Patricia HARO; John G. Balentine; Jack McNutt; Troy Hall, Plaintiffs-Appellees, v. Kathleen SEBELIUS, Secretary of the United States Department of Health and Human Services, Defendant-Appellant.
No. 11-16606
United States Court of Appeals, Ninth Circuit.
Decided Sept. 4, 2013.
Argued Dec. 5, 2012. Submitted Feb. 14, 2013.
726 F.3d 1000 | 993
III
Like the majority, I will not spend much time addressing the remaining preliminary injunction factors—irreparable harm, balance of the equities, and the public interest. See Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Considered together, those factors tip in Drakes Bay‘s favor.
Drakes Bay will suffer irreparable injury to its business and real-property rights if a preliminary injunction is erroneously denied. See, e.g., Sundance Land Corp. v. Cmty. First Fed. Sav. & Loan Ass‘n, 840 F.2d 653, 661 (9th Cir.1988); Am. Passage Media Corp. v. Cass Commc‘ns, Inc., 750 F.2d 1470, 1474 (9th Cir.1985). The loss of “an ongoing business representing many years of effort and the livelihood of its [owners] constitutes irreparable harm.” Roso-Lino Beverage Distribs., Inc. v. Coca-Cola Bottling Co., 749 F.2d 124, 125-26 (2d Cir.1984) (per curiam).
The balance of equities favors Drakes Bay. The majority concludes оtherwise by noting that Drakes Bay knew when it acquired the oyster farm that its permit would expire in 2012. Maj. op. at 987. But that is not the relevant consideration. Rather, the controlling consideration is that the harm Drakes Bay will suffer from the erroneous denial of a preliminary injunction far outweighs the harm the government will suffer from an erroneous grant of such relief. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1137-38 (9th Cir.2011); Scotts Co. v. United Indus. Corp., 315 F.3d 264, 284 (4th Cir.2002); Am. Hosp. Supply Corp. v. Hosp. Prods. Ltd., 780 F.2d 589, 593 (7th Cir.1986); Roso-Lino, 749 F.2d at 126. The government will suffer only modest harm if oyster farming‘s eighty-year history in the Estero continues a bit longer. But if a preliminary injunction is erroneously denied, Drakes Bay‘s business will be destroyed. That is all Drakes Bay must show to demonstrate that the balance of equities tips in its favor here.
Finally, the public interest favors neither side. As the district court observed, federal judges are ill equipped to weigh the adverse environmental consequences of denying a preliminary injunction against the consequences of granting such relief, or the relative interests in access to Drakes Bаy‘s oysters as opposed to unencumbered wilderness. It is the equities that carry the day in this case, see Nken v. Holder, 556 U.S. 418, 435, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009) (when the United States is a party, equities and the public interest merge), and the equities strongly favor Drakes Bay.
Gil Deford (argued) and Wey-Wey Kwok, Center for Medicare Advocacy, Willimantic, CT, for Plaintiffs-Appellees.
Before: BARRY G. SILVERMAN, RONALD M. GOULD, and MORGAN CHRISTEN, Circuit Judges.
OPINION
CHRISTEN, Circuit Judge:
Secretary of Health and Human Services Kathleen Sebelius appeals the district court‘s order certifying a nаtionwide class of Medicare beneficiaries and granting summary judgment in the beneficiaries’ favor. Patricia Haro, Jack McNutt, and Troy Hall are named plaintiffs. John Balentine was Haro‘s lawyer in her underlying personal injury suit.
Before the district court, the beneficiaries raised two claims: (1) the Secretary‘s practice of demanding “up front” reimbursement for secondary payments from beneficiaries who have appealed a reimbursement determination or sought waiver of the reimbursement obligation is inconsistent with the secondary payer provisions of the Medicare statutory scheme; and (2) the Secretary‘s practice violates their due process rights. Balentine separately claimed the Secretary‘s practice of demanding that attorneys withhold settlement proceeds from beneficiary-clients until Medicare is reimbursed is also inconsistent with the secondary payer provisions.
The district court agreed with the beneficiaries. The court enjoined the Secretary from seeking up front reimbursement of Medicare secondary payments from beneficiaries who have received payment from a primary plan if they have unresolved appeals of their reimbursement calculations or unresolved requests for waiver of their reimbursement obligations. The district court also agreed with Balentine and enjoined the Secretary from demanding that attorneys withhold settlement proceeds from their clients until after Medicare is reimbursed. The district court did not reach the beneficiaries’ due process claim.
On appeal to our court, the Secretary raises three jurisdictional arguments. First, she argues that this case is not justiciable because neither the beneficiaries nor Balentine had Article III standing. Second, she argues this case is moot. Third, she argues that the district court lacked subject matter jurisdiction over all claims in the complaint. On the merits, the Secretary maintains that her interpretation of the Medicare secondary payer provisions is reasonable.
We have jurisdiction over this appeal pursuant to
I. BACKGROUND
A. Statutory Background
Congress enacted the secondary payer provisions of the Medicare statute in 1980 to cut Medicare costs. See Zinman v. Shalala, 67 F.3d 841, 843 (9th Cir. 1995). Those provisions make Medicare secondary to other sources of insurance by forbidding Medicare payments when a primary plan—for instance, group health insurance or liability insurance—is reasonably expected to make payment for the same medical care; and by providing that certain Medicare payments are conditional and must be reimbursed.
Medicare makes a conditional payment when a primary insurer cannot reasonably be expected to pay promptly.
The statutory scheme also creates a cause of action by which the United States may recover from a primary plan or “from any entity that has received payment from a primary plan or from the proceeds of a primary plan‘s payment to any entity.”
When Medicare learns that a beneficiary has received payment from a primary plan, the Secretary makes an initial determination of the amount of reimbursement due from the beneficiary. Borrowing from the Social Security Act, the Medicare Act incorporates administrative review procedures set out in
B. Factual Background
1. Patricia Haro
Patricia Haro was injured in a car accident and Medicare paid for her medical treatment. Haro filed a personal injury claim against the tortfeasor, which eventually settled. Medicare, through the Medicare Secondary Payer Recovery Contrac
Haro disputed the reimbursement determination by letter dated January 21, 2009. Haro‘s lawyer sent a second letter, on February 2, 2009. In it, he argued that the reimbursement provision did not grant the Secretary authority to seek payment from a beneficiary within 60 days of notice of the settlement if the beneficiary had appealed the reimbursement determination. The letter also argued that the Due Process Clause prohibits takings of property before there has been a determination of rights to that property.
Medicare reduced Haro‘s reimbursement аmount to $696.13 by letter dated March 3, 2009. On March 4, 2009, likely before Haro received notice of the revised reimbursement figure, Haro sent Medicare a check for $800. Haro did not seek reconsideration of Medicare‘s reduced reimbursement amount and instead filed this lawsuit on March 10, 2009. Medicare reimbursed Haro $103.87 (the difference between $800 and $696.13) on April 13, 2009.
2. Jack McNutt
Like Haro, Jack McNutt was injured in a car accident and Medicare paid his medical costs. McNutt‘s personal injury lawsuit settled and McNutt notified Medicare of the settlement. Medicare responded with a letter requesting reimbursement of $26,487.07. The letter stated that McNutt was required to pay within 60 days of the receipt of the settlement proceeds and that interest would start to accrue if payment was not received within that time. The letter also informed McNutt of his rights to appeal and seek waiver of the reimbursement obligation. McNutt appealed the reimbursement determination.
After Medicare sent McNutt a notice of the Secretary‘s intent to refer the debt to the Department of Treasury, McNutt wrote a letter of “appeal,” but with his letter he enclosed a check for $11,366.58, the amount he believed he owed. Medicare sent McNutt an adjusted demand. Because of McNutt‘s earlier payment, only $1,422.93 (including $13.36 in interest) remained outstanding. Medicare notified McNutt that his remaining reimbursement payment “should” be made within 30 days. McNutt sought reconsideration of that amount, and the Secretary acknowledged that notice of intent to refer the debt to Treasury was sent in error.2 Medicare then reduced McNutt‘s total reimbursement amount again, and McNutt paid the remaining balance, plus interest. His administrative appeal was still pending at the time this appeal was filed. At the administrative level, McNutt did not challenge the Secretary‘s practice оf demanding up front reimbursement.
3. Troy Hall
Troy Hall was injured while working and Medicare paid for his injury-related medical care. After Hall settled his worker‘s compensation claim, he received a re
4. John Balentine
Attorney John Balentine represented Haro in her personal injury lawsuit and during administrative proceedings. He received a letter from Medicare similar to the letter that Haro received. It instructed him not to disburse settlement funds to his beneficiary-client until Medicare had been reimbursed, and said he would be personally liable if he did. Balentine declared that he routinely receives similar letters from Medicаre.
C. District Court Proceedings
As noted above, this appeal involves two separate claims against the Secretary. First, the beneficiaries alleged that the Secretary exceeded her authority under the Medicare secondary payer provisions by demanding payment before resolution of the beneficiaries’ appeals or completion of the waiver application process. Second, Balentine alleged that the Secretary‘s demand that beneficiaries’ attorneys withhold settlement proceeds until Medicare is reimbursed exceeds the Secretary‘s statutory authority. The beneficiaries also alleged that the Secretary‘s demand violated their due process rights. Plaintiffs sought declaratory and injunctive relief.
In the district court, the Secretary moved pursuant to
On cross-motions for summary judgment, the district court granted the named plaintiffs’ motion and certified a class of beneficiaries who had been or would be subject to demands for reimbursement from the Secretary before their administrative appeals were exhausted. Even analyzing the Secretary‘s practice pursuant to the deferential standard explained in Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), the district court determined that the Secretary‘s up front reimbursement requirement was inconsistent with the appeals and waiver processes. The district court therefore enjoined the Secretary from demanding reimbursement of secondary payments from beneficiaries prior to resolution of their administrative appeals or requests for waiver. The district court also enjoined the Secretary from demanding that attorneys withhold liability proceeds from their clients pending reimbursement of disputed claims.
II. STANDARD OF REVIEW
We review a district court‘s determination of subject matter jurisdiction de novo. Cook Inlet Region, Inc. v. Rude, 690 F.3d 1127, 1130 (9th Cir.2012). We also review an order granting summary judgment de novo. Int‘l Rehabilitative Sciences, Inc. v. Sebelius, 688 F.3d 994, 1000 (9th Cir.2012).
III. DISCUSSION
A. Jurisdictional Issues
On appeal, the Secretary argues that Article III‘s case or controversy require
1. Article III Standing
a. Beneficiaries
In order to demonstrate Article III standing, a plaintiff must show: (1) a concrete injury; (2) fairly traceable to the challenged action of the defendant; (3) that is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed. 2d 351 (1992). “In a class action, standing is satisfied if at least one named plaintiff meets the requirements.” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir.2007) (en banc). “[A] plaintiff must demonstrate standing for each claim” and “for each form of relief sought.” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) (internal quotation marks and citation omitted). “The standing formulation for a plaintiff seeking prospective injunctive relief” generally requires that the plaintiff‘s concrete injury be “coupled with ‘a sufficient likelihood that he will again be wronged in a similar way.‘” Bates, 511 F.3d at 985 (quoting City of Los Angeles v. Lyons, 461 U.S. 95, 111, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983)).
“[A] plaintiff is presumed to have constitutional standing to seek injunctive relief when [the plaintiff] is the direct object of [government] action challenged as unlawful.” Los Angeles Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 655 (9th Cir.2011) (citing Lujan, 504 U.S. at 561-62). Here, Haro was the direct object of the Secretary‘s allegedly overreaching collection practice. She received a letter requesting reimbursement before her administrative appeal had run its course. We therefore start with the presumption that Haro has Article III standing, on behаlf of the class, to challenge the Secretary‘s practice. See Mayfield v. United States, 599 F.3d 964, 971 (9th Cir.2010) (“When the lawsuit at issue challenges the legality of government action, and the plaintiff has been the object of the action, then it is presumed that a judgment preventing the action will redress his injury.“).
We consider whether the elements of Article III standing, as articulated in Lujan, were satisfied at the time the complaint was filed. Cnty. of Riverside v. McLaughlin, 500 U.S. 44, 51, 111 S.Ct. 1661, 114 L.Ed.2d 49 (1991). When the complaint was filed, Medicare owed Haro $103.87—the difference between the $800 she sent to Medicare in response to the first demand letter and Medicare‘s $696.13 final reimbursement determination. Haro had been deprived of $103.87 for approximately one month3 and had therefore suffered a modest but concrete fiscal injury that was directly traceable to the challenged action of the Secretary. The first two prongs of the Lujan formulation were therefore satisfied as to the beneficiaries’ claim.
The third element of Article III standing is redressаbility. The Secretary argues that Haro is not likely to suffer the
b. Balentine
Balentine is not part of the beneficiary class; he asserted an individual claim unique to his status as counsel for a Medicare beneficiary. Therefore, he must separately demonstrate Article III standing. DaimlerChrysler, 547 U.S. at 352. Because Balentine was the object of the Secretary‘s demand that he withhold disbursement of Haro‘s settlement funds, we begin with the presumption that he has standing to challenge the Secretary‘s action. Los Angeles Haven Hospice, 638 F.3d at 655 (citing Lujan, 504 U.S. at 561-62).
The demand Balentine received bears significant similarity to the demand at issue in Los Angeles Haven Hospice. Haven Hospice challenged a Department of Health and Human Services regulation implementing a cap on reimbursement for hospice care provided to Medicare beneficiaries. See id. at 649; see also
The demand letter the Secretary sent to Balentine represents direct application of the Secretary‘s interpretation of her authority under
2. Mootness
The Secretary next argues that the claims asserted in the complaint are moot.5 A claim becomes moot “when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969) (citation omitted). It is undisputed that Haro did not challenge Medicare‘s final reimbursement calculation and is not owed any additional refund. But the district court concluded, and the beneficiaries maintain, that the “capable of repetition, yet evading review” exception to mootness applies to their claim. See, e.g., Padilla v. Lever, 463 F.3d 1046, 1049 (9th Cir.2006) (en banc) (quoting Roe v. Wade, 410 U.S. 113, 125, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973)).
In Sosna v. Iowa, 419 U.S. 393, 401, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975), the Supreme Court held that mootness of a named plaintiff‘s claim after class certification does not moot the action. After incremental extension of Sosna,6 the Supreme Court held that whether class certification occurs before or after a named plaintiff‘s claim becomes moot is immaterial. McLaughlin, 500 U.S. at 52 (“That the class was not certified until after the named plaintiffs’ claims had become moot does not deprive us of jurisdiction.“). The Court stated that where a claim is “so inherently transitory that the trial court will not have ... enough time to rule on a motion for class certification before the proposed representative‘s individual interest expires ... the ‘relation back’ doctrine is properly invoked to preserve the merits of the case for judicial resolution.” Id. (citations omitted).
Here, Haro‘s claim expired before the district court certified the class. Her individual interest in injunctive relief expired once she was fully reimbursed—approximately one month after she filed this lawsuit—but the district court could not have been expected to rule on a motion for class certification in that period. Pursuant to the rule in Sosna and McLaughlin, expiration of Haro‘s personal stake in injunctive relief did not moot the beneficiaries’ claim for injunctive relief. We conclude that the beneficiaries’ claim for injunctive relief is not moot, and that Article III‘s justiciability requirements are satisfied.7
3. Statutory Subject Matter Jurisdiction
The Secretary maintains that the district court did not have subject matter
a. The beneficiaries’ claim
Federal question jurisdiction does not extend to most claims arising under the Medicare Act. The Medicare Act incorporates
No findings of fact or decision of the [Secretary] ... shall be reviewed by any person, tribunal, or governmental agency еxcept as herein provided. No action against the United States, the [Secretary] ... or any officer or employee thereof shall be brought under section 1331 ... of title 28 to recover on any claim arising under this subchapter.
The series of cases interpreting
The Supreme Court extended Salfi to the Medicare Act in Heckler v. Ringer, 466 U.S. 602, 614, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). There, the Court ruled that there was no federal question jurisdiction to consider a challenge to a procedure for determining Medicare benefits. The Court described the procedural claim as “inextricably intеrtwined” with the substantive claim for benefits, id., but the Court rejected the proposition that application of
Finally, in Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000), the Supreme Court explained that the broad purpose of
[T]he bar of
§ 405(h) reaches beyond ordinary administrative law principles of ‘ripeness’ and ‘exhaustion of administrative remedies‘—doctrines that in any event normally require channeling a legal challenge through the agency.... [I]t demands the ‘channeling’ of virtually all legal attacks through the agency [and] assures the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts applying ‘ripeness’ and ‘exhaustion’ exceptions case by case.
Id. at 12-13 (emphasis added) (citation omitted). Illinois Council continued, “[t]he fact that the agency might not provide a hеaring for [any] particular contention, or may lack the power to provide one ... is beside the point because it is the ‘action’ arising under the Medicare Act that must be channeled through the agency.” Id. at 23 (emphasis omitted) (citations omitted).
Here, the beneficiaries and Balentine maintain that the Secretary‘s interpre
Because the beneficiaries were required to satisfy the presentment and exhaustion requirements under
The Secretary maintains that
Eldridge involved a Social Security beneficiary who, after responding to a questionnaire, received notice that a state agency monitoring his status had tentatively concluded he was no longer disabled. Id. at 323-24. Eldridge disputed one of the reports relied upon by the agency but otherwise stated that the agency had enough evidence of his disability. Id. at 324. The Social Security Administration accepted the agency‘s determination and terminated Eldridge‘s benefits. Id. Eldridge did not request reconsideration of the administration‘s termination of his benefits before filing a lawsuit and arguing that due process required that he be given a pretermination evidentiary hearing. Id. at 324-25.
Analyzing the district court‘s jurisdiction to adjudicate Eldridge‘s claim, the Supreme Court ruled that “[t]hrough his answers to the state agency questionnaire, and his letter in response to the tentative determination that his disability had ceased, [Eldridge] specifically presented the claim that his benefits should not be terminated because he was still disabled.” Id. at 329 (emphasis added). The Court continued, “[t]he fact that Eldridge failed to raise with the Secretary his constitutional claim to a pretermination hearing is not controlling[,] ...
The beneficiaries maintain that Eldridge stands for the broad proposition that
The purpose of the channeling requirement is to “assure[] the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts applying ‘ripeness’ and ‘exhaustion’ exceptions.” Illinois Council, 529 U.S. at 13. This purpose would not be fulfilled if plaintiffs proceeding through the administrative channel were permitted to raise claims in federal court that were not raised before the agency. See Lifestar Ambulance Serv., Inc. v. United States, 365 F.3d 1293, 1298 (11th Cir.2004) (describing administrative review as “the first step in a comprehensive statutory remedial scheme that fully empowers a reviewing court to consider and remedy any of the violations of law alleged by [a] plaintiff“).
Moreover, the beneficiaries’ interpretation of the presentment requirement is fundamentally inconsistent with the general rule that “[o]nce federal subject matter jurisdiction is established over the underlying case between [plaintiff] and [defendant], the jurisdictional propriety of each additional claim is to be assessed individually.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 66 n. 1, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996) (quoting 3 James Moore, Moore‘s Federal Practice ¶ 14.26, 14-116 (2d ed.1996)). In Eldridge, the general rule described in Caterpillar was not contravened because the plaintiff‘s argument that he was entitled to a pretermination evidentiary hearing had direct bearing on the termination of his benefits. Notably, this case does not involve a “claim for benefits” because the beneficiaries do not challenge Medicare‘s reimbursement calculations. They challenge the Secretary‘s policy of demanding up front reimbursement, a policy that has no bearing on the reimbursement calculations questioned by the beneficiaries at the administrative level.8
Finally, Illinois Council, a case decided twenty-four years after Eldridge, persuades us that the beneficiaries’ interpretation of Eldridge is too expansive. In Illinois Council, the Supreme Court addressed a case bearing directly on challenges to Medicare regulations and made clear that the type of policy challenge at issue in this case is subject to the channeling requirement of
We decline to adopt the extraordinarily broad reading of Eldridge that the beneficiaries invite. We conclude that the named plaintiffs’ reimbursement disputes did not provide an opportunity for the Secretary to consider the claim that her interpretation of the secondary payer provisions exceeded her authority. Their requests for redetermination of their respective amounts of reimbursement did not constitute presentment of their policy challenge.
i. Haro‘s February 2, 2009 letter was not adequate presentment.
The beneficiaries rely solely on presentation of their reimbursement disputes as evidence that they fulfilled
Haro requested redetermination of the amount of hеr reimbursement obligation by letter dated January 21, 2009, but her letter did not challenge the Secretary‘s authority to demand “up front” reimbursement. Haro did make a brief objection to the Secretary‘s reimbursement practice in a follow-up letter dated February 2, 2009. But subsequent correspondence between Haro and the Secretary memorializes that both parties ignored Haro‘s objection. The correspondence shows that Haro sent payment in response to the Secretary‘s initial demand. Medicare then reduced its reimbursement demand, determined that Haro had overpaid, and refunded $103.87 to Haro. With its refund, Medicare gave Haro notice that it was closing its file. Haro did not object to the Secretary closing her file, signaling that the parties had resolved their dispute. Approximately one month passed between the time Haro sent her February 2, 2009 follow-up letter and the time the Sеcretary sent a letter reducing the reimbursement amount. Approximately one additional month passed before Haro was reimbursed for her overpayment. The record does not show that either of the parties ever followed up on Haro‘s objection to the Secretary‘s practice, and neither McNutt nor Hall ever objected to the Secretary‘s authority to demand up front reimbursement.
Haro‘s letter and subsequent inaction did not afford the Secretary an “opportunity to apply, interpret, or revise” the challenged policies or regulation. Illinois Council, 529 U.S. at 13. Given the sequence of the parties’ correspondence, Haro‘s silence signaled abandonment of her objection and an end to her dispute with Medicare. Haro‘s letter is not a basis for jurisdiction under
We conclude that the beneficiaries’ claim was not presented to the agency. Becausе presentment is a jurisdictional requirement under
Attorney Balentine brings a separate claim unique to his status as an attorney for a Medicare beneficiary. As such, we must separately consider whether the district court had jurisdiction to adjudicate his claim.
Between Ringer and Illinois Council, the Supreme Court decided Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986). Michigan Academy appeared to limit the scope of the channeling requirement in
Because Balentine is not a Medicare beneficiary, he did not have the opportunity to present his challenge through the same administrative channel as the beneficiaries.10 We are unaware of any other path to administrative review of the policy that Balеntine challenges, and the parties cite none. Therefore, because applying
B. The Secretary‘s interpretation of the reimbursement provision is reasonable.
Having determined that the district court lacked subject matter jurisdiction over the beneficiaries’ claim, but that it had jurisdiction to adjudicate Balentine‘s claim under
The district court concluded that the Secretary‘s practice of demanding that attorneys withhold client funds was inconsistent with the secondary payer provisions. The reimbursement provision states that “an entity that receives payment from a primary plan, shall reimburse [Medicare] for any [secondary payment] if it is demоnstrated that such primary plan ... had a responsibility to make [a primary] payment,”
The Secretary has interpreted “entity that receives payment from a primary plan” in accordance with the statute‘s enabling regulations.
1. Application of Chevron
The first step under Chevron is to determine “whether Congress has directly spoken to the precise question at issue.” 467 U.S. at 842. The reimbursement provision does not specify whether an attorney who receives settlement proceeds constitutes “an entity that receives payment from a primary plan,” and therefore Congress has not spoken to the precise issue.
“[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency‘s answer is based on a permissible construction of the statute.” Id. at 843. If the Secretary‘s construction is “rational and consistent with the statute, it is a permissible construction” and will be upheld. Zinman, 67 F.3d at 845 (internal quotation marks omitted). We therefore consider whether the Secretary‘s construction of the reimbursement provision is rational and consistent with the statute.
a. There is no statutory basis to distinguish between entities that receive payment from a primary plan and end-point recipients.
An attorney who receives settlement proceeds, even as an intermediary, has “receive[d] payment from a primary plan” in a literal sense; the Secretary‘s interpretation of the statute is rational in this regard. But the district court concluded that there is nothing in the secondary payer provisions supporting an action against attorneys, “except to the extent they are end-point recipients of settlement proceeds.” From this, we understand that the district court drew a distinction between fees earned and retained by an attorney representing a Medicare beneficiary, and funds deposited into an attorney‘s trust account to be held in trust on behalf of the attorney‘s beneficiary-client. But the relevant statutory text broadly states that “an entity that receives payment from a primary plan[] shall reimburse” Medicare; it does not distinguish between a recipient of payment from a primary plan and an “end-point recipient” of such payment.
b. The 2003 аmendments indicate that Congress intended a broad construction of “entity that receives payment from a primary plan.”
Before 2003, the cause of action provision stated that “the United States may bring an action against any entity which is required ... to [make a primary payment] or against any other entity (including any physician or provider) that has received payment from that entity.” United States v. Baxter Int‘l, Inc., 345 F.3d 866, 906 (11th Cir.2003) (quoting
c. The Secretary‘s interpretation is consistent with the purpose of the secondary payer provisions.
“The transformation of Medicare from the primary payer to the secondary payer with a right of reimbursement reflects the overarching statutory purpose of reducing Medicarе costs.” Zinman, 67 F.3d at 845. The Secretary‘s demand that attorneys who have received settlement proceeds reimburse Medicare before disbursing those proceeds to their clients certainly increases the likelihood that proceeds will be available for reimbursement. Therefore, the Secretary‘s interpretation of the reimbursement provision is consistent with the general purpose of the secondary payer provisions.
d. Whether the Secretary can recover from an attorney who has already disbursed settlement proceeds does not bear on the merits of the injunction.
Balentine maintains that the secondary payer provisions do not create a lien against the settlement proceeds. Therefore, he argues, the Secretary may not recover from an attorney who has already disbursed settlement proceeds. The district court agreed and rulеd that the Secretary does not have a right of action against attorneys who have already disbursed settlement proceeds. But that issue is not presented on the facts of this case. The Secretary was fully reimbursed and Balentine was not sued after disbursing Haro‘s settlement proceeds. The complaint alleges only that the Secretary‘s demand that attorneys withhold funds from their clients exceeds her authority under the secondary payer provisions. The Secretary‘s authority to bring an action against an attorney who has disbursed the proceeds is not a controversy ripe for our review.
We conclude the Secretary‘s interpretation of the reimbursement provision is rational and consistent with the statute‘s text, history, and purpose, therefore it is reasonable and the district court‘s second injunction and its order on summary judgment must be reversed.
IV. CONCLUSION
The district court lacked subject matter jurisdiction over the beneficiaries’ claims. The Secretary‘s interpretation of