                                   ___________

                                   No. 96-1561
                                   ___________

Clarinda Home Health, formerly         *
known as Nodaway Valley                *
Skilled Services, Inc.; Jay            *
Eickemeyer,                            *
                                       *
                     Appellants,       *
                                       *   Appeal from the United States
     v.                                *   District Court for the
                                       *   Southern District of Iowa.
Donna Shalala, Secretary of            *
Health and Human Services;             *
Medicare IASD Health Services          *
Corporation,                           *
                                       *
                      Appellees.       *

                                   ___________

                    Submitted:     June 13, 1996

                        Filed:     November 18, 1996
                                   ___________

Before BEAM, JOHN R. GIBSON, and HANSEN, Circuit Judges.

                                   ___________

JOHN R. GIBSON, Circuit Judge.


     Clarinda Home Health and Jay Eickemeyer appeal from an order of the
district   court   denying   their   motion   for   a   preliminary   injunction
restraining Donna Shalala, Secretary of Health and Human Services, and
Medicare IASD Health Services Corporation from suspending Medicare payments
to Clarinda Home Health without a hearing.       The district court denied the
claim for injunctive relief because of Clarinda's failure to show a
probability that it would succeed on the merits of either its procedural
due process liberty interest claim or its procedural due process property
interest
claim.      On appeal, Clarinda makes numerous claims of error, and the
Secretary responds that the courts are without jurisdiction to consider
Clarinda's claims.      We granted Clarinda's motion for injunctive relief
enjoining the Secretary from suspending past and future Medicare payments
during   the pendency of this appeal.            We conditioned this grant of
injunctive relief upon Clarinda's posting of a bond in an amount and under
the terms and conditions as set by the district court, with which Clarinda
successfully complied.    We dismiss this appeal and vacate the stay pending
appeal for want of subject matter jurisdiction and direct the district
court to dismiss the complaint for want of subject matter jurisdiction.


     There is little dispute as to the facts.               Clarinda Home Health,
formerly known as Nodaway Valley Skilled Services, Inc., provided health
services to elderly and handicapped persons in southern Iowa.            In May of
1993 Clarinda Home Health was certified by Medicare to be reimbursed for
health care supplies, products, and services provided to its patients who
qualified for Medicare benefits.         On December 21, 1995, Medicare IASD
Health Services Corporation, Clarinda's intermediary, notified Clarinda
that an investigation was being conducted for acts of fraud and/or willful
misrepresentation, and that it was suspending all payments to Clarinda for
services billed to the Medicare program.         The notification letter stated
that an investigation by the United States Department of Justice and the
Federal Bureau of Investigation had produced reliable evidence that Nodaway
Valley Skilled Services, Inc. (Clarinda) may have committed acts of fraud
and/or willful misrepresentation regarding claims submitted for Medicare
reimbursement.     As a result, Clarinda's intermediary withheld payments
totalling    nearly   $65,000   for   Medicare   services    already   rendered   by
Clarinda.


     Clarinda    sought   injunctive    relief   to   enjoin   the   Secretary    and
Medicare IASD Health Services Corporation from suspending Medicare payments
to Clarinda without a hearing.        The district court




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recognized that 42 C.F.R. § 405.371(b) (1995), which authorizes suspension
of payment where authorities have obtained reliable evidence of fraud or
willful misrepresentation, provided the authority for the decision to
suspend payment.


        The district court conducted the four-part inquiry outlined in
Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 114 (8th Cir.
1981)    (en banc), and denied relief.            It first determined that the
suspension would cause irreparable harm to the plaintiffs.             Next, it found
that    Clarinda's   interest   in   the    potential   closing   of    its   business
outweighed the government's interest in prohibiting fraudulent Medicare
payments.    The district court then looked to the merits of Clarinda's due
process claims and determined that there was no probability that Clarinda
would succeed on these claims.       Finally, because the court found that other
providers could care for Clarinda's patients if Clarinda was no longer able
to provide services, the court rejected Clarinda's argument that the grant
of an injunction would serve the public interest.


        Clarinda makes numerous claims of error with respect to the district
court's order, but in view of our conclusion that the Secretary properly
has raised an issue as to our jurisdiction over the subject matter of
Clarinda's suit, we need not consider those arguments.                 We review the
question of subject matter jurisdiction de novo.          See Drevlow v. Lutheran
Church, Missouri Synod, 991 F.2d 468, 470 (8th Cir. 1993).


        Before the district court's ruling, the Secretary filed a motion to
dismiss this action, asserting that the district court lacked jurisdiction
to hear Clarinda's suit.    The district court, however, did not rule on this
motion before proceeding to the merits.          The Secretary raises the lack of
jurisdiction again before this court.


        The Secretary points to 42 U.S.C. § 405(h) (1994) which




                                           -3-
specifically exempts 28 U.S.C. § 1346 (1994) as a jurisdictional basis for
actions arising under the Social Security Act, and explains that this
preclusive section has been incorporated into the Medicare Act by reference
through 42 U.S.C. § 1395ii (1994).     Next, the Secretary points to Heckler
v. Ringer, 466 U.S. 602 (1984), which dealt specifically with the Medicare
provisions of the Social Security Act, and argues that the temporary
withholding of Medicare payments is not a final decision subject to
judicial review under 42 U.S.C. § 405(g) (1994).         Clarinda responds that
the district court had subject matter jurisdiction pursuant to 28 U.S.C.
§§ 1331 and 1336 (1994) and that this Court now has subject matter
jurisdiction based on 28 U.S.C. § 1291 (1994).


                                       I.


     The Medicare program is divided into two parts.           42 U.S.C. §§ 1395-
1395ccc (1994).   Part A of the program deals with hospitalization benefits.
Part B of the program is a supplementary medical insurance program for the
aged and disabled.     To administer the Medicare program, Congress has
authorized the Secretary to enter into contracts with companies, known as
"carriers," to perform actions on behalf of the Secretary.           42 U.S.C. §
1395u.     Carriers are authorized to complete several tasks including:
determining the rates and proper payment amounts to providers of services;
auditing the records of providers; and receiving and accounting for
payments made to providers.


     The regulation at issue in this lawsuit, 42 C.F.R. § 405.371(b),
allows the carrier to suspend payment to the provider where the carrier has
reliable   evidence   of   willful   misrepresentation    or    fraud.   Section
405.371(b) supplied the authority to suspend payments to Clarinda.          This
section provides:

     (b)    Fraud or misrepresentation. The provisions of paragraph
            (a) of this section [allowing for notice




                                      -4-
             and an opportunity to respond] shall not apply where the
             intermediary or carrier has reliable evidence that the
             circumstances giving rise to the need for a suspension of
             payments involves fraud or willful misrepresentation.
             Instead, the intermediary or carrier may suspend payments
             without first notifying the provider or other supplier of
             an intention to suspend payments.


      Under this provision, authorities are not required to give a provider
prior notice of the suspension of payments and the provider has no right
to   the   payments   or   a    hearing     while   the     Secretary     investigates    the
underlying    charges.         Upon   the   conclusion      of    the   investigation,    the
intermediary    transfers       the    withheld     funds    to    the    provider   if   the
investigation     failed   to     establish    evidence      of    fraud.     Notably,    the
temporary withholding of payments pursuant to 42 C.F.R. § 405.371(b) is not
a final determination of exclusion from the Medicare program, but instead
is a provision designed to protect the government from suffering greater
losses.    If authorities establish evidence of fraud, the Secretary may then
make a final determination to exclude the provider from the Medicare
program.     After the Secretary's final determination, authorities must
supply the provider with notice of the proposed action and a hearing.                      42
C.F.R. §§ 1001, 1005 (1994).           Following this hearing, if the Department
concludes that exclusion is the appropriate sanction, the Secretary is
required to provide "reasonable notice to the public."                   42 U.S.C. § 1320a-
7(c)(1) (1994).    The excluded party is then entitled to notice and judicial
review pursuant to 42 U.S.C. § 405(g).


                                            II.
      We must determine whether subject matter jurisdiction exists over
Clarinda's claim.     We first look to the provisions of 42 U.S.C. § 405(h).
This section is part of the Social Security Act, but is incorporated into
the Medicare Act by 42 U.S.C. § 1395ii.              Section 405(h) provides:




                                             -5-
       The findings and decision of the Commissioner of Social
       Security after a hearing shall be binding upon all individuals
       who were parties to such hearing.      No findings of fact or
       decision of the Commissioner of Social Security shall be
       reviewed by any person, tribunal, or governmental agency except
       as herein provided. No action against the United States, the
       Commissioner of Social Security, or any officer or employee
       thereof shall be brought under sections 1331 or 1346 of title
       28 to recover on any claim arising under this subchapter.


       The scope of section 405(h) has been the subject of much litigation.
The Supreme Court has held that section 405(h) "extends to any action
seeking to recover on any Social Security claim."     Weinberger v. Salfi, 422
U.S. 749, 762 (1975).    The considerations behind the Social Security Act
that led Congress to limit judicial review are also applicable to the
Medicare program.   St. Louis Univ. v. Blue Cross Hosp. Serv., 537 F.2d 283,
289 (8th Cir.), cert. denied, 429 U.S. 977 (1976).         The Supreme Court
further considered the scope of this section in Heckler v. Ringer, 466 U.S.
602 (1984), and determined that claims arising under other statutes may be
barred by section 405(h) if they are "inextricably intertwined" with
benefit determinations under the Medicare Act.     Id. at 622-24.      In Ringer,
the    Medicare   claimants   challenged   the   Secretary's   final     decision
prohibiting reimbursement for bilateral carotid body claims on the grounds
that the Secretary's decision violated the Medicare Act, the Administration
Procedure Act, and the Due Process Clause.        The Court looked behind the
face of the claims and found that the plaintiffs' claim was, "at bottom,
a claim that they should be paid for their . . . surgery."          466 U.S. at
614.    The Court concluded, therefore, that the claim was "inextricably
intertwined" with the claim for benefits, and accordingly, was barred from
judicial review by section 405(h).     Id.


       Though section 405(h) seems to be a conclusive bar of jurisdiction
over Medicare claims, section 405(g), after requiring




                                     -6-
exhaustion of administrative avenues of relief, limits the preclusive
effect of section 405(h).   Section 405(g) states:


     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 commenced within sixty days
     after the mailing to him of notice of such decision or within
     such further time as the Commissioner of Social Security may
     allow. . . . The court shall have power to enter, upon the
     pleadings and transcript of the record, a judgment affirming,
     modifying, or reversing the decision of the Commissioner of
     Social Security, with or without remanding the cause for a
     rehearing.


     The scope of section 405(g) has also been the subject of much
litigation.   Ganem v. Heckler, 746 F.2d 844 (D.C. Cir. 1984), provides a
good description of the finality requirement.         Ganem brought an action to
recover Social Security benefits owed to her because of her deceased
husband's employment record in the United States for the period lasting
from November of 1979 to March of 1984.          Id. at 846.       During this time
Ganem, an Iranian citizen, was living in Iran.          The Social Security Act
allows nonresident beneficiaries to receive benefits if they live in a
country which has a social insurance program that does not discriminate
against Americans.   See 42 U.S.C. § 402(t)(2) (1994).


     Following the Iranian revolution, the Social Security Administration
suspended benefit payments to residents of Iran because it claimed it was
necessary to redetermine whether the Iranian social insurance scheme now
discriminated   against   Americans.         Ganem,   746   F.2d    at   846.   The
Administration argued that the lengthy suspension was unavoidable because
tense relations between the United States and Iran prohibited the Secretary
from making a final determination regarding Iran's social insurance scheme.




                                       -7-
     Before reaching the merits, the court considered whether it had
subject matter jurisdiction over the claim.   The court held that section
405(h) precluded it from having subject matter jurisdiction over Ganem's
claims.   In continuing its analysis of subject matter jurisdiction, the
court turned to 405(g) and concluded that section 405(g) did not provide
an avenue around the jurisdictional bar of 405(h) because Ganem had not yet
received a final decision on her benefit claims.   Id. at 849.


     The Secretary has not permanently cancelled benefits to Ganem;
     instead, those benefits have been merely suspended pending the
     necessary determination regarding Iranian law. . . . [I]f it is
     found that Iran does not have a social insurance scheme that
     discriminates against Americans, appellant will be entitled to
     past suspended benefit payments. Under these circumstances, it
     would strain the meaning of finality past the breaking point to
     hold that the Secretary has finally decided that Ganem is not
     entitled to the contested benefits. . . . As a result, there is
     as of now no final decision on Ganem's benefit claim that would
     trigger jurisdiction under 405(g). . . .


Id. at 849-50.



     Likewise, in this case, there has been no final determination of
whether the payments will eventually be made to Clarinda.     Instead, the
payments have been only temporarily suspended during an ongoing fraud
investigation.    Upon the conclusion of the investigation, if it is
determined that Clarinda did not commit any fraudulent acts, the withheld
funds will be immediately dispersed to Clarinda.        The withholding is
nothing more than a temporary measure necessary to maintain the status quo
while the necessary facts are gathered and evaluated.


     If the Secretary finds evidence of fraud, the Secretary may then make
a final determination to exclude Clarinda from the Medicare program.   After
the Secretary's final determination,




                                   -8-
Clarinda will be given notice and a hearing.   If the Secretary's decision
is upheld, Clarinda then will be entitled to notice, a post-exclusion
hearing pursuant to 42 U.S.C. § 405(b), and judicial review pursuant to 42
U.S.C. § 405(g).   Therefore, Clarinda will have its day in court after the
Secretary has rendered her final decision.


     Though the statutory framework provides no relief to Clarinda, this
Circuit previously has recognized a constitutional exception to the
statutory exhaustion requirement, thus our analysis does not stop here.
This exception applies where the litigant:       "(1) raises a colorable
constitutional claim collateral to his substantive claim of entitlement;
(2) shows that irreparable harm would result from exhaustion; and (3) shows
that the purposes of exhaustion would not be served by requiring further
administrative procedures."   Anderson v. Sullivan, 959 F.2d 690, 693 (8th
Cir. 1992) (citing Thorbus v. Bowen, 848 F.2d 901, 903 (8th Cir. 1988), and
Mathews v. Eldridge, 424 U.S. 319, 329-31 (1976)).


     In Anderson, a physician, Anderson, brought an action to compel the
government to maintain his Medicare reimbursement eligibility while his
appeals from exclusion from the Medicare program were pending.     Anderson
argued that he satisfied the three-part test for the exhaustion exception.
This court rejected his argument, however, holding that Anderson had not
shown a colorable constitutional claim because the procedures established
for excluding a physician from the Medicare program did not violate due
process.   959 F.2d at 693 (citing Thorbus, 848 F.2d at 903-04). Secondly,
Anderson had presented no evidence that exhausting his administrative
appeals would cause him irreparable injury.     Id.   Finally, Anderson had
offered no evidence that the strong policy interests behind exhaustion
would not be advanced in his case.    Id.


     The factual situation in this case differs somewhat from Anderson.
At issue here is not the exclusion of Clarinda from the




                                     -9-
Medicare program, but the temporary suspension of Medicare payments to
Clarinda     during      an    ongoing      investigation        for   acts     of       fraud   and
misrepresentation.            Nevertheless, the reasoning of Anderson applies to
Clarinda's claims.            If Anderson did not prove that the exclusion of a
physician from the Medicare program without a hearing was a colorable
constitutional         due    process     claim,     it   likewise     is     not    a    colorable
constitutional violation of due process to withhold payments temporarily
to a provider without a hearing.                    The private interest that will be
affected by a temporary withholding of Medicare payments is not as serious
in nature as an exclusion from the Medicare program.                   Because Clarinda has
less of an interest in having its claim resolved than a provider who had
been suspended from the program entirely would have, we hold that it is not
a violation of due process to temporarily withhold Medicare payments during
an ongoing investigation for acts of fraud.


     A Fifth Circuit decision, Peterson v. Weinberger, 508 F.2d 45 (5th
Cir.), cert. denied, 423 U.S. 830 (1975), supports our decision today.                            In
Peterson, authorities investigated Peterson, a physician, for acts of fraud
and misrepresentation.           Id. at 48-49.       During the investigation, Medicare
payments to Peterson were temporarily suspended.                       Id. at 49.          Peterson
brought suit alleging, among other things, that his property was taken
without due process.             The Fifth Circuit rejected Peterson's argument,
determining that a Medicare provider has no due process right to a hearing
during     the    course       of    an    investigation         for   acts     of       fraud   and
misrepresentation.           Id. at 50.


     Because          Clarinda      has   failed    to    establish     that    the       temporary
suspension       of    Medicare      payments      without   a    hearing      is    a    colorable
constitutional claim, it has failed the first part of the test for an
exception to the exhaustion requirement.                  It therefore is unnecessary to
consider the second and third parts of the test.




                                                -10-
     Accordingly, we have no subject matter jurisdiction over this appeal
and the district court had no jurisdiction to consider Clarinda's motion
for an injunction.    We dismiss this appeal, vacate the stay pending appeal,
and remand to the district court with direction that it dismiss the
complaint   and   make   what   orders   may    be   appropriate   with   respect   to
termination of the bond.


     A true copy.


            Attest:


                   CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT




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