High Country Home Health, Inc. v. Thompson, No. 02-8096.

• Decision Date: 03 March 2004
• Docket Number: No. 02-8096.
• Parties: HIGH COUNTRY HOME HEALTH, INC., Plaintiff-Appellant, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, and Dennis G. Smith, Administrator of the Centers for Medicare and Medicaid Services, formerly known as the Health Care Financing Administration,<SMALL><SUP>*</SUP></SMALL> Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

359 F.3d 1307

HIGH COUNTRY HOME HEALTH, INC., Plaintiff-Appellant, v. Tommy G. THOMPSON, Secretary of the United States Department of Health and Human Services, and Dennis G. Smith, Administrator of the Centers for Medicare and Medicaid Services, formerly known as the Health Care Financing Administration,^* Defendants-Appellees.

No. 02-8096.

United States Court of Appeals, Tenth Circuit.

Filed March 3, 2004.

Charles F. MacKelvie, Chicago, IL, for Plaintiff-Appellant.

Nicholas Vassallo, Assistant United States Attorney (Matthew H. Mead, United States Attorney, with him on the brief), Cheyenne, WY, for Defendants-Appellees.

Before SEYMOUR, HENRY, and McCONNELL, Circuit Judges.

McCONNELL, Circuit Judge.

The question presented is whether it was arbitrary or capricious for a Medicare administrative tribunal to dismiss an appeal for failure to meet a filing deadline. We conclude that it was not, and affirm the judgment of the district court.

BACKGROUND

Petitioner, High Country Home Health, Inc. ("High Country"), is owned and operated by a husband-and-wife duo, Reed and Marilyn Pedrick. During fiscal years ending ("FYE") in 1993, 1994, and 1995, Mr. Pedrick provided physical therapy services to Medicare-covered patients in their homes. In addition, he and his wife both spent substantial time working as administrators of the company. Each year, the company filed for and received Medicare reimbursements not only for the physical therapy visits, but also for the couple's administrative services. After further auditing, the fiscal intermediary that processed the reimbursement requests, a division of Blue Cross/Blue Shield of Alabama then known as Wellmark ("the Intermediary"), issued Notices of Program Reimbursement ("NPRs") for each of those fiscal years, stating that High Country had been overpaid and requiring it to recoup the overpayments. High Country has been embroiled in litigation attempting to establish its right to the alleged overpayments ever since. This appeal concerns a missed filing deadline in an administrative appeal of the Intermediary's revised NPR for FYE 1994.

The Intermediary's initial NPR for FYE 1994 reduced the amount of High Country's physical therapy reimbursement but not its reimbursement for administrative compensation. High Country appealed the physical therapy cost determination, and on March 19, 1997, the Provider Reimbursement Review Board (the "PRRB" or "Board") decided that appeal. Then, on June 16, 1997, the Intermediary reopened its 1994 NPR and issued a revised NPR finding that High Country's administrative compensation was also excessive.

High Country filed its appeal of the second 1994 NPR on July 2, 1997. When High Country received its notice of hearing in December, the notice specifically warned counsel that failure to meet the applicable deadlines would result in dismissal, and that no further reminder would be sent. High Country's preliminary position paper was due to the Intermediary in early March, 1999, and its final position paper was due to the Board by June 1, 1999.

There is a factual dispute over whether the preliminary position paper was ever filed,¹ but both sides agree that the final position paper was not timely filed. In a letter dated June 23, the Board notified counsel for High Country that it was dismissing the appeal. While that letter was in transit, on June 24, counsel for High Country (having independently realized the mistake) sent in the position paper, without any explanation for its lateness, by Federal Express overnight mail.

On June 28, counsel for High Country received notification of the Board's dismissal. The next day, he sent a letter requesting that the Board reopen the dismissed appeal. After that request was rejected, he urged the Board to reconsider in a second letter dated August 6, 1999. The Board curtly rebuffed his arguments, noting that it is a party's obligation to meet all relevant deadlines.

On appeal to the district court, High Country challenged both the Board's dismissal and the underlying revision to the 1994 NPR. The district court ruled that it had jurisdiction only over the Board's dismissal for untimeliness, and not over the merits. It initially remanded for reconsideration because it concluded that the Board's strict application of the final position paper deadline was probably based on a mistaken belief that High Country had already been delinquent by failing to file its preliminary position paper. The Secretary moved for reconsideration because the district court had decided that the preliminary paper had been filed on the basis of evidence never presented to the Board. On reconsideration, the district court vacated its previous order and upheld the Board's decision. This appeal followed.

DISCUSSION

I

High Country raises various objections to the Intermediary's decision to reopen the FYE 1994 determination. This Court's jurisdiction, however, is limited by 42 U.S.C. § 1395oo(f)(1):

Providers shall have the right to obtain judicial review of any final decision by the Board, or of any reversal, affirmance, or modification by the Secretary....

There is only one "final decision by the Board" at issue in this appeal: the dismissal for failure to timely file the final position paper.² Although that dismissal was not a decision on the merits, it is still a final decision subject to our jurisdiction. UHI, Inc. v. Thompson, 250 F.3d 993 (6th Cir.2001); see also Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 347-48 (4th Cir.2001); cf. Edgewater Hosp., Inc. v. Bowen, 857 F.2d 1123, 1130-32 (7th Cir.1988) (holding that federal courts have jurisdiction to review PRRB dismissals for want of jurisdiction). We review the Board's dismissal under the standards set forth in the Administrative Procedures Act, see 42 U.S.C. § 1395oo(f)(1), and will therefore uphold the decision of the Board unless it was "arbitrary and capricious," see 5 U.S.C. § 706(2)(A).

II

As High Country points out in its brief, the Board is burdened by an immense caseload, consisting of more than 11,000 claims each year. Especially in such circumstances, procedural rules requiring timely filings are indispensable devices for keeping the machinery of the reimbursement appeals process running smoothly. Congress has given the Board "full power and authority" to make such rules, see 42 U.S.C. § 1395oo(e), and the Board has chosen to exercise that authority by setting strict deadlines. Its rules governing PRRB procedure at the time of High Country's default³ contained this terse warning to providers: "If you fail to submit your final position paper to the Board by the due date, the Board may dismiss the appeal." Provider Reimbursement Manual ("PRM") § 2921.4E (1993) (repealed 2000).⁴

Strict procedural requirements like this one help manage a docket both by encouraging timely filing and by allowing the adjudicator to ignore late or improperly presented claims. But to a significant extent, these advantages are lost if a deadline is applied inconsistently or subjected to second-guessing by higher courts. If litigants know that they may be able to keep their claims alive despite missing a deadline, the procrastinators and the perfectionists may well decide to accept a chance of procedural default in return for another few days to improve their substantive argument. This problem is exacerbated once the deadline has passed. Then, the likely sanction for late filing becomes a sunk cost, and the price of an additional day to develop one's substantive argument is only the marginal increase in probability that the sanction will be imposed.

Of course, these costs should be balanced against the interest in remedying substantive injustices despite procedural technicalities. See Inova, 244 F.3d at 348. But for every plaintiff whose substantive claim or reason for default leads an adjudicator to excuse the default, ten less sympathetic plaintiffs are likely to demand similar treatment. The danger is that the deadline, which is supposed to help manage the burdens of a heavy caseload, will become a new (and less productive) font of litigation: instead of focusing on timely raised substantive claims, the adjudicator must expend resources on litigation about whether a party's excuse for missing the deadline was good enough, whether the deadline has been applied consistently, and so forth. All of this counsels in favor of applying our review of an administrative tribunal's procedural rulings especially sparingly.

III

When a party misses a deadline, it has several predictable avenues for attempting to avoid the resulting penalty. It can argue that there is a valid excuse for the tardiness; that some other filing should be deemed equivalent to the missed filing, so that the deadline was actually satisfied; that the party had no proper notice of the deadline; or that the deadline itself is invalid or inconsistently applied. High Country pursues all four strategies.

A

First, High Country argues that the PRRB should have excused its late filing because of extenuating circumstances. It explains, as it did in its June 29 request for reinstatement, that the office manager of its legal counsel disappeared in mid-June, 1999, apparently stealing computer equipment containing firm records. While we may sympathize with counsel's misfortune, we agree with the Board that the theft cannot excuse missing a deadline that had expired two weeks earlier. Besides the theft, High Country's only explanation for its late filing was that the office manager had apparently failed to docket several matters in the weeks leading up to her departure. Counsel for High Country acknowledged that "this may have been simple neglect or carelessness on her part," but also speculated that the office manager "may have acted to intentionally create exactly this type of problem for our firm." Request to Reinstate Case No. 97-2549, App. vol. 2 at 13-14. Especially in light of the fact that High Country timely...