Edgewater Foundation v. Thompson, Tommy G. ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-1745
EDGEWATER FOUNDATION,
Plaintiff-Appellant,
v.
TOMMY G. THOMPSON, Secretary of
Health and Human Services,
Defendant-Appellee.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 00 C 6600—Wayne R. Andersen, Judge.
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ARGUED OCTOBER 29, 2003—DECIDED DECEMBER 1, 2003
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Before FLAUM, Chief Judge, and EASTERBROOK and
KANNE, Circuit Judges.
EASTERBROOK, Circuit Judge. In January 1989
Edgewater Hospital, a Medicare provider, sold portions of
its operations to three successors: Edgewater Property Co.
bought the building; Edgewater Operating Co. bought the
equipment, records, and ongoing operations; and Peter
Rogan, the sole shareholder of these two firms, bought the
Hospital’s receivables. The old owner changed its name
from Edgewater Hospital, Inc., to Edgewater Foundation.
Sale of the business meant that accounts had to be settled
between the Hospital (and its successors) and the Medicare
program. After extended proceedings that it is unnecessary
2 No. 03-1745
to recount, the parties resolved most outstanding issues.
They agreed that Medicare owed the Hospital about $6.4
million as of the date the Hospital sold its assets and
operations, and that Edgewater Operating Co. owed the
Medicare program about $4 million for overpayments
received during 1989 and 1990. All obligations were offset,
and the Medicare program paid the balance.
Although the parties agreed on these numbers, they did
not agree on the calculation of interest under 42 U.S.C.
§1395g(d). Edgewater Foundation, as the Hospital’s succes-
sor (proceeding in this respect as Rogan’s proxy), claims an
entitlement to interest on the $6.4 million between January
1989 and the time the (net) payment of about $2.4 million
was made. As the Foundation sees things, it is distinct from
Edgewater Operating Co., so that overpayments after the
sale should not be set off against underpayments that
preceded the sale. The Administrator of the Health Care
Financing Administration (part of the Department of
Health and Human Services) made the final administrative
decision and determined that the Foundation and the
Operating Company are jointly and severally liable for
reimbursements of all overpayments, because the Medicare
program is entitled to treat a single hospital as one “pro-
vider” and to net all balances without regard to private
arrangements for the disposition of the proceeds. The
Administrator wrote: “Because the provider agreement was
automatically assigned to the new owner, the old and new
owner are jointly and severally liable for the overpayment.”
That conclusion cut off the Foundation’s demand for
interest, because the Medicare program paid the net
balance within 30 days of its ascertainment.
The Foundation filed this civil action under 42 U.S.C.
§1395oo(f)(1), contending that it is entitled to interest on
the $6.4 million that was due on account of events that
preceded the sale in January 1989. Instead of deciding
No. 03-1745 3
whether the Administrator had erred in netting this sum
against overpayments to the Operating Company during
1989 and 1990, the district court directed the agency to
determine whether the $6.4 million (which is, recall, a
figure on which all parties had agreed) had been correctly
calculated. In the judge’s view, if payment was excessive,
interest need not be added. The court remanded the matter
to the Department of Health and Human Services with
directions “to determine the following: 1) The legitimacy of
the valuations used as a basis for the reimbursement; 2)
The role of Peter Rogan in the transactions and the appro-
priateness of any payments ultimately made to him; and 3)
The payors and payees of all Medicare payments made after
the closing of the hospital regarding the ‘loss on sale’.”
Neither side had argued to the district court that any of
these matters is pertinent; no one had requested a remand.
One might have anticipated an appeal by the Administra-
tor, on the ground that a district court lacks authority to
treat the bureaucracy as an ombudsman that may be
directed to inquire into whatever issues pique the judge’s
curiosity. Whether the $6.4 million settlement was correct
is neither here nor there; it had not been raised as an issue
in the litigation; and if the settlement was excessive, it is
not the kind of error for which any statute provides either
administrative or judicial review. The Health Care Financ-
ing Administration has duties prescribed by statutes and
regulations; looking behind the validity of settlements, and
determining who paid how much of the proceeds to whom,
are not among them. Courts are supposed to address the
parties’ actual disputes, rather than the disputes that
judges think the parties ought to have, and are supposed to
resolve administrative cases on the record. The Medicare
statute lacks any parallel to Sentence Six of 42 U.S.C.
§405(g), which authorizes remand of disability-benefits
matters to receive new evidence. (The sort of remand
4 No. 03-1745
ordered here would have been outside the scope of Sentence
Six in a disability-benefits proceeding anyway; the matters
specified for determination do not concern new evidence.)
Remands usually are not appealable, because they are not
“final” decisions; but remands that otherwise may escape
appellate review may be reviewable immediately. See
Sullivan v. Finkelstein, 496 U.S. 617 (1990); Travis v.
Sullivan, 985 F.2d 919 (7th Cir. 1993). From the agency’s
perspective, this may well be such an other-
wise-unreviewable remand, as only the Foundation can seek
judicial review of the new administrative decision, and only
an immediate appeal could vindicate the agency’s interest
in avoiding pointless (if not ultra vires) administrative
proceedings.
But the agency did not appeal and thus has accepted (and
is bound to comply with) the terms of the remand. The
appeal now before us was filed by the Foundation, which
contends that the inquiries the agency has been ordered to
conduct are legally irrelevant to its claim for interest. The
Foundation wants us to review the Administrator’s interest
decision directly, sparing the parties the need to conduct
unnecessary and potentially futile administrative proceed-
ings. The problem, however, is that the statute places
review of the Administrator’s decisions in the district court,
not the court of appeals, and the district court has not
finished that task—indeed, has not begun it. The decision
asking the agency for more information is no more “final”
than is a decision requiring additional discovery, or denying
summary judgment and setting a case for trial. A litigant’s
belief that the discovery or trial is unnecessary—even
doomed, because the proceedings are infected by er-
ror—does not make the decision immediately appealable.
The district court has yet to decide whether the Founda-
tion is entitled to interest. Once that decision has been
made—as it surely will be, once the agency has answered
No. 03-1745 5
the questions posed by the remand order—then the losing
side will be entitled to appeal. If the questions that the
district judge framed are not legally material, and the judge
nonetheless uses the answers to resolve the dispute about
interest, then the appeal from that final decision will
provide an opportunity for correction by this court.
According to the Foundation, however, a series of deci-
sions by the Supreme Court about the finality of remands
in disability-benefits cases establishes that remands to
agencies are appealable. We have mentioned Finkelstein,
which offers the Foundation no comfort. It holds that a
remand is final when the main question will not recur after
the agency’s new decision. That cannot be said of this
dispute about interest. Unless the agency decides, in light
of its answers to the issues posed in the remand order, that
the Foundation is entitled to interest on the whole $6.4
million—exceedingly unlikely, given the nature of the
questions the judge framed and the reason why he asked
the agency to address them—the dispute will continue
and the Foundation can obtain review by filing an appropri-
ate pleading in the district court. The other decisions are
Forney v. Apfel, 524 U.S. 266 (1998), and Shalala
v. Schaefer, 509 U.S. 292 (1993). These are based on
language in the Social Security Act specifying that particu-
lar decisions are final. See 42 U.S.C. §405(g), Sentence
Eight. The Court stated in Forney that “this statutory
language means what it says”. 524 U.S. at 269. There is no
comparable language in §1395oo. To the extent that
Finkelstein, Schaefer, and Forney can be generalized beyond
§405(g), we concluded in Perlman v. Swiss Bank Corp.
Disability Plan, 195 F.3d 975, 979 (7th Cir. 1999), that the
rule they establish is this: “If the district court finds that
the [administrative] decision was erroneous and enters a
judgment wrapping up the litigation, that decision is
appealable even if extra-judicial proceedings lie ahead; but
if the court postpones adjudication until after additional
6 No. 03-1745
evidence has been analyzed, then it has not made a final
decision.” In this suit the district court has postponed
adjudication until after additional evidence has been
analyzed. That is not a final decision.
That the district court ended its opinion with the line
“This is a final and appealable order” is regrettable. It all
but compelled the Foundation to take an immediate appeal,
lest it tempt the district judge to hold later that by inaction
the Foundation had given up its principal claim. Yet district
judges cannot determine the scope of appellate jurisdiction
or authorize appeals from interlocutory orders, other than
through the means provided by 28 U.S.C. §1292(b). This
proceeding does not warrant an interlocutory appeal under
that statute, however, and at all events the district judge
did not make the findings specified by §1292(b). Despite the
judge’s nomenclature, the suit has not been “terminated” in
the district court; it is apparent that the judge expects to
resume the proceedings after receiving the agency’s find-
ings. Once the agency has made its findings, the Founda-
tion should file an appropriate motion in the existing civil
action (No. 00 C 6600), and the district judge should make
a prompt decision so that this lingering dispute can at last
be concluded.
The appeal is dismissed for want of jurisdiction.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-1-03