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PainMD, LLC v. Azar

United States District Court, M.D. Tennessee, Nashville Division

August 26, 2019

PainMD, LLC, et al., Plaintiffs,
ALEX M. AZAR II, Secretary of United States Department of Health and Human Services, et al., Defendants.




         Pending before the Court is Defendant United States' Motion to Dismiss the Complaint. (Doc. No. 50). Plaintiffs filed a response (Doc. No. 55) and Defendant filed a reply (Doc. No. 60). For the reasons discussed below, the motion to dismiss is GRANTED.

         I. BACKGROUND

         Plaintiff PainMD is a pain management clinic; Plaintiff Michael Kestner is the majority owner. (Compl., Doc. No. 1, ¶¶ 13-14). On November 15, 2018, the United States filed a civil action against PainMD, Kestner, and others under the False Claims Act, 37 U.S.C. §§ 3729, et seq. in United States v. Kestner, (No. 3:18-cv-01289) (M.D. Tenn, filed Nov. 15, 2018). Shortly thereafter, on December 5, 2018, CMS issued a Notice of Suspension of Medicare Payments to PainMD, stating all Medicare payments were suspended “based on credible allegations of fraud” pursuant to 42 C.F.R. § 405.370, and informing PainMD of its right to submit a rebuttal. (Doc. No. 9-2.)

         Plaintiffs immediately filed this case seeking a temporary restraining order, mandamus relief compelling CMS to issue a notice of overpayment determination, and a preliminary injunction to end the suspension of Medicare payments. (Compl., Doc. No. 1, ¶ 46). Plaintiff invoked federal question jurisdiction under 28 U.S.C. § 1331, and mandamus jurisdiction under 28 U.S.C. § 1361 and the All Writs Act 28 U.S.C. § 1651. The Court denied Plaintiffs' request for a temporary restraining order. (Doc. No. 17). Defendants moved to dismiss the Complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) for lack of subject-matter jurisdiction and failure to state a claim upon which relief can be granted, respectively.


         Whether a court has subject-matter jurisdiction is a “threshold determination” in any action. Am. Telecom Co. v. Republic of Lebanon, 501 F.3d 534, 537 (6th Cir. 2007). This reflects the fundamental principle that “[j]urisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)); see also, Wayside Church v. Van Buren Cty., 847 F.3d 812, 816 (6th Cir. 2017) (explaining that courts “are ‘bound to consider [a] 12(b)(1) motion first, since [a] Rule 12(b)(6) challenge becomes moot if th[e] court lacks subject matter jurisdiction” (quoting Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990))).

         The party asserting subject-matter jurisdiction bears the burden of establishing that it exists. Ammons v. Ally Fin., Inc., 305 F.Supp.3d 818, 820 (M.D. Tenn. 2018). A motion to dismiss under Rule 12(b)(1) for lack of subject-matter jurisdiction “may either attack the claim of jurisdiction on its face or it can attack the factual basis of jurisdiction.” Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005). A facial attack challenges the sufficiency of the pleading and, like a motion under Rule 12(b)(6), requires the Court to take all factual allegations in the pleading as true. Wayside Church, 847 F.3d at 816-17 (quoting Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007)). A factual attack challenges the allegations supporting jurisdiction, raising “a factual controversy requiring the district court to ‘weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist.” Id. at 817 (quoting Gentek Bldg. Prods., Inc., 491 F.3d at 330). District courts reviewing factual attacks have “wide discretion to allow affidavits, documents and even a limited evidentiary hearing to resolve disputed jurisdictional facts.” Ohio Nat'l Life Ins. Co. v. United States, 922 F.3d 320, 325 (6th Cir. 1990).

         In deciding a motion to dismiss under Rule 12(b)(6), a court must take all the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual allegations, accepted as true, to state a claim for relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. In reviewing a motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff, accepts its allegations as true, and draws all reasonable inferences in favor of the plaintiff. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).

         In considering a Rule 12(b)(6) motion, the Court may consider the complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to Defendant's motion to dismiss provided they are referred to in the Complaint and are central to the claims. Bassett v. National Collegiate Athletic Assn., 528 F.3d 426, 430 (6th Cir. 2008)

         III. ANALYSIS

         A. Regulatory Background

         The claims presented arise under the Medicare Act, 42 U.S.C. §§ 1395 et seq, and implementing regulations, 42 C.F.R. § 405. Medicare is a federal program designed to provide health insurance coverage to seniors and certain disabled individuals. See, Baptist Hosp. E. v. Sec'y of Health and Human Servs., 802 F.2d 860, 868 (6th Cir. 1986). The Secretary of Health and Human Services (the “Secretary”) has delegated the ...

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