Pam Squared at Texarkana, LLC v. Azar

CourtDistrict Court, District of Columbia
DecidedJanuary 22, 2020
DocketCivil Action No. 2018-2542
StatusPublished

This text of Pam Squared at Texarkana, LLC v. Azar (Pam Squared at Texarkana, LLC v. Azar) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Pam Squared at Texarkana, LLC v. Azar, (D.D.C. 2020).

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

PAM SQUARED AT TEXARKANA, LLC,

Plaintiff, Case No. 1:18-cv-02542 (TNM) v.

ALEX M. AZAR II,

Defendant.

MEMORANDUM OPINION

Medicare is a maze of statutes and regulations. One wrong turn and a Medicare provider

becomes entangled in a system of penalties, appeals, and more regulations. Such is the fate of

Post Acute Medical Squared at Texarkana, LLC (PAM Squared), a Medicare-certified long-term

care hospital. Four years ago, PAM Squared made a routine, required submission of data to the

Centers for Medicare & Medicaid Services (CMS). Or so it thought. As it turns out, the data

was inputted but never received by CMS because of a typo in at least one of the data sets.

Because of this typo, CMS imposed a two-percent Medicare payment reduction on PAM

Squared for the coming year, costing the hospital almost $300,000. PAM Squared

unsuccessfully appealed the penalty to both CMS and the Provider Reimbursement Review

Board (PRRB or “the Board”). It now appeals to this Court, arguing that the Board’s decision

violated the Administrative Procedure Act (APA). The Court agrees.

Here, the agency—like PAM Squared—got lost in its own labyrinth of Medicare

regulations. While affirming CMS’s denial of reconsideration, the Board cited to and relied on

an outdated final rule rather than the current regulation for CMS reconsideration. “One thing no

agency can do is apply the wrong law to citizens who come before it.” Caring Hearts Pers. Home Servs. v. Burwell, 824 F.3d 968, 970 (10th Cir. 2016) (Gorsuch, J.) (cleaned up). Since

this error infected the Board’s decision, the Court will grant summary judgment in part to PAM

Squared and remand this case to the Secretary of Health and Human Services.

I.

Consider first the relevant regulatory regime. Medicare Part A authorizes payments for

institutional care, including care provided at Long-Term Care Hospitals (LTCH). See 42 U.S.C.

§§ 1395c–1395i-5. These hospitals are statutorily required to submit to CMS “quality data” that

measures, among other things, the incidence of certain diseases designated by the Secretary of

Health and Human Services. See 42 U.S.C. § 1395ww(m)(5). After the hospitals input the data

to the Centers for Disease Control and Prevention’s National Healthcare Safety Network

(NHSN), the NHSN sends completed data sets to CMS. See CMS LTCH Quality Reporting

Program Manual Version 2.0, 5-10 (Nov. 2013), https://www.cms.gov/Medicare/Quality-

Initiatives-Patient-Assessment-Instruments/LTCH-Quality-Reporting/-LTCH-Quality-Reporting-

Archives.

Hospitals that fail to report this information in the “form and manner, and at a time,

specified by the Secretary” will have their Medicare payments reduced two-percent the next

year. 42 U.S.C. § 1395ww(m)(5)(A)(i), (C); 42 C.F.R. § 412.523(c)(4). So a hospital that fails

to report data for 2015 will have payments reduced in Fiscal Year (FY) 2017.

The Secretary announced that the hospitals should report six categories of quality data for

FY 2015, including the “Facility-Wide Inpatient Hospital-onset Clostridium difficile Infection

(CDC) Outcome Measure.” 80 Fed. Reg. 49,325, 49,750 (Aug. 17, 2015); A.R. at 103. 1 This

1 All page citations refer to the pagination generated by the Court’s CM/ECF system.

2 data measured each hospital’s incidence of a dangerous bacterial infection called C. diff. See

Def. Reply 2–4, ECF No. 26.

PAM Squared, as a LTCH, needed to submit all data specified by the Secretary. Compl.

¶ 10, ECF No. 1. Shortly after the final deadline for the 2015 data submission, CMS sent PAM

Squared a “Notification of Non-Compliance.” A.R. at 273. This notice stated that the hospital

“failed to submit the required data” and that CMS would reduce its FY 2017 Medicare payment

by two-percent. Id.

The hospital’s staff immediately began reviewing the data to determine where the

noncompliance occurred. A.R. at 123–24, 345. They verified that all the data appeared in the

system, but for an unknown reason, CMS could not view the data. Id. at 134–35. The next day,

Nurse Manager Brooke Buras contacted the NHSN to troubleshoot the issue. Id. at 346. After

reviewing the hospital’s submission, NHSN found the error: for at least one of the months from

April to September 2015, someone had populated the “Location Code” field with the hospital’s

Medicare number and name rather than the phrase “FACWIDEIN- Facility-wide Inpatient

(FacWIDEIn).” 2 Id. at 346. This typo prevented the NHSN system from forwarding PAM

Squared’s quarterly data to CMS. Id. at 138. In other words, PAM Squared had indeed

submitted the data to one arm of the Department of Health and Human Services, NHSN, but

NHSN never sent the data to another arm of the Department because of the typo. No one at

NHSN alerted PAM Squared to the problem, at least until after the submission deadline had

2 PAM Squared should have known this was a mistake because in a paragraph buried on the fourteenth page of the September 2014 “NHSN e-News” newsletter—one of the many guidance documents LTCHs are expected to adhere religiously to—NHSN stated that C. diff. data should be reported “using the FacWideIN location choice.” A.R. at 92; A.R. at 8 & n.27 (PRRB decision citing the newsletter).

3 passed. At NHSN’s suggestion, Buras corrected the Location Code and saved the data. Id. at

347. CMS could then access the hospital’s reports. Id.

PAM Squared asked CMS to reconsider the two-percent payment reduction. A.R. at

299–300. PAM Squared submitted screenshots showing that it had entered the data into NHSN

before CMS’s deadlines. Id. at 306–27. CMS responded with a form letter informing the

hospital that it had “reviewed [PAM Squared’s] reconsideration request” but was “upholding the

decision to reduce the annual payment” for FY 2017. Id. at 260.

The hospital next turned to the Provider Reimbursement Review Board. A.R. at 254.

The Board conducted a full evidentiary hearing, id. at 111–47, and ultimately upheld CMS’s

decision to impose the two-percent payment reduction, id. at 10. The Secretary declined to

review the Board’s decision, rendering that decision final. Id. at 2–3; 42 U.S.C. § 1395oo(f).

PAM Squared now contends that the Board violated the APA. See Pl. Mot. for Summ. J. 2, ECF

No. 21.

II.

Courts may review the PRRB’s final decisions under the APA’s standards of review. 42

U.S.C. § 1395oo(f). Normally, a court will grant summary judgment when there “is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). But Rule

56’s standards do not apply to a court’s review of a final agency action under the APA. See

Sierra Club v. Mainella, 459 F.

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