United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT M. DOW, Jr., District Judge.
Plaintiff, a former physician, brings statutory and constitutional challenges to Medicare's determination that it previously overpaid him and is therefore entitled to recoupment. Plaintiff has initiated but not completed an administrative appeal of Medicare's overpayment determination. The Secretary moves to dismiss , arguing that the Court lacks subject matter jurisdiction because Plaintiff has failed to exhaust his administrative remedies. For the reasons stated below, the Court grants the Secretary's motion and denies Plaintiff's motion to strike  the declaration attached to the Secretary's motion.
This action arises out of Medicare claims that Plaintiff filed while practicing medicine. Medicare is a federally subsidized health insurance program for the aged and disabled. Relevant here is Medicare Part B, a "supplementary medical insurance program for the aged and disabled" that compensates physicians for services rendered. 42 U.S.C. § 1395j. The Centers for Medicare & Medicaid Services (CMS) enter into contracts with private entities that perform various Medicare Part B activities. These contractors administer claim payment and overpayment recovery within the following framework.
A. Claim Payments and Overpayment Recovery
When a Medicare Part B supplier or provider submits a claim for payment, a contractor makes an "initial determination" as to what Medicare will pay the supplier. To ensure accuracy and detect fraud, a contractor may continue to investigate a claim and reopen an initial determination that resulted in overpayment. See 42 C.F.R. § 405.980(a)(1). The Secretary's regulations require reopening to occur on the following timeframe in relevant part:
(1) Within 1 year from the date of the initial determination or redetermination for any reason.
(2) Within 4 years from the date of the initial determination or redetermination for good cause as defined in § 405.986.
(3) At any time if there exists reliable evidence as defined in § 405.902 that the initial determination was procured by fraud or similar fault as defined in § 405.902.
42 C.F.R. § 405.980(b); see also 42 U.S.C. § 1395ff(b)(1)(G) (authorizing the Secretary to promulgate regulations governing the reopening of an initial determination).
If CMS discovers an overpayment, it may offset or recoup it. See 42 C.F.R. § 405.371(a)(3). Medicare, however, may not offset or recoup overpayments where a supplier or provider is "without fault." 42 U.S.C. § 1395gg(b). Generally, there is a rebuttable presumption that a supplier is "without fault" where an overpayment determination is made "subsequent to the third year following the year in which notice was sent to such individual that such amount had been paid." 42 U.S.C.A. § 1395gg (2003); see In re Nat'l Podiatric Network First Coast Serv. Options, 2011 WL 7145430, at *4 (H.H.S. Oct. 26, 2011). For overpayments made three years after the year of payment, "[o]rdinarily, the provider or beneficiary will be considered without fault unless there is evidence to the contrary." Medicare Financial Management Manual (MFMM), ch. 3 at § 80. As the Department of Health and Human Services' Medicare Appeals Council has explained,
Section 1870(b) does not define the meaning of the term "without fault." However, a provider is without fault if it exercised reasonable care in billing and accepting Medicare payment. MFMM, ch. 3, § 90. A provider has exercised "reasonable care" when it "made full disclosure of all material facts" and "on the basis of the information available to it, including, but not limited to, the Medicare instructions and regulations, it had a reasonable basis for assuming that the payment was correct, or, if it had reason to question the payment; it promptly brought the question to the FI or carrier'' attention." A provider is considered not "without fault" if, e.g., it billed, or Medicare paid, for services the provider should have known were not covered. Id. at § 90.1.H. The MFMM explains that the provider should have known about a policy or rule if the policy or rule is in the provider manual or in the regulations. Id.
In re Nat'l Podiatric Network, 2011 WL 7145430, at *4.
B. Administrative Appeals Process for Claims Denials
Suppliers or providers may appeal initial determinations of overpayment through four levels of administrative review. First, a supplier may request that the contractor conduct an independent "redetermination" of the initial adverse determination. 42 U.S.C. § 1395ff(a)(3); 42 C.F.R. §§ 405.960-978. If the redetermination is unfavorable, the supplier may request "reconsideration" by a Qualified Independent Contractor (QIC). 42 U.S.C. § 1395ff(b)(1)(A) & (c); 42 C.F.R. §§ 405.960-978. If the QIC's reconsideration is unfavorable (or untimely) and the amount in controversy requirement is satisfied, the supplier may request a hearing before an administrative law judge (ALJ). 42 U.S.C. § 1395ff(d); 42 C.F.R. §§ 405.1000-54. If the ALJ's decision is unfavorable (or untimely) and the amount in controversy requirement is satisfied, a supplier may seek review with the Medicare Appeals Council (MAC). 42 U.S.C. § 1395ff(d)(2) & (d)(3)(A); 42 C.F.R. §§ 405.1100-30. The MAC decision is the final decision of the Secretary. 42 C.F.R. § 405.1130. Once the MAC has issued a final decision (or failed to issue a timely decision), the supplier may appeal to a district court. 42 U.S.C. § 405(g) (incorporated by 42 U.S.C. § 1395ff(b)(1)(A)); 42 U.S.C. § 1395ff(d)(3)(B); 42 C.F.R. §§ 405.1130, 405.1132(a).
C. Medicare's Recoupment Action
In late 2006, TrustSolutions-a Medicare contractor hired to identify fraud and abuse- detected a pattern of what it believed to be suspicious billing from Plaintiff. As a part of its audit, it requested a sample of various records from Plaintiff and found his responsive documentation to be haphazard and incomplete. See  at 7, [36-1] at 2-3. A criminal investigation and prosecution began, at which point TrustSolutions suspended its administrative action. After the criminal matter was completed in 2012, TrustSolutions resumed the action. In April 2012, it notified Plaintiff that it had identified an overpayment of approximately $1 million. A month later, Wisconsin Physicians Service Insurance Corporation (WPS)-the contractor that administers physician reimbursement in Illinois-issued an overpayment demand for that same value and initiated recoupment. WPS stated that Medicare paid Plaintiff for services that he should have known he was not entitled to and that he therefore was not "without fault." See 42 U.S.C. § 1395gg(b) & (c).
Plaintiff then initiated an administrative appeal. WPS issued an unfavorable redetermination based on two findings: that Plaintiff's documentation was non-existent with respect to some claims for payment and inadequate with respect to others. The QIC's decision on reconsideration was unfavorable for the same reasons. Plaintiff then requested a hearing before an ALJ. At the hearing, he appears to have argued that the recoupment action was unlawful insofar as it turned on non-existent documentation. More specifically, Plaintiff contended (and continues to contend) that Medicare had not requested the relevant records until it reopened his claims; he further alleges that by the time it reopened his claims, his duty to maintain these records had expired under Illinois law, and, accordingly, he had discarded them. In other words, Plaintiff appears to have argued that a recoupment action based on lack of documentation is unlawful after the duty to maintain records has expired. Plaintiff further alleges the following:
38. After hearing these arguments, Judge Bergen stated that he would not and could not decide these questions since he lacked jurisdiction to do so, his role being limited to whether Dr. Miller could establish that he had provided the care on specific dates of service for the listed beneficiaries and adequately documented the services billed. He specifically found that he was ...