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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

CARE ORIGIN, INC., 

Plaintiff, 

v. 

UNITED STATES OF AMERICA,

DEPT. OF HEALTH & HUMAN SERVICES ET AL., 

Defendant. 

 / 

Case No. 14-cv-14686 

UNITED STATES DISTRICT COURT JUDGE

GERSHWIN A. DRAIN

UNITED STATES MAGISTRATE JUDGE

MICHAEL J. HLUCHANIUK

OPINION AND ORDER GRANTING MOTION TO DISMISS FEDERAL DEFENDANTS [15] AND

DISMISSING COMPLAINT FOR LACK OF SUBJECT-MATTER JURISDICTION

I. INTRODUCTION

On December 11, 2014, Plaintiff, Care Origin, Inc., filed a Complaint [1] against United 

States of America Department of Health & Human Services, U.S. Department of Treasury’s 

Community Health Accreditation Program, Centers for Medicare and Medicaid Services, and 

National Government Services, Inc. (collectively, “Federal Defendants”), as well as PSAVD, 

LLC and Cherry Catral (collectively, “Defendants-Counter Plaintiffs”). Dkt. No. 1, pp. 2–3 

(Page ID # 2–3). Care Origin sought a declaratory judgment that it was not liable for repaying 

Medicare overpayments and included three other counts related to misrepresentation and 

damages. See id., pp. 3–8 (Page ID # 3–8). Since filing, Care Origin has voluntarily dismissed 

Defendant Community Health Accreditation Program. See Dkt. No. 17. 

This matter is before the Court on the Federal Defendants’ Motion to Dismiss [15] 

pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, filed 

August 12, 2015. Dkt. No. 15., pp. 1–2 (Page ID # 79–80). Neither the Care Origin, nor the 

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Defendants-Counter Plaintiffs filed a response to Federal Defendants’ Motion. For the reasons 

discussed herein, the Court will GRANT the Federal Defendants’ Motion for Dismissal [15], 

and DISMISS Federal Defendants from this action WITHOUT PREJUDICE. 

II. BACKGROUND

Care Origin operated a home health agency that participated in Medicare and Medicaid. 

Dkt. No. 1, p. 4, ¶ 17 (Page ID # 4). In September 2010, Care Origin sold its operations to 

PSAVD, LLC (PSAVD), and filed paperwork with Centers for Medicare & Medicaid Services 

(CMS) for approval of the change in ownership. Dkt. No. 1-1, p. 9 (Page ID # 20). The Asset 

Purchase Agreement between the parties provided that closing would take place within 30 days 

of the agreement’s signing and that Care Origin would continue operating the home health 

agency until closing. Dkt. No. 15-2, p. 8 (Page ID # 119). CMS approved the parties’ change in 

ownership on September 23, 2011, with an effective date of September 15, 2010. Dkt. No. 15-3, 

p. 1 (Page ID # 124). Under the change of ownership, the existing provider’s agreement was 

automatically assigned to the new owner, who was then subject to all terms and conditions of the 

existing agreement. See id. 

In April 2011, Care Origin entered into an agreement with PSAVD that allowed PSAVD 

to provide patient services and bill CMS using Care Origin’s provider identifier. Dkt. No. 1-1, 

p. 9 (Page ID # 20). Thereafter, CMS payments were deposited into Care Origin’s bank account 

and Care Origin made payments to PSAVD. See id. Some of the bills submitted using Care 

Origin’s provider identifier included Requests for Anticipated Payments (RAPs) from the home 

health agency. Dkt. No. 1-1, p. 10 (Page ID # 21); Dkt. No. 15-6, pp. 2–3, ¶¶ 2–4 (Page ID 

# 132–33). Payments were made to Care Origin’s bank account in response to RAPs from June 

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through October 2011. See Dkt. No. 15-6, pp. 8–9, 22–23, 35, 48, 61–62, 74, 86–87, 99 (Page ID 

# 138–39, 152–53, 165, 178, 191–92, 204, 216–17, 229). 

After approving the change in ownership, CMS notified National Government Services 

(NGS), the Medicare Administrative Contractor for home health agencies in Michigan, about the 

ownership change on September 23, 2011. Dkt. No. 15-4 (Page ID # 127). That November, NGS 

attempted to perform two unannounced site visits at PSAVD to ensure that the agency was still 

operational. Dkt. No. 15-5, p. 1 (Page ID # 128). Upon finding that PSAVD was not operational, 

NGS revoked the agency’s Medicare Billing Privileges, effective November 28, 2011. See id. 

NGS subsequently attempted to recoup the outstanding RAP overpayments associated 

with the provider identifier used by Care Origin and PSAVD. See Dkt. No. 15-6, pp. 5–107 

(Page ID # 135–237). NGS sent eight letters from December 2011 through April 2012, seeking 

total repayment related to RAPs in the amount of $262.909.14, plus interest. See id. Care Origin 

responded to the first notice made on December 19, 2011, to inform NGS that the home health 

agency had been sold to PSAVD and the overpayment letter would be forwarded accordingly. 

See id., p. 115 (Page ID # 245). 

Additionally, NGS sent a letter to Care Origin in December 2012, stating that an 

additional overpayment in the amount of $172,718 existed, independent of RAP overpayments, 

because Care Origin had not submitted its Medicare Cost Report for the fiscal year ending 

November 28, 2011. See id. at 108–10 (Page ID # 238–40). When Care Origin failed to respond 

to this notice, NGS referred the debt to the Department of Treasury for collection in February 

2013. See id. at 111–114 (Page ID # 241–44). 

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 Care Origin filed the present Complaint on December 11, 2014, Dkt. No. 1 (Page ID # 1), 

after its previous civil actions were dismissed by this Court without prejudice in October 2012, 

November 2013, and September 2014.1

III. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(1) authorizes a party to challenge the court's 

subject matter jurisdiction. “Rule 12(b)(1) motions to dismiss for lack of subject-matter 

jurisdiction generally come in two varieties: a facial attack or a factual attack.” Gentek Bldg. 

Products, Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007) (citing Ohio Nat’l Life 

Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). A facial attack questions the 

sufficiency of the pleadings, taking all allegations in the complaint as true. Id. Conversely, in a 

factual attack, there is no presumptive truthfulness and the district court must weigh conflicting 

evidence to determine whether or not subject-matter exists. Id. 

Under Rule 12(b)(1), the plaintiff bears the burden of proving jurisdiction in order to 

survive the motion. Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir. 1986). “A court 

lacking jurisdiction cannot render judgment but must dismiss the cause at any stage of the 

proceedings in which it becomes apparent that jurisdiction is lacking.” Sweeton v. Brown, 27 

F.3d 1162, 1169 (6th Cir. 1994) (quoting United States v. Siviglia, 686 F.2d 832, 835 (10th Cir. 

1981), cert. denied, 461 U.S. 918 (1983)). 

IV. ANALYSIS

In its Complaint, Care Origin asserts that the Court has the power to adjudicate this 

matter under the Federal Claims Collection Act, 31 U.S.C. § 3711 et. seq. Dkt. No. 1, p. 5 (Page 

 1

 Case No. 4:12-cv-12307-GAD-MJH (dismissed without prejudice after Plaintiff failed to serve Defendants 

within 120 days after filing the complaint); Case No. 2:13-CV-11944-GAD-MJH (dismissed without prejudice after 

Plaintiff’s counsel failed to attend status conference and was unable to be contacted); Case No. 2:14-CV-11259-

GAD-MJH (dismissed without prejudice for failure to prosecute). 

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ID # 5). However, as Federal Defendants correctly point out, the Federal Claims Collection Act 

does not provide for a private right of action against the United States. See Dkt. No. 15, p. 16 

(Page ID # 102); 31 C.F.R. § 900.8 (“The standards in this chapter do not create any right or 

benefit, substantive or procedural, enforceable at law or in equity by a party against the United 

States, its agencies, its officers, or any other person, nor shall the failure of an agency to comply 

with any of the provisions of parts 900–904 of this chapter be available to any debtor as a 

defense.”). 

Thus, it is necessary to see if Care Origin’s claims lie under the Medicare Act. “Section 

405(h) of the Social Security Act, made applicable to the Medicare Act by 42 U.S.C. § 1395ii, 

strips courts of general federal question jurisdiction under 28 U.S.C. § 1331 for claims arising 

under the Medicare Act.” Triad at Jeffersonville I, LLC v. Leavitt, 563 F. Supp. 2d 1, 12 (D.D.C. 

2008). Specifically, the section states: 

No findings of fact or decision of the Secretary shall be reviewed by any person, 

tribunal, or governmental agency except as herein provided. No 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. 

42 U.S.C. § 405(h). “As so interpreted, § 405(h)’s bar reaches beyond ordinary administrative 

law principles of ‘ripeness’ and ‘exhaustion of administrative remedies’—doctrines that 

normally require channeling a legal challenge through the agency—by preventing the application 

of exceptions to those doctrines.” Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 

1, 2 (2000). 

Section 405(g)2

 provides “the only avenue for judicial review” of claims arising under the 

Medicare Act. See Heckler v. Ringer, 466 U.S. 602, 617 (1984). “[T]he exhaustion requirement 

 2

 Section 405(g) was incorporated into the Medicare Act by 42 U.S.C. § 1396i(b)(2). 

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of § 405(g) consists of [1] a nonwaivable requirement that a ‘claim for benefits shall have been 

presented to the Secretary,’ and [2] a waivable requirement that the administrative remedies 

prescribed by the Secretary be pursued fully by the claimant.” Id. (citations omitted); see also 

Cathedral Rock of N. Coll. Hill, Inc. v. Shalala, 223 F.3d 354, 359 (6th Cir. 2000) (“The 

Supreme Court ... held that ‘all aspects’ of a present or future claim for benefits must be 

‘channeled’ through the administrative process.”). 

Thus, a party wishing to bring a claim arising under the Medicare Act must have 

presented a claim to the Secretary and exhausted its administrative remedies prior to filing suit in 

federal court. See, e.g., Buckner v. Heckler, 804 F.2d 258, 258 (4th Cir. 1986) (finding that an 

overpayment constituted disputed Medicare benefits and affirming dismissal of a declaratory 

judgment action for failure to exhaust administrative remedies). “The fact that the agency might 

not provide a hearing for that particular contention, or may lack the power to provide one ... is 

beside the point because it is the ‘action’ arising under the Medicare Act that must be channeled 

through the agency.” Illinois Council, 529 U.S. at 23, (internal citations omitted); see also BP 

Care, Inc. v. Thompson, 398 F.3d 503, 511 (6th Cir. 2005) (“[Section] 405(h) applies unless 

requiring agency review of the plaintiff's claim would effectively mean ‘no review at all.’ ”) 

A. Care Origin’s Claims Arose Under the Medicare Act 

The Supreme Court determined in Ringer that a claim arises under the Medicare Act if 

“both the standing and the substantive basis for the presentation” of the claim is the Medicare 

Act. 466 U.S. at 615 (quoting Weinberger v. Salfi, 422 U.S. 749, 760–61 (1975)). Additionally, a 

claim may arise under the Act if it is “inextricably intertwined” with a claim for Medicare 

benefits. See id. at 624. 

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The present action arises under the Medicare Act, as Care Origin has challenged Federal 

Defendants attempts to collect Medicare overpayments and its liability for those overpayments. 

See Dkt. No. 1, pp. 3–4, ¶¶ 12, 16 (“This action further arises out of the Medicare and Medicaid 

enrollment, provider and participant documents, rules and regulations resulting in provider 

number 1245342310 and CCN: 23-7545.”). Accordingly, the Medicare Act’s judicial review 

limitations apply. 

B. Plaintiff Failed to Meet the Exhaustion Requirement of 405(g) 

Even read in the light most favorable to Care Origin, the facts alleged in the Complaint 

satisfy neither of the two criteria necessary for judicial review of a Medicare determination: 

presentation of a claim to the Secretary and full pursuit of administrative remedies. 

Only one letter has been submitted regarding to Care Origin’s contention that PSVAD 

was responsible for the overpayments. See Dkt. No. 15-6, p. 115 (Page ID # 245). In that letter, 

dated January 5, 2012, Care Origin notified NGS that it had been sold to PSAVD and that CMS 

had approved its change in ownership. Id. The letter further stated that Care Origin would 

forward the overpayment letter to PSAVD and request that they comply. Id. Care Origin did not 

dispute the overpayment or liability. See id. Thus, this letter does not present a claim to the 

Secretary, a nonwaivable requirement prior to seeking judicial review. Additionally, there is no 

evidence that Care Origin took any steps to exhaust its administrative remedies or that the 

Secretary has waived this requirement. 

V. CONCLUSION

For the reasons discussed above, the Court finds there is no subject-matter jurisdiction 

against Federal Defendants in this case. The Court HEREBY GRANTS the Motion to Dismiss 

[15]. Additionally, since all remaining parties are non-diverse and no federal claims remain, the 

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Court HEREBY DISMISSES this action WITHOUT PREJUDICE for lack of subject-matter 

jurisdiction. 

IT IS SO ORDERED.

Dated: October 20, 2015 s/Gershwin A. Drain 

 Detroit, Michigan GERSHWIN A. DRAIN 

 United States District Judge 

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