DCH Reg'l Med. Ctr. v. Azar

• Decision Date: 04 June 2019
• Docket Number: No. 17-5203,17-5203
• Citation: 925 F.3d 503
• Parties: DCH REGIONAL MEDICAL CENTER, Appellant v. Alex Michael AZAR, II, in His Official Capacity as Secretary of Health and Human Services, Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

925 F.3d 503

DCH REGIONAL MEDICAL CENTER, Appellant

v.Alex Michael AZAR, II, in His Official Capacity as Secretary of Health and Human Services, Appellee

No. 17-5203

United States Court of Appeals, District of Columbia Circuit.

Argued September 24, 2018

Decided June 4, 2019

Geoffrey M. Raux, Boston, MA, argued the cause for appellant. With him on the briefs were Lori A. Rubin and Donald H. Romano, Washington, DC.

Abby C. Wright, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Jessie K. Liu, U.S. Attorney, Alisa B. Klein, Attorney, Robert P. Charrow, General Counsel, U.S. Department of Health and Human Services, Janice L. Hoffman, Associate General Counsel, Susan Maxson Lyons, Deputy Associate General Counsel, and Jonathan C. Brumer, Attorney.

Before: Millett and Katsas, Circuit Judges, and Silberman, Senior Circuit Judge.

Katsas, Circuit Judge:

The Medicare statute precludes judicial review of estimates used to make certain payments to hospitals for treating low-income patients. We must decide whether this preclusion provision bars challenges to the methodology used to make the estimates.

I

Through Medicare, the federal government pays for health care for elderly and disabled individuals. 42 U.S.C. § 1395 et seq. Hospitals receive increased payments if they serve "a significantly disproportionate number of low-income patients." Id. § 1395ww(d)(5)(F)(i)(I). These increases are known as "DSH payments," which is shorthand for disproportionate share hospital payments. Id. § 1395ww(r).

The payment at issue here is the "additional payment" described in paragraph (2) of section 1395ww(r), which is made annually to each disproportionate share hospital. The payment is the product of three statutory "factors" estimated by the Secretary of Health and Human Services. The third factor measures an individual hospital’s share of all nationwide uncompensated care. It is the quotient of two amounts:

(i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is available which is a better proxy for the costs of [DSHs] for treating the uninsured, the use of such alternative data)); and

(ii) the aggregate amount of uncompensated care for all [DSHs] that receive a payment under this subsection for such period (as so estimated, based on such data).

42 U.S.C. § 1395ww(r)(2)(C).

Congress precluded judicial review of the estimates of the three statutory factors. Specifically, it provided that "[t]here shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise" of "[a]ny estimate of the Secretary for purposes of determining the factors described in paragraph (2)." 42 U.S.C. § 1395ww(r)(3)(A). Congress also precluded administrative and judicial review of "[a]ny period selected by the Secretary for such purposes." Id. § 1395ww(r)(3)(B).

In 2013, HHS promulgated a rule setting forth the "data sources and methodologies for computing" the three factors for fiscal year 2014. 78 Fed. Reg. 50,496, 50,627 (Aug. 19, 2013) (FY 2014 Rule ). HHS decided to use data from 2010 or 2011, as provided on hospitals’ then-most recent Medicare cost reports. Id. at 50,640. In the regulatory preamble, HHS stated that, "in the case of a merger between two hospitals" during that time, "Factor 3 will be calculated based on the [data] under the surviving [hospital’s certification number]." Id. at 50,642.

Plaintiff DCH Regional Medical Center merged with Northport Regional Medical Center on May 1, 2011. The merged entity operated under DCH’s name and certification number. Consistent with the preamble, it received a DSH payment for fiscal year 2014 based on DCH’s share of uncompensated care, but not Northport’s.

DCH filed an appeal with the Provider Reimbursement Review Board, which denied relief on the ground that section 1395ww(r)(3) barred administrative review.

DCH then sued. It sought to challenge "the methodology adopted and employed" by HHS to calculate the third factor bearing on its DSH additional payment. J.A. 5. DCH requested vacatur of "the Secretary’s Fiscal Year 2014 Factor 3 calculation for Plaintiff," as well as an order compelling the Secretary "to recalculate the Fiscal Year 2014 disproportionate share adjustment owed to Plaintiff through application of a methodology for determining Factor 3 that considers data associated with both the surviving and non-surviving hospitals that underwent a merger." J.A. 20.

The district court held that section 1395ww(r)(3) barred judicial review of DCH’s claims, so it dismissed the case for lack of jurisdiction. DCH Reg’l Med. Ctr. v. Price , 257 F. Supp. 3d 91 (D.D.C. 2017). We review that decision de novo. Am. Hosp. Ass’n v. Azar , 895 F.3d 822, 825 (D.C. Cir. 2018).

II

By its terms, section 1395ww(r)(3)(A) provides that "[t]here shall be no administrative or judicial review" of "[a]ny estimate of the Secretary for purposes of determining the factors described" in section 1395ww(r)(2). DCH concedes that this preclusion provision bars review of the estimates used by the Secretary to make the DSH additional payments under section 1395ww(r)(2). Yet DCH contends that the provision does not bar review of the methodology used to make the estimates. We disagree.

A

Although we "presume" that agency action is judicially reviewable, "that presumption, like all presumptions used in interpreting statutes, may be overcome by specific language that is a reliable indicator of congressional intent." Knapp Med. Ctr. v. Hargan , 875 F.3d 1125, 1128 (D.C. Cir. 2017) (cleaned up). When Congress provides that "there shall be no administrative or judicial review" of specified agency actions, 42 U.S.C. § 1395nn(i)(3)(I), its intent to bar review is clear, so we determine only whether the challenged action falls "within the preclusive scope" of the statute, Knapp Med. Ctr. , 875 F.3d at 1128. Here, Congress has barred review of "[a]ny estimate" used by the Secretary to calculate a DSH additional payment. 42 U.S.C. § 1395ww(r)(3)(A).

In this statutory scheme, a challenge to the methodology for estimating uncompensated care is unavoidably a challenge to the estimates themselves. The statute draws no distinction between the two. Instead, it simply provides for payments under a formula consisting of three factors estimated by the Secretary. 42 U.S.C. § 1395ww(r)(2). There is also no way to review the Secretary’s method of estimation without reviewing the estimate itself. DCH’s complaint confirms this point. It seeks both vacatur of "the Secretary’s Fiscal Year 2014 Factor 3 calculation for Plaintiff" and an order compelling the Secretary "to recalculate the Fiscal Year 2014 disproportionate share adjustment owed to Plaintiff." J.A. 20. This attacks the estimate used to calculate a DSH additional payment.

Moreover, DCH’s proposed distinction between methodology and estimates would eviscerate the statutory bar, for almost any challenge to an estimate could be recast as a challenge to its underlying methodology. For example, all the determinations made in the FY 2014 Rule, see 78 Fed. Reg. at 50,627 –47, or in any of its successor rules, are fairly described as methodological. So, the only unreviewable estimates would be ones turning on how to apply these elaborate rules in individual cases. Such a line might make sense if Congress had required the Secretary to formulate a methodology for calculating DSH additional payments by rule, and then foreclosed judicial review only of adjudications applying the rule to specific hospitals. But here, Congress has foreclosed review of "[a]ny estimate" used by the Secretary "for purposes of determining the factors" bearing on DSH additional payments. 42 U.S.C. § 1395ww(r)(3)(A). Many of the relevant estimates involve determinations that do not vary from hospital to hospital—and thus are sensibly made by rule. For example, the first statutory factor turns on "the aggregate amount of payments" that would have been made to all disproportionate share hospitals under a prior version of the statute, "as estimated by the Secretary." Id. § 1395ww(r)(2)(A). The second factor turns on the "percent change" of uninsured individuals under 65 years old nationwide, "as calculated by the Secretary" for fiscal years 2014 to 2017, and on the "percent change" of all uninsured individuals nationwide, "as estimated by the Secretary" in each subsequent fiscal year. Id. § 1395ww(r)(2)(B). The third factor turns on each individual hospital’s share of uninsured care, measured relative to a denominator of "the aggregate amount of uncompensated care" provided by all disproportionate share hospitals, "as estimated by the Secretary." Id. § 1395ww(r)(2)(C). Under this statutory structure, which plainly bars review of estimates made across-the-board and by rule, estimates cannot be separated from the methodology used to generate them.

Our decision in Florida Health Sciences Center, Inc. v. Secretary of HHS , 830 F.3d 515 (D.C. Cir. 2016), reinforces this analysis. There, we held that section 1395ww(r)(3)(A) bars judicial review of the choice of data used to estimate a hospital’s amount of uncompensated care. We rejected the argument that "an ‘estimate’ is not the same thing as the ‘data’ on which it is based." Id. at 519. Instead, we held that, because the selection of data used to make estimates is "inextricably intertwined" with the estimates themselves, the bar on judicial review applies to both. Id. at 521. That reasoning governs this case, for the methodology used to generate estimates is no less "inextricably intertwined" with the estimates. In particular, the decision held unreviewable in Florida Health —to exclude from the 2014 estimates any data submitted after March 2013—is a methodological choice as well as a data choice. Indeed, both the Secretary and this Court...