Gundersen Lutheran Medical Center, Inc. v. Leavitt

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
GUNDERSEN LUTHERAN MEDICAL
CENTER, INC.,
Plaintiff,
Civil Action No. 06-2195
v. TFH/DAR
CHARLES E. JOHNSON,
Acting Secretary, United States Department
of Health and Human Services,
Defendant.
REPORT AND RECOMMENDATION1
Gundersen Lutheran Medical Center (“Plaintiff”) is a full-service hospital located in
La Crosse, Wisconsin, which provides outpatient hemodialysis services to individuals with end
stage renal disease (“ESRD”). In this action, Plaintiff challenges the final decision rendered by
the Secretary of the United States Department of Health and Human Services (“Secretary”)
denying Plaintiff’s request for an exception to the method for determining the prospective
Medicare payment rate for dialysis treatments. Defendant maintains that his decision was proper
pursuant to the terms of the applicable statutes and regulations. Pending for consideration by the
undersigned United States Magistrate Judge are Plaintiff’s Motion for Summary Judgment
(Document No. 12), and Defendant’s Motion for Summary Judgment (Document No. 15).
Upon consideration of the motions; the memorandum in support thereof and in opposition
thereto; the administrative record, and the entire record herein, the undersigned recommends that
1
The Court has substituted the Acting Secretary as Defendant in place of his predecessor, Michael O.
Leavitt, who had been a party to this suit in his official capacity only. See Fed.R.Civ.P. 25(d)(1).
Gundersen Lutheran Medical Center, Inc. v. Johnson 2
Plaintiff’s motion for summary judgment be denied, and that Defendant’s motion for summary
judgment be granted.
I. BACKGROUND
(A) Statutory and Regulatory Framework
This action arises under Title XVIII of the Social Security Act, more commonly known as
the Medicare Act, a statutory scheme by which Congress established a federally funded health
insurance program for the elderly and disabled. See 42 U.S.C. §§ 1395 et seq. At issue in this
action are provisions which govern the cost reimbursements to providers of service (“Providers”)
rendering outpatient dialysis treatment to qualified individuals for end stage renal disease
(“ESRD”). See 42 U.S.C. § 1395rr(b)(7) (2001). Reimbursement is administered by the Centers
for Medicare and Medicaid Services (“CMS”), formerly the Health Care Financing
Administration (“HCFA”), under the direction of the Secretary of the United States Department
of Health and Human Services (“Secretary”).2 42 C.F.R. § 413.170(a) (2001).3 Medicare
reimbursement payments are determined by
a method (or methods) for determining prospectively the amounts
of payments to be made for dialysis services furnished by providers
of services[.] . . . Such method (or methods) shall provide for the
prospective determination of a rate (or rates) for each mode of care
based on a single composite weighted formula (which takes into
account the mix of patients who receive dialysis services at a
facility . . . and the relative costs of providing such services in such
setting) for hospital-based facilities . . . or based on such other
method or combination of methods . . . which the Secretary
2
The reimbursement payments of the cost for services rendered by providers of service are made through
private entities, known as fiscal intermediaries. See U.S.C. § 1395h; see also 42 C.F.R. § 413.180 (2001).
3
The court cites, where appropriate, the 2001 version of the Regulations that were in effect at the time
Plaintiff filed its request for a payment rate exception.
Gundersen Lutheran Medical Center, Inc. v. Johnson 3
determines, after detailed analysis, will more effectively encourage
the more efficient delivery of dialysis services[.]
42 U.S.C. § 1395rr(b)(7) (2001). Providers are authorized by statute to obtain “exceptions to
such methods as may be warranted by unusual circumstances[.]” Id.
The Secretary has promulgated regulations enumerating the circumstances warranting an
exception to the “method (or methods)” used for “the prospective determination of a rate (or
rates)” which determine the amounts of payment to be made for dialysis services. Id.; see also
42 C.F.R. § 413.180 (2001). Providers seeking such a “payment rate exception” must submit to
CMS materials specified in the implementing regulations, and at the request of CMS, which are
necessary for CMS to “adjudicate each type of exception.” Id. § 413.180(f). In pertinent part,
Providers must request a payment rate exception “within 180 days of . . . the effective date that
CMS opens the exceptions process[.]” Id. § 413.180(d)(2). The statute provides that “[e]ach
application for such an exception shall be deemed to be approved unless the Secretary
disapproves it by not later than 60 working days after the date the application is filed.” 42 U.S.C.
§ 1395rr(b)(7) (2001); see also 42 C.F.R § 413.180(h) (2001) (“An exception request is deemed
approved unless it is disapproved within 60 working days after it is filed with its intermediary.”).4
In the event that CMS determines that a provider has failed to meet its burden of
demonstrating that a payment rate exception is warranted, the provider may seek administrative
review of CMS’s decision. See 42 C.F.R. § 413.194(b) (2001). “The Provider Reimbursement
Review Board (“Board”) has the authority to review the action taken by CMS on the facility’s
requests. However, the [Board’s] decision is subject to review by the Administrator [of
4
70 Fed. Reg. 70116, 70331 (November 21, 2005), redesignated this subsection, in full text, effective
January 1, 2006, to 42 C.F.R. § 413.180(g).
Gundersen Lutheran Medical Center, Inc. v. Johnson 4
CMS][.]” Id. § 413.194(b)(2) (2001). “A decision of the Board shall be final unless the
Secretary, on its own motion, and within 60 days after the provider of services is notified of the
Board’s decision, reverses, affirms, or modifies the Board’s decision.” See 42 U.S.C. §
1395oo(f)(1) (2001). Moreover, a provider of service has the “right to obtain judicial review of
any final decision of the Board, or of any reversal, affirmance, or modification by the Secretary,
by a civil action commenced within 60 days of the date on which notice of any final decision by
the Board or . . . by the Secretary is received.” Id.
(B) Factual and Procedural Background
Plaintiff is “a 291-bed, full-service hospital” that is “certified as a provider of services
under the federal Medicare program.” See Complaint for Judicial Review of Final Adverse
Agency Decision on Medicare Reimbursement (“Complaint”) (Document No. 1), ¶¶ 5-6. On
July 2, 2001, pursuant to 42 U.S.C. § 1395rr(b)(7), Plaintiff submitted a request for a payment
rate exception to United Government Services, LLC, the Secretary’s fiscal intermediary
(“Intermediary”). See Administrative Record (“A.R.”) 3, 22, 925. Plaintiff’s request for a
payment rate exception was predicated upon its contention that it met the Atypical Service
Intensity criterion developed by CMS (A.R. 82); Plaintiff’s “requested payment relief” included
an $27.18 payment increase of for each hemodialysis treatment it provided. A.R. 112. The
sixtieth working day after July 2, 2001 was September 25, 2001. See A.R. 63-65 (2001 calendar
denoting the sixty-working days after July 2, 2001).
By letter dated September 21, 2001, CMS advised the Intermediary that “[Plaintiff’s]
Gundersen Lutheran Medical Center, Inc. v. Johnson 5
exception request is denied.” A.R. 205;5 see also A.R. 63-65. The Intermediary, by a letter dated
October 1, 2001, notified Plaintiff that “CMS has concluded that this [‘exception request filed
under the prospective (composite rate) payment system[,]’] be denied in its entirety because
[Plaintiff] has not demonstrated an atypical patient mix based on the evidence presented.” A.R.
206.6 Plaintiff appealed CMS’ decision to the Board. A.R. 925.
On September 14, 2006, the Board rendered its decision (see A.R. 20-25 (Provider
Reimbursement Review Board Decision)) observing that “[t]he parties . . . stipulated that the sole
issue before the [Board] is the timely notification of CMS’ decision by the Intermediary. The
actual exception request denial by CMS is not at issue before the Board.” A.R. 22 (footnote
omitted). The Board found “because CMS failed to ‘notify [Plaintiff] of the determination
within 60 working days as required by 42 U.S.C. § 1395rr(b)(7), [Plaintiff’s] exception request is
deemed approved.’” A.R. 24. In support of its decision, the Board found that (1) “Congressional
intent is frustrated if CMS fails to timely send notice of its decision [to the Provider][]”; (2) time
limits created in the 42 C.F.R. § 413.180(h) should be strictly enforced against CMS, just as they
are against the provider seeking an exception from the composite rate; (3) a literal reading of the
applicable regulation “ignores the reality that notice is essential to the exception process and to
fundamental notions of due process.” A.R. 23.
On September 25, 2006, pursuant to 42 U.S.C. § 1395oo(f)(1), the Administrator of CMS
notified Plaintiff and the Intermediary that the Board’s decision would be reviewed. See A.R.
5
September 21, 2001 letter from Joseph Logue, Health Insurance Specialist, Division of Chronic Care
Management to John P. Stoll, Manager, Medicare Provider Reimbursement, United Government Services, LLC. See
A.R. 202-05.
6
October 1, 2001 letter from the John Stoll, Manager, Provider Reimbursement to Mike Lefevre, CPA,
Gundersen Lutheran Hospital. See A.R. 206-09.
Gundersen Lutheran Medical Center, Inc. v. Johnson 6
15-16. On October 26, 2006, the Administrator reversed the Board’s decision (see A.R. 2-7
(Centers for Medicare and Medicaid Services Decision of the Administrator, dated September
14, 2006)) finding that “CMS’ September 21, 2001 disapproval of the Provider’s exception
request satisfied the statutory and regulatory requirements in that it was made within 60 working
days after the request was filed with the Intermediary.” A.R. 7. The Administrator further
observed that the applicable regulation and “statute does not state that the actual notice of the
disapproval must be issued by, or received by, the provider within 60 working days after the
application is filed.” A.R. 6 (footnote omitted).7 This decision constituted final agency action
(see 42 U.S.C. § 1395oo(f)(1)) from which Plaintiff seeks judicial review.
II. CONTENTIONS OF THE PARTIES
Plaintiff and Defendant cross-move for summary judgment pursuant to Rule 56 of the
Federal Rules of Civil Procedure, alleging that there are no genuine issues as to any material fact
and that each is entitled to summary judgment as a matter of law. Plaintiff, in support of its
motion for summary judgment, contends that the only issue presented in the instant action is
“[s]hould the exception request have been deemed approved pursuant to 42 U.S.C. §
1395rr(b)(7).” See Plaintiff’s Memorandum of Points and Authorities in Support of Plaintiff’s
Motion for Summary Judgment (“Plaintiff’s Memorandum”) (Document No. 12) at 5. Plaintiff
offers three grounds in support of its motion: (1) Plaintiff’s request for a payment rate exception
“should be deemed approved because the Secretary did not provide notification to [Plaintiff] of
its disapproval until after the 60 working day period[]” (id. at 6); (2) the Administrator’s
7
In its review of the Board’s decision, the Administrator did not make any findings concerning the
substantive determination by CMS that Plaintiff failed to satisfied the criteria for an atypical service intensity
exception. See A.R. 2-7.
Gundersen Lutheran Medical Center, Inc. v. Johnson 7
“rationale” that the statute does not require the Secretary to notify the Provider within the sixty-
working day period of its decision on a request for payment rate exception is “inconsistent with
congressional intent[]” (id. at 7); and (3) “[t]he denial letters [sic] dated September 21, 2001
. . . were subject to the indexing and disclosure requirements of [the Freedom of Information Act
(“FOIA”)][,] 5 U.S.C. § 552(a)(2)(A)[]” but “was not indexed or published in the publication
known as CMS Rulings[.]” Id. at 11. Further, Plaintiff contends that because CMS failed to
index or publish its September 21, 2001 denial letter in the publication known as CMS Rulings,
the denial letter “could not have been ‘relied on’ or ‘used’ against Gundersen until such time as
the latter received ‘actual’ notice thereof.” Id. at 11-12 (citation omitted). Plaintiff claims that
the Secretary’s “denial of its request for an exception to the Medicare prospectively determined
payment rate for dialysis treatments . . . constituted arbitrary and capricious agency action in
violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A).” Id. at 1.
Defendant, in his motion for summary judgment and opposition to Plaintiff’s motion for
summary judgment, submits that “the Secretary acted in full compliance with all statutory and
regulatory requirements . . . and his interpretation of the Medicare statute was reasonable and
should be upheld.” See Defendant’s Memorandum of Points and Authorities in Support of
Defendant’s Motion for Summary Judgment and in Opposition to Plaintiff’s Motion for
Summary Judgment (“Defendant’s Memorandum”) (Document Nos. 15, 16) at 10. In support of
his contention, Defendant asserts that (1) the applicable statute and implementing regulation, by
their terms, require only that he disapprove a request for a payment rate exception within the
sixty-working day limit (see id. at 10-12); (2) CMS notified the Intermediary, “[b]y letter dated
September 21, 2001” of its decision to deny Plaintiff’s request for a payment rate exception (id.
Gundersen Lutheran Medical Center, Inc. v. Johnson 8
at 5); (3) the Secretary’s interpretation of 42 U.S.C. § 1395rr(b)(7) is deferential, reasonable and
does not undermine the purpose of the Medicare statute (see id. at 5-13); (4) Plaintiff does not,
and could not, claim to have been prejudiced by the Intermediary’s notification of CMS’ decision
on the sixty-fourth working day after is request for a payment rate exception was filed with the
Intermediary (see id. at 13); and (5) “FOIA is irrelevant to the legal question before this Court[.]”
Id. at 14. Defendant contends that “there is not a genuine issue of material fact: as a matter of
law, the Secretary’s actions were not arbitrary or capricious or an abuse of discretion[,]” and that
“his interpretation of the Medicare statute was reasonable and should be upheld.” Id. at 9-10.
In its reply to Defendant’s opposition, and opposition to Defendant’s motion for summary
judgment, Plaintiff maintains that its request for payment rate exception should be deemed
approved. Plaintiff asserts that the Secretary’s September 21, 2001 denial of its request for
payment rate exception was not final because “the intermediary did not furnish notification of the
Secretary’s disapproval until after the 60 working day period.” See Plaintiff’s Reply
Memorandum in Support of Plaintiffs’ [sic] Motion for Summary Judgment and in Opposition to
Defendant’s Cross-Motion for Summary Judgment (“Plaintiff’s Response”) (Document Nos. 18,
19) at 2-3; see also id. at 2 (“[T]he Secretary’s notification to the intermediary [of its decision]
within the 60 day period was in reality nothing more than providing notification to itself.”); see
also id. at 3 (“[T]he September 21, 2001 denial letter did not become effective merely by virtue
of being communicated to the intermediary within the 60 working day period.”). Plaintiff
asserts that “[u]nder FOIA, a ‘final opinion’ or ‘order’ cannot be ‘used’ or ‘relied on’ until the
agency has either (a) placed a copy of the denial letter in the agency’s electronic reading room, or
(b) provided a copy of the denial letter to [Plaintiff].” Id. at 8. Plaintiff maintains that “the
Gundersen Lutheran Medical Center, Inc. v. Johnson 9
[CMS] September 21, 2001 denial [letter] was a ‘final opinion’ or ‘order’ within the context of
the FOIA[.]”8 Id.
Defendant, in his reply, maintained that his interpretation of 42 U.S.C. § 1395rr(b)(7) is
entitled to deference by the court and is within the bounds of reasonable interpretation. See
Defendant’s Reply to Plaintiffs’ [sic] Opposition to Defendant’s Motion for Summary Judgment
(“Defendant’s Reply”) (Document No. 22) at 1-7. Defendant further maintains that consideration
of notice requirements under FOIA is irrelevant to the issue before the court because “Plaintiff
has brought a claim pursuant to the Medicare statute, 42 U.S.C. § 1395oo(f)(1), not FOIA[,]” and
the “relief which Plaintiff seeks is in no way connected to the relief which may be afforded under
FOIA.” See id. at 8-9.
III. STANDARD OF REVIEW
(A) Motions for summary judgment
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be
granted if the pleadings on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). Material facts are those that “might affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). There is a genuine
issue of material fact “if the evidence is such that a reasonable jury could return a verdict for the
non-moving party.” Id. In considering a motion for summary judgment, all evidence and
8
Plaintiff “acknowledges [the] inconsistency between its assertion that the denial letter dated September
21, 2001 was not final, and its assertion that the denial letter constituted a ‘final opinion’ or ‘order’ within the
context of FOIA.” Plaintiff’s Response at 8, n.2. Plaintiff contends that its alternative arguments will lead to the
same conclusion. See id. (“[U]nder either legal theory, the denial letters were not effective as of
September 21[, 2001].”
Gundersen Lutheran Medical Center, Inc. v. Johnson 10
inferences to be drawn from the underlying facts must be viewed in the light most favorable to
the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). “Additionally, ‘in ruling on cross-motions for summary judgment, the court shall
grant summary judgment only if one of the moving parties is entitled to judgment as a matter of
law upon material facts that are not genuinely disputed.’” American Cargo Transport, Inc. v.
Natsios, 429 F. Supp. 2d 139, 145 (D.D.C. 2006) (quoting Petchem, Inc. v. United States, 99 F.
Supp. 2d 50, 54 (D.D.C. 2000)) (citations omitted).
(B) Judicial Review of Secretary’s decision pursuant to the Administrative Procedure Act
Judicial review of Medicare reimbursement disputes is governed by the standards set
forth in the Administrative Procedure Act (“APA”). 42 U.S.C. § 1395oo(f)(1); see also 5 U.S.C.
§ 706. To the extent necessary, “the reviewing court shall decide all relevant questions of law,
interpret constitutional and statutory provisions, and determine the meaning or applicability of
the terms of an agency action.” 5 U.S.C. § 706. Further, “[t]he reviewing court shall . . . hold
unlawful and set aside agency action, findings, and conclusions found to be without observance
of procedure required by law, unsupported by substantial evidence, arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A). “Generally,
an agency's decision is arbitrary and capricious ‘if the agency . . . entirely failed to consider an
important aspect of the problem, offered an explanation for its decision that runs counter to
evidence before the agency, or is so implausible that it could not be ascribed to a difference in
view or the product of agency expertise.’” Johnson v. U.S. Dep’t of Educ., 580 F. Supp. 2d 154,
157 (D.D.C. 2008) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463
Gundersen Lutheran Medical Center, Inc. v. Johnson 11
U.S. 29, 43 (1983)) (internal citations omitted). “As long as an agency has examined the relevant
data and articulated a satisfactory explanation for its action[,] including a rational connection
between the facts found and the choice made, courts will not disturb the agency's action.”
Heartland Reg’l Med. Ctr. v. Leavitt, 511 F. Supp. 2d 46, 51 (D.D.C. 2007) (citing Motor Veh.
Mfrs. Ass’n, 463 U.S. at 43). The scope of review of an agency decision is narrow, under the
arbitrary and capricious standard, and a federal court is not to substitute its judgment for that of
the agency. See Orion Reserves Ltd. P’ship v. Salazar, 553 F.3d 697, 706 (D.C. Cir. 2009)
(citations omitted). When reviewing an administrative decision, “the burden of showing that the
agency action violates the APA standards falls on the provider.” Heartland, 511 F. Supp. 2d at
51(citing Diplomat Lakewood Inc., v. Harris, 613 F.2d 1009, 1018 (D.C. Cir. 1979)) (citation
omitted).
“The Supreme Court set forth a two-step approach to determine whether an agency's
interpretation of a statute is valid under the APA. Quantum Entertainment, Ltd v. U.S. Dep’t of
the Interior, No. CIV.A.07-1295, 2009 WL 401871, at *4 (D.D.C. Feb. 19, 2009) (citing
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)). Application of
the “Chevron deference” standard “requires the court to first look to ‘whether Congress has
spoken to the precise question at issue.’ If so, the court ends its inquiry. But, if the statute is
ambiguous or silent, the second step requires the court to defer to the agency's position, as long
as it is ‘based on a permissible construction of the statute.’” Id. (internal citation omitted). The
Secretary’s interpretation of his own regulations is entitled to “substantial deference[,]” and
“must be given controlling weight unless it is plainly erroneous or inconsistent with the
regulation.” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (citation omitted).
Gundersen Lutheran Medical Center, Inc. v. Johnson 12
“Where the regulations involve a complex, highly technical regulatory program such as
Medicare, broad deference is ‘all the more warranted.’” St. Anthony's Health Ctr. v. Leavitt, 579
F. Supp. 2d 115, 119 (D.D.C. 2008) (quoting Thomas Jefferson Univ., 512 U.S. at 512) (internal
quotations omitted).
IV. DISCUSSION
(A) The Administrator’s interpretation of the applicable statute and regulation was
reasonable
Plaintiff, in the memorandum in support of its motion for summary judgment, states that
it “challenges the denial of its request for an exception to the Medicare prospectively determined
payment rate for dialysis treatments[,]” and maintains that such denial “constituted arbitrary and
capricious agency action in violation of the [APA].” Plaintiff’s Memorandum at 1. However,
Plaintiff does not seek judicial review of the merits of the determination to deny its request for an
exception; rather, Plaintiff casts the issue presented as “[s]hould the exception request have been
deemed approved pursuant to 42 U.S.C. § 1395rr(b)(7)?” Id. at 5; see also Complaint, ¶ 29
(“The exception request submitted by Plaintiff should have been approved based upon
Defendant’s failure to provide notice of its disapproval to Plaintiff within the 60 working day
period prescribed by 42 U.S.C. § 1395rr(b)(7).”).
Defendant contends that “there is not a genuine issue of material fact: as a matter of law,
the Secretary’s actions were not arbitrary or capricious or an abuse of discretion[,]” and that “his
interpretation of the Medicare statute was reasonable and should be upheld.” Defendant’s
Memorandum at 9-10. Additionally, Defendant asserts that “Plaintiff’s request was timely
disapproved by the September 21, 2001 letter.” Id. at 10.
Gundersen Lutheran Medical Center, Inc. v. Johnson 13
In pertinent part, the Medicare Act provides that
[e]ach application for . . . an exception shall be deemed to be
approved unless the Secretary disapproves it by not later than 60
working days after the date the application is filed.
42 U.S.C. § 1395rr(b)(7). The implementing regulation is markedly similar. See 42 C.F.R §
413.180(h) (“An exception request is deemed approved unless it is disapproved within 60
working days after it is filed with its intermediary.”). In reversing the Board’s decision that
Plaintiff’s request for payment rate exception was “deemed approved” by the failure of CMS to
provide notification to the Plaintiff of its determination, the Administrator found that a proper
interpretation of 42 U.S.C. § 1395rr(b)(7) is that by its terms “[t]he statute does not require that
the Provider receive the disapproval, or have notice of the disapproval, within [the] statutory time
period.” A.R. 6. Moreover, the Administrator found that “the plain language of the statute using
the word “disapproves” requires that CMS render the disapproval of the ESRD exception request
within the 60-working day statutory period.” Id. The Administrator concluded that the “key
word in [the statute] is ‘disapproves,’ which is defined in ordinary use as, ‘to refuse to approve;
reject.’” Id.
For the reasons detailed below, the undersigned finds that Defendant’s interpretation of
the 42 U.S.C. § 1395rr(b)(7) is reasonable and warrants deference by the court.
The undersigned finds that the Secretary’s decision is indeed consistent with the
applicable statute and regulation. The Supreme Court has explained that “[i]n interpreting a
statute a court should always turn to one cardinal canon before all others. . . . [C]ourts must
presume that a legislature says in a statute what it means and means in a statute what it says
there.” Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254 (1992). The Medicare statute
Gundersen Lutheran Medical Center, Inc. v. Johnson 14
controverted in the instant action requires only that the Secretary make a determination within the
prescribed sixty-working day period regarding “each application for . . . an exception” to the
“method (or methods)” used for “the prospective determination of a rate (or rates)” which
determine the amounts of payment to be made for dialysis services. See 42 U.S.C. § 1395rr(b)(7)
(2001). The language of the statute is plain and unambiguous; it admits no more than one
meaning of what is required of the Secretary with respect to the sixty-working day period.9 There
is no authority for the proposition asserted by Plaintiff that a request for payment rate exception
should be deemed approved where as here, the Secretary notified the Intermediary of its
determination on September 21, 2001, within the sixty-working day period. Thus, “[w]hen the
words of a statute are unambiguous, then, this first canon is also the last: ‘judicial inquiry is
complete.’” Connecticut Nat'l Bank, 503 U.S. at 254. Neither the statute, nor implementing
regulation require notification to the Provider. See id.; see also 42 C.F.R § 413.180(h) (2001).
Additionally, the undersigned finds the Administrator’s decision is reasonable and
supported by the following undisputed facts. Plaintiff timely submitted a request for payment
rate exception to the Intermediary on July 2, 2001 (see A.R. 3, 22, 925); the sixtieth working day
from July 2, 2001 was September 25, 2001 (A.R. 3, 63-65); CMS made a determination to deny
Plaintiff’s request for a payment rate exception (A.R. 205) and notified the Intermediary, by letter
dated September 21, 2001, of its determination (A.R. 202-05, 893); and the Intermediary, in a
letter dated October 1, 2001, notified Plaintiff of CMS’s decision to deny Plaintiff’s request for a
payment rate exception. A.R. 206; see also A.R. 2-7.
9
Further, the undersigned observes that Plaintiff did not dispute that Congress explicitly addressed the
time of notice to providers elsewhere in the Medicare statute. See 42 U.S.C. § 1395oo(f)(1) (“A decision of the
Board shall be final unless the Secretary, on his own motion, and within 60 days after the provider of services is
notified of the Board's decision, reverses, affirms, or modifies the Board's decision.”)
Gundersen Lutheran Medical Center, Inc. v. Johnson 15
Assuming, arguendo, that the relevant statute is ambiguous, as Defendant candidly
suggests (see Defendant’s Memorandum at 12 (“Because the statute does not speak directly to
when the provider must be given notice of the disapproval, it is ambiguous in this respect.”); see
also Plaintiff’s Response at 6), consideration of the legislative history supports the
Administrator’s permissible construction of the statute. The language in the controverted statute
was not codified in the Act until 1986 as part of the Omnibus Budget Reconciliation Act of 1986.
See House Report No. 99-727 at 76 (1986), Reprinted in 1986 U.S.C.C.A.N. 3607, 3666, 3851.
The Committee Report explained the Legislators desire to “amend the [applicable] statute to
require prompter consideration of requests for exceptions from . . . dialysis rates[,]” (id. at 3666)
in light of “complaints . . . received . . . that determinations [of the Secretary with respect to
requests for payment rate exception] are long delayed.” Id. The Committee Report was notably
silent on the issue of providing notification to the Provider within the time period afforded for
the Secretary to make its determination. The undersigned finds that the amendment was intended
to generate urgency within the Secretary to make prompt determinations with respect to a
Provider’s request for payment rate exception, so that the Secretary would not languish on its
duties and obligations to timely consider the requests of the reports.
Thus, in the instant action, the Administrator’s interpretation of the applicable statute and
the implementing regulation was reasonable and was not inconsistent with Congressional intent.
“So long as an agency's interpretation of ambiguous regulatory language is reasonable, it should
be given effect.” Heartland, 511 F. Supp. 2d at 51(citing Wyo. Outdoor Council v. United States
Forest Serv., 165 F.3d 43, 52 (D.C. Cir. 1999)). Further, “[w]here the regulations involve a
complex, highly technical regulatory program such as Medicare, broad deference is all the more
Gundersen Lutheran Medical Center, Inc. v. Johnson 16
warranted.” Id. (citing Thomas Jefferson Univ., 512 U.S. at 512).
(B) The requirements of the Freedom of Information Act are immaterial to the issue
before the court
Plaintiff contends that the September 21, 2001 denial letters [sic] “were [sic] subject to
the indexing and disclosure requirements of 5 U.S.C. § 552(a)(2)(A) [of the Freedom of
Information Act (“FOIA”)][,]” but “was not indexed or published in the publication known as
CMS Rulings[.]” See Plaintiff’s Memorandum at 11. Further, Plaintiff contends that because
CMS failed to index or publish its September 21, 2001 denial letter in the publication known as
CMS Rulings, the denial letter “could not have been ‘relied on’ or ‘used’ against Gundersen until
such time as the latter received ‘actual’ notice thereof.”10 Id. at 11-12. Defendant maintains that
“FOIA is irrelevant to the legal question before this Court[,]” and that “the timeliness of ESRD
exception request denials is to be determined pursuant to the Medicare statute, not FOIA.”
Defendant’s Memorandum at 14. Defendant further maintains that “[t]he Secretary complied
with the Medicare statute because he disapproved the exception request within sixty working
days[,]” and “FOIA cannot be read to . . . impose a stricter deadline for agency action than the
Medicare statute itself.” Id.The undersigned finds that Plaintiff’s invocation of FOIA is entirely misplaced.11 FOIA
is an enactment which “requires agencies of the federal government to release records to the
public upon request, unless one of nine statutory exemptions applies.” Moore v. Bush, No.
10
Plaintiff sought “supplemental briefing” on this issue in Plaintiff’s Motion for Leave to File Surreply
(Document No. 23). On March 5, 2009, the undersigned denied Plaintiff’s motion. See March 5, 2009 Minute
Order.
11
See n.10, supra.
Gundersen Lutheran Medical Center, Inc. v. Johnson 17
CIV.A.07-107, 2009 WL 504623, at *7 (D.D.C. Feb. 23, 2009); see also Ubunger v. U.S.
Citizenship and Immigration Services, No. CIV.A.08-673, 2009 WL 504680, at *3 (D.D.C. Mar.
2, 2009) (“FOIA provides public access to government records as a means for exposing and
examining government conduct[.]”). No authority supports the proposition that an agency’s
compliance–or lack thereof–with any “indexing and disclosure requirements of [FOIA]” (see
Plaintiff’s Memorandum at 11) is either relevant or material to a request for APA review of a
final agency decision.
V. CONCLUSION
For the foregoing reasons, the undersigned finds that (1) Defendant made a determination
with respect to Plaintiff’s request for payment rate exception prior to the expiration of the
prescribed 60-working day time period; (2) no authority supports the proposition advanced by
Plaintiff that the request should have been “deemed approved” merely because the Intermediary
did not advise Plaintiff of the timely denial of the request for payment rate exception until four
working days later; and (3) any “indexing and disclosure requirements” of the Freedom of
Information Act are neither relevant nor material to any of the issues presented in this action. It
is, therefore, this 9th day of March, 2009,
RECOMMENDED that Plaintiff’s Motion for Summary Judgment (Document No. 12)
be DENIED; and it is
Gundersen Lutheran Medical Center, Inc. v. Johnson 18
FURTHER RECOMMENDED that Defendant’s Motion for Summary Judgment
(Document No. 15) be GRANTED.
____________/S/__________________
DEBORAH A. ROBINSON
United States Magistrate Judge
Within ten days of the filing of the instant report and recommendation, either party may file
written objections. Such objections shall identify with specificity the portions of the findings and
recommendations to which objection is made, and the basis for the objection. In the absence of
timely objections, further review of issues addressed herein may be deemed waived.