Prime Healthcare Services San Dimas, Llc v. Sylvia Mathews Burwell

NOTICE OF MOTION AND MOTION to Dismiss Case ; Declaration of Lynn Healey Scaduto in Support Thereof

C.D. Cal.May 5, 2017

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 27 28 SANDRA R. BROWN Acting United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division DAVID K. BARRETT Assistant United States Attorney Chief, Civil Fraud Section LINDA A. KONTOS Assistant United States Attorney Deputy Chief, Civil Fraud Section LYNN HEALEY SCADUTO (SBN 205291) Assistant United States Attorney Room 7516, Federal Building 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-7395 Facsimile: (213) 894-7819 Email: lynn.scaduto@usdoj.gov Attorneys for Defendant THOMAS E. PRICE, M.D., in his official capacity as Secretary of the Department of Health and Human Services UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION PRIME HEALTHCARE SERVICES – SAN DIMAS, LLC, a limited liability company doing business as SAN DIMAS COMMUNITY HOSPITAL Plaintiff v. THOMAS E. PRICE, M.D., in his official capacity as SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant. No. CV 17-00078 DSF NOTICE OF MOTION AND MOTION TO DISMISS; DECLARATION OF LYNN HEALEY SCADUTO IN SUPPORT THEREOF [FED. R. CIV. P. 12(b)(6)] [[PROPOSED] ORDER FILED CONCURRENTLY HEREWITH] Date: Monday, June 12, 2017 Time: 1:30pm Place: Courtroom 7D Honorable Dale S. Fischer Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 1 of 16 Page ID #:82 i 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 27 28 TABLE OF CONTENTS Page I. INTRODUCTION ……………………………………………………. 2 II. PROCEDURAL BACKGROUND ………………………………….. 3 III. ARGUMENT …………………………………………………………. 5 A. Prime Will Have to Prove the Administrative Record Foreclosed a Reasonable Conclusion that Inpatient Admission Was Medically Unnecessary and Must Plead Facts Sufficient to Show That. ………………………………. 6 B. Prime Fails to Plead Facts Sufficient to Show the Administrative Record Foreclosed a Reasonable Conclusion that Inpatient Admission Was Medically Unnecessary. ………………………………………………….. 7 IV. CONCLUSION………………………………………………………. 9 Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 2 of 16 Page ID #:83 ii 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 27 28 TABLE OF AUTHORITIES Federal Cases Page(s) Balistreri v. Pacifica Police Department, 901 F.2d 696 (9th Cir. 1990) ........................................................................................ 5 Barnes v. U.S. Dep’t of Transp., 655 F.3d 1124 (9th Cir. 2011) ...................................................................................... 6 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ..................................................................................................... 5 Dickinson v. Zurko, 527 U.S. 150 (1999) ..................................................................................................... 6 East Bay Auto. Council v. NLRB, 483 F.3d 628 (9th Cir. 2007) ........................................................................................ 6 High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630 (9th Cir. 2004) ........................................................................................ 6 Kappos v. Hyatt, 132 S. Ct. 1690 (2012) ................................................................................................. 6 Levitt v. Yelp!, Inc., 765 F.3d 1123 (9th Cir. 2014) ...................................................................................... 6 Mayes v. Massanari, 276 F.3d 453 (9th Cir. 2001) ........................................................................................ 7 Monjaraz-Munoz v. INS, 327 F.3d 892 (9th Cir.), amended by 339 F.3d 1012 (9th Cir. 2003) ....................... 7, 8 NLRB v. Int’l Bhd. Of Elec. Workers, Local 48, 345 F.3d 1049 (9th Cir. 2003) ...................................................................................... 7 Snoqualmie Indian Tribe v. FERC, 545 F.3d 1207 (9th Cir. 2008) ...................................................................................... 7 U.S. Postal Serv. v. Gregory, 534 U.S. 1 (2001) ......................................................................................................... 6 Usher v. City of Los Angeles, 828 F.2d 556 (9th Cir. 1987) ........................................................................................ 5 Federal Statutes 5 U.S.C. § 701, et seq. ....................................................................................................... 6 42 U.S.C. § 405(g) ........................................................................................................ 4, 6 42 U.S.C. § 1395ff ............................................................................................................ 3 42 U.S.C. § 1395ff(a)(2)(A) .............................................................................................. 3 42 U.S.C. § 1395ff(a)(3) ................................................................................................... 3 42 U.S.C. § 1395ff(b)(1)(A), (E) ...................................................................................... 4 Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 3 of 16 Page ID #:84 iii 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 27 28 42 U.S.C. § 1395ff(b)(1)(E)(i), (d)(1)(A) ......................................................................... 4 42 U.S.C. § 1395ff(c) ........................................................................................................ 3 42 U.S.C. § 1395ff(c)(3)(C)(ii) ......................................................................................... 4 42 U.S.C. § 1395ff(d)(1)(a) .............................................................................................. 4 42 U.S.C. § 1395ff(d)(2) ................................................................................................... 4 42 U.S.C. § 1395ff(d)(3)(A) ............................................................................................. 4 42 U.S.C. § 1395ff(d)(3)(B) ............................................................................................. 5 42 U.S.C. § 1395kk–1(a)(1)–(4) ....................................................................................... 3 Regulations 42 C.F.R. § 405.968(a) ...................................................................................................... 3 42 C.F.R. § 405.1006(c) .................................................................................................... 5 42 C.F.R. § 405.1104 ........................................................................................................ 4 42 C.F.R. § 405.1108(d) ................................................................................................... 4 42 C.F.R. § 405.1132(b) ................................................................................................... 5 42 C.F.R. § 405.1136(f) .................................................................................................... 6 42 C.F.R. § 405.980 .......................................................................................................... 4 42 C.F.R. § 405.1130 ........................................................................................................ 4 42 C.F.R. §§ 405.1100(c)-(d) ............................................................................................ 4 Rules Fed. R. Civ. P. 12(b)(6) ......................................................................................... 2, 3, 5, 9 Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 4 of 16 Page ID #:85 1 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 27 28 PLEASE TAKE NOTICE that on Monday, June 12, 2017, at 1:30pm, or as soon thereafter as the matter may be heard, Defendant Thomas E. Price, M.D., in his official capacity as the Secretary of the Department of Health and Human Services (“United States” or “HHS”) will bring on for hearing a Motion to Dismiss before the Honorable Dale S. Fisher, United States District Judge, in Courtroom 7D in the First Street Courthouse, 350 W. First Street, Los Angeles, CA 90012. HHS hereby moves this Court for an order dismissing this action under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Motion is made on the ground that Plaintiff fails to allege facts that, if true, would be sufficient to state a claim for which relief can be granted. This motion is based on the attached Memorandum of Points and Authorities, the declaration of Lynn Healey Scaduto filed concurrently herewith, and upon such other and further argument the Court may allow at the time of the hearing. This motion is made following the conferences of counsel under Local Rule 7-3 which took place on March 22, 2017 and April 18, 2017. Dated: May 5, 2017 Respectfully submitted, SANDRA R. BROWN Acting United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division DAVID K. BARRETT Assistant United States Attorney Chief, Civil Fraud Section LINDA A. KONTOS Assistant United States Attorney Deputy Chief, Civil Fraud Section /s/ Lynn Healey Scaduto LYNN HEALEY SCADUTO Assistant United States Attorney Attorneys for the United States of America Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 5 of 16 Page ID #:86 2 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 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION After having its $4,938.48 claim for reimbursement denied by multiple levels of Medicare contractors and an Administrative Law Judge (“ALJ”), Plaintiff Prime Healthcare Services-San Dimas, LLC (“Prime”) evidently grew tired of waiting for the Departmental Appeals Board of the U.S. Department of Health and Human Services (“DAB”) to review the ALJ’s decision. After the statutorily prescribed time period elapsed, Prime elected to forego review by the DAB and escalate its claim to federal district court. Prime now asks this Court to reverse the ALJ’s decision to uphold the denial of Prime’s claim on the ground that Prime’s inpatient admission of beneficiary E.G. (“the Beneficiary”) was medically unnecessary. Defendant Thomas E. Price, M.D., in his official capacity as Secretary of the U.S. Department of Health and Human Services (“United States” or “HHS”) asks the Court to dismiss Prime’s complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Prime asserts that “[i]t is Prime’s position that the services provided to the beneficiary were medically reasonable and necessary” but “various Medicare subcontrators and the ALJ have issued rulings not supported by substantial evidence, denying the necessity of the instant claims.” Despite the fact that Prime was under no deadline to escalate the review of this claim from the agency to federal district court, Prime’s complaint is remarkably generic and contains no allegations about what the record before the ALJ contained that would have foreclosed a reasonable conclusion that the Beneficiary’s inpatient admission was medically unnecessary. Prime promises instead to one day “submit evidence and testimony that the inpatient admission denials were not supported by substantial evidence.” Without more, the fact that Prime disagrees with the ALJ’s decision is not enough to state a claim for relief. Judicial review of an agency decision is deferential: the role of the Court is not to substitute its judgment — or Prime’s — for the ALJ’s judgment that Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 6 of 16 Page ID #:87 3 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 27 28 inpatient admission was medically unnecessary. Prime’s complaint should be dismissed under Rule 12(b)(6) for failure to allege facts that, if true, would be sufficient to show that the contents of the administrative record could support only one reasonable conclusion, namely that the Beneficiary’s inpatient admission was medically necessary. II. PROCEDURAL BACKGROUND Release valves built into the Medicare’s overloaded and underfunded appeals process are the reason why Prime was able to now file this action to contest the denial of its $4,938.48 Medicare claim. See generally Statement of Nancy J. Griswold before the United States Senate Finance Committee (Apr. 28, 2015), http://www.finance.senate.gov/imo/media/doc/SFC%20Griswold- OMHA%20updated%20testimony%20%204%2028%2015.pdf (congressional testimony explaining, among other things, how Congressional funding for administrative adjudication has not kept pace with the dramatic increases in workload). After furnishing services to a Medicare beneficiary, hospitals and other health care providers submit claims for reimbursement to Medicare Administrative Contractors (“MAC”). See 42 U.S.C. §§ 1395kk–1(a)(1)–(4), 1395ff(a)(2)(A). If a claim is denied, a provider may appeal through a four-step administrative appeal process. See id. at § 1395ff. First, it may present its claim to the MAC for redetermination, which decision must occur within 60 days. Id. at § 1395ff(a)(3). A provider may then appeal a negative redetermination to a Qualified Independent Contractor (“QIC”). A QIC must conduct an “independent, on- the-record review of an initial determination, including the redetermination and all issues related to payment of the claim,” and, in so doing, it must “review[ ] the evidence and findings upon which the [previous determinations were] based,” together with “any additional evidence the parties submit or that the QIC obtains on its own.” 42 C.F.R. § 405.968(a). The QIC also has 60 days to resolve claims. 42 U.S.C. § 1395ff(c). Both of these stages are overseen by the Centers for Medicare & Medicaid Services (“CMS”) within HHS. Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 7 of 16 Page ID #:88 4 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 27 28 After these initial determinations, a provider whose claim has been denied may request a hearing before an ALJ. See 42 U.S.C. § 1395ff(b)(1)(E)(i), (d)(1)(A). The ALJ level of review is overseen by the Office of Medicare Hearings and Appeals (“OMHA”), a division within the Office of the Secretary that is functionally and fiscally separate from CMS. ALJs endeavor to issue a decision within 90 days of the time appellants request a hearing. See 42 U.S.C. § 1395ff(d)(1)(a). In the last stage of review, an ALJ’s decision may be appealed to the Departmental Appeals Board (“DAB”). See id. at § 1395ff(d)(2). The subunit of the DAB that reviews these claims is the Medicare Appeals Council. The DAB provides the final level of review within HHS, and its decision is considered that of the Secretary, subject to judicial review. See 42 C.F.R. §§ 405.980, 405.1130. A provider that obtains a final decision from the DAB is entitled to “judicial review of [HHS’s] final decision . . . as is provided in” 42 U.S.C. § 405(g), if at least $1000 (indexed for inflation from 2003) is in controversy. Id. at §§ 1395ff(b)(1)(A), (E). Section 405(g), in turn, permits a provider to file suit in district court in its home district, where the agency’s factual determinations are required to be “conclusive” if they are “supported by substantial evidence.” Id. at § 405(g). The Medicare Act provides for a process known as “escalation,” that allows providers to choose to bypass the QIC, ALJ, and DAB levels of review if those decisionmakers are unable to resolve their claims within the statutorily prescribed time period. If, for instance, a QIC is unable to complete its review within 60 days, an appellant may choose to “escalate” its appeal to an ALJ. See 42 U.S.C. § 1395ff(c)(3)(C)(ii). If an ALJ has not rendered a decision within 90 days, a claimant may choose to escalate to the DAB, id. at § 1395ff(d)(3)(A), in which case it is the QIC’s decision that is under review. See 42 C.F.R. § 405.1104; 42 C.F.R. § 405.1108(d). On escalated appeal, the DAB endeavors to render a decision within 180 days, as opposed to its typical 90-day timeframe. See 42 C.F.R. § 405.1100(c)-(d). Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 8 of 16 Page ID #:89 5 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 27 28 Where, as here, the DAB does not render a decision within the applicable timeframe, the provider may bypass the DAB and seek judicial review in federal court so long as its claim meets the amount-in-controversy requirement, which is currently $1,560. See 42 U.S.C. § 1395ff(d)(3)(B); 42 C.F.R. § 405.1132(b); 42 C.F.R. § 405.1006(c). Together, these provisions allow providers, in the event any level of the appeals process gets backlogged, to choose to “leapfrog” that level and move on to the next one. Although providers can seek judicial review, the vast majority do not. In the 2016 fiscal year, ALJs adjudicated more than 87,000 appeals and the DAB adjudicated more than 2,300. But there were only 27 appeals to the federal district court during the same time period. Declaration of Lynn Healey Scaduto (“Scaduto Decl.”) at ¶ 3. Leapfrogging the DAB to get to federal district court is even more rare: only five of the 27 appeals to district court were escalated to federal district court without a DAB decision. Id. That is what Prime has elected to do here and in more than two dozen other virtually identical cases it has filed in this District. See id. at Exh. 1. III. ARGUMENT A court must dismiss a complaint if it fails to state a claim for which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under such a theory. See Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). In deciding whether the plaintiff has alleged sufficient facts, the court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). While “heightened fact pleading of specifics” are not required, a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Courts in the Ninth Circuit employ a two-prong test of the sufficiency of the facts alleged in a complaint: Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 9 of 16 Page ID #:90 6 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 27 28 First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation. Levitt v. Yelp!, Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (internal quotations omitted). Here, Prime alleges only its “position” that the ALJ got it wrong in deciding that Prime’s claim was appropriately denied because inpatient admission was medically unnecessary. Articulating nothing more than its own disagreement with the ALJ’s decision, Prime fails to allege any “underlying facts” that must be presumed true, let alone facts that would be sufficient to show Prime is entitled to a reversal of that decision. Levitt, 765 F.3d at 1135. A. Prime Will Have to Prove the Administrative Record Foreclosed a Reasonable Conclusion that Inpatient Admission Was Medically Unnecessary and Must Plead Facts Sufficient to Show That. The Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., sets forth the standards governing judicial review of decisions made by federal administrative agencies. See Dickinson v. Zurko, 527 U.S. 150, 152 (1999); High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630, 638 (9th Cir. 2004); see also 42 U.S.C. § 405(g); 42 C.F.R. § 405.1136(f). Review under the APA is narrow and the reviewing court may not substitute its judgment for that of the agency. See U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6-7 (2001); Barnes v. U.S. Dep’t of Transp., 655 F.3d 1124, 1132 (9th Cir. 2011). An agency’s factual findings are reviewed under the “substantial evidence” standard. See Kappos v. Hyatt, 132 S. Ct. 1690, 1694 (2012); East Bay Auto. Council v. NLRB, 483 F.3d 628, 633 (9th Cir. 2007); see also 42 U.S.C. § 405(g) (HHS’s factual determinations are required to be “conclusive” if they are “supported by substantial Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 10 of 16 Page ID #:91 7 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 27 28 evidence”). Substantial evidence means more than a mere scintilla but less than a preponderance; it means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See NLRB v. Int’l Bhd. of Elec. Workers, Local 48, 345 F.3d 1049, 1054 (9th Cir. 2003). The standard is “extremely deferential” and a reviewing court must uphold the agency’s findings “unless the evidence presented would compel a reasonable factfinder to reach a contrary result.” See Monjaraz-Munoz v. INS, 327 F.3d 892, 895 (9th Cir.), amended by 339 F.3d 1012 (9th Cir. 2003) (internal quotation marks and citation omitted). The substantial evidence standard requires the reviewing court to review the administrative record as a whole, weighing both the evidence that supports the agency’s determination as well as the evidence that detracts from it. See Mayes v. Massanari, 276 F.3d 453, 458-59 (9th Cir. 2001). If the evidence is susceptible to more than one rational interpretation, the court may not substitute its judgment for that of the agency. See Snoqualmie Indian Tribe v. FERC, 545 F.3d 1207, 1212 (9th Cir. 2008). B. Prime Fails to Plead Facts Sufficient to Show the Administrative Record Foreclosed a Reasonable Conclusion that Inpatient Admission Was Medically Unnecessary. Prime contends that the “ALJ exceeded the authority granted by the Medicare statutes by rendering a decision not supported by substantial evidence, and/or based upon erroneous legal conclusions.” Docket No. 1 at ¶ 30; see also id. at ¶ 33. Prime alleges that, as a result of that decision, it has been denied reimbursement in the amount of $4,938.48. Id. at ¶¶ 20, 21. Prime asks the Court to enter “[a]n order declaring the ALJ decision is unlawful and revers[ing that decision]” and make “[a] determination that Plaintiff is entitled to reimbursement for the services provided in this matter.” Id. at Prayer for Relief at ¶¶ 1, 2. In support of its entitlement to such relief, Prime alleges only that “[i]t is Prime’s Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 11 of 16 Page ID #:92 8 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 27 28 position that the services provided to the beneficiary were medically reasonable and necessary” but “various Medicare subcontractors and the ALJ have issued rulings not supported by substantial evidence, denying the necessity of the instant claims.” Id. at ¶ 1. Nowhere in the complaint does Prime even specify what the administrative record shows was the condition for which the Beneficiary was purportedly admitted or the services Prime provided to address it. Remarkably, the “Factual Background” section of the complaint is comprised of one four-line paragraph. Id. at ¶ 26. Prime promises in that paragraph to one day “submit evidence and testimony that the inpatient admission denials were not supported by substantial evidence.” Id. As stated above, judicial review of agency factfinding is deferential. See Monjaraz-Munoz, 327 F.3d at 895. Without more, Prime’s “position” that inpatient admission was medically necessary cannot trump the ALJ’s judgment that it was not. Prime’s complaint sets forth no allegations about what the record before the ALJ contained that would have foreclosed a reasonable conclusion that the Beneficiary’s inpatient admission was medically unnecessary. Prime accordingly fails to state a claim for which relief can be granted. Id. (reviewing court must uphold agency’s findings “unless the evidence presented would compel a reasonable factfinder to reach a contrary result”). Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 12 of 16 Page ID #:93 9 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 27 28 IV. CONCLUSION For the foregoing reasons, the Court should dismiss Prime’s complaint under Rule 12(b)(6) for failure to state a claim for which relief can be granted. Dated: May 5, 2017 Respectfully submitted, SANDRA R. BROWN Acting United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division DAVID K. BARRETT Assistant United States Attorney Chief, Civil Fraud Section LINDA A. KONTOS Assistant United States Attorney Deputy Chief, Civil Fraud Section /s/ Lynn Healey Scaduto LYNN HEALEY SCADUTO Assistant United States Attorney Attorneys for the United States of America Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 13 of 16 Page ID #:94 10 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 27 28 DECLARATION OF LYNN HEALEY SCADUTO I, Lynn Healey Scaduto, declare: 1. I am the Assistant United States Attorney assigned responsibility for handling this action. This declaration is offered in support of the United States’ Motion to Dismiss this action. 2. Attached hereto as Exhibit 1 is a list of 26 actions pending in the Central District of California brought by hospitals operated by Prime Healthcare Services, Inc. and related entities (“Prime”). In each, Prime seeks a judicial reversal of the decision of a Medicare Administrative Law Judge (“ALJ”) to uphold the denial of an inpatient claim on the ground that an inpatient level of care was not medically necessary. 3. I have been informed by the Office of Medicare Hearings and Appeals (“OMHA”) that ALJs decided 87,123 appeals in the 2016 fiscal year. I have been informed by the Departmental Appeals Board of the U.S. Department of Health and Human Services (“DAB”) that, in the 2016 fiscal year, the Medicare Appeals Council, which is the subunit of the DAB that reviews claim denials like the one underlying this action, adjudicated 2,320 cases. During the same time period, claimants appealed 27 cases to federal district court. Of those 27, five were escalated to federal district court before the DAB had completed its review. 4. The foregoing is based on my personal knowledge and on information provided to me by the OMHA and the DAB. I declare under penalty of perjury that the foregoing is true and correct. Executed on May 5, 2017, at Los Angeles, California. /s/ Lynn Healey Scaduto LYNN HEALEY SCADUTO Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 14 of 16 Page ID #:95 11 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 27 28 EXHIBIT 1 1. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 16- 8098 RAO (filed October 31, 2016); 2. Prime Healthcare Services-San Dimas, LLC v. Price, Case No. CV 16-8099 JAK (filed October 31, 2016) 3. Prime Healthcare Services-San Dimas, LLC v. Price, Case No. CV 16-8101 ODW (filed October 31, 2016) 4. Prime Healthcare Huntington Beach, LLC v. Price, Case No. CV 16-8102 PA (filed October 31, 2016) 5. Prime Healthcare Services-San Dimas, LLC v. Price, Case No. CV 17-75 DMG (filed January 5, 2017) 6. Prime Healthcare Services-San Dimas, LLC v. Price, Case No. CV 17-78 DSF (filed January 5, 2017) 7. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 17- 161 DSF (filed on January 9, 2017) 8. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 17- 170 JFW (filed on January 9, 2017) 9. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 17- 174 VAP (filed on January 9, 2017) 10. Desert Valley Hospital, LLC v. Price, Case No. CV 17-661 DMG (filed January 27, 2017) 11. Prime Healthcare Services-Montclair, LLC v. Price, Case No. CV 17-659 PA (filed January 27, 2017) 12. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 17- 658 JFW (filed January 27, 2017) 13. Prime Healthcare Services-Garden Grove, LLC v. Price, Case No. CV 17- Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 15 of 16 Page ID #:96 12 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 27 28 169 AG (filed January 30, 2017) 14. Prime Healthcare Services-Garden Grove, LLC v. Price, Case No. CV 17- 178 AG (filed February 1, 2017) 15. Prime Healthcare Services- Montclair, LLC v. Price, Case No. CV 17-750 CAS (filed January 30, 2017) 16. Prime Healthcare Services-Garden Grove, LLC v. Price, Case No. CV 17- 171 DOC (filed January 30, 2017) 17. Prime Healthcare Services-Montclair, LLC v. Price, Case No. CV 17-173 AB (filed January 31, 2017) 18. Prime Healthcare Services- Montclair, LLC v. Price, Case No. CV 17-174 JFW (filed January 31, 2017) 19. Prime Healthcare Services-La Palma, LLC v. Price, Case No. CV 17-802 RGK (filed February 1, 2017) 20. Prime Healthcare Services-Garden Grove, LLC v. Price, Case No. CV 17- 340 JLS (filed February 24, 2017) 21. Prime Healthcare Services-Garden Grove v. Price, LLC, Case No. CV 17- 347 JVS (filed February 24, 2017) 22. Prime Healthcare Services-Sherman Oaks, LLC v. Price, Case No. CV 17- 1551 AB (filed February 24, 2017) 23. Prime Healthcare Services-Garden Grove v. Price, LLC, Case No. CV 17- 346 JLS (filed February 24, 2017) 24. Prime Healthcare Services-Encino, LLC v. Price, Case No. 17-1562 SJP (filed February 27, 2017) 25. Veritas Health Services, Inc., dba Chino Valley Medical Center v. Price, Case No. CV 17-359 MWF (filed February 24, 2017) 26. Veritas Health Service, Inc., dba Chino Valley Medical Center v. Price. Case No. CV 17-365 FMO (filed February 24, 2017) Case 2:17-cv-00078-DSF-SS Document 15 Filed 05/05/17 Page 16 of 16 Page ID #:97 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 27 28 SANDRA R. BROWN Acting United States Attorney DOROTHY A. SCHOUTEN Assistant United States Attorney Chief, Civil Division DAVID K. BARRETT Assistant United States Attorney Chief, Civil Fraud Section LINDA A. KONTOS Assistant United States Attorney Deputy Chief, Civil Fraud Section LYNN HEALEY SCADUTO (SBN 205291) Assistant United States Attorney Room 7516, Federal Building 300 North Los Angeles Street Los Angeles, California 90012 Telephone: (213) 894-7395 Facsimile: (213) 894-7819 Email: lynn.scaduto@usdoj.gov Attorneys for Defendant THOMAS E. PRICE, M.D., in his official capacity as Secretary of the Department of Health and Human Services UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION PRIME HEALTHCARE SERVICES – SAN DIMAS, LLC, a limited liability company doing business as SAN DIMAS COMMUNITY HOSPITAL, Plaintiff, v. THOMAS E. PRICE, M.D., in his official capacity as SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant. No. CV 17-00078 DSF [PROPOSED] ORDER ON MOTION TO DISMISS Honorable Dale S. Fischer Case 2:17-cv-00078-DSF-SS Document 15-1 Filed 05/05/17 Page 1 of 2 Page ID #:98 1 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 27 28 Defendant Thomas E. Price, M.D., in his official capacity as the Secretary of the Department of Health and Human Services (“HHS”) has moved the Court to dismiss the complaint in this action under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Having considered Plaintiff’s complaint in this action, HHS’s motion and supporting papers, the arguments in opposition and all other matters properly presented to the Court, the Court concludes that the complaint fails to state a claim for which relief can be granted. HHS’s Motion to Dismiss is granted and the complaint in this action is dismissed. IT IS SO ORDERED. Dated: , 2017 HONORABLE DALE S. FISCHER United States District Judge Case 2:17-cv-00078-DSF-SS Document 15-1 Filed 05/05/17 Page 2 of 2 Page ID #:99