Baker County Medical Services, Inc. v. U.S. Attorney General

Case: 13-13917 Date Filed: 08/14/2014 Page: 1 of 15
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-13917
________________________
D.C. Docket No. 3:12-cv-01232-HES-JRK
BAKER COUNTY MEDICAL SERVICES, INC.,
Ed Fraser Memorial Hospital,
Plaintiff - Appellant,
versus
U.S. ATTORNEY GENERAL,
DIRECTOR, U.S. DEPARTMENT OF HOMELAND SECURITY,
U.S. IMMIGRATION & CUSTOMS ENFORCEMENT, OFFICE OF
DETENTION AND REMOVAL,
U.S. MARSHAL WILLIAM B. BERGER, SR.,
United States Marshals Service, Prisoner & Operations Division,
Programs and Assistance Branch,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 14, 2014)
Case: 13-13917 Date Filed: 08/14/2014 Page: 2 of 15
Before JORDAN, Circuit Judge, and RYSKAMP * and BERMAN,** District
Judges.
JORDAN, Circuit Judge:
The federal government bears a constitutional “obligation to provide medical
care for those whom it is punishing by incarceration.” Estelle v. Gamble, 429 U.S.
97, 103 (1976). Pursuant to 18 U.S.C. § 4006(b)(1), Congress has elected to
impose the Medicare rate as full compensation for medical services rendered to
federal detainees.
Baker County Medical Services, d.b.a. Ed Fraser Memorial Hospital – a
small, rural hospital in Baker County, Florida – sued various federal agencies and
officials in federal district court, seeking a declaratory judgment that § 4006(b)(1)
is unconstitutional as applied. 1 This appeal requires us to decide whether the
Hospital can challenge this compensation scheme as an unconstitutional taking
under the Fifth Amendment, even though it has voluntarily opted into the Medicare
program and is, as a result, required to provide emergency services to federal
*
Honorable Kenneth L. Ryskamp, United States District Judge for the Southern District of
Florida, sitting by designation.
**
Honorable Richard M. Berman, United States District Judge for the Southern District of New
York, sitting by designation.
1
The Hospital also sought to recover in quantum meruit for the difference between its actual
costs for providing emergency care to federal detainees and the amount it was reimbursed at the
Medicare rate for such care since 2009. The district court dismissed the quantum meruit count as
barred by sovereign immunity, and the Hospital concedes that this claim fails as a matter of law.
2
Case: 13-13917 Date Filed: 08/14/2014 Page: 3 of 15
detainees. With benefit of oral argument, and for the reasons that follow, we
conclude that the Hospital may not bring such a challenge, and affirm the district
court’s dismissal of the Hospital’s declaratory judgment claim.
I
We review the grant of a motion to dismiss de novo. See Miyahira v.
Vitacost.com, Inc., 715 F.3d 1257, 1265 (11th Cir. 2013). Our review of
constitutional questions is likewise plenary. See United States v. Paige, 604 F.3d
1268, 1274 (11th Cir. 2010).
In applying the Rule 12(b)(6) standard, we construe the complaint in the
light most favorable to the Hospital, accepting all well-pleaded factual allegations
as true. See Miyahira, 715 F.3d at 1265. “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
The Hospital is a 25-bed facility that houses and operates the only
emergency room in Baker County. As a Medicare provider, it must accept the
Medicare payment rate as full compensation for treatment for Medicare
participants. Although the government has contracted with a provider to provide
on-site medical services for federal detainees housed in a local detention facility,
the Hospital has entered into no similar contract with the government to render off-
3
Case: 13-13917 Date Filed: 08/14/2014 Page: 4 of 15
site emergency care to federal detainees, who do not qualify as Medicare
participants. See 42 C.F.R. § 411.4. The Hospital nevertheless does afford
emergency services to such individuals, in keeping with its obligation to provide
emergency medical treatment to all patients irrespective of their ability to pay
under the Emergency Medical Treatment and Active Labor Act ("EMTALA"), 42
U.S.C. § 1395dd, and Florida law.
The Hospital sought a declaratory judgment that 18 U.S.C. § 4006(b)(1), as
applied, amounts to an unconstitutional taking. According to the Hospital, it is
forced to render emergency medical care to federal detainees but its compensation
for such treatment is limited to the Medicare rate, an amount less than its actual
costs. The district court dismissed the Hospital’s complaint with prejudice, ruling
that no taking occurred because the Hospital is under no general obligation to
provide emergency treatment to federal detainees. The district court reasoned that
the Hospital’s only putative obligation to provide such treatment under federal law
stemmed from voluntary participation in Medicare and from EMTALA, and that
did not create the requisite legal compulsion to constitute a taking. The Hospital
appeals.
II
Under the Takings Clause of the Fifth Amendment, “private property” shall
not “be taken for public use, without just compensation.” U.S. Const., amend. V.
4
Case: 13-13917 Date Filed: 08/14/2014 Page: 5 of 15
Although “[t]he paradigmatic taking requiring just compensation is a direct
government appropriation or physical invasion of private property,” the Supreme
Court has recognized that “government regulation of private property may, in some
instances, be so onerous that its effect is tantamount to a direct appropriation or
ouster” so as to effect a regulatory taking. See Lingle v. Chevron U.S.A. Inc., 544
U.S. 528, 537 (2005).
Even so, a long line of cases instructs that no taking occurs where a person
or entity voluntarily participates in a regulated program or activity. We have said
that “[i]t is well established that government price regulation does not constitute a
taking of property where the regulated group is not required to participate in the
regulated industry.” Whitney v. Heckler, 780 F.2d 963, 972 (11th Cir. 1986). See
also Yee v. City of Escondido, Cal., 503 U.S. 519, 527 (1992) (“the Takings Clause
requires compensation if the government authorizes a compelled physical invasion
of property”); Franklin Mem. Hosp. v. Harvey, 575 F.3d 121, 129 (1st Cir. 2009)
(“Of course, where a property owner voluntarily participates in a regulated
program, there can be no unconstitutional taking.”); Garelick v. Sullivan, 987 F.2d
913, 916 (2d Cir. 1993) (“[W]here a service provider voluntarily participates in a
price-regulated program or activity, there is no legal compulsion to provide service
and thus there can be no taking.”); Burditt v. U.S. Dept. of Health and Human
Servs., 934 F.2d 1362, 1376 (5th Cir. 1991) (holding that physician could not
5
Case: 13-13917 Date Filed: 08/14/2014 Page: 6 of 15
challenge imposition of a penalty for violation of EMTALA under Takings Clause
because, among other things, he voluntarily accepted “responsibility to facilitate a
hospital’s compliance with EMTALA”); Minn. Ass'n of Health Care Facilities,
Inc. v. Minn. Dep’t of Pub. Welfare, 742 F.2d 442, 446 (8th Cir. 1984) (finding no
taking because “Minnesota nursing homes . . . have freedom to decide whether to
remain in business and thus subject themselves voluntarily to the limits imposed by
Minnesota on the return they obtain from investment of their assets in nursing
home operation”); St. Francis Hosp. Ctr. v. Heckler, 714 F.2d 872, 884 (7th Cir.
1983) (holding that diminished market value does not constitute a taking where
plaintiffs “retain full rights and control over their net investment”).
The Hospital does not dispute these general legal principles. Instead, as it
succinctly frames its argument, the Hospital maintains that “because 18 U.S.C. §
4006 is not contained in, cross-referenced by, or itself ever referenced in, the
Medicare or EMTALA statutes, [its] voluntary participation in both of those
federal programs does not, expressly or by default, mean that [it] must agree to
accept less than cost reimbursement for the treatment of federal detainees.”
Appellant’s Reply Br. at 1. To determine whether the Hospital is correct, we first
consider the statutory framework of Medicare, Florida law regulating emergency
treatment, and § 4006(b)(1), and then turn to Takings Clause precedent.
6
Case: 13-13917 Date Filed: 08/14/2014 Page: 7 of 15
A
Medicare is a federally subsidized medical insurance program for persons
over the age of 65 or recipients of social security disability benefits. See 42 U.S.C.
§ 1395 et seq. The program is comprised of two sections. Part A focuses on
providing insurance and reimbursement for the costs of hospital, post-hospital,
home health, and hospice care. See 42 U.S.C. §§ 1395c-1395i-4. Part B is a
voluntary supplemental insurance program for Medicare beneficiaries who pay
premiums for additional insurance. See 42 U.S.C. § 1395j.
As a condition of participating in and receiving payments from Medicare, a
hospital must also opt into EMTALA. See 42 U.S.C. § 1395cc(a)(1)(I)(i).
EMTALA requires hospitals with emergency departments to provide a medical
screening to anyone who enters an emergency room and requests an examination
for a medical condition. See 42 U.S.C. § 1395dd(a). If the hospital determines
that the patient has an emergency medical condition, it must either provide medical
services to stabilize the condition or transfer the patient to another medical facility.
See 42 U.S.C. § 1395dd(b)(1)(a)-(b). The hospital must meet these obligations
without regard to the patient’s ability to pay. See 42 U.S.C. § 1395dd(h).
In keeping with the Florida Legislature’s intent “that emergency services
and care be provided by hospitals and physicians to every person in need of such
7
Case: 13-13917 Date Filed: 08/14/2014 Page: 8 of 15
care,” Fla. Stat. § 395.1041(1), Florida law imposes similar obligations of its own.
One statute, for example, requires every general hospital with an emergency
department to provide emergency care for any emergency condition when “[a]ny
person requests emergency services and care,” regardless of ability to pay. See
Fla. Stat. § 395.1041(3)(a)(1), (f). In addition, “[a] person may not be denied
treatment for any emergency medical condition that will deteriorate from a failure
to provide such treatment at any general hospital licensed under [C]hapter 395 [of
the Florida Statutes] . . . .” Fla. Stat. § 401.45(1)(b).
B
Neither Medicare nor EMTALA establishes the reimbursement rate for
emergency services provided to federal detainees. Congress instead chose to
codify such a compensation scheme under 18 U.S.C. § 4006(b)(1), which provides
that “[p]ayment for costs incurred for the provision of health care items and
services for individuals in the custody of the United States Marshals Service, the
Federal Bureau of Investigation and the Department of Homeland Security shall be
the amount billed, not to exceed the amount that would be paid for the provision of
similar health care items and services under the Medicare program . . . .”
8
Case: 13-13917 Date Filed: 08/14/2014 Page: 9 of 15
Notably, although it sets a maximum reimbursement rate for the treatment of
federal detainees, § 4006 includes no underlying requirement that hospitals provide
such treatment in the first place. Nor is § 4006 cross-referenced in Medicare. 2
The only other federal authority to which the parties point that mandates a
hospital’s treatment of federal detainees is EMTALA, which, as noted above,
requires participating hospitals to provide care to anyone who visits an emergency
room. Hence, although the Hospital is correct that neither Medicare nor EMTALA
expressly incorporates the reimbursement scheme codified in § 4006(b)(1), these
acts are not wholly removed from one another; hospitals which undertake the
obligation to treat federal detainees by opting into Medicare and EMTALA are
governed by the reimbursement rate separately set in § 4006(b)(1).
C
Because opting into EMTALA has committed the Hospital to treat all
emergency patients, including federal detainees, we must decide whether
voluntarily providing such care precludes the Hospital from challenging as a taking
the rate at which it is compensated under § 4006(b)(1). We conclude that it does.
In Bowles v. Willingham, 321 U.S. 503 (1944), the Supreme Court
annunciated the principle that voluntary participation in a regulated program
2
Indeed, § 4006 is codified in Title 18 of the U.S. Code, which regulates crimes and criminal
procedure.
9
Case: 13-13917 Date Filed: 08/14/2014 Page: 10 of 15
defeats a takings clause challenge. In that case, the Court analyzed a constitutional
challenge to a wartime federal rent control statute that resulted in a reduction in
property value. The Court held that the statute did not effect a taking, reasoning
that it did not compel landlords to offer their apartments for rent, and recognizing
that “price control, the same as other forms of regulation, may reduce the value of
the property regulated.” Id. at 517-18.
Four decades later, we applied this rule to the regulation of Medicare
reimbursement in Whitney. In that case, a group of physicians challenged a
temporary statutory freeze on fees charged to Medicare patients as an
unconstitutional taking. Underscoring that the physicians were “not required to
treat Medicare patients,” and observing that “the fact that Medicare patients
comprise a substantial percentage of their practices does not render their
participation [in Medicare] ‘involuntary,’” we held that the freeze did not
constitute a taking. See 780 F.2d at 972 & n.12.
Our sister circuits have come to similar conclusions in considering Takings
Clause challenges to Medicare and Medicaid price regulation schemes. We find
their decisions instructive.
In Garelick, for instance, the Second Circuit ruled that certain limitations
on permissible charges under Medicare Part B did not amount to a taking.
10
Case: 13-13917 Date Filed: 08/14/2014 Page: 11 of 15
Analogizing between the predicaments of the anesthesiologist plaintiffs in that case
and the landlords in Bowles, the Second Circuit concluded that the challenged
provisions “do not require anesthesiologists, or any other physicians, to provide
services to Medicare beneficiaries,” but instead “simply limit the amounts [the
plaintiffs] may charge those Medicare beneficiaries whom they choose to serve.”
987 F.2d at 916. The anesthesiologists’ argument that New York state law created
the requisite legal compulsion by forcing them to treat all patients, including
Medicare beneficiaries, did not change the outcome, as such a theory hinged on the
notion that it was the state, which was not a party in the case, “that indirectly
compel[led] anesthesiologists to treat Medicare patients and thus submit to price
regulations, not the federal government.” Id. The Second Circuit also concluded
that the anesthesiologists’ ethical duty to treat Medicare patients did not render
such treatment involuntary, reasoning that “such self-imposed requirements do not
constitute the kind of governmental compulsion that may give rise to a taking.” Id.
at 917-18.
The Eighth Circuit reached an analogous result in analyzing a takings
challenge to a Minnesota statute conditioning nursing homes’ participation in the
state’s Medicaid program on acceptance of limits on rates charged to certain
residents. See Minn. Ass'n of Health Care Facilities, 742 F.2d at 446. Although it
recognized “the strong financial inducement to participate in Medicaid,” the Eighth
11
Case: 13-13917 Date Filed: 08/14/2014 Page: 12 of 15
Circuit concluded that “a nursing home's decision to do so is nonetheless
voluntary,” a fact that “forecloses the possibility that the statute could result in an
imposed taking of private property which would give rise to the constitutional right
of just compensation[.]” Id. It declined the nursing homes’ invitation to apply
cases analyzing takings in the context of public utility rates, reasoning that, unlike
public utilities, nursing homes “have freedom to decide whether to remain in
business and thus subject themselves voluntarily to the limits imposed by [the
state] on the return they obtain from investment of their assets in nursing home
operation.” Id.
D
For the same reason the landlords in Bowles and the plaintiffs who contested
Medicare and Medicaid payment schemes in its wake could not prevail, the
Hospital’s takings challenge to the reimbursement rate in § 4006(b)(1) fails. Like
those plaintiffs, the Hospital seeks to challenge its rate of compensation in a
regulated industry for an obligation it voluntarily undertook (namely, providing
emergency treatment to federal detainees) when it opted into Medicare and became
subject to EMTALA. See Whitney, 780 F.2d at 972 (holding that no taking
occurred because physicians were “not required to treat Medicare patients”).
12
Case: 13-13917 Date Filed: 08/14/2014 Page: 13 of 15
The Hospital attempts to distinguish Whitney and the other post-Bowles
cases discussed above on the ground that they addressed legal compulsion in the
context of Medicare or Medicaid, rather than compulsion under a separate statute
regulating reimbursement for treatment of federal detainees. But we see no
meaningful difference in the Fifth Amendment sense. Just as physicians who
voluntarily treat Medicare beneficiaries cannot establish the legal compulsion
necessary to challenge Medicare reimbursement rates as a taking, so too is the
Hospital precluded from challenging the rate at which it is compensated for its
voluntary treatment of federal detainees, a regulated industry in which the Hospital
as a “regulated group is not required to participate.” Whitney, 780 F.2d at 972.
The Hospital also disputes the notion that its participation in Medicare and
EMTALA, and by extension its treatment of federal detainees, is truly voluntary,
but its arguments do not change our analysis. The Hospital maintains that, even if
it were to withdraw from Medicare and EMTALA, it would have no practical
choice but to continue treating federal detainees who require emergency services
because Florida state law compels it to treat everyone who enters its emergency
room. But the Hospital has neither named the state as a defendant nor challenged
the constitutionality of the relevant Florida statutes, and hence cannot lay
“indirect” compulsion on the part of the state at the feet of the federal government.
See Garelick, 987 F.2d at 916.
13
Case: 13-13917 Date Filed: 08/14/2014 Page: 14 of 15
Although the Hospital contends that opting out of Medicare would amount to a
grave financial setback, “economic hardship is not equivalent to legal compulsion
for purposes of takings analysis.” Id. at 917. See also Minn. Ass'n of Health Care
Facilities, 742 F.2d at 446 (holding that a “strong financial inducement to
participate” in a regulated program does not render such participation involuntary).
This contention, therefore, does not carry the day.
Finally, the Hospital points out that its withdrawal from Medicare would
leave Medicare participants with no hospital in Baker County from which they
could receive emergency care. This grim prospect provides a sympathetic
backdrop for the Hospital’s takings challenge and, if it came to pass, would result
in hardship to Medicare participants in Baker County. Yet it does not diminish the
underlying voluntariness of the Hospital’s participation in Medicare, as “the fact
that practicalities may in some cases dictate participation [in Medicare] does not
make participation involuntary.” St. Francis Hosp. Ctr. v. Heckler, 714 F.2d 872,
875 (7th Cir. 1983).3
III
We recognize the financial difficulties and perceived inequity that may come
with shortfalls in a rural hospital’s reimbursement for costs associated with
3
As counsel for the Hospital acknowledged at oral argument, the fact that the Hospital is
the only one of its kind in Baker County does not affect the merits of its Fifth Amendment claim.
14
Case: 13-13917 Date Filed: 08/14/2014 Page: 15 of 15
providing emergency treatment to federal detainees, but conclude that the Takings
Clause of the Fifth Amendment is not the proper vehicle for altering this harsh
reality. As is so often the case, the Hospital’s most effective remedy may lie with
Congress rather than the courts.
The district court’s dismissal of the Hospital’s declaratory judgment action
is affirmed.
AFFIRMED.
15