Southern Rehabilitation Group, P.L.L.C. v. Secretary of Health & Human Services

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 13a0296p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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SOUTHERN REHABILITATION GROUP, P.L.L.C. X

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Plaintiffs-Appellants, --

and JAMES P. LITTLE, M.D.,

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No. 12-5903

,

>

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v.

-

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SECRETARY OF HEALTH AND HUMAN

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SERVICES; CIGNA GOVERNMENT SERVICES,

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LLC; CIGNA HEALTHCARE, TENNESSEE,

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COMPUTER SCIENCES CORPORATION, dba

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AdvanceMed; and Q2 ADMINISTRATORS,

N

LLC,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Tennessee at Greeneville.

No. 2:09-cv-00226—J. Ronnie Greer, District Judge.

Argued: July 24, 2013

Decided and Filed: October 18, 2013

Before: BOGGS and McKEAGUE, Circuit Judges; BECKWITH, District Judge.*

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COUNSEL

ARGUED: Wynne du M. Caffey, RAMSEY ELMORE STONE & CAFFEY PLLC,

Knoxville, Tennessee, for Appellants. Robert C. McConkey III, UNITED STATES

ATTORNEY’S OFFICE, Knoxville, Tennessee, for Appellee. David L. Steed,

CORNELIUS & COLLINS, Nashville, Tennessee, for Amici Curiae. ON BRIEF:

Wynne du M. Caffey, Robert S. Stone, RAMSEY ELMORE STONE & CAFFEY

PLLC, Knoxville, Tennessee, for Appellants. Robert C. McConkey III, UNITED

STATES ATTORNEY’S OFFICE, Knoxville, Tennessee, for Appellee. David L. Steed,

CORNELIUS & COLLINS, Nashville, Tennessee, for Amici Curiae.

*

The Honorable Sandra S. Beckwith, Senior United States District Judge for the Southern District

of Ohio, sitting by designation.

1

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 2

_________________

OPINION

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McKEAGUE, Circuit Judge. Southern Rehabilitation Group and its medical

director, Dr. James P. Little, brought this civil action against the Secretary of Health and

Human Services and several past and present Medicare contractors seeking judicial

review of the Secretary’s final decision on 6,200 claims for Medicare reimbursement.

Along with their assertion that the Secretary’s decision was not supported by substantial

evidence, plaintiffs also sought relief based on several constitutional, statutory, and state

law theories of liability. On a motion by the Secretary, the district court remanded the

case so the Secretary could pay plaintiffs the disputed amount. After the Secretary’s

payment, the case returned to the district court. The district court concluded that

plaintiffs’ claims for payment were now moot, and it dismissed plaintiffs’ remaining

constitutional and statutory claims on the basis that they were barred by the jurisdictional

provisions of the Medicare Act. The court also determined that plaintiffs did not show

they were eligible to collect interest on their claims, and further that it did not have

jurisdiction over 8,900 other claims that plaintiffs alleged were still lingering in the

administrative process.

For the following reasons, we affirm the district court’s decision granting

summary judgment to defendants on plaintiffs’ federal and state law claims and on the

8,900 claims still in the administrative process, but we reverse its decision granting

summary judgment on plaintiffs’ claims for interest, and we remand for further

proceedings consistent with this opinion.

I.

Plaintiff Southern Rehabilitation provides inpatient rehabilitation services in

Kingsport, Tennessee. In 2001, plaintiff Dr. James Little joined the group and became

its medical director. According to plaintiffs, they care for approximately 40 patients per

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 3

day, 70% of whom are insured through Medicare. This generates approximately 10,000

Medicare claims per year.

Plaintiffs submit their Medicare reimbursement claims under Medicare Part B,

which is the portion of Medicare covering certain physician services. See 42 U.S.C.

§§ 1395j-1395k. At all relevant times, the Medicare statute prescribed a process for

reviewing claims. Initially, a provider’s claim goes to a Fiscal Intermediary (generally

a private insurance company, like defendant Cigna in this action, which is contracted by

the government to review claims) for an “initial determination.” The Fiscal Intermediary

either pays or denies the claim. If the claim is denied, the provider can appeal the

determination to the same Fiscal Intermediary for a “redetermination.” If denied at that

stage, the provider can appeal to a Qualified Independent Contractor (QIC) (such as

defendant Q2 Administrators in this action) for a “reconsideration.”1 If the claim is

again denied, the provider may appeal to an Administrative Law Judge (ALJ), who can

conduct an evidentiary hearing, take testimony, and consider all of the issues, including

any new issues under certain circumstances. If the ALJ denies the claim, the provider

can seek review with the Medicare Appeals Council, whose decision is considered the

final decision of the Secretary. If the claim is denied by the Appeals Council, the statute

provides for judicial review of the “final decision” in federal court. See 42 C.F.R.

§ 405.904(a)(2) (reciting system of claim appeals); 42 U.S.C. § 405(g).

Between 2001 and 2006, plaintiffs allege they submitted approximately 15,000

claims for Medicare payment that defendant CIGNA Government Services denied in

whole or in part because the claims lacked sufficient documentation. Plaintiffs maintain

that 8,900 of those denials were appealed on September 6, 2002 to CIGNA for a

1

Plaintiffs point out that while their claims were pending in 2005, this stage of the appeals process

was changed by Congress. Prior to 2005 an appeal from the Fiscal Intermediary’s redetermination would

go to a Fair Hearing Officer (which involved an “in person” hearing), not a Qualified Independent

Contractor.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 4

redetermination, but that no redetermination has ever been issued. Plaintiffs refer to

these claims as the Group 1 claims, and allege they are worth approximately $365,000.2

Plaintiffs assert that the remaining 6,200 claims were also appealed, and that all

but 11 of those claims resulted in a partially favorable Medicare Appeals Council

decision. Plaintiffs refer to these 6,200 claims as Groups 2, 3, and 4.3 Plaintiffs believed

they were still owed $107,171 on their Groups 2, 3, and 4 claims.

Plaintiffs filed this civil action seeking judicial review of the final agency

decision pursuant to 42 U.S.C. § 1395ff(b)(1). They sued the Secretary in her official

capacity, as well as several past and present Medicare contractors who perform claims-

review functions at various stages of the review process. Count I of plaintiffs’ Amended

Complaint sought review of the Secretary’s decision on the Groups 2, 3, and 4 claims,

alleging her decision was not based on substantial evidence and was arbitrary and

capricious. Count II alleged that defendants “violated numerous laws and regulations

under the Social Security Act,” and that on this basis plaintiffs were owed

reimbursement at the highest level of payment on their Groups 2, 3, and 4 claims.

Plaintiffs further asserted that these violations resulted in loss of their appeal rights on

their Group 1 claims (the 8,900 claims, which have allegedly been languishing at the

early stages of review since 2002), and claimed they were owed money damages as a

result of these delays. Count III alleged that the Social Security Act and Medicare

regulations, “as implemented by the Secretary,” violated plaintiffs’ due-process and

equal-protection rights, and as a result, “Plaintiffs incurred monetary damages.” Counts

IV through IX alleged various state-law theories of liability, including breach of

2

Plaintiffs also allege that because these 8,900 claims have not been paid, they have been denied

the ability to collect payments from secondary insurance sources that pay costs not covered by Medicare,

but only pay those costs after the Secretary pays her portion of the claim. Am. Compl. at 22, ¶ 61, Page

ID #51.

3

The Group 2 claims consist of 11 claims that plaintiffs at one point alleged were not the subject

of an ALJ or Appeals Council decision, Am. Compl. at 2, n.2, but in their briefing to this Court they

suggest the Group 2 claims “were addressed in an adverse MAC Decision on August 14, 2009.”

Regardless, as discussed below, the Secretary ultimately paid these 11 claims at the level plaintiffs

demanded.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 5

contract, unjust enrichment, fraud, misrepresentation, negligence, gross negligence,

recklessness and violations of the Tennessee Prompt Pay Act.

In sum, plaintiffs sought reimbursement on the 8,900 claims in Group 1;

reimbursement for their Groups 2, 3, and 4 claims; money damages for lost secondary

insurance payments; administrative expenses in the amount of $1,963,990; interest on

the unreimbursed claims; attorney’s fees, costs, and expenses; declaratory relief; and

injunctive relief requiring the Secretary to revise the claims-coding guidelines and

requiring the Secretary to hire and train new reviewers with expertise in rehabilitative

services.

Although plaintiffs accused defendants of committing several federal infractions,

plaintiffs’ Amended Complaint did not claim that the district court had jurisdiction under

the federal question statute, 28 U.S.C. § 1331.4 Rather, their Amended Complaint

claimed the district court had jurisdiction under 42 U.S.C. § 1395ff(b) and 42 U.S.C.

§ 405(g) (the Social Security Act); 28 U.S.C. § 1361 (original jurisdiction to provide

mandamus relief); 28 U.S.C. § 1367 (supplemental jurisdiction); and 28 U.S.C. § 2201

(declaratory relief).

In defendants’ answer to the Amended Complaint, they asserted that for any

matter for which plaintiffs did not receive a final agency decision, and to the extent the

allegations concerned anything other than review of a final decision, those claims should

be dismissed. Accordingly, defendants moved to dismiss the portion of Count II dealing

with the 8,900 claims still in the administrative process, and also moved to dismiss

Counts IV through IX (the state law claims).

During the course of the next year, defendants filed two motions seeking an

extension of time to file the administrative record, which, by defendants’ own admission,

may be the “single largest administrative record [their] office has compiled for any

4

Plaintiffs’ initial Complaint did assert that the district court had jurisdiction under 28 U.S.C.

§ 1331 (federal question). R. 1, Compl. at 5, Page ID # 5. On appeal, plaintiffs state that the sole bases

for the district court’s subject matter jurisdiction were the Social Security Act’s judicial-review provisions

detailed below. Pl’s Br. at 1.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 6

action for judicial review,” consisting of over 300 volumes and 145,000 printed pages.

R. 31-1, Decl. of Christopher Randolph, Page ID #228. Ultimately, having realized the

administrative burden in compiling the record was too great, on October 13, 2011, the

Secretary filed a motion for partial remand (only as to Count I and the portion of Count

II dealing with plaintiffs Group 2, 3, and 4 claims) in order to pay the remaining amount

in controversy, i.e., the disputed differences in payment on the Groups 2, 3, and 4 claims

of $107,171.07. The district court granted the partial remand on October 18, 2011.

On October 25, 2011, plaintiffs filed a motion for reconsideration of the remand

order arguing that reimbursement on their Groups 2, 3, and 4 claims would not make

them whole and that payment would wrongly relieve the Secretary of having to file the

administrative record. The district court declined to reconsider its remand ruling and

concluded that the administrative record was unnecessary for purposes of deciding

defendants’ motion to dismiss, which the court believed involved purely legal issues.

On remand, the Secretary made the payment.

Shortly after the hearing on plaintiffs’ motion to reconsider the remand ruling,

they filed their response to defendants’ motion to dismiss. Plaintiffs’ response conceded

that their Group 1 claims had not yet been subject to a final decision by the Secretary.

Nevertheless, they argued that the district court had jurisdiction to consider all of the

claims raised in their amended complaint because those claims were “inextricably

intertwined with [their] claims for payment for which they have exhausted their

administrative remedies . . . .” R. 56, Resp. to Mot. to Dismiss at 7-8, Page ID #324-

25. With respect to their Group 1 claims, plaintiffs argued that further pursuit of their

administrative remedies would be futile and that the district court should excuse the

exhaustion requirement for those claims. Finally, plaintiffs argued that the Secretary

was not the only real party in interest, and that it is permissible upon judicial review of

the final decision to directly sue Medicare contractors for their individual torts.

After receiving the Secretary’s notice of payment, the district court sua sponte

converted defendants’ motion to dismiss into a motion for summary judgment, and gave

plaintiffs an opportunity to provide “any evidence, which would establish a genuine

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 7

issue of material fact on the question of whether, in light of the Secretary’s Notice of

Payment on Remand, plaintiffs’ action is now moot.” R. 63, Order Converting Mot. to

Dismiss, Page ID #376. The court’s order also included a proposed opinion granting

summary judgment to defendants on the basis that plaintiffs’ claims for additional

payments had become moot, and that the court lacked subject matter jurisdiction over

all of plaintiffs’ other claims for relief, including their constitutional claims. R. 63-1 at

6-15, Page ID #382-91; S. Rehab. Grp., P.L.L.C. v. Sebelius, 874 F. Supp. 2d 733, 737-

41 (E.D. Tenn. 2012) The district court further concluded that plaintiffs were not

entitled to interest on the $107,171 the Secretary paid on remand. Id. at 18, Page ID

#394; S. Rehab. Grp., P.L.L.C., 874 F. Supp. 2d at 741-42.

Plaintiffs responded by requesting oral argument and repeating most of their prior

arguments. The district court’s subsequent order adopted its prior proposed order and

granted summary judgment to defendants while emphasizing that plaintiffs “submitted

no additional evidence,” and that plaintiffs merely reiterated arguments previously made.

S. Rehab. Grp., P.L.L.C., 874 F. Supp. at 735.

Plaintiffs timely appealed.5

II.

This court reviews a decision to grant summary judgment de novo. Gribcheck

v. Runyon, 245 F.3d 547, 550 (6th Cir. 2001). Summary judgment is appropriate “if the

pleadings, depositions, answers to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(a).

The moving party has the burden to show that no genuine issue of material fact exists.

Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has met its

burden, the burden then shifts to the nonmoving party, who “must do more than simply

show that there is some metaphysical doubt as to the material facts.” Matsushita Elec.

5

On appeal, the American Medical Association, and medical associations from Tennessee,

Kentucky, Michigan, and Ohio, all of whom have members who provide service to Medicare patients, filed

an amicus brief in support of plaintiffs.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 8

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Viewing the evidence in

the light most favorable to the non-moving party, “there must be evidence on which the

jury could reasonably find for the [nonmoving party].” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 252, 255 (1986). A dismissal for lack of jurisdiction is reviewed de novo.

Rimmer v. Holder, 700 F.3d 246, 261 (6th Cir. 2012).

III.

A. Guiding principles

In general, the United States is protected by sovereign immunity and on this basis

cannot be sued without its consent. United States v. Sherwood, 312 U.S. 584, 586

(1941). Only Congress can waive immunity, but “waivers of federal sovereign immunity

must be unequivocally expressed in the statutory text.” United States v. Idaho ex rel.

Dir., Idaho Dept. of Water Res., 508 U.S. 1, 6 (1993) (quotation marks and citations

omitted). “‘Any such waiver must be strictly construed in favor of the United States,’”

Id. at 7 (quoting Ardestani v. INS, 502 U.S. 129, 137 (1991)), “‘and not enlarged beyond

what the language of the statute requires.’” Id. (quoting Ruckelshaus v. Sierra Club, 463

U.S. 680, 685-86 (1983)).

The rule requiring express consent also applies to specific items of monetary

recovery, see Lane v. Pena, 518 U.S. 187, 192 (1996) (“To sustain a claim that the

Government is liable for awards of monetary damages, the waiver of sovereign

immunity must extend unambiguously to such monetary claims.”), and to claims of

interest to be imposed against the government, see Library of Congress v. Shaw, 478

U.S. 310, 311 (1986) (“[I]nterest cannot be recovered in a suit against the Government

in the absence of an express waiver of sovereign immunity from an award of interest.”);

see also Tex. Clinical Labs, Inc. v. Sebelius, 612 F.3d 771, 778 n.2 (5th Cir. 2010)

(noting Congress only provided a limited waiver of immunity on Medicare claims

seeking interest).

Further, where Congress has consented to suit against the government, it may

define the terms and conditions under which it is willing to allow the United States to

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 9

be sued. See Block v. North Dakota ex rel. Bd. of Univ. & Sch. Lands, 461 U.S. 273, 274

(1983) (“When Congress attaches conditions, such as statute of limitations, to legislation

waiving the United States’ sovereign immunity, those conditions must be strictly

observed, and exceptions thereto are not to be lightly implied.”). Congress’s

requirement that claims be presented or exhausted in administrative proceedings is one

such condition. See, e.g., Blakely v. United States, 276 F.3d 853, 864 (6th Cir. 2002)

(conditioning consent under FTCA on exhaustion of administrative remedies); Bruecher

Found. Serv., Inc. v. U.S., 383 F. App’x 381, 386-87 (5th Cir. 2010) (conditioning

consent on presentation of claims to the IRS).

One final note relevant to plaintiffs’ claims here. We have previously

emphasized how participation in the Medicare program is voluntary, and that those

providers who choose to participate have “no guarantee of solvency.” Livingston Care

Ctr., Inc. v. United States, 934 F.2d 719, 720-21 (6th Cir. 1991). Participation “involves

a degree of risk which increases directly with the percentage of patient services paid for

with government funds . . . .” Id. Plaintiffs here admit that 70% of the patients they care

for are insured through Medicare. Am. Compl. at 18, ¶¶ 47, 50, Page ID #47-48. In

other words, plaintiffs voluntarily participated in the program, knowing they had no

guarantee of solvency and that they were going to be subject to the conditions and

limitations established by Congress in its limited waiver of sovereign immunity under

the Medicare Act’s judicial review provisions.

It is against this backdrop that we consider the issues in this case.

B. Subject-matter jurisdiction over plaintiffs’ constitutional and state-law claims

Plaintiffs first argue that they should be permitted to bring their constitutional

and state-law claims into federal court alongside their claims for reimbursement. They

assert that by exhausting their reimbursement claims, they satisfied the statutory

prerequisites to filing a federal lawsuit, and should therefore be able to bring along any

other claims they have against the Secretary and her contractors. Whether plaintiffs

were permitted to bootstrap a number of state and federal causes of action to their

request for judicial review of their reimbursement claims depends upon whether they

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 10

satisfied the conditions and limitations Congress attached to judicial review under the

Medicare Act. See 42 U.S.C. §§ 405 (g) and (h).6 We conclude that plaintiffs have not

satisfied Congress’s requirements.

42 U.S.C. § 1395ff(b)(1)(A) provides the jurisdictional basis for judicial review

of a final decision of the Secretary on a Medicare Part B claim. It states that “any

individual dissatisfied . . . [with a determination] shall be entitled to . . . judicial review

of the Secretary’s final decision after [a] hearing as is provided in section 405(g) of this

title.” Section 405(g) states in relevant part that “Any individual, after any final decision

of the [Secretary] made after a hearing to which he was a party . . . may obtain a review

of such decision by a civil action . . . .” Section 405(g) also prescribes the reviewing

court’s power:

The court shall have power to enter, upon the pleadings and transcript of

the record, a judgment affirming, modifying, or reversing the decision of

the [Secretary], with or without remanding the cause for a rehearing.

42 U.S.C. § 405(g).

Section 405(g) has been interpreted to contain two prerequisites to judicial

review. First, a “nonwaivable and nonexcusable requirement that an individual present

a claim to the agency before raising it in court.” Shalala v. Ill. Council on Long Term

Care, Inc., 529 U.S. 1, 15 (2000). Second, a waivable requirement of exhaustion of

administrative review. Id. at 26; Mich. Ass’n of Homes & Servs. for the Aging v.

Shalala, 127 F.3d 496, 499 (6th Cir. 1997).

The Medicare Act also expressly adopts the Social Security Act’s jurisdictional

bar to judicial review found at 42 U.S.C. § 405(h). See 42 U.S.C. § 1395ii (“The

provisions of . . . subsection . . . (h) . . . of section 405 of this title shall also apply with

6

State-law causes of action in the Medicare context are subject to the same remedial scheme as

plaintiffs’ other claims. See, e.g., Bodimetric Health Services, Inc. v. Aetna Life & Cas., 903 F.2d 480,

487 (7th Cir. 1990) (“If litigants who have been denied benefits could routinely obtain judicial review of

these decisions by recharacterizing their claims under state and federal causes of action, the Medicare

Act’s goal of limited judicial review for a substantial number of claims would be severely undermined.”).

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 11

respect to this subchapter . . . .”). Section 405(h) further limits judicial review by

stating:

No findings of fact or decision of the [Secretary] shall be reviewed by

any person, tribunal, or governmental agency except as herein provided.

No action against the United States, the [Secretary], or any officer or

employee thereof shall be brought under section 1331 or 1346 of Title 28

to recover on any claim arising under this subchapter.

42 U.S.C. § 405(h).

Section 405(h) “‘channels most, if not all, Medicare claims through [the] special

review system’” of an administrative hearing and “‘purports to make exclusive the

judicial review method set forth in 405(g).’” Cathedral Rock of N. College Hill, Inc. v.

Shalala, 223 F.3d 354, 359 (6th Cir. 2000) (quoting Ill. Council, 529 U.S. at 10).

In sum, Congress provided a limited waiver of sovereign immunity in the

Medicare Act by permitting claimants to file civil actions seeking judicial review of the

Secretary’s final decision. However, Congress conditioned that waiver on several

elements: (1) claimants are required to have presented their claims to the Secretary;

(2) claimants must exhaust their administrative remedies resulting in a final decision;

and (3) claimants are barred from raising federal question claims that are “inextricably

intertwined” with their claim for benefits. In this case, we conclude that plaintiffs have

not shown they satisfied the first of these requirements.

In Weinberger v. Salfi, 422 U.S. 749 (1975), the Supreme Court held that

§ 405(h) barred jurisdiction over a direct challenge to the constitutionality of a provision

of the Social Security Act. The Court stated that § 405(h)’s jurisdictional bar applies

“irrespective of whether resort to judicial process is necessitated by discretionary

decisions of the Secretary or by his nondiscretionary application of allegedly

unconstitutional statutory restrictions.” Id. at 762. The Court noted that while § 405(h)

did not “preclude constitutional challenges,” it did “require that they be brought” under

the same “jurisdictional grants” and “in conformity with the same

standards . . . applicable to nonconstitutional claims arising under the Act.” Id. Such

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 12

a requirement is “manifestly reasonable” because it “assures the Secretary the

opportunity prior to constitutional litigation to ascertain, for example, that the particular

claims involved are neither invalid for other reasons nor allowable under other

provisions of the Social Security Act.” Id.; see also Heckler v. Ringer, 466 U.S. 602,

614-15 (1984) (reiterating that “all aspects” of any present or future claim must be

“channeled” through the administrative process).

The Supreme Court recently reemphasized that “the 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.” Ill. Council, 529 U.S. at 12 (quotation marks and

citations omitted). In Illinois Council, a nursing association attacked certain Medicare

regulations as, inter alia, unconstitutionally vague and, as here, attacked Medicare’s

administrative procedures as violative of due process. Id. at 7. In response to the

association’s argument that § 405(h) did not bar jurisdiction over these constitutional

claims, the Court stated: Ҥ 405(g) contains the nonwaivable and nonexcusable

requirement that an individual present a claim to the agency before raising it in court.

The Council has not done so here, and thus cannot establish jurisdiction under § 405(g).”

Id. at 15 (citations omitted); see also id. at 24 (“At a minimum, however, the matter must

be presented to the agency prior to review in a federal court. This the Council has not

done.”). The Court reiterated that § 405(h) “demands the channeling of virtually all legal

attacks through the agency” in order to “assure[] the agency greater opportunity to apply,

interpret, or revise policies, regulations, or statutes without possibly premature

interference by different individual courts . . . .” Id. at 13 (quotation marks omitted)

(emphasis added); see also Nichole Med. Equip. & Supply, Inc. v. TriCenturion, Inc.,

694 F.3d 340, 349 (3d Cir. 2012) (“Nichole Medical is not exempt from the [two-part]

exhaustion requirement simply because the claims arising under the Act are not within

the jurisdiction of the Secretary.”); BP Care, Inc. v. Thompson, 398 F.3d 503, 511 (6th

Cir. 2005) (noting that “[a]lthough ALJs in Medicare administrative proceedings

generally do not decide constitutional issues, and although BP Care’s challenge to the

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 13

constitutionality of successor liability is not fact-specific,” their claim for relief still

“arises under” the Medicare Act requiring presentment to the Secretary).

Here, plaintiffs argue that the requirements in §§ 405(g) and (h), if not satisfied,

do not erect an absolute bar to all causes of action inextricably intertwined with the

claim for review of the Secretary’s decision; rather, according to plaintiffs, §§ 405(g)

and (h) are “merely a jurisdictional threshold that must be met before the district court

may hear those related claims . . . . Section 405(g) is only a mandate that healthcare

providers first exhaust their administrative remedies through a final decision . . . . [o]nce

this requirement is met, the district court had jurisdiction over all of [plaintiffs’] causes

of action and requests for relief . . . .”

But this argument focuses on the Medicare Act’s exhaustion requirement while

ignoring the nonwaivable and nonexcusable presentment requirement, which mandates

that “virtually all legal attacks” be presented to the agency—including constitutional

challenges. Ill. Council, 529 U.S. at 7, 12; Salfi, 422 U.S. at 762. Plaintiffs’ Amended

Complaint, while exhaustively detailing the administrative process, does not allege they

ever presented their federal or state law claims to the agency. Plaintiffs’ response to

defendants’ motion to dismiss argued that they had exhausted the administrative appeal

process, R.56, Resp. to Mot. to Dismiss at 9, 11, Page ID #326, 328, and it also properly

recited that “[t]he jurisdictional grant contained in 405(g) contains two elements,”

including “the nonwaivable requirement is that the claimant present his or her claim to

the Secretary.” R. 56, Resp. to Mot. to Dismiss at 13, Page ID #330. But plaintiffs

never established that they actually satisfied this requirement with respect to their federal

and state-law claims.

Moreover, the district court’s proposed order granting summary judgment to

defendants gave plaintiffs notice of this presentment defect. The district court stated it

would be denying plaintiffs’ constitutional claims for lack of subject-matter jurisdiction

because their claims were not “channeled through the administrative process.” R. 63-1,

Order at 10, Page ID # 386 (citing Ringer, 466 U.S. at 614-15). The court invited

plaintiffs to submit any “additional evidence” in response to the proposed order.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 14

Plaintiffs responded by claiming that they could not submit any additional evidence

because defendants had not produced the administrative record, and they reemphasized

that they had “exhausted the administrative review channels,” and “properly progressed

through the administrative review process.” R. 64, Resp. to Order at 4, Page ID #399.

“The plaintiff bears the burden of establishing subject matter jurisdiction over

a claim.” Shea v. State Farm Ins. Co., 2 F. App’x 478, 479 (6th Cir. 2001) (per curiam)

(citing Whittle v. United States, 7 F.3d 1259, 1262 (6th Cir. 1993)). By failing to

establish that they satisfied the presentment requirement, plaintiffs have not fulfilled the

conditions placed on the limited waiver of immunity in the Medicare Act. Thus, the

district court correctly determined that it lacked subject-matter jurisdiction over these

claims.7

7

Neither did the district court have jurisdiction over plaintiffs’ federal and state-law claims

against the Secretary’s contractors. Section 405(h) precludes actions brought “against the United States,

the Secretary, or any officer or employee thereof.” 42 U.S.C. § 405(h) (emphasis added). Congress

specifically provided that administration of the Act “shall be conducted through contracts with medicare

administrative contractors . . . .” 42 U.S.C. § 1395u(a); see also 42 C.F.R. § 421.5(b) (“Intermediaries and

carriers act on behalf of [the agency] in carrying out certain administrative responsibilities that the law

imposes. ”) (emphasis added). Further, Medicare contractors, like CIGNA and Q2 Administrators in this

case, have been found by several federal courts to be agents of the Secretary and thus clothed with

immunity. See, e.g., Nichole Med. Equip. & Supply, Inc., 694 F.3d at 350 (3d Cir. 2012) (“Medicare

contractors are entitled to immunity for discretionary conduct that falls within the outer perimeter of their

official duties.”); Midland Psychiatric Assoc., Inc. v. United States, 145 F.3d 1000, 1002-03 (8th Cir.

1998) (holding Medicare contractors are government agents because they are “[u]nder contract with the

Secretary of [HHS], [and] do the work of the Government on the Secretary’s behalf.”); Bushman v. Seiler,

755 F.2d 653, 655 (8th Cir. 1985) (“It is well settled that Medicare intermediaries and carriers can be

governmental agents for immunity purposes.”) (citation omitted); Bodimetric Health Serv., Inc. v. Aetna

Life & Cas., 903 F.2d 480, 483 (7th Cir. 1990) (“If dissatisfied claimants could avoid the preclusive effect

of section 405(h) by simply bringing suit against the fiscal intermediary instead of the Secretary, the

Medicare Act’s goals of efficiency and finality would be substantially undermined.”); see also Berger v.

Pierce, 933 F.2d 393, 396 (6th Cir. 1991) (relying on the Eighth Circuit’s Bushman analysis that Medicare

agents receive immunity to hold that contracted fiscal agents of the Federal Insurance Administration are

clothed with immunity). Arguing against the weight of authority, plaintiffs point to a smattering of cases

where courts have been reluctant to extend immunity to contractors, but those cases are inapposite here

because they either involve tortious conduct that was outside the scope of the authority conferred by

Congress and the Secretary, see Rochester Methodist Hosp. v. Travelers Ins. Co., F.2d 1006, 1009-10 (8th

Cir. 1984) (“[T]he tort of fraud has been both alleged and proved, and the government clearly took the

position . . .that [the contractors] clearly exceeded their authority.”); or they involved a claim that was not

inextricably intertwined with a benefits claim, see Ardary v. Aetna Health Plans of S. Cal., 98 F.3d 496

(9th Cir. 1996) (seeking punitive damages for a wrongful death), limited by Kaiser v. Blue Cross of Cal.,

347 F.3d 1107, 1113 (9th Cir. 2003) (holding that Ardary “does not extend beyond patients and torts

committed in the sale or provision of medical services”). Here, plaintiffs have not shown the contractors

acted outside the scope of their authority, and they readily admit that their claims are inextricably

intertwined with their benefits claims. Accordingly, immunity for the contractors is appropriate.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 15

C. Subject-matter jurisdiction over the 8,900 claims lingering in the administrative

process

Plaintiffs next argue that, since September 6, 2002, several thousand of their

claims (referred to as the Group 1 claims) have been stuck at the first level of

administrative appeal (the “redetermination” phase), and that no redetermination has

ever issued. They allege that they requested a redetermination on these claims through

three separate letters and supporting documentation. They also assert that CIGNA

“agreed to pull documentation submitted with the earlier submission and process the

appeals” accordingly. Am. Compl. at 21, Page ID #50. Their Amended Complaint only

states that they filed their initial request in 2002 and have been waiting for a decision

since that time. Plaintiffs admit that these claims are unexhausted, R. 56, Resp. to Mot.

to Dismiss at 15-16, Page ID #332-33, yet they assert that requiring exhaustion of these

claims would be futile, and on this basis, the district court had jurisdiction to decide

whether plaintiffs should be reimbursed for these claims.

There is no question that the jurisdictional limits in §§ 405(g) and (h) preclude

plaintiffs’ admittedly unexhausted claims. See Michigan Ass’n of Homes & Servs. for

the Aging, 127 F.3d at 499 (discussing two-prong presentment and exhaustion

requirement under § 405(g)). And although the exhaustion requirement is waivable, see

Ill. Council, 529 U.S. at 26, the requirement has not been waived in this case.

Accordingly, plaintiffs’ argument that exhaustion should be excused here appears to be

the only possible basis for getting these claims in front of the district court.

There are three possible exceptions to the exhaustion requirement, only one of

which, the Michigan Academy exception, may apply in this case. In Bowen v. Mich.

Acad. of Family Physicians, the Supreme Court permitted a group of physicians to bring

a federal suit challenging the validity of a Medicare regulation establishing the method

for calculating payments. 476 U.S. 667, 680 (1986), superseded on other grounds by

Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99–509, 100 Stat. 1874,

2037–38 (1986). At the time, neither administrative nor judicial review were available

for challenges to such method determinations (the 1986 revisions to the statute now

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 16

require administrative review of challenges to method determinations). The Court

rejected the Secretary’s argument that § 405(h) barred judicial review of such actions,

and thus permitted the physicians’ suit even though they had not exhausted their

administrative remedies. Id. at 667. We have since recognized that in Illinois Council,

the Supreme Court “sharply limited” the Michigan Academy exception, to now apply

only “where application of § 405(h) . . . would mean no review at all.” BP Care, Inc.,

398 F.3d at 509-10 (quoting Ill. Council, 529 U.S. at 19).

Plaintiffs argue that their Group 1 claims have been “stuck in limbo beyond

[their] control since 2002.” Appellant Br. at 23. But the fact that the claims have taken

a very long time to be resolved or that the delay involves some other form of hardship

does not necessarily mean there is “no review at all.” Ill. Council, 529 U.S. at 19. As

the Illinois Council Court noted, Congress’s decision to require a universal obligation

to first present a claim to the Secretary, “though postponing review in some cases,” may

result in better overall review. Id. at 20. Accordingly, the relevant question is not

whether a particular case involves “added inconvenience or cost.” Id. at 22. The

relevant question is whether the hardship “turns what appears to be simply a channeling

requirement into complete preclusion of judicial review.” Id. at 22-23 (emphasis added)

(citing McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 496-97 (1991)).

Although they received an initial determination on their Group 1 claims,

plaintiffs argue that review of those claims has been completely precluded because the

Secretary’s regulations do not permit them to bypass the first level of appeal in order to

go directly to the next level of appeal. Accordingly, after appealing CIGNA’s initial

determination, plaintiffs maintain they have just had to wait for a decision with no other

recourse. They contend that this is a violation of their due-process rights.

In discussing recent administrative amendments to the appeals process, the

Secretary has acknowledged that “pre-[amendment] claims appeals did not have

timeframes within which decisions must be issued.” 77 Fed. Reg. 29002, 29017 (May

16, 2012). The Secretary has also indicated her desire (as part of the restructured

appeals process) to provide relief for parties in plaintiffs’ position. See id. (“We

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 17

proposed, and are finalizing in this rule, that parties who demonstrate that they requested

an appeal of a [pre-amendment] claim but did not receive a decision would be entitled

to refile their appeal request, and would have their appeal processed under the [current

appeal] regulations . . . .”). According to the Secretary, “[a]pplying the decision making

timeframes for current claims appeals to pre-[amendment] claims appeals will likely

result in quicker turnaround times for pre-[amendment] claims appeals, and a more

streamlined process . . . .” Id.

The current regulations establish that if plaintiffs did not receive a timely

decision on their initial request for a redetermination, their relief would be to refile their

appeal request with the appropriate fiscal intermediary for a redetermination. See 76

Fed. Reg. 65909, 65914 (Oct. 24, 2011); 77 Fed. Reg. 29002, 29016 (May 16, 2012)

(effective July 16, 2012) (“Any pre-[amendment] claims appeals identified on or after

the effective date of this final rule . . . that are still pending at the first level of appeal .

. . would be processed beginning at the redetermination level under the [new]

regulations.”).

This procedure is in contrast with regulations permitting “escalation” of an

appeal to the next level absent a timely decision by a QIC, ALJ, or the Appeals Council.

See 42 C.F.R. § 405.970, § 405.1104, & § 405.1132. Plaintiffs rely on this distinction

in the regulations as a basis for arguing that the Secretary has failed to provide them with

an avenue of relief. But the Secretary’s regulations merely track Congress’s language

in the Medicare Act. In the Act, Congress expressly permitted claimants to escalate their

appeal beyond the QIC determination, 42 U.S.C. § 1395ff(c)(3)(C)(ii), the ALJ hearing,

§ 1395ff(d)(3)(A), and the Appeals Council determination, § 1395ff(b)(2)(C)(i)(II),

absent a timely decision at those stages. Notably, Congress did not enact a provision

permitting escalation beyond the appeal to the fiscal intermediary. On the contrary,

Congress mandated that “[n]o initial determination may be . . . appealed . . . unless the

fiscal intermediary has made a redetermination of that initial determination.” 42 U.S.C.

§ 1395ff(a)(3)(B)(I).

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 18

Accordingly, in promulgating her appeal regulations, the Secretary did not

provide a way for claimants to escalate their redetermination—the only level of appeal

that Congress expressly required claimants to satisfy. The Secretary acknowledged this

congressional requirement when she considered public comments to the new regulations.

70 Fed. Reg. 11420, 11439 (March 8, 2005) (“We do not believe that it is appropriate

to permit escalation of redeterminations when contractors do not meet their deadlines.

We believe this is consistent with the statute in that the Congress seems to have weighed

the merits of escalation and chose to implement that option only at the QIC level and

above.”). Plaintiffs have never challenged the validity of the statute, or otherwise argued

that it is Congress (not the Secretary) that has precluded plaintiffs from seeking judicial

review.8

By permitting claimants to refile their appeal request, the Secretary’s regulation

endeavors to remain within the boundaries Congress established. The regulation

provides a way for plaintiffs to continue to advance their claims within the

administrative process and ultimately to judicial review. Though plaintiffs are not

required to refile their appeal request, that is currently their only option. And until they

receive a redetermination, they have not exhausted their claims as required by §§ 405(g)

and (h). Nor have plaintiffs shown that the path to exhaustion means “no review at all”

for their claims.9 We therefore affirm the district court’s conclusion that it lacked

jurisdiction to consider these claims.

8

Likewise, plaintiffs do not specifically challenge the Secretary’s regulation itself as invalid or

contrary to congressional intent. But it is worth noting that under Chevron v. Natural Res. Def. Council,

the regulation requiring a claimant to request subsequent redeterminations is likely a reasonable

interpretation of Congress’s requirement that a redetermination must issue before an initial determination

can be appealed. 467 U.S. 837 (1984). Under Chevron, where the statute is silent or ambiguous on the

specific issue (here, whether there should be a way of bypassing the first level of appeal), “the question

before the court is whether the agency’s answer is based on a permissible construction of the statute.” Id.

at 843. Given Congress’s requirement that redeterminations be made prior to an appeal, and its inclusion

of bypass methods for all of the subsequent levels of appeal but not for the first level, the Secretary’s

regulations merely allowing for subsequent redetermination requests seems to be an eminently reasonable

construction of the statute.

9

We acknowledge that 11 years seems to be an extraordinarily long time to wait for a

redetermination, or for some explanation from the Secretary about why the redetermination has taken so

long. But we express no opinion on how much longer plaintiffs would have to wait before their futility

argument might be sustainable.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 19

D. Interest

Plaintiffs next argue that they should be entitled to recover interest on all of their

approximately 15,000 claims.10 In general, no interest is payable by the federal

government except when Congress has expressly authorized it. United States v.

Louisiana, 446 U.S. 253, 264-65 (1980). If Congress has expressly authorized interest,

such a limited waiver of sovereign immunity must be “strictly construed . . . in favor of

the sovereign.” Gomez-Perez v. Potter, 553 U.S. 474, 491 (2008) (citing Lane v. Pena,

518 U.S. 187, 192 (1996)).

Plaintiffs rely exclusively on the “clean claims” provision in the Medicare Act

as Congress’s express authorization of interest in this case. See 42 U.S.C.

§ 1395u(c)(2)(B) and (C). That provision states:

(B)(i) The term ‘clean claim’ means a claim that has no defect or

impropriety (including any lack of any required substantiating

documentation) or particular circumstance requiring special treatment

that prevents timely payment from being made on this claim under this

part.

(ii) The term “applicable number of calendar days” means–

(V) 30 calendar days.

(C) If payment is not issued, mailed, or otherwise transmitted within

[30 days] after a clean claim is received, interest shall be paid . . . for the

period beginning on the day after the required payment date and ending

on the date on which payment is made.

42 U.S.C. § 1395u(c)(2)(B) and (C).

Plaintiffs’ basic argument is that among the 6,200 claims that made it through the

administrative process and that the Secretary eventually paid, and among the 8,900

10

Plaintiffs’ Amended Complaint ambiguously requested “Interest on the unreimbursed claims

. . . .” Am. Compl. at 50, Page ID #79, which would seem to include all 15,000 claims. Their response

to defendants’ motion to dismiss did not make any argument regarding interest. Their motion for

reconsideration of the remand order reiterated their request for “Interest on the unreimbursed claims.”

R.49 at 1, Page ID #295. Yet, they also stated in that motion that they were seeking interest on only the

Group 2, 3, and 4 claims. R. 49 at 4, Page ID #296. Plaintiffs’ response to the district court’s proposed

summary-judgment order again reiterated their request for interest, but did not specify the claims on which

they sought it. R. 64 at 8, Page ID #403. In their opening brief to this court, plaintiffs requested interest

on all of their claims. Appellant Br. at 28.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 20

claims that have been ensnared in the administrative process, they had clean claims that

were not paid within the 30-day window and thus they are owed interest on those claims.

The district court concluded that plaintiffs were not entitled to interest, at least as to the

6,200 claims, and that judgment for the Secretary was appropriate as a matter of law

because the Secretary’s Medicare Claims Manual states that the clean-claims provision

does not apply to claims initially denied and later approved for payment at some level.

R. 63-1, Order at 16, Page ID #392. Plaintiffs counter that the Claims Manual’s

interpretation of the clean-claims provision is completely at odds with the plain language

of the statute and thus it was error for the district court to rely on it in granting summary

judgment. We agree.11

The Manual states that interest payments are not available for clean claims

“initially processed to denial and on which payment is made subsequent to the initial

decision as a result of an appeal request.” Medicare Claims Processing Manual, CMS

Publication No. 100-04, Ch. 1; section 80.2.2.1.C. The Manual also states that this

applies to appeals where “more than [30 days] elapsed before an initial determination,

but the claim was later paid on appeal.” Id. In other words, even if a provider submits

a clean claim that is wrongfully denied outside of the 30-day window, the provider

cannot get interest on that claim if the claim was later paid on appeal.

This Manual provision is the Secretary’s interpretation of Congress’s statutory

language. Our review of an agency regulation interpreting a federal statute might

typically be under the Chevron framework. But, “Chevron deference is appropriate only

if the Congress has delegated authority to an agency to make rules having the ‘force of

law’ and the agency rule at issue was ‘promulgated in the exercise of that authority.’”

United States v. Mead Corp., 533 U.S. 218, 226-27 (2001). “[I]nterpretations contained

in policy statements, agency manuals, and enforcement guidelines . . . are beyond the

11

Defendants argue that plaintiffs did not raise this argument below or in briefing to this Court,

and because it is only now being raised through amici, we should not consider it. Defendants are not

entirely correct. Plaintiffs’ briefing here did initially assert the claim that, as related to the clean-claims

provision, the Secretary’s regulatory “scheme is itself unlawful” because it incentivizes denying claims

in the first instance. Appellant Br. at 28. Plaintiffs acknowledged that amici would more fully develop

this argument, and accordingly plaintiffs expressly adopted those arguments. Reply Br. at 21. We

therefore consider the argument plaintiffs initially raised and that amici more fully developed.

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 21

Chevron pale.” Id. at 234; see also Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 99

(1995) (“Interpretive rules do not require notice and comment, . . . they also do not have

the force and effect of law and are not accorded that weight in the adjudicatory

process.”). The Manual is “a prototypical example of an interpretive rule, issued by an

agency to advise the public of the agency’s construction of the statutes and rules which

it administers.” Guernsey Mem’l Hosp., 514 U.S. at 99 (discussing a provision in the

Medicare Provider Reimbursement Manual) (quotation marks and citation omitted).

While not subject to Chevron, the Secretary’s interpretation of the statute here

is still subject to some deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944).

See Chao v. Occupational Safety and Health Review Comm’n, 540 F.3d 519, 526-27 (6th

Cir. 2008) (“Because the Secretary's interpretation . . . is not the product of

notice-and-comment rulemaking, we conclude that the less-deferential Skidmore level

of review is warranted.”).

Under Skidmore, our deference to the Secretary’s interpretation “‘depend[s] upon

the thoroughness evident in its consideration, the validity of its reasoning, its consistency

with earlier and later pronouncements, and all those factors which give it power to

persuade, if lacking power to control.’” Chao, 540 F.3d at 526 (quoting Skidmore,

323 U.S. at 140); see also Gonzales v. Oregon, 546 U.S. 243, 269 (2006) (“[U]nder

Skidmore, we follow an agency's rule only to the extent it is persuasive . . . .”). In

deciding whether the Secretary’s interpretation is persuasive, “we look to the statute’s

text and design,” Gonzales, 546 U.S. at 269, including whether the regulation is

“consistent with the congressional purpose.” Morton v. Ruiz, 415 U.S. 199, 237 (1974).

Congress placed only two limitations on the payment of interest under the clean-

claims provision. First, the claim must be clean, meaning it has no “defects or

improprieties.” 42 U.S.C. § 1395u(c)(2)(B)(i). Second, if the claim is clean, interest is

automatically due if the claim is not paid “within [30 days] after the . . . claim is

received.” 42 U.S.C. § 1395u(c)(2)(C). That’s it. There are no further limitations in

Congress’s express language. This makes sense given that the purpose of the statute is

to incentivize prompt payments. Section 1395u(c) is titled “Prompt payment of claims.”

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 22

And the Secretary admits that the clean-claims provision is solely “concerned with

promptness in the processing of Medicare claims for payment . . . .” Appellee Br. at 46.

Accordingly, Congress clearly encouraged this efficiency through its limited waiver of

immunity requiring interest payments on any clean claim not paid within 30 days.

The Secretary’s Claims Manual, however, places additional limitations on when

the Secretary has to pay interest on clean claims. She states that even if the clean claim

was initially (and perhaps wrongfully) denied outside of the 30-day window (which

would trigger the interest payment under Congress’s plain language), no interest is due

if the claim is later paid on appeal. Medicare Claims Processing Manual, CMS

Publication No. 100-04, Ch. 1; section 80.2.2.1.C. The Secretary’s gloss on the statute

appears to reverse the incentive to promptly pay claims. Rather than encouraging

prompt payment, she incentivizes initially denying claims (even potentially clean

claims), and even doing so outside of the 30-day window, because there is absolutely no

risk of paying interest if the claim is later paid on appeal. This seems to be completely

at odds with the plain language and purposes of the statute. See Christensen v. Harris

Cnty., 529 U.S. 576, 588-89 (2000) (holding that agency opinion letter was unpersuasive

in part because it could not “overcome the regulation’s obvious meaning”); Gonzales,

546 U.S. at 922 (holding that Attorney General opinion letter was unpersuasive in part

because it was “discordant” with the language of the statute); Guernsey Mem’l Hosp.,

514 U.S. at 109 (O’Connor, J., dissenting) (“[The Manual provision] cannot be a valid

“interpretation” of the Medicare regulations because it is clearly at odds with the

meaning of [the regulation] itself. Thus, I would conclude that the Secretary's refusal,

premised upon an application of [the Manual provision], to reimburse the Hospital . . .

was invalid.”).

The unreasonableness of the Secretary’s interpretation is further magnified in the

immunity context. The Supreme Court has explained that “just as we should not take

it upon ourselves to extend the waiver beyond that which Congress intended, neither . . .

should we assume the authority to narrow the waiver that Congress intended.” Idaho ex

rel. Dir. Idaho Dept. of Water Res., 508 U.S. at 7 (quotation marks, citations, and

No. 12-5903 S. Rehab. Grp., et al. v. Sec’y HHS, et al. Page 23

alterations omitted). This same principle applies with equal force to the Secretary’s

interpretation here. Congress waived immunity by allowing interest on any clean claims

not paid within 30 days. Period. The waiver was not conditioned on whether the claim

was initially denied and later paid on appeal. And Congress certainly did not make an

exception for initial denials made outside of the 30-day period. The Secretary’s

interpretation of the statute narrows Congress’s waiver and in doing so directly conflicts

with the purpose of the statute. We therefore conclude that her interpretation is

unpersuasive and unreasonable. The district court erred by concluding that the Medicare

Claims Manual’s interpretation of the clean claims provision was controlling and that

on this basis plaintiffs were not entitled to interest as a matter of law.

On summary judgment, it was the Secretary’s burden to show that no genuine

issue of material fact exists as to plaintiffs’ claim for interest. Celotex Corp., 477 U.S.

at 325. But she cannot rely on her unreasonable interpretation of the clean-claims statute

as a basis for summary judgment. In order to be entitled to summary judgment, she

would presumably have to show that plaintiffs’ claims were not clean claims denied

outside of the 30-day window. 42 U.S.C. § 1395u(c)(2)(C). On remand, the district

court should address whether interest is due on some or all of the 6,200 claims for

reimbursement that plaintiffs appropriately brought before the district court. Any

interest due on plaintiffs’ 8,900 other claims can be addressed by the Secretary when

plaintiffs exhaust those claims.

IV.

We AFFIRM the district court’s decision granting summary judgment to

defendants on plaintiffs’ federal and state law claims and on the 8,900 claims still in the

administrative process, but we REVERSE its decision granting summary judgment on

plaintiffs’ claims for interest and REMAND for further proceedings consistent with this

opinion.