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.

2 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

3 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

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