Opinion
Case No. 4:19-cv-00067-SMR-CFB
2020-09-21
REGIONAL HOME HEALTH CARE, INC., Plaintiff, v. Alex M. AZAR, II, Secretary of the United States Department of Health and Human Services; NCI Information Systems, Inc. d/b/a AdvanceMed, an NCI Company, and Does 1 through 10, inclusive, Defendants.
Michael Cassin Burt, Des Moines, IA, pro se.
Michael Cassin Burt, Des Moines, IA, pro se.
ORDER ON DEFENDANTS' MOTION TO DISMISS
STEPHANIE M. ROSE, JUDGE
This case arises from an initial overpayment determination by the United States Department of Health and Human Services ("HHS") against Plaintiff Regional Home Health Care, Inc. ("Regional"), which resulted in a temporary suspension of payments to the healthcare services provider under the Medicare Act, 42 U.S.C. § 1395 et seq. (2020) (the "Act"). Regional unsuccessfully contested the temporary suspension through the agency's rebuttal process but did not challenge the final overpayment determination or otherwise pursue administrative remedies provided by statute. Instead, Regional closed its business and filed this lawsuit in federal court for damages, declaratory relief, and attorney's fees. See [ECF No. 1].
Defendants moved to dismiss for failure to state a claim and lack of subject matter jurisdiction. [ECF No. 27]; see Fed. R. Civ. P. 12(b)(1), (6). Defendants contend Regional does not state a viable claim for damages against the federal administrative agency and that the Medicare Act's channeling provision, 42 U.S.C. § 405(h), deprives the Court of jurisdiction to hear the provider's due process claims. The Court agrees for the additional reason that the relief Regional claims to seek—a declaratory judgment that the agency's temporary suspension procedure violated its right to procedural and substantive due process—requests retroactive relief that does not present a justiciable case or controversy under the Declaratory Judgment Act and Article III of the United States Constitution. Consequently, Defendants' Motion to Dismiss is GRANTED.
The parties did not request a hearing on Defendants' motion, and the Court concludes the matter can be resolved without oral argument. See LR 7(c).
I. BACKGROUND
Regional was a certified provider of home health care services under the Medicare Act, 42 U.S.C. § 1395 et seq. , in Donnellson, Iowa, before it went out of business in May 2018. See [ECF No. 1 ¶¶ 1, 50]. Regional had been a certified provider since 1996 and derived approximately 97% of its revenue from Medicare patients in rural Lee County. Id. ¶¶ 35–36.
Medicare reimbursement for certified service providers is administered by the Secretary of HHS through its operational division, the Centers for Medicare & Medicaid Services ("CMS"). Id. ¶ 3. CMS contracts with private Medicare Administrative Contractors ("MACs") to administer, process, and pay valid claims to qualified providers and with Unified Program Integrity Contractors ("UPICs") to review, investigate, and audit payments made on behalf of the federal government. Id. ¶¶ 4–6; see generally 42 U.S.C. §§ 1395kk-1(a), 1395ddd(a) – (b). Under rules promulgated to protect federal funds and promote the integrity of the Medicare program, CMS and its contractors are authorized to temporarily suspend Medicare payments to certified providers upon "reliable information that an overpayment exists or that the payments to be made may not be correct." 42 C.F.R. § 405.371(a). Suspensions are authorized for 180 days unless an extension is sought and granted. Id. § 405.372(d). If the agency finds an overpayment to exist, the agency will make a final overpayment determination and is authorized to issue a demand for the funds, in some cases withholding payments to recover the balance. See 42 U.S.C. § 1395ddd(f) ; 42 C.F.R. §§ 405.371(a)(3), 405.373, 405.377(a). The sums from any payments withheld during the suspension period are first applied to reduce or eliminate the overpayment debt. 42 C.F.R. § 405.372(e).
On January 31, 2018, CMS, through its program integrity contractor NCI Information Systems, Inc., d/b/a AdvanceMed, an NCI Company ("AdvanceMed"), informed Regional that the agency was suspending Medicare payments to the facility "based on reliable information that an overpayment exist[ed] or that payments to be made may not [have been] correct," citing a non-exhaustive list of five claims for payments Regional had submitted but were found to not comply with Medicare eligibility criteria. [ECF No. 1 ¶ 40]; see also [ECF No. 27-2 at 2] (Initial Suspension Letter, Defs.' Ex. A). The suspension was effective that same day. Regional had previously supplied AdvanceMed with medical documentation in June 2017 related to fifteen Medicare claims for five patients in response to CMS's representation that those claims for payment were being reopened for good cause. [ECF No. 1 ¶ 37]. CMS is generally required to give providers notice before a suspension is put in place unless the agency determines "that the Medicare Trust Funds would be harmed by giving prior notice" because "giving prior notice would hinder the possibility of recovering the money." 42 C.F.R. § 405.372(a)(1), (3). Nevertheless, HHS regulations require CMS to give the provider an opportunity to rebut the suspension and provide reasons why the suspension should be removed. Id. § 405.372(b)(2).
Generally, the Court does not consider matters outside the pleadings in deciding a motion to dismiss under Rule 12. But "documents ‘necessarily embraced by the complaint’ are not matters outside the pleading." Enervations, Inc. v. Minn. Mining & Mfg. Co. , 380 F.3d 1066, 1069 (8th Cir. 2004) (citations omitted). And documents incorporated by reference, items necessarily "integral to the claim," and matters "subject to judicial notice" or of public record may properly be considered in evaluating whether a complaint states a claim for which relief may be granted. 5B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed.).
Regional submitted a rebuttal statement and 148 pages of supporting medical documentation to AdvanceMed on February 6, 2018, where it addressed issues with the five claims raised by the agency in the initial suspension letter and notified the intermediary of the financial hardship it was suffering as a result of its suspension of Medicare payments. [ECF No. 1 ¶¶ 42–43]. In a letter dated February 22, 2018, AdvanceMed promptly informed Regional that CMS had reviewed Regional's submissions and concluded the suspension was still warranted. Id. ¶ 44; see also [ECF No. 27-2 at 4–6] (Rebuttal Response, Defs.' Ex. B); cf. 42 C.F.R. § 405.375(a) (noting CMS has fifteen days from the date a rebuttal is received to consider the statement and any relevant material to determine whether termination of the suspension is warranted). Though it reversed its initial determination in part, fully approving one claim and partially approving another based on Regional's rebuttal materials, CMS affirmed its denial of the remaining three for a lack of documentary support and reiterated that the five claims listed in the initial suspension letter were not exhaustive of its finding that Regional had been overpaid. [ECF No. 1 ¶¶ 44–45]. The agency's response stated that an additional ten claims also failed to comply with Medicare eligibility requirements. [ECF No. 27-2 at 5]. Accordingly, Regional did not receive any Medicare payments on previously submitted patient claims or claims filed during the suspension period while CMS and AdvanceMed continued their review. [ECF No. 1 ¶ 48].
The payment suspension was lifted less than six months later on July 18, 2018, when AdvanceMed informed Regional its investigation had revealed a $1,267,801.00 overpayment. See [ECF No. 27-2 at 7–8] (Notice of Termination, Defs.' Ex. C); id. at 9–21 (Overpayment Determination, Defs.' Ex. D). Regional claims that by that time, however, it had been forced to close its facility due to lack of payments coming from its Medicare-heavy home health business; after finding substitute home health care services for its patients, Regional states it closed on May 1, 2018. See id. ¶ 50. CMS issued a demand letter for the overpayment balance on August 1, 2018. Id. at 22–28 (Demand Letter, Defs.' Ex. E).
Medicare providers must follow a four-level administrative appeals process to challenge a final overpayment determination. See generally 42 U.S.C. § 1395ff ; 42 C.F.R. § 405.904.
First, [a provider] may submit to the MAC a claim for redetermination of the overpayment. 42 U.S.C. § 1395ff(a)(3)(A). Second, it may ask for reconsideration from a Qualified Independent Contractor ("QIC") hired by CMS for that purpose. Id. § 1395ff(c), (g) ; 42 C.F.R. § 405.904(a)(2).... Third, the provider may request de novo review before an [Administrative Law Judge] within the Office of Medicare Hearings and Appeals (OMHA), an agency independent of CMS. 42 U.S.C. § 1395ff(d) ; 42 C.F.R. § 405.1000(d).... Fourth, the provider may appeal to the Medicare Appeals Council ("Council"), an organization independent of both CMS and OMHA. 42 C.F.R. § 405.1100.
Family Rehabilitation, Inc. v. Azar , 886 F.3d 496, 499 (5th Cir. 2018). Finally, an aggrieved provider may seek judicial review of the Secretary's final decision under the exclusive procedures provided in 42 U.S.C. § 405(g). 42 U.S.C. §§ 1395ff(b)(1)(A), 1395ii (incorporating 42 U.S.C. 405(h) into the Medicare Act). However, there is no administrative process for challenging a temporary suspension of Medicare payments while an overpayment investigation is ongoing; in effect, temporary suspensions are not appealable. 42 C.F.R. § 405.375(c).
Rather than challenge the final overpayment determination through the agency, Regional filed this action in federal court. Regional is express about what it is challenging in this lawsuit: the Medicare provider "does not challenge the underlying billing dispute," nor does it argue that "any subsequent denial of claims and overpayment determination was or would be wrongful"; it asserts only that "CMS's decision to suspend Regional's Medicare payments on claims already approved by the MAC, and any future approved claims while the suspension [was] in effect, without notice or opportunity to appeal, robbed Regional of its constitutionally protected due process rights." Id. ¶¶ 7–8, 52. Counts I and II allege procedural and substantive due process violations, respectively, while Count III seeks damages under 42 U.S.C. § 1983. Defendants moved to dismiss for a lack of jurisdiction and failure to state a claim. [ECF No. 27].
II. STANDARD OF REVIEW
Subject matter jurisdiction presents "a question of justiciability" and considers "the constitutional power of a federal court to resolve a dispute and the wisdom of so doing." Miller v. Redwood Toxicology Lab., Inc. , 688 F.3d 928, 934 (8th Cir. 2012) (second quote citing Graden v. Conexant Sys., Inc. , 496 F.3d 291, 295 (3d Cir. 2007) ). Subject matter jurisdiction over a claim may be challenged "on its face or the factual truthfulness of its averments." Titus v. Sullivan , 4 F.3d 590, 593 (8th Cir. 1993) ; see also Osborn v. United States , 918 F.2d 724, 729 n.6 (8th Cir. 1990). "In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction." Titus , 4 F.3d at 593. A factual challenge invokes matters outside the pleadings to examine the propriety of jurisdiction, Moss v. United States , 895 F.3d 1091, 1097 (8th Cir. 2018), and the plaintiff loses the benefit of favorable inferences from its factual allegations, Titus , 4 F.3d at 593 n.1 ; see also Harris v. P.A.M. Transport, Inc. , 339 F.3d 635, 637 n.4 (8th Cir. 2003) (noting a factual challenge "does not ... convert the 12(b)(1) motion to one for summary judgment"). A federal court must dismiss the action if, at any time, the court determines that it lacks subject-matter jurisdiction. Fed. R. Civ. P. 12(h)(3) ; see Fed. R. Civ. P. 12(b)(1).
Moreover, the Federal Rules of Civil Procedure require a complaint to present "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Conversely, a complaint is subject to dismissal when it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To meet this standard, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Braden v. Wal-Mart Stores, Inc. , 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). When evaluating a motion to dismiss under Rule 12(b)(6), the Court accepts as true the factual allegations in the Complaint, but it need not accept their legal conclusions. See Brown v. Medtronic, Inc. , 628 F.3d 451, 459 (8th Cir. 2010). All reasonable inferences must be drawn in the plaintiff's favor, Crooks v. Lynch , 557 F.3d 846, 848 (8th Cir. 2009), but "[t]he facts alleged in the complaint ‘must be enough to raise a right to relief above the speculative level,’ " Clemons v. Crawford , 585 F.3d 1119, 1124 (8th Cir. 2009) (citation omitted).
III. ANALYSIS
Despite seeking relief from a temporary decision intricately tied up in the Medicare Act that has since expired, Regional insists its Complaint presents justiciable claims for due process violations that establish this Court's subject matter jurisdiction. The Court disagrees. Regional's action faces two core deficiencies that prevent the Court from exercising subject matter jurisdiction over its due process claims. First, Regional's due process claims are inextricably intertwined with its claim for Medicare payments and thus arise under the Medicare Act. But because Regional did not pursue its administrative remedies and does not seek judicial review of a final decision by the Secretary of HHS, the Court lacks subject matter jurisdiction over the Complaint. Second, Regional's request for relief does not present a justiciable "claim" or "controversy" under the Declaratory Judgment Act. After conceding its claim for damages is not viable against HHS and its contractors, Regional seeks only a declaration of rights for past acts that present no immediate threat of liability.
After examining Regional's assertion of subject matter jurisdiction, the Court finds declaratory judgment is not an available remedy in this case.
A. Subject Matter Jurisdiction
42 U.S.C. § 405(g) sets forth the exclusive method for judicial review of "any claim arising under" the Medicare Act. 42 U.S.C. § 405(h) ; Shalala v. Ill. Council on Long Term Care, Inc. , 529 U.S. 1, 10, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000). As a result, the statute is the sole grant of subject matter jurisdiction for litigation stemming from the administration of the Medicare Program. See Heckler v. Ringer , 466 U.S. 602, 614–16, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984) ; Weinberger v. Salfi , 422 U.S. 749, 756-61, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975).
The procedures for judicial review found in § 405(g) and administrative-channeling provision of § 405(h) are actually found in the Social Security Act, but apply to claims arising under the Medicare Act "to the same extent." 42 U.S.C. §§ 1395ii, 1395ff(b)(1)(A).
Regional does not seek judicial review under § 405(g). Regional instead asserts subject matter jurisdiction under a number of federal statutes, many of which can be easily disposed of from the start. First, there is 28 U.S.C. § 1343, providing jurisdiction for civil rights claims such as those arising under 42 U.S.C. § 1983. The Complaint fails to state a claim for damages, however, because § 1983 applies only to the deprivation of federal constitutional rights under color of state law, see, e.g., Williams v. Rogers , 449 F.2d 513, 517 (8th Cir. 1971), and even considered as a claim under Bivens v. Six Unknown Named Agents , 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), "[i]t is well settled that a Bivens action cannot be prosecuted against the United States and its agencies because of sovereign immunity," Buford v. Runyon , 160 F.3d 1199, 1203 (8th Cir. 1998) ; see also Midland Psychiatric Assocs., Inc. v. United States , 145 F.3d 1000, 1003–04 (8th Cir. 1998) (concluding private "fiscal intermediaries" acted as government agents in administering the Medicaid Program); 42 C.F.R. § 421.5(b) (stating CMS is the "real party in interest" in any litigation concerning the administration of the Medicare Program). Then there is the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. But it is equally well established that that statute is procedural, not jurisdictional, and does not independently confer jurisdiction on federal courts to hear a case. Skelly Oil Co. v. Phillips Petroleum Co. , 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950) (citing Aetna Life Ins. Co. v. Haworth , 300 U.S. 227, 240–41, 57 S.Ct. 461, 81 L.Ed. 617 (1937) ); Anderson v. Sullivan , 959 F.2d 690, 692 n.4 (8th Cir. 1992) (rejecting the Declaratory Judgment Act as an alternative basis for federal jurisdiction in suit challenging exclusion from Medicare participation pending administrative appeals because 28 U.S.C. § 2201 "presupposes an independent form of jurisdiction" and "does not expand the jurisdiction of the federal courts").
For this reason, Regional fails to state a claim for damages in Count III of the Complaint. See Fed. R. Civ. P. 12(b)(6).
Finally, Regional contends jurisdiction exists under 28 U.S.C. § 1331 (federal question) and 1332 (diversity of citizenship). Under 42 U.S.C. § 405(h), "no action" may be brought under § 1331 to assert any claim "arising under" the Medicare Act. This jurisdictional bar applies equally to § 1332. Midland Psychiatric Assocs., Inc. v. United States , 145 F.3d 1000, 1004 (8th Cir. 1998) (citing Bodimetric Health Servs., Inc. v. Aetna Life & Cas. , 903 F.2d 480, 487–88 (7th Cir. 1990) ). The deciding issue becomes whether Regional's due process claims arise under the Medicare Act. The Court concludes they do. And because neither the Eldridge nor the Michigan Academy exceptions apply, Regional's claims must be dismissed for lack of subject matter jurisdiction.
Mathews v. Eldridge , 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).
Bowen v. Mich. Academy of Family Physicians , 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986).
1. "Arising under" the Medicare Act
A claim "aris[es] under" the Medicare Act when the Act provides "both the standing and the substantive basis for the presentation of the[ ] constitutional contentions." Salfi , 422 U.S. at 760–61, 95 S.Ct. 2457 (1975). "[T]he inquiry in determining whether § 405(h) bars federal-question jurisdiction must be whether the claim ‘arises under’ the [Medicare] Act, not whether it lends itself to a ‘substantive’ rather than a ‘procedural’ label." Ringer , 466 U.S. at 614–15, 104 S.Ct. 2013 (citing Mathews v. Eldridge , 424 U.S. 319, 327, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) ). Rather, claims challenging procedural aspects of agency action arise under the Medicare Act when they are "inextricably intertwined" with the underlying substantive claim for benefits. Id. at 614, 104 S.Ct. 2013.
Regional's due process claims clearly arise out of the Medicare Act. The basis for Regional's substantive due process claim ultimately relates to the Medicare provider's participation in the Medicare Program and its "legitimate expectations from the Medicare Act, for receipt of Medicare payments for services provided." [ECF No. 1 ¶ 51]; see 42 U.S.C. § 1395g. Whether Regional was deprived of a fundamental liberty or property interest through its temporary suspension from receiving Medicare payments is undoubtedly an issue arising under the Medicare Act. And the provider's participation in the Medicare Program in turn provides the sole basis for Regional's standing to bring its procedural due process claim-without its claim for benefits, Regional would not be in a position to assert that it is entitled to any sort of pre-suspension hearing. See 42 U.S.C. § 1395fff ; 42 C.F.R. 405.375(c). Though Regional states it contests only the procedure by which its temporary suspension was imposed without any opportunity for appeal, and disclaims any substantive challenge to the suspension or final overpayment determination, its due process claims are "inextricably intertwined" with a claim for Medicare payments, Heckler , 466 U.S. at 614, 104 S.Ct. 2013, and "it is ... fruitless to argue that this action does not also arise under the Act," Weinberger , 422 U.S. at 761, 95 S.Ct. 2457 (emphasis added); see also Clarinda Home Health v. Shalala , 100 F.3d 526, 528–30 (8th Cir. 1996) (considering challenge to Medicare payment suspension procedure in the context of § 405(h) ); Long Island Ambulance, Inc. v. Thompson , 220 F. Supp. 2d 150, 160–61 (E.D.N.Y. 2002). Because Regional's suit "aris[es] under" the Medicare Act, the Court lacks subject matter jurisdiction over the Complaint unless an exception applies.
RenCare, Ltd. v. Humana Health Plan of Tex., Inc. , 395 F.3d 555 (5th Cir. 2004), the case upon which Regional relies, is inapposite. In that case the appellate court concluded the plaintiff's claims did not arise under the Medicare Act because the dispute was one between a medical care provider and another service provider under the parties' private contract. Id. at 558. "[U]nlike the situation in Ringer , there [were] no enrollees seeking Medicare benefits" and, accordingly, "the government ha[d] no financial interest" in the case under the Act. Id. Regional's claims, by contrast, directly relate to the procedure by which it received—more precisely, did not receive—Medicare payments from claims submitted to CMS under the Medicare Act.
2. Mathews collateral-claim exception
A claim arising out of the Medicare Act and subject to § 405(g)'s judicial review procedure requires (a) the claim be presented to the Secretary and (b) the party have exhausted administrative remedies through agency review. Heckler , 466 U.S. at 617, 104 S.Ct. 2013. The "exhaustion" requirement is waivable by HHS, but the "presentment" requirement is not. Eldridge , 424 U.S. at 328–29, 96 S.Ct. 893. Otherwise lacking jurisdiction, Regional invokes the constitutional exception to the statutory exhaustion requirement announced in Mathews v. Eldridge , 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), for claims "entirely collateral" to a substantive agency decision where "full relief cannot be obtained at a postdeprivation hearing." Id. at 330–32, 96 S.Ct. 893. The Eldridge exception applies where the claimant: "(1) raises a colorable constitutional claim collateral to his [or her] substantive claim of entitlement; (2) shows that irreparable harm would result from exhaustion; and (3) shows that the purposes of exhaustion would not be served by requiring further administrative procedures." Anderson , 959 F.2d at 693 (citation omitted).
As an initial matter, Defendants contend Regional has not satisfied the presentment element of § 405(g), a prerequisite to successfully invoking the Eldridge exception. Defendants argue Regional did not adequately present its due process claims to the Secretary of HHS because the provider never even pursued the first-level administrative appeal process to challenge the overpayment determination by seeking a redetermination. See 42 U.S.C. § 1395ff(a)(3)(A) ; [ECF No. 27-2 at 29] (Defs.' Ex. F). But Regional need not present its constitutional claim to the Secretary, only its substantive claim for benefits. Eldridge , 424 U.S. at 329 & n.10, 96 S.Ct. 893 ; see also Salfi , 422 U.S. at 764-65, 95 S.Ct. 2457. Regional contends it did so when it filed a rebuttal statement with AdvanceMed challenging CMS's imposition of a temporary suspension. See [ECF No. 32 at 8–9].
In Eldridge , the Supreme Court concluded the claimant had met the jurisdictional prerequisite of presentment when the claimant filed suit in federal district court after lodging only an initial objection to the termination of his Social Security benefits with the state agency charged with monitoring his medical condition. See 424 U.S. at 328–30, 96 S.Ct. 893. The state agency notified the claimant that it had preliminarily determined his disability had ceased and advised him it would terminate his receipt of benefits pending the submission of additional information on his condition. Id. at 324, 96 S.Ct. 893. The claimant filed suit after lodging a single objection to the characterization of his medical condition and pointing to records already within the agency's possession as evidence establishing his disability, contending he was entitled to a hearing before his benefits could be terminated. Id. at 324–25, 96 S.Ct. 893. The Court concluded the claimant had "presented" his substantive claim to the Secretary "[t]hrough his answers to the state agency questionnaire, and his letter in response to the tentative determination that his disability had ceased," notwithstanding "[t]he fact that [he] failed to raise with the Secretary his constitutional claim to a pretermination hearing." Id. at 329, 96 S.Ct. 893. Regional's position finds some support in Eldridge. Similar to the claimant in that case, Regional lodged an initial objection to the agency's action without raising any constitutional argument asking for a pre-deprivation hearing. Regional responded to five deficiencies raised by AdvanceMed through its rebuttal submission to the intermediary and presented the substantive claim that its Medicare provider payments should not be suspended. [ECF No. 1 ¶ 42]. Defendants offer no authority for the position that this is insufficient to satisfy the presentment requirement, but they acknowledge that AdvanceMed acts as a government agent stepping into the shoes of HHS to administer the Medicare Program. See 42 U.S.C. § 421.5(b).
Assuming without deciding that Regional has minimally satisfied the presentment requirement of § 405(g) by engaging in the rebuttal process to contest its temporary suspension of Medicare payments under 42 C.F.R. § 405.372(b)(2), Regional cannot avail itself of the Eldridge exception because, under Clarinda , no colorable constitutional claim exists here. The United States Court of Appeals for the Eighth Circuit has considered and rejected the exact argument advanced by Regional when a healthcare provider in that case sought an injunction barring HHS from suspending Medicare payments without a prior hearing while it pursued an administrative appeal of the agency's determination of fraud and willful misrepresentation. See 100 F.3d at 527-28. The Eighth Circuit held that, just as in the case of total exclusion from the Medicare Program without a hearing, the temporary suspension of payments without pre-deprivation hearing "is not a colorable constitutional violation of due process." Id. at 531 (citing Anderson , 959 F.2d at 693 ). The suspension, it concluded, was "nothing more than a temporary measure necessary to maintain the status quo while the necessary facts are gathered and evaluated," and because the provider "will have its day in court after the Secretary has rendered her final decision," its "private interest that will be affected by a temporary withholding of Medicare payments is not as serious in nature as an exclusion from the Medicare program." Id. Clarinda is dispositive. Because Regional's suit fails to satisfy the first of the three Eldridge factors, Regional cannot show the exhaustion requirement of § 405(g) should be waived to establish subject matter jurisdiction.
3. Michigan Academy "no review" exception
Alternatively, Regional contends the exhaustion requirement of § 405(g) forecloses the possibility of any judicial review of its temporary suspension and thus jurisdiction is proper under Bowen v. Mich. Acad. of Family Physicians , 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986). The Supreme Court has recognized this extremely narrow exception to apply only when channeling a claim through the administrative review process "would mean no review at all." Ill. Council , 529 U.S. at 19, 120 S.Ct. 1084. Regional asserts its circumstances warrant application of the Michigan Academy exception because it went out of business prior to the Secretary issuing a final overpayment determination. As a result, Regional argues, the temporary suspension was the only determination Regional could have contested, and because temporary suspensions are not appealable, 42 C.F.R. § 405.375(c), there exists no circumstances under which it could have obtained review within the procedures promulgated by HHS.
The Supreme Court has made clear, however, that the Michigan Academy exception applies only where the agency's procedures create "complete preclusion of judicial review." Id. at 22–23, 120 S.Ct. 1084 ; see id. at 19, 120 S.Ct. 1084 (holding 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"). "[D]elay-related hardships" are the trade-off for voluntarily participating in such a "massive, complex health and safety program such as Medicare." Id. at 13, 120 S.Ct. 1084 ; see also Ringer , 466 U.S. at 627, 104 S.Ct. 2013 ("Congress must have felt that cases of individual hardship resulting from delays in the administrative process had to be balanced against the potential for overly casual or premature judicial intervention in an administrative system that processes literally millions of claims every year. If the balance is to be struck anew, the decision must come from Congress and not from this Court." (footnote omitted)). As in Clarinda , Regional had the opportunity to challenge the Secretary's final overpayment decision through the administrative review process and a post-determination hearing pursuant to § 405(b) prior to judicial review of that agency decision. 100 F.3d at 530 ; see also Blue Valley Hosp., Inc. v. Azar , 919 F.3d 1278, 1287–88 (10th Cir. 2019) ("[T]he Supreme Court has declined to extend the Michigan Academy exception to cases in which parties allege financial hardship forecloses further review."); Family Rehabilitation , 886 F.3d at 505 ("[I]t is not enough to assert that judicial review will be delayed and that [the plaintiff] itself will be prejudiced by that delay."). Cessation of business would not have prevented Regional from pursuing administrative remedies any more than it has prevented the provider from initiating this lawsuit in federal court. Regional cannot manufacture a lack of review for itself by declining to pursue administrative remedies on its own accord.
4. Conclusion
In sum, Regional's Complaint fails to establish subject matter jurisdiction because its due process claims arise under the Medicare Act, and § 405(h) requires that it bring any claim first through the administrative appeal process prior to seeking judicial review of the agency's final decision in federal court. Because Eighth Circuit precedent forecloses Regional's due process violation, it cannot bypass the statute's administrative exhaustion requirement under the Eldridge exception. And because review would have been available had Regional pursued a challenge following the agency's appeal procedures, the Michigan Academy "no review" exception also does not apply.
B. Justiciable Case or Controversy
Independently, the Court has serious doubts that Regional's suit establishes a justiciable controversy capable of resolution under the Declaratory Judgment Act—the only avenue of relief now sought by the Medicare provider. See [ECF No. 32 at 2 n.1] (conceding the Complaint does not state a viable constitutional tort for damages). The Declaratory Judgment Act provides: "In a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). Whether a case is one of "actual controversy" under the Declaratory Judgment Act "refers to the type of ‘Cases’ and ‘Controversies’ that are justiciable under Article III" of the United States Constitution. MedImmune, Inc. v. Genentech, Inc. , 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (citation omitted). The dispute must be "of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Marine Equip. Mgmt. Co. v. United States , 4 F.3d 643, 646 (8th Cir. 1993) (citation omitted). And the declaratory remedy "is meant to define the legal rights and obligations of the parties in anticipation of some future conduct , not simply to proclaim liability for a past act." Justice Network Inc. v. Craighead Cty. , 931 F.3d 753, 764 (8th Cir. 2019). By contrast, a complaint seeking " ‘a declaration of past liability’ ... does not satisfy the definition of ‘declaratory judgment and renders declaratory relief unavailable." Id. "Thus, declaratory relief is limited to prospective declaratory relief." Id.
Skeptical that the due process claims alleged in this case truly seek prospective declaratory relief, the Court sought additional briefing on the issue of whether Regional's lawsuit brings an "actual controversy" that is justiciable under the Declaratory Judgment Act. [ECF No. 36]. Regional contends the lack of pre-deprivation procedure prior to its temporary suspension from receiving Medicare provider payments was coercive, requiring it to continue to operate with no revenue while pursuing a lengthy administrative appeals process or close its business in anticipation of the recoupment process. See [ECF No. 38 at 3–4]. But the temporary suspension did not place Regional in a dilemma forcing it to choose between "abandoning [its] rights or risking [liability]." See MedImmune , 549 U.S. at 129, 127 S.Ct. 764. Regional challenged the suspension of Medicare payments through the agency's rebuttal process, which took less than thirty days. See [ECF No. 27-2 at 1–6]. Regional's request for declaratory judgment might have been immediate had it then sued to contest the pre-deprivation procedures while the temporary suspension was in effect. Cf. Family Rehabilitation , 886 F.3d at 503 (concluding procedural due process and ultra vires claims challenging imposition of recoupment without hearing prior to completion of the administrative review process to be a colorable constitutional claim collateral to the underlying claim for benefits). But the temporary suspension was terminated, and the time for a hearing has now passed. [ECF No. 27-2 at 7]. Declaratory relief is unavailable to Regional because its Complaint seeks nothing more than "a declaration of past liability" against Defendants. See Justice Network , 931 F.3d at 764 (citation omitted).
Regional also contends "the declaration of rights is a bona fide necessity" for it to "carry on with its business" as a Medicare service provider because it will still be subject to the temporary suspension procedures it claims are unconstitutional if it restarts its operations. See Maytag Corp. v. Int'l Union, United Automobile, Aerospace & Agric. Implement Workers of Am. , 687 F.3d 1076, 1082 (8th Cir. 2012). The situation posed by Regional is purely hypothetical and far too speculative to establish a concrete dispute of sufficient immediacy. Regional's position hinges on if the provider resumes its operations; if it is again subject to an overpayment investigation; and if CMS again imposes a temporary suspension without notice. Any order from this Court in its favor would do nothing other than issue an academic opinion "advising what the law would be upon a hypothetical state of facts," not issue a concrete resolution of future rights that would immediately affect the relationship of the parties. MedImmune , 549 U.S. at 127, 127 S.Ct. 764.
Moreover, under the Declaratory Judgment Act, a court " ‘may declare the rights and other legal relations of any interested party,’ not that it must do so." MedImmune , 549 U.S. at 136, 127 S.Ct. 764 (quoting 28 U.S.C. § 2201(a) ). Thus, even if Regional could show either of the exceptions to § 405(h)'s channeling requirements could be met, the Court would still dismiss the Complaint for failure to state a justiciable "case" or "controversy" under the Declaratory Judgment Act.
C. Leave to Amend
Regional requests leave to amend should the Court grant Defendants' motion. [ECF No. 32 at 13]; see also Fed. R. Civ. P. 15(a)(2). Regional fails to articulate how any deficiency in subject matter jurisdiction may be cured through amended pleadings, and the Court concludes amendment would be futile. See Knapp v. Hanson , 183 F.3d 786, 790 (8th Cir. 1999). Leave to amend is denied. IV. CONCLUSION
For the reasons discussed above, Defendants' Motion to Dismiss is GRANTED, and Regional's complaint is DISMISSED.
IT IS SO ORDERED.