Health Law Daily Wrap Up, CIVIL MONEY PENALTIES—N.D.N.Y.: Court finds it lacks subject-matter jurisdiction to hear CMP dispute, (Jan 23, 2026)

By Patricia K. Ruiz, J.D.

The Medicare Act’s channeling provisions require providers to pursue administrative hearings before judicial review.

The U.S. District Court for the Northern District of New York dismissed a lawsuit brought by a nursing home challenging a civil monetary penalty imposed by CMS for noncompliance with Medicare participation requirements. The court found that it lacked subject matter jurisdiction to hear the dispute because the Medicare statute requires such claims to be channeled through the administrative review system. The court further held that the plaintiff’s Seventh Amendment challenge failed because the imposition of Medicare civil penalties falls within the public rights doctrine and does not trigger a right to a jury trial. The court denied leave to amend (NCRNC, LLC, v. Kennedy, No. 1:25-cv-00607 (MAD/PJE) (N.D.N.Y. Jan. 20, 2026)).

Background. NCRNC, LLC (Northeast Center), a New York-licensed nursing home, self reported an incident where an employee failed to follow a patient’s care plan, resulting in a fall and injury. The New York State Department of Health issued a statement of deficiencies, and CMS subsequently notified the facility of noncompliance with Medicare conditions of participation. CMS imposed a civil monetary penalty and concurrently suspended the facility’s Nurse Aide Training and Competency Evaluation Program (NATCEP). Northeast Center disputed the penalty, arguing that under the Supreme Court’s decision in Jarkesy, the Seventh Amendment entitled it to a jury trial before any monetary penalty could be imposed by the government. It simultaneously asserted that the NATCEP suspension was unconstitutional because it flowed from an allegedly invalid penalty. The facility sought a TRO and preliminary injunction to bar CMS from recouping the penalty, but after a temporary restraining order was granted, the court later denied the preliminary injunction and dissolved the TRO. CMS then moved to dismiss the complaint, while the facility cross moved for leave to amend.

Motion to dismiss. The court held that the Medicare Act’s channeling provisions—requiring providers to first pursue administrative hearings and then seek judicial review only in the courts of appeals—applied squarely. Because Northeast Center had already initiated the administrative appeals process by requesting an administrative law judge (ALJ) hearing, its claims must proceed through that established pathway. The court emphasized that the plaintiff did not challenge the legitimacy of the administrative forum itself, distinguishing the case from Supreme Court precedent addressing structural constitutional challenges. Instead, Northeast Center challenged only the absence of a jury trial before CMS imposed the penalty, making the Medicare review structure the proper route. The court reiterated that meaningful judicial review remained available upon completion of the administrative process, defeating any argument that the district court should intervene.

Seventh Amendment. The court rejected the plaintiff’s Seventh Amendment argument, finding no disputed factual issues requiring jury determination, as the plaintiff’s own complaint acknowledged the employee’s failure to follow the care plan, the resulting patient injury, the state issued deficiencies, and CMS’s subsequent enforcement actions. Even if factual disputes had existed, the court held that the “public rights” doctrine applied: Medicare is a public benefits program, and CMS’s enforcement of participation conditions—including the imposition of monetary penalties—is a quintessential exercise of public rights adjudication entrusted to the executive branch. Because the government was not stepping into the shoes of a private litigant but was instead enforcing compliance with federally funded healthcare requirements, the Seventh Amendment did not apply.

Leave to amend. The plaintiff's attempt to amend its complaint to emphasize its status as a dual Medicare and Medicaid provider likewise failed. The facility argued that its Medicaid status created an independent basis for federal question jurisdiction, relying on Avon Nursing & Rehab v. Becerra, where the Second Circuit allowed providers to bring a pre enforcement challenge under the Medicaid Act. The court rejected this argument, noting that unlike Avon, this case involved a post enforcement penalty already subject to Medicare’s statutory review process. Moreover, the same underlying incident formed the basis for any claim under either statute, rendering the Medicare and Medicaid issues “inextricably intertwined” and subject to the Medicare Act’s channeling rules. The court further held that amending the complaint would not cure the fundamental deficiency in the Seventh Amendment claim—namely, the absence of any factual dispute requiring adjudication by a jury.

The case is No. 1:25-cv-00607 (MAD/PJE).

Judge: D’Agostino, M.

Attorneys: Cornelius D. Murray (O'Connell, Aronowitz Law Firm) for NCRNC, LLC d/b/a Northeast Center for Rehabilitation and Brain Injury. Christopher Robert Moran, U.S. Department of Justice, for Robert F. Kennedy, Jr.

Companies: NCRNC, LLC d/b/a Northeast Center for Rehabilitation and Brain Injury

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