F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

P A T R I C I A H A R

O ; J O H N G. B A L E N T I N E ; J A C K M C

N U T T ; T R

O Y H A L L , Plaintiffs-Appellees

,

v

.

K A T H L E E N S E B E L I U S , Secretary

of the United States Department of Health and Human Services,

Defendant-Appellant

. N o. 11-16606

D.C. No. 4:09-cv-00134- DCB

ORDER AND AMENDED OPI NI ON

A ppeal from the United States District Court for the District of Ariz o na David C. B ury , District J udg e, Presiding

Arg u ed December 5, 2012 Submitted F ebruary 14, 2013 San F rancisco, California

F iled September 4, 2013 Amended J anuary

2, 2014

B efore: B arry

G. Silverman, Ronald M. Gould, and Morg an Christen, Circuit J udg es.

Opinion by J udg e ChristenH A R O V

. S E B E L I U S 2

SUMMARY *

Medicare

The panel amended a

n opinion filed September 4, 20 13, vacated injunctions entered by the district court, and reversed the district court’s su m m a r y j udg ment e ntered in favor of a nationwide class of Medicare beneficiaries in an action broug ht by the beneficiaries, a n d a named plaintiff’s attorney , challeng i n g the Secretary of Health and Human Services’ practice of demanding “up front” reimbursement for secondary pay

ments from beneficiaries who have a ppealed a reimbursement d e t e rm i nation or soug h t a waiver of the reimbursement oblig ation.

The district court enjoined the Secretary from seeking up front r eimbursements of Medicare secondary pay ments from beneficiaries who have received p ay ment from a primary p lan if they have unresolved a

ppeals or waivers, a

nd enjoined the Secretary from demanding that attorney s withhold settlement proceeds from their clients until after Medicare is reimbursed. The panel held that p laintiff Patricia Haro demonstrated Article I I I standin g o n b e half of the class of Medicare b e n e f i c i a r i e s , a n d H a r o ’ s a t t o r n e y i n d e p e n d e n t l y demonstrated s t a

n d i ng to raise his individual claim. However, the panel c oncluded that the beneficiaries failed to satisfy the channeling r equirement at the administr a t i ve level, a nd therefore the district court lacked subject matter jurisdiction pursuant to 42 US.C. d 405(g ). The panel reached the merits of the attorn ey ’s claim, but concluded that the Secretary ’s

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.H A R O V

. S E B E L I U S 3

interpretation of the s e condary pay er provisions was reasonable. The panel remanded for c onsider a t i o n of the appellees’ due process claim.

COUNSEL

Alisa B . Klein (arg

u ed) and Mark B . Stern, Attorney s; Tony W est, Assistant Attorney General; Ann B

. Scheel, Actin g United States Attorney
, U nited States Department of J ustice, Civil D ivision, W ashing ton, D.C.; Wi l l i a m B

. S c h u l t z, A cting General Counsel; Marg aret M. Dotz e l, Depu t y G eneral Counsel; J an i c e L

. Hoffman, Associate General Counsel; Carol J

. B ennett, D e p u ty A ssociate General Counsel for Prog r am I nteg rity ; L eslie M. S t a fford, Attorney
, United States Department of Health a nd Human Services, W a shing ton D.C., for Defendant-Appellant.

Gil Deford (arg

ued) and W ey

- We y K w o k, Center for Medicare Advocacy

, W illimantic, Connecticut, for P l a i n tiffsAppellees.

B arbara J o n es, AARP F oundation L itig ation, Pasadena, California; I ris Y. Gonz ález

, AARP F oundation L iti ga t i on, W a shin gt o n D.C.; Michael Schuster, AARP, W ashing ton D.C., for Amicus Curiae AARP.H A R O V

. S E B E L I U S 4

ORDER

The o pinion filed on September 4, 2013, and appearing at 729 F .3d 993, is amended as follows:

On p ag e 5 of the slip o p i n i o n , r e place the third sentence of the first parag

raph with the following lang uag e:

B u t we conclude that t h e beneficiaries failed
to satisfy the channeling requirement at the administrative level and therefore the district
court lacked subject m atter jurisdiction pursuant to 42 US.C. § 405(g ).

On pag e 5 of the slip opinion, in the fifth sentence of the fi rst parag raph, r eplace the word “beneficiaries’ ” with the word “appellees.’ ”

On pag e 1 0 of the slip opinion, in the second full sentence appearing on the pag e, replace the word “beneficiaries” with “plaintiffs.”

On pag e 23 of the slip opinion, replace footnote 8 with the following lang uag e :

The benefici aries also cite, inter alia

, Mathews v. Di a z , 4 26 U S. 67 ( 1976), Briggs

v. Sullivan

, 886 F

. 2d 1 132 (9th Cir. 1989), and Lopez v. Heckler

, 725 F .2d 1489 (9th Cir. 1984), vacated 4 69 US. 1 082 (1984). B ut these cases pre-date I

llinois Council

, 529 US. 1 (2000).H A R O V

. S E B E L I U S 5

On pag e 24 of the slip opinion, replace heading i with the heading “Haro’s F e bruary 2, 2009 l etter did not satisfy the channelingrequirement.”

O n pag e 24 of the slip o pinion, in the first sentence i n subsection i, r eplace the w o r d “ presentment” with “channeling .”

On pag es 25 of th e slip o pinion, r eplace the last two parag raphs of subsection i with the followinglang u ag e:

Even if Haro’s letter and subsequent inaction did affo r d t h e S e c r e t a r y an “opportunity to apply

, interpret, or revise” the challeng ed policy

, Har o failed to ex haust her administrative remedies before filing suit in federal court. To ex h aust h e r administrative remedies, a beneficiary must proceed throug h the f ive levels of a dministrative review: ( 1 ) t h e i n i t i a l d e t e r m i n a t i o n ; (2) redetermination; (3) reconsideration of the redeterminat i o n ; (4) a

n AL J hearing ; a

nd (5) review by the Medicare Appeals Council. 42 C

. F. R

. § 405. Haro failed to press her cl a im bey ond level two. I nstead, less than a week after she mailed he r r eimbursement check to the Secretary
, Haro filed suit

— before any ag e n c y review of the up-front reimbursement policy

.

Haro claims t h a t the g overnment has

w aived the ex haustion requirement. B ut we

can find no unambig u ous waiver of this issueH A R O V

. S E B E L I U S 6

i n the record, and therefore conclude that th e issue is not waived.

W e conclude t hat the channeling requirement of § 405(g ) was not met. B ecause channeling is a jurisdictional requirement, the district court lacked subject
matter jurisdiction over the beneficiaries’ claim.

On p ag e 32 of t h e s l ip opinion, replace the word “beneficiaries’ ” with the word “appellees.’ ”

An a mended opinion is filed c o ncurrently with this order.

W i t h this amendment, J udg es Silverman, Gould, a nd Christen vote to d eny Appellant’s petition for panel rehearing and rehearing en banc, filed on O ctober 18, 2 0 1 3

. The full
court has been advised of the petition for rehearing a nd rehearing en banc a

nd no judg e requested a vote on whether to rehear the matter en banc. F e d. R. App. P. 35.

The petition f

or panel rehearing and rehearing e n banc is DENIED

. No further petitions for en b anc or panel rehearing shall be permitted.H A R O V

. S E B E L I U S 7

OP INION

CHRI STEN, Circuit J udg e:

Secretary of Health and H uman Se r vices Kathleen S eb e l ius a

ppeals the district court’s order certify ing a nationwide class of Medicare benefici aries and g ranting
summary judg ment in the beneficiaries’ favor. Patricia Haro, J ack McNutt, and Troy Hall are n amed plaintiffs. J ohn B alentine was Haro’s lawy er in her und e rly ing personal injury suit.

B e fore the d i strict court, the b eneficiaries raised two claims: (1) the Secretary ’ s practice of demanding “up front” reimbursement for seco ndary pay ments from beneficiaries who have appealed a reimbursement determination o r soug ht waiver of the reimbursement oblig ation is incons istent with the secondary pay er provisions o f th e M e d icare statutory scheme; and (2) the Secretary ’s p ractice v i o l a tes their d ue process rig hts. B alentine separately claimed t he Secretary ’s practice of demanding that attorney s withhold s ettlement proceeds fr om beneficiary -clients until Medicare is reimbursed is also inconsistent w ith the secondary p a y er provisions.

The district court ag reed with the beneficiaries. The court enjoined the Secretary from seeking up front reimbursement of Medicare secondary pay ment s from beneficiaries w ho have rece i v e d pay

ment from a primary plan if they have unresolved appeals of their reimbursement calcula t i o ns o r

unr e s o l ved requests f

or waiver o f their reimbursement oblig ations. The district c ourt also ag reed with B alentine a nd enjoined t h e Secretary f rom demanding that attorney s withhold settlement proceeds from their c lients u ntil af t erH A R O V

. S E B E L I U S 8

Medicare is reimbursed. The district court did not reach the beneficiaries’ due process claim.

On appeal to our court, the Secretary raises three jurisdictional a

rg uments. F irst, she arg ues that this case is not justiciable because neither the beneficiaries nor B alentine h ad Article I I I standing

. Second, she arg u es this c ase is moot. Third, she arg ues that the d istrict court lacked subject matter jurisdiction o ver all claims i n the complaint. O n the merits, the Secretary maintains that her inter p r e t a tion of the Medicare secondary pay er provisions is reasonable.

W e have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. W e conclude that H aro has demonstrated Article I I I standing o n b e h a l f of the class of Medicare b e n e f i c i a r i es and that B alentine has indep e n d e n t l y demonstrated standing to raise his individual claim. B u t we conclude that the beneficiaries failed to satisfy the channeling requirement a t the administrative leve l a nd therefore the district court lacked subject matter jurisdicti o n pursuant to 42 US.C. § 405(g ). W e reach the merits of B alentine’s c laim, bu t conclude that the Secretary ’s interpretation of the seconda r y p ay er provisions is reasonable. W e therefore
vacate the district c o u rt’s injunctions, reverse the district court’s summary judg m ent o r der, and remand for consideration of the appellees’ due process claim.

I. BACK G R OUND

A. Statutory Background

Cong r ess e nacted the secondary pay er p r ovisions of the Medicare statute in 1980 to cut Medicare costs. See Zinman

v. Shalala

, 67 F .3d 8 4 1
, 8 4 3 (9th Cir. 1995). ThoseH A R O V

. S E B E L I U S 9

provisions make Medicare seco n d ary to other sources o f insurance by forbidding Medicare pay ments when a primary plan—for instance, g roup health insurance o r liability insurance—is reasonably e x pected to make pay ment fo r t he

same medical care; and b y p roviding that certain Medicare
pay ments a re conditional and must be r eimbursed. 42 US.C. § 1395y (b)(2)(A), (B ). Conditional pay ments are at issue in this case.

Medicare makes a conditional pay ment when a primary insurer cannot reasonably be e x pected to pay promptly

. Id. § 1395y (b)(2)(B )(i). I f Medicare makes a co n d i tional
pay ment and the beneficiary late r receives pay ment f rom a primary insurer, Medicare is entitled to reimbursement. Id. § 1395y (b)(2)(B )(ii). Specifically

, § 1395y (b)(2)(B )(ii) provides that “a primary plan [ or] an entity that receives
pay ment from a primary plan, shal l reimburse” Medicare

once the primary plan’s responsibility h as been demonstrated by a judg ment or settle m ent. Id. W e refer to this
parag raph—§ 1395y (b)(2 ) (B )(ii)—as the “reimbursement provision.” I f Medicare is not reimbursed within 60 day s after notice of the primary insurer’s pay ment, the Secretary is entitled to charg e interest on the reimbursement amount. Id.

The statutory scheme also c reates a c a u s e o f action b y which the United States may recover from a primary

plan or “from any e ntity that has received pay ment fro m a primary plan or f rom the proceeds of a primary plan’s pay ment to any entity .” Id. § 1395y (b)(2)(B ) (iii). W e refer to this part of the Medicare statutory scheme as the “cause of a ction provision.” The cause of action provision allows the U nited States to seek reimbursement f

rom “ the b enefi ciary herself.” Zinman
, 67 F

. 3d at 844–45; see also 42 C.F .R. § 411.24(g ) (Medicare “has a r ig h t of action to r ecover its pay ments from any entity

,H A R O V

. S E B E L I U S 10

including a beneficiary

. . . [ o r] attorney

. . . that has received a primary pay ment.”).

W h en Medicare learns that a beneficiary has received
pay ment f rom a primary plan, the Secretary makes an initial determination of the amount of reimbursement due from the beneficiary

. B orrowing from the Social Security Act, the Medicare Act incorporates administrative review procedures
set out in 42 US.C. § 405(b) and judicial review p ursuant to 42 US.C. § 405(g ). See 42 U S.C. § 1 39 5 f f ( b ) ( 1 )(A). A beneficiary may contest the amount of reimbursement or seek waiver of any r eimbursement amount. S ee id. § 1395g g

.

B. F actual Background

1. P atricia Haro

Patricia Haro was injured in a car accident and Medicare paid for her medical treatment. Haro filed a p e rsonal i n j u r y claim a g ainst the tortfeasor, which eventually s e t tled. Medicare, throug h the Medicare Secondary Pay er Recov e ry Contractor, 1 soug ht reimbursem e n t of $ 1,682.72 in a letter dated J anuary 1 2, 2 009. The letter informed Haro of her rig ht
to appeal the reimbursement determination or seek waiver but

a l s o stated that Haro “must” pay within 60 day s and that interest would start t o run if p ay ment was not made in that period. T he letter encourag ed Haro to p ay the amount in full,

even if she dec i d e d t o appeal or seek a waiver, in order to avoid interest charg es.

1 T h e M e d i c a r e Seco n d ary P ay er R eco v ery Co n tracto r i s a p riv ate

co n tracto r th at c o l lects seco n d ary p ay m en t reim

b u rsem en ts o n beh alf of Med icare. Fo r sim

p licity

, th is o p in io n ref

ers to bo th en tities as Med icare.H A R O V

. S E B E L I U S 11

Haro disputed the r eimbursement determination by letter dated J anuar

y 2 1
, 2009. Haro’s lawy e r sent a second letter,

on F ebruary 2, 2009. I n it, he arg ued that the reimbursement provision did not g ran t t h e Secretary authority to seek
p a y ment from a beneficiary within 6 0 day s of notice o f t h e settlement if the beneficiary h ad appealed the reimbursement determination. The l e t t e r also arg ued that the Due Process Clause prohibits taking s of p roperty befor e t h ere has been a determination of rig hts to that property

.

Medicare reduced Haro’s reimbursement amount to $696.13 by letter dated March 3
, 2 0 0 9

. On March 4, 2009, l i k ely b efore Haro r e c eived notice of the revised reimbursement fig ure, Haro sent Medicare a check for $800. Haro did n ot seek reco n s i d e ration of Medicare’s reduced reimbursement amount and instead filed this lawsuit on March 10, 2009. Medicare reimbur s e d H aro $103.87 (the difference between $800 and $696.13) on April 13, 2009.

2. Jack McNutt

L ike Haro, J a ck McNutt was injured in a car a ccident a nd Medicare paid his medical costs. M c Nu t t’s personal injury lawsuit settled and McNutt notified M e d i c a re of the settlement. Medicare responded w ith a letter requesting reimbursement of $26,487.07. T he letter stated that McNutt

was req u i r ed to pay w ithin 60 day s of the receipt of the settlement proceeds and that interest would start to accrue if
pay ment was n o t r ec e ived w ithin that time. The letter also informed McNutt of his rig ht s to a ppeal and seek waiver o f the reimbursement oblig ation. McNutt appealed the reimbursement determination.H A R O V

. S E B E L I U S 12

After Medicare sent McNutt a n o t i c e of the Secretary ’s intent to refer the debt to the D epartment of Treasury
, McNutt
wrote a letter o f “a p p e al,” but with his letter he enclosed a check for $11,366.58, the a m ount h e believed h e owed. Medicare sent McNutt an a djusted demand. B ecause o f McNutt’s earlier pay

ment, only $ 1,422.93 (including $13.36 in interest) remained outstanding

. Medicare notified McNutt that his remaining reimbursement pay ment “should” be made within 30 day s. McNutt soug h t r e c o n sideration o f that amount, a nd the Secretary acknowledg ed that notice of intent
to refer the debt to Treasury was sent in error. 2 Medicare then reduced McNutt’s total reimbursement amount ag a in, and McNut t p a id the remaining balance, plus interest. His administrative appeal was still pending at the time this appeal

was filed. At the adm i n i s t r ative level, McNutt did not challeng e the Secretary ’s prac t ice of demanding up front reimbursement.

3. Troy Hall

Troy Hall was injured while working and Medicare paid for his injury -related medical c are. After Hall settled his worker’s compensation claim, h e received a reimburs e ment demand from the Secretary

. Hall appealed t h e S ecretary ’s i n i tial reimbursement calculation. Medicare reduced the reimbursement amount and determined that H a l l owed

n o t h i ng

. A t the administrative level, Hall d id not object t o t h e S e c r e t a r y ’ s p r a c t i c e o f d e m a n d i n g u p f r o n t reimbursement.

2 T h e letter states th at “ d eb ts p en din g ap p eal are ex clu d ed f ro m ref erral
to th e Dep artm en t o f

T reasu ry .”H A R O V

. S E B E L I U S 13

4. John Balentine

Attorney J ohn B alentine r epresented Haro in her personal injury lawsuit and duri n g administrative proceeding s. He received a letter from Medicare similar to the letter that Haro received. I t instructe d h i m not to disburse settlement funds
to h is beneficiary

-client until Medicare had b e en reimbursed, and said he w ould be personally liable if h e d id. B alentine declared t h a t he routinely receives similar letters from Medicare.

C. District Court P roceedings

As noted above, this appeal involves two separate c laims
ag ainst the Secretary

. F irst, the b eneficiaries alleg ed that the Secretary e x ceeded her authority un d er the Medicare secondary pay er provisions by dem anding pay ment before resolution of the plaintiffs’ appeals or c o mpletion of the waiver application process. Second, B alen t i n e alleg ed that the Secretary ’s demand that beneficiaries’ attorney s withhold settlement proceeds until Medicare is reimbursed ex ceeds the Secretary ’ s statutory authority

. The beneficiaries also alleg ed that the Secretary ’s demand violated their due process rig hts. Plaintiffs soug ht declaratory and injunctive relief.

I n the district court, the Secretary moved p u r s uant to F ederal Rule of Civil Procedure 12(b)(1) to dismiss the complaint for lack of subject ma t t e r jurisdiction. The Secretary arg ued that the ben e f iciaries lacked Article I I I standing and had not e x hausted their administrative remedies

as r e q u ired by 42 US.C. § 405(g ). The district court concluded that Haro and McNutt had Article I I I standing a nd
t h a t , with respect to McNutt, § 405(g )’s e x haustionH A R O V

. S E B E L I U S 14

requirement was properly waived. The d istrict court denied the motion to dismiss.

On cross-motions for summary jud gm e n t, the district

c o urt g ranted the named plaintiffs’ motion and certif i e d a class of beneficiaries w ho had been o r would be subj e c t to demands for r eimbursement from the Secretary before their administrative appeals were ex hausted. Even analy z i ng the Secretary ’ s practice pursuan t to the deferential standard

ex p lained in Chevron U.S.A. v. Natural Resources Defense Council

, 467 US. 837 (1984), the district court d e termined that the Secretary ’s up front reimbursement requirement was inconsistent with the appeals and waiver processes. The district court therefore enjoined the Secretary from demanding reimbursement of secondary pay ments from beneficiaries prior to resolution o f their administrative appeals or r equests for waiver. Th e district court also

e n joined the Secretary from demanding that attorney s withhold liability proceeds from their clients p e nding reimbursement of disputed claims.

II. STANDARD OF REVIEW

W e review a district court’s determination of s u b j ect matter jurisdiction de novo. Cook Inlet Region, I nc. v. Rude

, 690 F .3d 1127, 1130 ( 9 th Cir. 2012). W e also review an order g ranting summary j u d gm e nt de novo. I nt’l Rehabilitative Sciences, I nc. v. Sebelius

, 688 F .3d 994, 1000 (9th Cir. 2012).H A R O V

. S E B E L I U S 15

III. DISCUSSION

A. Jurisdictional Issues

On appeal, the Secretary arg ues that Article I I I ’s case o r

c o n troversy requirement was not met in this case because nei ther the beneficiaries nor B alentine had standing a nd because the beneficiaries’ claims are moot. The Secretary also maintains that the district court lacked statutory subject
matter jurisdiction. Each jurisdictional arg um e n t is addressed in turn.

1. Article III Standing

a. Benef iciaries

I n order to demonstrate Article I I I s t a n d ing

, a p laintiff

m u s t s how: (1) a concrete injury ; (2) fairly traceable to the challeng ed action of the defendant; (3) that is l i k e l y to be redressed by a f

avorable decision. Luj a n v

. Defenders of W ildlife

, 504 US. 555, 560–61 (1992). “ I n a class action, standing is satisfied if at least one named plaintiff meets the requirements.” Bates v. Un i t e d Parcel Serv., Inc.
, 511 F .3d 9 7 4, 9 85 (9th Cir. 2 007) (en b anc). “[ A] plaintiff mu s t demonstrate standing for each cla i m ” and “for each form o f relief soug ht.” DaimlerChrysler Corp. v. Cuno
, 547 U S. 332, 352 (2006) ( intern a l q u otation marks and citation omitted). “The standing formulation for a plaintiff seeking prospective injunctive relief” g e n erally r equires that the plaintiff’s
concrete injury be “coupled w ith ‘a sufficient likelihood that he will a g ain be wrong ed in a similar way .’” Bates
, 511 F .3d
at 985 (quoting City of

Los Angeles v. Lyons
, 461 US. 9 5, 111 (1983)).H A R O V

. S E B E L I U S 16

“[ A] plaintiff is presumed to have constitutional standing
to seek inju n c t ive relief when [ the plaintiff] is the direct object of [ g overnment] action challeng e d as unlawful.” Los Angeles Haven Hospice, Inc. v

. Sebelius

, 638 F .3d 644, 6 5 5 (9th Cir. 2011) (citing L u jan
, 5 04 US. at 561–62). Here, Haro was the direct object of th e Secretary ’s alleg edly

ove r r e a ching collection p ractice. She received a letter requesting reimbursement be fo re her administrative appeal had run its course. W e therefore sta r t with the presumption that Haro has Articl e I I I standing

, on behalf of the class, to challen ge t h e Secretary ’s practice. See Mayfield v. United States
, 599 F .3d 964, 971 (9th Cir. 2010) (“W hen the lawsuit
at issue challeng e s the leg ality of g overnment action, and the plaintiff has been the object of the action, then it is presumed that a judg ment p re v enting the a c tion will redress his injury .”).

W e consider whether the elements of Article I I I standing

, as a rticulated in Lujan
, were satisfied at t h e t i me the complaint w as filed. Cnty. of Riverside v

. McL aughlin

, 500 U S. 44, 5 1 (199 1 )

. W hen the complaint was filed, Medicare owed Haro $103.87—t he difference between the $800 she sent to Medicare in response to t h e f i r s t demand letter a nd Medicare’s $696.13 final reim bursement determination. Haro had been deprived of $103.87 for
approx imately one month 3 and h ad therefore suffered a

m o dest but concrete f

iscal injury that was directly traceab l e

3 Haro claim s i n an af

f i d av i t th at s h e sen t t

h e $ 8 0 0 p ay

m en t w i t h h er req u est f o r red e t e r m i n atio n o n J an u ary 2 1
, 20 0 9

. Sh e rep eats th is

co n ten tio n in h er b rief

. H o w ev er, t he c h e ck itself w as d ated March 4
, 2 0 0 9

. Mo reo v er, a March 4 letter f ro m B alen tin e to Med i care states th at

an $ 80 0 ch eck

is en clo sed . T h e co m

p l ain t w as f

iled o n March 10
, 2 0 0 9

an d Med icare’ s reim

b u rsem en t ch eck

to Haro w as d ated A

p ril 1 3 , 2 0 0 9

.H A R O V

. S E B E L I U S 17

to the challeng ed ac t i o n of the Secretary

. The first two prong s of the Lujan formulation were therefore satisfied as to the beneficiaries’ claim.

The third element of Article I I I standing is redressability

. The Secretary arg ues that Haro is not likely to suffer the same injury ag ain and that she therefore cannot show that injunctive relief would r edress her injury

. Lyons sug g ests that Haro must demonstrate that she was likely to suffer the same injury in t h e future, a

bsent injunctive relief. 461 US. at 105–06 (choke-hold victim lacked standing to pursue injunct i v e relief ag ainst police where he was u nable to demonstrate likelihood of future c hoke-holds). B ut u nlike the plaintiff in L

yo n s , Haro’s alleg ed injury was ong oing a t the time the complaint was filed—she was deprived o f $103.87. An injunction prohibiting the S e cretary from withholding

r eimbursement pay

ments until after completion of the appe a l s proc ess would have redressed Haro’s injury

. See McLaughlin

, 500 US. at 51 (disting u ishing Lyons ). B ecause

we conclude that a p roperly framed injunct i o n would have redressed Haro’s injury

, Haro has demonstrated the necessary criteria for Article I I I standing on behalf of the class.

b. Balentine

B a lentine is not part of the b e n eficiary class; he asserted

an individual claim unique to his status a s co u n s e l for a Medica r e beneficiary

. Therefore, he must separately demonstrate Article I I I standing

. DaimlerChrysler

, 547 US.

a t 352. B ecause B alentine was the object of the Sec re t a r y ’s demand that he withhold disbursement of Haro’s set t l e ment funds, w e beg in with the presumption that he h as standing to challeng e the Secretary ’s action. Los Angeles Haven Hospice , 638 F .3d at 655 (citing Lujan
, 504 US. at 561–62).H A R O V

. S E B E L I U S 18

The demand B alentine received bears sig nif i c a nt similarity to the demand at issue in Los Angeles Haven Hospice

. Haven Hospice challeng ed a D epartment o f Health and Human Services reg ulation im p l em enting a cap on reimbursement for hospice care provided to Me d i c a re beneficiaries. See id. at 649; see also 42 US.C. § 1395f(i)(2). Haven Hospice received a demand for repay ment of the
amount it had been reimbursed in ex cess of the statutory cap. Los Angeles Haven Hospice
, 638 F .3d at 652. The Secretary maintained that the hospice did not have Article I I I standing
to c halleng e the reg ulation or seek to enjoin its enforcement. Id. at 654. B ut this co u r t , a pply ing the Lujan presumption, concluded: “[ T] he fact that the alleg edly unlawful reg ulation

was directly applied to Haven Hospice and ex posed it to individual liability for the claimed o verpay ments, is sufficient
to support its claim of Article I I I standi n g t o p ursue the declaratory and injunctive relief soug ht in the complaint.” Id. at 655.

The demand letter the S ecretary sent to B alentine represents direct application of the Secretary ’s interpretation of her authority under 42 C.F .R. § 4 1 1.24(g ). 4 The letter
states that “Medicare’s claim must b e p a i d u p front out o f settlement proceeds b efore any distribution occurs,” and that “Medicare must be p a id w ithin 6 0 day s of receipt o f the proceeds from the third party .” B ecause 4 2 C

. F. R. § 411.2 4 ( g) provides that Medicare “has a rig ht of action to

4 W h eth er w e an aly ze 4 2 C

. F

. R

. § 4 1 1 .2 4(g ) i n d iv id u ally

, o r in

co n j u n ctio n w i th 4 2 C.F.R. § 4 1 1 .2 4 (h ) is larg ely acad em ic: § 4 1 1 .2 4 (h ) in terp rets th e r eim

b u rsem en t p ro v i sio n an d p ro v id es th at “ [i]f th e b en ef iciary o r oth er p arty receiv es a p rim ary p ay m en t, t h e b en ef iciary or

o th er p arty m

u s t reim b u rse Med icare w ith in 6 0 d ay s.” T h e Secretary ’ s in terp retatio n

o f th e reim bu rsem en t p ro v i sio n

is th u s sim ilarly

b ro ad —it

en co m p asses atto rn ey s w

h o h av e receiv ed a p rim ary p ay m en t.H A R O V

. S E B E L I U S 19

r e c o v e r its pay

ments from any entity

, including a[ n]

. . . attorney

. . . that has r eceived a primary p ay ment,” the
reg ulation subjects B alentine to individual l i ability

. Consistent with Los Angeles H aven Hospice
, B alenti n e has demonstrated Article I I I standing . 638 F .3d at 655.

2. Mootness

The Secretary nex t arg ues th a t the c laims asserted in the complaint are moot. 5 A claim b ecomes moot “when the issues p r e s e n ted are no long er ‘live’ o r the parties lack a leg ally c o gn iz able interest in the outcome.” Powell v

. McCormack

, 395 US. 486, 496 (1969) (citation omitted). I t is u ndisputed that H aro did not c halleng e Me d i c are’s final reimbursement calculation a nd is not owed any additional refund. B ut the district c o urt concluded, and the beneficiaries maintain, that the “capable of repetition, y et evading review”

ex c e ption to mootness applies to their claim. See, e.g. , Padilla v. Lever
, 4 63 F .3d 1 046, 1049 ( 9 t h Cir. 2006) (en banc) (quoting Roe v. W

a de , 410 US. 113, 125 (1973)).

I n Sosna v. Iowa
, 419 U S. 393, 401 (1975), the Supreme Court held that mootness of a n amed p laintiff’s claim a fter class certific a t i o n does n o t moot the action. After incremental e x tension o f Sosna
, 6 the Supreme Court held that whether class certification o ccu r s before or after a named

5 B ecau s e w e c o n c l u d e , in fra

, th at Haro is th e o n ly p lain tif f w h o arg u ab ly p resen t ed a ch allen g e to th e p ractic e o f req u irin g u p f ro n t reim b u rsem e n t at th e ad m in i strativ e lev el, w e l im it o u r an aly sis o f th e Secretary ’ s m o o tn ess arg u m en t to Haro ’ s claim

.

6 Fo r a co m

p reh e n s i v e s u m m a r y o f th is case law

, see Pitts v. Terrib le Herb st, In c. , 6 5 3 F.3 d 1 0 8 1 , 1 0 86

– 90 (9 th Cir. 2 0 1 1 ).H A R O V

. S E B E L I U S 20

plaintiff’s claim becomes moot is immaterial. McLaughlin

, 500 U S. at 52 (“That the c lass was not certified until after the named p laintiffs’ clai ms had become moot does not deprive

us of jurisd i c t i o n.”). The Court stated that where a claim is “so inherently

transitory

that the trial court will not have . . .
enoug h time to rule on a motion for class certification before the proposed repr esentative’s individual interest e x pires

. . . the ‘relation b ack’ doctrine is properly i n v o k e d to preserve the merits of the case fo r j u d i cial resolution.” I d. (citations omitted).

Here, Haro’s claim ex pired before the d istrict court certified the class. H er individual interest in injunctive relief

ex p ired once she w as fully reimbursed—approx imately o ne month after she filed this lawsuit—but the district c ourt could
not have been ex pected to rule on a motion for class certification in that period. Pursuant to the rule in Sosna a nd McLaughlin

, e x piration of Haro’s p ersonal stake in injunctive relief did not moot the beneficiaries’ c la i m f o r injunctive

r elief. W e conclude that the beneficiaries’ claim for injunctive relief i s n ot moot, and that A r ticle I I I ’s justiciability

requirements are satisfied. 7

7 T h e Secretary arg u es t

h at h er cu rren t practice—u n d er w h i ch d eb t s th at h av e b een ap p e a l ed are n o t ref erred to t h e Dep artm en t o f T reasu ry f or

co llectio n s—m o o ted th e ben ef iciaries’ claim

. B u

t th is m isap p reh en d s th e

n atu re o f th e b en ef

ici a r i e s ’ claim

. W h eth er th e claim s are ref erred f or

co llectio n o r n o t, p lain tif f s o b j ect t o th e d em an d f

or u p f ro n t reim b u rsem en t. T o th e ex t en t a cu rren t p o l icy co u l d h a v e m o o ted th e b en ef iciaries’ claim

, th e v o lu n tary cessatio n ex cep tio n ap p lies. S ee Frien d s of t h e Ea rth v

. L a i d l a w , 5 2 8 US. 1 6 7
, 1 8 9 (2 0 00 ) (“ [A ] d ef en d an t ’ s v o lu n tary cessatio n o f a ch allen g ed practice d o es n ot d ep riv e

a f ed eral co u

rt of i t s p o w e r to d eterm in e t h e l eg ality o f th e practice.” (in t ern al q u o tatio n

m ark s o m i tted )).H A R O V

. S E B E L I U S 21

3. Statutory Subject Matter Jurisdiction

The Secretary maintains that the district cour t d i d not have subject matter jurisdiction. The complaint a lleg ed federal question jurisdiction under 28 US.C. § 1331 a n d, alternatively

, jurisdiction under 42 US.C. § 1395ff(b)(1)(A). The latter statu t e i s a provision in the Medicare scheme that incorporates 42 US.C. § 405(g ), the statute that establishes federal jurisdict i o n t o r eview final decisions o f the Commissioner of Social Security

. The district court determined that it had subject matter jurisdiction p ursuant to § 405(g ).

a. The benef

iciaries’ claim

F ederal question jurisdic t ion does not ex tend to most claims arising under the Medicare Act. The Medicare A ct incorporates 42 US.C. § 405(h), which provides:

No finding s of fact or decision of the [ Secretary

]

. . . shall be reviewed b y a n y person, tribunal, or g o vernmental ag ency

ex c ept as herein p rovided. No action ag ainst the United States, the [ Secretary ]

. . . , or any officer or employ ee thereof shall be broug ht under section 1331

. . . of title 2 8 to recover on any claim arising under this subchapter.

42 US.C. § 405(h); 42 US.C. § 1395ii.

The series of cases interpreting § 405(h) makes clear that it precludes federal question jurisdiction in this case. F irst, in W einberge r v. Salfi

, 422 US. 749, 760–61 (1975), the Supreme Court ruled that a c laim “arises under” the SocialH A R O V

. S E B E L I U S 22

Security Act, for purposes of § 405(h), if the Social Security Act “provides both the standing and the substantive basis for the presentation of” t h e c laim. Salfi held that a due process and e qual p rotection challeng e to duration-of-relation s hip provisions of the Social Security Act could not proceed under § 1331. Id. at 761.

The Supreme Court ex tended Salfi to the Medicare Act in Heckler v. R inger
, 4 66 U S. 602, 614 (1984). There, the Court ruled that t h e re w as no federal question jurisdiction to consider a challeng e to a procedure for determining Medicare benefits. The Court described the procedural claim a s “inex tricably intertwined” with the substantive c laim for benefits, id.

, but the Court rejected the pr o position that application of § 4 0 5 ( h ) d e pends on w hether a claim is “procedural” rather than “substantive,” id. at 615.

F inally

, in Shahala v. Illinois Council on Long Term Care, Inc.
, the Supreme Court ex plained that th e b r o ad
purpose of § 405(h) is to ensure that claims are channeled so that the ag e ncy has the first o pport u n i t y to revise its o wn policies:

[ T] he bar of § 405(h) r eaches bey ond ordinary

a d m i nistrative law principles of ‘ripeness’ and ‘ex haustion o f administrative re m edies’— doctrines that in a n y e vent n ormally require channeling a leg al cha l l eng e throug h the

a g ency

. . . . [ I

] t demands the ‘channeling’ o f virtually all legal attacks through the agency [ and ] assures the agency g

reater opportunity
to apply, interpret, or revise policies, regulations, or statutes withou t possibly premature interference by different individualH A R O V

. S E B E L I U S 23

courts applying ‘

ripeness’ and ‘exhaustion’ exceptions case by case

.

529 US. 1, 12–13 (2000) ( emphasis added) (citation omitted). Illinois Council c ontinued, “[ t ] h e fact that the ag e ncy mig ht
not provide a hearing for [ any ] 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 throug h the ag ency .” Id. at 23 (emphasis omitted) (citations omitted).

Here, t he b eneficiaries and B alentine maintain that the Secretary ’ s inter

p r etation of the secondary pay er provisions is unlawful and t h a t the Secretary ’s application of the statute’s enabling reg ulations inj u r e d them. B ecause the secondary pay er provisions o f the Medicare A c t provide the standing and the substantive b asis for the benefi ciaries’ c laim, § 405(h) precludes orig inal jurisdiction unde r § 1 3 3 1. See Salfi , 422 US. at 760–61; see also Fanning v. United States

, 346 F .3d 386, 392, 399–400 (3d Cir. 2003) (district court did
not have federal question jurisdiction o v e r “ class action

co m p l a int seeking to enjoin the g o vernment’s attempt to obtain reimbursement of Medicare overpay ments pursuant to the secondary pay er provisi o n s”). Pursuant to § 405(h), we conclude the beneficiaries’ claim is subject to the r equirement that it be administratively channeled.

B ec a u se the beneficiaries were required to satisfy the presentme nt and ex haustion requirements u nder § 405(g ) prior to seeking judicial relief, we must first d e termine whether Haro f

airly presented h er claim at the administrative level. Kaiser v. Blue Cross of Cal.

, 347 F .3d 1107, 1115 (9th Cir. 2003). Ex haustion is waivable, presentment is not. Id. (citing Mathews v. Eldridge

, 424 US. 319, 328 (1976)). OnlyH A R O V

. S E B E L I U S 24

presentment is “purely jurisdictional.” Eldridge , 424 US. at 328 (internal quotation marks omitted).

The Secretary maintains that § 405(g )’s jurisdicti o n al presentment r equirement was n o t met because none of the named plaintiffs presented to the ag ency the claim that the Secretary lacks authority to demand up front reimbursement. The beneficiaries rely heavily on E ldridge to arg ue that a fi n a l decision from the Secretary with respect to a claim for benefits e ntitles a beneficiary to r aise any policy challeng e in federal court, ostensibly o n r e v i ew of the Secretary ’s final benefits d ecision. W e conclude the beneficiaries’ position is inconsistent with the purpose of the channeling r equirement in § 405(h) as ex plained b y the Supreme Court in I llinois Council

. Eldridge involved a Social Security benef i c iary who, a fter responding to a questionnaire, received notic e that a state ag ency monitoring his status had tentatively concluded he

was no long e r disabled. I

d. at 323–24. Eldridg e disputed o ne of the reports relied upon by the ag ency but otherwise stated that the ag ency had enoug h evidence o f his disability

. Id. at 324. The Social Security Administrat ion accepted the
ag ency ’s determination a n d termina t e d Eldridg e’s benefits. Id. Eldridg e did not req uest reconsideration of the administration’s termination of his benefits before filing a lawsuit and arg uing that due process required that h e be g iven a pretermination evidentiary hearing

. Id. at 324–25.

Analy z ing the district court’s jurisdiction to adjudicate Eldridg e’s claim, the Supreme Court ruled that “ [ t] hroug h his

answers to the state a g ency questionnaire, a n d his letter in
response to the tentative determination that his disability h ad ceased, [ Eldridg e] specifically p resented the claim that hisH A R O V

. S E B E L I U S 25

benefits should not be termin a t e d because he was still disabl e d .” Id. at 329 (emphasis added). The Court continued, “[ t] he f

act that Eldridg e f

ailed t o r a ise with the Secretary his constitutional claim to a p retermination h earing is not controlling [ ,]

. . . § 405(g ) requires only that there be a ‘final decision’ b y the Secretary with r espect to the c l aim o f entitlement to benefits.” Id. Conse quently

, the Court concluded that “the nonwaivable jurisdictional ele m e n t [ o f § 405(g )] was satisfied.” Id. at 330.

Th e beneficiaries maintain that Eldridge stands for the broad proposition that § 405(g )’s presentment r equirement is satisfied once a beneficiary has raised a claim for benefits. I n their view, a final decision on a claim for be n e f i t s p e rmits a beneficiary to raise any separate claim pertaining to the
ag ency ’s procedure o r policy in federal court. W e disag ree. I n our view, the beneficiaries’ reading o f Eldridge is overly broad.

The purpose of the channeling requirement is to “assure[ ] the ag ency g reater opportunity to apply

, i n t e r pret, or revise policies, reg ulations, or statute s w ithout possibly premature interference by different individual courts apply ing ‘ripeness’ and ‘ ex h austion’ ex ceptions

. ” I llinois Council

, 529 U S. at 13. This p urpose would not be fulf i l l e d if plaintiffs proceeding t

h r o u g h t h e a d m i n i s t r a t i ve c hannel were p ermitted
to raise claims in federal court that were not raised b efore the
ag ency

. See Lifestar Ambulance Serv., I nc. v. United States
, 365 F .3d 1293, 1298 ( 1 1 t h Cir. 2004) ( describing administr at i v e review as “the first step in a comprehensive statutory remedial scheme that f ully empowers a reviewing
court to consider and remedy any of the violations of law alleg ed by

[ a] plaintiff”).H A R O V

. S E B E L I U S 26

Moreover, the beneficiaries’ interpretation of the
p resentment requirement is fundamentally inconsistent wi t h the g eneral rule that “[ o ] nce federal subject matter ju r i s d i ction is established over the underly ing case b etween [ plaintiff] and [defendant]

, the jurisdictional prop r i ety of e ach additional claim is to be assessed individually .” Caterpillar Inc. v. Lewis
, 519 US. 61, 6 6 n.1 ( 1996) (quoting 3 J ames Moore, M

oore’s Federal Practice ¶ 1 4.26, 1 4

- 1 1 6 (2d ed. 1996)). I n Eldridge

, the g e neral rule described in Caterpillar

was not contravened because the plaintiff’s arg ument that he

was entitled to a pretermination e videntiary hearing h ad direct bearing on the termination of h is benefits. Notably

, this case does not involve a “claim for benefits” because the beneficiaries do not challeng e Medicare’s reimbursement calculations. They ch al l e ng e the Secretary ’ s policy o f demanding u

p front reimbur s e m ent, a policy that has no bearing o n the reimbursement calculations questioned by the beneficiaries at the administrative level. 8

F inally

, Illinois Council

, a case decided twenty -four y ears after Eldridge

, persuades us that the beneficiaries’ interpretation of Eldridge is too ex pansi v e

. I n I llinois Council

, the Supreme Court addressed a case bearing directly

on challeng e s to Medicare reg ulations a nd made clear that the ty pe of policy

challeng e at issue in this case is subject to the channeling requirement of § 405( h), a nd to the presentment requirement in § 4 05(g )

. Illinois Council

, 52 9 U S

. a t 14 (“Nor c an we accept a distinct i on that limits the scope o f § 405(h) to claims for monetary benefits.”).

8 T h e b en ef

iciaries also cite, i n ter a l ia
, M a th e w s v

. Dia z , 4 2 6 US. 6 7 (1 9 7 6), Brig

g s v. S u lliva n , 8 8 6 F.2 d 1 1 3 2 (9 t h C ir. 1 9 89 ), an d Lo

p e z v. Heckler

, 7 2 5 F.2 d 1 4 8 9 ( 9 th Cir. 1 9 8 4 ), va ca ted 4 6 9 US. 1 0 8 2 (1 9 8 4 ). B u t th ese cases p re- d ate Illin o is Co u n cil , 5 2 9 US. 1 (2 0 0 0 ).H A R O V

. S E B E L I U S 27

W e decline to adopt the ex traordinarily broad reading

of Eldridge that the beneficiaries invite. W e conclud e that the named plaintiffs’ reimbursement disputes did n ot p rovide an opportunity for the Secretary to consider the claim that her interpretation of the secondary p ay er provisions ex c eeded her authority

. Their requests for r e d e t e rmination of their respective amounts of reimbursement did not constitute presentment of their policy challeng e.

i. Haro’s F eb r u a ry 2, 2009 letter did not satisf y the channeling requirem ent.

The b eneficiaries rely solely on presentation of their reimbursemen t d i sputes as evidence that they f ulfilled § 405(g )’s channeling r equirement, but we c onsider whether the requirement was otherwise satisfied. I n t h e course o f

ex c h a ng ing c orrespo n dence r e g arding the amount o f reimbursement they each owed, only H aro made mention o f the arg u ment that the Secretary ex ceeded her authority under the Medicare secondary pay er provisions by seeking up front reimbursement.

Haro r equested redetermination o f the amount of her reimbursement oblig ation by letter d ated J anuary 21, 2009, but her lett e r did not c halleng e the Secretary ’s authority to demand “up front” reim b u r s e ment. Haro did make a brief objecti o n to the Secretary ’s reimbursement practice in a follow-up l e t t er dated F ebruary 2
, 2009. B ut subsequent

c o r r e s p o n d e n c e b e t w e e n H a r o a n d t h e S e c r e t a r y memorializ es that both parties ig nored Haro’s objection. The correspondence shows that Haro sent pay ment in r esponse to the Secretary ’s initial de m a n d

. Medicare then reduced its reimbursement demand, determined that Haro had overpaid, and refunded $103.87 to Haro

. W ith its refund, MedicareH A R O V

. S E B E L I U S 28

g ave Haro n otice t h a t it was closing its file. Haro did not object to th e S ecretary closing her f ile, sig naling that the parties had r esolved their dispute. Approx imately one month
p a ssed between the time Haro sent her F ebruary 2, 2 0 0 9 follow-up letter and the time the Secretary sent a letter reducing the reimbursement amount. Approx i mately o ne additional month passed b efore Haro was reimbursed for her
overpay ment. The record do es not show that either of the parties ever followed up on Haro’s objection t o t h e Secretary ’ s practice, a

nd neither McNu tt nor Hall ever objected to the S ecretary ’s authority to demand up front reimbursement.

Even if Haro’s letter an d subsequent inaction did afford the Secretary a

n “opp o r t u nity to apply

, interpret, or revise” th e challeng e d policy

, Haro failed to ex haust her administrative remedies before f iling suit in federal court. T o

ex h aust her administrative remedies, a beneficiary must proceed throug h the f

ive levels of administrative review: (1)
t h e i n i t i a l d e t e r m i n a t i o n ; ( 2 ) r e d e t e r m i n a t i o n ; ( 3 ) reconsideration of the redeterminati o n ; (4) an AL J hearing ; and (5) review by the Medicare A ppeals Council. 42 C.F .R. § 4 0 5. Haro failed to p ress her c laim bey ond level t w o

. I nstead, less than a w eek after she mailed her reimbursement check to the Secretary
, Haro filed suit — before any ag ency review of the up-front reimbursement policy

.

Haro c laims that the g o vernment has waived t h e

ex h austion requirement. B ut we can f i n d n o unambig uous waiver o f this issue in the record, and therefore conclude that the issue is not waived.

W e conclude that the channeling requirement of § 405(g )

was not met. B ecaus e c h a n neling is a jurisdictionalH A R O V

. S E B E L I U S 29

r e quirement, the district court lacked subject matt e r jurisdiction over the beneficiaries’ claim.

b. Bale n t i ne’s claim is excepted from the channeling requirem ent.

Attorney B alentine bring s a separate claim unique to his
status as an attorney for a Medicare beneficiary

. As such, we must separately consider w hether the district c o u r t h ad jurisdiction to adjudicate his claim.

B e tween Ringer a

nd Illinois Council

, the Supreme Court decided Bowen v

. Michigan Academy of Family Physicians

, 476 US. 667 (1986 )

. M

ichigan A cademy appeared to limit the scope of the ch a n n e ling requirement in § 405(h) to quantitative, b enefit-amount d e terminations. See id. at 680–81. B ut in Illinois Council the Supreme Court c larified that “it is more plausible to read Michi g a n A cademy a s holding that § 1395ii [the provision of the Med i care statute that incorporates § 405(h) into the Me d icare Act] does not apply § 4 0 5 (h) where a

pplication of § 405(h) would not simply c hannel r eview throug h the ag ency , but wo u l d mean no review at all.” Illinois Council , 529 US. at 19.

B e cause B alentine i s n ot a Medicare beneficiary

, he did
not have the opportunity to present his challeng e throug h the

same ad m i n istrative channel a s the beneficiaries. 9 We a re

9 Su b part I of 4 2 C.F.R. § 40 5 describ es th e f iv e lev els o f ad m in istrativ e

rev iew

. A b en ef

iciary f irst receiv es an i n itial d eterm in atio n

. 4 2 C .F.R. § 4 0 5 .9 2 4 (b )

. I f th e b en ef iciary is d issatisf

ied

, th e b en ef

iciary m ay req u est red eterm in atio n , i d

. § 4 0 5 .9 4 0
, reco n sid eratio n o f th e

r e d e t e r m i n a t i o n , i d

. § § 4 0 5

. 9 6 0 –.9 7 8
, an A L J h e a r i n g, i d

. § § 4 0 5 .1 0 0 0

– .1 0 5 4
, an d rev i ew b y th e M e d i care A p p eals Co u n cil, id

. § § 4 0 5 .1 1 0 0– .1 1 4 0

. B ecau se B alen tin e is n o t a ben ef iciary

, h e w ou ld n o tH A R O V

. S E B E L I U S 30

unaware of any other p ath to administrative review of the policy that B alentine challeng es, a n d the parties cite n one. Therefore, b ecause apply in g § 405(h)’s channeling requirement would mean no r eview of B alentine’s individual cla i m , the claim f

alls within the very narrow M ichigan Academy ex ception, see id.

, a n d the district court had federal question jurisdiction under § 1331 to adjudicate it.

B. The Secretary’s interpretation of the reim burs e me nt provision is reasonable.

Having determined that the district court lacked subject
matter jurisdiction over the beneficiaries’ claim, but t h at it had jurisdiction to a djudicate B alentine’s claim under § 1331,

we turn to the merits of the Secretary ’ s appeal of the district court’s second injunction.

The district court concluded that the Secretary ’s practice of demanding that attorney s w ithhold client funds was inconsistent with the secondary pay e r provisions. The reimbursement provision states that “ a n entity that receives
pay ment from a primary plan, shall reimburse [ Medicare] for
any [ se c ondary pay

ment] if it is demonstrated that such primary plan

. . . had a re s p o n s ibility to make [ a primary ]
pay ment,” 42 US.C. § 1395y (b)(2)(B )(ii) (emp h a s i s added), but it does not define “entity .”

The Secretary h as interpreted “ e ntity t h a t receives
p a y ment f rom a primary p lan” in accordance w ith the statute’s enabli n g reg ulations. 42 C.F .R. § 411.24(g ) provides that the Secretary “has a rig ht of action to recover its

receiv e an in itial d eterm in atio n o f a reim b u rsem en t am ou n t d irected at h im

.H A R O V

. S E B E L I U S 31

pay ments from any entity

, including a beneficiary

. . . [or] attorney

. . . that has received a primary pay ment.” (emphasis added). And 42 C.F .R. § 411.24(h) states that “[ i] f the beneficiary or other party receives a primary pay ment, the beneficiary or o ther p a rty must reimburse Medicare w ithin 6 0 day s.” W e review the Secretary ’s interpretation of the statute pursuant to the deferential Chevron standard. Zinman
, 67 F .3d at 843–44.

1. Application of Chevron

The first step under Chevron is to determine “ w h ether Cong r ess has directly spoken to the precise question at issue.” 467 U S. a t 842. The reimbursement provision does not specify whether an attorney who receives settlement proceeds constitutes “an entity that receives pay ment from a primary plan,” and therefore Cong r ess has not spoken to t h e p recise issue.

“[ I ] f the statute is silent or ambig uous with respect to the specific issue, the q

uestion f or the cou rt is whether the
ag ency ’s answer is based on a permissible construction of the statute.” Id. at 843. I f the Secr et ary ’s construction is “rational and c ons i s t e n t with the statute, it is a permissible construction” and will be upheld. Zinman
, 6 7 F. 3 d at 845 (internal q

uotation marks omitte d ). We therefore consider whether the Secretary ’s construction of the re i m b ursement provision is rational and consistent with the statute.

a. There is no stat u t o ry basis to distinguish betw een entit i es that receive paym e nt f rom a prim ary plan and end-point recipients.H A R O V

. S E B E L I U S 32

An attorney who receives settlement proceeds, even a s an intermediary , has “receive[ d] pay ment from a primary

plan” in a literal sense; the Secretary ’s interpretation of the statute is rational in this reg ard. B u t the district court concluded that there is nothing in the secondary pay er provisions supporting

an action a g ainst attorney s, “ex cept to the ex tent they are endpoi n t r ecipients of settlement p roceeds.” F rom this, we understan d that the district court drew a distinction b etween fees e arned and retained by an a t torney representing a Medicare beneficiary

, and funds deposited into an attorney ’s
trust account to be held in trust on behalf of th e a t t o r n e y ’s beneficiary

-client. But the relevant statutory tex t broadly
states that “an entity that receives p ay ment from a primary plan[ ] shall reimburse” Medicare; i t does not disting uish between a recipient of pay ment from a p rimary plan and an “end-point rec ipient” of such pay ment. 42 US.C. § 1395y (b)(2)(B )(ii). W e find nothing in the statutory lang uag e to persuade us that the o bl i ga t i o n to reimburse Medicare is limited to “end-point” recipients.

b. The 2003 am endm ents indicate th at Congress intended a broad construction of “entity t hat receives paym ent f

rom a prim ary plan.”

B e fore 2003, the c ause o f action p rovision stated that “the United States may bring an a ction ag ainst any entity which is required

. . . to [ make a primary pay ment] or a ga i n s t any other entity (i n c l u d ing a

ny phy sician o r provider) that has

r eceived pay

ment from that entity .” United States v. Bax t e r Int’l, I nc. , 3 45 F. 3d 866, 906 (11th Cir. 2003) (quoting 42 U.S.C. § 1395y (b)(2)(B )(ii)). 1 0 Analy z ing t h e previous

10 B ef o re 2 0 0 3 , th e cau se o f

actio n p ro v isio n

w as co d if

ied at 4 2 US.C. § 1 3 9 5y (b )(2 )(B )(ii), w h ich n o w co d if ies th e reim

b u rsem en t p ro v i s io n

.H A R O V

. S E B E L I U S 33

version of the statute, the Baxter court applied the doctrine o f ejusdem g eneris to conclude that “Cong ress intended the term ‘any other entit y ’ to be understood with reference to ‘phy sician’ and ‘provider,’ and to encompass only entities o f like k ind.” Id. at 906. B ut i n t h e w a k e of Baxter
, Cong ress amended the statute to eliminate its reference to “phy sician” and “ provider.” The amended statute now states that the United S tates may r ecover, without limitation, “ from any entity that has received pay ment from a primary plan o r from the proceeds o f a p rimary plan’s pay ment to any e ntity

. ” 42 U.S.C. § 1395y (b)(2)(B )(iii). The amended c a u s e o f action provision i ndicates that Cong ress intended a more

e x p a nsive construction o f “entity that has received pay ment from a prima ry plan” than the o ne described in Baxter

. B ecause the reimbursement provision u ses identical lang uag e to the amended cause of action provision, t h e 2 0 03 amendments support the Secretary ’s positi o n that her construction of the reimbursement pro v i s i on is consistent with c ong ressional intent. See Bowoto v

. Chevron Corp.
, 621 F .3d 1116, 1127 (9th Cir. 2010) (“ i d e n t i cal words used in d ifferent part of the same act are intended to have the same meaning ” (q u oting Comm’r v. Lundy

, 516 US. 235, 250 (1996)).

c. The Secretary’s i n t erpretation is consistent

w ith the purpose o f t he secondary payer provisions.

“ The transformation of Medicare from the primary pay er to the secondary pay er with a rig h t of reimbursement reflects the overarching statuto r y purpose of reducing Medicare costs.” Zinman
, 67 F .3d at 845. T h e Secretary ’s demand that attorney s who have received settlement proceeds reim b urse Medicare b efore disbursi ng those proceeds to their c lientsH A R O V

. S E B E L I U S 34

certainly increases the likelihood that p r oceeds w ill be available for reimbursement. Therefore, the S e c retary ’s interpretation of the reimburse m ent provision is consistent with the g eneral purpose of the secondary pay er provisions.

d. Whether the Secretary c an rec o v e r f r om an attorney who has already disbursed settlem ent proceeds does not bea r o n the m erits o f the injunction.

B al e ntine maintains that the secondary pay er provisions do not create a lien ag ainst the settlement p r oceeds. Therefore, he arg

ues, the Secretary may not recover from an attorney who has already disbursed settlement proceeds. The d istrict court ag r eed and r uled that the Secretary doe s n o t have a rig h t of a ction ag ainst atto rn e y s who have already disbursed settlement p roceeds. B ut that issue is not presented

on the facts of this c ase. The Secretary w as f ully reimbursed and B alentine was not sued after disbursing Haro’s settlement proceeds. The complaint alleg es only t hat the Secretary ’s d e mand that attorney s withhold funds from their clie n t s

ex c e eds her authority u nder the secondary pay er provisions. The Secretary ’s authority to bring an action ag ainst an attorney who has disbursed the proceeds is not a controversy ripe for our review.

W e conclude the Secretary ’s interpretation o f the reimbursement p r o v ision is rational and consistent with the statute’s tex t, history , and purpose, therefore it is reasonable and the d i s t r ict court’s second injunction and its order on summary judg ment must be reversed.H A R O V

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IV. CONCLUSION

The district court lacked subject matter jurisdiction over the b eneficiaries’ c laims. The Secre t a r y ’s interpretation o f 42 U.S.C. §§ 1 395y (b)(2)(B )(ii) and ( iii) is reasonable. W e t h erefore VACATE the injunctions entered by the district
court and REVERSE the district court’s summary judg ment order. W e REMAND this case to the district court for consideration of the appellees’ due process claim.