District courts lack jurisdiction to award a Medicare provider injunctive relief until administrative remedies are exhausted.
Medicare contractors determine provider reimbursement eligibility based on several sources, including local coverage determinations (LCD). A provider can challenge a contractor’s denial of reimbursement through four levels of administrative review. Here, a contractor repeatedly invoked a particular LCD in denying reimbursement claims by Dr. Robert Odell, who treats Medicare patients suffering from a neurological pain disorder with a combination of nerve blocks and electrical stimulation. Dr. Odell successfully challenged some of the denials via administrative review. He then sued the Secretary of Health and Human Services to enjoin the contractor from applying that LCD to deny his reimbursement claims.
The Secretary moved to dismiss for lack of subject-matter jurisdiction, arguing that Dr. Odell was required to (yet did not) exhaust his administrative remedies before seeking judicial review. The district court found that Dr. Odell had failed to exhaust, but excused the failure on the ground it was futile to challenge hundreds of denials individually before seeking injunctive relief. The court then denied the Secretary’s motion to dismiss and granted the injunction. The Secretary appealed.
The Ninth Circuit vacated and remanded for dismissal, holding that the district court lacked subject-matter jurisdiction. The Social Security Act, incorporated into the Medicare statute, provides the exclusive mechanism for review of the agency’s decision. Under the Act, judicial review is available only after a final agency decision. Here, in bypassing full administrative review and seeking a blanket injunction, Dr. Odell failed to meet the presentation requirement for his claims. The district court lacked jurisdiction to adjudicate past claims because Dr. Odell failed to challenge any particular adverse “final decision” by the agency. The district court also lacked jurisdiction to furnish prospective relief as to his future claims because they had not yet been presented to the agency. The court held that jurisdiction to adjudicate unpresented claims was lacking even if those claims appear to be identical to ones the agency had previously considered. The court rejected Dr. Odell’s argument that the presentation requirement improperly deprived him of any opportunity for review, holding that the existing administrative channels were adequate to challenge future claims. Finally, the court recognized that the claim-by-claim administrative review process imposes a high cost on individuals like Dr. Odell, who must challenge each denial individually, but concluded that “[w]hether that price is worth paying is a judgment for Congress to make.”
The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.