United States District Court, D. Idaho
DANNY R. DESFOSSES, Plaintiff,
NORIDIAN HEALTHCARE SOLUTIONS, LLC; and NORIDIAN ADMINISTRATIVE SERVICES, LLC; Delaware Entities, Defendants.
MEMORANDUM DECISION AND ORDER
CANDY W. DALE, Magistrate Judge.
Pending before the Court is Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). The matter is fully briefed and ripe for the Court's consideration. Having fully reviewed the record herein, the Court finds the facts and legal arguments are adequately represented in the briefs and record. In the interest of avoiding delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motion will be decided on the record before the Court. Dist. Idaho L. Rule 7.1.
FACTUAL AND PROCEDURAL BACKGROUND
Desfosses is a physical therapist practicing in Pocatello, Idaho. Since 1984, Desfosses has been authorized by Medicare to submit claims for reimbursement for providing physical therapy services. See United States v. DesFosses, 1:11-CR-00065-EJL, Dkt. 63, ¶ III(B). In 2011, Desfosses was indicted for multiple counts of fraud in connection with a Medicare audit and claims. ( Id., Dkt. 1, 20.) In September of 2011, he pled guilty to one felony charge of alteration of a record. ( Id., Dkt. 63, ¶ I(A), 65.) As part of the plea agreement, Desfosses agreed that the elements of that crime included knowingly altering or falsifying a record with intent to impede or influence an investigation. ( Id., Dkt. 63 ¶ III(A).)
On July 18, 2012, the Office of Inspector General, on behalf of the Department of Health and Human Services, notified Desfosses that, as a result of his conviction, the Department was considering "excluding you from participation in any capacity in the Medicare, Medicaid, and all Federal health care programs as defined in section 1128B(f) of the Social Security Act (Act). Section 1128(b)(2) of the Act (42 U.S.C. 1320a-7(b)) authorizes the imposition of this exclusion, which will be in addition to any sanction an individual Federal or State agency may impose under its own authority." (Dkt. 23-2.) The letter further informed Desfosses he had 30 days from the date of the letter to submit any information he wanted the OIG to consider before making a final determination regarding the potential exclusion.
Desfosses submitted additional information regarding the program exclusion, which was received by the OIG on August 20, 2012. (Dkt. 23-3.) After further review, the OIG notified Desfosses on October 23, 2012, that it had determined "this action does not meet the statutory requirements for an exclusion under the authority of section 1128(b)(2) of the Act. Therefore, we have closed our case file and anticipate no further action on this matter at this time." (Dkt. 23-4.)
Separately, on February 9, 2012, Noridian, as the Medicare Administrative Contractor acting on behalf of Centers for Medicare and Medicaid (CMS), notified Desfosses, that his enrollment as a Medicare Part B provider was revoked due to his felony conviction and that he was barred from participating in the Medicare program for three years due to his conviction. Walseth Decl., Ex. A. The February 9, 2012 letter informed Desfosses that, if he was dissatisfied with the revocation of his Medicare provider number, he could request an appeal of the revocation. Desfosses did not appeal CMS's February 9, 2012 revocation decision.
On July 8, 2013, after receiving the October 23, 2012 OIG letter, Desfosses submitted an application to Noridian to enroll (or re-enroll) as a Medicare provider. (Dkt. 20-3.) Desfosses's enrollment application disclosed his felony conviction in 2011 and attached a copy of the October 23, 2012 OIG letter.
Noridian sent the application and OIG letter to CMS and asked for advice pursuant to CMS protocol. CMS directed Noridian to deny the application for enrollment under 42 C.F.R. § 424.535(a)(3) because of the felony conviction. On August 21, 2013, Noridian issued a denial letter. (Dkt. 20-5.) The letter informed Desfosses he could request reconsideration from Noridian within 60 calendar days from the date of the letter.
On September 11, 2013, Desfosses timely submitted a request for reconsideration of the denial of his enrollment application. Desfosses contended he had been informed by the OIG that his conviction did not meet the statutory requirements for exclusion under section 1128(a) of the Social Security Act. Upon reconsideration, and pursuant to the Medicare provider enrollment regulations, Noridan denied Desfosses' enrollment application by letter dated November 6, 2013. Noridian mentioned the OIG letter as follows: "The decision not to put an exclusion on the provider by the Office of Inspector General does not affect the decision to deny enrollment for a felony by Medicare." The letter informed Desfosses that, if he was dissatisfied with the decision, he could appeal to an Administrative Law Judge, and set forth instructions for doing so.
Desfosses did not appeal CMS's decision to deny his 2013 application for enrollment. He filed his Complaint against Noridian in this Court on June 18, 2014. Noridian asserts the Complaint must be dismissed because Desfosses failed to exhaust his administrative remedies, resulting in lack of subject matter jurisdiction by the Court.
1. Motion to Dismiss ...