686 F.2d 989 (D.C. Cir. 1982), 81-1807, Athens Community Hosp., Inc. v. Schweiker

Docket Nº:81-1807, 81-1814.
Citation:686 F.2d 989
Party Name:ATHENS COMMUNITY HOSPITAL, INC., et al. v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Appellant. HOSPITAL CORPORATION OF AMERICA, a Tennessee Corporation v. Richard S. SCHWEIKER, Secretary of Health and Human Services, et al., Appellants.
Case Date:August 27, 1982
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 989

686 F.2d 989 (D.C. Cir. 1982)

ATHENS COMMUNITY HOSPITAL, INC., et al.

v.

Richard S. SCHWEIKER, Secretary of Health and Human

Services, Appellant.

HOSPITAL CORPORATION OF AMERICA, a Tennessee Corporation

v.

Richard S. SCHWEIKER, Secretary of Health and Human

Services, et al., Appellants.

Nos. 81-1807, 81-1814.

United States Court of Appeals, District of Columbia Circuit

August 27, 1982

        Argued April 5, 1982.

Page 990

        Appeals from the United States District Court for the District of Columbia (D. C. Civil Action Nos. 79-00616 and 80-01553).

        Susanne M. Lee, Atty., Dept. of Health and Human Services, Washington, D. C., with whom Juan A. del Real, Gen. Counsel, Lynne K. Zusman, Deputy Gen. Counsel and Henry R. Goldberg, Atty., Dept. of Health and Human Services, Washington, D. C., were on the brief, for appellants. Kenneth M. Raisler, Valerie K. Schurman and Royce C. Lamberth, Asst. U. S. Attys., Washington, D. C., also entered appearances for appellants.

        James C. Pyles, Washington, D. C., with whom Robert A. Klein, Washington, D. C., was on the brief for appellees. Patrick K. O'Hare, Washington, D. C., also entered an appearance for appellees.

        Before ROBINSON, Chief Judge, BORK, Circuit Judge and LARSON, [*] Senior District Judge for the United States District Court of Minnesota.

        Opinion for the Court filed by Circuit Judge BORK.

        BORK, Circuit Judge:

        These consolidated actions were brought by a group of hospitals that seek reimbursement for their provision of health care under the Medicare program. The Medicare statute and regulations prescribe a specific procedure for filing reimbursement claims and for appealing reimbursement decisions with which the provider disagrees. The primary appellate forum is the Provider Reimbursement Review Board ("PRRB" or "Board"), a statutorily created administrative tribunal. These cases concern the jurisdiction of the PRRB to consider out-of-time applications for reimbursement of costs.

        The hospitals sought review of a decision by the fiscal intermediary, the initial reviewer of reimbursement claims, not to award certain reimbursements. The Board denied review, finding that it lacked jurisdiction because the claims were not made within the time required by regulation. This decision was then appealed to the United States District Court for the District of Columbia which held that the Board must assert jurisdiction over the claims. The Secretary of Health and Human Services (HHS) now seeks review of that decision. In addition, this court sua sponte raised the question of whether subject matter jurisdiction existed. For the reasons

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discussed below, we find that this court does have subject matter jurisdiction to review the decision of the PRRB, and that the PRRB correctly held that it lacked jurisdiction to review the decision of the intermediary. Accordingly, we reverse the judgment of the district court.

Background

The Medicare Statute and Regulations

        The Medicare Act, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq. (1976), created a comprehensive system of health care for the elderly and infirm. Under the Medicare Act, certain institutions known as "providers" are reimbursed for the cost of the services they provide to qualified Medicare beneficiaries. All of the hospitals in these actions are providers by virtue of having filed agreements with the Secretary of Health and Human Services. 42 U.S.C. § 1395cc(a)(1).

        Providers receive reimbursement for the "reasonable costs" of the services provided. 42 U.S.C. § 1395x(v)(1)(A). Although the Secretary may directly reimburse a provider, the more common method of reimbursement is for the provider to appoint a "fiscal intermediary" which acts as the Secretary's agent for the purpose of reviewing claims and awarding reimbursement. 42 U.S.C. § 1395h. A fiscal intermediary is usually a private insurance company. Here it was appellant Blue Cross and Blue Shield of Tennessee, Inc.

        At the end of its fiscal year, a provider submits to the intermediary a cost report upon which reimbursement is based. Medicare regulations require that this cost report be filed within three months of the end of the fiscal year, although a provider may be granted an additional 30 days for good cause. 42 C.F.R. § 405.453(f)(2)(i), (ii) (1981). The intermediary then audits the cost report and determines and awards the appropriate reimbursement.

        Under certain circumstances, the intermediary may permit a provider to amend a filed cost report. However, the availability of this procedure, known as "reopening," is very limited and

will depend upon whether new and material evidence has been submitted, or a clear and obvious error was made, or the determination is found to be inconsistent with the law, regulations and rulings, or general instructions.

        Medicare Intermediary Manual (HIM-13) § 2631.2. Moreover, a determination not to reopen is not appealable. 42 C.F.R. §§ 405.1885(c), 405.1889.

        If the provider disagrees with the reimbursement award, it may appeal to the PRRB. Under the statute, the PRRB will review determinations of the fiscal intermediary only if (1) the provider has filed a timely cost report, (2) the amount in controversy is $10,000 or more, and (3) the appeal is filed within 180 days. 42 U.S.C. § 1395oo (a); 42 C.F.R. Part 405, Sub. R. Following review by the PRRB, the Secretary may then review the decision and reverse, affirm, or modify. 42 U.S.C. § 1395oo (f)(1). If a provider is dissatisfied with a final decision of the Board or Secretary, it may seek review by suit in federal district court. Id.

Facts

        The facts of this case are not in dispute. Appellees, the Hospital Corporation of America (HCA) and 33 hospitals which HCA owns, timely filed cost reports for the periods ending December 31, 1973 and December 31, 1974. These reports claimed reimbursement for "home office" costs-costs which HCA incurred as the home office of the hospital chain. However, neither the home office cost reports nor the hospitals' cost reports included claims for stock option costs or federal income taxes.

        Following submission of the cost reports, the fiscal intermediary notified the hospitals of their Medicare reimbursement. In addition, HCA, as home office, was notified of its reimbursement. HCA then timely filed an appeal to the PRRB, challenging six adjustments to the 1973 cost report made by the intermediary.

        On March 16, 1978, prior to the PRRB's decision on the challenges, HCA requested

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permission from the intermediary to amend its 1973 and 1974 cost reports to include costs incurred in connection with HCA's stock option plan and federal income taxes. This was the first time HCA had made such a claim. 1 The intermediary responded by requesting a position paper in support of the claims, and, on April 26, 1978, HCA filed its position paper.

        On June 30, 1978, the fiscal intermediary informed HCA that it would not reopen the cost reports. In a rather detailed decision entitled "Notice of Refusal to Reopen," the intermediary addressed the merits rather than the timeliness of the claim and found that the costs HCA claimed were not reimbursable under the Medicare regulations. HCA then sought to appeal this decision to the PRRB, not by filing a de novo appeal but rather by seeking to add these issues...

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