37 F. Supp. 3d 348
D.D.C.2014Background
- Plaintiffs Emanuel Medical Center and Merced Community Medical Center ("Providers") appealed PRRB jurisdictional rulings about revised Notices of Program Reimbursement (NPRs) involving Disproportionate Share Hospital (DSH) payment calculations for FY 1991–1992.
- Providers submitted cost reports; intermediaries reopened and issued revised NPRs that increased the DSH adjustments by incorporating audited Medi‑Cal (California Medicaid) days. Emanuel’s revised NPR also (as conceded by the Secretary) adjusted the SSI fraction. Merced’s revised NPRs reapplied the original SSI fraction.
- Providers appealed the revised NPRs to the PRRB; the SSI fraction issue was transferred into a multi‑hospital "SSI Group Appeal."
- The PRRB issued a jurisdictional decision holding it lacked jurisdiction over appeals from revised NPRs unless the specific issue (e.g., SSI%) was reopened and adjusted by the intermediary; it found Merced’s SSI fraction was not adjusted and thus dismissed Merced’s appeals but later accepted that Emanuel’s SSI fraction was adjusted.
- Plaintiffs sued for review; the district court applied Chevron deference to the Secretary’s "issue‑specific" interpretation of reopening regulations, remanded Emanuel’s appeal to the agency, and upheld the PRRB’s lack of jurisdiction over Merced’s appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PRRB has jurisdiction to review issues on appeal from a revised NPR absent a specific reopening/adjustment of that issue | Merced: a DSH recalculation (or reconsideration of DSH) necessarily revisits all DSH components (including SSI%) and thus is appealable | Secretary: PRRB jurisdiction over revised NPRs is limited to the particular issues the intermediary reopened/adjusted; other issues remain time‑barred | Court: Adopted HCA/Chevron framework; upheld issue‑specific rule and held Merced failed to show SSI% was reopened, so no jurisdiction |
| Whether agency interpretation of reopening regs is reasonable and entitled to deference | Merced: challenges deference and argues DSH is a single indivisible issue | Secretary: interpretation is permissible, preserves statutory 180‑day appeal limitation and accords with regulatory text | Court: Secretary’s issue‑specific interpretation is reasonable and entitled to Chevron deference |
| Whether the PRRB acted arbitrarily/inconsistently in applying issue‑specific rule to DSH adjustments | Merced: Secretary applied standard inconsistently to DSH cases and intermediate positions create a Catch‑22 | Secretary: decisions and record show consistent application; intermediary positions do not bind HHS | Court: No meaningful inconsistency shown; PRRB's decision not arbitrary or capricious |
| Appropriate remedy for Emanuel (whose revised NPR did adjust SSI%) | Emanuel: seeks remand and relief consistent with CMS Ruling CMS‑1498‑R | Secretary: concedes SSI% was adjusted and requests remand to implement relief | Court: Remanded Emanuel’s appeal to agency for resolution consistent with opinion |
Key Cases Cited
- HCA Health Servs. of Okla. v. Shalala, 27 F.3d 614 (D.C. Cir. 1994) (upholding Secretary's issue‑specific interpretation of reopening regulations under Chevron)
- Auburn Reg'l Med. Ctr. v. Sebelius, 133 S. Ct. 817 (U.S. 2013) (discusses SSI fraction and DSH methodology)
- Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399 (U.S. 1988) (PRRB's broad review of original NPRs)
- Baystate Med. Ctr. v. Secretary of HHS, 545 F. Supp. 2d 44 (D. Mass. 2008) (district court finding CMS miscalculated SSI fractions; prompted CMS Ruling 1498‑R)
- French Hosp. Med. Ctr. v. Shalala, 89 F.3d 1411 (9th Cir. 1996) (limiting PRRB review when intermediary did not reconsider specific components on reopening)
- In re Polar Bear Endangered Species Act Litig., 709 F.3d 1 (D.C. Cir. 2013) (standards for arbitrary and capricious review)