Court Opinion

ID: 38156
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:03:58+00
Date Added: 2024-06-11T17:15:54.498548
License: Public Domain

United States Court of Appeals
                                                                      Fifth Circuit
                                                                   F I L E D
                     UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT                      May 18, 2005

                        _______________________                Charles R. Fulbruge III
                                                                       Clerk
                              No. 04-20394
                        _______________________

          TROY MARSAW; LOVING CARE PHYSICAL MEDICINE, INC.;
            LOVING CARE PHYSICAL MEDICINE OF BRENHAM INC.,
                doing business as Brenham Rehab Clinic;
             LOVING CARE PHYSICAL MEDICINE OF BRYAN, INC.,
                 doing business as Bryan Rehab Clinic,

                                                Plaintiffs - Appellants,

                                  versus

                       TOMMY THOMPSON, SECRETARY,
                 DEPARTMENT OF HEALTH & HUMAN SERVICES;
                  TRAILBLAZER HEALTH ENTERPRISES, LLC,

                                                 Defendants - Appellees.

            Appeal from the United States District Court
                 For the Southern District of Texas
                          No. 4:03-CV-1197

Before REAVLEY, JONES and GARZA, Circuit Judges.

EDITH H. JONES, Circuit Judge:*

            Troy Marsaw and his rehabilitation clinics appeal from

the   district    court’s   dismissal    for   lack   of   subject    matter

jurisdiction of his constitutional, civil rights, and state law

damages claims stemming from the denial of Medicare reimbursements.

For the following reasons, we AFFIRM.

      *
            Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
            This is the second case brought by Troy Marsaw, the owner

of   several    Medicare    providers,       and   his   clinics    (collectively

“Marsaw”) against the Secretary of the United States Department of

Health and Human Services (“the Secretary” or “HHS”) and the

Medicare    contractor,       Trailblazer      Health     Enterprises,       L.L.C.

(“Trailblazer”).         In October 2001, Marsaw filed his first action

against    Trailblazer      and   the   Secretary.        Marsaw,    an   African-

American, alleged that Trailblazer engaged in racial discrimination

when it placed Marsaw’s clinics in pre-payment review (which forced

the clinics to engage in lengthy administrative work to receive

Medicare reimbursements) and then denied reimbursements of the

submitted      claims,    ultimately    forcing     Marsaw   out    of    business.

Marsaw’s complaint sought an injunction to correct the Medicare

administrative process and judicial review of denied Medicare

claims. Marsaw also alleged causes of action for violations of his

rights under the equal protection and due process clauses of the

Fifth Amendment of the United States Constitution; 42 U.S.C.

§ 1981; Title VI of the Civil Rights Act of 1964, 42 U.S.C.

§ 2000d; and state law causes of action for tortious interference

with contract or prospective business relations.

            The district court found that Plaintiffs’ claims “arose

under” the Medicare Act and that Marsaw’s failure to exhaust

administrative remedies, as required by 42 U.S.C. § 405(g) of the

Social Security Act, precluded judicial review of the pending

claims based on a lack of subject matter jurisdiction.                   See Marsaw

                                         2
v. Trailblazer Health Enterprises, L.L.C., 192 F. Supp. 2d 737

(S.D. Tex. 2002).    This determination was not appealed.

           In this second action, filed on January 17, 2003, Marsaw

alleges that his clinics have completed the administrative review

process and have been awarded payment of 98 percent of the Medicare

claims previously denied by Trailblazer.           However, Marsaw seeks an

additional    $50   million    in     damages   from   the     Secretary    and

Trailblazer for initially denying the Medicare claims.               Marsaw’s

factual allegations and legal claims in this second action are the

same as in the first action.

           The   district     court    dismissed    Marsaw’s    second     suit,

holding that (1) Marsaw’s various claims arise under Medicare

because they are inextricably intertwined with a substantive claim

of administrative entitlement; (2) the fact that Marsaw seeks

damages for constitutional violations beyond the reimbursement

payments     available   under      Medicare    does   not     undercut    this

conclusion; and (3) § 405(g) precluded federal question jurisdic-

tion because Marsaw had successfully litigated his benefits claims

before the administrative law judge.

           Finally, the district court held that a civil rights suit

against the Secretary in his official capacity was barred by

sovereign immunity and, further, because the Secretary was not

being sued in his individual capacity, neither Bivens nor the civil

rights statutes provided a jurisdictional predicate for the action.

The district court also held that Trailblazer, as a Medicare

                                       3
“carrier,” could not be sued under Bivens or the civil rights

statutes because it was a private insurer acting under color of

federal law.

           On appeal, Marsaw asserts federal jurisdiction over an

implied right of action based on Bivens v. Six Unknown Named Agents

of Federal Bureau of Narcotics, 403 U.S. 388 (1971).              We review

dismissals for lack of subject matter jurisdiction de novo, using

the same standards as those employed by the lower court.              Beall v.

United States, 336 F.3d 419, 421 (5th Cir. 2003).          We must take as

true all of the complaint's uncontroverted factual allegations.

John Corp. v. City of Houston, 214 F.3d 573, 576 (5th Cir.2000).

           Significantly, Marsaw does not challenge the district

court’s   determination      that   Secretary   Thompson   is   entitled   to

sovereign immunity.        He has waived any argument to the contrary.

Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993).

           As   to   the   defendant   Trailblazer,   there     are   several

reasons Marsaw failed to meet his burden to demonstrate federal

subject matter jurisdiction.         First, there is no implied private

right of action, pursuant to Bivens, for damages against private

entities such as Trailblazer that engage in alleged constitutional

deprivations while acting under color of federal law. Correctional

Services Corp. v. Malesko, 534 U.S. 61, 122 S. Ct. 515 (2001).

           Second, Marsaw’s constitutional claims arise under the

Medicare Act (and are not collateral to it) because they are

“inextricably intertwined” with plaintiffs’ substantive claims for

                                       4
entitlement under Medicare.         See Affiliated Professional Home

Health Care Agency v. Shalala, 164 F.3d 282 (5th Cir. 1999).        As in

Affiliated, to fully address Marsaw’s claim that his constitutional

rights were violated through the improper enforcement of Medicare

regulations, a court would necessarily have to review the propriety

of thousands of Trailblazer’s Medicare claims determinations and

the decisions of its hearing officers to evaluate whether there was

legitimate doubt about Marsaw’s compliance. Section 405(g), to the

exclusion of 28 U.S.C. § 1331, is the sole avenue for judicial

review for all ‘claim[s] arising under’ the Medicare Act.         Heckler

v. Ringer, 466 U.S. 602, 614-615, 104 S. Ct. 2013, 80 L.Ed.2d 622

(1984).   A condition for jurisdiction under § 405(g) is that the

Medicare system has made a determination adverse to the claimant.

Weinberger v. Salfi, 422 U.S. 749, 758 n.6, 95 S. Ct. 2457, 2464

n.6 (1975). Because Marsaw has now received precisely the Medicare

payments he claims were wrongfully denied, and the statute entitles

him to no other relief, his case is moot.

          The constitutional nature of Marsaw's claim does not, by

itself, alter that conclusion.       Affiliated, 164 F.3d at 285.        In

Schweiker v. Chilicky, 487 U.S. 412, 108 S. Ct. 2460 (1988), the

Supreme Court refused to extend a Bivens claim to recipients of

Social Security disability benefits who, although their benefits

had been reinstated, claimed that defendants’ unconstitutional

conduct resulted in the wrongful termination of benefits, causing

injury above   and   beyond   the   amount   they   temporarily   lost   in

                                    5
benefits alone.       Following Chilicky, this court will not imply a

Bivens remedy for an alleged constitutional violation in the denial

of   Medicare   Act    reimbursements,    because       Congress     created    a

comprehensive statutory administrative review mechanism, which was

intended fully to address the problems created by wrongful denial

of Medicare reimbursements. Moreover, “the harm resulting from the

alleged constitutional violation cannot be separated from the harm

resulting from the denial of the statutory right.”              Chilicky, 487

U.S. at 428, 108 S. Ct. at 2470.

           Third,     Trailblazer   qualifies   for      sovereign    immunity

because it was acting under the direction of the federal government

in performing duties delegated by HHS.       See    Matranga v. Travelers

Ins. Co., 563 F.2d 677 (5th Cir. 1977).      Marsaw’s claims arise from

Trailblazer’s decisions to pay or deny reimbursements.                    Thus,

Trailblazer was acting within the scope of official duties and is

entitled to the same official immunity as officers or employees of

the United States performing discretionary duties.              Id.    This is

not a case like Rochester Methodist Hospital v. Travelers Insurance

Co., 728 F.2d 1006 (8th Cir. 1984), where the intermediary acted

beyond the scope of its authority; in Rochester, it was alleged and

proved   that   the    intermediary   committed     a    tort   of    fraud    by

misrepresenting that the medicare provider’s dormitory costs in

connection with a nursing education program were not reimbursable.

           In light of the above, Marsaw has shown no error with

regard to the dismissal of his supplemental state law claims.

                                      6
AFFIRMED.

            7