325 F. Supp. 3d 18
D.C. Cir.2018Background
- Plaintiffs are five acute-care hospitals that appealed to the Provider Reimbursement Review Board (the Board) challenging the amount of Medicare "outlier" payments for FY 2008, 2009, and 2012 and sought the Board's certification for expedited judicial review of an APA challenge to the outlier regulations.
- The Board denied expedited-review certification under the Medicare "self-disallowance" regulation because Plaintiffs had not reported the disputed costs to fiscal intermediaries, prompting this suit challenging the Board's jurisdictional decision (not the outlier regulations themselves).
- The Secretary initially asked the court to remand so the Board could confirm jurisdiction and grant expedited review; Plaintiffs instead sought vacatur of the self-disallowance regulation and retention of the case to litigate the outlier rules on the merits.
- After this court denied the Secretary's first remand request, three developments occurred: (1) the Secretary explained the Board was bound by existing regulations and could not unilaterally apply Banner Heart; (2) CMS issued Ruling 1727-R acquiescing to this court's Banner Heart decision for a defined class of appeals; and (3) the D.C. Circuit decided Billings Clinic, signaling potential jurisdictional problems if district courts proceed without Board expedited-review certification.
- The court reconsidered under Rule 54(b), concluded remand was appropriate to avoid the jurisdictional quandary signaled by Billings Clinic, and remanded the case to the Board with instructions to follow Banner Heart and to act on expedited-review requests within 30 days; cross-motions for summary judgment were dismissed as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether remand to the Board is appropriate | Bayshore argued court should vacate self-disallowance and retain case to reach outlier-rule merits | Hargan argued remand appropriate so Board can (and must) grant expedited review; Board was constrained by regulations | Court granted remand to Board for proceedings consistent with Banner Heart; denied vacatur |
| Whether vacatur of the self-disallowance regulation is required | Plaintiffs sought vacatur to prevent future Board reliance on the regulation and to keep case in district court | Secretary urged remand, noting CMS acquiescence and administrative consequences of vacatur | Court declined vacatur; remand preferred remedy where agency legal error occurred and acquiescence mitigates need for vacatur |
| Whether Board must grant expedited judicial review | Plaintiffs: Board erred in denying expedited review under self-disallowance when providers raise legal challenges that fiscal intermediaries cannot resolve | Secretary initially defended Board action as binding under regulations but later agreed to follow Banner Heart | Court held Board must grant expedited review on remand (consistent with Allina and Banner Heart) and remanded for that purpose |
| Whether district court lacks jurisdiction absent Board certification | Plaintiffs argued court could retain jurisdiction and decide merits | Secretary warned of jurisdictional risk; Billings Clinic suggested district courts may lack jurisdiction without Board certification | Court accepted jurisdictional risk concerns and ordered remand so Board will issue certification, avoiding potential jurisdictional bar |
Key Cases Cited
- Banner Heart Hosp. v. Burwell, 201 F. Supp. 3d 131 (D.D.C. 2016) (district court held applying self-disallowance to providers raising unresolvable legal challenges conflicted with Medicare statute)
- Bayshore Cmty. Hosp. v. Hargan, 285 F. Supp. 3d 9 (D.D.C. 2017) (court previously denied remand but reconsidered in light of new developments)
- Billings Clinic v. Azar, 901 F.3d 301 (D.C. Cir. 2018) (noted a "jurisdictional quandary" where district courts proceed without Board expedited-review certification)
- Allina Health Servs. v. Price, 863 F.3d 937 (D.C. Cir. 2017) (Board must grant expedited judicial review when legal question challenges validity of regulation)
- Allina Health Servs. v. Sebelius, 746 F.3d 1102 (D.C. Cir. 2014) (vacatur may be improper when it would produce disruptive consequences)
- Ne. Hosp. Corp. v. Sebelius, 699 F. Supp. 2d 81 (D.D.C. 2010) (remand is the appropriate remedy when an agency has committed a legal error)
- Palisades Gen. Hosp. v. Leavitt, 426 F.3d 400 (D.C. Cir. 2005) (remand to agency for action consistent with correct legal standards)
- Ryan v. Bentsen, 12 F.3d 245 (D.C. Cir. 1993) (completing administrative process aids focused judicial review)
- Cobell v. Jewell, 802 F.3d 12 (D.C. Cir. 2015) (explaining Rule 54(b) reconsideration standard)