Edgewater Hosp., Inc. v. Bowen
| Decision Date | 09 January 1989 |
| Docket Number | No. 87-1699,87-1699 |
| Citation | 857 F.2d 1123 |
| Parties | , Medicare&Medicaid Gu 37,437 The EDGEWATER HOSPITAL, INC., Plaintiff-Appellee, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Richard A. Urbin, Asst. Counsel, Dept. of Health and Human Services, Chicago, Ill., for defendant-appellant.
Howard M. Hoffmann, Norman B. Berger, John L. Hines, Jr., Holleb & Coff, Chicago, Ill., for plaintiff-appellee.
Before CUMMINGS and FLAUM, Circuit Judges, and GRANT, Senior District Judge. * GRANT, Senior District Judge.
Edgewater Hospital requested a hearing from the Provider Reimbursement Review Board to review the fiscal intermediary's disallowance of certain Medicare reimbursements. When the Board denied the request for lack of jurisdiction, the hospital filed suit in district court against the Secretary of Health and Human Services. The district court granted the hospital's motion for summary judgment. The Secretary appeals that determination. For the reasons stated below, we affirm in part and reverse and vacate in part.
Appellee, The Edgewater Hospital, Inc. [Edgewater], is a qualified provider of Medicare services. The Medicare Program (Title XVIII of the Social Security Act, 42 U.S.C. Sec. 1395 et seq. (1982 ed. and Supp. III)) reimburses such a provider for authorized health care services given to qualified elderly and disabled patients. Although the Secretary of Health and Human Services administers the Program, private "fiscal intermediaries" functioning as the Secretary's agent (42 U.S.C. Sec. 1395h) are responsible for reviewing the claims submitted by a provider. In the case herein, Blue Cross/Blue Shield of Illinois [BCBS] was the fiscal intermediary for Edgewater Hospital.
The reimbursement procedures are statutorily established. The provider submits a cost report covering a twelve-month period to the fiscal intermediary for reimbursement of the "reasonable cost" of services rendered to Medicare patients. 42 C.F.R. Sec. 405.1801(b). After analyzing and auditing the cost report, the intermediary issues a Notice of Program Reimbursement [NPR] which specifies the allowed and disallowed Medicare expenses and sets forth the total amount of reimbursement due the provider. 42 C.F.R. Sec. 405.1803.
A dissatisfied provider may appeal the intermediary's final determination by requesting a hearing, in writing, before the Provider Reimbursement Review Board [PRRB or Board], within 180 days of the issuance of the Notice of Program Reimbursement. 42 U.S.C. Sec. 1395oo(a). The PRRB has the power to affirm, modify, or reverse decisions of a fiscal intermediary. 42 U.S.C. Sec. 1395 oo(d). If the provider is dissatisfied with the Board's final decision, it may seek review in the United States District Court. 1 42 U.S.C. Sec. 1395 oo(f).
The facts in this case are not in dispute. Edgewater claimed Medicare reimbursement for its fiscal year ending March 31, 1983, by submitting a cost report to its fiscal intermediary BCBS. On February 15, 1984, BCBS issued a Notice of Program Reimbursement specifically disallowing four items. By letter of February 23, 1984, Edgewater requested that the intermediary reconsider the four disallowances. BCBS responded on March 22, 1984, with a letter to Edgewater stating its reasons for not changing three of the disallowed claims but granting Edgewater's fourth disputed claim. On March 30, 1984, BCBS sent Edgewater a second Notice of Program Reimbursement, stating that it was the "Revised and Final Settlement of Reopened Cost Report," with the recalculated adjustment for the one item allowed after reconsideration.
On September 26, 1984, Edgewater sent a notice of appeal to the Board, seeking a hearing on two of the denied adjustments. The appeal was filed within 180 days of the issuance of the second Notice of Program Reimbursement, but outside the time period if calculated from the first Notice. The Board notified Edgewater by letter of May 1, 1985, that the hospital's review request was denied for the reason that, the appeal not having been filed within 180 days of the first Notice, the Board lacked jurisdiction pursuant to 42 U.S.C. Sec. 1395oo(a).
On June 25, 1985, Edgewater filed a complaint against the Secretary of Health and Human Services in district court, seeking judicial review of the Board's decision and claiming deprivation of property without due process of law. Edgewater and the Secretary filed cross-motions for summary judgment.
The magistrate to whom the motions had been referred recommended that the district court grant Edgewater's motion for summary judgment, deny the Secretary's motion, and order the Board to consider Edgewater's claims. 664 F.Supp. at 1131. Relying on St. Joseph's Hospital of Kansas City v. Heckler, 786 F.2d 848 (8th Cir.1986), the magistrate noted that a "final decision" for purposes of judicial review includes the Board's decision that a provider has failed to satisfy the threshold requirements of section 1395oo(a). Id. The magistrate also rejected the D.C. Circuit cases upon which the Secretary relied, Athens Community Hospital, Inc. v. Schweiker, 743 F.2d 1 (D.C.Cir.1984) and St. Mary of Nazareth Hospital Center v. Schweiker, 741 F.2d 1447 (D.C.Cir.1984), in two ways. First, he concluded that they were inapposite to the facts herein, since they concerned claims not included in the original cost reports, claims raised after the NPR was issued. Second, even though Athens stated that "only the matters revised are open to review," 743 F.2d at 8, "Edgewater had no notice that the items claimed ... would not be revised until the second NPR of March 30, 1984 or at least until the letter of March 22, 1984, from the intermediary." Id. Because the intermediary considered Edgewater's four disputed claims in its March 22, 1984 letter, "it would defeat the 'salutory [sic] purposes' of section 1395oo(f) to begin the 180-day appeal period [before] the second NPR was issued on March 30, 1984." Id.
The district court adopted the magistrate's report and recommendation. Id. at 1129. It found that both notices were entitled "Notice of Program Reimbursement," and that both contained the provision that the health care provider could request a Board hearing within 180 days of the Notice. Further, the second one was also designated the "Revised and Final Settlement of Reopened Cost Report." Since Edgewater filed its appeal within 180 days of the second Notice, in accordance with its directive, the court held that "the Secretary is estopped from claiming that the plaintiff was required to appeal within 180 days of the first NPR." The district court granted plaintiff's motion for summary judgment and ordered the Board hearing; it did not address the plaintiff's constitutional due process claims.
Before the court are three disputes concerning "finality": (1) Which NPR was the "final determination" under Sec. 1395oo(a)(3) that triggered the 180-day period for filing an appeal to the PRRB; (2) Was the PRRB's decision that it lacked jurisdiction a "final decision of the Board" which gives providers the right to judicial review; and (3) Was the district court's decision "final and appealable" to this court. In other words, we are faced with jurisdictional problems at every level of determination. The Secretary has also raised two other issues: whether a Medicare intermediary's revisions to a cost report are "issue specific," so that only revised cost items may be appealed; and whether the district court's estoppel order was appropriate.
Because appellate jurisdiction must be found before other issues can be considered, we begin this analysis with resolution of this court's right to review the district court's ruling.
Appellee Edgewater challenges this court's jurisdiction over the district court's judgment in the "Jurisdictional Summary" of its brief:
The March 2, 1987 judgment was a judgment in Appellee's favor as to one of two counts in the Complaint. The district court expressly refused to decide the issues raised by Count II of the Complaint. The judgment order contains no express determination that there is no just reason to delay as required by Fed.R.Civ.P. 54(b). The judgment is therefore not final.
Following Edgewater's analysis, therefore, we must conclude that, if the disposition is not final, it is not appealable to this court and must be dismissed.
We begin by recognizing that the district court's ruling was the granting of plaintiff's motion for summary judgment and the denial of defendant's cross-motion for summary judgment. Because that holding completely and succinctly ends the litigation, the judgment is final and appealable. Homemakers North Shore, Inc. v. Bowen, 823 F.2d 174, 174 (7th Cir.1987). Appellee asserts, however, that the judgment was only partial, and that the district court did not comply with the requirements of Rule 54(b) in order to allow this appeal of the first count alone.
The constitutional claim in Edgewater's second count was deprivation of property without due process of law. Alleging the same background and facts in both counts, Edgewater contends in its first count that it is entitled to a hearing before the PRRB on the second NPR issued on March 30, 1984, and in its second count that the denial of its request for a hearing constituted a taking of Edgewater's property without due process of law.
Both the magistrate and the district judge acknowledged that plaintiff had raised constitutional claims in its complaint. In his Report and Recommendation, Magistrate Balog stated, "Because I recommend the...
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