Confirm Laboratory LLC v. Becerra

United States District Court

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

CONFIRM LABORATORY, LLC §

§

v. §

§ CIVIL ACTION NO. 3:23-CV-0460-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 (“Motion”) [ECF

No. 13]. The Court has reviewed the Motion, the Appendix in Support of Defendant’s Motion to

Dismiss (“Appendix”) [ECF No. 14], Plaintiff Confirm Laboratory, LLC’s Response to

Defendant’s Motion to Dismiss (“Response”) [ECF No. 26], Defendant’s Reply to Support Motion

to Dismiss (“Reply”) [ECF No. 29], Plaintiffs Sur-Reply in Opposition to HHS’s Motion to

Dismiss (“Sur-Reply”)} [ECF No. 32], Defendant’s Final Reply to Support His Motion to Dismiss

[ECF No. 35], and the applicable law. For the following reasons, the Court GRANTS the Motion.

I. BACKGROUND

Plaintiff Confirm Laboratory, LLC, provides laboratory services to Medicare beneficiaries

in Dallas, Texas, and the surrounding area. Verified Compl. (“Complaint”) [ECF No. 1] {{{ 4, 19.

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. J§ 5, 9. As a Medicare provider, Plaintiff submits claims for payment to Novitas

Solutions, a Medicare Administrative Contractor. Jd § 11. Those claims are subject to review by

a Unified Program Integrity Contractor (“UPIC”) for suspected fraud, waste, abuse, and improper

payments. Jd.

On May 12, 2022, the UPIC Qlarant issued a notice of suspension of Medicare payments

to Plaintiff pursuant to 42 C.F.R. § 405.371 (a)(2). fd. J 22. 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. J 22-25. Plaintiff filed a rebuttal statement with

Qlarant on July 18, 2022. Id. § 49. Qlarant did not respond to the rebuttal statement. Jd. {| 63.

On October 27, 2022, Qlarant sent Plaintiff a Notice of Termination of Suspension of

Medicare Payments, which allegedly terminated the suspension immediately. Jd {| 27-28.

Plaintiff alleges that, despite the termination letter, CMS continued to suspend its Medicare

payments. Jd. 28-29. While the suspension was still ongoing, Defendant Xavier Becerra, in his

capacity as Secretary of HHS, issued two notices of Medicare overpayment to Plaintiff: a

November 25, 2022, notice for $28,448.28, and a December 8, 2022, notice for $1,983,427. Id. □□

33-34,

Plaintiff filed suit regarding the May 2022 suspension and its continuation after the

October 27, 2022, notice of termination. See id 2-3. Specifically, Plaintiff alleges that

Defendant has illegally confiscated over $417,445 in suspended payments, of which at least

$245,698 was incurred after October 27, 2022, without the opportunity for a hearing or judicial

review. Jd. Plaintiff brings claims for violation of its due process, violation of its patients’ due

process rights and access to Medicare, arbitrary and capricious actions by Defendant, ultra vires

withholding of Medicare payments, and mandamus. /d. {{[ 67-87. Plaintiff also requests a

temporary restraining order, preliminary injunction, permanent injunction, and declaratory relief.

Id. {{ 88-97. 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 (5th 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 y. Guardian Life Ins. Co. of Am., 511

U.S. 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 (Sth Cir. 2001) (citing Williamson v. Tucker,

645 F.2d 404, 412 (Sth Cir. 1981)). If the court determines that it lacks subject matter jurisdiction,

it must dismiss the action. Fep, R. Crv. P. 12(h)(3).

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 aclaim.’” 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

(Sth Cir. 2009) (quoting Stanley v. CIA, 639 F.2d 1146, 1157 (Sth Cir. Unit B March 1981)).

Ti. 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. 12-13. 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. { 66; Sur-Reply 5.7 Instead, Plaintiff invokes

three exceptions to the administrative exhaustion requirement. Plaintiff argues that the Court has

subject matter jurisdiction under: (1) the collateral claim exception, (2) the “no review at all”

exception, and (3) mandamus jurisdiction. Resp. 5.

2 “A ithough § 405(g) is a provision of the Social Security Act, it has been made applicable to Medicare by

42, U.S.C. § 1395ff(b)(1)(A).” Fam. Rehab., 886 F.3d at 500 n.4 (citations omitted).

3 Plaintiff argues that the exhaustion requirement is “excused” because it has been deprived of an

administrative process. See Compl. J 66; see also Resp. 1-2. Plaintiff only asserts three bases for

jurisdiction, none of which require exhaustion. Therefore, the Court need not address this argument.

A, Collateral Claim Exception

Plaintiff argues that the Court has subject matter jurisdiction under the collateral claim

exception established in Mathews v. Eldridge, 424 U.S. 319 (1976). See Compl. § 6; Resp. 5-8. In

Eldridge, the Court held that “jurisdiction may lie over claims (a) that are ‘entirely collateral’ to a

substantive agency decision and (b) for which ‘full relief cannot be obtained at a postdeprivation

hearing.’” Fam. Rehab., 886 F.3d at 501 (quoting Eldridge, 424 U.S. at 330-32). A claim is not

collateral if it requires the court to “immerse itself” in the substance of the underlying Medicare

claim, requires the court to demand a “factual determination” as to the application of the Medicare

Act, or if it seeks relief that would be “‘administrative,’ ie., the substantive, permanent relief that

the plaintiff seeks or should seek through the agency appeals process.” /d. (citations omitted). Put

another way, “[i]f the court must examine the merits of the underlying dispute, delve into the statue

and regulations, or make independent judgments as to plaintiffs’ eligibility under a statute, the

claim is not collateral.” Jd. at 503 (citations omitted). A plaintiff establishes that full relief cannot

be obtained at a postdeprivation hearing if it “‘raise[s] at least a colorable claim’ that erroneous

recoupment will ‘damage [it] in a way not recompensable through retroactive payments.” Jd. at

504 (second alteration in original) (quoting Eldridge, 424 US. at 331).

As to the first Eldridge element, the Court concludes that Plaintiff's claims are not

collateral to a substantive agency decision for two reasons. First, Plaintiff seeks substantive,

administrative relief in the form of monetary repayment. Plaintiff asks the Court to compel

Defendant to “immediately refund the $417,445.00 confiscated” as well as “$245,698.00 and any

other payments withheld after the suspension was terminated.” Compl. f{ 2-3. In fact, each of

Plaintiffs claims request relief related to the amount of money Defendant has allegedly withheld.

Claims 1 through 4 request injunctive relief to halt the post-October 27, 2022, suspension of

payments, id. J{ 73, 77, 80, 83, while Claim 5 asks the Court to compel Defendant to cease its

withholding of $417,445 in payments, id. | 87. “Although [Plaintiff] sues for money damages

rather than Medicare benefits, the money damages [it] seeks would compensate [it] for

{Defendant’s] premature recoupment{.|” Griego v. Leavitt, No. CIV. A, 3:07-CV-1708-D, 2008

WL 2200052, at *10 (N.D. Tex. May 16, 2008) (citation omitted). Plaintiff's requests for money

are thus “an indirect suit for Medicare benefits” and are not collateral. Jd.

Plaintiff's attempt to frame its requests as procedural is unpersuasive. Plaintiff argues that

its claims are about procedural and constitutional issues since it “does not seek an ‘award of

benefits.’” Resp. 7 (quoting Heckler, 466 U.S, at 614). As evidenced by the Complaint’s focus on

the amount of money Plaintiff is owed, Plaintiffs claims seek “essentially substantive relief.”

Fam, Rehab., 886 F.3d at 502-03 (citation omitted). Plaintiff admits that in a previous lawsuit it

“asserted a right to hearing before its payments are suspended,” but that its “position has evolved

and Plaintiff [now] seeks injunctive relief that stops the withholding [of payments]. . . and that the

government be ordered to return illegally confiscated payments.” Resp. 8 & n.6. “Although

Plaintiff has framed [its] claim[s] in constitutional terms by alleging a denial of appeal rights[,] . .

. it essentially seeks to prevent improper recoupment and suspension of its Medicare payments,

which is clearly an administrative remedy.” Citadel Healthcare Servs. Inc. v. Sebelius, No. 3:10-

CV-1077-BH, 2010 WL 5101389, at *4 (N.D. Tex. Dec. 8, 2010) (citation omitted); see also

Affiliated Pro. Home Health Care Agency v. Shalala, 164 F.3d 282, 285 (Sth Cir. 1999) (finding a

claim framed as constitutional that seeks compensatory damages and the termination of a

suspension of Medicare payments as “unquestionably administrative in nature”), Plaintiffs

procedural claims are “inextricably intertwined” with its claim for benefits and are therefore not

collateral. Heckler, 466 U.S. at 614.

Second, Plaintiffs claims would require the Court to delve into Medicare statutes and

regulations as well as the merits of Defendant’s suspension of Plaintiff. Defendant suspended

Plaintiff's benefits on suspicion of fraud. Compl. 22-23. Plaintiff counters that such benefits

were “earned,” see id. ff 69-71 (Count 1), 76-77 (Count 2), 79 (Count 3), 82 (Count 4), 87 (Count

5), and that Defendant’s withholding of payment is “illegal” and “ultra vires,” see id. J 73 (Count

1), 77 (Count 2), 80 (Count 3), 83 (Count 4), 87 (Count 5). Plaintiff dedicates almost five full

pages of the Complaint to why there was no fraud, see id. {{[ 49-61, while Defendant contends that

the Plaintiff's payment submissions “did not meet Medicare requirements,” Mot. 1. Furthermore,

Plaintiff describes its suspension as impermissibly “indefinite.” See Compl. {ff 6, 16, 42, 44, 49,

64, 69. Defendant responds that the suspension cannot be indefinite because it needs to be re-

evaluated every 180 days under Medicare regulations. Reply 7-8 (citing 42 C.F.R.

§ 405.371(b)(1)-(2)). Each of these disputes are central to Plaintiffs claims and concern Medicare

regulations about valid invoices and suspension protocol. Accordingly, for the Court to fully

address Plaintiff's claims that its earned payments were improperly withheld the Court would

“necessarily have to immerse itself in [Medicare] regulations and make a factual determination as

to whether [Plaintiff] was actually in compliance.” Affiliated Pro. Home Health, 164 F.3d at 285-

86; see also Citadel, 2010 WL 5101389, at *4 (finding a plaintiff's claims that its constitutional

rights were violated through improper enforcement of Medicare regulations would necessarily lead

the court to immerse itself in those regulations and make a factual determination regarding

plaintiff's compliance with the same).°

4 The term ultra vires means “beyond the powers.” Fontenot v. City of Houston, No. 4:12-CV-3503, 2014

WL 3891682, at *4(S.D. Tex. Aug. 7, 2014) (citing BLACK’S LAW DICTIONARY 1662 (9th ed. 2009), aff'd,

647 F. App’x 402 (5th Cir. 2016}.

5 Because the Court concludes that the first Eldridge element is not satisfied it does not reach the second.

B. No Review at All

Plaintiff relies on Shalala v. Hlinois Council on Long Term Care, Inc., to assert that this

Court has jurisdiction because Section 405 “would not simply channel review through the agency[]

but would mean no review at all.” 529 U.S. 1, 19 (2000); see Compl. § 7 (quoting M1. Council,

529 U.S. at 19); Resp. 6, 9-11. As part of this argument, Plaintiff also claims Section 405(g)

jurisdiction through 42 U.S.C. §§ 1395ii and 1395ff(b). Compl. {| 7.

Neither Sections 1395ii nor 1395ff(b) establish subject matter jurisdiction. Section 139511

applies select subsections of Section 405 to the Medicare Act, which are not at issue here. Am.

Med. Hospice Care, LLC v. Azar, No. 5:20-CV-757 DAE, 2020 WL 9814144, at *7 (W.D. Tex.

Dec. 9, 2020). “Notably, Congress did not use § 1395ii to apply to subsection (g) [of Section 405],

which provides judicial review to the Medicare Act.” fd 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 Jl. 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.” fd. at 504-05 (quoting

Hl. Council, 529 U.S. 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

® 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).

reviewed in any capacity, administratively or judicially.” /d@. 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. {| 22. In the October 27,

2022, letter regarding Plaintiff's suspension, Qlarant informed Plaintiff that CMS had discovered

overpayments and that overpayment demand letters would be issued. App. 001.’ Plaintiff was

issued overpayment demand letters on November 25, 2022, and December 8, 2022. Compl. {ff 33-

34; see also App. 002-018. These overpayment determinations count as “initial determinations”

that “trigger[] 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. 006,

016 (“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.

7 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 (5th Cir. 2004) (quoting Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (Sth Cir.

2000)). Defendant attached the October 27, 2022, letter from Qlarant to the Motion, as well as the two

subsequent overpayment determination letters. See App. Because each of 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.

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. 11; see also Compl. { 17 n.3 (noting that suspensions are not

considered initial determinations for purposes of appeal rights). However, “[t]he 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.” J. Council, 529 U.S. at 23 (citations omitted). 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 Plaintiff's property and its ‘approved’ Medicare payments that ultimately will be ‘applied to

reduce or eliminate any overpayment determined by the Medicare contractor.’” Resp. 7 (emphasis

added) (citations omitted); see also id. (“[Plaintiff] claims that the government has wrongly

confiscated its property, i.e., eamed Medicare payments that HHS is applying to reduce an alleged

overpayment liability.” (emphasis added)). 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”—hbefore the court. /7/, 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., PLLC v. Azar, No. 3:16-CV-3470-8, 2018 WL 6592664, at *6. (N.D. Tex. Dec, 14, 2018).

C. Mandamus Jurisdiction

Finally, Plaintiff maintains the Court has mandamus jurisdiction. Compl. § 3; Resp. 6, 11-

18. Under 28 U.S.C. § 1361, “district courts shall have original jurisdiction of any action in the

nature of mandamus to compel an officer or employee of the United States or any agency thereof

10

to perform a duty owed to the plaintiff.” Mandamus is “an extraordinary remedy . . . reserved for

extraordinary situations.” Winningham v. U.S. Dep't of Hous. & Urb. Dev., 512 F.2d 617, 620 □□□

Cir. 1975) (citations omitted), For mandamus jurisdiction to exist, a plaintiff must ask the court to

compel the defendant to complete “affirmative actions” related to a “nondiscretionary duty owed

to plaintiff.” Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 766 (5th Cir, 2011)

(citations omitted). Conversely, Section 1361 does not confer jurisdiction over other types of relief,

“such as injunctive relief” that seeks “the undoing of injurious acts and the restoration of the status

quo” or “a remedy to restrain the doing of injurious acts.” /d. As it relates to Medicare cases,

mandamus jurisdiction is not precluded by 42 U.S.C. § 405¢(h) and is available to plaintiffs “to

review otherwise unreviewable procedural issues.” Fam. Rehab,, 886 F.3d at 505 (quoting

Wolcott, 635 F.3d at 764). A plaintiff may seek a writ of mandamus without exhausting all other

avenues of relief. See id. at 506.

The Court lacks mandamus jurisdiction in this matter for two reasons. First, Plaintiff seeks

only injunctive relief. Each of Plaintiff's claims ask the Court to enjoin Defendant from an act as

opposed to compelling Defendant to affirmatively perform a nondiscretionary duty. Claims 1

through 4 all end with: “Accordingly, Plaintiff is entitled to injunctive relief[.]” Compl. {{{ 73, 77,

80, 83. Claim 5 states that this Court “should issue a decision compelling Defendant to cease its

continued withholding” of Plaintiff's Medicare payments. /d 987. Plaintiff's requests for a

temporary restraining order, preliminary injunction, permanent injunction, and for declaratory

relief likewise ask the court to enjoin Defendant from certain acts. See id. J] 88-97. Plaintiff

summarizes that it “seeks injunctive relief that restrains HHS from its continued illegal

confiscation of payments and seeks affirmative injunctive relief that orders the government to

return the provider’s property .. . thereby reestablishing the status quo.” Resp. 6-7; see also id. 5

11

(“Plaintiff maintains that the [C]ourt has mandamus jurisdiction to order the return of payments

illegally confiscated.”). The Court does not have mandamus jurisdiction over Plaintiff's claims

because they “would require the court to prohibit [Defendant] from acting in a certain manner in

the future rather than compel [Defendant] to affirmatively perform a presently existing duty under

the law.” Wolcott, 635 F.3d at 767; see also Supreme Home Health Servs., Inc. v. Azar, 380 F.

Supp. 3d 533, 551 (W.D. La. 2019) (finding no mandamus jurisdiction because the plaintiffs

sought an “injunction prohibiting Defendants from recouping from Plaintiffs’ Medicare

payments”), aff'd, 812 F. App’x 229 (Sth Cir. 2020).

In its Response, Plaintiff argues that it is “entitled to the issuance of an order of mandamus

requiring Defendants [sic] to properly adjudicate its administrative appeal pursuant to 42 U.S.C. §

1395ff.” Resp. 11. Plaintiff also tries to frame its request as a “temporary abatement of the

suspension and withholding of its Medicare payments until hearing.” Sur-Reply 6, These

arguments are unavailing because those requests do not appear in the Complaint, which only seeks

injunctive relief. See generally Compl. The Court will not consider “theories that are first raised

in a response without having been referenced in the pleadings” as they are “not properly before

the Court when it considers a motion to dismiss.” See Phalanx Grp. Int’l v. Critical Sols. Int’l, No.

3:18-CV-0244-B, 2019 WL 5425480, at *5 (N.D. Tex. Oct. 22, 2019) (citation omitted); see also

Green v. Harris Cnty., No. CV H-16-893, 2019 WL 338243, at *5 (S.D, Tex. Jan. 28, 2019) (“[A]

court examines the allegations in the complaint in order to determine the nature of a plaintiff's

cause of action.” (citing Parker v. Graves, 479 F.2d 335, 336 (Sth Cir. 1973))).

Second, Plaintiff does not identify a nondiscretionary duty Defendant purportedly owes.

According to Plaintiff, Defendant had a “clear duty to . . . cease its continued withholding of

Plaintiff's earned Medicare payments .. . [and to give Plaintiff] an immediate refund of

1?

$245,698.00 and any other payments withheld after the suspension was terminated.” Compl. € 3.

Plaintiff also alleges that Plaintiff's continued withholding of payments is illegal. Jd. [J 28, 38.

However, Plaintiff does not allege a statutory basis for Defendant’s duty. See Dunn-Campbell

Royalty Int., Inc. v. Nat'l Park Serv,, 112 F.3d 1283, 1288 (Sth Cir. 1997) (“The legal duty must

be set out in the Constitution or by statute[.]” (citing Giddings v. Chandler, 979 F.2d 1104, 1108

(Sth Cir.1992))). Instead, Plaintiff acknowledges that CMS has a statutory right to suspend

payments where, as here, it suspects fraud. See Compl. 13-15. Because “Plaintiff cites to no

authority establishing as a matter of law that Defendant has a clearly established duty[, ]so plainly

established as to be free from doubt[,]” the Court concludes that Plaintiff has not identified a

nondiscretionary duty owed to it. /nfinity Healthcare Servs., Inc. v. Azar, 349 F. Supp. 3d 580, 586

(S.D, Tex. 2018), “Accordingly, Plaintiff has not met its burden to establish that the Court has

subject matter jurisdiction over Plaintiff's mandamus claim[.]” /d

Plaintiff attempts to expand its petition for mandamus in its Response by stating that the

nondiscretionary duty owed to Plaintiff is “clearly established under the Medicare Act in requiring

payment of Plaintiffs claims in accordance with the statute and regulations and the concomitant

duty of returning the provider’s property, i.e., refund illegally confiscated payments[,]” under “42

U.S.C. §§ 1395g and 1395h.” Resp. 14; see also id. 16-17; Sur-Reply 7-8. But neither of these

statutes are cited or referenced in the Complaint. See generally Compl. For the reasons explained

above, the Court will not consider theories absent from the Compiaint.

13

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Defendant Xavier Becerra’s Motion to

Dismiss. Because the Court lacks subject matter jurisdiction, Plaintiff Confirm Laboratory, LLC’s

claims are DISMISSED WITHOUT PREJUDICE.

SO ORDERED.

SIGNED March 28, 2024.

REN GREN SCHOLER

UNITED STATES DISTRICT JUDGE

j4