Banner Health v. Sebelius
2012 U.S. Dist. LEXIS 167266
| D.D.C. | 2012Background
- Plaintiffs are twenty-nine hospital-related organizations challenging Medicare outlier payments for fiscal years 1998–2006 due to the regulatory scheme.
- The Secretary moved to dismiss only the claims relating to four CMS documents (three program memoranda and one program transmittal) directing reopening of Medicare payment determinations.
- Outlier payments under 42 U.S.C. § 1395ww(d)(5) are governed by fixed loss thresholds and DRG-based rates, with annual targets ensuring total outlier payments fall within 5–6% of DRG-based payments.
- The fixed loss thresholds were set annually to yield approximately 5.1% outlier payments; the size of the threshold affects which cases qualify for outlier payments.
- Plaintiffs filed a Notice of Claims identifying the CMS documents; the case concerns whether reopening of cost reports is a reviewable agency action under the Medicare Act and APA.
- The court grants the Secretary’s motion to dismiss the reopening-related claims and denies Plaintiffs’ surreply request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction over reopening of determinations | Plaintiffs contend reopening policies affect payment amounts and are reviewable | Reopening decisions are discretionary and not final payment determinations under §1395oo | Lacks jurisdiction to review reopening determinations |
| Ripeness under APA for reopening claims | Reopening policies are final actions subject to review | Reopening decisions require concrete application to a claimant; not ripe | Reopening claims not ripe for review |
| APA reviewability of agency discretion | Documents affect implementation of outlier regulations | Reopenings are committed to agency discretion and unreviewable under Your Home Visiting Nurse Services | Claims dismissed as unreviewable under APA and Your Home Visiting Nurse Services |
Key Cases Cited
- Your Home Visiting Nurse Services, Inc. v. Shalala, 183 F.3d 1066 (D.C. Cir. 1999) (reopening decisions are discretionary and not reviewable under the APA)
- Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011) (under the Medicare statute, DRG-based payments and outlier rules; district court review limits)
- Cnty. of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999) (outlier payments and threshold methodology limitations)
- Monmouth Med. Ctr. v. Thompson, 257 F.3d 807 (D.C. Cir. 2001) (jurisdictional considerations under Medicare claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requiring more than mere labels and conclusions)
- Haynesworth v. Miller, 820 F.2d 1245 (D.C. Cir. 1987) ( Rule 12 standard for reviewing pleadings)