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FOX v. HARRIS

April 25, 1980

Morry S. FOX, Plaintiff,
v.
Patricia Roberts HARRIS et al., Defendants.



The opinion of the court was delivered by: GESELL

MEMORANDUM AND ORDER

Plaintiff, an osteopathic physician, operated a medical clinic in Miami, delivering a range of health services inter alia to Part B Medicare beneficiaries. *fn1" By this complaint he seeks close to two million dollars from the Department of Health, Education and Welfare ("HEW") and its insurance carrier and agent, Blue Shield of Florida ("Blue Shield"), as compensation for services performed. Fox contends that he has been the victim of unlawful suspensions, reductions and withholdings of payments due under Part B. Further, he alleges a conspiracy to deprive him of constitutional rights among Blue Shield and several HEW officials sued in their individual capacities, for which he claims an additional one million dollars in punitive damages. Defendants have moved to dismiss on a variety of jurisdictional and other procedural grounds, and plaintiff has cross-moved for summary judgment as to the largest of his several compensatory damage counts. The motions have been thoroughly briefed and argued.

 Primary among these, in terms of the amount at stake, is a claim for payment due in the amount of $ 890,399, representing compensation for previously unprocessed claims, on which Fox seeks summary judgment. The origin of this claim is not disputed. HEW and its carrier, Blue Shield, *fn2" suspended processing and payment of some 11,000 claims submitted by plaintiff or physicians employed at his clinic between 1969 and 1974. Following three years of negotiations and the review of a small number of the claims, selected pursuant to an agreed sampling technique, plaintiff and HEW arrived at a form of resolution calling for issuance of $ 890,399 in full payment of the unprocessed claims. Defendants refer to this resolution, reached in late 1977, as a tentative agreement, while plaintiff calls it an "initial determination," final and irrevocable under the controlling regulations. *fn3" Although a check was drawn up in the agreed amount, it was never issued and the arrangement was repudiated. Plaintiff argues that once agreement had been reached and the check written, defendants' duty to pay was purely ministerial. Defendants contend that further discretionary judgment was exercised prior to actual payment, and that, in any event, plaintiff subsequently acquiesced in administrative remedies, thus abrogating any possibility of recourse to the mandamus relief sought here by summary judgment.

 Plaintiff's other claims for unreimbursed services involve a complex assortment of agency transactions which the Court accepts as validly characterized for purposes of defendants' motion to dismiss. Fox challenges Blue Shield's recoupment of over $ 500,000 that was wrongfully identified as "overpayment," and excepts to the carrier's disallowance of all claims for EKG services over a six-year period, and to its across-the-board payment reduction of 57 percent, imposed unilaterally in September, 1972. In addition, Fox seeks payment for unrecompensed services performed by Dr. Hill and Dr. Gateman of his clinic, who had previously assigned to plaintiff the full extent of their claims against Blue Shield.

 The motion to dismiss focuses on the Court's alleged lack of jurisdiction to resolve these various matters. It is argued that the Court lacks subject matter jurisdiction to hear plaintiff's claims for reimbursement against HEW and Blue Shield, *fn4" and that personal jurisdiction does not lie with respect to the civil rights and constitutional violations asserted against defendants in their individual capacities. Resolution of these arguments determines whether or not the Court need reach any of plaintiff's substantive demands for relief.

 I.

 The Court first turns to counts eight and nine of the complaint, which allege civil rights offenses. In his claims against the three individual defendants and against Blue Shield in its individual capacity, plaintiff presumes that proper venue and service of process are established under 28 U.S.C. § 1391(e) (1976). *fn5" After Stafford v. Briggs, 444 U.S. 527, 100 S. Ct. 774, 63 L. Ed. 2d 1 (1980), this is no longer the case. The liberal venue provisions of section 1391(e) do not govern damages actions brought against federal officials or agents in their individual capacities. Id. Service of process on the three individual defendants, which was accomplished by registered mail pursuant to § 1391(e), is therefore ineffective. Attempted service of process on a national Blue Cross/Blue Shield official in his Washington, D.C., office also is invalid as to defendant Blue Shield of Florida. Moreover, since the alleged offenses did not arise in the District of Columbia, and none of the individual defendants resides here, proper venue in this district cannot be established. 28 U.S.C. § 1391(b). Because the Court lacks jurisdiction over these defendants in connection with alleged improprieties committed outside their official capacities, the claims must be dismissed as to them. Accordingly, counts eight and nine are dismissed without prejudice to their being filed in a court of appropriate jurisdiction.

 II.

 Plaintiff's effort in count one of the complaint to compel payment on unprocessed claims amounting to $ 890,399, relies on the applicability of 28 U.S.C. § 1361 (1976). Mandamus is an extraordinary remedy, appropriate only in cases of clearly arbitrary and illegal official action when no alternative judicial or administrative relief is available. Association of American Medical Colleges v. Califano, 186 U.S. App. D.C. 270, 569 F.2d 101, 110-11 n. 80 (D.C.Cir.1977); Haneke v. Secretary of HEW, 175 U.S. App. D.C. 329, 535 F.2d 1291, 1296 n. 15 (D.C.Cir.1976). Plaintiff's grievance fails to qualify under those extreme requirements. The proposed release and the escrow agreement, both drawn up in December, 1977, to support the payment of $ 890,399, represent the near culmination of a protracted and unusual if not unique negotiating process. To characterize the arrangement as an ordinary "initial determination" under the Medicare regulations belies the actual course of events. Moreover, the ultimate processing and payment by the Government of this large negotiated claim implicates more than mere clerical or ministerial duties as the Secretary's subsequent refusal to approve demonstrates. Serious questions were raised regarding the sampling methodology, the neutrality of the peer review committee, and the adequacy of underlying documentation. *fn6" Without expressing any view as to the merit of these reservations, the Court finds they were predicated on a permissible exercise of discretion as to whether or not the treatment provided was "medically necessary" under the Medicare Act. See 42 U.S.C. § 1395y(a)(1) (1976).

 Finally, and of critical importance in light of the jurisdictional provision invoked here, alternative relief is plainly available. Plaintiff essentially alleges the formation of a bilateral executory contract whereby the United States agreed to pay him $ 890,399 in exchange for his promise to waive all other claims arising out of the relevant five-year period. A lawsuit seeking to enforce such an alleged agreement, while foreclosed in this Court, *fn7" can be brought in the Court of Claims, 28 U.S.C. § 1491 (1976). Further, an admittedly belated administrative review with respect to the 11,000 claims is in progress at the present time. Plaintiff has accepted over $ 340,000 as partial payment for these unreimbursed claims. He may well receive additional sums as part of the ongoing review process. To allow mandamus now would in effect circumvent the review procedures provided for by statute and regulation. There is no justification for such action, and, in the present context, no jurisdiction. *fn8" Similarly, no basis exists for entertaining the claim to enjoin administrative review in which plaintiff has participated and which is apparently nearing completion. There simply is no case or controversy.

 III.

 Plaintiff asserts two other bases for this Court's jurisdiction to review his monetary claims against HEW and Blue Shield as its agent performing in an official capacity. *fn9" These assertions, however, must be viewed against the restrictive provisions of the Medicare Act that govern this Court's authority to review physician claims for reimbursement under Part B of the Medicare program. The Act nowhere provides for judicial review of decisions regarding benefit amounts due under Part B. See Drennan v. Harris, 606 F.2d 846, 849 (9th Cir. 1979); Cervoni v. Secretary of HEW, 581 F.2d 1010, 1015 (1st Cir. 1978). *fn10" Moreover, the Act incorporates section 205(h) of the Social Security Act, 42 U.S.C. § 405(h), *fn11" precluding judicial review of such decisions under the general federal question jurisdiction of 28 U.S.C. § 1331. See 42 U.S.C. § 1395ii (1976). Section 205(h) establishes a jurisdictional bar to a beneficiary's constitutional claims as well as his challenge to the merits of the agency's determination. Weinberger v. Salfi, 422 U.S. 749, 760-62, 95 S. Ct. 2457, 2464-65, 45 L. Ed. 2d 522 (1975). See Humana of South Carolina, Inc. v. Califano, 191 U.S. App. D.C. 368, 590 F.2d 1070 (D.C.Cir.1978) ("Humana"); Association of American Medical Colleges v. Califano, 186 U.S. App. D.C. 270, 569 F.2d 101 (D.C.Cir.1977). Thus it would appear that jurisdiction is not available under 28 U.S.C. § 1331 for any aspect of plaintiff's claims in counts one and three through seven. Access also is foreclosed under the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq., which provides no independent basis for this Court's jurisdiction. Califano v. Sanders, 430 U.S. 99, 105, 97 S. Ct. 980, 984, 51 L. Ed. 2d 192 (1977).

 Plaintiff suggests that special problems arise in applying the restrictive rule of Weinberger v. Salfi, supra to administrative determinations reached under Part B of the Medicare Act. *fn12" Because plaintiff allegedly seeks to protect his right to procedural regularity, and in so doing raises issues of constitutional due process, it is urged that he must not be denied his day in court. To foreclose all judicial review of such primarily procedural or constitutional claims would presumably raise a serious question as to the constitutionality of the statute itself. See Weinberger v. Salfi, supra, 422 ...


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