Bartlett Memorial Medical Center, Inc. v. Thompson

• Decision Date: 20 October 2003
• Docket Number: No. 02-6152.,No. 02-6142.,02-6142.,02-6152.
• Citation: 347 F.3d 828
• Parties: BARTLETT MEMORIAL MEDICAL CENTER, INC.; Comanche County Hospital Authority, d/b/a Comanche County Memorial Hospital; Hillcrest Medical Center; SSM Mission Hill Corporation, d/b/a Mission Hill Memorial Hospital; Midamerica Health Care, Inc., d/b/a Shawnee Regional Hospital; Pauls Valley General Hospital; Sisters of Sorrowful Mother — St. John Ministry Corporation, d/b/a St. John Medical Center; University Hospitals Authority, d/b/a University Hospital, Plaintiffs-Appellees/Cross-Appellants, v. Tommy G. THOMPSON, Secretary, Department of Health and Human Services, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

347 F.3d 828

BARTLETT MEMORIAL MEDICAL CENTER, INC.; Comanche County Hospital Authority, d/b/a Comanche County Memorial Hospital; Hillcrest Medical Center; SSM Mission Hill Corporation, d/b/a Mission Hill Memorial Hospital; Midamerica Health Care, Inc., d/b/a Shawnee Regional Hospital; Pauls Valley General Hospital; Sisters of Sorrowful Mother — St. John Ministry Corporation, d/b/a St. John Medical Center; University Hospitals Authority, d/b/a University Hospital, Plaintiffs-Appellees/Cross-Appellants, v. Tommy G. THOMPSON, Secretary, Department of Health and Human Services, Defendant-Appellant/Cross-Appellee.

No. 02-6142.

No. 02-6152.

United States Court of Appeals, Tenth Circuit.

October 20, 2003.

COPYRIGHT MATERIAL OMITTED

Anne Murphy, Attorney, Appellate Staff Civil Division, United States Department of Justice, Washington, DC (Robert D. McCallum, Jr., Assistant Attorney General, United States Department of Justice, Washington, DC, Robert G. McCampbell, United States Attorney, Oklahoma City, OK, and Anthony J. Steinmeyer, Attorney, Appellate Staff Civil Division, United States Department of Justice, Washington, DC, with her on the briefs), for Defendant-Appellant/Cross-Appellee.

Sanford E. Pitler, Bennett, Bigelow & Leedom, P.S., Seattle, WA (Lisa Dobson Gould, Bennett Bigelow & Leedom, P.S., Seattle, WA, with him on the briefs), for Plaintiffs-Appellees/Cross-Appellants.

Before EBEL and BRISCOE, Circuit Judges, and SHADUR,^* Senior District Judge.

EBEL, Circuit Judge.

The Medicare Act, 42 U.S.C. §§ 1395 et seq., contains a "disproportionate share hospital" (DSH) provision which permits additional reimbursement to hospitals that handle a disproportionate share of low-income patients. In the mid-1990s, many hospitals, including Plaintiffs, sued the Secretary¹ of Health and Human Services (HHS), claiming that his regulations improperly interpreted this provision, resulting in lower payments to hospitals. This litigation was successful, and on February 27, 1997, the Secretary issued Ruling 97-2, which purported to change the Secretary's interpretation of the DSH provision to comply with these court rulings. The Secretary instructed, however, that the new interpretation would only be applied prospectively and that no cost reports from previous years would be reopened for recalculation under the new rule.

Unhappy with the prospective nature of the Secretary's ruling, the Plaintiff Hospitals in this case sought to have cost reports from the early 1990s reopened and adjusted to reflect the new interpretation. Their requests were denied because of Ruling 97-2's instruction that reports could not be reopened with respect to the DSH reimbursement. Plaintiffs unsuccessfully sought to appeal within the agency, which held it had no authority to review a denial of a request for reopening. Plaintiffs then sought judicial review in the Western District of Oklahoma to challenge the validity of Ruling 97-2. Over the Secretary's objection, the district court found jurisdiction to hear the case under the mandamus statute, 28 U.S.C. § 1361. It ordered that some of the reports be reopened and that others be considered for reopening.

The Secretary now appeals, asserting that the district court erred in finding mandamus jurisdiction, and the Secretary argues there is no other jurisdictional basis to hear these claims. Plaintiffs cross-appeal, primarily contending that the district court should also have found federal question jurisdiction.

Because we find that the Secretary did not owe any clear, non-discretionary duty to Plaintiffs, we hold that mandamus jurisdiction does not lie; however, because we find this case falls into a narrow exception created by Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986), we find that federal question jurisdiction does lie. Nevertheless, exercising our federal question jurisdiction, we REVERSE the district court's grant of summary judgment to Plaintiffs—and its denial of summary judgment to the Secretary—because we determine that Plaintiffs cannot prevail as a matter of law on any of their claims.

I. BACKGROUND

Plaintiffs are or operate Oklahoma for-profit, not-for-profit or public hospitals that participate in the Medicare and Medicaid programs. The Health Care Financing Authority ("HCFA") (now called the Center for Medicare and Medicaid Services), is the agency of HHS responsible for administering the Medicare program.

Some of the hospital services provided by Plaintiffs are covered by Medicare. At the close of each fiscal year, Plaintiffs file a "cost report" with a fiscal intermediary to determine their entitlement to Medicare reimbursement. 42 C.F.R. §§ 413.20(b). A fiscal intermediary is generally a private insurance company (in this case, BlueCross BlueShield of Oklahoma) that acts as a claims processor for Medicare claims. The intermediary analyzes and audits the cost report and issues a notice of program reimbursement (NPR) that gives the hospital a final determination of the amount of its Medicare reimbursement for the given year. Id. § 405.1803.

Once a hospital has received an NPR from its fiscal intermediary, it has two ways to contest the amount of reimbursement. First, it may file an appeal with the Provider Reimbursement Review Board ("PRRB" or "Board"). 42 U.S.C. § 1395oo(a). An appeal to the PRRB must be filed within 180 days of the receipt of the NPR, id. § 1395oo(a)(3), and any final decision of the PRRB is subject to judicial review, id. § 1395oo(f)(1).

Second, the fiscal intermediary may reopen the NPR. 42 C.F.R. § 405.1885.² It is this reopening provision that is primarily at issue in this case. There are two separate ways reopening may occur. First, within three years of the issuance of the NPR, the hospital may request that the fiscal intermediary reopen the NPR. Id. § 405.1885(a). The fiscal intermediary has exclusive jurisdiction over this decision, and a denial of reopening may not be reviewed by the PRRB or the federal courts. Id. § 405.1885(c); Your Home Visiting Nurse Servs. v. Shalala, 525 U.S. 449, 452-56, 119 S.Ct. 930, 142 L.Ed.2d 919 (1999). Second, if within three years of the issuance of an NPR, the HCFA notifies the intermediary that its initial determination "is inconsistent with the applicable law, regulations, or general instructions issued by the [HCFA]," the intermediary must reopen and revise the NPR. Id. § 405.1885(b). These two procedures are respectively referred to as "discretionary reopening" and "mandatory reopening."

In the early 1990s, one component of Plaintiffs' reimbursement was based on the Medicare Act's "disproportionate share hospital" (DSH) provision, which permits more recovery for hospitals handling a disproportionate share of low-income patients. 42 U.S.C. § 1395ww(d)(5)(F)(i). Despite clear instruction from Congress in 1986 that DSH reimbursement should be based on days for which the patient was eligible for state Medicaid assistance, see id. § 1395ww(d)(5)(F)(vi)(II), the Secretary's regulations permitted recovery under this provision only for days for which the patient was entitled to state Medicaid assistance. 42 C.F.R. § 412.106(b)(4). Between 1994 and 1996, the Fourth, Sixth, Eighth and Ninth Circuits addressed this issue and held that the Secretary's interpretation was inconsistent with the Medicare statute. Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984, 991 (4th Cir.1996); Legacy Emanuel Hosp. & Health Ctr. v. Shalala, 97 F.3d 1261, 1266 (9th Cir.1996); Deaconess Health Servs. Corp. v. Shalala, 83 F.3d 1041, 1041 (8th Cir.1996); Jewish Hosp., Inc. v. Sec'y of Health & Human Servs., 19 F.3d 270, 272 (6th Cir.1994); see also Incarnate Word Health Servs. v. Shalala, No. 3:95-CV-0851-R, 1997 WL 446463, at *1 (N.D.Tex. July 25, 1997).

Because their DSH reimbursement prior to these decisions had been calculated based on the Secretary's interpretation, Plaintiffs initiated two courses of litigation. The first course of litigation mimicked the suits decided by the Fourth, Sixth, Eighth and Ninth Circuits and involved seven of the eight Plaintiffs named in this case. In that litigation, the plaintiffs challenged the DSH reimbursement in NPRs which had been issued to them within the preceding 180 days. Because the plaintiffs in that case acted within the 180-day window, they were able to appeal those NPRs to the PRRB. 42 U.S.C. § 1395oo. The PRRB denied their appeals, and they sought judicial review in the Western District of Oklahoma. See Anadarko Municipal Hosp. v. Shalala, No. CIV-97-288-A, 1998 WL 34007421 (W.D.Okla. Apr. 13, 1998). On April 13, 1998, that court followed the Courts of Appeals that had previously decided the issue and invalidated the Secretary's DSH regulation, 42 C.F.R. § 412.106(b)(4), as inconsistent with the Medicare statute. Anadarko, No. CIV-97-288-A, 1998 WL 34007421, at *5. It held that the Secretary's regulation was void ab initio, ordered that the HCFA recalculate the DSH reimbursement for the challenged NPRs, and ordered that the Secretary apprise the Court every three months regarding its rescission of the challenged regulation. Id. at *7. The Secretary did not challenge this decision on appeal and initiated efforts to revise the invalid regulation through rulemaking.

The second track of litigation culminated in the instant case. The Plaintiffs sought review of fifteen NPRs that were fewer than three years old but that could not be appealed directly to the PRRB because more than 180 days had passed since their issuance.³ With respect to these NPRs, Plaintiffs filed requests for discretionary reopening under § 405.1885(a) with the fiscal intermediary between June 13, 1996 and May 1, 1998.

On February 27, 1997, during the time the Plaintiffs were filing these requests for reopening, but before the fiscal intermediary had ruled on any of the requests, the Secretary issued Ruling 97-2. Ruling 97-2 stated that the Secretary...