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ELR Care Maine, LLC v. Progressive Management Systems LLC

United States District Court, D. Maine

October 16, 2014



JOHN C. NIVISON, Magistrate Judge.

In this action, Plaintiff ELR Care Maine, LLC, seeks a declaratory judgment as to the proper party to appeal from an administrative decision of Defendant Department of Health and Human Services (DHHS), through the Centers for Medicare and Medicaid Services, to terminate the Medicare provider agreement of Penobscot Nursing Home, a facility owned by Plaintiff. The matter is before the Court on Plaintiff's Emergency Motion for Expedited Briefing Schedule (ECF No. 5). As explained below, Plaintiff's motion is denied, and the recommendation is that the Court dismiss Plaintiff's Complaint without prejudice.

Factual Background

According to Plaintiff's Complaint, Plaintiff owns Penobscot Nursing Home (the nursing home), which is located in Penobscot, Maine, and other nursing home facilities. When Plaintiff purchased the nursing home, Plaintiff also acquired the prior owner's provider agreement with DHHS. Through the provider agreement, Plaintiff was required to provide nursing home services for Medicare recipients, and DHHS was to pay Medicare benefits to Plaintiff for the services rendered.

In October 2008, on a petition of the Maine Department of Health and Human Services, Penobscot Nursing Home and Plaintiff's other facilities were placed under receivership by order of the Maine Superior Court. Defendant Progressive Management Services, LLC, is the current court appointed receiver.

On June 18, 2014, through a letter addressed to Defendant's administrator, DHHS informed the nursing home that Plaintiff's provider agreement would be terminated on July 4, 2014. Plaintiff filed an administrative appeal from the termination decision, and requested a hearing. Upon receipt of the notice of appeal, DHHS notified Plaintiff that it could not act upon Plaintiff's request because the receiver (Defendant Progressive) had already filed an extension of time to request a hearing or file a waiver of its right to a hearing. Plaintiff informed DHHS that Defendant Progressive's interests were not aligned with Plaintiff's interests, and that it wished to proceed on its appeal.

On September 11, 2014, the Administrative Law Judge (ALJ) assigned to the matter, under the caption of the Departmental Appeals Board of the United States Department of Health and Human Services, issued an order stating that his "authority is limited to determining whether Petitioner [Penobscot Nursing Home] failed to comply substantially with participation requirements and whether the remedies imposed by CMS for that alleged noncompliance are reasonable." (ECF No. 1-5.) According to the ALJ, he does "not have the authority to decide who is authorized to file a hearing request on behalf of Petitioner." ( Id. ) The order instructs the parties to determine who should file the hearing request. ( Id. )

When the parties were unable to resolve the issue, Plaintiff filed this action asking the Court to declare "which of the parties - Plaintiff ELR Care or Defendant Progressive - has the legal right, under 42 C.F.R. §§ 489.53(e) and 498.5(b), to appeal DHHS' decision to terminate ELR Care's Provider Agreement." (Complaint at 5.) Plaintiff asserts that this Court has jurisdiction to issue such an order under 28 U.S.C. §§ 1331 and 1346(a)(2). ( Id. ¶¶ 1, 2.)


Pursuant to 42 U.S.C. § 1395ii and 42 U.S.C. § 405(h), the United States District Courts do not have general jurisdiction to adjudicate in piecemeal fashion issues arising in the context of the Department's administrative procedures under the Medicare Act. See Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 13-14 (2000). Title 42 U.S.C. § 405(h) provides in relevant part: "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.". Under section 405, the Commissioner has:

full power and authority to make rules and regulations and to establish procedures, not inconsistent with the provisions of this subchapter, which are necessary or appropriate to carry out such provisions, and shall adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder.

42 U.S.C. § 405(a). The Secretary has in fact adopted rules regarding the notice required for termination of a provider agreement and the appellate rights of those affected by the decision.[1] Significantly, the regulations provide for judicial review following exhaustion of administrative proceedings. 42 C.F.R. §§ 498.90, 498.5.

The Court's authority to consider a claim involving the Medicare Act is limited to the judicial review of agency action prescribed by the Act. The Supreme Court stated in Illinois Council on Long Term Care:

Insofar as § 405(h) prevents application of the ripeness' and exhaustion' exceptions, i.e., insofar as it demands the channeling' of virtually all legal attacks through the agency, it assures the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by ...

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