BEACON HEALTHCARE SERVICES, INC. v. Leavitt
2010 U.S. App. LEXIS 25620
| 9th Cir. | 2010Background
- Beacon operates Newport Bay Hospital, a 34-bed psychiatric facility serving geriatric patients, with higher expected costs.
- For period ending April 30, 2001, TEFRA capped Beacon's reimbursement at a target amount based on all psychiatric hospitals' costs, adjusted by inflation.
- In 2003 Beacon sought an increase to its TEFRA target for atypically geriatric mix; Mutual denied the increase but paid Beacon a $32,081 incentive when 2001 costs were below the TEFRA ceiling.
- Beacon appealed to the PRRB, which dismissed for lack of jurisdiction under the $10,000 amount in controversy requirement and regulatory interpretation.
- District court affirmed the PRRB's dismissal on jurisdictional grounds and, alternative, on merits that Beacon wasn’t entitled to an adjustment; Beacon timely appealed.
- The court ultimately held PRRB had jurisdiction, but Beacon was not entitled to a TEFRA target adjustment and unexhausted § 1331 claims were barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PRRB had jurisdiction over Beacon's appeal | Beacon's amount in controversy met §1395oo(a)(2). | PRRB treated controversy as tied to the remedy, not the amount in controversy. | PRRB jurisdiction was proper; amount in controversy determined Beacon's right to a hearing. |
| Whether Beacon is entitled to a TEFRA target adjustment | Events beyond control merit an adjustment under §1395ww(b)(4)(A). | Adjustment only when operating costs exceed TEFRA ceiling per 42 C.F.R. §413.40(g)(1)(iii). | Beacon not eligible; costs did not exceed the TEFRA ceiling. |
| Whether Beacon's unexhausted §1331 claims are reviewable | Claims should be reviewable on appeal of the agency decision. | 42 U.S.C. §405(h) bars review of unexhausted claims; exclusive review under §1395oo(f). | Beacons unexhausted claims precluded; district court lacked jurisdiction over them. |
Key Cases Cited
- Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362 (9th Cir. 1986) (amount in controversy normally determined from pleadings)
- Mt. Diablo Hosp. v. Shalala, 3 F.3d 1226 (9th Cir. 1993) (APA review standard for Secretary's merits actions)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (§405(h) bars §1331 review in typical Medicare benefits cases)
- Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (reasonableness review of agency interpretations)
- Reed Elsevier Inc. v. Muchnick, 130 S. Ct. 1237 (2010) (avoid conflating jurisdictional limits with nonjurisdictional limitations)