Florida Health Sciences Center, Inc. v. Secretary of Health & Human Services

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 22, 2016 Decided July 26, 2016
No. 15-5163
FLORIDA HEALTH SCIENCES CENTER, INC., DOING BUSINESS AS
TAMPA GENERAL HOSPITAL,
APPELLANT
v.
SECRETARY OF HEALTH AND HUMAN SERVICES,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:14-cv-00791)
Stephanie A. Webster argued the cause for appellant.
With her on the briefs was Hyland Hunt.
Abby C. Wright, Attorney, U.S. Department of Justice,
argued the cause for appellee. With her on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney
General, Alisa B. Klein, Attorney, William B. Schultz, General
Counsel, U.S. Department of Health and Human Services,
Janice L. Hoffman, Associate General Counsel, Susan
Maxson Lysons, Deputy Associate General Counsel for
Litigation, and Jonathan C. Brumer, Attorney.
2
Before: GRIFFITH and KAVANAUGH, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
GRIFFITH, Circuit Judge: Tampa General Hospital
receives federal funds for serving patients who cannot pay for
the healthcare they receive. To determine how much federal
funding goes to each hospital for providing such care, the
Secretary of the U.S. Department of Health and Human
Services (HHS) makes certain “estimates” as required by the
Affordable Care Act. Although the Act bars judicial review of
the Secretary’s estimates, Tampa General seeks to challenge
the data underlying them. We hold that the bar on judicial
review of the Secretary’s estimates precludes review of the
underlying data as well.
I
Tampa General Hospital serves a large share of Tampa’s
low-income population. The federal government has long
compensated hospitals like Tampa General for serving low-
income patients by disbursing funds through a system known
as Disproportionate Share Hospital (DSH) payments. See 42
U.S.C. § 1395ww(d)(5)(F) (1988). Historically, HHS
calculated a hospital’s DSH payment based on the number of
days per year that the hospital served Medicaid and low-
income Medicare patients. This calculation did not factor in
the costs to the hospitals of “uncompensated care,” which
they provide to patients who have no means to pay, whether
through federal programs or otherwise. See Medicare Program
Final Rule, 78 Fed. Reg. 50,496, 50,622, 50,634-35 (Aug. 19,
2013).
The Affordable Care Act revised the process for
calculating DSH payments. The new formula, which took
effect in 2014, bases DSH payments largely on the
3
uncompensated care hospitals provide. See 42 U.S.C.
§ 1395ww(r) (2012); 78 Fed. Reg. at 50,622. HHS pays each
hospital 25% of the amount it received under the old formula,
42 U.S.C. § 1395ww(r)(1), then adds more based in part on
the Secretary’s “estimate” of the percentage of the nation’s
overall uncompensated care that each hospital provides, id.
§ 1395ww(r)(2)(C).
To implement this change, the Secretary issued a final
rule describing HHS’s methodology for calculating DSH
payments for 2014. 78 Fed. Reg. at 50,627-47. The Secretary
decided to estimate each hospital’s amount of uncompensated
care, one part of the DSH payment, by looking to the number
of days spent in each hospital by Medicaid patients and low-
income Medicare patients who receive Supplemental Security
Income benefits (Medicare SSI). Id. at 50,636-40. This
number is then divided by the total number of days that such
patients spent in all eligible hospitals to determine each
hospital’s share of the nation’s uncompensated care. In other
words, the Secretary decided to use each hospital’s number of
insured Medicaid and Medicare SSI patients as a proxy for its
number of low-income uninsured patients. The Secretary
reasoned that researchers often treat these two groups
similarly, and that the proxy data was reliable because it had
been “historically publicly available, subject to audit, and
used for payment purposes.” Id. at 50,635-37.
Hospitals keep track of the number of Medicaid patients
served by submitting annual reports to HHS. HHS decided to
use data from the hospitals’ 2010/2011 reports, which offered
“the most recently available” information. Id. at 50,638. If
hospitals determine that the initial figures they submitted were
inaccurate, they can amend their annual reports. Mindful of
this possibility, HHS picked the March 2013 updates as the
most recent data it would use. Id. at 50,641-42. HHS would
not use data submitted after the deadline when calculating
4
DSH payments for 2014 because there would not be enough
time to ensure its accuracy with an audit. Id. at 50,647.
Even so, Tampa General sought to give the Secretary
new data in April 2013. When the Secretary refused to use the
data, Tampa General filed suit in district court, arguing that
the Secretary’s reliance on “obsolete” data rather than “the
most recent data available” violated the Administrative
Procedure Act and the Medicare statute. Fla. Health Scis.
Ctr., Inc. v. HHS, 89 F. Supp. 3d 121, 126 (D.D.C. 2015).
Tampa General claimed that the data submitted in April 2013
established that it was entitled to $3 million more than the
Secretary originally calculated. Id. at 129.
The district court dismissed the hospital’s claim for lack
of subject matter jurisdiction, holding that 42 U.S.C.
§ 1395ww(r)(3), which precludes judicial review of the
Secretary’s “estimate” of a hospital’s amount of
uncompensated care, bars review of the Secretary’s choice of
data used in determining that estimate. The district court
reasoned that any other conclusion would be an end run
around the bar on review. Florida Health, 89 F. Supp. 3d at
129.
Tampa General timely appealed, and we have jurisdiction
under 28 U.S.C. § 1291.
II
We review de novo the district court’s dismissal for lack
of subject matter jurisdiction, taking Tampa General’s
allegations as true and drawing all reasonable inferences in its
favor. Council for Urological Interests v. Sebelius, 668 F.3d
704, 713 (D.C. Cir. 2011). Although it is Tampa General’s
burden to establish subject matter jurisdiction, Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992), we apply a
5
presumption in favor of judicial review of agency action and
read statutory bars on judicial review narrowly. El Paso Nat.
Gas Co. v. United States, 632 F.3d 1272, 1276 (D.C. Cir.
2011). But the presumption in favor of review can be
overcome by “specific language” in the statute that is a
“reliable indicator” of Congress’s intent to bar review. Tex.
Alliance for Home Care Servs. v. Sebelius, 681 F.3d 402, 408
(D.C. Cir. 2012) (quoting Block v. Cmty. Nutrition Inst., 467
U.S. 340, 349 (1984)).
We find such a reliable indicator here and affirm the
district court.
A
Tampa General seeks to challenge the Secretary’s refusal
to use the most recent available data to estimate the hospital’s
2014 DSH payment. But the Affordable Care Act bars
“administrative or judicial review” of “[a]ny estimate of the
Secretary” or “[a]ny period selected by the Secretary” to
determine each hospital’s DSH payment. See 42 U.S.C.
§ 1395ww(r)(3). 1 We recently held that virtually identical
language in another statute “unequivocally precludes review”
of the agency action that falls within the bar. Texas Alliance,
681 F.3d at 409 (“[T]hat there be ‘no administrative or
judicial review’ under the . . . statutes ‘or otherwise’
unequivocally precludes review of the Secretary’s actions
[listed in the judicial-review bar].”). Accordingly, we cannot
review the Secretary’s choice of data here if that decision “is
1
The judicial review bar provides in full: “There shall be no
administrative or judicial review under section 1395ff of this title,
section 1395oo of this title, or otherwise of the following: (A) Any
estimate of the Secretary for purposes of determining the factors
described in paragraph (2). (B) Any period selected by the
Secretary for such purposes.” 42 U.S.C. § 1395ww(r)(3).
6
of the sort shielded from review.” Id. (quoting Amgen, Inc. v.
Smith, 357 F.3d 103, 113 (D.C. Cir. 2004)). We conclude that
it is.
Tampa General concedes that the Act bars judicial review
of the Secretary’s “estimate” of the hospital’s “amount of
uncompensated care.” 42 U.S.C. § 1395ww(r)(2)(C)(i)
(providing that this “amount” is to be “estimated by the
Secretary”). But Tampa General argues that we can review
the underlying data on which the Secretary relied, because an
“estimate” is not the same thing as the “data” on which it is
based. The estimate is an output, and the data are an input.
Tampa General notes that the statute requires the Secretary to
base her estimates on “appropriate” data, id., and urges that its
challenge is to the Secretary’s reliance on inappropriate data,
not her methodology for estimating uncompensated care.
We rejected a similar argument in Texas Alliance. 681
F.3d at 409-10. There, HHS deemed suppliers of certain
healthcare products ineligible for a Medicare contract because
they had failed to meet the financial standards HHS had set
forth in a regulation. Although the statute precluded judicial
review of, among other things, “the awarding of contracts,”
the suppliers brought a challenge to the financial-standards
regulation. Id. at 409 (quoting 42 U.S.C. § 1395w-
3(b)(11)(B)). The suppliers argued that they could challenge
the financial standards, even though those standards affected
the Secretary’s decision whether to award a contract, because
only the ultimate contract decision was barred from review.
Id. at 410. In other words, the suppliers sought to challenge an
input (the financial standards), contending that only review of
the output (the awarding of contracts) was expressly off
limits.
But we rejected the categorical distinction between inputs
and outputs that the suppliers urged. Instead, we held that the
7
scope of the congressional directive that there be “no
administrative or judicial review” turned on the relationship
between the challenged decision and the agency action
shielded from review. Id. at 409-11. We reasoned that the
financial standards that determined a bidder’s eligibility for a
contract were “indispensable” to the ultimate contract
decision, which could not be challenged in court. Id. at 409-
10 (“If a bidder is found financially ineligible, its bid is
rejected[.]”). Additionally, the statute barred judicial review
of “the bidding structure” for such contracts, and the financial
standards were “integral” to and “inextricably intertwined”
with the Secretary’s bidding structure. Id. at 411 (identifying
each step in the bidding process that involved the challenged
financial standards). In sum, we could not review a decision
that was “indispensable” or “integral” to, or “inextricably
intertwined” with, the unreviewable agency action. Id. at 409-
11.
Following that reasoning, we cannot review the data that
underlie the Secretary’s estimate of Tampa General’s amount
of uncompensated care in 2014. As already described, to
determine that amount, the Secretary used the number of
Medicaid and Medicare SSI patients as a proxy for the
population of uninsured low-income patients. 78 Fed. Reg. at
50,636. No other data factored into the Secretary’s estimate of
uncompensated care. A challenge to the data would
“eviscerate the bar on judicial review.” El Paso, 632 F.3d at
1278. Just like the financial standards in Texas Alliance, the
underlying data here are “indispensable” and “integral” to,
and “inextricably intertwined” with, the Secretary’s estimate
of Tampa General’s amount of uncompensated care. 681 F.3d
at 409, 411. Indeed, the data are the entire basis for the
estimate. The bar on judicial review in section 1395ww(r)(3)
therefore “expressly preclude[s]” Tampa General’s challenge
to the data, id. at 411, and we lack jurisdiction to consider it.
8
Tampa General’s efforts to distinguish Texas Alliance fall
short. First, the hospital invokes the canon of statutory
interpretation that cautions against interpreting one provision
in a way that renders another redundant. Marx v. Gen.
Revenue Corp., 133 S. Ct. 1166, 1176-77 (2013) (discussing
the surplusage canon). Tampa General contends that the
statutory provision that bars judicial review of “[a]ny period
selected by the Secretary” for the purpose of calculating
Tampa General’s DSH payment, 42 U.S.C.
§ 1395ww(r)(3)(B), would do no work if “estimate” were
interpreted to bar review of anything that affects the estimate.
This is so, Tampa General claims, because the period affects
the estimate as well. According to Tampa General, Texas
Alliance did not involve two such separate provisions, one of
which would be deprived of “all meaning and effect” by the
government’s interpretation. Reply Br. 9 (emphasis omitted).
But our interpretation of “estimate” does not deprive the
“period” provision of all meaning and effect. To be sure, in
the part of the statute at issue, the period that the Secretary
chooses affects her estimate. See 42 U.S.C.
§ 1395ww(r)(2)(C) (requiring the Secretary to “estimate” the
“amount of uncompensated care” provided by each hospital
“for a period selected by the Secretary”). But the statute’s bar
on judicial review of “[a]ny period selected by the Secretary”
also encompasses two additional parts of the statute that are
not at issue in this case. See id. § 1395ww(r)(2)(A)-(B). As
applied to one of these provisions, the bar precludes review of
periods that have nothing to do with any estimate the
Secretary makes. See id. § 1395ww(r)(2)(B)(i) (requiring the
Secretary to “calculate[]” the number of uninsured people
nationwide “in the most recent period for which data is
available” by looking to “estimates” from the Congressional
Budget Office—not estimates made by the Secretary).
9
Even if our interpretation of “estimate” creates some
overlap with the “period” provision in the specific paragraph
at issue in this case, at times Congress “drafts provisions that
appear duplicative of others—simply, in Macbeth’s words, ‘to
make assurance double sure.’” Shook v. D.C. Fin.
Responsibility & Mgmt. Assistance Auth., 132 F.3d 775, 782
(D.C. Cir. 1998); see also Fort Stewart Sch. v. Fed. Labor
Relations Auth., 495 U.S. 641, 646 (1990) (recognizing that
Congress sometimes includes terms that are “technically
unnecessary, and were inserted out of an abundance of
caution”).
Tampa General invokes another canon of statutory
interpretation that applies where the context suggests that
Congress’s “mention of one thing” reasonably “impl[ies] the
preclusion of alternatives.” Shook, 132 F.3d at 782
(discussing the expressio unius canon). Tampa General
contends that the bar on review of the period, which is one
component of the estimate, shows that Congress left other
components of the estimate, like the data, subject to review.
This argument fails for the same reason as the argument
that the Secretary’s interpretation creates redundancies within
the statute. Although the period is a component of the
Secretary’s estimate in some provisions of the statute, in
others it is not a component of any such estimate. Thus,
“looking at the structure of the statute,” id., we doubt that by
explicitly barring review of the period, Congress intended to
allow review of the data underlying the Secretary’s estimate.
Instead, “a normal draftsman” would have foreclosed review
of the period to emphasize that the period cannot be reviewed
in challenges to calculations under any of the relevant
statutory provisions—whether or not the period is connected
to an estimate made by the Secretary. Id.
10
Finally, Tampa General argues that Texas Alliance is
distinguishable because the bar on judicial review we
considered there worked much differently than the bar on
judicial review before us. In Texas Alliance, the statute
precluded courts from reviewing the agency’s ultimate
decision whether to award a contract. By contrast, Tampa
General argues, the statute here creates no bar to a court
reviewing the Secretary’s ultimate decision as to the amount
of a hospital’s DSH payment, but only her intermediate
determination as to the estimate of a hospital’s share of
uncompensated care. To illustrate this difference, Tampa
General suggests that a hospital could challenge a DSH
payment that failed to take into account required statutory
factors other than the estimates or periods chosen by the
Secretary.
This is a distinction without a difference. The critical
factor in Texas Alliance was not whether the statute barred
from review the agency’s ultimate determination or merely an
intermediate step in reaching that decision. Rather, we were
concerned with the close connection between the element
being challenged and the decision that could not be
challenged in court. Texas Alliance, 681 F.3d at 409-11. That
analysis applies with equal force here. The dispositive issue is
whether the challenged data are inextricably intertwined with
an action that all agree is shielded from review, regardless of
where that action lies in the agency’s decision tree. Because
the data here are inextricably intertwined with the Secretary’s
estimate of uncompensated care, Tampa General cannot
challenge the Secretary’s choice of data in court.
Tampa General makes a similar argument that we should
read the bar here narrowly because Congress shielded from
judicial challenge only two components of HHS’s
methodology—the estimates and periods—rather than the
11
entire methodology or the ultimate determination. In contrast,
Tampa General points to other parts of the Affordable Care
Act where Congress broadly precluded judicial review of
ultimate payment amounts or entire methodologies for
determining payments. See, e.g., 42 U.S.C.
§ 1395ww(o)(11)(B)(i) (barring review of “the determination
of” the “amount of the value-based incentive payment”); id.
(barring review of the “methodology used to determine the
amount of the value-based incentive payment”). But even
viewing the bar here narrowly, the selection of data fits
squarely within it. The data and the estimate are so closely
intertwined that we cannot review either. As a result, we have
no jurisdiction to review the Secretary’s choice of data.
B
Tampa General also seeks to reframe its challenge as an
attack on something other than an estimate by the Secretary.
We are not persuaded.
Relying on our decision in ParkView Medical Associates
v. Shalala, 158 F.3d 146 (D.C. Cir. 1998), Tampa General
asserts that we should construe its complaint as a challenge to
HHS’s general rules leading to the estimate rather than as a
challenge to the estimate itself. In ParkView, we said that
even if judicial review of a decision is barred, “hospitals [are]
free to challenge the general rules leading to” that decision.
Id. at 148. This principle, according to Tampa General, allows
the hospital to challenge the Secretary’s refusal to use the data
that Tampa General thinks most accurate.
As Tampa General recognizes, however, since our
decision in ParkView we have clarified that judicial review is
not permitted “when a procedure is challenged solely in order
to reverse an individual . . . decision” that we otherwise
cannot review. Palisades Gen. Hosp. Inc. v. Leavitt, 426 F.3d
12
400, 405 (D.C. Cir. 2005). “The proposition that hospitals
may challenge the general rules leading to denial” is
“inapplicable” where “the hospital’s challenge is no more
than an attempt to undo” a shielded determination. Id. That
fits what Tampa General is trying to do in this case. Tampa
General has not brought a challenge to any general rules
leading to the Secretary’s estimate. Tampa General is simply
trying to undo the Secretary’s estimate of the hospital’s
uncompensated care by recasting its challenge to the
Secretary’s choice of data as an attack on the general rules
leading to her estimate.
Finally, Tampa General attempts to repackage its
arguments to fall within a line of cases in which we have
found jurisdiction to review an agency’s action that is ultra
vires, i.e., beyond the scope of its lawful authority. See Sw.
Airlines Co. v. TSA, 554 F.3d 1065, 1071 (D.C. Cir. 2009).
Because we presume Congress “rarely intends to foreclose
review of action exceeding agency authority,” we typically
construe bars on judicial review to extend “no further than the
Secretary’s statutory authority” to make the challenged
determination. Amgen, 357 F.3d at 112. Tampa General thus
contends that because the statute directs the Secretary to base
her estimates on “appropriate” data, 42 U.S.C.
§ 1395ww(r)(2)(C)(i), any estimate based on inappropriate
data is ultra vires.
To challenge agency action on the ground that it is ultra
vires, Tampa General must show a “patent violation of agency
authority.” Indep. Cosmetic Mfrs. & Distribs., Inc. v. U.S.
Dep’t of Health, Educ. & Welfare, 574 F.2d 553, 555 (D.C.
Cir. 1978); see also Qwest Corp. v. FCC, 482 F.3d 471, 476
(D.C. Cir. 2007) (defining “ultra vires” action as “patently in
excess of [the agency’s] authority” (quoting Wash. Ass’n for
Television & Children v. FCC, 712 F.2d 677, 682 (D.C. Cir.
13
1983))). A violation is “patent” if it is “[o]bvious” or
“apparent.” BLACK’S LAW DICTIONARY (10th ed. 2014).
Tampa General’s claimed violation is neither.
Tampa General relies heavily on our decision in
Southwest Airlines v. TSA, but that decision does not help the
hospital. The statute at issue in Southwest Airlines authorized
the Transportation Security Administration (TSA) to charge
airlines certain fees, but capped those fees at the amount that
airlines paid “for screening passengers and property” in the
era before the agency was formed. 554 F.3d at 1068 (quoting
49 U.S.C. § 44940(a)(2)(B)(i) (repealed)). Congress barred
judicial review of “[d]eterminations of the Under Secretary”
regarding the fee limitations. Id. at 1069 (quoting Pub. L. No.
107-71, 115 Stat. 597, 625 (2001)). But when TSA calculated
the fees, it included the screening costs for non-passengers as
well as for passengers. Even though we could not review the
fee determinations made “for screening passengers and
property,” we could and did invalidate the fee determinations
insofar as they included costs for screening non-passengers,
because those cost calculations patently fell outside TSA’s
statutory authority. See id. at 1071-72.
Here, the Secretary’s choice of data is not obviously
beyond the terms of the statute. It is far from apparent that
choosing March instead of April as the cutoff date for
hospitals to update their Medicaid data was “[in]appropriate.”
42 U.S.C. § 1395ww(r)(2)(C)(i). By asking us to review the
appropriateness of the data the Secretary used to calculate
Tampa General’s DSH payment, Tampa General urges us to
engage in the kind of “case-by-case review of the
reasonableness or procedural propriety of the Secretary’s
individual applications” that Congress intended to bar.
Amgen, 357 F.3d at 113. We will not permit Tampa General
to “couch[]” this type of reasonableness challenge “in terms
14
of the agency’s exceeding its statutorily-defined authority.”
Nw. Airlines, Inc. v. FAA, 14 F.3d 64, 73 (D.C. Cir. 1994).
IV
We affirm the district court and hold that 42 U.S.C.
§ 1395ww(r)(3) bars Tampa General’s challenge.