Pinnacle Peak Neurology Llc v. Noridian Healthcare Solutions Llc

MOTION to Dismiss Case Defendant Noridan Healthcare Solutions, LLC's Motion to Dismiss

D. Ariz.December 7, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 QB\157377.00004\42902350.1 WILEY REIN LLP KATHRYN BUCHER, DC Bar No. 375614 (Pro Hac Vice Approved) kbucher@wileyrein.com RACHEL ANN ALEXANDER, DC Bar No. 494963, Maryland Bar No. 0512130010 (Pro Hac Vice Application Forthcoming) ralexander@wileyrein.com 1776 K Street NW Washington, DC 20006 Telephone: (202) 719-7000 Facsimile: (202) 719-7049 QUARLES & BRADY LLP LAUREN ELLIOTT STINE, AZ Bar No. 025083 lauren.stine@quarles.com One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004 Telephone: (602) 229-5200 Facsimile: (602) 229-5690 Attorneys for Defendant Noridian Heathcare Solutions, LLC IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Pinnacle Peak Neurology, LLC, Plaintiff, v. Noridian Healthcare Solutions, LLC, Defendant. Case No. CV-16-03614-PHX-DJH DEFENDANT NORIDIAN HEALTHCARE SOLUTIONS, LLC’S MOTION TO DISMISSS (ORAL ARGUMENT REQUESTED) Defendant Noridian Healthcare Solutions, LLC respectfully moves, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), to dismiss the Complaint filed by Plaintiff Pinnacle Peak Neurology, LLC [Dkt. 1, Compl., Exhibit A]. This Motion is supported by the following Memorandum of Points and Authorities, the certification of counsel, and the entire record in this action. Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 1 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2 QB\157377.00004\42902350.1 RESPECTFULLY SUBMITTED this 7th day of December, 2016. QUARLES & BRADY LLP Renaissance One Two North Central Avenue Phoenix, AZ 85004-2391 By /s/ Lauren Elliott Stine Lauren Elliott Stine Attorneys for Defendant Noridian Healthcare Solutions, LLC Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 2 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 QB\157377.00004\42902350.1 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiff Pinnacle Peak Neurology (“Plaintiff”) is a neurology practice that participates in the Medicare program. Defendant Noridian Healthcare Solutions, LLC (“Noridian”) is a federal government contractor that provides administrative services to the Medicare program under contract with the Centers for Medicare & Medicaid Services (“CMS”). Plaintiff’s allegations – that Noridian failed to process and pay Plaintiff’s Medicare claims in accordance with an Administrative Law Judge’s decision – “arise under” the Medicare statute and thus, pursuant to that statute, must be asserted against the Secretary of the U.S. Department of Health and Human Services (“the Secretary”), not her government contractor Noridian. 42 U.S.C. § 405(g)-(h). The Supreme Court has defined claims that “arise under” the Medicare statute as claims that are “inextricably intertwined” with a claim for Medicare benefits, or claims where “both the standing and the substantive basis for presentation” is the Medicare statute. See Heckler v. Ringer, 466 U.S. 602, 614-15 (1984). The Supreme Court’s definition fits Plaintiff’s claims to a “t”: Plaintiff’s claims squarely arise under the Medicare statute as Plaintiff seeks payment for services it provided to Medicare beneficiaries. Furthermore, to the extent that recovery is awarded in this suit, it would be paid from the Medicare Supplementary Medical Insurance Trust Fund (“Medicare Trust Fund”), a federally-managed account on the books of the U.S. Treasury over which the Secretary (not Noridian) has control. See 42 U.S.C. § 1395t. Accordingly, Noridian is not the proper party in this suit. The Secretary is the real party in interest. In addition, Noridian enjoys statutory immunity from suit for its discretionary actions taken under federal contract on behalf of the Medicare program. The Medicare statute provides Medicare contractors, like Noridian, with immunity from suits alleging Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 3 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2 QB\157377.00004\42902350.1 mispayment or nonpayment of Medicare services. 42 U.S.C. § 1395kk-1(d)(3). And in recognizing their immunity, the statute also offers these contractors indemnification should they be wrongly sued. 42 U.S.C. § 1395kk-1(d)(4). For these reasons, the Court lacks subject matter jurisdiction over Plaintiff’s suit against Noridian, and Plaintiff’s Complaint fails to state a claim for which relief can be granted. II. BACKGROUND Congress established the Medicare program to provide health insurance to the elderly and disabled. See 42 U.S.C. §§ 1395 et seq. The Medicare program is divided into several “Parts.” Part B, at issue here, is a voluntary program that provides supplemental Medicare coverage for various medical items and services, including physician services. See 42 U.S.C. § 1395k(a)(2).1 Plaintiff is a physician group rendering services under Part B. CMS is the operating component of the U.S. Department of Health and Human Services (“HHS”) charged with administering the Medicare program. At Congress’s direction, the Secretary of HHS, through CMS, has arranged for many administrative service functions under the Medicare program to be carried out by Medicare administrative contractors (“MACs”).2 See 42 U.S.C. § 1395u(a) (“The administration of [Part B] shall be conducted through contracts with Medicare administrative contractors 1 Part A provides insurance coverage for medical items and services, including inpatient hospital care and other institutional services. See 42 U.S.C. § 1395c. 2 Prior to 2006, Medicare contractors were known as “Part A fiscal intermediaries” and “Part B carriers” and performed the functions performed by MACs today. See United States ex rel. Sikkenga v. Regence BlueCross BlueShield, 472 F.3d 702, 706 n.2 (10th Cir. 2006); see also Pub. L. No. 108-173, § 911(e), 117 Stat. 2066, 2386 (2003) (deeming any reference to a fiscal intermediary or carrier under the Medicare statute to be a reference to a MAC). Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 4 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 3 QB\157377.00004\42902350.1 under section 1395kk-1 of this title.”). Noridian is the MAC responsible for providing administrative services in the multi-state Medicare region of the country known as Jurisdiction F, which includes Arizona. (See Dkt. 1, Compl., Exhibit A ¶ 5). See also CMS Jurisdiction F Fact Sheet, available at https://www.cms.gov/Medicare/Medicare- Contracting/Medicare-Administrative-Contractors/Downloads/ MACFAwardFactSheet.pdf.3 Among other administrative tasks, MACs “adjudicate” claims submitted by entities and individuals rendering items and services to Medicare beneficiaries under Parts A and B (collectively, “providers”). See id. § 1395kk-1(a)(4). More specifically, MACs are responsible for processing and then paying reimburseable Medicare claims in accordance with Medicare law, including extensive agency guidance. See Popkin v. Burwell, 172 F. Supp. 3d 161, 164 (D.D.C. 2016) (“Under [the Medicare] system, a Medicare health care provider submits its claim for payment directly to the Medicare Administrative Contractor for its geographic region, and the Medicare Administrative Contractor issues an initial payment determination.”) (citations omitted). MACs pay Medicare providers from the Medicare Trust Fund, a federally- managed account on the books of the U.S. Treasury that is funded by both Congress and premiums from Medicare enrollees, over which the Secretary (and not Noridian) has control. See 42 U.S.C. § 1395t (“The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health and Human Services certifies are necessary to make the payments provided for by this part . . . .”) (emphasis added). 3 The CMS Jurisdiction F Fact Sheet is published on an official government website and is therefore subject to judicial notice and does not convert this Rule 12(b) motion into a motion for summary judgment. See, e.g., Cachil Dehe Band of Wintun Indians of the Colusa Indian Cmty. v. California, 547 F.3d 962, 968-69 n.4 (9th Cir. 2008) (taking judicial notice of compacts on government website). The Fact Sheet is attached as Ex. 1. Noridian respectfully requests that the Court take judicial notice of it. Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 5 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 4 QB\157377.00004\42902350.1 When a MAC denies or limits payment on a claim, there is a five-level administrative appeal process that the provider is required to follow if it wishes to dispute that initial claim determination. At the first level, a provider must request that the MAC re-review its initial claim determination. 42 U.S.C § 1395ff(a)(3); 42 C.F.R. §§ 405.904(a)(2), 405.948. This first level of appeal is called a “redetermination.” If unsatisfied with the result of the redetermination, the provider may move on to a second level of appeal and seek reconsideration of the MAC’s decision by a Qualified Independent Contractor.4 42 U.S.C. § 1395ff(b)-(c), (g); 42 C.F.R. § 405.904(a)(2). This second level of appeal is referred to as a “reconsideration.” Where the amount in controversy exceeds the annually revised threshold, a third level of review is available to dissatisfied providers – a hearing before an administrative law judge (“ALJ”). 42 U.S.C. §§ 1395ff(b)(1)(E), (d)(1). A provider disappointed with the ALJ decision can appeal that decision to a fourth level of review, the Medicare Appeals Council. See id. § 1395ff(d)(2). Finally, a dissatisfied party can have the decision of the Medicare Appeals Council reviewed via a civil action in federal court against the Secretary. See id. § 1395ff(b)(1)(A); id. § 405(g). Plaintiff appealed the claims that are the subject of this Complaint through to the third level of appeal, at which time Administrative Law Judge Bennett S. Engelman determined that Medicare should cover certain of Plaintiff’s claims (the “Engelman Claims”) for services rendered to Medicare beneficiaries. (See Dkt. 1, Compl., Exhibit A ¶ 13). Judge Engelman’s decision does not specify any dollar amount to be paid; rather, it directs that the Engelman Claims be processed in accordance with his decision. See id. Plaintiff’s Complaint alleges that Noridian did not process the Engelman Claims in accordance with Judge Engelman’s decision (id. ¶ 19), an allegation for which Plaintiff 4 A Qualified Independent Contractor is an entity that contracts with the Secretary to decide requests for reconsideration among other things. 42 C.F.R. § 405.902. Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 6 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 5 QB\157377.00004\42902350.1 offers no support and which Noridian has been unable to verify despite extensive research. All allegations in the Complaint concerning Noridian pertain to actions Noridian took in its capacity as a MAC. (Id. ¶¶ 5, 8, 9, 15, 19). See also 42 U.S.C. § 1395h; 42 C.F.R. §§ 421.100, 421.200, 421.401. III. THE STANDARD OF REVIEW Federal Rule of Civil Procedure 12(b)(1) requires dismissal of a complaint where the court lacks subject matter jurisdiction. Plaintiffs bear the burden of establishing that the court has subject matter jurisdiction, Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992), and courts “presume that [they] lack jurisdiction unless the contrary appears affirmatively from the record,” Renne v. Geary, 501 U.S. 312, 316 (1991) (internal quotation marks and citations omitted). When considering a motion to dismiss for lack of subject-matter jurisdiction, the court is not restricted to the face of the pleadings but may review any evidence to resolve factual disputes concerning the existence of jurisdiction. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988). The court must determine whether it has jurisdiction before proceeding with the case. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). In order to survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted, plaintiffs must plead “enough facts to state a claim of relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Dismissal under Federal Rule of Civil Procedure 12(b)(6) is appropriate when, even if all material facts in the pleading under attack are true, the moving party is entitled to judgment as a matter of law. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 7 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 6 QB\157377.00004\42902350.1 IV. ARGUMENT A. Plaintiff’s Claims Must Be Asserted Against the HHS Secretary And Not Noridian. Plaintiff’s claims concerning Noridian’s alleged failure to adjudicate and effectuate the Engelman Claims in accordance with ALJ Engelman’s decision “arise under” the Medicare statute, 42 U.S.C. § 405(g)-(h),5 and therefore, as directed by the statute, must be asserted against the Secretary – not Noridian. The Supreme Court has defined claims that “arise under” the Medicare statute as claims that are “inextricably intertwined” with a claim for Medicare benefits or claims where “both the standing and the substantive basis for the presentation” is the Medicare statute. See Heckler v. Ringer, 466 U.S. 602, 614-15 (1984). Courts have further clarified that “[a] claim is ‘inextricably intertwined’ if it does not involve issues separate from the party’s claim that it is entitled to benefits and/or if those claims are not completely separate from its substantive claim to benefits.” Nichole Med. Equip. & Supply, Inc. v. TriCenturion, Inc., 694 F.3d 340, 348 (3d Cir. 2012) (citation omitted) (determining that a provider’s claims arose under the Medicare statute where “all of the actions complained of are squarely rooted in, and arise from, the relationship between the [supplier and Medicare contractors]. That relationship is firmly rooted in the Act and certainly arises from it.”). The actions Plaintiff complains of here – Noridian’s failure to 5 References in 42 U.S.C. § 405(g) to the Commissioner of Social Security are to be read as references to the Secretary. See 42 U.S.C. § 1395ff(b)(1)(A) (incorporating 42 U.S.C. § 405(g) into the Medicare statute and stating that references to the Commissioner of Social Security shall be considered references to the Secretary). Likewise, references in 42 U.S.C. § 405(h) to the Commissioner of Social Security are to be read as references to the Secretary. See 42 U.S.C. § 1395ii (incorporating 42 U.S.C. § 405(h) into the Medicare statute and stating that references to the Commissioner of Social Security shall be considered references to the Secretary); see also Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 9 (2000) (“Section 1395ii makes § 405(h) applicable to the Medicare Act ‘to the same extent as’ it applies to the Social Security Act.”). Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 8 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 7 QB\157377.00004\42902350.1 properly adjudicate and pay the Engelman Claims – are “squarely rooted” in Plaintiff’s relationship with Noridian as a MAC and thus are “inextricably intertwined” with Plaintiff’s claims for Medicare benefits. (See, e.g., Dkt. 1, Compl., Exhibit A ¶¶ 5-11). Judicial relief for actions arising under the Medicare statute may be sought only against the Secretary, and not against the contractors that assist in the administration of the Medicare program, because the Secretary alone is responsible for the administration of the program and thus is the real party in interest. See 42 U.S.C. §§ 405(g)-(h), 1395ii; see also Bodimetric Health Servs., v. Aetna Life & Cas., 903 F.2d 480, 487 (7th Cir. 1990) (holding that suits against contractors are governed by 42 U.S.C. § 405(h) because the real party in interest is HHS). MACs, such as Noridian, carry out the Secretary’s direction, which she gives through regulation and agency guidance. The Secretary, not the MAC, determines what amount shall be paid to each health care entity and when such payments are made. See, e.g., 42 U.S.C. § 1395g(a) (“The Secretary shall periodically determine the amount which should be paid under this part to each provider of services with respect to the services furnished by it, and the provider of services shall be paid, at such time or times as the Secretary believes appropriate.”). All of Plaintiff’s allegations against Noridian spring from actions that Noridian took pursuant to its MAC contract with the Secretary and her regulations and guidance. In that capacity, Noridian was responsible for, among other functions, “determining the amount of payments to be made to providers [from the Medicare Trust Fund] for covered services furnished to Medicare beneficiaries,” consistent with the Secretary’s direction, and “undertaking to adjust incorrect payments and recover overpayments when it is determined that an overpayment was made.” See 42 C.F.R. § 421.100 (listing functions of a MAC); see also United States v. Erika, Inc., 456 U.S. 201, 203 (1982) (“[T]he Secretary is authorized to assign the task of paying Part B claims from the Trust Fund to private [entities] experienced in such matters.”) (citations omitted). Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 9 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 8 QB\157377.00004\42902350.1 Furthermore, Noridian has no vested interest in the amounts paid to providers. As explained above, Noridian pays providers from the Medicare Trust Fund, not with corporate funds. While Congress intended for Medicare contractors to play a “considerable role” in the Medicare reimbursement program by “carrying on for [the Secretary] the governmental administrative responsibilities imposed by the bill,” S. Rep. No. 89-404, as reprinted in 1965 U.S.C.C.A.N. 1943, 1992-95, Congress also has understood that the “Secretary, however, would be the real party in interest in the administration of the program.” Id. And, as the Supreme Court has acknowledged, the Secretary’s regulations expressly state that the Secretary, not the MAC, is the real party in interest in any litigation involving the Medicare program. See Erika, 456 U.S. at 205 n.4. Those regulations provide: Indemnification of intermediaries and carriers. Intermediaries and carriers act on behalf of CMS in carrying out certain administrative responsibilities that the law imposes. Accordingly, their agreements and contracts contain clauses providing for indemnification with respect to actions taken on behalf of CMS and CMS is the real party of interest in any litigation involving the administration of the program. 42 C.F.R. § 421.5(b) (emphasis added); see also Anderson v. Occidental Life Ins. Co., 727 F.2d 855, 856-57 (9th Cir. 1984) (“The United States is the real party in interest in actions against Medicare carriers [MAC predecessors] because recovery would come from the federal treasury.”); Mitchell v. Occidental Ins., Medicare, 619 F.2d 28, 30 (9th Cir. 1980); Peterson v. Weinberger, 508 F.2d 45, 51-52, n.7 (5th Cir. 1975) (United States is the real party in interest in physician’s suit against intermediary [MAC predecessor]); Pavano v. Shalala, 95 F.3d 147, 148 (2d Cir. 1996) (“Because the carriers are authorized agents of . . . the Department of Health and Human Services, see 42 U.S.C. § 1395u(a), the Secretary is the real party in interest here, see 42 C.F.R. § 421.5(b).”). Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 10 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 9 QB\157377.00004\42902350.1 Given the undisputed legal status of the Secretary as the real party in interest in this matter, there is no practical reason or legal basis to maintain Noridian as a party in this litigation, and Plaintiff’s suit must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(1). B. Noridian Is Immune From This Suit. Noridian enjoys immunity from complaints such as Plaintiff’s. Accordingly, this Court lacks subject matter jurisdiction or, alternatively, the Complaint fails to state a claim for which relief can be granted. The Medicare statute provides MACs, like Noridian, with immunity from claims alleging mispayment of Medicare services: No medicare administrative contractor shall be liable to the United States for a payment by a certifying or disbursing officer unless, in connection with such payment, the medicare administrative contractor acted with reckless disregard of its obligations under its medicare administrative contract or with intent to defraud the United States. 42 U.S.C. § 1395kk-1(d)(3); see also Kaiser v. Blue Cross, 347 F.3d 1107, 1117 (9th Cir. 2003) (“Fiscal intermediaries, when acting as agents for [CMS], are also protected by sovereign immunity.”); Matranga v. Travelers Ins. Co., 563 F.2d 677, 677 (5th Cir. 1977) (same); Grp. Health Inc. v. Blue Cross Ass’n, 739 F. Supp. 921, 932-33 (S.D.N.Y. 1990) (Secretary is the real party in interest and, as such, fiscal intermediary is entitled to sovereign immunity with respect to claims based on negligent misrepresentations), cited with approval in Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 72 (2d Cir. 1998). The statute also offers indemnification for costs incurred by MACs improperly sued for any matter “arising from or relating directly to the claims administration process”: [I]n the case of a medicare administrative contractor (or a person who is a director, officer, or employee of such a contractor or who is engaged by the Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 11 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 10 QB\157377.00004\42902350.1 contractor to participate directly in the claims administration process) who is made a party to any judicial or administrative proceeding arising from or relating directly to the claims administration process under this subchapter, the Secretary may, to the extent the Secretary determines to be appropriate and as specified in the contract with the contractor, indemnify the contractor and such persons. 42 U.S.C. § 1395kk-1(d)(4). Immunity and indemnification for MACs exist because MACs carry out governmental functions and because (as stated above) the Secretary is the real party in interest in litigation involving the administration of Medicare. 42 C.F.R. § 421.5(b). Noridian’s immunity from suit means that this Court lacks subject matter jurisdiction and must dismiss Plaintiff’s suit pursuant to Federal Rule of Civil Procedure 12(b)(1). See Kaiser, 347 F.3d at 1117 (explaining that MACs, like the United States government, are protected by sovereign immunity and, because of sovereign immunity, “courts have no subject matter jurisdiction”). Alternatively, Plaintiffs have not alleged a claim for which relief can be granted against Noridian because the claims are based on Noridian’s discretionary conduct as a MAC (e.g., processing of the Engelman Claims and effectuation of Judge Engelman’s decision), and thus Plaintiff’s claims also fail under Federal Rule of Civil Procedure 12(b)(6). See TriCenturion, Inc., 694 F.3d at 351 (upholding dismissal of state tort claims for failure to state a claim because “[defendants], as Medicare contractors, are entitled to immunity for discretionary conduct that falls within the outer perimeter of their official duties”); Midland Psychiatric Assocs., Inc. v. United States, 145 F.3d 1000, 1005 (8th Cir. 1998); Marsaw v. Thompson, 133 F. App’x 946, 948 (5th Cir. 2005) (no private right of action against private entities, such as Medicare contractors, “that engage in alleged constitutional deprivations while acting under color of federal law”). Accordingly, Plaintiff’s suit must be dismissed. \ /// /// Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 12 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 11 QB\157377.00004\42902350.1 V. CERTIFICATION OF COUNSEL In accordance with the Court’s October 20, 2016 Order [Dkt. 5], Noridian certifies that it, along with Cathy Burdette, counsel from the Department of Justice, conferred with Plaintiff in advance of filing this Motion to Dismiss to determine whether Plaintiff would be amenable to amending its Complaint to cure its defects by dismissing suit against Noridian and serving the Secretary. Plaintiff declined to amend the pleading to correct the defects. VI. CONCLUSION For the foregoing reasons, this Court should dismiss Plaintiff’s Complaint in its entirety. RESPECTFULLY SUBMITTED this 7th day of December, 2016. QUARLES & BRADY LLP Renaissance One Two North Central Avenue Phoenix, AZ 85004-2391 By /s/ Lauren Elliott Stine Lauren Elliott Stine Attorneys for Defendant Noridian Healthcare Solutions, LLC Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 13 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 12 QB\157377.00004\42902350.1 CERTIFICATE OF SERVICE I hereby certify that I electronically transmitted the attached document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrant, and mailed a copy of same to the following if non-registrants, this 7th day of December, 2016: Jason M. Bruno Jared C. Olson SHERRETS BRUNO & VOGT LLC 8700 East Vista Bonita Drive, Suite 236 Scottsdale, Arizona 85255 Attorneys for Plaintiff /s/ Debra L. Hitchens Case 2:16-cv-03614-DJH Document 11 Filed 12/07/16 Page 14 of 14 EXHIBIT 1 EXHIBIT 1 Case 2:16-cv-03614-DJH Document 11-1 Filed 12/07/16 Page 1 of 3 1 Award of Part A/B Medicare Administrative Contractor (A/B MAC) Contract for Jurisdiction F  On August 22, 2011, the Centers for Medicare & Medicaid Services (CMS) announced that Noridian Administrative Services (NAS) has been awarded the contract for the administration of Medicare Part A and Part B fee-for-service claims in the newly formed A/B MAC Jurisdiction F.  Jurisdiction F was formed by consolidating A/B MAC Jurisdictions 2 and 3. This change reflects the CMS MAC jurisdiction strategy, announced in 2010, to consolidate from 15 (fifteen) Part A/B MAC jurisdictions to 10 (ten) by 2016.  When the contract is fully implemented, the A/B MAC Jurisdiction F will serve beneficiaries in Alaska, Arizona, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. These states are shown below in gray.  Jurisdiction F includes over 2.5 million Medicare fee-for-service beneficiaries. The Jurisdiction A/B MAC will serve approximately 600 Medicare hospitals and 60,000 physicians. This jurisdiction comprises approximately 5.8% of the overall national Medicare fee-for-service Part A and Part B claims volume.  This contract award concludes the first re-competition of a Part A/B MAC contract awarded under the competitive contracting provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. CMS issued the solicitation for this contract in October 2010.  The Part A/B MAC Jurisdiction F contract includes a base year and four option years, for a maximum duration of five years. The contract is a “cost plus award fee” contract; the award fee will be earned only if the contractor exceeds the base requirements of the contract. Inclusive of all options, the awarded contract has a value of $218 million.  In addition to processing Part A and Part B claims in Jurisdiction F, NAS will perform other critical Medicare operational functions, including enrolling, educating, and auditing Medicare providers. Case 2:16-cv-03614-DJH Document 11-1 Filed 12/07/16 Page 2 of 3 2  Over the next several months, CMS will oversee the transfer of Medicare work from the incumbent contractors to the Jurisdiction F A/B MAC. NAS is the incumbent contractor for A/B MAC Jurisdiction 3 (Arizona, Montana, North Dakota, South Dakota, Utah, and Wyoming). NAS holds the Part A Fiscal Intermediary contracts in Alaska, Idaho, Oregon, and Washington. NAS also holds the Part B carrier contracts in Alaska, Oregon, and Washington. CGS Inc. holds the Part B carrier contract in Idaho.  CMS anticipates that implementation of the new contract will go smoothly, with few, if any, disruptions in service for Medicare beneficiaries and providers.  Questions about the contract award should be directed to Chip Farmer in CMS’ Office of Acquisition and Grants Management. Mr. Farmer may be reached at 410-786-1997 or at Edward.Farmer@cms.hhs.gov. Background on Medicare Contracting Reform  In 2003, Congress mandated that CMS award contracts for Medicare fee-for-service claims administration service through competitive federal contracting processes.  In 2005, CMS announced it would consolidate Medicare Part A and Part B fee-for- service claims administration into 15 (fifteen) regional jurisdictions.  Eleven of these regional MAC jurisdictions are fully implemented, and the remaining four MACs are in process.  The competitive contracting provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 require that the MAC contracts be re- competed every five years. The award of MAC Jurisdiction F concludes the first re- competition of an A/B MAC contract. Further re-competitions of the initial set of MAC contracts are currently underway.  In 2010, CMS announced the further consolidation of MAC jurisdictions from 15 (fifteen) Part A/B MAC jurisdictions to 10 (ten) by 2016. The first stage of this consolidation, to 13 (thirteen) MACs, will be accomplished in 2011.  CMS has stringent standards for contract performance on the MAC contracts and measures performance through a variety of processes, including on-site oversight, data reviews and protocol-driven quality assurance reviews, as well as independent audits.  As CMS continues to use the competitive process to select claims administration contractors, past performance to the contract requirements is a major evaluation factor. Case 2:16-cv-03614-DJH Document 11-1 Filed 12/07/16 Page 3 of 3