Allcare Hospice, Inc. v. Sebelius
| Decision Date | 23 October 2012 |
| Docket Number | CIV-11-365-FHS |
| Parties | ALLCARE HOSPICE, INC. f/n/a COMFORTING CARE HOSPICE, INC., Plaintiff, v. KATHLEEN SEBELIUS, Secretary, UNITED STATES DEPARTMENT of HEALTH AND HUMAN SERVICES, Defendant. |
| Court | U.S. District Court — Eastern District of Oklahoma |
Before the court for its consideration is the Defendant's Motion to Dismiss and Brief in Support. (Doc. 14). In the motion to dismiss, the defendant seeks dismissal of the Complaint arguing this court lacks jurisdiction. Defendant also argues even if the court were to find jurisdiction, many of the claims brought by plaintiff fail to state a claim for relief. Plaintiff responds by arguing the court has jurisdiction over this matter and it has adequately stated a claim for relief on all counts.
Plaintiff is a provider of hospice services. It provided services to Medicare beneficiaries between 2003 and 2009. For each of these years, Allcare submitted cost reports to its fiscal intermediary, Palmetto GBA (Palmetto), who was charged with calculating the annual hospice cap. In return for each year, Palmetto sent Allcare a letter (a) reporting that Allcare had exceeded the statutory cap on total annual Medicare payments, and (b) demanding that Allcare begin repaying Palmetto for theexcess.1 However, during the time-frame that Allcare was repaying their debt to Palmetto other providers were challenging their repayment determinations. These providers attacked the validity of the method the Secretary used to calculate a provider's annual hospice cap. By March 2011, multiple courts including one in this district had rejected the Secretary's method of calculation set forth in 42 C.F.R. Sec. 418.309 (b)(1) as inconsistent with the Medicare statute. Zia Hospice, Inc. v. Sebelius, 793 F. Supp. 2d 1289, 1296 (D.N.M. 2011).
On July 21, 2011, after becoming aware of these rulings, Allcare asked the Provider Reimbursement Board (Board) to review all six repayment demands it had received from Palmetto. Allcare does not dispute this filing was made more than seven months after Palmetto's last demand letter to Allcare and years after Palmetto's earlier letters. Conceding that it had missed the 180 day statutory deadline for appealing to the board, Allcare asked the Board for a "good cause" extension under 42 C.F.R. Sec. 405.1836 to seek a belated hearing. Allcare also requested expedited judicial review. Plaintiff hoped to argue in federal court that Palmetto's repayment demands had been computed using a regulation, 42 C.F.R. Sec. 418.309 (b)(1) that contradicted with the plain terms of 42 U.S.C. Sec. 1395f (i)(2)(A), a provision of the Medicare Act.
On August 19, 2011, the Board found it lacked jurisdiction over each of Allcare's six appeals because they were not timelyfiled. Applying 42 C.F.R. Sec. 405.1836 the Board denied Allcare's request for a "good cause" extensions holding that (1) good cause may be found only in extraordinary circumstances not present here, and (2) a change in the law never constituted good cause. The Board also denied Allcare's request for expedited judicial review, holding that Board jurisdiction over an appeal was a prerequisite to such review.
Plaintiff then filed this lawsuit and in Count One, challenged the validity of 42 C.F.R. Sec. 418.309(b). In Count Two, Plaintiff contends such overstated repayment demands constitute an unlawful taking in violation of the Fifth Amendment. Count Three requests Declaratory relief and an Injunction on Enforcement of an Unlawful regulation. Count Four asks this Court to exercise mandamus jurisdiction to compel Palmetto to calculate new repayment demands using a correct methodology. Count Five also seeks review of the Board's judgment denying Plaintiff's "good cause" extension under 42 C.F.R. Sec. 405.1836. Finally, the plaintiff seeks to invalidate the Secretary's regulation, specifically, 42 C.F.R. Sec. 405.1842 (b)(2) requesting the expedited judicial review provision of the Medicare Act.
Before the court can address the merits of plaintiff's Complaint, it must first determine whether it has jurisdiction. Sabido Valdivia v. Gonzales, 423 F.3d 1144, 1147 (10th Cir. 2005). Defendant has sought to dismiss Counts One, Two, Three, and Five of the Complaint for lack of jurisdiction. Allcare's Complaint cites four grounds for jurisdiction over these claims: the Medicare statute specifically, 42 U.S.C. Sec. 1395oo(f)(1), the federal question statute, 28 U.S.C. Sec. 1331, the APA, 5 U.S.C Sec. 702 and the Kyrne Doctrine, for actions agencies takenthat are considered ultra vires. The court will take each of these in turn to determine if this court has jurisdiction.
In Count Five of the Complaint, plaintiff asks this court to set aside as arbitrary and capricious the Board's denial of Allcare's requests for a good cause extension under 42 C.F.R. Sec. 405.1836. 42 C.F.R. Sec. 405.1836(e)(4) provides that "a finding by the Board....that the provider....did not demonstrate good cause for extending the time for requesting a board hearing is not subject to judicial review." The plain language of this statute prohibits review of the Board's decision to deny the extension.
The Medicare statute includes a provision that a provider of services "shall have the right to obtain judicial review of any final decision of the Board." 42 U.S.C. Sec. 1395oo(f)(1). However, the court finds this is not the type of final decision that is entitled to judicial review. The court finds the phrase "decision of the Board" is sufficiently ambiguous as to whether it includes the Board's denial of a good cause extension. As a result, the court must utilize the procedure found in Cheveron USA, Inc. v. National Resource Defense Council, 467 U.S. 837, 842-43 (1984) to determine if the Secretary has reasonably interpreted that ambiguous phrase to exclude the Board's denial of a good cause extension to the 180 day appeal deadline. The Secretary has interpreted the phrase "decision of the Board" to mean some, but not all decisions of the board. 42 C.F.R. Sec. 405.1877 (a)(3)(I) & (ii) specifies which decisions of the Board are subject to judicial review and when such decisions are final.
First, it should be noted the Medicare Act itself does notprovide for an extension to the 180 day time-frame but rather, the extension is a creation of the Secretary. Nothing in the language of 42 U.S.C. Sec. 1395oo requires the Board to entertain a provider's late request for a hearing. The Secretary determined that Board denials of such extensions do not qualify as the type of "final decision of the Board" subject to judicial review under 42 U.S.C. Sec. 1395oo(f). The court finds the Secretary has reasonably interpreted the phrase "final decision of the board."
The reasonableness of this construction is confirmed by two Supreme Court cases. In Your Home Visiting Nurse Services, Inc., v. Shala, 525 U.S. 449 (1999), the court accorded deference to the Secretary's interpretation that a fiscal intermediary's decision not to reopen a payment determination is not subject to Board or judicial review. The court stated the Secretary's interpretation was "reasonable" Id. at 453. The court relied on the fact that "the right of a provider to seek reopening exists only by grace of the Secretary." Id. at 454. The extension to the 180 day time-limit in the case at bar was also only by the grace of the Secretary. In Califano v. Sanders, 430 U.S. 99 (1977), the Court had similarly held the Social Security Act does not authorize review of the Secretary's decision not to reopen a previously adjudicated claim of benefits, reasoning again that "the opportunity to reopen a benefit adjudication was afforded only by regulation and not by the Social Security Act itself." Id. at 108. These cases demonstrate that because of the Medicare Act's silence as to good cause extensions and the fact they are created by the grace of the Secretary, the Secretary may construe 42 U.S.C.A. Sec. 1395oo(f) not to grant providers judicial review of Board denials of such extensions.
Finally, under 42 U.S.C. Sec 1395oo(f)(1), review of Board decisions is governed exclusively by the standards in the APA. See 42 U.S.C. Sec. 1395oo(f)(1). 5 U.S.C.A. Sec. 701 (a)(2) of the APA precludes judicial review of agency action "committed to agency discretion by law." 5 U.S.C.A. Sec. 701 (a)(2). The Tenth Circuit Court of Appeals has defined this exception to apply "when a statute or regulation is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion." Colo. Envtl. Coal v. Wenker, 353 F.3d 1221, 1228 (10th Cir. 2004).
That regulation states that a "request for a Board hearing....received after the applicable 180-day time limit...must be dismissed by the Board, except that the Board may extend the time limit upon a good cause showing by the provider." Sec. 405.1836(a). The regulation then goes on to say that "the Board may find good cause to extend the time limit only if the provider....demonstrates...extraordinary circumstances beyond its control....and the....request for an extension be received..within a reasonable time." Sec. 405.1836 (b).
The regulation provides no meaningful standard for evaluating the reasonableness of the Board's denial of a good cause extension. The Board's authority to grant an extension is drawn in strictly permissive terms: even if the provider satisfies both preconditions for an extension and demonstrates "good cause", the Board "may"-not must- grant an extension. Sec. 405.1836 (a). The Secretary's regulation provides no standard by which to guide, let alone constrain, the Board's ultimate decision whether to extend the filing deadline once good cause is shown. Lenox Hill Hospital v. Shala, 131 F. Supp. 2d 136, 142 (D.D.C. 2000)( that good cause extensions are committed toagency discretion by law.). Thus, the court finds the decision of no good cause shown to extend the 180 deadline...
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