University of Colorado Health at Memorial Hospital v. Burwell

District Court, District of Columbia·Decided August 4, 2023·No. Civil Action No. 2014-1220·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNIVERSITY OF COLORADO HEALTH : AT MEMORIAL HOSPITAL, f/k/a/ : MEMORIAL HOSPITAL OF COLORADO : SPRINGS, et al., :

:

Plaintiffs, : Civil Action No.: 14-1220 (RC)

:

v. : Re Document Nos.: 212, 213, 214 :

XAVIER BECERRA, Secretary of Health : and Human Services, :

:

Defendant. :

MEMORANDUM OPINION

DENYING PLAINTIFFS’ MOTION FOR RULE 54(B) CERTIFICATION I. INTRODUCTION

The Plaintiffs, who are a collection of hospitals, have filed a motion under Federal Rule of Civil Procedure 54(b) asking this Court to enter a final judgment as to its June 17, 2022 order granting partial summary judgment. See Mot. for Rule 54(b) Certification (“Rule 54(b) Mot.”), ECF No. 212; see also Summ. J. Op., ECF No. 203. The Defendant, the Secretary of Health and Human Services (“HHS”) opposes the motion. See Sec.’s Mem. of P. & A. in Opp’n to Pls.’ Mot. for Entry of Final J. (“HHS Opp’n”), ECF No. 213. For the reasons stated below, the motion is DENIED.

II. BACKGROUND

These consolidated cases concern an array of challenges to HHS’s 2007 to 2016 annual rulemaking for reimbursements to hospitals under Medicare. 1 Summ. J. Op. at 7. HHS provides hospitals with outlier payments to compensate for particularly costly cases, and the amount of those reimbursements depends on a number known as the “fixed loss threshold.” Id. at 2–4; see also Billings Clinic v. Azar, 901 F.3d 301, 304 (D.C. Cir. 2018). HHS sets the fixed loss threshold for the coming federal fiscal year through an annual rulemaking process. Summ. J. Op. at 2–3. The Plaintiff hospitals contest their reimbursements for numerous reimbursement years spanning from 2007 to 2016, arguing the fixed loss threshold rules affecting their reimbursements are improper due to lack of notice and comment as well as arbitrary and capricious decision-making. Id. at 2–12.

Federal fiscal years and hospital fiscal years do not necessarily align, meaning that when health care providers seek reimbursement for a hospital fiscal year through a Notice of Program Reimbursement, those reimbursements may concern two different fixed loss threshold rules. See 42 U.S.C. § 1395h(a); 42 U.S.C. § 1395kk-1(a)(3)–(a)(4)(B); 42 C.F.R. § 413.20(b); 42 C.F.R. § 405.1803(a). Hospitals can challenge a Notice of Program Reimbursement by appealing to the Provider Reimbursement Review Board (“PRRB”), a specialized administrative body. 42 U.S.C. § 1395oo(a). Hospitals can seek judicial review of the PRRB’s final decision. Id. § 1395oo(f)(1). The PRRB can also grant immediate expedited judicial review (“EJR”) of a “question of law or regulations relevant to the matters in controversy” instead of issuing its own decision first. Id.

1 The Court assumes familiarity with the prior opinions in this matter and condenses this background section. For a more detailed description of the fixed loss threshold and reimbursement procedures, the Court directs the reader to the summary judgment opinion. See Summ. J. Op. at 2–7.

The many Plaintiff hospitals have claims against different sets of fixed loss threshold rule years, and many of these hospitals have also engaged in prior litigation. See, e.g., Banner Health v. Azar, No. 10-cv-1638. They previously challenged the fixed loss threshold rules for federal fiscal years 1998 through 2006, ultimately ending in a stipulated dismissal. See id., Order, June 18, 2020, ECF No. 189. Another challenge, targeting certain 2003 rulemaking actions and the fixed loss threshold rules for federal fiscal years 2008 through 2011 ended with the D.C. Circuit affirming the district court’s grant of summary judgment for HHS on all claims. See Billings Clinic, 901 F.3d at 302–03.

This consolidated case, Univ. of Colo. Health at Mem’l Hosp. v. Azar, No. 14-cv-1220, comprises eight cases filed between July 2014 and March 2019. See Order at 1, Dec. 19, 2018, ECF No. 108; Order at 1, Feb. 15, 2019, ECF No. 112; Order at 2, April 1, 2019, ECF No. 131. Each Plaintiff hospital received a grant of expedited judicial review from the PRRB regarding the fixed loss threshold rules governing their cost reports. See Summ. J. Op. at 2–7.

The Court has decided dispositive motions in this case. See, e.g., Mot. Dismiss Op., ECF No. 155. In March 2020, the Court dismissed certain claims as voluntarily abandoned and others as barred by claim preclusion. See id. at 14, 19. In that decision, the Court determined that a hospital’s claim was measured by reference to whether a particular fixed loss threshold rule was invalid, not by reference to a given Notice of Program Reimbursement. See id. Later on in the litigation, the parties both moved for summary judgment on all remaining claims. See Pls.’ Mot. for Summ. J., ECF No. 185; Sec.’s Cross Mot. for Summ. J., ECF No. 188. The Court granted summary judgment for HHS on most claims, except for the Plaintiffs making a notice and comment challenge to the federal fiscal year 2012 and 2013 rules. Summ. J. Op. at 1–2. The Court remanded the 2012 and 2013 rules to HHS for additional explanation or action. Id. at 75–

76. Because the 2012 and 2013 rules were remanded without vacatur, the Court did not enter final judgment on any of the claims, with the sole exception of the Cabell Huntington case that challenged the 2010 and 2011 rules. 2 Id. at 72–75.

Originally, HHS appealed seven of the eight consolidated cases to the D.C. Circuit. 3 See HHS’s Notice of Appeal, ECF No. 207. The Plaintiffs cross-appealed. See Pls.’ Notice of Appeal, ECF No. 209. Meanwhile, the Cabell Huntington plaintiffs also filed a notice of appeal as to their claims against the 2010 and 2011 rules. See id. at 2. In October 2022, HHS filed a motion to voluntarily abandon its appeal, and moved to dismiss Plaintiffs’ cross-appeals. See Gov’t’s Mot. to Voluntarily Dismiss Appeal, USCA Case No. 22-5218, Dkt. No. 1967218. The Plaintiffs requested a stay of the case in order to seek Rule 54(b) certification from this Court. See Hosps.’ Mot. for Temporary Stay, Dkt. No. 1968840. The D.C. Circuit granted the request, and the case and HHS’s dismissal motion have been stayed until the resolution of the present motion. See Order, Dec. 5, 2022, Dkt. No. 1976139.

The Plaintiffs have moved under Rule 54(b) for the Court to enter a final judgment for all claims that do not concern the 2012 and 2013 rules. See Rule 54(b) Mot. Regardless of HHS’s request to dismiss its appeal, the requested final judgment would allow Plaintiffs to appeal the Court’s 2020 dismissals and much of the Court’s June 2022 grant of summary judgment. Id. at 5. HHS opposes the motion. See HHS Opp’n.

2 The Court does not enter final judgment when a challenged rule is on remand without vacatur. See, e.g., N.C. Fisheries Ass’n v. Gutierrez, 550 F.3d 16, 19 (D.C. Cir. 2008); see also Sierra Club v. U.S. Dep’t of Agric., 716 F.3d 653, 656 (D.C. Cir. 2013).

3 D.C. Circuit precedent contains a “limited exception permitting a government agency to appeal immediately [from a remand order.]” Sierra Club, 716 F.3d at 656-57 (quoting N.C. Fisheries Ass’n, F.3d 16 at 19–20). When an agency appeals, the other parties may cross-appeal. Cnty. of L.A. v. Shalala, 192 F.3d 1005, 1012 (D.C. Cir. 1999).

III. LEGAL STANDARD

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