560 F.Supp.3d 295
D.D.C.2021Background
- FirstHealth Moore Regional Hospital received a June 9, 2015 NPR from the MAC for FY 2011 showing an overpayment; the hospital appealed to the PRRB within 180 days and also requested a MAC reopening.
- Plaintiff conditioned withdrawal of its PRRB appeal on the MAC’s agreement to reopen; the MAC agreed and plaintiff withdrew the PRRB appeal.
- The MAC issued a September 27, 2017 Revised NPR that increased reimbursement on some bad-debt items but left other contested items unchanged.
- Plaintiff sought reinstatement of its withdrawn PRRB appeal within three years (August 13, 2019), arguing the MAC ‘only partially accounted’ for its issues; the MAC opposed reinstatement.
- The PRRB denied reinstatement (Feb. 19, 2020) because the MAC had issued a Revised NPR that addressed the reopened issues; plaintiff sued under the APA.
- The court granted summary judgment to HHS: it found the withdrawal rule ambiguous and the agency’s non-mandatory reading reasonable; reinstatement was properly denied and the regulatory bar on appealing unrevised reopened matters controls.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PRRB Rule stating 'it is the Provider’s responsibility to withdraw' makes withdrawal mandatory | The wording created a mandatory rule forcing withdrawal of issues when a MAC agreed to reopen, unlawfully stripping appeal rights | The term 'responsibility' is ambiguous; Rules use explicit mandatory language elsewhere; the provision is best read as non-mandatory | Court: Ambiguous; defers to HHS under Kisor/Auer; agency reasonable to read rule as voluntary and lawful |
| Whether PRRB erred in denying reinstatement under Rule 47.2.2 because the MAC failed to fully resolve issues | Reinstatement is nondiscretionary when MAC did not fully resolve originally appealed issues; here MAC only partially accounted for issues so reinstatement required | MAC performed the promised review and issued a Revised NPR addressing the issues; plaintiff’s conclusory claim lacks particulars | Court: PRRB correctly denied reinstatement—MAC issued a Revised NPR that dealt with the reopened issues; plaintiff offered no evidence of unexamined issues |
| Whether PRRB rules (and practice) deprived plaintiff of statutory PRRB appeal rights | The combined effect of mandatory withdrawal plus denial of reinstatement unlawfully deprived statutory appeal rights | Plaintiff voluntarily pursued reopening and thereby invoked the regulatory consequences; regulations bar appeals of reopened-but-unrevised matters | Court: No deprivation—regulation 42 C.F.R. §405.1889(b)(2) forecloses appeals of matters reopened but not revised; plaintiff was not forced to choose reopening |
| Whether plaintiff waived its challenge by not raising the rule interpretation earlier (issue exhaustion) | The challenge arose only after PRRB denied reinstatement; plaintiff did not forfeit the right to litigate the rule’s legality in court | PRRB argues plaintiff could have raised the rule challenge earlier before the agency and thus waived it | Court: No waiver—plaintiff’s entitlement to judicial review arose when PRRB denied reinstatement; exhaustion argument fails here |
Key Cases Cited
- Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692 (D.C. Cir. 2014) (describing Medicare’s complexity)
- New LifeCare Hosps. of N.C., LLC v. Becerra, 7 F.4th 1215 (D.C. Cir. 2021) (summarizing Medicare cost-report and PRRB framework)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (Auer/Kisor deference requirements for agency interpretations of ambiguous rules)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary and capricious standard under the APA)
- HCA Health Servs. of Okla., Inc. v. Shalala, 27 F.3d 614 (D.C. Cir. 1994) (upholding PRRB procedural constraints on post-reopening appeals)
- Edgewater Hospital, Inc. v. Bowen, 857 F.2d 1123 (7th Cir. 1988) (case HHS sought to overrule by narrowing post-reopening appeal scope)
- Carr v. Saul, 141 S. Ct. 1352 (2021) (discussing when courts should impose issue-exhaustion requirements on administrative challenges)