It Doesn't Pay to Cheat Medicare

When Medicare Errs The Vendor Must Fulfill Administrative Remedies
Post 5193

Pain Care Providers Services to Medicare are not Unlimited

In the People Of The State Of California ex rel. San Diego Comprehensive Pain Management Center, Inc. v.  Jaysen Eisengrein and Sandra Love, No. 24-cv-01481-BAS-BJC, United States District Court, S.D. California (September 17, 2025) Defendants Jaysen Eisengrein and Sandra Love's (“Defendants”) moved the USDC to Dismiss Plaintiff San Diego Comprehensive Pain Management Center, Inc.'s (“SDCPMC” or “Plaintiff”) Complaint.

Plaintiff is a medical provider located in San Diego County that treats Medicare beneficiaries with chronic pain, and this is the third action stemming from a suspension of its Medicare payments. Previously the USDC dismissed Plaintiff's suit for lack of subject matter jurisdiction because it did not show that it had exhausted administrative remedies or show that the exhaustion requirement should be judicially waived.

BACKGROUND
Administrative Remedies

Although providers cannot appeal a temporary payment suspension, a suspension “may culminate in an appealable determination . . . if [reimbursement] claims are subsequently denied.” Before filing suit in court, a Medicare beneficiary must proceed through five levels of administrative review, described in regulations issued by the controlling agency, CMS, as follows:

an initial determination by the Medicare administrative contractor;
a redetermination by the Medicare administrative contractor;
reconsideration by a qualified independent contractor;
a hearing before an administrative law judge . . .; and
review by the Medicare Appeals Council.

If the beneficiary is dissatisfied with the Appeals Council's decision, he or she may then seek judicial review.

The Prior Actions

In late 2021, Plaintiff and two related medical practices sued, among others, HHS and Qlarant Integrity Solutions, LLC (“Qlarant”) to remove the suspension and receive payments for their outstanding claims. The Court analyzed whether waiving the exhaustion requirement was appropriate and found waiver was not warranted. The Court consequently dismissed Plaintiffs' action in SDCPMC I and SDCPMC II for lack of subject matter jurisdiction.

The Present Action

Ultimately, Plaintiff's Complaint in this present action is nearly identical to its Complaint in SDCPMC II.

MOTION TO DISMISS

Defendants move to dismiss pursuant to  Rule 12(b)(1) because this ground is decisive.

Defendants Mount Facial and Factual Challenges to Subject Matter Jurisdiction

As a threshold matter, the Court concluded that Defendants' motion presents both a facial and a factual attack to subject matter jurisdiction. Defendants mount a factual attack. The Court recognizes that Defendants have raised a factual attack on subject matter jurisdiction.

Plaintiff's Complaint Recycles Allegations from SDCPMC II

First and foremost the subject matter jurisdiction analysis conducted in SDCPMC II does not change simply because Plaintiff now alleges that Medicare has terminated the suspension of payments in effect at the time.

Plaintiff may not seek judicial review without first obtaining a final agency decision subject to administrative appeal, and failure to exhaust one's administrative remedies deprives federal courts of subject matter jurisdiction over claims arising under the Medicare Act. Plaintiff cannot circumvent this Court's prior ruling by characterizing the termination of a payment suspension as a final agency decision.

The Court granted Defendants' Rule 12(b)(1) motion due to the plaintiff's failure to establish subject matter jurisdiction. The court emphasized that even if diversity jurisdiction could be established, the Medicare Act's provisions would still preclude subject matter jurisdiction without a final decision issued by the Secretary. Consequently, the case was dismissed without prejudice.

ZALMA OPINION

Health care providers who improperly bill Medicare find CMS refuses to pay their claims for payment for services to Medicare patients. The law allows - indeed - requires that the provider seek administrative remedies before they can sue. The Defendants - health care providers - attempted three time to circumvent the need to fulfill administrative remedies only to find their attempts failed and the USDC dismissing their attempt three time by attempting recycle previous litigation. It didn't work.

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c) 2025 Barry Zalma & ClaimSchool, Inc.

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