The U.S. District Court for the District of Massachusetts found that it was without subject matter jurisdiction and dismissed the government's lawsuit against the University of Massachusetts Medical Memorial Center (UMass) seeking recoupment of alleged overpayments made to UMass for outpatient laboratory services provided to Medicare patients. United States v. Univ. of Mass. Mem'l Med. Ctr., 296 F. Supp. 2d 20 (D. Mass. 2003). The complaint filed by the government relied on several common law theories to recoup the alleged overpayments, including unjust enrichment and payment under mistake of fact. The government alleged that UMass had submitted claims for blood chemistry tests performed on an outpatient basis between July 1, 1993 and December 31, 1996 that resulted in "systematic overpayment." UMass responded that the court lacked jurisdiction over the subject matter of the suit because the government had failed to exhaust its available administrative remedies as required under 42 U.S.C. § 405(h). That statute provides:

The findings and decision of the [Secretary] after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the [Secretary] 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.

The United States argued that the jurisdictional limits imposed by § 405(h) did not apply to actions brought by the United States. Finding the issue to be one of first impression in the First Circuit, the court disagreed.

Finding that the government's claims required interpretations of HHS reimbursement regulations and manuals, the court found it appropriate to defer to the Secretary's interpretations and applications of Medicare reimbursement guidelines. "In the complex scheme of Medicare reimbursement, the First Circuit has afforded the Secretary 'a heightened degree of deference,' acknowledging that Congress recognized legislators' and judges' lack of medical expertise and accordingly assigned the Secretary primary responsibility for 'assessing reasonable costs owed to Medicare providers." 296 F. Supp. 2d at 28. The court emphasized, however, that the government's claims sought to recover overpayments resulting from UMass's misinterpretation of Medicare regulations and were not claims based upon fraud or falsity.

The court pointed out that, because the government was not seeking to recover overpayments made as the result of fraud or falsity, its holding in this action might not apply to an action brought by the government under the FCA. Actions under the FCA seek to reach "all types of fraud" and concern matters "within the conventional experience of judges," said the court. Unlike the government's instant complaint, actions brought under the FCA "do not fall within the special competence of HHS."