Feiss, M.D. v. United States

United States Court of Federal Claims

No. 17-1263C

Filed: May 30, 2018

______________________________________

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ROBERT E. FEISS, M.D., )

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Plaintiff, )

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v. )

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THE UNITED STATES, )

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Defendant. )

______________________________________ )

Natasha A. Saggar Sheth, Nossaman, LLP, San Francisco, CA, counsel for plaintiff.

Sean King, U.S. Department of Justice, Civil Division, Washington, D.C., counsel for defendant.

OPINION AND ORDER

SMITH, Senior Judge

This is not a just decision, but it is one that the law requires. It appears that, through no

fault of his own, plaintiff has lost over $39,000 in government Medicare incentive payments that

he was entitled to by providing Family Practice services. However, 42 U.S.C. section

1395l(x)(4) prohibits judicial or administrative review of the government’s coding system, which

determines who is classified as a Family Practice physician. The evidence strongly supports

plaintiff’s argument that he was providing Family Practice services and should have been

classified as such, but a coding error denied plaintiff this status for several years. It is not the

role of this Court to dispense “justice” as it sees fit. Rather, the role of this Court is to decide

cases pursuant to the legal rules and statutes established by the legislative branch. Typically, that

leads to justice. In the rare case in which it does not, the Court cannot ignore the statute and act

above the law to impose its own view of justice. Doing so would make a mockery of the judicial

system and the separation of powers upon which liberty depends. It would also violate the

Judge’s oath. Above all, the Court must hold justice under the law as its First Commandment.

This matter is before the Court on defendant’s Motion to Dismiss. Plaintiff, Robert E.

Feiss, M.D. (“Dr. Feiss”), alleges that the government breached its contractual duty by

wrongfully withholding incentive payments owed to Dr. Feiss through the Patient Protection and

Affordable Care Act’s (“ACA”) Primary Care Incentive Payment Program (“PCIP”). Dr. Feiss

seeks monetary relief in the amount of $39,709.66, plus costs and interest. The government

argues that plaintiff’s Complaint must be dismissed because the authorizing statute, 42 U.S.C.

section 1395l(x)(4) (2010), precludes judicial review, and because plaintiff’s claims are barred

by the statute of limitations. Alternatively, the government asserts that plaintiff fails to establish

the elements of a breach of implied contract claim, and thus fails to state a claim upon which

relief can be granted. After careful review and for the reasons that follow, the Court grants

defendant’s Motion to Dismiss.

I. Background

A. Factual History

Plaintiff, Dr. Feiss, has been a primary care physician since 2002. Complaint (hereinafter

“Compl.”) at 1. During his practice, Dr. Feiss has been enrolled as a Medicare supplier with a

primary specialty designation of “[F]amily [P]ractice.” Compl. at 2. According to Dr. Feiss, 90

percent or more of Dr. Feiss’ allowed charges since 2002 have been for his provision of primary

care services. Id. In 2010, Congress enacted the ACA, which created PCIP by adding section

1833(x) to the Social Security Act (“SSA”), codified at 42 U.S.C. section 1395l(x). See

generally 42 U.S.C. § 1395l(x). Through PCIP, eligible primary care physicians may collect

incentive payments for primary care services rendered from January 1, 2011, through January 1,

2016. See § 1395l(x)(1); Compl. at 2; see also 42 C.F.R. § 414.80 (2011) (mirroring 42 U.S.C. §

1395l(x)). To qualify as an eligible “primary care practitioner,” a physician must be enrolled in

Medicare as a supplier with a “primary specialty designation of [F]amily [M]edicine, [I]nternal

[M]edicine, [G]eriatric [M]edicine, or [P]ediatric [M]edicine,” and provide primary care services

for at least 60 percent of a physician’s allowed charges per year. § 1395l(x)(2)(A); Compl. at 2.

In addition to the amount of payment that would otherwise be made for primary care services

provided, eligible physicians, under PCIP, “also shall be paid . . . an amount equal to 10 percent

of the payment amount for [their services] . . . .” § 1395l(x)(1); Motion to Dismiss (hereinafter

“MTD”) at 3. While physicians are not required to enroll in PCIP to participate, the Centers for

Medicare and Medicaid Services (“CMS”) identifies such eligible physicians through National

Provider Identifier (“NPI”) numbers, based on physicians’ histories of Medicare claims. MTD at

3.

In 2010, Dr. Feiss confirmed his PCIP eligibility, which was set to begin in 2011, through

CMS contractor Palmetto GBA (“Palmetto”), by searching for his NPI number on Palmetto’s

website. Compl. at 3. After failing to receive PCIP payments throughout most of 2011, Dr.

Feiss contacted Palmetto, which confirmed Dr. Feiss’ PCIP eligibility and informed Dr. Feiss

that such payments were forthcoming, albeit delayed. Id. at 3-4. After 18 months of

nonpayment, Dr. Feiss was informed that he was ineligible for PCIP because his specialty

identification had been miscoded in CMS’ system as “Emergency Medicine” rather than

“Primary Care.” Id. at 4. Palmetto explained that “[t]here were issues with the PCIP tool on [its]

website” and that it had “received a corrupted file that was loaded and therefore provid[ed]

incorrect information.” Plaintiff’s Exhibit (hereinafter “P’s Ex.”) 3. Palmetto indicated that Dr.

Feiss could receive his PCIP payments so long as Palmetto received authorization from CMS to

correct the coding error. Compl. at 4. On or about December 30, 2013, CMS held a phone

conference with Dr. Feiss, wherein all present CMS representatives, CMS contractors, and Dr.

Feiss agreed to the following: (1) Dr. Feiss provided primary care services during all relevant

times; (2) 94 percent of Dr. Feiss’ patient care codes were primary care codes; and (3) Dr. Feiss

had provided the services for which he was seeking PCIP payment. Compl. at 5. After Dr. Feiss

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requested assistance from both CMS and Palmetto, which relinquished its contract to Noridian

Healthcare Solutions, LLC (“Noridian”), Dr. Feiss learned that he was ineligible for PCIP in

years prior to 2014 because his listed Medicare specialty did not qualify him for PCIP under the

SSA. See MTD at 4 (referencing 42 U.S.C. § 1395l(x)(2)(A)). Only after Dr. Feiss corrected his

specialty to “[F]amily [P]ractice,” CMS explained, did Dr. Feiss become PCIP eligible. Id. at 4-

5.

Subsequently, on July 22, 2016, Dr. Feiss filed a request for a hearing before an

administrative law judge (“ALJ”) at the Department of Health and Human Services (“HHS”),

which was dismissed on the grounds that the SSA explicitly states that “[t]here shall be no

administrative or judicial review . . . respecting the identification of primary care practitioners

under this subsection.” 42 U.S.C. § 1395l(x)(4); MTD at 3-5. On March 17, 2017, the HHS

Departmental Appeals Board, Appellate Division, issued its Final Decision, upholding ALJ’s

dismissal of Dr. Feiss’ request for a hearing. Compl. at 7; MTD at 5.

B. Procedural History

On September 15, 2017, Dr. Feiss filed his Complaint in this Court against CMS and

HHS, seeking PCIP payments from 2011, 2012, 2013, and the first three quarters of 2014.

Compl. at 12. Dr. Feiss asserts that CMS, by withholding those PCIP payments, breached its

implied contract and violated 42 U.S.C. section 1395l(x) and its governing regulation, 42 C.F.R.

section 414.80. MTD at 5.

On November 14, 2017, the government filed its Motion to Dismiss, arguing that the

Court should dismiss Dr. Feiss’ Complaint for lack of subject-matter jurisdiction, or, in the

alternative, for failure to state a claim upon which relief could be granted, pursuant to Rules

12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims (“RCFC _”). Id. at 1, 5.

Specifically, the government asserts that 42 U.S.C. section 1395l(x)(4) explicitly precludes

judicial review of CMS’ identification of primary care practitioners. Id. at 7. Although section

1395l(x)(4) allows for agency review of mathematical or clerical errors involving PCIP

eligibility, the government argues that such statutory interpretation does not open the door to

further administrative or judicial review. Id. at 7-8. Additionally, the government alleges that

the statute of limitations has run according to 28 U.S.C. section 2501. Id. at 1 (relying on 28

U.S.C. § 2501 (2004)). Finally, the government argues that, this Court should dismiss Dr. Feiss’

Complaint under RCFC 12(b)(6), as Dr. Feiss failed to establish a valid claim for breach of

implied contract. Id. at 9.

In his Response, Dr. Feiss argues the following three points: (1) the government

mischaracterizes the claims made in his Complaint; (2) the government’s representation that the

PCIP payments were delayed but forthcoming postponed Dr. Feiss’ realization of his potential

claims; and (3) section 1395l(x) falls within the narrow category of statutes that bind the

government in contract. Plaintiff’s Opposition to Defendant’s Motion to Dismiss (hereinafter

“P’s Resp.”) at 6, 9-12. In its Reply, the government argues that Dr. Feiss “mischaracterizes his

suit as one simply requesting payments that he is owed, stating that there is no dispute as to his

identification as a qualifying primary care practitioner.” Defendant’s Reply in Support of its

Motion to Dismiss (hereinafter “D’s Reply”) at 2. Additionally, the government reiterates its

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arguments that the statute of limitations has run and that section 1395l(x)(4) does not bind the

government in contract. D’s Reply at 7-8 (referencing ARRA Energy, 97 Fed. Cl. 12, 27 (2011)

(citing Nat’l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465-66

(1985)); Moda Health Plan, Inc. v. United States, 130 Fed. Cl. 436, 463 (2017)). The

government further bolsters this assertion by stating that “PCIP is nothing more than a statute

and accompanying regulation that CMS may be obligated to follow without any contractual duty

to perform.” Id. at 7 (citing Land of Lincoln Mut. Health Ins. Co. v. United States, 129 Fed. Cl.

81, 112 (2016)). The Court held Oral Argument on defendant’s Motion to Dismiss on February

12, 2018. Defendant’s Motion to Dismiss is fully briefed and ripe for review.

II. Discussion

This Court’s jurisdictional grant is found primarily in the Tucker Act, which provides the

Court of Federal Claims with the power “to render judgment upon any claim against the United

States founded either upon the Constitution, or any Act of Congress or any regulation of an

executive department, or upon any express or implied contract with the United States . . . in cases

not sounding in tort.” 28 U.S.C. § 1491(a)(1) (2012). Although the Tucker Act explicitly

waives the sovereign immunity of the United States against such claims, it “does not create any

substantive right enforceable against the United States for money damages.” United States v.

Testan, 424 U.S. 392, 398 (1976). Rather, to fall within the scope of the Tucker Act, “a plaintiff

must identify a separate source of substantive law that creates the right to money damages.”

Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part).

A. Statutory Bar Under 42 U.S.C. § 1395l(x)(4)

Subject-matter jurisdiction is a threshold matter that must be addressed before the Court

evaluates the merits of plaintiff’s claims. See Deponte Invs., Inc. v. United States, 54 Fed. Cl.

112, 114 (2002) (referencing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998)).

When considering a motion to dismiss for lack of subject-matter jurisdiction, the Court must

accept as true all undisputed facts asserted in plaintiff’s complaint and draw all reasonable

inferences in plaintiff’s favor. See Trusted Integration, Inc. v. United States, 659 F.3d 1159,

1163 (Fed. Cir. 2011) (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995)).

Plaintiff bears the burden of establishing subject-matter jurisdiction by a preponderance of the

evidence. See Grayton v. United States, 92 Fed. Cl. 327, 331 (referencing Reynolds v. Army &

Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)). “If the [C]ourt determines at any

time that it lacks subject-matter jurisdiction, the [C]ourt must dismiss the action.” RCFC

12(h)(3).

The government contends that this Court lacks subject-matter jurisdiction to entertain Dr.

Feiss’ Complaint because, pursuant to the SSA, which governs the provision of PCIP payments

at issue, “[t]here shall be no administrative or judicial review . . . respecting the identification of

primary care practitioners under this subsection.” 42 U.S.C. § 1395l(x)(4) (emphasis added).

Dr. Feiss asserts that his cause of action is based on CMS’ nonpayment of PCIP incentive

payments, stemming from an unspecified clerical error by CMS wherein Dr. Feiss’ primary

special designation was miscoded. Compl. at 10; P’s Resp. at 6. Dr. Feiss alleges that the

statutory bar under section 1395l(x)(4) is inapplicable to his claims because he is not seeking

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review of CMS’ “identification of primary care practitioners,” but, rather, a review of CMS’

nonpayment of PCIP payments. P’s Resp. at 6. While the government acknowledges this

nonpayment, the government explains that it is due to the misidentification of Dr. Feiss’ primary

specialty, cementing the applicability of that statutory bar to Dr. Feiss’ claims. MTD at 5.

Absent CMS’ misidentification of his Medicare specialty, Dr. Feiss would have received

PCIP payments for eligible services rendered throughout the period at issue, as a qualified

primary service provider under the SSA. Thus, CMS’ miscoding of Dr. Feiss’ specialty as

“Emergency Medicine” rather than “Primary Care” was a clerical error that caused the

nonpayment of PCIP payments currently at issue. The Court recognizes that Dr. Feiss is not at

fault for this misidentification and appreciates his attempts to rectify the error. However, his

Complaint, which exclusively involves his identification as a primary care practitioner, is the

very type of complaint Congress precludes this Court from reviewing under section 1395l(x)(4).

In order to entertain Dr. Feiss’ Complaint, this Court must examine Dr. Feiss’ designation as an

ineligible PCIP primary care practitioner, which section 1395l(x)(4) expressly prohibits.

Accordingly, this Court lacks the necessary subject-matter jurisdiction to entertain plaintiff’s

claims, and review of those claims is statutorily barred by 42 U.S.C. section 1395l(x)(4).

B. Breach of Implied Contract Claim

It is well-settled that a complaint should be dismissed for failure to state a claim upon

which relief can be granted “when the facts asserted by the claimant do not entitle him to a legal

remedy.” Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002) (citing Boyle v. United

States, 200 F.3d 1369, 1372 (Fed. Cir. 2000)). When considering a motion to dismiss brought

under RCFC 12(b)(6), “the allegations of the complaint should be construed favorably to the

pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Still, the Court must inquire whether

the complaint meets the “plausibility” standard described by the U.S. Supreme Court, i.e.,

whether the complaint adequately states a claim and provides a “showing [of] any set of facts

consistent with the allegations in the complaint.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 560,

563 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). Additionally, pursuant to the Tucker

Act, this Court has jurisdiction to hear claims brought against the government based upon

“express or implied contract[s].” 28 U.S.C. § 1491(a)(1); see also Mendez v. United States, 121

Fed. Cl. 370, 378 (2015). The following elements are necessary for the formation of a valid

government contract: (1) offer; (2) acceptance; (3) consideration; and (4) government agent

authority. MTD at 9 (referencing Hanlin v. United States, 316 F.3d 1325, 1329-31 (Fed. Cir.

2003) and Harbert/Lummus Agrifuels Projects v. United States, 142 F.3d 1429, 1434 (Fed. Cir.

1998)).

Plaintiff alleges that the SSA and its regulations created an implied contract between Dr.

Feiss and CMS, wherein Dr. Feiss served as a supplier of primary care services in exchange for

full, timely payments for those services provided. Compl. at 11. Dr. Feiss asserts that the

implied contract was confirmed by statements and actions of both parties. Id.; P’s Resp. at 13

(referencing Moda Health Plan, 130 Fed. Cl. at 463 (“In short, statutes or regulations show the

[g]overnment’s intent to contract if they have the following implicit structure: if you participate

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in this program and follow its rules, we promise you will receive a specific incentive.”)).

Specifically, Dr. Feiss alleges that, having fully performed his contractual obligations by

submitting proper billing for the primary care services provided to Medicare recipients, he is

entitled to PCIP payments for the services provided throughout the period at issue. Compl. at 11.

Dr. Feiss further contends that CMS has breached its contractual duty by failing to make such

payments. Id. Finally, Dr. Feiss argues that section 1395l(x) falls within the narrow category of

statutes that bind the government in contract, and CMS lacked the discretion to withhold PCIP

payments once Dr. Feiss accepted CMS’ offer by performance.1 P’s Resp. at 12-14.

In response, the government argues that, as “[t]here is a general presumption that statutes

are not intended to create any vested contractual rights,” Dr. Feiss has failed to allege the

elements of a contract with the government under RCFC 12(b)(6). See MTD at 9 (quoting ARRA

Energy, 97 Fed. Cl. at27 (citing Nat’l R.R. Passenger Corp., 470 U.S. at 465-66)). Dr. Feiss

attempts to distinguish this case from ARRA Energy, alleging that ARRA Energy involved no

continuing services or benefits, as plaintiffs’ mere filling in the blanks of a government-prepared

form does not constitute acceptance by performance, while the present case involves ongoing

primary care services, which demonstrate the parties’ mutual intent to contract. See P’s Resp. at

13-14 (citing Moda Health Plan, 130 Fed. Cl. at 464 (finding that the ACA created an incentive

program for insurers and thereby the government intended to enter into contracts with insurers);

Molina Healthcare, 133 Fed. Cl. at 45 (finding that the government entered into an implied

contract with plaintiff by agreeing to pay plaintiff a specified portion of its losses if plaintiff sold

Qualified Health Plans to eligible purchasers)).

Although, in limited circumstances, this Court has held that statutes and regulations may

bind the government in contract, PCIP does not fall into such an exception. As this Court has

previously stated, “HHS’s obligation to make . . . payments when certain conditions are met

represents the agency’s independent authority and obligation as directed by Congress, not any

promissory undertaking or offer . . . . Thus there is no apparent mutuality of intent to contract.”

Land of Lincoln, 129 Fed. Cl. at 112. Dr. Feiss’ allegations that an implied contract existed are

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In support of his argument, Dr. Feiss relies on two “Risk-Corridor” cases that are currently

under appeal. See P’s Resp. at 12-14 (citing Moda Health Plan, 130 Fed. Cl. at 463; Molina

Healthcare of California, Inc. v. United States, 133 Fed. Cl. 14, 45 (2017)). The government

relies on a separate Risk-Corridor case, also currently under appeal, throughout its brief to

support its legal theory. See generally Land of Lincoln, 129 Fed. Cl. 81. The Court would note

that, while these cases directly oppose one another, they are distinguishable from the case at bar.

Moda Health Plan, Molina Healthcare, and Land of Lincoln deal with the relationship between

the authorizing statute and the insurers. See, e.g., Molina Healthcare, 133 Fed. Cl. at 18 n.1 (The

Risk-Corridor concept deals with sharing the risk of new health insurance endeavors between

insurers and the government in order to encourage more insurers to participate in the new ACA

endeavor. Reimbursing certain revenue losses would allow insurers to maintain health insurance

premiums for consumers at a lower and more reasonable rate. The insurance companies

voluntarily entered into the program based upon the government’s promise terms.). The

forthcoming decisions from the Federal Circuit are related to the case at bar but not dispositive of

the Court’s ultimate decision here. This complaint concerns doctors’ PCIP payments, rather than

the rate of insurance premiums.

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merely conclusory and, thus, insufficient to rebut the general presumption that statutes do not

automatically create vested contractual rights. Accordingly, Dr. Feiss has failed to allege that an

implied contract exists, and that CMS breached that contract by withholding PCIP payments. As

plaintiff has failed to establish a valid breach of implied contract claim or assert facts that entitle

him to a legal remedy, he has not sufficiently stated a claim upon which relief can be granted.

C. Statute of Limitations

Every claim over which this Court has jurisdiction is subject to a six-year statute of

limitations from the date such claim first accrues. 28 U.S.C. § 2501. Pursuant to the Tucker Act,

a claim accrues when a claimant knew or should have known that his claim existed. 28 U.S.C. §

1491(a)(1); Banks v. United States, 741 F.3d 1268, 1279-80 (Fed. Cir. 2014). In other words,

“[a] cause of action cognizable in a Tucker Act suit accrues as soon as all events have occurred

that are necessary to enable the [claimant] to bring suit, [i.e.,] when ‘all events have occurred to

fix the government’s alleged liability, entitling the claimant to demand payment and sue [to

recover] his money.’” Martinez v. United States, 333 F.3d 1295, 1303 (Fed. Cir. 2003) (en banc)

(quoting Nager Elec. Co. v. United States, 368 F.2d 847, 851 (Ct. Cl. 1966)).

Here, the government argues that Dr. Feiss knew or should have known about his claim

in early- to mid-2011, and, as such, his September 15, 2017 Complaint runs afoul of the six-year

statute of limitations. D’s Reply at 5. While the Court does not agree with the government’s

statute of limitations argument, this Court must nevertheless dismiss Dr. Feiss’ Complaint for

lack of subject-matter jurisdiction and failure to state a claim. As the Court lacks subject-matter

jurisdiction to entertain Dr. Feiss’ statutorily barred claims, the Court need not analyze the

government’s argument under 28 U.S.C. section 2501 or evaluate when the statute of limitations

began to run.

D. Conclusion

Construing the facts in the light most favorable to Dr. Feiss, the nonmoving party, the

Court finds that 42 U.S.C. section 1395l(x)(4) prohibits administrative or judicial review of

plaintiff’s claims. Further, plaintiff has failed to allege the elements of an implied contract, or

that the government breached such contract by withholding plaintiff’s PCIP payments.

Accordingly, this Court lacks the requisite subject-matter jurisdiction to consider Dr. Feiss’

Complaint, and Dr. Feiss has failed to state a claim upon which relief can be granted.

For the reasons set forth above, defendant’s MOTION to Dismiss is GRANTED. The

Court directs the Clerk of Court to enter judgment in favor of defendant, consistent with this

Order.

IT IS SO ORDERED.

s/ Loren A. Smith

Loren A. Smith,

Senior Judge

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