Bayshore Cmty. Hosp. v. Hargan

285 F. Supp. 3d 9
CourtCourt of Appeals for the D.C. Circuit
DecidedOctober 25, 2017
DocketCase No. 16–cv–2353 (APM)
StatusPublished
Cited by4 cases

This text of 285 F. Supp. 3d 9 (Bayshore Cmty. Hosp. v. Hargan) 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. Hargan, 285 F. Supp. 3d 9 (D.C. Cir. 2017).

Opinion

Amit P. Mehta, United States District Judge

Plaintiffs Bayshore Community Hospital, Ocean Medical Center, Riverview Medical Center, Southern Ocean Medical Center, and Jersey Shore University Medical Center appeal the decision of the United States Department of Health and Human Services' Provider Reimbursement Board to deny "expedited judicial review" of their procedural and substantive challenges under the Administrative Procedure Act to federal regulations regarding "outlier" Medicare reimbursements. Defendant Eric D. Hargan, Acting Secretary of the Department of Health and Human Services, asks the court to remand this matter to the Board for further proceedings consistent with this court's opinion in Banner Heart Hospital v. Burwell , 201 F.Supp.3d 131 (D.D.C. 2016). In that opinion, the court held that applying a procedural regulation known as the "self-disallowance regulation" to deny expedited judicial review ran afoul of the Supreme Court's decision in Bethesda Hospital Association v. Bowen , 485 U.S. 399, 108 S.Ct. 1255, 99 L.Ed.2d 460 (1988). When the Board made its decision in this case, it acknowledged but explicitly declined to follow Banner Heart and, instead, relied on the self-disallowance regulation to deny Plaintiffs expedited judicial review. In an opposition and cross-motion for judgment on the pleadings, Plaintiffs argue that the court should not only deny Defendant's Motion, but also vacate in full the self-disallowance regulation and allow them leave to amend their Complaint to plead Administrative Procedure Act challenges to the outlier regulations.

For the reasons herein, the court denies Defendant's Motion for Voluntary Remand *13and Plaintiffs' Cross-Motion for Judgment on the Pleadings.

I

The federal Medicare program allows participating hospitals and other service providers to seek reimbursement for the cost of medical services they deliver to eligible patients. The Centers for Medicare and Medicaid Services ("CMS") is an agency housed within the United States Department of Health and Human Services ("HHS") that oversees the program.

Medicare reimbursements are based on a prospectively determined formula, with additional payments available under certain circumstances. Federal law specifically provides for additional payments, known as "outlier payments," when a patient's medical care is either particularly costly or lengthy. See 42 U.S.C. § 1395ww(d)(5)(A) ; Banner Health v. Price , 867 F.3d 1323, 1329 (D.C. Cir. 2017) (per curiam); Pls.' Opp'n to Def.'s Mot. & Cross-Mot. for J. on Pleadings, ECF No. 13 [hereinafter Pls.' Opp'n], Ex. A, ECF No. 13-1 [hereinafter Bd. Decision], at 2. HHS finances outlier payments by reducing the standard reimbursement payments made to acute care hospitals and limiting reimbursement to those amounts that exceed a "fixed-loss threshold," which is set annually. See 42 U.S.C. § 1395ww(d)(3)(B), (5)(A) ; Banner Health , 867 F.3d at 1329. Federal regulations further limit which providers qualify for outlier payments. See Banner Health , 867 F.3d at 1330 ; 42 C.F.R. §§ 412.80 - 86, 412.80(c).

The reimbursement process occurs in two stages, with an opportunity for administrative review and federal judicial review of an adverse determination. CMS makes reimbursements to participating providers through "fiscal intermediaries," which are often private insurance companies. The reimbursement process begins when a participating provider submits an annual cost report to the fiscal intermediary, which then audits the report, determines the amount owed to the provider for the year, and reimburses the provider. A provider has a statutory right to a hearing before the Provider Reimbursement Review Board if (1) it is "dissatisfied" with the fiscal intermediary's determination of the reimbursement amount or the Secretary's determination of the outlier payment amount; (2) the amount in controversy is at least $10,000; and (3) the provider files a request for a hearing within 180 days of receiving the fiscal intermediary's determination. 42 U.S.C. § 1395oo (a)(1). The Board can "affirm, modify, or reverse" the fiscal intermediary's decision regarding the cost report, as well as make any other revisions to matters covered by the cost report. Id. § 1395oo (d). Providers may seek review of the Board's determination by filing suit in federal court within 60 days of receiving the Board's decision. Id. § 1395oo (f)(1). In certain circumstances, "expedited judicial review"-sending the matter directly to a federal district court before the Board renders a decision-is appropriate. The Board "must grant" expedited judicial review if it has jurisdiction to conduct a hearing but lacks authority to decide the legal question the provider raised. 42 C.F.R. § 405.1842(f)(1). The Board lacks authority to rule on challenges to the constitutionality of a statute or the procedural or substantive validity of a regulation. See id. § 405.1842(f)(1)(ii).

Plaintiffs, five acute care hospitals, believe they did not receive the full amount of outlier payments to which they were entitled for fiscal years 2008, 2009, and 2012, and filed an appeal to the Board. Their appeal challenged the amount of outlier payments they received on the ground that the federal regulations governing those payments are substantially and procedurally *14invalid, in violation of the Administrative Procedure Act ("APA").

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Related

Bayshore Community Hospital v. Burwell
District of Columbia, 2018
Bayshore Cmty. Hosp. v. Azar
325 F. Supp. 3d 18 (D.C. Circuit, 2018)

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Bluebook (online)
285 F. Supp. 3d 9, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bayshore-cmty-hosp-v-hargan-cadc-2017.