Temple University Hospital v. Secretary United States Dept ( 2021 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 21-1293
____________
TEMPLE UNIVERSITY HOSPITAL, INC.,
Appellant
v.
SECRETARY UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES; ADMINISTRATOR
CENTERS FOR MEDICARE & MEDICAID SERVICES;
CHAIRMAN MEDICARE GEOGRAPHIC
CLASSIFICATION REVIEW BOARD
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-20-cv-04533)
District Judge: Honorable Mitchell S. Goldberg
____________
Argued: April 29, 2021
Before: PHIPPS, NYGAARD, and ROTH, Circuit Judges.
(Filed: June 21, 2021)
____________
Joseph D. Glazer [Argued]
THE LAW OFFICE OF JOSEPH D. GLAZER
Suite 200
116 Village Boulevard
Princeton, NJ 08540
Counsel for Temple University Hospital, Inc.
Thomas Pulham [Argued]
UNITED STATES DEPARTMENT OF JUSTICE
APPELLATE SECTION
Room 7323
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Michael S. Raab
UNITED STATES DEPARTMENT OF JUSTICE
CIVIL DIVISION
Room 7237
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Counsel for Secretary United States
Department of Health and Human Services;
Administrator Centers for Medicare &
Medicaid Services; Chairman Medicare
Geographic Classification Review Board
2
__________
OPINION OF THE COURT
__________
PHIPPS, Circuit Judge.
This case involves a dispute between a hospital and a
federal agency over Medicare reimbursements. The core
controversy concerns the hospital’s geographical-area
assignment for purposes of the wage index, which is used to
calculate those reimbursements. The hospital, located in the
City of Philadelphia, received a reclassification into the New
York City area, which would sizably increase the hospital’s
Medicare reimbursements due to that area’s higher wage
index. Although a statute makes such reclassifications
effective for three fiscal years, the agency updated the
geographical boundaries for the New York City area before the
close of that period. After doing so, the agency reassigned the
hospital to an area in New Jersey with an appreciably lower
wage index.
As a result of that reassignment, the hospital sued three
agency officials in the Eastern District of Pennsylvania. But
the Medicare Act channels reimbursement disputes through
administrative adjudication as a near-absolute prerequisite to
judicial review. And here, the hospital did not pursue its claim
through administrative adjudication before suing in federal
court. By not following the statutory channeling requirement,
the hospital has no valid basis for subject-matter
jurisdiction. Accordingly, we will vacate the District Court’s
judgment in favor of the agency officials and remand with
3
instructions to dismiss the complaint for lack of subject-matter
jurisdiction.
I. BACKGROUND
A. Statutory and Regulatory Framework
Originally enacted in 1965 and later amended, the Medicare
Act establishes a national health insurance program for persons
65 and older who are eligible for Social Security benefits, as
well as for persons with certain disabilities. See 42 U.S.C.
§ 426(a), (b). See generally Social Security Amendments of
1965 (Medicare Act), tit. XVIII, Pub. L. No. 89-97, 79 Stat.
286. Through the Inpatient Prospective Payment System, the
Medicare Part A Program reimburses hospitals for the
operating costs of providing inpatient healthcare services to
Medicare beneficiaries. See 42 U.S.C. § 1395ww(d)(2); see
also id. § 1395ww(a)(4) (defining “operating costs of inpatient
hospital services”). The amount of the operating-cost
reimbursement is calculated on a per-patient basis using
predetermined, fixed rates for each treatment category. See id.
§ 1395ww(d)(2), (4); 42 C.F.R. § 412.2(a) (detailing the basis
of payment per discharge). Each year, the Secretary of Health
and Human Services sets those fixed reimbursement rates. See
42 U.S.C. § 1395ww(b)(3)(B), (d)(3)(A)–(C); 42 C.F.R.
§ 412.64(d).
Although they are set in advance, Medicare reimbursement
rates are not uniform throughout the nation. Instead, the
Secretary annually adjusts the national reimbursement rate, see
42 U.S.C. § 1395ww(d)(3), based on a wage index for different
geographic areas, see id. § 1395ww(d)(3)(E)(i) (requiring the
Secretary to adjust the proportion of a hospital’s costs
“attributable to wages and wage-related costs” to reflect “the
4
relative hospital wage level in the geographic area of the
hospital compared to the national average hospital wage
level”); 42 C.F.R. § 412.64(h)(1) (“The wage index is updated
annually.”).
To group hospitals into geographic areas for calculating
and applying the wage index, the Secretary has formally
adopted regional designations from the Office of Management
and Budget (OMB). See, e.g., Fiscal Year 2021 Final Rule,1
85 Fed. Reg. 58,432, 58,742 (Sept. 18, 2020); see also Bellevue
Hosp. Ctr. v. Leavitt, 443 F.3d 163, 169 (2d Cir. 2006). OMB
calls those geographical regions Core Based Statistical Areas
or CBSAs. See Standards for Defining Metropolitan and
Micropolitan Statistical Areas, 65 Fed. Reg. 82,228, 82,235–
36 (Dec. 27, 2000). Each CBSA contains a county or counties
with at least one population core of 10,000 persons, which may
be joined with adjacent counties that are socially and
economically integrated. See id. at 82,236; 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas,
75 Fed. Reg. 37,246, 37,251 (June 28, 2010). The Secretary
calculates the annual wage index for each CBSA using “a
1
The full title of the Fiscal Year 2021 Final Rule is “Medicare
Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital
Prospective Payment System and Final Policy Changes and
Fiscal Year 2021 Rates; Quality Reporting and Medicare and
Medicaid Promoting Interoperability Programs Requirements
for Eligible Hospitals and Critical Access Hospitals.” Other
relevant proposed and final rules feature titles of similar length.
Such rules are referred to herein, not by their formal titles, but
as proposed or final rules for a given fiscal year.
5
survey of wages and wage-related costs of short-term, acute
care hospitals.” Fiscal Year 2021 Final Rule, 85 Fed. Reg. at
58,742. Then, the Secretary adjusts Medicare reimbursement
rates by the wage index applicable to each CBSA (or rural area
outside any CBSA). See 42 U.S.C. § 1395ww(d)(2)(H),
(d)(3)(E); 42 C.F.R. § 412.64(h).
1. Changes to a Hospital’s Assigned CBSA
As relevant here, a hospital’s assignment to a particular
CBSA may change through either of two events: an order
granting a hospital’s application for geographic reclassification
or reassignment by the Secretary, usually after adoption of
OMB’s revised CBSA geographical boundaries.2
A hospital may request reclassification into another CBSA
through an application to the five-member Medicare
Geographic Classification Review Board. See 42 U.S.C.
§ 1395ww(d)(10). A requirement for reclassification is that
the destination CBSA be within “close proximity” to the
hospital. 42 C.F.R. § 412.230(b). An “urban hospital”
2
The Secretary is not required to adopt OMB’s CBSA
boundaries and may define geographical boundaries
differently for purposes of calculating the wage index. See
Bellevue Hosp., 443 F.3d at 175 (“[T]he statute is silent as to
how this process is to take place, leaving the agency with broad
discretion.”); Fiscal Year 2021 Final Rule, 85 Fed. Reg. at
58,745 (“We concur with commenters that [the agency] is not
bound by statute to adhere to OMB definitions or delineations
in calculating the [Inpatient Prospective Payment System]
wage index.”); see also 42 U.S.C. § 1395ww(d)(3)(E)(i).
6
satisfies this proximity requirement by being within 15 miles
of the target CBSA; a “rural hospital” must be within 35 miles
of the target CBSA. Id. If the Board grants the reclassification
application, then the hospital receives the wage index
applicable to the target CBSA. See 42 U.S.C.
§ 1395ww(d)(10)(C)(i). By statute, a reclassification is
“effective for a period of 3 fiscal years,” unless the hospital
elects to “terminate such reclassification before the end of such
period.” Id. § 1395ww(d)(10)(D)(v). But if the Board denies
the reclassification application, then the hospital may
administratively appeal to the Secretary. See id.
§ 1395ww(d)(10)(C)(iii)(II) (incorporating the administrative
appeal process from the Administrative Procedure Act,
5 U.S.C. § 557(b)). The Secretary’s decision “shall be final
and shall not be subject to judicial review.” Id.The Secretary may also reassign a hospital into a different
CBSA after adopting revised CBSA boundaries. OMB
typically revises CBSA boundaries every ten years based on
the results of the decennial census, but OMB sometimes makes
interim revisions. See Fiscal Year 2021 Final Rule, 85 Fed.
Reg. at 58,743. When OMB updates the CBSA boundaries,
the Secretary often adopts those new regional groupings and
calculates new wage indexes for the redrawn CBSAs.3 By
doing so, the Secretary resolves the wage index for non-
reclassified hospitals: they receive the wage index for the
3
See, e.g., Fiscal Year 2019 Final Rule, 83 Fed. Reg. 41,144,
41,362–63 (Aug. 17, 2018) (incorporating the updates from
OMB Bulletin No. 17-01, issued between censuses); Fiscal
Year 2015 Final Rule, 79 Fed. Reg. 49,854, 49,951 (Aug. 22,
2014) (incorporating the updates from OMB Bulletin No. 13-
01, issued following publication of data from the 2010 census).
7
CBSA in which they are located. But that does not resolve the
fate of a hospital that was previously reclassified into a CBSA
with later-redrawn boundaries. See Fiscal Year 2021 Final
Rule, 85 Fed. Reg. at 58,771 (explaining that “if CBSAs are
split apart, or if counties shift from one CBSA to another under
the revised OMB delineations, [the agency] must determine
which reclassified area to assign to the hospital for the
remainder of a hospital’s 3-year reclassification period if the
area to which the hospital reclassified split or had counties shift
to another new or modified urban CBSA”). To assign such a
hospital after the redrawing of CBSAs, the Secretary has
followed a most-proximate-county policy. See, e.g., Fiscal
Year 2021 Final Rule, 85 Fed. Reg. at 58,771–72; Fiscal Year
2015 Final Rule, 79 Fed. Reg. 49,854, 49,974–76 (Aug. 22,
2014); Fiscal Year 2005 Final Rule, 69 Fed. Reg. 48,916,
49,054–55 (Aug. 11, 2004). Under that approach, the
Secretary reassigns a previously reclassified hospital to the
redrawn CBSA containing the county from the original CBSA
that is closest to the hospital (as long as that county remains
outside the CBSA in which the hospital is physically located).
See Fiscal Year 2021 Final Rule, 85 Fed. Reg. at 58,771.
2. Challenges to Medicare Reimbursements
The Medicare Act also provides a mechanism for hospitals
to dispute the amount of reimbursement that they receive for
inpatient care. Subject to timing and amount-in-controversy
requirements, see 42 U.S.C. § 1395oo(a)(2)–(3), a hospital that
receives reimbursements for the operating costs of inpatient
services may challenge “a final determination of the Secretary
as to the amount of the payment” through an appeal to another
five-member board, the Provider Reimbursement Review
Board. Id. § 1395oo(a)(1)(A)(ii) (permitting a challenge to the
8
amount of payment made under subsections (b) or (d) of
42 U.S.C. § 1395ww), (h) (defining the composition of the
Provider Reimbursement Review Board); see also id.
§ 1395ww(b) (providing for the computation and adjustment
of payment for “the operating costs of inpatient hospital
services”), (d) (providing the process for determining
prospective rates for inpatient care reimbursements).
Through such an appeal, a hospital may dispute not only
the amount of its reimbursement but also the method for
calculating that amount. See 42 U.S.C. § 1395oo(a)(1)(A)(ii);
see also St. Francis Med. Ctr. v. Shalala, 32 F.3d 805, 812 (3d
Cir. 1994) (recognizing that 42 U.S.C. § 1395oo “provides
avenues by which a provider seeking Part A payments may
contest both the amount of its payments and the methods by
which those payments are calculated”). And because the
method for computing the reimbursement amount involves the
wage index, a hospital may – in challenging “a final
determination” as to the amount of its reimbursement – dispute
the applicable wage index. See, e.g., Good Samaritan Hosp. v.
Shalala, 508 U.S. 402, 407 (1993) (“Pursuant to 42 U.S.C.
§ 1395oo, [six hospitals] filed an appeal to the Provider
Reimbursement Review Board. . . [challenging] the wage
index . . . .”). The Secretary has 60 days from the date of the
Provider Reimbursement Review Board’s decision to revise
the Board’s decision. See 42 U.S.C. § 1395oo(f)(1) (“A
decision of the Board shall be final unless the Secretary, on his
own motion, and within 60 days after the provider of services
is notified of the Board’s decision, reverses, affirms, or
modifies the Board’s decision.”).
Final decisions of the Provider Reimbursement Review
Board are subject to judicial review. A hospital dissatisfied
9
with the Provider Reimbursement Review Board’s decision (or
the Secretary’s revision) has 60 days to file a civil action
challenging it in federal court. See id. To invoke that judicial-
review provision, a hospital must first present the
reimbursement challenge to the Provider Reimbursement
Review Board. See Shalala v. Ill. Council on Long Term Care,
Inc., 529 U.S. 1, 24 (2000) (“At a minimum, however, the
matter must be presented to the agency prior to review in a
federal court.”).
This avenue for judicial review operates in conjunction
with the jurisdiction-stripping provision of the Social Security
Act. See 42 U.S.C. § 405(h). That provision, through its
application to the Medicare Act, see id. § 1395ii, precludes
subject-matter jurisdiction under 28 U.S.C. § 1331 (federal-
question jurisdiction) and 28 U.S.C. § 1346 (jurisdiction over
claims against the United States) for claims “arising under” the
Medicare Act. 42 U.S.C. § 405(h).4
Together, these statutes establish a “channeling
requirement.” Ill. Council, 529 U.S. at 19. Although the
4
Although not relevant to Temple’s present challenge to a
determination in a table addendum to a final rule promulgated
through the notice-and-comment process, the jurisdiction-
stripping provision further diminishes the opportunities for
judicial review of challenges to the Secretary’s “findings and
decision” made “after a hearing.” 42 U.S.C. § 405(h). In such
a circumstance, the Secretary’s “findings and decision” may
not be “reviewed by any person, tribunal, or governmental
agency” except as provided by the Social Security Act and the
Medicare Act. Id.; id. § 1395ii; see also Nichole Med. Equip.
& Supply, Inc. v. TriCenturion, Inc., 694 F.3d 340, 346–47
10
jurisdiction-stripping provision eliminates federal-question
jurisdiction for reimbursement claims arising under the
Medicare Act, it leaves intact the judicial review provision of
the Medicare Act, 42 U.S.C. § 1395oo(f)(1). Thus, as a
general rule, claims for Medicare reimbursement must be
channeled through the Provider Reimbursement Review Board
before they may be challenged in court. See Heckler v. Ringer,
466 U.S. 602, 627 (1984) (“In the best of all worlds, immediate
judicial access for all of these parties might be desirable. But
Congress, in § 405(g) and § 405(h), struck a different balance,
refusing declaratory relief and requiring that administrative
remedies be exhausted before judicial review of the Secretary’s
decisions takes place.”); see also Abington Mem’l Hosp. v.
Heckler, 750 F.2d 242, 244 (3d Cir. 1984) (“Section 405(h) of
the Social Security Act, 42 U.S.C. § 405(h), as incorporated
into the Medicare Act by 42 U.S.C. § 1395ii, removes from the
federal courts any jurisdiction over claims arising under the
Medicare Act for reimbursement, except to the extent allowed
in 42 U.S.C. § 1395oo(f).” (statutory years omitted)).
Although the channeling requirement operates as near-
absolute bar to federal-question jurisdiction for claims arising
under the Medicare Act that have not been challenged
administratively, an exception exists. When presentation of a
challenge to the Provider Reimbursement Review Board
“would not simply channel review through the agency, but
would mean no review at all,” channeling is not required. Ill.
Council, 529 U.S. at 19; see Bowen v. Mich. Acad. of Fam.
(3d Cir. 2012) (holding, in a case challenging the outcome of
an agency hearing, that the “except as herein provided” clause
of § 405(h) “bar[s] virtually all grants of jurisdiction under
Title 28”).
11
Physicians, 476 U.S. 667 (1986) (originating this exception).
This lone exception is quite “narrow.” Taransky v. Sec’y of the
U.S. Dep’t of Health & Hum. Servs., 760 F.3d 307, 321 n.13
(3d Cir. 2014). It applies only when, “as applied generally to
those covered by a particular statutory provision, hardship
likely found in many cases turns what appears to be simply a
channeling requirement into complete preclusion of judicial
review.” Ill. Council, 529 U.S. at 22–23. A postponement of
judicial review that would add “inconvenience or cost in an
isolated, particular case” does not suffice. Id. at 23.
B. Factual Background and Procedural History
Despite Temple University Hospital’s physical location
within the Philadelphia CBSA, this dispute originates from a
redrawing of the New York City CBSA. In September 2018,
OMB redefined the CBSA for New York City to no longer
include three New Jersey counties – Middlesex, Monmouth,
and Ocean.5 Those three counties were combined with a fourth
– Somerset – to create a new CBSA, the New Brunswick-
5
See Off. of Mgmt. & Budget, Exec. Off. of the President,
OMB Bull. No. 18-04, Revised Delineations of Metropolitan
Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas, and Guidance on Uses of the
Delineations of These Areas 61 (2018) (referring to the New
York City CBSA as the New York-Jersey City-White Plains,
NY-NJ CBSA); see also Fiscal Year 2021 Final Rule, 85 Fed.
Reg. at 58,746.
12
Lakewood, NJ CBSA. See OMB Bull. No 18-04 at 61; see also
Fiscal Year 2021 Final Rule, 85 Fed. Reg. at 58,746.
Before the Secretary decided to adopt OMB’s proposed
changes to these CBSAs, Temple applied for reclassification
into the New York City CBSA. See Reclassification Appl.
(submitted on September 3, 2019) (JA40). To achieve that
result, Temple also requested designation as a rural hospital,
which would enable it to use the 35-mile proximity
requirement (instead of the 15-mile requirement for urban
hospitals). See 42 C.F.R. § 412.230(b). With that designation,
Temple would be within range of Monmouth County, which,
at 34.7 miles away, was the nearest county in the then-defined
New York City CBSA.
On February 21, 2020, still before the Secretary decided to
adopt OMB’s redrawn CBSAs, the Geographic Classification
Review Board granted Temple’s reclassification request.
Under that decision, Temple was to receive the wage index for
the New York City CBSA for three fiscal years – from 2021
through 2023 (October 1, 2020, through September 30, 2023).
See Geographic Classification Rev. Bd. Decision (JA54); see
also 42 U.S.C. § 1395ww(d)(10)(D)(v). That represented an
upgrade to Temple’s wage index: the New York City CBSA
had a wage index of 1.3239 compared to the Philadelphia
CBSA’s wage index of 1.06.
Temple’s success did not last as long as anticipated. Three
months later, the Secretary provided notice of a proposed rule
that would adopt OMB’s 2018 revisions to the CBSAs. See
Fiscal Year 2021 Proposed Rule, 85 Fed. Reg. 32,460, 32,696–
97 (May 29, 2020). Under those proposed revisions,
Monmouth County would transfer out of the New York City
13
CBSA and into the newly formed New Brunswick CBSA. See
OMB Bull. No 18-04 at 61. As part of that notice, the Secretary
proposed reassigning hospitals under the most-proximate-
county policy. See Fiscal Year 2021 Proposed Rule, 85 Fed.
Reg. at 32,717. Of the counties in the original New York City
CBSA, Monmouth County was the closest county to Temple.
Thus, under the proposal, Temple would follow Monmouth
County in its reassignment to the New Brunswick CBSA. That
CBSA, however, had a wage index of 1.0754 – appreciably
lower than that of the New York City CBSA. See id. at 32,720.
The proposed rule also sought to mitigate the effects of the
revised CBSA boundaries. One proposal was a transitional
wage index for affected reclassified hospitals that would cap at
five percent the wage-index decrease for the first year of the
revised CBSAs. See id. at 32,718. Another proposal would
allow a hospital to seek further reassignment to a CBSA that
contained at least one county from its prior reclassified CBSA
– as long as the hospital met the proximity requirements for
that county. See id. at 32,720; see also 42 C.F.R. § 412.230(b).
The notice of the proposed rule also reminded reclassified
hospitals of the opt-out option: they could elect to terminate
reclassification and return to their home CBSA, where they are
physically located. See 85 Fed. Reg. at 32,717.
After publication of that notice, Temple followed a course
not mentioned among the proposed mitigation measures. It
applied for reclassification into another CBSA – the Vineland-
Bridgeton, NJ CBSA – starting in fiscal year 2022. At that
time, the wage index for the Vineland CBSA was 1.224 –
higher than the wage index for the New Brunswick and
Philadelphia CBSAs, but lower than the wage index for the
New York City CBSA. The Geographic Classification Review
14
Board granted that request, enabling Temple’s reclassification
into the Vineland CBSA for fiscal years 2022 through 2024
(October 1, 2021, through September 30, 2024). Temple has
until June 24, 2021 – forty-five days after the notice of
proposed rulemaking for Fiscal Year 2022 – to withdraw from
that reclassification. See 42 C.F.R. § 412.273(c)(1)(ii), Fiscal
Year 2022 Proposed Rule, 86 Fed. Reg. 25,070 (May 10,
2021).
Temple’s reclassification into the Vineland CBSA took on
additional significance after the Secretary issued the final rule
for Fiscal Year 2021. That rule adopted OMB’s redefined New
York City CBSA. See Fiscal Year 2021 Final Rule, 85 Fed.
Reg. at 58,743–44. And through a table addendum to that rule,
the Secretary reassigned Temple to the New Brunswick CBSA.
See id. at 58,778 tbl. 2 (reassigning Temple based on its
Medicare Provider Number (39-0027) and its case number
before the Geographic Classification Review Board
(21C0393)).
That reassignment prompted this lawsuit. Temple sued the
Secretary and two other agency officials, contending that by
statute, see 42 U.S.C. § 1395ww(d)(10)(D)(v), its
reclassification into the New York City CBSA for wage index
purposes should have been effective for three fiscal years –
until September 30, 2023. In resolving the parties’ competing
summary judgment motions, the District Court entered
judgment for the Secretary, reasoning that the Secretary’s
reassignment of Temple to the New Brunswick CBSA
qualified for Chevron deference and must be upheld. See
Temple Univ. Hosp., Inc. v. Azar, 2021 WL 431448, at *5–11
(E.D. Pa. Feb. 8, 2021).
15
Temple then filed this appeal, which has been expedited to
accommodate Temple’s deadline of June 24, 2021, to
withdraw from its reclassification into the Vineland CBSA.
See 42 C.F.R. § 412.273(d)(4). Temple disputes the
application of Chevron deference, which the Secretary
defends. But the Secretary has also introduced a new
dimension to this appeal: he contends that there is no subject-
matter jurisdiction due to the channeling requirement and
Temple’s failure to present its challenge to the Provider
Reimbursement Review Board. In exercising appellate
jurisdiction over the District Court’s “final decision,”
28 U.S.C. § 1291; see Harris v. Kellogg Brown & Root Servs.,
Inc., 618 F.3d 398, 400 (3d Cir. 2010), we will vacate the
judgment and remand with instructions to dismiss the
complaint for lack of subject-matter jurisdiction.
II. DISCUSSION
Federal courts are courts of limited jurisdiction, and
without subject-matter jurisdiction, they lack authority to
address the merits of a case. See Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 94–95 (1998). A challenge to
subject-matter jurisdiction may be raised any time during a
lawsuit (including for the first time on appeal). See, e.g.,
United States v. Cotton, 535 U.S. 625, 630 (2002); Grp.
Against Smog & Pollution, Inc. v. Shenango Inc., 810 F.3d 116,
122 n.6 (3d Cir. 2016).
Here, although the Secretary did not dispute subject-matter
jurisdiction in District Court, that defense has not been waived.
See Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019).
And subject-matter jurisdiction is lacking here. Temple cannot
invoke federal-question jurisdiction due to the Medicare Act’s
16
channeling requirement. The remaining potential
jurisdictional bases that Temple identifies fare no better.
A. The Channeling Requirement Precludes Temple
from Invoking Federal-Question Jurisdiction.
The Medicare Act’s channeling requirement eliminates
federal-question jurisdiction for claims “arising under” the
Medicare Act. See 42 U.S.C. § 405(h); id. § 1395ii. The
Supreme Court has construed the ‘arising under’ language of
the Medicare Act’s channeling requirement “quite broadly.”
Ringer, 466 U.S. at 615. A claim arises under the Medicare
Act when ‘“both the standing and the substantive basis for the
presentation’ of a claim is the Medicare Act.” Ill. Council,
529 U.S. at 12 (quoting Ringer, 466 U.S. at 615); Weinberger
v. Salfi, 422 U.S. 749, 761 (1975); see also Cmty. Oncology
All., Inc. v. Off. of Mgmt. & Budget, 987 F.3d 1137, 1142–43
(D.C. Cir. 2021).6
Temple’s claim satisfies those two elements. First, Temple
has standing to sue based on the Secretary’s action pursuant to
his authority under the Medicare Act. Reassigning Temple
6
For other statutes, involving the jurisdictional balance
between federal and state courts, the Supreme Court has
construed ‘arising under’ differently than it has for the Social
Security Act and the Medicare Act, which instead implicate
administrative law principles, such as ripeness and exhaustion.
Compare Gunn v. Minton, 568 U.S. 251, 257 (2013), Grable
& Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S.
308, 314 (2005), and Am. Well Works Co. v. Layne & Bowler
Co., 241 U.S. 257, 260 (1916), with Ill. Council, 529 U.S. at
12, and Salfi, 422 U.S. at 761.
17
from the New York City CBSA to the New Brunswick CBSA
constitutes an injury-in-fact (a lower wage index), fairly
traceable to the Secretary’s action (the reassignment), and that
injury-in-fact would be redressed by a favorable judicial
decision (setting aside the reassignment). See Valley Forge
Christian Coll. v. Ams. United for Separation of Church &
State, Inc., 454 U.S. 464, 472 (1982) (articulating the three
elements of Article III standing); see also Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, 1547 (2016) (explaining that for
Article III standing, “[t]he plaintiff must have (1) suffered an
injury in fact, (2) that is fairly traceable to the challenged
conduct of the defendant, and (3) that is likely to be redressed
by a favorable judicial decision”). Second, the Medicare Act
provides the substantive basis for Temple’s claim. As
amended, it provides that reclassifications “shall be effective
for a period of 3 fiscal years,” 42 U.S.C.
§ 1395ww(d)(10)(D)(v), and the merits of Temple’s claim
depend on whether the Secretary’s reassignment decision
violated that three-year durational mandate. Thus, Temple
cannot invoke federal-question jurisdiction here because its
challenge to the New Brunswick CBSA reassignment arises
under the Medicare Act.
B. Temple Cannot Avail Itself of the Narrow
Exception to the Channeling Requirement.
Temple contends that it qualifies for the lone exception to
the channeling requirement. That exception applies only when
application of the channeling requirement “would not simply
channel review through the agency, but would mean no review
at all.” Ill. Council, 529 U.S. at 19. The channeling
requirement would have no such effect here. Temple can
dispute its reclassification to the New Brunswick CBSA before
18
the Provider Reimbursement Review Board because the wage
index associated with that CBSA affects the amount of
Temple’s Medicare reimbursements. And under the Medicare
Act, Temple can seek judicial review of the Board’s
determination. See 42 U.S.C. § 1395oo(f)(1) (“Providers shall
have the right to obtain judicial review of any final decision of
the Board . . . by a civil action commenced within 60 days of
the date on which notice of any final decision by the Board . .
. is received.”). Temple tacitly acknowledges as much. The
thrust of its argument is not that it has no opportunity for
judicial review, but rather that it must surrender its subsequent
reclassification to the Vineland CBSA to fully vindicate its
three-year assignment to the New York City CBSA. But that
concern does not trigger the narrow exception to the
channeling requirement because Temple has an opportunity for
judicial review of its reassignment out of the New York City
CBSA. See Ill. Council, 529 U.S. at 22 (explaining that the
channeling requirement cannot be circumvented on the
grounds of “added inconvenience or cost in an isolated,
particular case”); see also Sw. Pharmacy Sols., Inc. v. Ctrs. for
Medicare & Medicaid Servs., 718 F.3d 436, 441 (5th Cir.
2013) (“The fact that a plaintiff would suffer great hardship if
forced to proceed through administrative channels before
obtaining judicial review is insufficient to warrant application
of the Illinois Council exception.”).
Temple’s reference to the COVID-19 pandemic does not
alter this conclusion. Temple offers only conjecture and
speculation for the proposition that the pandemic would have
prevented or critically delayed administrative review of its
claim. Those concerns cannot overcome the near-absolute
force of the channeling requirement – especially considering
19
the Provider Reimbursement Review Board’s publicly
announced intention to keep operating on time.
C. None of the Remaining Bases for Subject-Matter
Jurisdiction Have Merit.
No other statutory grant of subject-matter jurisdiction
applies to Temple’s claim. In its complaint, Temple also
identifies the Declaratory Judgment Act, the Administrative
Procedure Act, the mandamus-jurisdiction statute, and the
Medicare Act as potential bases for subject-matter jurisdiction.
The Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202,
does not independently grant subject-matter jurisdiction. See
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)
(“[T]he operation of the Declaratory Judgment Act is
procedural only.”); Allen v. DeBello, 861 F.3d 433, 444 (3d
Cir. 2017) (“The Declaratory Judgment Act does not, however,
provide an independent basis for subject-matter jurisdiction; it
merely defines a remedy.”).
Nor does Temple gain any jurisdictional traction from the
Administrative Procedure Act. Although it waives sovereign
immunity, see 5 U.S.C. § 702, and provides several causes of
action, see, e.g., id. § 706, the Administrative Procedure Act
includes no independent grant of subject-matter jurisdiction,
see Califano v. Sanders, 430 U.S. 99, 107 (1977); Chehazeh v.
Att’y Gen., 666 F.3d 118, 125 n.11 (3d Cir. 2012).
The mandamus-jurisdiction statute, 28 U.S.C. § 1361,
conditions its grant of jurisdiction on the unavailability of
adequate alternative remedies. See 33 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure Judicial
20
Review § 8312 (2d ed. Apr. 2021 update) (“To qualify
for mandamus, however, a litigant must satisfy three
requirements that courts have characterized as jurisdictional:
(1) a clear and indisputable right to relief, (2) that the
government agency or official is violating a clear duty to act,
and (3) that no adequate alternative remedy exists.” (citation
and quotation marks omitted)); see also Ringer, 466 U.S. at
616 (“The common-law writ of mandamus, as codified
in 28 U.S.C. § 1361, is intended to provide a remedy for a
plaintiff only if he has exhausted all other avenues of relief . .
. .”); Semper v. Gomez, 747 F.3d 229, 250–51 (3d Cir. 2014).
And here, Temple has an adequate alternative remedy through
administrative appeal to the Provider Reimbursement Review
Board. See 42 U.S.C. § 1395oo(a)(1)(A)(ii); see also St.
Francis Med. Ctr., 32 F.3d at 812.7
Similarly, judicial review under the Medicare Act for
reimbursement claims requires administrative exhaustion. See
42 U.S.C. § 1395oo(f)(1); see also Ill. Council, 529 U.S. at 24.
And Temple did not present its wage-index challenge to the
Provider Reimbursement Review Board. Without such
presentation, the Medicare Act does not authorize judicial
review of Temple’s dispute.
7
The All Writs Act, 28 U.S.C. § 1651(a), likewise does not
provide a basis for jurisdiction over Temple’s request
mandamus relief: that statute does not independently grant
subject-matter jurisdiction. See Clinton v. Goldsmith, 526 U.S.
529, 534–35 (1999); United States v. Apple MacPro Comput.,
851 F.3d 238, 244 (3d Cir. 2017).
21
***
In sum, Temple’s challenge to its reassignment to the New
Brunswick CBSA arises under the Medicare Act, and so it is
subject to the Act’s channeling requirement. Under that
requirement, Temple cannot rely on federal-question
jurisdiction as a basis for subject-matter jurisdiction. And
because Temple did not present its claim for administrative
adjudication, it has no other valid basis for subject-matter
jurisdiction. We will therefore vacate the District Court’s
judgment and remand with instructions to dismiss the
complaint for lack of subject-matter jurisdiction.
22