The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge
ORDER FINDING THE COURT HAS JURISDICTION AND PLAINTIFFS' CLAIMS ARE RIPE FOR REVIEW
Plaintiffs Sharp Healthcare, Scripps Health, and Internist Laboratory filed a motion for a temporary restraining order. In denying the motion, the Court ordered Plaintiffs to show cause why this case should not be dismissed for lack of jurisdiction and standing. Having reviewed the parties' responses to the OSC, the Court finds that jurisdiction and standing exist.
On February 4, 2008, Plaintiffs filed a motion for a TRO to enjoin the Secretary's deadline to submit bids to provide clinical diagnostic laboratory tests covered by Medicare Part B. On February 14, 2008, the Court denied the TRO finding that the Secretary had raised serious issues regarding the Court's jurisdiction (thereby preventing Plaintiffs from establishing a likelihood of success on the merits) and finding that Plaintiffs would not suffer irreparable harm by having to comply with the application deadline.
In light of the serious jurisdictional issues raised by the Secretary, the Court also issued an OSC requiring the parties to provide briefing on the following issues:
(1) Do Plaintiffs have to exhaust administrative remedies before pursuing their claims in federal court?
(2) Is judicial review of Plaintiffs' claims barred under 42 U.S.C. § 1395w-3(10)?
(3) Are ripeness and standing requirements met?
The parties have submitted their briefing. For the reasons discussed below, the Court finds that it has jurisdiction, and that Plaintiffs have standing.
II. EXHAUSTION OF ADMINISTRATIVE REMEDIES
In Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000), the Supreme Court held that 42 U.S.C. § 405(h), which is incorporated into the Medicare Act by 42 U.S.C. § 1395ii, "demands the 'channeling' of virtually all legal attacks through the agency." Id. at 13. In so holding, however, the Supreme Court recognized an exception to the channeling requirement where application of § 405(h) would amount to "no review at all." Id. at 19.
There is no dispute that Plaintiffs did not pursue administrative remedies before filing this lawsuit. The issue, therefore, is whether requiring Plaintiffs to first seek administrative review would amount to "no review at all."
The Secretary argues that administrative review is available for Plaintiffs' claims. According to the Secretary, after winners are selected, Plaintiffs--whether they win or lose--will be in a position to submit claims for laboratory tests to Medicare and, if not satisfied with the reimbursement, may pursue administrative claims.
But the controlling statute provides that losing laboratories are not entitled to payment from Medicare. See 42 U.S.C. §1395w-3(5)(A) ("Payment under this part for competitively priced items and services . . . shall be based on bids submitted and accepted under this section. . . .") And the Department of Health and Human Services' October 17, 2007 Notice specifically states that "[w]e will not directly pay... for services furnished by a required bidder that . . . did not win." 72 F.R. 58856-01; see also Def.'s Opp. to TRO, p.5 ("Required bidders who either lose in the bidding process or fail to submit bids may not bill Medicare directly for any of the laboratory tests involved in the project.") ...