Blue Valley Hosp., Inc. v. Azar
| Decision Date | 07 June 2018 |
| Docket Number | Case No. 18–2176–JAR–GLR |
| Parties | BLUE VALLEY HOSPITAL, INC., Plaintiff, v. Alex M. AZAR II, in his official capacity as Secretary, United States Department of Health and Human Services, Seema Verma, Administrator for the Center of Medicare and Medicaid Services, and Jeff Hinson, Regional Administrator for (Region 7) the Center for Medicare and Medicaid Services, Defendants. |
| Court | U.S. District Court — District of Kansas |
Andrew Jason Ricke, Curtis L. Tideman, Lathrop Gage, LLP, Overland Park, KS, for Defendant.
Christopher Allman, Robin R. Anderson, Office of United States Attorney, Kansas City, KS 66101, for Defendant.
Plaintiff Blue Valley Hospital, Inc. ("BVH") seeks injunctive relief to prevent Defendants, the Department of Health and Human Services ("HHS") and the Centers for Medicare and Medicaid Services ("CMS"), from terminating BVH's Medicare certification and provider contracts pending review by an administrative appeals board and any subsequent judicial review. BVH also seeks to enjoin Defendants from publishing, disseminating, or communicating to third parties or the public any notice or communication suggesting that BVH's Medicare participation rights have been or will be decertified or terminated. Before the Court is BVH's Motion for Preliminary Injunction, as supplemented (Docs. 3, 24) and Defendants' response seeking dismissal of the case under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction, as supplemented (Docs. 8, 25). BVH has responded to the motion to dismiss (Docs. 15, 24) and the Court is now prepared to rule. As described more fully below, the Court dismisses the case for lack of jurisdiction.
The following facts are alleged in the Amended Verified Complaint and/or presented in BVH's Motion for Emergency TRO and Preliminary Injunction and the parties' subsequent briefing.
BVH is an acute care hospital located in Overland Park, Kansas. It is a licensed facility and was recently accredited by the Healthcare Facilities Accreditation Program ("HFAP"). BVH offers a wide variety of services, including bariatric and spine surgery, general hospitalist services, inpatient care, therapy services, and specialty consults. In particular, BVH provides "unique and specialized bariatric and intervention services to the underserved surrounding community and region."1
Since 2015, BVH had been certified by CMS as a provider under the Medicare Program. On September 6, 2017, CMS issued S & C Memo 17–44.2 The memo states the statutory rule that a hospital must be primarily engaged in providing certain care "to inpatients."3 It then identifies factors that could be used in making that determination:
CMS considers multiple factors and will make a final determination based on an evaluation of the facility in totality. Such factors include, but are not limited to [average daily census], [average length of stay], the number of off-campus outpatient locations, the number of provider based emergency departments, the number of inpatient beds related to the size of the facility and scope of services offered, volume of outpatient surgical procedures compared to inpatient surgical procedures, staffing patterns, patterns of [average daily census] by day of week, etc. Hospitals are not required to have a specific inpatient to outpatient ratio in order to meet the definition of primarily engaged.4
The memo states that, "for surveyors to determine whether or not a hospital is in compliance with the statutory and regulatory requirements of Medicare participation, including the definition of a hospital, they must observe the provision of care;" if there are no inpatients to observe, only then do surveyors turn to census data, and only then so that they can decide how to proceed.5 If the numbers add up, a second survey is attempted at a later date so that patient care can be observed.6 A facility is not penalized just because they don't have inpatients at the time of the survey as long as census data suggests that, on average, they are primarily engaged in providing care to inpatients, that is, patients who stay two midnights.7
The memo goes on to state that when the facility does not have the inpatient numbers, the surveyors are instructed to determine whether a second survey should be attempted or whether to recommend termination of the provider agreement. Factors that go into that determination are:
The memo states that the determination of whether a facility meets the definition of a hospital "will not be based on a single factor, such as failing to have two inpatients at the time of the survey."9
On November 13 and 14, 2017, the Kansas Department of Health and Environment ("KDHE"), pursuant to direction from CMS, conducted an onsite survey of BVH to validate the findings of BVH's recent accreditation by HFAP.10 The KDHE survey was conducted unannounced and without prior notice to BVH. On February 2, 2018, CMS informed BVH of the results of the survey and issued a Statement of Deficiencies regarding whether BVH meets the definition of "primarily engaged" in providing inpatient services, and tagging BVH with operating an outpatient surgical center with little to no inpatient census.11 In support CMS relied on historical data and statistics relating to the average daily census ("ADC") and average length of stay ("ALOS") of admitted patients. CMS found that BVH did not meet the two patient ADC and two-night AKOS requirements.12 BVH alleges that this new criteria was issued in the S & C Memo and sought to impose new standards for determining compliance without following statutory rule-making procedures, including public notice and opportunity for comment.13
These deficiencies were "determined to be of such serious nature as to substantially limit the hospital's capacity to render adequate care and services and prevent it from being in compliance with all the [Conditions of Participation] for hospitals."14 Because BVH was found to be out of compliance with one or more of the Conditions of Participation, CMS decided to terminate the Medicare provider agreement for BVH as of May 3, 2018.15 The Noncompliance Notice indicated that "[t]ermination can only be averted by correction of the enclosed deficiencies," and requested BVH submit a plan of correction within ten days. The Noncompliance Notice further stated that, upon review of the Plan of Correction, CMS would conduct another survey to verify that the necessary corrections had been implemented and would then communicate the findings to BVH in writing.16
On February 12, 2018, BVH submitted a Plan of Correction outlining the specific measures it had taken and would be taking to remedy the alleged deficiencies, as well as a Statement of Compliance.17 On March 27, 2018, CMS sent BVH a final notice that it was terminating its provider agreement effective April 11, 2018.18 CMS stated that BVH still had not met the definition of a hospital as required by certain regulations, and concluded that the Plan of Correction submitted by BVH lacked any specific dates as to when BVH would come into compliance and was "aspirational only."19 BVH was told how to claim payments for services through the date of termination and how to appeal the termination decision to an Administrative Law Judge and the Departmental Appeals Board.
Following receipt of the Termination Notice, BVH submitted additional documents and information to CMS and made numerous requests for CMS to reconsider its decision and conduct a second survey. Over the following weeks, BVH believed CMS would reconsider its termination decision and would be conducting another survey. On April 11, 2018, the effective date of termination, CMS's regional counsel advised BVH that CMS would not be reconsidering or conducting another survey, and that "the termination will take effect today as scheduled."
On April 12, 2018, BVH requested an expedited administrative appeal of the termination decision.20 That same date, BVH filed this lawsuit seeking a temporary restraining order and injunction enjoining CMS from terminating BVH's Medicare participation rights pending the aforementioned administrative process and any subsequent judicial review. The Verified Complaint alleged one count: injunctive relief pending its administrative appeal and any subsequent judicial review. Citing the "lack of merit to CMS's determination and the lack of due process,"21 the prayer for relief sought a temporary restraining order/preliminary injunction pending the duration of BVH's administrative appeal and any subsequent judicial review process, prohibiting Defendants from denying BVH's Medicare participation rights, decertifying BVH's Medicare rights and terminating its Medicare provider agreement, and publishing, disseminating, or communicating to third parties any notice or communication suggesting BVH has or will be decertified under Medicare or its provider agreement.22
The Court set the matter for hearing on the motion for TRO and ordered expedited briefing from the parties.23 After CMS agreed to postpone the termination date to the original stated date of termination, May 3, 2018, and to re-evaluate BVH in the interim, counsel for BVH requested continuation of the TRO hearing until the re-evaluation had been completed. The Court notified the parties it would convert the motion for TRO to one for...
To continue reading
Request your trial