765 F. Supp. 2d 20
D.D.C.2011Background
- Baptist-Memphis sought inclusion of TennCare expansion waiver days in the DSH payment calculations for FYE 1994 and FYE 1995.
- PRRB initially ruled in Baptist-Memphis’ favor on hold harmless issues, but CMS reversed both decisions.
- PM A-99-62 clarified that only Title XIX Medicaid days could count toward the Medicaid (Medicaid fraction) DSH calculation and held harmless for certain pre-2000 disputes.
- PM A-99-62 deadline required appeal before October 15, 1999 for hold harmless treatment.
- The cost report audit for FYE 1994 showed expansion waiver days were excluded prior to audit; Audit Adjustment #49 reflected Medicaid-eligible days only.
- The group appeal by BMCHC reached the D.C. Circuit, which held that the underlying statutory change did not retroactively alter settled law; Congress clarified an ambiguity but did not change preexisting policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PM A-99-62’s October 15, 1999 deadline is retroactive policy. | Baptist-Memphis contends the deadline creates retroactive rulemaking. | Secretary argues PM A-99-62 merely clarifies existing policy and is not retroactive. | Not retroactive; PM A-99-62 clarifies existing policy. |
| Whether Baptist-Memphis satisfied hold harmless requirements to be eligible for expansion-day inclusion. | Baptist-Memphis asserts its March 1998 PPP and related materials sufficiently raised the expansion-day issue. | Appeal did not specifically raise the exclusion of expansion waiver days before October 15, 1999. | Secretary’s hold-harmless determination supported by substantial evidence; Baptist-Memphis did not meet hold harmless criteria. |
| Whether the PRRB’s bifurcation of group and individual appeals violated res judicata. | BMCHC contends bifurcation improperly split the issues. | Secretary argues this bifurcation did not prejudice the outcome; substantial evidence supports the decision. | Court does not reach this issue because first ground supports the decision. |
Key Cases Cited
- Regions Hosp. v. Shalala, 522 U.S. 448 (1998) (retroactivity analysis; antecedent facts can be used to apply a rule)
- Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (retroactivity principles for agency rules)
- St. Joseph’s Hosp. v. Leavitt, 425 F. Supp. 2d 94 (D.D.C. 2006) (precludes reliance on “magic words” in appeals; consider record trail)
- Cookeville Reg’l Med. Ctr. v. Leavitt, 531 F.3d 844 (D.C. Cir. 2008) (holding that the 1115 expansion waiver issues were clarified, not retroactive policy change)
- MD Pharm., Inc. v. Drug Enforcement Admin., 133 F.3d 8 (D.C. Cir. 1998) (requires rational connection between facts and agency action; substantial evidence standard)