Opinion ID: 509033
Heading Depth: 2
Heading Rank: 1

Heading: Medicare Fraud: 42 U.S.C. Sec. 1395nn(b)(2)(B)

Text: 15 West Allis sought preliminary injunctive relief against St. Luke's waiver program under 42 U.S.C. Sec. 1395nn(b)(2)(B) which provides: 16 Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person--to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any item or service for which payment may be made in whole or in part under this subchapter ... shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both. 17 In denying the preliminary injunction, the district court assumed, without specifically finding, that great irreparable harm would be suffered by West Allis if the injunction were to be denied, but concluded that there was almost no likelihood that West Allis [would] succeed on the merits, because it could not show any entitlement to the injunctive relief sought. West Allis Memorial Hospital, 660 F.Supp. at 938-39. In so ruling, the court relied on a long-standing doctrine that equity will not enjoin the commission of a crime, and found that no exception to that doctrine was warranted under the circumstances. Id. at 939-40. The district court therefore did not reach the ultimate issue of whether St. Luke's waiver program was violative of Sec. 1395nn(b)(2)(B). 18 West Allis contends on appeal that the district court abused its discretion when it found that it could not employ its equitable powers to enjoin the criminal activity complained of. While West Allis acknowledges that courts generally will not enjoin a crime, it maintains that the present case falls within one of the recognized exceptions to that doctrine under which a court may enjoin criminal activity when statutorily authorized to do so. United States v. Jalas, 409 F.2d 358, 360 (7th Cir.1969). Arguing that such authority exists under Sec. 1395nn, and that the statute creates an implied private right of action in favor of Medicare providers, West Allis concludes that the denial of the preliminary injunction constitutes a reversible error of law. We do not agree. 19 While the district court did not address the issue of standing under an implied right of action, our review must begin at that point, for the power of the federal courts to entertain an action is not unlimited. As the Supreme Court recently noted in Bender v. Williamsport Area School District, 475 U.S. 534, 106 S.Ct. 1326, 1328, 89 L.Ed.2d 501 (1986): 20 [E]very federal appellate court has a special obligation to satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review,.... Mitchell v. Maurer, 293 U.S. 237, 244 [55 S.Ct. 162, 165, 79 L.Ed. 338] (1934). See Juidice v. Vail, 430 U.S. 327, 331-332 [97 S.Ct. 1211, 1215, 51 L.Ed.2d 376] (1977) (standing).... [When the lower court] lack[s] jurisdiction, we have jurisdiction on appeal, not of the merits but merely for the purpose of correcting the error of the lower court in entertaining the suit. United States v. Corrick, 298 U.S. 435, 440 [56 S.Ct. 829, 831, 80 L.Ed. 1263] (1936) (footnotes omitted). 21 475 U.S. at 541, 106 S.Ct. at 1331. 22 To the extent West Allis asserts standing under Sec. 1395nn, based on a perceived implied private right of action, we find its arguments unpersuasive. A strong presumption exists against the creation of such implied rights of action. Community & Economic Development Ass'n of Cook County, Inc. v. Suburban Cook County Area Agency on Aging, 770 F.2d 662, 664 (7th Cir.1985). The factors which a court should consider in determining whether such a right exists include: (1) whether the plaintiff is one of the class for whose especial benefit the statute was enacted; (2) whether there is any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one; (3) whether it is consistent with the underlying purpose of the legislative scheme to imply such a remedy for the plaintiff; and, (4) whether the cause of action was one traditionally relegated to state law. Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975) (citations omitted). The ultimate question, however, is whether Congress intended to provide such a right in enacting the statute. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 145-48, 105 S.Ct. 3085, 3091-93, 87 L.Ed.2d 96 (1985); Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S. 353, 377-78, 102 S.Ct. 1825, 1838-39, 72 L.Ed.2d 182 (1982); Cort v. Ash, 422 U.S. at 78, 95 S.Ct. at 2087; City of Evanston v. Regional Transportation Authority, 825 F.2d 1121, 1123 (7th Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 697, 98 L.Ed.2d 649 (1988). 23 In the present case, we find that neither the structure of Sec. 1395nn nor its legislative history suggests that Congress intended to provide a private remedy to Medicare providers such as West Allis which may be injured as a result of a competitor's noncompliance with the provisions of that statute. The Secretary of Health and Human Services is charged with the administration of the Medicare program pursuant to 42 U.S.C. Sec. 1395kk. He is aided in that endeavor by the Attorney General, whose duty it is to enforce the laws and Constitution of the United States. Where a statute is framed as a general prohibition or command to a federal agency, as it is in the present case, a private right of action will seldom be implied. City of Evanston v. Regional Transportation Auth., 825 F.2d at 1123, quoting Rapid Transit Advocates v. Southern California Rapid Transit District, 752 F.2d 373, 376 (9th Cir.1985). The legislative history of Sec. 1395nn further supports the conclusion that it is the Government, and not private parties, which is charged with the enforcement of the Medicare program where it identifies the purpose of Sec. 1395nn as: 24 Legislation to amend the Social Security Act to strengthen the capability of the Government to detect, prosecute, and punish fraudulent activities under the Medicare and Medicaid programs.... 25 1977 U.S.Code Cong. & Admin.News 3039, 3040. (Emphasis added). Whether this purpose would be better achieved by arming providers such as West Allis with the authority to enforce the provisions of Sec. 1395nn is a judgment better left to Congress. See Drake v. Honeywell, Inc., 797 F.2d 603, 611 (8th Cir.1986). 26 Finding no intent on the part of Congress to create a private right of action in favor of West Allis, we need not carry the Cort v. Ash inquiry further. Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 94 n. 31, 101 S.Ct. 1571, n. 31, 67 L.Ed.2d 750 (1981); see also Massachusetts Mutual Life Insurance Co., 473 U.S. at 148, 105 S.Ct. at 3093. The resolution of the question of standing also obviates the need for this court to determine whether a waiver program such as St. Luke's violates the language of Sec. 1395nn(b)(2)(B)--an issue which Congress has clearly recognized and chosen to deal with in its own way. 4 27 Even assuming West Allis had the requisite standing to bring an action under Sec. 1395nn, we would concur with the district court in finding that no exception to the equitable doctrine against enjoining criminal activity was warranted. There are three recognized exceptions to the doctrine: national emergencies, widespread public nuisances, and where a specific statutory grant of power exists authorizing injunctive relief. United States v. Jalas, 409 F.2d at 360. West Allis does not contend that it falls within the first two exceptions, and we find nothing in the language of Sec. 1395nn which would authorize the issuance of an injunction against violators thereof. Absent such specific statutory authority, the district court was powerless to enter the injunctive relief requested. 28 We find that West Allis' claim for preliminary injunctive relief against the federal defendants is similarly without merit. In denying such relief, the district court found: (1) that equity jurisprudence barred the court from acting to restrain a criminal prosecution where the movant had an adequate remedy at law, and the only harm suffered was the anxiety, cost, and inconvenience of having to defend against a criminal prosecution, Trainer v. Hernandez, 431 U.S. 434, 97 S.Ct. 1911, 52 L.Ed.2d 486 (1977); (2) that West Allis ha[d] only the remotest of chances ... of being prosecuted if it institute[d] a waiver program and therefore lacked standing to seek injunctive relief against any prospective criminal prosecution; and, (3) that even assuming that West Allis was sufficiently threatened with prosecution to establish standing, the court should defer to the Department of Justice in determining who should be prosecuted under Sec. 1395nn where, as here, the statute itself was not challenged as constitutionally invalid. West Allis Memorial Hospital, 660 F.Supp. at 940. 29 We find no error in the district court's ruling. Even if we assume, as did the district court, that West Allis has established the requisite standing, there is a heavy presumption against enjoining pending or threatened criminal prosecutions. Downstate Stone Co. v. United States, 651 F.2d 1234, 1238 (7th Cir.1981). In the absence of a showing of exceptional circumstances, a federal court generally will not use its equitable powers to prevent the enforcement of a criminal statute which is concededly valid and constitutional. See Spielman Motor Sales Co., Inc. v. Dodge, 295 U.S. 89, 95, 55 S.Ct. 678, 680, 79 L.Ed. 1322 (1935); Downstate Stone Co., 651 F.2d at 1238; Ivy v. Katzenbach, 351 F.2d 32, 34-35 (7th Cir.), cert. denied, 382 U.S. 958, 86 S.Ct. 437, 15 L.Ed.2d 362 (1965). West Allis has failed to demonstrate that such circumstances exist in the present case, and that judicial interference is warranted.