Alegent Health-Immanuel Medical Center v. Sebelius

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
ALEGENT HEALTH-IMMANUEL )
MEDICAL CENTER et al., )
)
Plaintiffs, )
)
v. ) Case No. 11-139 (EGS)
)
KATHLEEN SEBELIUS, )
)
Defendant. )
)
)
ST. ANTHONY’S HOSPITAL, et al., )
)
Plaintiffs, )
)
v. ) Case No. 11-1932 (EGS)
)
KATHLEEN SEBELIUS, )
)
Defendant. )
)
MEMORANDUM OPINION
In these related cases, over 100 hospitals and medical
centers participating in the Medicare and Medicaid program
(collectively, “plaintiffs”) filed suit against Kathleen
Sebelius in her official capacity as Secretary of the United
States Department of Health and Human Services. Plaintiffs
claim that HHS miscalculated the payments owed to them as
Medicare disproportionate share hospitals (“DSH”) for services
furnished to low income patients. Complaint ¶ 1. As another
judge on this court explained in a substantially identical case,
although the statutory scheme is complex, “the fundamental
dispute between the parties is relatively simple: whether
patient days attributable to participants in the Medicare+Choice
program” or Medicare Advantage plan under Part C of Medicare
“should be included in the “Medicaid fraction” portion of
calculations for reimbursement pursuant to the DSH statute.”
Baptist Medical Center v. Sebelius, 855 F. Supp. 2d 1 (D.D.C.
2012).
The D.C. Circuit resolved this dispute in Northeast
Hospital Corporation v. Sebelius, 657 F.3d 1 (D.C. Cir. 2011).
The Circuit held that HHS’ decision to exclude these patient
days from the Medicaid fraction prior to October 1, 2004
violates the rule against retroactive rulemaking. See id. at
16-17. Accordingly, the Circuit held that that HHS could not
count the patient days of individuals enrolled in Medicare Part
C in the Medicare fraction of the Medicare DSH calculation when
determining a provider’s DSH payment for fiscal years preceding
October 1, 2004.
The parties agree that Northeast Hospital is controlling in
both cases before this Court, and further agree that the cases
should be remanded to HHS for recalculation of the reimbursement
amounts owed to plaintiffs, “which is the relief to which
Plaintiffs would be entitled if they were to prevail on the
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merits here.” St. Anthony’s v. Sebelius, Case No. 11-1932,
Defendant’s Motion to Dismiss and Remand at 2, ECF No. 10. The
only remaining issue is whether the Court should impose
additional obligations on the agency in its remand order.
Plaintiffs request the Court include several such obligations,
while defendant argues that the Court not include any.
For the reasons set forth below, the Court will vacate and
remand the final decisions of the Secretary, and will further
order the Secretary to pay the plaintiff providers interest on
any additional amounts determined to be owing to plaintiffs
after recalculation. The Court will not, however, issue any
other specific instructions to the Secretary to follow on
remand, nor will the Court retain jurisdiction. Accordingly,
Defendant’s Motion to Dismiss and Remand in St. Anthony’s
Hospital and Plaintiffs’ Motion for Judgment in Alegent Health-
Immanuel Medical Center are GRANTED only insofar as consistent
with this Memorandum Order.
Plaintiffs’ first request, that the Secretary’s decisions
be vacated and the cases remanded for further proceedings
consistent with Northeast Hospital, is not contested. See
Def.’s Opp’n to Pls.’ Mot. for Judgment at 2, Alegent Health-
Immanuel Medical Center, ECF No. 18. Accordingly, in light of
the parties’ agreement and for good cause shown, the Court will
grant this request.
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The Court is also persuaded by plaintiffs’ argument that
the remand order should include an instruction that the
Secretary pay interest on any additional reimbursements owed
upon remand pursuant to 42 U.S.C. § 1395oo(f)(2). The statute
provides, in pertinent part:
Where a provider seeks judicial review [of certain
decisions by the Secretary, including the ones at issue in
these cases], the amount in controversy shall be subject to
annual interest . . . to be awarded by the reviewing court
in favor of the prevailing party.
Id. Defendants do not dispute that plaintiffs are the
prevailing parties in these cases. See Tucson Med. Ctr. v.
Sullivan, 947 F.2d 971, 982 (D.C. Cir. 1991) (describing a two-
part test for a prevailing party for purposes of section
1395oo(f)(2): whether the party “substantially received the
relief sought,” and whether the civil action was “a catalytic,
necessary or substantial factor in obtaining the relief.”); see
also St. Anthony’s, Case No. 11-1932, Def.’s Motion to Dismiss
and Remand at 2 (agreeing that the case should be remanded to
HHS for recalculation of the reimbursement amounts owed to
plaintiffs, “which is the relief to which Plaintiffs would be
entitled if they were to prevail on the merits here.”) In
addition, “Section 1395oo(f)(2) is explicitly directed to the
judiciary. It provides that interest shall “be awarded by the
reviewing Court in favor of the prevailing party.”” Tucson, 947
F.2d at 981 (quoting 42 U.S.C. § 1395oo(f)(2)). Because the
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statutory provision is not directed at the agency’s
administration of the law on remand, but rather is a directive
to the reviewing court, this Court concludes it should be part
of the order dismissing and remanding these cases.1
Plaintiffs seek two additional requirements in the remand
orders, namely, that the Court (1) issue instructions to the
Agency as to how to recalculate plaintiffs’ DSH payments on
remand, and order the Agency to act promptly in doing so; and
(2) retain jurisdiction pending the completion of the remand and
order the Secretary to file progress reports every 90 days. The
Court declines to include either. Although the Court
sympathizes with Plaintiffs’ desire for clear directions to, and
prompt attention from, the agency, “[u]nder settled principles
of administrative law, when a court reviewing agency action
determines that an agency made an error of law, the court’s
inquiry is at an end: the case must be remanded to the agency
for further action consistent with the corrected legal
standards.” PPG Indus. Inc. v. United States, 52 F.3d 363, 365
1
The Secretary argues that it is premature to determine that
there are amounts due to plaintiffs at that time. See Alegent
Health-Immanuel Med. Ctr., Def.’s Opp’n to Pls.’ Mot. for
Judgment at 3. Defendant’s argument is misplaced. This Order
does not constitute a determination that additional amounts are
indeed owing to the plaintiffs after recalculation; that is to
be determined by the agency on remand, in accordance with
Northeast Hospital. However, to the extent that there are
amounts due, the Court awards interest on those amounts in
accordance with the statute.
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(D.C. Cir. 1995) (citations omitted). “Only in extraordinary
circumstances do courts issue detailed remedial orders.”
Baptist Med. Ctr., 855 F. Supp. 2d at 3 (quoting N.C. Fisheries
Ass’n v. Gutierrez, 550 F.3d 16, 20 (D.C. Cir. 2008)).
Likewise, although courts have discretion to retain
jurisdiction pending completion of a remand and to order
progress reports in the meantime, this discretion is also
exercised only in unusual circumstances, not present here, such
as “cases alleging unreasonable delay of agency action or
failure to comply with a statutory deadline, or for cases
involving a history of agency noncompliance with court orders or
resistance to fulfillment of legal duties.” Baystate Med. Ctr.
v. Leavitt, 587 F. Supp. 2d 37, 41 (D.D.C. 2008). “The norm is
to vacate agency action that is held to be arbitrary and
capricious and remand for further proceedings consistent with
the judicial decision, without retaining oversight over the
remand proceedings.” Id. (collecting cases). The Court finds
no reason to depart from “the norm” in these cases, and
accordingly will not exercise its discretion to do so.
For the foregoing reasons, it is hereby
ORDERED Defendant’s Motion to Dismiss and Remand in St.
Anthony’s Hospital is GRANTED; and it is further
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ORDERED that Plaintiffs’ Motion for Judgment in Alegent
Health-Immanuel Medical Center is GRANTED IN PART AND DENIED IN
PART; and it is further
ORDERED that both these actions are dismissed without
prejudice; and it is further
ORDERED that the final decisions of the Secretary in both
these cases is VACATED; and it is further
ORDERED that both these matters are remanded to the
Secretary for further proceedings consistent with the holdings
in Northeast Hospital Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir.
2011); and it is further
ORDERED that, in the event the Secretary determines
additional monies are due on remand, the Secretary shall pay
plaintiffs in both cases interest on the amount in controversy
calculated in accordance with 42 U.S.C. § 1395oo(f)(2), and it
is further
ORDERED that plaintiffs’ motion is DENIED in all respects
not consistent with this memorandum order.
An separate Order accompanies this Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
December 31, 2012
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