Southeast Ark. Hospice Inc. v. Dep't of Health
| Decision Date | 24 March 2011 |
| Docket Number | Case No. 4:10CV00721 BSM. |
| Citation | 784 F.Supp.2d 1102 |
| Parties | SOUTHEAST ARKANSAS HOSPICE, INC., Plaintiffv.Department of Health and Human Services, Kathleen SEBELIUS, Secretary, Defendant. |
| Court | U.S. District Court — Eastern District of Arkansas |
OPINION TEXT STARTS HERE
Don E. Trimble, Attorney at Law, Little Rock, AR, for Plaintiff.Shannon S. Smith, U.S. Attorney's Office, Little Rock, AR, for Defendant.
Plaintiff Southeast Arkansas Hospice, Inc., (SEARK) filed this case against defendant Kathleen Sebelius, the Secretary of the United States Department of Health and Human Services (DHHS), seeking to invalidate the Secretary's regulation implementing a statutory cap on Medicare payments to hospice-care providers. Four motions are pending: (1) the Secretary's motion to dismiss for lack of subject matter jurisdiction [Doc. No. 17]; (2) the Secretary's motion to dissolve the preliminary injunction [Doc. No. 29]; (3) SEARK's motion to amend its complaint [Doc. No. 36]; and (4) SEARK's motion for summary judgment [Doc. No. 38]. For the reasons set forth below, the Secretary's motion to dismiss is granted in part and denied in part; the Secretary's motion to dissolve the preliminary injunction is denied as moot; SEARK's motion to amend its complaint is denied; and SEARK's motion for summary judgment is granted in part and denied in part.
It is undisputed that SEARK operates hospice-care facilities in Arkansas and receives reimbursement from Medicare for certain services it provides to terminally ill patients. See 42 U.S.C. § 1395f(a)(7) (2006). To ensure that hospice care payments do not exceed the costs of treatment in a conventional setting, there is a “cap” on the total amount paid in reimbursements to SEARK for all eligible patients in any given fiscal year. Id. § 1395f(i)(2)(A); H.R.Rep. No. 98–333, at 1 (1983), U.S. Code Cong. & Admin.News 1983, p. 1043. This cap is codified at 42 U.S.C. § 1395f(i)(2), and the attendant regulation, which is at the heart of this lawsuit, is found at 42 C.F.R. § 418.309(b)(1). A provider's annual cap is calculated by multiplying (a) a per-patient amount defined by statute and indexed for inflation, times (b) the number of Medicare beneficiaries in the hospice program during that fiscal year. 42 U.S.C. § 1395f(i)(2)(A).
As is typical in the hospice-care industry, SEARK receives Medicare payments through a fiscal intermediary. SEARK's fiscal intermediary is Palmetto GBA (“Palmetto”). The fiscal intermediary is responsible for reviewing a provider's claims and generally pays the provider upon invoice. When a provider receives reimbursements from Medicare that exceed its annual cap, the fiscal intermediary issues a Notice of Program Reimbursement (NPR), which is essentially a demand for the overage. Palmetto served four such demands on SEARK for fiscal years 2004, 2005, 2007, and 2009.
Under 42 U.S.C. § 1395 oo(a), a provider may challenge an NPR so long as the amount in controversy is at least $10,000 and it requests a hearing before the Provider Reimbursement Review Board (PRRB) within 180 days after receipt of the demand. If the provider is dissatisfied with the PRRB's ruling, it may obtain judicial review by filing a civil action within 60 days of the PRRB's final determination. Id. § 1395 oo(f)(1).
On June 25, 2007, Palmetto sent an NPR to SEARK demanding that SEARK refund overpayments in the amount of $137,113 for the period of November 1, 2003, through October 31, 2004. SEARK did not appeal this NPR to the PRRB.
On September 26, 2006, Palmetto sent an NPR to SEARK demanding that SEARK refund overpayments in the amount of $358,170 for the period of November 1, 2004, through October 31, 2005. SEARK timely appealed this determination to the PRRB. The PRRB responded with a letter directed to SEARK's counsel that set forth certain deadlines in the administrative appeal process. When SEARK failed to perfect its appeal by timely completing the enumerated tasks, the PRRB dismissed its appeal. SEARK did not file a civil action to review this ruling within 60 days as required by statute.
On January 7, 2009, Palmetto sent an NPR to SEARK demanding that SEARK refund overpayments in the amount of $16,383 for the period of November 1, 2006, through October 31, 2007. SEARK did not appeal this NPR to the PRRB.
On June 8, 2010, Palmetto sent an NPR to SEARK demanding that SEARK refund overpayments in the amount of $89,368 for the period of November 1, 2008, through October 31, 2009. Two weeks later, SEARK filed this lawsuit. On August 17, 2010, SEARK's motion for a temporary restraining order was granted. [Doc. No. 14]. On September 7, 2010, the parties appeared for a hearing to determine whether a preliminary injunction was appropriate. The Secretary argued that SEARK's failure to exhaust its administrative remedies as to fiscal years ending 2004, 2007, and 2009, and to timely commence suit as to fiscal year ending 2005, deprives this court of subject matter jurisdiction. SEARK countered that several exceptions to the doctrine of exhaustion were applicable and further noted that it had in fact recently commenced a timely appeal with the PRRB as to fiscal year 2009. A preliminary injunction was imposed on September 24, 2010, preserving the status quo so that a meaningful decision could eventually be rendered on the merits. [Doc. No. 26].
Indeed, SEARK's appeal of the 2009 NPR was docketed by the PRRB as case number 10–1323 on September 14, 2010, and on October 5, 2010, the PRRB granted expedited judicial review. Centers for Medicare and Medicaid Services (CMS), however, on its own motion, intervened on October 18, 2010, notifying SEARK and the PRRB that it intended to review “whether the Board [the PRRB] properly determined jurisdiction.” In a 13–page order dated December 6, 2010, CMS vacated the PRRB's determination that the amount in controversy exceeded $10,000 by defining amount-in-controversy to mean the difference between the cap as calculated by the regulation and a theoretical cap purportedly calculated according to the statute.
The gist of the Secretary's motion to dismiss is that SEARK's failure to exhaust its administrative remedies precludes this court from having subject matter jurisdiction over its claims. Accordingly, her motion to dismiss, or in the alternative, for summary judgment, will be initially construed as motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). The standards governing motions for leave to amend a complaint, for summary judgment, and to dissolve a preliminary injunction are also set forth herein.
Because federal question jurisdiction under 28 U.S.C. § 1331 does not lie in Medicare reimbursement cases, see Shalala v. Ill. Council on Long Term Care, 529 U.S. 1, 10–20, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000), section 1395 oo provides the sole means for a provider to obtain judicial review of the Secretary's overpayment determination. In St. Joseph's Hospital of Kansas City v. Heckler, the Eighth Circuit Court of Appeals held that “a provider's right to seek further review [of a fiscal intermediary's decision] is strictly limited” and the court held that the threshold requirements of section 1395 oo(a)—including the 180–day filing deadline—are jurisdictional in nature. 786 F.2d 848, 849–50, 853 (8th Cir.1986).
St. Joseph's distinguished cases in which a provider challenges the PRRB's determination that its appeal failed to meet the threshold requirements of section 1395 oo(a) from those in which the provider blatantly failed to follow the administrative scheme, finding the former cases ripe for judicial review and the latter unripe. Id. at 851. Essentially, the rule is when there is no legitimate dispute that the provider's appeal was untimely or failed to establish the requisite amount-in-controversy, the PRRB does not have jurisdiction to render a final decision. Because the right to judicial review attaches solely to a “final decision” by the PRRB and not the fiscal intermediary's determination, a district court lacks subject matter jurisdiction to hear a dispute between a provider and the Secretary that was not initially heard by the PRRB. Id. at 852.
Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend should be freely granted when justice so requires. The amended complaint, however, should cure the defects in the original complaint; leave need not be granted where the proposed amendments would be futile. See Humphreys v. Roche Biomedical Laboratories, Inc., 990 F.2d 1078, 1082 (8th Cir.1993).
Summary judgment is proper if, after viewing the evidence in the light most favorable to the nonmoving party, no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Nelson v. Corr. Med. Servs., 533 F.3d 958, 961 (8th Cir.2008). The Secretary cannot survive the motion for summary judgment merely by pointing to disputed facts; the facts in dispute must be material to the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the facts alleged by the Secretary, when viewed in the light most favorable to her case, would not allow a reasonable factfinder to find in her favor, then summary judgment should be granted in favor of SEARK. Bloom v. Metro Heart Group of St. Louis, Inc., 440 F.3d 1025, 1029 (8th Cir.2006).
Under Federal Rule of Civil Procedure 59(e), an order may be amended to correct manifest errors or law or fact. See Hagerman v. Yukon Energy Corp., 839 F.2d 407, 414 (8th Cir.1988).
This section contains four distinct rulings: (1) although SEARK's...
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Se. Ark. Hospice, Inc. v. Sebelius
...invalid for implying a calculus contrary to the legislative intent of 42 U.S.C. § 1395f(i)(2)(C). Southeast Arkansas Hospice, Inc. v. Sebelius, 784 F.Supp.2d 1102, 1109 (E.D.Ark.2011) (collecting cases).1 In 2011, SEARK obtained a permanent injunction enjoining the Secretary from enforcing ......