Morales v. Providence Health System-Southern California
702 F. App'x 550
| 9th Cir. | 2017Background
- Renate Morales received 20 physical therapy sessions after a fall at a Providence Health System facility; Medicare made conditional payments for the first 12 sessions.
- Providence did not bill Medicare for the remaining 8 sessions and instead placed a lien on Morales’ tort claim.
- Morales filed a putative class action alleging breach of contract, fraud, negligent misrepresentation, violations of California UCL and CLRA, and breach of the covenant of good faith and fair dealing based on Providence’s failure to bill Medicare.
- The district court dismissed Morales’ first amended complaint without prejudice for failure to exhaust administrative remedies under the Medicare scheme.
- Morales appealed, arguing § 405(h) did not apply because she was not suing the Secretary or seeking review of a Secretary decision and contending no administrative remedy existed for her claims.
- The Ninth Circuit found no remaining administrative remedies and proceeded to address whether Morales’ claims arose under the Medicare Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether this court has jurisdiction over an appeal from a dismissal without prejudice for failure to exhaust administrative remedies | Morales argued dismissal without prejudice is not final and thus not appealable | Providence argued appealable because dismissal effectively terminates the action where no administrative remedies remain | Court held it has jurisdiction because no administrative remedies remain and appeal is treated as final (Barboza) |
| Whether § 405(h) exhaustion requirement applies to Morales’ claims against a private provider | Morales argued § 405(h) does not apply because she is not seeking review of a Secretary decision nor suing the Secretary | Providence argued Morales’ claims are effectively challenges to Medicare benefits determinations and thus arise under the Medicare Act | Court held claims arise under the Medicare Act and are subject to § 405(h) exhaustion (per Uhm/Heckler test) |
| Whether Morales had available administrative remedies to pursue her Medicare-related claims | Morales contended no administrative remedies existed for a provider’s failure to bill Medicare | Providence and the court pointed to administrative appeals under 42 U.S.C. § 1395ff and direct submission procedures (forms/regulations) | Court held administrative avenues did exist (appeals or direct submission) and Morales failed to exhaust them |
| Proper remedy for failure to exhaust administrative remedies | Morales sought to proceed in district court without exhausting | Providence argued dismissal was required | Court affirmed dismissal without prejudice for lack of exhaustion and denied judicial notice motions |
Key Cases Cited
- Barboza v. Cal. Ass’n of Prof’l Firefighters, 651 F.3d 1073 (9th Cir. 2011) (treats dismissal for failure to exhaust as final when no administrative remedies remain)
- Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010) (describes when claims “arise under” the Medicare Act and are subject to § 405(h) exhaustion)
- Heckler v. Ringer, 466 U.S. 602 (1984) (establishes the two-part test for determining whether a claim arises under the Medicare Act)
AFFIRMED.