NEW BRITAIN GEN. HOSP. v. Bowen, Civ. A. No. 88-2804.
| Decision Date | 07 December 1988 |
| Docket Number | Civ. A. No. 88-2804. |
| Citation | 702 F. Supp. 288 |
| Parties | NEW BRITAIN GENERAL HOSPITAL HOME HEALTH AGENCY, et al., Plaintiffs, v. Otis R. BOWEN, M.D., Secretary of the United States Department of Health and Human Services, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Barbara Elaine Straub, James C. Pyles, Powers, Pyles & Sutter, Washington, D.C., for plaintiffs.
Robin D. Ball, Asst. U.S. Atty., U.S. Dept. of Justice, Washington, D.C., for defendants.
Sean Connelly, Brand & Lowell, William A. Dombi, Washington, D.C., for defendant amicus curiae Nat. Ass'n for Home Care.
This action involves a challenge to regulations promulgated by the Secretary of Health and Human Services ("the Secretary") at 42 C.F.R. § 421.117, 53 Fed.Reg. 17,936 (May 19, 1988). These regulations require that the processing of reimbursements under the Medicare Act for hospital-based home health agencies ("HHAs") be transferred from the "intermediary" of each HHA to one of ten regional intermediaries. Plaintiffs, hospital-based HHAs1, have moved for summary judgment, arguing that the adoption of the regulations violated the requirements of 42 U.S.C. §§ 1395h(f) and (e)(4) and the Administrative Procedure Act ("APA"), 5 U.S.C. § 501, et seq. The Secretary opposes plaintiffs' motion and simultaneously moves for summary judgment in his favor. The issues have been extensively briefed. For the reasons that follow we deny plaintiffs' motion for summary judgment and grant defendants' motion.
Pursuant to § 1395h(e)(4) of the Medicare Act2 the Secretary promulgated regulations requiring that the processing of reimbursement claims for hospital-based HHAs be transferred to ten regional intermediaries. In approving the regulations the Secretary determined that, on the basis of six stated criteria3, the assignments would result in the more effective and efficient administration of the Medicare program. See 53 Fed.Reg. 17,936 (May 19, 1988).
Plaintiffs filed this action, along with a motion for a temporary restraining order ("TRO") and preliminary injunction on September 28, 1988, more than four months after the final regulation was issued.4 After a hearing on the TRO, plaintiffs' motion for a TRO was denied on the basis that plaintiffs had failed to establish that they would suffer irreparable injury prior to a hearing and decision on the motion for preliminary injunction. New Britain General Hospital Home Health Agency v. Bowen, (September 30, 1988) 1988 WL 104919. The parties subsequently entered into a stipulation to resolve the case on expedited cross motions for summary judgment instead of proceeding with plaintiffs' preliminary injunction motion.
Plaintiffs argue that the regulations at issue are violative of the Medicare Act and must be enjoined because the Secretary failed to apply the statutory criteria set forth in § 1395h(f)5 in determining whether the transfer of hospital-based HHAs to regional intermediaries would result in the more effective and efficient administration of the Medicare program. They also maintain that the Secretary's action was arbitrary and capricious and therefore in violation of the Administrative Procedure Act.
Plaintiffs' principal challenge to the regulations at issue is that the Secretary was required under 42 U.S.C. § 1395h(e)(4) to apply "standards, criteria, and procedures" promulgated under 42 U.S.C. § 1395h(f) to assess whether transferring the hospital-based HHAs to the regional intermediaries would promote effective and efficient administration of the Medicare program. See Memorandum of Points and Authorities in Support of Plaintiffs' Motion for Summary Judgment ("Plaintiffs' Brief") at 7. Defendants maintain, to the contrary, that the standards, criteria, and procedures promulgated under § 1395h(f) are inapplicable to evaluating the efficiency and effectiveness of requiring hospital-based HHAs to transfer to regional intermediaries pursuant to § 1395h(e)(4). See Memorandum of Points and Authorities in Support of Defendants' Motion for Summary Judgment and in Opposition to Plaintiffs' Motion for Summary Judgment ("Defendants' Brief") at 9-24. Defendants further contend that under the plain language of § 1395h(e)(4), the Secretary was free to promulgate different criteria for determining whether assignments of hospital-based HHAs to regional intermediaries promoted effective and efficient administration of the program.
42 U.S.C. § 1395h(e)(4).
There is also no dispute that the Secretary is required to determine that a reassignment of hospital-based HHAs to regional intermediaries would result in more efficient and effective administration of the Medicare program prior to approving the transfer. Rather, the issue is a narrow one and involves which set of benchmarks or guidelines the Secretary is required to consider when making the determination on administrative effectiveness and efficiency.
We find plaintiffs' argument that the Secretary is required to consider the criteria promulgated under § 1395h(f) in this instance to be unpersuasive. The plain language of § 1395h(e)(4) dictates that the Secretary is to apply "such criteria relating to administrative efficiency and effectiveness as he shall promulgate." 42 U.S. C. § 1395h(e)(4) (emphasis added).6 The language and design of the statute as a whole compels the view that § 1395h(f) is inapplicable to agency regulations promulgated under § 1395h(e)(4). The first two subsections of 1395h(e), 1395h(e)(1) and (e)(2) were enacted with § 1395h(f) in 1977. Subsections (e)(1) and (e)(2) authorize the Secretary to assign or reassign providers to designated intermediaries, and both subsections specifically require application of the criteria developed under § 1395h(f).7
In 1980, concerned with the lack of consistency by the many intermediaries processing HHAs' claims, Congress addressed this question and amended the Medicare Act by enacting § 1395h(e)(4) to deal specifically with assignments of HHAs to regional intermediaries. See H.R.Rep. No. 1167, 96th Cong., 2d Sess. 368, reprinted in 1980 U.S.Code Cong. & Admin.News 5526, 5731-32. Prior to the enactment of § 1395h(e)(4), the Secretary would have been required to act under §§ 1395h(e)(1) or (e)(2), and necessarily employ the § 1395h(f) criteria, to transfer any HHA to a different intermediary. However, the plain language of § 1395h(e)(4) rendered subsections (e)(1) and (e)(2), and consequently the criteria of § 1395h(f) specified by these subsections, inapplicable. 42 U.S. C. § 1395h(e)(4) (). Had Congress intended, as plaintiffs contend, to require the criteria developed under § 1395h(f) to apply to the transfer of HHAs to regional intermediaries, it could have specifically so stated as it has elsewhere in the statute. Section 1395h(e)(4), unlike other sub-sections of § 1395h(e), makes no reference to the requirements of § 1395h(f). Furthermore, if it were Congress' intent to specify that the § 1395h(f) criteria applies to HHA transfers under § 1395h(e)(4), there would be no reason to repudiate subsections (e)(1) and (e)(2). Indeed, plaintiffs' construction attempts to transpose into § 1395h(e)(4) provisions that Congress has expressly rendered inapplicable.8
Our examination of the language and structure of 42 U.S.C. § 1395h(e) and (f) lead us to conclude that the Secretary is not required under § 1395h(e)(4) to apply the criteria promulgated under § 1395h(f).9
Plaintiffs' further argument that the new criteria which the Secretary applied to determine effectiveness and efficiency in administration of the program violated notice and comment requirements is entirely premised upon the assumption that § 1395h(f) applies to the regulations promulgated under § 1395h(e)(4). See Plaintiffs' Brief at 21-24. We do not question the proposition that § 1395h(f) expressly requires proposed standards and criteria to be published with an opportunity for the public to comment thereon. This is irrelevant because we have found § 1395h(f) to be inapplicable to regulations promulgated under § 1395h(e)(4). It follows that the notice and comment provision of § 1395h(f) is inapplicable as well.10
Plaintiffs turn next to the substance of the regulations and challenge them as arbitrary and capricious insofar as the agency failed to examine and explain the available relevant data and offer a rational connection between the facts found and the choice made. They assail as implausible the Secretary's conclusion that the transfer of hospital-based HHAs to the regional intermediaries would promote more effective and efficient administration of the Medicare program. Plaintiffs focus their attention almost entirely on the personal preferences of the numerous HHAs which they represent. This is to be expected. At the same time, they ignore or at least underplay the vast responsibilities of the government in the administration of a complex statute. They seem to contend that the Secretary should make a case-by-case analysis of the facts concerning each individual HHA. They argue that the Secretary failed to consider extensive available data, and additionally failed to consider the alternative of allowing hospital-based HHAs to continue using their 53 existing intermediaries and issuing clearer coverage guidelines for the 53 existing intermediaries to use. We shall address each of these matters in turn, but digress for a...
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