RANDALL D. WOLCOTT, MD, PA v. Sebelius

Case: 10-10290 Document: 00511410855 Page: 1 Date Filed: 03/15/2011

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

March 15, 2011

No. 10-10290 Lyle W. Cayce

Clerk

RANDALL D WOLCOTT, MD, P.A.,

Plaintiff–Appellant

v.

KATHLEEN SEBELIUS, in her official capacity as Secretary of Health and

Human Services of the United States; TRAILBLAZER HEALTH

ENTERPRISES LLC,

Defendants–Appellees

Appeal from the United States District Court

for the Northern District of Texas

Before WIENER, GARZA, and PRADO, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

This appeal arises from the district court’s dismissal under Rule 12(b) of

five claims for mandamus relief brought by Plaintiff–Appellant Randall D.

Wolcott, M.D., P.A. (“Wolcott”), a provider of wound-care services. Wolcott is

suing Defendant–Appellee Kathleen Sebelius (“Secretary”), in her official

capacity as Secretary of Health and Human Services, the agency that

administers the Medicare Program, and TrailBlazer Health Enterprises, LLC

(“TrailBlazer”), a for-profit limited liability company that has been contracted

to administer payment of Medicare benefits in Texas.

Case: 10-10290 Document: 00511410855 Page: 2 Date Filed: 03/15/2011

Wolcott organized his five mandamus claims by count. Additionally,

Wolcott brought a claim for violations of procedural and substantive due process

under the Fifth Amendment and a claim for violations of the Administrative

Procedures Act. The defendants moved for dismissal of the entire action arguing

that there was no subject matter jurisdiction because Wolcott failed to meet the

requirements for judicial review under 42 U.S.C. § 405(g) and (h), and that

Wolcott had failed to plead claims upon which mandamus relief may be granted.

The district court granted the defendants’ motion and dismissed the entire

action. Wolcott appeals only the dismissal of the five mandamus actions. We

AFFIRM the dismissal of Counts II, III, IV, and V, and REVERSE and

REMAND the dismissal of Count I.

I. BACKGROUND

A. The Parties

Wolcott is a professional association organized under the laws of Texas

with its principal offices located in Lubbock, Texas. Wolcott is a provider of

wound-care services, including debridement, which is the removal of dead,

damaged, or infected tissue to expose healthy tissue. Since 1994, Wolcott is a

participating supplier of professional medical services under Part B of the

federal Medicare program. Kathleen Sebelius is named in her official capacity

as Secretary of the United States Department of Health and Human Services,

the agency that administers the Medicare Program. TrailBlazer is a for-profit

limited liability company organized in Texas and an affiliate of BlueCross

BlueShield of South Carolina. TrailBlazer is a Medicare Contractor or “carrier”

that has contracted to administer the payment of Medicare benefits in Texas.

B. The Administrative Appeals Process for Medicare Claims

This case involves Wolcott’s reimbursement claims under Medicare Part B.

42 U.S.C. §§ 1395j–1395w. Part B is a federally subsidized, voluntary health

insurance program that provides supplemental insurance coverage for certain

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items, including outpatient physician services rendered in clinic settings. See

id.

The Secretary delegates the administration of the Medicare Act to the

Centers for Medicare and Medicaid Services (“CMS”). CMS contracts with

private insurance companies to perform carrier functions. See 42 C.F.R. § 421.5.

These carriers process claims, determine whether services are covered by

Medicare, and determine the amount of payment for services furnished, among

other duties. 42 C.F.R. § 421.200. TrailBlazer is acting as the Medicare carrier

for Wolcott.

Medicare has a highly structured appeals process for claims:

The Medicare contractor makes an initial determination when a

claim for Medicare benefits under Part A or Part B is submitted. A

beneficiary who is dissatisfied with the initial determination may

request that the contractor perform a redetermination of the claim

if the requirements for obtaining a redetermination are met.

Following the contractor’s redetermination, the beneficiary may

request, and the Qualified Independent Contractor (QIC) will

perform, a reconsideration of the claim if the requirements for

obtaining a reconsideration are met. Following the reconsideration,

the beneficiary may request, and the ALJ will conduct a hearing if

the amount remaining in controversy and other requirements for an

ALJ hearing are met. If the beneficiary is dissatisfied with the

decision of the ALJ, he or she may request the [Medicare Appeals

Council (“MAC”)] to review the case. If the MAC reviews the case

and issues a decision, and the beneficiary is dissatisfied with the

decision, the beneficiary may file suit in Federal district court if the

amount remaining in controversy and the other requirements for

judicial review are met.

42 C.F.R. § 405.904(a)(2).

C. Factual and Procedural Background

Because this appeal concerns motions to dismiss under Federal Rule of

Civil Procedure 12(b), the facts presented below are as alleged by Wolcott.

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Wolcott received assignments from his Medicare patient–beneficiaries. As

the assignee, Wolcott stepped into the shoes of each patient–beneficiary and thus

assumed each patient’s right to payment and of appeal. Wolcott alleges that

between March 2008 and June 2009, TrailBlazer denied virtually 100% of

Wolcott’s debridement claims, with a total value of over $700,000. Wolcott

appealed these denials through the Medicare administrative appeals process.

For the administrative appeals in which final decisions had been rendered by the

time of the complaint, 100% of the defendants’ denials were reversed. Ninety-

two percent of the reversals came from decisions by administrative law judges

(“ALJ”)—the third level of the Medicare administrative appellate process. The

decisions favorable to Wolcott found that Wolcott “is entitled to Medicare

payment for services rendered” and “DIRECTED [TrailBlazer] to process the

claim[s] in accordance with [the] decision.” (emphasis in original). Despite

Wolcott’s success in obtaining administrative appellate decisions reversing the

denial of claims, the defendants allegedly affirmatively re-denied a subset of

these claims for lack of medical necessity—the same basis on which TrailBlazer

initially denied the claims.

Further, the defendants allegedly routinely failed to pay Wolcott within

the legally prescribed time periods after Wolcott successfully appealed the

denied claims. For example, Wolcott alleges in its complaint that after a

September 5, 2008 ALJ decision approving $21,000 in payments, TrailBlazer

failed to issue $11,500 of those claims until April, 2009—more than six months

after the usual 40-day period by which payment should be paid after an

administrative reversal of a claim denial.

Wolcott also alleges that the defendants acted unlawfully in processing

new claims submitted subsequent to the appeals. Despite ALJ determinations

that the defendants’ stated rationales for denying past claims were legally

invalid, Wolcott alleges that the defendants continue to use those same

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rationales to deny new claims. Specifically, the defendants have denied claims

because allegedly: the number of debridements exceed five debridements per

patient per year; Wolcott’s services are “investigational or do not meet the

medical standard of care for wound care”; Wolcott does not conduct

contemporaneous Skin Oxygenation and Perfusion Assessments; Wolcott uses

of standardized, template, or rote language in its documentation; and Wolcott

fails to actively manage comorbidities.1

Wolcott further contends that TrailBlazer automatically denies

debridement claims in excess of five debridements per patient per year. Wolcott

asserts the automatic denial of debridement claims in excess of five

debridements per patient per year is contrary to law and TrailBlazer’s own Local

Coverage Determination (“LCD”).

Wolcott also asserts that the defendants have failed to remove Wolcott

from non-random prepayment complex medical review (“prepayment review”),

despite the fact that a carrier is typically prohibited from keeping a supplier on

prepayment review for more than one year. Wolcott was on prepayment review

beginning March 17, 2008. Despite having received a letter from the defendants

informing it that they had removed Wolcott from prepayment review on March

21, 2009, Wolcott alleges it was still on prepayment review as of June 22, 2009

and that the defendants have denied more than 1,500 of Wolcott’s claims,

totaling in excess of $150,000, while it was on prepayment review.

In his complaint, Wolcott brought five claims for mandamus relief, a claim

for violations of procedural and substantive due process under the Fifth

Amendment, and a claim for violations of the Administrative Procedure Act.

Wolcott organizes his five mandamus claims by counts. In Count I, Wolcott asks

for mandamus compelling the defendants to process and pay successfully

1

A comorbidity is the presence of a disorder or medical condition in addition to the

primary disease or disorder, or the effect of such additional disorders or diseases.

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appealed claims in accordance with final administrative decisions. In Count II,

Wolcott asks for an order in mandamus compelling the defendants to timely pay

Wolcott for claims after it succeeds on appeal and to implement effective

processes to effectuate timely payment as required by law. In Count III, Wolcott

asks the Court to order the defendants to cease denying Wolcott’s new claims for

reasons that have previously been held invalid in final administrative decisions

and to reverse all denials predicated on such invalid reasons. In Count IV,

Wolcott asks for an order in mandamus compelling the defendants to reverse

prepayment-review denials made after March 21, 2009, and to remove Wolcott

from prepayment review. Finally, in Count V, Wolcott asks the court to order

the defendants to cease automatically denying debridement claims in excess of

five per patient per year.

The district court granted the defendants’ motion in a fourteen-page order

nunc pro tunc and dismissed all of Wolcott’s claims. Wolcott timely appealed the

dismissal of the five claims for mandamus relief. Wolcott does not appeal the

dismissal of the latter two claims; it appeals only the five mandamus claims.

The Court has jurisdiction to review this decision pursuant to 28 U.S.C. § 1291.

II. STANDARDS OF REVIEW

“When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12

motions, the court should consider the Rule 12(b)(1) jurisdictional attack before

addressing any attack on the merits.” Ramming v. United States, 281 F.3d 158,

161 (5th Cir. 2001).

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

We review a district court’s dismissal under Rule 12(b)(1) for lack of

subject matter jurisdiction de novo. Taylor v. Acxiom Corp., 612 F.3d 325, 331

(5th Cir. 2010). The district court must dismiss the action if it finds that it lacks

subject matter jurisdiction. F ED. R. C IV. P. 12(h)(3). The party asserting

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jurisdiction bears the burden of proof for a 12(b)(1) motion to dismiss. Ramming,

281 F.3d at 161.

A trial court may find that subject matter jurisdiction is lacking based on

“(1) the complaint alone; (2) the complaint supplemented by undisputed facts

evidenced in the record; or (3) the complaint supplemented by undisputed facts

plus the court’s resolution of disputed facts.” Id. (citing Barrera-Montenegro v.

United States, 74 F.3d 657, 659 (5th Cir. 1996)). In cases where 28 U.S.C. § 1361

jurisdiction was at issue, this Court has noted that courts should be mindful to

“avoid tackling the merits under the ruse of assessing jurisdiction.” See Jones

v. Alexander, 609 F.2d 778, 781 (5th Cir. 1980); see also McClain v. Pan. Canal

Comm’n, 834 F.2d 452, 454 (5th Cir. 1987) (“The court should not look to the

merits in deciding the jurisdictional question.”). Instead, “the court must accept

as true all nonfrivolous allegations of the complaint.” McClain, 834 F.2d at 454.

B. Motion to Dismiss for Failure to State a Claim

We “review[] a district court’s dismissal under a Rule 12(b)(6) motion de

novo, accepting all well-pleaded facts as true and viewing those facts in the light

most favorable to the plaintiffs.” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.

2009) (citation and quotation marks omitted). However, we are “not bound to

accept as true a legal conclusion couched as factual allegation.” Ashcroft v.

Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2008)). We examine the factual allegations to ensure that they are

“enough to raise a right to relief above the speculative level.” Twombly, 550 U.S.

at 555. The plaintiff must plead “sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949

(quoting Twombly, 550 U.S. at 570). Generally, a court ruling on a 12(b)(6)

motion may rely on the complaint, its proper attachments, “documents

incorporated into the complaint by reference, and matters of which a court may

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take judicial notice.” Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th

Cir. 2008) (citations and internal quotation marks omitted).

We have recognized that “‘reversal is inappropriate if the ruling of the

district court can be affirmed on any grounds, regardless of whether those

grounds were used by the district court.’” Cardoso v. Reno, 216 F.3d 512, 515

(5th Cir. 2000) (quoting Bickford v. Int’l Speedway Corp., 654 F.2d 1028, 1031

(5th Cir. 1981)).

III. DISCUSSION

Wolcott asserts that the district court erred in dismissing the five

mandamus claims because there is subject matter jurisdiction for each of the

claims and because each count properly states a claim for relief. Given that

reversal is inappropriate if the ruling can be affirmed on any ground, we analyze

each count to determine whether it can be properly dismissed under either Rule

12(b)(1) or Rule 12(b)(6), addressing subject matter jurisdiction first.

A. Subject Matter Jurisdiction

We consider the defendants’ argument that 42 U.S.C. § 405(h) precludes

mandamus jurisdiction under 28 U.S.C § 1361 before addressing whether

mandamus jurisdiction exists over each claim.

1. 42 U.S.C. § 405(h) and Mandamus Jurisdiction

Section 405(h) of Title 42 concerns the finality of the Secretary’s decisions

under the Medicare Act and when federal courts are prohibited from exercising

judicial review of those decisions. The defendants argue that 42 U.S.C. § 405(h)

precludes jurisdiction over this action by rendering the provisions of 42 U.S.C.

§ 405(g) the sole avenue for judicial review of claims arising under the Medicare

Act. The defendants contend that Wolcott failed to meet the jurisdictional

requirements of § 405(g) by failing to exhaust administrative remedies and

receive a final decision from the Secretary before bringing these claims in the

federal courts. The district court did not explicitly decide the issue of whether

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mandamus jurisdiction under 28 U.S.C. § 1361 is precluded by § 405(h).

However, if the defendants’ argument is correct, the entire suit would have to be

dismissed for lack of subject matter jurisdiction. We join the near unanimity of

all other circuits holding § 405(h) does not preclude mandamus jurisdiction to

review otherwise unreviewable procedural issues.

Section 405(h) states:

The findings and decision of the Commissioner of Social Security

after a hearing shall be binding upon all individuals who were

parties to such hearing. No findings of fact or decision of the

Commissioner of Social Security shall be reviewed by any person,

tribunal, or governmental agency except as herein provided. No

action against the United States, the Commissioner of Social

Security, 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) is part of the Social Security Act; however, it

is made applicable to the Medicare Act by 42 U.S.C. § 1395ii, with any reference

to “Commissioner of Social Security or the Social Security Administration

considered as a reference to the Secretary or the Department of Health and

Human Services, respectively.” 42 U.S.C. § 1395ii.

The defendants would have this Court focus on the second sentence of

§ 405(h), and require Wolcott to satisfy the requirements of § 405(g), which are:

(1) a final decision of the Secretary made after a hearing; (2)

commencement of a civil action within 60 days after the mailing of

notice of such decision (or within such further time as the Secretary

may allow); and (3) filing of the action in an appropriate district

court, in general that of the plaintiff's residence or principal place

of business.

Weinberger v. Salfi, 422 U.S. 749, 763–64 (1975); see 42 U.S.C. § 405(g). The

defendants cite to several Supreme Court cases and one Fifth Circuit case to

support their argument that § 405(g) is the sole avenue of judicial review for

claims arising under the Medicare Act: Shalala v. Illinois Council on Long Term

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Care, Inc., 529 U.S. 1, 20 (2000); Heckler v. Ringer, 466 U.S. 602, 605 (1984);

Salfi, 422 U.S. at 760–61; and Affiliated Professional Home Health Care Agency

v. Shalala, 164 F.3d 282, 285 (5th Cir. 1999).

None of the cases cited by the defendants are controlling in this case.

Illinois Council on Long Term Care, Salfi, and Affiliated Professional Home do

not concern § 1361 jurisdiction. Ringer explicitly left open the question of

whether § 1361 jurisdiction was available. See Ringer, 466 U.S. at 616.

Furthermore, as other circuits have pointed out, the second sentence of § 405(h)

is only controlling where a judicial decision favorable to the plaintiff would affect

the merits of whether the plaintiff is entitled to the benefits, not when the suit

is brought to review otherwise unreviewable procedural issues. Belles v.

Schweiker, 720 F.2d 509, 512 (8th Cir. 1983); Dockstader v. Miller, 719 F.2d 327,

329 (10th Cir. 1983); Dietsch v. Schweiker, 700 F.2d 865, 868 (2d Cir. 1983).

Here, the plaintiff does not seek a redetermination of administrative decisions

concerning its right to benefits, but rather the enforcement of these

administrative decisions and a review of what Wolcott characterizes as

otherwise unreviewable procedural issues. Thus, the second sentence of § 405(h)

is not the issue.

The actual threshold issue here is whether the third sentence of § 405(h)

precludes mandamus jurisdiction to review otherwise unreviewable procedural

issues. The third sentence reads: “No action against the United States, the

Commissioner of Social Security, 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). To date, the Supreme Court and the

Fifth Circuit have declined to reach this issue, holding instead that even if

§ 1361 jurisdiction were not precluded, mandamus was not an appropriate

remedy because the claim was insubstantial or because an adequate alternative

remedy existed. See, e.g., Your Home Visiting Nurse Servs., Inc. v. Shalala, 525

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U.S. 449, 456–57 n.3 (1999); Ringer, 466 U.S. at 616–17 (holding that mandamus

was not appropriate because there was an adequate alternative remedy); Smith

v. N. La. Med. Review Ass’n, 735 F.2d 168, 172 (5th Cir. 1984).2

There is nearly unanimous consensus among the other circuits that 28

U.S.C. § 1361 “provides jurisdiction in cases challenging the procedures used in

administering . . . benefits but unrelated to the merits” of the benefits claim.

Burnett v. Bowen, 830 F.2d 731, 737–38 (7th Cir. 1987); see Monmouth Med. Ctr.

v. Thompson, 257 F.3d 807, 813 (D.C. Cir. 2001); Cordoba v. Massanari, 256

F.3d 1044, 1047 (10th Cir. 2001); Buchanan v. Apfel, 249 F.3d 485, 491–92 (6th

Cir. 2001); United States ex rel. Rahman v. Oncology Assocs., P.C., 198 F.3d 502,

508–09 (4th Cir. 1999); Briggs v. Sullivan, 886 F.2d 1132, 1142 (9th Cir. 1989);

City of New York v. Heckler, 742 F.2d 729, 739 (2d Cir. 1984); Belles, 720 F.2d

at 512; see also Colonial Penn Ins. Co. v. Heckler, 721 F.2d 431, 437 n.2 (3rd Cir.

1983) (noting that it has previously exercised mandamus jurisdiction in Social

Security cases). The First and Eleventh Circuits have not decided this issue, but

have left open the possibility of mandamus jurisdiction. See Lifestar Ambulance

Serv., Inc. v. United States, 365 F.3d 1293, 1295 n.3 (11th Cir. 2004) (assuming,

without deciding, that mandamus jurisdiction is not barred by § 405(h)); Matos

v. Sec’y of Health, Educ. & Welfare, 581 F.2d 282, 186 n.6 (1st Cir. 1978) (leaving

open the possibility that mandamus jurisdiction is available where no other

remedy is available).

2

In Green v. Heckler, 742 F.2d 237 (5th Cir. 1984), a case concerning the merits of

whether the plaintiffs were entitled to emergency advance payments of benefits, we stated

that exercising mandamus jurisdiction in that case would frustrate the purpose of § 405(g) and

(h) to provide the sole method of review of Social Security Claims. Green is factually

distinguishable from this case as it involved an action where the merits of the benefits

determination were at issue, unlike here where the claims determinations are not at issue so

much as the process of enforcing final determinations of benefit claims and other procedural

issues.

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The rationale undergirding several of the circuit courts’ holdings that

§ 405(h) does not preclude mandamus jurisdiction is that Congress could have

withdrawn mandamus jurisdiction, but chose not to do so. The third sentence

of § 405(h) specifically strips the federal courts of jurisdiction under 28 U.S.C.

§§ 1331 and 1346 for any claims arising under the Medicare Act, but does not

mention § 1361. See 42 U.S.C. § 405(h). The D.C. Circuit reasoned “that

Congress knows how to withdraw a particular remedy and [the fact that it] has

not expressly done so is some indication of congressional intent to preserve that

remedy.” Ganem v. Heckler, 746 F.2d 844, 851–52 (D.C. Cir. 1984) (noting that

Congress explicitly stripped the federal courts of mandamus jurisdiction to

review Veterans Affairs decisions regarding benefit claims when it amended 38

U.S.C. § 211(a) in response to federal courts narrowly construing the prior

language of § 211 and exercising judicial review). Thus, these courts reason that

“Congress’s failure to express disapproval of the use of mandamus jurisdiction

in [Medicare] cases when it amended other jurisdictional provisions is evidence

that Congress intended to preserve mandamus jurisdiction for claims that are

procedural in nature under the [Medicare] Act.” Burnett, 830 F.2d at 738.

We find these circuits’ reasoning is persuasive. We hold that § 405(h) does

not preclude § 1361 jurisdiction to review otherwise unreviewable procedural

issues and join the unbroken consensus among the overwhelming majority of

other circuit courts.

2. Jurisdiction Under 28 U.S.C. § 1361

We must now determine whether the district court has jurisdiction over

each of the claims for mandamus under 28 U.S.C. § 1361. Under the Mandamus

and Venue Act, 28 U.S.C. § 1361, a district court has “jurisdiction [over] any

action in the nature of mandamus to compel an officer or employee of the United

States or any agency thereof to perform a duty owed to the plaintiff.” 28 U.S.C.

§ 1361. Section 1361 did not make any substantive change to the common law

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of mandamus, but merely extended mandamus jurisdiction formerly exercised

only by the United States District Court for the District of Columbia to other

district courts. Carter v. Seamans, 411 F.2d 767, 773 (5th Cir. 1969) (per

curiam) (summary calendar). This Court has found mandamus jurisdiction

exists if the action is an attempt to compel an officer or employee of the United

States or its agencies to perform an allegedly nondiscretionary duty owed to the

plaintiff. See Ingalls Shipbuilding, Inc. v. Asbestos Health Claimants, 17 F.3d

130, 132 (5th Cir. 1994); McClain, 834 F.2d at 454.

The plain language of § 1361 is clear that it only grants jurisdiction to

consider a mandamus action; it does not grant jurisdiction to consider actions

asking for other types of relief—such as injunctive relief. See 28 U.S.C. § 1361.

An injunction “is a remedy to restrain the doing of injurious acts” or to require

“the undoing of injurious acts and the restoration of the status quo,” whereas

“mandamus commands the performance of a particular duty that rests on the

defendant or respondent, by operation or law or because of official status.” 42

A M. J UR. 2 D Injunctions § 7 (citations omitted).

Taking Wolcott’s allegations at face value, there is subject matter

jurisdiction for Counts I, II, and IV because the ultimate relief Wolcott seeks in

each count is an order compelling the defendants to perform a nondiscretionary

duty. Count I asks the district court to compel the defendants to process and pay

claims in accordance with binding final administrative decisions ordering

payment of these claims. Count II seeks an order to compel defendants to

adhere to payment deadlines mandated in the Medicare Claims Processing

Manual. Count IV seeks an order compelling the defendants to remove Wolcott

from prepayment review as required by 42 C.F.R. § 421.505(a)(1). These three

counts ask the district court to order the defendants to complete affirmative

actions to fulfill their allegedly nondiscretionary duties under the law.

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There is no subject matter jurisdiction under § 1361 for Counts III and V

for a reason not articulated by the parties or the district court: the relief Wolcott

seeks is not mandamus but rather declaratory judgment and injunctive relief.

In Counts III and V, Wolcott asks the court to cease doing an injurious action in

the future. In Count III, the Wolcott asks the court to order defendants to cease

denying its new claims for reasons that have been held invalid in previous

administrative decisions. In Count V, Wolcott asks the court to order the

defendants to cease automatically denying debridement claims in excess of five

per patient per year. Both of these requests for relief would require the court to

prohibit the defendants from acting in a certain manner in the future rather

than compel the defendants to affirmatively perform a presently existing duty

under the law. Section 1361 does not confer subject matter jurisdiction to the

federal courts to consider such an action or grant such relief.

Given that the relief sought in Counts III and V is declaratory and

injunctive in nature and there is no jurisdiction under §1361, Wolcott must prove

there is another basis for subject matter jurisdiction for these counts. See Jones,

609 F.2d at 781 (“Declaratory Judgment Act is not an independent ground for

jurisdiction; it permits the award of declaratory relief only when other bases for

jurisdiction are present.”); Enter. Int’l, Inc. v. Corporacion Estatal Petrolera

Ecuatoriana, 762 F.2d 464, 470 (5th Cir. 1985) (“The district court has no power

to grant an interlocutory or final injunction against a party over whom it has not

acquired valid jurisdiction . . . .” (citation and quotation marks omitted)).

However, Wolcott only raises the issue of jurisdiction under § 1361 in this

appeal; it does not appeal the district court’s determination that there is no

jurisdiction under 42 U.S.C. § 405(g) or 28 U.S.C. § 1331. Thus, there is no

independent basis for subject matter jurisdiction for Counts III and V.

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Accordingly, we AFFIRM the district court’s decision dismissing Counts

III3 and V.4 We proceed to determine whether we should affirm the district

court’s decision to dismiss Counts I, II, and IV.

B. Stating a Claim for Mandamus

When mandamus jurisdiction exists, the court must determine whether

Wolcott has stated a claim for mandamus relief. Mandamus may only issue

when (1) the plaintiff has a clear right to relief, (2) the defendant a clear duty to

act, and (3) no other adequate remedy exists. Jones, 609 F.2d at 781; Green, 742

F.2d at 241 (citations omitted).

We have further clarified what constitutes a duty and an adequate remedy

under the mandamus standard. Mandamus is only appropriate when the duty

is “so plainly prescribed as to be free from doubt”; thus, mandamus is not

available to review discretionary acts of agency officials. Giddings v. Chandler,

979 F.2d 1104, 1108 (5th Cir. 1992) (citations and internal quotation marks

3

Wolcott quotes extensively from and cites to DeWall Enterprise, Inc. v. Thompson to

support its claim for mandamus relief in Count III. 206 F. Supp. 2d 992 (D. Neb. 2002). The

plaintiff’s reliance on that case is unavailing because it involved a true mandamus action

rather than an action for injunctive relief. The plaintiff in DeWall sought an order in

mandamus compelling the defendant–carrier to consistently process the plaintiff’s claim for

a certain piece of medical equipment under the Code L0430 as directed by a prior, allegedly

binding ALJ order involving the same claimant, the same device, and the same regulation.

Id. at 1000, 1002. Thus, the relief requested was an order compelling the performance of an

affirmative action to fulfill an allegedly binding nondiscretionary duty. Here, Wolcott asks the

court to order that defendants cease denying any new claims brought by Wolcott for reasons

previously held invalid in administrative decisions. Unlike in DeWall, future claims may

involve different patients and different medical circumstances.

4

Claim V would fail under Rule 12(b)(6) as well. A carrier may automatically deny

claims when a “clear policy serves as basis for denial” for that type of claim. Medicare

Program Integrity Manual, Pub. No. 100-08, Ch. 3, § 3.5.1. The Manual clarifies that the term

“clear policy” means “statute, regulation . . . or LCD [Local Carrier Determination].” Id.

TrailBlazer’s LCD states that “services beyond the fifth . . . surgical debridement per patient

per year will be payable only upon medical review of records that demonstrate the medical

reasonableness and necessity (appeal).” Given this policy in the LCD, TrailBlazer may

automatically deny debridement claims in excess of five per patient per year, and Wolcott may

appeal that decision and demonstrate medical reasonableness and necessity in the course of

that appeal to receive payment.

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omitted); see Green, 742 F.2d at 241. In short, mandamus does not create or

expand duties, but merely enforces clear, non-discretionary duties already in

existence.

The third element requires that there be no other adequate remedy

available. Jones, 609 F.2d at 781. This requires the exhaustion of any adequate

administrative remedies before a court may issue mandamus. Ringer, 466 U.S.

at 616–17 (finding an adequate remedy under § 405(g) to challenge all aspects

of the Secretary’s denial). The Supreme Court has stated that “[o]rdinarily

mandamus may not be resorted to as a mode of review where a statutory method

of appeal has been prescribed.” Roche v. Evaporated Milk Ass’n, 319 U.S. 21,

27–28 (1943). An alternative remedy, including an administrative remedy, is

adequate if it is “capable of affording full relief as to the very subject matter in

question.” See Carter, 411 F.2d at 773.

Even when a court finds that all three elements are satisfied, the decision

to grant or deny the writ remains within the court’s discretion because of the

extraordinary nature of the remedy. See United States v. Denson, 603 F.2d 1143,

1146 (5th Cir. 1979).

1. Count I: The Defendants’ Alleged Failure to Abide by Final

ALJ Decisions Affording Benefit Payments to Wolcott

In the complaint, Wolcott asks for mandamus to compel the defendants to

process and pay claims that have been successfully appealed in accordance with

final administrative decisions. Wolcott asserts the defendants have a “non-

discretionary duty to issue payment to Wolcott for appealed claims finally

decided in Wolcott’s favor” by the ALJ. Additionally, Wolcott pleads that there

is no administrative appeals process to challenge the defendants’ failure to pay

administratively reversed denials.

To support this mandamus claim and plead sufficient facts to raise the

right to relief beyond that of speculation, Wolcott attaches a fully favorable

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decision by an administrative law judge (“ALJ”), dated June 23, 2009, which

reversed the denial of ninety-five debridement claims for services rendered in

April and May 2008 and concluded that “the provider is entitled to Medicare

payment for services rendered in every case.” Wolcott also attaches a remittance

notice received on August 26, 2009, that corresponds to a list of patient names

and services that were the basis of the claims at issue in the June 23 decision.

A handwritten note on the remittance form states that only one debridement

treatment was paid per patient and that payment for the remaining

debridement treatments per patient were denied for lack of medical necessity.

The defendants first argue that Wolcott has failed to plead a set of facts

for this claim that raises a right to relief above the speculative level because

Wolcott has failed to include all the remittance notices related to the June 23,

2009 decision. The defendants further argue that Wolcott has failed to plead a

claim in mandamus. Though the defendants agree that they have a

nondiscretionary duty to pay a successfully appealed claim, they argue they met

that duty and merely exercised their discretion in determining the amount of

payment due by issuing one payment to each patient/service-date combination

listed in the appended list. Finally, they argue that Wolcott had two alternative

administrative remedies. They argue that Wolcott could have appealed the

amount of payment because an amount of payment determined by a contractor

in effectuating the ALJ’s decision is a new initial determination under § 405.924.

See 42 C.F.R. § 405.1046(c). Alternatively, they argue that Wolcott could have

requested a “reopening,” which is a remedial action taken to change a binding

determination or decision that resulted in underpayment. See 42 C.F.R.

§ 405.980(a). We find that Wolcott has sufficiently alleged that the defendant

has a nondiscretionary duty to issue payment for a successfully appealed claim

and that there is no adequate alternative remedy.

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The defendants concede that TrailBlazer has a non-discretionary duty to

pay a successfully appealed claim, but argue that they fulfilled this duty and

that TrailBlazer merely exercised its discretion on what amount to pay. See 42

C.F.R. §§ 405.1048, 405.1130 (describing when an administrative appeals

decision becomes binding on the parties). The defendants seek to recast

Wolcott’s allegation as a claim contesting the amount Wolcott was paid. The

defendants’ argument is unpersuasive. Wolcott’s complaint does not allege that

it was not paid enough for each successively appealed claim; rather, it alleges

that the defendants wrongfully redetermined that a subset of the successively

appealed claims were not covered by Medicare because the treatments were not

medically necessary, and that these redeterminations denying coverage were in

direct contravention to a binding June 23 ALJ decision that already dealt with

this issue. In the complaint, Wolcott states: “Although Defendants have a clear

nondiscretionary duty to issue payment to Wolcott for appealed claims finally

decided in Wolcott’s favor, they have re-denied and wrongfully failed to pay

many such claims.” In fleshing out this allegation, Wolcott states that when it

received remittance notices that purported to resolve payments for the claims at

issue in the June 23 ALJ decision, it found that TrailBlazer had redenied a

subset of the claims for lack of medical necessity—the same basis for the

defendants’ initial denial of these claims that the ALJ rejected in his June 23

decision.

To support this allegation, Wolcott attaches (1) the fully favorable June 23

ALJ decision, and (2) a remittance notice received on August 26, 2009, that

corresponds to a list of patient names and services that were the basis of the

claims at issue in the June 23 decision. In the June 23 decision, the ALJ notes

that in the administrative proceeding, the defendants argued that the services

rendered by Wolcott were investigational in nature and thus inappropriate for

Medicare payment, and that Wolcott argued that the treatments were medically

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reasonable and necessary. The ALJ stated that only if Wolcott “is unable to stop

tissue devitalization [through debridements] does he resort to amputation[, and

that the ALJ] fails to see how this can be viewed experimental or investigational

in nature.” The ALJ then went on to rule that “[t]he treatment provided to the

multiple beneficiaries as listed on the attached appendix meet the criteria for

coverage under Medicare Part B . . . [and that t]he provider is entitled to

Medicare payment for services rendered in every case.” Thus, the issue of

whether Medicare covers these treatments was already decided by the ALJ in

the June 23 administrative decision. The attached remittance form, however,

shows that despite the above-quoted language from the ALJ decision, the

defendants did not issue payment for some of the successfully appealed claims

because TrailBlazer again determined these treatments were not covered by

Medicare. On the remittance form, the unpaid treatments were coded “CO-50,”

meaning that the treatments were not covered by Medicare because the

treatments were not medically reasonable or necessary. With the allegations in

the complaint, the plaintiff’s attachments, and the defendant’s concession that

TrailBlazer has a non-discretionary duty to pay a successfully appealed claim,

Wolcott has sufficiently alleged that it has a clear right to relief and that the

defendant had a clear nondiscretionary duty to act.

As to the third element, Wolcott does not have an adequate alternative

remedy. If Wolcott were merely disputing the amount it was paid for

successfully appealed claims, there would be an adequate remedy. When a

contractor determines the amount of payment to effectuate an ALJ’s decision,

this is a new initial determination. 42 C.F.R. § 405.1046(c). Thus, the plaintiff

could ask for an administrative review of this new initial determination

pursuant to the process described in 42 C.F.R. § 406.904(a)(2). Here, however,

Wolcott does not allege that it has been paid too little, but rather alleges that the

defendants wrongfully redenied successfully appealed claims for the same reason

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that the ALJ rejected in the administrative proceeding. Accordingly, there is no

new initial determination to appeal.

A reopening of an administrative reconsideration, hearing, or review is not

an adequate alternative remedy either. Section 405.980 allows a party to a

hearing or review to request that an ALJ or the MAC reopen a hearing or a

review for good cause. 42 C.F.R. § 405.980. However, good cause is limited to

reasons listed in § 405.986(a):

(1) There is new and material evidence that--

(i) Was not available or known at the time of the

determination or decision; and

(ii) May result in a different conclusion; or

(2) The evidence that was considered in making the determination

or decision clearly shows on its face that an obvious error was made

at the time of the determination or decision.

42 C.F.R. § 405.980. Neither of these reasons is applicable here. Additionally,

Wolcott does not want the ALJ or MAC to revise its decision given that the

decision was in Wolcott’s favor. Wolcott has properly stated a claim in

mandamus for the first count.

The defendants’ argument that Wolcott must attach all remittance notices

to the complaint and identify each specific line item from the ALJ decisions that

it is contesting is unavailing. Wolcott has no duty to present evidence upon

filing a complaint; it must merely plead a short and plain statement of the

grounds for jurisdiction, the claim that entitles it to relief, and a demand for

relief sought. F ED. R. C IV. P. 8(a).

Wolcott has sufficiently pleaded that it has a clear right to relief, that the

defendants owe a non-discretionary duty to issue payment to Wolcott for

appealed claims finally decided in Wolcott’s favor, and that no adequate

alternative remedies exist. Accordingly, we REVERSE the district court’s

dismissal of Count I.

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2. Count II: The Defendants’ Alleged Failure to Timely Pay

Wolcott after Successful Appeal

In the second count, the plaintiff seeks an order in mandamus compelling

the defendants to (1) timely pay Wolcott for claims that it successfully appealed,

and (2) establish and implement effective processes to ensure timely payment

as required by law. Wolcott argues that the defendants have a nondiscretionary

duty to issue timely payment to Wolcott for successfully appealed claims within

deadlines established in the Medicare Claims Processing Manual: (1) the QIC

must “mail or fax the effectuation form to the Carrier within ten days of

receiving the decision from the ALJ” and (2) the carrier (here, TrailBlazer) must

issue payment within one of three specified time periods, the most common time

period being thirty days from receipt of the effectuation notice. If these

deadlines are followed, Wolcott alleges that TrailBlazer should issue payment

to Wolcott on most claims within forty days unless there is a circumstance

requiring a separate computation or clarification; however, Wolcott alleges

TrailBlazer has routinely failed to issue payments within this time period,

sometimes nearly six months after payment was due. Wolcott additionally

pleads that there is no other adequate remedy available because “[t]here is no

administrative appeal process to challenge Defendant’s unlawful failure to

timely pay Wolcott successfully appealed claims.”

The defendants argue that the Wolcott has failed to articulate what kind

of remedy the mandamus order will provide especially given that circumstances

outside of the Administrative QIC and the carrier’s control, such as a delay in

the ALJ mailing the decision and variations in transmission time in the mail,

could affect transmission time. The defendants further argue that Wolcott has

failed to demonstrate the Secretary’s nondiscretionary duty to pay within one

standard time frame or a clear right to relief because the agency has established

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multiple time frames with multiple exceptions allowing variations in turnaround

time and flexibility.

Wolcott has failed to plead a clear right to relief. All parties agree that the

Medicare Claims Processing Manual establishes several different time frames

by which the carrier must effectuate an ALJ decision ordering payment

depending on the contents of the ALJ decision, whether clarification is required,

and whether the decision is referred to the Appeals Council.5 Thus, the actual

issue here is whether Wolcott has sufficiently plead the first element of the

mandamus standard: whether there was a breach of the duty such that Wolcott

5

The relevant sections of the Medicare Claims Processing Manual are sections 330.4

and 330.5 in chapter 29. Section 330.4 states that the administrative QIC (“AdQIC”) will

receive all case files and administrative decisions and that the AdQIC must fax or mail an

effectuation form containing the necessary information to effectuate the decision to the carrier

within ten calendar days from the date the AdQIC receives the case and decision. Section

330.5 sets forth the dates by which a contractor must effectuate the ALJ decision after it

receives the effectuation form:

If the ALJ decision is partially or wholly favorable to the appellant, gives a

specific amount to be paid, and there is no agency referral to the Appeals

Council, the contractor effectuates within 30 calendar days of the date of the

effectuation notice from the AdQIC. . . .

If the decision is partially or wholly favorable and no agency referral is made,

but the amount must be computed by the contractor, it effectuates the decision

within 30 days after it computes the amount to be paid to the appellant. The

amount must be computed as soon as possible, but no later than 30 calendar

days of the date of receipt of the effectuation notice from the AdQIC. . . .

If clarification from the AdQIC is necessary, the contractor considers the date

of the clarification the final determination for purposes of effectuation. If

clarification is needed from the provider/physician/supplier (e.g., splitting

charges), the contractor requests clarification as soon as possible and computes

the amount payable within 30 calendar days after the receipt of the necessary

clarification. The contractor considers the date of receipt of the clarification as

the date of the final determination for purposes of effectuation.

Medicare Claims Processing Manual, Pub. Ch. 29 §§ 330.5. However, where AdQIC refers the

decision to the MAC, there are still other deadlines by which the contractor must effectuate

the deadlines. Where the AdQIC submitted an agency referral to the Appeals Council, the

contractor does not effectuate until it receives notification from the AdQIC. The AdQIC waits

for a determination from the Appeals Council. Medicare Claims Processing Manual, Pub. Ch.

29, § 330.5.

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is clearly entitled to relief in mandamus. Even construing the facts in the light

most favorable to the plaintiff, Wolcott has not alleged an actual breach has

occurred. Wolcott merely suggests that it is possible that a breach may have

occurred. Wolcott pleads that the defendants have routinely failed to issue

payment for claims forty days after the ALJ decision—the alleged time frame by

which TrailBlazer is required to issue payment in most instances. The

complaint thus forces this Court to speculate as to whether TrailBlazer actually

failed in their duty to timely pay, or whether there were circumstances present

such that TrailBlazer had to pay by one of the many different deadlines set forth

in the manual.

Wolcott “is confident that whatever other lawful delays may have occurred,

discovery will prove that its allegations that Defendants have failed to meet the

two mandatory deadline are true,” but confidence in finding facts in the future

is not enough to save a claim for which sufficient factual allegations have not

already been pled. Mandamus may only issue where there is a clear right to

relief; Wolcott has failed to plead a set of factual allegations that satisfies this

element by only pleading facts that suggest the defendants may have failed in

their duty, rather than pleading an actual breach. We AFFIRM the district

court’s dismissal of Count II.

3. Count IV: The Defendants’ Alleged Failure to Remove

Wolcott from Prepayment Complex Medical Review

Under the fourth count, Wolcott seeks an order in mandamus compelling

the defendants to remove Wolcott from prepayment review status and reverse

the prepayment review denials made after March 21, 2009. Wolcott alleges that

it was placed on prepayment review three months longer than the one year

allowed by law despite TrailBlazer’s letter to Wolcott stating the contrary, and

that during that time, the defendants unlawfully “sent Wolcott more than 1,500

prepayment letters denying more than 1,500 claims at an average of $100 per

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claim, totaling more than $150,000 worth of claims.” Wolcott alleges that (1) the

defendants had a clear nondiscretionary duty to remove Wolcott from

prepayment review after one year; (2) Wolcott has a clear right to be removed

from prepayment review denials and to receive a reversal for all claims denied

on prepayment review that were made after the allowed year; and (3) there is no

adequate remedy available to challenge the defendants’ action in keeping

Wolcott on prepayment review longer than legally allowed.

The defendants argue Wolcott does not have a right to an order in

mandamus compelling reversal of denials after March 21, 2009, because

(1) Wolcott was not on prepayment review after March 2009, and TrailBlazer

had informed Wolcott as such, and (2) being on “prepayment review” is not itself

a basis for denying a claim, but merely an approval and payment process that

requires more documentation and manual examination of each claim. The

defendants further argue that Wolcott has not demonstrated that the defendants

had a nondiscretionary duty to “abstain from denying claims during the alleged

three-month period of extended prepayment review” such that Wolcott should

have been “automatically paid within 30 days of submission.” Finally, they

argue that Wolcott should have appealed the denials through the administrative

appeals process if Wolcott disagreed with the denials.

Wolcott has failed to state a claim upon which the court could compel

reversal of claims denied on prepayment review. Though it has successfully

pleaded a claim upon which the court could compel TrailBlazer to remove

Wolcott from prepayment review, this portion of Count IV is moot as Wolcott has

since been removed from prepayment review.

a. Compelling Reversal of Claims Denied on Prepayment

Review After March 21, 2009

Wolcott has failed to demonstrate (1) a clear right to an order compelling

reversal of claims denied on prepayment review after March 21, 2009, and (2)

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that no adequate alternative remedy exists. Even if TrailBlazer has, in fact,

kept Wolcott on prepayment review for longer than lawfully allowed, this does

not mean that Wolcott’s claims would have automatically been approved and

paid had Wolcott been properly removed from prepayment review. For example,

TrailBlazer may have denied the claims because they were not covered under

the Medicare Act or because the services were not medically necessary or

appropriate. See 42 C.F.R. 405.924. Wolcott itself points out that TrailBlazer

can issue automated denials when a “clear policy or certain other conditions

exist.” Thus, Wolcott has failed to prove TrailBlazers’ nondiscretionary duty to

automatically approve these claims. Further, these denials are initial

determinations under 42 C.F.R. § 405.924, and Wolcott must appeal these initial

determinations through the process described in 42 C.F.R. § 405.924. Thus, this

part of Count IV fails to state a claim upon which relief can be granted.

b. Compelling Removal from Prepayment Review

Federal courts may adjudicate only actual, ongoing cases or controversies.

Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990). This means that

“throughout the litigation, the plaintiff must have suffered, or be threatened

with, an actual injury traceable to the defendant and likely to be redressed by

a favorable judicial decision.” Spencer v. Kemna, 523 U.S. 1, 7 (1998) (citation

and internal quotation marks omitted). To sustain this Court’s jurisdiction, “it

is not enough that a dispute was very much alive when suit was filed, or when

review was obtained in the Court of Appeals.” Lewis, 494 U.S. at 477–78.

Wolcott successfully pleads a claim in mandamus for removal from

prepayment review. However, the plaintiff conceded at oral argument that the

defendants have since removed Wolcott from prepayment review. Thus, this

portion of Count IV is moot and lacks subject matter jurisdiction.

We AFFIRM the district court’s dismissal of the portion of Count IV asking

for an order in mandamus compelling the reversal of claims denied on unlawful

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prepayment review after March 21, 2009 because Wolcott failed to demonstrate

TrailBlazer had a duty to automatically approve Wolcott’s claims and because

Wolcott had an alternative remedy in administrative appeal. We AFFIRM the

dismissal of the portion of Count IV asking for an order compelling TrailBlazer

to remove Wolcott from prepayment review because this portion of the claim is

now moot.

IV. CONCLUSION

Wolcott is clearly frustrated with what it perceives as TrailBlazer’s

attempts to give it the bureaucratic runaround by changing the rules to deny or

delay payment. However, the federal courts’ power to review agency actions

under the Medicare Act is limited to extraordinary circumstances where the

plaintiff can demonstrate it has a clear right to relief, the defendant a clear duty

to act, and that no adequate alternative remedy exists. Accordingly, we

AFFIRM the district court’s dismissal of Counts II, III, IV, and V; and

REVERSE and REMAND the district court’s dismissal of Count I.

26