Kidney Center of Hollywood v. Shalala, Civ.A. 98-0912 (JR).

• Decision Date: 30 August 1999
• Docket Number: No. Civ.A. 98-0912 (JR).,Civ.A. 98-0912 (JR).
• Citation: 63 F.Supp.2d 51
• Court: U.S. District Court — District of Columbia
• Parties: The KIDNEY CENTER OF HOLLYWOOD, et al., Plaintiffs, v. Donna E. SHALALA, Secretary, U.S. Department of Health and Human Services, Defendant.

63 F.Supp.2d 51

The KIDNEY CENTER OF HOLLYWOOD, et al., Plaintiffs, v. Donna E. SHALALA, Secretary, U.S. Department of Health and Human Services, Defendant.

No. Civ.A. 98-0912 (JR).

United States District Court, District of Columbia.

August 30, 1999.

Eugene A. Massey, Arent Fox Kintner Plotkin & Kahn, Washington, DC, for plaintiffs.

Sonia Orfield, Office of the General Counsel, Department of Health and Human Services, Washington, DC, for defendant.

MEMORANDUM OPINION

ROBERTSON, District Judge.

Plaintiffs are ten affiliated healthcare providers aggrieved by a decision by the Medicare Provider Reimbursement Review Board ("Board" or "PRRB") dismissing their claims for certain costs they incurred during the 1987 cost reporting year. They sue for judicial review and reversal of that decision and of subsequent decisions by the Board and the Administrator of the Health Care Financing Administration ("HCFA") refusing to reinstate their claims. The Government moves to dismiss. For the reasons set forth below, the motion must be granted, although not for the reasons advanced by the Government.

BACKGROUND

A. Statutory and regulatory framework

A healthcare provider seeking reimbursement from the Secretary of Health and Human Services for services to Medicare patients must submit an annual cost report to a fiscal intermediary (typically an insurance company), which acts as paying agent under contract with the Secretary. See 42 C.F.R. § 413.20 (1997). The fiscal intermediary analyzes the cost report and issues a final determination in the form of a Notice of Program Reimbursement ("NPR"), that sets forth the amount of allowable Medicare payments. See 42 C.F.R. § 405.1803(1) (1997).

A provider wishing to appeal the intermediary's determination has 180 days after receiving the NPR to request a hearing before the Medicare Provider Reimbursement Review Board. See 42 U.S.C. § 1395oo(a)(3) (1994). The Board is an administrative tribunal established specifically to adjudicate reimbursement disputes. The Administrator of HCFA, who is the Secretary's delegate in these matters, may review any Board decision on her own motion, or on the motion of a party or HCFA. See 42 C.F.R. § 405.1875(a)(1) (1997). If HCFA or a party wishes the Administrator to review a Board decision, it must file a written request within 15 days of the receipt of a Board decision, see 42 C.F.R. § 405.1875(b), but such a request does not ensure that the Administrator will grant the review. See 42 C.F.R. § 405.1875(d)(2).

The Secretary's regulations provide another way for a dissatisfied provider to seek administrative revision of a reimbursement decision. A decision at any administrative level — intermediary, Board, or Administrator — may be reopened, within three years, on the motion of the Board, or the Administrator, or the provider. See 42 C.F.R. § 405.1885(a) (1997). However, "[j]urisdiction for reopening a determination or decision rests exclusively with that administrative body that rendered the last determination or decision." 42 C.F.R. § 405.1885(c).

Before a provider may seek judicial consideration of a claim under 42 U.S.C. § 1395oo, it must at least have presented a claim to the Board and obtained a "final decision" by the Board. See 42 U.S.C. § 1395oo(f)(1); Ass'n of American Medical Colleges v. Califano, 569 F.2d 101, 110 (D.C.Cir.1977). The Board's decision on a provider's appeal becomes final and subject to judicial review, unless the HCFA Administrator, at her discretion, and within 60 days following the provider's receipt of the Board's decision, reverses, affirms, or modifies it. See 42 U.S.C. § 1395oo(f)(1). And, "[i]f the Administrator declines to review a Board decision, the provider must file an appeal [with the appropriate district court] within 60 days of receipt of the decision of the Board." 42 C.F.R. § 405.1877(b) (1997).

B. Procedural history

The plaintiff-providers are all owned and operated by Fresenius Medical Care, North America Inc. ("FMC"). In November of 1990, FMC (then doing business as National Medical Care, Inc.) timely appealed to the Board from the intermediary's determinations for the 1987 cost reporting year. Four and a half years later(!), in April 1995, the Board issued a scheduling order to FMC and the intermediary, requiring them to file position papers¹ by June 1, 1998, with a hearing anticipated in January of 1999(!!). In June 1995, the Board issued a second scheduling order, revising the deadline for final position papers to February 1, 1996, with a hearing expected in June 1996. FMC signed a certified mail receipt for this second scheduling order, see Certified Record, at 78, but evidently misfiled it. FMC failed to file the required position papers by the new deadline, and the intermediary moved to dismiss the appeals for abandonment. The Board granted the motion to dismiss on October 21, 1996. On December 2, 1996, FMC petitioned the Board for reinstatement of its appeals, arguing that it did not have notice of the revised schedule. This request was denied on May 12, 1997. On August 5, 1997, well after the 60-day statutory period in which to seek judicial review of the Board's original decision, and more than 60 days after the Board's May 12, 1997 decision not to reinstate the appeals, but still within the three year period in which to move to reopen, FMC again petitioned the Board for reinstatement. This second petition for reinstatement advanced an argument related to plaintiffs' other ongoing appeals of Medicare reimbursement decisions.² On January 14, 1998, the Board denied FMC's second petition for reinstatement. On February 13, 1998, FMC sent a written request to the HCFA Administrator, seeking her review of the Board's refusal to reopen. On March 27, 1998, the HCFA Attorney Advisor (which reviews incoming motions) informed FMC that the Administrator would not review the Board's decision. The Attorney Advisor's letter indicated that the plaintiffs' request had not reached HCFA until February 18, 1998, and was thus untimely in light of the 15-day limitation on petitioning for such review. See Certified Record, at 1 (citing 42 C.F.R. § 405.1875(b)). The letter also explained that the Attorney Advisor's office had not received plaintiffs' request until March 27, 1998 — after the expiration of 60-day statutory period during which the Administrator could review a Board decision. See Certified Record, at 1 ("Administrator bound by the 60-day statutory time period for review for which there is no cause for extension."). FMC filed the complaint in this action on April 10, 1998, more than 60 days from the date on which it received notice of the Board's January 14 decision.

ANALYSIS

Plaintiffs argue that the Board's decision to dismiss the appeals as well as its two subsequent decisions not to reinstate the appeals were arbitrary and capricious and an abuse of discretion under 5 U.S.C. § 706. They seek an order setting aside the Board's denial of the two petitions for reinstatement and consolidating the 1987 cost report appeals with plaintiffs' other pending cost report appeals.³ The Government's motion to dismiss invokes Fed. R.Civ.P. 12(b)(6), and argues that the Board's decision to dismiss, as well as its subsequent decisions to deny reinstatement of the appeals, are not subject to review under 5 U.S.C. § 701(a)(2). The government's motion does not invoke Fed. R.Civ.P. 12(b)(1), but "it is incumbent upon federal courts — trial and appellate — to constantly examine the basis of jurisdiction," sua sponte if necessary. Save the Bay, Inc. v. U.S. Army, et. al., 639 F.2d 1100, 1102 (5th Cir. Feb.1981) (citing Fed. R.Civ.P. 12(h)(3); Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908)). After examining the basis of the jurisdiction claimed by plaintiffs, I have concluded that it is inadequate.

The judicial review provision of the Medicare Act provides, in relevant part:

(1) A decision of the Board shall be final unless the Secretary, on his own motion, and within 60 days after the provider of services is notified of the Board's decision, reverses, affirms, or modifies the Board's decision. Providers shall have the right to obtain judicial review of any final decision of the Board, or of any reversal, affirmance, or modification by the Secretary, by a civil action commenced within 60 days of the date on which notice of any final decision by the Board or of any reversal, affirmance, or modification of the Secretary is received.

42 U.S.C. § 1395oo(f)(1).

The Board's October 21, 1996, order dismissing plaintiffs' claims was a final decision of the Board, from which an appeal could be taken. Yet plaintiffs sought neither judicial review within 60 days nor review by the HCFA Administrator within 15 days. Instead they moved to reopen the claims on December 2, 1996. The well-established rule in this Circuit is that when a timely motion for reconsideration or reopening is made, the statutory period in which to seek judicial review does not begin to run until the motion is acted upon by the appropriate administrative body. See ICC v. Bhd. of Locomotive Engineers, 482 U.S. 270, 284-85, 107 S.Ct. 2360, 96 L.Ed.2d 222 (1987) (citing Outland v. CAB, 284 F.2d 224, 227 (D.C.Cir. 1960)). See also Stone v. INS, 514 U.S. 386, 391-92, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995). Plaintiffs' motion to reopen was filed within 60 days of October 21, 1996, and therefore was timely for the purposes of preserving the right to seek judicial review of the Board's original decision to dismiss. Indeed, once the plaintiffs filed their December 2, 1996, motion to reopen, they did not again obtain the right to seek judicial review until the date of the Board's subsequent denial of that motion, on May 12, 1997. See Stone, 514 U.S. at 392, 115 S.Ct. 1537; Columbia Falls Aluminum Co. v. EPA, 139 F.3d 914, 919 (D.C.Cir.1998).

Plaintiffs failed to seek judicial review within 60 days of the May 12, 1997...