American Hospital Association v. Sylvia Burwell

812 F.3d 183, 421 U.S. App. D.C. 123, 2016 U.S. App. LEXIS 2164, 2016 WL 491658
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 9, 2016
Docket15-5015
StatusPublished
Cited by214 cases

This text of 812 F.3d 183 (American Hospital Association v. Sylvia Burwell) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Hospital Association v. Sylvia Burwell, 812 F.3d 183, 421 U.S. App. D.C. 123, 2016 U.S. App. LEXIS 2164, 2016 WL 491658 (D.C. Cir. 2016).

Opinion

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

At heart, this case is about an agency caught between two congressionally assigned tasks. Congress has prescribed specific time frames for the Secretary of Health and Human Services to reach decisions on various stages of administrative appeals of Medicare reimbursement claim denials. But Congress has also directed the Secretary to implement the Medicare Recovery Audit Program to detect waste, fraud, and abuse. Although the audit program has recovered billions of dollars in fraudulently or otherwise improperly paid funds, it has also contributed significantly to a volume of appeals that makes compliance with the statutory time frames impossible. Plaintiffs, including several hospitals with a significant amount.of money tied up in the appeals process for far longer than the statute contemplates, seek a writ of mandamus compelling the Secretary to act within those time frames. Although Plaintiffs disclaim any desire or authority to force the Secretary to curtail the audit program or take any other particular action to meet thfe deadlines, the record suggests that absent further congressional action, the Secretary would likely have to drastically curtail that program to comply with such an order. The district court concluded that mandamus relief was unwarranted, noting the political branches’ ongoing efforts to resolve this tension and the audit program’s success in detecting improper payments. For the reasons set forth in this opinion, we reverse and remand with instructions to the district court to consider the problem as it now stands— worse, not better.

I.

After a hospital or other health-care provider performs Medicare-eligible services, it submits a claim for reimbursement to a Medicare Administrative Contractor (MAC). 42 U.S.C. §§ 1395ff(a)(l)-(2), 1395kk-l(a); 42 C.F.R. §§ 405.904(a)(2), 405.920-405.928. The MAC decides whether to pay or deny the claim. If a claim is denied, the Medicare Act provides a four-level administrative appeal process, followed by judicial review. At the first level, the health care provider presents its claim again to the MAC for “redetermination.” 42 U.S.C. § 1395ff(a)(3)(A), (a)(3)(C)(ii). The second level involves “reconsideration” by a Qualified Independent Contractor (QIC). Id. § 1395ff(c). The Centers for Medicare and Medicaid Services (CMS) oversees initial determinations and redeterminations by the MACs, as well as reconsiderations by the QICs.

If the provider remains unsatisfied, and if its claim exceeds $150, it may continue to the third stage: de novo review by an administrative law judge, including a hearing. Id. § 1395ff(b)(l)(E)(i)„ (b)(l)(E)(iii), (d)(1)(A); 42 C.F.R. § 405.1006(b); 80 Fed.Reg. 57,827, 57,827 (2015). This stage of the process is overseen by the Office of Medicare Hearings and Appeals (OMHA), which houses ALJs and their support staff, and which is funded by a separate appro *186 priation. See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub.L. No. 108-173, § 931, 117 Stat. 2066 (requiring the Secretary to create an “administrative office that is organizationally and functionally separate from [CMS]” to “assure the independence of administrative law judges”). The fourth and final administrative stage involves de novo review by the Medicare Appeals Council, a division of the Departmental Appeals Board (DAB). Although the DAB has authority to hold a hearing, it does so only if “there is an extraordinary question of law/policy/fact.” Mot. for Summ. J. Ex. 2, at 118. Finally, after completing the administrative appeal process, providers may seek review in district court of claim denials worth at least $1,500. 42 U.S.C. § 1395ff(b)(l)(E)(i), (b)(l)(E)(iii); 42 C.F.R. § 405.1006(c); 80 Fed.Reg. at 57,-827. We apologize to our readers for all of the acronyms, but this is, after all, a Medicare case, and acronyms seem integral to the parties’ native language.

To prevent appeals from lingering unresolved, the statute includes specific time frames for each step of the process. In particular, redetermination by the MACs “shall be concluded” within sixty days, 42 U.S.C. § 1395ff(a)(3)(C)(ii), and, with exceptions not relevant here, QICs “shall conduct and conclude” reconsiderations within sixty days, id. § 1395ff(c)(3)(C)(i). Similarly, ALJs “shall conduct and conclude a hearing ... and render a decision” within ninety days, id. § 1395ff(d)(l)(A), although the appealing provider may “waive” this “deadline,” id. § 1395ff(d)(l)(B). And finally, the DAB “shall conduct and conclude a review ... and make a decision or remand the case to the administrative law judge for reconsideration” within ninety days. Id. § 1395ff(d)(2)(A). If all these time periods are met, appeals will work their way through the administrative process within about a year.

The statute also prescribes “consequences of failure to meet” several of the statutory “deadlines.” In a process commonly referred to as “escalation,” a provider that has been waiting for longer than the statutory time limit may advance its appeal to the next stage. Thus, a provider may “escalate” its appeal to the ALJ stage if the QIC fails to act within the required sixty days, id. § 1395ff(c)(3)(C)(ii), to the DAB stage if the ALJ fails to act within the required ninety days, id. § 1395ff(d)(3)(A), and to district court review if the DAB fails to act within the required ninety days, id. § 1395ff(d)(3)(B).

For years, the administrative appeal process functioned largely as anticipated, with its various stages typically completed within the statutory time frames. American Hospital Ass’n v. Burwell, 76 F.Supp.3d 43, 46 (D.D.C.2014). Then, in 2010, the Secretary fully implemented the Medicare Recovery Audit Program, which Congress had required the Secretary to set up “for the purpose of identifying underpayments and overpayments and recouping overpayments.” 42 U.S.C. § 1395ddd(h)(l). Specifically, Congress directed that the Secretary “shall enter into contracts with recovery audit contractors” (RACs), who must be paid “on a contingent basis for collecting overpay-ments” and “in such amounts as the Secretary may specify for identifying underpayments.” Id. § 1395ddd(h)(l)(B). Although Congress also specified certain other features of the program, such as that it must have “[n]ationwide coverage,” id. § 1395ddd(h)(3), it left the Secretary broad discretion to determine many other program details.

The RAC program has had two primary effects.

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Bluebook (online)
812 F.3d 183, 421 U.S. App. D.C. 123, 2016 U.S. App. LEXIS 2164, 2016 WL 491658, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-hospital-association-v-sylvia-burwell-cadc-2016.