Allina Health Services v. Sebelius

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
ALLINA HEALTH SERVICES, et. al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 10-1463 (RMC)
)
KATHLEEN SEBELIUS, Secretary, )
U.S. Department of Health and )
Human Services, )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
Plaintiff Hospitals1 bring suit under the Medicare Act, Title XVIII of the Social
Security Act, 42 U.S.C. § 1395 et seq., and the Administrative Procedure Act, 5 U.S.C. § 551 et
seq., challenging the interpretation by the U.S. Department of Health and Human Services of a
specific kind of Medicare payment. Pending before the Court are the parties’ cross-motions.
The Hospitals seek a preliminary injunction to direct the Secretary of HHS to amend its
methodology while the Secretary moves the Court to stay this matter pending the resolution of an
appeal in a related case by the D.C. Circuit. See Northeast Hospital Corp. v. Sebelius, 699 F.
Supp. 2d 81 (D.D.C. 2010), appeal docketed, No. 10-5163 (D.C. Cir. May 27, 2010). See Def.’s
1
Plaintiff Hospitals include Allina Health Services, Highland Hospital of Rochester,
Kaleida Health, Kingsbrook Jewish Medical Center, Lutheran Medical Center, Maimonides
Medical Center, Methodist Dallas Medical Center, Methodist Hospitals of Dallas, Montefiore
Medical Center, Mount Sinai Medical Center of Florida, Inc., New York Hospital Medical
Center of Queens, New York Methodist Hospital, New York Presbyterian Hospital, North
Carolina Baptist Hospital, North Shore Long Island Jewish Health System, Inc., Shands Medical
Center, Inc., Shands Teaching Hospital and Clinics, Inc., University of Rochester, Florida Health
Sciences Center, Inc., and the Henry Ford Health System.
Mot. to Stay Proceedings [Dkt. # 7]. The parties agree that the D.C. Circuit’s decision in
Northeast will likely be dispositive of the merits of this case. See id. at 2; Pls.’ Reply in Supp. of
Mot. for Prelim. Inj. [Dkt. # 14] 1, 3. For reasons articulated below, the Court will deny the
Plaintiffs’ request for a preliminary injunction without prejudice and will grant the Secretary’s
motion for a stay until the D.C. Circuit renders its opinion on the Northeast appeal.
I. FACTS
The Secretary administers Medicare through the Centers for Medicare and
Medicaid Services (“CMS”), an agency within HHS. The Medicare program includes Part A,
which authorizes payments to hospitals for covered inpatient services, see 42 U.S.C. § 1395c to
1395i-4, based on prospectively determined, standardized, national and regional rates, rather than
on the actual operating costs incurred by providers. Id. § 1395ww(d)(1)-(4); see also Southeast
Alabama Med. Ctr. v. Sebelius, 572 F.3d 912, 914 (D.C. Cir. 2009). However, the system allows
for certain upward payment adjustments based on hospital-specific factors, including a
“disproportionate share hospital” (“DSH”) adjustment. DSH provides an upward adjustment for
hospitals that serve a disproportionate number of low-income patients, due to the higher costs
incurred by serving this population. See 42 U.S.C. § 1395ww(d)(5)(F)(i)(I).
This case focuses on the method by which the Secretary calculates whether and to
what extent a hospital qualifies for such an adjustment, based, in part, on the hospital’s
“disproportionate patient percentage.” See id. § 1395ww(d)(5)(F). The disproportionate patient
percentage is a statutory formula determined by adding the results of two fractions and
expressing that sum as a percentage. The two computations are: (a) the Medicare/Supplemental
Security Income (“SSI”) fraction, and (b) the Medicaid fraction. Id. § 1395ww(d)(5)(F)(vi))(I),
2
(II); see also 42 C.F.R. § 412.106(2)(b). The SSI fraction is meant as a proxy for low-income
Medicare patients and is defined as:
the fraction (expressed as a percentage), the numerator of which is
the number of such hospital’s patient days for such period which
were made up of patients who (for such days) were entitled to
benefits under part A of [Title XVIII] and were entitled to [SSI]
benefits (excluding any State supplementation) under [Title] XVI
of this chapter, and the denominator of which is the number of
such hospital’s patient days for such fiscal year which were made
up of patients who (for such days) were entitled to benefits under
part A of [Title XVIII] . . . .
42 U.S.C. § 1395ww(d)(5)(F)(vi)(I) (emphasis added). The SSI fraction is therefore based on the
number of patient days that are attributable to individuals who are receiving SSI benefits and
who are “entitled to benefits under part A.”
A Medicare beneficiary has the option to receive benefits for hospital care under
Medicare Part C, also called the Medicare Advantage program, instead of Part A. See id.
§ 1395w-21(a)(1); 42 C.F.R. § 422.50. Part C allows beneficiaries to enroll with private health
organizations, such as a health maintenance organization (HMO), which have entered into a
payment contract with Medicare. The Medicare program does not pay hospitals directly for
services provided to patients enrolled in Part C plans. Instead, CMS contracts with these private
health organizations, and pays them directly for services provided to Part C enrollees at pre-
determined per-patient rates. See 42 U.S.C. § 1395w-23(f), -27, -21(i)(1)–(2).
While the obligations of a Medicare Advantage plan to a Part C enrollee are
heavily regulated by federal law and federal contracts, the terms of the contractual relationship
between the plan and the hospital, or other health care provider, are left largely to the parties to
negotiate and define. This includes the financial terms and reimbursement rates within the
3
contract. Thus, if a dispute erupts between a Medicare Advantage organization and a hospital,
for instance, neither the Medicare Advantage statute, nor CMS’s regulations, nor CMS’s contract
with the insurer provides terms of resolution.
In certain situations, Medicare Advantage plans are required to pay for services
provided to their enrollees even though the plans do not have a contract with the hospital in
question. See 42 C.F.R. § 422.100(b). In such a case, the hospital must “accept as payment in
full,” the amount that would have been paid by Medicare Part A as if the services had been
provided on that basis. 42 U.S.C. § 1395cc(a)(1)(O). CMS has not further defined this statutory
requirement through regulation. See 42 C.F.R. § 422.214. CMS does, however, make
information available so that hospitals and Medicare Advantage plans can estimate what
Medicare Part A would have paid for a particular service.
The Hospitals challenge the Secretary’s current definition of the term “entitled to
benefits” under Medicare Part A per the DSH statute. Prior to 2004, the Secretary interpreted the
Medicare DSH statute to exclude Part C days in the SSI fraction, i.e., Part C enrollees were not
counted as being entitled to benefits under Part A. However, the Secretary changed course in
2004, see 69 Fed. Reg. 48916, 49099 (Aug. 11, 2004), although the policy was not immediately
implemented. Starting with federal fiscal year 2007 claims, the Secretary has employed an SSI
fraction which includes Part C patient days, thereby finding that Part C patients are entitled to
benefits under Part A. Plaintiffs sue to block the Secretary from including Part C days in the SSI
fraction.
II. LEGAL STANDARD
A district court has broad discretion to stay a proceeding pending the resolution of
4
proceedings in other courts where the other proceedings may affect the scope and necessity for
the litigation. IBT/HERE Employee Representatives’ Council v. Gate Gourmet Div. Am., 402 F.
Supp. 2d 289, 292–93 (D.D.C. 2005); see also Landis v. N. Am. Co., 299 U.S. 248, 254–55
(1936). “The power to stay proceedings is incidental to the power inherent in every court to
control the disposition of the causes on its docket with economy of time and effort for itself, for
counsel, and for litigants. How this can best be done calls for the exercise of judgment, which
must weigh competing interests and maintain an even balance.” Air Line Pilots Ass’n v. Miller,
523 U.S. 866, 879 n.6 (1998). Therefore, “[a] trial court may, with propriety, find it is efficient
for its own docket and the fairest course for the parties to enter a stay of an action before it,
pending resolution of independent proceedings which bear upon the case.” IBT/HERE, 402 F.
Supp. 2d at 292 (quoting Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863–64 (9th Cir.
1979)).
A district court may grant a preliminary injunction “to preserve the relative
positions of the parties until a trial on the merits can be held.” Univ. Of Tex. v. Camenisch, 451
U.S. 390, 395 (1981). An injunction is an equitable remedy so its issuance is one which falls
within the sound discretion of the district court. See Hecht Co. v. Bowles, 321 U.S. 321, 329
(1944). However, an injunction is an extraordinary and drastic form of relief. Mazurek v.
Armstrong, 520 U.S. 968, 972 (1997). A plaintiff seeking a preliminary injunction must
establish that:
(a) he is likely to succeed on the merits;
(b) that he is likely to suffer irreparable harm in the absence of
preliminary relief;
(c) that the balance of equities tips in his favor; and
(d) that an injunction is in the public interest.
5
Winter v. NRDC, Inc., 129 S. Ct. 365, 374 (2008); accord Ark. Dairy Coop Ass’n, Inc. v. U.S.
Dep’t of Agric., 573 F.3d 815, 821 (D.C. Cir. 2009).
The foregoing factors should be balanced on a “sliding scale,” i.e., a lesser
showing on one factor can be surmounted by a greater showing on another factor. CSX Transp.,
Inc. v. Williams, 406 F.3d 667 (D.C. Cir. 2005). Even so, in order to justify intruding into the
ordinary litigation process by issuing a preliminary injunction, it is critical that a movant 1) make
a substantial showing of likelihood of success on the merits and 2) make a showing of at least
some injury. CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C. Cir.
1995). A preliminary injunction is “an extraordinary remedy that should be granted only when
the party seeking the relief, by a clear showing, carries the burden of persuasion.” Cobell v.
Norton, 391 F.3d 251, 258 (D.C. Cir. 2004).
III. ANALYSIS
A. Likelihood of Success on the Merits
The parties agree that the resolution of Northeast by the D.C. Circuit will be
dispositive of the claims in this matter.2 See Def.’s Mot. to Stay 2; Pls.’ Reply in Supp. of Mot.
2
The Secretary’s appeal of the district court decision was docketed as No. 10-5163, see
Northeast Hospital Corp. v. Sebelius, No. 10-5163 (D.C. Cir. filed May 27, 2010), whereas
Plaintiff Northeast Hospital Corporation filed a cross-appeal, docketed as No. 10-5185, see
Northeast Hospital Corp. v. Sebelius, No. 10-5185 (D.C. Cir. June 6, 2010). The parties in this
matter refer to the appeal as No. 10-5185 because the D.C. Circuit consolidated the Secretary’s
appeal with the cross-appeal. See Northeast, No. 10-5185, Order Consolidating Cases [Dkt.
# 1252546] (D.C. Cir. June 29, 2010). However, by joint stipulation, see id., Joint Stipulation of
Dismissal [Dkt. # 1272284] (D.C. Cir. Oct. 19, 2010), Northeast Hospital Corporation’s cross-
appeal was dismissed. Accordingly, the D.C. Circuit dismissed the cross-appeal, No. 10-5185,
and terminated the consolidation of the cases. See id., Order Dismissing No. 10-5185 [Dkt.
# 1272655] (D.C. Cir. Oct. 20, 2010). Therefore, while the parties continue to refer to the
Northeast appeal as No. 10-5185 in their briefs, it is now in fact case No. 10-5163.
6
for Prelim. Inj. [Dkt. # 14] 1, 3. Despite the pending decision by the D.C. Circuit, the Hospitals
point to the reasoning of the Northeast district court as proof that they will likely succeed on the
merits and, in fact, believe the Northeast decision and stare decisis compel this Court to come to
the same conclusion.3 See Reply 3 (citing to Brewster v. Commissioner, 607 F.2d 1369, 1373
(D.C. Cir. 1979) (“Stare decisis compels adherence to a prior factually indistinguishable decision
of a controlling court. This principle assumes increased importance when the antecedent case
involves construction of a statute.”) (internal citations omitted)). Stare decisis is inapplicable
here as the Northeast district court is not a controlling court. Although the decision may be
persuasive, “one district court decision is not binding on another district court.” Am. Council of
the Blind v. Wash. Metro. Area Transit Auth., 133 F. Supp. 2d 66, 74 n.2 (D.D.C. 2001); accord
In re Executive Office of the President, 215 F.3d 20, 24 (D.C. Cir. 2000) (“District Court
decisions do not establish the law of the circuit, nor, indeed, do they even establish the law of the
district.”) (citations and internal quotation marks omitted).
The Hospitals ask this Court to evaluate, and rely on, the decision of another
judge of this district to find the Secretary’s actions unlawful despite the fact that the D.C. Circuit
is currently reviewing the same opinion and will soon issue a controlling decision in this matter.
Ultimately, an injunction is not a remedy that “issues as of course.” Weinberger v.
Romero-Barcelo, 456 U.S. 305, 311 (1982). This is true even when a plaintiff demonstrates a
substantial likelihood that a challenged agency action was unlawful. See Amoco Prod. Co. v.
3
Plaintiffs also move the Court to convert their motion for a preliminary injunction to a
motion for summary judgment, and upon deciding this case on its merits, grant the Plaintiffs both
declaratory and injunctive relief. See Reply 3. For the reasons stated in this decision, this motion
will also be denied.
7
Vill. of Gambell, 480 U.S. 531, 542 (1987) (“[The] grant of jurisdiction to ensure compliance
with a statute hardly suggests an absolute duty to do so under any and all circumstances, and a
federal judge sitting as chancellor is not mechanically obligated to grant an injunction for every
violation of law.”) (internal citation omitted), National Wildlife Fed'n v. Espy, 45 F.3d 1337,
1343 (9th Cir. 1995) (“Although the district court has power to do so, it is not required to set
aside every unlawful agency action. The court’s decision to grant or deny injunctive or
declaratory relief under APA is controlled by principles of equity.”). Even assuming the
Hospitals have demonstrated a likelihood of success on the merits, the Court will nonetheless
deny its motion for a preliminary injunction without prejudice in light of the imminence of a
controlling decision from the D.C. Circuit and the public interest.
B. Irreparable Harm
The Hospitals argue they are suffering irreparable harm because the inclusion of
Part C days in the SSI fraction is irretrievably depriving them of significant Medicare Advantage
payments. Specifically, the damage to the Hospitals caused by the Secretary’s 2007 SSI fraction
derives from not only out-of-network payments, where a plan pays a hospital what Part A would
have paid for the same services, but also, many plans with whom Plaintiffs contract also
negotiate rates that pay what Part A would have paid. Representing approximately twenty-nine
non-profit hospitals, Plaintiffs argue they collectively lost more than $22 million dollars over the
first year following the publication of the challenged fraction, from September 1, 2009 through
August 30, 2010. See Pls.’ Mem. in Supp. of Mot. for Prelim. Inj. [Dkt. # 9] 18; Reply 5.
A plaintiff faces a high burden to demonstrate irreparable injury. The injury
“must be both certain and great; it must be actual and not theoretical.” Wisc. Gas Co. v. FERC,
8
758 F.2d 669, 674 (D.C. Cir. 1985) (per curiam). “The moving party must show the injury
complained of is of such imminence that there is a clear and present need for equitable relief to
prevent irreparable harm.” Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297
(D.C. Cir. 2006) (internal quotation marks omitted). The injury must also be without remedy.
As the Circuit has held: “The key word in this consideration is irreparable. Mere injuries,
however substantial, in terms of money, time and energy necessarily expended in the absence of
a stay are not enough. The possibility that adequate compensatory or other corrective relief will
be available at a later date, in the ordinary course of litigation weighs heavily against a claim of
irreparable harm.” Id. at 297–98 (quoting Virginia Petroleum Jobbers Asso. v. Federal Power
Com., 259 F.2d 921, 925 (D.C. Cir. 1958)) (internal quotation marks omitted).
The “general rule [is] that economic harm does not constitute irreparable injury.”
Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1295 (D.C. Cir. 2009). Harm that is
“merely economic” in character is typically not sufficiently grave under the irreparable injury
standard. See, e.g., Robinson-Reeder v. Am. Council on Educ., 626 F. Supp. 2d 11, 14 (D.D.C.
2009); Coal. for Common Sense in Gov’t Procurement v. United States, 576 F. Supp. 2d 162,
168 (D.D.C. 2008) (noting that where the alleged injury was admittedly economic, movant must
compensate by demonstrating the severity of its alleged economic harm).
Alleged economic injury must be “more than simply irretrievable,” Mylan Labs.,
Inc. v. Leavitt, 484 F. Supp. 2d 109, 123 (D.D.C. 2007); it must also be “serious in terms of its
effect on the plaintiff.” Hi-Tech Pharmacal Co. v. FDA, 587 F. Supp. 2d 1, 11 (D.D.C. 2008);
accord Toxco Inc. v. Chu, Civ. No. 09-1925, 2010 U.S. Dist. LEXIS 72567, *39 (D.D.C. July 20,
2010). Therefore, an inability to recover lost profits or payments does not always constitute
9
irreparable harm. See LG Electronics, U.S.A., Inc. v. Dep’t of Energy, 679 F. Supp. 2d 18, 35–36
(D.D.C. 2010) (noting that “[e]ven assuming [the plaintiff] will not be able to recover monetary
damages from DOE . . . the financial impact [the plaintiff] claims it will suffer does not rise to
the level of irreparable harm” as those losses represented “a minuscule portion of the company’s
worldwide revenues”), Coal. for Common Sense in Gov’t Procurement, 576 F. Supp. 2d at169–70 (holding that the plaintiff’s claims of lost income, even if irretrievable, did not rise to the
level of irreparable harm because the losses amounted to a fraction of the plaintiff’s overall
business), Sandoz, Inc. v. F.D.A., 439 F. Supp. 2d 26, 31–32 (D.D.C. 2006) (holding that even if
the court were to credit the plaintiff’s allegations of thirty one million dollars in irretrievably lost
sales during the pendency of the litigation, the economic loss was insufficiently severe in the
context of the plaintiff’s overall business operations to warrant a finding of irreparable harm),
Apotex, Inc. v. Food & Drug Admin., Civ. No. 06-0627, 2006 U.S. Dist. LEXIS 20894, *53–57
(D.D.C. Apr. 19, 2006) (concluding that the plaintiff’s lost sales during the pendency of the
litigation, even if irretrievable, were insufficiently severe to constitute irreparable harm); but see
Smoking Everywhere, Inc. v. FDA, 680 F. Supp. 2d 62, 77 n.19 (D.D.C. 2010) (“It is also worth
noting that even if the claimed economic injury did not threaten plaintiffs’ viability, it is still
irreparable because plaintiffs cannot recover money damages against FDA. Where a plaintiff
cannot recover damages from an agency because the agency has sovereign immunity, any loss of
income suffered by [the] plaintiff is irreparable per se.”) (quotations and citations omitted) aff’d
No. 10-5032, slip. op. (D.C. Cir. Dec. 7, 2010), Bracco Diagnostics v. Shalala, 963 F. Supp. 20,
29 (D.D.C. 1997) (noting that alleged irretrievable economic harm would result in “significant
and irreparable” injury as plaintiffs were small companies).
10
The Secretary contends that the harm alleged by the Hospitals represents a small
economic loss to the Hospitals so that even if irretrievable, the loss does not rise to the level of
irreparable harm. Plaintiffs counter that they operate on “razor-thin margins” or at a loss. Reply
7. By the Hospitals’ estimate, the yearly impact per hospital ranges from $95,101 to a high of
$3.4 million, with an average yearly loss of approximately $789,000 per hospital. See Reply,
[Ex. 2] Summary of Economic Impact on Plaintiffs.4 However, none of the Hospitals alleges that
the claimed loss has endangered its viability or has impacted its ability to provide services.
The Hospitals’ claim of irreparable injury is somewhat speculative, as it is unclear
to what extent an injunction would remedy the injury. The Secretary asserts that even if she were
ordered to cease using the published 2007 SSI fraction, or any fraction that included Part C days,
it would not necessarily follow that Medicare Advantage plans would also stop using the 2007
fraction, or an SSI fraction that included Part C days, let alone start paying the Hospitals greater
amounts. Opp’n [Dkt. # 13] 16. While the insurance plans must pay out-of-network providers
an amount equal to the amount Part A would pay for the same hospital services, it appears that
the Secretary does not mandate a precise amount and the Medicare Advantage plans are free to
use their own calculation. See Opp’n, [Ex. 3] Decl. of William London, Office of the Actuary,
CMS, ¶¶ 4, 6–10. Thus, even if the Secretary were directed to change the SSI fraction, it appears
that some plans could disregard the Secretary’s new fraction to calculate out-of-network
payments.
The Medicare DSH system provides for a great deal of flexibility in its joints. In
4
The $789,000 average is derived from Plaintiffs’ Summary of Economic Impact. It
appears from the document that twenty-nine individual hospitals suffered a combined yearly loss
of $22,893,850. See Reply, [Ex. 2] Summary of Economic Impact on Plaintiffs.
11
the end, Medicare Advantage plans are not parties to this action, so the amount, degree, and pace
of financial relief the Hospitals would enjoy from an injunction against the Secretary remains
speculative and largely dependent upon the actions of third parties. The Hospitals undoubtedly
suffer from a meaningful loss in payments, but when the amount of the alleged economic injury
is viewed in context of the speculative nature of the requested injunction to fully remedy the loss,
the question of whether the Hospitals have satisfied their burden of demonstrating irreparable
harm becomes a close one.
C. Balance of Equities
Just as the Hospitals argue that lost payments are irretrievable if they ultimately
prevail, the corollary is that if the Court issued an injunction and the Secretary ultimately
prevailed, the Medicare Advantage plans and the Secretary would likely be unable to recover
whatever additional amounts they will have paid the Hospitals. See Opp’n 4, 32. The balance of
equities weighs against an injunction as the alleged irreparable economic injury suffered by the
Plaintiffs would be offset by the corresponding economic injury to the Secretary or third party
Medicare Advantage plans. See Virginia Petroleum, 259 F.2d at 925 (“Relief saving one
claimant from irreparable injury, at the expense of similar harm caused another, might not qualify
as the equitable judgment that a stay represents.”), Amoco, 480 U.S. at 542 (noting that in
considering a claim of irreparable injury, “a court must balance the competing claims of injury
and must consider the effect on each party of the granting or withholding of the requested
relief”); see also Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1326 (D.C. Cir. 1998). The
Hospitals have failed to demonstrate that the “balance of equities tips in [their] favor.” Winter,
129 S. Ct. at 374.
12
D. Whether An Injunction Would Be in the Public Interest
A consideration of the effect of an injunction on the public interest is a
predominant concern here. “In exercising their sound discretion, courts of equity should pay
particular regard for the public consequences in employing the extraordinary remedy of
injunction.” Winter, 129 S. Ct. at 376–77 (quoting Romero-Barcelo, 456 U.S. at 312);
Romero-Barcelo, 456 U.S. at 312 (noting that where an injunction is sought that would adversely
affect the public interest, a court may deny the relief until an adjudication of the merits, even
where postponement may be burdensome to the plaintiff). It is axiomatic that the purpose of a
preliminary injunction is to preserve the status quo pending a hearing on the merits, Camenisch,
451 U.S. at 395, yet the Hospitals seek to disrupt the status quo by forcing the Secretary to
change the SSI fraction pending a disposition on the merits before this Court and a related appeal
before the D.C. Circuit. It is also noteworthy that the Hospitals seek a mandatory, as opposed to
a prohibitive injunction. Some courts have held the movant for a mandatory injunction to a
higher burden, although the D.C. Circuit has yet to address this question.5
5
For instance, this Court found:
The party that moves for a mandatory preliminary injunction must
do more than merely raise a serious question about the law under
which its predicates the right of recovery. In such cases, “where a
party seeks mandatory preliminary relief that goes well beyond
maintaining the status quo pendente lite, courts should be
extremely cautious about issuing a preliminary injunction.”
Stanley v. University of S. Cal., 13 F.3d 1313, 1319 (9th Cir.
1994). Thus, “where an injunction is mandatory--that is, where its
terms would alter, rather than preserve, the status quo by
commanding some positive act--the moving party must meet a
higher standard than in the ordinary case by showing ‘clearly’ that
he or she is entitled to relief or that ‘extreme or very serious
damage’ will result from the denial of the injunction.” Phillip v.
13
Plaintiffs argue that equity favors an injunction as the purpose of the Medicare
DSH statute is to compensate hospitals for the higher costs of medical care to low-income
patients. Pls.’ Mem. 35 (citing to Jewish Hosp. v. Secretary of Health & Human Servs., 19 F.3d
270, 275 (6th Cir. 1994) (noting that the overarching intent of Congress in adopting the DSH
payment scheme was to supplement resources available to hospitals serving low-income persons
and to “ensure the continued operation of these facilities for the benefit of those persons who
have no other health care alternative”)). Plaintiffs further argue that compliance with the law
serves the public interest. See, e.g., In re Medicare Reimbursement Litig., 309 F. Supp. 2d 89, 99
(D.D.C. 2004) (holding, in a mandamus action, that “the Secretary’s compliance with applicable
law constitutes a separate, compelling public interest”), aff’d 414 F.3d 7 (D.C. Cir. 2005). It is
also true that a court will not reflexively issue an injunction just because a movant has shown
there to be a violation of the law. Amoco Prod. Co., 480 U.S. at 542. The services provided by
the Hospitals to a population in need undoubtedly benefits the public interest and it is
Fairfield Univ., 118 F.3d 131, 133 (2d Cir. 1997). As a rule,
“when a mandatory preliminary injunction is requested, the district
court should deny such relief ‘unless the facts and law clearly favor
the moving party.’” Id. (quoting Anderson v. United States, 612
F.2d 1112, 1114 (9th Cir. 1979)) (emphasis added); accord
Martinez v. Mathews, 544 F.2d 1233, 1243 (5th Cir. 1976).
Columbia Hosp. for Women Found. v. Bank of Tokyo-Mitsubishi, 15 F. Supp. 2d 1, 4–5 (D.D.C.
1997); accord In re Navy Chaplaincy, 516 F. Supp. 2d 119, 123 (D.D.C. 2007), Veitch v. Danzig,
135 F. Supp. 2d 32, 35 (D.D.C. 2001), Adair v. England, 217 F. Supp. 2d 1, 3 n.6 (D.D.C. 2002).
The D.C. Circuit has yet to adopt or reject a heightened burden for mandatory injunctions. See
Columbia Hosp. for Women Found. v. Bank of Tokyo-Mitsubishi, No. 97-7225, 1998 U.S. App.
LEXIS 7871 (D.C. Cir. Apr. 17, 1998), Friends for All Children, Inc. v. Lockheed Aircraft Corp.,
746 F.2d 816, 834 n.31 (D.C. Cir. 1984); but see Dorfmann v. Boozer, 414 F.2d 1168, 1173
(D.C. Cir. 1969) (“The power to issue a preliminary injunction, especially a mandatory one,
should be sparingly exercised.”) (internal quotation marks omitted).
14
uncontested these services fit within the purpose of the Medicare DSH program. However, this
is not a situation where only an injunction can vindicate the purpose of the statute in question,
nor one where the statute “compel[s]” such an extraordinary remedy. See Romero-Barcelo, 456
U.S. at 313–14. The rights sought to be vindicated by Plaintiffs will be addressed through this
litigation and the Northeast appeal.
The Court finds that the public interest would be harmed if an injunction were
granted. The Hospitals seek to force the Secretary to change the DSH payment scheme, based on
a general application statute that applies to hospitals and other providers. The burden of this
injunction on the Secretary and the interruption it could cause to DSH payments would be great.
This is not a dispute over a specific reimbursement or payment, but the method of calculating the
SSI fraction which applies to all entities involved in the DSH scheme. Even if, as the Hospitals
argue in their reply, see Reply 13–14, the injunction could be narrowly tailored to apply only to
the Plaintiffs, this would nonetheless create an enormous burden to the entire DSH payment
scheme by forcing the Secretary, and possibly the Medicare Advantage plans, to recognize a few
exceptions to the payment processing system. The public interest is served by the consistent and
uniform application of regulations to similarly-situated parties, without carving out judicial
exceptions for individual parties through the injunction mechanism.
Further, the public interest would not be served by such a disruptive remedy in
light of the D.C. Circuit’s impending and controlling decision on the legal issue which will
provide an opportunity for the Secretary, if changes are required, to alter the DSH payment
scheme consistently and uniformly. Winter, 129 S. Ct. at 378 (“The policy against the imposition
of judicial restraints prior to an adjudication of the merits becomes more significant when there is
15
reason to believe that the decree will be burdensome.”) (quoting 11A C. Wright, A. Miller, & M.
Kane, Federal Practice and Procedure § 2948.2, p. 167–68 (2d ed. 1995)). Therefore, despite the
fact that some measure of irreparable injury might result to the Hospitals until the D.C. Circuit
renders its decision in Northeast, the Court will deny the motion for a preliminary injunction,
without prejudice, based on the balance of equities and the harm it would cause to the public
interest. See Romero-Barcelo, 456 U.S. at 312.
E. The Secretary’s Motion to Stay
As the parties agree that the resolution of Northeast by the D.C. Circuit will be
dispositive of the Plaintiffs’ arguments here, the Secretary argues a stay “is appropriate, will
further judicial economy, and will save time and expense for the parties.” Def.’s Mot. to Stay 2.
The D.C. Circuit is scheduled to hear oral arguments on the Northeast appeal on February 11,
2011, see Northeast Hospital Corp. v. Sebelius, No. 10-5163, Scheduling Order [Dkt.
# 1282042] (D.C. Cir. Dec. 8, 2010), and the Court anticipates a decision not long thereafter.
The Court therefore finds good cause to stay this matter. “A trial court may, with propriety, find
it is efficient for its own docket and the fairest course for the parties to enter a stay of an action
before it, pending resolution of independent proceedings which bear upon the case.” IBT/HERE,
402 F. Supp. 2d at 292 (quoting Leyva, 593 F.2d at 863–64).
IV. CONCLUSION
The plaintiff in Northeast sought an injunction on a different matter and the
district court found “[e]ven assuming that this Court has the authority to ‘enjoin the Secretary’ in
the manner requested by the Hospital, then, nothing in the record suggests that such an aggressive
approach is warranted at this time.” Northeast, 699 F. Supp. 2d at 96. The Court finds
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resonance in this statement. The Hospitals’ motion for a preliminary injunction will be denied
without prejudice and the Defendant’s motion for a stay will be granted. Accordingly, this case
will be stayed until the D.C. Circuit issues its decision in Northeast Hospital Corp. v. Sebelius,
No. 10-5163 (D.C. Cir. filed May 27, 2010). The parties shall file notice of the Circuit’s
Northeast decision within ten days of its issuance. Further, the Secretary shall file an answer or
otherwise respond to the Complaint within twenty days of the Northeast decision. A
memorializing Order accompanies this Memorandum Opinion.
Date: December 22, 2010 /s/
ROSEMARY M. COLLYER
United States District Judge
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