazer engaged in racial discrimination

when it placed Marsaw’s clinics in pre-payment review (which forced

the clinics to eng age in lengthy administrative work to receive

Medicare reimbursements) and then denied reimbursements of the

submi tted claims, ultimately forcing Marsaw out of business.

Marsaw’s complaint so ught an injunction to correct the Medicare

admi n istrative process and judicial review of denied Medicare

claims. Marsaw also alleged causes of action for violations of his

rights under the equal protection and due process clauses of the

Fifth Amendment of the United States Constitution; 42 U.S.C.

§ 1981; Title VI of the Civil Rights Act of 1964, 42 U.S.C.

§ 2000d; and state law causes of action for tortious interference

with contract or prospective business relations.

The district court found that Plaintiffs’ claims “arose

under” the Medicare Act and that Marsaw’s fai lure to exhaust

administrative remedies, as required by 42 U.S.C. § 405(g) of the

Social Security Act, precluded judicial review of the pending

claims based on a lack of subject matter jurisdiction. S ee Marsaw3

v. Trailblazer Health Enterprises, L.L.C.

, 192 F. Supp. 2d 737

(S.D. Tex. 2002). This determination was not appealed.

In this second action, filed on January 17, 2003, Marsaw

alleges that his clinics have completed the administrative review

process and have been awarded payment of 98 percent of the Medicare

claims previously denied by Trailblazer. However, Marsaw seeks an

additional $50 million in damages from the Secretary and

Trailblazer for initially denying the Medicare claims. Marsaw’s

factual allegations and legal claims in this second action are the

same as in the first action.

The district court dismissed Marsaw’s second suit,

holding that (1) Marsaw’s various claims arise under Medicare

because they are inextricably intertwined with a substantive claim

of administrative entitlement; (2) the fact that Marsaw seeks

damages for constitutional violations beyond the reimbursement

payments available under Medicare does not un dercut this

conclusion; and (3) § 405(g) precluded federal question jurisdiction because Marsaw had successfully litigated his benefits claims

before the administrative law judge.

Finally, the district court held that a civil rights suit

against the Secretary in his official capacity was barred by

sovereign imm unity and, further, because the Secretary was not

being sued in his individual capacity, neither Bivens nor the civil

rights statutes provided a jurisdictional predicate for the action.

The district court also held that Trailblazer, as a Medicare4

“carrier,” could not be sued under Bivens or the civil rights

statutes because it was a private insurer acting under color of

federal law.

On appeal, Marsaw asserts federal juris diction over an

implied right of action based on Bivens v. Six Unknown Named Agents

of Federal Bureau of Narcotics

, 403 U.S. 388 (1971). We review

dismissals for lack of subject matter jurisdiction de novo, using

the same standards as those employed by the lower court. B eall v.

United States

, 336 F.3d 419, 421 (5th Cir. 2003). We must take as

true all of the co mplaint's uncontroverted factual allegations.

John Corp. v. City of Houston , 214 F.3d 573, 576 (5th Cir.2000).

Significantly, Marsaw does not challenge the district

court’s determination that Secretary Thompson is en titled to

sovereign immunity. He has waived any argument to the contrary.

Yohey v. Collins , 985 F.2d 222, 224-25 (5th Cir. 1993).

As to the defendant Trailblaz er, there are several

reas ons Marsaw failed to meet his burden to demonstrate federal

subject m atter jurisdiction. First, there is no implied private

right of action, pursuant to Bivens

, for damages ag ainst private

entities such as Trailblazer that engage in alleged constitutional

deprivations while acting under color of federal law. C orrectional

Services Corp. v. Malesko , 534 U.S. 61, 122 S. Ct. 515 (2001).

Second, Marsaw’s constitutional claims arise under the

Medicare Act (and are not collateral to it) because they are

“inextricably intertwined” with plaintiffs’ substantive claims for5

entitlement under Medicare. S ee Affiliated Professional Home

Health Care Agency v. Shalala

, 164 F.3d 282 (5th Cir. 1999). As in

Affiliated

, to fully address Marsaw’s claim that his constitutional

rights were violated through the improper enforcement of Medicare

regulations, a court would necessarily have to review the propriety

of thousands of T railblazer’s Medicare claims determinations and

the decisions of its hearing officers to evaluate whether there was

legitimate doubt about Marsaw’s compliance. Section 405(g), to the

e xclusion of 28 U.S.C. § 1331, is the sole avenue for judicia l

review for all ‘claim[s] arising under’ the Medicare Act. H eckler

v. Ringer , 466 U.S. 602, 614-615, 104 S. Ct. 2013, 80 L.Ed.2d 622

(1984). A condition for jurisdiction under § 405(g) is that the

Medicare system has made a determination adverse to the claimant.

Weinberger v. Salfi

, 422 U.S. 749 , 758 n.6, 95 S. Ct. 2457, 2464

n.6 (1975). Because Marsaw has now received precisely the Medicare

payments he claims were wrongfully denied, and the statute entitles

him to no other relief, his case is moot.

The constitutional nature of Marsaw's claim does not, by

itself, alter that conclusion. A ffiliated

, 164 F.3 d at 285. In

Schweiker v. Chilicky

, 487 U. S. 412, 108 S. Ct. 2460 (1988), the

Supreme Court refused to extend a Bivens claim to recipients of

Social Security disability benefits who, although their benefits

had been reinstated, claimed that defendants’ unconstitutional

conduct resulted in the wrongful termination of benefits, causing

injury above and beyond the amount they temporarily lost in6

benefits alone. Following C hilicky

, this court will not imply a

Bivens remedy for an alleged constitutional violation in the denial

of Medicare Act reimbursements, because Congress created a

comprehensive statutory administrative review mechanism, which was

intended fully to address the problems created by wrongful denial

of Medicare reimbursements. Moreover, “the harm resulting from the

alleged constitutional violation cannot be separated from the harm

resulting from the denial of the statutory right.” Chilicky , 487

U.S. at 428, 108 S. Ct. at 2470.

Third, Trailblazer qualifies for sovereign immunity

because it was acting under the direction of the federal government

in performing duties delegated by HHS. S ee M atranga v. Travelers

Ins. Co.

, 563 F.2d 677 (5th Cir. 1977). Marsaw’s claims arise from

Trailblazer’s decisions to pay or deny reimbursements. Thus,

Trailblazer was acting within the scope of official duties and is

entitled to the same official immunity as officers or employees of

the United States performing discretionary duties. I d. This is

not a case like Rochester Methodist Hospital v. Travelers Insurance

Co.

, 728 F.2d 1006 (8th Cir. 1984), where the intermediary acted

beyond the scope of its authority; in Rochester

, it was alleged and

proved that the interme diary committed a tort of fraud by

misrepresenting that the medic are provider’s dormitory costs in

connection with a nursing education program were not reimbursable.

In light of the above, Marsaw has shown no error with

regard to the dismissal of his supplemental state law claims.7 AFFIRMED.