Nightingale Home Healthcare v. United States ( 2017 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 16-2054, 16-3668, & 16-3669
HOME CARE PROVIDERS, INC., et al.,
Plaintiffs-Appellants,
v.
KELLY HEMMELGARN, et al.,
Defendants-Appellees.
____________________
IN RE: NIGHTINGALE HOME HEALTHCARE, INC.,
Debtor.
NIGHTINGALE HOME HEALTHCARE, INC.,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA, et al.,
Defendants-Appellees.
____________________
Appeals from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
Nos. 1:16-cv-00303-LJM-TAB, 1:16-cv-00317-LJM-TAB, &
1:16-cv-00583-LJM-TAB — Larry J. McKinney, Judge.
____________________
2 Nos. 16-2054, 16-3668, & 16-3669
ARGUED MAY 16, 2017 — DECIDED JUNE 27, 2017
____________________
Before BAUER, FLAUM, and KANNE, Circuit Judges.
FLAUM, Circuit Judge. This consolidated appeal was
prompted by the federal government’s termination of Night-
ingale Home Healthcare, Inc.’s Medicare provider agreement.
Nightingale sought and received a preliminary injunction
from the bankruptcy court that prevented the government
from terminating Nightingale’s agreement. On appeal, the
district court concluded that the bankruptcy court had lacked
jurisdiction to issue an injunction and reversed the order. We
conclude, however, that the issue of whether the bankruptcy
court properly granted the injunction was moot, as the bank-
ruptcy court had dissolved the underlying injunction prior to
the district court’s ruling. Separately, Home Care Providers,
Inc., Nightingale’s sole shareholder, and its owner, Dr. Dev A.
Brar, filed a civil action in the district court, alleging that cer-
tain Indiana state surveyors had committed various constitu-
tional violations leading up to Nightingale’s Medicare termi-
nation. 1 The district court dismissed those claims with preju-
dice. We conclude Nightingale’s and Dr. Brar’s constitutional
claims were also jurisdictionally barred, pursuant to 42 U.S.C.
§ 405(g), and vacate and remand with instructions to dismiss
without prejudice.
1For the remainder of the opinion, we refer to Nightingale, Home
Care Providers, any other related subsidiaries, and Dr. Brar as simply,
“Nightingale.”
Nos. 16-2054, 16-3668, & 16-3669 3
I. Background
Nightingale Home Healthcare, Inc. provides home health
care services in a number of states, including Indiana. In the
course of this business, Nightingale signed a provider agree-
ment with the United States Secretary of Health and Human
Services to receive Medicare reimbursements and agreed to
conform to certain statutory and regulatory requirements.
In October and November 2015, the Indiana State Depart-
ment of Health (“ISDH”) conducted a survey at one of Night-
ingale’s facilities and concluded that Nightingale had failed to
comply with the applicable requirements. 2 The ISDH found
that Nightingale’s deficiencies placed its patients in “immedi-
ate jeopardy,”3 and recommended that the Centers for Medi-
care & Medicaid Services (“CMS”), which administers Medi-
care, terminate Nightingale’s Medicare agreement. On No-
vember 17, CMS notified Nightingale that the agency would
terminate Nightingale’s agreement on December 10, unless
Nightingale corrected its irregularities. Later, on December 8
and 9, the ISDH conducted a revisit survey and concluded
2 Under 42 U.S.C. § 1395bbb(c), home health agencies are subject to
periodic surveys to determine whether they are in compliance with certain
statutory and regulatory requirements. These surveys can be carried out
by state agencies pursuant to a contract with the Secretary. 42 U.S.C.
§§ 1395aa, 1395bbb(c).
3 “Immediate jeopardy” is defined as “a situation in which the pro-
vider’s noncompliance with one or more requirements of participation has
caused, or is likely to cause, serious injury, harm, impairment, or death”
to a patient. 42 C.F.R. § 488.805. If the Secretary determines that deficien-
cies “immediately jeopardize the health and safety of the individuals to
whom the agency furnishes items and services, the Secretary shall take
immediate action to correct the deficiencies,” up to and including termi-
nation of provider agreements. 42 U.S.C. § 1395bbb(e)(1).
4 Nos. 16-2054, 16-3668, & 16-3669
that Nightingale had failed to comply, and CMS informed
Nightingale that its provider agreement would terminate as
scheduled. Nightingale filed an administrative appeal and re-
quested expedited review.
A. Bankruptcy Proceedings
On December 10, before CMS terminated the Medicare
agreement, Nightingale filed a voluntary petition to reorgan-
ize in bankruptcy. Nightingale then commenced an adversary
proceeding in the United States Bankruptcy Court for the
Southern District of Indiana against federal and state officials
administering the Medicare program, invoking the court’s
subject-matter jurisdiction under 28 U.S.C. §§ 157(b)(1)
& 1334. Nightingale filed a complaint and an emergency mo-
tion for a preliminary injunction, seeking (1) to enjoin CMS
from terminating its provider agreement during the pen-
dency of the reorganization and completion of administrative
appeals, (2) to compel CMS to pay out Medicare receivables
purportedly due for services already provided, and (3) to
compel CMS to continue to reimburse Nightingale for ser-
vices rendered after the agreement’s termination. The federal
government moved to dismiss Nightingale’s complaint for
lack of jurisdiction.
On January 19, 2016, the bankruptcy court held an eviden-
tiary hearing on Nightingale’s request for injunctive relief. It
granted the motion on January 25, directing the federal gov-
ernment to abide by the Medicare provider agreement. The
court cautioned Nightingale that it was still obligated to com-
ply with the applicable Medicare requirements. Finally, the
court concluded that 28 U.S.C. § 1334 provided a basis for ex-
ercising jurisdiction over Nightingale’s property, including, in
Nos. 16-2054, 16-3668, & 16-3669 5
relevant part, its provider agreement to participate in Medi-
care, and could thus preserve the status quo pending exhaus-
tion of Nightingale’s administrative appeals. Thus, the court
explained, the terms of the provider agreement would remain
in place. The court later repeated this holding in denying the
government’s motion to dismiss for lack of subject-matter ju-
risdiction. The federal government timely sought review of
the bankruptcy court’s decisions in the district court.
On April 22, while the government’s appeal was pending,
the ISDH investigated several complaints concerning Night-
ingale’s post-petition services. The agency again found that
Nightingale was placing patients in “immediate jeopardy.”
The federal government subsequently sought relief from the
bankruptcy court’s preliminary injunction, and the court dis-
solved the injunction on July 15. CMS notified Nightingale
that CMS would terminate the provider agreement on July 16.
On May 9, a Medicare Administrative Law Judge (“ALJ”)
affirmed the termination of Nightingale’s provider agree-
ment. The ALJ concluded that the evidence overwhelmingly
proved that Nightingale had violated regulatory and statu-
tory requirements, and that those deficiencies placed patients
in “immediate jeopardy.” Nightingale appealed the ALJ’s de-
cision to the Departmental Appeals Board in June. (Recently,
on April 14, 2017, the Board affirmed the ALJ’s decision, con-
stituting a final administrative decision on Nightingale’s
claims).
On June 2, 2016, Nightingale sought the bankruptcy
court’s authority to sell all of its assets. After failing to com-
plete a sale by July, however, Nightingale began discharging
its patients and winding down Indiana business operations.
6 Nos. 16-2054, 16-3668, & 16-3669
As of August 17, 2016, Nightingale had completely halted its
business in Indiana.
Finally, on September 16, 2016, the district court addressed
the federal government’s bankruptcy appeal. The court con-
cluded that the bankruptcy court had lacked subject-matter
jurisdiction to issue the preliminary injunction, pursuant to
42 U.S.C. § 405(h) of the Social Security Act. 4 Although the
bankruptcy court had already dissolved the injunction, the
court rejected Nightingale’s argument that the government’s
appeal was moot, explaining that the government could still
seek restitution for the nearly $5 million in reimbursements it
had provided for Nightingale’s post-injunction services. After
the district court issued its opinion, CMS filed a claim for res-
titution that is currently pending, 5 and Nightingale timely
filed this appeal.
B. Constitutional Claims
Separately, on February 4, 2016, Nightingale initiated a
civil proceeding in federal court against Sylvia Matthews Bur-
well, then-Secretary of the United States Department of
Health and Human Services; Jerome Adams, Commissioner
of the Indiana State Department of Health; and Kelly Hem-
melgarn, Randall Snyder, and Ingrid Miller, three Indiana
4 Under 42 U.S.C. § 1395ii, the provisions of 42 U.S.C. § 405(h) “shall
[] apply with respect to [the Medicare Act] to the same extent as they are
applicable with respect to [the Social Security Act].”
5 CMS brought its separate restitution claim before the bankruptcy
court on July 21, 2016, while this case was pending before the district
court. The bankruptcy court denied the government’s request, and the
government appealed the matter to the district court. Upon a joint motion,
the district court then stayed the restitution case pending the outcome of
this appeal.
Nos. 16-2054, 16-3668, & 16-3669 7
state surveyors. According to the complaint, the defendants
had collectively abused the Medicare survey process, violat-
ing Nightingale’s (1) equal-protection, (2) First Amendment,
(3) due-process, and (4) Fourth Amendment rights. Nightin-
gale requested an order directing the state defendants to with-
draw all of the survey reports issued against Nightingale
since January 1, 2015, including those underlying the termi-
nation of Nightingale’s Medicare agreement. Nightingale also
sought an injunction preventing CMS from using the Indiana
State Department of Health to conduct further surveys of
Nightingale, or an order directing Indiana to conduct surveys
against Nightingale only upon the filing of a bona fide, third-
party complaint alleging facts likely to constitute an immedi-
ate threat to the health and well-being of patients. Finally,
Nightingale requested money damages from the state survey-
ors.
Defendants moved to dismiss Nightingale’s complaint, ar-
guing that the district court lacked subject-matter jurisdiction
under Federal Rule of Civil Procedure 12(b)(1), and that the
complaint failed to state a claim for which relief could be
granted under Rule 12(b)(6). The district court granted both
motions and dismissed the case with prejudice. This appeal
followed.
On May 1, 2017, while this appeal was pending, Nightin-
gale moved to dismiss its case against the Secretary and the
Commissioner, and all claims for equitable relief, as Nightin-
gale had ceased its operations in Indiana. All that remains are
Nightingale’s constitutional claims against the state surveyors
and its request for damages.
8 Nos. 16-2054, 16-3668, & 16-3669
II. Discussion
A. Bankruptcy Appeal
As a threshold matter, Nightingale asserts that the bank-
ruptcy case was moot prior to the district court’s decision, be-
cause the bankruptcy court had already dissolved the injunc-
tion at issue. The government does not dispute that the bank-
ruptcy court had dissolved the injunction, but argues that its
separate restitution action (now pending before the district
court) presented a live and equitably redressable controversy.
“Whether a case has been rendered moot is a question of law
that we review de novo.” Fed’n of Advert. Indus. Representatives,
Inc. v. City of Chi., 326 F.3d 924, 928–29 (7th Cir. 2003) (citation
omitted). “Under Article III of the Constitution, the judicial
power of the United States extends only to cases and contro-
versies.” Wis. Right to Life, Inc. v. Schober, 366 F.3d 485, 488 (7th
Cir. 2004) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 102 (1998)). “This jurisdictional requirement ensures that
the resources of the federal judiciary are not expended on ad-
visory opinions and hypothetical disputes.” Id. Accordingly,
“cases that do not involve ‘actual, ongoing controversies’ are
moot and must be dismissed for lack of jurisdiction.” Id. at
490–91. (quoting Fed’n, 326 F.3d at 929). Nightingale, the party
asserting mootness, bears the burden of persuasion. Id. at 491
(citation omitted).
The scope of an appellate court’s review over a prelimi-
nary injunction that has expired while on appeal is controlled
by the Supreme Court’s decision in University of Texas v. Came-
nisch, 451 U.S. 390 (1980); see also Nat’l Kidney Patients Ass’n v.
Sullivan, 902 F.2d 51, 54 (D.C. Cir. 1990) (Kidney Patients I) (cit-
ing Camenisch, 451 U.S. at 394–95). In Camenisch, a deaf grad-
Nos. 16-2054, 16-3668, & 16-3669 9
uate student sought and received injunctive relief that re-
quired the University of Texas to appoint him a sign-language
interpreter. Id. at 392. The university appealed the injunction
decision and, while that appeal was pending, the university
paid for the plaintiff’s interpreter, and the plaintiff graduated.
Id. at 393. The Fifth Circuit affirmed the injunction and re-
jected the notion that the case was moot, explaining that the
issue of who should pay for the interpreter still remained. Id.
The Supreme Court, however, concluded that the appeal was
moot, because the terms of the injunction had been fully car-
ried out. Id. at 398. The question of who should bear the cost
of the injunction was “significantly different” from the “[va-
lidity of the] injunction itself,” and could not breathe life into
the now-moot controversy. See id. at 393 (“[T]he issue before
the Court of Appeals was not who should pay for the inter-
preter, but rather whether the District Court had abused its
discretion in issuing a preliminary injunction requiring the
University to pay for him. The two issues are significantly dif-
ferent ….”) (internal citations omitted). Instead, the case was
“simply another instance in which one issue in a case ha[d]
become moot, but the case as a whole remain[ed] alive be-
cause other issues ha[d] not become moot.” Id. (citation omit-
ted). Because the injunction was the only issue before the
Court at that time, id. at 394, the Court concluded that it
lacked jurisdiction and remanded the case to the district court
for a trial on the merits to address questions of costs, id. at 398.
Here, the case before the district court—sitting as a court
of review—was indistinguishable from Camenisch. The issue
on appeal was whether the bankruptcy court had improperly
implemented the preliminary injunction, and that issue be-
came moot once the bankruptcy court dissolved the injunc-
tion. Unfortunately for the government, courts of review may
10 Nos. 16-2054, 16-3668, & 16-3669
consider only the issues raised before them. See Camenisch, 451
U.S. at 393; see also St. Pierre v. United States, 319 U.S. 41, 42
(1943) (“A federal court is without power to decide moot ques-
tions or to give advisory opinions which cannot affect the
rights of the litigants in the case before it.” (citing United States
v. Alaska S.S. Co., 253 U.S. 113, 115 (1916))) (emphasis added);
Kidney Patients I, 902 F.2d at 54 (citation omitted). In fact, un-
like the university in Camenisch, the government has not pre-
sented a restitution issue on appeal; rather, it brought the res-
titution claim as a separate lawsuit that is still pending before
the district court. Because a party cannot avoid mootness by
making reference to a different live issue, it follows that it can-
not do so using an entirely separate action. Accordingly, the
district court lacked jurisdiction to address the merits of the
injunction, and the government’s separate restitution action
did not revive that court’s jurisdiction. See Camenisch, 451 U.S.
at 393–95; see also Orion Sales, Inc. v. Emerson Radio Corp., 148
F.3d 840, 842 (7th Cir. 1998) (“[R]eview of a preliminary in-
junction that has become moot would run afoul of the consti-
tutional command that limits our jurisdiction to cases and
controversies.”) (citation and quotation marks omitted);
Henco, Inc. v. Brown, 904 F.2d 11, 13–14 (7th Cir. 1990) (“[T]he
issue of whether the district court should have issued the pre-
liminary injunction is moot because the injunction has dis-
solved … well before this appeal was heard. It would be inap-
propriate for this court to intimate any view on the merits of
the parties’ competing claims….”). 6
6Although the parties did not rely on it here, the Supreme Court’s
decision in Liner v. Jafco, Inc., 375 U.S. 301 (1964), is often cited for the prop-
osition that parties prejudiced by erroneously granted injunctions may
Nos. 16-2054, 16-3668, & 16-3669 11
The government’s reliance on Arkadelphia Milling Co. v. St.
Louis Southwestern Railway. Co., 249 U.S. 134, 145–46 (1919), is
unpersuasive. In Arkadelphia, railway companies had sought
and received injunctions to restrain the enforcement of certain
intrastate freight and passenger rates. Id. at 137–38. In as-
sessing the defendants’ appeal against the injunctions, the Su-
preme Court delineated the equitable principle that a party
against whom an erroneous judgment has been carried into
effect is entitled to be restored. Id. at 145. The power to carry
out that principle, however, is only inherent in a court “so
avoid mootness notwithstanding the dissolution of the underlying injunc-
tion. See id. at 305–06. We note two distinctions between our case and Liner.
First, the injunction in Liner included an injunction bond that constituted
the legal interest precluding mootness. id. at 394 (“The petitioners plainly
have a substantial stake in the judgment [affirming an injunction] which
exists apart from and is unaffected by the [injunction’s dissolution]. Their
interest derives from … respondent[‘s] … injunction bond [requiring it] to
indemnify them in damages if the injunction was ‘wrongfully’ sued out.”)
(internal citation and quotation marks omitted). Here, the underlying in-
junction included no such bond. Consol. Appx at 37. (“Debtor shall not be
required to post the security that would otherwise be required under Fed.
R. Civ. P. 65(c), made applicable to the Adversary Proceeding by Fed. R.
Bankr. P. 7065.”). Second, the injunction in Liner was permanent, not pre-
liminary. See Camenisch, 451 U.S. at 396 (“[W]here a federal district court
has granted a preliminary injunction, the parties generally will have had
the benefit neither of a full opportunity to present their cases nor of a final
judicial decision based on the actual merits of the controversy. Thus when
the injunctive aspects of a case become moot on appeal of a preliminary
injunction, any issue preserved by an injunction bond can generally not
be resolved on appeal, but must be resolved in a trial on the merits. Where,
by contrast, a federal district court has granted a permanent injunction,
the parties will already have had their trial on the merits, and, even if the
case would otherwise be moot, a determination can be had on appeal of
the correctness of the trial court's decision on the merits, since the case has
been saved from mootness by the injunction bond.”).
12 Nos. 16-2054, 16-3668, & 16-3669
long as it retains control of the subject-matter.” Id. at 146 (em-
phasis added). In this case, the issue was moot by the time it
came before the district court, and, as a result, the district
court lacked subject-matter jurisdiction. See Pakovich v. Verizon
LTD Plan, 653 F.3d 488, 492 (7th Cir. 2011). Thus, no equitable
relief was permissible.
The government’s reliance on National Kidney Patients As-
sociation v. Sullivan, 958 F.2d 1127, 1136–37 (D.C. Cir. 1992)
(Kidney Patients II), meets the same fate. There, the govern-
ment challenged an injunction enjoining it from reducing
Medicare reimbursements for certain treatments and eventu-
ally sought recoupment of amounts paid under the injunc-
tion. Id. at 1129. Before addressing recoupment in Kidney Pa-
tients II, however, the court had concluded in a previous opin-
ion that the injunction issue had been mooted by newly-en-
acted legislation, stripping the court of subject-matter juris-
diction. Id. (citing Kidney Patients I, 902 F.2d at 55); see also Kid-
ney Patients I, 902 F.2d at 54–55. In fact, in Kidney Patients I, the
court had rejected the argument that the government now
proffers, stating,
[T]he recoupment of any reimbursement for
[the expenses at issue] … was not presented on
appeal. Those claims must first be determined
by the trial court on the merits before they can
furnish a basis for appellate review .… The only
issue presently before us—the correctness of the
decision to grant a preliminary injunction—is
no longer justiciable. Accordingly, the appeal is
dismissed.…
Nos. 16-2054, 16-3668, & 16-3669 13
902 F.2d at 54–55 (internal citations omitted). This case mirrors
Kidney Patients I, and we likewise conclude that the “correct-
ness of the decision to grant a preliminary injunction” was
moot. Id. at 55.
This leads us to the question of vacatur. The government
argues that if there is no longer a controversy regarding the
preliminary injunction, this court should simply dismiss the
appeal, not reverse the lower court’s judgment. See Orion, 148
F.3d at 843. Thus, concludes the government, the district
court’s decision that the bankruptcy court lacked jurisdiction
to issue the injunction should be left intact. While the govern-
ment’s reasoning is correct, its conclusion ignores the addi-
tional layer of review in bankruptcy cases. In Orion, the dis-
trict court’s preliminary injunction became moot, and this
Court, the first reviewing court, dismissed the appeal without
disturbing the district court’s order granting the injunction. Id.Here, the bankruptcy court’s injunction became moot, and the
district court was the first to review the bankruptcy court’s or-
der. This procedural posture makes all the difference: Because
we conclude that the injunction had expired before the district
court had issued its ruling, that court should have dismissed
the appeal as moot, leaving the bankruptcy court’s orders un-
disturbed. See Certified Grocers v. Produce Union, Local 703, 816
F.2d 329, 332 (7th Cir. 1987) (“[A]ppeals from expired prelim-
inary injunctions should be dismissed without vacating the
underlying order.”) (citing Gjersten v. Bd. of Election Comm’rs,
751 F.2d 199 (7th Cir. 1984)). As such, we vacate the district
court’s judgment reversing the bankruptcy court’s injunction
orders.7
7 Our decision leaves the parties free to dispute the merits of the in-
junction as it relates to the government’s restitution action—a live issue
14 Nos. 16-2054, 16-3668, & 16-3669
B. Constitutional Claims
We turn next to Nightingale’s constitutional challenges.
Like the bankruptcy appeal, this dispute begins and ends
with jurisdiction.
Nightingale argues that its claims invoked the district
court’s subject-matter jurisdiction under 42 U.S.C. § 405(g). 8
Typically, “an institution dissatisfied with a final decision by
the Secretary to terminate its Medicare provider agreement
may obtain judicial review of the matter in accordance with
42 U.S.C. s 405(g).” Northlake Cmty. Hosp. v. United States, 654
F.2d 1234, 1240 (7th Cir. 1980) (citing 42 U.S.C. § 1395ff(c)). Re-
view is available, however, only if that institution satisfies
three requirements: It must (1) bring an action “after any final
decision of the Secretary made after a hearing to which (the
provider) was a party;” (2) commence the action within sixty
days after the mailing of the notice of decision by the Secre-
tary or within such time as the Secretary may allow; and (3)
file the action in an appropriate court. Id. (citing 42 U.S.C.
§ 405(g)). The Supreme Court has regarded the “requirement
pending in the district court. In the event either party is dissatisfied with
the outcome of that action and files an appeal, we can review the merits of
the underlying decisions then. See Henco, 904 F.2d at 13 (“If [appellant]
eventually moves the district court for damages on the injunction bond
and is dissatisfied with the district court’s ruling, we can review the cor-
rectness of the trial judge’s decision after the district court has had an op-
portunity to fully deliberate on the merits of the parties’ claims.”).
8 Although Nightingale did not assert jurisdiction based on § 405(g) in
its complaint, it argues on appeal that we may nonetheless recognize it as
a basis for federal jurisdiction. See Littleton v. Berbling, 468 F.2d 389, 395
(7th Cir. 1972). We need not reach this issue, however, because Nightin-
gale did not comply with § 405(g)’s administrative-exhaustion require-
ment.
Nos. 16-2054, 16-3668, & 16-3669 15
that there be a final decision by the Secretary after a hearing”
as “central to the requisite grant of subject-matter jurisdic-
tion.” Mathews v. Eldridge, 424 U.S. 319, 328 (1976) (quoting
Weinberger v. Salfi, 422 U.S. 749, 764 (1975)). This requirement
consists of two elements, “only one of which is purely ‘juris-
dictional’ in the sense that it cannot be ‘waived’ by the Secre-
tary in a particular case.” Id. “The waivable element is the re-
quirement that the administrative remedies prescribed by the
Secretary be exhausted. The nonwaivable element is the re-
quirement that a claim for benefits shall have been presented
to the Secretary.” Id.Nightingale does not dispute that it failed to exhaust its
administrative remedies. Indeed, only on April 14, 2017—
some fourteen months after Nightingale filed its action
against the state surveyors—did the Board issue its final deci-
sion upholding the government’s termination of Nightingale’s
Medicare agreement. Instead, Nightingale argues that this
case falls within an exception, allowing for waiver of the ex-
haustion requirement. We have previously detailed the two
circumstances in which waiver is appropriate:
If the Secretary determines that additional admin-
istrative review would be futile either because the
agency's needs have been satisfied or because the
requested relief is beyond the agency's power to
confer the Secretary may waive the exhaustion re-
quirement at any stage of the administrative pro-
cess. Similarly, if the claimant raises a constitutional
challenge which is entirely collateral to his claim of
entitlement, and the claimant's interest in having
16 Nos. 16-2054, 16-3668, & 16-3669
the issue resolved promptly is so great that defer-
ence to the agency's judgment is inappropriate, the
court may waive the exhaustion requirement.
Northlake, 654 F.2d at 1241 (internal quotation marks and
alterations omitted (quoting Eldridge, 424 U.S. at 330) (citing
Salfi, 422 U.S. at 765–67)). This case does not fall into either of
these exceptions. The Secretary has not waived Nightingale’s
exhaustion requirement, and the constitutional claims are ei-
ther not “colorable,” not “entirely collateral” to Nightingale’s
substantive entitlement claims, or both. See id. (“The mere as-
sertion of a constitutional claim is not enough” to mandate a
waiver of § 405(g)’s exhaustion prerequisite; “the record be-
fore the court must present a colorable constitutional claim.”)
(citation omitted).
As pled, most of Nightingale’s constitutional challenges
are not entirely collateral to its substantive entitlement claims.
It alleged, in part, “class-of-one” and racial discrimination
equal-protection claims, a First Amendment claim, and a due-
process claim—all based on its allegations that the state sur-
veyors subjected them to an inordinate number of surveys
and administrative complaints, issued harsh findings and re-
ports, and failed to provide specific information regarding the
Medicare termination, all without a rational basis. “A party,”
however, “cannot avoid the Medicare Act’s jurisdictional bar
simply by styling its attack as a claim for collateral damages
instead of a challenge to the underlying denial of benefits.”
Bodimetric Health Servs., Inc. v. Aetna Life & Cas., 903 F.2d 480,
487 (7th Cir. 1990). Indeed, “[i]f litigants who have been de-
nied benefits could routinely obtain judicial review of these
decisions by recharacterizing their claims under state and fed-
Nos. 16-2054, 16-3668, & 16-3669 17
eral causes of action, the Medicare Act’s goal of limited judi-
cial review for a substantial number of claims would be se-
verely undermined.” Id. (citing Bowen v. Mich. Acad. of Family
Physicians, 476 U.S. 667, 680 n.11 (1986)). We understand
Nightingale’s claims to be administrative challenges framed
as collateral constitutional ones—inappropriately attacking
the survey results underlying Nightingale’s Medicare termi-
nation. See id. at 484–86 (citing United States v. Erika, 456 U.S.
201 (1982)). It is telling that Nightingale originally sought or-
ders to remove the state’s survey results and prevent the state
from surveying Nightingale moving forward. 9 The applicable
Medicare regulations provided Nightingale an opportunity to
challenge the surveyors’ approach in a two-tiered appellate
system, including formal evidentiary hearings and opportu-
nities to present written argument. See generally 42 U.S.C. §
1395cc(h)(1); 42 C.F.R. §§ 431.153, 498.40–498.66, 498.80,
498.85–86. Indeed, Nightingale availed itself of this process,
but filed the present civil action before receiving a final deci-
sion. This it cannot do.
Moreover, Nightingale’s generalized allegations do not
amount to colorable constitutional challenges. Plaintiffs alleg-
ing equal-protection violations must identify, at a minimum,
the type of discrimination suffered, by whom, and when. See
Swanson v. Citibank, N.A., 614 F.3d 400, 405 (7th Cir. 2010) (ci-
tations omitted). Nightingale’s class-of-one claim fails to in-
clude integral details regarding what the survey and inspec-
tion process normally entails; how Nightingale’s survey pro-
cess deviated from that process; which particular surveys or
9 Although Nightingale now seeks only damages, they do so because
they have ceased operating in Indiana; this does not alter our interpreta-
tion of its claims as they were originally pled.
18 Nos. 16-2054, 16-3668, & 16-3669
inspections were “harsh” and how; or whether the state sur-
veyors strayed from the applicable regulatory and statutory
guidelines governing the survey process. And Nightingale’s
claim that the allegedly harsh survey process was due to racial
animus fares no better. The only evidence Nightingale points
to is a voicemail left by defendant Snyder’s unnamed col-
league, during which the individual purportedly voiced “ra-
cially tinged” remarks in the background after forgetting to
disconnect the call. Nightingale fails, however, to connect
these remarks to any named state surveyor. The remainder of
Nightingale’s allegations rely on general speculation that the
state surveyors were motivated by race. Without more, Night-
ingale’s equal-protection claims do not rise to the level of col-
orable constitutional challenges.
Further, Nightingale did not include arguments or cite to
legal authority in its opening brief regarding its First Amend-
ment or due-process claims. It has thus waived any argument
on appeal that these claims are colorable. See, e.g., United
States v. Beavers, 756 F.3d 1044, 1059 (7th Cir. 2014) (“Perfunc-
tory, undeveloped arguments without discussion or citation
to pertinent legal authority are waived.”(quoting Mahaffey v.
Ramos, 588 F.3d 1142, 1146 (7th Cir. 2009)).
Finally, Nightingale’s Fourth Amendment claim lacks suf-
ficient detail. Nightingale alleged that the state surveyors con-
ducted an unreasonable search and seizure by entering one of
its former business premises and rummaging through desks.
It is not clear, however, whether Nightingale owned the build-
ing, given that the complaint describes the building as “former
business premises.” (emphasis added). See United States v.
Fuesting, 845 F.2d 664, 671 (7th Cir. 1988) (“It is well-estab-
lished that Fourth Amendment rights are personal rights
Nos. 16-2054, 16-3668, & 16-3669 19
which … may not be vicariously asserted…. A person who is
aggrieved by an illegal search and seizure only through the
introduction of damaging evidence secured by a search of a
third person’s premises or property has not had any of his
Fourth Amendment rights infringed .…”) (citations and inter-
nal quotation marks omitted). It is equally unclear what
Nightingale’s alleged damages are, because there is no allega-
tion that the state surveyor obtained any information from in-
side the building or any details of what that information en-
tailed. Without more, Nightingale has failed to present a col-
orable Fourth Amendment claim. See Eastern Bridge, LLC v.
Chao, 320 F.3d 84, 91 (1st Cir. 2003) (“Plaintiffs also assert that
because they are alleging a Fourth Amendment violation,
they need not exhaust administrative remedies. But this invo-
cation of constitutional authority, without more, cannot
breathe life into a theory already pronounced dead by the Su-
preme Court in binding precedent.”).
This case thus does not call for us to waive § 405(g)’s ad-
ministrative-exhaustion requirement. Given that Nightingale
failed to satisfy all three of § 405(g)’s requirements, the district
court correctly determined that it was statutorily barred from
considering the case. The district court, however, dismissed
the claims with prejudice. Because we conclude that the
claims are jurisdictionally barred by § 405(g), the complaint
should be dismissed without prejudice. See Frederiksen v. City
of Lockport, 384 F.3d 437, 438–39 (7th Cir. 2004) (“A jurisdic-
tional disposition is conclusive on the jurisdictional question:
the plaintiff cannot re-file in federal court. But it is without
20 Nos. 16-2054, 16-3668, & 16-3669
prejudice on the merits ….” (citing T.W. v. Brophy, 124 F.3d 893,
898 (7th Cir. 1997))). 10
III. Conclusion
For the foregoing reasons, we VACATE the judgment of
the district court regarding the bankruptcy appeal, and
REMAND to the district court for further proceedings. Addi-
tionally, we VACATE the judgment of the district court re-
garding the constitutional claims and REMAND with instruc-
tions to dismiss these claims without prejudice for lack of sub-
ject-matter jurisdiction.
10In light of our conclusion that Nightingale’s claims were jurisdic-
tionally barred under § 405(g)’s administrative-exhaustion requirement,
we offer no opinion regarding whether these claims were barred by
§ 405(h).