UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

SELECT SPECIALTY HOSPITALANN ARBOR, INC. (MATTILA) 

 Plaintiff, 

v. Case No. 14-14412 

 HON. TERRENCE G. BERG 

THE SECRETARY OF HEALTH AND HON. DAVID R. GRAND 

HUMAN SERVICES, 

 Defendant. 

 / 

OPINION AND ORDER 

GRANTING DEFENDANT’S MOTION TO DISMISS (DKT. 7) 

In this case, a hospital that treated a patient covered by Medicare is suing 

the Secretary of Health and Human Services for reimbursement of the costs for over 

three months of treatment and procedures. The agency argues that the hospital 

never submitted its reimbursement claim correctly, and therefore this case is not 

properly before this Court and must be dismissed. 

I. PROCEDURAL POSTURE 

Plaintiff Select Specialty Hospital-Ann Arbor, Inc. brings this suit against 

Defendant Secretary of Health and Human Services seeking declaratory and 

injunctive relief. (See Dkt. 1, §§ 25-26, p. 6.) Plaintiff, a hospital in Ypsilanti, 

Michigan, treated patient Milda Mattila (“Mattila”) from December 27, 2012 

through April 12, 2013. (Dkt. 13, p. 6.) The parties agree that Mattila was insured 

by Medicare when Plaintiff treated her. (See Dkt. 1, ¶ 4; Dkt. 7, p. 7.) However, 

Medicare has not reimbursed Plaintiff for the care Plaintiff provided because it 

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maintains that Plaintiff has not filed a valid claim for reimbursement and the 

statutory deadline to do so has expired. (See Dkt. 7, pp. 12-13.) 

 Defendant now moves to dismiss this case pursuant to Federal Rule of Civil 

Procedure 12(b)(1). (Dkt. 7.) In its complaint, Plaintiff alleges subject matter 

jurisdiction on the bases of federal question jurisdiction pursuant to 28 U.S.C. 

§1331 and diversity jurisdiction pursuant to 28 U.S.C. §1332. (Dkt. 1, ¶¶ 13-18.) 

Defendant, however, maintains that this Court has no subject matter jurisdiction 

over this case on either basis. (See Dkt. 7.) 

 Defendant argues that diversity jurisdiction does not exist because agencies 

of the United States are not citizens of any state for the purposes of 28 U.S.C. 

§1332. (Dkt. 7, p. 9.) Moreover, 42 U.S.C. §405(h), incorporated into the Medicare 

Act via 42 U.S.C. §1395ii, prevents this Court from exercising federal question 

jurisdiction because Plaintiff: (1) never presented its claim to the Secretary or 

received an initial claim determination; and thus could not (2) exhaust its 

administrative remedies by appealing an initial determination through the 

administrative appeals process and receive a final decision from the Secretary for 

this Court to review. (Id. at 6, 11-12.) In short, Defendant alleges that Plaintiff is 

attempting to bypass the administrative review process and proceed directly to 

federal court. 

 In response, Plaintiff argues that: (1) it should not be required to exhaust its 

administrative remedies because proceeding through the administrative review 

process would have been futile; (2) Defendant should be equitably estopped from 

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arguing that Plaintiff failed to exhaust its administrative remedies because the 

employee of a Medicare contractor gave Plaintiff erroneous information regarding 

the filing and status of its claim; or (3) the Court should rely on equitable tolling 

principals to excuse Plaintiff’s failure to resubmit its claim within the Medicare 

Act’s one-year deadline established in 42 C.F.R. 424.44(a)(1). (Dkt. 13, pp. 8-13.) In 

its supplemental brief submitted on October 19, 2015, Plaintiff also maintains that 

the Court should find that the six-month extension of time to file a claim pursuant 

to 42 C.F.R. §424.44(b)(5) applies. (Dkt. 17, p. 4.) 

 After oral argument on September 28, 2015, the Court directed the parties to 

submit supplemental briefing on the following points: (1) when Plaintiff was sent a 

computer-generated message rejecting Plaintiff’s claim for reimbursement; (2) the 

format of the message and what details it contained; (3) when Plaintiff received the 

claim rejection message; (4) whether Douglas C. Dyer (“Dyer”) is employed by 

Novitas Solutions, Inc.; and (5) the dates and details of any conversations that took 

place between Plaintiff and Dyer. The parties timely submitted their supplemental 

briefs by October 19, 2015. (See Dkts. 16-17.) 

 Defendant’s motion is now fully briefed, all supplemental briefing has been 

submitted, and oral argument has been heard. While the Court has some sympathy 

with Plaintiff’s dilemma, the agency must be given the opportunity to decide, before 

the Court intervenes, whether and how to apply its own policies and regulations, 

and to correct any irregularities in its own procedure, in the context of these 

particular facts. Because the Court will find that the agency has not yet been 

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afforded such an opportunity, the law requires that Defendant’s motion be 

GRANTED and this case be DISMISSED WITHOUT PREJUDICE for lack of 

subject matter jurisdiction. 

II. FACTUAL BACKGROUND 

The Medicare Act establishes a federal program of health insurance for the 

elderly and disabled. See 42 U.S.C. §1395, et seq. The Secretary of Health and 

Human Services (“the Secretary”) administers the Medicare program, but has 

delegated most administrative responsibilities to Centers for Medicare and 

Medicaid Services (“CMS”). See Health Care Financing Administration; Statement 

of Organization, Functions, and Delegations of Authority, 46 Fed. Reg. 56,911 (Nov. 

19, 1981); see also 42 C.F.R. §400.200. CMS is authorized to use contractors to 

administer the Medicare program. See 42 U.S.C. §§1395h, 1395u; 42 C.F.R. §421.5. 

In this case, CMS authorized Novitas to assist with processing Medicare claims, and 

as a Medicare administrative contractor, Novitas is bound by the Medicare statute, 

the regulations and guidelines issued by CMS. 

In October 2012, Milda Mattila received a contaminated methylprednisolone 

acetate (“MPA”) injection for joint pain at the Michigan Pain Specialists clinic in 

Ann Arbor, Michigan. (Dkt. 13, p. 6.) As a result of ensuing complications, Mattila 

required significant medical intervention and treatment at Plaintiff Select Specialty 

Hospital-Ann Arbor, Inc.’s Ypsilanti, Michigan facility from December 27, 2012 to 

April 12, 2013. (See Dkt. 1, ¶¶ 2-3; Dkt. 1, Ex. E, p. 1.) Mattila was covered by 

Medicare health insurance at the time of treatment. (Dkt. 7, p. 17.) 

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On November 16, 2012, Mattila filed a products liability suit in the Eastern 

District of Michigan arising out of the contaminated MPA injection. (Dkt. 13, p. 6, 

Ex. B.) Before judgment could be rendered, however, the Defendant in that case, 

New England Compounding Pharmacy, Inc. (“New England”), filed for Chapter 11 

bankruptcy. (Dkt. 13, p. 6, Ex. C.) Consequently, Mattila’s suit was stayed on 

January 31, 2013. (Dkt. 13, p. 6.) On February 28, 2013, Mattila’s case was 

transferred to the District of Massachusetts as part of a multidistrict litigation 

proceeding against Defendant New England.1 See Mattila et al v. New England 

Compounding Pharmacy, Inc., Case No. 12-15083 (E.D. Mich), Dkt. 12. 

On June 25, 2013,2 Novitas received an electronically-submitted claim from 

Plaintiff requesting a conditional payment totaling $501,515.23 for Mattila’s 

medical care. (See Dkt. 1, ¶¶3-4; Dkt. 7, Ex. 1.) By filing this type of claim, Plaintiff 

asked Medicare to pay Mattila’s treatment expenses now on the condition that 

Medicare would be reimbursed from any lawsuit settlement proceeds. (Dkt. 7, Ex. 2, 

¶ 5.) Plaintiff submitted its claim via the Fiscal Intermediary Shared System 

(“FISS”), a computer system through which enables providers like Plaintiff to 

communicate with Novitas in order to submit claims and review claim-related 

information. (See Dkt. 16, Ex. 1, ¶¶3-4; Dkt. 17, p. 2.) 

                                                            

1 This multidistrict litigation proceeding is open and ongoing as of the date of this order. See In re: 

New England Compounding Pharmacy, Inc., MDL no. 2491, Case No. 13-md-2491 (D. Mass.) 

2 The parties dispute the date Plaintiff submitted its Mattila claim – Plaintiff maintains that it 

submitted its claim on June 21, 2013 (Dkt. 17, p. 2) while Defendant asserts that the claim was 

submitted on June 25, 2013 (Dkt. 16, p. 2). The computer-generated claim rejection message 

indicates that the claim was received on June 25, 2013. (See Dkt. 7, Ex. 1.) The Court thus recognizes 

June 25, 2013 as the date Plaintiff’s claim was received for processing by Novitas. 

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On July 25, 2013, approximately one month after Plaintiff submitted the 

Mattila claim, Novitas posted notice of its rejection on FISS. (See Dkt. 7, Ex. 1; Dkt. 

17, Ex. A, ¶ 5.) Plaintiff acknowledges becoming aware of the rejection notice on or 

about that same date. (Dkt. 17, p. 2.) FISS automatically rejects incorrectly-coded 

claims. (Dkt. 7, Ex. 2, ¶ 6.) In this case, there was a coding discrepancy because the 

claim was submitted under “Claim Adjustment Reason Code 20” (“CARC 20”), a 

code indicating that Plaintiff has already received payment from a primary liability 

carrier and is billing Medicare as a secondary payer, but with a “Value Code” 

indicating that no money had been received from the primary insurer.3 (See Dkt 7, 

Ex. 1 and Ex. 2, ¶ 7-8.) A claim coded under CARC 20 is thus inconsistent with the 

conditional payment Plaintiff was seeking from Medicare and with the Value Code 

Plaintiff submitted. Accordingly, FISS automatically rejected Plaintiff’s conditional 

payment claim because it was billed incorrectly. (See Dkt. 7, Ex. 1 and Ex. 2, ¶ 7.) 

Upon detecting the discrepant code values, FISS generated a notice 

explaining that the claim had been rejected under rejection code 31266. (See Dkt. 7, 

Ex. 1.) Rejection code 31266 is used to indicate a discrepancy between the CARC 

                                                            

3 A Claim Adjustment Reason Code (“CARC”) is used to communicate financial adjustments to a 

claim such as reductions or increases in payment – in short, why a claim was paid differently than it 

was billed. Centers for Medicare and Medicaid Services, Medicare Claims Processing Manual, ch. 22 

§60.2, issued on July 2, 2015, available at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/clm104c22.pdf. CARC 20 indicates that an injury or illness 

is covered by the liability carrier. Washington Publishing Company, Claim Adjustment Reason 

Codes, http://www.wpc-edi.com/reference/codelists/healthcare/claim-adjustment-reason-codes/ (last 

updated Jan. 1, 2016). A Value Code is used to report the amount paid on a claim by the primary 

insurer. (Dkt. 7, Ex. 2, ¶ 8.) According to the FISS rejection notice, Plaintiff submitted its claim with 

a Value Code of zero or that was left blank. (See Dkt. 7, Ex. 1.) Plaintiff thus submitted a claim 

purporting to bill Medicare as the secondary payer because payment had been received from a 

primary insurer but also indicating that the primary insurer had not paid anything on Plaintiff’s 

claim. (See id.) 

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and the Value Code. (Dkt. 7, Ex. 2, ¶ 8.) The notice included a narrative statement 

explaining that there was a discrepancy between the CARC and Value Code 

charges4 and directed Plaintiff to “cancel the rejected claim, make corrections as 

needed on a new claim and submit.” (Dkt. 7, Ex. 1.) Plaintiff, however, never 

followed these instructions and cannot resubmit this particular claim now because 

the one-year deadline to do so established by 42 C.F.R. §424.44(a)(1) has expired.5

(See Dkt. 13, p. 7.) 

 Plaintiff maintains that it relied on incorrect instructions and information 

from Novitas employee Douglas Dyer. Dyer has worked for Novitas since 2008, and 

has been a manager in the Claims Department since July 2012. (Dkt. 16, Ex. 1, ¶ 9.) 

According to Plaintiff, it “had discussions” with Dyer at some point prior to 

submitting the Mattila claim about how to properly submit it. (Dkt. 17, Ex. A, ¶ 3.) 

Plaintiff does not document when these conversations occurred, how many such 

conversations Plaintiff had with Dyer, or their content,6 but Plaintiff asserts that it 

                                                            

4 The narrative statement in the rejection notice explains that the claim “was submitted containing a 

value code with the associated charges being either blank or zero” but “was transmitted with one of 

the following claim adjustment reason codes (CARCS) with charges greater than zero: [...] 20 [...].” 

(Dkt. 7, Ex. 1.) 

5 Section 424.44(a)(1) states in relevant part that “for services furnished on or after January 1, 2010, 

the claim must be filed no later than the close of the period ending 1 calendar year after the date of 

service.” Mattila was treated from December 27, 2012 through April 12, 2013. (See Dkt. 1, Ex. E, p. 

1.) Plaintiff submitted a claim for Mattila’s treatment on or about June 25, 2013 that was rejected on 

July 25, 2013. (See Dkt. 7, Ex. 1; Dkt. 17, Ex. A, ¶ 5.) Plaintiff thus had at most approximately eight 

months from the rejection date to correct and resubmit its claim. 

6 At the hearing, the parties informed the Court that Plaintiff’s phone conversations with Dyer were 

likely not recorded. There are no call logs, recordings, or transcripts in the record. With respect to 

the content of these alleged conversations, Plaintiff has filed the affidavit of Tonya Williams who 

states that Plaintiff “had discussions” with Dyer prior to submitting the Mattila claim and had 

“subsequent discussions” with Dyer, “specifically on October 23, 2013”, which caused Plaintiff to 

believe that its claim was denied and that its resubmission would be futile. (Dkt. 17, Ex. A, ¶¶ 4-8.) 

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coded its claim under CARC 20 because Dyer instructed Plaintiff to do so. (Id. at ¶¶ 

3-4.) 

 After its claim was rejected, Plaintiff maintains that it did not resubmit its 

claim because of Dyer’s representation that any such action would be futile. (See id. 

at ¶¶ 6-8.) On October 23, 2013, three months after Plaintiff acknowledges 

becoming aware of the FISS rejection notice and resubmission instruction, Plaintiff 

asserts that it spoke with Dyer again about the Mattila claim. (Id. at ¶ 6.) Dyer 

allegedly stated that Medicare would not pay the claim until Mattila’s pending 

litigation against New England was resolved. (Id.) Based solely on Dyer’s oral 

representations, Plaintiff says it “understood the claim was denied” and believes 

therefore that its resubmission “would be futile.” (Id. at ¶¶ 6-8.) The next day, on 

October 24, 2013, Plaintiff sent Mattila a letter informing her that its Medicare 

claim for her inpatient stay had been denied and that she was required to pay the 

$501,515.23 balance within 30 days. (Dkt. 1, Ex. B.) Plaintiff, however, had not 

received any initial determination from Novitas7 in a “Remittance Advice” notice8 or 

                                                            

7 Pursuant to 42 U.S.C. §1395(a)(2)(A), an initial claim determination “shall be concluded by not 

later than the 45-day period beginning on the date the fiscal intermediary or the carrier, as the case 

may be, receives a claim for benefits” and notice of the determination shall be mailed to the claimant 

“before the conclusion of such 45-day period.” 

8 An electronic or paper Remittance Advice notice is a notice of initial determination that a Medicare 

contractor such as Novitas will use to communicate claims processing decisions to claimants and that 

can include the initial determination as well as instructions for requesting a redetermination if the 

claimant disagrees with the decision. See Centers for Medicare and Medicaid Services, Remittance 

Advice Information: An Overview (April 2013), available at https://www.cms.gov/Outreach-andEducation/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Remit-Advice-OverviewFact-Sheet-ICN908325.pdf; see also 42 C.F.R. § 405.921(b). In this case, Plaintiff never received any 

Remittance Advice notice. Plaintiff only received a notice via FISS of rejection for improper coding 

with an instruction to correct the error and resubmit the claim. (See Dkt. 7, Ex. 1.) 

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in any other form, indicating definitively that its claim has been denied or even 

considered. 

 On February 24, 2014, approximately four months after its last documented 

conversation with Dyer and seven months after receiving the rejection notice, 

Plaintiff sent a Medicare Redetermination Request9 to Novitas. (Dkt. 1, Ex. 5.) 

Plaintiff requested that Novitas: (1) reconsider its denial of Plaintiff’s claim; and (2) 

refer Plaintiff’s claim to a Medicare Secondary Payer Recovery Contractor for 

conditional payment. (Id.) Plaintiff does not reference Dyer or the rejection notice in 

the redetermination request, but states “that Medicare has denied [Plaintiff’s] 

claims because Mrs. Mattila has asserted a products liability claim against the 

manufacturer of the tainted injection [manufactured by] New England 

Compounding Pharmacy, Inc.” (Id. at 1.) 

                                                            

9 The procedures for conducting appeals of Medicare claims are well-established. See 42 C.F.R. §§ 

405.900 et seq.; 42 U.S.C. §§ 1395ff. The Medicare claim appeal process consists of five steps: (1) 

submitting a redetermination request to a Medicare contractor after receiving an initial 

determination; (2) reconsideration by a qualified independent contractor of the redetermination 

decision; (3) a hearing before an Administrative Law Judge (“ALJ”); (4) review by the Medicare 

Appeals Council of the ALJ’s decision; and (5) judicial review of the Secretary’s final decision in 

United States District Court. See generally Centers for Medicare and Medicaid Services, Medicare 

Parts A & B Appeals Process (Feb. 2015), available at https://www.cms.gov/Outreach-andEducation/Medicare-Learning-Network-MLN/MLNProducts/downloads/medicareappealsprocess.pdf. 

Submitting a redetermination request to a Medicare Administrative Contractor such as Novitas is 

thus the first of five steps in the Medicare claims appeal process. See 42 C.F.R. § 405.904(a)(2); see 

also Medicare Parts A & B Appeals Process, pp. 2-3. A request for redetermination must be filed 

within 120 days of receiving notice of the initial determination and instructions for submitting a 

redetermination request. See 42 C.F.R. § 405.942(a). The Medicare Administrative Contractor will 

consider the request and will issue a decision within 60 days of receipt of the request for 

redetermination. See 42 C.F.R. § 405.950(a). Here, Plaintiff submitted a request for redetermination 

approximately seven months after receiving the claim rejection notice and without having received a 

Remittance Advice notice or initial determination. When Plaintiff did not receive a reply to its stepone request, Plaintiff proceeded to the fifth step in the appeals process – seeking judicial review in 

federal court. 

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 After waiting approximately eight months without receiving any response 

from Novitas10 (See Dkt. 17, Ex. A, ¶ 10.), Plaintiff filed the above-captioned case in 

this Court on November 18, 2014 (See Dkt 1). Defendant maintains that subject 

matter jurisdiction does not exist. (Dkt. 7, p. 4.) Defendant also asserts that, within 

a month of the claim’s submission, it provided Plaintiff with notice of and an 

explanation for the claim rejection, and instructed Plaintiff to correct and resubmit 

the claim. (Id. at 5-6.) Because Plaintiff’s claim was not denied by Medicare but 

merely rejected and never resubmitted, Medicare has never had the opportunity to 

make an initial claim determination that Plaintiff could appeal through the 

Medicare appeals process.11 (Id. at 10-13.) The one-year deadline for submitting a 

claim has now expired. Accordingly, Defendant argues that this case must be 

dismissed for lack of jurisdiction. (See id. at 6.) 

                                                            

10 Pursuant to 42 U.S.C. §1395ff(b), a request for redetermination “shall be concluded by not later 

than the 60-day period beginning on the date the fiscal intermediary or the carrier, as the case may 

be, receives a request for a redetermination.” 

11 A rejection, unlike a denial, is not an appealable initial determination. See 42 C.F.R. § 405.924(b) 

(“A finding that a request for payment or other submission does not meet the requirements for a 

Medicare claim as defined in § 424.32 of this chapter, is not considered an initial determination.”); 

see also 42 C.F.R. § 405.926. Appeals rights are detailed in 42 U.S.C. §1395ff(b), which states in 

relevant part: 

Subject to subparagraph (D), any individual dissatisfied with any initial determination 

under subsection (a)(1) of this section shall be entitled to reconsideration of the 

determination, and, subject to subparagraphs (D) and (E), a hearing thereon by the Secretary 

to the same extent as is provided in section 405(b) of this title and, subject to paragraph (2), 

to judicial review of the Secretary’s final decision after such hearing as is provided in section 

405(g) of this title. For purposes of the preceding sentence, any reference to the 

“Commissioner of Social Security” or the “Social Security Administration” in subsection (g) or 

(l) of section 405 of this title shall be considered a reference to the “Secretary” or the 

“Department of Health and Human Services”, respectively. 

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III. LEGAL STANDARD 

Defendant moves to dismiss Plaintiff’s Complaint pursuant to Federal Rule of 

Civil Procedure 12(b)(1) on the ground that the Court does not have subject matter 

jurisdiction over this case under 28 U.S.C. §1331, 28 U.S.C. §1332, or the Medicare 

appeals process. (See Dkt. 7.) Where subject matter jurisdiction is challenged in a 

Rule 12(b)(1) motion, the Plaintiff bears the burden of proving jurisdiction. See Moir 

v. Greater Cleveland Regional Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990). 

Subject matter jurisdiction is established on the basis of federal question or 

diversity jurisdiction. See 28 U.S.C. §§ 1331-1332. Because federal agencies are not 

citizens of any state and cannot be sued in diversity, the only possible basis for 

subject matter jurisdiction in this case is federal question jurisdiction.12 Texas v. 

Interstate Commerce Comm’n, 258 U.S. 158, 160, (1922) (“...both defendants are 

sued as corporate entities created by the United States for governmental purposes; 

and, if that be their status, they are not citizens of any state...”); Koppers Co. v. 

Garling & Langlois, 594 F.2d 1094, 1097 n. 1 (6th Cir. 1979) (The United States is 

“a party who may not be sued in diversity.”). 

Rule 12(b)(1) motions to dismiss for lack of subject matter jurisdiction fall 

into two general categories: facial attacks and factual attacks. See Fed. R. Civ. P. 

12(b)(1); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack 

                                                            

12 Here, Plaintiff brings an action against the Secretary of Health and Human Services in her official 

capacity. (Dkt. 1, p. 1.) When a Plaintiff brings an action against a Defendant in his or her official 

capacity, that action is treated as an action against the entity of which the Defendant is an agent. 

Kentucky v. Graham, 473 U.S. 159, 165 (1985). Since the Secretary of Health and Human Services is 

an agent of the United States, the action must be treated as if it were an action against the United 

States, which is not a party that can be sued in diversity. See Graham, 473 U.S. at 165; see also 

Koppers Co. v. Garling & Langlois, 594 F.2d 1094, 1097 n. 1 (6th Cir. 1979). 

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challenges the sufficiency of the pleading itself. Where the Rule 12(b)(1) motion 

presents a facial attack, the Court accepts the material allegations in the complaint 

as true and construes them in the light most favorable to the nonmoving party, 

similar to the standard for a Rule 12(b)(6) motion. Ritchie, 15 F.3d at 598 (citing 

Scheuer v. Rhodes, 416 U.S. 232, 235-37 (1974).) 

In contrast, a factual attack is “not a challenge to the sufficiency of the 

pleading’s allegation, but a challenge to the factual existence of subject matter 

jurisdiction.” Id. Where the motion presents a factual attack, the allegations in the 

complaint are not afforded a presumption of truthfulness and the Court weighs the 

evidence to determine whether subject matter jurisdiction exists. On a factual 

attack, the Court has broad discretion to consider extrinsic evidence, including 

affidavits and documents, and can conduct a limited evidentiary hearing if 

necessary. See DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004); Ohio Nat’l 

Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990). In this case, 

Defendant is making a factual challenge to the Court’s jurisdiction. (See Dkt. 7, p. 

9.) 

IV. ANALYSIS 

Defendant’s motion presents the question whether this Court has subject 

matter jurisdiction over this case. Given that diversity jurisdiction is not available 

in an action against a federal agency because such an agency is a not citizen of any 

state for purposes of 28 U.S.C. § 1332, Plaintiff must establish jurisdiction on the 

basis of a federal question. According to Defendant, federal question jurisdiction 

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does not exist because the Medicare Act, pursuant to 42 U.S.C. §405(g)-(h),13

provides that the sole route to judicial review is through the Medicare appeals 

process and Plaintiff has not even presented a valid claim let alone completed that 

process. (Dkt. 7, pp. 6-7.) 

Defendant argues that Plaintiff cannot pursue the Medicare appeals process 

because it seeks to appeal a claim that has been rejected for improper coding rather 

than formally denied via an initial determination. (Id.) Given that a rejection is not 

a denial and therefore not an initial determination appealable through the 

Medicare appeals process, Defendant asserts that Plaintiff has satisfied neither the 

presentment (presented a valid claim) nor exhaustion (exhausted its administrative 

remedies) requirements for judicial review under § 405(g). (Id.) Defendant asserts 

that Plaintiff is not entitled to have its claim considered even if it were to be 

corrected and resubmitted because the deadline for submitting a claim has now 

passed.14

Plaintiff does not argue that it has properly presented a claim. Instead, 

Plaintiff requests equitable relief. First, Plaintiff argues that the exhaustion 

requirement should be waived in this case because it was futile for Plaintiff to 

                                                            

13 These provisions of the Social Security Act have been incorporated into the Medicare Act. Section 

405(h) has been incorporated into the Medicare Act by 42 U.S.C. § 1395ii while the judicial review 

provisions of § 405(g) have been incorporated into the Medicare Act by 42 U.S.C. § 1395ff(b)(1)(A). 

14 At the hearing, when asked whether Medicare would consider Plaintiff’s claim after the statutory 

deadline had expired were Plaintiff to resubmit it with the correct coding, Defense counsel could not 

say definitively whether the claim would be considered despite being untimely, but emphasized that 

Medicare would not be required by law to consider it. In light of Medicare’s statutory purpose of 

providing coverage, refusing to consider Plaintiff’s claim simply because of an unintentional coding 

error would appear a callous and draconian action by the agency. 

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attempt to exhaust its administrative remedies beyond its request for a 

redetermination submitted to Novitas. (Dkt. 13, pp. 9-11.) Moreover, Defendant 

should be equitably estopped from arguing failure to exhaust given Plaintiff’s 

reliance on Dyer’s alleged misrepresentations regarding claim status and futility of 

resubmission. (Id. at 11-13.) Finally, if the Court decides that it does not have 

jurisdiction, the Court should “toll the time requirements of 42 C.F.R. § 

424.44(a)(1)15 given Defendant’s bad faith actions in processing [Plaintiff’s] claim” 

(Id. at 11) or order Novitas to grant Plaintiff a six-month extension of the claim 

submission deadline pursuant to 42 C.F.R. § 424.44(b)(5)16 (Dkt. 17, p. 4). 

The Court has carefully considered the parties’ arguments and all available 

evidence and will find that Plaintiff has not met its burden of establishing that 

jurisdiction exists in this case. Because Plaintiff has not established that it has 

satisfied either the presentment or exhaustion requirement of §405(g), this case will 

be dismissed for lack of subject matter jurisdiction. 

A. The Presentment and Exhaustion Requirements Are Not Met 

 Plaintiff contends that the Court has subject matter jurisdiction over this 

case pursuant to 28 U.S.C. § 1331. The Court’s jurisdiction over Medicare cases is 

                                                            

15 This section of the Code of Federal Regulations requires that a claim “must be filed no later than 

the close of the period ending 1 calendar year after the date of service.” 42 C.F.R. § 424.44(a)(1). 

16 This section provides that where a failure to meet the one-year deadline for filing a claim “was 

caused by error or misrepresentation of an employee, Medicare contractor (including Medicare 

Administrative Contractor, intermediary, or carrier), or agent of HHS that was performing Medicare 

functions and acting within the scope of its authority,” the time to file a claim “will be extended 

through the last day of the sixth calendar month following the month in which either the beneficiary 

or the provider or supplier received notification that the error or misrepresentation” was corrected. 

42 C.F.R. § 424.44(b)(5). 

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limited by 42 U.S.C. §§ 405(g) and (h), which specifically prevent a claimant from 

pursuing judicial review of claims “arising under” the Medicare Act, 42 U.S.C. § 

1395, et seq.,17 except where the Secretary issues a “final decision”, as provided in 

42 U.S.C. § 405(g). A “final decision” is rendered on a Medicare claim only after the 

individual claimant has pressed her claim through all designated levels of 

administrative review. See 42 U.S.C. §§ 1395hh, 1395ii. 

 As 42 U.S.C. § 405(h) states, “[n]o action against the United States, [the 

Secretary], or any officer or employee thereof shall be brought under section 1331 or 

1346 of Title 28 to recover on any claim arising under this subchapter.” According to 

the Supreme Court, “§ 405, to the exclusion of 28 U.S.C. § 1331, is the sole avenue 

for judicial review for all ‘[claims] arising under’ the Medicare Act.” Heckler v. 

Ringer, 466 U.S. 602, 615, (1984) (alteration in original). This section thus severely 

restricts the authority of federal courts because it “demands the ‘channeling’ of 

virtually all legal attacks through the agency”. Shalala v. Illinois Council on Long 

Term Care, Inc., 529 U.S. 1, 13 (2000). 

 Section 405(h) is not a complete bar to judicial review, however. Any person 

or group of individuals who wants to challenge an adverse final decision of the 

                                                            

17 The parties do not dispute that Plaintiff’s claim “arises under” the Medicare Act and regardless 

that language is to be read very broadly. See Heckler v. Ringer, 466 U.S. 602, 615 (1984). Just as the 

Heckler Plaintiffs’ claims were claims that Medicare should pay for their surgery, Plaintiff’s claim in 

this case is that Medicare should pay it for services performed. See id. at 614 (“It seems to us that it 

makes no sense to construe the claims of those three respondents as anything more than, at bottom, 

a claim that they should be paid for their BCBR surgery.”). The statute is clear that Plaintiff may 

only pursue judicial review under 42 U.S.C. §§ 405(g) and (h) after exhausting its administrative 

remedies. The Court’s analysis will therefore focus on whether Plaintiff satisfied the presentment 

and exhaustion requirements of §405(g). 

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16 

Secretary in federal court may do so by satisfying the jurisdictional requirements of 

42 U.S.C. § 405(g): 

Any individual, after any final decision of [the Secretary] made after a 

hearing to which he was a party, irrespective of the amount in controversy, 

may obtain a review of such decision by a civil action commenced within sixty 

days after the mailing to him of notice of such decision or within such further 

time as the [Secretary] may allow. Such action shall be brought in the district 

court of the United States for the judicial district in which the plaintiff 

resides, or has his principal place of business, or, if he does not reside or have 

his principal place of business within any such judicial district, in the United 

States District Court for the District of Columbia. 

42 U.S.C. § 405(g). Section 405(g) thus specifies that a “final decision of [the 

Secretary] made after a hearing” is a prerequisite for judicial review. According to 

the Supreme Court, this requirement is “central to the requisite grant of subjectmatter jurisdiction—the statute empowers district courts to review a particular 

type of decision by the Secretary, that type being those which are ‘final’ and ‘made 

after a hearing.’” Weinberger v. Salfi, 422 U.S. 749, 764 (1975). 

 In Mathews v Eldridge, 424 U.S. 319 (1976), the Supreme Court held that the 

“final decision” requirement of § 405(g) consists of two elements: (1) presentment of 

a claim; and (2) exhaustion of administrative remedies. 424 U.S. at 328. 

 Defendant argues that Plaintiff has satisfied neither of these elements. 

Presentment is a jurisdictional and nonwaivable requirement that a claim for 

benefits must be presented to the Secretary in the first instance. See id. (“Absent 

such a claim there can be no ‘decision’ of any type. And some decision by the 

Secretary is clearly required by the statute.”). Presentment is satisfied “[s]o long as 

the Secretary is given an opportunity to make an initial decision”. Caswell v. 

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17 

Califano, 435 F. Supp. 127, 133 (D. Me. 1977) aff’d, 583 F.2d 9 (1st Cir. 1978) (citing 

Mathews, 424 U.S. at 328-30). 

 Exhaustion requires that the administrative remedies prescribed by the 

Secretary be exhausted before judicial review is available. Mathews, 424 U.S. at 

328. The exhaustion requirement “assures the agency greater opportunity to apply, 

interpret, or revise policies, regulations, or statutes without possibly premature 

interference by different individual courts.” Illinois Council, 529 U.S. at 13. While 

exhaustion is waivable in limited circumstances, the presentment requirement 

must be satisfied first because it is a nonwaivable, essential, and distinct 

precondition for § 405(g) jurisdiction. See Mathews, 424 U.S. at 328-29; see also 

Ringer, 466 U.S. at 621 (exhaustion requirement cannot be satisfied because 

claimant had “not given the Secretary an opportunity to rule on a concrete claim for 

reimbursement”); Cathedral Rock of N. Coll. Hill, Inc. v. Shalala, 223 F.3d 354, 359 

(6th Cir. 2000) (presentment is nonwaivable, exhaustion is waivable by the 

Secretary); Wyninger v. Thompson, No. 03-2481 M1, 2004 WL 2375636, at *6 (W.D. 

Tenn. Mar. 24, 2004) (Plaintiff could not show that exhaustion of administrative 

remedies would be futile where the Secretary had not even issued an initial 

determination.) 

 There is a “strong presumption that Congress intends judicial review of 

administrative action.” Bowen v. Michigan Acad. of Family Physicians, 476 U.S. 

667, 670 (1986). The Sixth Circuit has clarified, however, that “virtually all legal 

challenges to an administrative determination must be channeled through the 

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18 

Secretary’s administrative process before judicial review is available as set forth in 

§ 405(g), and any claimed exceptions to this requirement of exhaustion of 

administrative remedies must be examined critically.” Cathedral Rock, 223 F.3d at 

359. 

 When bringing a claim through the prescribed administrative appeal process 

would amount to “no review at all” of the claim, however, the Supreme Court has 

stated that administrative appeals may be bypassed and 28 U.S.C. § 1331 invoked. 

Illinois Council, 529 U.S. at 19. If channeling Plaintiff’s claims through the 

Medicare review process “will amount to the ‘practical equivalent of a total denial of 

judicial review,’ ” Plaintiff may bring those claims under 28 U.S.C. § 1331. Id. at 20 

(quoting McNary v. Haitian Refugee Ctr., 498 U.S. 479, 497 (1991)).18 

 This exception is narrow and does not permit a party to avoid § 405(h) with a 

mere showing that postponement of judicial review would mean inconvenience or 

cost to Plaintiff. Id. at 22. As Illinois Council established, delays in the 

administrative process, or hardships related to the delay, are not sufficient to allow 

parties to proceed directly to federal court, and Congress was aware that it was 

                                                            

18 In McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 497 (1991), for example, the United States 

Supreme Court held that a district court had general federal question jurisdiction to entertain a 

class action brought by aliens who claimed that the INS was administering the Special Agricultural 

Workers amnesty program in a way that violated due process and the Immigration Reform and 

Control Act of 1986. The Supreme Court found that “restricting judicial review to the courts of 

appeals as a component of the review of an individual deportation order is the practical equivalent of 

a total denial of judicial review of generic constitutional and statutory claims.” Id. Other examples 

where an agency practice or action has been found to totally preclude judicial review include Nat’l 

Ass’n of Psychiatric Health Sys. v. Shalala, 120 F. Supp. 2d 33, 38 (D.D.C. 2000), where the District 

Court had subject matter jurisdiction because forcing a hospital to violate a condition of participation 

in the Medicare program and face termination from the program in order to contest the validity of a 

rule was a total denial of judicial review. 

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19 

imposing these costs and delays on health-care providers. See id. at 13; see also 

Vertos Med., Inc., v. Novitas Sols., Inc., 2012 WL 5943542, *5 (S.D. Tex. Nov. 27, 

2012). The question is whether Plaintiff “is simply being required to seek review 

first through the agency or is being denied altogether the opportunity for judicial 

review.” Cathedral Rock, 223 F.3d at 360. Here, Plaintiff has not made a plausible 

showing of a legal impossibility to judicial or administrative review; therefore, the 

Court will not find complete preclusion of judicial review in this case. 

1. Plaintiff has not Satisfied the Presentment Requirement 

 Here, Plaintiff does not argue that it has satisfied the presentment 

requirement, but even if Plaintiff asserted that it had, this argument would fail 

because Plaintiff never received even an initial determination on its claim. While 

Plaintiff did attempt to submit a claim, attempting to submit a claim is not the same 

as presenting a claim. See Wright v. Sebelius, 818 F. Supp. 2d 1153, 1160 (D. Neb. 

2011) (holding that attempting to submit a claim and receiving a preliminary 

calculation of benefits from a Medicare contractor does not satisfy presentment 

because no initial determination subject to reconsideration had been made). 

 Plaintiff’s claim was rejected for improper coding. Where Medicare or one of 

its designated contractors like Novitas finds “that a request for payment or other 

submission does not meet the requirements for a Medicare claim as defined in § 

424.32 of this chapter, [such a finding] is not considered an initial determination.” 

42 C.F.R § 405.924(b). Plaintiff did not correct and resubmit its claim even though 

the rejection notice it received contained an explanation of the reason for the 

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20 

rejection and instructions that the claim needed to be resubmitted. As a result, 

Plaintiff’s claim was never presented to the Secretary, or any agent, for 

consideration. 

 Consequently, Plaintiff has never received any formal indication such as a 

Remittance Advice notice that its claim had been accepted, considered, or denied. 

The only documented, written communication Plaintiff has received in response to 

its attempt to submit a claim is a notice indicating that Plaintiff’s claim needed to 

be corrected and resubmitted because it had been automatically rejected due to a 

coding error. Plaintiff did submit a redetermination request some seven months 

after receiving the claim rejection notice, but it did so without first receiving the 

requisite Remittance Advice notice containing the initial determination to be 

reconsidered. See Centers for Medicare and Medicaid Services, Medicare Parts A & 

B Appeals Process, pp. 2-3 (Feb. 2015); see also 42 C.F.R. § 405.942(a).

 Because Plaintiff’s claim was not pending in FISS when the redetermination 

request was submitted, there was no denial or initial determination of any kind to 

reconsider. While Plaintiff contends that Novitas employee Dyer told Plaintiff that 

the claim had been denied, the record is clear that the agency was never given an 

opportunity to make an initial determination and Plaintiff never received any 

formal indication that such a determination had been made. Without an initial 

determination, or the opportunity for the Secretary to make one, a claim has not 

been presented for purposes of §405(g). See Mathews, 424 U.S. at 328-30; see also 

Caswell, 435 F. Supp. at 133. 

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21 

 Accordingly, Plaintiff has not met the nonwaivable presentment requirement 

for judicial review pursuant to § 405(g) and the Court cannot exercise subject 

matter jurisdiction over this case. The Court will nevertheless address Plaintiff’s 

arguments that it should not be required to exhaust its administrative remedies. As 

explained in greater detail below, however, Plaintiff, a provider and an experienced 

claimant in the Medicare claims process, is not excused from inexplicably 

disregarding the FISS notice and otherwise failing to adhere to established 

Medicare procedure and statutory deadlines.

2. Plaintiff has not Satisfied the Exhaustion Requirement 

As noted above, Plaintiff cannot show that exhaustion of its administrative 

remedies is futile without first satisfying the nonwaivable presentment 

requirement. Even if the Court were to find that Plaintiff had presented a claim, 

Plaintiff’s argument that the exhaustion requirement should be waived as futile is 

unavailing. 

The Supreme Court has made clear that if this administrative review process 

is available, it must be followed, even if it is time-consuming, and even if the agency 

cannot grant the relief sought. See Illinois Council, 529 U.S. at 20, 22–24. The 

exhaustion requirement allows the agency to compile a detailed factual record and 

apply agency expertise in administering its own regulations, something completely 

lacking in this case. This requirement, although fundamental, may be waived in 

limited circumstances. 

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In Bowen v. City of New York, 476 U.S. 467, 482-86 (1986), the Supreme 

Court identified three factors to be considered in deciding whether to waive the 

exhaustion requirement: (1) whether the claims at issue are collateral to the 

underlying decision as to eligibility for entitlements; (2) whether claimants would 

be irreparably harmed were the exhaustion requirement enforced against them; and 

(3) whether exhaustion of administrative remedies would be futile. See also

Manakee Prof’l Med. Transfer Serv., Inc. v. Shalala, 71 F.3d 574, 580 (6th Cir. 

1995); Day v. Shalala, 23 F.3d 1052, 1059 (6th Cir. 1994). 

Plaintiff maintains that the third factor is determinative here. The 

exhaustion of administrative remedies may be waived “if it would be futile, that is, 

if there is no reasonable prospect that the applicant could obtain any relief by 

pursuing them.” Manakee, 71 F.3d at 581. Plaintiff argues that despite receiving the 

FISS notice that its claim had been rejected and could be corrected and 

resubmitted, it understood from Dyer that its claim had been denied and that it 

would be futile to resubmit it because Medicare would not pay the claim until the 

products liability suit was resolved. (Dkt. 13, p. 9.) In light of Dyer’s 

representations, and because Plaintiff received no response to its request for 

redetermination when a response was required, Plaintiff maintains that its “only 

recourse was to file suit” at that point. (Id.) 

The Court disagrees. The five-step Medicare appeals process is wellestablished and explicitly provides for judicial review only of the Secretary’s final 

decision. See 42 C.F.R. §§ 405.900 et seq. Even though Plaintiff never received an 

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23 

initial determination from the Secretary, Plaintiff began the appeals process by 

filing a redetermination request with Novitas. (Dkt. 1, Ex. E.) Plaintiff does not 

reference Dyer in its request letter, but states that it understands its claim has 

been denied and requests that this denial be reconsidered and its claim referred for 

conditional payment. (See id.) Because Plaintiff never resubmitted its claim, no 

claim was pending in FISS when the redetermination request was sent. 

In general, upon receipt of a timely request for redetermination, Novitas is 

required to mail or otherwise transmit written notice of its redetermination within 

60 days. 42 C.F.R. § 405.950(a). Here, for reasons that are not known, Novitas never 

responded to Plaintiff’s redetermination request. Plaintiff argues that this 

oversight, in conjunction with Dyer’s representations, justifies forgoing the next 

three steps in the appeals process and coming directly to federal court without an 

initial or final decision from the Secretary for this Court to review. 

Plaintiff, however, has never raised the issue of Novitas’ failure to respond 

with either Novitas or Medicare and thus neither has had the opportunity to 

investigate or correct this potential oversight. Alleging an irregularity in agency 

procedure is insufficient support for a waiver of the exhaustion requirement. The 

Supreme Court stated in Bowen, 476 U.S. at 484–85, that an agency’s “mere 

deviation from the applicable regulations ... [is] fully correctable upon subsequent 

administrative review since the claimant on appeal will alert the agency to the 

alleged deviation.” See also Manakee, 71 F.3d at 581. The Bowen Court clarified 

that exhaustion is not waivable “whenever a claimant alleges an irregularity in the 

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24 

agency proceedings” because the agency’s expertise in applying its own regulations 

should afford the agency “the opportunity to review application of those regulations 

to a particular factual context.” 476 U.S. at 485. Plaintiff does not explain why, after 

receiving no response from Novitas, it did not follow up with Novitas, express its 

concerns about Dyer to Novitas, or proceed to the next levels of review in an 

attempt to get a response from the agency and to draw attention to Novitas’ 

potential oversight or Dyer’s alleged misrepresentations.19 

Plaintiff seeks to have its claim considered even though the one-year deadline 

for submitting its claim has passed. Plaintiff maintains that the Court should 

excuse this failure and extend the statutory deadline, either by applying principles 

of equitable tolling or by ordering Novitas to grant Plaintiff a six-month extension 

under 42 C.F.R. § 424.44(b)(5)20 to file its claim. Plaintiff cites no case law that 

would support either request. The preliminary problem, however, is that neither 

Novitas nor Medicare has been given the opportunity to consider the arguments for 

relief that Plaintiff is making to this Court. 

Before Plaintiff can come to this Court, Plaintiff must ask the agency to 

interpret and apply its own regulations to this case because the agency may still be 

able to grant Plaintiff the relief it seeks. See Illinois Council, 529 U.S. at 13. With 

                                                            

19 According to Plaintiff, it last spoke with Dyer regarding the Mattila claim on October 23, 2013, 

nearly four months before it filed its request for a redetermination. (See Dkt 17, Ex. A, ¶ 6.) Plaintiff 

asserts that it understood from that conversation that its Mattila claim was denied and that 

resubmitting it would be futile. (Id. at ¶¶ 7-8.) Plaintiff does not claim that it spoke with Dyer 

regarding the lack of response from Novitas or the viability of continuing the appeals process, thus it 

is not apparent that Dyer ever made any representations relevant to those issues. 

20 At oral argument, the Court raised the potential application of this regulation. Defense Counsel 

expressed a reluctant willingness to consider its application, and Plaintiff’s Counsel stated that he 

would make an argument under that regulation to Medicare. 

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25 

respect to 42 C.F.R. § 424.44(b)(5), that section states that “[i]f CMS or one of its 

contractors determines that a failure to meet the [one-year deadline] was caused by 

error or misrepresentation of an employee, [or] Medicare contractor (including 

Medicare Administrative Contractor, intermediary, or carrier)”, the time to file a 

claim will be extended by six months from the date Plaintiff receives notice that the 

error or misrepresentation has been corrected. No extension can be granted under 

this section if the request is made “to CMS or one of its contractors more than 4 

years after the date of service.” Id. 

According to this regulation, either CMS or one of its contractors decides 

whether a six-month extension is warranted. See 42 C.F.R. § 424.44(b)(5). If 

Plaintiff believes that Dyer’s “error or misrepresentation” caused Plaintiff’s failure 

to meet the one-year deadline for claim submission, Plaintiff can still make its case 

to “CMS or one of its contractors”. See 42 C.F.R. § 424.44(b)(5). If Novitas or CMS 

agrees a mistake was made that caused the delay, the regulatory language indicates 

that Plaintiff will have an additional six months from the date it receives notice of 

the correction of any error or misrepresentation to resubmit its Mattila claim and 

seek the relief that Plaintiff currently seeks from this Court. Accordingly, on the 

issue of futility, Plaintiff cannot show that there “is no reasonable prospect that the 

applicant could obtain any relief by pursuing” the administrative review process. 

Manakee, 71 F.3d at 581. 

A well-established administrative review process exists for appealing the 

Secretary’s initial determination of a Medicare claim. That administrative 

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26 

procedure, far from precluding judicial review, explicitly provides for such review 

once the Secretary has reached a final decision. Because Plaintiff fails to satisfy the 

nonwaivable presentment requirement, it has not exhausted administrative 

remedies as required by § 405(g) and (h). This Court therefore lacks subject matter 

jurisdiction over this matter. Ringer, 466 U.S. at 621 (“Because Ringer has not 

given the Secretary an opportunity to rule on a concrete claim for reimbursement, 

he has not satisfied the nonwaivable exhaustion requirement of § 405(g). The 

District Court, therefore, had no jurisdiction as to respondent Ringer.”). 

B. The Court will not Apply Equitable Estoppel 

 Plaintiff further asserts that Defendant should be equitably estopped from 

relying on exhaustion because of Dyer’s alleged misrepresentations that the Mattila 

claim had been denied and that its resubmission would be futile. “The traditional 

elements required to invoke equitable estoppel are a definite misrepresentation by 

one party, intended to induce some action in reliance, and which does reasonably 

induce action in reliance by another party to his detriment.” Heckler, 467 U.S. at 59; 

See also U.S. v. Guy, 978 F.2d 934, 937 (6th Cir. 1992.) 

Estoppel, however, cannot be used against the government on the same terms 

as against private parties. Office of Personnel Management v. Richmond, 496 U.S. 

414, 419 (1990); Heckler, 467 U.S. at 60; United States v. River Coal Co., Inc., 748 

F.2d 1103, 1108 (6th Cir. 1984) (ordinarily the United States is not estopped by acts 

of individual officers and agents); Housing Authority of Elliott County v. Bergland, 

749 F.2d 1184, 1190 (6th Cir. 1984) (equitable estoppel generally is not available 

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27 

against the government); Guy, 978 F.2d 934 (6th Cir. 1992) (equitable estoppel is 

not available where taxpayer unreasonably relied on an IRS agent’s “certain oral 

assurances” to taxpayer that the IRS would not pursue taxpayer for outstanding tax 

liability). “At the very minimum, some affirmative misconduct by a government 

agent is required as a basis of estoppel.” Guy, 978 F.2d at 937. 

Plaintiff alleges bad faith on the part of Medicare generally, but not that 

Dyer engaged in any “affirmative misconduct.” Moreover, Plaintiff does not claim 

that it spoke with Dyer after submitting its redetermination request; there is thus 

no allegation that Dyer ever made representations about the lack of response from 

Novitas or the viability of the Medicare appeals process for Plaintiff. Furthermore, 

Dyer’s representations were oral; and as the Supreme Court stated in Heckler: 

It is not merely the possibility of fraud that undermines our confidence in the 

reliability of official action that is not confirmed or evidenced by a written 

instrument. Written advice, like a written judicial opinion, requires its 

author to reflect about the nature of the advice that is given to the citizen, 

and subjects that advice to the possibility of review, criticism, and 

reexamination. The necessity for ensuring that governmental agents stay 

within the lawful scope of their authority, and that those who seek public 

funds act with scrupulous exactitude, argues strongly for the conclusion that 

an estoppel cannot be erected on the basis of the oral advice.... 

467 U.S. at 65 (emphasis added). 

 Finally, the Court notes that equitable estoppel cannot be used as a way to 

establish subject-matter jurisdiction. See American Fire & Casualty Co. v. Finn, 341 

U.S. 6, 17–18 (1951) (principles of estoppel do not apply to subject-matter 

jurisdiction); see also Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 

U.S. 694, 702 (1982) (“...no action of the parties can confer subject-matter 

4:14-cv-14412-TGB-DRG Doc # 18 Filed 02/08/16 Pg 27 of 30 Pg ID 180
28 

jurisdiction upon a federal court...[the] principles of estoppel do not apply...”); 

Dunklebarger v. Merit Sys. Prot. Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (“It is 

well settled that no action of the parties can confer subject-matter jurisdiction on a 

tribunal and that the principles of estoppel do not apply to vest subject-matter 

jurisdiction where Congress has not done so.”); Franzel v. Kerr Mfg. Co., 959 F.2d 

628, 629-630 (6th Cir. 1992) (citing American Fire, 341 U.S. 6 for the proposition 

that principles of estoppel may not be used to confer subject-matter jurisdiction). 

Plaintiff cites no authority to the contrary. 

As the Supreme Court noted in Heckler v. Community Health Services of 

Crawford County, Inc., the general rule is that “those who deal with the 

Government are expected to know the law and may not rely on the conduct of 

Government agents contrary to the law.” 467 U.S. 51, 63 (1984). Providers like 

Plaintiff are “repeat players” who voluntarily participate in the Medicare system, 

and thus cannot claim lack of notice of the Secretary’s regulations. See Sebelius v. 

Auburn Re’l Med. Ctr., 133 S. Ct. 817, 828 (2013). The Court will not apply 

equitable estoppel here. 

C. The Court will not Apply Equitable Tolling 

 Plaintiff’s final argument is that equitable tolling principals should excuse its 

failure to resubmit its claim within the Medicare Act’s one-year deadline. See 42 

C.F.R. 424.44(a)(1). Equitable tolling is argued to apply because of Defendant’s 

unspecified “bad faith actions” in processing the claim. (Dkt. 13, p. 11.) Plaintiff 

cites no case in which a court has tolled this one-year deadline. (See Dkts. 13, 17.) 

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29 

Instead, Plaintiff relies on the Supreme Court’s decision in Am. Pipe & Const. Co. v. 

Utah, a case involving the statute of limitations under the Clayton Act and Rule 23 

of Federal Rules of Civil Procedure which established that the filing of a class action 

complaint tolls the statute of limitations applicable to the claims of absent class 

members. 414 U.S. 538, 552-53 (1974). In that case, which is easily-distinguishable 

from the facts of this one, the Court generalized about the authority of federal 

courts to toll a statute of limitations by stating that where a “plaintiff has refrained 

from commencing suit during the period of limitation because of inducement by the 

defendant” or “because of fraudulent concealment,” the Court tolls the statutory 

period. Id. at 559. 

 This argument is underdeveloped and unavailing. “Congress vested in the 

Secretary large rulemaking authority to administer the Medicare program.” 

Auburn, 133 S. Ct. at 826 (holding that provision of Medicare statute setting 180-

day limit for a provider to appeal to the Provider Reimbursement Review Board was 

not subject to equitable tolling). Plaintiff is a provider who has elected to participate 

in the Medicare system and cannot claim ignorance of the regulations that govern 

that system. Id. at 828. Plaintiff received a rejection notice directing it to correct its 

own error and resubmit its claim. The one-year time limit to submit a claim is 

clearly stated in 42 C.F.R. 424.44(a)(1), and exceptions to this deadline are listed in 

42 C.F.R. 424.44(b). While the agency may equitably toll this limitations period 

under the facts before the Court, Plaintiff has presented no sound basis which 

would convince the Court to do so at this time. 

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30 

V. CONCLUSION 

The purpose of Medicare is to create a program to reimburse health care 

providers who have valid claims. In this case, that program has clearly not served 

its function. However, a Plaintiff that ignores the available administrative 

procedures may not simply choose its own path to federal court. Accordingly, for all 

of the reasons explained above, Defendant’s Motion to Dismiss (Dkt. 7.) is 

GRANTED. Plaintiff’s claims are DISMISSED WITHOUT PREJUDICE for lack 

of subject matter jurisdiction. 

 SO ORDERED. 

s/Terrence G. Berg 

 TERRENCE G. BERG 

UNITED STATES DISTRICT JUDGE 

 

Dated: February 8, 2016 

Certificate of Service 

I hereby certify that this Order was electronically submitted on February 8, 

2016, using the CM/ECF system, which will send notification to each party. 

s/A. Chubb 

 Case Manager 

 

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