Monmouth Medical Center v. Thompson
| Decision Date | 27 July 2001 |
| Docket Number | 00-5110,No. 00-5109,00-5109 |
| Citation | 257 F.3d 807 |
| Parties | (D.C.Cir. 2001) Monmouth Medical Center, Appellant v. Tommy G. Thompson, Secretary, Department of Health and Human Services, Appellee |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (No. 98cv01228) (No. 98cv01229)
Robert L. Roth argued the cause and filed the briefs for appellants.
Gerard Keating, Attorney, U.S. Department of Health & Human Services, argued the cause for appellee. With him on the brief were David W. Ogden, Assistant Attorney General, Anthony J. Steinmeyer, Attorney, Wilma A. Lewis, U.S. Attorney at the time the brief was filed, Harriet S. Rabb, General Counsel, U.S. Department of Health & Human Services, and Henry R. Goldberg, Deputy Associate General Counsel.
Before: Edwards, Williams and Sentelle, Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Plaintiff-appellants Monmouth Medical Center and Staten Island University Hospital are acute-care facilities that receive payments under Medicare Part A for services to Medicare beneficiaries. Since 1983, the Secretary of Health and Human Services has made payments to cover hospital operating costs for inpatient care under the Prospective Payment System ("PPS"), which reimburses according to a uniform national rate schedule. See 42 U.S.C. 1395ww(d). The two hospitals, because they serve a disproportionate share of low-income Medicare recipients, are eligible for "disproportionate share hospital" ("DSH") adjustments to their PPS payments. See 42 U.S.C. 1395ww(d)(5)(F). Monmouth and Staten Island sought the aid of the district court in an attempt to have their fiscal year ("FY") 1993 and FY 1994 DSH payments recalculated, asserting jurisdiction under 42 U.S.C. 1395oo(a)(1)(a), 28 U.S.C. 1331, and 28 U.S.C. 1361. The district court decided that the hospitals failed to follow the statutorily mandated procedure for appealing their payments, that 42 U.S.C. 1395ii precluded other review, and that, accordingly, it lacked subject matter jurisdiction. We reverse.
* * *
The Secretary of HHS has delegated authority to administer the Medicare Act to the Health Care Financing Administration ("HCFA").1 Determinations of payment amounts are in turn often delegated to fiscal intermediaries, generally private insurers that manage the payments for the Secretary. See 42 U.S.C. 1395h. Estimated payments are made periodically and an annual accounting is done by the intermediary in the form of a Notice of Provider Reimbursement ("NPR") based on a cost report submitted by the provider after the close of each fiscal year.
The Medicare Act has detailed instructions on the procedures for seeking review of payment determinations. Under 42 U.S.C. 1395oo(a)(1)(A) a dissatisfied provider may appeal two types of "final determinations" to the Provider Reimbursement Review Board ("Board"). Clause (i) covers a fiscal intermediary's final reimbursement decision, commonly the NPR, and clause (ii) covers a final determination of the Secretary regarding payments under 42 U.S.C. §§ 1395ww(b) or (d), including the DSH payments. Appeals are to be filed within 180 days of notice of the final determination. Id. 1395oo(a)(3). In either case, the decision of the Board is then reviewable by filing in district court within 60 days of notice of the decision, or by the Secretary's own motion. Id. 1395oo(f). Section 1395ii generally forecloses other avenues of review by incorporating the review-limiting provision of the Social Security Act, 42 U.S.C. 405(h):
The findings and decision of the [Secretary of HHS] after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the [Secretary of HHS] shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the [Secretary of HHS], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter.
42 U.S.C. 405(h).
The Secretary's regulations provide three additional channels of administrative review. Under 42 CFR 405.1841(b), a late-filed request for Board review may be considered by the Board, provided that good cause is shown and the request is filed no more than three years after the NPR. The regulations also provide two possibilities for the reopening of a determination, again with a three-year limit. 42 CFR 405.1885(a) provides for reopening, at the discretion of the decisionmaker, on the motion of the provider. Subsection (b) of that same regulation, which ultimately controls here, mandates reopening in one special circumstance. It directs that the decision
shall be reopened and revised by the intermediary if ... the [HCFA] notifies the intermediary that such determination or decision is inconsistent with the applicable law, regulations, or general instructions issued by the [HCFA].
42 CFR 405.1885(b) (emphasis added).
Under the statute authorizing DSH adjustments, eligibility for and calculation of the payment require the summing of two fractions. The numerator of one of these fractions calls for the number of inpatient days of patients who "were eligible for medical assistance under a State plan [i.e., Medicaid]." 42 U.S.C. 1395ww(d)(5)(F)(vi)(II) (emphasis added). The Secretary promulgated a regulation on how to make the calculation and has repeatedly amended it. See 42 CFR 412.106 (1993) (). At the same time, the Secretary published an interpretation of that rule in the Federal Register as part of the notice and comment rulemaking implementing the PPS. See 51 Fed. Reg. 16,772, 16,777 (May 6, 1986); 51 Fed. Reg. 31,454, 31,460 (September 3, 1986). Reading "who were eligible" as " 'who (for such days) were eligible' " the Secretary declared that "Medicaid covered days will include only those days for which benefits are payable." 51 Fed. Reg. at 16,777/2-3 (emphasis added). This interpretation had the effect of reducing payments by limiting adjustments for patients who were "eligible" for Medicaid benefits under the natural reading of the word, but who, because of a particular state's program, were not receiving such benefits on a given day.
Neither hospital timely availed itself of the right to appeal the NPRs in question. But other providers did. The Secretary's interpretation fared poorly, being struck down in four of our sister circuits. See Cabell Huntington Hosp. v. Shalala, 101 F.3d 984 (4th Cir. 1996); Legacy Emanuel Hosp. & Health Ctr. v. Shalala, 97 F.3d 1261 (9th Cir. 1996); Deaconess Health Serv. Corp. v. Shalala, 83 F.3d 1041 (8th Cir. 1996); Jewish Hosp., Inc. v. Secretary of Health and Human Services, 19 F.3d 270 (6th Cir. 1994). In light of these decisions, the Administrator of HCFA issued a ruling that rescinded the Secretary's challenged interpretation nationwide. See Health Care Financing Administration Ruling 97-2 (February 27, 1997) ("HCFAR 97-2"). The ruling established a new interpretation more favorable to hospitals, providing that Medicaid-eligible days would be counted "whether or not the hospital received payment for those inpatient hospital services." Id. The new interpretation was to be effective in the month of its publication and applied to all as yet unsettled cost reports and all cases in which "jurisdictionally proper" appeals were still pending. See id. The ruling explicitly foreclosed retrospective application: "We will not reopen settled cost reports based on this issue." Id. Like all such rulings, HCFAR 97-2 was issued without notice or opportunity for comment.
The hospitals nonetheless sought recalculation of their DSH payments, filing with their intermediaries for reopening well within the three years required by 405.1885. Their respective intermediaries denied the requests, citing HCFAR 97-2. Both hospitals also sought Board review in attempts to satisfy the jurisdictional requirements of 42 U.S.C. 1395oo. They filed their appeals within 180 days of the publication of HCFAR 97-2, but the intermediaries objected that the trigger event was each hospital's NPR, not HCFAR 97-2. In response, the hospitals invoked 405.1841(b), which allows extension of the time limit for "good cause." They argued that the delay was unavoidable because they could not have anticipated HCFAR 97-2's refusal to grant reopening. In separate letters to the providers, the Board stated that "your rationale for late filing does not constitute good cause" and that it lacked jurisdiction to hear the appeals. Both hospitals sought review in the district court. We review the district court's jurisdictional determination de novo. See Moore v. Valder, 65 F.3d 189, 196 (D.C. Cir. 1995). Although we eventually conclude that we have jurisdiction under 42 U.S.C. 1361, we must first examine all other possible avenues of relief to ensure that the hospitals have fully exhausted those which were available.
* * *
The hospitals first invoke the jurisdiction of the district court under 42 U.S.C. 1395oo(f) to review the Board's denial of their appeals. Having acknowledged that their appeals were untimely with respect to the NPRs, they frame the appeals here as challenges to the reopening prohibition in HCFAR 97-2. At issue is whether the Board could properly consider such an attack. As noted above, clause (i) of 1395oo(a)(1)(A), the prerequisite for district court jurisdiction under 1395oo(f), gives the Board jurisdiction to review final reimbursement determinations by intermediaries. But it appears that neither of the hospitals attacked its intermediary's non-reopening decision in its appeal to the Board, and an HCFA Ruling is not the action of an intermediary. Staten Island did not even request reopening until three months after it sought...
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