Adirondack Medical Center v. Sebelius ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
ADIRONDACK MEDICAL CENTER, et )
al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 11-313 (RMC)
)
KATHLEEN SEBELIUS, Secretary, )
Department of Health and Human )
Services, )
)
Defendant. )
)
MEMORANDUM OPINION
Plaintiff Hospitals challenge the Secretary of Health and Human Services’
calculation of hospital-specific Medicare payment rates after January 1, 2009. The Secretary
moves to dismiss and remand, arguing that the case is not in a proper procedural posture for this
Court’s review. The motion will be denied as the course suggested by the Secretary will waste
administrative and court resources.
The payment calculations that are the subject of this suit are part of Medicare’s
Inpatient Prospective Payment System, through which the Secretary sets Medicare payment rates
in advance. The rates govern hospital reimbursements for inpatient operating costs in any given
fiscal year. See 42 U.S.C. §§ 1395 et seq. Challenges to hospital payments are channeled
through the Provider Reimbursement Review Board (“PRRB”). See id. § 1395oo; 42 C.F.R.
§§ 405.1801-.1871. When a payment is challenged, PRRB determines whether it has
jurisdiction, see 42 C.F.R. § 405.1840, and if so, proceeds to the merits of the claim. Id.§ 405.1843-.1871. Within 60 days, a PRRB decision is subject to review by the CMS1
Administrator; if the Administrator takes no action or declines to review the decision, PRRB’s
decision stands as the final agency action. 42 U.S.C. § 1395oo(f)(1); 42 C.F.R.
§§ 405.1875(a)(2), .1877(a)(2), (3).
Instead of making a finding on the merits, PRRB may determine that it lacks
authority to decide the underlying question of law and expedited judicial review (“EJR”) is
appropriate. 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. §§ 405.1842(a). An EJR determination is a
final decision not subject to review by the Secretary, but instead judicial review is available. 42
U.S.C. § 1395oo(f)(1); 42 C.F.R. §§ 405.1842(a).
Here, Plaintiffs are Medicare-participating hospitals who filed a challenge to
payment rates with PRRB and sought EJR. On December 9, 2010, PRRB determined that it
lacked jurisdiction over Plaintiffs’ appeals. Def.’s Mot. to Dismiss and Remand [Dkt. # 8]
(“Def.’s Mot.”), Ex. A (“PRRB Decision”) at 3. Anticipating that its jurisdictional decision
would be reversed, PRRB ruled in the alternative that if it did have jurisdiction, it lacked
authority to decide the underlying legal question and EJR was appropriate. Id., PRRB Decision
at 7-8.
PRRB predicted that its jurisdictional decision would be reversed because, at least
since 2008, the Secretary has maintained that PRRB’s interpretation of 42 C.F.R. § 405.1804 as
precluding jurisdiction is in error. See Cape Cod Hosp. v. Leavitt, 565 F. Supp. 2d 137, 139
(D.D.C. 2008) (granting Secretary’s motion to dismiss and remand; Secretary declined to defend
1
“CMS” is the Centers for Medicare & Medicaid Services, an operating component of
the Department of Health and Human Services.
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PRRB’s decision regarding jurisdiction). After Cape Cod, the Administrator has repeatedly
reversed jurisdictional dismissals by PRRB. See Compl. [Dkt. #1] ¶ 110, Armstrong Cty. Mem’l
Hosp. v. Sebelius, Civ. No. 11-565 (RCL) (filed Mar. 18, 2011); Compl. [Dkt. #1] ¶ 108, Banner
Baywood Heart Hosp. v. Sebelius, Civ. No. 10-1799 (RCL) (D.D.C.) (filed Oct. 25, 2010); Am.
Compl. [Dkt. #6] ¶ 109, Highland Hosp. v. Sebelius, Civ. No. 10-1064 (RCL) (D.D.C.) (filed
Aug. 10, 2010).
In this case, PRRB’s decision stands as the final decision of the agency because
the CMS Administrator did not take any action on the decision within 60 days. The Secretary
now indicates that “the PRRB’s jurisdictional decision is in error and [the Secretary] does not
wish to defend that decision in this case.” Def.’s Mot. at 6. Plaintiff Hospitals agree that PRRB
erred in finding it lacked jurisdiction. The Secretary seeks dismissal and remand to permit the
Secretary (via the CMS Administrator) to reverse PRRB’s decision that it lacked jurisdiction.
The Secretary already had the opportunity to reverse PRRB’s decision, but failed to do so within
the 60-day time period. The process that the Secretary suggests is unnecessary, time-consuming,
and inefficient. It would merely serve to delay the resolution of this case on the merits. PRRB’s
decision constitutes final agency action, and it is properly before this Court.
The Secretary contends that this case is analogous to Cape Cod and should
similarly be subject to dismissal and remand. In Cape Cod, the district court reviewed a PRRB
decision that it lacked jurisdiction to consider Medicare providers’ administrative appeals. The
Administrator failed to take action within the 60-day window for review. After the 60-day period
had expired, the Secretary determined that PRRB’s jurisdictional determination was incorrect.
565 F. Supp. 2d at 140. The Secretary moved for dismissal and remand, and the district court
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granted the motion, concluding that PRRB “must be afforded an opportunity to consider the
merits of plaintiff’s claims before the substantive issues may be properly before this Court.” Id.
at 141.
It is true that this case is like Cape Cod in that PRRB decided it lacked
jurisdiction, the Administrator failed to take action within the 60-day time period, and the
Secretary subsequently decided that it wanted to reverse PRRB. But PRRB’s decision in this
case is critically different. Here, PRRB decided in the alternative and “in the interest of judicial
economy” that, if it had jurisdiction (fully expecting that the Secretary would reverse its
jurisdictional determination), it lacked authority to decide the underlying issue of law and EJR
was required. PRRB Decision at 8. Unlike Cape Cod, here there is no need to provide PRRB
the opportunity to address the substantive issues. PRRB already did so and found that EJR was
required. Dismissal and remand will be denied, as this Court cannot countenance the
squandering of adjudicative resources that would result from the procedure suggested by the
Secretary.
The Court will deny the Secretary’s Motion to Dismiss and Remand [Dkt. # 8].
The parties shall file a joint proposed dispositive motion briefing schedule no later than February
22, 2012. A memorializing Order accompanies this Memorandum Opinion.
Date: January 31, 2012 /s/
ROSEMARY M. COLLYER
United States District Judge
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