Opinion ID: 2648174
Heading Depth: 5
Heading Rank: 1

Heading: The beneficiaries’ claim

Text: Federal question jurisdiction does not extend to most claims arising under the Medicare Act. The Medicare Act incorporates 42 US.C. § 405(h), which provides: 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 . . . of title 28 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. First, in Weinberger v. Salfi, 422 US. 749, 760–61 (1975), the Supreme Court ruled that a claim “arises under” the Social 22 HARO V. SEBELIUS Security Act, for purposes of § 405(h), if the Social Security Act “provides both the standing and the substantive basis for the presentation of” the claim. Salfi held that a due process and equal protection challenge to duration-of-relationship provisions of the Social Security Act could not proceed under § 1331. Id. at 761. The Supreme Court extended Salfi to the Medicare Act in Heckler v. Ringer, 466 US. 602, 614 (1984). There, the Court ruled that there was no federal question jurisdiction to consider a challenge to a procedure for determining Medicare benefits. The Court described the procedural claim as “inextricably intertwined” with the substantive claim for benefits, id., but the Court rejected the proposition that application of § 405(h) depends on whether a claim is “procedural” rather than “substantive,” id. at 615. Finally, in Shahala v. Illinois Council on Long Term Care, Inc., the Supreme Court explained that the broad purpose of § 405(h) is to ensure that claims are channeled so that the agency has the first opportunity to revise its own policies: [T]he bar of § 405(h) reaches beyond ordinary administrative law principles of ‘ripeness’ and ‘exhaustion of administrative remedies’— doctrines that in any event normally require channeling a legal challenge through the agency. . . . [I]t demands the ‘channeling’ of virtually all legal attacks through the agency [and] assures the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual HARO V. SEBELIUS 23 courts applying ‘ripeness’ and ‘exhaustion’ exceptions case by case. 529 US. 1, 12–13 (2000) (emphasis added) (citation omitted). Illinois Council continued, “[t]he fact that the agency might 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 through the agency.” Id. at 23 (emphasis omitted) (citations omitted). Here, the beneficiaries and Balentine maintain that the Secretary’s interpretation of the secondary payer provisions is unlawful and that the Secretary’s application of the statute’s enabling regulations injured them. Because the secondary payer provisions of the Medicare Act provide the standing and the substantive basis for the beneficiaries’ claim, § 405(h) precludes original jurisdiction under § 1331. 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 over “class action complaint seeking to enjoin the government’s attempt to obtain reimbursement of Medicare overpayments pursuant to the secondary payer provisions”). Pursuant to § 405(h), we conclude the beneficiaries’ claim is subject to the requirement that it be administratively channeled. Because the beneficiaries were required to satisfy the presentment and exhaustion requirements under § 405(g) prior to seeking judicial relief, we must first determine whether Haro fairly presented her claim at the administrative level. Kaiser v. Blue Cross of Cal., 347 F.3d 1107, 1115 (9th Cir. 2003). Exhaustion is waivable, presentment is not. Id. (citing Mathews v. Eldridge, 424 US. 319, 328 (1976)). Only 24 HARO V. SEBELIUS presentment is “purely jurisdictional.” Eldridge, 424 US. at 328 (internal quotation marks omitted). The Secretary maintains that § 405(g)’s jurisdictional presentment requirement was not met because none of the named plaintiffs presented to the agency the claim that the Secretary lacks authority to demand up front reimbursement. The beneficiaries rely heavily on Eldridge to argue that a final decision from the Secretary with respect to a claim for benefits entitles a beneficiary to raise any policy challenge in federal court, ostensibly on review of the Secretary’s final benefits decision. We conclude the beneficiaries’ position is inconsistent with the purpose of the channeling requirement in § 405(h) as explained by the Supreme Court in Illinois Council. Eldridge involved a Social Security beneficiary who, after responding to a questionnaire, received notice that a state agency monitoring his status had tentatively concluded he was no longer disabled. Id. at 323–24. Eldridge disputed one of the reports relied upon by the agency but otherwise stated that the agency had enough evidence of his disability. Id. at 324. The Social Security Administration accepted the agency’s determination and terminated Eldridge’s benefits. Id. Eldridge did not request reconsideration of the administration’s termination of his benefits before filing a lawsuit and arguing that due process required that he be given a pretermination evidentiary hearing. Id. at 324–25. Analyzing the district court’s jurisdiction to adjudicate Eldridge’s claim, the Supreme Court ruled that “[t]hrough his answers to the state agency questionnaire, and his letter in response to the tentative determination that his disability had ceased, [Eldridge] specifically presented the claim that his HARO V. SEBELIUS 25 benefits should not be terminated because he was still disabled.” Id. at 329 (emphasis added). The Court continued, “[t]he fact that Eldridge failed to raise with the Secretary his constitutional claim to a pretermination hearing is not controlling[,] . . . § 405(g) requires only that there be a ‘final decision’ by the Secretary with respect to the claim of entitlement to benefits.” Id. Consequently, the Court concluded that “the nonwaivable jurisdictional element [of § 405(g)] was satisfied.” Id. at 330. The beneficiaries maintain that Eldridge stands for the broad proposition that § 405(g)’s presentment requirement is satisfied once a beneficiary has raised a claim for benefits. In their view, a final decision on a claim for benefits permits a beneficiary to raise any separate claim pertaining to the agency’s procedure or policy in federal court. We disagree. In our view, the beneficiaries’ reading of Eldridge is overly broad. The purpose of the channeling requirement is to “assure[] the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts applying ‘ripeness’ and ‘exhaustion’ exceptions.” Illinois Council, 529 US. at 13. This purpose would not be fulfilled if plaintiffs proceeding through the administrative channel were permitted to raise claims in federal court that were not raised before the agency. See Lifestar Ambulance Serv., Inc. v. United States, 365 F.3d 1293, 1298 (11th Cir. 2004) (describing administrative review as “the first step in a comprehensive statutory remedial scheme that fully empowers a reviewing court to consider and remedy any of the violations of law alleged by [a] plaintiff”). 26 HARO V. SEBELIUS Moreover, the beneficiaries’ interpretation of the presentment requirement is fundamentally inconsistent with the general rule that “[o]nce federal subject matter jurisdiction is established over the underlying case between [plaintiff] and [defendant], the jurisdictional propriety of each additional claim is to be assessed individually.” Caterpillar Inc. v. Lewis, 519 US. 61, 66 n.1 (1996) (quoting 3 James Moore, Moore’s Federal Practice ¶ 14.26, 14-116 (2d ed. 1996)). In Eldridge, the general rule described in Caterpillar was not contravened because the plaintiff’s argument that he was entitled to a pretermination evidentiary hearing had direct bearing on the termination of his benefits. Notably, this case does not involve a “claim for benefits” because the beneficiaries do not challenge Medicare’s reimbursement calculations. They challenge the Secretary’s policy of demanding up front reimbursement, a policy that has no bearing on the reimbursement calculations questioned by the beneficiaries at the administrative level.8 Finally, Illinois Council, a case decided twenty-four years after Eldridge, persuades us that the beneficiaries’ interpretation of Eldridge is too expansive. In Illinois Council, the Supreme Court addressed a case bearing directly on challenges to Medicare regulations and made clear that the type of policy challenge at issue in this case is subject to the channeling requirement of § 405(h), and to the presentment requirement in § 405(g). Illinois Council, 529 US. at 14 (“Nor can we accept a distinction that limits the scope of § 405(h) to claims for monetary benefits.”). 8 The beneficiaries also cite, inter alia, Mathews v. Diaz, 426 US. 67 (1976), Briggs v. Sullivan, 886 F.2d 1132 (9th Cir. 1989), and Lopez v. Heckler, 725 F.2d 1489 (9th Cir. 1984), vacated 469 US. 1082 (1984). But these cases pre-date Illinois Council, 529 US. 1 (2000). HARO V. SEBELIUS 27 We decline to adopt the extraordinarily broad reading of Eldridge that the beneficiaries invite. We conclude that the named plaintiffs’ reimbursement disputes did not provide an opportunity for the Secretary to consider the claim that her interpretation of the secondary payer provisions exceeded her authority. Their requests for redetermination of their respective amounts of reimbursement did not constitute presentment of their policy challenge.
satisfy the channeling requirement. The beneficiaries rely solely on presentation of their reimbursement disputes as evidence that they fulfilled § 405(g)’s channeling requirement, but we consider whether the requirement was otherwise satisfied. In the course of exchanging correspondence regarding the amount of reimbursement they each owed, only Haro made mention of the argument that the Secretary exceeded her authority under the Medicare secondary payer provisions by seeking up front reimbursement. Haro requested redetermination of the amount of her reimbursement obligation by letter dated January 21, 2009, but her letter did not challenge the Secretary’s authority to demand “up front” reimbursement. Haro did make a brief objection to the Secretary’s reimbursement practice in a follow-up letter dated February 2, 2009. But subsequent correspondence between Haro and the Secretary memorializes that both parties ignored Haro’s objection. The correspondence shows that Haro sent payment in response to the Secretary’s initial demand. Medicare then reduced its reimbursement demand, determined that Haro had overpaid, and refunded $103.87 to Haro. With its refund, Medicare 28 HARO V. SEBELIUS gave Haro notice that it was closing its file. Haro did not object to the Secretary closing her file, signaling that the parties had resolved their dispute. Approximately one month passed between the time Haro sent her February 2, 2009 follow-up letter and the time the Secretary sent a letter reducing the reimbursement amount. Approximately one additional month passed before Haro was reimbursed for her overpayment. The record does not show that either of the parties ever followed up on Haro’s objection to the Secretary’s practice, and neither McNutt nor Hall ever objected to the Secretary’s authority to demand up front reimbursement. Even if Haro’s letter and subsequent inaction did afford the Secretary an “opportunity to apply, interpret, or revise” the challenged policy, Haro failed to exhaust her administrative remedies before filing suit in federal court. To exhaust her administrative remedies, a beneficiary must proceed through the five levels of administrative review: (1) the initial determination; (2) redetermination; (3) reconsideration of the redetermination; (4) an ALJ hearing; and (5) review by the Medicare Appeals Council. 42 C.F.R. § 405. Haro failed to press her claim beyond level two. Instead, less than a week after she mailed her reimbursement check to the Secretary, Haro filed suit — before any agency review of the up-front reimbursement policy. Haro claims that the government has waived the exhaustion requirement. But we can find no unambiguous waiver of this issue in the record, and therefore conclude that the issue is not waived. We conclude that the channeling requirement of § 405(g) was not met. Because channeling is a jurisdictional HARO V. SEBELIUS 29 requirement, the district court lacked subject matter jurisdiction over the beneficiaries’ claim.