Filed: Sep. 18, 2020
Latest Update: Sep. 18, 2020
Summary: Case: 18-41120 Document: 00515570391 Page: 1 Date Filed: 09/18/2020 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 18, 2020 No. 18-41120 Lyle W. Cayce Clerk Sahara Health Care, Incorporated, Plaintiff—Appellant, versus Alex M. Azar, II, Secretary, U.S. Department of Health and Human Services; Seema Verma, Administrator for the Centers for Medicare and Medicaid Services, Defendants—Appellees. Appeals from the United States Distric
Summary: Case: 18-41120 Document: 00515570391 Page: 1 Date Filed: 09/18/2020 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 18, 2020 No. 18-41120 Lyle W. Cayce Clerk Sahara Health Care, Incorporated, Plaintiff—Appellant, versus Alex M. Azar, II, Secretary, U.S. Department of Health and Human Services; Seema Verma, Administrator for the Centers for Medicare and Medicaid Services, Defendants—Appellees. Appeals from the United States District..
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Case: 18-41120 Document: 00515570391 Page: 1 Date Filed: 09/18/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 18, 2020
No. 18-41120
Lyle W. Cayce
Clerk
Sahara Health Care, Incorporated,
Plaintiff—Appellant,
versus
Alex M. Azar, II, Secretary, U.S. Department of Health
and Human Services; Seema Verma, Administrator for
the Centers for Medicare and Medicaid Services,
Defendants—Appellees.
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 7:18-CV-203
Before Elrod, Willett, and Oldham, Circuit Judges.
Jennifer Walker Elrod, Circuit Judge: *
Congress devised an intricate procedure for medical providers to dis-
pute Medicare recoupment: four layers of administrative review, followed by
review in a federal court. But over a period of five years, administrative
*
Judge Oldham concurs in the judgment only.
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appeals for Medicare recoupment grew twelve-fold. At its peak, the backlog
of appeals grew to a ten-year wait. This logjam resulted in a remarkable opin-
ion by the D.C. Circuit, in which that court told Congress that it would likely
mandamus the Secretary of Health and Human Services if the political
branches “failed to make meaningful progress within a reasonable period of
time—say, the close of the next full appropriations cycle.” See Am. Hosp.
Ass’n v. Burwell, 812 F.3d 183, 193 (D.C. Cir. 2016). As they say, the best laid
plans of mice and men oft go awry. 1
Sahara Health Care is a provider stuck in this bureaucratic mire. The
government told Sahara that past Medicare reimbursements had been over-
paid and were ripe for recoupment. After step two of the four-step adminis-
trative review process (with fifth-step judicial review), HHS began to recoup
overpayments from Sahara’s present and future reimbursements. Although
the statute requires an ALJ hearing and decision within 90 days of a request,
the current ALJ backlog results in a typical three-to-five year wait.
Sahara sought injunctive relief, asserting that its statutory and due
process rights were violated and that the government acted ultra vires by re-
couping payments without providing a timely ALJ hearing. The district court
granted the government’s motion to dismiss, holding alternatively that Sa-
hara lacked a protected property interest in forestalling the recoupment and
that the government had provided adequate process. It also concluded that
the government had not exceeded its statutory authority. Because we agree
1
Cf. Robert Burns, To a Mouse (1785) (“The best-laid schemes o’mice an’ men /
Gang aft agley[.]”).
2
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that the government provided Sahara adequate process and complied with
the statute, we AFFIRM.
I.
The Medicare program processes over a billion claims each year.
Ctrs. for Medicare & Medicaid Servs., The Medicare Recovery
Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstra-
tion at 9 (2008). It cannot inspect each claim as it comes. Instead, it generally
pays facially valid claims, and conducts post-payment audits to detect over-
payments. See 42 U.S.C. § 1395ddd; see generally Palomar Med. Ctr. v. Sebe-
lius, 693 F.3d 1151, 1156–57 (9th Cir. 2012) (outlining the operation of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003,
Pub. L. No. 108–173, 117 Stat. 2066, (2003), which governs recoupment).
Providers who wish to challenge an overpayment determination have access
to four phases of administrative review culminating in a phase five judicial
review. See 42 U.S.C. § 1395ff.
Sahara Health Care is a home health agency that depends on Medicare
reimbursements for about 75% of its revenue. In 2017, a Medicare contractor
audited a sample of Sahara’s claims and, after analysis and extrapolation, cal-
culated that HHS had overpaid it about $3.6 million. The government
wanted that money back. Sahara objected. After two levels of administrative
review, Sahara had successfully reduced that number down to about $2.4 mil-
lion (excluding interest). Sahara believed that was still excessive. It exercised
its statutory right to an ALJ hearing within 90 days of a request. Unfortu-
nately for Sahara, the massive administrative backlog resulted in a three-to-
3
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five year wait for a hearing. See Cumberland Cty. Hosp. Sys., Inc. v. Burwell,
816 F.3d 48, 50–51 (4th Cir. 2016). This case arises from the conflict between
the statutory right to a hearing within 90 days and the administrative reality
that no such hearing occurs for years.
A.
The first phase of administrative review is a “redetermination” from
an HHS contractor. See 42 U.S.C. § 1395ff(a)(3); 42 C.F.R. § 405.948. Sec-
ond, a provider can seek “reconsideration” from a qualified independent
contractor. See 42 U.S.C. § 1395ff(b)–(c), (g); 42 C.F.R. §§ 405.902,
405.904(a)(2). At steps one and two, a provider may submit additional evi-
dence and must put forth a written explanation of its disagreement with the
initial determination. 42 C.F.R. §§ 405.946(a); 405.966(a). If it wants to
submit evidence, that is the time: “A provider of services or supplier may not
introduce evidence” after step two “unless there is good cause which pre-
cluded the introduction of such evidence at or before that reconsideration.”
42 U.S.C. § 1395ff(b)(3); 42 C.F.R. § 405.966(a)(2). Redetermination at step
one and reconsideration at step two result in reasoned, written decisions. See
42 U.S.C. § 1395ff(a)(5) (requiring “written notice” with “specific reasons”
at step one); 42 C.F.R. § 405.956(b) (detailing content of step one decision);
42 U.S.C. § 1395ff(c)(3)(E) (requiring “a detailed explanation of the deci-
sion” at step two); 42 C.F.R. § 405.976(b) (detailing content of step two de-
cision). The process does not end there.
At step three, a provider is entitled to a hearing and decision from an
ALJ, who must “render a decision on such hearing by not later than the end
4
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of the 90-day period” after the request was timely filed. 42 U.S.C.
§ 1395ff(d)(1)(A). Congress specified what happens when an ALJ misses
that deadline:
In the case of a failure by an administrative law judge to render
a decision by the end of the period described in paragraph (1),
the party requesting the hearing may request a review by [the
HHS Appeals Board] notwithstanding any requirements for a
hearing for purposes of the party’s right to such a review.
42 U.S.C. § 1395ff(d)(3)(A).
The Appeals Board then has 90 days to conduct a de novo review and
issue a decision, or 180 days if the case was “escalated” to skip the step-three
hearing. 42 U.S.C. § 1395ff(d)(2)(A); 42 C.F.R. §§ 405.1100(c) (de novo re-
view); 405.1100(d) (180 days if escalated). Congress anticipated that the Ap-
peals Board deadline might pose some problems. After 180 days have passed
without a board decision, the statute permits a party to “seek judicial review,
notwithstanding any requirements for a hearing for purposes of the party’s
right to such a judicial review.” 42 U.S.C. § 1395ff(d)(3)(B).
B.
Recoupment is “the recovery by Medicare of any outstanding Medi-
care debt by reducing present or future Medicare payments and applying the
amount withheld to the indebtedness.” 42 C.F.R. § 405.370. Congress pro-
hibited HHS from recouping payments during the first two stages of admin-
istrative review. 42 U.S.C. § 1395ff(f)(2)(A). After those two appeals, how-
ever, if a provider is still found to have been overpaid, “recoupment remains
in effect.” 42 C.F.R. § 405.379(d)(4)–(5). HHS must provide an overpaid
5
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provider with notice and an opportunity to respond in writing. 42 C.F.R.
§§ 405.373(a), (b)(1).
If repayment of an overpayment would constitute an “extreme hard-
ship, as determined by the Secretary,” the agency “shall enter into a plan
with the provider” for repayment “over a period of at least 60 months but . .
. not longer than 5 years.” 42 U.S.C. § 1395ddd(f)(1)(A). That hardship
safety valve has some exceptions that work against insolvent providers. If
“the Secretary has reason to believe that the provider of services or supplier
may file for bankruptcy or otherwise cease to do business or discontinue par-
ticipation” in the Medicare program, then the extended repayment plan is
off the table. 42 U.S.C. § 1395ddd(f)(1)(C)(i). A provider that ultimately
succeeds in overturning an overpayment determination receives the wrong-
fully recouped payments with interest. 42 U.S.C. § 1395ddd(f)(2)(B).
C.
A years-long administrative logjam helps explain why Sahara filed this
lawsuit. Between 2009 and 2014, the number of ALJ appeals increased more
than 1,200 percent. OMHA, HHS, Fiscal Year 2017 Justification of Estimates
for Appropriations Committee 8 (FY 2017 Budget). The agency’s budget did
not receive a similar increase. Cases piled up. At its peak in 2016, HHS had
almost ten years of appeals pending. See Cumberland Cty. Hosp., 816 F.3d at
50–51. The agency has since received a funding increase, and currently ex-
pects to clear the backlog by 2022. See Am. Hosp. Ass’n v. Azar, No. 14-cv-
851,
2018 WL 5723141 (D.D.C. Nov. 1, 2018). In fact, the Secretary is under
6
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a mandamus order requiring such a timetable. See id. at *1. But 2022 is still
a ways off, and multi-year waits are abundant.
D.
Sahara was notified of a $3.5 million overpayment determination in
February 2017. It appealed. At step one (“redetermination”), after multiple
requests and corrected decisions, the overpayment determination was par-
tially upheld. Sahara went to step two (“reconsideration”), and ultimately
received a revised overpayment demand of $2.4 million in July 2018. In June
2018, Sahara timely requested an ALJ hearing. 2 The next month, it re-
quested an extended repayment schedule to pay down the debt over ten
years. The agency denied the request, noting that it lacked statutory author-
ity to extend schedules longer than five years. Sahara was financially unable
to accept a five-year plan, which “would have had a devastating impact on
the business’ [sic] financial well-being.” 3
Four days after it requested an ALJ hearing, Sahara filed a lawsuit for
injunctive relief in the Southern District of Texas. The district court granted
the government’s motion to dismiss and denied Sahara’s motions for a pre-
liminary injunction and temporary restraining order. The district court held
that Sahara had no protected “property interest in the recoupment or fore-
stalling of the recoupment.” The claim also failed, the district court
2
The ALJ hearing was requested before the final reconsideration decision because
reconsideration involves multiple submissions and decisions.
3
Since the filing of this appeal, Sahara entered a graduated repayment plan that
currently requires payments of $10,000 per month, ramping up to $75,000 in February
2021.
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concluded, because Sahara received constitutionally adequate process. Fi-
nally, the district court dismissed the ultra vires claim, explaining that Sahara
asserted “only conclusory statements” and that Medicare’s “backlog argu-
ment falls outside the Court’s jurisdiction.” Sahara appealed.
II.
“This court reviews a district court’s decision to dismiss under rule
12(b)(6) de novo.” O’Daniel v. Indus. Serv. Sols., 922 F.3d 299, 304 (5th Cir.
2019). Accepting the plaintiff’s factual allegations as true, those facts must
state a claim that is plausible on its face. Bowlby v. City of Aberdeen,
681 F.3d
215, 219 (5th Cir. 2012).
To be entitled to a preliminary injunction, Sahara must demonstrate
that: (1) it is substantially likely to succeed on the merits of its claim; (2) it
will suffer irreparable injury in the absence of injunctive relief; (3) the balance
of the equities tips in its favor; and (4) the public interest is served by the
injunction. Opulent Life Church v. City of Holly Springs, 697 F.3d 279, 288
(5th Cir. 2012). We review the denial of injunctive relief for abuse of discre-
tion.
Id.
We have jurisdiction under the collateral-claim exception to the Med-
icare Act’s administrative exhaustion requirement. See Family Rehab., Inc. v.
Azar,
886 F.3d 496, 504 (5th Cir. 2018).
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III.
In its complaint, Sahara asserted one count of procedural due process
and one count of ultra vires acts.4 To succeed on a constitutional due process
claim, Sahara must demonstrate that the balance of the private interest, gov-
ernment interest, and value of additional procedure weighs in its favor. See
Mathews v. Eldridge, 424 U.S. 319, 335 (1976). Its ultra vires claim is straight-
forward: Sahara argues that the government acted without statutory author-
ity by recouping payments before it had provided an ALJ hearing. We reject
each claim. 5
4
District courts in this circuit have divided on the due process question. Compare,
e.g., Sahara Health Care, Inc. v. Azar, 349 F. Supp. 3d 555, 579 (S.D. Tex. 2018) (dismissing
due process claim), and Supreme Home Health Servs., Inc. v. Azar,
380 F. Supp. 3d 533, 556
(W.D. La. 2019) (same), with Adams EMS, Inc. v. Azar, No. H-18-1443,
2018 WL 5264244,
at *12 (S.D. Tex. Oct. 23, 2018) (granting injunctive relief on due process claim), and Fam-
ily Rehab., Inc. v. Azar, No. 3:17-CV-3008-K,
2018 WL 3155911, at *4 (N.D. Tex. June 28,
2018) (same).
5
In its reply brief, Sahara contends that collection of overpayments is “no longer
legally enforceable” because: (1) the recoupment was promulgated under the Patient Pro-
tection and Affordable Care Act; (2) a district court held that ACA’s individual mandate
was unconstitutional and inseverable from the ACA, see Texas v. United States, 340 F. Supp.
3d 579, 585 (N.D. Tex. 2018); and (3) the federal government agreed. This argument has
many flaws, but we limit ourselves to three. First, we ordinarily disregard arguments raised
for the first time in a reply brief. See Hardman v. Colvin,
820 F.3d 142, 152 (5th Cir. 2016).
Even if the argument were properly presented, we would reject it. The Secretary’s recoup-
ment authority does not derive from the ACA. The laws authorizing recovery of overpay-
ments are codified at 42 U.S.C. § 1395ddd(f). Congress enacted those provisions as part
of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub.
L. No. 108–173, 117 Stat. 2066. The ACA amended subsections (a) and (h) and added sub-
section (i). See Pub. L. No. 111-148, 124 Stat. 119. It did not amend or affect subsection (f),
and it has no relevance to this case. And even if recoupment were a part of the ACA, the
federal government would still be allowed to enforce the statute while simultaneously con-
testing its constitutionality. See United States v. Windsor,
570 U.S. 744, 749–53 (2013).
9
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A.
The Fifth Amendment guarantees that no person shall “be deprived
of . . . property . . . without due process of law[.]” U.S. Const. amend. V.
Administrative deprivations of property are governed by the “familiar proce-
dural due process inspection instructed by Mathews v. Eldridge, 424 U.S. 319
(1976)[.]” Nelson v. Colorado,
137 S. Ct. 1249, 1255 (2017). Under this ex-
emplar of “th’ol’ totality of the circumstances test,” see United States v.
Mead Corp.,
533 U.S. 218, 241 (2001) (Scalia, J., dissenting) (internal quota-
tion marks omitted), the court balances the private interest, the governmen-
tal interest, and the costs and benefits of additional procedures. Specifically,
one looks to:
First, the private interest that will be affected by the official ac-
tion; second, the risk of an erroneous deprivation of such inter-
est through the procedures used, and the probable value, if any,
of additional or substitute procedural safeguards; and finally,
the Government’s interest, including the function involved
and the fiscal and administrative burdens that the additional or
substitute procedural requirement would entail.
Mathews, 424 U.S. at 335.
To successfully invoke the Due Process Clause, a plaintiff must
demonstrate that it has a protected property or liberty interest at issue. See
Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 569–71 (1972). Sahara
maintains that it has a property interest in “Medicare payments it has earned
for services rendered on properly billed claims.” This court has rejected a
similar theory, where providers argued that they had “a property interest in
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legitimately earned, current [Medicaid] reimbursements that are not subject
to investigation.” See Pers. Care Prods., Inc. v. Hawkins, 635 F.3d 155, 159
(5th Cir. 2011). But because we conclude that the government provided Sa-
hara adequate process, we decline to decide the property interest question. 6
Cf. Accident, Injury & Rehab., PC v. Azar,
943 F.3d 195, 204 (4th Cir. 2019)
(rejecting identical due process claim while declining to determine whether
provider had protected property interest).
Looking to the first and third Mathews factors, Sahara’s private inter-
est in adding a hearing outweighs the government’s interest in efficient re-
coupment administration. But turning to the second Mathews factor, the suf-
ficiency of the current procedures and the minimal benefit of the live hearing
weighs so strongly against Sahara that we reject its due process claim.
1.
Sahara’s private interest will be greatly affected by beginning recoup-
ment. Counsel represents that “the government’s recoupment will force Sa-
hara out of business[.]” In the district court, the Administrator of Sahara
declared that about 75% of the company’s revenue comes from the Medicare
program and that full recoupment would cause the company to close. What
is more, Medicare recoupments are not subject to an automatic stay in bank-
ruptcy. See Med-Cert, 2019 WL 426465, at *9. Wrongly recouped funds will
6
Even though the district court ruled that there is not a protected property interest
at issue, the government declined to address whether Sahara possesses a valid property
interest. In its briefing to this court, it offered only that “there is no need for this Court to
resolve the issue.” Similarly, at oral argument, the government demurred on the question,
emphasizing that, “We’re not saying rule that there’s no property interest here.”
11
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be repaid with interest. See 42 U.S.C. § 1395ddd(f)(2)(B). But that will be
cold comfort if Sahara has already closed its doors. The government cor-
rectly notes that providers are aware of the overpayment/recoupment re-
gime. And since this appeal was filed, Sahara has entered a graduated repay-
ment plan that ramps up from $10,000 to $75,000 on February 1, 2021. In
sum, however, the threat to Sahara is real, and its private interest faces great
harm.
The government interest, in comparison, is slight. Medicare pos-
sesses a broad systematic concern in recouping overpayments from provid-
ers. And the government has a valuable interest in conserving scarce admin-
istrative and financial resources. But as Sahara correctly notes, if at the end
of the day, a provider is found to have been overpaid, the government gets its
due sooner or later (with interest). The only questions here are when Sahara
will pay and whether it will receive a hearing first. Accordingly, the private
interest outweighs government interest.
Nonetheless, the adequate process that Sahara has received and the
procedural protections it has chosen to forego weigh strongly, and decisively,
against it. The constitutional minimum of due process guarantees that “no-
tice and an opportunity to be heard be granted at a meaningful time and in a
meaningful manner.” Gibson v. Tex. Dep’t of Ins., 700 F.3d 227, 239 (5th Cir.
2012) (quoting Fuentes v. Shevin,
407 U.S. 67, 80, 92 (1972)) (internal quota-
tion marks omitted). There is no dispute that Sahara received notice. The
issue is whether it received a meaningful opportunity to be heard.
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2.
“The type of hearing necessary—the process due—is a function of
the context of the individual case.” Jones v. La Bd. of Sup’rs of Univ. of La.
Sys., 809 F.3d 231, 236 (5th Cir. 2015). Sahara has already received two
meaningful opportunities to be heard. At step one, it could submit a written
statement and additional evidence. 42 U.S.C. § 1395ff(a)(3); 42 C.F.R.
§ 405.948. The independent contractor provided a written, reasoned deci-
sion. 42 U.S.C. § 1395ff(a)(5). At step two, a different independent contrac-
tor delivered a reasoned, written decision after Sahara had the opportunity to
provide additional evidence and written arguments of fact and law. 42 U.S.C.
§ 1395ff(c)(3)(E); 42 C.F.R. § 405.976(b). Sahara’s claims were reviewed by
a “panel of clinical experts consisting of a physician and a licensed health care
professional” and a “statistician who evaluated the validity of the statistical
sampling and extrapolation.” This was not an exercise in rubberstamping:
those two reviews lowered Sahara’s overpay amount from $3,573,595.61 to
$2,416,157.10. And these two steps were just a part of the “comprehensive
whole that ends with an opportunity for timely judicial review.” See Accident,
Injury &
Rehab., 943 F.3d at 204.
Sahara does not explain why steps one and two, standing alone, fail to
satisfy the constitutional requirement. Instead, Sahara dwells on the proce-
dural additions of the step-three ALJ hearing. According to Sahara, “an ALJ
hearing provides essential procedural safeguards . . . in its Medicare appeal
of the alleged overpayment.” It is true that a step-three hearing may offer
“the opportunity to have a live hearing, present testimony, cross-examine
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witnesses, and submit written statements of law and fact.” Family Rehab.,
Inc. v. Azar, 886 F.3d 496, 499 (5th Cir. 2018) (citing 42 C.F.R.
§ 405.1036(c)–(d)). But Sahara fails to demonstrate what value the hearing
would add to the process Sahara has already received or is otherwise entitled
to receive.
First, Sahara concedes that the hearing will not develop the factual
record. Absent good cause, additional evidence can only be provided in steps
one and two. See 42 U.S.C. § 1395ff(b)(3). And Sahara does not argue that
it can demonstrate good cause. Similarly, the step-three hearing does not
permit a provider to compel discovery beyond the administrative record that
was compiled at steps one and two. See 42 C.F.R. § 405.1036(f)(1); id.
§§ 405.1012, 405.1037(a).
Second, Sahara does not explain how the possibility of cross-examina-
tion at the hearing would benefit it. Cross-examination or a live hearing may
be constitutionally required “where credibility [is] critical.” See Walsh v.
Hodge, No. 19-10785,
2020 WL 5525397, at *6 (5th Cir. Sept. 15, 2020); see
also
Mathews, 424 U.S. at 343–44 (analyzing whether “issues of witness cred-
ibility and veracity . . . are critical to the decisionmaking process”); accord
Doe v. Baum,
903 F.3d 575, 584 (6th Cir. 2018) (explaining, in context of Title
IX disciplinary hearing, that “if credibility is in dispute and material to the
outcome, due process requires cross-examination”); cf. Nondiscrimination on
the Basis of Sex in Education Programs or Activities Receiving Federal Financial
Assistance, 85 Fed. Reg. 30,026 (May 19, 2020) (to be codified at 34 C.F.R.
14
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pt. 106) (requiring postsecondary institutions to hold live disciplinary hear-
ings and allow cross-examination in Title IX sexual misconduct proceedings).
Sahara does not submit that the credibility or veracity of the govern-
ment’s witnesses are at issue here. Cf. Jones v. La. Bd. of Sup’rs of Univ. of
La. Sys., 809 F.3d 231, 237 (5th Cir. 2015) (noting that “[i]t is difficult to see
exactly where veracity or credibility would come into play” in a decision,
based on applying organization policies to a paper record, which was “unre-
lated to the [plaintiff’s] actions”). Indeed, Sahara does not identify a single
point of inquiry it would pursue or a single dispute of material fact that it
would address if given the opportunity to cross-examine the government’s
witnesses. Cf. Plummer v. Univ. of Houston,
860 F.3d 767, 783 (5th Cir. 2017)
(Jones, J., dissenting) (“[A]dditional or substitute safeguards would have en-
hanced the quality of factfinding and adjudication by providing a confronta-
tion right if material fact issues existed.”) (emphasis added). In short, Sahara
does not explain what, in this case, cross-examination would add.
Third, even if Sahara received the hearing that it requests, it is unlikely
that it would even receive the opportunity to cross-examine a witness. At the
hearing, the ALJ “may not issue a subpoena to CMS or its contractors, on
his or her own initiative or at the request of a party, to compel an appearance,
testimony, or the production of evidence.” 42 C.F.R. § 405.1036(f)(1). In
other words, cross examination is only available if HHS chooses it to be. Sa-
hara does not assert that this regulation or the statutory scheme is unlawful.
Perhaps that is because Sahara does not even assert that it desires to
15
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subpoena any witness, much less identify who those witnesses would be and
why their presence would add value.
Sahara contends that the step-three hearing “provides essential pro-
cedural safeguards,” but cannot explain what those safeguards are. The step-
three hearing does not allow a provider to supplement the record and does
not ensure that any government witnesses will be available. That means that
“the very procedural safeguards that [Sahara] argues are critical are far from
assured even at the ALJ hearing level.” Accident, Injury & Rehab., 943 F.3d
at 204 (holding that the Medicare recoupment escalation procedure provided
due process where the step-three ALJ hearing was functionally unavailable).
In other words, Sahara’s “argument relies on a faulty understanding of the
relative benefits of an ALJ hearing and judicial review.”
Id. And Sahara does
not allege that the recoupment procedure itself is structured in an unconsti-
tutional way.
Here, “the risk of erroneous deprivation and the likely value of any
additional procedures” is “the factor most important to resolution of this
case.” Gilbert v. Homar, 520 U.S. 924, 933 (1997). Sahara has failed to
demonstrate why that factor weighs in its favor. Accordingly, it has failed to
demonstrate why the overall Mathews balance favors it as well.
3.
Congress foresaw that an ALJ backlog may arise. It provided a solu-
tion: a provider may “escalate” an appeal directly from step two to step four
(Appeals Board review) if no decision has been rendered 90 days after timely
notice. 42 U.S.C. § 1395ff(d)(3)(A). Sahara chose not to take that route,
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which would have resulted in a de novo decision rendered within 180 days.
See 42 U.S.C. § 1395ff(d)(2)(A); 42 C.F.R. § 405.1100(c). And if the Ap-
peals Board were to exceed 180 days, Sahara could receive (admittedly def-
erential) judicial review before an Article III judge. See 42 U.S.C.
§ 1395ff(d)(2)(A); Am. Hosp. Ass’n, 812 F.3d at 191.
The Constitution entrusts the political branches, not the judiciary,
with making difficult and value-laden policy decisions. There were an infinite
number of schemes Congress could have reasonably selected. Congress set-
tled on one that guarantees at least two levels of administrative review and
judicial review. And in the case of a backlog, Congress provided the ability
to bypass long waits on the way to judicial review. Sahara rejected that op-
tion. At bottom, Sahara believes a different scheme would be better. But we
lack the power to change it. “[U]nless Congress exceeds its authority or tres-
passes on a protected area, judges are bound to respect its decisions—no mat-
ter what policy disagreements they may have with Congress’s choices.”
Diarmuid F. O’Scannlain, The Role of the Federal Judge in the Constitutional
Structure: An Originalist Perspective, 50 San Diego L. Rev. 517, 520 (2013).
We have no opinion on the prudence of Congress’s choice—and we do not
need one. The Due Process Clause, not personal opinion, determines the
outcome.
Our only sister circuit to face this question reached the same conclu-
sion. The Fourth Circuit recently vacated an injunction that barred “HHS
from pursuing recoupment efforts until [the plaintiff-provider] could chal-
lenge the recoupment amounts in a hearing before an ALJ.” See Accident,
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Injury & Rehab., 943 F.3d at 197. The court discussed two fatal flaws to the
plaintiff’s theory. First, the provider was myopically focused on the tree of
the hearing while it ignored the forest of the full comprehensive five-step
scheme of procedural protections. See
id. at 204. Second, the provider, by
seeking an injunction instead of the statutorily prescribed escalation proce-
dures, could not then “complain that its election denie[d] it due process.”
Id. We agree on both points. The step-three hearing is just one part of a
procedurally protective whole. And Sahara cannot complain about lacking
due process when the privation (foregoing escalation and judicial review) was
its own choice.
Sahara received some procedure, chose to forego additional protec-
tions, and cannot demonstrate the additional value of the hearing it requests.
The procedure it received was constitutionally adequate, and we affirm the
district court’s dismissal of Sahara’s due process claim. We likewise affirm
the district court’s denial of injunctive relief.
B.
Sahara devotes a single page to its ultra vires argument. It argues that
injunctive relief is appropriate because “[t]he government has initiated re-
coupment of Sahara’s current payments” even though it “failed to provide
an administrative appeal in accordance with 42 U.S.C. § 1395ff.” This claim
fails too.
The statute entitles a provider to two steps of administrative review
before the government recoups funds. See 42 U.S.C. § 1395ff(a)(3) (step
one); 42 U.S.C. § 1395ff(b)(1)(A) (step two). Sahara received that review.
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The statute does not prohibit recoupment after step two. Cf. 42 U.S.C.
§ 1395ddd(f)(2)(A) (prohibiting recoupment during steps one and two); 42
C.F.R. § 405.379(d)(4)–(5) (authorizing recoupment after step two). Con-
gress afforded a provider who has not received a timely ALJ hearing the right
to escalate to the Appeals Board. 42 U.S.C. § 1395ff(d)(3)(A). Sahara re-
jected that remedy. The Secretary and the Administrator acted within their
statutory limits and we affirm the district court’s dismissal of Sahara’s ultra
vires claim.
Sahara’s out-of-circuit authority does not save it. It relies on a D.C.
Circuit case that, in dicta, remarked that “nothing suggests that Congress
intended escalation to serve as an adequate or exclusive remedy where, as
here, a systemic failure causes virtually all appeals to be decided well after the
statutory deadlines.” See Am. Hosp. Ass’n¸ 812 F.3d at 191. But American
Hospital was a very unusual case. Hospitals sought to mandamus the Secre-
tary of HHS to comply with the 90-day hearing requirement and to solve the
problem of the multi-year backlog.
Id. at 185. The court held that mandamus
jurisdiction existed, but that issuance of the writ was premature. It told Con-
gress that “given the unique circumstances of this case, the clarity of the stat-
utory duty likely will require issuance of the writ if the political branches have
failed to make meaningful progress within a reasonable period of time—say,
the close of the next full appropriations cycle.”
Id. at 193.
Congress heeded that warning and appropriated $182.3 million to ad-
dress the appeals backlog, “more than doubl[ing] [the agency’s] FY 2017 dis-
position capacity.” Am. Hosp. Ass’n v. Azar, No. 14-cv-851,
2018 WL
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5723141, at *2 (D.D.C. Nov. 1, 2018). As a result, the agency is under a man-
damus order to eliminate the backlog by the end of fiscal year 2022. See id.
at *3. The “unique circumstances” that justified the American Hospital de-
cision are no longer present. See Am. Hosp.
Ass’n, 812 F.3d at 193. The case
is inapposite to Sahara’s present claim.
Sahara fails to state a claim for ultra vires actions. The district court
did not err by denying injunctive relief on that ground.
* * *
An unwieldly backlog of cases has prevented Sahara Health Care from
receiving a hearing from an administrative law judge. Congress predicted this
might happen, and provided a statutory solution: the ability to escalate the
appeal, culminating in judicial review. Sahara has chosen not to avail itself of
that option. Given that choice, it cannot complain that it was denied due
process or that the government acted ultra vires. We AFFIRM the judgment
of the district court.
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