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Haro v. Sebelius

United States Court of Appeals, Ninth Circuit

September 4, 2013

Patricia Haro; John G. Balentine; Jack McNutt; Troy Hall, Plaintiffs-Appellees,
v.
Kathleen Sebelius, Secretary of the United States Department of Health and Human Services, Defendant-Appellant.

Submitted February 14, 2013

Argued December 5, 2012 San Francisco, California

Amended January 2, 2014

Appeal from the United States District Court for the District of Arizona D.C. No. 4:09-cv-00134-DCB David C. Bury, District Judge, Presiding

Alisa B. Klein (argued) and Mark B. Stern, Attorneys; Tony West, Assistant Attorney General; Ann B. Scheel, Acting United States Attorney, United States Department of Justice, Civil Division, Washington, D.C.; William B. Schultz, Acting General Counsel; Margaret M. Dotzel, Deputy General Counsel; Janice L. Hoffman, Associate General Counsel; Carol J. Bennett, Deputy Associate General Counsel for Program Integrity; Leslie M. Stafford, Attorney, United States Department of Health and Human Services, Washington D.C., for Defendant-Appellant.

Gil Deford (argued) and Wey-Wey Kwok, Center for Medicare Advocacy, Willimantic, Connecticut, for Plaintiffs-Appellees.

Barbara Jones, AARP Foundation Litigation, Pasadena, California; Iris Y. González, AARP Foundation Litigation, Washington D.C.; Michael Schuster, AARP, Washington D.C., for Amicus Curiae AARP.

Before: Barry G. Silverman, Ronald M. Gould, and Morgan Christen, Circuit Judges.

SUMMARY [*]

Medicare

The panel amended an opinion filed September 4, 2013, vacated injunctions entered by the district court, and reversed the district court's summary judgment entered in favor of a nationwide class of Medicare beneficiaries in an action brought by the beneficiaries, and a named plaintiff's attorney, challenging the Secretary of Health and Human Services' practice of demanding "up front" reimbursement for secondary payments from beneficiaries who have appealed a reimbursement determination or sought a waiver of the reimbursement obligation.

The district court enjoined the Secretary from seeking up front reimbursements of Medicare secondary payments from beneficiaries who have received payment from a primary plan if they have unresolved appeals or waivers, and enjoined the Secretary from demanding that attorneys withhold settlement proceeds from their clients until after Medicare is reimbursed. The panel held that plaintiff Patricia Haro demonstrated Article III standing on behalf of the class of Medicare beneficiaries, and Haro's attorney independently demonstrated standing to raise his individual claim. However, the panel concluded that the beneficiaries failed to satisfy the channeling requirement at the administrative level, and therefore the district court lacked subject matter jurisdiction pursuant to 42 US.C. d 405(g). The panel reached the merits of the attorney's claim, but concluded that the Secretary's interpretation of the secondary payer provisions was reasonable. The panel remanded for consideration of the appellees' due process claim.

ORDER

The opinion filed on September 4, 2013, and appearing at 729 F.3d 993, is amended as follows:

On page 5 of the slip opinion, replace the third sentence of the first paragraph with the following language:

But we conclude that the beneficiaries failed to satisfy the channeling requirement at the administrative level and therefore the district court lacked subject matter jurisdiction pursuant to 42 US.C. § 405(g).

On page 5 of the slip opinion, in the fifth sentence of the first paragraph, replace the word "beneficiaries' " with the word "appellees.' "

On page 10 of the slip opinion, in the second full sentence appearing on the page, replace the word "beneficiaries" with "plaintiffs."

On page 23 of the slip opinion, replace footnote 8 with the following language:

The beneficiaries also cite, inter alia, Mathews v. Diaz, 426 US. 67 (1976), Briggs v. Sullivan, 886 F.2d 1132 (9th Cir. 1989), and Lopez v. Heckler, 725 F.2d 1489 (9th Cir. 1984), vacated 469 US. 1082 (1984). But these cases pre-date Illinois Council, 529 US. 1 (2000).

On page 24 of the slip opinion, replace heading i with the heading "Haro's February 2, 2009 letter did not satisfy the channeling requirement."

On page 24 of the slip opinion, in the first sentence in subsection i, replace the word "presentment" with "channeling."

On pages 25 of the slip opinion, replace the last two paragraphs of subsection i with the following language:

Even if Haro's letter and subsequent inaction did afford the Secretary an "opportunity to apply, interpret, or revise" the challenged policy, Haro failed to exhaust her administrative remedies before filing suit in federal court. To exhaust her administrative remedies, a beneficiary must proceed through the five levels of administrative review:
(1) the initial determination;
(2)redetermination; (3) reconsideration of the redetermination; (4) an ALJ hearing; and (5) review by the Medicare Appeals Council. 42 C.F.R. § 405. Haro failed to press her claim beyond level two. Instead, less than a week after she mailed her reimbursement check to the Secretary, Haro filed suit — before any agency review of the up-front reimbursement policy.
Haro claims that the government has waived the exhaustion requirement. But we can find no unambiguous waiver of this issue in the record, and therefore conclude that the issue is not waived.
We conclude that the channeling requirement of § 405(g) was not met. Because channeling is a jurisdictional requirement, the district court lacked subject matter jurisdiction over the beneficiaries' claim.

On page 32 of the slip opinion, replace the word "beneficiaries' " with the word "appellees.' " An amended opinion is filed concurrently with this order.

With this amendment, Judges Silverman, Gould, and Christen vote to deny Appellant's petition for panel rehearing and rehearing en banc, filed on October 18, 2013. The full court has been advised of the petition for rehearing and rehearing en banc and no judge requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.

The petition for panel rehearing and rehearing en banc is DENIED. No further petitions for en banc or panel rehearing shall be permitted.

OPINION

CHRISTEN, Circuit Judge:

Secretary of Health and Human Services Kathleen Sebelius appeals the district court's order certifying a nationwide class of Medicare beneficiaries and granting summary judgment in the beneficiaries' favor. Patricia Haro, Jack McNutt, and Troy Hall are named plaintiffs. John Balentine was Haro's lawyer in her underlying personal injury suit.

Before the district court, the beneficiaries raised two claims: (1) the Secretary's practice of demanding "up front" reimbursement for secondary payments from beneficiaries who have appealed a reimbursement determination or sought waiver of the reimbursement obligation is inconsistent with the secondary payer provisions of the Medicare statutory scheme; and (2) the Secretary's practice violates their due process rights. Balentine separately claimed the Secretary's practice of demanding that attorneys withhold settlement proceeds from beneficiary-clients until Medicare is reimbursed is also inconsistent with the secondary payer provisions.

The district court agreed with the beneficiaries. The court enjoined the Secretary from seeking up front reimbursement of Medicare secondary payments from beneficiaries who have received payment from a primary plan if they have unresolved appeals of their reimbursement calculations or unresolved requests for waiver of their reimbursement obligations. The district court also agreed with Balentine and enjoined the Secretary from demanding that attorneys withhold settlement proceeds from their clients until after Medicare is reimbursed. The district court did not reach the beneficiaries' due process claim.

On appeal to our court, the Secretary raises three jurisdictional arguments. First, she argues that this case is not justiciable because neither the beneficiaries nor Balentine had Article III standing. Second, she argues this case is moot. Third, she argues that the district court lacked subject matter jurisdiction over all claims in the complaint. On the merits, the Secretary maintains that her interpretation of the Medicare secondary payer provisions is reasonable.

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We conclude that Haro has demonstrated Article III standing on behalf of the class of Medicare beneficiaries and that Balentine has independently demonstrated standing to raise his individual claim. But we conclude that the beneficiaries failed to satisfy the channeling requirement at the administrative level and therefore the district court lacked subject matter jurisdiction pursuant to 42 US.C. § 405(g). We reach the merits of Balentine's claim, but conclude that the Secretary's interpretation of the secondary payer provisions is reasonable. We ...


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