United States District Court, W.D. Washington
EMMETT L. SMITH, YESFIR MIKHAYLIK a/k/a ESTHER SMITH, Plaintiffs,
UNITED STATES OF AMERICA; HEALTHPOINT; DEP'T OF HEALTH AND HUMAN SERVICES; OFFICE OF MEDICARE, Defendants,
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION TO DISMISS
BARBARA J. ROTHSTEIN UNITED STATES DISTRICT JUDGE.
Emmett Smith brings this action seeking: (1)
declaratory relief that he is not required to reimburse the
government the amounts paid for his medical treatment for his
kidney disease or, alternatively, that repayment should be
paid by a settlement reversionary trust, (2) review of the
final HHS administrative decision affirming Smith's
obligation to repay the Medicare program, and (3) a claim
under the Little Tucker Act for amounts the government took
from Smith's tax refund in partial satisfaction of his
Medicare debt. Before the Court is Defendants' partial
motion to dismiss the first and third Claims. Plaintiff
opposes the motion and the matter is now fully briefed.
See Dkt Nos. 27, 29, 30. Having considered the
parties' submissions, the record of the case, and
relevant legal authorities, the Court will GRANT in part and
DENY in part Defendants' motion.
and 2013, Emmett Smith sought medical treatment at
HealthPoint Community Clinic, a federally funded community
health center, in Renton, Washington. Dkt. No. 12-1 at 3-4.
In February 2013 he was sent to a larger hospital, where
testing revealed that he had acute renal failure, a condition
also known as End-Stage Renal Disease ("ESRD").
Id. at 4. He immediately began emergency dialysis
and learned that he only had 5-6% kidney function and would
require a kidney transplant. Id.
paid for much of Smith's medical treatment. Medicare is a
federal program administered by the Centers for Medicare and
Medicaid Services ("CMS"), which is a federal
agency within the U.S. Department of Health and Human
Services ("HHS"). Medicare pays for medical care
for the aged, disabled, and persons suffering from ESRD.
See Medicare Act, 42 U.S.C. § 1395, et
seq. Medicare was originally designed to paid for
medical services regardless of whether the beneficiary was
also covered by other insurance. Beginning in 1980, however,
Congress enacted the Medicare Secondary Payer
("MSP") statute, 42 U.S.C. § 1395y(b)(2), to
reduce program costs by making Medicare coverage secondary to
other insurance coverage. Health Ins. Ass'n of
America, Inc. v. Shalala, 23 F.3d 412, 414 (D.C. Cir.
1994). The MSP statute permits Medicare to make conditional
payments that are subject to reimbursement if paid by another
source. 42 U.S.C. § 1395y(b)(2)(B)(i). Under MSP, HHS
through CMS can pursue reimbursement, including, if
necessary, from a Medicare beneficiary. See 42
C.F.R. § 411.37; Buckner v. Heckler, 804 F.2d
258, 259 (4th Cir. 1986).
Smith filed an administrative claim under the Federal Tort
Claims Act ("FTCA"), 28 USC §§ 1346(b),
2401(b), 2671-80, alleging that the United States, through
Health Point and its doctors, was negligent in diagnosing and
treating his kidney condition. After the United States denied
the claim, Smith filed suit in 2015 against the United
States. See Smith v. United States, Case No.
2:15-cv-00116-RSL (W.D. Wash.). Following mediation, the FTCA
claim was settled and then dismissed by stipulated motion on
June 20, 2017. As part of the settlement, the parties
established an Irrevocable Reversionary Inter Vivos Grantor
Medical Care Trust to pay benefits to Smith related to the
underlying FTCA lawsuit. Dkt. No. 12-2.
the settlement and dismissal of Smith's FTCA claim, CMS,
through its Medicare contractor, issued a letter demanding
that Smith repay Medicare $33, 513.79, plus future interest.
Dkt. No. 12-3 at p. 2. This letter included a notice of
intent that CMS would refer the debt to the Department of
Treasury for cross-servicing. Id.
sought review of this demand for reimbursement through a
four-step administrative review process. At these stages
Smith argued that he should not have to reimburse Medicare
because he had already settled his FTCA claim with the United
States for a lower amount to account for and eliminate his
debt to Medicare. First, he sought a redetermination from the
Medicare contractor, who concluded that the demand for
reimbursement plus accumulated interest was properly made.
See Dkt. No. 12-5 at p. 6. Second, Smith sought
reconsideration by a Qualified Independent Contractor, who
also found that Smith owed the Medicare program the amount
sought. Id. Third, Smith requested a hearing before
an administrative law judge ("ALJ") who held a
de novo review hearing and issued a decision
affirming Smith's obligation to repay Medicare.
Id. at p. 15. Fourth, Smith appealed the ALJ's
finding to the Medicare Appeals Council, which on April 5,
2019 issued a final decision affirming Smith's obligation
to repay the Medicare program. See Dkt. No. 12-7 at
p. 2; Dkt. No. 12 at p. 5.
February 27, 2019 the Department of Treasury notified Smith
that it had withheld $9505 from Smith's joint tax refund
in partial satisfaction of his debt to Medicare. Dkt. No.
29-1 at 5.
filed the present action in this Court on January 14, 2019,
and amended his complaint on May 9, 2019. Compl., Dkt No. 1,
Am. Compl., Dkt. No. 12.
Lack of Subject Matter Jurisdiction
Rule of Civil Procedure 12(b)(1) allows litigants to seek the
dismissal of an action for lack of subject matter
jurisdiction. Federal district courts are courts of limited
jurisdiction that "may not grant relief absent a
constitutional or valid statutory grant of
jurisdiction." A-Z Int'l v.
Phillips, 323 F.3d 1141, 1145 (9th Cir. 2003) (citations
and quotation marks omitted). "When subject matter
jurisdiction is challenged under Federal Rule of Procedure
12(b)(1), the plaintiff has the burden of proving
jurisdiction in order to survive the motion." Tosco
Corp. v. Communities for a Better Env't, 236 F.3d
495, 499 (9th Cir. 2001) (per curiam), abrogated on other
grounds by Hertz Corp. v. Friend, 559 U.S. 77
(2010). Subject matter jurisdiction is a threshold issue that
goes to the court's power to hear the case. See,
e.g., Steel Co. v. Citizens for a Better Env't, 523
U.S. 83, 94-95 (1998).
considering a motion to dismiss for lack of subject matter
jurisdiction, the court construes the complaint in the light
most favorable to the non-moving party. See Livid
Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d
940, 946 (9th Cir. 2005); see also Wolfe v.
Strankman,392 F.3d 358, 362 (9th Cir. 2004). Generally,
the court must accept as true all well- pleaded allegations
of material fact and draw all reasonable inferences in favor
of the plaintiff. See Wyler Summit P'ship v. Turner
Broad. Sys., Inc.,135 F.3d 658, 661 (9th Cir. 1998).
However, a federal court is presumed to lack subject matter
jurisdiction until the plaintiff establishes otherwise.
Kokkonen v. Guardian Life Ins. Co. of America, 511
U.S. 375, 377 (1994). Therefore, a plaintiff bears the burden