Southern Rehabilitation Group, P.L.L.C. v. Secretary of Health & Human Services
2013 U.S. App. LEXIS 21122
| 6th Cir. | 2013Background
- Southern Rehabilitation Group and its medical director sued the Secretary of Health and Human Services and Medicare contractors seeking judicial review of final decisions on Medicare Part B claims.
- Plaintiffs allege 6,200 claims were finally decided for payment (Groups 2–4) and 8,900 claims lingered at the administrative level (Group 1); total exposure about $472,000 plus other relief.
- The district court remanded to pay the disputed $107,171 on Groups 2–4; after payment, it held the rest of the Group 1 and other constitutional/state-law claims moot and dismissed those claims for lack of jurisdiction.
- Plaintiffs asserted federal and state-law theories for damages, interest, and injunctive relief, plus requests to reform coding guidelines and hire new reviewers.
- Defendants moved to dismiss the unexhausted Group 1 claims and the state-law claims; later the court converted to summary judgment on mootness, denied interest, and dismissed related claims; the appellate court reviews de novo on jurisdiction and summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had jurisdiction over constitutional and state-law claims | Plaintiffs exhausted remedies and should be able to raise intertwined claims | No, presentment and exhaustion required; §405(h) bars untimely constitutional claims | No jurisdiction; presentment/exhaustion requirements not satisfied |
| Whether the Group 1 unexhausted claims are reviewable | Exhaustion would be futile; preclusion prevented review | Exhaustion required; no Michigan Academy exception here | Lacked jurisdiction over unexhausted Group 1 claims |
| Whether the district court erred in denying interest on clean claims | Interest should accrue on all unreimbursed claims not paid within 30 days | Secretary’s manual limits interest in certain post-appeal payments | Claim for interest should be evaluated on remand; Secretary’s manual interpretation rejected as controlling |
| Whether the district court correctly dismissed 8,900 claims still in administrative process | Group 1 delays violated due-process and funding claims intertwined with reimbursement | Claims awaiting redetermination must proceed within administrative scheme | Affirmed; 8,900 claims dismissed from review; mootness as to those claims affirmed |
Key Cases Cited
- United States v. Sherwood, 312 U.S. 584 ((1941)) (sovereign immunity and consent must be express)
- Illinois Council on Long Term Care v. Shalala, 529 U.S. 1 ((2000)) (nonwaivable presentment and channeling requirement; review limited to final decision)
- Weinberger v. Salfi, 422 U.S. 749 ((1975)) (bar to direct constitutional challenges unless presented under reviewed framework)
- Ill. Council v. Shalala, 529 U.S. 1 ((2000)) (emphasizes § 405(h) presentment and channeling to agency proceedings)
- BP Care, Inc. v. Thompson, 398 F.3d 503 ((6th Cir. 2005)) (limits Michigan Academy exception; exhaustion required unless no review at all)