Fla. Health Scis. Ctr., Inc. v. Sec'y of Health & Human Servs.

• Decision Date: 26 July 2016
• Docket Number: No. 15-5163,15-5163
• Citation: 830 F.3d 515
• Parties: Florida Health Sciences Center, Inc., doing business as Tampa General Hospital, Appellant v. Secretary of Health and Human Services, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

830 F.3d 515

Florida Health Sciences Center, Inc., doing business as Tampa General Hospital, Appellant

v.Secretary of Health and Human Services, Appellee.

No. 15-5163

United States Court of Appeals, District of Columbia Circuit.

Argued March 22, 2016

Decided July 26, 2016

Stephanie A. Webster, Washington, DC, argued the cause for appellant. With her on the briefs was Hyland Hunt, Washington, DC.

Abby C. Wright, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Alisa B. Klein, Attorney, William B. Schultz, General Counsel, U.S. Department of Health and Human Services, Janice L. Hoffman, Associate General Counsel, Susan Maxson Lysons, Deputy Associate General Counsel for Litigation, and Jonathan C. Brumer, Attorney, Washington, DC.

Before: Griffith and Kavanaugh, Circuit Judges, and Sentelle, Senior Circuit Judge.

Griffith

, Circuit Judge:

Tampa General Hospital receives federal funds for serving patients who cannot pay for the healthcare they receive. To determine how much federal funding goes to each hospital for providing such care, the Secretary of the U.S. Department of Health and Human Services (HHS) makes certain “estimates” as required by the Affordable Care Act. Although the Act bars judicial review of the Secretary's estimates, Tampa General seeks to challenge the data underlying them. We hold that the bar on judicial review of the Secretary's estimates precludes review of the underlying data as well.

I

Tampa General Hospital serves a large share of Tampa's low-income population. The federal government has long compensated hospitals like Tampa General for serving low-income patients by disbursing funds through a system known as Disproportionate Share Hospital (DSH) payments. See 42 U.S.C. § 1395ww(d)(5)(F) (1988)

. Historically, HHS calculated a hospital's DSH payment based on the number of days per year that the hospital served Medicaid and low-income Medicare patients. This calculation did not factor in the costs to the hospitals of “uncompensated care,” which they provide to patients who have no means to pay, whether through federal programs or otherwise. See Medicare Program Final Rule, 78 Fed. Reg. 50,496, 50,622, 50,634 -35 (Aug. 19, 2013).

The Affordable Care Act revised the process for calculating DSH payments. The new formula, which took effect in 2014, bases DSH payments largely on the uncompensated care hospitals provide. See 42 U.S.C. § 1395ww(r) (2012)

; 78 Fed. Reg. at 50,622. HHS pays each hospital 25% of the amount it received under the old formula, 42 U.S.C. § 1395ww(r)(1), then adds more based in part on the Secretary's “estimate” of the percentage of the nation's overall uncompensated care that each hospital provides, id. § 1395ww(r)(2)(C).

To implement this change, the Secretary issued a final rule describing HHS's methodology for calculating DSH payments for 2014. 78 Fed. Reg. at 50,627

-47. The Secretary decided to estimate each hospital's amount of uncompensated care, one part of the DSH payment, by looking to the number of days spent in each hospital by Medicaid patients and low-income Medicare patients who receive Supplemental Security Income benefits (Medicare SSI). Id. at 50,636 -40. This number is then divided by the total number of days that such patients spent in all eligible hospitals to determine each hospital's share of the nation's uncompensated care. In other words, the Secretary decided to use each hospital's number of insured Medicaid and Medicare SSI patients as a proxy for its number of low-income uninsured patients. The Secretary reasoned that researchers often treat these two groups similarly, and that the proxy data was reliable because it had been “historically publicly available, subject to audit, and used for payment purposes.” Id. at 50,635 -37.

Hospitals keep track of the number of Medicaid patients served by submitting annual reports to HHS. HHS decided to use data from the hospitals' 2010/2011 reports, which offered “the most recently available” information. Id. at 50,638

. If hospitals determine that the initial figures they submitted were inaccurate, they can amend their annual reports. Mindful of this possibility, HHS picked the March 2013 updates as the most recent data it would use. Id. at 50,641 -42. HHS would not use data submitted after the deadline when calculating DSH payments for 2014 because there would not be enough time to ensure its accuracy with an audit. Id. at 50,647

.

Even so, Tampa General sought to give the Secretary new data in April 2013. When the Secretary refused to use the data, Tampa General filed suit in district court, arguing that the Secretary's reliance on “obsolete” data rather than “the most recent data available” violated the Administrative Procedure Act and the Medicare statute. Fla. Health Scis. Ctr., Inc. v. HHS , 89 F.Supp.3d 121, 126 (D.D.C. 2015)

. Tampa General claimed that the data submitted in April 2013 established that it was entitled to $3 million more than the Secretary originally calculated. Id. at 129.

The district court dismissed the hospital's claim for lack of subject matter jurisdiction, holding that 42 U.S.C. § 1395ww(r)(3)

, which precludes judicial review of the Secretary's “estimate” of a hospital's amount of uncompensated care, bars review of the Secretary's choice of data used in determining that estimate. The district court reasoned that any other conclusion would be an end run around the bar on review. Florida Health , 89 F.Supp.3d at 129.

Tampa General timely appealed, and we have jurisdiction under 28 U.S.C. § 1291

.

II

We review de novo the district court's dismissal for lack of subject matter jurisdiction, taking Tampa General's allegations as true and drawing all reasonable inferences in its favor. Council for Urological Interests v. Sebelius , 668 F.3d 704, 713 (D.C. Cir. 2011)

. Although it is Tampa General's burden to establish subject matter jurisdiction, Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), we apply a presumption in favor of judicial review of agency action and read statutory bars on judicial review narrowly. El Paso Nat. Gas Co. v. United States , 632 F.3d 1272, 1276 (D.C. Cir. 2011). But the presumption in favor of review can be overcome by “specific language” in the statute that is a “reliable indicator” of Congress's intent to bar review. Tex. Alliance for Home Care Servs. v. Sebelius , 681 F.3d 402, 408 (D.C. Cir. 2012) (quoting Block v. Cmty. Nutrition Inst. , 467 U.S. 340, 349, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984) ).

We find such a reliable indicator here and affirm the district court.

A

Tampa General seeks to challenge the Secretary's refusal to use the most recent available data to estimate the hospital's 2014 DSH payment. But the Affordable Care Act bars “administrative or judicial review” of “[a]ny estimate of the Secretary” or “[a]ny period selected by the Secretary” to determine each hospital's DSH payment. See 42 U.S.C. § 1395ww(r)(3)

.¹ We recently held that virtually identical language in another statute “unequivocally precludes review” of the agency action that falls within the bar. Texas Alliance , 681 F.3d at 409 (“[T]hat there be ‘no administrative or judicial review’ under the ... statutes ‘or otherwise ’ unequivocally precludes review of the Secretary's actions [listed in the judicial-review bar].”). Accordingly, we cannot review the Secretary's choice of data here if that decision “is of the sort shielded from review.” Id. (quoting Am gen, Inc. v. Smith , 357 F.3d 103, 113 (D.C. Cir. 2004)

). We conclude that it is.

Tampa General concedes that the Act bars judicial review of the Secretary's “estimate” of the hospital's “amount of uncompensated care.” 42 U.S.C. § 1395ww(r)(2)(C)(I)

(providing that this “amount” is to be “estimated by the Secretary”). But Tampa General argues that we can review the underlying data on which the Secretary relied, because an “estimate” is not the same thing as the “data” on which it is based. The estimate is an output, and the data are an input. Tampa General notes that the statute requires the Secretary to base her estimates on “appropriate” data, id. and urges that its challenge is to the Secretary's reliance on inappropriate data, not her methodology for estimating uncompensated care.

We rejected a similar argument in Texas Alliance , 681 F.3d at 409–10

. There, HHS deemed suppliers of certain healthcare products ineligible for a Medicare contract because they had failed to meet the financial standards HHS had set forth in a regulation. Although the statute precluded judicial review of, among other things, “the awarding of contracts,” the suppliers brought a challenge to the financial-standards regulation. Id. at 409 (quoting 42 U.S.C. § 1395w–3(b)(11)(B) ). The suppliers argued that they could challenge the financial standards, even though those standards affected the Secretary's decision whether to award a contract, because only the ultimate contract decision was barred from review. Id. at 410. In other words, the suppliers sought to challenge an input (the financial standards), contending that only review of the output (the awarding of contracts) was expressly off limits.

But we rejected the categorical distinction between inputs and outputs that the suppliers urged. Instead, we held that the scope of the congressional directive that there be “no administrative or judicial review” turned on the relationship between the challenged decision and the agency action shielded from review. Id. at 409–11

. We reasoned that the financial standards that determined a bidder's eligibility for a contract were “indispensable” to the ultimate contract decision, which could not be challenged in court. Id. at 409–10 (“If a bidder is found financially ineligible, its bid is rejected [.]”). Additionally, the statute barred judicial review of “the bidding structure” for such contracts, and the financial...