Air Force Base Clinic ("Hanscom") and Winn Army Community Hospital ("Winn"), pursuant to a Memorandum of Understanding ("MOU") and an Internal Partnership Agreement (the "Agreement") between plaintiff and the clinics. Defs.' Exhs. F, G. Through the MOU and the Agreement, TSG agreed to provide medical services to the dependents of military personnel in accordance with the Defense Department's CHAMPUS program. Id. Beneficiaries and providers submit claims pursuant to CHAMPUS regulation that are processed by fiscal agents, fiscal intermediaries for the government, or managed care fixed price contractors according to the requirements imposed by the Office of CHAMPUS. 10 U.S.C. § 1079(n). Submission of claims in the proper format is not a guarantee of payment. The care must be considered medically necessary and appropriate for CHAMPUS coverage to be granted. 10 U.S.C. § 1079(a)(13). Payment is made with funds appropriated by Congress. 10 U.S.C. § 1100; 32 C.F.R. § 199.1(e).
The CHAMPUS regulations provide an extensive administrative appeal procedure. 32 C.F.R. § 199.10. Generally, when a claim form is submitted, the CHAMPUS fiscal intermediary will adjudicate it and issue a CHAMPUS explanation of benefits (CEOB). 32 C.F.R. § 199.10(a)(1)(D); see, e.g., Defs.' Exh. K. If the claim is totally or partially denied, the beneficiary or participating provider can request consideration by the fiscal intermediary of any denial. Succeeding levels of appeal can include a formal review by the Office of CHAMPUS, a hearing before an independent hearing officer who will render a recommended decision, and a Final Decision by either the Director, Office of CHAMPUS, or the Assistant Secretary of Defense (Health Affairs), acting upon the Recommended Decision of the hearing officer. 32 C.F.R. § 199.10 (b)-(e).
"The doctrine of exhaustion of administrative remedies requires that parties first use all prescribed administrative remedies for resolving conflict before they seek judicial remedies. . . . This doctrine serves judicial economy by preventing piecemeal judicial review of agency actions and facilitates judicial review by allowing the administrative tribunal to use its expertise to develop a complete factual record. . . . Further, the doctrine serves to prevent the courts from frustrating congressional decisions to have certain disputes resolved originally in administrative forums." Facchiano v. United States Dept. of Labor, 859 F.2d 1163, 1166-67 (3d Cir. 1988) (citations omitted), cert. denied, 490 U.S. 1097, 104 L. Ed. 2d 1002, 109 S. Ct. 2447 (1989). Exhaustion is generally required unless 1) the challenged agency action involves a "clear and unambiguous violation of statutory rights or constitutional rights," 2) irreparable injury will result from resorting to the administrative process, or 3) exhaustion is futile. Id. at 1167-68 (citations omitted); see also McCarthy v. Madigan, 503 U.S. 140, 146-48, 117 L. Ed. 2d 291, 112 S. Ct. 1081 (1992) (exhaustion not required where administrative process cannot grant effective relief, will result in unreasonable delay, or is biased).
There is no record of plaintiff having availed itself of the administrative process available under 32 C.F.R. § 199.10 for resolution of its grievances prior to the filing of these complaints. Defs.' Exh. H P 4. Moreover, plaintiff does not aver that any exception to the exhaustion doctrine applies. Rather, it refers the court to a letter apparently sent to Ms. Sabo at the Chief Office of Program Integrity as "evidence" of its exhaustion of administrative remedies. See Pl.'s Response P 2 & Exh. B.
Requiring exhaustion of administrative remedies is entirely appropriate under this statutory framework. Plaintiff is seeking payment for small claims against members of the armed forces. CHAMPUS provides for a detailed adjudication of these claims by a tribunal more familiar with the interworkings and requirements of CHAMPUS. Cf. National Ass'n of Psychiatric Treatment Centers for Children v. Mendez, 857 F. Supp. 85, 91 n.7 (D.D.C. 1994) (not requiring exhaustion under CHAMPUS only because the plaintiff challenged "the legality and constitutionality of the certification and coverage procedures, rather than the results of individual cases in which certification or coverage was denied"). Moreover, the CHAMPUS statute traces the Social Security Act, under which courts have held that exhaustion of administrative remedies is required. See, e.g., 10 U.S.C. § 1079(o)(2) (peer review program under CHAMPUS may adopt or adapt requirements or procedures of the peer review program required under the Social Security Act); 10 U.S.C. § 1106 (historical and statutory notes (c)) (requiring consistency with Medicare claim processing requirements); Abbey v. Sullivan, 978 F.2d 37, 47 (2d Cir. 1992) (requiring plaintiffs to exhaust administrative remedies where dispute was over the application of valid Medicare claim regulations).
CHAMPUS Regulations Bar Suit Against LeBlanc and O'Neil
Under the CHAMPUS program, plaintiff may not seek payment for CHAMPUS covered services directly from individual members of the military. 10 U.S.C. § 1096, et seq.; 32 C.F.R. § 199.7(c)(2)(i)(B); see also Defs.' Exhs. J, K (alerting TSG to nonliability of patients). The federal regulations applicable to the CHAMPUS program provide, in pertinent part:
. . . the provider has agreed . . . that the CHAMPUS-determined allowable charge or cost will constitute the full charge or cost for the medical care listed on the specific claim form; and further agrees to accept the amount paid by CHAMPUS or the CHAMPUS payment combined with the cost-shared amount
paid by, or on behalf of the beneficiary [i.e. the dependent of the covered member of the military], as full payment for the covered medical services or supplies.