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COURTNEY v. CHOPLIN

April 12, 2002

ROBERT COURTNEY, D.O., PLAINTIFF,
V.
RONALD CHOPLIN, EMPIRE MEDICARE, DEFENDANTS.



The opinion of the court was delivered by: Joseph E. Irenas, U.S.D.J.

OPINION

Plaintiff Robert Courtney, a Medicare supplier, brings this action against Empire Medicare Services ("Empire"), a private Medicare insurance carrier under contract with the United States Department of Health and Human Services, to recover the balance of an amount allegedly due for medical services provided to Ronald Choplin, a medicare beneficiary and a co-defendant in this action. This civil action was commenced in the Superior Court of New Jersey and subsequently removed by Defendant Empire to this Court on November 28, 2001, pursuant to 28 U.S.C. § 1441(b) and 1442(a)(1). Empire now moves to dismiss Plaintiff's complaint under Fed.R.Civ.P. 12(b)(1). For the reasons set forth below, Defendant's motion to dismiss will be granted.

I.

Federal Rule of Civil Procedure 12(b)(1) provides that a court may dismiss a complaint for "lack of jurisdiction over the subject matter." In evaluating a 12(b)(1) motion, the court first must determine whether the motion attacks the complaint on its face or on its facts. See Carpet Group Int'l v. Oriental Rug Imp. Ass'n, 227 F.3d 62, 69 (3d Cir. 2000) (citing Mortenson v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). As with a 12(b)(6) motion, a court evaluating a facial challenge must accept the allegations in the complaint as true, and disposition of the motion becomes purely a legal question. Mortenson, 549 F.2d at 891. On the other hand, if the motion disputes the existence of subject matter jurisdiction in fact, then "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Id. Moreover, in resolving such jurisdictional questions, the court is not confined to the face of the pleadings and may properly consider matters outside the pleadings such as affidavits and other material properly before the court without converting the motion into a Rule 56 summary judgment motion. Fed.R.Civ.P. 12(b); see also, id.; Berardi v. Swanson Mem'l Lodge No. 48 of Fraternal Order of Police, 920 F.2d 198, 200 (3d Cir. 1990). In resolving questions concerning the court's authority to adjudicate particular cases or claims, the burden remains on the Plaintiff to establish "that the case is properly before the court at all stages of the litigation." Tobin v. United States, 170 F. Supp.2d 472, 476 (D.N.J. 2001) (Brotman, J.).

The central issue raised by the instant motion is fact-based. Empire maintains that Plaintiff has failed to timely exhaust all tiers of administrative review available under 42 U.S.C. § 1295ff and obtain a "final decision" of the Secretary, and that this underlying procedural default forecloses judicial review of Plaintiff's claim for reimbursement.

II.

Within the HHS, the agency currently known as the Centers for Medicare and Medicaid Services ("CMS") is principally responsible for administering the Medicare Part B program.*fn1 Pursuant to 42 U.S.C. § 1395u, the Secretary, through CMS, designates certain non-governmental insurance carriers as fiscal intermediaries to whom it delegates primary claims processing responsibility. Medicare beneficiaries are reimbursed for medical procedures, ambulance charges, and other Part B services on the basis of the amounts charged, subject to the carrier's contractual responsibility, as an agent of CMS, to evaluate the reasonableness of the charges. A beneficiary may assign his or her right to receive payment to the physician supplying the service ("supplier"). 42 U.S.C. § 1395u(b)(3)(B); 42 C.F.R. § 424.53, 424.55. When a physician accepts a patient-beneficiary's assignment of his claim for Medicare benefits, the physician assumes the responsibility for submitting a claim for reimbursement to the carrier for any medical services provided. Moreover, by accepting the assignment, the supplier is generally precluded from seeking recourse against the beneficiary for any outstanding balance of the amount claimed, with certain exceptions for co-insurance and deductibles. 42 U.S.C. § 1395u(b)(3)(B)(ii); 42 C.F.R. § 424.55(b); see also, Manakee Professional Medical Transfer Service, Inc., 71 F.3d 574, 577 ("If the supplier accepts the assignment, it must accept the carrier's determination as to the amount of reimbursement and . . . may not seek the difference from the beneficiary").

The Social Security Act, 42 U.S.C. § 405, which has been incorporated into the Medicare law, see 42 U.S.C. § 1395ii, sets forth a comprehensive regulatory scheme through which a beneficiary or supplier can obtain administrative and judicial review of their claims for reimbursement under Part B of the Medicare Act. The relevant administrative regulations establish a multi-tiered review process, consisting of five separate levels of administrative appeal, which culminates with a "final decision" by the HHS Departmental Appeals Board ("Appeals Board") which may then be appealed to the district court. The initial consideration of a beneficiary or assignee's claim for reimbursement is made at the carrier level. The carrier makes an initial determination regarding coverage for specific medical services and the amount of benefits to be paid, and sends written notice of the decision to the beneficiary and the supplier within 60 days after the claim is filed. See 42 C.F.R. § 405.803, 405.804. A beneficiary or supplier dissatisfied with the carrier's initial reimbursement determination must, within six months of the date of the notice of the carrier's adverse determination is received, make a request that the carrier review its initial decision. See id. at § 405.087. If the carrier issues an adverse review determination, the claimant may file a request for a "fair hearing" before a carrier-appointed hearing officer, but must do so within 6 months of the date of the review determination notice. See id. at §§ 405.815, 504.821, 405.823. If denial of the claim is reaffirmed after reconsideration and the claim exceeds $500, the party may seek a fair hearing before an administrative law judge ("ALJ") by filing a request for further administrative review within 60 days of receipt of the carrier hearing officer's decision. Finally, if the ALJ upholds the carrier's decision to deny reimbursement for all or part of the claim and the amount of the remaining Medicare claim exceeds $1000, the supplier may appeal the ALJ's adverse determination to the Appeals Board. A final decision of the Appeals Board either denying the reimbursement claim on its merits or declining to review the ALJ's decision then triggers the 60-day period for seeking judicial review in federal district court, pursuant to 42 U.S.C. § 405(g), as incorporated by 42 U.S.C. § 1395ff(b)(1). See id. at § 405.857.

III.

On July 28, 1998, Plaintiff, Dr. Robert Courtney, performed a bypass graft on Medicare beneficiary, Ronald Choplin, and accepted an assignment of his claim for Medicare benefits. Plaintiff subsequently filed a claim with Defendant Empire Medicare Services, the designated Medicare Part B carrier for New Jersey, seeking reimbursement for his services under two procedure codes, 35571 and 35566, in the amount of $1840.00. On March 19, 1999, Empire notified Plaintiff that while it had accepted his claim for $246.07 for those medical services corresponding to treatment code 35571, his claim under code 35566 would be disallowed. On March 24, 1999, Dr. Courtney sent a letter to Empire's post-payment review department requesting that the carrier review its denial of coverage for those services identified by treatment code 35566. This letter contained a typed request to "put this matter through whatever appeal mechanism, hearing, committee, fair hearing or any other process that you have available in order to pay this," along with a handwritten notation asking generally that plaintiff's claim be "put . . . thru [sic] your full appeal process whatever that might be."
Upon receiving Plaintiff's letter, Empire conducted a review of its initial reimbursement determination and, by letter dated May 14, 1999, advised Plaintiff that it had reaffirmed its decision disallowing reimbursement for the balance of Plaintiff's claim. The notice explained that the basis for Empire's calculation of the amount of payment due was its determination that the types of treatment identified by these two service codes "are considered mutually exclusive" and thus could not reasonably have been "performed at the same session by the same provider on the same beneficiary." The notice further informed Plaintiff, in a Section clearly labeled "APPEAL RIGHTS," of the opportunity to appeal the review determination should he disagree with the conclusions set forth in the letter. The instructions referenced in this section and attached to the letter instructed Plaintiff that he had 6 months within which to request a fair hearing before a carrier-appointed hearing officer and that this could be accomplished by simply signing and dating the bottom of the notice and returning it to Empire at the address provided.
On March 29, 2000, more than 10 months after the date of the notice, Plaintiff sent another letter to Empire's post-payment review department which restated his demand for reimbursement and contained a handwritten notation stating simply: "I asked for a fair hearing but you never scheduled it." On April 12, 2000, in response to Plaintiff's letter, Empire advised Plaintiff that there would be no further review of his claim because his request for a fair hearing had not been received within 6 months of his receipt of the letter notifying him of the carrier's initial review determination. Notwithstanding Plaintiff's belated request for appeal, Empire informed Plaintiff that it might reconsider this position if Plaintiff provided a satisfactory written explanation for the delay in submitting his request for further administrative review. See 42 C.F.R. § 405.821(c) (granting the carrier discretion to extend the period for requesting a carrier hearing).
In response, Plaintiff forwarded a letter to Empire on March 5, 2001, in which he stated, succinctly and without explanation, that he had "filed [his] claim on a timely basis." He further accused Empire of committing Medicare "fraud" by refusing to reimburse him for the balance of his claim and threatened legal action if he were not compensated in full within 10 days. Empire responded to Plaintiff's letter on April 26, 2001, informing Plaintiff that the information in its April 12 letter was correct and that it had determined, based on the information contained in its file, that there was "no reason to reopen the case." On May 9, 2001, Empire received a copy of its April 26, 2001 correspondence containing Plaintiff's handwritten notations maintaining simply that he had "repeatedly" submitted requests for appeals and a fair hearing, but that Empire had failed to consider either request. In two letters dated May 17, 2001, and June 13, 2001, Empire reiterated its refusal to consider Plaintiff's request for a ...

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