Edgewater Foundation v. Tommy G. Thompson, Secretary of Health and Human Services

350 F.3d 694, 2003 U.S. App. LEXIS 24164, 2003 WL 22837083
CourtCourt of Appeals for the Seventh Circuit
DecidedDecember 1, 2003
Docket03-1745
StatusPublished
Cited by8 cases

This text of 350 F.3d 694 (Edgewater Foundation v. Tommy G. Thompson, Secretary of Health and Human Services) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edgewater Foundation v. Tommy G. Thompson, Secretary of Health and Human Services, 350 F.3d 694, 2003 U.S. App. LEXIS 24164, 2003 WL 22837083 (7th Cir. 2003).

Opinion

EASTERBROOK, Circuit Judge.

In. January 1989 Edgewater Hospital, a Medicare provider, sold portions of its operations to three successors: Edgewater Property Co. bought the building; Edge-water Operating Co. bought the equipment, records, and ongoing operations; and Peter Rogan, the sole shareholder of these two firms, bought the Hospital’s receivables.’ The old owner changed its name from Edgewater Hospital, Inc., to Edgewater Foundation. Sale of the business meant that accounts had to be settled between the Hospital (and its successors) and the Medicare program. After extended proceedings that it is unnecessary to recount, the parties resolved most outstanding issues. They agreed that Medicare owed the Hospital about $6.4 million as of the date the Hospital sold its assets and operations, and that Edgewater Operating Co. owed the Medicare program about. $4 million for overpayments received during 1989 and 1990. All obligations were offset, and the Medicare program paid the balance.

Although the parties agreed on these numbers, they did not agree on the calculation of interest under 42 U.S.C. § 1395g(d). Edgewater Foundation, as the Hospital’s successor (proceeding in this respect, as Rogan’s proxy), claims an entitlement to interest on the $6.4 million between January 1989 and the time the (net) payment of about $2.4 million was made. As the Foundation sees things, it is distinct from Edgewater Operating Co., so that overpayments after the sale should not be set off against underpayments that preceded the sale. The Administrator of the Health Care Financing Administration (part of the Department of Health and Human Services) made the final administrative decision and determined that the Foundation and the Operating Company are jointly'and severally liable for reimbursements of all overpayments, because the Medicare program is entitled to treat a single hospital as one “provider” and to net all balances without regard to private arrangements for the disposition of the *644 proceeds. The Administrator wrote: “Because the provider agreement was automatically assigned to the new owner, the old and new owner are jointly and severally liable for the overpayment.” That conclusion cut off the Foundation’s demand for interest, because the Medicare program paid the net balance within 30 days of its ascertainment.

The Foundation filed this civil action under 42 U.S.C. § 1395oo (f)(1), contending that it is entitled to interest on the $6.4 million that was due on account of events that preceded the sale in January 1989. Instead of deciding whether the Administrator had erred in netting this sum against overpayments to the Operating Company during 1989 and 1990, the district court directed the agency to determine whether the $6.4 million (which is, recall, a figure on which all parties had agreed) had been correctly calculated. In the judge’s view, if payment was excessive, interest need not be added. The court remanded the matter to the Department of Health and Human Services with directions “to determine the following: 1) The legitimacy of the valuations used as a basis for the reimbursement; 2) The role of Peter Rogan in the transactions and the appropriateness of any payments ultimately made to him; and 3) The payors and payees of all Medicare payments made after the closing of the hospital regarding the ‘loss on sale’.” Neither side had argued to the district court that any of these matters is pertinent; no one had requested a remand.

One might have anticipated an appeal by the Administrator, on the ground that a district court lacks authority to treat the bureaucracy as an ombudsman that may be directed to inquire into whatever issues pique the judge’s curiosity. Whether the $6.4 million settlement was correct is neither here nor there; it had not been raised as an issue in the litigation; and if the settlement was excessive, it is not the kind of error for which any statute provides either administrative or judicial review. The Health Care Financing Administration has duties prescribed by statutes and regulations; looking behind the validity of settlements, and determining who paid how much of the proceeds to whom, are not among them. Courts are supposed to address the parties’ actual disputes, rather than the disputes that judges think the parties ought to have, and are supposed to resolve administrative cases on the record. The Medicare statute lacks any parallel to Sentence Six of 42 U.S.C. § 405(g), which authorizes remand of disability-benefits matters to receive new evidence. (The sort of remand ordered here would have been outside the scope of Sentence Six in a disability-benefits proceeding anyway; the matters specified for determination do not concern new evidence.) Remands usually are not appealable, because they are not “final” decisions; but remands that otherwise may escape appellate review may be renewable immediately. See Sullivan v. Finkelstein, 496 U.S. 617, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990); Travis v. Sullivan, 985 F.2d 919 (7th Cir.1993). From the agency’s perspective, this may well be such an otherwise-unreviewable remand, as only the Foundation can seek judicial review of the new administrative decision, and only an immediate appeal could vindicate the agency’s interest in avoiding pointless (if not ultra vires) administrative proceedings.

But the agency did not appeal and thus has accepted (and is bound to comply with) the terms of the remand. The appeal now before us was filed by the Foundation, which contends that the inquiries the agency has been ordered to conduct are legally irrelevant to its claim for interest. The Foundation wants us to review the Admin *645 istrator’s interest decision directly, sparing the parties the need to conduct unnecessary and potentially futile administrative proceedings. The problem, however, is that the statute places review of the Administrator’s decisions in the district court, not the court of appeals, and the district court has not finished that task — indeed, has not begun it. The decision asking the agency for more information is no more “final” than is a decision requiring additional discovery, or denying summary judgment and setting a case for trial. A litigant’s belief that the discovery or trial is unnecessary — even doomed, because the proceedings are infected by error — does not make the decision immediately appeal-able.

The district court has yet to decide whether the Foundation is entitled to interest. Once that decision has been made — as it surely will be, once the agency has answered the questions posed by the remand order- — then the losing side will be entitled to appeal. If the questions that the district judge framed are not legally material, and the judge nonetheless uses the answers to resolve the dispute about interest, then the appeal from that final decision will provide an opportunity for correction by this court.

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Bluebook (online)
350 F.3d 694, 2003 U.S. App. LEXIS 24164, 2003 WL 22837083, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edgewater-foundation-v-tommy-g-thompson-secretary-of-health-and-human-ca7-2003.