943 F.3d 195
4th Cir.2019Background
- HHS's Program Integrity Contractor audited Advantage Health's Medicare billing and extrapolated a 93.26% error rate from an 80‑beneficiary sample, assessing roughly $6,648,877.92 in overpayments.
- HHS recouped alleged overpayments by offsetting ongoing Medicare reimbursements; it recovered about $1.8 million to date.
- Advantage Health obtained redetermination and QIC review; the QIC reversed a few claims but affirmed most denials.
- Advantage Health requested an ALJ hearing; OMHA backlog meant the ALJ hearing would not occur for years (HHS estimated not before 2022).
- Advantage Health sued in district court seeking a preliminary injunction to stop recoupment pending an ALJ hearing; the district court granted the injunction.
- The Fourth Circuit vacated the preliminary injunction, holding that statutory escalation to prompt judicial review (bypassing delayed ALJ review) preserves due process and thus Advantage Health was unlikely to succeed on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §405(g) exhaustion/jurisdiction bars district-court action | Advantage Health: due‑process claim is collateral to merits and §405(g) should not bar relief | HHS: plaintiff must exhaust administrative remedies and obtain a final Secretary decision before suit | Court: §405(g) is not jurisdictional here; Mathews collateral‑due‑process exception applies, so district court had jurisdiction |
| Whether recoupment during long ALJ delay violates procedural due process | Advantage Health: property interest in Medicare payments; withholding payments before a prompt ALJ hearing causes irreparable, uncompensable harm | HHS: statute provides a multilevel review with escalation to judicial review; plaintiff can bypass delayed ALJ and obtain timely court review, so process as a whole satisfies due process | Court: plaintiff focused narrowly on ALJ delay; escalation to judicial review cures delay risk and ALJ hearing offers no guaranteed additional protections, so no likely success on due‑process claim |
| Appropriateness of preliminary injunction halting recoupment | Advantage Health: meets Winter factors given irreparable harm and due process likelihood | HHS: plaintiff cannot show likelihood of success because statutory escalation suffices; equities and public interest favor HHS | Court: because plaintiff unlikely to succeed on merits, injunction was improperly entered (other Winter factors not reached) |
Key Cases Cited
- Cumberland County Hosp. Sys., Inc. v. Burwell, 816 F.3d 48 (4th Cir. 2016) (administrative scheme permits escalation/bypass to obtain relatively prompt judicial review).
- Mathews v. Eldridge, 424 U.S. 319 (1976) (Mathews balancing test for procedural due process).
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (preliminary‑injunction standard).
- Ram v. Heckler, 792 F.2d 444 (4th Cir. 1986) (due‑process collateral‑claim exhaustion exception discussed in Mathews).