Allina Health System v. Burwell
268 F. Supp. 3d 211
| D.D.C. | 2017Background
- Plaintiffs are more than two dozen hospitals challenging how HHS/CMS treated Medicare Part C (Medicare Advantage) patient days in calculating Disproportionate Share Hospital (DSH) payments for FY2007.
- The DSH payment relies on two fractions: the SSI/Medicare fraction and the Medicaid fraction; Part C days must be counted in one fraction or the other under the statute.
- In 2004 CMS promulgated a rule treating Part C days as Medicare (included in the SSI/Medicare fraction); that rule was later vacated after litigation (Allina I), and the matter was remanded to CMS for further proceedings.
- On remand the CMS Administrator adjudicated that Part C days are entitled to Part A benefits and should be counted in the SSI/Medicare fraction; the hospitals challenged that adjudication in this suit.
- The Secretary moved to dismiss, arguing (1) the hospitals failed to challenge the Medicaid fraction in the earlier proceedings so the court lacks jurisdiction to hear it now, and (2) the hospitals are judicially estopped from contesting the Medicaid fraction given their prior positions.
- The District Court denied the motion to dismiss, holding the jurisdictional/waiver argument was misplaced and that judicial estoppel did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court lacks jurisdiction to hear challenges to the Medicaid fraction after remand | Hospitals: D.C. Circuit remand left the agency adjudication open; hospitals may challenge the Administrator’s post-remand interpretation including effects on the Medicaid fraction | Secretary: Hospitals did not raise the Medicaid-fraction challenge in Allina I; waiver/"law-of-the-case" principles bar raising it now, so no jurisdiction | Court: Denied—waiver rule invoked by defendant is non-jurisdictional; remand made the post-remand agency action reviewable now |
| Whether judicial estoppel bars hospitals from challenging the Medicaid fraction | Hospitals: No clearly inconsistent prior position; they preserved challenges and rely on different arguments now without contradiction | Secretary: Hospitals focused on the SSI/Medicare fraction earlier and gained procedural advantage; estoppel needed to prevent unfairness | Court: Denied—defendant failed to meet New Hampshire v. Maine factors; no clear inconsistency or unfair advantage shown |
| Whether silence in prior proceedings equals concession as to the Medicaid fraction | Hospitals: Silence ≠ concession; prior litigation context and D.C. Circuit guidance meant hospitals could not have litigated the post-remand agency adjudication earlier | Secretary: Hospitals’ prior focus and tactical choices should preclude new claims on remand | Court: Rejected defendant; silence and litigation strategy do not constitute estoppel or jurisdictional bar |
| Whether challenges to one fraction necessarily implicate the other | Hospitals: Statute and D.C. Circuit precedent treat Part C days as binary—excluding from one fraction compels inclusion in the other; relief for one fraction affects the other | Secretary: Different litigation angles and financial impacts mean claims can be distinct; prior litigation focused on SSI/Medicare fraction | Court: Not required to decide fully here but found that remand and precedent permit consideration of Medicaid-fraction issues now |
Key Cases Cited
- Ne. Hosp. Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir.) (discusses Part C days treatment and limits on retroactive application)
- Allina Health Servs. v. Sebelius, 746 F.3d 1102 (D.C. Cir.) (vacatur of 2004 rule; remand—statute requires Part C days be in one fraction or the other)
- Catholic Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914 (D.C. Cir.) (interpretation of SSI/Medicare and Medicaid fraction language)
- Northwestern Indiana Tel. Co. v. FCC, 872 F.2d 465 (D.C. Cir.) (waiver principle on arguments not raised earlier)
- Alpharma, Inc. v. Leavitt, 460 F.3d 1 (D.C. Cir.) (permitting new arguments after remand where agency acted anew)
- New Hampshire v. Maine, 532 U.S. 742 (U.S.) (judicial estoppel factors)
- Baystate Med. Ctr. v. Leavitt, 545 F. Supp. 2d 20 (D.D.C.) (district-court discussion of scope of review and limiting challenges to particular fractions)