919 F.3d 1278
10th Cir.2019Background
- Blue Valley Hospital (BVH), a Kansas acute-care hospital, was certified by CMS for Medicare/Medicaid from 2015 until CMS terminated its provider agreement effective April 11, 2018, for failing to be “primarily engaged” in inpatient care.
- CMS based its decision in part on administrative guidance (S&C Memo 17-44) setting inpatient thresholds; BVH submitted a Plan of Correction that CMS rejected and then accelerated termination.
- BVH filed an expedited administrative appeal with the HHS Departmental Appeals Board on April 12, 2018 and simultaneously sued in federal district court seeking an injunction to halt termination pending administrative review (i.e., a pre-termination hearing).
- Defendants moved to dismiss for lack of subject-matter jurisdiction under the Medicare Act’s administrative channeling provisions; the district court dismissed, and BVH appealed.
- BVH argued federal-question jurisdiction via a due process claim, invoked Mathews v. Eldridge to excuse exhaustion (colorable collateral constitutional claim), and sought the Michigan Academy exception (that exhaustion would foreclose any review).
- The Tenth Circuit affirmed dismissal, holding BVH’s claims arise under the Medicare Act and that BVH failed to show a collateral, colorable due-process claim or total preclusion of review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §405(h) bars §1331 jurisdiction over BVH’s due-process claim | BVH: claim is constitutional so §1331 jurisdiction exists | Defs: claim "arises under" Medicare Act; §405(h) channels review to agency | Held: §405(h) bars §1331; BVH’s claim arises under the Medicare Act |
| Whether Mathews v. Eldridge permits bypassing administrative exhaustion | BVH: raises a collateral, colorable due-process claim entitling it to immediate judicial relief | Defs: BVH’s claim is not collateral or colorable; exhaustion required | Held: Mathews test fails—BVH’s claim is neither collateral nor colorable |
| Whether BVH’s requested relief (pre-termination hearing) is constitutionally required | BVH: due process entitles it to a pre-termination hearing to avoid irreparable harm | Defs: no statutory or constitutional right to pre-termination hearing; post-termination review suffices | Held: Pre-termination hearing not constitutionally required (Geriatrics controls) |
| Whether Michigan Academy exception applies because termination would foreclose review | BVH: economic harm would make administrative/judicial review impossible | Defs: exception limited to total preclusion of review; BVH has filed administrative appeal | Held: Exception not applicable; BVH has not shown total preclusion of review |
Key Cases Cited
- Mathews v. Eldridge, 424 U.S. 319 (1976) (framework for excusing exhaustion when asserting collateral, colorable due-process claims)
- Heckler v. Ringer, 466 U.S. 602 (1984) (test for when a claim "arises under" a statutory benefits scheme)
- Weinberger v. Salfi, 422 U.S. 749 (1975) (claims deriving standing and substantive basis from statute are channeled to administrative review)
- Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986) (distinguishing collateral constitutional claims from intertwined ones)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (limits on bypassing §405(h); Michigan Academy exception applies only to total preclusion of review)
- Geriatrics, Inc. v. Harris, 640 F.2d 262 (10th Cir. 1981) (no constitutional right to pre-termination hearing for providers)
- Family Rehab., Inc. v. Azar, 886 F.3d 496 (5th Cir. 2018) (claims requiring courts to evaluate application of Medicare rules are not collateral)
- Harline v. Drug Enforcement Admin., 148 F.3d 1199 (10th Cir. 1998) (Mathews excusal elements; plaintiff’s burden to show collateral, colorable claim)