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Nationwide Ambulance Services, Inc. v. Sebelius

United States District Court, Third Circuit

September 3, 2013



DENNIS M. CAVANAUGH, District Judge.

This matter comes before the Court upon Defendants Kathleen Sebelius, Secretary United States Department of Health and Human service, Highmark Medicare Services, Inc., and Safeguard Services, LLC (collectively "Defendants") Motion to Dismiss Mandamus Complaint (Jan. 24, 2013, ECF No. 55). Pursuant to FED. R. Civ. P 78, no oral argument was heard. Based on the following and for the reasons expressed herein, Defendants' Motion is granted.


Nationwide is a New Jersey ambulance service provider headquartered in Cranford, New Jersey. SafeGuard is a Delaware Limited Liability Company and Medicare contractor headquartered in Miramar, Florida. Nationwide renders non-emergency, scheduled, repetitive ambulance services to dialysis patients for transportation between their residences and the nearest dialysis center for dialysis therapy. Initial payments for services under Medicare are ordinarily made as long as the claim contains no irregularities on its face. SafeGuard is a designated Program Safeguard Contractor ("PSC") specifically contracted to review and investigate claims with a focus on preventing fraudulent claims or claims resulting from errors in processing. SafeGuard serves as an intermediary between a service provider, such as Nationwide, and a Medicare Administrative Contractor ("MAC") such as Highmark Medicare Services ("Highmark"). Highmark determines overpayments and underpayments to suppliers and is the party who actually makes payments on claims. Nationwide argues that SafeGuard interfered with their right to receive Medicare payments from Highmark. Nationwide had, at points, been receiving reimbursement payments regularly from Highmark under the Medicare program. On January 13, 2011, CMS notified Nationwide that "the PSC for New York and New Jersey" would be conducting a "pre-payment process... to ensure that all payments made by the Medicare program are appropriate and consistent with Medicare policy" (the "pre-payment audit"). As of September 20, 2011, 950 claims had been reviewed by SafeGuard as part of the pre-payment audit. (Ilg Cert. 15, Sept.13, 2011; Baldwin Cert. ¶ 35, Sept. 26, 2011). Of 950 claims, 875 had been denied (92.1%) by Highmark based on SafeGuard's recommendation. Id.

Previously, in 2008, Nationwide underwent a pre-payment audit resulting in denial of claims for want of evidence beyond a physician's Certificate of Medical Necessity ("CMN"). Plaintiffs brought suit alleging that denial of claims was unfounded and violative of federal statutes guiding medicare payments (Docket No. 11-cv-5213) (hereinafter, the "First-Filed Action"). In part because Plaintiff conceded that administrative remedies on appeal had not been exhausted, this Court found that it lacked jurisdiction to consider Plaintiff's claims.

On September 9, 2011, Nationwide filed a complaint against Medicare's PSC, Safeguard Services, asserting state law tort claims against it for insisting on reviewing documentation in addition to physician certifications in determining the medical necessity of Nationwide's ambulance services during a prepayment review. Plaintiff sought an injunction and recovery of damages against Safeguard (the "First Complaint;" see 11-CV-5213 (DMC)). The United States Attorney's Office, District of New Jersey, appearing for Safeguard, opposed the preliminary injunction and crossmoved to dismiss and for summary judgment. On October 7, 2011, this Court issued an Order and Opinion denying Nationwide's motion, finding that the Court lacked subject matter jurisdiction. Accordingly, the Court granted Safeguard "leave to renew and resubmit the cross-motion to dismiss and for summary judgment.

On October 11, 2011, Safeguard renewed its motion to dismiss for lack of subject matter jurisdiction. On November 21, 2011, Nationwide filed a brief opposing Safeguard's motion to dismiss and cross-moving for leave to amend the complaint. Specifically, citing Federal Rule of Civil Procedure 15, Nationwide sought the Court's permission to file an amended complaint to allege a cause of action against the Secretary of HHS and CMS for mandamus

On December 23, 2011, Safeguard filed a reply in further support of the motion to dismiss and in opposition to Nationwide's motion to amend. With regard to the cross-motion to amend, Safeguard argued that Nationwide's proposed amendment would be futile because the mandamus claim sought injunctive relief and not enforcement of a non-discretionary duty of the Secretary.

After the cross-motions were fully briefed and pending, Plaintiff filed a notice of voluntary dismissal pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), seeking dismissal without prejudice. Before Safeguard had the opportunity to respond, on January 31, 2012, the Court issued an order dismissing the action without prejudice.

On February 13, 2012, two weeks after this Court's order granting the voluntary dismissal, Plaintiff filed this complaint against Safeguard, HHS and Highmark "for relief in the nature of mandamus" (The "Second Complaint in Mandamus;" see 12-CV-0830). The relief sought in this Second Complaint in Mandamus is precisely the relief Nationwide sought through the cross-motion to amend the First Complaint and which Safeguard opposed as futile in briefing before this Court. Defendant filed a motion to stay the action pending its request that the first action be reopened and both complaints be consolidated, which request was granted on August 22, 2012.

In the interim, Nationwide filed two additional complaints, and stated its intent to file additional complaints in the future. The third such complaint, filed on August 1, 2012, and originally docketed as 2:12-CV-04293-JLL (the "Third Complaint"), seeks judicial review of final decisions of the Secretary following administrative review of Highmark's denial of its claims pursuant to 42 U.S.C. § 405(g). This Third Complaint was consolidated into this action on September 12, 2012. Nationwide's fourth complaint, filed on October 1, 2012, and docketed as 2:12-CV-06147-FSH (the "Fourth Complaint"), also seeks judicial review of final decisions of the Secretary following administrative review.

Both the Third and Fourth complaints contend, as this Second Complaint in Mandamus does, that CMS's regulation at 42 C.F.R. § 410.40(d)(2) requires the Secretary and her contractors to limit their review of the medical necessity of nonemergency, scheduled, repetitive ambulance services to physician certifications submitted by Plaintiff, to the exclusion of any other documentation.

On July 24, 2013, this Court entered an Order that the parties consent to the dismissal of the Third and Fourth Complaints without prejudice. (ECF No. 69). The present Motion to Dismiss was filed on January 24, 2012 (ECF No. 55, Def.'s Br.). Plaintiff opposed the motion (Apr. 8, 2013, ECF No. 62, Pl.'s ...

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