Affiliated Professional Home Health Care Agency v. Shalala

Revised January 29, 1999

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
__________________________________________

No. 98-40032
_________________________________________

AFFILIATED PROFESSIONAL HOME HEALTH CARE AGENCY; CARRIE M.
HAMILTON, Individually; WESSIE DOBBINS, Individually; ETHEL
SHELTON, Individually,

Plaintiffs-Appellees,

VERSUS

DONNA E. SHALALA, SECRETARY, DEPARTMENT OF HEALTH & HUMAN
SERVICES, ET AL.,

Defendants,

DONNA E. SHALALA, SECRETARY, DEPARTMENT OF HEALTH & HUMAN
SERVICES,

Defendant - Appellant.

__________________________________________

Appeal from the United States District Court
for the Southern District of Texas
__________________________________________
January 20, 1999

Before REYNALDO G. GARZA, JONES, and DeMOSS, Circuit Judges.

PER CURIAM:

I. FACTUAL AND PROCEDURAL BACKGROUND

In this appeal we must decide whether the district court

properly granted a preliminary injunction in favor of Affiliated

Professional Home Health Care Agency (“APRO”).

APRO is a health care agency that specializes in providing
home-based health care. It is an African-American owned

enterprise, founded in 1993, that operates in Harris, Galveston,

and Jefferson Counties, Texas. In 1997, APRO was participating

as a health care provider in the federal Medicare program, as

established by Title XVIII of the Social Security Act, 42 U.S.C.

§ 1395 et seq. Although that program is funded entirely by the

federal government, and administered by the Secretary of Health

and Human Services, various administrative functions are

performed by state agencies that work for the Secretary under

contract. Those tasks included unannounced, on-site surveys of

Medicare providers to ensure their compliance with the statutory

requirements for Medicare participation. After a state agency

conducts such a survey, it submits its findings and

recommendations to the Secretary. Then the Secretary initiates

any necessary action including the termination of the Medicare

provider agreement between the Secretary and the health care

agency. In Texas, the Health Facility Licensure and

Certification Agency, which is part of the Texas Department of

Health (“TDH”), is the state agency that conducts Medicare

surveys on behalf of the Secretary.

Once a health care agency is given notice that its provider

agreement is being terminated, the provider may request an

evidentiary hearing before an administrative law judge (“ALJ”) on

the Health and Human Services Department Appeals Board (“Appeals

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Board”). The ALJ’s decision becomes the Secretary’s final

decision for purposes of judicial review unless that decision is

subsequently reviewed by the Appellate Division of the Appeals

Board. The provider may seek judicial review in federal district

court only after it has exhausted all of these administrative

remedies. See 42 U.S.C. § 405(g) & (h); 42 U.S.C. §

1395cc(h)(1).

In 1997, the TDH conducted three separate surveys of APRO,

each revealing that APRO had fallen out of compliance with

various conditions of participation. After each of the first two

surveys APRO was afforded an opportunity to correct the

deficiencies in order to avoid having its provider status

terminated. After the third survey revealed that APRO was still

not in compliance, the Secretary issued a notice of termination

effective November 15, 1997. The Secretary also ordered the

suspension of Medicare payments to APRO.

On October 30, 1997, APRO, two of its corporate officers,

and one of its patients (plaintiffs-appellees, collectively

referred to as “APRO”), filed suit in federal court against the

Secretary, the Deputy Administrator of the Health Care Finance

Administration (“HCFA”), TDH, its Commissioner, and four of its

surveyors (collectively referred to as “defendants”), alleging

that they conspired to violate APRO’s right to due process and

equal protection under the United States Constitution.

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Specifically, APRO charged the Secretary with improperly and

arbitrarily enforcing various Medicare rules and regulations

based solely on the fact that APRO is an African-American owned

enterprise.

On October 30, 1997, APRO moved for a preliminary inunction

seeking to prevent the defendants from terminating APRO’s

Medicare provider status. The Secretary and Deputy Administrator

of the HCFA opposed the motion through written responses and

moved to dismiss APRO’s complaint for lack of jurisdiction.1

On November 6, 1997, the district court held a hearing on

the motion for a preliminary injunction and granted the motion

from the bench.2 The Secretary appealed the district court’s

decision to this Court.

II. STANDARD OF REVIEW

Our standard of review for a district court’s granting of a

preliminary injunction is “whether the issuance of the

injunction, in the light of the applicable standard, constitutes

an abuse of discretion.” Concerned Women for America, Inc. v.

Lafayette County, 883 F.2d 32, 34 (5th Cir. 1989). In performing

1
The other defendants did not appeal the district court’s
holding.
2
The district court enjoined the Secretary from terminating
APRO’s provider status, and from terminating APRO’s Medicare
funding. The district court also conditioned the injunction on
APRO posting a bond of $1,000,000.

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that review, findings of fact that support the district court’s

decision are examined for clear error, whereas conclusions of law

are reviewed de novo. Id.

III. DISCUSSION

A preliminary injunction is an equitable remedy that may be

granted only if the movant satisfies four requirements: (1) a

substantial likelihood of success on the merits; (2) a

substantial threat that the movant will suffer irreparable injury

if the injunction is denied; (3) that the threatened injury

outweighs any damage that the injunction might cause the

defendant; and (4) that the injunction will not disserve the

public interest. Sunbeam Products, Inc. v. West Bend Co., 123

F.3d 246, 250 (5th Cir. 1997).

In this case, the district court granted the preliminary

injunction, holding that APRO would suffer irreparable injuries

if it were not granted. The lower court also held that denying

the injunction would result in a loss of medical services to the

under-served communities of Galveston, Harris and Jefferson

Counties and that patients would lose the right to choose APRO as

their health care provider.

On appeal, the Secretary argues: (1) that the district court

erred in granting the preliminary injunction because it lacked

subject matter jurisdiction; and (2) that APRO cannot assert any

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of the various civil right claims that are invoked in its

complaint because the United States has not waived its sovereign

immunity to claims brought under these statutes.

A. Jurisdiction Based on Section 405(g)

Title 42 U.S.C. § 1395, commonly known as the Medicare Act,

establishes a federally subsidized health insurance program that

is administered by the Secretary. See Heckler v. Ringer, 466

U.S. 602, 605 (1984). Title 42 U.S.C. § 405(g) is the sole

avenue for judicial review of all claims arising under the

Medicare Act. Id. Pursuant to her rule-making authority, the

Secretary has provided that a final decision is rendered on a

Medicare claim only after the claimant has pressed the claim

through all designated levels of administrative review. Id.

In Mathews v. Eldridge, 424 U.S. 319, 328 (1976), the

Supreme Court held that jurisdiction under section 405(g) is

determined under a two prong test. First, there must have been a

presentment to the Secretary. Id. This element can never be

waived and no decision of any type can be rendered if this

requirement is not satisfied. Id. Second, the claimant must

have exhausted his administrative review.

Although APRO asserts that the first prong of Eldridge can

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still be satisfied,3 there is absolutely no doubt that APRO did

not exhaust its administrative remedies before seeking judicial

review. Therefore, the failure to satisfy this second prong

might be enough to deny them relief.

APRO correctly argues that exhaustion of administrative

review may be waived. This may occur when a plaintiff asserts a

collateral challenge that can not be remedied after the

exhaustion of administrative review. Id. at 330-32.

On the facts of this case, APRO’s claim is not a collateral

claim for purposes of exhaustion. Although its claim is framed

in constitutional terms and seeks compensatory and punitive

damages, APRO also seeks to rescind the termination of its

provider status and to halt the suspension of its Medicare

payments. Such relief is unquestionably administrative in

nature.

Additionally, to fully address APRO’s claim that their due

process and equal protection rights were violated through the

improper enforcement of Medicare regulations, a court would

necessarily have to immerse itself in those regulations and make

a factual determination as to whether APRO was actually in

3
APRO notes that it filed an unopposed motion for leave to
supplement the record to show that the Secretary has actual
knowledge of the presentment. In Mathews v. Diaz, 426 U.S. 67,
75 (1976), the Supreme Court concluded that it was not too late
to supplement the record during pendency of the case on appeal
wherein the Secretary stipulated the condition was satisfied.

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compliance. Given the administrative nature of that inquiry, it

cannot be reasonably concluded that APRO’s claim is collateral to

a claim for administrative entitlement.

The constitutional nature of APRO’s claim does not, by

itself, alter that conclusion. The Supreme Court has recognized

that the constitutional tenor of a claim is not a determinative

factor in deciding whether a claim is collateral. Instead, the

exhaustion requirement is applicable to a constitutionally-based

claim when that claim is “inextricably intertwined” with a

substantive claim of administrative entitlement. Id. at 611; see

also Weinberger v. Salfi, 422 U.S. 749 (1975). In this case,

there is little doubt that APRO’s claim is “inextricably

intertwined” with a demand for benefits.

A more difficult issue, however, is whether the facts of

this case give rise to a sufficient threat of irreparable harm so

as to justify waiver of the administrative exhaustion

requirement.

The briefs and the record do not address the evidence that

was offered in support of the district court’s finding of

irreparable harm. Furthermore, it seems highly unlikely that the

termination of APRO’s provider status would result in a

measurable loss of home-based health care in three separate

counties. Similarly, it seems unreasonable to conclude that

APRO’s patients will be deprived of adequate home-based health

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care if APRO is forced out of business.

B. Jurisdiction based upon the Civil Rights Statutes

APRO’s cites various civil rights statutes in its complaint

against the Secretary; 28 U.S.C. § 1343 and 42 U.S.C. §§ 1981,

1983, 1985, 1986, and 1988.

This Court has long recognized that suits against the United

States brought under the civil rights statutes are barred by

sovereign immunity. Unimex, Inc. v. United States Dept. of

Housing and Urban Development, 594 F.2d 1060, 1061 (5th Cir.

1979). Moreover, Bivens v. Six Unknown Agents of Federal Bureau

of Narcotics, 403 U.S. 388 (1971), provides a cause of action

only against government officers in their individual capacities.

There is no indication that the Secretary is being sued in her

individual capacity. Therefore, neither Bivens, nor the civil

rights statutes provide a valid jurisdictional predicate for this

action.

IV. CONCLUSION

We find that APRO should have exhausted its administrative

remedies under section 405(g) and that APRO’s civil rights

complaints are barred by sovereign immunity. Accordingly, we

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REVERSE the district court’s decision based on lack of subject

matter jurisdiction.

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