Charleston Area Medical Center v. Burwell, 216 F. Supp. 3d 18

Background:

Thirty-five acute-care hospitals sued HHS challenging (a) the 2003 outlier-payment regulation (changes to the charge-to-cost ratio methodology) and (b) the fixed-loss-threshold regulations for FY 2011–2013, alleging underpayment of outlier reimbursements.
Plaintiffs seek supplementation of the administrative rulemaking records with various documents (interim rules, impact files, formulas, data, actuarial analyses, early MedPAR files, reconciliation materials).
The Secretary produced certified administrative records and relied in part on records produced in related district cases (e.g., University of Colorado Health), but Plaintiffs contend key materials are missing.
Standard of review: courts review the “whole record” before the agency; plaintiffs must identify omitted documents with concrete, non-speculative evidence that the agency considered them.
The court followed the reasoning of other D.D.C. decisions addressing similar Medicare outlier-record disputes and applied the same principles to determine which materials must be added to the administrative record.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Inclusion of the 2003 interim final rule	The interim final rule (which would have lowered the 2003 fixed-loss threshold) was an alternative considered and must be in the record	Interim rule is irrelevant because Plaintiffs only challenge the 2003 charge-to-cost ratio, not the 2003 threshold	Court ordered inclusion: interim final rule must be added (it evidences alternatives the agency considered)
Inclusion of 2003 impact file	Impact file (data used to set thresholds) was used in 2003 rulemaking and is relevant to ratio/threshold interaction	Impact files are relevant to threshold rulemakings, not the 2003 charge-to-cost rule	Court ordered inclusion: 2003 impact file must be added
Underlying data/working papers for 2003 regulatory-impact analysis	Plaintiffs assert the $145 million impact figure implies underlying analyses/data that should be in the record	No concrete evidence those underlying documents exist or were considered/memorialized	Denied: plaintiffs failed to identify omitted documents; no supplementation required
Formulas, data trims, and prior-years’ formulas for 2011–2013 thresholds	Plaintiffs seek formulas, how MedPAR was trimmed, and prior-years’ formulas to reproduce threshold calculations	Secretary shows formulas/trim methodology are already in the administrative record and explains where they appear	Denied as to further supplementation: record contains the relevant formulas/methodology; trimmed full MedPAR available elsewhere
Actuarial analysis and data underlying cost-to-charge adjustment factors	Plaintiffs say Office of the Actuary work and supporting data must be included	Agency shows the rulemakings disclose the methodology and the Actuary provided a plug-in number; no separate actuarial file exists	Denied: no further actuarial materials exist beyond what is in the record
Early MedPAR (inflation-factor) and reconciliation documents	Plaintiffs want early MedPAR and reconciliation analyses (to verify inflation/reconciliation assumptions)	Early MedPAR contains HIPAA-protected data; produced data suffices to approximate factors; no specific reconciliation materials shown to have been considered	Denied: early update unnecessary and protected; reconciliation support not specified as considered by agency; leave to challenge assumptions on the merits

Key Cases Cited

Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) (administrative review must be based on the whole record)
NRDC v. Train, 519 F.2d 287 (D.C. Cir. 1975) (plaintiff must specify omitted documents to overcome record presumption)
Dist. Hosp. Partners, L.P. v. Burwell, 786 F.3d 46 (D.C. Cir. 2015) (upholding district-court approaches to MedPAR/formula issues)
Univ. of Colo. Health at Mem’l Hosp. v. Burwell, 151 F. Supp. 3d 1 (D.D.C. 2015) (guiding supplementation decisions in related outlier cases)
Lee Mem’l Hosp. v. Burwell, 109 F. Supp. 3d 40 (D.D.C. 2015) (similar analysis on record completeness)
Banner Health v. Sebelius, 945 F. Supp. 2d 1 (D.D.C. 2013) (administrative-record supplementation limits)
Occidental Petroleum Corp. v. SEC, 873 F.2d 325 (D.C. Cir. 1989) (record must delineate the agency’s path to decision)