Children's Hosp. of Buffalo v. Apfel

• Citation: 110 F.Supp.2d 158
• Decision Date: 29 March 2000
• Docket Number: No. 97-CV-942S(F).,97-CV-942S(F).
• Parties: The CHILDREN'S HOSPITAL OF BUFFALO, Plaintiff, v. Kenneth S. APFEL, Commissioner of Health and Human Services,<SMALL><SUP>1</SUP></SMALL> and The Department of Health and Human Services, Defendant.
• Court: U.S. District Court — Western District of New York

Page 158

110 F.Supp.2d 158

The CHILDREN'S HOSPITAL OF BUFFALO, Plaintiff, v. Kenneth S. APFEL, Commissioner of Health and Human Services,¹ and The Department of Health and Human Services, Defendant.

No. 97-CV-942S(F).

United States District Court, W.D. New York.

March 29, 2000.

Hodgson, Russ, Andrews, Woods & Goodyear, LLP, Robert J. Lane, Jr., Kevin D. Szczepanski, of counsel, Buffalo, NY, for plaintiff.

Denise D. O'Donnell, United States Attorney, Jane B. Wolfe, Assistant United States Attorney, of counsel, Buffalo, NY, for defendants.

ORDER

SKRETNY, District Judge.

1. On February 13, 1998, Hon. Richard J. Arcara, United States District Judge, referred this case, including jurisdiction to hear and report upon dispositive motions, to Hon. Leslie G. Foschio, United States Magistrate Judge.

2. On July 10, 1998, Defendant filed a motion for judgment on the pleadings.

3. On April 7, 1999, Magistrate Judge Foschio issued a Report and Recommendation

concluding that defendants' motion should be granted.

4. On April 20, 1999, Magistrate Judge Foschio, upon agreement by the parties, deemed the April 7, 1999 Report and Recommendation as withdrawn and allowed the parties to submit additional pleadings.

5. On May 21, 1999, Plaintiff filed a cross-motion for summary judgment.

6. On July 6, 1999, Magistrate Judge Foschio issued a Report and Recommendation concluding that defendants' motion for judgment on the pleadings should be granted; that Plaintiff's cross-motion for summary judgment should be denied; and that this case should be dismissed.

7. On July 20, 1999, Plaintiff filed an objection to Magistrate Judge Foschio's July 6, 1999 Report and Recommendation.

8. On September 21, 1999, Judge Arcara issued an Order transferring this case to this Court.

9. On February 7, 2000, this Court heard oral argument on Plaintiff's objections and directed the parties to return on March 7, 2000 for decision.

10. On March 7, 2000, this Court issued a statement from the bench in which it, for the reasons stated on the record, denied Plaintiff's objections, accepted Magistrate Judge Foschio's July 6, 1999 Report and Recommendation, granted Defendant's motion for motion for judgment on the pleadings, and denied Plaintiff's cross-motion for summary judgment.

IT HEREBY IS ORDERED, that this Court ACCEPTS, for the reasons stated on the record, Magistrate Judge Foschio's July 6, 1999 Report and Recommendation;

FURTHER, that Defendant's motion for judgment on the pleadings is GRANTED;

FURTHER, that Plaintiff's cross-motion for summary judgment is DENIED.

FURTHER, the Clerk of the Court is directed to take the necessary steps to close this case.

SO ORDERED.

REPORT and RECOMMENDATION

FOSCHIO, United States Magistrate Judge.

JURISDICTION

This matter was referred to the undersigned on February 13, 1998 by the Hon. Richard J. Arcara for report and recommendation. It is before the court on Defendants' motion for judgment on the pleadings filed July 10, 1998 (Docket Item No. 8), and Plaintiff's cross-motion for summary judgment filed May 21, 1999 (Docket Item No. 13).

BACKGROUND

Plaintiff, The Children's Hospital of Buffalo, commenced this action pursuant to 42 U.S.C. §§ 405(g), 1395rr(g)(3) and 405.1877(a), and 5 U.SC. §§ 702 and 704, seeking judicial review of a decision by the Health Care Finance Administration's Administrator which rejected Plaintiff's request for an exception rate for Medicare reimbursement as untimely. Defendants filed an answer to the Complaint on February 10, 1998.

By order dated March 11, 1998, Defendants were given until July 10, 1998 to move for judgment on the pleadings and Plaintiff was to respond to such motion within two months of such filing. On July 10, 1998 Defendants filed a motion for judgment on the pleadings and a Memorandum of Law in support.

Pursuant to an order dated April 20, 1999, Plaintiff filed on May 21, 1999 a cross-motion for summary judgment, a statement of undisputed facts, and a memorandum of law. On June 9, 1999, Defendants filed a reply memorandum of law in further support of its motion for judgment on the pleadings. Oral argument was deemed unnecessary.

Based on the following, Defendants' motion for judgment on the pleadings should be GRANTED and Plaintiff's cross-motion for summary judgment should be DENIED.

FACTS²

The Health Care Finance Administration ("HCFA") is a division of the Department of Health and Human Services ("HHS"). Pursuant to Title XVIII of the Social Security Act ("the Act"), 42 U.S.C. §§ 1395-1395ccc, Medicare reimbursement is available for Medicare beneficiaries who have been diagnosed with End Stage Renal Disease³ ("ESRD"). The Secretary of Health and Human Services has delegated responsibility for administration of the Medicare program to the Administrator of the HCFA by entering into contracts with private health insurance carriers ("carriers") to administer and pay claims for health care services and treatment rendered to Medicare beneficiaries. 42 C.F.R. § 401.101(a). Such a carrier is referred to as an "intermediary." Id.

Facilities which provide ESRD medical services and treatment ("Providers") are reimbursed through the Medicare Part A program⁴ in accordance with 42 U.S.C. § 1395rr and 45 C.F.R. Part 405, Subpart U. A network of intermediaries is responsible for administering the Medicare Part A program on a nationwide basis. Blue Shield of Western New York, Inc., is the designated intermediary charged with administering the Medicare Part A program in Western New York, which includes all of New York State except for New York City. Thus, it is the Intermediary responsible for Children's Hospital's ESRD Medicare reimbursements.

Reimbursement under the Medicare program is generally at a "composite rate" under 42 U.S.C. § 1395rr(b)(7), which also provides for an "exception" to the composite rate for an ESRD facility with "unusual circumstances" including the provision of ESRD services and treatment to pediatric patients who require a significantly higher staff-to-patient ratio than typical adult patients. Even though previously approved for such an exception, each time HCFA issues a new composite rate, an ESRD provider is required to request a new exception.

The Children's Hospital of Buffalo ("Children's Hospital"), previously applied for and received an exception to the ESRD composite rate from December 1, 1989 through February 29, 1991 on the basis that it renders ESRD services and treatment to pediatric patients. Complaint, ¶ 12. In February 1991, HCFA advised the Intermediaries that a new ESRD composite rate became effective as of January 1, 1991. Intermediary Program Memorandum ("IPM") No. A-91-2. (R. 269).⁵ By memorandum dated February 22, 1991, Children's Hospital was advised by its Intermediary that the composite rate previously in effect as of September 30, 1990 had changed effective for dialysis treatments furnished on or after January 1, 1991, referencing a rate notification dated January 17, 1991. Memorandum dated February 22, 1991, by Peter J. Wawak, Director of Medicare A Reimbursement to Hospital Based ESRD Facilities, Exhibit A to Complaint ("Wawak Memorandum"). Children's Hospital was further advised

A new exception cycle commences on March 1, 1991. Renal facilities have 180 days from March 1, 1991 to file a valid exception request. No composite rate exception request received by us after August 27, 1991 will be accepted. Requests for reconsideration must also be received by August 27, 1991. After that date the Health Care Financing Administration will not review any exception determination.

Wawak Memorandum (Underlining in original) (Italics added).

On August 27, 1991, Children's Hospital mailed an exception request to the Intermediary by an overnight mail carrier. The Intermediary, having received that request on August 28, 1991, returned it to Children's Hospital on August 29, 1991, accompanied by a letter explaining that the exception request was denied as untimely. By letter dated September 4, 1991, Children's Hospital advised the Intermediary that the 180-day time period for filing exception requests was improperly calculated and called the Intermediary's attention to a discrepancy regarding the description of 180-day time period in two earlier communications from the Intermediary.⁶ Children's Hospital also protested the denial of its exception request on the basis that the Medicare Provider Reimbursement Manual ("PRM") required only that an ESRD composite rate exception request be filed within 180 days which it maintains is defined under the relevant Medicare regulation as mailed. As the Intermediary did not withdraw its denial, on February 14, 1992, Children's Hospital appealed the decision to the Provider Reimbursement Review Board ("PRRB") pursuant to 42 C.F.R. Part 405, Subpart R.

A hearing was held on November 14, 1996 at the HCFA headquarters in Baltimore, Maryland. In a decision issued August 4, 1997, the PRRB found that the Intermediary had improperly rejected Children's Hospital exceptions request as untimely and remanded the exception request to the Intermediary and HCFA for review on its merits. On August 22, 1997, the HCFA Administrator advised Children's Hospital and the Intermediary of its intention to review the PRRB's decision.⁷ Upon review, the HCFA Administrator found that Children's Hospital did not timely file its request for an ESRD composite rate exception and reversed the PRRB's decision on October 6, 1997. This lawsuit followed.

DISCUSSION

Defendants have moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). Upon motion for judgment on the pleadings under Rule 12(c), the court follows the same standards applicable to a motion to dismiss for failure to state a claim upon which relief may be granted under Rule 12(b)(6). Irish Lesbian, Gay Organization v. Giuliani, 143 F.3d 638, 644 (2d Cir.1998); Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir.1994), cert. denied, 513...