Opinion ID: 702330
Heading Depth: 2
Heading Rank: 2

Heading: Jurisdiction under the Medicare Act

Text: 18 Medicare claimants, under both Parts A and B, must ordinarily present their claims to the Secretary for review and exhaust their administrative remedies by obtaining a final decision of the Secretary before they can present a claim for judicial review. 42 U.S.C. Sec. 405(g); Bowen v. City of N.Y., 476 U.S. 467, 472, 106 S.Ct. 2022, 2025-26, 90 L.Ed.2d 462 (1986); Ringer, 466 U.S. at 617, 104 S.Ct. at 2022-23. That final agency ruling by the Secretary is central to the requisite grant of subject-matter jurisdiction. Weinberger v. Salfi, 422 U.S. 749, 764, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975). The district court found that the plaintiffs had satisfied the nonwaivable presentment prerequisite. Although we believe that decision is a generous one, 15 we shall accept, for the sake of argument, that the plaintiffs have overcome that jurisdictional hurdle and will focus on the second requirement under Sec. 405(g): that there be full administrative review culminating in a final decision of the Secretary. City of N.Y., 476 U.S. at 482-83, 106 S.Ct. at 2031-32. This requirement of exhaustion of administrative remedies is waivable under certain limited circumstances. Ringer, 466 U.S. at 618, 104 S.Ct. at 2024. 19 In this case, the plaintiffs have not specifically alleged that they have exhausted, or have attempted to proceed through, their administrative remedies. They have alleged only that [a]ll conditions precedent have been performed or have occurred, R.10 at p 32, and that they were not granted the opportunity for a fair hearing and thus had no available or meaningful method to challenge Associated's locality classification. Compl. at pp 21, 22, 31, 32, 33. There is no administrative record here. See Michigan Ass'n of Indep. Clinical Labs., 52 F.3d at 1350 (holding, in case with no administrative record and no ALJ decision, that plaintiffs' letters were not sufficient to constitute exhaustion or a basis for waiver of exhaustion). Nevertheless, the exhaustion requirement may be waived if it would be futile, that is, if there is no reasonable prospect that the applicant could obtain any relief by pursuing them, Health Equity Resources, 927 F.2d at 965. Our court has also held exhaustion unnecessary if the claim is collateral to the claim for benefits and ... if requiring exhaustion would cause irreparable harm. Marcus v. Sullivan, 926 F.2d 604, 614 (7th Cir.1991). The Second Circuit, although noting that those factors may not be applied mechanically, has neatly listed the three criteria for waiver of the exhaustion rule: (1) The claim must be collateral to a demand for benefits; (2) exhaustion of the administrative process would be futile; and (3) the plaintiffs would suffer irreparable harm if required to move through the administrative procedure before obtaining relief. Abbey, 978 F.2d at 44 (citing City of N.Y. v. Heckler, 742 F.2d 729, 736 (2d Cir.1984), aff'd, Bowen v. City of N.Y., 476 U.S. 467, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986)); see also Day v. Shalala, 23 F.3d 1052, 1059 (6th Cir.1994). 20 The plaintiffs submit that they are entitled to bypass the waivable requirement of exhaustion because their claims are substantially collateral to their claim for specific Medicare benefits. According to the plaintiffs, their complaint challenged the defendants' application and administration of Medicare provisions and their methods of classifying Dearborn County as a Category 03 locality, but did not challenge the amounts of their benefits. The district court disagreed; it held that the plaintiffs' locality designation claim was part and parcel of their claims for benefits. We believe the district court's reasoning is sound. As our discussion above indicates, when a complaint asserts that the plaintiffs have not received the full Part B Medicare benefits and seeks damages for lost benefits, we cannot consider it as anything other than a claim for higher benefits. These plaintiffs, unlike those in Marcus and Day, 16 are basically seeking additional reimbursement that is in no way collateral to an amounts determination. 21 The plaintiffs also claim that it would be futile to attempt to exhaust their administrative remedies because no meaningful method to challenge Associated's methods of classification is available. Plaintiffs rely on Dr. Kohlhaas' letter from the Acting Region V Administrator of the Department of Health and Human Services, dated December 4, 1987, which stated that no such formal appeals process exists whereby a physician can appeal the methodology a Medicare carrier used to establish its reasonable charge localities. R.17. On the basis of that statement, the plaintiffs posit that there is no administrative remedy available for them, and therefore that exhaustion would have been futile. 22 We believe that the letter, read in full, conveys a different message. The administrator answers Dr. Kohlhaas' questions on locality determinations; he then explains the established appeals process to follow for a review of a denied claim. The full sentence, from which the plaintiffs have excerpted the portion on which they rely, states: 23 While there is an established appeals process a physician may utilize when he disagrees with a Medicare carrier's decision on an assigned claim, no such formal appeals process exists whereby a physician can appeal the methodology a Medicare carrier used to establish its reasonable charge localities. 24 R.17. Thus the above quoted statement, in context, indicates that there is no process for obtaining the sort of declaratory relief Dr. Kohlhaas might prefer, but that a claimant could ask the carrier that handled the disputed claim to review the locality designation within the context of that claim. See Michigan Ass'n of Indep. Clinical Labs., 52 F.3d at 1350 (determining that plaintiffs' five-year letter-writing crusade did not qualify as request for review determination or hearing). Nor have these plaintiffs presented a legal basis on which to claim that the hearing officer, administrative law judge, or appeals council do not have the competence to address the locality classification as one of the factors used to compute a reimbursement. In sum, we conclude that futility cannot be a basis, in this case, for waiving the exhaustion requirement. 25 Finally, the plaintiffs have not shown that they would be irreparably harmed if the exhaustion requirement were enforced. The district court properly recognized that the plaintiffs failed to demonstrate that deferment of judicial review until exhaustion of administrative remedies would cause them injury that cannot be remedied by later payment of the benefits requested. R.2 at 15. There has been no showing of injury, hardship, or futility, and no justification for asserting that their claim is collateral to a claim for benefits. As a result, the requirement that administrative remedies be exhausted cannot be ignored. Because the plaintiffs failed to exhaust the Sec. 405(g) requirements, the district court properly dismissed their claims for lack of subject matter jurisdiction.