Marsaw v. Thompson , 133 F. App'x 946 ( 2005 )

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT May 18, 2005
_______________________ Charles R. Fulbruge III
Clerk
No. 04-20394
_______________________
TROY MARSAW; LOVING CARE PHYSICAL MEDICINE, INC.;
LOVING CARE PHYSICAL MEDICINE OF BRENHAM INC.,
doing business as Brenham Rehab Clinic;
LOVING CARE PHYSICAL MEDICINE OF BRYAN, INC.,
doing business as Bryan Rehab Clinic,
Plaintiffs - Appellants,
versus
TOMMY THOMPSON, SECRETARY,
DEPARTMENT OF HEALTH & HUMAN SERVICES;
TRAILBLAZER HEALTH ENTERPRISES, LLC,
Defendants - Appellees.
Appeal from the United States District Court
For the Southern District of Texas
No. 4:03-CV-1197
Before REAVLEY, JONES and GARZA, Circuit Judges.
EDITH H. JONES, Circuit Judge:*
Troy Marsaw and his rehabilitation clinics appeal from
the district court’s dismissal for lack of subject matter
jurisdiction of his constitutional, civil rights, and state law
damages claims stemming from the denial of Medicare reimbursements.
For the following reasons, we AFFIRM.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
This is the second case brought by Troy Marsaw, the owner
of several Medicare providers, and his clinics (collectively
“Marsaw”) against the Secretary of the United States Department of
Health and Human Services (“the Secretary” or “HHS”) and the
Medicare contractor, Trailblazer Health Enterprises, L.L.C.
(“Trailblazer”). In October 2001, Marsaw filed his first action
against Trailblazer and the Secretary. Marsaw, an African-
American, alleged that Trailblazer engaged in racial discrimination
when it placed Marsaw’s clinics in pre-payment review (which forced
the clinics to engage in lengthy administrative work to receive
Medicare reimbursements) and then denied reimbursements of the
submitted claims, ultimately forcing Marsaw out of business.
Marsaw’s complaint sought an injunction to correct the Medicare
administrative process and judicial review of denied Medicare
claims. Marsaw also alleged causes of action for violations of his
rights under the equal protection and due process clauses of the
Fifth Amendment of the United States Constitution; 42 U.S.C.
§ 1981; Title VI of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000d; and state law causes of action for tortious interference
with contract or prospective business relations.
The district court found that Plaintiffs’ claims “arose
under” the Medicare Act and that Marsaw’s failure to exhaust
administrative remedies, as required by 42 U.S.C. § 405(g) of the
Social Security Act, precluded judicial review of the pending
claims based on a lack of subject matter jurisdiction. See Marsaw
2
v. Trailblazer Health Enterprises, L.L.C., 192 F. Supp. 2d 737(S.D. Tex. 2002). This determination was not appealed.
In this second action, filed on January 17, 2003, Marsaw
alleges that his clinics have completed the administrative review
process and have been awarded payment of 98 percent of the Medicare
claims previously denied by Trailblazer. However, Marsaw seeks an
additional $50 million in damages from the Secretary and
Trailblazer for initially denying the Medicare claims. Marsaw’s
factual allegations and legal claims in this second action are the
same as in the first action.
The district court dismissed Marsaw’s second suit,
holding that (1) Marsaw’s various claims arise under Medicare
because they are inextricably intertwined with a substantive claim
of administrative entitlement; (2) the fact that Marsaw seeks
damages for constitutional violations beyond the reimbursement
payments available under Medicare does not undercut this
conclusion; and (3) § 405(g) precluded federal question jurisdic-
tion because Marsaw had successfully litigated his benefits claims
before the administrative law judge.
Finally, the district court held that a civil rights suit
against the Secretary in his official capacity was barred by
sovereign immunity and, further, because the Secretary was not
being sued in his individual capacity, neither Bivens nor the civil
rights statutes provided a jurisdictional predicate for the action.
The district court also held that Trailblazer, as a Medicare
3
“carrier,” could not be sued under Bivens or the civil rights
statutes because it was a private insurer acting under color of
federal law.
On appeal, Marsaw asserts federal jurisdiction over an
implied right of action based on Bivens v. Six Unknown Named Agents
of Federal Bureau of Narcotics, 403 U.S. 388 (1971). We review
dismissals for lack of subject matter jurisdiction de novo, using
the same standards as those employed by the lower court. Beall v.
United States, 336 F.3d 419, 421 (5th Cir. 2003). We must take as
true all of the complaint's uncontroverted factual allegations.
John Corp. v. City of Houston, 214 F.3d 573, 576 (5th Cir.2000).
Significantly, Marsaw does not challenge the district
court’s determination that Secretary Thompson is entitled to
sovereign immunity. He has waived any argument to the contrary.
Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993).
As to the defendant Trailblazer, there are several
reasons Marsaw failed to meet his burden to demonstrate federal
subject matter jurisdiction. First, there is no implied private
right of action, pursuant to Bivens, for damages against private
entities such as Trailblazer that engage in alleged constitutional
deprivations while acting under color of federal law. Correctional
Services Corp. v. Malesko, 534 U.S. 61, 122 S. Ct. 515 (2001).
Second, Marsaw’s constitutional claims arise under the
Medicare Act (and are not collateral to it) because they are
“inextricably intertwined” with plaintiffs’ substantive claims for
4
entitlement under Medicare. See Affiliated Professional Home
Health Care Agency v. Shalala, 164 F.3d 282 (5th Cir. 1999). As in
Affiliated, to fully address Marsaw’s claim that his constitutional
rights were violated through the improper enforcement of Medicare
regulations, a court would necessarily have to review the propriety
of thousands of Trailblazer’s Medicare claims determinations and
the decisions of its hearing officers to evaluate whether there was
legitimate doubt about Marsaw’s compliance. Section 405(g), to the
exclusion of 28 U.S.C. § 1331, is the sole avenue for judicial
review for all ‘claim[s] arising under’ the Medicare Act. Heckler
v. Ringer, 466 U.S. 602, 614-615, 104 S. Ct. 2013, 80 L.Ed.2d 622(1984). A condition for jurisdiction under § 405(g) is that the
Medicare system has made a determination adverse to the claimant.
Weinberger v. Salfi, 422 U.S. 749, 758 n.6, 95 S. Ct. 2457, 2464
n.6 (1975). Because Marsaw has now received precisely the Medicare
payments he claims were wrongfully denied, and the statute entitles
him to no other relief, his case is moot.
The constitutional nature of Marsaw's claim does not, by
itself, alter that conclusion. Affiliated, 164 F.3d at 285. In
Schweiker v. Chilicky, 487 U.S. 412, 108 S. Ct. 2460 (1988), the
Supreme Court refused to extend a Bivens claim to recipients of
Social Security disability benefits who, although their benefits
had been reinstated, claimed that defendants’ unconstitutional
conduct resulted in the wrongful termination of benefits, causing
injury above and beyond the amount they temporarily lost in
5
benefits alone. Following Chilicky, this court will not imply a
Bivens remedy for an alleged constitutional violation in the denial
of Medicare Act reimbursements, because Congress created a
comprehensive statutory administrative review mechanism, which was
intended fully to address the problems created by wrongful denial
of Medicare reimbursements. Moreover, “the harm resulting from the
alleged constitutional violation cannot be separated from the harm
resulting from the denial of the statutory right.” Chilicky, 487
U.S. at 428, 108 S. Ct. at 2470.
Third, Trailblazer qualifies for sovereign immunity
because it was acting under the direction of the federal government
in performing duties delegated by HHS. See Matranga v. Travelers
Ins. Co., 563 F.2d 677 (5th Cir. 1977). Marsaw’s claims arise from
Trailblazer’s decisions to pay or deny reimbursements. Thus,
Trailblazer was acting within the scope of official duties and is
entitled to the same official immunity as officers or employees of
the United States performing discretionary duties. Id. This is
not a case like Rochester Methodist Hospital v. Travelers Insurance
Co., 728 F.2d 1006 (8th Cir. 1984), where the intermediary acted
beyond the scope of its authority; in Rochester, it was alleged and
proved that the intermediary committed a tort of fraud by
misrepresenting that the medicare provider’s dormitory costs in
connection with a nursing education program were not reimbursable.
In light of the above, Marsaw has shown no error with
regard to the dismissal of his supplemental state law claims.
6
AFFIRMED.
7