United States Ex Rel. Rahman v. Oncology Associates, P.C.

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, ex rel.
Syed Rahman, M.D.,
Plaintiff-Appellant,
and
SYED RAHMAN, M.D.,
Plaintiff,
v.
ONCOLOGY ASSOCIATES, P.C.;
ONCOLOGY SERVICES CORPORATION;
DOUGLAS COLKITT, M.D.; JEROME
DERDEL, M.D.; JOANNE RUSSELL;
ONCOLOGY FUNDING CORPORATION;
STONEBORO ONCOLOGY ASSOCIATES,
No. 99-1905
P.C.; WARREN ONCOLOGY
ASSOCIATES, P.C.; PHOENIXVILLE
ONCOLOGY ASSOCIATES, P.C.;
LITTLESTOWN ONCOLOGY ASSOCIATES,
P.C.; LEHIGHTON ONCOLOGY
ASSOCIATES, P.C.; EXTON ONCOLOGY
ASSOCIATES, P.C.; BUCKS COUNTY
ONCOLOGY ASSOCIATES, P.C.;
GREENBELT CANCER TREATMENT
CENTER, L.P.; ATLANTIC RADIATION
ONCOLOGY L.L.C.; DERDEL
RANDALLSTOWN ONCOLOGY
ASSOCIATES, P.C.; ATLANTIC
RADIATION ONCOLOGY ASSOCIATES,
P.C.; DERDEL UNION MEMORIAL
ONCOLOGY ASSOCIATES, P.C.; DERDEL
RIVERSIDE ONCOLOGY ASSOCIATES,
P.C.; DERDEL CHESAPEAKE ONCOLOGY
ASSOCIATES, P.C.; OKEECHOBEE
ONCOLOGY ASSOCIATES, P.A.; KEY
WEST ONCOLOGY ASSOCIATES, P.A.;
TAMPA ONCOLOGY ASSOCIATES, P.A.;
TREASURE COAST ONCOLOGY
ASSOCIATES, P.A.; LAUDERDALE
LAKES ONCOLOGY, P.A.; ST.
LAWRENCE ONCOLOGY, P.C.; LIBERTY
ONCOLOGY ASSOCIATES, P.C.;
COMMUNITY RADIATION THERAPY
ASSOCIATES, P.C.; KINGS PLAZA
RADIOLOGY, P.C.; SOUTHERN NEW
JERSEY CANCER TREATMENT;
WILLIAMS COUNTY ONCOLOGY
ASSOCIATES, P.C.; PARK ONCOLOGY
ASSOCIATES, P.C.; PARKS ONCOLOGY
ASSOCIATES, INCORPORATED; GHCC
INCORPORATED f.k.a. GREATER
HARRISBURG CANCER CENTER,
INCORPORATED; MGH CANCER
TREATMENT CENTER, L.P.; ONCOLOGY
SERVICES CORPORATION OF
LAWNWOOD; KEYS CANCER CENTER
LIMITED PARTNERSHIP; XCC,
INCORPORATED; GPCC,
INCORPORATED; IRCC, INCORPORATED;
KRTC, INCORPORATED; LVCC,
INCORPORATED; MGHCC,
INCORPORATED; MHCC,
INCORPORATED; MARYLAND GENERAL
CANCER CENTER, INCORPORATED; ST.
LUCIE COUNTY RADIATION ONCOLOGY,
2
LIMITED; ONCOLOGY ASSOCIATES,
PC/INDIANA; ONCOLOGY ASSOCIATES,
PC/ALBEMARLE; DERDEL MARYLAND
GENERAL ONCOLOGY ASSOCIATES, PC;
DERDEL MGH ONCOLOGY
ASSOCIATES, PC; KANKAKEE
ONCOLOGY ASSOCIATES, PC;
ONCOLOGY ASSOCIATES,
PC/HARRISBURG; PLEASANT HILLS
ONCOLOGY ASSOCIATES, PC;
ONCOLOGY ASSOCIATES, PC/LEBANON;
ONCOLOGY ASSOCIATES,
PC/SALISBURY; FLAGSTAFF ONCOLOGY
ASSOCIATES, PC; FORT PIERCE
ONCOLOGY ASSOCIATES, PC;
GREENWAY ONCOLOGY ASSOCIATES,
PC; GREATER PITTSBURGH ONCOLOGY
ASSOCIATES, PC; NORTHWEST
RADIATION TREATMENT SERVICES,
INCORPORATED; MARLTON ONCOLOGY,
PC; RANDALLSTOWN ONCOLOGY
CENTER, INCORPORATED; WESTCHESTER
ONCOLOGY, PC; CHESAPEAKE
REGIONAL CANCER CENTER,
INCORPORATED; UNION MEMORIAL
ONCOLOGY CENTER, INCORPORATED;
WILLIAMS COUNTY ONCOLOGY
ASSOCIATES, INCORPORATED; TRI-
STATE ONCOLOGY ASSOCIATES,
INCORPORATED; HERITAGE HILLS
MEDICAL, LP; RIVERSIDE ONCOLOGY;
JEFFERSON RADIATION ONCOLOGY
CENTER, LP; ALBEMARLE REGIONAL
CANCER CENTER, LP; BROWARD
RADIATION THERAPY CORPORATION;
3
LAKE OKEECHOBEE CANCER CENTER,
INCORPORATED; LAWNWOOD REGIONAL
CANCER CENTER, LP; ONCOLOGY
SERVICES CORPORATION OF KEY WEST,
INCORPORATED; ONEONTA RADIATION
ONCOLOGY, PC; ONCOLOGY SERVICES
CORPORATION OF TAMPA,
INCORPORATED; GREENBELT CANCER
TREATMENT CENTER; BILLING
SERVICES, INCORPORATED; NATIONAL
MEDICAL FINANCIAL SERVICES
CORPORATION; COLKITT ONCOLOGY
GROUP, INCORPORATED; EQUIMED,
INCORPORATED;
Defendants-Appellees,
and
GREATER HARRISBURG CANCER
CENTER, INCORPORATED; ONCOLOGY
ASSOCIATES, PC/LIFE CARE;
ONCOLOGY ASSOCIATES, PC/HERITAGE
HILLS; ONCOLOGY ASSOCIATES,
PC/PITTSBURGH; CANCER CENTER OF
NORTHERN ARIZONA PTR; SALISBURY
RADIATION ONCOLOGY CENTER,
INCORPORATED; MEDTREND HEALTH
SYSTEMS, INCORPORATED; ST.
LAWRENCE ONCOLOGY,
PC/OGDENSBURG; PMCB,
INCORPORATED; ST. LAWRENCE
ONCOLOGY, PC/BROOKLYN; SKYLINE
ONCOLOGY ASSOCIATES, P.C.
PITTSBURGH, PA; MALONE ONCOLOGY
ASSOCIATES, P.C., STATE COLLEGE,
PA; NIXON EQUIPMENT CORPORATION,
a corporation formed under the laws
of Nevis State College, PA;
4
THOMAS JEFFERSON REAL ESTATE
CORPORATION, a corporation formed
under the laws of Nevis State
College, PA; GEORGE WASHINGTON
REAL ESTATE CORPORATION, a
corporation formed under the laws
of Nevis State College, PA;
OAKTREE CANCER CARE,
INCORPORATED, PITTSBURGH, PA;
KEYSTONE ONCOLOGY, LLC, STATE
COLLEGE PA; EASTERN PENNSYLVANIA
ONCOLOGY, LLC; MASSACHUSETTS
RADIATION ONCOLOGY SERVICES, P.C.;
CHESTER COUNTY ONCOLOGY, LLC;
ROSEWOOD CANCER CARE,
INCORPORATED; FLORIDA ONCOLOGY,
P.A.; COASTAL ONCOLOGY, LLC,
Defendants,
v.
HIGHMARK, INCORPORATED dba XACT
MEDICARE SERVICES; NORIDIAN
MUTUAL INSURANCE COMPANY dba
BLUE CROSS BLUE SHIELD OF NORTH
DAKOTA; AETNA INCORPORATED; BLUE
CROSS BLUE SHIELD OF FLORIDA;
HEALTH CARE SERVICE CORPORATION,
A Mutual Legal Reserve Company;
TRAILBLAZER HEALTH ENTERPRISES,
LLC; BLUE CROSS BLUE SHIELD OF
MARYLAND, INCORPORATED; EMPIRE
BLUE CROSS AND BLUE SHIELD;
GROUP HEALTH INCORPORATED; BLUE
CROSS AND BLUE SHIELD OF WESTERN
NEW YORK, INCORPORATED; CIGNA
5
CORPORATION; CONNECTICUT GENERAL
LIFE INSURANCE COMPANY;
NATIONWIDE MUTUAL INSURANCE
COMPANY,
Third-Party Defendants.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Alexander Harvey II, Senior District Judge.
(CA-95-2241-H)
Argued: September 22, 1999
Decided: December 14, 1999
Before WIDENER and NIEMEYER, Circuit Judges, and
James H. MICHAEL, Senior United States District Judge for the
Western District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Niemeyer wrote the opinion, in which Judge Widener and
Senior Judge Michael joined.
_________________________________________________________________
COUNSEL
ARGUED: Dana Joan Martin, Appellate Staff, Civil Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellant. Paul Mark Sandler, FREISHTAT & SANDLER,
Baltimore, Maryland, for Appellees. ON BRIEF: David W. Ogden,
Acting Assistant Attorney General, Lynne A. Battaglia, United States
Attorney, Mark B. Stern, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellant.
_________________________________________________________________
6
OPINION
NIEMEYER, Circuit Judge:
The defendants in this case, who are radiation oncology service
providers, obtained a writ of mandamus from the district court, com-
pelling the United States (the Health Care Financing Administration
("HCFA")) and its administering contract carriers to proceed
promptly with the administrative process established for processing
providers' Medicare Part B reimbursements. The United States had
suspended the administrative process pending judicial determination
in this case of whether the oncology service providers defrauded
HCFA and whether they are entitled to reimbursement.
We affirm the district court's writ of mandamus insofar as it
requires HCFA and its contract carriers to proceed with the adminis-
trative process established by regulation without regard to the prog-
ress of this action, but we reverse the district court's requirement that
they accomplish the next step in the administrative process -- that of
making overpayment determinations as provided by 42 C.F.R.
§ 405.372(c) -- within 20 days.
I
The United States filed its complaint in this case against Dr. Doug-
las Colkitt; his wife; his business partner, Dr. Jerome Derdel; and
more than 80 healthcare entities owned, operated, or controlled by
Colkitt, which provide diverse healthcare services in the field of radi-
ation oncology. The complaint, as amended, alleges that the defendant
oncology service providers engaged in fraudulent billing schemes
involving the Medicare Part B program during the 1992-1997 period
and the CHAMPUS program (the Medicare counterpart for the uni-
formed services) during the 1992-1996 period, causing losses to these
programs in excess of $12 million. Specifically, the United States
alleges that the defendants claimed reimbursement on bills for radia-
tion oncology services that were neither provided nor ordered by the
physician and on bills for unnecessary radiation oncology services,
and that the defendants misrepresented the medical services rendered
in order to obtain both higher and double reimbursements for ser-
vices.
7
Before this action was commenced, some of these oncology service
providers had applied to the Medicare Part B program for reimburse-
ment of more than $2 million in services that HCFA had directed its
carriers to suspend because of HCFA's suspicion of fraud. In particu-
lar, HCFA suspended various reimbursement payments to some 23 of
the defendant Medicare providers on October 8, 1998, December 18,
1998, and March 16, 1999, totaling approximately $2.2 million. The
Department of Justice ("DOJ"), which filed this action on behalf of
the United States, took the position that the administrative process
should be suspended until judgment was reached in this action
because the administrative forum was neither intended nor sufficient
to deal with cases of Medicare fraud. As a result, the contract carriers
-- private insurance companies under contract with HCFA to process
claims for Medicare reimbursement, see infra Part IV.A -- took no
further steps in the administrative process, which includes the critical
determination of the amount of overpayment, a step that is a condition
precedent to the providers' right to challenge HCFA's position
through the administrative process. See 42 C.F.R. § 405.801. The
administrative process has accordingly come to a halt. At oral argu-
ment, the United States conceded that it has stayed the administrative
proceedings pending the outcome of this litigation. The United States
also took this position before the district court ("It is the Agency's
position that to make [the overpayment determinations] requires
information that's coming out in this False Claims Act case").
On April 28, 1999, the defendants filed a motion for a writ of man-
damus in this action, then pending before the district court, to compel
HCFA and its contract carriers to lift the reimbursement payment sus-
pensions, or alternatively, to issue overpayment determinations. The
defendants also requested that the DOJ "immediately cease all inter-
ference in any audits by Medicare carriers which involve Defen-
dants." Following a hearing on June 11, 1999, the district court issued
an order dated June 21, 1999, granting in part and denying in part the
defendants' motion for a writ of mandamus. The court concluded that
"Defendants are entitled to the entry of an order directing the HCFA
and the carriers to promptly make overpayment determinations man-
dated by § 405.372(c) so that defendants may go forward with the
administrative process to which they are entitled under the applicable
regulations." The court reasoned that there are no exceptions to the
administrative procedures applicable when a suit under the False
8
Claims Act is pending in federal court and that there is no reason why
parallel administrative and judicial proceedings cannot go forward at
the same time. The court concluded that, by suspending the adminis-
trative process, the United States was merely "expressing its disagree-
ment with the administrative procedures mandated by the regulation."
The court directed the United States and its contract carriers "to make
said overpayment determinations within 20 days from the date of this
Order."
The United States filed this appeal, and we stayed the district
court's writ of mandamus pending its resolution. On appeal, the
United States contends that (1) the defendants failed to satisfy proce-
dural requirements for issuance of the writ of mandamus; and (2) in
any event, the defendants have not satisfied the conditions for issu-
ance of the writ by demonstrating that they have a clear right to the
relief sought and that they have no other adequate remedy. The defen-
dants moved to dismiss this appeal, contending that we lack jurisdic-
tion to review the writ of mandamus as an interlocutory order.
II
At the outset, we must address the defendants' motion to dismiss
this appeal, alleging that we are without jurisdiction to review an
interlocutory mandamus order. The defendants contend that 28 U.S.C.
§ 1292(a)(1), on which the United States relies, provides no basis for
the appeal of an order that is not an injunction.
Section 1292(a)(1) confers jurisdiction on courts of appeals to
review interlocutory orders "granting, continuing, modifying, refusing
or dissolving injunctions, or refusing to dissolve or modify injunc-
tions." Thus, the statutory language does not in haec verba authorize
the interlocutory appeal of orders granting a writ of mandamus. But
this does not mean that a writ of mandamus does not, in particular cir-
cumstances, amount to an injunction reviewable under§ 1292(a)(1).
An order entitled "injunction" must, by definition, prohibit or com-
mand specific conduct. A writ of mandamus may serve the same
office, commanding the performance of a specified official act or
duty; indeed, the Latin word "mandamus" means"we command."
But, of course, not all orders commanding conduct are injunctions of
the type that Congress intended to make appealable under
9
§ 1292(a)(1). For example, an order compelling discovery involves an
interlocutory command that may be subject to the contempt power of
the court, yet such an order is not thought to be cognizable under
§ 1292(a)(1). See 16 Wright, Miller & Cooper, Federal Practice and
Procedure § 3922.2, at 97-102 (1996).
The Supreme Court has held that § 1292(a)(1) provides appellate
jurisdiction not only for the review of orders that grant or deny
injunctions but also for the review of "orders that have the practical
effect of granting or denying injunctions" and that are of "serious,
perhaps irreparable, consequence." Gulfstream Aerospace Corp. v.
Mayacamas Corp., 485 U.S. 271, 287-88 (1988) (internal quotation
marks and citations omitted). The Court had earlier delineated two
essential requirements for determining whether an order in the nature
of an injunction should be appealable as an interlocutory order under
1292(a)(1): that the order be of "serious, perhaps irreparable, conse-
quence" and that it can be "effectually challenged" only by immediate
appeal. Carson v. American Brands, Inc., 450 U.S. 79, 84 (1981); see
also NationsBank Corp. v. Herman, 174 F.3d 424, 427 n.1 (4th Cir.
1999) (stating that "in Carson, the Supreme Court set forth the stan-
dard governing appeals of interlocutory orders that have effects simi-
lar to those of injunctions, but that technically are not injunctions"),
petition for cert. filed, 63 U.S.L.W. 3154 (U.S. Sept. 1, 1999) (No.
99-394). See generally 16 Wright, Miller & Cooper, Federal Practice
and Procedure § 3922, at 69-70 (1996).
In this case, the United States argues that the writ of mandamus,
if left standing, will have a serious and irreparable consequence that
will not be effectively appealable at a later time. The United States
notes that, because of the nature of the alleged fraud in this case, it
cannot issue an informed overpayment determination within the time
constraints provided, with the consequence that money might be
released to the defendants and later might not be recoverable. The
United States alleges that the defendants have already disposed of
assets and moved money to the Caribbean island of Nevis. See United
States v. Oncology Associates, P.C., No. 99-1979, ___ F.3d ___(4th
Cir. Nov. 8, 1999) (affirming district court's authority to enter prelim-
inary injunction freezing defendants' assets in this case in the face of
reorganizations and transfers of assets by defendants).
10
On its argument that an immediate appeal is necessary, the United
States observes that if it is required to comply with the writ of manda-
mus and issue inaccurate overpayment determinations, its ability to
correct the determinations would be limited. While the United States
can reopen overpayment determinations administratively, see 42
C.F.R. § 405.841, it cannot, by regulation, appeal any final adminis-
trative action to the courts. The defendants, by contrast, are entitled
to seek judicial review. See 42 U.S.C. § 1395ff(b); cf. Bender v.
Clark, 744 F.2d 1424, 1428 (10th Cir. 1984).
We agree with the United States that premature overpayment deter-
minations, made on an abbreviated timetable, could have serious and
irreparable consequences and could effectively be challenged only by
immediate appeal. Irreparable harm is shown where there is a reason-
able danger that money and assets sought by the United States would
be concealed or moved beyond reach of the government. Once assets
are lost, any effort to redress erroneous overpayment determinations
would, as a practical matter, become futile.
Accordingly, we conclude that the district court's writ of manda-
mus has "the practical effect" of granting an injunction and therefore
is appealable under 28 U.S.C. § 1292(a)(1). See Gulfstream
Aerospace, 485 U.S. at 287-88.
III
Claiming first that the defendants have not met the procedural pre-
requisites for a writ of mandamus, the United States contends (1) that
a writ of mandamus may not be granted in a pending action, but rather
must be sought in a separate action; (2) that the writ must identify the
specific government officers against whom mandamus relief is sought
and be served on them; and (3) that an action for mandamus relief
filed under 28 U.S.C. § 1361 may not issue against private carriers
who have not been made parties. We address these in order.
A
First, the United States contends that mandamus relief may not be
granted in a pending action, but must be sought in a separate action.
11
While the common-law writ of mandamus authorizes an independent
action at law for mandamus relief, this does not preclude a request for
mandamus relief in an action seeking other relief. Nor does the lan-
guage of 28 U.S.C. § 1361, which confers jurisdiction over "any
action in the nature of mandamus" (emphasis added), require that a
separate action be filed. On the contrary, the modern trend in civil
pleading has been to encourage that all claims for relief be brought
in a single suit. See Fed. R. Civ. P. 2 (providing that under federal
procedure, all remedies in law or equity may be sought in "one form
of action" known as a "civil action"); Fed. R. Civ. P. 8(a) (providing
that in a civil action, relief "of several different types may be
demanded"). We have previously entertained appeals on the merits,
coupled with petitions for a writ of mandamus. See, e.g., Shives v.
CSX Transp. Inc., 151 F.3d 164 (4th Cir.) (entertaining both an appeal
from a final judgment and a petition for a writ of mandamus in the
same action), cert. denied, 119 S. Ct. 547 (1998); cf. Kerr v. United
States Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 396-401
(1976) (entertaining a petition for a writ of mandamus to review trial
court's discovery order); Schlagenhauf v. Holder , 379 U.S. 104, 108-
09 (1964) (entertaining a petition for a writ of mandamus to review
trial court's order that the defendant in a personal injury suit undergo
mental and physical examinations).
Accordingly, we conclude that the district court did not err by
entertaining a motion for a writ of mandamus in the context of a
pending action.
B
The United States also argues that specific United States officers
need to be identified and served with the writ of mandamus. We like-
wise conclude that this argument lacks merit since it fails to recognize
that because HCFA filed this action, it is already before the court and
is subject to court orders. And while no specific officer in HCFA is
named in the writ issued by the district court, HCFA, which is an
agency of the United States with defined responsibilities and which
may be sued, is named.
Just as at common law where writs of mandamus can issue against
corporations that have a public duty, see, e.g. , Northern Pac. R.R. v.
12
Dustin, 142 U.S. 492, 499 (1892) ("If . . . the charter of a railroad cor-
poration expressly requires it to maintain its railroad as a continuous
line, it may be compelled to do so by mandamus"), so too a writ can
issue against any entity that is itself given a clear public duty to act.
HCFA has clearly defined responsibilities in administering the Medi-
care Part B program, and the agency is organized in a manner that
identifies the accountability of its employees. While the chief execu-
tive officer of a corporation, in lieu of the corporation, could be
named in a mandamus writ, a writ naming only a corporation does not
become invalid by virtue of that omission. Like a corporation, HCFA
is suable, and its organizational structure provides accountability.
HCFA's status under 42 C.F.R. § 421.5(b) as the real party in interest
in any litigation involving the administration of the Medicare Part B
program also justifies the district court's naming it as the responsible
party for carrying out the duties prescribed by the writ of mandamus,
without naming persons or carriers. See 42 C.F.R. § 421.5(b)
("carriers act on behalf of HCFA in carrying out certain administra-
tive responsibilities that the law imposes . . . .[A]nd HCFA is the real
party of interest in any litigation involving the administration of the
program"). Moreover, HCFA is the agency that at the request of the
DOJ has stayed the administrative processing of the defendants'
application for reimbursement, and neither HCFA nor the DOJ asserts
any doubt about what would be required of HCFA if the writ of man-
damus is enforced.
The United States also argues that 28 U.S.C. § 1361, which refers
to mandamus actions filed against "an officer or employee of the
United States or any agency thereof," precludes entry of the writ
against an agency. But this argument reveals a misunderstanding of
the writ of mandamus and of the office of the statute. Section 1361,
together with 28 U.S.C. § 1391(e), was enacted as the Mandamus and
Venue Act of 1962 to confer jurisdiction and venue to entertain man-
damus actions against government officials responsible for federal
administrative action in locations other than Washington, D.C. See
Clark Byse & Joseph V. Fiocca, Section 1361 of the Mandamus and
Venue Act of 1962 and "Nonstatutory" Judicial Review of Federal
Administrative Action, 81 Harv. L. Rev. 308, 318-19 (1967). Thus,
the language of § 1361, far from imposing the restrictive procedural
requirements urged by the United States, simply recognizes the
common-law writ and provides the basis, when federal actors are
13
involved, for federal jurisdiction over an action based on the writ. See
id. at 319 ("[S]ection 1361 . . . does not restrict the availability or
scope of judicial review that could have been obtained had section
1361 not been enacted"). Indeed, in this case, where federal jurisdic-
tion is based on 28 U.S.C. § 1345 because the United States com-
menced the action, § 1361 is not needed to provide a jurisdictional
basis for the mandamus writ that issued, even though the district court
did rely on § 1361.
C
Finally, the United States asserts as a procedural matter that 28
U.S.C. § 1361 does not authorize the writ of mandamus to issue
against private parties, such as HCFA's contract carriers, who have
not even been served with process. While it is true that § 1361 is lim-
ited to an "officer or employee of the United States or any agency
thereof," that constraint is necessary only to justify federal jurisdic-
tion. Section 1361 does not purport to narrow the scope of the
common-law writ, which presumably could be issued on a jurisdic-
tional basis other than § 1361. See Byse & Fiocca, Section 1361 of the
Mandamus and Venue Act, 81 Harv. L. Rev. at 311-13.
The common-law writ of mandamus is not limited to a particular
type of person, but is characterized by its authorization to command
performance of a specified official act or duty. Blackstone defines the
writ as follows:
A writ of mandamus is, in general, a command issuing in
the king's name from the court of king's bench, and directed
to any person, corporation or inferior court of judicature
within the king's dominions, requiring them to do some
particular thing therein specified, which appertains to their
office and duty, and which the court of king's bench has
previously determined, or at least supposes, to be consonant
to right and justice.
3 William Blackstone, Commentaries *110. As we noted above, the
writ may issue to private persons or corporations that have a clear
public duty. See Northern Pac. R.R., 142 U.S. at 499; see also Stern
v. South Chester Tube Co., 390 U.S. 606, 608-09 (1968). Thus, the
14
question is not whether the contract carriers are private or public enti-
ties, but rather whether they are responsible for carrying out an offi-
cial act or duty. See Your Home Visiting Nurse Servs., Inc. v.
Secretary of Health and Human Servs., 132 F.3d 1135, 1141-42 (6th
Cir. 1997) ("Although [HHS] has discretion over whether to allow
reopenings, the proper question is whether . . . the fiscal intermediary
had a nondiscretionary duty to reopen pursuant to[HHS's] regula-
tions and interpretations thereof"1 ), aff'd, 119 S. Ct. 930 (1999).
Not only are the contract carriers for the Medicare Part B program
given a clear duty to perform official acts in administering the pro-
gram, they are actually considered "officers or employees" of the
United States within the meaning of the Medicare Act. See Your
Home Visiting Nurse Servs., Inc. v. Shalala, 119 S. Ct. 930, 935
(1999) (determining that judicial review of fiscal intermediary's
refusal to reopen a reimbursement determination was precluded by 42
U.S.C. § 405(h), which provides that "[n]o action against the United
States, the Commissioner of Social Security, or any officer or
employee thereof shall be brought under Section 1331 or 1346 of
Title 28 to recover on any claim arising under [the Medicare Act]");
Bodimetric Health Servs., Inc. v. Aetna Life & Cas. , 903 F.2d 480,
487-88 (7th Cir. 1990) (holding that suits against fiscal intermediaries
are governed by the terms of § 405(h) as "officers or employees" of
the United States).
Thus, HCFA's contract carriers, while not parties to this action
because HCFA is the real party in interest, are in privity with HCFA
and therefore are bound by orders directed at "HCFA and its carriers,"
provided they have actual notice of the court's order. Cf. Fed. R. Civ.
P. 65(d) (injunctions binding on "parties and persons in active concert
or participation with them who receive actual notice of the order by
personal service or otherwise").
_________________________________________________________________
1 "Fiscal intermediaries," which are contract carriers administering the
Medicare Part A program, are comparable to the contract carriers admin-
istering the Medicare Part B program. See infra note 2.
15
IV
On the merits, the United States contends that the defendants failed
to make the requisite substantive showing for issuance of a writ of
mandamus.
The conditions for the issuance of the writ are generally settled.
The mandamus remedy is a "drastic one" reserved for "extraordinary
situations" involving the performance of official acts or duties. Kerr
v. United States Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 402
(1976); see also Gulfstream Aerospace Corp. v. Mayacamas Corp.,
485 U.S. 271, 289 (1988). Accordingly, as a condition for issuance
of the writ, the party seeking it must satisfy "the burden of showing
that his right to issuance of the writ is clear and indisputable." Kerr,
426 U.S. at 403 (internal quotation marks and citations omitted). To
that end, he must demonstrate not only that he has a clear right to the
relief sought but also that the responding party has a clear duty to per-
form the act amounting to the relief sought. See In re First Fed. Sav.
& Loan Ass'n of Durham, 860 F.2d 135, 138 (4th Cir. 1988). As a
"wildcard remedy" -- "it issues in all cases where the party hath a
right to have anything done, and hath no other specific means of com-
pelling its performance," 3 Blackstone, at *110-- the petitioner must
demonstrate that he has "no other adequate means to attain the relief
he desires." Kerr, 426 U.S. at 403; see also First Fed. Sav. & Loan,
860 F.2d at 138. While the writ is recognized at law, it is administered
with equitable principles in the interest of justice and at the discretion
of the issuing court. Kerr, 426 U.S. at 403; United States ex rel.
Girard Trust Co. v. Helvering, 301 U.S. 540, 543 (1937) (the right to
the writ "may turn on equitable considerations").
In short, to establish the conditions necessary for issuance of a writ
of mandamus, the party seeking the writ must demonstrate that (1) he
has a clear and indisputable right to the relief sought; (2) the respond-
ing party has a clear duty to do the specific act requested; (3) the act
requested is an official act or duty; (4) there are no other adequate
means to attain the relief he desires; and (5) the issuance of the writ
will effect right and justice in the circumstances. See Kerr, 426 U.S.
at 403; Estate of Michael ex rel. Michael v. Lullo, 173 F.3d 503, 512-
13 (4th Cir. 1999); First Fed. Sav. & Loan, 860 F.2d at 138; 3 Black-
stone, at *110-111.
16
Against these background principles, the United States contends
that the defendants have not demonstrated a right to relief because
they have failed to establish that HCFA has a clear duty to issue over-
payment determinations within 20 days, as ordered by the district
court. On the contrary, the United States argues, the time frames spec-
ified by regulation give HCFA discretion when to act, and this discre-
tion does not form the basis for finding a clear right in the defendants.
The United States also contends that the defendants have failed to
establish that there are no other adequate means to attain the relief
desired. On the contrary, the United States maintains, the defendants
have failed to follow the prescribed administrative framework by
refusing to wait for the requisite agency overpayment determinations
and thereafter to appeal them within the agency through processes
established by regulation.
We address these two contentions after describing briefly the
administrative process for reviewing claims for reimbursement under
the Medicare Part B program.
A
The "Supplementary Medical Benefits Program for the Aged and
Disabled" under 42 U.S.C. § 1395j-w, established by Part B, Title
XVIII, of the Social Security Act (the Medicare Part B program), is
administered by the Department of Health and Human Services,
which has delegated Part B administration to its component agency,
HCFA. HCFA administers reimbursement of Part B benefits, which
are paid from the Federal Supplementary Medical Insurance Trust
Fund. HCFA contractually assigns the task of processing and paying
Part B benefits to private insurance carriers (or"contract carriers") as
authorized by 42 U.S.C. § 1395u. While HCFA remains the real party
in interest in any litigation involving the administration of the Medi-
care program by a carrier, the carrier is HCFA's agent.2 See 42 C.F.R.
§ 421.5(b).
_________________________________________________________________
2 Under the Medicare Act, a "carrier" is a private insurance company
that contracts with the Department of Health and Human Services to
administer claims submitted under the Medicare Part B program, while
a "fiscal intermediary" is a private insurance company that contracts with
17
Individual Medicare Part B enrollees may assign their right to
Medicare Part B benefits to their healthcare providers, see 42 U.S.C.
§ 1395u, who in turn apply to HCFA for reimbursement. When a
healthcare provider submits a claim for reimbursement to HCFA, the
contract carrier will reimburse the provider after determining that the
claim is appropriate. When a contract carrier determines, however,
that either all or part of a claim submitted by a healthcare provider is
incorrect or is unwarranted, the carrier may suspend payment to the
healthcare provider in order to determine the amount of any overpay-
ment that is claimed. See 42 C.F.R. §§ 405.371-.372. But with a sus-
pension of payment, the carrier must take "timely action" to "obtain
the additional evidence it may need to make a determination as to
whether an overpayment exists . . . [and] make[ ] all reasonable
efforts to expedite the determination." 42 C.F.R.§ 405.372(c). A sus-
pension of payment to a provider is limited to 180 days, after which
a one-time extension of an additional 180 days may be obtained. See
42 C.F.R. § 405.372(d). These specific time limits may be extended
by HCFA or waived altogether only if the DOJ requests HCFA to
continue its suspension "based on the ongoing investigation and antic-
ipated filing of criminal and/or civil actions" or if the Office of
Inspector General is considering the case for administrative action.
See 42 C.F.R. § 405.372(d)(3).
When a healthcare provider is dissatisfied with a contract carrier's
overpayment determination, the provider may request the carrier to
review the decision, see 42 C.F.R. § 405.807, or may seek administra-
tive review and hearing by the Secretary of the Department of Health
_________________________________________________________________
the Department of Health and Human Services to administer major medi-
cal claims under the Medicare Part A program. Fiscal intermediaries and
carriers perform comparable roles. See S. Rep. 89-404, reprinted in 1965
U.S.C.C.A.N. 1943, 1995 ("In the performance of their contractual
undertakings, the carriers and fiscal intermediaries. . . act on behalf of
the Secretary, carrying on for him the governmental administrative
responsibilities imposed by the bill"). Courts have treated them in the
same way. See United States v. Blue Cross & Blue Shield of Ala., Inc.,
156 F.3d 1098, 1106 n.17 (11th Cir. 1998) (Carrier is "the Part B equiva-
lent of a fiscal intermediary"); United States v. Suba, 132 F.3d 662, 665
n.4 (11th Cir. 1998) ("Fiscal intermediaries and carriers are government
contractors who administer payments to health care providers").
18
and Human Services, see 42 U.S.C. § 1395ff(b). After exhausting
administrative procedures, the healthcare provider may seek judicial
review pursuant to the mechanisms provided by the Social Security
Act, 42 U.S.C. § 405(g). See 42 U.S.C.§ 1395ff(b). Although the
United States has authority to reopen certain decisions within the
administrative process, see 42 C.F.R. § 405.841, the regulations do
not allow the United States to obtain review of an administrative deci-
sion in the courts; only a healthcare provider dissatisfied with a carri-
er's initial determination may continue to appeal an adverse decision
to the courts. The statutes and regulations governing the Medicare
Part B program, however, do not preclude the United States from
bringing an independent action in federal court to litigate claims
under statutes such as the False Claims Act, 31 U.S.C. § 3729 et seq.,
the Federal Debt Collection Procedures Act, 28 U.S.C. § 3301 et seq.,
or related common-law claims, as was done in this case.
B
The United States contends that these administrative procedures do
not provide the defendants with a clear and indisputable right to
receive overpayment determinations within 20 days, as ordered by the
district court in its writ of mandamus ("the HCFA and the carriers are
hereby directed to make said overpayment determinations within 20
days from the date of this Order [June 21, 1999]"). This contention
raises two questions: (1) whether the defendants have a clear right to
overpayment determinations, and (2) whether the defendants have a
clear right to any such determinations within 20 days.
We have no doubt that the regulations provide the defendants with
the clear right to a "timely" overpayment determination. When a
HCFA contract carrier suspends a reimbursement payment to a
healthcare provider, the regulations clearly anticipate the suspension
to be temporary, pending an overpayment determination. See 42
C.F.R. §§ 405.371-.372. The suspension is designed to enable the
contract carrier "to obtain the additional evidence it may need to make
a determination as to whether an overpayment exists or the payments
may be made." 42 C.F.R. § 405.372(c). Once the determination is
made, the carrier is required to inform the healthcare provider and, "if
appropriate," rescind the suspension of payment or adjust the provid-
er's claim "to take into account the ``overpayment' determination." 42
19
C.F.R. § 405.372(c). Once the carrier makes the required determina-
tion, a healthcare provider dissatisfied with the decision can then seek
further review within the administrative process.
The United States does not dispute that the defendants are entitled
to overpayment determinations. It argues, rather, that because of the
complexity of the alleged fraud in this case, the agency cannot effec-
tively and accurately make the overpayment determinations and that
the discovery and fact-finding mechanisms provided by the judicial
process will assist in that effort. It argues essentially that it is entitled
to defer the overpayment determinations pending the outcome of this
litigation under the authority of 42 C.F.R. § 405.372(d)(3)(ii), which
provides that HCFA may grant an unspecified extension of time to
make an overpayment determination "if the Department of Justice
submits a written request to HCFA that the suspension of payment be
continued based on the ongoing investigation and anticipated filing of
criminal and/or civil actions."
The difficulty with this argument is that it fails to recognize the
respective roles of the administrative process and the courts in any
parallel judicial action. Section 405.372(d)(3) provides that the
administrative process may be delayed pending an"ongoing investi-
gation." The United States' argument, however, would substitute "on-
going parallel litigation" for "ongoing investigation." Indeed, it
concedes that the prosecution of this action essentially amounts to its
investigation. The United States would thus have the outcome of this
judicial proceeding provide the basis for the overpayment determina-
tion required by 42 C.F.R. § 405.372.
To incorporate this judicial action into the administrative process,
however, would not only contravene the language of the regulation
itself, but would also create an impossible scenario that would obliter-
ate much of the administrative process. If HCFA, in order to make the
overpayment determination, were entitled to await the outcome of this
action to obtain a judicial determination of whether and to what extent
the defendants committed fraud, it would be inserting a judicial deter-
mination into the administrative process for evaluation and applica-
tion as HCFA would determine appropriate. In addition, at the end of
that administrative process, the court providing judicial review would
be put into a confrontational position, squaring off with the courts in
20
this case that reached the decisions that HCFA incorporated into the
administrative process. Surely, the Department of Health and Human
Services, in drafting its regulations, did not have in mind the possibil-
ity that HCFA would review judicial decisions and force reviewing
courts to square off with other courts issuing those decisions. To
avoid such an unseemly scenario, the United States would be forced
to recognize that any determination made in this case would trump
any further administrative process designed to make similar determi-
nations, thus eliminating any further administrative review.
For these reasons, we reject the United States' suggestion that the
decision in this case should form the basis for further administrative
determinations, and therefore we readily conclude that the defendants
have identified a clear right in the regulations to have overpayment
determinations made by HCFA regardless of the progress in this case.
These determinations should be made in accordance with the speci-
fied administrative process without the delay imposed by the prosecu-
tion of this parallel action. Like the district court, we perceive no
reason why the administrative and judicial processes cannot proceed
on parallel tracks. Nowhere do the regulations authorize HCFA to
postpone an overpayment determination pending the outcome of judi-
cial inquiry into the presence of fraud. It may be that the two routes
will ultimately yield different determinations of the amount, if any, of
the defendants' fraud, but mechanisms for review exist in both ven-
ues.
While it may be, as the United States asserted at oral argument, that
HCFA is not equipped by regulation to make determinations regard-
ing complex fraud, this weakness in the administrative process does
not relieve the United States of its obligation to follow existing regu-
latory procedures. The United States certainly may seek to amend the
regulations, but it is not excused from compliance with them. See,
e.g., In re Sabin Oral Polio Vaccine Prod. Liab. Litig., 984 F.2d 124,
127 (4th Cir. 1983) (concern over public's reaction to amendment of
regulations "cannot justify the violation of the regulations" where
agency "elected to take other actions which they deemed to be safe,
rather than seek amendments to the regulations").
We agree with the United States, however, that these overpayment
determinations need not be made within 20 days. The regulations pro-
21
vide that a suspension of payment can last 180 days, beginning with
the date the suspension begins, and that the carrier may obtain an
additional 180-day extension "if it is unable to complete its examina-
tion of the information or investigation" within the original 180-day
time limit provided. See 42 C.F.R. § 405.372(d) (1), (2). The regula-
tions nowhere specify a situation in which HCFA must reach its
determination in fewer than 360 days. Even the 360-day limit, how-
ever, may be extended indefinitely if the DOJ requests that HCFA
suspend its determination "based on the ongoing investigation and
anticipated filing of criminal and/or civil actions." 42 C.F.R.
§ 405.372(d)(3). The United States acknowledges that to date it has
not made such a request. But even in the absence of a request from
the DOJ, the 360-day period has not elapsed with respect to two of
the suspensions. Thus, while the district court could compel the
administrative process to proceed, it abused its discretion in mandat-
ing that HCFA and its carriers provide this determination within 20
days.
C
The United States also contends that mandamus relief is not avail-
able because other adequate means to attain the relief exist. In other
words, it argues that the defendants cannot avail themselves of judi-
cial relief when they are given an administrative process to follow.
This argument blinks the procedural reality. The defendants seek
judicial relief here not to circumvent the administrative process, but
to compel its resumption. The very reason that the defendants have
not completed the administrative process is that HCFA has refused to
investigate, much less issue, overpayment determinations until this
action is concluded.
Although it is well established that a plaintiff must exhaust admin-
istrative remedies before seeking judicial review and that the exis-
tence of such administrative procedures will preclude the issuance of
a writ of mandamus, we conclude that in this case the administrative
process normally available is not accessible to the defendants because
HCFA "will not act on the claims presented to[it]." Hopewell Nurs-
ing Home, Inc. v. Schweiker, 666 F.2d 34, 42 (4th Cir. 1981); cf.
McDonald v. Centra, Inc., 946 F.2d 1059, 1063 (4th Cir. 1991)
22
(exhaustion requirement excused where "the resort to administrative
procedures would be futile"); Starnes v. Schweiker, 715 F.2d 134, 142
n.6 (4th Cir. 1983), vacated, 467 U.S. 1223 (1984) ("[M]andamus
jurisdiction [is] unavailable to those plaintiffs who fail[ ] to exhaust
administrative remedies, absent a showing that the Secretary frus-
trated exhaustion by failing to act on the plaintiff's administrative
claims").
In this case, the United States has acknowledged that it has not
acted on the defendants' overpayment determinations because the
judicial process is not complete. We conclude that this constitutes an
adequate showing that no other adequate means exist for the relief
sought, fulfilling the fourth prerequisite for obtaining mandamus
relief.
V
For the reasons given, we affirm the district court's writ of manda-
mus to the extent that it requires HCFA and its contract carriers to
make overpayment determinations and reverse to the extent that the
writ requires compliance within 20 days. We remand to the district
court to permit it to modify the writ to conform the timing of overpay-
ment determinations to the requirements of the applicable regulations.
AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED
23