                                                                                                                           Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-24-2008

Pace v. Leavitt
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-4510




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Recommended Citation
"Pace v. Leavitt" (2008). 2008 Decisions. Paper 492.
http://digitalcommons.law.villanova.edu/thirdcircuit_2008/492


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                                                               NOT PRECEDENTIAL


                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                 __________

                                     No. 07-4510
                                     __________

         DONNA PACE, on behalf of herself and all others similarly situated,
                                           Appellant

                                          vs.

               MICHAEL O. LEAVITT, Secretary of the United States
                   Department of Health and Human Services

                                     __________

                   On Appeal from the United States District Court
                             For the District of New Jersey
                                   (Civ. No. 06-2925)
                  District Court Judge: Honorable William J. Martini
                                     ___________

                     Submitted Under Third Circuit L.A.R. 34.1(a)
                                September 23, 2008
                                   ___________

               Before: BARRY, AMBRO and GARTH, Circuit Judges,

                             ( Filed: September 24, 2008)

                                     ___________

                                      OPINION
                                     ___________

GARTH, Circuit Judge:

    Donna Pace appeals from the District Court’s order affirming the substitution of
Michael O. Leavitt, Secretary of the U.S. Department of Health and Human Services (the

“Secretary”), for the named defendant, Riverbend Government Benefits Administrator,

Inc. For the following reasons, we will affirm.

                                             I.

       On July 7, 2005, Riverbend, a private insurance company acting as an intermediary

for the Medicare program, sent two attached letters to Pace, a Medicare beneficiary,

requesting reimbursement for an overpayment. One was a standard Medicare demand

letter listing the full amount owed as $4,735.64. The other was a cover letter

acknowledging past receipt of $1,064.58 and stating that the remaining balance was

$3,671.06.

       On May 15, 2006, after resolving the overpayment owed, Pace filed a complaint in

state court against Riverbend alleging that these letters violated the Fair Debt Collection

Practices Act (“FDCPA”), 15 U.S.C. §§ 1692–1692p.1 The case was removed to federal

court, and the Government moved to substitute Secretary Leavitt for Riverbend as the real

party of interest pursuant to Federal Rule of Civil Procedure 17, or alternatively to

intervene pursuant to Federal Rule of Civil Procedure 24(a). The Magistrate Judge

granted the motion for substitution on July 14, 2006, and the District Court affirmed on

January 31, 2007.



       1
         In essence, Pace claimed that the letters failed to state that Riverbend was a debt
collector or that it was attempting to collect a debt. She later conceded that she had no
issue with the standard Medicare demand letter, leaving only the cover letter at issue.

                                             -2-
       Subsequently, on November 7, 2007, the District Court dismissed the complaint

for lack of subject matter jurisdiction because a FDCPA claim cannot be asserted against

an “officer or employee of the United States.” 15 U.S.C. § 1692a(6)(C). Pace now

appeals the substitution of the Secretary.

                                             II.

       The District Court had original jurisdiction pursuant to 28 U.S.C. § 1441. We

have jurisdiction under 28 U.S.C. § 1291, which provides appellate jurisdiction from all

final decisions of U.S. district courts. We review for abuse of discretion a district court’s

decision whether to join or substitute a party as a “real party of interest” under Federal

Rule of Civil Procedure 17(a). Esposito v. United States, 368 F.3d 1271, 1273 (10th Cir.

2004); Wieburg v. GTE Southwest Inc., 272 F.3d 302, 308 (5th Cir. 2001). We exercise

de novo review over a dismissal for lack of subject matter jurisdiction. Metropolitan Life

Ins. Co. v. Price, 501 F.3d 271, 275 (3d Cir. 2007).

                                             III.

       Pace contends that Riverbend should be subject to liability under the FDCPA

because it was like any other private contractor hired by the Government. Extending

governmental immunity to Riverbend would, Pace argues, permit it to escape its duties

and obligations under the FDCPA as a private debt collector. We do not agree.

       Private insurance companies, such as Riverbend, contracted by the Secretary under

Part A of the Medicare Program have been known as “fiscal intermediaries.” 42 U.S.C.



                                             -3-
§ 1395h.2 These fiscal intermediaries “‘act[] on behalf of the [Medicare] Administrator in

carrying out certain administrative responsibilities that the law imposes’ and [are] entitled

to indemnification from the United States, which, therefore, is ‘the real party of interest.’”

Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 71-72 (2d Cir. 1998) (quoting 42

C.F.R. § 421.5(b)) (surveying cases); accord S. Rep. No. 89-404 (1965), as reprinted in

1965 U.S.C.C.A.N. 1943, 1995 (“In the performance of their contractual undertakings,

the carriers and fiscal intermediaries would act on behalf of the Secretary . . . . The

Secretary, however, would be the real party in interest in the administration of the

program.”). In sending the letters at issue in this case, Riverbend clearly was acting on

behalf of the Secretary in administering the Medicare program.

        Because we find that the Secretary was properly substituted as the real party of

interest, we need not decide whether Riverbend was otherwise entitled to immunity.

Since FDCPA claims cannot be asserted against the Secretary, the District Court properly

dismissed the complaint for lack of subject matter jurisdiction.

                                             IV.

 Accordingly, we affirm the District Court’s orders of January 31, 2007 and November 27,

2007.




        2
         As the District Court noted, Congress amended the Medicare Act to authorize
the Secretary to enter into contracts with “Medicare Administrative Contractors,” rather
than fiscal intermediaries, but this amendment did not become effective until after the
relevant events in this case. 42 U.S.C. § 1395kk-1 (effective October 1, 2005).
