Alvarado Hospital, LLC v. Cochran

United States Court of Appeals
for the Federal Circuit
______________________
ALVARADO HOSPITAL, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA ALVARADO
HOSPITAL MEDICAL CENTER, VERITAS HEALTH
SERVICE, INC., A CALIFORNIA CORPORATION,
DBA CHINO VALLEY MEDICAL CENTER, DESERT
VALLEY HOSPITAL, INC., A CALIFORNIA
CORPORATION, DBA DESERT VALLEY
HOSPITAL, PRIME HEALTHCARE CENTINELA,
LLC, A DELAWARE LIMITED LIABILITY
COMPANY, DBA CENTINELA HOSPITAL
MEDICAL CENTER, PRIME HEALTHCARE -
ENCINO HOSPITAL, LLC, A DELAWARE LIMITED
LIABILITY COMPANY, DBA ENCINO HOSPITAL
MEDICAL CENTER, PRIME HEALTHCARE
SERVICES - GARDEN GROVE, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA GARDEN
GROVE HOSPITAL MEDICAL CENTER, PRIME
HEALTHCARE HUNTINGTON BEACH, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
HUNTINGTON BEACH HOSPITAL, PRIME
HEALTHCARE LA PALMA, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA LA PALMA
INTERCOMMUNITY HOSPITAL, PRIME
HEALTHCARE SERVICES - LOW BUCK LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
LOWER BUCKS HOSPITAL, PRIME HEALTHCARE
SERVICES - MONTCLAIR, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA
MONTCLAIR HOSPITAL MEDICAL CENTER,
PRIME HEALTHCARE PARADISE VALLEY, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
PARADISE VALLEY HOSPITAL, PRIME
2 ALVARADO HOSPITAL, LLC v. COCHRAN
HEALTHCARE SERVICES - ROXBOROUGH, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
ROXBOROUGH MEMORIAL HOSPITAL, PRIME
HEALTHCARE SERVICES - SAN DIMAS, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
SAN DIMAS COMMUNITY HOSPITAL, PRIME
HEALTHCARE SERVICES - SHASTA, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
SHASTA REGIONAL MEDICAL CENTER, PRIME
HEALTHCARE SERVICES - SHERMAN OAKS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
DBA SHERMAN OAKS HOSPITAL, PRIME
HEALTHCARE ANAHEIM, LLC, A DELAWARE
LIMITED LIABILITY COMPANY,
DBA WEST ANAHEIM MEDICAL CENTER,
Plaintiffs-Appellants
v.
NORRIS COCHRAN, ACTING SECRETARY OF
HEALTH AND HUMAN SERVICES,
Defendant-Appellee
______________________
2016-1356
______________________
Appeal from the United States District Court for the
Central District of California in No. 2:15-cv-06312-R-PLA,
Judge Manuel L. Real.
______________________
Decided: August 22, 2017
______________________
MARK STEVEN HARDIMAN, Nelson Hardiman LLP, Los
Angeles, CA, argued for plaintiffs-appellants. Also repre-
sented by JOHN ALFRED MILLS, JONATHAN WINSOR RADKE.
ALVARADO HOSPITAL, LLC v. COCHRAN 3
BENJAMIN M. SHULTZ, Appellate Staff, Civil Division,
United States Department of Justice, Washington, DC,
argued for defendant-appellee. Also represented by
MICHAEL S. RAAB, BENJAMIN C. MIZER; SEAN SIEKKINEN,
Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, DC; EILEEN
M. DECKER, Office of the United States Attorney for the
Central District of California, United States Department
of Justice, Los Angeles, CA.
______________________
Before PROST, Chief Judge, NEWMAN and LOURIE, Circuit
Judges.
Opinion for the court filed by Chief Judge PROST.
Dissenting opinion filed by Circuit Judge NEWMAN.
PROST, Chief Judge.
Plaintiffs-Appellants Prime Hospitals1 appeal from
the order of the United States District Court for the
Central District of California transferring their complaint
under 28 U.S.C. § 1631 to the United States Court of
1 Alvarado Hospital, LLC; Veritas Health Services,
Inc.; Prime Healthcare Centinela, LLC; Desert Valley
Hospital, Inc.; Prime Healthcare Services – Encino, LLC;
Prime Healthcare Huntington Beach, LLC; Prime
Healthcare – La Palma, LLC; Prime Healthcare Services
– Garden Grove, LLC; Prime Healthcare Services – Lower
Bucks, LLC; Prime Healthcare Services – Montclair, LLC;
Prime Healthcare Paradise Valley, LLC; Prime
Healthcare Services – Roxborough, LLC; Prime
Healthcare Services – San Dimas, LLC; Prime Healthcare
Services – Shasta, LLC; Prime Healthcare Services –
Sherman Oaks, LLC; and Prime Healthcare Anaheim,
LLC (collectively, the “Prime Hospitals”).
4 ALVARADO HOSPITAL, LLC v. COCHRAN
Federal Claims. Prime Hospitals are seeking monetary
relief for a breach of an alleged settlement agreement
and, in the alternative, declaratory, injunctive, and man-
damus relief from an alleged secret and illegal policy to
prevent and delay Prime Hospitals from exhausting their
administrative remedies.
Because Prime Hospitals’ breach of contract claim is
fundamentally a suit to enforce a contract and it does not
arise under the Medicare Act, we hold that the Court of
Federal Claims has exclusive jurisdiction over that claim
under the Tucker Act, 28 U.S.C. § 1491. We also hold
that the Court of Federal Claims does not have jurisdic-
tion, however, over Prime Hospitals’ alternative claims
seeking declaratory, injunctive, and mandamus relief.
Accordingly, we affirm the district court’s transfer order
in-part, reverse-in-part, and remand for further proceed-
ings.
BACKGROUND
I
The Medicare program, which provides health insur-
ance for the elderly and disabled, is administered by the
United States Department of Health & Humans Services
(“HHS”) through its agency, the Center for Medicare &
Medicaid Services (“CMS”). 42 U.S.C. §§ 1395 et seq.
Medicare Part A covers hospital inpatient services and
Medicare Part B covers outpatient services, including
emergency room services for patients who do not require a
hospital admission. See id. § 1395d, k. Under both Part
A and Part B, providers submit individual claims for
payment to private contractors who make an initial
determination as to what payment, if any, should be made
on the claim. See id. § 1395ff(a)(1)–(2). A provider dissat-
isfied with the initial determination can bring a challenge
through an administrative appeals process provided
under the Medicare Act. See id. § 1395ff(a)–(d).
ALVARADO HOSPITAL, LLC v. COCHRAN 5
A provider may first seek a redetermination by the
private contractor. Id. § 1395ff(a)(3). If still dissatisfied,
the provider may then seek reconsideration by an inde-
pendent entity under contract with HHS. Id. § 1395ff(b)–
(c), (g). If the provider is dissatisfied with the reconsider-
ation decision, the provider may request a hearing before
an administrative law judge. See id. § 1395ff(b)(1),
(c)(3)(C)(ii), (d)(1). The Medicare Appeals Council, which
is part of the Departmental Appeals Board within HHS,
provides the final level of administrative review. Id.
§ 1395ff(d)(2).
A provider that obtains a final decision from the Med-
icare Appeals Council is entitled to judicial review of that
decision. Id. §§ 405(g), 1395ff(b)(1)(A). Under § 405(g),
the provider may file suit in district court, and the Act
mandates that “[n]o findings of fact or decision of the
[Secretary] shall be reviewed by any person, tribunal, or
governmental agency except as” provided under the Act.
Id. §§ 405(h), 1395ii.
II
Prime Hospitals are sixteen acute care hospitals that
are part of Prime Healthcare Services, Inc. and Prime
Healthcare Foundation, a national healthcare system that
owns and operates thirty-five for-profit and non-profit
hospitals in ten different states. Prime Hospitals provide
inpatient hospital services under Medicare Part A to
patients covered under the Medicare program.
Prime Hospitals, like other Medicare providers, sub-
mit individual claims for payment to private contractors,
who make initial reimbursement determinations for the
inpatient hospital services provided. Prime Hospitals
alleged that, although the private contractors generally
processed and paid their individual claims, many of their
claims for one-day inpatient stays (known as “short-stay
claims”) were subsequently subject to post-payment
review and denied. In response, Prime Hospitals ap-
6 ALVARADO HOSPITAL, LLC v. COCHRAN
pealed the denials of these Medicare short-stay claims
through the Medicare administrative appeal process.
Prime Hospitals alleged the audits of short-stay
claims were not limited to Prime Hospitals but were part
of a larger initiative that resulted in a substantial in-
crease in hospital claim denials. As a result of this in-
crease, Prime Hospitals alleged, CMS became
overwhelmed by the number of hospital appeals of inpa-
tient claim denials. Prime Hospitals’ complaint states
that these appeals caused “the number of appeals re-
ceived . . . to soar from 1,250 per week in January 2012 to
more than 15,000 per week in December 2013. The yearly
number of . . . appeals more than quintupled from 59,600
appeals in 2011 to 384,151 appeals in 2013.” J.A. 33.
In an effort to reduce the backlog of hospital appeals
of Medicare short-stay claim denials and ease the admin-
istrative burden for all parties, CMS began offering
health care providers the opportunity to resolve their
eligible appeals through settlement. In its letter an-
nouncing the offer and corresponding settlement parame-
ters, CMS indicated that it was proposing “to make a
partial payment (68 percent of the net payable amount of
the denied inpatient claim) in exchange for hospitals
agreeing to the dismissal of any associated appeals and
accept[ing] the settlement as final administrative and
legal resolution of the eligible claims.” J.A. 46. CMS
subsequently explained in a letter to Congressman Kevin
Brady that
[t]his settlement is intended to ease the adminis-
trative burden for all parties. The settlement of-
fers an opportunity for the government to reduce
the pending appeals backlog by resolving a large
number of homogeneous claims in a short period
of time. In addition, the settlement offers an op-
portunity for hospitals to obtain payment now for
rendered services, rather than waiting a consider-
ALVARADO HOSPITAL, LLC v. COCHRAN 7
able amount of time with the associated risk of
not prevailing in the appeals process.
J.A. 166.
Prime Hospitals alleged that, under its settlement of-
fer, CMS agreed to pay all such Medicare short-stay
appeal claims if a hospital accepted the offer of partial
payment on or before October 31, 2014, by submitting
(1) a spreadsheet of eligible claims to CMS by October 31,
2014, and (2) an executed copy of the CMS administrative
settlement agreement. Prime Hospitals also alleged that
“[s]ubject to checking the spreadsheets to ensure that the
claims were eligible Short-stay Appeal Claims, CMS
expressly and unconditionally agreed to execute the
settlement agreement and process the eligible claims if
the Prime Hospitals accepted its offer by timely submit-
ting the spreadsheet and an executed settlement agree-
ment.” J.A. 34.
In particular, Prime Hospitals pointed to CMS’s set-
tlement agreement where it stated that “[u]pon receipt of
an Agreement executed by the Hospital, CMS will deter-
mine whether the list of appeals furnished by the Hospi-
tal matches CMS’s records at each level of the
administrative appeals process,” and, “[i]f so, CMS will
execute the Agreement,” and, “[i]f not, CMS and the
Hospital will use their best efforts to work together to
resolve promptly any discrepancies so that a match is
achieved, at which time CMS will execute the Agree-
ment.” J.A. 56; see also J.A. 34.
Prime Hospitals alleged that, on or before October 31,
2014, they accepted CMS’s offer by each submitting a
spreadsheet of their eligible Medicare short-stay appeal
claims and an executed CMS administrative settlement
agreement. Thus, Prime Hospitals contends that once
they accepted the offer, under the terms of the settlement
agreement, the agency was contractually required to pay
them sixty-eight percent of the net payable amount of
8 ALVARADO HOSPITAL, LLC v. COCHRAN
their 5,079 separate Medicare appeals—a total sum
equaling $23,205,245—in exchange for their agreement
that the related appeals would be dismissed.
CMS ultimately refused to allow the Prime Hospitals
to participate in the CMS settlement because the agency
“ha[d] been made aware of one or more ongoing False
Claims Act case(s) or investigation(s) involving the facili-
ties.” J.A. 37. Prime Hospitals alleged that the settle-
ment agreement did not authorize such an exclusion.
Accordingly, Prime Hospitals alleged that CMS failed to
execute the settlement agreements as required and
breached the agreement by failing to pay “the agreed-
upon sum of $23,205,245.” J.A. 35.
Based on these allegations, Prime Hospitals filed a
complaint in the district court for breach of contract. In
their complaint, Prime Hospitals specifically alleged that:
(1) CMS offered them a settlement agreement; (2) Prime
Hospitals signed and otherwise accepted the agreement;
(3) CMS is estopped from claiming that its signature was
required to form a binding contract; (4) CMS agreed to
settle Prime Hospitals’ pending Medicare administrative
appeals for sixty-eight percent of the net payable amounts
of those denied claims in exchange for Prime Hospitals
dismissing the appeals and their acceptance of the set-
tlements as a final administrative and legal resolution of
the claims; and (5) CMS breached the agreement when it
failed to pay plaintiffs the agreed-upon sum
($23,205,245).
Prime Hospitals also pleaded two other independent
and alternative causes of action in their complaint. They
alleged that the seven-month delay in deciding to exclude
them from CMS’s settlement program and the time in
which the agency had allegedly improperly stayed their
short-stay appeals amounted to “a secret and illegal policy
to prevent and delay [Prime Hospitals] from exhausting
their administrative remedies under the Medicare ap-
ALVARADO HOSPITAL, LLC v. COCHRAN 9
peals process with respect to their Medicare short-stay
claim denials.” J.A. 41.
In Prime Hospitals’ second alternative cause of action,
Prime Hospitals requested declaratory and injunctive
relief from this scheme because it violated the Medicare
Act and their right to procedural and substantive due
process. In Prime Hospitals’ third alternative cause of
action for a writ of mandamus, Prime Hospitals requested
an order compelling the Secretary to comply with the
“clear, indisputable and non-discretionary duty to provide
a Medicare appeals process for [Prime Hospitals] to
administratively appeal denials of their Medicare inpa-
tient claims within specified time frames.” J.A. 43.
The Secretary filed a motion to dismiss the complaint
on various grounds, including that the district court
lacked subject matter jurisdiction over the hospitals’
breach of contract claim because under the Tucker Act, 28
U.S.C. § 1491, the Court of Federal Claims had exclusive
jurisdiction to adjudicate this claim.
The district court issued a written order that denied
the Secretary’s motion to dismiss but transferred the case
to the Court of Federal Claims. According to the district
court, the Court of Federal Claims has Tucker Act juris-
diction over the Prime Hospitals’ breach of contract cause
of action because it involves questions of contract for-
mation and scope, not questions about Medicare reim-
bursement law. The district court also concluded that,
because Prime Hospitals’ second cause of action seeking
declaratory and injunctive relief and third cause of action
seeking a writ of mandamus depended on the resolution of
the breach of contract claim, those claims also arose under
contract law.
We have jurisdiction to review the district court’s de-
cision to transfer Prime Hospitals’ case to the Court of
Federal Claims under 28 U.S.C. § 1292(d)(4)(A).
10 ALVARADO HOSPITAL, LLC v. COCHRAN
DISCUSSION
We review a district court’s decision to transfer a case
under the federal transfer statute, 28 U.S.C. § 1631, to
the Court of Federal Claims de novo because the district
court’s underlying determination is one of jurisdiction.
Acceptance Ins. Co. v. United States, 503 F.3d 1328, 1332
(Fed. Cir. 2007). It is well settled that transfer of a case
to another court is only permissible if the destination
court has subject matter jurisdiction to hear the case.
Souders v. S.C. Pub. Serv. Auth., 497 F.3d 1303, 1307
(Fed. Cir. 2007) (citing 28 U.S.C. § 1631; James v. Calde-
ra, 159 F.3d 573, 582–83 (Fed. Cir. 1998)). Accordingly,
our “crucial inquiry” is whether the Court of Federal
Claims has subject matter jurisdiction over the claims at
issue. Souders, 497 F.3d at 1307.
We first discuss whether the Court of Federal Claims
has jurisdiction to adjudicate Prime Hospitals’ claim for
breach of the alleged settlement agreement. This discus-
sion includes two parts. First, although the Court of
Federal Claims typically has Tucker Act jurisdiction over
any express or implied contract with the United States,
the settlement agreement at issue here arose from dis-
putes under the Medicare Act, which has its own compre-
hensive administrative and judicial review scheme. We
must determine, therefore, whether the Medicare Act
preempts Tucker Act jurisdiction over the contract claim.
We conclude that it does not. Second, because the Medi-
care Act’s own review scheme, which places jurisdiction in
the district court, provides the sole avenue for judicial
review for all claims “arising under” the Medicare Act and
the Supreme Court has construed the “arising under”
language broadly, we must also determine whether the
contract claim arises under the Medicare Act. We con-
clude that it does not. In sum, we hold that jurisdiction
over the contract claim is proper in the Court of Federal
Claims.
ALVARADO HOSPITAL, LLC v. COCHRAN 11
We also address the question of whether the Court of
Federal Claims has subject matter jurisdiction over Prime
Hospitals’ alternative claims seeking declaratory, injunc-
tive, and mandamus relief from the Secretary’s alleged
policy to prevent and delay Prime Hospitals from exhaust-
ing their administrative remedies. We conclude that it
does not. We take each issue in turn.
I
A
The jurisdiction of the Court of Federal Claims is set
forth in the Tucker Act, 28 U.S.C. § 1491(a), which states:
The United States Court of Federal Claims shall
have jurisdiction to render judgment upon any
claim against the United States founded either
upon the Constitution, or any Act of Congress or
any regulation of an executive department, or up-
on any express or implied contract with the Unit-
ed States, or for liquidated or unliquidated
damages in cases not sounding in tort.
The Tucker Act, however, does not create any sub-
stantive right enforceable against the United States.
United States v. Testan, 424 U.S. 392, 398 (1976). In
order to come within the jurisdictional reach of the Tucker
Act, a plaintiff must identify a separate source of substan-
tive law that creates the right to money damages. Fisher
v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005)
(citing United States v. Mitchell (Mitchell II), 463 U.S.
206, 216–17 (1983); Testan, 424 U.S. at 398).
Contract law is one such separate source of law com-
pensable under the Tucker Act. 28 U.S.C. § 1491(a);
Higbie v. United States, 778 F.3d 990, 993 (Fed. Cir.
2015), cert. denied, 136 S. Ct. 37 (2015). The Supreme
Court has also recognized non-contractual bases of Tucker
Act jurisdiction, which include those claims “founded
either upon the Constitution, or any Act of Congress, or
12 ALVARADO HOSPITAL, LLC v. COCHRAN
any regulation of an executive department,” 28 U.S.C.
§ 1491(a). Testan, 424 U.S. at 398. In order for a non-
contractual claim to be “cognizable under the Tucker
Act . . . the claimant must demonstrate that the source of
substantive law he relies upon can fairly be interpreted as
mandating compensation by the Federal Government for
the damages sustained.” Mitchell II, 463 U.S. at 216–17
(internal quotation marks omitted). Tucker Act jurisdic-
tion is preempted, however, when that non-contractual
source of substantive law contains its own judicial review
scheme. United States v. Bormes, 568 U.S. 6, 12 (2012).
If such a remedial scheme exists, it will establish the
exclusive framework for the monetary liability Congress
created under the statute. Id.
The Medicare Act is a non-contractual source of sub-
stantive law that mandates compensation to private
parties by the Federal Government. See, e.g., Appalachi-
an Reg’l Healthcare, Inc. v. United States, 999 F.2d 1573,
1577 (Fed. Cir. 1993) (observing that the Medicare Act
provides a substantive right to money damages). It also
contains its own judicial review scheme. See Heckler v.
Ringer, 466 U.S. 602, 614–15 (1984) (explaining that 42
U.S.C. §§ 405(h), (g), and 1395ii provide “the sole avenue
for judicial review for all ‘claim[s] arising under’ the
Medicare Act”). Accordingly, this court has held that
Tucker Act jurisdiction over Medicare reimbursement
claims is preempted. St. Vincent’s Med. Ctr. v. United
States, 32 F.3d 548, 550 (Fed. Cir. 1994).
There is a distinction between such non-contractual
claims arising under the Constitution, a statute, or a
regulation and those stemming from a contract. Holmes
v. United States, 657 F.3d 1303, 1313 (Fed. Cir. 2011).
Any express or implied contract with the United States
provides an independent substantive right, enforceable in
the Court of Federal Claims under the Tucker Act. Id.
When the contract at issue, however, is a settlement
agreement with the United States arising from a dispute
ALVARADO HOSPITAL, LLC v. COCHRAN 13
under a statute that has its own judicial review scheme,
the question remains whether Tucker Act jurisdiction
over that contract claim is nevertheless preempted.
We have addressed this question with respect to a
number of settlement agreements arising from disputes
under statutes having their own comprehensive review
schemes and each time have concluded that the statute’s
review scheme does not preclude Tucker Act jurisdiction
over those settlement agreements. See, e.g., Cunningham
v. United States, 748 F.3d 1172, 1179 (Fed. Cir. 2014)
(Civil Service Reform Act); Holmes, 657 F.3d at 1312
(Title VII); Massie v. United States, 166 F.3d 1184, 1189
(Fed. Cir. 1999) (Military Claims Act). In each case, we
have drawn a distinction between claims for which the
statute provides the exclusive remedy and claims for
breach of settlement that fall outside the comprehensive
scheme, with Tucker Act jurisdiction extending to the
latter. See, e.g., Holmes, 657 F.3d at 1312. This court has
yet to resolve this question with respect to settlement
agreements with the United States arising from reim-
bursement disputes under the Medicare Act. We do so
today.
We begin our analysis by reviewing the relevant ju-
risprudence.
The Supreme Court has identified a distinction be-
tween an action on a settlement agreement and one under
a law whose alleged violation gave rise to the settlement.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
378–82 (1994); see also Holmes, 657 F.3d at 1311 n.5.
This court and the Court of Federal Claims have since
applied this distinction to conclude that settlement
agreements are within the jurisdiction of the Court of
Federal Claims because they fall outside of, and must be
analyzed separately from, the statutory schemes from
which they arose. See, e.g., Holmes, 657 F.3d at 1311.
Relevant to our analysis, the Supreme Court has observed
14 ALVARADO HOSPITAL, LLC v. COCHRAN
that “[e]nforcement of the settlement agreement . . .
whether through award of damages or decree of specific
performance, is more than just a continuation or renewal
of the dismissed suit, and hence requires its own basis for
jurisdiction.” Kokkonen, 511 U.S. at 378. The Court has
also noted that “the facts to be determined with regard to
such alleged breaches of contract are quite separate from
the facts to be determined in the principal suit” from
which the settlement arose. Id. at 380.
In Holmes, this court held that the comprehensive
statutory scheme established under Title VII was not a
bar to the exercise of Tucker Act jurisdiction in a suit
alleging breach of a Title VII settlement agreement. 657
F.3d at 1312. We concluded that “although the [settle-
ment a]greements arose out of Title VII litigation, [the]
suit for breach of contract is just that: a suit to enforce a
contract with the government.” Id. (citing Kokkonen, 511
U.S. at 378–82). In addition to relying on Kokkonen, the
Holmes court also relied on this court’s decisions in Del-
Rio Drilling Programs, Inc. v. United States, 146 F.3d
1358 (Fed. Cir. 1998) and Massie v. United States, 166
F.3d 1184 (Fed. Cir. 1999). In Del-Rio Drilling, this court
held that “the fact that the court may have to interpret
[an] Act or make other determinations regarding princi-
ples of state and federal law in order to resolve the con-
tract claim does not deprive the [Court of Federal Claims]
of jurisdiction to decide that claim.” 146 F.3d at 1367.
Likewise, in Massie, this court addressed whether, be-
cause the Military Claims Act (MCA) provides a complete
and comprehensive statutory scheme pertaining to the
payment of military claims, the Court of Federal Claims
has jurisdiction over an agreement to pay an MCA claim.
166 F.3d at 1187–89. We concluded that “the MCA itself
does not deprive the court of jurisdiction to hear [the
contract] claim” because “the MCA does not address the
breach of agreements to pay MCA claims. Nor does its
legislative history shed light on this issue.” Id. at 1188.
ALVARADO HOSPITAL, LLC v. COCHRAN 15
This court also found it to be dispositive that “Massie
ha[d] not requested review of the substantive issues of the
MCA claim—the existence and extent of the government’s
liability for Massie’s injuries.” Id. at 1189. Rather, the
court noted, Massie “agrees with the Secretary’s decision
and seeks only to enforce the express contract embodying
it.” Id.
In Cunningham v. United States, this court applied
the holding in Holmes to an agreement settling a dispute
arising under the Civil Service Reform Act (CSRA) and
concluded that the Court of Federal Claims possessed
subject matter jurisdiction over the breach of contract
claim for money damages. 748 F.3d 1172, 1178–79 (Fed.
Cir. 2014). It was dispositive that the adjudication of the
claim for monetary relief did not involve the review of a
personnel action nor did it require the Claims Court to
review the facts or law underlying the initial discrimina-
tion grievance. Id. at 1178–79. Further, the suit did not
demand equitable relief that might require undertaking a
personnel action, but rather, sought money damages to
compensate for breach of the settlement agreement. Id.
Following our decisions in this line of cases, although
the alleged settlement agreement with CMS arose from
disputes under the Medicare Act, Prime Hospitals’ breach
of contract claim for money damages against the govern-
ment falls outside of the Medicare Act’s remedial scheme. 2
2 Prime Hospitals sufficiently pleaded, for Tucker
Act purposes, the requirements for a valid contract with
the United States. See J.A. 40–41, 135–40. See also
Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325
(Fed. Cir. 1997) (“To show jurisdiction in the Court of
Federal Claims, a party must show that either an express
or implied-in-fact contract underlies its claim.”); Total
Med. Mgmt., Inc. v. United States, 104 F.3d 1314, 1319
16 ALVARADO HOSPITAL, LLC v. COCHRAN
Prime Hospitals’ enforcement of the settlement
agreement is a separate action and not a continuation of
(Fed. Cir. 1997) (“The requirements for a valid contract
with the United States are: a mutual intent to contract
including offer, acceptance, and consideration; and au-
thority on the part of the government representative who
entered or ratified the agreement to bind the United
States in contract.”). The parties do not dispute this on
appeal.
“Jurisdiction . . . is not defeated . . . by the possibility
that the averments might fail to state a cause of action on
which petitioners could actually recover.” Do-Well Mach.
Shop, Inc. v. United States, 870 F.2d 637, 639 (Fed. Cir.
1989) (quoting Bell v. Hood, 327 U.S. 678, 682 (1946)).
Nonetheless, the dissent focuses on the merits of Prime
Hospitals’ contract claim and argues that jurisdiction is
lacking largely because, in its view, there is only a pro-
posed settlement and no enforceable contract. But that is
not a jurisdictional issue. “[T]he law is clear that, for the
Court of Federal Claims to have jurisdiction, a valid
contract must only be pleaded, not ultimately proven.”
Total Med., 104 F.3d at 1319 (emphasis added). The
dissent is not alone in its confusion. “As frequently hap-
pens where jurisdiction depends on subject matter, the
question whether jurisdiction exists has been confused
with the question whether the complaint states a cause of
action.” Montana-Dakota Utils. Co. v. Nw. Pub. Serv. Co.,
341 U.S. 246, 249 (1951). Yet, as this court has recog-
nized, “[t]he distinction between lack of jurisdiction and
failure to state a claim upon which relief can be granted,
is an important one.” Do-Well Mach. Shop, 870 F.2d at
639. We hold that the Court of Federal Claims has exclu-
sive jurisdiction over Prime Hospitals’ breach of contract
claim, so it is up to that court to determine whether, on
the merits, Prime Hospitals has failed to state a claim
upon which relief can be granted.
ALVARADO HOSPITAL, LLC v. COCHRAN 17
their underlying claims for Medicare reimbursement. See
Kokkonen, 511 U.S. at 378. Prime Hospitals do not sug-
gest that their contract claim is one that they should have
been required to present to the agency in the first in-
stance through the Medicare Act’s own comprehensive
review scheme. Nor does the language of the settlement
agreement itself contemplate review under the Medicare
Act’s administrative review scheme. It indicates that
“[a]ny dispute between the Parties under this Agreement
shall be resolved by a federal court of competent jurisdic-
tion.” J.A. 57. Rather, Prime Hospitals contend the
alleged settlement was brought about to end ongoing
administrative disputes. They pleaded that they agreed
to dismiss their appeals and accept the settlement as a
final administrative and legal resolution of their claims of
entitlement to Medicare benefits. In other words, Prime
Hospitals’ enforcement of the settlement agreement is not
a continuation or renewal of their denied claims for Medi-
care reimbursement.
The facts to be determined with respect to Prime Hos-
pitals’ breach of contract suit are also separate from the
facts determined in their underlying individual claims for
reimbursement. See Kokkonen, 511 U.S. at 380. The
facts to be determined with regard to the breach of con-
tract suit include whether CMS offered a settlement
agreement to Prime Hospitals, whether Prime Hospitals
signed and otherwise accepted the agreement, whether
CMS also accepted the settlement agreement, and wheth-
er CMS breached the agreement when it failed to pay
Prime Hospitals the agreed-upon sum. Contrast these
with facts that were likely determined for Prime Hospi-
tals’ individual claims for reimbursement. For example,
under the Medicare Act, as part of an initial determina-
tion, the facts to be determined include whether the items
and services the provider furnished are covered or other-
wise reimbursable under the Medicare Act and what
18 ALVARADO HOSPITAL, LLC v. COCHRAN
amounts are payable for those items and services, if any.
42 C.F.R. § 405.902.
As in Massie and Cunningham, where this court
found it dispositive that the claimant had not requested
review of the facts or law underlying the initial MCA or
CSRA dispute, Prime Hospitals are also not disputing the
underlying determinations denying their reimbursement
claims. Prime Hospitals have not requested review of, for
example, whether the items and services they furnished
are reimbursable under the Medicare Act nor have they
requested review of what amounts are payable for those
items and services. Rather, as in Massie, Prime Hospitals
agree with the Secretary’s decision to settle pending
Medicare administrative appeals for sixty-eight percent of
the net payable amounts of eligible claims as the final
administrative and legal resolution of the claims and seek
only to enforce the alleged contract they have with CMS
memorializing this decision. Massie, 166 F.3d at 1189.
Prime Hospitals seek the benefit of the bargain they
struck with CMS. Cunningham, 748 F.3d at 1177 (ob-
serving that “[w]hen a plaintiff seeks to obtain the benefit
of the bargain struck by the plaintiff and the government
in an underlying settlement agreement, the plaintiff is
enforcing a contract”). Finally, as in Cunningham, Prime
Hospitals do not demand equitable relief through their
breach of contract claim that might require undertaking
an action under the Medicare Act but only money damag-
es to compensate for breach of the settlement agreement.
To the extent that Prime Hospitals argue that their
contract claim cannot fall outside of the Medicare Act’s
remedial scheme because determining the scope of the
settlement agreement would require an application of the
Medicare Act, we disagree. See Del-Rio Drilling, 146 F.3d
at 1367. Prime Hospitals are referring to the fact that the
settlement agreement provides that it is intended to
resolve only “eligible claims” as defined by the settlement
agreement. J.A. 54. To be eligible for settlement the
ALVARADO HOSPITAL, LLC v. COCHRAN 19
agreement requires, for example, that the claim must
have been denied by any entity that conducted a review
on behalf of CMS and that the hospital must have timely
appealed the denial of that claim. That the settlement
agreement resolves only claims for reimbursement that
meet the criteria of “eligible claims,” however, does not
make the settlement agreement any less of a contractual
undertaking by the government. Del-Rio Drilling, 146
F.3d at 1367.
Indeed, Prime Hospitals describe the process for de-
termining which claims are eligible for settlement in their
complaint as simply “checking the spreadsheets.” J.A. 34.
The language of the settlement agreement describes this
process as follows: “Upon receipt of an Agreement exe-
cuted by the Hospital, CMS will determine whether the
list of appeals furnished by the Hospital matches CMS’s
records at each level of the administrative appeals pro-
cess.” J.A. 56; see also J.A. 34. Whether or not Prime
Hospitals are correct that determining the scope of the
contract in this manner would require an application of
the Medicare Act, that the parties might have to compare
spreadsheets to determine whether their records match
does not remove jurisdiction from the Court of Federal
Claims. As this court held in Del-Rio Drilling, the fact
that the court may have to interpret an Act or make other
determinations regarding principles of federal law in
order to resolve the contract claim does not deprive the
Court of Federal Claims of jurisdiction to decide that
claim. 146 F.3d at 1367. 3
3 Moreover, the issue of whether every one of Prime
Hospitals’ underlying individual claims is an “eligible
claim[]” as defined by the settlement agreement is not
part of the dispute between the parties. Indeed, Prime
Hospitals concede that CMS will determine whether the
list of appeals furnished by Prime Hospitals matches
20 ALVARADO HOSPITAL, LLC v. COCHRAN
In sum, following this court’s precedent, we hold that
Prime Hospitals’ claim for monetary relief against the
government alleging breach of their settlement agreement
with CMS is fundamentally a suit to enforce a contract
and therefore within the Court of Federal Claims’ juris-
diction under the Tucker Act.
B
Having concluded that Tucker Act jurisdiction over
Prime Hospitals’ contract claim is not preempted, we also
reject, for similar reasons, Prime Hospitals’ arguments
that Court of Federal Claims is precluded from reviewing
their contract claim because it “arises under” the Medi-
care Act.
The Medicare Act’s own comprehensive administra-
tive and judicial review scheme provides the sole avenue
for judicial review for all claims “arising under” the Medi-
care Act. Heckler v. Ringer, 466 U.S. 602, 614–15 (1984);
see also St. Vincent’s, 32 F.3d at 549–50. This judicial
review scheme places jurisdiction in the district courts
and therefore precludes the Court of Federal Claims from
reviewing reimbursement claims arising under the Medi-
care Act. St. Vincent’s, 32 F.3d at 550; Wilson ex rel.
Estate of Wilson v. United States, 405 F.3d 1002, 1010
(Fed. Cir. 2005).
The inquiry in determining whether the Medicare
Act’s review scheme bars jurisdiction over a claim is
whether the claim at issue “arises under” the Act. Ringer,
466 U.S. at 615. The Supreme Court has construed the
“claim arising under” language quite broadly to include
any claims in which the Medicare Act provides both the
standing and the substantive basis for the presentation of
CMS’s records only “[a]ssuming that the Prime Hospitals
can establish there is a contract” in the first instance.
Appellant’s Reply Br. 14–15.
ALVARADO HOSPITAL, LLC v. COCHRAN 21
the claims. Ringer, 466 U.S. at 615 (citing Weinberger v.
Salfi, 422 U.S. 749, 760–61 (1975)). Under this broad
test, the Court concluded that a claim arises under the
Act when it is “at bottom, a claim that they should be paid
for their” Medicare services. Id. at 614. See also Do Sung
Uhm v. Humana, Inc., 620 F.3d 1134, 1142–43 (9th Cir.
2010) (concluding that “where, at bottom, a plaintiff is
complaining about the denial of Medicare benefits . . . the
claim ‘arises under’ the Medicare Act” (emphasis added)).
The Supreme Court has also held that a claim arises
under the Medicare Act when it is “inextricably inter-
twined” with a claim for benefits. Ringer, 466 U.S. at
614–16. In Ringer, the claim was inextricably inter-
twined with a claim for benefits because the relief sought
was a determination that the Medicare services were
reimbursable under the Act. Id. at 614. The Third Cir-
cuit considers a claim to be inextricably intertwined “if it
does not involve issues separate from the party’s claim
that it is entitled to benefits and/or if those claims are not
completely separate from its substantive claim to bene-
fits.” Nichole Med. Equip. & Supply, Inc. v. TriCenturion,
Inc., 694 F.3d 340, 348 (3d Cir. 2012).
The type of remedy sought is generally not dispositive
of whether the claim arises under the Medicare Act. See,
e.g., Ringer, 466 U.S. at 615 (“It is of no importance that
respondents here . . . sought only declaratory and injunc-
tive relief and not an actual award of benefits as well.”).
The ultimate question is whether the claim is a claim for
reimbursement benefits. See, e.g., id. (concluding that
although respondents sought declaratory relief, they
ultimately sought an award of benefits because
“[f]ollowing the declaration which respondents seek from
the Secretary . . . only essentially ministerial details will
remain before respondents would receive reimburse-
ment”). A claim that challenges a denial of reimburse-
ment benefits, no matter how it is styled, is a claim for
reimbursement benefits. See, e.g., id. at 614; Do Sung
22 ALVARADO HOSPITAL, LLC v. COCHRAN
Uhm, 620 F.3d at 1142–43; Midland Psychiatric Assocs.,
Inc. v. United States, 145 F.3d 1000, 1004 (8th Cir. 1998);
Bodimetric Health Servs., Inc. v. Aetna Life & Cas., 903
F.2d 480, 487 (7th Cir. 1990).
Against this backdrop, Prime Hospitals maintain that
their breach of contract claim arises under the Medicare
Act because, at bottom, they are seeking reimbursement
for services they provided to the Medicare beneficiaries.
We disagree.
First, the Medicare Act does not provide either the
standing or the substantive basis for the presentation of
Prime Hospitals’ claim. Cf. RenCare, Ltd. v. Humana
Health Plan of Tex., Inc., 395 F.3d 555, 557 (5th Cir. 2004)
(finding that the standing and substantive basis for
claims that are based on state law, such as breach of
contract claims, are clearly not provided by the Medicare
Act). Their claim does not challenge the denial of benefits
in each of their individual reimbursement claims. Indeed,
their underlying claims must have been denied to be
considered “eligible claims” under the settlement agree-
ment. Nor do Prime Hospitals seek any declaration or
determination that the services that they provided to the
Medicare beneficiaries are reimbursable under the Act.
They pleaded that the settlement agreement is the final
administrative and legal resolution of their eligible
claims, thus they seek to dismiss their claims altogether.
Finally, Prime Hospitals do not challenge provisions of
the Medicare Act or its regulations as having denied them
benefits. Instead, they pleaded that they were denied the
amount owed to them under the settlement agreement as
a direct and proximate result of the Secretary’s breach of
the settlement agreement.
Unlike Do Sung Uhm where the contract claim was
found to arise under the Medicare Act, in part, because
the contract at issue only imposed a duty to comply with
the Medicare Act itself, 620 F.3d at 1142, Prime Hospi-
ALVARADO HOSPITAL, LLC v. COCHRAN 23
tals’ contract almost exclusively imposes duties on CMS
that do not involve compliance with the Medicare Act.
The relief Prime Hospitals seek is not reimbursement
payments for services they provided to the Medicare
beneficiaries in each of their individual claims. Rather,
they seek to dismiss their claims altogether and receive,
under contract principles, the benefit of the bargain they
struck with CMS. The benefit Prime Hospitals seek, as
CMS itself explained, is the bargained-for payment
amount which they can receive immediately through the
settlement agreement, “rather than waiting a considera-
ble amount of time with the associated risk of not prevail-
ing in the appeals process.” J.A. 166. Prime Hospitals
claim that they are owed the agreed-upon “total sum” that
CMS offered to pay under the settlement agreement.
J.A. 54. That Prime Hospitals also call this sum in their
complaint “Medicare reimbursement” does not change the
fact that the damages they seek are really the bargained-
for total sum under the settlement agreement. Brazos
Elec. Power Co-op., Inc. v. United States, 144 F.3d 784,
787 (Fed. Cir. 1998) (“Court of Federal Claims jurisdiction
cannot be circumvented by such artful pleading and,
accordingly, we customarily look to the substance of the
pleadings rather than their form.”).
Unlike the cases upon which Prime Hospitals rely,
their alleged injury cannot be remedied through the
retroactive payment of Medicare benefits nor can it be
remedied through the Act’s administrative review process.
See, e.g., Do Sung Uhm, 620 F.3d at 1143–44; Bodimetric,
903 F.2d at 486. Because Prime Hospitals seek the bene-
fit of the bargain under the settlement agreement and do
not challenge the Secretary’s denial of their claims for
payment for their Medicare services, they do not have an
adequate remedy under the Medicare review scheme. Cf.
Ringer, 466 U.S. at 617 (concluding that respondents
clearly had an adequate remedy in the Medicare review
scheme for challenging the Secretary’s denial of their
24 ALVARADO HOSPITAL, LLC v. COCHRAN
claims). See also Wilson, 405 F.3d at 1010 n.9 (clarifying
that the Medicare Act does not preclude judicial review in
the Court of Federal Claims when the specialized admin-
istrative and judicial review processes provided in the
statute are not available).
Second, Prime Hospitals’ breach of contract claim is
not inextricably intertwined with their underlying claims
for Medicare benefits. Prime Hospitals’ breach of contract
claim involves separate issues and is completely separate
from a substantive claim to benefits. See Nichole Med.,
694 F.3d at 348. Also, unlike the cases upon which Prime
Hospitals rely, hearing their breach of contract claim will
not mean reviewing the merits of the underlying reim-
bursement claims decisions. See, e.g., Midland, 145 F.3d
at 1004. Cf. Kaiser v. Blue Cross of Cal., 347 F.3d 1107,
1114–15 (9th Cir. 2003) (concluding that the only claims
that do not arise under the Medicare Act are the defama-
tion and invasion of privacy claim, because the alleged
facts are largely independent of the underlying Medicare
law).
In particular, Prime Hospitals’ breach of contract
claim involves issues such as whether CMS offered a
settlement agreement to Prime Hospitals, whether Prime
Hospitals and CMS both accepted the settlement agree-
ment, and whether CMS breached the agreement when it
failed to pay Prime Hospitals the agreed-upon sum.
These issues are separate from those that would arise in a
substantive claim of entitlement to benefits, such as,
whether the items and services Prime Hospitals furnished
are covered or otherwise reimbursable under the Medi-
care Act and what amounts are payable for those items
and services, if any. 42 C.F.R. § 405.902. Importantly,
Prime Hospitals do not challenge any such findings as
they do not challenge the denials of their underlying
individual reimbursement claims. Rather, Prime Hospi-
tals have alleged that their claims of entitlement to
Medicare benefits are fully resolved, both administrative-
ALVARADO HOSPITAL, LLC v. COCHRAN 25
ly and legally, by the settlement agreement, and they
seek payment only under the alleged contract.
In support of their argument that their breach of con-
tract claim arises under the Medicare Act, Prime Hospi-
tals centrally rely on Pines Residential Treatment Center,
Inc. v. United States, 444 F.3d 1379 (Fed. Cir. 2006). This
case, however, is readily distinguishable.
Pines Residential, an operator of a hospital, entered
into a written settlement agreement with a Medicare
Intermediary who agreed to allow a loss of an agreed-
upon amount and issue a revised notice of program reim-
bursement reflecting this allowance. Id. at 1380. The
Intermediary then complied with the settlement agree-
ment and issued revised notices reflecting the agreed-
upon loss and stating that a check would be issued if
payment were due. Id. Before the Court of Federal
Claims, the government provided evidence showing that
Pines Residential did not receive any payment because
the Intermediary had offset the agreed-upon loss amount
against an overpayment. Brief for Defendant-Appellee at
11, Pines Residential Treatment Ctr., 444 F.3d 1379 (Fed.
Cir. Aug. 31, 2005) (No. 05-5102), 2005 WL 2477446 at
*11. Thus, the only issue that could be litigated, the
government argued, was whether the offset decision was
proper and appropriate according to the Medicare statutes
and regulations. Id. at *35. This court affirmed the
Court of Claims’ finding that it was without jurisdiction to
hear Pines Residential’s claim because, although styled as
a breach of contract claim, it was, at a minimum, inextri-
cably intertwined with a claim for Medicare reimburse-
ment. Pines, 444 F.3d at 1381. Determining whether the
offset claimed by the government was proper would
require application of the provisions of the Medicare Act.
Id.
Unlike Pines Residential’s settlement agreement,
which did not entitle it to payment, here, Prime Hospitals’
26 ALVARADO HOSPITAL, LLC v. COCHRAN
alleged settlement agreement entitles them to a total sum
in exchange for dismissing their eligible reimbursement
appeals. Also unlike Pines where the parties disagreed as
to whether the payment owed was properly applied to an
overpayment under the applicable Medicare regulations,
here, Prime Hospitals and the government only dispute
whether or not a contract was formed between Prime
Hospitals and CMS. They do not disagree as to, or even
discuss, the merits of Prime Hospitals’ individual reim-
bursement claims from which the alleged settlement
agreement arose. Thus, unlike Pines, where determining
whether any payment was due to Pines Residential would
almost exclusively require resolving questions under the
Medicare Act, here determining whether Prime Hospitals
are entitled to the total sum payment in exchange for
dismissing their eligible reimbursement appeals requires
an analysis of whether a contract was formed under
contract principles.
In sum, Prime Hospitals’ breach of contract claim does
not arise under the Medicare Act because they do not seek
reimbursement for services provided to Medicare benefi-
ciaries. It is contract law, and not the Medicare Act, that
provides both the standing and the substantive basis for
the presentation of Prime Hospitals’ breach of contract
claim. Also, Prime Hospitals’ enforcement of their settle-
ment agreement is not inextricably intertwined with their
underlying claims for Medicare benefits because their
claim involves separate issues and is completely separate
from a substantive claim that they are entitled to bene-
fits.
Prime Hospitals’ breach of contract claim is just that:
a suit to enforce a contract with the government, and it
does not arise under the Medicare Act.
II
We turn now to Prime Hospitals’ remaining claims for
declaratory, injunctive, and mandamus relief. Prime
ALVARADO HOSPITAL, LLC v. COCHRAN 27
Hospitals and the government do not dispute that the
Court of Federal Claims does not have jurisdiction to
adjudicate these claims. Indeed, the government had not
asked the district court to transfer these claims but had
sought dismissal on other grounds. We conclude that the
Court of Federal Claims lacks jurisdiction over Prime
Hospitals’ remaining claims.
The Tucker Act does not generally confer jurisdiction
for actions seeking declaratory or injunctive relief. See
Richardson v. Morris, 409 U.S. 464, 456 (1973). Alt-
hough, as the government identifies, there are a limited
number of statutory exceptions to that rule, none are
applicable here. Similarly, the Court of Federal Claims
does not have jurisdiction to issue a writ of mandamus
pursuant to 28 U.S.C. § 1361. See Hornback v. United
States, 405 F.3d 999, 1002 (Fed. Cir. 2005) (“28 U.S.C.
§ 1361 vests ‘original jurisdiction’ for the issuance of
mandamus orders in the district courts.”).
Accordingly, we conclude that the Court of Federal
Claims does not have jurisdiction over Prime Hospitals’
remaining claims and we reverse the district court’s order
transferring Prime Hospitals’ claims for declaratory,
injunctive, and mandamus relief. Cf. United States v. Cty.
of Cook, Ill., 170 F.3d 1084, 1089 (Fed. Cir. 1999) (“Sec-
tion 1631 allows for the transfer of less than all of the
claims in a civil action to the Court of Federal Claims.”).
CONCLUSION
For the foregoing reasons, we hold that the Court of
Federal Claims has exclusive jurisdiction under the
Tucker Act, 28 U.S.C. § 1491, over Prime Hospitals’
breach of contract claim but does not have jurisdiction
over their remaining claims. Accordingly, we affirm the
district court’s transfer order with respect to the breach of
contract claim but reverse with respect to Prime Hospi-
tals’ remaining claims seeking declaratory, injunctive,
28 ALVARADO HOSPITAL, LLC v. COCHRAN
and mandamus relief. We remand for further proceed-
ings.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED
COSTS
The parties shall bear their own costs.
United States Court of Appeals
for the Federal Circuit
______________________
ALVARADO HOSPITAL, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA ALVARADO
HOSPITAL MEDICAL CENTER, VERITAS HEALTH
SERVICE, INC., A CALIFORNIA CORPORATION,
DBA CHINO VALLEY MEDICAL CENTER, DESERT
VALLEY HOSPITAL, INC., A CALIFORNIA
CORPORATION, DBA DESERT VALLEY
HOSPITAL, PRIME HEALTHCARE CENTINELA,
LLC, A DELAWARE LIMITED LIABILITY
COMPANY, DBA CENTINELA HOSPITAL
MEDICAL CENTER, PRIME HEALTHCARE -
ENCINO HOSPITAL, LLC, A DELAWARE LIMITED
LIABILITY COMPANY, DBA ENCINO HOSPITAL
MEDICAL CENTER, PRIME HEALTHCARE
SERVICES - GARDEN GROVE, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA GARDEN
GROVE HOSPITAL MEDICAL CENTER, PRIME
HEALTHCARE HUNTINGTON BEACH, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
HUNTINGTON BEACH HOSPITAL, PRIME
HEALTHCARE LA PALMA, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA LA PALMA
INTERCOMMUNITY HOSPITAL, PRIME
HEALTHCARE SERVICES - LOW BUCK LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
LOWER BUCKS HOSPITAL, PRIME HEALTHCARE
SERVICES - MONTCLAIR, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, DBA
MONTCLAIR HOSPITAL MEDICAL CENTER,
PRIME HEALTHCARE PARADISE VALLEY, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
PARADISE VALLEY HOSPITAL, PRIME
2 ALVARADO HOSPITAL, LLC v. COCHRAN
HEALTHCARE SERVICES - ROXBOROUGH, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
ROXBOROUGH MEMORIAL HOSPITAL, PRIME
HEALTHCARE SERVICES - SAN DIMAS, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
SAN DIMAS COMMUNITY HOSPITAL, PRIME
HEALTHCARE SERVICES - SHASTA, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, DBA
SHASTA REGIONAL MEDICAL CENTER, PRIME
HEALTHCARE SERVICES - SHERMAN OAKS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
DBA SHERMAN OAKS HOSPITAL, PRIME
HEALTHCARE ANAHEIM, LLC, A DELAWARE
LIMITED LIABILITY COMPANY,
DBA WEST ANAHEIM MEDICAL CENTER,
Plaintiffs-Appellants
v.
NORRIS COCHRAN, ACTING SECRETARY OF
HEALTH AND HUMAN SERVICES,
Defendant-Appellee
______________________
2016-1356
______________________
Appeal from the United States District Court for the
Central District of California in No. 2:15-cv-06312-R-PLA,
Judge Manuel L. Real.
_____________________
NEWMAN, Circuit Judge, dissenting.
I respectfully dissent from the ruling that the Medi-
care Act’s jurisdictional assignment to the district courts
does not apply when there is an offer of settlement of a
Medicare reimbursement claim. This explicit statutory
assignment is not erased if the Medicare administrator
ALVARADO HOSPITAL, LLC v. COCHRAN 3
offers to settle a Medicare claim. The jurisdictional
statute is clear, and precedent has long implemented its
terms:
Any individual, after any final decision of the
[Secretary of HHS] made after a hearing to which
he was a party, irrespective of the amount in con-
troversy, may obtain a review of such decision by
a civil action commenced within sixty days after
the mailing to him of notice of such decision or
within such further time as the [Secretary] may
allow. Such action shall be brought in the
district court of the United States for the judi-
cial district in which the plaintiff resides, or has
his principal place of business, or, if he does not
reside or have his principal place of business with-
in any such judicial district, in the United States
District Court for the District of Columbia.
42 U.S.C. § 1395ff(b)(1)(A), from the Medicare Act (incor-
porating 42 U.S.C. § 405(g), from the Social Security Act)
(emphasis added). The courts have consistently agreed.
In St. Vincent’s Medical Center v. United States, we cited
extensive authority concerning the statute:
Because the Medicare Act contains its own com-
prehensive administrative and judicial review
scheme, there is no Tucker Act jurisdiction over
Medicare reimbursement claims. Courts have
consistently found preemption of Tucker Act ju-
risdiction where Congress has enacted a precisely
drawn, comprehensive and detailed scheme of re-
view in another forum, as in the present case.
See, e.g., United States v. Fausto, 484 U.S. 439,
454–55 (1988); Harris v. United States, 841 F.2d
1097, 1100–01 (Fed. Cir. 1988); Fiorentino v.
United States, 607 F.2d 963, 969–70 (Fed. Cl.
1979). In fact, we recently held in Appalachian
Regional Healthcare, Inc. v. United States, 999
4 ALVARADO HOSPITAL, LLC v. COCHRAN
F.2d 1573, 1577 (Fed. Cir. 1993) (citations omit-
ted), that “when the Medicare statute specifically
provides for review, providers and courts must fol-
low the specified procedures.”
32 F.3d 548, 549–50 (Fed. Cir. 1994) (parallel citations
and footnote omitted). The Supreme Court explained
such jurisdictional assignments in United States v.
Bormes:
The Tucker Act is displaced . . . when a law as-
sertedly imposing monetary liability on the Unit-
ed States contains its own judicial remedies. In
that event, the specific remedial scheme estab-
lishes the exclusive framework for the liability
Congress created under the statute.
568 U.S. 6, 12 (2012) (discussing the Fair Credit Report-
ing Act).
Nonetheless, my colleagues endorse the transfer of
this action from the district court to the Court of Federal
Claims under the Tucker Act, reasoning that the statuto-
ry assignment of Medicare jurisdiction does not apply
when the issue includes a proposal for settlement of a
Medicare claim. However, as precedent has resolved,
settlement of a Medicare claim does not remove the
statutory Medicare Act jurisdiction. See Pines Residential
Treatment Ctr., Inc. v. United States, 444 F.3d 1379 (Fed.
Cir. 2006) (holding that Tucker Act jurisdiction is inap-
propriate when a settlement agreement “is inextricably
intertwined with a benefits claim” over which the Claims
Court lacks jurisdiction). Pines Residential dealt with the
asserted breach of a settlement agreement for a Medicare
claim, and this court held that the Court of Federal
Claims lacks jurisdiction, for “there is no Tucker Act
jurisdiction over Medicare reimbursement claims.” Id. at
1381 (quoting St. Vincents Med. Ctr., 32 F.3d at 549–50).
ALVARADO HOSPITAL, LLC v. COCHRAN 5
The court today ratifies the jurisdictional anomaly
proposed by the Medicare administrators at HHS, where-
by a denied Medicare claim can be reviewed only in the
district court under the Medicare Act, but a proposal to
settle a Medicare claim can be reviewed only in the Court
of Federal Claims under the Tucker Act. The provisions
of the Medicare Act, and precedent of the Supreme Court,
the Federal Circuit, the Court of Federal Claims, and the
district courts are contrary to the position today of HHS,
now endorsed by my colleagues. 1
These Medicare Act claims relating to “short-
stay” hospital costs were proposed for settle-
ment by Medicare administrators
These Medicare reimbursement claims relate to hos-
pital costs for procedures that the Medicare administra-
1 The jurisdictional inquiry is not whether a valid
contract was pleaded, but whether the issues in dispute
are preempted by the jurisdictional provision of the Medi-
care Act. It is not disputed that this action arises under
the Medicare Act, as the pleadings state, citing 42 U.S.C.
§§ 1395ff(b)(1)(A) and 405(g). J.A. 40. The panel majority
now bifurcates this appeal, assigning some aspects of the
denied Medicare claims to the Court of Federal Claims,
while returning other aspects to the district court; that is,
returning the requests for declaratory, injunctive, and
mandamus relief regarding adjudication of the denied
claims. Aside from valid concerns of judicial economy,
these claims relate to the same denied claims and are
brought under the same review provisions of the Medicare
Act, and Prime Hospitals’ requested remedy is the receipt
of compensation for provided services under the proposed
Medicare settlement that the government refused to
accept or ratify. J.A. 40, 43.
6 ALVARADO HOSPITAL, LLC v. COCHRAN
tors held should have been conducted on an out-patient
basis. Thousands of short-stay hospital claims were
denied—Prime Hospitals says in an administrative policy
shift—and were appealed through the prescribed Medi-
care administrative process. A large backlog of appeals
ensued, and in August 2014 HHS proposed to settle short-
stay claims by paying 68 percent of the eligible amounts
determined in accordance with a seven-factor test. J.A.
59. An HHS official sent Prime Hospitals a proposed
Administrative Agreement stating the settlement condi-
tions; the accompanying letter stated that the “Parties’
obligations under the agreement become binding upon
execution of the Administrative Agreement.” J.A. 57.
Prime Hospitals executed the Agreement and provid-
ed the requested eligibility information. However, the
HHS official then refused to countersign the Agreement,
stating that there was an ongoing False Claims Act
investigation related to Prime Hospitals’ short-stay
claims. 2 Prime Hospitals then filed this suit in the dis-
2 The court states at its footnote 2 that “the parties
do not dispute” that “a government representative . . .
entered or ratified the agreement.” That is incorrect.
This dispute arose because the government representative
refused to enter or ratify the proposed settlement agree-
ment. This refusal was explicit, the Medicare representa-
tive stating that the Prime Hospitals were no longer able
to participate in the proposed settlement because the
agency “has been made aware of one or more ongoing
False Claims Act case(s) or investigation(s) involving the
facilities.” J.A. 37. The Secretary continues to assert the
absence of a valid contract in this appeal. See Appellee’s
Br. 9 (stating that “HHS had never signed the settlement
agreement, meaning that the government had never
assented to the purported deal.”).
ALVARADO HOSPITAL, LLC v. COCHRAN 7
trict court, requesting that HHS either proceed with the
proposed settlement or resolve the separate administra-
tive appeals. HHS then took the position that the district
court did not have jurisdiction, and moved for transfer to
the Court of Federal Claims. The district court trans-
ferred the case; this appeal is from that transfer.
Medicare Act reimbursement claims are re-
viewed under the Medicare Act, not the Tuck-
er Act
Although my colleagues on this panel appear to rec-
ognize that the Medicare Act placed judicial review of
Medicare claims exclusively in the district courts, they
hold that when there is an issue related to a proposed
settlement, only the Court of Federal Claims has jurisdic-
tion. However, the Tucker Act cannot displace the explic-
it jurisdictional assignment in the Medicare Act. 3 As
stated in Bormes, the Supreme Court has “consistently
held that statutory schemes with their own remedial
framework exclude alternative relief under the general
terms of the Tucker Act.” 568 U.S. at 13. See also Wilson
ex rel. Est. of Wilson v. United States, 405 F.3d 1002, 1015
(Fed. Cir. 2005) (Because “the Medicare Act contains its
3 The legislative history of the Medicare Act shows
that Congress considered, and rejected, concurrent juris-
diction in the Court of Claims. The rejected provision
stated, “The district courts of the United States shall have
original jurisdiction, concurrent with the Court of Claims,
of any civil action or claim of a carrier, a provided [sic] of
services, or a State against the United States founded
upon this Act.” H.R. 4351, 89th Cong. § 341 (1965). The
clear intent of Congress to place jurisdiction in the district
courts, through its repudiation of an attempt to place
jurisdiction in the Court of Claims, should be respected.
8 ALVARADO HOSPITAL, LLC v. COCHRAN
own comprehensive administrative and judicial review
scheme which was available to Ms. Wilson, Congress has
expressly placed jurisdiction elsewhere, and there is no
Tucker Act jurisdiction . . . .” (internal quotation marks
and citation omitted) (quoting Aerolineas Argentinas v.
United States, 77 F.3d 1564, 1573 (Fed. Cir. 1996))). The
purported authority cited by my colleagues does not hold
otherwise.
The Medicare Act incorporated the judicial
review provisions of the Social Security Act.
The Medicare Act and the Social Security Act are ex-
plicit that judicial review is placed in the district courts,
but is not under 28 U.S.C. § 1331 (federal question juris-
diction) or § 1346 (Little Tucker Act). Both statutes
include the same provision:
No findings of fact or decision of the [Secretary]
shall be reviewed by any person, tribunal, or gov-
ernmental agency except as herein provided. No
action against the United States, the [Secretary],
or any officer or employee thereof shall be brought
under section 1331 or 1346 of Title 28 to recover
on any claim arising under this subchapter.
42 U.S.C. § 1395ii (incorporating 42 U.S.C. § 405(h), from
the Social Security Act).
The “arising under” provision of the Medicare Act
does not exclude settlement, or proposals for settlement,
of Medicare claims. 42 U.S.C. § 405(h) (“No action against
the United States, the [Secretary], or any officer or em-
ployee thereof shall be brought under section 1331 or
1346 of Title 28 to recover on any claim arising under this
subchapter.”)
Precedent guides the determination of whether a
claim “arises under” the Medicare Act. See Heckler v.
Ringer, 466 U.S. 602, 614 (1984) (inquiring whether a
claim is “anything more than, at bottom, a claim” for
ALVARADO HOSPITAL, LLC v. COCHRAN 9
Medicare benefits). In Ringer, the Secretary had denied
payment for a medical procedure, and the Court held that
“the inquiry in determining whether section 405(h) bars
federal-question jurisdiction must be whether the claim
‘arises under’ the Act.” Id. at 615. The Court explained
that a “claim arising under” includes “any claim in which
‘both the standing and the substantive basis for the
presentation’ of the claims” is the Medicare Act, and
reaffirmed that the same approach is appropriate under
the Medicare Act and the Social Security Act. Id; see also
Weinberger v. Salfi, 422 U.S. 749, 760–61 (1975) (compar-
ing arising under jurisdiction under the Medicare Act and
the Social Security Act).
The Medicare Act provides both the standing and sub-
stantive basis for Prime Hospitals’ claim. The issues are
not “separate from those that would arise in a substantive
claim of entitlement to benefits.” Maj. Op. 24. The pro-
posed Administrative Agreement contains ongoing obliga-
tions of eligibility determinations, not merely an exercise
in contract enforcement. The proposed settlement is not
simply enforcement of a contracted-for lump sum pay-
ment, as the majority describes it. The proposed settle-
ment would require individual review of the eligibility of
each claim, before the 68 percent payment would be
authorized. Like the claim in Pines Residential, the
Prime Hospital settlement proposal is “inextricably inter-
twined” with the eligibility of each individual claim,
measured by “application of the provisions of the Medi-
care Act.” Pines Residential, 444 F.3d at 1381.
The “Settlement Instructions” state that “CMS is re-
quiring each facility to complete a spreadsheet of claims it
believes to be eligible for inclusion.” J.A. 47. This eligibil-
ity process is not simply where “parties might have to
compare spreadsheets to determine whether their records
match,” quoting the panel majority. Maj. Op. 19. Each
claim requires review for eligibility, including whether the
“claim was not for items/services provided to a Medicare
10 ALVARADO HOSPITAL, LLC v. COCHRAN
Part C enrollee,” whether “the claim was denied by an
entity who conducted review on behalf of CMS,” whether
“the claim was denied based on inappropriate patient
status,” whether “the denial was timely appealed by the
hospital,” and whether “the provider did not receive
payment for the services as a Part B claim (‘rebill’).” J.A.
47–8. This is not a “simple” contract enforcement pro-
ceeding, as the majority holds. Maj. Op. 19.
The HHS proposal to settle short-stay Medicare
claims does not dissolve the settled judicial review provi-
sion of the Medicare Act.
The panel majority’s purported authority
does not override the Medicare Statute
The HHS and my colleagues have cited purported au-
thority from other statutes and other facts, while ignoring
the Medicare statute and direct precedent. For example,
in Holmes v. United States, 657 F.3d 1303, 1312 (Fed. Cir.
2011), cited by my colleagues, the court held that damag-
es for breach of a Title VII settlement agreement, de-
scribed as a “straightforward contract dispute,” could be
obtained in the Court of Federal Claims. Holmes present-
ed no issue of a proposed but unsigned contract. Fur-
thermore, the issue here requires application of the
Medicare regulations, an inquiry beyond a straightfor-
ward contract dispute.
My colleagues also rely on Massie v. United States,
166 F.3d 1184 (Fed. Cir. 1999), a case arising under the
Military Claims Act, where the parties had an executed
settlement agreement, and the court held that recovery on
the contract could be obtained in the Court of Federal
Claims. The court stated that Massie “agrees with the
Secretary’s decision and seeks only to enforce the express
contract embodying it.” Id. at 1189. Unlike Massie, HHS
not only denied the Hospitals’ claims but declined to sign
its proposed settlement agreement.
ALVARADO HOSPITAL, LLC v. COCHRAN 11
The panel majority also cites Cunningham v. United
States, 748 F.3d 1172 (Fed. Cir. 2014), where the parties
had entered into a consent decree under the Civil Service
Reform Act; this court stated that “Mr. Cunningham’s suit
does not require the Claims Court to review the facts or
law underlying his initial discrimination grievance
against OPM,” and held that the consent decree was
enforceable under the Tucker Act. Again, there was a
signed, completed contract, and the underlying claims had
been resolved, eliminating the possibility of further agen-
cy involvement.
The majority cites Del-Rio Drilling Programs, Inc. v.
United States, 146 F.3d 1358 (Fed. Cir. 1998), to argue
that the Court of Federal Claims is not deprived of juris-
diction by “the fact that the court may have to interpret
[an] Act or make other determinations regarding princi-
ples of state and federal law in order to resolve the con-
tract claim.” Id. at 1367. However, the question is not
whether the Court of Federal Claims is “deprived of” its
general Tucker Act jurisdiction; the question is whether
the district court is deprived of its statutory assignment of
jurisdiction of Medicare Act claims.
I take note of the court’s citation of Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994), to
support the conclusion that “[e]nforcement of the settle-
ment agreement, however, whether through award of
damages or decree of specific performance, is more than
just a continuation or renewal of the dismissed suit, and
hence requires its own basis for jurisdiction.” Maj. Op.
13–14. This case, concerning enforcement of an insurance
settlement, does not override the Medicare Act’s jurisdic-
tional statute. Here, the required basis exists, for the
Medicare statute is written to encompass such routine
disputes as settlement of a Medicare claim under its
“arising under” jurisdiction.
12 ALVARADO HOSPITAL, LLC v. COCHRAN
In all of the cases in which contract enforcement was
implemented by the Court of Federal Claims, the court
relied on the completeness of the contract claim and the
absence of continuing agency involvement in the enforce-
ment. In contrast, here the proposed Medicare short-stay
claim settlement requires Medicare Act determination of
seven factors of eligibility of each claim. These cases do
not support elimination of the Medicare Act’s assignment
of jurisdiction to the district court.
The Court of Federal Claims, the district
courts, and other circuits have recognized
the statutory Medicare Act jurisdiction
The Court of Federal Claims has addressed the issue
of its jurisdiction, and recognized that it does not have
jurisdiction for proposed settlements of Medicare claims.
In Bloomington Hosp. v. United States, 29 Fed. Cl. 286
(Fed. Cl. 1993), the court was presented with a situation
similar to that of Prime Hospitals. The Secretary made a
settlement offer to several hospitals, related to a dispute
over the computation of the average per diem cost of
routine patient health care. The settlement was offered
to “any hospitals that have such appeals properly pending
at the administrative level or before the Courts,” id. at
290, but Bloomington Hospital had not timely filed its
appeal. The court observed that “settlement or compro-
mise agreements are contractual in nature,” id. at 293,
but ruled that the Medicare Act placed the issue in the
district court, stating:
Although plaintiffs describe their claim as a “con-
tract dispute,” the subject matter of the purported
underlying contract is wholly based on a Medicare
reimbursement dispute. Therefore, notwithstand-
ing this court’s ability to exercise jurisdiction
when a settlement agreement or contract with the
federal government is at issue, it is clear that
plaintiffs are merely seeking a redetermination of
ALVARADO HOSPITAL, LLC v. COCHRAN 13
a continuing Medicare reimbursement dispute.
Thus, this court is without jurisdiction because
Congress has explicitly provided that Medicare re-
imbursement disputes are to be heard solely in
the district courts.
Id. This ruling comports with those of all other courts,
that the Medicare Act assigned these issues to the district
courts. The new position of HHS is untenable, and should
not be endorsed by this court.
A district court addressed Medicare Act jurisdiction in
Caregivers Plus, Inc. v. Thompson, 311 F. Supp. 2d 728
(N.D. Ind. 2004), and held that it possessed the standing
and substantive basis for a claim that a Medicare fiscal
intermediary breached a Medicare settlement agreement.
Id. at 734. Although the suit in the district court was
dismissed on the basis that the administrative process
had not been exhausted, the opinion does not hint that
jurisdiction belongs in the Court of Federal Claims. The
district court remarked on the Medicare Act’s “exclusive
procedure for review,” and cited Bodimetric Health Ser-
vices v. Aetna Life & Casualty, 903 F.2d 480, 487 (7th Cir.
1990), where the dispute was “inextricably intertwined
with [an] initial benefits determination,” for elaboration of
the “kinds of decisions that must proceed, if at all,
through the Medicare Act’s exclusive procedure for re-
view.” Caregivers Plus, 311 F. Supp. 2d at 734.
The panel majority cites RenCare, Ltd. v. Humana
Health Plan of Tex., Inc., 395 F.3d 555 (5th Cir. 2004) for
a ruling that state-law contract claims do not provide
standing or a substantive basis under the Medicare Act.
Maj. Op. 22. RenCare was a dispute between a provider
and a Health Maintenance Organization (HMO)—private
parties in which “the government had no financial inter-
est.” Id. at 558. The Fifth Circuit found that the claims
did not arise under the Medicare Act because “[a]t bottom,
RenCare’s claims are claims for payment pursuant to a
14 ALVARADO HOSPITAL, LLC v. COCHRAN
contract between private parties,” since neither “enrollees
nor the government hav[e] any financial interest in the
resolution of this dispute.” Id. at 559. Here, where the
claim is one for Medicare reimbursement benefits be-
tween a provider and the government, RenCare illustrates
the statutory distinctions.
Also informative is Do Sung Uhm v. Humana, Inc.,
620 F.3d 1134 (9th Cir. 2010), where the district court
considered whether a breach of contract claim against a
Medicare contractor arose under the Medicare statute,
and held that a dispute falls under the Medicare Act
“where at bottom, a plaintiff is complaining about the
denial of Medicare benefits.” Maj. Op. 21 (citing Do Sung
Uhm, 620 F.3d at 1142–43). In its district court com-
plaint, Prime Hospitals requested the remedy of “Medi-
care reimbursement of their Short Stay Appeal claims in
an amount according to proof at trial, and interest on said
amount at the maximum rate permitted by law.” J.A. 43.
Such a remedy is indicative of a “concealed claim for
benefits” arising under the Medicare Act. See Kaiser v.
Blue Cross of California, 347 F.3d 1107, 1112 (9th Cir.
2003) (noting that cases do not need to claim specific
Medicare benefits or reimbursements to arise under
Medicare). As in Ringer, when a claim is ultimately one
for benefits under the Medicare Act, Medicare Act juris-
diction applies. Ringer, 466 U.S. at 614–17.
The lengthy experience with the Social Secu-
rity Act also guides Medicare Act jurisdiction
The Social Security Act jurisdictional provisions are
incorporated into the Medicare Act. We have found no
ALVARADO HOSPITAL, LLC v. COCHRAN 15
case where a settlement of Social Security benefits was
removed from the jurisdiction of the district court. 4
CONCLUSION
These holdings, that the Court of Federal Claims does
not have jurisdiction of a fully executed Medicare settle-
ment, resolve the question of whether the Court of Feder-
al Claims has jurisdiction of a proposed, non-executed
settlement. The Medicare Act dictates the path of judicial
review of Medicare claims, whether the review is of a
denied claim, or a proposal to settle a claim.
Prime Hospitals’ claim arises under the Medicare Act,
whether viewed as an appeal of denied reimbursement, or
as related to the proposed settlement terms for eligible
claims. Precedent reinforces that this case belongs in the
district court. From my colleagues’ contrary conclusion, I
respectfully dissent.
4 The majority states at its footnote 2 that the ques-
tion before the Court of Federal Claims is whether the
proposed settlement agreement meets the Federal Rule
12(b)(6) standard of stating a claim on which relief can
be granted. That is not the issue of jurisdiction in this
case. The issue is not whether there is an enforceable
settlement agreement; the issue is whether the Medicare
Act’s assignment of jurisdiction to the district court in-
cludes the issues raised on this denial of reimbursement.