Westchester General Hospital, Inc. v. dept.of Health & Human Services, Debbie Paul

• Court: Court of Appeals for the Eleventh Circuit
• Decided: October 14, 2011
• Docket: 11-12476
• Status: Unpublished

Opinion

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________ FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 11-12476 OCTOBER 14, 2011 Non-Argument Calendar JOHN LEY ________________________ CLERK

D.C. Docket No. 1:10-cv-21113-JAL

WESTCHESTER GENERAL HOSPITAL, INC.,

Plaintiff-Appellant,

versus

DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare and Medicaid Services,

lllllllllllllllllllllllllllllllllllllll l Defendant-Appellee,

DEBBIE PAUL,

lllllllllllllllllllllllllllllllllllllll lDefendant.

________________________

Appeal from the United States District Court for the Southern District of Florida ________________________

(October 14, 2011) Before HULL, MARTIN and ANDERSON, Circuit Judges.

PER CURIAM:

Plaintiff-Appellant Westchester General Hospital, Inc. (“Westchester”)

appeals the district court’s grant of summary judgment to Defendant-Appellee

Department of Health and Human Services (“DHHS”). Westchester claims

DHHS’s denial of Westchester’s request for permission to depose a DHHS

employee was arbitrary and capricious under the Administrative Procedure Act,

5 U.S.C. § 706(2)(A). After review of the briefs and the record, we affirm the

district court’s order granting summary judgment to DHHS.

I. BACKGROUND

This case arises from a state court breach-of-contract action brought by

Defendant Westchester, to which the federal government and DHHS are not

participants. The state court action relates to an agreement between Westchester

and Nova Southeastern University (“Nova”). Pursuant to that agreement,

Westchester used its Medicare provider status to seek reimbursement from

Medicare for the costs of Nova’s dental residency program. When Medicare

rejected certain reimbursement requests by Westchester, the Westchester-Nova

agreement deteriorated, leading to the state court lawsuit.

Medicare based its reimbursement rejections in part on audits conducted by

2 Debbie Paul, an audit branch manager for DHHS’s intermediary, First Coast

Service Options, Inc. Because of Paul’s role in the reimbursement requests,

Westchester sought to depose Paul in the state court action. To that end,

Westchester sent DHHS a letter requesting permission to take Paul’s deposition.

DHHS requires that any request for deposition testimony follow the

procedures set forth in its regulations.1 45 C.F.R. §§ 2.1, 2.4. More particularly,

the request “must state the nature of the requested testimony, why the information

sought is unavailable by any other means, and the reasons why the testimony

would be in the interest of the DHHS or the federal government.” Id. § 2.4(a).

“The availability of Department employees to testify in litigation not involving

federal parties is governed by the Department’s policy to maintain strict

impartiality with respect to private litigants and to minimize the disruption of

official duties.” Id. § 2.1(b). The regulations further provide that a DHHS

employee may only provide testimony “concerning information acquired in the

course of performing official duties” if it is “authorized by the Agency

head . . . based on a determination by the Agency head, after consultation with the

1 Pursuant to the federal “housekeeping statute,” 5 U.S.C. § 301, executive agencies may promulgate regulations concerning testimony by agency employees. See United States ex rel. Touhy v. Ragen, 340 U.S. 462, 469-70, 71 S. Ct. 416, 420 (1951); Moore v. Armour Pharm. Co., 927 F.2d 1194, 1196-97 (11th Cir. 1991). Regulations promulgated pursuant to that statute are referred to as an agency’s “Touhy” regulations. See, e.g., Hasie v. Office of the Comptroller of the Currency of the United States, 633 F.3d 361, 364 (5th Cir. 2011).

3 Office of the General Counsel, that compliance with the request would promote

the objectives of the Department.” Id. § 2.3.

In accordance with DHHS’s regulations, Westchester’s deposition request

first set forth “the nature of the requested testimony.” Its request focused on

several audits Paul performed of Westchester’s Medicare reimbursement requests

for Nova. Westchester’s letter stated it expected testimony regarding the

following:

[Paul’s] analysis and conclusions with respect to the Dental Program in connection with the audits of fiscal years 2001 through 2005; the sufficiency of the documentation provided in support of the Dental Program; communications between Ms. Paul and Westchester regarding the Dental Program; and communications between Ms. Paul and Nova regarding the Dental Program.

Next, Westchester’s letter claimed the information was unavailable by any

other means. The letter elaborated:

First Coast has sole access to the requested testimony, records, and information that resulted in the disallowance of substantial costs in Westchester’s costs [sic] reports relating to the dental residency program. Specifically, Ms. Paul oversaw the relevant audits and was in direct contact with Westchester during the course of each audit. Ms. Paul’s review and analysis of the dental program, including her finding of the insufficiency of the documents provided in support of the program, was made directly to Westchester. She was an integral part of the audits of Westchester’s cost reports, and her analysis and conclusions with respect to the dental program and [sic] are important elements to the resolution of this lawsuit.

4 Westchester’s letter concluded that “[a]s discussed above, the testimony is

in the interest of DHHS and the Federal Government because it involves the

proper administration of the Medicare Program.” No other reasons were

provided.

In a letter dated January 28, 2010, DHHS denied Westchester’s deposition

request. After reiterating Westchester’s requested categories of testimony, DHHS

stated that in accordance with 45 C.F.R. § 2.4, it “disagree[d] that the information

sought is unavailable by any other means.” DHHS’s letter pointed out that “[t]he

parties to this case, themselves, are best able to testify with respect to any direct

communications they may have had with Ms. Paul.” The DHHS letter advised that

its “decision to decline the requested testimony is in keeping with the

Department’s policy to maintain impartiality with respect to private litigants and to

minimize the disruption of official duties in accordance with 45 C.F.R.[ ]2.1.”

DHHS then directed Westchester to inform DHHS of any further questions.

Subsequently, Westchester filed a lawsuit in the district court, seeking an

order (1) setting aside DHHS’s decision as arbitrary and capricious under the

Administrative Procedure Act, and (2) ordering Paul to appear for a deposition.

DHHS then filed a motion for summary judgment, which was followed by

5 Westchester’s own summary judgment motion. A magistrate judge held a hearing

on the parties’ motions and recommended that the district court grant DHHS’s

motion and deny Westchester’s. After consideration of the magistrate judge’s

report and the administrative record, the district court adopted the report and

granted DHHS’s motion, finding that DHHS’s denial of Westchester’s deposition

request was not arbitrary or capricious. This appeal followed.

II. DISCUSSION

The Administrative Procedure Act (“APA”) § 702 provides that “[a] person

suffering legal wrong because of agency action, or adversely affected or aggrieved

by agency action within the meaning of a relevant statute, is entitled to judicial

review thereof.” 5 U.S.C. § 702. Here, DHHS’s denial of Plaintiff’s deposition

request is agency action subject to judicial review under APA § 706(2)(A).

In reviewing an agency action pursuant to valid agency regulations, we

review de novo the district court’s grant of summary judgment and apply the same

standard of review used by the district court. 5 U.S.C. § 702; Miccosukee Tribe of

Indians of Florida v. United States, 566 F.3d 1257, 1264 (11th Cir. 2009). That is,

“[t]he reviewing court shall . . . hold unlawful and set aside agency action,

findings, and conclusions found to be . . . arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A);

6 Miccosukee Tribe, 566 F.3d at 1264. This “exceedingly deferential” standard

examines “whether the [agency] decision was based on a consideration of the

relevant factors and whether there has been a clear error of judgment.” Fund for

Animals, Inc. v. Rice, 85 F.3d 535, 541 (11th Cir. 1996).

In this case, we cannot say DHHS’s decision was arbitrary or capricious.

DHHS, in rejecting Westchester’s request, stated that it “disagree[d] that the

information is unavailable by any other means.” DHHS explicitly noted that

Westchester and Nova “are best able” to provide the information concerning their

communications with Paul. When read alongside Westchester’s letter, DHHS’s

statements demonstrate it considered the relevant factors, as presented in

Westchester’s letter, and arrived at a rational conclusion that the information was

available from other sources.

An examination of Westchester’s letter readily shows this, for Westchester’s

own description of the requested testimony defeats its claim of unavailability. As

to the first request for Paul’s “analysis and conclusions” regarding the Westchester

audits, Westchester’s letter stated: “Ms. Paul oversaw the relevant audits and was

in direct contact with Westchester during the course of each audit.” As to the

second request for Paul’s testimony regarding “the sufficiency of documentation

7 provided in support of the dental program,” Westchester’s letter stated: “Ms.

Paul’s review and analysis of the dental program, including her finding of the

insufficiency of the documents provided in support of the program, was made

directly to Westchester.” As to the third and fourth requests for “communications

between Paul” and Westchester and Nova, Westchester would itself have

knowledge of what it communicated to Paul, and could depose Nova employees to

similar end. While Westchester might prefer to depose Paul, DHHS’s regulations

make no exceptions for party preferences. The regulations inquire only whether

the information is otherwise unavailable. Westchester’s letter on its face did not

meet its burden under DHHS’s valid Touhy regulations. See Touhy, 340 U.S. at

469-70; Moore, 927 F.2d at 1197.

Accordingly, we agree with the magistrate judge and the district court that

DHHS’s denial of Westchester’s deposition request was not arbitrary or capricious

under APA § 702. DHHS adequately considered the relevant factors and its

decision contained no clear error of judgment. See Fund for Animals, 85 F.3d at

541. The district court’s grant of summary judgment in favor of DHHS is

affirmed.