Shands Jacksonville Med. Ctr. v. Cochran
| Decision Date | 08 February 2021 |
| Docket Number | Case No. 14-263 (RDM) (cons.) |
| Parties | SHANDS JACKSONVILLE MEDICAL CENTER, INC., et al., Plaintiffs, v. NORRIS COCHRAN, Defendant. |
| Court | U.S. District Court — District of Columbia |
This is the final chapter in a long-running series of cases originally brought by more than a thousand hospitals. In the Court's most recent opinion, the Court concluded that some, but not all, of the hospitals were entitled to an award of interest as "prevailing part[ies]" pursuant to 42 U.S.C. § 1395oo(f)(2). A subset of hospitals that were not entitled to interest under § 1395oo(f)(2) for some of the claims at issue (the "Hooper and Akin Plaintiffs") pressed an alternative theory, asking that the Court direct the Secretary of Health and Human Services ("Secretary") to award them interest under 42 U.S.C. § 1395g(d). Unlike the "prevailing party" provision, which applies to those who are successful in litigating claims against the Secretary, § 1395g(d) applies at the agency level and requires the Secretary to pay or to recover interest when an administrative "determination is made that the amount of payment . . . to [the] provider . . . was in excess of or less than the amount of payment that [was] due" and the "excess or deficit" is not paid or recovered within 30 days of the determination. 42 U.S.C. § 1395g(d). TheCourt rejected the Hooper and Akin Plaintiffs' § 1395g(d) challenge on the grounds that the hospitals never presented that claim to the Secretary and, indeed, never raised the issue before any decisionmaker at the administrative level. There was, in short, no decision, action, or refusal to act for the Court to review.
In a footnote, the Hooper and Akin Plaintiffs asked as a last resort that the Court remand their FY 2016 appeals to the Provider Reimbursement Review Board ("PRRB") for a ruling on the availability of interest under § 1395g(d). The Court denied that request, also in a footnote, but because the issue was not briefed in any detail, the Court granted the hospitals leave to renew their request for "good cause" after conferring with counsel for the Secretary. Although the Court intended to provide the Hooper and Akin Plaintiffs with only a limited opportunity to explore a narrow issue, the Court's footnote ultimately precipitated multiple rounds of additional briefing, oral argument, and an evolving cascade of arguments. Suffice it to say, the hospitals have focused less on whether a remand is appropriate and, instead, have (in substance if not in name) sought reconsideration of the Court's conclusion that their § 1395g(d) challenge failed for lack of presentment.
Treating the hospitals' multiple submissions and arguments as a motion for reconsideration, the Court will deny that motion on the ground that the hospitals could have, but did not, raise the § 1395g(d) issue with the Secretary in a timely manner. That was the basis of the Court's prior decision, and, with minor refinement to the relevant analysis, the Court remains persuaded that it lacks jurisdiction to consider the Hooper and Akin Plaintiffs' § 1395g(d) claim. The Court will also deny their request that the Court remand the matter to the PRRB for further proceedings because (1) the Court lacks jurisdiction to do so and (2) in any event, the hospitalshave failed to demonstrate good cause for not raising the § 1395g(d) issue with the Secretary in the first instance.
The litigation began when over a thousand hospitals brought an array of lawsuits challenging a regulation promulgated by the Secretary of Health and Human Services ("Secretary") that imposed a 0.2 percent, across-the-board reduction in the Inpatient Prospective Payment System ("IPPS") rates used to compensate hospitals under the Medicare program. In 2015, the Court concluded that the Secretary failed to provide sufficient notice of the actuarial assumptions and methodology that she employed in calculating the 0.2 percent reduction and that, without this information, the hospitals were denied a meaningful opportunity to comment on the rule. See Shands Jacksonville Med. Ctr. v. Burwell, 139 F. Supp. 3d 240, 261-65 (D.D.C. 2015) ("Shands I"). To remedy this procedural omission, the Court remanded the matter to the Secretary for further administrative proceedings, but applying the factors set forth in Allied-Signal, Inc. v. U.S. Nuclear Regul. Comm'n, 988 F.2d 146 (D.C. Cir. 1993), the Court declined to vacate the rule. Shands I, 139 F. Supp. 3d at 267-71.
On remand, the Secretary published a notice describing the assumptions that the actuaries had used and, as contemplated by the Court's decision, invited further public comment. See Medicare Program; Inpatient Prospective Payment Systems; 0.2 Percent Reduction, 80 Fed. Reg. 75,107 (Dec. 1, 2015). After receiving comments and considering the matter further, however, the Secretary lost confidence in the basis for the 0.2 percent rate reduction and, as a result, issued a proposed rule that would remove the 0.2 percent adjustment for FY 2017 and thereafter and that would address the effects of the 0.2 percent rate reductions for FYs 2014, 2015, and 2016 by adopting a one-time 0.6 percent rate increase for FY 2017. See Medicare Program; HospitalInpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2017 Rates, 81 Fed. Reg. 24,946, 25,137-38 (Apr. 27, 2016) ("2017 Proposed Rule"). Consistent with this proposal, in the final rule setting the FY 2017 rates, the Secretary abandoned the 0.2 percent rate reduction going forward and adopted the proposed one-time 0.6 percent rate increase for FY 2017. See Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2017 Rates, 81 Fed. Reg. 56,762 (Aug. 22, 2016) ("2017 Final Rule").
Some of the comments submitted in response to the 2017 Proposed Rule raised concerns about the time value of money and argued that some or all of the hospitals should receive interest to make up for this asserted loss. Id. at 57,060. These commenters asked that the Secretary "refine the 1.006 percent adjustment [for FY 2017] to account for" the time value of money or that the Secretary "otherwise address the issue." Id. In response, the Secretary announced:
We will not contest that hospitals that are party to the Shands Jacksonville Medical Center, Inc. v. Burwell, No. 14-263 (D.D.C.) and other currently pending cases that challenge the -0.2 percent adjustment should receive interest under section 1878(f)(2) of the Act [42 U.S.C. § 1395oo(f)(2)]. For these hospitals, we will slightly increase the 1.006 factor by a uniform factor consistent with the interest rates used for this purpose in effect for the relevant time periods for paying interest. We disagree with commenters who indicated that we should pay all hospitals interest or for the time value of money.
Id. In short, after considering the comments, the Secretary decided not to contest the award of interest under 42 U.S.C. § 1395oo(f)(2) for those hospitals that were parties to the Shands case itself or to any of the "other currently pending cases." Id. (emphasis added). The Secretary, however, otherwise declined to compensate hospitals for the time value of money. Id.
Many of the hospitals then returned to this Court to challenge the adequacy of the Secretary's actions on remand. One group of hospitals argued that the Secretary should haverepealed or amended the rule that initially adopted the 0.2 percent rate reduction, which would have resulted in the recalculation of amounts each hospital was entitled to receive for FYs 2014, 2015, and 2016. Shands Jacksonville Med. Ctr., Inc. v. Azar, 366 F. Supp. 3d 32, 51 (D.D.C. 2018) ("Shands II"). And a second group of hospitals argued that the Secretary took a step in the right direction in the 2017 Final Rule but did not go far enough. In their view, the Secretary should have adopted an across-the-board rate increase (above and beyond the 0.6 percent make-up payment) to compensate hospitals for losses that they allegedly sustained due to the Secretary's decision to alter the manner in which the Medicare program distinguishes between in-patient and out-patient services. Id. at 57-58. This Court rejected those challenges, see id. at 66, and the D.C. Circuit affirmed that decision, see Shands Jacksonville Med. Ctr., Inc. v. Azar, 959 F.3d 1113 (D.C. Cir. 2020).
The Court's third opinion took up the question of interest. Three different groups of hospitals sought the award of interest to make them whole for the delay in payments resulting from the 0.2 percent reduction in their IPPS rates for FYs 2014, 2015, and 2016, which they did not recoup until they received the 0.6 percent rate increase in FY 2017. Shands Jacksonville Med. Ctr., Inc. v. Azar, No. 14-cv-263, 2019 WL 1228061 (D.D.C. Mar. 15, 2019) ("Shands III"). All three groups of hospitals argued that they were "prevailing parties" within the meaning of 42 U.S.C. § 1395oo(f)(2) and, as a result, were entitled to interest for each of the three fiscal years at issue. Id. at *1. The Court agreed that those hospitals that had filed suit before the Secretary adopted the 0.6 percent rate increase in the 2017 Final Rule were entitled to prevailing-party interest but that those hospitals that did not bring suit until after the Secretary had already provided them with the relief that they sought were not entitled to prevailing-party interest. Id. at *6-14. On appeal, the D.C. Circuit agreed that "the [h]ospitals [were] entitled to interest foreach fiscal year that they challenged the rate reduction in court by August 2, 2016, when the Secretary promulgated the FY 2017 rate increase" and that those hospitals that had not brought suit by August 2, 2016 had no claim to interest under § 1395oo(f)...
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