Alexandria Hosp. v. Heckler, Civ. A. No. 83-0233-R.

• Decision Date: 07 May 1984
• Docket Number: Civ. A. No. 83-0233-R.
• Citation: 586 F. Supp. 581
• Court: U.S. District Court — Eastern District of Virginia
• Parties: ALEXANDRIA HOSPITAL, et al., Plaintiffs, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.

586 F. Supp. 581

ALEXANDRIA HOSPITAL, et al., Plaintiffs, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.

Civ. A. No. 83-0233-R.

United States District Court, E.D. Virginia, Richmond Division.

May 7, 1984.

Martin A. Donlan, Jr., John William Crews, Crews, Hancock & Dunn, Richmond, Va., Margaret W. Manning, Leonard C. Homer, Ober, Grimes & Shriver, Baltimore, Md., for plaintiffs.

Debra J. Prillaman, Asst. U.S. Atty., Richmond, Va., for defendant.

MEMORANDUM

MERHIGE, District Judge.

The plaintiffs in this action are a group of hospitals who are "providers of services" to Medicare patients under Part A of the Medicare program, as defined in 42 U.S.C. § 1395x(u). They challenge an administrative regulation promulgated in June of 1979¹ that altered the computation formula utilized from the inception of the Medicare program, in 1966, to reimburse provider hospitals for the cost of malpractice insurance. The defendant Secretary is the administrator of the Medicare program. The plaintiffs invoke the Court's jurisdiction pursuant to 42 U.S.C. § 1395oo (f)(1).

The matter is before the Court on the parties' cross-motions for summary judgment. Also before the Court are defendant's motion to strike certain of plaintiffs' exhibits and defendant's two motions to dismiss. One motion to dismiss is directed at only three of the plaintiffs; the other, filed after summary judgment motions had already been briefed and argued, seeks dismissal of the entire action on jurisdictional grounds.

In summary, the Court's ruling on the pending motions are as follows:

1. the motion to dismiss the entire action will be denied;

2. the motion to dismiss three plaintiffs on the current record will be denied, and the issue raised therein remanded to the Provider Reimbursement Review Board for further consideration in accordance with this opinion;

3. the motion to strike plaintiffs' affidavits will be granted;

4. the defendant's summary judgment motion will be denied; and

5. the plaintiffs' summary judgment motion will be granted.

Introduction

Numerous provider hospitals have filed suit in various federal district courts across the country challenging the regulation that is the subject of this action. At least thirteen of those courts have now issued their rulings on it.² Quite recently, Judge Turk, U.S. District Judge for the Western District of Virginia, issued a thorough, careful, and well-reasoned opinion in a case factually and procedurally almost identical to the instant one. Bedford County Memorial Hospital et al. v. Heckler, 583 F.Supp. 367 (W.D.Va.1984). The Bedford County opinion summarizes the history of the regulation, the administrative challenges to it, and the contention made in these civil actions. That summary is fully applicable to the instant case, with two differences hereinafter noted. Rather than repeat unnecessarily what Judge Turk has already so ably said, this Court will simply reference and adopt the Bedford County's introductory remarks as if fully reprinted herein.

The differences between this case and Bedford County both relate to the status of the plaintiffs. The first is factual and carries no legal significance: the medicare utilization rates for the instant plaintiffs ranged from 19.5% to 53.6% for the cost years in question (1980 and 1981) rather than from 27% to 60% as in Bedford County.

The second difference is procedural: while most of the instant plaintiffs, like those in Bedford County, sought reimbursement from their fiscal intermediaries for the malpractice costs now in issue, several of them did not. Those several — Potomac Hospital, Mary Immaculate Hospital, and Greensville Memorial Hospital (in its 1980 claim only) — claim instead to have complied with the new malpractice regulation and thereby to have effected a "self-disallowance" in the cost reports they filed with their intermediaries. They then sought to challenge the malpractice regulation in an appeal of the intermediaries' determinations to the Provider Reimbursement Review Board ("the Board"). The Board held in effect that because they had not disputed the issue with their intermediaries, they had waived their right to administrative or judicial review of the regulation. This procedural fact, unlike in Bedford County, is the basis of a motion to dismiss.

Motions to Dismiss

The Court will address the most recently filed dismissal motion first. In this post-argument motion made pursuant to Fed.R. Civ.P. 12(b)(1), the defendant argues that the plaintiffs failed to file this action within a statutorily fixed sixty-day filing period, and that such failure amounts to non-compliance with a jurisdictional prerequisite, thereby requiring dismissal of the entire action. The plaintiffs respond that they did file within the specified 60-day period and, alternatively, that the filing time limit is a waivable — and in this instance waived — statute of limitations rather than a jurisdictional prerequisite.

The Court agrees with the plaintiffs on both contentions. Judge Turk considered the issue in Bedford County and concluded that the 60-day filing requirement is a statute of limitations, not a jurisdictional prerequisite. This Court agrees with and adopts Judge Turk's reasoning in that regard. In this case, as in Bedford County, the defendant failed to raise the issue by way of an affirmative defense in her answer, and consequently she has now waived it.

As an alternative basis for denying the motion, the Court finds, for reasons that follow, that the instant plaintiffs in fact complied with the sixty-day filing requirement as the Court construes it.

Section 1395oo (f)(1) of Title 42, U.S.Code provides that a provider may challenge a "final decision" of the Board, or reversal, affirmance or modification thereof 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 of any reversal, affirmance, or modification by the Secretary is received.

(Emphasis added).

The statute goes on to set out special procedures for expediting the administrative review process in cases in which the Board has no authority to grant the relief requested. The special procedures are applicable, in particular, to cases such as the instant one in which a provider seeks to overturn a regulation or law according to which its reimbursement has been computed, rather than simply to challenge the application of the regulations and laws. The portion of § 1395oo (f)(1) that sets out these special procedures was added by amendment in 1980.

The legislative history of the 1980 amendment reveals that the purpose of the special procedures was to eliminate unnecessary delay in obtaining meaningful review. H.Rep. No. 96-1167, 96th Cong., 2d Sess., at 394, reprinted in 1980 U.S.Code Cong. & Ad.News 5526, 5757; H.Conf.Rep. No. 96-1479, 96th Cong., 2d Sess. at 136, reprinted in 1980 U.S.Code Cong. & Ad. News 5903, 5927. Before the amendment, a provider challenging a regulation had to undergo a time-consuming, but inevitably meaningless, full review by the Board, who had no authority to grant its challenge, before it could obtain judicial review. The amended § 1395oo (f)(1) allows a provider to obtain an early determination from the Board on whether or not it had jurisdiction to grant the relief sought. If the determination is negative (or if no determination is made within a specified time), a provider may seek immediate judicial review,

by a civil action commenced within 60 days of the date on which such determination is rendered.

42 U.S.C. § 1395oo (f)(1) (emphasis added).

The defendant argues that the statute unambiguously creates two different time limits, one for a final Board decision on the merits (60 days from when notice of decision is received) and another for a Board determination on jurisdiction (60 days from when notice of determination is mailed). The instant suit was filed 59 days after the plaintiffs received notice of the determination and 63 days after it was mailed. If, as the defendant argues, the statutory time limit for jurisdictional determinations runs from when the notice is mailed, then the plaintiffs filed three days late. If the time limit runs from when the providers received the notice, then their filing was timely.

The Court does not find the statute as unambiguous as the defendant suggests. The phrase "date on which such determination is rendered" could mean either the date on which the determination is tendered to the parties (i.e. received) or the date on which the determination is made (i.e. mailed). Additionally, the statute, as amended in 1980, specifies that a Board determination that it lacks jurisdiction "shall be considered a final decision..." (emphasis added). The older, general portion of the statute remains clear that a "final decision may be challenged "within 60 days of the date on which notice is received." § 1395oo (f)(1).

The legislative history of the 1980 amendment, cited supra, does not indicate any intent to specify a different time limit for challenging jurisdictional determinations than that previously set for challenging decisions on the merits. The purpose of the amendment, as previously discussed, was altogether different. In the Court's view, the statute is properly construed as specifying a single time limit for each: 60 days from the date on which the notice is received. This action was brought safely within that limit.

Additionally, the statute is at best ambiguous, in which case the Board could properly issue interpretive rules consistent with it. 42 U.S.C. § 1395oo (e). In this case, and apparently all similar cases until quite recently, the Board's decision letter, notifying providers of its determination that it lacked jurisdiction, informed the providers that the filing time limit was 60 days from the date the notice was received. This interpretation of the statute is consistent with the statute and was...