Opinion ID: 2648174
Heading Depth: 5
Heading Rank: 2

Heading: Balentine’s claim is excepted from the

Text: channeling requirement. Attorney Balentine brings a separate claim unique to his status as an attorney for a Medicare beneficiary. As such, we must separately consider whether the district court had jurisdiction to adjudicate his claim. Between Ringer and Illinois Council, the Supreme Court decided Bowen v. Michigan Academy of Family Physicians, 476 US. 667 (1986). Michigan Academy appeared to limit the scope of the channeling requirement in § 405(h) to quantitative, benefit-amount determinations. See id. at 680–81. But in Illinois Council the Supreme Court clarified that “it is more plausible to read Michigan Academy as holding that § 1395ii [the provision of the Medicare statute that incorporates § 405(h) into the Medicare Act] does not apply § 405(h) where application of § 405(h) would not simply channel review through the agency, but would mean no review at all.” Illinois Council, 529 US. at 19. Because Balentine is not a Medicare beneficiary, he did not have the opportunity to present his challenge through the same administrative channel as the beneficiaries.9 We are 9 Subpart I of 42 C.F.R. § 405 describes the five levels of administrative review. A beneficiary first receives an initial determination. 42 C.F.R. § 405.924(b). If the beneficiary is dissatisfied, the beneficiary may request redetermination, id. § 405.940, reconsideration of the redetermination, id. §§ 405.960–.978, an ALJ hearing, id. §§ 405.1000–.1054, and review by the Medicare Appeals Council, id. §§ 405.1100–.1140. Because Balentine is not a beneficiary, he would not 30 HARO V. SEBELIUS unaware of any other path to administrative review of the policy that Balentine challenges, and the parties cite none. Therefore, because applying § 405(h)’s channeling requirement would mean no review of Balentine’s individual claim, the claim falls within the very narrow Michigan Academy exception, see id., and the district court had federal question jurisdiction under § 1331 to adjudicate it. B. The Secretary’s interpretation of the reimbursement provision is reasonable. Having determined that the district court lacked subject matter jurisdiction over the beneficiaries’ claim, but that it had jurisdiction to adjudicate Balentine’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 attorneys withhold client funds was inconsistent with the secondary payer provisions. The reimbursement provision states that “an entity that receives payment from a primary plan, shall reimburse [Medicare] for any [secondary payment] if it is demonstrated that such primary plan . . . had a responsibility to make [a primary] payment,” 42 US.C. § 1395y(b)(2)(B)(ii) (emphasis added), but it does not define “entity.” The Secretary has interpreted “entity that receives payment from a primary plan” in accordance with the statute’s enabling regulations. 42 C.F.R. § 411.24(g) provides that the Secretary “has a right of action to recover its receive an initial determination of a reimbursement amount directed at him. HARO V. SEBELIUS 31 payments from any entity, including a beneficiary . . . [or] attorney . . . that has received a primary payment.” (emphasis added). And 42 C.F.R. § 411.24(h) states that “[i]f the beneficiary or other party receives a primary payment, the beneficiary or other party must reimburse Medicare within 60 days.” We 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 “whether Congress has directly spoken to the precise question at issue.” 467 US. at 842. The reimbursement provision does not specify whether an attorney who receives settlement proceeds constitutes “an entity that receives payment from a primary plan,” and therefore Congress has not spoken to the precise issue. “[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843. If the Secretary’s construction is “rational and consistent with the statute, it is a permissible construction” and will be upheld. Zinman, 67 F.3d at 845 (internal quotation marks omitted). We therefore consider whether the Secretary’s construction of the reimbursement provision is rational and consistent with the statute. a. There is no statutory basis to distinguish between entities that receive payment from a primary plan and end-point recipients. 32 HARO V. SEBELIUS An attorney who receives settlement proceeds, even as an intermediary, has “receive[d] payment from a primary plan” in a literal sense; the Secretary’s interpretation of the statute is rational in this regard. But the district court concluded that there is nothing in the secondary payer provisions supporting an action against attorneys, “except to the extent they are endpoint recipients of settlement proceeds.” From this, we understand that the district court drew a distinction between fees earned and retained by an attorney representing a Medicare beneficiary, and funds deposited into an attorney’s trust account to be held in trust on behalf of the attorney’s beneficiary-client. But the relevant statutory text broadly states that “an entity that receives payment from a primary plan[] shall reimburse” Medicare; it does not distinguish between a recipient of payment from a primary plan and an “end-point recipient” of such payment. 42 US.C. § 1395y(b)(2)(B)(ii). We find nothing in the statutory language to persuade us that the obligation to reimburse Medicare is limited to “end-point” recipients. b. The 2003 amendments indicate that Congress intended a broad construction of “entity that receives payment from a primary plan.” Before 2003, the cause of action provision stated that “the United States may bring an action against any entity which is required . . . to [make a primary payment] or against any other entity (including any physician or provider) that has received payment from that entity.” United States v. Baxter Int’l, Inc., 345 F.3d 866, 906 (11th Cir. 2003) (quoting 42 U.S.C. § 1395y(b)(2)(B)(ii)).10 Analyzing the previous 10 Before 2003, the cause of action provision was codified at 42 US.C. § 1395y(b)(2)(B)(ii), which now codifies the reimbursement provision. HARO V. SEBELIUS 33 version of the statute, the Baxter court applied the doctrine of ejusdem generis to conclude that “Congress intended the term ‘any other entity’ to be understood with reference to ‘physician’ and ‘provider,’ and to encompass only entities of like kind.” Id. at 906. But in the wake of Baxter, Congress amended the statute to eliminate its reference to “physician” and “provider.” The amended statute now states that the United States may recover, without limitation, “from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” 42 U.S.C. § 1395y(b)(2)(B)(iii). The amended cause of action provision indicates that Congress intended a more expansive construction of “entity that has received payment from a primary plan” than the one described in Baxter. Because the reimbursement provision uses identical language to the amended cause of action provision, the 2003 amendments support the Secretary’s position that her construction of the reimbursement provision is consistent with congressional intent. See Bowoto v. Chevron Corp., 621 F.3d 1116, 1127 (9th Cir. 2010) (“identical words used in different part of the same act are intended to have the same meaning” (quoting Comm’r v. Lundy, 516 US. 235, 250 (1996)).