United States District Court, S.D. Indiana, Indianapolis Division
UNITED STATES OF AMERICA, SYLVIA MATHEWS BURWELL Secretary of the United States Department of Health and Human Services, and CENTERS FOR MEDICARE AND MEDICAID SERVICES Through acting administrator, Andy Slavitt, Appellants,
NIGHTINGALE HOME HEALTHCARE, INC., Appellee.
STATES OF AMERICA, Appellant, represented by Jeffrey L.
Hunter, UNITED STATES ATTORNEY'S OFFICE.
MATHEWS BURWELL, Appellant, represented by James P. Walsh,
Office of the United States Attorney & Jeffrey L. Hunter,
UNITED STATES ATTORNEY'S OFFICE.
CENTERS FOR MEDICARE AND MEDICAID SERVICES, Appellant,
represented by James P. Walsh, Office of the United States
Attorney & Jeffrey L. Hunter, UNITED STATES ATTORNEY'S
NIGHTINGALE HOME HEALTHCARE, INC., Appellee, represented by
Wendy D. Brewer, JEFFERSON & BREWER, LLC.
J. McKINNEY, District Judge.
actions are before the Court on appeal from rulings in the
Bankruptcy Court in favor of Nightingale Home Healthcare,
February 4, 2016, Home Care Providers, Inc., Nightingale Home
Health Care, Inc. ("Appellee"), Nightingale Hospice
Care, Inc. ("Hospice"), and Dev A. Bar (all of
these entities and the individual, collectively,
"Plaintiffs") filed a Complaint with this Court.
See Home Health Care Providers, Inc. v. Hemmelgarn,
1:16-cv-00303-LJM-TAB ("Civil Case"). The Complaint
sought damages and an injunction against the state and
federal governmental regulators of the Medicare health care
provider industry. Plaintiffs, a home health care company, a
hospice agency, and their owner, contended that they were
victims of harassment and retaliation based upon race,
ethnicity and/or national origin at the hands of the
governmental agencies and specified employees ("Civil
Defendants"). Plaintiffs further alleged that the
described harassment forced them to seek bankruptcy
protection which they received in the form of a temporary
injunction against further action including termination of
their contract with Medicare.
Civil Defendants all have a role in the Medicare program
which reimburses health providers for the provision of
services to Medicare qualified individuals. Under the
program, in order to be eligible for reimbursement from the
government, the providers must agree to and be in compliance
with statutory and regulatory conditions and sign a provider
agreement reflecting their obligation to the patients and to
governmental agencies then combine to survey the providers to
ensure that the clearly delineated provisions of the
agreement are being met. The history provided in the
Complaint shows that surveys were performed finding both
Appellee and Hospice out of compliance. Plaintiffs complained
that these findings were the result of deliberate harassment,
unlawful search and seizure and contained false accusations.
Court issued its opinion denying the request for an
injunction and dismissing the complaint for lack of
jurisdiction. See Civil Case, 1:16-cv-00303-LJM-TAB,
Dkt. No. 42. The Court held that:
The Court agrees with the Secretary and the State Defendants
that the relief sought by Plaintiffs in this case must be
subject to exhaustion under Â§ 405(h). In the first instance,
Plaintiffs cannot and do not deny that the relief they seek
is to change the review procedure used for their facilities.
It is clear that this review and oversight process is set
forth in the Act and regulations promulgated by the Secretary
under the Act and even provides for instances in which the
Secretary may use a service other than CMS and a state
agency. See 42 U.S.C. Â§Â§ 1395x(m), 1395x(o),
1395bbb, 1395aa(a), 1395bb, 1395aa(c), & 1395cc(b); 42 C.F.R.
Â§Â§ 488.6, 488.7, 488.8, 488.10, 488.11, 488.12, 488.20,
498.3, 498.40, 498.80 & 498.90. In a case that challenges the
procedures undertaken by the Secretary with respect to
regulation of a Medicare provider, 42 U.S.C. Â§ 1395ii
channels all claims arising under the Act to an
administrative process exclusively: "No findings of fact
or decision of the [Secretary] shall be reviewed by any
person, tribunal or governmental agency except as herein
provided;" and "[n]o action against [the Secretary]
shall be brought under section 1331 or 1346 of title 28 to
recover on any claim arising under this subchapter." 42
U.S.C. Â§ 405(h). That Plaintiffs have claimed that their
Constitutional rights have been violated does not change the
analysis because the Secretary has the authority to review
such a challenge. Accord Ill. Council, 529 U.S. at
13-14 (concluding that a certain nursing homes' challenge
to provisions of the Medicare Act as unconstitutional are
subject to the administrative procedure in Â§ 405(h);
Salfi, 422 U.S. at 761 (concluding that allegations
of due process and equal protection violations in the Social
Security context could not proceed under Â§ 1331);
Ringer, 466 U.S. at 614-15, 621-22 (concluding that
Â§ 405(h) applies where "both the standing and the
substantive basis for the presentation" of the claim is
the Medicare Act). Moreover, the relief Plaintiffs seek in
the Complaint is withdrawal of several surveys that formed
the basis for termination of their status. As such, their
claims must first be addressed through the administrative
Id. at 10-11.
concluded that a District Court does not have jurisdiction of
the underlying administrative action until the administrative
remedies were exhausted, the Court turns here to whether a
bankruptcy court can grant relief before the administrative
remedies are exhausted. The Eleventh Circuit has concluded
that it cannot. In re Bayou Shores SNF, LLC, No.
15-13731, 2016 WL 3675462 (11th Cir. July 11, 2016). In that
case the plaintiff-provider sought a preliminary injunction
in the District Court to prevent the termination of the
provider agreement much like the case at bar. The District
Court denied the relief for the same reason that this Court
denied relief. The plaintiff-provider immediately thereafter
filed for the same relief in the Bankruptcy Court. The
Bayou Shores Bankruptcy Court, as it did here,
granted the relief and issued the preliminary injunction on
the plaintiff-provider's behalf.
Bayou Shores, as in the instant case, the
governmental parties appealed, although after the plan or
reorganization was approved and the preliminary injunction
was dissolved by the Bankruptcy Court. On appeal from the
Bankruptcy Court, the District Court held that the Bankruptcy
Court did not have jurisdiction to issue an injunction for
the same reason that the ...