Baptist Memorial Hosp. v. Johnson

• Decision Date: 25 March 2009
• Docket Number: Civil Action No. 02-1919 (PLF).
• Citation: 603 F.Supp.2d 40
• Parties: BAPTIST MEMORIAL HOSPITAL, Plaintiff, v. Charles E. JOHNSON, Acting Secretary, United States Department of Health and Human Services, Defendant.<SMALL><SUP>1</SUP></SMALL>
• Court: U.S. District Court — District of Columbia

603 F.Supp.2d 40

BAPTIST MEMORIAL HOSPITAL, Plaintiff, v. Charles E. JOHNSON, Acting Secretary, United States Department of Health and Human Services, Defendant.¹

Civil Action No. 02-1919 (PLF).

United States District Court, District of Columbia.

March 25, 2009.

Kenneth R. Marcus, Honigman Miller Schwartz and Cohn L.L.P., Detroit, MI, Leslie David Alderman, III, Alderman, Devorsetz & Hora PLLC, Washington, DC, for Plaintiff.

Gerard Keating, U.S. Department of Health & Human Services, Office of the General Counsel, Peter Bryce, U.S. Department of Justice, Washington, DC, for Defendants.

OPINION

PAUL L. FRIEDMAN, District Judge.

Plaintiff hospital brings suit for declaratory and injunctive relief in the nature of mandamus, asking the Court to compel defendant, the Secretary of Health and Human Services, through the Centers for Medicare and Medicaid Services ("CMS") to reopen a final payment decision issued by the Secretary's payment agent and to recalculate the Secretary's reimbursement of plaintiff for services it rendered to indigent clients.² Three motions are currently before the Court for consideration—defendant's motion to dismiss for lack of jurisdiction, plaintiff's motion for discovery, and plaintiff's motion for summary judgment.³ After careful consideration of the parties' papers and the entire record in the case, the Court will deny plaintiff's motion for discovery, will grant defendant's motion to dismiss and, as a result, finds that plaintiff's motion for summary judgment is moot. The case will be dismissed.

I. BACKGROUND

This case is related to an issue that has been litigated before this Court and resolved by the United States Court of Appeals for the District of Columbia Circuit in Monmouth Med. Ctr. v. Thompson, 257 F.3d 807 (D.C.Cir.2001), and In re Medicare Reimbursement Litig., 414 F.3d 7 (D.C.Cir.2005), cert. denied, 547 U.S. 1054, 126 S.Ct. 1672, 164 L.Ed.2d 396 (2006). The history of this litigation is described, in brief, below.

The Medicare Act, Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., creates a federally funded health insurance program for the elderly and disabled. Part A of the Medicare Act reimburses hospitals for the operating costs of certain inpatient services. See 42 U.S.C. § 1395ww. In order to obtain this reimbursement, eligible hospitals file cost reports with their "fiscal intermediaries," see 42 C.F.R. § 413.20, usually insurance companies serving as the Secretary's agents for the purpose of reimbursing health care providers. See 42 C.F.R. § 421.3; In re Medicare Reimbursement Litigation, 414 F.3d at 8. The intermediaries audit the hospitals' cost reports and then issue Notice of Program Reimbursements ("NPRs") in which they determine the amount owed by the Secretary to the hospitals for the fiscal year at issue. See 42 C.F.R. § 405.1803(a). Hospitals may appeal the NPR to the Provider Reimbursement Review Board (the "PRRB") within 180 days. See 42 U.S.C. § 1395oo(a). The PRRB may reverse, affirm or modify the intermediary's decision; subsequently, the Secretary may similarly reverse affirm or modify the PRRB's decision. See 42 U.S.C. §§ 1395oo(d), (f)(1). Hospitals still dissatisfied with the final decision may seek judicial review by filing suit in the appropriate United States District Court. See 42 U.S.C. § 1395oo(f); In re Medicare Reimbursement Litig., 414 F.3d at 8.

Reimbursement to hospitals varies based on hospital-specific factors, see 42 U.S.C. § 1395ww(d)(5); those hospitals that serve a "significantly disproportionate number of low-income patients" receive increased reimbursements known as "disproportionate share" ("DSH") adjustments. 42 U.S.C. § 1395ww(d)(5)(F)(i)(I). Congress enacted legislation that established detailed criteria for determining hospital eligibility and the extent of any DSH adjustment. See 42 U.S.C. § 1395ww(d)(5)(F); In re Medicare Reimbursement Litig., 414 F.3d at 9. The HCFA promulgated interpretive regulations to implement these provisions—regulations that four circuits subsequently found to be inconsistent with the Medicare Act because they improperly restricted DSH eligibility and reduced payments to eligible hospitals. See Cabell Huntington Hosp. Inc. v. Shalala, 101 F.3d 984 (4th Cir.1996); Legacy Emanuel Hosp. & Health Ctr. v. Shalala, 97 F.3d 1261 (9th Cir.1996); Deaconess Health Servs. Corp. v. Shalala, 83 F.3d 1041 (8th Cir.1996) (per curiam); Jewish Hosp., Inc. v. Sec'y of Health and Human Servs., 19 F.3d 270 (6th Cir.1994).

In light of these decisions, the Administrator of HCFA issued a ruling that rescinded the challenged regulation nationwide, announcing a new interpretation more favorable to hospitals. See Health Care Financing Administration Ruling 97-2 (February 27, 1997) ("HCFAR 97-2"); see also In re Medicare Reimbursement Litigation, 414 F.3d at 9. In Monmouth Med. Ctr. v. Thompson, 257 F.3d at 813-15, the court of appeals addressed the reach of HCFAR 97-2 in conjunction with 42 C.F.R. § 405.1885(b) (1997), which required an NPR to be reopened and revised if, within three years, the HCFA provided notice to the intermediary that the decision was "inconsistent with the applicable law." Id. at 813.⁴ The court held that because HCFAR 97-2 constitutes "notice" under 42 C.F.R. § 405.1885(b) (1997), that regulation imposed a clear duty on intermediaries, enforceable through mandamus, to reopen NPRs issued for the three years prior to the Secretary's issuance of HCFAR 97-2. Id. at 814. The court found that even though HCFAR 97-2 stated that it only had prospective effect, the mandatory language of 42 C.F.R. § 405.1885(b) (1997) created a nondiscretionary duty to reopen NPRs decided under the rescinded regulation within the three years prior to its issuance. Id. at 813-15. The D.C. Circuit subsequently ruled in In re Medicare Reimbursement Litig., 414 F.3d at 11, that this duty to reopen applied to NPRs issued in the three years prior to the issuance of HCFAR 97-2, even if the hospitals had not previously applied for reopening, because it would have been futile for the hospitals to have timely sought reopening in view of the Secretary's original ruling that HCFAR 97-2 only applied prospectively.

Plaintiff Baptist Memorial Hospital now seeks, through mandamus, an order directing the Secretary to reopen and correct the NPR ruling on its fiscal year 1991 cost report. When plaintiff filed this report, prior to the issuance of HCFAR 97-2, it relied on the now rescinded regulation to compute its DSH eligibility. See Am. Compl. ¶ 29. Upon auditing plaintiff's cost report, the intermediary determined that plaintiff was not eligible for the DSH Adjustment, a determination that plaintiff alleges is incorrect. See Am. Compl. ¶¶ 30-31. Plaintiff says that it appealed the intermediary's DSH computation, including the Secretary's method of calculating DSH eligibility and reimbursement, to the PRRB on March 23, 1994. See Am. Compl. ¶ 32. Plaintiff further alleges that the appeal was properly pending before the PRRB when HCFAR 97-2 was issued, on February 27, 1997. See Am. Compl. ¶ 33. Plaintiff makes no further allegations regarding its pursuit of its appeal or any efforts to obtain other relief.

II. DISCUSSION

A. Standard for Relief in the Nature of Mandamus

Disposition of the parties' motions rests on whether mandamus relief is available to plaintiff. Section 1361 of Title 28 provides that "[t]he district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff." 28 U.S.C. § 1361. The remedy of mandamus "is a drastic one, to be invoked only in extraordinary circumstances." Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980). Mandamus is available only if: "(1) the plaintiff has a clear right to relief; (2) the defendant has a clear duty to act; and (3) there is no other adequate remedy available to the plaintiff." In re Medicare Reimbursement Litig., 414 F.3d at 10 (quoting Power v. Barnhart, 292 F.3d 781, 784 (D.C.Cir. 2002)). The party seeking mandamus "has the burden of showing that `its right to issuance of the writ is clear and indisputable.'" Northern States Power Co. v. U.S. Dep't of Energy, 128 F.3d 754, 758 (D.C.Cir.1997) (quoting Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 289, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988)).⁵

B. Plaintiff's Motion for Discovery

Plaintiff moves for limited discovery related to the Court's mandamus jurisdiction. In certain circumstances, plaintiffs should "be given an opportunity for discovery of facts necessary to establish jurisdiction prior to decision of a 12(b)(1) motion." Ignatiev v. United States, 238 F.3d 464, 467 (D.C.Cir.2001). Where additional discovery would not "be beneficial to [plaintiff's] establishment of jurisdiction," discovery need not be granted prior to dismissal on jurisdictional grounds. Cheyenne-Arapaho Tribes v. United States, 517 F.Supp.2d 365, 373 (D.D.C.2007) (citations omitted), aff'd 558 F.3d 592 (D.C.Cir.2009). "When requesting jurisdictional discovery, however, a plaintiff must make a `detailed showing of what discovery it wishes to conduct or what results it thinks such discovery would produce.'" Medical Solutions v. C Change Surgical LLC, 468 F.Supp.2d 130, 135 (D.D.C.2006) (citing United States v. Philip Morris Inc., 116 F.Supp.2d 116, 130 n. 16 (D.D.C.2000)). "Where there is no showing of how jurisdictional discovery would help plaintiff discover anything new, `it [is] inappropriate to subject [defendant] to the burden and expense of discovery.'" Medical Solutions v. C Change Surgical LLC, 468 F.Supp.2d at 135 (citing COMSAT Corp. v. Finshipyards S.A.M., 900 F.Supp. 515, 524 n. 4 (D.D.C.1995)); see also Cheyenne Arapaho Tribes v. United States, 558 F.3d at 596 ("conclusory assertions about the potential value of discovery are...