Evelyn Buckner, Appellant, v. Margaret Heckler, Secretary of Health and Human Services, Appellee, 804 F.2d 258 (4th Cir. 1986)

Evelyn Buckner appeals the judgment of the United States District Court for the Western District of Virginia, dismissing her declaratory judgment action on the ground that it lacked jurisdiction due to her failure to exhaust administrative remedies. We agree with the district court that she must present her claim to the Secretary of Health and Human Services (Secretary) before seeking relief in a judicial forum. Accordingly, we affirm.I

Buckner was involved in an automobile accident on December 6, 1982. She was admitted to Memorial Hospital of Danville, Virginia, and incurred $20,845.45 in medical expenses. The medicare program, 42 U.S.C. §§ 1395-1395zz (1983 & Supp.1986), which is administered by the Secretary, paid for $20,636.66 of those expenses. As of February 21, 1983, Buckner owed Memorial Hospital the balance of $208.79.

On February 26, 1983, Buckner's private automobile insurance carrier, Nationwide, paid Memorial Hospital $5317.76, leaving an overpayment to the hospital of $5108.97. The hospital has refused to return the overpayment to Buckner because the medicare intermediary, Blue Cross of Virginia,¹  has claimed it. On November 22, 1983, Buckner filed a declaratory judgment action against the Secretary to determine who is entitled to receive the overpayment of $5108.97. The district court concluded that the overpayment constituted disputed medicare benefits. Since Buckner had not exhausted her administrative remedies by presenting her claim for those benefits to the Secretary, the lower court dismissed the action for lack of jurisdiction.

II

We believe that Heckler v. Ringer, 466 U.S. 602, 104 S. Ct. 2013, 80 L. Ed. 2d 622 (1984), is dispositive of this case. Ringer holds that exhaustion of administrative remedies is required for all claims arising under the Medicare Act, 42 U.S.C. §§ 1395-1395zz (1983 & Supp.1986).²  A claim arises under the Act if it furnishes " 'both the standing and the substantive basis for the presentation' " of the claim. Ringer at 615, 104 S. Ct. 2022 (quoting Weinberger v. Salfi, 422 U.S. 749, 761, 95 S. Ct. 2457, 2464, 45 L. Ed. 2d 522 (1975)) .

Here, there can be little doubt that Buckner's claim to the overpayment of $5108.97 does arise under the Act. First, we note that she sued the Secretary, not Nationwide, to determine who is entitled to that fund. Buckner's choice of defendant indicates her recognition that the overpaid amount should be treated as part of the medicare benefits received by the hospital, not as part of the insurance proceeds also received. Second, the Act expressly conditions the payment of medicare benefits, such as that made here, on reimbursement if payment is later made under an automobile insurance policy. 42 U.S.C. § 1395y(b) (1) (1983).³  When Buckner's automobile insurer paid the policy proceeds, the excess payment to the hospital of $5108.97 became an overpayment of medicare benefits. At that point, the Secretary has the right to make a claim against the hospital for the overpayment. See 42 C.F.R. Sec. 405.374 (1985). This the Secretary has done through her fiscal intermediary. Lastly, Buckner's claim of entitlement to the $5108.97 relies on a substantive provision of the Secretary's regulations promulgated pursuant to the Act. She asserts that she is entitled to be excepted by virtue of 42 C.F.R. Sec. 405.322 (d) (2)⁴  from the general rule that would allow recovery from the hospital after the insurance payment. For the foregoing reasons, we must conclude that her claim arises under the Medicare Act.

Since Buckner's claim arises under the Act, she must exhaust her administrative remedies prior to seeking relief in the district court.

III

Buckner argues that she has no administrative remedy and, alternatively, that, if she does, its pursuit would be futile.

" [T]he exhaustion requirement of [42 U.S.C.] Sec. 405(g) consists of a nonwaivable requirement that a 'claim for benefits shall have been presented to the Secretary,' ... and a waivable requirement that the administrative remedies prescribed by the Secretary be pursued fully by the claimant." Ringer at 617, 104 S. Ct. at 2023 (quoting Mathews v. Eldridge, 424 U.S. 319, 328, 96 S. Ct. 893, 899, 47 L. Ed. 2d 18 (1976)) . As discussed above, Buckner's claim that she is entitled to the overpayment is, in essence, one for medicare benefits. There is no evidence in the record that she has presented this claim to the Secretary.⁵  Thus, at the very least, Buckner can and, indeed, must request payment for benefits from the Secretary. We need not reach the question of whether the waivable requirement of full pursuit of administrative remedies has been met.⁶ 

In Ringer, the United States Supreme Court recognized an exception to the exhaustion requirement when further exhaustion would be futile. We believe, however, that it is applicable only as to the waivable requirement of exhaustion and does not come into play until one has first presented a claim to the Secretary. See Ringer at 617-19, 104 S. Ct. at 2023-25. We find both of Buckner's arguments to be unavailing.

IV

To permit Buckner to maintain a declaratory judgment action in this instance "would allow [her] substantially to undercut Congress' carefully crafted scheme for administering the Medicare Act." Ringer at 621, 104 S. Ct. at 2025. If Buckner cannot intervene in the Secretary's action against the hospital for overpayment, it is unfortunate, but that fact does not give her the right to maintain this suit without waiting for the overpayment action to run its course and presenting her claim at a later time to the Secretary.⁷  Exhaustion prevents premature interference with agency processes. Ringer at 619 n. 12, 104 S. Ct. at 2024 n. 12.

Having determined that Buckner's claim arises under the Medicare Act and that she has not exhausted her administrative remedies, we conclude that the district court properly dismissed her declaratory judgment action against the Secretary.

AFFIRMED.