Heartland Regional Medical Center v. Leavitt

• Decision Date: 04 September 2007
• Docket Number: Civil Action No. 00-2802 (RMU).
• Parties: HEARTLAND REGIONAL MEDICAL CENTER, Plaintiff, v. Michael O. LEAVITT,<SMALL><SUP>1</SUP></SMALL> in his official capacity as Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Columbia

511 F.Supp.2d 46

HEARTLAND REGIONAL MEDICAL CENTER, Plaintiff, v. Michael O. LEAVITT,¹ in his official capacity as Secretary of Health and Human Services, Defendant.

Civil Action No. 00-2802 (RMU).

United States District Court, District of Columbia.

September 4, 2007.

COPYRIGHT MATERIAL OMITTED

Christopher L. Crosswhite, Duane Morris LLP, Washington, DC, Michael Brian Desanctis, Jenner & Block LLP, Washington, DC, for Plaintiff.

Megan Lindholm Rose, Peter S. Smith, United States Attorney's Office, Robert Ernest Leidenheimer, Jr., U.S. Attorney's Office, Tracey Glover, Department Of Health & Human Services, Washington, DC, for Defendant.

MEMORANDUM OPINION

GRANTING THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

RICARDO M. URBINA, District Judge.

I. INTRODUCTION

This matter comes before the court on the parties' cross-motions for summary judgment. The plaintiff, Heartland Regional Medical Center (Heartland), requests that the court reverse and remand the Department of Health and Human Services' (HHS) decision that prevented Heartland from obtaining Medicare reimbursements from 1992 through 1999. Because HHS's decision cures the deficiencies noted by this court in a previous administrative appeal, the court denies the plaintiff's motion for summary judgment and grants the defendant's motion for summary judgment.

II. BACKGROUND

A. Factual History

Medicare reimburses certain hospitals for medical care provided to eligible elderly and disabled persons. 42 U.S.C. §§ 1395 et seq. Congress authorizes the Secretary of HHS to impose certain limitations on Medicare reimbursements; however, the Secretary may not impose reimbursement limitations on a sole community hospital (SCH). Heartland Hosp. v. Thompson, 328 F.Supp.2d 8, 9 (D.D.C. 2004) (Heartland II). From 1992 through 1998,² a hospital located less than 35 miles from other like hospitals could qualify as an SCH if it was located in a rural area and met at least one of three additional criteria.³ 42 C.F.R. § 412.92(a) (1992). The regulations define rural as any area outside an urban area and define urban area as a Metropolitan Statistical Area (MSA).⁴ 42 C.F.R. § 412.62(f)(ii), (iii) (1992).

In May 1992, the plaintiff submitted a request for SCH status, but because the plaintiff was located in an urban area less than 35 miles away from the nearest like hospital, the Health Care Financing Administration denied the plaintiff's request. Id. at 10. Heartland appealed the decision to the Provider Reimbursement Review Board (the Board) challenging the rural requirement in 42 C.F.R. § 412.92(a). Def.'s Mot. for Summ. J. (Def.'s Mot.) at 2. Because Heartland's challenge raised `a question of law or regulations,' the Board determined that it lacked jurisdiction and, therefore, granted the plaintiff's request for expedited judicial review. Id.

B. Procedural History

In Heartland Hospital v. Shalala, No. 95-951 (D.D.C. June 15, 1998) (Heartland I), the plaintiff brought suit against HHS challenging the rural requirement. Id. at 1. The plaintiff moved for summary judgment claiming that the rural requirement was arbitrary and capricious and, therefore, invalid under the Administrative Procedure Act (`APA'). Heartland II, 328 F.Supp.2d at 10. In 1998, the late Judge Harold Greene granted summary judgment in favor of the plaintiff, stating that [t]he failure of the Secretary to respond to reasonable alternatives suggested during the comment period renders the adoption of the regulations arbitrary and capricious and, consequently, invalid. Heartland I at 23-24. The court reasoned that [r]esponding to only one alternative ... is not enough to satisfy the APA. Id. at 20-21. The order accompanying the opinion remanded the action to HHS for action consistent with the foregoing opinion. Heartland I, Order (June 10, 1998).

On remand, HHS requested proposals from the plaintiff and the agency's staff on how to interpret this court's order. Def.'s Mot. at 12.⁵ HHS then determined that the district court in Heartland I had remanded the case for further explanation of the agency's choice of MSAs to define urban area[,] ... but it did not vacate the regulation itself. Def.'s Mot. at 12. In September 2000, HHS issued a final ruling concerning Heartland's request for SCH status, again applying the rural requirement based on the MSA based definition of urban areas, and again denying Heartland SCH status. Heartland II, 328 F.Supp.2d at 11.

In November 2000, Heartland moved this court to enforce the judgment of Heartland I and to reverse and remand HHS's September 2000 decision for violating the APA. Id. This court stayed the APA challenges and denied Heartland's motion to enforce, reasoning that reconsider[ing] the alternatives to the MSA and conclude[ing] that they are inferior was all that was required by the prior judgment. Id. at 15. Furthermore, the court noted that Judge Greene did not intend to grant the plaintiff SCH status, reimbursement and interest. Id. The D.C. Circuit affirmed, stating that what Heartland I required was HHS' reconsideration of the alternatives to the MSA based definition of `urban area,' ... [and] if Heartland is to obtain further relief, it must seek it through a separate APA challenge. Heartland Reg'l Med. Ctr. v. Leavitt, 415 F.3d 24, 33 (D.C.Cir.2005) (Heartland III). Having resolved the plaintiff's motion to enforce, the court now turns to the plaintiff's APA challenges.

III. ANALYSIS

A. Legal Standard for a Motion for Summary Judgment

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. FED.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C.Cir.1995). To determine which facts are material, a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477. U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex, 477 U.S. at 322, 106 S.Ct. 2548; Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. A nonmoving party, however, must establish more than the mere existence of a scintilla of evidence in support of its position. Id. at 252, 106 S.Ct. 2505. To prevail on a motion for summary judgment, the moving party must show that the nonmoving party fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. By pointing to the absence of evidence proffered by the nonmoving party, a moving party may succeed on summary judgment. Id.

The moving party may defeat summary judgment through factual representations made in a sworn affidavit if he support[s] his allegations ... with facts in the record, Greene, 164 F.3d at 675 (quoting Harding v. Gray, 9 F.3d 150, 154 (D.C.Cir.1993)), or provides direct testimonial evidence, Arrington v. United States, 473 F.3d 329, 338 (D.C.Cir.2006). Indeed, for the court to accept anything less would defeat the central purpose of the summary judgment device, which is to weed out those cases insufficiently meritorious to warrant the expense of a jury trial. Greene, 164 F.3d at 675.

B. Administrative Procedure Act Standards

Pursuant to the Medicare statute, this court reviews Board decisions in accordance with standard of review set forth in the APA. 42 U.S.C. § 1395oo(f)(1); Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994); Mem'l Hosp./Adair County Health Ctr., Inc. v. Bowen, 829 F.2d 111, 116 (D.C.Cir.1987). The APA requires a reviewing court to set aside an agency action that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or unsupported by substantial evidence in a case ... otherwise reviewed on the record of an agency hearing provided by statute. 5 U.S.C. § 706(2)(A), (E). The arbitrary-and-capricious standard and the substantial-evidence standard require equivalent levels of scrutiny.⁶ Adair County, 829 F.2d at 117. Under both standards, the scope of review is narrow and a court must not substitute its judgment for that of the agency. Motor Veh. Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); Gen. Teamsters Local Union No. 174 v. Nat'l Labor Relations Bd., 723 F.2d 966, 971 (D.C.Cir. 1983). As long as an agency has examined the relevant data and articulated a satisfactory explanation for its action including a rational connection between the facts found and the choice made, courts will not disturb the agency's action. Motor Veh. Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. 2856. The burden of showing that the agency action violates the APA standards falls on the provider. Diplomat Lakewood Inc. v. Harris, 613 F.2d 1009, 1018 (D.C.Cir. 1979); St. Joseph's Hosp. (Marshfield, Wis.) v. Bowen, 1988 WL 235541, at *3 (D.D.C. Apr.15, 1988).

In reviewing an agency's interpretation of its regulations, the court must afford the agency substantial deference, giving the agency's interpretation controlling weight unless it is plainly erroneous or inconsistent with the regulation.⁷ Thomas Jefferson, 512 U.S. at 512, 114 S.Ct. 2381 (internal quotations omitted); Presbyterian Med. Ctr. of Univ. of Pa. Health Sys. v. Shalala, 170 F.3d 1146, 1150 (D.C.Cir. 1999); see also Qwest Corp....