Brief provided by Thomas McLean M.D., J.D.
The court held that in a tort action against a Medicare
or Medicaid facility, the plaintiff does not have to exhaust administrative
remedies before the case is ripe for judicial review.
The plaintiffs on behalf of themselves, their family members
and their descendants filed suit against a nursing home claiming that they had
received and continue to receive inadequate care and services. Because the nursing
home was a provider for both the Medicare and Medicaid programs, the nursing
home must comply with health, safety, and administrative standards established
these statutes. [42 U.S.C. §§1395i-3(a)-(d) & 1396r(a)-(d), Michigan Ass'n
of Homes & Services for the Aging, Inc. v. Shalala, 931 F. Supp. 1338 (E.D.
Mich. 1996). The trial court found that "plaintiffs seek a refund of the
amounts that they paid, or that were paid on their behalf, while they were residents
at Cedars and that they do not seek damages for any individual physical harm
they may have suffered as a result of this alleged mistreatment." The plaintiffs
alleged a number of complaints arising in both contract and torts.
The defendants filed a motion to dismiss all of the plaintiff's
claims "asserting, inter alia, that the trial court lacked jurisdiction
under the applicable state and federal statutes to hear disputes involving Medicare
and Medicaid." All plaintiffs who were at all times Medicare or Medicaid
recipients were then dismissed for lack of jurisdiction. However, "the
remaining plaintiffs could seek restitution and damages for emotional distress
only for the period beginning with their stay at Cedars and ending when they
first received any Medicare or Medicaid benefits." The appeals court construed
the dismissal order to mean that only the plaintiff's tort claims were on appeal.
"The doctrine of exhaustion of administrative remedies
serves as a threshold to judicial review and requires parties in a civil action
to pursue available statutory administrative remedies before filing suit in
district court." (State v. Golden's Concrete Co., 962 P.2d 919 (Colo. 1998)).
The court took notice that under Social Security Act (42 U.S.C. §§405) any an
individual, "after any final decision of the Commissioner of Social Security
made after a hearing to which he was a party . . . may obtain a review of such
decision by a civil action commenced within sixty days." Further a claim
"arising under" the Medicare Act "includes any claim in which
both the standing and the substantive basis for the presentation of the claim
is the Act. A claim may arise under the Act when it is inextricably intertwined
with a claim for benefits. (Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013,
80 L.Ed.2d 622 (1984)).
Based on the logic of Golden Concrete, the court then observed "even if we assume that plaintiffs' claims are based to some extent on the Medicare and Medicaid Acts, and in that sense "arise under" those Acts, the remedy they seek is not available through Medicare's or Medicaid's administrative processes. Resort to administrative processes would have been futile, and could not operate as a precondition for plaintiffs' suit here." But, the court noted that plaintiff may not be entitled to restitution remedy. [Since the trial court's "certification order did not encompass its ruling that the remaining plaintiffs could not proceed with restitution, we do not address the appropriateness of restitution as a remedy."]
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