DCH Regional Medical Center v. Alex M. Azar II
925 F.3d 503
D.C. Cir.2019Background
- Medicare pays "DSH" (disproportionate share hospital) additional payments via a statutory formula consisting of three factors that the Secretary "estimates." 42 U.S.C. § 1395ww(r)(2).
- Congress expressly barred administrative or judicial review of “any estimate of the Secretary” used to determine those factors and of the "period selected by the Secretary." 42 U.S.C. § 1395ww(r)(3).
- HHS issued the FY 2014 Rule setting data sources/methodologies for computing the factors and stated that after a hospital merger, Factor 3 would be calculated under the surviving hospital’s certification number.
- DCH Regional Medical Center merged with Northport in 2011; DCH’s FY2014 Factor 3 and DSH payment were calculated using only DCH’s data (not Northport’s).
- DCH sought review—challenging the Secretary’s methodology for calculating Factor 3 and asking for vacatur and recalculation— but the PRRB and the district court concluded § 1395ww(r)(3) precluded review; DCH appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1395ww(r)(3) bars judicial review of the Secretary’s methodology used to generate estimates for DSH payments | DCH: The statute bars review of estimates themselves but not the underlying methodology; methodology challenges remain reviewable | HHS: The statutory bar on "any estimate" reaches methodological choices because methodology is inextricably intertwined with the estimate | The court held the bar covers methodology as well; methodology challenges necessarily attack the estimates and are precluded |
| Whether a Leedom/Kyne "ultra vires" exception permits district-court review despite the express bar | DCH: Even if § 1395ww(r)(3) applies, the court may set aside agency action that plainly exceeds statutory authority (ultra vires) | HHS: Kyne exception is narrow; the bar here is express and DCH does not allege an obvious clear statutory violation | The court held Kyne/Leedom does not apply: the preclusion is express and DCH did not plead an extreme, obvious violation of a clear statutory command |
Key Cases Cited
- Florida Health Sciences Ctr., Inc. v. Sec’y of HHS, 830 F.3d 515 (D.C. Cir. 2016) (selection of data used to estimate uncompensated care is inextricable from the estimate and unreviewable under § 1395ww(r)(3))
- Leedom v. Kyne, 358 U.S. 184 (1958) (district-court review may be available for agency actions plainly beyond statutory authority in limited circumstances)
- Bd. of Governors of the Fed. Reserve Sys. v. MCorp Fin., Inc., 502 U.S. 32 (1991) (limits on the Kyne exception; courts should not lightly bypass statutory review bars)
- McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479 (1991) (distinguishes review of procedures from review of individual determinations; preclusion may leave room for process claims in certain contexts)
- Parkview Med. Assocs. v. Shalala, 158 F.3d 146 (D.C. Cir. 1998) (preclusion of review of particular adjudicatory decisions does not always bar challenges to general rules, but limited where relief seeks to undo individual decisions)
- Mercy Hosp., Inc. v. Azar, 891 F.3d 1062 (D.C. Cir. 2018) (adjustments used to calculate barred payment rates are inextricably intertwined with the rates and thus unreviewable)