*

Honorable Edward S. Smith, Senior U.S. Circuit Judge for the Federal Circuit, sitting by

designation. 

 1

42 U.S.C. § 301 et seq. (1994). 

 2

42 U.S.C. § 1395 et seq. (1994). 

United States Court of Appeals,

Eleventh Circuit.

No. 95-6429.

UNITED STATES of America, Qui Tam for Frank E. BODY, Plaintiff-Appellant,

v.

BLUE CROSS AND BLUE SHIELD OF ALABAMA, INC., Defendant-Appellee.

June 26, 1998

Appeal from the United States District Court for the Northern District of Alabama. (No. 93-P-1508-

S), Sam C. Pointer, Jr., Judge.

Before TJOFLAT and BIRCH, Circuit Judges, and SMITH*

, Senior Circuit Judge.

TJOFLAT, Circuit Judge:

Frank E. Body appeals the district court's dismissal of his claim against Blue Cross and Blue

Shield of Alabama ("BCBSA") for lack of subject matter jurisdiction. Body, a former employee of

BCBSA, brought suit as a qui tam relator under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-

33 (1994), alleging that BCBSA, in its role as a fiscal intermediary for Medicare Part A claims in

Alabama, knowingly presented or caused to be presented false or fraudulent claims to the United

States government in violation of 31 U.S.C. § 3729(a). The district court held that 42 U.S.C. §

405(h) (1994), a provision of the Social Security Act1

 made applicable to the Medicare Act2 by 42

U.S.C. § 1395ii (1994), operated as a bar to its subject matter jurisdiction over the case, and

therefore dismissed Body's suit. Body appealed the district court's decision to this court. We
 3

The Medicare program is administered by the Health Care Finance Administration (the

"HCFA"), part of the Department of Health and Human Services ("HHS"). The program is

authorized by Title VIII of the Social Security Act, and is divided into two parts. Part A of the

Medicare program deals primarily with the reimbursement of hospitals for costs that they incur

treating patients covered by Medicare, while Part B generally deals with the reimbursement of

providers for physicians' services. Under 42 U.S.C. § 1395h(a), the Secretary of Health and

Human Services (the "Secretary") can contract with public or private agencies or organizations

to serve as fiscal intermediaries in administering Medicare Part A. Blue Cross and Blue Shield

Association ("BCA") entered into such a contract with the Secretary. BCA then subcontracted

with BCBSA to serve as a fiscal intermediary for Medicare in Alabama. 

disagree with the district court's interpretation of subsection 405(h), but affirm the district court's

dismissal because we find that under 42 U.S.C. § 1395h(i)(3) (1994), BCBSA is immune from

liability to the United States for payments its officers certify and disburse to Medicare beneficiaries.

In part I, we describe the factual and procedural background of Body's case. In part II, we

explain why we disagree with the district court's interpretation of subsection 405(h), analyzing both

the context within which the subsection is made applicable to the Medicare Act, and the Supreme

Court cases that have construed it. In part III, we discuss the meaning and applicability of

subsection 1395h(i)(3), and explain why it shields BCBSA from liability to the United States in the

current action.

I.

Frank E. Body was an employee of appellee Blue Cross and Blue Shield of Alabama from

1973 to 1989. In addition to its traditional role as a provider of medical insurance, BCBSA serves

as a fiscal intermediary for Medicare Part A in Alabama.3 In its role as a fiscal intermediary,

BCBSA processes and audits cost reports from hospitals in Alabama, adjudicates disputed claims

for benefits from these health service providers, and issues reimbursement payments to these

hospitals for costs appropriately incurred in the treatment of Medicare patients. BCBSA applies

provisions from a number of different sources to its administration of Medicare Part A, including:
1) portions of Title VIII of the Social Security Act governing Medicare; 2) regulations contained

in Title 42, Part 405 of the Code of Federal Regulations; 3) provisions contained in the Provider

Reimbursement Manual (the "Manual") issued by the HCFA; 4) periodic "policy statements" from

the HCFA; and 5) additional guidance from BCA to its subcontractors, issued in the form of

Administrative Bulletins.

Body was employed as a senior auditor by BCBSA in 1984, and was assigned to audit the

1983 cost reports of, among others, Baptist Medical Centers ("Baptist") and Carraway Methodist

Medical Center ("Carraway"). In the course of auditing the cost reports of Baptist and Carraway,

Body proposed a number of adjustments to the hospitals' reports based on his application of

Medicare regulations, provisions of the Manual, and guidelines from BCA. In general, Body's

adjustments related to interest expenses claimed on refunded capital debt (i.e., interest on bonds

issued, at least in part, to pay off an older bond issue) and to interest earned on funded depreciation

accounts (i.e., accounts containing funds set aside for future capital expenses). BCBSA disagreed

with a number of Body's recommendations, and, despite his protest, reversed his proposed

adjustments.

Body contacted the Federal Bureau of Investigation in January 1989 to report BCBSA's

reimbursements to Alabama hospitals of interest costs that he felt were not authorized under

Medicare regulations. The FBI referred Body to the Office of the Inspector General ("OIG") of

HHS, which initiated an investigation of the allegations. The OIG investigated fourteen adjustments

proposed by Body and reversed by BCBSA. In its report, dated September 1994, the OIG concluded

that four of the fourteen adjustments were "immaterial," six were properly handled by BCBSA, two

of the adjustments had been reinstated by BCBSA upon HCFA instruction, and the final two

adjustments were determined to be correctly handled by BCBSA after the HCFA issued a policy
 4

The qui tam provision of the FCA permits, in certain circumstances, suits by private parties

("relators") on behalf of the United States against anyone submitting a false claim to the

Government. See 31 U.S.C. § 3730(b); Hughes Aircraft Co. v. U.S. ex rel. Schumer, --- U.S. ----

, ----, 117 S.Ct. 1871, 1874, 138 L.Ed.2d 135 (1997). 

 5

Body's complaint asserted that BCBSA had improperly reimbursed other Alabama hospitals,

in addition to Baptist and Carraway, for costs not properly certifiable to Medicare. These

additional allegations are not discussed here, because they fail under the same legal conclusion

that precludes Body's claims against Baptist and Carraway. 

 6

Subsection 3732(a), entitled "False claims jurisdiction," states:

Actions Under Section 3730.—Any action under section 3730 may be brought in

any judicial district in which the defendant or, in the case of multiple defendants,

any one defendant can be found, resides, transacts business, or in which any act

proscribed by section 3729 occurred. A summons as required by the Federal

Rules of Civil Procedure shall be issued by the appropriate district court and

served at any place within or outside the United States. 

clarification.

In August 1993, prior to the issuance of the OIG's final report, Body instituted this lawsuit

for the United States as a qui tam relator4

 under the False Claims Act. Body alleges that BCBSA has

been reimbursing Alabama hospitals, in particular Baptist and Carraway, for interest costs that are

not chargeable to Medicare. His complaint essentially reiterated the information that he provided

to the OIG regarding BCBSA's handling of the 1983 cost reports of Baptist and Carraway, and

claimed that BCBSA continues to allow Medicare to be charged unallowable interest expenses.5

Body asserted that the district court had jurisdiction over his action pursuant to 31 U.S.C. § 3732(a).6

BCBSA moved the district court, inter alia, for summary judgment on the ground that the

court lacked subject matter jurisdiction over Body's complaint. BCBSA argued that subsection

3732(a) was simply a venue provision, and as a result, Body's claim depended upon general

federal-question subject matter jurisdiction under 28 U.S.C. § 1331 (1994). BCBSA argued further

that 42 U.S.C. § 405(h) acted as a bar to federal-question jurisdiction for Body's claims. The third
 7

BCBSA raised the issue of subject matter jurisdiction in a motion for summary judgment. 

Subject matter jurisdiction is appropriately dealt with by means of a Federal Rule of Civil

Procedure Rule 12(b)(1) motion to dismiss, as noted by the district court, and we will treat the

district court's summary judgment ruling as a dismissal under Rule 12(b)(1). See Tuley v. Heyd,

482 F.2d 590, 593 (5th Cir.1973) ("It is a familiar principle that the label a district court puts on

its disposition of a case is not binding on a court of appeals.") (In Bonner v. City of Prichard,

661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this court adopted as binding precedent all

decisions of the former Fifth Circuit handed down prior to October 1, 1981.). This court's

jurisdiction and our analysis of the legal question raised on appeal are not affected by our

treatment of the district court's action. 

sentence of subsection 405(h) states:

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 made applicable to Medicare and modified by 42 U.S.C. § 1395ii). In its

April 28, 1995 opinion, the district court agreed that subsection 405(h) deprived the court of

jurisdiction under section 1331 and found no other jurisdictional provision, including subsection

3732(a), that could save Body's claims. The district court, therefore, granted BCBSA summary

judgment and ordered Body's suit dismissed.7 Body appeals the district court's dismissal.

 This court has jurisdiction to hear this appeal of the district court's final decision pursuant

to 28 U.S.C. § 1291 (1994). We review de novo the district court's dismissal of Body's action for

lack of subject matter jurisdiction. See Plumbers & Pipefitters Local Union 72 v. John Payne Co.,

850 F.2d 1535, 1537 (11th Cir.1988).

II.

Body raises three issues in this appeal. First, he claims that subsection 3732(a) of the False

Claims Act contains an independent grant of subject matter jurisdiction, and that therefore his claim

does not rely on either of the jurisdictional provisions negated by subsection 405(h). Second, Body

claims that an action brought by a qui tam relator under the False Claims Act qualifies as a
 8

We use the term "beneficiaries" in this opinion to denote the broad range of individuals and

organizations that either receive health services covered by Medicare or receive payments from

Medicare for providing health services to covered persons; these include: physicians,

physicians' associations, hospitals, nursing homes, and other health care providers. In addition,

when discussing the subsection's application to actions brought under the Social Security Act,

we use the term generically to refer to individuals receiving Social Security benefits from the

government. 

 9

We use this term here to include organizations that are the equivalent of fiscal

intermediaries; i.e., the organization or agency responsible for determining eligibility for and

amounts of benefits under either Medicare Part A or Part B, and under the Social Security Act.

"proceeding[ ] commenced by the United States" within the meaning of 28 U.S.C. § 1345 (1994),

again avoiding the jurisdictional bar of subsection 405(h). Finally, Body argues that the district

court erred in finding that subsection 405(h) was applicable to his action against BCBSA at all.

Because we find that the district court erred in holding that subsection 405(h) applied to Body's

claims, we do not address the first two issues.

 The third sentence of subsection 405(h) clearly revokes federal-question jurisdiction in the

district courts under 28 U.S.C. § 1331 over all cases "arising under" the Medicare Act. The threshold

question for this court, then, is whether Body's claim "arises under" the Medicare Act and is

therefore subject to subsection 405(h). See Heckler v. Ringer, 466 U.S. 602, 615, 104 S.Ct. 2013,

2021, 80 L.Ed.2d 622 (1984) ("[T]o be true to the language of the statute, the inquiry in determining

whether § 405(h) bars federal-question jurisdiction must be whether the claim "arises under' the

Act....").

Subsection 405(h) has been interpreted in many cases and by many courts—in the context

of its application both to actions arising under Social Security, for which it was originally drafted,

and to actions arising under Medicare. In fact, the Supreme Court has discussed the scope of the

subsection's jurisdictional preclusion in several significant opinions. All of these cases, however,

involved suits brought by beneficiaries8

 against the United States or against a fiscal intermediary9
The organizations that administer Part B of the Medicare Act, for instance, are referred to as

"carriers." See 42 U.S.C. § 1395u(f) (1994). 

to recover benefits not previously paid. As best as we can tell, the application of subsection 405(h)

to a False Claims Act action, brought by or for the United States against a fiscal intermediary, to

recover money improperly paid to Medicare beneficiaries is a matter of first impression in the

federal courts. The relevance of this distinction to determining whether a particular action "arises

under" the Medicare Act becomes apparent when one analyzes the role the subsection plays in the

broader context of administrative and judicial challenges to Medicare determinations, as well as the

Supreme Court's decisions interpreting the scope and application of subsection 405(h). In part II.A,

therefore, we describe the larger system for administrative and judicial appeals of Medicare claims.

In part II.B, we discuss the Supreme Court's decisions defining the applicability of subsection 405(h)

to actions "arising under" both the Medicare Act and the Social Security Act. Finally, in part II.C,

we conclude that Body's FCA claims do not "arise under" the Medicare Act for purposes of

subsection 405(h).

A.

On its face, the third sentence of subsection 405(h) plainly reads as a broad exclusion of

federal-question jurisdiction over matters "arising under" the Medicare Act. That sentence, however,

neither exists nor operates in isolation. To understand the actual scope of the subsection's exclusive

effect, therefore, we must view the third sentence of subsection 405(h) both within the context of

the entire section 405—most of which is made applicable to Medicare by sections 1395ff and 1395ii,

see 42 U.S.C. § 1395ff(b)(1) (making subsections 405(b) and 405(g) applicable to challenges to

Medicare coverage and amounts determinations); § 1395ii (making subsections 405(a), (d), (e), (h),

(i), (j), (k), and (l ) applicable to the Medicare Act)—and within the larger context of the
 10The decisions of the Secretary will actually be made in the first instance by fiscal

intermediaries, followed by appeals to either an administrative law judge or a Departmental

Appeals Board, or both. See 42 C.F.R. §§ 405.701-405.730 (1997) (governing reconsideration

and appeals of eligibility and amount of benefits decisions under Medicare Part A). 

subsection's application to appeals under the Medicare Act in general.

Section 1395ff, entitled "Determinations of Secretary," governs the ability of beneficiaries

dissatisfied with eligibility determinations or amount of benefits determinations to obtain a hearing

and judicial review. The section adopts by reference the Social Security Act's procedures for

hearings and appeals as defined in subsections 405(b) and 405(g), respectively. See 42 U.S.C. §

1395ff(b)(1). Under subsection 405(g), a person dissatisfied with a decision of the Secretary of

Health and Human Services after a hearing10 may appeal the decision to a United States district

court. The subsection contains a specific grant of jurisdiction to the district courts, stating that

"[s]uch 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).

Subsection 405(h), which immediately follows subsection 405(g), channels all challenges

to eligibility and amount determinations through the administrative and appeals process provided

in subsections 405(b) and 405(g). The full subsection 405(h) states:

The findings and decision of the [Secretary] after a hearing shall be binding upon all

individuals who were parties to such hearing. 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 made applicable to Medicare and modified by section 1395ii). The first

sentence of subsection 405(h) makes the decisions of the Secretary of Health and Human Services
 11Although the Supreme Court has never addressed the application of subsection 405(h) to a

claim that could not be brought administratively under section 405, and subsequently appealed to

a district court under subsection 405(g), the Court has implied that subsection 405(g)—with its

concomitant requirement of administrative exhaustion—provides federal court jurisdiction over

all claims for which subsection 405(h) removes federal-question jurisdiction under section 1331. 

See Heckler, 466 U.S. at 614-15, 104 S.Ct. at 2021 ("The third sentence of 42 U.S.C. § 405(h) ...

provides that § 405(g), to the exclusion of 28 U.S.C. § 1331, is the sole avenue for judicial

review for all "claim[s] arising under' the Medicare Act." (emphasis added)) (citing Weinberger

v. Salfi, 422 U.S. 749, 760-61, 95 S.Ct. 2457, 2464-65, 45 L.Ed.2d 522 (1975)). This suggests

binding on all parties to the hearing. By its second sentence, the subsection prevents "any person,

tribunal, or governmental agency" from reviewing the Secretary's decision, "except as herein

provided"—as "provided" by subsection 405(g) that is. Finally, the third sentence removes

federal-question jurisdiction over any claim "arising under" the Medicare Act.

Taken alone, the third sentence of the subsection appears to be a plenary revocation of

federal-question jurisdiction for Medicare-related cases. Taken in context, however, it is quite clear

that the provision is intended to prevent circumvention of the administrative process provided for

the adjudication of disputes between Medicare beneficiaries and the government (or agents of the

government such as fiscal intermediaries). The provision takes away general federal-question

jurisdiction over claims by Medicare beneficiaries, forcing them to pursue their claims in a hearing

under subsection 405(b) and then, if necessary, in an appeal under the specific grant of jurisdiction

contained in subsection 405(g). Thus, the third sentence is the final piece in an administrative

scheme designed to give the administrative process the first opportunity to resolve disputes over

eligibility or the amount of benefits awarded under the Act.

 Nothing in subsection 405(h), however, or in the rest of section 405, suggests that the third

sentence of subsection 405(h) eliminates federal-question jurisdiction over all actions implicating

the Medicare Act, regardless of the availability—or unavailability—of administrative and judicial

review within the Medicare administrative scheme.11 Subsection 405(h) prevents beneficiaries and
that if administrative and judicial review is unavailable under section 405, then federal-question

jurisdiction under section 1331 is not precluded by operation of subsection 405(h); the claim

does not "arise under" Medicare. 

 12For instance, the third sentence of the subsection prevents potential beneficiaries from

bringing actions for declaratory and injunctive relief—prior to filing for reimbursement for a

health service, or even prior to receiving a health service at all—that would direct the Secretary

to provide reimbursement for that particular health service. See Ringer, 466 U.S. at 620-22, 104

S.Ct. at 2024-25 (explaining that respondent Ringer's action for declaratory and injunctive relief,

prior to the operation for which he ultimately wanted to be reimbursed, was still barred by

subsection 405(h) because Ringer wants future payments for the operation that may only be

pursued "in the manner which Congress has provided"). Instead, the beneficiary must obtain the

health service and file an actual claim for reimbursement. The beneficiary may then challenge

the offending regulation in her action challenging the denial of reimbursement, obtaining judicial

review only after administrative exhaustion. See id. at 621-22, 104 S.Ct. at 2025. 

 13There is very little legislative history available on subsection 405(h). Nowhere, however, is

there any mention of congressional intent to preclude federal-question jurisdiction over claims

other than those brought by beneficiaries challenging the denial of benefits or eligibility for

benefits. See S.Rep. No. 89-404 (1965), reprinted in 1965 U.S.C.C.A.N. 1943, 1995 (describing

appeals under the Medicare Act and noting, in apparent reference to subsection 405(h), that "the

remedies provided by these review procedures shall be exclusive"); see also discussion of

Bowen v. Michigan Academy, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986), infra part

II.B. 

potential beneficiaries from evading administrative review by creatively styling their benefits and

eligibility claims as constitutional or statutory challenges to Medicare statutes and regulations.12 It

does not create two classes of claims "arising under" Medicare: those that may be brought

administratively and then appealed under the grant of jurisdiction in subsection 405(g), and those

that are not subject to administrative review and are therefore not reviewable at all.13 Actions such

as Body's, which do not seek payment from the government and could not be brought under section

405, are therefore not barred by subsection 405(h).

As we illustrate in part II.B, the Supreme Court's cases involving subsection 405(h) further

confirm our interpretation of its purpose.

B.
 14Recall that subsection 405(h) is a provision of the Social Security Act made applicable to

Medicare by section 1395ii. See supra part II.A. 

The Supreme Court has analyzed the breadth and effect of subsection 405(h) in its

application to both the Social Security Act and to Parts A and B of the Medicare Act. Generally, the

Court has given the provision a very broad reading, in an attempt to reflect the intent of the drafters.

See Heckler, 466 U.S. at 615, 104 S.Ct. at 2022 (noting that the Court "construed the "claim arising

under' language quite broadly" in Salfi, 422 U.S. at 760-61, 95 S.Ct. at 2464-65). Although none

of the Supreme Court cases that have analyzed the scope and effect of section 405(h) have involved

suits by the government against any of its fiscal intermediaries, a close look at the rationale behind

the Court's decisions construing the subsection is nonetheless instructive. Our examination reveals

that the Supreme Court's justification for broadly construing the "claims arising under" language of

subsection 405(h) is to prevent beneficiaries from circumventing the administrative process by

creatively styling their benefits claims as collateral constitutional or statutory challenges not "arising

under" Medicare.

The first major Supreme Court case to analyze the operation of subsection 405(h) was

Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). In Salfi, a deceased wage

earner's widow and stepchild challenged the constitutionality of provisions of the Social Security

Act requiring them to have had a nine-month-long relationship with the deceased in order to receive

survivors' benefits. See id. at 752-55, 95 S.Ct. at 2460-62.14 The three-judge district court held that

the duration-of-relationship requirement was unconstitutional. Id. at 755, 95 S.Ct. at 2462. The

district court found that it had jurisdiction over the case under 28 U.S.C. § 1331, concluding that

subsection 405(h) was nothing more than a codification of the doctrine of administrative exhaustion.
 15The three-judge district court held further that exhaustion in this case would be futile; thus

the exhaustion requirement, in its codified version at subsection 405(h), was waived by the court. 

See Salfi v. Weinberger, 373 F.Supp. 961, 964 (N.D.Cal.1974). 

Id. at 756-57, 95 S.Ct. at 2462-63.15

On appeal, the Supreme Court found that the three-judge district court had taken an "entirely

too narrow" view of the scope of subsection 405(h). The Court stated:

That the third sentence of § 405(h) is more than a codified requirement of administrative

exhaustion is plain from its own language, which is sweeping and direct and which states

that no action shall be brought under § 1331, not merely that only those actions shall be

brought in which administrative remedies have been exhausted.

Id. at 757, 95 S.Ct. at 2463. The Court found more substantial the claim that subsection 405(h) did

not bar jurisdiction over the widow and stepchild's claim because their claim "arose under" the

Constitution rather than under the Social Security Act. Id. at 760, 95 S.Ct. at 2464. But the Court

found that the action, although it indeed arose under the Constitution, also arose under the Social

Security Act because, "not only is it Social Security benefits which appellees seek to recover, but

it is the Social Security Act which provides both the standing and the substantive basis for the

presentation of their constitutional contentions." Id. at 760-61, 95 S.Ct. at 2464 (emphasis added).

Thus, the Court held that subsection 405(h) barred resort to federal-question jurisdiction under

section 1331. Id. at 761, 95 S.Ct. at 2464-65.

The Supreme Court explained, however, that its ruling under subsection 405(h) did not bar

the appellees from bringing their constitutional challenges before a United States district court. In

fact, the Court noted that such a result would "raise[ ] a serious constitutional question of the

validity" of subsection 405(h). Id. at 762, 95 S.Ct. at 2465 (distinguishing Johnson v. Robison, 415

U.S. 361, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974), and noting that such an "extraordinary" restriction

on federal court jurisdiction over a constitutional claim would require "clear and convincing"
 16The damages and penalties that Body seeks to recover are quite different from the "benefits"

sought by the appellees in Salfi. Body seeks damages on behalf of the government calculated as

a multiple of benefits improperly paid out of government funds because of BCBSA's alleged

fraud, as well as the statutory penalties authorized by subsection 3729(a), rather than

reimbursement from the government for health services authorized under Medicare. 

evidence of congressional intent). The Court concluded that the appellees could still pursue their

constitutional challenges through the administrative review process provided for in 42 U.S.C. § 405,

appealing the Secretary's final decision to the federal district court under the explicit jurisdictional

grant in subsection 405(g). See id. at 762-64, 95 S.Ct. at 2465-66. In fact, the Court subsequently

held that it had jurisdiction over the appellees' personal claims under subsection 405(g) because they

had previously exhausted their administrative remedies. See id. at 762-67, 95 S.Ct. at 2465-68.

Body's claim is distinguishable from Salfi for several reasons. First, Body only has standing

to bring this suit through operation of the qui tam provisions of the False Claims Act. See 31 U.S.C.

§ 3730(b)-(h). Second, the FCA arguably provides the substantive basis of Body's suit as well;

although BCBSA's application of the Medicare rules and regulations clearly would be determinative

of whether false claims were, in fact, submitted, Body's claim is premised upon BCBSA's alleged

knowing submission of fraudulent claims to the United States, and seeks to recover civil penalties

as well as treble damages authorized by the FCA, not the Medicare Act. See 31 U.S.C. § 3729(a).16

Finally, and most importantly, Body's suit could not go forward under the administrative review

provisions prescribed by section 405(g). Body would not have standing to challenge BCBSA's

benefits determination under section 1395ff. His application to the district court, therefore,

represents his only avenue of obtaining any forum for his claim, rather than a strategic decision

calculated at circumventing the administrative process.

The Court next analyzed the limited review provisions of the Medicare Act in United States

v. Erika, Inc., 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982). The plaintiff in Erika brought
 17Until 1987, subsection 1395ff(b) only provided for review of Medicare Part B amount

determinations in a hearing by the carrier, the Part B equivalent of a fiscal intermediary. The

1986 amendments to the Medicare Act made Part B amount determinations subject to judicial

review, as provided by subsection 405(g), to the same extent as Part A amount determinations. 

See Omnibus Budget Reconciliation Act of 1986, Pub.L. No. 99-509, § 9341, 100 Stat. 1874,

2037 (1986) (amending section 1395ff). 

a constitutional challenge to the amount of certain reimbursement determinations under Medicare

Part B before the Court of Claims, which held that it had jurisdiction under the Tucker Act. See id.

at 205, 102 S.Ct. at 1653. On appeal, the Supreme Court did not address the proscriptive effect of

subsection 405(h). See id. at 206 n. 6, 102 S.Ct. at 1653 n. 6 (noting that the Court did not reach the

subsection 405(h) issue). The Court instead focused on the terms of subsection 1395ff(b), which,

prior to 1987, explicitly provided for judicial review of eligibility determinations under Parts A and

B, and for amount of benefits determinations under Part A, but "[c]onspicuously ... fail[ed] to

authorize further review for determinations of the amount of Part B awards." Id. at 208, 102 S.Ct.

at 1654.17

Although the statute omitted any reference to judicial appeal of Part B amount

determinations, it did not specifically forbid judicial review of those determinations either. The

Erika Court found, however, that the legislative history demonstrated that the omission of a right

of individuals dissatisfied with their Part B amount determinations to judicial review was more than

just congressional oversight. The Court held that the history conclusively demonstrated that

Congress intended no judicial review for Part B amount determinations under 1395ff because the

amounts were expected to be much smaller than those under Part A, "quite minor matters" that

Congress feared might overload the courts. See id. at 208-11, 102 S.Ct. at 1654-55 (discussing

unambiguous statements to that effect in Senate and Conference Reports, as well as statements in

the Congressional Record). The Court found that the express language of section 1395ff and the
 18Judicial review of Medicare Part A amount determinations was always available under

section 1395ff(b), following exhaustion of the administrative process and subject to

amount-in-controversy requirements. See 42 U.S.C. § 1395ff. Only Part B amount

determinations were unreviewable prior to 1986. See supra note 17 and accompanying text. 

section's legislative history, taken together, provided sufficient evidence that Congress did not intend

for amount determinations under Part B to be reviewable, and therefore held that the Court of Claims

had no jurisdiction. See id. at 205-11, 102 S.Ct. at 1653-55.

Despite the fact that the Court's decision in Erika was premised on section 1395ff rather than

on subsection 405(h), it demonstrates the Supreme Court's intent to respect the complex

administrative scheme designed by Congress to implement old-age security programs: Medicare

in Erika, and Social Security in Salfi. The Erika Court was even willing to forego any judicial

review for beneficiaries dissatisfied with the amount of their benefits under Part B, but only because

Congress' intent to preclude such review was clear. In contrast, there is no evidence that Congress,

in making subsection 405(h) applicable to Medicare (or enacting it as part of the Social Security Act,

for that matter), intended to eliminate federal-question jurisdiction under section 1331 for FCA

actions such as Body's.

The Supreme Court analyzed the application of subsection 405(h) to the Medicare Act for

the first time in Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). In

Heckler, four persons brought constitutional and statutory challenges against the policy of the

Secretary of Health and Human Services not to pay for a special type of surgery intended to relieve

respiratory distress, a type of surgery that had previously been covered under Medicare Part A. See

id. at 604-07, 104 S.Ct. at 2013-18.18 The plaintiffs sought declaratory and injunctive relief that

would invalidate the Secretary's policy and compel her to instruct fiscal intermediaries to pay for

the surgery, without requiring claimants to pursue their claims through the administrative process.
 19Unlike the other three, the fourth plaintiff had not yet had the surgery but challenged the

policy because, he claimed, its existence precluded his having the surgery. Id. at 620, 104 S.Ct.

at 2024. The Court dismissed the fourth plaintiff's claim as well because it, too, was "essentially

one requesting the payment of benefits for ... surgery, a claim cognizable only under § 405(g)." 

Id. 

Id. at 610-611, 104 S.Ct. at 2019. The district court dismissed their claims for lack of jurisdiction,

holding "that 42 U.S.C. § 405(g) with its administrative exhaustion prerequisite provide[d] the sole

avenue for judicial review," and that the plaintiffs had failed to exhaust their administrative

remedies. Id. at 611-12, 104 S.Ct. at 2019-20. The Ninth Circuit reversed. Id. at 612, 104 S.Ct. at

2020.

The Supreme Court reversed the Ninth Circuit, finding that the plaintiffs' claims for

declaratory and injunctive relief were "inextricably intertwined" with their claims for benefits. Id.

at 614, 104 S.Ct. at 2021. The Court stated, "it makes no sense to construe the claims of those

three19 respondents as anything more than, at bottom, a claim that they should be paid for their

BCBR surgery." Id. Noting that it had construed the term "arising under" broadly in Salfi, the Court

concluded that the plaintiffs' "benefits" claims "arose under" Medicare and, therefore, fell within the

purview of subsection 405(h), notwithstanding the fact that they sought injunctive and declaratory

relief rather than benefits. "Following the declaration which respondents seek from the

Secretary—that BCBR surgery is a covered service—only essentially ministerial details will remain

before respondents would receive reimbursement." Id. at 615, 104 S.Ct. at 2022. Because the

plaintiffs had not yet pursued their claims through the administrative process, the Court held that

judicial review was unavailable under subsection 405(g) and that subsection 405(h) foreclosed the

district court's federal-question jurisdiction under section 1331. See id. at 616-19, 104 S.Ct. at 2022-

24. Thus the district court's dismissal was appropriate.

The Supreme Court discerned a cleverly concealed claim for benefits behind the plaintiffs'
constitutional and statutory challenges. As in Salfi, the Court found that section 405(g) provided

an adequate remedy for each of the plaintiffs, concluding:

Although respondents would clearly prefer an immediate appeal to the District Court rather

than the often lengthy administrative review process, exhaustion of administrative remedies

is in no sense futile for these respondents, and they, therefore, must adhere to the

administrative procedure which Congress has established for adjudicating their Medicare

claims.

Id. at 619, 104 S.Ct. at 2024. Heckler provides clear evidence that subsection 405(h) is meant to

protect the integrity of the Medicare administrative scheme, "to prevent "premature interference with

agency processes' and to give the agency a chance "to compile a record which is adequate for

judicial review.' " Id. at 619 n. 12, 104 S.Ct. at 2024 n. 12 (quoting Salfi, 422 U.S. at 765, 95 S.Ct.

at 2466). That these justifications are inapposite in a case such as Body's, which is not cognizable

in the administrative scheme, aptly demonstrates why subsection 405(h) is inapplicable to claims

brought against a fiscal intermediary under the False Claims Act. A look at the most recent Supreme

Court case to address the application of subsection 405(h) reinforces this view.

In Bowen v. Michigan Academy, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986), the

Court reviewed a statutory challenge to administrative regulations promulgated under Medicare Part

B. The challenged regulations provided for different benefits payments for similar physicians'

services. The case presented the Court with two issues. First, the Court considered whether the pre1987 version of 1395ff, which did not provide for judicial review of amount determinations under

Part B, see supra note 17 and accompanying text, implicitly precluded judicial review of a challenge

to regulations controlling the amount of benefits paid. Alternatively, the Court examined whether

subsection 405(h) worked as a bar to the district court's jurisdiction over such a challenge.

The Court began its analysis by noting the "strong presumption that Congress intends judicial

review of administrative action," Id. at 670, 106 S.Ct. at 2135, a presumption that may only be
 20The Court concluded that "[t]he presumption of judicial review is, after all, a presumption,

and like all presumptions used in interpreting statutes, may be overcome by, inter alia, specific

language or specific legislative history that is a reliable indicator of congressional intent, or a

specific congressional intent to preclude judicial review that is "fairly discernible in the detail of

the legislative scheme'." Id. at 673, 106 S.Ct. at 2137 (quoting Block v. Community Nutrition

Institute, 467 U.S. 340, 349, 351, 104 S.Ct. 2450, 2456, 2457, 81 L.Ed.2d 270 (1984)) (internal

quotation marks omitted). 

overcome by "a showing of "clear and convincing evidence' of a contrary legislative intent...." Id.

at 671, 106 S.Ct. at 2136 (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511,

18 L.Ed.2d 681 (1967)).20 Turning to the question of whether the omission of any specific

authorization of administrative or judicial review of Part B amount determinations in section 1395ff

impliedly precluded the district court from hearing a challenge to the regulations, the Court found

that "[s]ection 1395ff on its face is an explicit authorization of judicial review, not a bar." Id. at 674,

106 S.Ct. at 2137. Contrasting a challenge to the administrative regulations governing Medicare

Part B with the claim brought in Erika, the Court stated:

The reticulated statutory scheme, which carefully details the forum and limits of review of

"any determination ... of ... the amount of benefits under part A," 42 U.S.C. §

1395ff(b)(1)(C) (1982 ed., Supp. II), and of the "amount of ... payment" of benefits under

Part B, 42 U.S.C. § 1395u(b)(3)(C), simply does not speak to challenges mounted against

the method by which such amounts are to be determined rather than the determinations

themselves.

Id. at 675, 106 S.Ct. at 2138 (omissions in original). Therefore, the Court concluded, "those matters

which Congress did not leave to be determined in a "fair hearing' conducted by the

carrier—including challenges to the validity of the Secretary's instructions and regulations—are not

impliedly insulated from judicial review by 42 U.S.C. § 1395ff." Id. at 678, 106 S.Ct. at 2140.

The Court next addressed the contention that the third sentence of subsection 405(h) serves

as a bar to federal-question jurisdiction in the district courts over challenges to administrative

regulations governing Medicare Part B. First noting the implausibility of Congress' providing carrier
 21Notably, the Supreme Court implicitly endorsed our view that subsection 405(h) is intended

to ensure that beneficiaries do not evade the administrative process described in section 405,

rather than to establish a broad preclusion of federal-question jurisdiction over all actions related

to Medicare benefits, such as Body's claim under the FCA. To support its conclusion that

subsection 405(h) did not block the plaintiffs' statutory challenge to the Medicare regulatory

scheme, the Court referred to the legislative history of section 1395ff, specifically Senator

Bennett's remarks connected to the 1972 amendments to that section, wherein Bennett stated that

the amendments were meant to clearly demonstrate that Congress intended to preclude judicial

"review only of "amount determinations'—i.e., those "quite minor matters,' remitted finally and

exclusively to adjudication by private insurance carriers in a "fair hearing.' " Id. at 680, 106

S.Ct. at 2141 (citing 118 Cong. Rec. 33992 (1972)(remarks of Senator Bennett)). From those

remarks, the Court inferred that subsection 405(h) was not intended to preclude the district

courts from hearing cases not cognizable before carriers, presumably because the subsection's

role was limited to ensuring that the hearing and appeal procedures under section 405 were

utilized. See id. at 680-81 & n. 10, 106 S.Ct. at 2141 & n. 10 (noting in footnote that "the

legislative history summarized in the preceding section speaks to provisions for appeal

generically, and is thus as probative of congressional intent in enacting § 1395ii as it is of §

1395ff" (citations omitted) (emphasis added)). Therefore, federal-question jurisdiction was

available for the plaintiffs' statutory challenge. 

review of "trivial" amounts determinations while simultaneously denying any review of "statutory

and constitutional challenges to regulations promulgated by the Secretary," the Court concluded

again that Congress only intended to foreclose judicial review of amount determinations when it

promulgated subsection 405(h). Id. at 678-80, 106 S.Ct. at 2140-41. "[M]atters which Congress

did not delegate to private carriers, such as challenges to the validity of the Secretary's instructions

and regulations, are cognizable in courts of law." Id. at 680, 106 S.Ct. at 2141 (emphasis added).21

Perhaps most clearly of the four Supreme Court cases analyzing the jurisdictional limitations

contained in the Medicare Act, Bowen demonstrates that subsection 405(h), viewed within the

context in which it was drafted and made applicable to Medicare, simply seeks to preserve the

integrity of the administrative process Congress designed to deal with challenges to amounts

determinations by dissatisfied beneficiaries, not to serve as a complete preclusion of all claims

related to benefits determinations in general.

C.
In every case discussed in subpart B, the Supreme Court was faced with a suit by a

beneficiary—a person or an organization that wanted, ultimately, to receive money from the

government for health services. The Court scrutinized each plaintiff's claim to determine whether

the plaintiff was simply seeking benefits, a claim cognizable within the administrative scheme

designed by Congress, or was bringing a claim for which administrative review was unavailable.

Cleverly concealed claims for benefits, veiled attempts to evade the sometimes tedious

administrative process, were dismissed, see Heckler, 466 U.S. at 626-27, 104 S.Ct. at 2027-28;

Erika, 456 U.S. at 206-11, 102 S.Ct. at 1653-55; Cf. Salfi 422 U.S. at 756-62, 95 S.Ct. at 2462-65

(finding that subsection 405(h) blocked federal-question jurisdiction but that the claimants had

effectively exhausted their administrative remedies and could pursue their claims under the

jurisdictional grant in subsection 405(g)), enabling the Secretary of Health and Human Services to

get the "first crack" at interpreting HHS rules and regulations, as Congress intended. See Heckler,

466 U.S. at 619 n. 12, 104 S.Ct. at 2024; Salfi, 422 U.S. at 765, 95 S.Ct. at 2466. In the one

instance in which a challenge from a potential beneficiary was neither specifically prohibited by the

Act nor cognizable in the administrative process, the Supreme Court held that subsection 405(h) did

not, by its terms, bar federal-question jurisdiction under section 1331. See Bowen, 476 U.S. at 678-

681, 106 S.Ct. at 2140-41.

In sum, the Supreme Court has sought to prevent claimants from circumventing the

administrative framework designed by Congress to execute the Medicare Act by creatively styling

their claims as collateral attacks not "arising under" Medicare and thus not subject to subsection

405(h). The Supreme Court has not sought, however, to extend the reach of subsection 405(h) to

bar claims that, although they may implicate benefits determinations, are certainly not veiled claims

for benefits by a disgruntled beneficiary that could have, and should have, been pursued
 22The district court in this case relied primarily on its interpretation of the Seventh Circuit's

opinion in Bodimetric Health Services, Inc. v. Aetna Life & Casualty, 903 F.2d 480 (7th

Cir.1990), and that court's interpretation of Supreme Court precedent, in determining that Body's

claim "arose under" the Medicare Act and was, therefore, subject to the jurisdiction-stripping

provision of subsection 405(h). The court of appeals in Bodimetric, depending largely on its

interpretation of the Supreme Court's decisions in Erika and Bowen, distinguished between "two

types of Medicare claims: challenges to the amount of benefits to be paid[, which] are not

reviewable, ... [and] challenges to the regulatory scheme under which the amount of benefits is

calculated[, which] are reviewable." Bodimetric, 903 F.2d at 485.

The district court in the instant case found the logic of Bodimetric quite

persuasive. It held that Body's claims "more closely resemble[ ] a determination of

benefits dispute," and, therefore, that "it [was] without subject matter jurisdiction over

the Complaint." Although it is true that the issues in this case are more closely related to

benefits determinations than to challenges to the regulatory scheme set up by the

Secretary of Health and Human Services (in fact, Body claims that BCBSA misapplied

valid regulations), the district court's reliance upon the Erika-Bowen distinction drawn in

Bodimetric is misplaced.

At the time that Erika and Bowen were decided, the Medicare Act did not provide

for review of Part B decisions beyond a "fair hearing" before the carrier administrating

the program. The 1986 amendments to the Medicare Act made Part B claims reviewable

to the same extent as Part A claims. See supra note 17 and accompanying text. Most

courts considering the question, including this court in American Academy of

Dermatology v. Department of Health & Human Services, 118 F.3d 1495 (11th

Cir.1997), have held that the 1986 amendments extinguished the "amount/methodology

distinction established in [Bowen v.] Michigan Academy." Id. at 1500; see, e.g., Martin

v. Shalala, 63 F.3d 497, 502-03 (7th Cir.1995) ("As a result of the 1986 Amendments ...

the Michigan Academy distinctions drawn between "amount of payment' and "validity of

the statute and regulations' challenges are no longer meaningful or necessary."); Farkas

v. Blue Cross & Blue Shield of Michigan, 24 F.3d 853, 860 (6th Cir.1994) (rejecting

argument that amount/methodology distinction is "good law" and stating that 1986

amendments "deprived Michigan Academy of lasting precedential value"); Abbey v.

Sullivan, 978 F.2d 37, 41-43 (2d Cir.1992) (amendments have relegated distinction to

irrelevance); National Kidney Patients Ass'n v. Sullivan, 958 F.2d 1127, 1132-33

(D.C.Cir.1992) (same). To hold otherwise, the Erika-Bowen distinction would have to be

applied to challenges to the regulations and statutes governing Part A claims as well (as

the Seventh Circuit erroneously did in Bodimetric ), meaning Bowen, sub silentio,

"overruled [Ringer and] the entire line of Supreme Court cases that has [required

exhaustion and] denied direct federal-question jurisdiction to claims under Part A."

American Academy, 118 F.3d at 1500 (alterations in original) (quoting Farkas, 24 F.3d at

860).

administratively in the first instance.22
We rely today on an entirely different distinction: the distinction between a case

brought by a beneficiary, who ultimately wants funds from the government and may

challenge adverse decisions through the administrative process, and a case brought by a

qui tam relator under the False Claims Act, who seeks to recover money erroneously paid

by the government, a claim not cognizable in the administrative scheme. 

We are not faced with a claim for benefits from a dissatisfied Medicare beneficiary, nor are

we faced with a claim cognizable within the administrative framework provided in section 405. We

are faced with a claim by a former employee of a fiscal intermediary alleging fraud against the

United States government. BCBSA would have us hold that subsection 405(h) blocks the district

court's federal-question jurisdiction over such a case (and that no other jurisdictional basis for the

case exists), and that, therefore, Body's claim should be dismissed for lack of subject matter

jurisdiction. Dismissal of Body's claim on that ground, however, would have an anomalous result:

the government could bring an FCA claim against BCBSA under the jurisdictional grant in 28

U.S.C. § 1345, but the qui tam provisions of the FCA would be rendered useless. The FCA's

incentives for informed agents to monitor their employers and bring suit for violations would thus

be destroyed. We do not believe that this result is either necessary or correct.

Although a number of benefits determinations are at issue in this suit, and although treble

damages under the FCA bear a direct relation to the amount of overpayment of benefits, this claim

is simply not the type of claim that subsection 405(h) was intended to prevent. Hence, we conclude

that subsection 405(h) does not bar federal-question jurisdiction over a claim brought against a fiscal

intermediary under the False Claims Act. Such a claim, for purposes of subsection 405(h), arises

under the False Claims Act, not the Medicare Act, and federal-question jurisdiction under section

1331 is available.

III.

 Our inquiry does not end with our holding that subsection 405(h) is inapplicable to Body's
 23To our knowledge, the subsection has only been cited by one court since it was first enacted

in 1965. See Mount Sinai Hosp. of Greater Miami, Inc. v. Weinberger, 376 F.Supp. 1099, 1127

(S.D.Fla.1974) (simply citing the subsection (then denominated subsection 1395h(g)) for the

proposition that its limits on the liability of government agents and officers are a departure from

common law). 

qui tam suit against BCBSA. Notwithstanding the district court's subject matter jurisdiction over

the matter, BCBSA argues that it is immune from suits of this sort under 42 U.S.C. § 1395h(i)(3)

(1994). Although the district court did not address the subsection 1395h(i)(3) immunity issue in its

opinion dismissing the case, the issue was raised by BCBSA and was briefed by both parties before

this court. We thus consider the issue as an alternative basis for affirming the district court's

dismissal of the action. See Bonanni Ship Supply, Inc. v. United States, 959 F.2d 1558, 1561 (11th

Cir.1992) (holding that "this court may affirm the district court where the judgment entered is

correct on any legal ground regardless of the grounds addressed, adopted or rejected by the district

court").

Subsection 1395h(i) has never been authoritatively construed by the federal courts. This

case, therefore, presents a matter of first impression for this court.23 We do not interpret the

subsection in the abstract, however: Like subsection 405(h) discussed in part II, subsection

1395h(i)(3) must be read and understood in context.

First and foremost, subsection 1395h(i)(3) appears as part of subsection 1395h(i), entitled

"Liability of certifying and disbursing officers designated under agreement for negligent, etc.

payments." Subsection 1395h(i) reads:

(1) No individual designated pursuant to an agreement under this section as a certifying

officer shall, in the absence of gross negligence or intent to defraud the United States, be

liable with respect to any payments certified by him under this section.

(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the

United States, be liable with respect to any payment by him under this section if it was based

upon a voucher signed by a certifying officer designated as provided in paragraph (1) of this
subsection.

(3) No such agency or organization [such as a fiscal intermediary] shall be liable to the

United States for any payments referred to in paragraph (1) or (2).

42 U.S.C. § 1395h(i). Subsection 1395h(i)(1) limits the liability of fiscal intermediary employees

responsible for certifying claims for payment from beneficiaries, protecting them from liability for,

in effect, mistaken (negligent) certifications, while retaining the certifying officers' individual

liability for grossly negligent or fraudulent certifications. Subsection 1395h(i)(2) similarly limits

the individual liability of the disbursing officers of fiscal intermediaries for making mistaken or

negligent payments, but only if they do so based upon a certifying officer's voucher, and only in the

absence of fraud or gross negligence.

 In contrast to the limited immunity accorded to certifying and disbursing officers, subsection

1395h(i)(3) broadly states that the fiscal intermediaries themselves will not be liable to the

Government for any of the payments referred to in paragraphs (1) and (2)—that is, payments

certified by certifying officers and disbursed by disbursing officers. A clause limiting immunity to

payments not involving gross negligence or fraud is conspicuously absent. When the language of

a statute is unambiguous, we are bound to give it its plain meaning, absent "a clearly expressed

legislative intent to the contrary." United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524,

2527, 69 L.Ed.2d 246 (1981) (quoting Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447

U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980)); see also United States v. Grigsby,

111 F.3d 806, 816 (11th Cir.1997). Subsection 1395h(i)(3) purports to give fiscal intermediaries

full immunity from liability for payments that are certified by its certifying officers and issued by

its disbursing officers, and we are not persuaded that Congress did not intend this immunity to

extend to fraudulent payments certified and disbursed to Medicare Part A providers. Cf. Erika, 456

U.S. at 207-08, 102 S.Ct. at 1653-54 (finding that Congress' failure to grant judicial review of Part
 24We are mindful of the brief statement in the Conference Committee's report that subsection

1395h(i)(3) is intended to grant fiscal intermediaries "the same immunity from liability for

incorrect payments as would be provided their certifying and disbursing officers." H.R. Conf.

Rep. No. 682 (1965), reprinted in 1965 U.S.C.C.A.N. 2228, 2231. This brief and inconclusive

statement is insufficient to overcome the clear language of the subsection. 

B amount determinations in the pre-1986 version of 1395ff, while simultaneously granting review

of amount determinations under Part A and of eligibility determinations under Parts A and B,

"provides persuasive evidence that Congress deliberately intended to foreclose further review of

such claims").24

Our reading of the subsection is consistent with the broader goals of section 1395h and the

efficient administration of the Medicare system. Fiscal intermediaries, such as BCBSA, function

much like an administrative agency. They "act on behalf of the Secretary, carrying on for [her] the

governmental administrative responsibilities imposed by the [Medicare Act]." Sen. Rep. No. 404

(1965) reprinted in 1965 U.S.C.C.A.N. 1943, 1995 (adding that "[t]he Secretary, however, would

be the real party in interest in the administration of the program"). In recognition of their

administrative role, the Medicare regulations require that contracts with fiscal intermediaries

"contain clauses providing for indemnification with respect to actions taken on behalf of HCFA,"

42 C.F.R. § 421.5(b) (1997), and the federal courts have extended the doctrine of sovereign

immunity to them. See Matranga v. Travelers Ins. Co., 563 F.2d 677, 677-78 (5th Cir.1977)

(justifying extension of the doctrine because the United States is the real party in interest); Peterson

v. Blue Cross/Blue Shield of Texas, 508 F.2d 55, 57-58 (5th Cir.1975). Rather than impose liability

on fiscal intermediaries for the vast amounts of federal money their agents certify and disburse to

Medicare providers, a task delegated by the HCFA, Congress established provisions providing for

recoupment of overpayments from the actual recipients of the funds. See 42 U.S.C. § 1395gg; see

also 42 C.F.R. §§ 405.301-405.378 (1997) (specifying method for recouping overpayments from
 25We would imagine that provider complicity would be evident in almost every instance

where Medicare claims are fraudulently certified and paid to providers. Otherwise, the fiscal

intermediary's agents certifying and disbursing United States Government funds are simply

performing unacknowledged acts of charity, because they cannot directly benefit from the

payments they have fraudulently certified and disbursed to unwitting, albeit happily enriched,

providers. 

providers).

This system of allocating liability for erroneous Medicare payments does not leave the

government without any remedies for punishing Medicare fraud. Not only can the government

recoup incorrect payments, it can certainly bring an FCA action against the recipient of the funds

if that recipient participated in the scheme.25 The government could also bring an action against the

actual persons in the fiscal intermediary organization who executed the fraudulent scheme—the

certifying officers and disbursing officers who paid out the government's money in knowing

contravention of Medicare guidelines. The government's inability to bring an FCA action against

the intermediary does not mean it will have no recourse to deep pockets either. By allowing the

government to require surety bonds for intermediary employees, subsection 1395h(h) implicitly

acknowledges that fiscal intermediary employees handling the government's cash will be in a

position to pilfer. See 42 U.S.C. § 1395h(h).

Fiscal intermediary immunity from liability to the United States for payments certified and

disbursed by its officers in the normal course of business also does not preclude the government

from seeking recourse against recalcitrant intermediaries. Most obviously, the government can

terminate the contract of an intermediary if "the continuation of some or all of the functions provided

for in the agreement with the [fiscal intermediary] is disadvantageous," 42 U.S.C. § 1395h(g)

(emphasis added), much less if the government detects intentional disobedience to Medicare rules

and regulations. See also 42 C.F.R. §§ 421.120 (intermediary performance criteria), 421.122
 26Cf. United States ex rel. Flynn v. Blue Cross/Blue Shield of Michigan,(D.Md.1995). Flynn

involved a settlement agreement between the government and Blue Cross/Blue Shield of

Michigan ("BCBSM"). Therefore, we do not cite the case for its legal conclusions about liability

under the FCA, because there are none. The case does describe, however, the type of fiscal

intermediary fraud for which we do not believe section 1395h(i)(3) would provide immunity.

In Flynn, the government, by relator Darcy Flynn, brought an FCA action against

BCBSM because the intermediary was not performing audits for which it was being paid

by the government, causing the government to pay BCBSM for phantom services, in

addition to costing the government money it would have recovered had the audits been

performed. Id. at *6. By the time of the settlement, BCBSM was no longer either a fiscal

intermediary or carrier for Medicare in Michigan, and it agreed to pay the government

$27,600,000 to settle the claims. Id. at *8. 

(performance standards), 421.124 (intermediary's failure to perform efficiently and effectively),

421.126 (termination of intermediary agreements) (1997). Fiscal intermediaries would also be liable

for any money pilfered directly by the intermediary from government funds, such as government

cash illegally siphoned into the intermediary's own accounts or charges to the government for

services the intermediary did not perform, because its immunity extends only to payments to

Medicare beneficiaries certified by certifying officers and disbursed by disbursing officers.26

Finally, if the government discovered rampant fraud and abuse of Medicare by a fiscal intermediary,

we do not doubt that it could find sufficient civil and criminal grounds to punish the fiscal

intermediary and its officers, and/or recoup any lost money. Cf. Flynn,(detailing terms of massive

settlement between BCBSM and the government for BCBSM's fraud).

Body's action under the False Claims Act is premised upon precisely the types of payments

for which Congress provided the fiscal intermediaries with immunity. There is nothing in Body's

complaint to suggest that the payments were not made in the normal course of reimbursing Alabama

hospitals for costs attributable to Medicare patients, that is, payments certified and disbursed to the
 27Body claims that his unnamed "superiors" ordered him to certify the payments to Baptist

and Carraway. If he were actually coerced to certify the payments, and the payments were

fraudulent, those superiors may be liable under the FCA, because they would have essentially

usurped his certifying function. We express serious doubt, however, that Body (or the

government) could succeed on such a claim. The payments made to Alabama hospitals were not

concealed from the government; the Secretary of Health and Human Services could have

pursued the recoupment of the money, but chose not to; and, even after the OIG investigation,

almost all of BCBSA's determinations were upheld. Given these facts, it is highly unlikely that

Body could succeed in proving that BCBSA, or any of its officers, defrauded the United States

government. 

 28Body's suit seeks recovery for the United States under the qui tam provisions of the FCA,

not recovery for Body personally. Thus any argument subsection 1395h(i)(3) does not apply

because Body does not seek to impose liability "to the United States" would be similarly

unavailing. 

 29We note briefly that given our holding that BCBSA is immune from liability under

subsection 1395h(i)(3), Body's suit is properly dismissed under Federal Rule of Civil Procedure

Rule 12(b)(6), for failure to state a claim upon which relief can be granted, rather than Rule

12(b)(1) for lack of subject matter jurisdiction. 

providers. In fact, it appears that Body himself was the certifying officer.27 Although Body could

argue that he does not seek to impose liability for "payments" as meant in subsection 1395h(i)(3),

but rather for statutory penalties and treble damages for violations of the FCA, that argument would

be unavailing. We cannot ignore that Body's suit would be premised upon payments for which

subsection 1395h(i)(3) provides BCBSA immunity.28 Allowing Body to circumvent that immunity

by appeal to the False Claims Act would destroy the integrity of the system that Congress designed.

BCBSA, therefore, is immune from Body's suit.

IV.

For the foregoing reasons, we hold that the district court erred in dismissing Body's suit for

lack of subject matter jurisdiction. We also hold, however, that Body has not stated a claim for

which relief can be granted because, under 42 U.S.C. § 1395h(i)(3), BCBSA is immune from

liability to the United States for the payments it made to Alabama hospitals.29 The district court's
dismissal is thus

AFFIRMED.