Westchester General Hospital, Inc. v. dept.of Health & Human Services, Debbie Paul

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 11-12476
OCTOBER 14, 2011
Non-Argument Calendar
JOHN LEY
________________________ CLERK
D.C. Docket No. 1:10-cv-21113-JAL
WESTCHESTER GENERAL HOSPITAL, INC.,
Plaintiff-Appellant,
versus
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Centers for Medicare and Medicaid Services,
lllllllllllllllllllllllllllllllllllllll l Defendant-Appellee,
DEBBIE PAUL,
lllllllllllllllllllllllllllllllllllllll lDefendant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(October 14, 2011)
Before HULL, MARTIN and ANDERSON, Circuit Judges.
PER CURIAM:
Plaintiff-Appellant Westchester General Hospital, Inc. (“Westchester”)
appeals the district court’s grant of summary judgment to Defendant-Appellee
Department of Health and Human Services (“DHHS”). Westchester claims
DHHS’s denial of Westchester’s request for permission to depose a DHHS
employee was arbitrary and capricious under the Administrative Procedure Act,
5 U.S.C. § 706(2)(A). After review of the briefs and the record, we affirm the
district court’s order granting summary judgment to DHHS.
I. BACKGROUND
This case arises from a state court breach-of-contract action brought by
Defendant Westchester, to which the federal government and DHHS are not
participants. The state court action relates to an agreement between Westchester
and Nova Southeastern University (“Nova”). Pursuant to that agreement,
Westchester used its Medicare provider status to seek reimbursement from
Medicare for the costs of Nova’s dental residency program. When Medicare
rejected certain reimbursement requests by Westchester, the Westchester-Nova
agreement deteriorated, leading to the state court lawsuit.
Medicare based its reimbursement rejections in part on audits conducted by
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Debbie Paul, an audit branch manager for DHHS’s intermediary, First Coast
Service Options, Inc. Because of Paul’s role in the reimbursement requests,
Westchester sought to depose Paul in the state court action. To that end,
Westchester sent DHHS a letter requesting permission to take Paul’s deposition.
DHHS requires that any request for deposition testimony follow the
procedures set forth in its regulations.1 45 C.F.R. §§ 2.1, 2.4. More particularly,
the request “must state the nature of the requested testimony, why the information
sought is unavailable by any other means, and the reasons why the testimony
would be in the interest of the DHHS or the federal government.” Id. § 2.4(a).
“The availability of Department employees to testify in litigation not involving
federal parties is governed by the Department’s policy to maintain strict
impartiality with respect to private litigants and to minimize the disruption of
official duties.” Id. § 2.1(b). The regulations further provide that a DHHS
employee may only provide testimony “concerning information acquired in the
course of performing official duties” if it is “authorized by the Agency
head . . . based on a determination by the Agency head, after consultation with the
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Pursuant to the federal “housekeeping statute,” 5 U.S.C. § 301, executive agencies may
promulgate regulations concerning testimony by agency employees. See United States ex rel.
Touhy v. Ragen, 340 U.S. 462, 469-70, 71 S. Ct. 416, 420 (1951); Moore v. Armour Pharm. Co.,
927 F.2d 1194, 1196-97 (11th Cir. 1991). Regulations promulgated pursuant to that statute are
referred to as an agency’s “Touhy” regulations. See, e.g., Hasie v. Office of the Comptroller of
the Currency of the United States, 633 F.3d 361, 364 (5th Cir. 2011).
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Office of the General Counsel, that compliance with the request would promote
the objectives of the Department.” Id. § 2.3.
In accordance with DHHS’s regulations, Westchester’s deposition request
first set forth “the nature of the requested testimony.” Its request focused on
several audits Paul performed of Westchester’s Medicare reimbursement requests
for Nova. Westchester’s letter stated it expected testimony regarding the
following:
[Paul’s] analysis and conclusions with respect to the Dental Program in
connection with the audits of fiscal years 2001 through 2005; the
sufficiency of the documentation provided in support of the Dental
Program; communications between Ms. Paul and Westchester regarding
the Dental Program; and communications between Ms. Paul and Nova
regarding the Dental Program.
Next, Westchester’s letter claimed the information was unavailable by any
other means. The letter elaborated:
First Coast has sole access to the requested testimony, records, and
information that resulted in the disallowance of substantial costs in
Westchester’s costs [sic] reports relating to the dental residency
program. Specifically, Ms. Paul oversaw the relevant audits and was in
direct contact with Westchester during the course of each audit. Ms.
Paul’s review and analysis of the dental program, including her finding
of the insufficiency of the documents provided in support of the
program, was made directly to Westchester. She was an integral part of
the audits of Westchester’s cost reports, and her analysis and
conclusions with respect to the dental program and [sic] are important
elements to the resolution of this lawsuit.
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Westchester’s letter concluded that “[a]s discussed above, the testimony is
in the interest of DHHS and the Federal Government because it involves the
proper administration of the Medicare Program.” No other reasons were
provided.
In a letter dated January 28, 2010, DHHS denied Westchester’s deposition
request. After reiterating Westchester’s requested categories of testimony, DHHS
stated that in accordance with 45 C.F.R. § 2.4, it “disagree[d] that the information
sought is unavailable by any other means.” DHHS’s letter pointed out that “[t]he
parties to this case, themselves, are best able to testify with respect to any direct
communications they may have had with Ms. Paul.” The DHHS letter advised that
its “decision to decline the requested testimony is in keeping with the
Department’s policy to maintain impartiality with respect to private litigants and to
minimize the disruption of official duties in accordance with 45 C.F.R.[ ]2.1.”
DHHS then directed Westchester to inform DHHS of any further questions.
Subsequently, Westchester filed a lawsuit in the district court, seeking an
order (1) setting aside DHHS’s decision as arbitrary and capricious under the
Administrative Procedure Act, and (2) ordering Paul to appear for a deposition.
DHHS then filed a motion for summary judgment, which was followed by
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Westchester’s own summary judgment motion. A magistrate judge held a hearing
on the parties’ motions and recommended that the district court grant DHHS’s
motion and deny Westchester’s. After consideration of the magistrate judge’s
report and the administrative record, the district court adopted the report and
granted DHHS’s motion, finding that DHHS’s denial of Westchester’s deposition
request was not arbitrary or capricious. This appeal followed.
II. DISCUSSION
The Administrative Procedure Act (“APA”) § 702 provides that “[a] person
suffering legal wrong because of agency action, or adversely affected or aggrieved
by agency action within the meaning of a relevant statute, is entitled to judicial
review thereof.” 5 U.S.C. § 702. Here, DHHS’s denial of Plaintiff’s deposition
request is agency action subject to judicial review under APA § 706(2)(A).
In reviewing an agency action pursuant to valid agency regulations, we
review de novo the district court’s grant of summary judgment and apply the same
standard of review used by the district court. 5 U.S.C. § 702; Miccosukee Tribe of
Indians of Florida v. United States, 566 F.3d 1257, 1264 (11th Cir. 2009). That is,
“[t]he reviewing court shall . . . hold unlawful and set aside agency action,
findings, and conclusions found to be . . . arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A);
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Miccosukee Tribe, 566 F.3d at 1264. This “exceedingly deferential” standard
examines “whether the [agency] decision was based on a consideration of the
relevant factors and whether there has been a clear error of judgment.” Fund for
Animals, Inc. v. Rice, 85 F.3d 535, 541 (11th Cir. 1996).
In this case, we cannot say DHHS’s decision was arbitrary or capricious.
DHHS, in rejecting Westchester’s request, stated that it “disagree[d] that the
information is unavailable by any other means.” DHHS explicitly noted that
Westchester and Nova “are best able” to provide the information concerning their
communications with Paul. When read alongside Westchester’s letter, DHHS’s
statements demonstrate it considered the relevant factors, as presented in
Westchester’s letter, and arrived at a rational conclusion that the information was
available from other sources.
An examination of Westchester’s letter readily shows this, for Westchester’s
own description of the requested testimony defeats its claim of unavailability. As
to the first request for Paul’s “analysis and conclusions” regarding the Westchester
audits, Westchester’s letter stated: “Ms. Paul oversaw the relevant audits and was
in direct contact with Westchester during the course of each audit.” As to the
second request for Paul’s testimony regarding “the sufficiency of documentation
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provided in support of the dental program,” Westchester’s letter stated: “Ms.
Paul’s review and analysis of the dental program, including her finding of the
insufficiency of the documents provided in support of the program, was made
directly to Westchester.” As to the third and fourth requests for “communications
between Paul” and Westchester and Nova, Westchester would itself have
knowledge of what it communicated to Paul, and could depose Nova employees to
similar end. While Westchester might prefer to depose Paul, DHHS’s regulations
make no exceptions for party preferences. The regulations inquire only whether
the information is otherwise unavailable. Westchester’s letter on its face did not
meet its burden under DHHS’s valid Touhy regulations. See Touhy, 340 U.S. at
469-70; Moore, 927 F.2d at 1197.
Accordingly, we agree with the magistrate judge and the district court that
DHHS’s denial of Westchester’s deposition request was not arbitrary or capricious
under APA § 702. DHHS adequately considered the relevant factors and its
decision contained no clear error of judgment. See Fund for Animals, 85 F.3d at
541. The district court’s grant of summary judgment in favor of DHHS is
affirmed.
AFFIRMED.
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