BLUE VALLEY HOSPITAL, INC., Plаintiff - Appellant, v. ALEX M. AZAR, II, in his official capacity as Secretary, United States Department of Health and Human Services; SEEMA VERMA, Administrator for the Center of Medicare and Medicaid Services; JEFF HINSON, Regional Administrator for (Region 7) the Center for Medicare and Medicaid Services, Defendants - Appellees.
No. 18-3117
United States Court of Appeals for the Tenth Circuit
March 27, 2019
PUBLISH. Elisabeth A. Shumaker, Clerk of Court.
Appeal from the United States District Court for the District of Kansas (D.C. No. 2:18-CV-02176-JAR-GLR)
Curtis L. Tideman (Andrew J. Ricke with him on the briefs), Lathrop Gage LLP, Overland Park, Kansas, for Plaintiff-Appellant.
Robin R. Anderson, Assistant United States Attorney (Stephen R. McAllister, United States Attorney, and Christopher Allman, Assistant United States Attorney, with her on the brief), Office of the United States Attorney, Kansas City, Kansas, for Defendants-Appellees.
Before LUCERO, HARTZ, and CARSON, Circuit Judges.
Blue Valley Hospital, Inc., (“BVH“) appeals the district court‘s dismissal of its action for lack of subject matter jurisdiction. On April 11, 2018, the Department of Health and Human Services (“HHS“) and the Centers for Medicare and Medicaid Services (“CMS“) terminated BVH‘s Medicare certification. The next day, BVH sought an administrative appeal before the HHS Departmental Appeals Board and brought this action. In this action, BVH seeks an injunction to stay the termination of its Medicare certification and provider contracts pending its administrative appeal. In effect, the injunction would provide BVH a pre-termination hearing. The district court dismissed, hоlding the Medicare Act requires BVH exhaust its administrative appeals before subject matter jurisdiction vests in the district court.
BVH acknowledges that it did not exhaust administrative appeals with the Secretary of HHS prior to bringing this action, but argues: (1) the district court had federal question jurisdiction arising from BVH‘s constitutional due process claim; (2) BVH‘s due process claim presents a colorable
I
BVH is an acute care hospital in Overland Park, Kansas, that provides a range of medical services, specializing in bariatric surgery and intervention services. CMS certified BVH as a hospital provider under the Medicare and Medicaid programs from 2015 until April 11, 2018.1
For а treatment facility to retain hospital classification under the Medicare and Medicaid programs the facility must be “primarily engaged” in providing care to “inpatients.”
These surveys identify a facility‘s failures to meet certain participation requirements under the Medicare Act, termed deficiencies.
Pursuant to this regulatory framework, CMS, through the Kansas Department of Health and Environment, conducted an unannounced onsite survey of BVH on November 13 and 14, 2017. On February 2, 2018, CMS sent BVH a noncompliance notice detailing the deficiencies the onsite survey uncovered. The notice states that BVH did not meet the Conditions of Participation for hospitals because it was not “primarily engaged” in providing “inpatient services.” Specifically, CMS analyzed BVH‘s historical data and determined that the facility did not meet either the two-patient average daily census requirement or the two-night average length of stay requirement. CMS had issued these criteria in an administrative guidance document, “S&C Memo 17-44,” on September 6, 2017.
In the notice of noncompliance, CMS indicated it would terminate BVH‘s provider agreement on May 3, 2018, unless BVH presented a Plan of Correction to resolve the observed deficiencies. BVH timely submitted a Plan оf Correction on February 12, 2018. In a termination notice dated
The following day, BVH submitted a request for an expedited appeal to the HHS Departmental Appeals Board. BVH also filed this action agаinst the following defendants: (1) the Secretary of HHS, Alex M. Azar, II; (2) the Administrator for CMS, Seema Verma; and (3) the Regional Administrator for (Region 7) of CMS, Jeff Hinson. BVH sought an injunction to prevent CMS from terminating its provider agreement pending the administrative appeal process. Defendants moved to dismiss the action for lack of subject matter jurisdiction, but agreed to postpone termination to May 3, 2018, allowing BVH to continue to receive payment under the Medicare and Medicaid programs until that date.
CMS conducted a second survey of BVH on April 22 to 25, 2018. On May 10, 2018, CMS issued a second statement of deficiencies summarizing that survey and affirming its decision to terminate BVH‘s Medicare and Medicaid provider agreement because it was not primarily engaged in providing inpatient services. The district court dismissed BVH‘s action for lack of subject matter jurisdiction. BVH timely appealed.
II
We rеview dismissals for lack of subject matter jurisdiction de novo. Niemi v. Lasshofer, 770 F.3d 1331, 1344 (10th Cir. 2014). In reviewing an attack on the sufficiency of a complaint‘s allegations as to subject matter jurisdiction, we accept the well-pled factual allegations in the complaint as true. Pueblo of Jemez v. United States, 790 F.3d 1143, 1148 n.4 (10th Cir. 2015).
A
BVH argues its constitutional procedural due process claim vests the district court with federal question jurisdiction pursuant to
A claim arises under the Medicare Act if the claim derives “both . . . standing and . . . substantive basis” from the Act, or if the claim is “inextricably intertwined with [plaintiff‘s] claim for benefits.” Heckler v. Ringer, 466 U.S. 602, 615, 624 (1984) (quotation omitted). BVH‘s claim arises under the Medicare Act because it derives standing and substantive basis from the Act‘s provisions allowing: (1) CMS to terminate
BVH nonetheless contends the administrative exhaustion requirements apply only to challenges to the Secretary‘s final termination decisions, not to claims for injunctive relief seeking additional process.3 But the “sweeping and direct” language
of
Moreover, the Supreme Court has concluded that the type of relief sought is irrelevant to plaintiffs’ efforts to avoid
B
BVH also asserts jurisdiction pursuant to Mathews v. Eldridge, 424 U.S. 319 (1976). That case authorizes courts to reverse the Secretary‘s determination that a plaintiff has not yet obtained a final administrative decision for the purposes of satisfying
We may do so only if “(1) the plaintiff asserts a colorable constitutional claim that is collateral to the substantive issues of the administrative proceedings, (2) exhaustion would result in irreparable harm, and (3) exhaustion would be futile.” Harline v. Drug Enf‘t Admin., 148 F.3d 1199, 1203 (10th Cir. 1998).4 “The plaintiff bears the burden of establishing these elements.” Id. Because BVH establishes neither a collateral nor colorable constitutional claim, we do not address the remaining factors.
1
“For a claim to be collateral, it must not require the court to immerse itself in the substance of the underlying Medicare claim or demand a factual determination as to the application of the Medicare Act.” Family Rehab., Inc. v. Azar, 886 F.3d 496, 501 (5th Cir. 2018) (quotation omitted). The clаim “must seek some form of relief that would be unavailable through the administrative process,” rather than the “substantive, permanent relief that the plaintiff seeks . . . through the agency appeals process.” Id. at 501-02; see also Bowen v. City of New York, 476 U.S. 467, 483 (1986) (holding claims collateral because plaintiffs “neither sought nor were awarded benefits . . . but rather challenged the Secretary‘s failure to follow the application regulations“).
BVH argues its claims are collatеral because, like the claim at issue in Eldridge, they “sound only in constitutional or procedural law and request that benefits be maintained temporarily until the agency follows the statutorily or constitutionally required procedures.” Family Rehab., 886 F.3d at 503. But BVH does not seek a general review of the constitutionality of the Medicare Act‘s termination procedures for healthcare providers.5 And BVH could not viably pursue such a constitutional challengе because, as explained below, this court has rejected the claim that due process requires a formal hearing prior to the termination of a provider‘s Medicare certification. Geriatrics, Inc. v. Harris, 640 F.2d 262, 265 (10th Cir. 1981) (“There is . . . no statutory or constitutional requirement that a hearing be conducted prior to the cessation of benefits.“).
Instead, BVH‘s due process claim is based on its disagreement with the factual determinations made by CMS and the mаnner in which CMS promulgated administrative guidance governing compliance determinations. The arguments supporting BVH‘s due process claim are thus identical to the arguments BVH raises
in its administrative appeal to reverse the termination decision. The complaint specifically challenges as “[m]ost noteworthy” the fact that “CMS‘[] decision relies primarily upon newly-issued criteria for determining whether a medical facility is ‘primarily engaged’ in providing inpatient services in order to qualify as a ‘hospital’ for Medicare purposes.” BVH‘s constitutional claim requires
Other circuits have expressly rejected BVH‘s assertion that constitutional challenges requiring courts to assess the application of Medicare regulations to a plaintiff are collateral. See Affiliated Prof‘l Home Health Care Agency v. Shalala, 164 F.3d 282, 285-86 (5th Cir. 1999) (“[T]o fully address [the provider‘s] claim that their due process . . . rights were violated through the improper enforcement of Medicare regulations, a court would necessarily have to immerse itself in those regulations and make a factual determination as to whether [the provider] was actually in compliance. Given the administrative nature of that inquiry, it cannot be reasonably concluded that [the provider‘s] claim is collateral.“). As the Supreme Court has explained when distinguishing collateral from intertwined constitutional claims, allegations of “mere deviation from the applicable regulations in [any] particular administrative proceeding” are “fully correctable upon subsequent
administrative review,” and should not disturb the presumption that an agency “should be given the opportunity to review application of those regulations to a particular factual context.” Michigan Academy, 476 U.S. at 484-85. BVH‘s constitutional claims are not wholly collateral because they аllege precisely such “deviation from the applicable regulations.” Id. And the Secretary should determine in the first instance whether the retroactive application of criteria promulgated as administrative guidance was improper.
2
Even if BVH‘s constitutional claims were entirely collateral, they are not colorable. “A constitutional claim in this context is not colorable if it is immaterial and made solely for the purpose of obtaining jurisdiction or . . . is wholly insubstantial or frivolous.” Harline, 148 F.3d at 1203 (quotation omitted). This circuit has “generously [] defined” colorable, Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1240 (10th Cir. 2001), but will deny jurisdiction if the claims are “foreclosed by prior decisions,” Harline, 148 F.3d at 1203 (quoting Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 89 (1998)).
Our decision in Geriatrics, 640 F.2d at 262, forecloses BVH‘s constitutional claim requesting a hearing before an ALJ prior to the termination of its Medicare provider agreement. In Geriatrics, which BVH neglects entirely, we held that “[t]here is [] no statutory or constitutional requirement that a hearing be conducted prior to the cessation of benefits” for providers such as BVH. Id. at 265 (explaining providers are not the intended beneficiary of the Medicaid program, and so “[t]he
unfortunate reality that [the provider] will probably encounter difficulty operating at capacity . . . [is] not of constitutional significance“). And BVH fails to distinguish the provider‘s claim for a pre-termination hearing that we rejected in Geriatrics from the identical relief BVH seeks in this case.
Our holding in Geriatrics is consistent with those of our sibling circuits. See Cathedral Rock of N. Coll. Hill, Inc. v. Shalala, 223 F.3d 354, 364 (6th Cir. 2000) (“[W]e hold that [the Mediсare and Medicaid provider] has not made a colorable claim that it is entitled to a pre-termination hearing under the Due Process Clause.“); Varandani v. Bowen, 824 F.2d 307, 310 (4th Cir. 1987) (declining to find a “‘colorable’ procedural
Geriatrics is also consistent with Supreme Court dicta suggesting that providers losing their certification are not entitled to a pre-termination hearing. See O‘Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 784 n.17 (1980). The “Court in O‘Bannon . . . makes it clear that the post-termination hearing provided under Medicare regulations adequately meеts a provider‘s due process objections.”
Northlake, 654 F.2d at 1243. BVH thus fails to raise a colorable constitutional claim and cannot claim jurisdiction pursuant to the Supreme Court‘s decision in Mathews v. Eldridge.6
C
Finally, BVH argues the federal courts have subject matter jurisdiction pursuant to the exception to jurisdictional administrative exhaustion requirements outlined in Michigan Academy. The Supreme Court has clarified that this exception to the administrative channeling requirement in
unable to pursue its administrative appeal, and thus foreclose the possibility of both administrative and judicial review.
But the Supreme Court has declined to extend the Michigan Academy exception to cases in which parties allege financial hardship forеcloses further review. See Ill. Council, 529 U.S. at 22 (“[W]e do not hold that an individual party could circumvent [
Moreover, this circuit has recognized a denial of review sufficiently absolute to trigger the Michigan Academy exception only if there exist “no conceivable set of circumstances that could have permitted Plaintiffs to challenge the validity of the [administrative action] within the procedures provided by the agency.” Bartlett Mem‘l Med. Ctr., Inc. v. Thompson, 347 F.3d 828, 844 (10th Cir. 2003). Because BVH‘s administrative apрeal “has been filed and is currently pending before an ALJ,” BVH cannot establish the “total preclusion of review” necessary to avail itself of the Michigan Academy exception. Ill. Council, 529 U.S. at 19 (noting the “distinction that this Court has often drawn between a total preclusion of review and postponement of review“).
III
For the foregoing reasons, we AFFIRM the district court‘s dismissal of BVH‘s action for lack of subject matter jurisdiction.