Edgewater Hosp. v. Bowen

• Decision Date: 10 November 1986
• Docket Number: No. 85 C 5866.,85 C 5866.
• Citation: 664 F. Supp. 1128
• Parties: EDGEWATER HOSPITAL, Plaintiff, v. Otis BOWEN, Secretary, Health and Human Services, Defendant.
• Court: U.S. District Court — Northern District of Illinois

664 F. Supp. 1128

EDGEWATER HOSPITAL, Plaintiff, v. Otis BOWEN, Secretary, Health and Human Services, Defendant.

No. 85 C 5866.

United States District Court, N.D. Illinois, E.D.

November 10, 1986.

Howard M. Hoffman, Norman B. Berger, Christopher B. Cohen, Holleb & Coff, Ltd., Chicago, Ill., for plaintiff.

James J. Kubik, Asst. U.S. Atty., for defendant.

ORDER

LEINENWEBER, District Judge.

Before the Court is the Report and Recommendation of Magistrate James T. Balog regarding this matter. For the reasons stated herein, the Court hereby adopts Magistrate Balog's Report and Recommendation.

Having reviewed the relevant caselaw and record of this case, the court concludes that the Secretary should not be entitled to benefit from the fact that the second NPR misled the plaintiff. The second NPR, like the first NPR, was entitled, "Notice of Program Reimbursement" and also provided that it was the "Revised and Final Settlement of Reopened Cost Report." Further, the second NPR provided that the plaintiff could write to the Board within 180 days of the second NPR for a hearing. Since plaintiff filed its appeal in accordance with this directive, the Secretary is estopped from claiming that plaintiff was required to appeal within 180 days of the first NPR. The Court agrees with plaintiff that the Secretary had an affirmative obligation to inform the plaintiff of its right to appeal the order and the relevant time period within which to do so. The plaintiff was entitled to rely on the second NPR and, therefore, timely filed an appeal of the second NPR.

Accordingly, the Court adopts Magistrate Balog's Report and Recommendation and also finds that the Secretary is estopped from challenging the timeliness of plaintiff's appeal due to the fact that the second NPR issued by the Secretary indicated that plaintiff could appeal that NPR within 180 days. Since the court orders the PRRB to hold a hearing on claims 5 & 13, no findings will be made on plaintiff's constitutional claims.

IT IS SO ORDERED.

REPORT AND RECOMMENDATION

July 16, 1986.

JAMES T. BALOG, United States Magistrate.

Before the court are the parties cross-motions for summary judgment. The motions concern plaintiff Edgewater Hospital's claim for Medicare reimbursement.

Hospitals are entitled to reimbursement from the government for the actual, reasonable costs of furnishing care to Medicare beneficiaries. 42 U.S.C. § 1395cc(a)(1) (1982); 42 U.S.C. § 1395x(v)(1)(A) (1982). In seeking reimbursement, a hospital ("provider") may receive payments from a private agency. Id. § 1395h. If, as in the case at bar, the provider selects a private agency, that agency acts as the fiscal intermediary for the Secretary of Health and Human Services ("Secretary"), Id., and is initially responsible for awarding reimbursement. 42 C.F.R. § 405.406 (1983). The fiscal intermediary in the instant case is Blue Cross/Blue Shield of Illinois ("BCBS"). The final determination of reimbursable costs is made on the basis of the costs claimed by providers in the year-end cost report.

The rest of the fiscal intermediary's review process is succinctly stated in St. Joseph's Hospital v. Heckler, 786 F.2d 848 (8th Cir.1986) as follows:

"After reviewing the claims submitted by a provider, the fiscal intermediary issues a notice of reimbursement detailing those costs that will be allowed by the intermediary. Id. § 405.1803. If a provider is dissatisfied with this determination, it is entitled to request a hearing before the fiscal intermediary. Id. § 405.1807.

When a hearing has been requested, the decision of the intermediary made after that hearing is, subject to revision, its final determination. Id. §§ 405.1833, 405.1885. If a provider is satisfied with the intermediary's initial determination or for some other reason declines to request a hearing, that decision, contained in the intermediary's notice of reimbursement, also becomes its final determination. Id. § 405.1807.

After the decision of the fiscal intermediary becomes final, a provider may seek further review before the Provider Review Reimbursement Board (PRRB or Board). 42 U.S.C. § 1395oo. However, a provider's right to seek further review is strictly limited. Review may be obtained only if the provider first satisfies four threshold requirements: (1) the provider must file a timely cost report with the fiscal intermediary; (2) the provider must be dissatisfied with the fiscal intermediary's final determination; (3) the amount in controversy must be $10,000 or more; and (4) the appeal to the Board must be filed within 180 days of notice of the intermediary's final determination. 42 U.S.C. § 1395oo(a); see also Athens Community Hospital v. Schweiker, 686 F.2d 989, 991 (D.C.Cir.1982)."

The subject of controversy in the case at bar is whether the plaintiff filed the appeal within 180 days notice of the intermediary's final determination. The Secretary contends that if Edgewater did not file an appeal to the Board within 180 days, then the Board's refusal to hear the appeal would not be a "final decision" which the statute requires in order for the Board to have jurisdiction to hear the claim. 42 U.S.C. § 1395oo(f).

In determining whether Edgewater filed its appeal to the Board within 180 days, the parties admit the following facts:

Edgewater applied to BCBS for cost reimbursement from the Secretary for the hospital's fiscal year ending March 31, 1983. On February 15, 1984, the fiscal intermediary issued a Notice of Program Reimbursement ("NPR") specifically disallowing four items: Edgewater's claim for $461,460, representing costs associated for bringing the hospital in compliance with safety codes (Item 5); Edgewater's claim for $36,474 representing various laboratory expenses (Item 9); Edgewater's claim for $81,969 for funding of an educational program at one of Edgewater's satellite facilities (Item 13); and other miscellaneous lab expenses (Item 39).

On February 23, 1984, Edgewater requested that the intermediary reconsider the adjustments in the NPR to Items 5, 9, 13 and 39.

By letter dated March 22, 1984, the...