Pace v. Leavitt , 293 F. App'x 919 ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
9-24-2008
Pace v. Leavitt
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-4510
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"Pace v. Leavitt" (2008). 2008 Decisions. Paper 492.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 07-4510
__________
DONNA PACE, on behalf of herself and all others similarly situated,
Appellant
vs.
MICHAEL O. LEAVITT, Secretary of the United States
Department of Health and Human Services
__________
On Appeal from the United States District Court
For the District of New Jersey
(Civ. No. 06-2925)
District Court Judge: Honorable William J. Martini
___________
Submitted Under Third Circuit L.A.R. 34.1(a)
September 23, 2008
___________
Before: BARRY, AMBRO and GARTH, Circuit Judges,
( Filed: September 24, 2008)
___________
OPINION
___________
GARTH, Circuit Judge:
Donna Pace appeals from the District Court’s order affirming the substitution of
Michael O. Leavitt, Secretary of the U.S. Department of Health and Human Services (the
“Secretary”), for the named defendant, Riverbend Government Benefits Administrator,
Inc. For the following reasons, we will affirm.
I.
On July 7, 2005, Riverbend, a private insurance company acting as an intermediary
for the Medicare program, sent two attached letters to Pace, a Medicare beneficiary,
requesting reimbursement for an overpayment. One was a standard Medicare demand
letter listing the full amount owed as $4,735.64. The other was a cover letter
acknowledging past receipt of $1,064.58 and stating that the remaining balance was
$3,671.06.
On May 15, 2006, after resolving the overpayment owed, Pace filed a complaint in
state court against Riverbend alleging that these letters violated the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. §§ 1692–1692p.1 The case was removed to federal
court, and the Government moved to substitute Secretary Leavitt for Riverbend as the real
party of interest pursuant to Federal Rule of Civil Procedure 17, or alternatively to
intervene pursuant to Federal Rule of Civil Procedure 24(a). The Magistrate Judge
granted the motion for substitution on July 14, 2006, and the District Court affirmed on
January 31, 2007.
1
In essence, Pace claimed that the letters failed to state that Riverbend was a debt
collector or that it was attempting to collect a debt. She later conceded that she had no
issue with the standard Medicare demand letter, leaving only the cover letter at issue.
-2-
Subsequently, on November 7, 2007, the District Court dismissed the complaint
for lack of subject matter jurisdiction because a FDCPA claim cannot be asserted against
an “officer or employee of the United States.” 15 U.S.C. § 1692a(6)(C). Pace now
appeals the substitution of the Secretary.
II.
The District Court had original jurisdiction pursuant to 28 U.S.C. § 1441. We
have jurisdiction under 28 U.S.C. § 1291, which provides appellate jurisdiction from all
final decisions of U.S. district courts. We review for abuse of discretion a district court’s
decision whether to join or substitute a party as a “real party of interest” under Federal
Rule of Civil Procedure 17(a). Esposito v. United States, 368 F.3d 1271, 1273 (10th Cir.
2004); Wieburg v. GTE Southwest Inc., 272 F.3d 302, 308 (5th Cir. 2001). We exercise
de novo review over a dismissal for lack of subject matter jurisdiction. Metropolitan Life
Ins. Co. v. Price, 501 F.3d 271, 275 (3d Cir. 2007).
III.
Pace contends that Riverbend should be subject to liability under the FDCPA
because it was like any other private contractor hired by the Government. Extending
governmental immunity to Riverbend would, Pace argues, permit it to escape its duties
and obligations under the FDCPA as a private debt collector. We do not agree.
Private insurance companies, such as Riverbend, contracted by the Secretary under
Part A of the Medicare Program have been known as “fiscal intermediaries.” 42 U.S.C.
-3-
§ 1395h.2 These fiscal intermediaries “‘act[] on behalf of the [Medicare] Administrator in
carrying out certain administrative responsibilities that the law imposes’ and [are] entitled
to indemnification from the United States, which, therefore, is ‘the real party of interest.’”
Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 71-72 (2d Cir. 1998) (quoting 42
C.F.R. § 421.5(b)) (surveying cases); accord S. Rep. No. 89-404 (1965), as reprinted in
1965 U.S.C.C.A.N. 1943, 1995 (“In the performance of their contractual undertakings,
the carriers and fiscal intermediaries would act on behalf of the Secretary . . . . The
Secretary, however, would be the real party in interest in the administration of the
program.”). In sending the letters at issue in this case, Riverbend clearly was acting on
behalf of the Secretary in administering the Medicare program.
Because we find that the Secretary was properly substituted as the real party of
interest, we need not decide whether Riverbend was otherwise entitled to immunity.
Since FDCPA claims cannot be asserted against the Secretary, the District Court properly
dismissed the complaint for lack of subject matter jurisdiction.
IV.
Accordingly, we affirm the District Court’s orders of January 31, 2007 and November 27,
2007.
2
As the District Court noted, Congress amended the Medicare Act to authorize
the Secretary to enter into contracts with “Medicare Administrative Contractors,” rather
than fiscal intermediaries, but this amendment did not become effective until after the
relevant events in this case. 42 U.S.C. § 1395kk-1 (effective October 1, 2005).