Bailey v. Azar ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BENNY RAY BAILEY, )
Plaintiff,
Vv. Civil Case No. 19-1721 (RJL)
ALEX M. AZAR, I, et al.,
Defendants. F I L E D
| JUL 22 2020
MEMORANDUM OPINION oor for ine Dict of Columb
(July Eh; [Dkt. # 12]
Plaintiff Benny Ray Bailey (“plaintiff’ or “Bailey”) brings suit against Alex M.
Azar, Il, in his official capacity as Secretary for the United States Department of Health
and Human Services, (“the Secretary”), and Joanne M. Chiedi, in her official capacity as
Acting Inspector General for the United States Department of Health and Human Services,
(“the IG”), seeking judicial review of the Secretary’s final determination excluding
plaintiff from participating for five years in all federal healthcare programs because of his
prior conviction of conspiracy to commit money laundering, which related to his work at a
pain management clinic. Before this Court is the Secretary’s and the IG’s (collectively,
“defendants”) motion to dismiss for improper venue. See Defs.’ Mot. to Dismiss [Dkt. #
12] (“Defs.’ Mot.”). For the following reasons, defendants’ motion to dismiss is
GRANTED, and, in the interest of justice, this matter is TRANSFERRED to the United
States District Court for the Eastern District of Kentucky.
BACKGROUND
kL Prsoatirsl History
In 2016, plaintiff was the office manager of Clarion Health and Wellness, LLC
(“Clarion”), a pain management clinic in Hazard, Kentucky. Compl. ff 14-15 [Dkt. # 1].
On September twelfth of that year, the United States District Court for the Eastern District
of Kentucky entered a judgment of conviction against plaintiff for conspiracy to commit
money laundering in violation of 18 U.S.C. § 1956. Jd. § 19. On April 20, 2018, the
Secretary notified plaintiff that, due to that conviction, he would be excluded from
participating in Medicare, Medicaid, and all other federal health care programs for the
minimum period of five years under 42 U.S.C. § 1320a-7(a). Jd. 9] 35-37, 64, 68. Not
surprisingly, plaintiff appealed. Jd. § 72.
An Administrative Law Judge (“ALJ”) upheld the Secretary’s five-year exclusion,
and on December 17, 2018, he appealed the ALJ’s final determination to the Department
of Health and Human Services’ Departmental Appeals Board (“the Board”). Jd. {J 86, 89.
The Board issued a final determination upholding the Secretary’s decision four months
later. Id. | 92.
Undaunted, plaintiff filed this action, seeking judicial review of the Board’s final
determination by raising various claims under the Social Security Act (“the Act”), the
Administrative Procedure Act (“the APA, and the Fifth Amendment. Jd. 94-147. He
contends that his suit was properly brought before this Court under 28 U.S.C. § 1391(e),!
| Plaintiff cites to both §§ 1391(b)(2) and 1391(e)(2) in his complaint but references the
language of § 1391(e)(1). Compl. 4 12. Plaintiff's briefing makes clear that he asserts
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which generally confers venue where defendant resides or where “‘a substantial part of the
events or omissions giving rise to the claim occurred” in a “civil action in which a
defendant is an officer or employee of the United States or any agency thereof.” Jd. | 12
(citing 28 U.S.C. § 1391).
On September 19, 2019, defendants filed a motion to dismiss for improper venue.
See Defs.’ Mot. That motion is now ripe for my review.
II. Statutory Scheme
Under 42 U.S.C. § 1320a-7(a), the Secretary of Health and Human Services is
required to exclude any individual from participation in Medicare, Medicaid, and all
federal health care programs who is convicted of a felony related to a health care fraud,
including felonies consisting of fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct related to delivery of a healthcare item or
service. 42 U.S.C. § 1320a-7(a)(3).
An individual excluded under § 1320a-7(a) may challenge that exclusion in several
ways. He may request a hearing before an ALJ to challenge the basis of the sanction or
the length of exclusion. 42 C.F.R. § 1001.2007(a)(1). Should the ALJ affirm the
Secretary’s determination, he may then appeal the ALJ’s decision to the Appellate Division
of the Board. 42 C.F.R. § 1005.21(a). And, should that appeal prove unsuccessful, the
excluded individual may seek “judicial review of the Secretary’s final decision.” 42 U.S.C.
§ 1320a-7(f)(1).
proper venue under § 1391(e). Pl.’s Opp’n to Defs.” Mot. to Dismiss [Dkt. # 14] (“PI.’s
Opp’n’’) at 6.
Section 1320a-7 incorporates the venue and jurisdiction requirements of 42 U.S.C.
§§ 405(g) and (h) into judicial review of the Secretary’s final decision. 42 U.S.C. § 1320a-
7(f)(1) (providing for judicial review “as is provided in section 405(g)”); id. § 1320a-
7(£)(3) (“The provisions of [42 U.S.C. § 405(h)] shall apply with respect to this section
....). Section 405(h) provides, in relevant part:
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 [federal question jurisdiction] or
1346 [jurisdiction where the United States is a defendant] of Title 28
to recover on any claim arising under this subchapter.
42 U.S.C. § 405(h). Section 405(g) provides that judicial review of the final determination
“shall be brought in the district court of the United States for the judicial district in which
the plaintiff resides, or has his principal place of business.” Jd. § 405(g).
ANALYSIS
L Standard of Review
“The Federal Rules provide that a court will dismiss or transfer a case if venue is
improper or inconvenient in the plaintiff's chosen forum.” Corbett v. Jennifer, 888 F.
Supp. 2d 42, 44 (D.D.C. 2012) (citing Fed. R. Civ. P. 12(b)(3)); see also 28 US.C.§ 1406
(“The district court of a district in which is filed a case laying venue in the wrong division
or district shall dismiss, or if it be in the interest of justice, transfer such case to any district
or division in which it could have been brought.”).
“To prevail on a motion to dismiss for improper venue, ... the defendant must present
facts that will defeat the plaintiff's assertion of venue.” Ananiev v. Wells Fargo Bank, N.A.,
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968 F. Supp. 2d 123, 129 (D.D.C. 2013) (internal citation omitted). But it is ultimately
plaintiff's burden to establish proper venue. Myers v. Holiday Inns, Inc., 915 F. Supp. 2d
136, 144 (D.D.C. 2013). “In assessing a motion for improper venue, the court accepts the
plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable
inferences from those allegations in the plaintiff's favor and resolves any factual conflicts
in the plaintiff's favor.” Fam v. Bank of Am. NA (USA), 236 F. Supp. 3d 397, 405 (D.D.C.
2017) cailion omitted). But the Court “need not accept the plaintiff's legal conclusions
as true.” Jd. at 406.
II. ‘Plaintiff Failed to Allege Proper Venue in the United States District Court
for the District of Columbia.
Defendants argue that § 405(g) is the sole avenue for plaintiffs challenge to the
Secretary’s final determination, and venue is improper because plaintiff failed to allege any
facts establishing his residence in the District of Columbia as required by § 405(g). Defs.’
Mot. at 13-14. Plaintiff counters that § 405(g) is not the sole avenue for plaintiff's
challenge, and that his APA claim permits proper venue for his case in the District of
Columbia because it is brought against officers of an agency of the United States where a
substantial part of the events or omission giving rise to the claim occurred and where the
defendants reside. Pl.’s Opp’n at 6 (citing 28 U.S.C. § 1391). Unfortunately for Bailey,
he is wrong!
First, 42 U.S.C. § 1320a-7(f)(1) specifically provides § 405(g) as the source of
venue for a challenge to the Secretary’s final determination. 42 U.S.C. § 1320a-7(f(1).
Section 405(g), of course, requires that judicial review “be brought in the district court of
the United States for the judicial district in which the plaintiff resides, or has his principal
place of business.” 42 U.S.C. § 405(g). Bailey’s complaint does not allege any facts that—
if taken as true—establish that plaintiff resides (or has a principal place of business) in the
District of Columbia, as required by § 405(g).* Therefore, Bailey has failed to establish
that venue is proper in the District of Columbia.
Second, plaintiff cannot do an end run around § 405(g)’s venue requirement by
asserting an APA claim because any APA claim concerning the Board’s exclusion
determination would arise under the Act, which, in turn, would subject it to § 405(g)’s
venue requirement. In addition, § 1320a-7(f)(3) incorporates § 405(h) into an excluded
individual’s challenge to the Secretary’s final determination. 42 U.S.C. § 1320a-7(f)(3)
(“The provisions of section 405(h) of this title shall apply with respect to this section ....”).
Section 405(h), in turn, contains two provisions that establish that § 405(g) is the exclusive
avenue for judicial review of all claims “arising under” the Social Security Act. 42 U.S.C.
§ 405(h). The first provision states, “No findings of fact or decision of the Commissioner
of Social Security shall be reviewed by any ... tribunal] ... except as herein provided.”
42 U.S.C. § 405(h). The second provision “provides that § 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 []
Act.” Heckler v. Ringer, 466 U.S. 602, 614-15 (1984) (emphasis added); > see also 42
* Section 405(g) also allows for proper venue in the District of Columbia when the plaintiff
“does not reside or have his principal place of business within any such judicial district.”
42 U.S.C. § 405(g). Plaintiff's complaint makes no such allegation, nor has plaintiff argued
that venue is proper under that provision.
> The fact that Ringer concerned the Medicare Act and not § 1320a-7 is irrelevant. Section
§ 405(h) is applicable to judicial review of claims arising under the Medicare Act, see 42
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U.S.C. § 405(h) (“No action against ... the Commissioner of Social Security, or any officer
or employee thereof shall be brought under [28 U.S.C. §§ 1331, 1346] to recover on any
claim arising under this subchapter.”) (emphasis added).
Moreover, the “arising under” language of § 405(h) is construed “quite broadly to
include any claims in which ‘both the standing and the substantive basis for the
presentation’ of the claims is the Social Security Act.” Ringer, 466 U.S. at 615 (quoting
Weinberger v. Salfi, 422 U.S. 749, 761 (1975)). Here, there is no doubt that Bailey’s APA
claim arises under the Social Security Act. See Compl. § 119 (alleging that defendants
“enforc[ed] the Social Security Act in a manner that is contrary to law, arbitrary and
capricious, an abuse of discretion, or unsupported by substantial evidence”) (emphasis
added); id. § 120 (“The Secretary’s interpretation and application of the statute in this
proceeding [i.e. § 1320a-7 of the Act] is inconsistent with past interpretations ....”); see
also Ringer, 466 U.S. at 622-24 (rejecting an argument that the district court had
jurisdiction under § 1331 of a plaintiff's APA claim because that claim arose under the
Medicare Act, not the APA). “And when § 405(g) provides jurisdiction, there is no basis
for ignoring that provision’s specific venue requirement.” Michener v. Saul, No. CV 18-
1657 (RC), 2019 WL 3238582, at *3 (D.D.C. July 18, 2019) (emphasis added).
_Bailey’s arguments to the contrary are simply without merit. He contends that the
APA provides an alternative venue provision, pointing to our Circuit Court’s decision in
Friedman v. Sebelius, 686 F.3d 813 (D.C. Cir. 2012). Pl.’s Opp’n at 6-7. But that case
U.S.C. § 1395ii, just as § 405(h) is applicable to judicial review of claims arising under the
Secretary’s exclusion determinations, see 42 U.S.C. § 1320a-7(f)(3).
a
does not advance his position. Indeed, the court in Friedman determined that § 405(g) only
spoke to review of findings of fact for substantial evidence, and under Supreme Court
precedent concerning “virtually identical” language, the arbitrary and capricious standard
of the APA was incorporated into § 405(g). /d. at 826-27. It did not, as plaintiff contends,
hold that the APA offers an alternative venue provision to § 405(g). And, moreover, venue
was not even challenged in Friedman, and, as a result, the decision is silent on that issue.
Plaintiffs alchemist-like attempt to transform that silence into approval is, to say the least,
unconvincing. *
Thus, having concluded that plaintiff's APA claim arises under the Social Security
Act, § 405(h) mandates that the venue requirement of § 405(g) applies. And having failed
to allege any facts that would establish that he resides in the District of Columbia, Bailey
has failed to establish that venue is proper in this Court.
III. The Appropriate Remedy is to Transfer this Matter to the United States
District Court for the Eastern District of Kentucky.
In the absence of venue, I must still determine whether to dismiss the complaint or
transfer it to the appropriate district court. See 28 U.S.C. § 1406(a) (“The district court of
a district in which is filed a case laying venue in the wrong division or district shall dismiss,
or if it be in the interest of justice, transfer such case to any district or division in which it
4 Plaintiffs final argument that the Court should not read § 405(g) “too literally” is also
without merit. See Pl.’s Opp’n at 9-11. The cases cited by plaintiff were cases in which
there were multiple plaintiffs, at least one of whom did not reside in the district in which
the suit was brought. Fournier v. Johnson, 677 F. Supp. 2d 1172, 1174 (D. Ariz. 2009)
(holding that venue is proper under § 405(g) “for all plaintiffs so long as it is proper for at
least one plaintiff’); Webber v. Norwalk, No. 05-4219, 2007 U.S. Dist. LEXIS 102514, at
*30 (D. Ariz. 2007) (same). That is not the case here.
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could have been brought.”). “The decision whether a transfer or a dismissal is in the
interest of justice ... rests within the sound discretion of the district court.” Naartex
Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983). Not surprisingly, a transfer
of a case is generally favored over a dismissal. Murdoch v. Rosenberg & Assocs., LLC,
875 F. Supp. 2d 6, 11 (D.D.C. 2012) (citation omitted). But dismissal may be appropriate
where pine s claims have “obvious substantive problems.” Lemon v. Kramer, 270 F.
Supp. 3d 125, 140 (D.D.C. 2017) (citation omitted); see also Buchanan v. Manley, 145
F.3d 386, 389. n.6 (D.C. Cir. 1998) (finding no abuse of discretion where district court
dismissed claims rather than transferring in light of “substantive problems” with the
claims).
Seeing ab substantive issues here with plaintiff's complaint (apart, of course, from
the venue issue discussed above), I find that it is in the interest of justice to transfer this
case to the appropriate venue.
Under § 405(g), plaintiff must bring his claim in the “judicial district in which the
plaintiff resides.” 42 U.S.C. § 405(g). Plaintiff alleges that he worked for Clarion in
Hazard, emaniey, Compl. § 14, and plaintiff used an address in Hindman, Kentucky for
his appeal to the Board, (AR 27). Further, plaintiff did not contest defendants’ argument
that—if this matter is transferred—it should be transferred to the Eastern District of
Kentucky. See Defs.’ Mot. at 14. Consequently, I find that it is in the interest of justice
that this matter be transferred to the United States District Court for the Eastern District of
Kentucky.
CONCLUSION
For all. of the foregoing reasons, defendants’ motion to dismiss [Dkt. # 12] is
GRANTED, and this matter is TRANSFERRED to the United States District Court for
the Eastern District of Kentucky. An order consistent with this decision accompanies this
Memorandum Opinion.
( CebusLl
RICHARD J-CEON
United States District Judge
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