UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
SWEDISH AMERICAN HOSPITAL, : : Plaintiff, : Civil Action No.: 08-2046 (RMU) : v. : Re Document Nos.: 4, 13 : KATHLEEN SEBELIUS, in her official : capacity as Secretary of the Department of : Health and Human Services, et al., : : Defendants. :
MEMORANDUM OPINION
GRANTING IN PART AND DENYING IN PART THE DEFENDANTS’ MOTION TO DISMISS; GRANTING THE PLAINTIFF’S MOTION TO COMPEL PRODUCTION OF THE ADMINISTRATIVE RECORD
I. INTRODUCTION
This matter comes before the court on the defendants’ motion to dismiss and the
plaintiff’s motion to compel production of the administrative record. On September 30, 2008,
the Secretary of the Department of Health and Human Services (“the Secretary”) issued an
administrative ruling that required the plaintiff, a hospital in Rockford, Illinois, to repay several
million dollars to the Medicare program. The plaintiff commenced this action challenging the
Secretary’s decision under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 et seq.,
and asserting tort claims against Mutual of Omaha (“Mutual”), the insurance company that
advised the plaintiff with respect to its Medicare obligations, and Wisconsin Physicians Service
Insurance Corporation (“WPS”), the insurance company to which Mutual’s Medicare business
was transferred in 2007. As discussed in more detail below, because the court lacks subject
matter jurisdiction over the plaintiff’s tort claims against the insurance companies, it grants in
part the defendants’ motion to dismiss. The court denies, however, the portion of the defendants’ motion that calls for the dismissal of the plaintiff’s APA claim against the Secretary. Finally, the
court grants the plaintiff’s motion to compel production of the administrative record.
II. BACKGROUND
A. The Medicare Program
Medicare provides health insurance to the elderly and disabled by entitling eligible
beneficiaries to have payment made on their behalf for the care and services rendered by
hospitals, termed “providers.” See 42 U.S.C. §§ 1395 et seq. Providers, in turn, are reimbursed
by insurance companies, known as “fiscal intermediaries,” that have contracted with the
Department of Health and Human Services to aid in administering the Medicare program. See id.
§ 1395h. Fiscal intermediaries determine the amount of reimbursement due to providers under
the Medicare Act and applicable regulations. See id.
Providers that train residents in approved residency programs may be reimbursed for the
costs of “graduate medical education” (“GME”) and “indirect medical education” (“IME”). See
42 U.S.C. § 1395ww. One variable used to calculate the GME and IME costs to be allocated to a
provider is the number of full-time equivalent (“FTE”) residents in that provider’s training
program. See id. A high GME or IME FTE count yields a correspondingly high GME or IME
payment for the provider. See id.
Providers obtain Medicare reimbursement by submitting cost reports to their fiscal
intermediary demonstrating the costs they incurred during the previous fiscal year and the portion
of those costs to be allocated to Medicare. See 42 C.F.R. § 413.20. After receiving a provider’s
cost report, the fiscal intermediary may audit the report before determining the total amount of
2 reimbursement to which the hospital is entitled, which it then memorializes in a Notice of
Program Reimbursement (“NPR”). See id. § 405.1803. The fiscal intermediary may reopen and
revise a cost report within three years after the date of the NPR. Id. § 405.1885.
In the Balanced Budget Act of 1997 (“BBA”), Congress capped the amount that providers
could be reimbursed for their GME and IME costs. See id. More specifically, for cost reporting
periods beginning on or after October 1, 1997, teaching hospitals were limited to the number of
GME FTEs and IME FTEs “for the hospital’s most recent cost reporting period ending on or
before December 31, 1996” for the purpose of calculating GME and IME payments. See id.
Following the enactment of the BBA, the Secretary promulgated regulations implementing the
caps imposed by the statute. See 42 C.F.R. §§ 413.86(g)(4), 412.105(f)(1)(iv) (1997). The
Secretary subsequently revised the regulations concerning the GME and IME resident caps in
1998, 1999 and 2001. See 42 C.F.R. §§ 413.86, 412.105 (1998); 42 C.F.R. §§ 413.86(g)(8)
(1999); 42 C.F.R. §§ 413.86(g)(8)(iii), 412.105(f)(1)(ix) (2001).
B. Factual and Procedural History
The plaintiff is a certified Medicare provider that participates in the Family Practice
Residency Program (“the residency program”), which is sponsored by the University of Illinois
College of Medicine for the purpose of training residents as family practice physicians. Compl.
¶¶ 12-14. The plaintiff alleges that during fiscal years 1995 and 1996, another hospital, St.
Anthony Medical Center (“St. Anthony”), also participated in the residency program. Id. ¶¶ 17-
18. In 1996, however, St. Anthony withdrew from the program and the plaintiff absorbed the
residents that St. Anthony would otherwise have trained. Id.
3 After the plaintiff took on the residents who had previously been trained by St. Anthony,
the plaintiff contacted the fiscal intermediary, Mutual, which advised the plaintiff to adjust its
GME and IME FTE resident caps upward to reflect the fact that the plaintiff had assumed the
residents formerly trained by St. Anthony. Id. ¶¶ 18-19. The plaintiff’s NPRs for fiscal years
1998 through 2002 were based on FTE resident caps that reflected both the residents trained by
the plaintiff and the residents previously trained by St. Anthony. Id. ¶ 20.
In February 2005, Mutual reopened the cost reports for fiscal years 1999 through 20021
and adjusted the plaintiff’s FTE resident caps downward to omit consideration of the residents
previously trained by St. Anthony. Id. ¶¶ 21-22. Likewise, Mutual omitted consideration of St.
Anthony’s residents in the NPR that it issued for fiscal year 2003. Id. ¶ 23. After the plaintiff
appealed Mutual’s determination to the Provider Reimbursement Review Board, the Secretary
issued a ruling affirming Mutual’s adjustments on September 30, 2008. Id. ¶ 25. This
determination resulted in Medicare recouping nearly $5 million from the plaintiff. Id.
The plaintiff commenced the instant action in this court in November 2008 alleging that
the Secretary’s decision violated the APA and asserting estoppel and other tort claims against
Mutual and WPS. See generally id. On April 9, 2009, the defendants filed a motion to dismiss
for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for
1 As the NPR for fiscal year 1998 was issued in February 2000, see Compl. ¶ 37, the three-year limitation period on reopening a cost report had passed by the time Mutual issued the Notices of Reopening in February 2005, see id. ¶ 21.
4 failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).2 See generally Defs.’
Mot. to Dismiss (“Defs.’ Mot.”). In response, the plaintiff filed a motion to compel production
of the administrative record, see generally Pl.’s Mot. for Turnover of the Admin. R. (“Pl.’s
Mot.”), as well as an opposition to the defendants’ motion to dismiss, see generally Pl.’s Opp’n
to Defs.’ Mot. (“Pl.’s Opp’n”). With both motions fully briefed, the court turns now to the
applicable legal standards and the parties’ arguments.
III. ANALYSIS
A. Legal Standard for a Motion to Dismiss Pursuant to Rule 12(b)(1)
Federal courts are courts of limited jurisdiction and the law presumes that “a cause lies
outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938); see also Gen.
Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C. Cir. 2004) (noting that “[a]s a
court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction”).
Because “subject-matter jurisdiction is an ‘Art[icle] III as well as a statutory
requirement[,] no action of the parties can confer subject-matter jurisdiction upon a federal
court.’” Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003) (quoting Ins.
Corp. of Ir., Ltd. v. Compagnie des Bauxite de Guinea, 456 U.S. 694, 702 (1982)). On a motion
to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the
2 The defendants also moved to dismiss the plaintiff’s claims against Mutual for insufficient service of process under Federal Rule of Civil Procedure 12(b)(5), see Defs.’ Mot. to Dismiss (“Defs.’ Mot.”) at 25, but later withdrew that motion, see Defs.’ Reply in Support of Mot. to Dismiss at 17 n.14.
5 burden of establishing by a preponderance of the evidence that the court has subject matter
jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
Because subject matter jurisdiction focuses on the court’s power to hear the claim,
however, the court must give the plaintiff’s factual allegations closer scrutiny when resolving a
Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a
claim. Macharia v. United States, 334 F.3d 61, 64, 69 (D.C. Cir. 2003); Grand Lodge of
Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001). Thus, the court is
not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227,
241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64 (1987). When necessary, the court
may consider the complaint supplemented by undisputed facts evidenced in the record, or the
complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.
Herbert v. Nat’l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992).
B. Legal Standard for a Motion to Dismiss Pursuant to Rule 12(b)(6)
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint. Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). The complaint need only set forth a short and plain
statement of the claim, giving the defendant fair notice of the claim and the grounds upon which
it rests. Kingman Park Civic Ass’n v. Williams, 348 F.3d 1033, 1040 (D.C. Cir. 2003) (citing
FED . R. CIV . P. 8(a)(2) and Conley v. Gibson, 355 U.S. 41, 47 (1957)). “Such simplified notice
pleading is made possible by the liberal opportunity for discovery and the other pre-trial
procedures established by the Rules to disclose more precisely the basis of both claim and
defense to define more narrowly the disputed facts and issues.” Conley, 355 U.S. at 47-48
(internal quotation marks omitted). It is not necessary for the plaintiff to plead all elements of his
6 prima facie case in the complaint, Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511-14 (2002), or
“plead law or match facts to every element of a legal theory,” Krieger v. Fadely, 211 F.3d 134,
136 (D.C. Cir. 2000) (internal quotation marks and citation omitted).
Yet, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009) (internal quotation marks omitted); Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007) (abrogating the oft-quoted language from Conley, 355 U.S. at 45-56, instructing
courts not to dismiss for failure to state a claim unless it appears beyond doubt that “no set of
facts in support of his claim [] would entitle him to relief”). A claim is facially plausible when
the pleaded factual content “allows the court to draw the reasonable inference that the defendant
is liable for the misconduct.” Iqbal, 129 S. Ct. at 1949. “The plausibility standard is not akin to
a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id.
In resolving a Rule 12(b)(6) motion, the court must treat the complaint’s factual
allegations – including mixed questions of law and fact – as true and draw all reasonable
inferences therefrom in the plaintiff’s favor. Macharia v. United States, 334 F.3d 61, 64, 67
(D.C. Cir. 2003); Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156, 165 (D.C. Cir.
2003); Browning, 292 F.3d at 242. While many well-pleaded complaints are conclusory, the
court need not accept as true inferences unsupported by facts set out in the complaint or legal
conclusions cast as factual allegations. Warren v. District of Columbia, 353 F.3d 36, 40 (D.C.
Cir. 2004); Browning, 292 F.3d at 242. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 129 S. Ct. at 1949.
7 C. The Court Grants in Part and Denies in Part the Defendants’ Motion to Dismiss and Grants the Plaintiff’s Motion to Compel Production of the Administrative Record
1. The Court Grants the Defendants’ Motion to Dismiss the Plaintiff’s Tort Claims Against Mutual and WPS Based on Lack of Subject Matter Jurisdiction
This Circuit has noted that courts should resolve Rule 12(b)(1) jurisdictional challenges
before considering Rule 12(b)(6) challenges. United States ex rel. Settlemire v. District of
Columbia, 198 F.3d 913, 920 (D.C. Cir. 1999) (citing United States ex rel. Kreindler &
Kreindler v. United Techs. Corp., 985 F.2d 1148, 1155-56 (2d Cir. 1993)). Put simply, “if [the
court] must dismiss the complaint for lack of subject matter jurisdiction, the accompanying
defenses and objections become moot and do not need to be determined.” Kreindler &
Kreindler, 985 F.2d at 1155-56 (citing 5 FED . PRAC. & PROC. § 1350). Accordingly, the court
will first address the defendants’ argument that the court lacks subject matter jurisdiction over
the plaintiff’s tort claims against Mutual and WPS. See Defs.’ Mot. at 17-20.
The defendants argue that 42 U.S.C. § 405(h), as construed in unambiguous Supreme
Court precedent, makes clear that the Medicare Act provides no remedy for an aggrieved hospital
beyond the recovery, through the administrative process set forth in the Act, of the Medicare
reimbursement to which the hospital is entitled. Id. at 17-18. Thus, the defendants argue, the
court’s jurisdiction extends only to the plaintiffs’ APA claim against the Secretary and does not
encompass a tort action against Mutual and WPS for additional money damages arising out of the
Secretary’s denial of the plaintiff’s request for reimbursement. Id. at 18-20. In addition, the
defendants contend that because Mutual and WPS were acting as agents of the federal
government in committing the conduct in question, the claims asserted against them as fiscal
8 intermediaries are effectively suits against the United States government, which is immune from
the plaintiff’s tort claims. Id. at 20.
The plaintiff takes issue with the defendants’ suggestion that it is seeking “additional”
funds, pointing out that it seeks only the Medicare reimbursement to which it claims it is entitled
by virtue of having trained St. Anthony’s former residents, rather than any “additional” money.
Pl.’s Opp’n at 18. The plaintiff also draws factual distinctions between this case and the three
principal cases upon which the defendants rely – Shalala v. Illinois Council on Long Term Care,
Inc., 529 U.S. 1 (2000), Schweiker v. Chilicky, 487 U.S. 412 (1988), and Heckler v. Ringer, 466
U.S. 602 (1984) – by pointing out that the plaintiffs in Schweiker sought money damages against
the federal government for alleged constitutional violations, and that the plaintiffs in Illinois
Council on Long Term Care and Ringer failed to exhaust their administrative remedies and
asserted federal question jurisdiction pursuant to 28 U.S.C. § 1331. Pl.’s Opp’n at 18. Here, in
contrast, whether the plaintiff exhausted its administrative remedies is not in dispute, and the
plaintiff “is not trying to invoke jurisdiction under federal question jurisdiction.” Id. at 18-19. In
short, the plaintiff maintains that it “is only seeking review of the [Provider Reimbursement
Review Board’s] decision and recovery of the amount of reimbursement based on its educating
and training all the Program residents after St. Anthony discontinued its involvement in the
residency program.” Id. at 19.
Pursuant to 42 U.S.C. § 405(h), as applied to the Medicare program by 42 U.S.C. §
1395ii,
[n]o findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the [Secretary], or any officer or employee thereof shall be brought
9 under section 1331 [(authorizing federal question jurisdiction)] or 1346 [(authorizing federal defendant jurisdiction)] of Title 28 to recover on any claim arising under this subchapter.
42 U.S.C. §§ 405(h), see also id. § 1395ii. Thus, the plaintiff’s tort claims against Mutual and
WPS are barred if those fiscal intermediaries are “officer[s] or employee[s]” of the United States
or the Secretary and if the plaintiff’s tort claims “aris[e] under” the Medicare Act. The court will
consider each of these questions in turn.
First, the regulations interpreting the Medicare Act state that fiscal “[i]ntermediaries and
carriers[3] act on behalf of [the Department of Health and Human Services] in carrying out certain
administrative responsibilities that the law imposes.” 42 C.F.R. § 421.5(b). Several other
Circuits have concluded that fiscal intermediaries serve as “officer[s] or employee[s]” of the
United States and therefore fall under the scope of § 405(h). See United States ex rel. Rahman v.
Oncology Assocs., P.C., 198 F.3d 502, 510-11 (4th Cir. 1999) (observing that “[n]ot only are
[carriers] given a clear duty to perform official acts in administering the program, they are
actually considered ‘officers or employees’ of the United States within the meaning of the
Medicare Act” (citing Your Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449 (1999));
Midland Psychiatric Assocs., Inc. v. United States, 145 F.3d 1000, 1003-04 (8th Cir. 1998)
(concluding that fiscal intermediaries and carriers “are government agents . . . [because] [u]nder
contract with the Secretary of Health and Human Services, they do the work of the Government
on the Secretary’s behalf”) (internal citations omitted); Bodimetric Health Servs., Inc. v. Aetna
Life & Cas., 903 F.2d 480, 487-88 (7th Cir. 1990) (holding that fiscal intermediaries serve as
3 Carriers are comparable to fiscal intermediaries. See United States ex rel. Rahman v. Oncology Assocs., P.C., 198 F.3d 502, 510 n.1 (4th Cir. 1999).
10 “officer[s] or employee[s]” of the United States). In addition, this Circuit has held that fiscal
intermediaries serve as agents of the United States. See Pine View Gardens, Inc. v. Mutual of
Omaha Ins. Co., 485 F.2d 1073, 1075 (D.C. Cir. 1973) (noting that the fiscal intermediary was
“an agent for the government as a disclosed principal”). Thus, the court concludes that Mutual
and WPS are “officer[s] or employee[s]” of the government of the purposes of § 405(h).
Second, a claim “aris[es] under” the Medicare Act for purposes of § 405(h) if it is
“inextricably intertwined” with a claim for benefits, Ringer, 466 U.S. at 614-15, regardless of
whether the claim is brought under federal question jurisdiction,4 see Bodimetric Health Servs.,
Inc., 903 F.2d at 487 (holding that “[a] party cannot avoid the Medicare Act’s jurisdictional bar
simply by styling its attack as a claim for collateral damages instead of a challenge to the
underlying denial of benefits” because “[i]f litigants who have been denied benefits could
routinely obtain judicial review of these decisions by recharacterizing their claims under state . . .
causes of action, the Medicare Act’s goal of limited judicial review for a substantial number of
claims would be severely undermined”). Under this standard, the plaintiff’s tort claims against
Mutual and WPS plainly “aris[e] under” the Medicare Act. See Ringer, 466 U.S. at 614 (noting
that “at bottom, [the plaintiffs’ constitutional and statutory claims amounted to] a claim that they
should be paid” Medicare reimbursements). Indeed, the plaintiff in this case appears to concede
that its claims “arise under” the Medicare Act. See Compl. ¶ 5 (stating that this “action arises out
4 The court notes that, contrary to the plaintiff’s assertion that it “is not trying to invoke jurisdiction under federal question jurisdiction,” Pl.’s Opp’n at 18-19, the plaintiff in fact states in the complaint that “jurisdiction is based on 28 U.S.C. § 1331 [(governing federal question jurisdiction)], 42 U.S.C. § 1395oo [(governing judicial review of decisions of the Provider Reimbursement Review Board)] and 5 U.S.C. § 702 [(governing judicial review of agency decisions under the Administrative Procedure Act)] because the action arises out of a final agency action of the United States Department of Health and Human Services,” Compl. ¶ 5.
11 of a final agency action of the United States Department of Health and Human Services”). Thus,
§ 405(h) divests the court of subject matter jurisdiction over the plaintiff’s tort claims against
Mutual and WPS.5 Cf. In re Series 7 Broker Qualification Exam Scoring Litig., 548 F.3d 110,
114 (D.C. Cir. 2008) (observing, in the context of the Exchange Act, that “rather than allowing
plaintiffs to sue under common law theories, Congress created a self-contained process to review
and remedy such complaints”).
2. The Court Denies the Defendants’ Motion to Dismiss the Plaintiff’s APA Claim Against the Secretary and Grants the Plaintiff’s Motion to Compel Production of the Administrative Record
The court turns next to the defendants’ motion to dismiss the plaintiff’s APA claim
against the Secretary. The defendants maintain that the Secretary properly concluded that St.
Anthony’s resident caps could not be added to the plaintiff’s resident caps in calculating the
reimbursement due to the plaintiff. Defs.’ Mot. at 11-17. More specifically, the defendants
contend that the Secretary’s decision must be given broad deference, id. at 11-12, and that under
this deferential standard of review the decision was reasonable, id. at 12-15. The defendants also
assert that to the extent the plaintiff argues that it may estop the government based on the advice
given to it by Mutual, the court must reject this argument as a matter of law. Id. at 15-17.
The plaintiff counters that the Secretary’s decision was arbitrary and capricious and
therefore must be overturned under the APA. Pl.’s Opp’n at 7-12. It first disputes the
defendants’ contention that the court should afford broad deference to the decision, asserting
instead that the Secretary’s conflicting interpretations of the relevant statutory provisions in
5 As a result, the court need not reach the defendants’ alternative argument that Mutual and WPS are immune from the plaintiff’s tort claims. See Defs.’ Mot. at 20-23.
12 1997, 1998, 2001 and 2002 diminish the degree of deference to which the Secretary’s decision is
entitled. Id. at 7-8. In addition, the plaintiff argues that the Secretary’s decision conflicted with
Congress’s intent. Id. at 8-10. Finally, the plaintiff disputes the defendants’ assertion that the
plaintiff cannot assert equitable estoppel against the government, arguing that the court should
entertain the plaintiff’s estoppel argument against the government and the fiscal intermediaries in
light of the unique facts of this case. Id. at 10-18.
After the defendants filed their motion to dismiss, the plaintiff filed a motion to compel
production of the administrative record, arguing that it should be permitted to cite to the
administrative record in preparing its opposition to the defendants’ motion to dismiss. See
generally Pl.’s Mot.6 In their opposition to the plaintiff’s motion, the defendants note that they
purposefully did not cite to the administrative record in their motion to dismiss and argue that
“all of Plaintiff’s claims should be dismissed as a matter of law based on the face of the
Complaint, and without reference to extraneous evidence.” Defs.’ Opp’n at 3. In other words,
the defendants assert, “[t]he Court does not need the administrative record to resolve [the issues
raised in the defendant’s motion to dismiss] and, therefore, the Secretary has not yet produced it.”
Id. at 2.
With respect to the defendants’ motion to dismiss the plaintiff’s tort claims against the
fiscal intermediaries, the defendants are correct that the court can – and should – resolve the
6 Despite the fact that the plaintiff asserted that it “ha[d] the right to cite to the Administrative Record in preparing its response to” the defendants’ motion to dismiss, Pl.’s Mot. ¶ 24, two weeks after filing its motion to compel production of the administrative record – before the court issued a ruling on the motion – the plaintiff filed an opposition to the defendants’ motion to dismiss, see generally Pl.’s Opp’n. The plaintiff did not request that the court permit it to file an opposition to the defendants’ motion to dismiss after the court ruled on the plaintiff’s motion to compel production of the administrative record.
13 jurisdictional issues raised in the motion to dismiss at the earliest possible stage. See, e.g., Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998) (noting “[t]he requirement that
jurisdiction be established as a threshold matter”). As discussed in Part III.B.1 supra, the court
has determined that it lacks subject matter jurisdiction over the plaintiff’s tort claims against the
fiscal intermediaries without reference to the administrative record.
The same cannot be said, however, of the court’s consideration of the defendants’ motion
to dismiss the plaintiff’s APA claims against the Secretary. For, although the arguments raised in
the defendants’ motion to dismiss are compelling, the court’s task is not simply to determine
whether the Secretary reached the correct result in denying the plaintiff’s request for
reimbursement. Rather, the court must assess whether the Secretary “examined the relevant data
and articulated a satisfactory explanation for its action including a rational connection between
the facts found and the choice made.” Md. Pharm., Inc. v. Drug Enforcement Admin., 133 F.3d
8, 16 (D.C. Cir. 1998) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43 (1983)). “The requirement that agency action not be arbitrary and capricious
includes a requirement that the agency adequately explain its result.” Appleby v. Harvey, 517 F.
Supp. 2d 253, 260 (D.D.C. 2007) (quoting Dickson v. Sec’y of Def., 68 F.3d 1396, 1404 (D.C.
Cir. 1995)). “The arbitrary and capricious standard . . . ‘mandat[es] that an agency . . . provide an
explanation that will enable the court to evaluate the agency’s rationale at the time of decision.’”
Id. (citing Dickson, 68 F.3d at 1404). Without the administrative record, the court is unable to
perform this function. Cf. Shays v. Fed. Election Comm’n, 414 F.3d 76, 97-100 (D.C. Cir. 2005)
(concluding, based on the administrative record, that the agency had given no rational
justification for its determination and the determination was therefore arbitrary and capricious).
14 For this reason, the defendants’ reliance on American Bankers Association v. National
Credit Union Administration, 271 F.3d 262 (D.C. Cir. 2001) is misplaced. In American Bankers
Association, the Circuit concluded that the trial court did not err by not directing the National
Credit Union Administration (“the NCUA”) to produce the administrative record because the
plaintiff’s challenge to the NCUA’s rule “depend[ed] entirely on the argument that the rule itself
violate[d] the statute.” Id. at 267. The Circuit relied on the analogous case of Sierra Club v.
United States Fish & Wildlife Service, 245 F.3d 434 (5th Cir. 2001), in which the Fifth Circuit
concluded that production of the administrative record was not necessary because the Circuit’s
“review [was] limited to interpreting the extent to which the regulation [was] consistent with the
statute.” Id. at 440 n.37. Here, in contrast, viewing the complaint in the light most favorable to
the plaintiff, the plaintiff is challenging not just whether the Secretary’s regulations were
consistent with the statute, but also whether the Secretary’s adjudicatory process was reasonable
and whether the decision was consistent with Congressional intent. See Compl. ¶¶ 81-85. In
other words, the plaintiff is challenging not only the administrative decision, but also the process
that led to that decision. The court is unable to assess the merits of these arguments without
considering the administrative record. See Md. Pharm., Inc. v. Drug Enforcement Admin., 133
F.3d 8, 16 (D.C. Cir. 1998) (directing the court to determine whether the agency “examined the
relevant data and articulated a satisfactory explanation for its action including a rational
connection between the facts found and the choice made”); Dickson v. Sec’y of Def., 68 F.3d
1396, 1404 (D.C. Cir. 1995) (directing the court to assess the agency’s explanation for its
determination). As a result, the court denies the defendants’ motion to dismiss the plaintiffs’
APA claim and grants the plaintiff’s motion to compel production of the administrative record.
15 IV. CONCLUSION
For the foregoing reasons, the court grants in part and denies in part the defendants’
motion to dismiss and grants the plaintiff’s motion to compel production of the administrative
record. An Order consistent with this Memorandum Opinion is separately and
contemporaneously issued this 5th day of March, 2010.
RICARDO M. URBINA United States District Judge