PINES RESIDENTIAL TREATMENT CENTER, INC. (formerly known as Heritage Mental Health… v. United States

United States Court of Appeals for the Federal Circuit
05-5102
PINES RESIDENTIAL TREATMENT CENTER, INC.
(formerly known as Heritage Mental Health Center, Inc.),
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
James E. Moore, Christian & Barton, LLP, of Richmond, Virginia, argued for
plaintiff-appellant.
Jeffery T. Infelise, Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, of Washington, DC, argued for defendant-appellee. On
the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director,
Brian M. Simkin, Assistant Director, and Kenneth S. Kessler, Attorney. Of counsel on
the brief was Clifford Pierce, Assistant Regional Counsel, Office of General Counsel,
United States Department of Health and Human Services, of Boston, Massachusetts.
Appealed from: United States Court of Federal Claims
Judge Emily C. Hewitt

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United States Court of Appeals for the Federal Circuit
05-5102
PINES RESIDENTIAL TREATMENT CENTER, INC.
(formerly known as Heritage Mental Health Center, Inc.),
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: April 12, 2006
__________________________
Before MICHEL, Chief Judge, MAYER, and BRYSON, Circuit Judges.
MAYER, Circuit Judge.
Pines Residential Treatment Center, Inc. appeals the judgment of the United
States Court of Federal Claims, which dismissed its complaint for lack of subject matter
jurisdiction. Pines Residential Treatment Ctr., Inc. v. United States, 64 Fed. Cl. 307
(Fed. Cl. 2005). We affirm.
Background
Pines Residential Treatment Center, Inc. (“Pines”) operated Heritage Hospital, an
inpatient hospital facility, from November 1994 through May 1996. To begin its
operations, Pines purchased the hospital assets from the previous owner, Heritage

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Hospital, Inc. (“Heritage”), which was an approved provider of services under the
Medicare Act. Although the purchase agreement anticipated that Pines would not
assume Heritage’s liabilities or Medicare contracts, Pines operated the hospital under
Heritage’s Medicare provider agreement and used Heritage’s provider numbers. Pines
sold the hospital assets in May 1996, and then filed a terminating cost report claiming
Medicare reimbursement for a loss of $630,243 from the sale. Associated Hospital
Services of Maine, Inc. (“the Intermediary”), acting as the Medicare intermediary,
disallowed the entire claim for lack of adequate documentation.
Pines appealed the disallowance to the Provider Reimbursement Review Board
(“PRRB”). While the appeal was pending, Pines and the Intermediary entered into a
written settlement agreement under which the Intermediary agreed to reverse its original
disallowance; allow a loss of $548,104; and issue a revised notice of program
reimbursement (“NPR”) reflecting this allowance. The agreement also provided that it
did not affect “any rights, claims, duties, or obligations that the parties may have with
respect to any other issues or cost reporting periods.” The Intermediary then issued two
revised NPRs for the relevant fiscal year reflecting the agreed-upon loss and stating that
a check would be issued if payment were due, but also providing that the check would
be applied “against any previous outstanding liability that has been liquidated for which
you do not have an approved repayment schedule.” The NPRs did not set forth any
other liabilities.
After an unanswered demand for payment of the amount set forth in the revised
NPRs, Pines filed a second administrative appeal to the PRRB, seeking payment of the
agreed-upon loss. In particular, the appeal letter stated that it “agrees with the amounts
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set forth in the NPRs and, therefore, there is no factual matter in dispute.” The PRRB
dismissed the complaint, reasoning that without a dispute over the reimbursement
amount or dissatisfaction with a final determination of the Intermediary, jurisdiction was
lacking. Pines did not appeal the PRRB’s dismissal but instead filed suit in the Court of
Federal Claims, which dismissed the case for lack of jurisdiction. Pines appeals that
dismissal and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
Discussion
The trial court’s ruling as to subject matter jurisdiction is a question of law that we
review de novo. See, e.g., Tex. Peanut Farmers v. United States, 409 F.3d 1370, 1372
(Fed. Cir. 2005) (citing Frazer v. United States, 288 F.3d 1347, 1351 (Fed. Cir. 2002)).
Regardless of a party’s characterization of its claim, “we look to the true nature of the
action in determining the existence or not of jurisdiction.” Katz v. Cisneros, 16 F.3d
1204, 1207 (Fed. Cir. 1994) (citations omitted); see also Tex. Peanut Farmers, 409 F.3d
at 1372 (citations omitted).
“Courts have consistently found preemption of Tucker Act jurisdiction where
Congress has enacted a precisely drawn, comprehensive and detailed scheme of
review in another forum . . . .” St. Vincent’s Med. Ctr. v. United States, 32 F.3d 548, 550
(Fed. Cir. 1994). In St. Vincent’s, we held that the Medicare Act’s “comprehensive
administrative and district court review procedures” give rise to such preemption. Id. at
549. In doing so, we explained that under the Medicare scheme, “a provider seeking
judicial review of a denial of reimbursement must first bring its claim before the PRRB.
The PRRB will either conduct a hearing concerning the reimbursement dispute or, if the
PRRB determines that it lacks authority to rule upon the challenge, it will certify the case
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for expedited judicial review, which makes available immediate judicial review in the
district courts in lieu of an administrative hearing.” Id. (citing 42 U.S.C. § 1395oo(f)(1);
42 C.F.R. § 1842). We concluded that “[b]ecause the Medicare Act contains its own
comprehensive administrative and judicial review scheme, there is no Tucker Act
jurisdiction over Medicare reimbursement claims.” Id. at 549-50.
We also held in St. Vincent’s that “[t]he Medicare Act specifically precludes
review of reimbursement claims by, inter alia, the Court of Federal Claims.” Id. at 550.
We observed that “[s]ection 405(h) of title 42 of the United States Code, read in
conjunction with 42 U.S.C. § 1395ii, unequivocally provides that ‘no action’ arising under
the Medicare Act shall be brought in any forum or before any tribunal that is not
specifically provided for in the Medicare Act.” Id. at 550. Therefore, because “[t]he
Medicare Act does not provide for jurisdiction in the Court of Federal Claims; . . . [it] is
precluded from reviewing reimbursement disputes arising under the Act.” Id. at 550.
Here, Pines’ claim is one for Medicare reimbursement, and its artful attempt to
style it as one for breach of contract must fail. The settlement agreement Pines seeks
to enforce did not entitle it to payment, but only to recognition of a loss of $548,104.
Ultimately, determining whether any payment is due to Pines requires resolving
questions under the Medicare Act. In particular, the government contends that it is
entitled to reduce, or offset, any payment to Pines by an amount owed to the
government for an overpayment to Pines’ predecessor. Whether the offset claimed by
the government is proper requires application of the provisions of the Medicare Act.
Thus, at a minimum, Pines’ claim is inextricably intertwined with a benefits claim over
which the trial court lacks jurisdiction. See Heckler v. Ringer, 466 U.S. 602, 614 (1984)
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(finding plaintiffs’ constitutional claim to be “inextricably intertwined” with their claim for
benefits and, hence, “arising under” the Medicare Act and subject to its review scheme);
Wilson v. United States, 405 F.3d 1002, 1012 (Fed. Cir. 2005). Pines’ argument that
the offset was improper because the government did not follow the applicable Medicare
regulations in applying it only reinforces our conclusion by proving that resolution of this
case requires an evaluation of the Medicare statutes and regulations. Finally, although
a party’s characterization of its claim is not conclusive, Pines’ complaint was quite
correct in stating that “[t]his case involves a claim against the United States for payment
of Medicare reimbursement.” For that very reason, the trial court was without
jurisdiction.
Conclusion
Accordingly, the judgment of the United States Court of Federal Claims is
affirmed.
AFFIRMED
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