Banner Health v. Sebelius
2013 U.S. Dist. LEXIS 69889
| D.D.C. | 2013Background
- Plaintiffs are 29 hospitals challenging CMS outlier payment regulations under Medicare, seeking more than $350 million in payments from 1998–2006.
- The case focuses on the Outlier Payment Regulations (42 C.F.R. 412.80–412.86) and the Fixed Loss Threshold Regulations used to determine outlier payments.
- The Court previously allowed expedited judicial review of PRRB determinations and directed the parties to identify discrete agency actions to challenge.
- The court reviewed statutory structure: DRG-based prospective payments, wage-index adjustments, DRG weights, and the fixed loss threshold that triggers outlier payments.
- The 2011–2013 proceedings center on whether the administrative record before the Secretary was complete or should be supplemented with additional materials.
- The court applied the “whole record” standard under 5 U.S.C. § 706 and outlined the narrow exceptions to the rule against supplementation of the administrative record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Certification of completeness of the record | Plaintiffs want certification that the record is complete | Secretary asserts certifications are not required and presumption of regularity remains | Denied: no legal requirement for certification; presumption of regularity preserved |
| Complete administrative record broad supplementation | Plaintiffs seek broad supplementation beyond identified items | Record presumed complete; only unusual circumstances justify supplementation | Denied in part: broad supplementation denied; limited supplementation under unusual circumstances granted |
| Interim Final Rule (Item 1) supplementation | Interim Final Rule contains contrary data and analyses; should be in record | Document predates rulemaking and not part of final record | Granted: Item 1 supplementation approved as unusual circumstance demonstrating adverse information to final rule |
| Impact Files and related data (Items 14-15) supplementation | Impact Files essential to show data/assumptions used for final rules | Some items are tied to proposed rules; others are already in record | Granted-in-part: require final-amendment Impact Files and underlying data; exclude only proposed-rule materials |
Key Cases Cited
- Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011) (outlier/DRG framework; accuracy of thresholds; standard of review under Medicare cases)
- Natural Resources Def. Council, Inc. v. Train, 519 F.2d 287 (D.C. Cir. 1975) (whole record standard; agency record should be complete and not truncated)
- Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (Supreme Court 1971) (“whole record” review; deference to agency’s record; supplementation rare)