     Case: 11-40631   Document: 00511959283   Page: 1   Date Filed: 08/16/2012




          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                                   FILED
                                                                August 16, 2012

                                 No. 11-40631                   Lyle W. Cayce
                                                                     Clerk

PHYSICIAN HOSPITALS OF AMERICA; TEXAS SPINE & JOINT
HOSPITAL, LIMITED,

                                           Plaintiffs-Appellants
v.

KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH AND
HUMAN SERVICES,

                                           Defendant-Appellee



                 Appeal from the United States District Court
                      for the Eastern District of Texas


Before SMITH, GARZA, and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
        A trade group and a physician-owned hospital sued the Secretary of the
Department of Health and Human Services. They sought injunctive relief to
remedy multiple alleged constitutional infirmities with Section 6001 of the
Patient Protection and Affordable Care Act of 2010.        Section 6001 limits
Medicare reimbursement for services furnished to a patient referred by a
physician owner. Although it denied the Secretary’s motion to dismiss for lack
of jurisdiction, the district court granted summary judgment to the Secretary.
The court concluded that Congress had a rational basis for enacting Section
6001, the new law does not constitute a real or regulatory taking, and the law’s
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                                  No. 11-40631

requirements are not unconstitutionally vague.        The plaintiffs appeal and
challenge the district court’s ruling as an erroneous evaluation of the taking
claims and an improper application of rational-basis review. Concluding that
the district court lacked subject-matter jurisdiction, we VACATE and DISMISS.
              FACTUAL AND PROCEDURAL BACKGROUND
      Starting in 1989 with what is known as the “Stark Law,” Congress ended
reimbursement for services provided to Medicare patients at a facility in which
a referring physician had an ownership interest. See 42 U.S.C. § 1395nn.
Congress expanded the ban in 1993 to cover hospitals where the referring
physician had an ownership interest unless that interest was in the whole
hospital. Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66,
§13562, 107 Stat. 312 (1993). During this period, there was a rise in the number
of speciality hospitals. U.S. Gov’t Accounting Office, GAO–03–683R, Specialty
Hospitals: Information on National Market Share, Physician Ownership, and
Patients Served 3 (2003). In 2003, Congress enacted an 18-month moratorium
on reimbursements to new and certain expanded specialty hospitals while
directing the Medicare Payment Advisory Commission (MedPAC) and the
Department of Health and Human Services (HHS) to study a number of issues
relating to the cost and type of care at speciality hospitals.           Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No.
108-173, § 507, 117 Stat. 2066 (2003). The moratorium expired after the initial
18-month period.
      In 2010, Congress enacted the Patient Protection and Affordable Care Act.
It contains Section 6001, the provision at issue in this case. Pub. L. No. 111-148,
124 Stat. 119 (2010). Soon after, Congress amended Section 6001 in the Health
Care and Education Reconciliation Act. Pub. L. No. 111-152, 124 Stat. 1029
(2010). In its current form, Section 6001 provides that any physician-owned
hospital licensed as of December 31, 2010, falls under the whole-hospital

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exception. 42 U.S.C. § 1395nn(i)(1)(A). This subsection provides, however, that
such grandfathered facilities may not expand unless first obtaining an exception
from the Secretary. Id. § 1395nn(i)(1)(B), (i)(3).
      One plaintiff is Physician Hospitals of America. It is an organization that
supports physician-owned hospitals. The other plaintiff, Texas Spine & Joint
Hospital (TSJH), is a physician-owned hospital that opened in Tyler, Texas in
2002. In 2008, TSJH decided to expand its facilities and spent about $3 million
towards a planned $30 million expansion. Because TSJH would have been
unable to complete its expansion before the statutory cutoff, it stopped
construction after the passage of Section 6001. TSJH alleges that in order to file
an administrative claim it would have to complete its new building and treat a
patient in that building, thereby risking millions of dollars in investment and
creating a potential of having a large, empty building. The Secretary does not
appear to challenge this allegation. Physician Hospitals and TSJH brought this
case in the Eastern District of Texas seeking declaratory and injunctive relief on
the basis that Section 6001 violates the Due Process Clause generally, is void for
vagueness, and violates the Equal Protection Clause of the Constitution. The
Secretary moved to dismiss for lack of subject-matter jurisdiction, which the
court denied. Instead, the court granted the Secretary’s motion for summary
judgment. The plaintiffs appealed.
                                 DISCUSSION
      We first determine whether the district court had subject-matter
jurisdiction. Our review of jurisdictional issues is de novo. Volvo Trucks N. Am.,
Inc. v. Crescent Ford Truck Sales, Inc., 666 F.3d 932, 935 (5th Cir. 2012).
Generally, the proponents of federal-court jurisdiction carry the burden of
establishing it. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
The plaintiffs have not offered any basis on which to conclude the burden lies
elsewhere in this case and we see none. Because the district court resolved this

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issue at the Rule 12(b)(1) stage of the proceedings, the plaintiffs’ burden is to
allege a plausible set of facts establishing jurisdiction. See Davis v. United
States, 597 F.3d 646, 649-50 (5th Cir. 2009). Thus, the plaintiffs carry the
burden of establishing that statutory subject-matter jurisdiction exists and they
have failed to do so.
      The Medicare Act severely restricts the authority of federal courts by
requiring “virtually all legal attacks” under the Act be brought through the
agency. Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 13 (2000).
The government argues we lack jurisdiction because the plaintiffs failed to follow
the statutorily mandated administrative procedures. In the alternative, the
government argues the current suit should instead be one seeking compensation
in the Court of Federal Claims.
      As we will explain, the plaintiffs had to proceed with the available
administrative procedures. Their failure to do so leaves us without subject-
matter jurisdiction over the claims they have presented in this suit. Accordingly,
we do not reach the other issues raised for review.
      By statute, claims under Medicare must first be presented to the HHS
Secretary. The first relevant statute mandates a procedure for another context:
      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
      section 1331 or 1346 of Title 28 to recover on any claim arising
      under this subchapter.

42 U.S.C. § 405(h). Title 42, Section 1395ii makes Section 405(h) applicable to
Medicare, substituting the HHS Secretary for the references to the Social
Security Commissioner.        Once the Secretary reaches a final decision, an


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individual who was a party to the administrative proceeding “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
[Secretary] may allow.” 42 U.S.C. § 405(g).
      In summary, judicial review of such a claim is available only after a party
first presents the claim to the Secretary and receives a final decision.
      The Supreme Court has had four occasions to interpret Section 405(h).
After its most recent such opinion, a few courts of appeals have also considered
the application of this Section. These opinions acknowledge that bringing claims
administratively comes “at a price, namely, occasional individual, delay-related
hardship.” Ill. Council, 529 U.S. at 13. The hardship is identified as one that
Congress was aware it was imposing on health-care providers:
      In the context of a massive, complex health and safety program such
      as Medicare, embodied in hundreds of pages of statutes and
      thousands of pages of often interrelated regulations, any of which
      may become the subject of a legal challenge in any of several
      different courts, paying this price may seem justified. In any event,
      such was the judgment of Congress as understood [by the Court].

Id. Section 405(h) requires that short of a “complete preclusion of judicial
review,” a party must channel his or her claims to the Secretary prior to
litigating in federal court. Id. at 22-23.
      In the first of the four Supreme Court decisions, plaintiffs challenged the
constitutionality of portions of the Social Security Act in federal court.
Weinberger v. Salfi, 422 U.S. 749, 752-53 (1975). The district court exercised
jurisdiction over all of the claims in the case, including those that had not been
first pursued administratively. Id. at 755. The district court concluded that
Section 405(h) “amounted to no more than a codification of the doctrine of
exhaustion of administrative remedies.” Id. at 757. The Supreme Court found
this reasoning to be “entirely too narrow.” Id. The Court elaborated: “That the


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third sentence of § 405(h) is more than a codified requirement of administrative
exhaustion is plain from its own language, which is sweeping and direct and
which states that no action shall be brought under § 1331, not merely that only
those actions shall be brought in which administrative remedies have been
exhausted.” Id.1 The Court also concluded that a claim “arising under this
subchapter” encompassed a constitutional challenge because “not only is it Social
Security benefits which appellees seek to recover, but it is the Social Security Act
which provides both the standing and the substantive basis for the presentation
of their constitutional contentions.” Id. at 760-61.
       The Court then addressed an argument also presented by the plaintiffs
here, which is that preclusion of judicial review requires Congress to manifest
its intent by clear and convincing evidence. Id. at 761-63. Section 405(h) does
not preclude judicial review, but instead channels it through the Secretary:
       [T]he Social Security Act itself provides jurisdiction for
       constitutional challenges to its provisions. Thus the plain words of
       the third sentence of § 405(h) do not preclude constitutional
       challenges. They simply require that they be brought under
       jurisdictional grants contained in the Act, and thus in conformity
       with the same standards which are applicable to nonconstitutional
       claims arising under the Act.          The result is not only of
       unquestionable constitutionality, but it is also manifestly
       reasonable, since it assures the Secretary the opportunity prior to
       constitutional litigation to ascertain, for example, that the
       particular claims involved are neither invalid for other reasons nor
       allowable under other provisions of the Social Security Act.

Id. at 762.
       In its next opinion analyzing Section 405(h), the Court considered whether
Medicare claimants could bring a direct challenge in federal court to the
Secretary’s policy of not paying medical benefits for a particular surgery.


       1
         This statute is the general congressional grant of jurisdiction which permits districts
courts to hear cases arising under federal law. 28 U.S.C. § 1331.

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Heckler v. Ringer, 466 U.S. 602, 604-05 (1984).            The Court construed these
claims as arising under the Medicare Act because of the broad language in
Section 405(h). Id. at 615. “It is of no importance that respondents here, unlike
the claimants in Weinberger v. Salfi, sought only declaratory and injunctive
relief and not an actual award of benefits as well.” Id.2 The Court concluded
that “Congress must have felt that cases of individual hardship resulting from
delays in the administrative process had to be balanced against the potential for
overly casual or premature judicial intervention in an administrative system
that processes literally millions of claims every year.” Id. at 627.
       Two years after Ringer, the Court reviewed a challenge to the way HHS
paid doctors providing treatment to Medicare Part B patients. Bowen v. Mich.
Acad. of Family Physicians, 476 U.S. 667, 668 (1986). There was no judicial or
administrative review available to the plaintiffs in Michigan Academy because
all payment disputes were processed by insurance companies. Id. at 675-76.
Thus, “no forum” would have existed for the plaintiffs. Id. at 678. Having no
forum, not even a costly or impractical one, would have raised serious
constitutional questions that the Court avoided by determining the plaintiffs
could avail themselves of federal question jurisdiction. Id. at 681 & n.12.
       The Court’s fourth and most recent review of Section 405(h) came in a suit
brought by an association of nursing homes against the Secretary challenging
certain nursing-home regulations. Ill. Council, 529 U.S. at 6-7. The case
presented an opportunity for the Court to resolve a circuit split over whether
Michigan Academy had “significantly modified [the] Court’s earlier case law.”


       2
        One of the plaintiffs in Ringer had yet to have the relevant surgery. The Court
considered whether this meant he lacked a claim that could arise under the Act. Ringer, 466
U.S. at 621. The Court found “that argument superficially appealing but ultimately
unavailing”; the “claim for future benefits must be construed as a ‘claim arising under’ the
Medicare Act because any other construction would allow claimants substantially to undercut
Congress’ carefully crafted scheme for administering the Medicare Act.” Id.

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Id. at 9. The Court held it had not. See id. at 19. It clarified that Michigan
Academy should be interpreted to mean that Section 405(h) does not apply
“where application of § 405(h) would not simply channel review through the
agency, but would mean no review at all.” Id. Ill. Council further noted that
“Congress may well have concluded that a universal obligation to present a legal
claim first to HHS, though postponing review in some cases, would produce
speedier, as well as better, review overall.” Id. at 20.3
       The courts of appeals that have applied Illinois Council have done so
relatively consistently, unlike the split that resulted after Michigan Academy.
Channeling will be required unless plaintiffs can show there is “no way of having
their claims reviewed,” there is “complete preclusion,” or there exists a “serious
‘practical roadblock’” to having their claims reviewed in any capacity,
administratively or judicially.4
       We now apply these principles to resolve the following issues: whether the
plaintiffs’ claims here arise under the Medicare Act; whether Congress stopped
or only delayed judicial review; can a constitutional challenge at least be
brought; and do the plaintiffs’ claims fit under the Illinois Council exception?
       First, do these claims arise under the Medicare Act? The plaintiffs seek,
among other things, a declaration that patients who one day would be treated
in their expanded facility will be eligible for Medicare reimbursements. In
Illinois Council, the Supreme Court answered a similar question. It recognized
it had to decide whether the suit was one “to recover on any claim arising under”


       3
        The Court explicitly declined to reconsider this conclusion, noting that it had “crossed
the relevant bridge long ago when it held that Congress, in both the Social Security Act and
the Medicare Act, insisted upon an initial presentation of the matter to the agency.” Id.
       4
          Fanning v. United States, 346 F.3d 386, 400 (3d Cir. 2003) (“no way”); Nat’l Athletic
Trainers’ Ass’n, Inc. v. U.S. Dep’t of Health & Human Servs., 455 F.3d 500, 504 (5th Cir. 2006)
(“complete preclusion”); Council for Urological Interests v. Sebelius, 668 F.3d 704, 712 (D.C.
Cir. 2011) (“roadblock”).

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the Medicare Act when “a group . . . needing advance knowledge for planning
purposes, together bring[s] a § 1331 action challenging . . . a rule or regulation
on general legal grounds.” Ill. Council, 529 U.S. at 10. The Court determined
that such claims do arise under the Medicare Act. Id. at 25. We similarly
conclude that the plaintiffs’ claims in this case arise under the Medicare Act
because the Act “provides both the standing and the substantive basis for the
presentation of their constitutional contentions.” Salfi, 422 U.S. at 760-61.
      Second, the plaintiffs assert that because the Secretary argues that the
“statutory scheme” eliminates judicial review of a constitutional question,
“Congress’ intent to do so [must be] manifested by ‘clear and convincing’
evidence.” Califano v. Sanders, 430 U.S. 99, 109 (1977). As already discussed,
the Supreme Court has explicitly rejected this very argument. Salfi, 422 U.S.
at 762. Section 405(h) does not remove jurisdiction from the federal courts but
only delays it.
      Third, the plaintiffs argue that their claims “do not seek recovery under
the Medicare Act; instead, they invoke the U.S. Constitution.” The Supreme
Court has also explicitly rejected the argument that constitutional challenges
are free from Section 405(h)’s requirements. Id. at 760-61. The plaintiffs seek
to distinguish Salfi as a case about the recovery of Social Security benefits, while
their case pertains to declaratory and injunctive relief. Again, the Court has
rejected this argument. Ringer, 466 U.S. at 615-16.
      Finally, plaintiffs argue that their claims fall under the Illinois Council
exception because “the channeling requirement would result in the practical
denial of judicial review.” See Ill. Council, 529 U.S. at 22. They assert that
these are the necessary steps for TSJH to channel its protest: knock down two
commercial buildings, perfect financing, borrow tens of millions of dollars, finish
the architectural and construction plans, pay a contractor, take two years to
build a new hospital, treat a patient in the expansion, bill Medicare, appeal the

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denial of the payment administratively, receive a final denial of claim, and file
a suit in federal court under Section 405(g).5
       The Secretary responds in two ways. She argues the Illinois Council
exception only applies when there is a “complete preclusion of judicial review,”
and the plaintiffs have not argued that a legal bar exists to their claim. See id.
at 23. The Secretary also argues that even if the plaintiffs are unable to bring
their claim, the courts are only concerned with whether no one may bring the
claim. See Council for Urological Interests, 668 F.3d at 711-12. The Secretary
insists there are other potential parties who could bring such a claim. We will
examine both of these responses.
       The Illinois Council exception has been limited to cases in which there is
no other path for judicial review. For example, the D.C. Circuit held that
“section 405(h) is inapplicable where the Medicare Act offers no avenue for
review of a particular category of statutory or constitutional claims.” Id. at 708.
The plaintiffs argue that bringing the claim requires the enormously wasteful
expense of constructing a large building first, a structure they will not be able
to use if the claim ultimately is denied. According to the plaintiffs, they also risk
losing Medicare reimbursements on their existing facility. These burdens
allegedly leave them no legitimate and practical way to bring the claim.
       There has not been an appellate court decision addressing the effect of
such a large initial expense on the obligation to channel a claim. There certainly
have been attendant costs to the operation of Section 405(h) that have not
caused courts to waive the requirement. One example is having to forgo a
desired surgery or pay for it out of pocket prior to bringing an administrative
claim. Ringer, 466 U.S. at 620-21. The plaintiffs are asking us to expand the
Illinois Council exception to Section 405(h) to include cases in which channeling

       5
         We do not take a position on what the factual prerequisites would be for bringing a
claim to the Secretary.

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would require extraordinary expenses that are unrecoverable if the plaintiff is
unsuccessful after administrative and judicial review.
      Even if an exception for severe economic impracticability would be a
justified expansion of the existing caselaw, it is not enough for a plaintiff to
allege that it cannot channel.     The D.C. Circuit explained the necessary
allegations this way:
      [A] party may not circumvent the channeling requirement by
      showing merely that “postponement of judicial review would mean
      added inconvenience or cost in an isolated, particular case.” Rather,
      in determining whether the Illinois Council exception to section
      405(h) applies, “the question is whether, as applied generally to
      those covered by a particular statutory provision, hardship likely
      found in many cases turns what appears to be simply a channeling
      requirement into complete preclusion of judicial review.”
Council for Urological Interests, 668 F.3d at 708 (quoting Ill. Council, 529 U.S.
at 22-23). The quoted Supreme Court language requires that a party go beyond
showing its own hardship and indicate that the difficulty it encounters is
sufficiently widespread as to threaten the loss of any judicial review.
      The relevant hardship in Illinois Council was the possibility that the
claimant nursing home would have to subject itself to the threat of termination
from the Medicare program in order to contest the relevant regulation, a
possibility the government denied. Ill. Council, 529 U.S. at 21-22.
      The D.C. Circuit explained the hardship in its case by asking a question:
“How does section 405(h) apply when the Medicare Act provides an avenue for
administrative and judicial review of a particular claim . . . but not by the
category of affected parties who wish to bring it?” Council for Urological
Interests, 668 F.3d at 708. There, a group of joint venturers providing surgical
equipment sought to challenge the Secretary’s regulation under the Stark Law
that prohibited arrangements where physician-owned joint ventures purchased
surgical equipment, which hospitals used, and then reimbursed the doctors for


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their services while using the equipment. Id. at 706. Because the plaintiffs were
not providers they could not seek administrative review. Id. at 706-07. The
court then examined whether third parties could bring the claim. Such parties,
the court decided, were at best neutral and at worst stood to gain from the new
regulation. Id. at 713. Thus, the third parties lacked the incentive to bring a
challenge because they were categorically misaligned with the plaintiffs. Id.
Consequently, there was a preclusion of administrative review that required an
Illinois Council exception be made to Section 405(h) channeling. Id.
       We have also analyzed Section 405(h) issues. In one such suit, the
plaintiffs challenging a new Medicare rule did not have standing to bring an
administrative claim, but there potentially were other parties with an interest
and a right to seek administrative review. Nat’l Athletic Trainers’ Ass’n, Inc.,
455 F.3d at 504. The plaintiffs in that case argued that no other party would
bring a challenge because of the potential for fines, criminal penalties, and civil
liability under the Act if improper claims were made. Id. at 505. The Secretary
countered, explaining that third parties would be protected by the scienter
requirements of the statutes that allegedly threatened such penalties. Id. at
505-06. We concluded there were third parties properly aligned to bring a
challenge, that “sufficient incentive to challenge the rule” by those parties
existed, that the Secretary’s position on scienter was reasonable,6 and that
therefore “the Illinois Council exception does not apply.” Id. at 507.
       The plaintiffs in the present case argue that the facts here fit the Illinois
Council exception. We have already listed the financial costs that plaintiffs
claim they must incur to position themselves to bring a claim to the Secretary.
What we are addressing now is a different point, namely, is the hardship these


       6
        We noted that “a physician who disclosed to the government that the services were
not reimbursable could not be said to have knowingly submitted a false claim.” Nat’l Athletic
Trainers’ Ass’n, 455 F.3d at 507.

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plaintiffs face so widespread that it “turns what appears to be simply a
channeling requirement into complete preclusion of judicial review[?]” Ill.
Council, 529 U.S. at 22-23.
      The plaintiffs allege that Physician Hospitals has “over 166 member
hospitals.” Their member hospitals are “typically enrolled as providers under
the Medicare and Medicaid programs with up to 70% of their case mix stemming
from Medicare and Medicaid patients.” They also allege that as of December 31,
2010, they anticipated there would be 294 physician-owned Medicare certified
hospitals in the United States. Further, they allege that “39 hospitals that were
previously under development . . . are currently not continuing the development
process due to the Physician Hospital Law.” These figures reveal that the
hospitals potentially affected by Section 6001 are numerous.          They are of
different sizes and have different patient mixes. The plaintiffs do not address
whether a lesser expansion than TSJH has planned would permit some other
physician-owned hospital from challenging the law, whether there are physician-
owned hospitals with a low enough Medicare and Medicaid case mix such that
they would challenge the law (either among Physician Hospitals’s membership
or among the almost half of the physician-owned hospitals that it does not allege
are members), or whether other expansions could have alternative uses such
that a failed challenge to the law would not render an expansion worthless.
      The Secretary argues that there are physician-owned hospitals that are
not “so heavily dependent on Medicare payments that further construction would
make no sense.”7 Such hospitals arguably could complete similar expansions,
admit Medicare patients, and bring to the Secretary the arguments the plaintiffs
wish to make here. The plaintiffs respond, in part, with the same argument we
rejected in National Athletic Trainers’, which is that every provider who files a

      7
        The evidence the Secretary cites is a report that identifies physician-owned
nonorthopedic surgical hospitals as some with lower numbers of Medicare patients.

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Medicare reimbursement claim that is found to be in violation of the Stark Law
faces substantial penalties. We discussed the ways in which the Secretary
explained such penalties could be avoided. Nat’l Athletic Trainers’, 455 F. 3d at
506. Both the potential criminal and civil liability had requirements that a
claim be knowingly false. Id. at 507. We concluded that the ability to submit a
claim along with a disclosure that the charged services were not reimbursable
“greatly reduce[d] the disincentive to challenge the rule.” Id.
       The plaintiffs have failed to allege that their case is analogous either to
Michigan Academy or Council for Urological Interests, or to provide another
basis on which we could conclude that the challenges in this case present a
“complete preclusion of judicial review.” Ill. Council, 529 U.S. at 22-23.8 In
Michigan Academy, there was a legal impossibility that any claimant would
obtain judicial or administrative review. Michigan Academy, 476 U.S. at 675-76.
In Council for Urological Interests, the plaintiff presented sufficient allegations
for the D.C. Circuit to conclude that while it had “no need to determine precisely
at what point a third party’s lack of incentive or misalignment of interests
triggers the Illinois Council exception,” it was “clear that given the particular
circumstances of [that] case, the Illinois Council exception applie[d].” Council
for Urological Interests, 668 F.3d at 713. Far from being clear, the plaintiffs’
allegations in this case appear almost silent as to third parties. Thus, they have
failed to meet their burden of establishing subject-matter jurisdiction.
       The plaintiffs have not met their burden of alleging more than that TSJH
cannot channel its claim. This is insufficient to constitute a “complete preclusion
of judicial review.” Ill. Council, 529 U.S. at 22-23.
       The plaintiffs’ arguments rely heavily on the seeming lack of purpose
behind administrative channeling in this case. It certainly appears that the

      8
        Additionally, the Section 405 bar may not be waived by the Secretary. Ill. Council,
529 U.S. at 15.

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plaintiffs will suffer a “delay-related hardship” by following this path. See id.
at 13; see Fanning, 346 F.3d at 401 n.17.        The unsatisfactory nature of
channeling was identified by the dissent in Illinois Council, which forcefully
argued that “[d]elayed review – that is, a requirement that a regulated entity
disobey the regulation, suffer an enforcement proceeding by the agency, and only
then seek judicial review – may mean no review at all.” Ill. Council, 529 U.S. at
47 (Thomas, J., dissenting). The dissent continued that “when the costs of
‘presenting’ a claim via the delayed review route exceed the costs of simply
complying with the regulation, the regulated entity will buckle under and
comply, even when the regulation is plainly invalid.” Id.
      The majority agreed that the channeling requirement “comes at a price”
but rejected the dissent’s argument. The Court noted that “[i]n the context of
a massive, complex health and safety program such as Medicare, embodied in
hundreds of pages of statutes and thousands of pages of often interrelated
regulations, any of which may become the subject of a legal challenge in any of
several different courts, paying this price may seem justified.” Id. at 13.
      The ever-evolving landscape of health care in the United States may one
day prompt a new structure for judicial review in a case such as this. “If the
balance is to be struck anew, the decision must come from Congress” and not
from the courts. Ringer, 466 U.S. at 627. Section 405(h) makes clear that “No
action . . . shall be brought under section 1331.” The district court lacked
subject-matter jurisdiction over this case.
      VACATED and DISMISSED.




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