Kaiser v. Blue Cross

Kaiser v. Blue Cross

Opinion

 [*1109]  CUDAHY, Circuit Judge:

The Kaisers owned and operated an Idaho home health agency called Community Home Health, which was a Medicare provider operating under fiscal intermediary Blue Cross of California. In 1998, after Blue Cross ceased making payments to Community Home Health on account of Blue Cross's previous overpayments, Community Home Health entered Chapter 7 bankruptcy. The Kaisers sued Blue Cross and the federal government on constitutional, statutory and common law claims, asserting that Blue Cross [**2]  and the federal government acted improperly in their relationship with Community Home Health. The district court dismissed the case, finding no jurisdiction absent exhaustion of administrative review. 42 U.S.C. § 405(g), (h). The Kaisers appeal, arguing that the nature of their claims makes administrative procedures inapposite. Because their claims arise under Medicare, we affirm.

] Because this case was dismissed for lack of subject matter jurisdiction, we construe all facts in the light most favorable to the plaintiffs. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003).

Medicare, first enacted in 1965, provides health insurance to eligible aged and disabled persons. Among the services covered [*1110]  under Medicare are home health services, such as part-time nursing care, physical therapy and home health aid services. 42 U.S.C. § 1395d. An agency within the Department of Health and Human Services, the Health Care Financing Agency (HCFA, recently renamed the Centers for Medicare and Medicaid Services, or CMS), oversees the program. Home health care providers, like other Medicare providers, coordinate [**3]  with the HCFA through "fiscal intermediaries," private insurance companies that contract with the HCFA to serve as agents for functions such as claims processing. 42 U.S.C. § 1395h. Blue Cross of California is such a fiscal intermediary.

Gary and Verlene Kaiser (along with the other individual plaintiffs in this lawsuit) ³ were shareholders of Community Home Health (CHH), an Idaho corporation providing home health services to some 500 clients in central and southwest Idaho. Since almost all of its patients were Medicare or Medicaid beneficiaries, CHH was highly dependent on the payments it received from the government through Blue Cross of California, the fiscal intermediary under which it operated; the government was its primary source of revenue. These payments, called periodic interim payments, were made in installments based on estimates of CHH's volume of business.

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