Baptist Memorial Hospital v. Thompson

District Court, District of Columbia·Decided March 25, 2009·No. Civil Action No. 2002-1919·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

)

BAPTIST MEMORIAL HOSPITAL, )

)

Plaintiff, )

)

v. ) Civil Action No. 02-1919 (PLF)

)

CHARLES E. JOHNSON, ) Acting Secretary, United States Department of ) Health and Human Services, )

)

Defendant.1 )

__________________________________________)

OPINION

Plaintiff hospital brings suit for declaratory and injunctive relief in the nature of mandamus, asking the Court to compel defendant, the Secretary of Health and Human Services, through the Centers for Medicare and Medicaid Services (“CMS”) to reopen a final payment decision issued by the Secretary’s payment agent and to recalculate the Secretary’s reimbursement of plaintiff for services it rendered to indigent clients.2 Three motions are currently before the Court for consideration — defendant’s motion to dismiss for lack of jurisdiction, plaintiff’s motion for discovery, and plaintiff’s motion for summary judgment.3

1 The Court has substituted Acting Secretary Charles E. Johnson as defendant pursuant to Rule 25(d) of the Federal Rules of Civil Procedure.

2 CMS is the component of the Department of Health and Human Services that is responsible for administering the Medicare program. It was formerly known as the Health Care Financing Administration (“HCFA”).

3 The Court has considered the following papers: the Amended Complaint (“Am.

Compl.”); Plaintiff’s Motion for Discovery (“Mot. for Disco.”); Defendant’s Consolidated Motion in Opposition to Plaintiff’s Motion to Modify Case Management Order and Plaintiff’s

After careful consideration of the parties’ papers and the entire record in the case, the Court will deny plaintiff’s motion for discovery, will grant defendant’s motion to dismiss and, as a result, finds that plaintiff’s motion for summary judgment is moot. The case will be dismissed.

I. BACKGROUND

This case is related to an issue that has been litigated before this Court and resolved by the United States Court of Appeals for the District of Columbia Circuit in Monmouth Med. Ctr. v. Thompson, 257 F. 3d 807 (D.C. Cir. 2001), and In re Medicare Reimbursement Litig., 414 F.3d 7 (D.C. Cir. 2005), cert. denied, 547 U.S. 1054 (2006). The history of this litigation is described, in brief, below.

The Medicare Act, Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., creates a federally funded health insurance program for the elderly and disabled. Part A of the Medicare Act reimburses hospitals for the operating costs of certain inpatient services. See 42 U.S.C. § 1395ww. In order to obtain this reimbursement, eligible hospitals file cost reports with their “fiscal intermediaries,” see 42 C.F.R. § 413.20, usually insurance companies serving as the Secretary’s agents for the purpose of reimbursing health care providers. See 42 C.F.R. § 421.3; In re Medicare Reimbursement Litigation, 414 F.3d at 8. The intermediaries audit the hospitals’ cost reports and then issue Notice of Program Reimbursements (“NPRs”) in which they determine the amount owed by the Secretary to the hospitals for the fiscal year at issue. See

Motion for Discovery; Plaintiff’s Reply to Defendant’s Opposition to Plaintiff’s Motion to Modify Case Management Order and Plaintiff’s Motion for Discovery; Defendant’s Motion to Dismiss; Plaintiff’s Combined Motion for Summary Judgment and Opposition to Dismissal (“Opp. to Mot. to Dismiss”); Defendant’s Reply in Support of Motion to Dismiss and Opposition to Plaintiff’s Motion for Summary Judgment; and Plaintiff’s Reply to Defendant’s Opposition to Plaintiff’s Motion for Summary Judgment.

42 C.F.R. § 405.1803(a). Hospitals may appeal the NPR to the Provider Reimbursement Review Board (the “PRRB”) within 180 days. See 42 U.S.C. § 1395oo(a). The PRRB may reverse, affirm or modify the intermediary’s decision; subsequently, the Secretary may similarly reverse affirm or modify the PRRB’s decision. See 42 U.S.C. §§ 1395oo(d), (f)(1). Hospitals still dissatisfied with the final decision may seek judicial review by filing suit in the appropriate United States District Court. See 42 U.S.C .§ 1395oo(f); In re Medicare Reimbursement Litig., 414 F.3d at 8.

Reimbursement to hospitals varies based on hospital-specific factors, see 42 U.S.C. § 1395ww(d)(5); those hospitals that serve a “significantly disproportionate number of low-income patients” receive increased reimbursements known as “disproportionate share” (“DSH”) adjustments. 42 U.S.C. § 1395ww(d)(5)(F)(i)(I). Congress enacted legislation that established detailed criteria for determining hospital eligibility and the extent of any DSH adjustment. See 42 U.S.C. § 1395ww(d)(5)(F); In re Medicare Reimbursement Litig., 414 F.3d at 9. The HCFA promulgated interpretive regulations to implement these provisions — regulations that four circuits subsequently found to be inconsistent with the Medicare Act because they improperly restricted DSH eligibility and reduced payments to eligible hospitals. See Cabell Hunting Hosp. Inc. 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 Servs. Corp. v. Shalala, 83 F.3d 1041 (8th Cir. 1996) (per curiam); Jewish Hosp., Inc. v. Sec’y of Health and Human Servs., 19 F.3d 270 (6th Cir. 1994).

In light of these decisions, the Administrator of HCFA issued a ruling that rescinded the challenged regulation nationwide, announcing a new interpretation more favorable

to hospitals. See Health Care Financing Administration Ruling 97-2 (February 27, 1997) (“HCFAR 97-2”); see also In re Medicare Reimbursement Litigation, 414 F.3d at 9. In Monmouth Med. Ctr. v. Thompson, 257 F. 3d at 813-15, the court of appeals addressed the reach of HCFAR 97-2 in conjunction with 42 C.F.R. § 405.1885(b) (1997), which required an NPR to be reopened and revised if, within three years, the HCFA provided notice to the intermediary that the decision was “inconsistent with the applicable law.” Id. at 813.4 The court held that because HCFAR 97-2 constitutes “notice” under 42 C.F.R. § 405.1885(b) (1997), that regulation imposed a clear duty on intermediaries, enforceable through mandamus, to reopen NPRs issued for the three years prior to the Secretary’s issuance of HCFAR 97-2. Id. at 814. The court found that even though HCFAR 97-2 stated that it only had prospective effect, the mandatory language of 42 C.F.R. § 405.1885(b) (1997) created a nondiscretionary duty to reopen NPRs decided under the rescinded regulation within the three years prior to its issuance. Id. at 813-15. The D.C. Circuit subsequently ruled in In re Medicare Reimbursement Litig., 414 F.3d at 11, that this duty to reopen applied to NPRs issued in the three years prior to the issuance of HCFAR 97-2, even if the hospitals had not previously applied for reopening, because it would have been futile for the hospitals to have timely sought reopening in view of the Secretary’s original ruling that HCFAR 97-2 only applied prospectively.

Plaintiff Baptist Memorial Hospital now seeks, through mandamus, an order directing the Secretary to reopen and correct the NPR ruling on its fiscal year 1991 cost report.

4 The parties both rely on the version of the reopening regulation, 42 C.F.R.

§ 405.1885, that was in effect as of February 27, 1997, even though the regulation has since been amended for clarification. The Court will do the same. See In re Medicare Reimbursement Litig., 309 F. Supp. 2d 89, 97 n. 6 (declining to apply current version of regulation).

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