285 F. Supp. 3d 9
D.C. Cir.2017Background
- Five acute-care hospitals challenged federal Medicare "outlier" payment regulations, seeking expedited judicial review of APA challenges after the Provider Reimbursement Board denied their request.
- The Board denied expedited review because plaintiffs had not complied with a now-former "self-disallowance" regulation that barred Board hearings when providers knew an item was non-reimbursable and did not report it to the fiscal intermediary.
- The Board acknowledged but declined to follow this Court's decision in Banner Heart Hospital v. Burwell, which held the self-disallowance rule could not bar expedited review of regulatory challenges.
- HHS (Defendant) moved for voluntary remand, consenting to application of Banner Heart for purposes of this case; plaintiffs opposed remand and moved for judgment on the pleadings to invalidate the self-disallowance rule and proceed on the merits.
- The court denied HHS's motion for voluntary remand (finding lack of substantial justification, undue prejudice to plaintiffs, and futility because law requires expedited review) and denied plaintiffs’ Rule 12(c) cross-motion as premature because the pleadings were not closed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether voluntary remand is appropriate | Remand is pointless and prejudicial delay; court should accept jurisdiction now | Agency consents to apply Banner Heart here and requests remand so Board can grant expedited review | Denied remand: no substantial justification, undue prejudice, and remand would be futile |
| Whether Board had to grant expedited judicial review | Plaintiffs: Board had jurisdiction and lacked authority to resolve APA challenge, so expedited review is mandatory | Defendant: initially relied on self-disallowance to deny review; now consents to Banner Heart outcome but provides no new reason for remand | Held: expedited judicial review is required because Board has no authority to decide regulatory validity |
| Validity/applicability of the self-disallowance regulation | Plaintiffs: the rule cannot bar providers who raise legal challenges to regulations; ask court to invalidate it | Defendant: defended Board's application; now declines to relitigate Banner Heart but did not concede rule's invalidity generally | Court declined to rule on broad invalidation now; signaled willingness to find rule does not bar these plaintiffs but denied Rule 12(c) as premature |
| Plaintiffs' Rule 12(c) motion for judgment on the pleadings | Plaintiffs: ask for immediate invalidation of the self-disallowance rule and leave to amend to add substantive APA claims | Defendant: had not answered; procedural posture improper | Denied as premature because pleadings are not closed; court invited stipulation or properly framed motions to proceed |
Key Cases Cited
- Banner Health v. Price, 867 F.3d 1323 (D.C. Cir.) (explains limits on applying self-disallowance to bar expedited review of regulatory challenges)
- Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399 (Sup. Ct.) (fiscal intermediary and Board lack authority to declare regulations invalid; exhaustion not required for judicial review of legal challenges)
- Allina Health Servs. v. Price, 863 F.3d 937 (D.C. Cir.) (holds Board must grant expedited judicial review when the legal question challenges the substantive or procedural validity of a regulation)