State of Delaware Department of Health and Social Services, Division of Medicaid & Medical Assistance v. United States Department of Health and Human Services

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

STATE OF DELAWARE
DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, DIVISION OF
MEDICAID & MEDICAL
ASSISTANCE,
Plaintiff,
Civil Action No. 16-1734 (CKK)
v.
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
(August 8, 2017)

The pending case raises a thicket of regulatory and jurisdictional issues. Plaintiff is

the entity charged with administering Delaware’s Medicaid program. Due to a

technological limitation, Delaware’s computer systems were unable to separately report

certain collections that the State made from third-parties. Part of these collections were

owed to the federal government. Plaintiff addressed this technological limitation by simply

netting these collections from its Medicaid expenditures, and only seeking federal funding

based on the net amount. The federal government issued two reports warning Delaware

that this approach was unacceptable, principally because there was insufficient evidence

that the relevant collections were actually being netted, and that the federal government

was receiving due credit. Not long after the second report was issued, the federal

government “disallowed” $10,080,378 in federal funding, equal to what it viewed as the

amount that Delaware had failed to credit the federal government from third-party

collections. Delaware sees this is a manifest injustice, believing that it has already credited

the federal government with this amount, and must now double pay.
1
 Despite this indignation, however, Delaware missed the deadline to seek

administrative review of the disallowance determination by two weeks. After a lengthy

period during which Delaware allegedly sought a retroactive extension of the filing

deadline, Delaware filed an appeal with the Departmental Appeals Board (the “Board”),

which summarily rejected the appeal for untimeliness. Plaintiff sought review of the

rejection before this Court, and Defendants moved to dismiss, principally on the basis that

judicial review was unavailable. Upon consideration of the pleadings, 1 the relevant legal

authorities, and the record as a whole, the Court shall GRANT-IN-PART and DENY-IN-

PART the motion to dismiss.

The Court finds that it has subject-matter jurisdiction under 42 U.S.C. §

1316(e)(2)(C) to exert judicial review over the Board’s decision to reject Plaintiff’s appeal,

and that under a standard of review set by the Administrative Procedure Act (“APA”),

Plaintiff has stated a plausible claim that the Board’s decision was arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law. Given the availability of an

adequate remedy at law, however, Plaintiff’s common law claims for unjust enrichment

and for money had and received are dismissed without prejudice because they sound in

equity, among other considerations.

1
The Court’s consideration has focused on the following documents:

• Defs.’ Mem. Of Points & Authority in Supp. of. Defs.’ Mot. to Dismiss, ECF No.
13-1 (“Defs.’ Mem.”);
• Delaware’s Mem. of Points & Authorities in Opp’n to Defs.’ Mot. to Dismiss,
ECF No. 14 (“Pl.’s Opp’n”); and
• Mem. in Reply to Pl.’s Opp’n to Defs.’ Mot. to Dismiss, ECF No. 16 (“Defs.’
Reply”).
2
 Finally, the alleged APA violations were pled only against Defendants United

States Department of Health and Human Services (“HHS”) and the Secretary of the United

States Department of Health and Human Services (the “Secretary”). See Compl., Counts

I–III. Only the common law claims were brought against the other two Defendants, the

Centers for Medicare and Medicaid Services (“CMS”), and the Administrator for the

Centers for Medicare and Medicaid Services (the “Administrator”). Id., Counts IV–V.

Accordingly, CMS and the Administrator are dismissed from this lawsuit without

prejudice.

I. BACKGROUND

A. Statutory and Regulatory Background

1. Medicaid

Medicaid is a cooperative federal-state program through which the federal

government provides financial assistance for States to furnish medical care to low-income

families and individuals. Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 502 (1990). In

order to participate in Medicaid, a State must first develop a Medicaid plan “describing

conditions of eligibility and covered services.” Bowen v. Massachusetts, 487 U.S. 879, 883

(1988). That plan must then be approved by CMS. 42 U.S.C. § 1396a.

Once approved, the federal government pays the State on a quarterly basis for a

specified percentage of the State’s Medicaid expenditures. Id. § 1396b. This financial

contribution is called the “federal financial participation” (“FFP”). The quarterly federal

contribution is made as an advance payment “based on the State’s estimate of its

anticipated future expenditures.” Bowen, 487 U.S. at 883–84. Then, within 30 days after

the end of the quarter, the State must submit a Form CMS-64, entitled the Quarterly

3
Medicaid Statement of Expenditures for the Medical Assistance Program (“QSE”), on

which the State reports its actual expenditures for the quarter. See 42 C.F.R. §§

430.30(c)(1)–(2).

Because the Medicaid program is a payor of last resort, the State is responsible for

recovering payments from third-parties that were legally obligated to cover medical care

that was ultimately paid for the by the State. 42 U.S.C. § 1396a(a)(25)(A). If the State

receives federal funds for services for which it later recovers monies from third-parties, the

corresponding federal contributions are considered “overpayments” and the State must

refund those amounts to the federal government. 42 U.S.C. § 1396b(d)(2)(B). The State

must report and refund overpayments through a credit to the federal government on its

quarterly QSE. 42 C.F.R. § 433.320(a)(1). If a State does not credit the federal government

with overpayments, then CMS “will disallow expenditures equal to the determined

overpayment amount.” Compl. ¶ 20; see 42 U.S.C. § 1316(d); 42 C.F.R. § 430.42(a)

(describing disallowance procedure).

2. Reconsideration and Appeals Process

Section 1316(e) and accompanying regulations set forth two routes for the State to

contest a disallowance determination. The first route is the reconsideration process, which

allows the State to request “reconsideration of the disallowance, provided that such request

is made during the 60-day period that begins on the date the State receives notice of the

disallowance.” 42 U.S.C. § 1316(e)(1). Within 60 days of receiving the request for

reconsideration, the Administrator “shall . . . issue a written decision or a request for

additional information . . . .” Id. § 430.42(c)(2). If the State is required to submit additional

information, the Administrator “shall issue a written decision, within 60 days from the due

4
date of such information.” Id. § 430.42(c)(5). The final written decision “shall constitute

final CMS administrative action on the reconsideration.” Id. § 430.42(b)(6). If the State

receives an adverse reconsideration decision, it may then appeal “during the 60-day period

that begins on the date the State receives notice of . . . the unfavorable reconsideration . . .

to the Departmental Appeals Board.” 42 U.S.C. § 1316(e)(2)(A); 42 C.F.R. § 430.42(b)(5)

(“The State may . . . seek reconsideration, and following the reconsideration decision,

request a review from the Board.”).

The second option—the appeal route—permits the State to bypass the

reconsideration process and appeal the disallowance decision directly to the Departmental

Appeals Board. 42 U.S.C. § 1316(e)(2)(A) (“A State may appeal a disallowance . . . during

the 60-day period that begins on the date the State receives notice of the disallowance . . .

by filing a notice of appeal with the Board.”); 42 C.F.R. § 430.42(b)(4) (“The State is not

required to seek reconsideration before seeking review from the Departmental Appeals

Board.”). The State may pursue either the reconsideration route or the appeal route, but

may not pursue both at the same time. If the State “elects reconsideration, the

reconsideration process must be completed or withdrawn before requesting review by the

Board.” 42 C.F.R. § 430.42(b)(6).

Whether on direct appeal, or following the reconsideration process, the statute

directs the Board to “conduct a thorough review of the issues, taking into account all

relevant evidence.” Id. The Board’s decision of an appeal is “the final decision of the

Secretary.” 42 U.S.C. § 1316(e)(2)(B). Either party may then move the Board to reconsider

its “final decision” within 60 days of the Board’s decision “upon a motion by either party

that alleges a clear error of fact or law.” Id.; 42 C.F.R. § 430.42(f).

5
 Finally, a State may “obtain judicial review of a decision of the Board by filing an

action in any United States District Court located within the appealing State . . . or the

United States District Court for the District of Columbia,” by filing such an action within

60 days of the Board’s decision. 42 U.S.C. § 1316(e)(2)(C).

B. Factual and Procedural Background

Plaintiff is the agency charged with administering Delaware’s Medicaid program.

Compl. ¶ 23. As a result, Plaintiff is required to collect payments from third-parties who

are legally obligated to pay the expenses of Medicaid participants who have received

government funding. Id. ¶ 24. Such recoveries are treated as overpayments, and must

therefore be credited to the federal government on Delaware’s quarterly QSEs. Id. ¶¶ 24–

25.

Overpayments are supposed to be separately reported on the QSEs. Id. ¶ 25.

However, the computer system that Delaware used to track collections from third-parties

was unable to distinguish between overpayments and other types of collections. Id. To

address this technological limitation, Delaware simply netted all of its collections from

third-parties against its total Medicaid expenditures, and reported the net amount as its

claim for federal assistance. Id. In Delaware’s view, this approach resulted in the federal

government receiving full credit for overpayments collected by the State, even though they

were not separately reported on the quarterly QSEs. Id.

The HHS Office of Inspector General (“OIG”) disagreed. First, in 2004, OIG issued

a report finding that Delaware had not separately reported overpayments on its quarterly

QSEs. Id. ¶ 27 (citing Review of Delaware’s Accounts Receivable System for Medicaid

Provider Overpayments (Oct. 2004) (“2004 OIG Report”), available at

6
https://oig.hhs.gov/oas/reports /region3/30400205.pdf ). The report found that Delaware

had not “accurately report[ed] provider overpayments” and recommended that Delaware

“establish an adequate integrated accounting system that records, ages and accurately

reports overpayments . . . .” 2004 OIG Report, at 5–6. Although Delaware decided to

implement changes to its computer system, the new system was not expected to become

operational until January 2017. Compl. ¶ 28.

OIG issued another report in 2012. Id. ¶ 29 (citing Delaware Did Not Comply with

Federal Requirements To Report All Medicaid Overpayment Collections (June 2012)

(“2012 OIG Report”), available at https://oig.hhs.gov/oas/reports/region3/31100203.

pdf”). As relevant here, the second report found that Delaware had failed to report

$10,080,378 in overpayments that were owed to the federal government. 2012 OIG Report,

at 3. OIG recognized that Delaware netted its aggregate collections from third-parties

against expenditures, and reported only the net amount of expenditures to the federal

government. Id. at 5. However, it concluded that State officials “could not provide support

for this explanation,” and that the State “did not have internal controls to verify or track

the collections once they entered the” computer system. Id.; see also id. at 7 (finding that

Delaware “did not support that the specific Medicaid overpayments [that OIG] reviewed

had, in fact, been carried through to the netted expenditures”). Delaware disputes this

finding, contending that it was “certain that net expenditures reported . . . reflect

overpayment collections.” Id. App’x (Letter from Rosanne Mahaney to Stephen

Virbitksky, dated Mar. 14, 2012).

On September 24, 2014, based principally on the findings of the 2012 OIG Report,

CMS sent Plaintiff “an official notice of a disallowance in the amount of $10,082,769.”

7
Defs.’ Mem., Ex. A, ECF No. 13-2, at 2. Although Plaintiff sought reconsideration of the

disallowance, it concedes that it missed the 60-day deadline for filing a request for

reconsideration by approximately two weeks, allegedly “[d]ue to the press of . . . other

matters . . . .” Compl. ¶ 35. In December 2014, Plaintiff “initiated efforts to secure an

extension of the reconsideration period from CMS . . . .” Id. ¶ 36. More than one year later,

on January 20, 2016, “CMS informed [Plaintiff] that it would not reconsider the

disallowance.” Id. ¶ 39. On March 11, 2016, Plaintiff filed an appeal with the Board, 2 and

simultaneously “moved to extend the appeal deadline in the event that the Board considered

the appeal to be untimely.” Compl. ¶ 40.

A “Rejection of Appeal for Untimeliness” was issued to Plaintiff on July 1, 2017

by Constance B. Tobias, Chair of the Departmental Appeals Board. Compl., Ex. A

(“Rejection Letter”). The Chair found that Plaintiff had filed its appeal “more than one year

and three months after Delaware’s notice of appeal was due,” and consequently well past

the 60-day deadline for filing an appeal directly with the Board. Rejection Letter, at 1–2.

The Chair also rejected Plaintiff’s request for an extension of the filing deadline, holding

that Plaintiff had “not given a good reason for its protracted delay.” Id. at 3. Within 60 days

of the issuance of the Rejection Letter, Plaintiff filed this action.

2
Although Plaintiff alleges in the complaint that it filed the appeal on March 1, 2016,
Defendants point out that the correct date was March 11, 2016. Defs.’ Mem. at 9 n.3 (citing
Compl., Ex. A, at 1). However, either date falls within 60 days of January 20, 2016, the
date on which Plaintiff alleges CMS informed Plaintiff that it would not reconsider the
disallowance. Compl. ¶ 39.
8
 II. LEGAL STANDARD

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(1), Plaintiff bears the burden of establishing that the Court has subject-matter

jurisdiction over its claims. Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir.

2007); Ctr. for Arms Control & Non-Proliferation v. Redd, No. CIV.A. 05-682 (RMC),

2005 WL 3447891, at *3 (D.D.C. Dec. 15, 2005). A court’s decision regarding its “subject-

matter jurisdiction necessarily precedes a ruling on the merits . . . .” Ruhrgas AG v.

Marathon Oil Co., 526 U.S. 574, 584 (1999).

In determining whether there is jurisdiction, the Court may “consider the complaint

supplemented by undisputed facts evidenced in the record, or the complaint supplemented

by undisputed facts plus the court’s resolution of disputed facts.” Coal. for Underground

Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (internal quotation marks

omitted); see also Charles Alan Wright & Arthur R. Miller, 5B Federal Practice &

Procedure § 1350 (3d ed. 2017) (noting the “wide array of cases from the four corners of

the federal judicial system involving the district court’s broad discretion to consider

relevant and competent evidence on a motion to dismiss for lack of subject matter

jurisdiction to resolve factual issues”). “Although a court must accept as true all factual

allegations contained in the complaint when reviewing a motion to dismiss pursuant to

Rule 12(b)(1),” the factual allegations in the complaint “will bear closer scrutiny in

resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.”

Wright v. Foreign Serv. Grievance Bd., 503 F. Supp. 2d 163, 170 (D.D.C. 2007) (internal

quotation marks omitted).

9
 B. Motion to Dismiss for Failure to State a Claim

Defendants also move to dismiss the Complaint for “failure to state a claim upon

which relief can be granted” pursuant to Federal Rule of Civil Procedure 12(b)(6). “[A]

complaint [does not] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual

enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 557 (2007)). Rather, a complaint must contain sufficient factual

allegations that, if accepted as true, “state a claim to relief that is plausible on its face.”

Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Iqbal, 556 U.S. at 678.

In deciding a Rule 12(b)(6) motion, a court may consider “the facts alleged in the

complaint, documents attached as exhibits or incorporated by reference in the complaint,”

or “documents upon which the plaintiff’s complaint necessarily relies even if the document

is produced not by the plaintiff in the complaint but by the defendant in

a motion to dismiss.” Ward v. District of Columbia Dep’t of Youth Rehab. Servs., 768

F.Supp.2d 117, 119 (D.D.C. 2011) (internal quotation marks omitted). The court may also

consider documents in the public record of which the court may take judicial notice. Abhe

& Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).

III. DISCUSSION

A. The Court Has Subject-Matter Jurisdiction Under Section 1316(e)

Plaintiff has presented a multitude of alleged jurisdictional bases in the complaint

and the briefing on the pending motion to dismiss. These include mandamus (28 U.S.C. §

1361), equity, general federal question jurisdiction (28 U.S.C. § 1331), and the APA. The

10
Court, however, sees the jurisdictional question through a narrower lens. Section

1316(e)(2)(C) provides for judicial review of Board decisions:

A State may obtain judicial review of a decision of the Board by filing an
action in . . . the United States District Court for the District of Columbia.
Such an action may only be filed . . . if no motion for reconsideration was
filed within the 60-day period specified in subparagraph (B), during such
60-day period.

42 U.S.C. § 1316(e)(2)(C). Accordingly, for the Court to exert judicial review, Plaintiff

must have received “a decision of the Board” and must have brought an action in this

district within 60 days of the date on which the decision was rendered. The parties agree

that this action was filed within the applicable time period. They only disagree over

whether the Rejection Letter constitutes “a decision of the Board.”

There is a paucity of case law on section 1316(e)(2)(C). Fortunately, the United

States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) has provided

substantial guidance with respect to an analogous statute in the Medicare context. Under

the Medicare statute, 42 U.S.C. § 1395 et seq., “providers are reimbursed for the cost of

the services they provide to qualified Medicare beneficiaries” based on agreements with

HHS. Athens Community Hospital v. Schweiker, 686 F.2d 989, 991 (D.C. Cir. 1982). HHS

has appointed a “fiscal intermediary” who “acts as the Secretary’s agent for the purpose of

reviewing claims and awarding reimbursement.” Id. (citing 42 U.S.C. § 1395h). At the end

of the fiscal year, the fiscal intermediary reviews the providers’ claims and awards

reimbursement. Id. If the provider disagrees with the reimbursement award, it may appeal

to the Provider Reimbursement Review Board (“PRRB”). The PRRB will review

determinations of the fiscal intermediary “only if (1) the provider has filed a timely cost

report; (2) the amount in controversy is $10,000 or more, and (3) the appeal is filed within

11
180 days.” Id. (citing 42 U.S.C. § 1395oo(a)). Section 1395oo(f)(1) provides for judicial

review with respect to the PRRB:

Providers shall have the right to obtain judicial review of any final decision
of the [PRRB], or of any reversal, affirmance, or modification by the
Secretary, by a civil action commenced within 60 days of the date on which
notice of any final decision by the [PRRB] or of any reversal, affirmance,
or modification by the Secretary is received . . . . Such action shall be
brought in the district court of the United States for the judicial district in
which the provider is located or in the District Court for the District of
Columbia and shall be tried pursuant to the applicable provisions under
chapter 7 of Title 5 . . . .

42 U.S.C. § 1395oo(f)(1).

In Athens, the D.C. Circuit considered whether a decision by the PRRB not to assert

jurisdiction constituted a “final decision” subject to judicial review pursuant to section

1395oo(f)(1). Athens, 686 F.2d at 993. Relying principally on the out-of-circuit authority

Cleveland Memorial Hospital, Inc. v. Califano, 444 F. Supp. 125 (E.D.N.C. 1978), aff’d,

594 F.2d 993 (4th Cir. 1979), the court held that such a decision was “final” and that the

court therefore had subject-matter jurisdiction. First, the court found persuasive the

argument that “if a refusal by the PRRB to exercise jurisdiction were not reviewable, the

PRRB could effectively preclude any judicial review of its decisions simply by denying

jurisdiction of those claims that it deems to be non-meritorious.” Id. (internal quotation

marks and citations omitted). Second, the court found persuasive the analogy between

judicial review of the PRRB’s decision and the authority of the courts of appeals to review

“final decisions” of the district courts, noting that dismissals for lack of jurisdiction by

district courts have “consistently been understood as ‘final decisions.’” Id. The D.C. Circuit

concluded that:

12
 [A] decision by the PRRB refusing to exercise jurisdiction is, for the
purpose of 42 U.S.C. § 1395oo(f)(1), a final decision sufficient to permit
judicial review. The reasoning of the court in Cleveland Memorial is
especially persuasive. Moreover, while the Medicare Act and, in particular,
42 U.S.C. § 1395oo(f)(1) are structured so as to limit judicial review, there
is nothing in either the statute or the legislative history which suggests that
such review is limited exclusively to substantive issues. Thus, if the
threshold requirements of 42 U.S.C. § 1395oo(f)(1) are met, a court has
jurisdiction to review a decision by the PRRB that it lacks jurisdiction to
review a determination of the fiscal intermediary.

Id. (emphasis added).

This issue was revisited by the D.C. Circuit in Auburn Regional Medical Center v.

Sebelius, 642 F.3d 1145 (D.C. Cir. 2011), rev’d on other grounds, 568 U.S. 145, 157

(2013). In Auburn, Medicare providers contested the rate at which they had been

reimbursed for the fiscal years 1987–1994 based on a discovery in an unrelated case that

CMS had miscalculated rates for similar providers during that time period. Id. at 1147. The

providers petitioned the PRRB in 2006, significantly outside of the 180-day appeals

window. Id. The PRRB held that the providers’ “untimely” claim was beyond its

jurisdiction and declined to review the merits of the claim. Id. In assessing whether it had

subject-matter jurisdiction, the district court relied on Athens, and read that case to hold

that “a plaintiff may obtain judicial review of a PRRB refusal to exercise jurisdiction only

if an administrative appeal has been filed within the 180-day limitations period.” Auburn

Regional Medical Center v. Sebelius, 686 F. Supp. 55, 64 (D.D.C. 2010). On this issue, the

D.C. Circuit reversed the district court, reaffirming the holding in Athens that “a decision

of the PRRB denying jurisdiction is a final decision subject to judicial review,” reasoning

that “[s]uch a dismissal is final in any sense of the word. It is not pending, interlocutory,

tentative, conditional, doubtful, unsettled or otherwise indeterminate. It is done.” Auburn,

642 F.3d at 1148. For purposes of assessing the availability of judicial review, the D.C.

13
Circuit held that it was irrelevant whether plaintiff had filed its PRRB petition within the

180-day period set by statute, holding that section “1395oo(f)(1) only requires that ‘a civil

action [be] commenced within 60 days’ of the PRRB’s ‘final decision.’ It says nothing

about the 180–day limitations period [for appealing to the PRRB].” Id. at 1147 (first

alternation in original).

In light of these authorities, the question before the Court is a narrow one: are the

threshold requirements of section 1316(e)(2)(C) satisfied such that the Court can exert

judicial review. As already noted, the parties do not dispute that this action was filed within

the 60-day period for seeking judicial review. Rather, they differ over whether the

Rejection Letter constitutes a Board “decision” subject to judicial review. Defendants

principally rely on the fact that the Rejection Letter was issued solely by the Chair of the

Board, and not by three board members. As support, Defendants point to the regulations

under section 1316(e). One of these provides that “[e]ach decision is issued by three Board

members (see § 16.5(b)) . . . .” 45 C.F.R. § 16.21(a). Section 16.5(b), in turn, provides that

“[e]ach decision of the Board is issued by the presiding Board member and two other Board

members.” 45 C.F.R. § 16.5(b).

However, Defendants have not explained why the Court should defer to the

agency’s interpretation of the word “decision” in section 1316(e)(2)(C). The D.C. Circuit,

for one, has held that “an agency’s interpretation of a statutory provision defining the

jurisdiction of the court [is not] entitled to . . . deference under Chevron.” Fox Television

Stations, Inc. v. FCC, 280 F.3d 1027, 1038 (D.C. Cir. 2002) (citing Adams Fruit Co. v.

Barrett, 494 U.S. 638, 649 (1990) (“even if [the] language establishing a private right of

action is ambiguous, we need not defer to the Secretary of Labor’s view of the scope of

14
[the statute] because Congress has expressly established the Judiciary and not the

Department of Labor as the adjudicator of private rights of action arising under the

statute”)). Furthermore, the regulations are not as clear as Defendants would have. The

definitional section provides that “[r]eference . . . to an action of the Board means an action

of the Chair, another Board member, or Board staff acting at the direction of a Board

member.” 45 C.F.R. § 16.2(a). Furthermore, the specific regulation regarding the action at

issue in this case—the rejection of Plaintiff’s appeal—provides as follows:

Within ten days after receiving the notice of appeal, the Board will send an
acknowledgment, enclose a copy of these procedures, and advise the
appellant of the next steps. The Board will also send a copy of the notice of
appeal, its attachments, and the Board’s acknowledgment to the respondent.
If the Board Chair has determined that the appeal does not meet the
conditions of § 16.3 or if further information is needed to make this
determination, the Board will notify the parties at this point.

45 C.F.R. § 16.7(b) (emphasis added). Contrary to the position taken by Defendant, this

regulation suggests that a rejection of an appeal is a type of Board action, and not merely

an action by the Chair of the Board.

As a more substantive matter, however, the reasoning of Athens and Auburn apply

directly to the jurisdictional question in this case. Were the Court to hold that a decision to

decline jurisdiction over an appeal was not subject to judicial review under section

1316(e)(2)(C), then the Board would be free to escape judicial review by dismissing

appeals on jurisdictional grounds, rather than on the merits—that is, the exact concern

raised by the D.C. Circuit in Athens and Auburn. Furthermore, regardless of whether such

a decision is issued by three members of the Board, or solely by the Chair, there is no real

disagreement over the fact that the decision is final and ripe for judicial review. The

15
Rejection Letter, for instance, has all the hallmarks of a final legal decision and makes no

mention of further administrative proceedings.

Finally, contrary to Defendants’ assertions, Auburn makes clear that the availability

of subject-matter jurisdiction in this case does not hinge upon whether Plaintiff complied

with administrative filing deadlines in the proceedings below. Auburn, 642 F.3d at 1147

(holding that judicial review was available so long as the threshold requirements of the

statute providing for judicial review were met, regardless of whether an administrative

filing deadline had been met); compare Def.’s Mem. at 3 (claiming that “judicial review

under the Medicaid statute is available only to States that exhaust their administrative

remedies”). Accordingly, the Court concludes that the Rejection Letter is a “decision of the

Board,” and that Plaintiff filed this action within 60 days of the issuance of the Rejection

Letter. This means that the “threshold requirements” of section 1316(e)(2)(C) have been

met, and consequently that the Court has subject-matter jurisdiction pursuant to section

1316(e)(2)(C) to exert judicial review over the Board’s decision to decline jurisdiction over

Plaintiff’s appeal, as memorialized in the Rejection Letter. Athens, 686 at 993.

Because the Court finds that it has subject-matter jurisdiction pursuant to section

1316(e)(2)(C), Plaintiff’s other arguments regarding subject-matter jurisdiction are left

unaddressed.

B. Plaintiff Has Stated a Plausible Claim

The parties agree that the APA provides the appropriate standard of review for

assessing a claim under section 1316(e)(2)(C). Defs.’ Reply at 9 (“the APA supplies the

standard of review for . . . judicial review under 42 U.S.C. § 1316”); Pl.’s Mem. at 12–13

(contending that section 1316(e)(2)(C) merely codified the prior practice of Board

16
decisions being reviewed pursuant to the APA). Furthermore, the analogous Medicare

statute—section 42 U.S.C. § 1395oo(f)(1)—expressly provides that judicial review should

be conducted pursuant to the APA.

Section 706(2)(A) of the APA empowers courts to “hold unlawful and set aside

agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law . . . .” 5 U.S.C. § 706(2)(A). Plaintiff

has stated a plausible claim that the decision of the Board was “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law . . . .” Plaintiff alleges that

although it missed the deadline for seeking reconsideration of the disallowance

determination by two-weeks, CMS improperly rebuffed its request to reconsider that

determination because it erroneously held that “the agency does not have the authority to

allow reconsideration beyond the 60 day time period allowed by statute.” Compl. ¶ 38

(internal quotation marks and alterations omitted). The Supreme Court has held that an

analogous filing deadline in the Medicare statute discussed above is not jurisdictional,

meaning that the Secretary was permitted to extend the Medicare deadline for “good cause

shown.” Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 149 (2013). Plaintiff alleges

that the Rejection Letter failed to recognize CMS’s error in holding that the time-limit for

seeking reconsideration was jurisdictional and that it lacked authority to grant an extension,

Compl. ¶ 43, and that the Rejection Letter further erred because it failed to recognize that

once Delaware “elected to seek reconsideration, [it was required] to complete or withdraw

from the process before seeking Board review,” Compl. ¶ 42 (citing 42 C.F.R. §

430.42(b)(6)).

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 As a result of these errors, Plaintiff alleges that the Board improperly determined

that Plaintiff filed its appeal “more than one year and three months late.” Compl. ¶ 42

Under Plaintiff’s interpretation of the law, the appeal to the Board was timely because it

was filed within 60 days of CMS’s final determination to not allow for reconsideration, Id.

¶ 40; and although the request for reconsideration was late, it was only two weeks late, and

Plaintiff contends that CMS had authority to provide for a good cause extension of the

reconsideration deadline. Notably, the Rejection Letter recognized the availability of a

good cause extension, but found that it was unavailable in part due to the substantial length

of the delay—in the Board’s view, one year and three months. Rejection Letter, at 3

(“Delaware claims it had good reason to delay its appeal for 15 months based on the

following grounds . . . . An extension of the appeal deadline would not be justified here

because Delaware has not given a good reason for its protracted delay.” (emphasis added)).

If the actual delay is as Plaintiff claims—only two weeks—then the Board’s decision

seemingly rests on a patently erroneous determination. Finally, the Court is unmoved by

Defendants’ contention that Plaintiff has not stated a viable claim because it failed to

properly exhaust its administrative remedies. See Defs.’ Reply at 16. The very nature of

Plaintiff’s claim is that Defendants erred in not affording it administrative relief. Were the

Court to hold otherwise, then no challenge could be brought based on an agency’s refusal

to hear a claim for untimeliness, which would be contrary to the D.C. Circuit’s holdings in

Athens and Auburn. As a result, Plaintiff has plausibly alleged that the Rejection Letter was

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,”

and accordingly, has stated a plausible claim under section 1316(e)(2)(C) with respect to

the Board’s decision to decline jurisdiction over Plaintiff’s appeal due to untimeliness.

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 C. Common Law Claims

Because the Court finds that Plaintiff has stated a viable claim under section

1316(e)(2)(C) and the applicable APA standard of review, Plaintiff’s unjust enrichment

claim, which sounds in equity, shall be dismissed without prejudice. “It is a basic doctrine

of equity jurisprudence that courts of equity should not act when the moving party has an

adequate remedy at law and will not suffer irreparable injury if denied equitable relief.”

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992) (internal quotation marks

and alterations omitted). Here, the Court finds that adequate relief at law may be available

pursuant to section 1316(e)(2)(C), and consequently, Plaintiff is not yet faced with a

situation in which it lacks “an adequate remedy at law.” This, Plaintiff appears to recognize,

if not concede. Pl.’s Opp’n at 22 (“While Defendants are correct that an adequate remedy

at law may defeat an equitable claim, such a claim cannot be defeated by the availability

of any remedy at law.” (emphasis in original)).

This leaves Plaintiff’s claim for “money had and received.” See Compl., Count V.

Plaintiff contends that this is not an equitable claim, but rather one at law. See Pl.’s Opp’n

at 23. The Supreme Court has noted that “‘a court of the United States will not sustain a

bill in equity to obtain only a decree for the payment of money by way of damages, when

the like amount can be recovered at law in an action . . . for money had and received.’”

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 47–48 (1989) (citing Buzard v. Houston,

119 U.S. 347, 352 (1886)). Plaintiff also cites an out-of-circuit authority, which states that

“[i]t is not clear that all jurisdictions would deem this claim an equitable one or impose a

requirement that no adequate alternative remedy at law exist for recovery for money had

and received.” Turney v. Dz Bank AG Deutsche Zentral Genossenschaftsbank, No. 09-

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2533-JWL, 2010 WL 3735757, at *9 (D. Kan. Sept. 20, 2010). Plaintiff, however, has

provided no choice-of-law analysis, and the law of the District of Columbia makes no

distinction between actions for unjust enrichment and for money had and received. Chase

Manhattan Bank v. Burden, 489 A.2d 494, 497 n.8 (D.C. 1985) (holding that the two causes

of action are “essentially the same”). In any event, regardless of whether an action for

money had and received is “at law” in some general sense, the claim in this case sounds in

equity. The Complaint seeks only equitable relief and contains no money demand. See

Compl., Request for Relief. And if there were a money demand, it is unclear that this Court

would have jurisdiction over the claim. Plaintiff has espoused no theory as to how

Defendants have waived their sovereign immunity for money damages, rather than

equitable relief. United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)

(“[j]urisdiction over any suit against the Government requires a clear statement from the

United States waiving sovereign immunity”); Pl.’s Opp’n Mem. at 22 (contending that

waiver of sovereign immunity against Defendants is supplied by the APA, but then noting

that such waiver applies to suits “seeking relief other than money damages” (citing 5

U.S.C. § 702)). Finally, jurisdiction for a pure money damages claim would likely lie only

with the United States Court of Federal Claims. The Tucker Act provides that court with

“exclusive” jurisdiction, where the amount sought exceeds $10,000, “to render judgment

upon any claim against the United States founded . . . upon any express or implied contract

with the United States, or for liquidated or unliquidated damages in cases not sounding in

tort.” Kidwell v. Dep’t of Army, Bd. for Correction of Military Records, 56 F.3d 279, 283

(D.C. Cir. 1995) (internal quotation marks omitted; citing 28 U.S.C. § 1491); cf. Bowen,

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487 U.S. at 910 n.48 (noting that jurisdiction would not lie solely with the Court of Federal

Claims where monetary relief is sought incident to other forms of relief under the APA).

Accordingly, Plaintiff’s claims for unjust enrichment and for money had and

received are dismissed without prejudice.

IV. CONCLUSION AND ORDER

For the foregoing reasons, Defendants’ [13] Motion to Dismiss is GRANTED-IN-

PART and DENIED-IN-PART. The Court has subject-matter jurisdiction under 42

U.S.C. § 1316(e)(2)(C) to exert judicial review over the Board’s decision to reject

Plaintiff’s appeal. Furthermore, under a standard of review set by the APA, Plaintiff has

stated a plausible claim that the Board’s decision was arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law. However, Plaintiff’s common law

claims for unjust enrichment and for money had and received are dismissed without

prejudice. Finally, given the composition of the remaining claims, Defendants CMS and

the Administrator are dismissed from this lawsuit without prejudice.

/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge

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