Affiliated Professional Home Health Care Agency v. Shalala , 164 F.3d 282 ( 1999 )

Revised January 29, 1999
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
__________________________________________
No. 98-40032
_________________________________________
AFFILIATED PROFESSIONAL HOME HEALTH CARE AGENCY; CARRIE M.
HAMILTON, Individually; WESSIE DOBBINS, Individually; ETHEL
SHELTON, Individually,
Plaintiffs-Appellees,
VERSUS
DONNA E. SHALALA, SECRETARY, DEPARTMENT OF HEALTH & HUMAN
SERVICES, ET AL.,
Defendants,
DONNA E. SHALALA, SECRETARY, DEPARTMENT OF HEALTH & HUMAN
SERVICES,
Defendant - Appellant.
__________________________________________
Appeal from the United States District Court
for the Southern District of Texas
__________________________________________
January 20, 1999
Before REYNALDO G. GARZA, JONES, and DeMOSS, Circuit Judges.
PER CURIAM:
I. FACTUAL AND PROCEDURAL BACKGROUND
In this appeal we must decide whether the district court
properly granted a preliminary injunction in favor of Affiliated
Professional Home Health Care Agency (“APRO”).
APRO is a health care agency that specializes in providing
home-based health care. It is an African-American owned
enterprise, founded in 1993, that operates in Harris, Galveston,
and Jefferson Counties, Texas. In 1997, APRO was participating
as a health care provider in the federal Medicare program, as
established by Title XVIII of the Social Security Act, 42 U.S.C.
§ 1395 et seq. Although that program is funded entirely by the
federal government, and administered by the Secretary of Health
and Human Services, various administrative functions are
performed by state agencies that work for the Secretary under
contract. Those tasks included unannounced, on-site surveys of
Medicare providers to ensure their compliance with the statutory
requirements for Medicare participation. After a state agency
conducts such a survey, it submits its findings and
recommendations to the Secretary. Then the Secretary initiates
any necessary action including the termination of the Medicare
provider agreement between the Secretary and the health care
agency. In Texas, the Health Facility Licensure and
Certification Agency, which is part of the Texas Department of
Health (“TDH”), is the state agency that conducts Medicare
surveys on behalf of the Secretary.
Once a health care agency is given notice that its provider
agreement is being terminated, the provider may request an
evidentiary hearing before an administrative law judge (“ALJ”) on
the Health and Human Services Department Appeals Board (“Appeals
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Board”). The ALJ’s decision becomes the Secretary’s final
decision for purposes of judicial review unless that decision is
subsequently reviewed by the Appellate Division of the Appeals
Board. The provider may seek judicial review in federal district
court only after it has exhausted all of these administrative
remedies. See 42 U.S.C. § 405(g) & (h); 42 U.S.C. §
1395cc(h)(1).
In 1997, the TDH conducted three separate surveys of APRO,
each revealing that APRO had fallen out of compliance with
various conditions of participation. After each of the first two
surveys APRO was afforded an opportunity to correct the
deficiencies in order to avoid having its provider status
terminated. After the third survey revealed that APRO was still
not in compliance, the Secretary issued a notice of termination
effective November 15, 1997. The Secretary also ordered the
suspension of Medicare payments to APRO.
On October 30, 1997, APRO, two of its corporate officers,
and one of its patients (plaintiffs-appellees, collectively
referred to as “APRO”), filed suit in federal court against the
Secretary, the Deputy Administrator of the Health Care Finance
Administration (“HCFA”), TDH, its Commissioner, and four of its
surveyors (collectively referred to as “defendants”), alleging
that they conspired to violate APRO’s right to due process and
equal protection under the United States Constitution.
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Specifically, APRO charged the Secretary with improperly and
arbitrarily enforcing various Medicare rules and regulations
based solely on the fact that APRO is an African-American owned
enterprise.
On October 30, 1997, APRO moved for a preliminary inunction
seeking to prevent the defendants from terminating APRO’s
Medicare provider status. The Secretary and Deputy Administrator
of the HCFA opposed the motion through written responses and
moved to dismiss APRO’s complaint for lack of jurisdiction.1
On November 6, 1997, the district court held a hearing on
the motion for a preliminary injunction and granted the motion
from the bench.2 The Secretary appealed the district court’s
decision to this Court.
II. STANDARD OF REVIEW
Our standard of review for a district court’s granting of a
preliminary injunction is “whether the issuance of the
injunction, in the light of the applicable standard, constitutes
an abuse of discretion.” Concerned Women for America, Inc. v.
Lafayette County, 883 F.2d 32, 34 (5th Cir. 1989). In performing
1
The other defendants did not appeal the district court’s
holding.
2
The district court enjoined the Secretary from terminating
APRO’s provider status, and from terminating APRO’s Medicare
funding. The district court also conditioned the injunction on
APRO posting a bond of $1,000,000.
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that review, findings of fact that support the district court’s
decision are examined for clear error, whereas conclusions of law
are reviewed de novo. Id.
III. DISCUSSION
A preliminary injunction is an equitable remedy that may be
granted only if the movant satisfies four requirements: (1) a
substantial likelihood of success on the merits; (2) a
substantial threat that the movant will suffer irreparable injury
if the injunction is denied; (3) that the threatened injury
outweighs any damage that the injunction might cause the
defendant; and (4) that the injunction will not disserve the
public interest. Sunbeam Products, Inc. v. West Bend Co., 123
F.3d 246, 250 (5th Cir. 1997).
In this case, the district court granted the preliminary
injunction, holding that APRO would suffer irreparable injuries
if it were not granted. The lower court also held that denying
the injunction would result in a loss of medical services to the
under-served communities of Galveston, Harris and Jefferson
Counties and that patients would lose the right to choose APRO as
their health care provider.
On appeal, the Secretary argues: (1) that the district court
erred in granting the preliminary injunction because it lacked
subject matter jurisdiction; and (2) that APRO cannot assert any
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of the various civil right claims that are invoked in its
complaint because the United States has not waived its sovereign
immunity to claims brought under these statutes.
A. Jurisdiction Based on Section 405(g)
Title 42 U.S.C. § 1395, commonly known as the Medicare Act,
establishes a federally subsidized health insurance program that
is administered by the Secretary. See Heckler v. Ringer, 466
U.S. 602, 605 (1984). Title 42 U.S.C. § 405(g) is the sole
avenue for judicial review of all claims arising under the
Medicare Act. Id. Pursuant to her rule-making authority, the
Secretary has provided that a final decision is rendered on a
Medicare claim only after the claimant has pressed the claim
through all designated levels of administrative review. Id.
In Mathews v. Eldridge, 424 U.S. 319, 328 (1976), the
Supreme Court held that jurisdiction under section 405(g) is
determined under a two prong test. First, there must have been a
presentment to the Secretary. Id. This element can never be
waived and no decision of any type can be rendered if this
requirement is not satisfied. Id. Second, the claimant must
have exhausted his administrative review.
Although APRO asserts that the first prong of Eldridge can
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still be satisfied,3 there is absolutely no doubt that APRO did
not exhaust its administrative remedies before seeking judicial
review. Therefore, the failure to satisfy this second prong
might be enough to deny them relief.
APRO correctly argues that exhaustion of administrative
review may be waived. This may occur when a plaintiff asserts a
collateral challenge that can not be remedied after the
exhaustion of administrative review. Id. at 330-32.
On the facts of this case, APRO’s claim is not a collateral
claim for purposes of exhaustion. Although its claim is framed
in constitutional terms and seeks compensatory and punitive
damages, APRO also seeks to rescind the termination of its
provider status and to halt the suspension of its Medicare
payments. Such relief is unquestionably administrative in
nature.
Additionally, to fully address APRO’s claim that their due
process and equal protection rights were violated through the
improper enforcement of Medicare regulations, a court would
necessarily have to immerse itself in those regulations and make
a factual determination as to whether APRO was actually in
3
APRO notes that it filed an unopposed motion for leave to
supplement the record to show that the Secretary has actual
knowledge of the presentment. In Mathews v. Diaz, 426 U.S. 67,
75 (1976), the Supreme Court concluded that it was not too late
to supplement the record during pendency of the case on appeal
wherein the Secretary stipulated the condition was satisfied.
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compliance. Given the administrative nature of that inquiry, it
cannot be reasonably concluded that APRO’s claim is collateral to
a claim for administrative entitlement.
The constitutional nature of APRO’s claim does not, by
itself, alter that conclusion. The Supreme Court has recognized
that the constitutional tenor of a claim is not a determinative
factor in deciding whether a claim is collateral. Instead, the
exhaustion requirement is applicable to a constitutionally-based
claim when that claim is “inextricably intertwined” with a
substantive claim of administrative entitlement. Id. at 611; see
also Weinberger v. Salfi, 422 U.S. 749 (1975). In this case,
there is little doubt that APRO’s claim is “inextricably
intertwined” with a demand for benefits.
A more difficult issue, however, is whether the facts of
this case give rise to a sufficient threat of irreparable harm so
as to justify waiver of the administrative exhaustion
requirement.
The briefs and the record do not address the evidence that
was offered in support of the district court’s finding of
irreparable harm. Furthermore, it seems highly unlikely that the
termination of APRO’s provider status would result in a
measurable loss of home-based health care in three separate
counties. Similarly, it seems unreasonable to conclude that
APRO’s patients will be deprived of adequate home-based health
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care if APRO is forced out of business.
B. Jurisdiction based upon the Civil Rights Statutes
APRO’s cites various civil rights statutes in its complaint
against the Secretary; 28 U.S.C. § 1343 and 42 U.S.C. §§ 1981,
1983, 1985, 1986, and 1988.
This Court has long recognized that suits against the United
States brought under the civil rights statutes are barred by
sovereign immunity. Unimex, Inc. v. United States Dept. of
Housing and Urban Development, 594 F.2d 1060, 1061 (5th Cir.
1979). Moreover, Bivens v. Six Unknown Agents of Federal Bureau
of Narcotics, 403 U.S. 388 (1971), provides a cause of action
only against government officers in their individual capacities.
There is no indication that the Secretary is being sued in her
individual capacity. Therefore, neither Bivens, nor the civil
rights statutes provide a valid jurisdictional predicate for this
action.
IV. CONCLUSION
We find that APRO should have exhausted its administrative
remedies under section 405(g) and that APRO’s civil rights
complaints are barred by sovereign immunity. Accordingly, we
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REVERSE the district court’s decision based on lack of subject
matter jurisdiction.
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