Bayshore Cmty. Hosp. v. Azar

325 F. Supp. 3d 18
CourtCourt of Appeals for the D.C. Circuit
DecidedSeptember 6, 2018
DocketCase No. 16-cv-02353 (APM)
StatusPublished
Cited by7 cases

This text of 325 F. Supp. 3d 18 (Bayshore Cmty. Hosp. v. Azar) 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
Bayshore Cmty. Hosp. v. Azar, 325 F. Supp. 3d 18 (D.C. Cir. 2018).

Opinion

Amit P. Mehta, United States District Judge

I.

This matter is before the court in an unusual posture. Strictly speaking, the court has before it the parties' cross-motions for summary judgment and a suggestion of mootness filed by Defendant Secretary *20of Health and Human Services. But it is not the merits of Plaintiffs' claims that are at issue in these motions; rather, what the parties vigorously contest is the proper remedy to afford these Plaintiffs.

Plaintiffs are five acute care hospitals who brought this action to seek review of a determination by the U.S. Department of Health and Human Services' Provider Reimbursement Review Board that it lacked jurisdiction to hear Plaintiffs' appeal. Plaintiffs' appeal to the Board challenged the amount of "outlier" payments Plaintiffs received in fiscal years 2008, 2009, and 2012 on the ground that the federal Medicare regulations governing those payments violated the Administrative Procedure Act ("APA") and, as relevant here, requested that the Board grant "expedited judicial review" of Plaintiffs' APA challenge.2 The Board denied Plaintiffs' request for expedited judicial review, however, under what is known as the "self-disallowance" regulation.3 It is this decision by the Board that forms the basis for Plaintiffs' lawsuit, at least in its current form. Plaintiffs' challenge to the outlier regulations is not presently before the court.

Defendant does not seek to defend the Board's determination that it lacked jurisdiction to grant Plaintiffs' request for expedited judicial review. Instead, he asks the court-for a second time-to remand this matter to the Board so that it can confirm its jurisdiction and grant these Plaintiffs the expedited judicial review finding that the Board previously withheld. Plaintiffs, on the other hand, do not want a remand. They ask for greater relief. They want the court to vacate the self-disallowance regulation that the Board relied upon to deny them expedited judicial review. Such relief is warranted, they say, following this court's decision in Banner Heart Hospital v. Burwell , 201 F.Supp.3d 131 (D.D.C. 2016), in which the court held that applying the self-disallowance regulation to dissatisfied providers, like these Plaintiffs, who assert a legal challenge to an agency regulation or policy that cannot be addressed by a fiscal intermediary is contrary to the Medicare statute. After the regulation is vacated, Plaintiffs maintain, the court could retain jurisdiction, freeing Plaintiffs to amend their Complaint to challenge the outlier regulation on the merits.

The court previously rejected Defendant's request for a remand. See generally *21Bayshore Cmty. Hosp. v. Hargan , 285 F.Supp.3d 9 (D.D.C. 2017).4 The court ruled that a remand was inappropriate because (1) Defendant had not offered a "substantial and legitimate" reason warranting remand; (2) a remand would prejudice Plaintiffs by causing extensive delay; and (3) remand would be futile, as the law unambiguously requires the Board to grant expedited judicial review. See id. at 16. The landscape has changed, however, since the court's ruling.

Three things have occurred. First, in his motion for summary judgment and remand, Defendant has offered a more fulsome explanation for why the Board did not apply Banner Heart to Plaintiffs' appeal in the first instance. Defendant explains that the Board had no choice but to apply the self-disallowance regulation to Plaintiffs' appeal, notwithstanding the court's decision in Banner Heart , because "the Board is constrained by the agency's existing regulations, which it lacks the power to overrule." Def.'s Cross-Mot. for Summ. J. & Remand, ECF No. 29 [hereinafter Def.'s Mot.], at 19 (citing 42 C.F.R. § 405.1867 ).5 In other words, the Board was not at liberty to apply Banner Heart even if it wanted to do so. In denying Defendant's first motion for remand, the court did not appreciate this limitation on the Board's authority. Cf. Bayshore Cmty. Hosp. , 285 F.Supp.3d at 16-17.

Second, on April 23, 2018, the Centers for Medicare and Medicaid Services ("CMS") issued a ruling formally acquiescing in the court's decision in Banner Heart . See Notice of Suppl. Authority, ECF No. 33, Ex. 1, ECF No. 33-1 [hereinafter CMS Ruling No. 1727-R]. The ruling "states the policy of [CMS] concerning [its] decision to follow the U.S. District Court for the District of Columbia's holding in [ Banner Heart ] for appeals of cost reporting periods that ended on or after December 31, 2008[,] and began before January 12, 2016[,] that were pending or filed on or after April 23, 2018." Id. at 1-2.6 In practical terms, the new CMS ruling means that the Board, generally speaking, now has jurisdiction to grant expedited judicial review to providers who, like Plaintiffs, did not follow the self-disallowance regulation by including a challenged item on a cost report "due to a good faith belief that the [challenged] item was subject to a payment regulation or other policy" as to which the fiscal intermediary had "no authority or discretion to make payment in the manner ... sought." Id. at 2. Plaintiffs candidly acknowledge that CMS' acquiescence to Banner Heart negates at least one form of relief that they originally sought: an injunction prohibiting the Board from applying the self-disallowance regulation to similarly situated providers in the future. See Pls.' Resp. to Def.'s Suggestion of Mootness, ECF No. 37 [hereinafter Pls.' Resp.], at 2 ("Although CMS Ruling 1727 does not moot the request for vacatur, it does effectively remove the need for injunctive relief barring prospective application of the offending portions of the self-disallowance regulation.").

Third, the D.C. Circuit recently decided Billings Clinic v. Azar , No. 17-5006, 901 F.3d 301, 2018 WL 3910505 (D.C. Cir. Aug. 10, 2018). In that case, multiple hospitals brought suit to challenge the agency's methodology for calculating a particular *22component of their Medicare reimbursements. See id. at 302-03,

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Bluebook (online)
325 F. Supp. 3d 18, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bayshore-cmty-hosp-v-azar-cadc-2018.