Kaiser Found. Hospitals v. Sebelius

• Decision Date: 15 June 2011
• Docket Number: No. 09–56200.,09–56200.
• Citation: 2011 Daily Journal D.A.R. 8779,11 Cal. Daily Op. Serv. 7300,649 F.3d 1153
• Parties: KAISER FOUNDATION HOSPITALS, a California Nonprofit Public Benefit Corporation, dba Kaiser Foundation Hospital–Anaheim, Plaintiff–Appellant,v.Kathleen SEBELIUS,* Secretary of the United States Department of Health and Human Services, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

649 F.3d 1153

11 Cal. Daily Op. Serv. 7300

2011 Daily Journal D.A.R. 8779

KAISER FOUNDATION HOSPITALS, a California Nonprofit Public Benefit Corporation, dba Kaiser Foundation Hospital–Anaheim, Plaintiff–Appellant,

v.Kathleen SEBELIUS,* Secretary of the United States Department of Health and Human Services, Defendant–Appellee.

No. 09–56200.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 1, 2010.Filed June 15, 2011.

Jordan B. Keville (argued), Jon P. Neustadter and Nina N. Adatia; Hooper, Lundy, & Bookman, Inc., Los Angeles, CA, for appellant Kaiser Foundation Hospitals.Russell W. Chittenden (argued), Leon W. Weidman and Indira Joy Cameron–Banks; Assistant United States Attorneys, Los Angeles, CA, for appellee Kathleen Sebelius, Secretary of the United States Department of Health and Human Services.Appeal from the United States District Court for the Central District of California, Dean D. Pregerson, District Judge, Presiding. D.C. No. 2:08–cv–02129–DDP–PJW.Before: ALFRED T. GOODWIN and JOHNNIE B. RAWLINSON, Circuit Judges, and JACK ZOUHARY, District Judge.^**Opinion by Judge RAWLINSON; Dissent by Judge ZOUHARY.

OPINION

RAWLINSON, Circuit Judge:

Kaiser Foundation Hospital–Anaheim (Kaiser), a medicare provider, appealed its notice of program reimbursement for the fiscal year ending in 2001 to the Provider Reimbursement Review Board (PRRB or Board), which dismissed the appeal because Kaiser missed its deadline to file a preliminary position paper. After the Board denied Kaiser's motion for reinstatement of its appeal, Kaiser filed this action. Kaiser now appeals the district court's order granting Sebelius's motion for summary judgment.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm the district court's judgment.

I. BACKGROUNDA. Statutory and Regulatory Framework

The Medicare Act established a system of health insurance for the aged and disabled. See 42 U.S.C. § 1395 et seq.

Eligible beneficiaries receive medical care from “providers,” which are medical care facilities that have entered into agreements with the Secretary to furnish care, and the providers are then reimbursed by the Medicare program. Part A of the Medicare program authorizes payments for institutional care provided primarily on an inpatient basis. See 42 U.S.C. §§ 1395c–1395i–4.

Medical care facilities, such as plaintiffs, receive reimbursement under Part A or Part B (or both) from a “fiscal intermediary,” ... that functions as the Secretary's agent in making payment on covered claims. At the close of each fiscal year, a provider must submit a “cost report” to the fiscal intermediary showing the costs it has incurred, and the appropriate portion of such costs to be allocated to the Medicare program during the fiscal period covered by the cost report. 42 C.F.R. §§ 413.20, 413.24.

Irvine Med. Ctr. v. Thompson, 275 F.3d 823, 826 (9th Cir.2002) (citations omitted).

After analyzing a provider's cost report, the fiscal intermediary is to “furnish the provider ... a written notice reflecting the intermediary's determination of the total amount of reimbursement due to the provider.” 42 C.F.R. § 405.1803(a). This notice is commonly referred to as the Notice of Provider Reimbursement (NPR). If a provider “is dissatisfied with the final determination of the ... fiscal intermediary ... as to the amount of total program reimbursement[,] ...” it may obtain a hearing, before the Provider Reimbursement Review Board. 42 U.S.C. § 1395 oo(a)(1). “The Board shall have the power to affirm, modify, or reverse a final determination of the fiscal intermediary with respect to a cost report ...” 42 U.S.C. § 1395 oo(d).

The statutory requirements for appealing an intermediary's NPR are that the amount in controversy be at least $10,000, and that the provider file the request for a hearing within 180 days after receiving the NPR. See 42 U.S.C. § 1395 oo(a)(2) and (3). A group of providers may appeal an NPR if (i) each provider in the group was eligible to request a hearing, (ii) the aggregate amount in controversy is at least $50,000, and (iii) the matters in controversy involve a common question of fact or interpretation of law or regulations. See 42 U.S.C. § 1395 oo(b). The Board is endowed with the power to promulgate rules and procedures “which are necessary or appropriate” to hear and decide these appeals. See 42 U.S.C. § 1395 oo(e).

At all times relevant to this action, the 2002 PRRB Instructions were in effect. Pursuant to those instructions, once the Board received a request for a hearing, it sent an “Acknowledgment and Critical Due Dates” letter to both the provider and fiscal intermediary. PRRB Instructions, Part I(C)(I). This letter notified the provider of the due dates for the preliminary position paper (due to the intermediary) the final position paper (due to the Board) and placed the appeal on the Board's long-term calendar. See id.; see also PRRB Instructions, Part II(B). When the provider submits its preliminary position paper to the intermediary, it must also submit the first page to the Board. See PRRB Instructions, Part II(B)(I). If the provider fails to submit the preliminary position paper by the due date, “the Board will dismiss [the provider's] appeal for failure to follow Board procedure.” Id. The provider is subject to the same action if it fails to submit its final position paper by the specified due date. PRRB Instructions, Part II(B)(II).

If multiple providers are eligible to bring an appeal based on one common issue regarding a question of fact or interpretation of law, regulation, or Centers for Medicare and Medicaid Services (CMS) ruling, then they may request an “optional” group appeal. PRRB Instructions, Part I(B)(I)(d). If multiple providers “are under common ownership or control and have an issue in common, [they] must file a group appeal if the amount in controversy is $50,000 or more.” Id. Individual providers may also join a group appeal. See PRRB Instructions, Part I(C)(VI) and (VII).

Finally, the Board may consider requests to reinstate appeals that were dismissed due to failure to comply with Board procedure. See PRRB Instructions, Part I(C)(XIII)(b).

B. Factual Background

On or around April 18, 2007, Kaiser received its NPR from fiscal intermediary Mutual of Omaha Insurance Company, for the fiscal year ending December, 2001 (FYE 2001). On September 21, 2007, Kaiser timely filed a request for a hearing before the PRRB, and designated counsel for the appeal. See 42 U.S.C. § 1395 oo(a)(3) (providing 180 days to file an appeal).

Kaiser received the PRRB's “Acknowledgment and Critical Due Dates” letter on October 9, 2007. The letter referred Kaiser to the Board Instructions and set the following deadlines: (1) February 1, 2008, for Kaiser to submit preliminary position papers to the intermediary; (2) April 1, 2008, for the intermediary to submit preliminary position papers to the provider; and (3) June 1, 2008, for both parties to submit final position papers to the Board. The Board also set October, 2008, as a tentative date for the hearing. Finally, the letter stated:

You are responsible for pursuing your appeal in accordance with the Board's procedures, which are outlined in the Board's Instructions. You must file your position papers, regardless of any outstanding jurisdictional challenges, motions or subpoena requests. If you miss any of your due dates including meeting either position paper due date, the Board will dismiss your appeal. The Board will not send a due date reminder.

Approximately a month after the due date for Kaiser's preliminary position paper passed, the Board advised Kaiser that because its position paper was not submitted to the intermediary, its appeal was being dismissed. On March 4, 2008, Kaiser petitioned the Board for reinstatement of its appeal, and enclosed its Final Position Paper. The Board replied on March 19, 2008, noting the filing of Kaiser's final position paper that included the following arguments for reinstatement:

-no party was prejudiced and the situation was easily rectifiable in advance of the final position paper deadline and the live hearing; -the Board should allow a decision on the merits rather than punish the Provider over a procedural technicality;

-Federal Statutes and Regulations do not require providers to file preliminary position papers; and

-the case involves a single issue that would have been transferred to a Common Issue Related Party (CIRP) group.

Nevertheless, the Board denied Kaiser's request, concluding that it was the “Group Representative's responsibility to determine when a CIRP [Common Issue–Related Party] group is required and to structure the group accordingly.” The Board also noted that if the issue was previously briefed in the CIRP appeal, Kaiser could have easily reproduced the applicable arguments in a preliminary position paper for its individual appeal. Finally, the Board explained that Kaiser failed to transfer the individual appeal to the CIRP despite Kaiser's counsel's experience in handling cases before the Board.

Kaiser subsequently filed this action against the Secretary of the United States Department of Health and Human Services. Kaiser moved for summary judgment and Sebelius moved for dismissal based on lack of subject matter jurisdiction, or in the alternative, for summary judgment. The district court denied Kaiser's motion for summary judgment and Sebelius's motion to dismiss, but granted Sebelius's motion for summary judgment. Kaiser filed a timely notice of appeal. We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm the district court's judgment.

II. STANDARD OF REVIEW

“We review de novo both the district court's grant of summary judgment and its holdings on questions of statutory interpretation.” Phoenix Mem'l. Hosp. v. Sebelius, 622 F.3d 1219, 1224 (9th Cir.2010) (citation omitted). When no issues of fact are raised, and both parties move for summary judgment, we review...