United States District Court, D. Connecticut
RUTH SHERMAN, executor of the Estate of Bradley Olsen-Ecker, Plaintiff,
SYLVIA MATHEWS BURWELL, Secretary of Health and Human Services, Defendant.
RULING DENYING MOTION TO DISMISS AND GRANTING MOTION
FOR CLASS CERTIFICATION
Jeffrey Alker Meyer United States District Judge.
a case about a Medicare recipient‘s probability of
obtaining payment for services. Plaintiff Ruth Sherman, the
executor of the estate of Medicare beneficiary Bradley
Olsen-Ecker, alleges on behalf of Olsen-Ecker‘s estate
as well as many other Medicare beneficiaries that the
Department of Health and Human Services (HHS) has routinely
and erroneously denied claims at the first levels of review.
She claims that HHS has denied claims to the extent that, at
times, less than 1% of claims reviewed received payment.
Plaintiff alleges that the defendant, Secretary Sylvia
Burwell of HHS, had reviewers apply a secret policy in
administering and denying claims. Although plaintiff cannot
say what secret method was used to deny the claims, she
contends that such a low claim-approval rating must violate
the right to due process under the Fifth Amendment of the
Constitution and rights under the Medicare statute. Defendant
has moved to dismiss the case and deny class certification. I
will deny the motion to dismiss in large part and grant class
Olsen-Ecker was a 69-year-old Medicare beneficiary suffering
from debilitating illness who needed home health care
services after being released from a long period of
hospitalization. Olsen-Ecker has since passed away, and his
wife, Ruth Sherman, has continued the litigation as the
executrix of his estate. When Olsen-Ecker arrived home in
April 2015, he began receiving home health care services from
a Medicare-certified home health agency including skilled
nursing visits and physical therapy by of his primary care
physician. After a few months of receiving services, the home
health agency informed Olsen-Ecker that Medicare would no
longer cover physical therapy or skilled nursing visits.
Olsen-Ecker appealed this decision through Medicare‘s
four levels of review and, at the time of the filing of his
complaint, had been denied at the first three levels of
review and was awaiting decision at the fourth level of
review. He continued to receive physical therapy
through the home health agency and paid out of pocket.
current Medicare appeals process involves four separate
levels of review. First, Medicare beneficiaries who wish to
appeal a decision receive a paper review redetermination by
the original contractor who made the determination. A
"paper review" is a review of the documents alone,
without an in-person hearing. If that review fails, the
beneficiary requests reconsideration by a separate entity
that contracts with HHS (known as the Qualified Independent
Contractor, or QIC). If a beneficiary does not obtain relief
from the QIC‘s review, he may request a hearing before
an ALJ. Finally, if the claim is denied by the ALJ, a
beneficiary may receive a paper review by the Medicare
Appeals Council. There is also an expedited process
available, of which Olsen-Ecker took advantage of in his
current review process went into effect in 2010. Previously,
a Medicare beneficiary who wanted to appeal an initial
adverse determination first obtained a paper review by the
original contractor. If that appeal was denied, then the
beneficiary could either receive a de novo hearing
in front of an ALJ or a "carrier hearing" before a
hearing officer, depending on the type of Medicare benefits
the beneficiary received. Either way, the second level of
review under the old review system involved a hearing and not
just another paper review. Then, if the beneficiary still
wanted to appeal, he either received a paper review by the
Medicare Appeals Council, or an ALJ hearing if he had not had
one before, and then a paper review by the Medicare Appeals
to plaintiff, this change in process has resulted in a
drastic reduction in the number of appeals that result in a
favorable coverage determination for beneficiaries at the
first two levels of review-the redetermination by paper
review by the original contractor, and the reconsideration by
paper review by the QIC. These two levels of reconsideration
have success rates for claimants as low as .61% each year, or
as high as 2.2%. The total number of redetermination requests
has also increased nearly ten-fold from 13, 385 in 2008 to
112, 844 in 2012. The change has also placed a great burden
on the ALJs, increasing their workload by 184%. In the
meantime, the reversal rate by ALJs-resulting in favorable
coverage decisions-is about 70% across all of Medicare, and
62% on home health care and hospice decisions, according to
also contends that this new process resulted in Olsen-Ecker
being denied coverage for a claim that should have been
easily covered. In Olsen-Ecker‘s particular case,
plaintiff alleges that Olsen-Ecker at first received
necessary home health care by skilled caregivers, for tasks
including tracheostomy care, suctioning, supplemental oxygen,
tube feedings, medications, and wound care, but then his
Medicare-approved provider denied his claims for continued
skilled care, stating that Olsen-Ecker‘s health care
needs could be met "by patient or unskilled caregivers,
" the cost of which was not covered by Medicare. Doc. #1
at 11. He also had been receiving physical therapy that was
discontinued because he had reached "maximum
potential." Ibid. Olsen-Ecker continued to
receive physical therapy, but ceased using skilled home
appealed both of these denials, citing the need for ongoing
skilled care due to his multiple medical issues to avoid
readmission to the hospital, and the care provider found that
"[a]lthough monitoring for early detection of problems
may appear rational, it would not justify continuation of
these skilled services." Id. at 12. Olsen-Ecker
appealed to the QIC, the second level of review, which
affirmed the denial of care. The QIC‘s decision noted
that Olsen-Ecker required treatment including assessing body
systems, assessing the effectiveness of medications,
instructing the caregiver on tube feeding and tracheostomy
care and suctioning, and providing early detection and
intervention for symptoms, but that these services
"d[id] not require the unique skills of a licensed
therapist or nurse for safe and effective delivery."
Id. at 13.
appealed this decision to the ALJ level, where he was again
denied. He appealed this decision to the Medicare Appeals
Council, the final level of review. At the time of the filing
of the complaint, Olsen-Ecker was still waiting for the
Council to rule. While he was waiting, Olsen-Ecker passed
away. During the pendency of Olsen-Ecker‘s appeals,
plaintiff‘s counsel asked the physical therapy care
provider to request a "demand bill" from Medicare.
Through the demand bill procedure, the care provider has now
been reimbursed by Medicare for the physical therapy sessions
not originally covered.
now brings a motion to dismiss plaintiff‘s lawsuit for
lack of jurisdiction, on the grounds that plaintiff has
failed to exhaust administrative remedies, that
plaintiff‘s claim is now mooted as the estate has been
paid, or alternatively, for failure of plaintiff to state a
claim upon which relief can be granted. See Doc.
#31. Defendant has also opposed plaintiff‘s motion for
class certification. See Docs. #13 (motion for class
certification), #21 (opposition to class certification).
threshold matter, I must determine whether this Court has
jurisdiction and if plaintiff has standing to pursue her
claim. The Medicare statute provides exclusive judicial
review of agency determinations under 42 U.S.C. §
Any individual, after any final decision of the Commissioner
of Social Security made after a hearing to which he was a
party, irrespective of the amount in controversy, may obtain
a review of such decision by a civil action . . . .
Id. Further, the statute expressly limits judicial
review under general federal question jurisdiction in §
No action against the United States, the Commissioner of
Social Security, or any officer or employee thereof shall be
brought under section 1331 or 1346 of Title 28 to recover on
any claim arising under this subchapter.
42 U.S.C. § 405(h) (emphasis added). A claim
"arises under" the Medicare statute not only when
the claim challenges a direct denial of benefits, but also
when a claim challenges "agency policy determinations .
. . or . . . the application, interpretation, or
constitutionality of interrelated regulations or statutory
provisions." Shalala v. Illinois Council on Long
Term Care, Inc., 529 U.S. 1, 14 (2000).
Exhaustion of Administrative Remedies
of the administrative review process is required for a court
to exercise jurisdiction. See Mathews v. Eldridge,
424 U.S. 319, 323, 327 (1976). A final decision consists of
two elements: a jurisdictional, non-waivable requirement that
the claim for benefits has been presented for decision to the
agency, and a waivable requirement of exhaustion of the
agency‘s administrative review process.
Mathews, 424 U.S. at 328-30; Weinberger v.
Salfi, 422 U.S. 749, 764-65 (1975).
exhaustion is the general rule, the agency may waive the
exhaustion requirement, or a court may deem the exhaustion
requirement waived when "a claimant's interest in
having a particular issue resolved promptly is so great that
deference to the agency‘s judgment is
inappropriate" as to whether to forego the entirety of
the administrative review process. Bowen v. City of New
York, 476 U.S. 467, 483 (1986). A court may excuse a
plaintiff‘s failure to exhaust the agency‘s
administrative review process if (1) the claim is collateral
to a demand for benefits, (2) exhaustion would be futile, or
(3) irreparable harm would occur if exhaustion were required.
See, e.g., Skubel v. Fuoroli, 113 F.3d 330,
335 (2d Cir. 1997); Pavano v. Shalala, 95 F.3d 147,
150 (2d Cir. 1996).
that plaintiff has satisfied this test and deem exhaustion
waived. Plaintiff‘s claim is collateral to a demand for
benefits because she challenges the underlying validity of
the agency‘s policies, not how those policies were
applied to Olsen-Ecker‘s situation in particular.
See City of New York v. Heckler, 742 F.2d 729,
736-37 (2d Cir. 1984), aff’d sub nom. Bowen v. City
of New York, 476 U.S. 467 (1986). Exhaustion here would
be futile; the "procedural right that claimants sought
to obtain . . . could not have been vindicated by individual
eligibility decisions." State of N.Y. v.
Sullivan, 906 F.2d 910, 918 (2d Cir. 1990); see also
Landers v. Leavitt, 232 F.R.D. 42, 46 (D. Conn. 2005).
Even though Olsen-Ecker‘s denied Medicare claims were
ultimately paid in this case, the procedural right claimed
here (to proper early-level review) has not been remedied by
later payment of the underlying benefit.
further presents a colorable claim of irreparable harm that
would result from being forced to complete the administrative
process in order to waive exhaustion. See Heckler v.
Ringer, 466 U.S. 602, 640-41 & n.32 (1984). Not only
are constitutional deprivations such as the due process
deprivation alleged here generally considered per se
irreparable harm, but courts should be "especially
sensitive to . . . harm where the Government seeks to require
claimants to exhaust administrative remedies merely to enable
them to receive the procedure they should have been afforded
in the first place." Sullivan, 906 F.2d at 918;
see also St. Francis Hosp. v. Sebelius, 874
F.Supp.2d 127, 134 (E.D.N.Y. 2012) ("Generally, in this
Circuit, a constitutional deprivation constitutes per se