Case: 18-30925 Document: 00515019860 Page: 1 Date Filed: 07/02/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 18-30925 July 2, 2019
Lyle W. Cayce
D&G HOLDINGS, L.L.C., formerly operating as Doctors Lab, Clerk
Plaintiff - Appellant
v.
ALEX M. AZAR, II, SECRETARY, U.S. DEPARTMENT OF HEALTH AND
HUMAN SERVICES,
Defendant - Appellee
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 5:17-CV-1045
Before CLEMENT, DUNCAN, and OLDHAM, Circuit Judges.
PER CURIAM:*
The parties have asked us to decide a jurisdictional question regarding
a claim for repayment of Medicare benefits wrongly recouped by a Medicare
Administrative Contractor (“MAC”). The question centers around 42 U.S.C.
§ 405(h)—a provision specifying the jurisdictional avenues available for
Medicare claims. In In re Benjamin, we recently expounded upon § 405(h)’s
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
Case: 18-30925 Document: 00515019860 Page: 2 Date Filed: 07/02/2019
No. 18-30925
meaning. 924 F.3d 180 (5th Cir. 2019). As the district court did not have the
benefit of Benjamin’s guidance, we vacate its judgment and remand for
reconsideration in light of Benjamin.
I.
D&G Holdings, LLC, is a Medicare supplier that provides lab services to
nursing homes and other homebound people in Louisiana. In 2011, a Medicare
Zone Program Integrity Contractor (“ZPIC”) audited D&G’s Medicare claims.
Three years later, the ZPIC concluded that D&G had overbilled the Medicare
program and had consequently received $8.3 million in excess Medicare
reimbursements. Novitas Solutions, Inc., the MAC for Louisiana, relied on the
ZPIC’s finding and instructed D&G to refund the full amount. D&G challenged
Novitas’s overpayment determination through the “harrowing labyrinth of
Medicare appeals.” Family Rehab. Inc. v. Azar, 886 F.3d 496, 499 (5th Cir.
2018).
This court recently summarized that appeals process as follows:
A provider must go through a four-level appeals process.
First, it may submit to the MAC a claim for redetermination of the
overpayment. Second, it may ask for reconsideration from a
Qualified Independent Contractor (“QIC”) hired by [the Centers for
Medicare and Medicaid Services (“CMS”)] for that purpose. If the
QIC affirms the MAC’s determination, the MAC may begin
recouping the overpayment by garnishing future reimbursements
otherwise due the provider.
Third, the provider may request de novo review before an
ALJ within the Office of Medicare Hearings and Appeals (OMHA)
. . . . The ALJ stage presents the opportunity to have a live hearing,
present testimony, cross-examine witnesses, and submit written
statements of law and fact. The ALJ “shall conduct and conclude a
hearing . . . and render a decision . . . not later than” 90 days after
a timely request. 42 U.S.C. § 1395ff(d)(1)(A). Fourth, the provider
may appeal to the Medicare Appeals Council (“Council”), an
organization independent of both CMS and OMHA. The Council
reviews the ALJ’s decision de novo and is similarly required to
2
Case: 18-30925 Document: 00515019860 Page: 3 Date Filed: 07/02/2019
No. 18-30925
issue a final decision within 90 days. Furthermore, if the ALJ fails
to issue a decision within 90 days, the provider may “escalate” the
appeal to the Council, which will review the QIC’s reconsideration.
Id. at 499–500 (footnote omitted) (internal citations omitted). If a provider is
still unsatisfied after this lengthy administrative-appeals process, it can seek
judicial review under 42 U.S.C. § 405(g) of the Council’s final decision in
district court. 42 U.S.C. § 1395ff(b)(1)(A).
For over three years, D&G slogged through this administrative morass.
It emerged victorious: The Council overturned the overpayment
determination. When an overpayment determination is overturned, the money
recouped from a Medicare provider during the administrative-appeals process
must be returned. 42 U.S.C. § 1395ddd(f)(2)(B). D&G has waited for this
repayment. It has never come.
So D&G resorted to the federal courts. It sued the Secretary of the
Department of Health and Human Services (“Secretary”), invoking the district
court’s jurisdiction under § 405(g). D&G alleged that the Secretary must return
the recouped money under § 1395ddd(f)(2)(B). D&G further alleged that the
total amount recouped—and the amount it was therefore owed under
§ 1395ddd(f)(2)(B)—was $4.1 million, plus interest. On the same day D&G filed
its complaint, Novitas without explanation made a single $1.8 million payment
to D&G.
The district court dismissed D&G’s complaint for lack of subject matter
jurisdiction under § 405(g). This appeal followed. D&G asks us to find
jurisdiction under § 405(g) or, in the alternative, allow it to add a mandamus
claim to its complaint.
3
Case: 18-30925 Document: 00515019860 Page: 4 Date Filed: 07/02/2019
No. 18-30925
II.
On May 10, 2019, this court issued In re Benjamin. There, we interpreted
both the second and third sentences of 42 U.S.C. § 405(h). 1 The gist of our
decision was this: The third sentence strips federal jurisdiction under only the
listed statutory provisions—§§ 1331 and 1346—not under unlisted ones, such
as bankruptcy jurisdiction under 28 U.S.C. § 1334. 924 F.3d at 184–88. The
second sentence, in turn, channels certain claims under Title II into § 405(g)
as the exclusive path for obtaining judicial review. But that is true only for
claims falling within its scope. The only claims that fall within its scope are
claims challenging a disability determination by the Commissioner of Social
Security for which § 405(b)(1) provides a hearing. Id. at 188–89. For claims
falling outside of the second sentence’s scope, a litigant may altogether avoid
§ 405(g)’s channeling and exhaustion requirements. At the same time,
however, a litigant who takes himself outside of § 405(g) then needs an
independent basis of jurisdiction. That is, § 405(g) jurisdiction is unavailable
for such claims. Id.
Because Benjamin could impact D&G’s claim, 2 we vacate the district
court’s judgment and remand for reconsideration in light of Benjamin. On
remand, the district court should allow D&G to amend its complaint to add a
1 Section 405(h) states:
[1] The findings and decision of the Commissioner of Social
Security after a hearing shall be binding upon all individuals
who were parties to such hearing. [2] No findings of fact or
decision of the Commissioner of Social Security shall be
reviewed by any person, tribunal, or governmental agency
except as [provided in § 405(g)]. [3] No action against the United
States, the Commissioner of Social Security, or any officer or
employee thereof shall be brought under section 1331 or 1346 of
Title 28 to recover on any claim arising under [Title II of the
Social Security Act].
2 While Benjamin is a Social Security case, the Medicare Act incorporates the same
provisions at issue in Benjamin. See 42 U.S.C. §§ 1395ff(b)(1)(A) (incorporating § 405(b) and
(g)); 1395ii (incorporating § 405(h) along with other provisions).
4
Case: 18-30925 Document: 00515019860 Page: 5 Date Filed: 07/02/2019
No. 18-30925
mandamus claim under 28 U.S.C. § 1361, which Benjamin makes clear would
not be barred—or in any way limited—by either the second or third sentence
of § 405(h).
We do not address the correctness of the district court’s July 27, 2018
opinion, save for one aspect. The district court thought that Novitas’s decision
to issue D&G a check for $1.8 million was akin to an initial determination. This
characterization is wrong.
Novitas’s repayment decision does not meet the Medicare Act’s definition
of an “initial determination.” Under § 1395ff(a), initial determinations include
an “initial determination of whether an individual is entitled to benefits” and
“the amount of benefits available to the individual” under Parts A and B of the
Medicare Act. 42 U.S.C. § 1395ff(a)(1)(A)–(B). An initial determination also
includes “an initial determination by the Secretary that payment may not be
made, or may no longer be made, for an item or service” under Parts A and B.
Id. § 1395ff(a)(1)(C). Here, Novitas determined (by unknown means) how much
money it had garnished from D&G and sent a check. Determining that amount
has nothing to do with whether D&G was entitled to certain benefits or
whether a payment should not be made or no longer made for a particular
service. Instead, it involves a determination regarding the amount of funds
that Novitas previously allocated to pay D&G’s Medicare debt. See 42 C.F.R.
§ 405.370 (defining recoupment as “[t]he recovery by Medicare of any
outstanding Medicare debt by reducing present or future Medicare payments
and applying the amount withheld to the indebtedness”).
Additionally, Medicare providers must be given written notice of an
initial determination. See, e.g., 42 U.S.C. § 1395ff(a)(2)(A), (a)(4); 42 C.F.R.
§ 405.921. No party contends that Novitas sent a written notice to D&G
regarding its repayment decision. In fact, the Secretary’s counsel at oral
argument conceded that she was unaware of any documentation or explanation
5
Case: 18-30925 Document: 00515019860 Page: 6 Date Filed: 07/02/2019
No. 18-30925
regarding the $1.8 million check Novitas sent to D&G. As best we can tell, it
appears that Novitas picked the number out of thin air. What is worse, its
affiant (Shaena Parker) admits the amount was wrong. All this makes one
thing inescapably clear: Neither the Secretary nor Novitas seem to have any
idea what they are doing or what is going on. It is inexcusable that the
Secretary would allow Novitas to wield the sovereign authority of the United
States to seize money from a private company but then be utterly unable to
give an accounting for the amount pillaged.
That said, it is for the district court to determine what effect our
classification of Novitas’s repayment determination has on D&G’s claim. But
we note that it would likely be relevant to the § 405(g) analysis under Benjamin
and to whether D&G has an adequate alternative remedy that could defeat a
mandamus claim.
* * *
For the foregoing reasons, we VACATE the district court’s judgment and
REMAND for proceedings consistent with this opinion.
6
D&G Holdings, L.L.C. v. Alex Azar, II, Secretary
Combined Opinion