Appeal
from the United States District Court for the District of
Kansas (D.C. No. 2:18-CV-02176-JAR-GLR)
Curtis
L. Tideman (Andrew J. Ricke with him on the briefs), Lathrop
Gage LLP, Overland Park, Kansas, for Plaintiff-Appellant.
Robin
R. Anderson, Assistant United States Attorney (Stephen R.
McAllister, United States Attorney, and Christopher Allman,
Assistant United States Attorney, with her on the brief),
Office of the United States Attorney, Kansas City, Kansas,
for Defendants-Appellees.
Before
LUCERO, HARTZ, and CARSON, Circuit Judges.
LUCERO, Circuit Judge.
Blue
Valley Hospital, Inc., ("BVH") appeals the district
court's dismissal of its action for lack of subject
matter jurisdiction. On April 11, 2018, the Department of
Health and Human Services ("HHS") and the Centers
for Medicare and Medicaid Services ("CMS")
terminated BVH's Medicare certification. The next day,
BVH sought an administrative appeal before the HHS
Departmental Appeals Board and brought this action. In this
action, BVH seeks an injunction to stay the termination of
its Medicare certification and provider contracts pending its
administrative appeal. In effect, the injunction would
provide BVH a pre-termination hearing. The district court
dismissed, holding the Medicare Act requires BVH exhaust its
administrative appeals before subject matter jurisdiction
vests in the district court.
BVH
acknowledges that it did not exhaust administrative appeals
with the Secretary of HHS prior to bringing this action, but
argues: (1) the district court had federal question
jurisdiction arising from BVH's constitutional due
process claim; (2) BVH's due process claim presents a
colorable and collateral constitutional claim for which
jurisdictional exhaustion requirements are waived under
Mathews v. Eldridge, 424 U.S. 319 (1976); and (3)
the exhaustion requirements foreclose the possibility of any
judicial review and thus cannot deny jurisdiction under
Bowen v. Michigan Academy of Family Physicians, 476
U.S. 667 (1986). We disagree. Exercising jurisdiction under
28 U.S.C. § 1291, we affirm.
I
BVH is
an acute care hospital in Overland Park, Kansas, that
provides a range of medical services, specializing in
bariatric surgery and intervention services. CMS certified
BVH as a hospital provider under the Medicare and Medicaid
programs from 2015 until April 11, 2018.[1]
For a
treatment facility to retain hospital classification under
the Medicare and Medicaid programs the facility must be
"primarily engaged" in providing care to
"inpatients." 42 U.S.C. § 1395x(e)(1).
Hospital classification allows BVH to receive payment through
the Medicare and Medicaid programs for treatment it provides.
42 C.F.R. § 488.3(a)(1). To ensure healthcare providers
comply with the statutory and regulatory Conditions of
Participation in the programs, CMS conducts surveys through
state survey agencies. 42 C.F.R. §§ 488.20(b),
488.26(c).
These
surveys identify a facility's failures to meet certain
participation requirements under the Medicare Act, termed
deficiencies. 42 C.F.R. § 488.301. If a facility's
deficiencies are serious or extensive enough, CMS may
determine it is not in compliance with the Conditions of
Participation. See 42 C.F.R. § 482.11. And if a
facility is in violation of the Conditions of Participation,
the Secretary may deny that facility further payments under
the Medicare Act by terminating its provider agreement. 42
U.S.C. § 1395cc(b)(2). Following termination of a
provider agreement, a facility can avail itself of an appeal
process that includes: (1) a hearing before an Administrative
Law Judge ("ALJ") under 42 C.F.R. § 498.5(b);
(2) review of the ALJ decision by the HHS Departmental
Appeals Board under 42 C.F.R. § 498.5(c); and (3)
judicial review of the Departmental Appeals Board's
decision under 42 C.F.R. § 498.5(c) and 42 U.S.C. §
405(g).
Pursuant
to this regulatory framework, CMS, through the Kansas
Department of Health and Environment, conducted an
unannounced onsite survey of BVH on November 13 and 14, 2017.
On February 2, 2018, CMS sent BVH a noncompliance notice
detailing the deficiencies the onsite survey uncovered. The
notice states that BVH did not meet the Conditions of
Participation for hospitals because it was not
"primarily engaged" in providing "inpatient
services." Specifically, CMS analyzed BVH's
historical data and determined that the facility did not meet
either the two-patient average daily census requirement or
the two-night average length of stay requirement. CMS had
issued these criteria in an administrative guidance document,
"S&C Memo 17-44," on September 6, 2017.
In the
notice of noncompliance, CMS indicated it would terminate
BVH's provider agreement on May 3, 2018, unless BVH
presented a Plan of Correction to resolve the observed
deficiencies. BVH timely submitted a Plan of Correction on
February 12, 2018. In a termination notice dated March 27,
2018, CMS rejected the proposal as aspirational and moved
forward the termination date of BVH's Medicare and
Medicaid provider agreement to April 11, 2018. CMS terminated
BVH's provider agreement on that date.
The
following day, BVH submitted a request for an expedited
appeal to the HHS Departmental Appeals Board. BVH also filed
this action against the following defendants: (1) the
Secretary of HHS, Alex M. Azar, II; (2) the Administrator for
CMS, Seema Verma; and (3) the Regional Administrator for
(Region 7) of CMS, Jeff Hinson. BVH sought an injunction to
prevent CMS from terminating its provider agreement pending
the administrative appeal process. Defendants moved to
dismiss the action for lack of subject matter jurisdiction,
but ...