# Brooks Home Care Services Inc v. Becerra

> District Court, N.D. Texas · March 29, 2024

URL: https://www.frixlaw.com/law-library/cases/10671850

## Case

- **Court:** District Court, N.D. Texas
- **Decided:** March 29, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

United States District Court
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
BROOKS HOME CARE SERVICES, §
INC. §
§
v. § CIVIL ACTION NO. 3:23-CV-0477-S
§
XAVIER BECERRA, Secretary, United §
States Department of Health and Human §
Services §
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Xavier Becerra’s Motion to Dismiss Plaintiff’s Amended
Complaint (“Motion”) [ECF No. 34]. The Court has reviewed the Motion, Appendix in Support
of Xavier Becerra’s Motion to Dismiss Plaintiff's Amended Complaint (“Appendix”) [ECF
No. 35], Plaintiff's Response to Defendant’s Motion to Dismiss (“Response”) [ECF No. 38],
Defendant’s Reply to Support Motion to Dismiss [ECF No. 44], and the applicable law. For the
following reasons, the Court GRANTS the Motion.
I. BACKGROUND
Plaintiff Brooks Home Care Services, Inc., provides home health services to Medicare
beneficiaries in Dallas, Texas, and the surrounding area. P1.’s First Am. Compl. (“Complaint”)
[ECF No. 24] § 10. Medicare is a national health insurance program established through the Social
Security Amendments of 1965 and is managed by the Centers for Medicare and Medicaid Services
(“CMS”), which is an agency within the United States Department of Health and Human Services
(“HHS”). fd. Jf 11, 15. As a Medicare provider, Plaintiff submits claims for payment to Palmetto
GBA, a Medicare Administrative Contractor. Jd. § 17. Those claims are subject to review by a
Unified Program Integrity Contractor (“UPIC”) for suspected fraud, waste, abuse, and improper
payments. Jd.

On February 24, 2022, the UPIC Qlarant issued a notice of suspension of Medicare
payments to Plaintiff pursuant to 42 C.F.R. § 405.371(a)(2). Jd. 7 36. According to Qlarant, CMS
determined that there was a “credible allegation of fraud” related to Plaintiff's services billed to
Medicare and suspended all Medicare payments to Plaintiff. Jd. 36-40. Plaintiff filed a rebuttal
statement with Qlarant on March 7, 2022, which Qlarant found did not justify terminating the
suspension. Jd. J§ 52-53. Plaintiff filed a supplemental rebuttal statement with Qlarant on
August 1, 2022, which Qlarant did not respond to. Jd. JJ 54, 63.
On January 24, 2023, Qlarant notified Plaintiff that it had “received Medicare payments in
error, which has resulted in an extrapolated overpayment of $746.757.75 for the universe of claims
with paid dates from April 20, 2019[,] through April 19, 2022.” Id. 66. Subsequently, on
January 30, 2023, Palmetto GBA issued an initial request regarding the overpayment which
included a notice of Plaintiff’s right to appeal. Jd. | 67. According to Plaintiff, Qlarant had been
aware of the overpayment since August 15, 2022, when it first prepared an overpayment report.
Id. 4 68.
Plaintiff filed suit regarding the February 2022 suspension. See id. J 2-3. Specifically,
Plaintiff alleges that Defendant Xavier Becerra, in his capacity as Secretary of HHS, has illegally
suspended Medicare payments without the opportunity to dispute or contest the suspension
because it is not considered an “initial determination” which can be appealed. See id. Ff 1-2, 70.
Plaintiff further claims that Defendant “violated 42 C.F.R. § 405.372(c) by delaying over 150 days
to lift the Medicare payment suspension[.]” Jd. J] 7-8, 69. Plaintiff brings claims for violation of
the Takings Clause of the Fifth Amendment, violation of its due process, violation of its patients’
due process rights and access to Medicare, arbitrary and capricious actions by Defendant, and ultra
vires withholding of Medicare payments. Jd. F§ 71-111. Plaintiff also requests a preliminary

injunction, permanent injunction, and declaratory relief. Jd {J 112-20. Defendant moves to
dismiss based on Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction,
and 12(b)(6) for failure to state a claim upon which relief can be granted. See Mot. 1-2. Because
the Court finds that it lacks subject matter jurisdiction, it does not reach Defendant’s 12(b)(6)
arguments. !
II. LEGAL STANDARD
“Federal courts are courts of limited jurisdiction, and absent jurisdiction conferred by
statute, lack the power to adjudicate claims.” La. Real Est. Appraisers Bd. v. Fed. Trade Comm’n,
917 F.3d 389, 391 (Sth Cir. 2019) (quoting Texas v. Travis Cnty., 910 F.3d 809, 811 (Sth Cir.
2018)). Courts “must presume that a suit lies outside this limited jurisdiction, and the burden of
establishing federal jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate
Ins. Co,, 243 F.3d 912, 916 (Sth Cir. 2001) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511
US. 375, 377 (1994)).
Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a party may challenge the
subject matter jurisdiction of the district court to hear a case. The district court may dismiss for
lack of subject matter jurisdiction based on the complaint alone. Ramming v. United States, 281
F.3d 158, 161 (Sth Cir. 2001) (citing Barrera-Montenegro v. United States, 74 F.3d 657, 659 (Sth
Cir. 1996)). The court must accept all factual allegations in the complaint as true. Den Norske Stats
Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001) (citing Williamson v. Tucker,

motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction [is] considered by
the court before any other challenge because ‘the court must find jurisdiction before determining the validity
of a claim.”” Sharpe v. Roman Cath. Diocese of Dall., No. CIV. A. 3:02-CV-0552-G, 2002 WL 31165987,
at *3 (N.D. Tex. Sept. 27, 2002) (quoting Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (Sth Cir.
1994)), aff'd, 71 F. App’x 380 (Sth Cir. 2003). “When a court must dismiss a case for lack of jurisdiction,
the court should not adjudicate the merits of the claim.” Pillar Panama, S.A. v. DeLape, 326 F. App’x 740
(5th Cir. 2009) (quoting Stanley v. CIA, 639 F.2d 1146, 1157 (5th Cir. Unit B March 1981).

645 F.2d 404, 412 (Sth Cir. 1981)). If the court determines that it lacks subject matter jurisdiction,
it must dismiss the action. FED. R. Civ. P. 12(h)(3).
Ill. ANALYSIS
When dealing with claims “arising under” the Medicare Act, federal courts only have
jurisdiction over a “final decision” of HHS. Fam. Rehab., Inc. v. Azar, 886 F.3d 496, 500 (Sth Cir.
2018) (citing 42 U.S.C. § 405(g)-(h)’). “A claim arises under the Medicare Act if ‘both the standing
and the substantive basis for the presentation’ of the claims is in the Medicare Act.” RenCare, Lid.
v. Humana Health Plan of Tex., Inc., 395 F.3d 555, 557 (Sth Cir. 2004) (quoting Heckler v. Ringer,
466 U.S. 602, 606 (1984)). Ordinarily, a provider may only file suit in a district court after
exhausting its administrative remedies. Fam. Rehab., 886 F.3d at 500 n.4 (citations omitted). This
means a provider must either (1) satisfy all four stages of administrative appeal and receive a
decision from the Medicare Appeals Council (“Council”), or (2) escalate its claim to the Council
and wait 180 days for the Council to act or fail to act. Jd. at 500-01.
It is undisputed that Plaintiff's claims—which challenge a Medicare suspension as a
Medicare provider—arise under the Medicare Act. See Mot. 1; Resp. 1, 5. Therefore, the Court
considers whether Plaintiff exhausted its administrative remedies. Plaintiff does not allege that it
exhausted administrative remedies by receiving a decision from the Council or waiting 180 days
after escalating its claim to the Council. See Compl. { 70.° Instead, Plaintiff invokes two exceptions
to the administrative exhaustion requirement. Plaintiff argues that the Court has subject matter
jurisdiction under the collateral claim exception and the “no review at all” exception. Resp. 5-10.

? Pursuant to Medicare regulations concerning suspension protocol, CMS may find that good cause exists
not to suspend a provider’s payments where, among other things, beneficiary access to services would be
“so jeopardized by a payment suspension” as to cause a “danger to life or health.” 42 C.F.R.
§ 405.371(b)(1\(ii).
Because the Court concludes that the first E/dridge element is not satisfied it does not reach the second.

which provides judicial review to the Medicare Act.” Jd. Therefore, Plaintiff cannot establish
jurisdiction through Section 1395ii. Similarly, Subsection 1395ff(b) concerns appeal rights of an
initial determination. Jd. at 6 (citation omitted). Because Plaintiff does not allege receiving an
initial determination,’ it cannot establish subject matter jurisdiction under this section as well.
As to the “no review at all” exception, federal question jurisdiction is available under
28 U.S.C. § 1331 when going through the Section 405 appeals process “would not simply channel
review through the agency[] but would mean no review at all.” Fam. Rehab., 886 F.3d at 501, 504
(quoting J/1. Council, 529 U.S. at 17, 19). This “narrow” exception is only available when going
through the agency would result in “complete preclusion of judicial review.” Jd. at 504-05 (quoting
Hl, Council, 529 US. at 23). Therefore, a plaintiff must show either that its claim “administratively
is ‘a legal impossibility” or that it faces “a serious practical roadblock to having [its] claims
reviewed in any capacity, administratively or judicially.” Jd. at 505 (alteration in original) (quoting
Physician Hosps. of Am. v. Sebelius, 691 F.3d 649, 655, 659 (Sth Cir. 2012)).
Plaintiff has not shown that it cannot have its claims reviewed, either practically or legally.
Administrative review is available for Medicare payments that are withheld subject to an

overpayment determination, as is the case here. CMS suspended Plaintiff's payments under
42 C.F.R. § 405.372(a)(2) due to a credible allegation of fraud. Compl. f§f 36-39. In the
January 24, 2023, letter regarding Plaintiffs suspension, Qlarant informed Plaintiff that CMS had
discovered overpayments and that Palmetto GBA would issue an overpayment demand letter. Jd.

7 As discussed below, Plaintiff received overpayment notices that qualify as initial determinations.
However, Section 1395ff(b) only gives a court jurisdiction over those initial determinations after a Section
405(g) hearing has been held and HHS has issued a final decision, neither of which is alleged to have
happened. See 42 U.S.C. § 1395ff(b)(1)(A).

oO

66; App. 009.° Plaintiff was issued an overpayment demand letter on January 30, 2023. Compl.
{ 67; see also App. 010-016. The overpayment determination counts as an “initial determination”
that “triggers the multi-step administrative appeals process for a provider . . . to follow if it is
dissatisfied with the initial overpayment determination.” True Health Diagnostics, LLC v. Azar,
392 F. Supp. 3d 656, 661 (E.D. Tex. 2019) (citing 42 C.F.R. § 405.904(a)(2)); see also App. 013
(“If you disagree with this overpayment decision, you may file an appeal.”). Only once Plaintiff
receives a decision from the overpayment appeals process can it seek review in federal court. True
Health Diagnostics, 392 F. Supp. 3d at 661 (citing 42 U.S.C. § 1395ff(b)(1)(A); 42 C.F.R.
§ 405.1136; 42 C.F.R. § 405.1130). Therefore, Plaintiff has not demonstrated complete preclusion
of judicial review.
Plaintiff further contends that appeals for overpayments are irrelevant since its challenge
is to the Medicare payment suspension itself, “which [was] imposed without a right to a hearing
or administrative appeal.” Resp. 10; see also id. at 3 (“Contrary to HHS’s contentions, the
administrative process and right to challenge the overpayment urged by the government does not afford
Plaintiff an opportunity to challenge the wrongs at issue in this case.”); Compl. { 2 (noting that
suspensions are not considered initial determinations for purposes of appeal rights). However,
fact that the agency might not provide a hearing for that 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.” I//. Council, 529 U.S. at 23 (citations omitted).

8 A court may consider documents outside the pleadings that are attached to the motion to dismiss, referred
to in the complaint, and central to the plaintiff's claim. Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d
285, 288 (Sth Cir. 2004) (quoting Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (Sth Cir.
2000)). Defendant attached the January 24, 2023, letter from Qlarant to the Motion, as well as the January
30, 2023, overpayment demand letter. See App. Because these documents are referenced in the Complaint
and are central to Plaintiff's claim that Medicare payments were improperly withheld, the Court considers
them in evaluating the Motion.

1)

As explained above, Plaintiff was subject to an overpayment determination, which has its own
appeals process. Plaintiff acknowledges this, explaining that “the crux of the matter is whether
HHS has illegally taken Plaintiffs property and its ‘approved’ Medicare payments that ultimately
will be ‘applied to reduce or eliminate any overpayment determined by the Medicare contractor.’”
Resp. 7 (citations omitted); see also id. at 1 (“[T]he administrative process provides no remedy to
the illegal confiscation of Plaintiff's earned Medicare payments that were withheld to offset an
alleged Medicare overpayment.”). Once Plaintiff exhausts the administrative appeals process, it
may bring its claims—including “any statutory or constitutional contention that the agency does
not, or cannot, decide”—before the court. ///, Council, 529 U.S. at 23-24 (citations omitted).
Because Plaintiff has not demonstrated that channeling review through the agency would mean no
review at all, the “no review at all” exception does not apply. See Arthritis Treatment of Tex.,
PLIC y. Azar, No. 3:16-CV-3470-S, 2018 WL 6592664, at *6. (N.D. Tex. Dec. 14, 2018).
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant Xavier Becerra’s Motion to
Dismiss Plaintiff's Amended Complaint. Because the Court lacks subject matter jurisdiction,
Plaintiff Brooks Home Care Services, Inc.’s claims are DISMISSED WITHOUT PREJUDICE.
SO ORDERED.
SIGNED March 29, 2024.
[iw bale
KAREN GREN SCHOLER
UNITED STATES DISTRICT JUDGE

14

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10671850. Public record. Not legal advice.