407 F.Supp.3d 28
D.D.C.2019Background:
- Plaintiffs are two hospitals (Franciscan St. Margaret and Franciscan St. Anthony) that received Revised Notices of Program Reimbursement (RNPRs) reducing Medicaid-eligible days in their DSH calculations for FY reimbursements.
- In 2015 a related hospital (St. Francis) filed a common-issue group appeal with the PRRB challenging treatment of dual-eligible days (an SSI/Medicare-fraction issue); that appeal was later transferred and closed.
- Plaintiffs requested the PRRB to reinstate the St. Francis common-issue group appeal and add them, arguing the RNPRs implicated related DSH issues; the contractor objected because Plaintiffs’ RNPRs did not revise dual-eligible days or the Medicare (SSI) fraction.
- The PRRB denied reinstatement/joining, concluding Plaintiffs’ RNPRs only specifically revised Medicaid-fraction days and therefore did not present a common question of fact or law with the St. Francis appeal.
- Plaintiffs sued under the Administrative Procedure Act seeking to set aside the Board’s decision; cross-motions for summary judgment were filed.
- The district court applied the APA’s deferential arbitrary-and-capricious standard, upheld the Board’s decision, denied Plaintiffs’ motion, and granted Defendant’s cross-motion.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs could join/reinstate the St. Francis common‑issue group appeal | St. Francis’ appeal touched DSH treatment generally; because Plaintiffs’ RNPRs changed their Medicaid fraction (affecting DSH), they should join the group appeal | Plaintiffs’ RNPRs did not specifically revise dual‑eligible or Medicare (SSI) fraction — only Medicaid‑fraction days — so no common question exists | Board acted reasonably: no common question; denial to reinstate/join upheld |
| Whether an RNPR that revises only one fraction allows appeal of other fractions or broader DSH adjustment | Plaintiffs: overall DSH adjustment was altered so they should be able to join a related group appeal | Defendant: regulations allow appeal only of matters "specifically revised" in an RNPR; cannot broaden to unmodified fractions | Held for Defendant: appeals limited to specifically revised matters; expansive view rejected |
| Whether Board’s decision was arbitrary and capricious under the APA | Plaintiffs: Board misapplied common‑issue/group rules and PRRB rules requiring narrow issue statements | Defendant: Board followed statute, regulations, and PRRB rules (issues must be narrow; group appeals require common questions) | Held for Defendant: decision not arbitrary or capricious; consistent with law and rules |
Key Cases Cited
- Catholic Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914 (D.C. Cir. 2013) (explains purpose and structure of DSH adjustment)
- Sebelius v. Auburn Regional Medical Center, 568 U.S. 145 (2013) (discusses SSI/Medicare fraction terminology and treatment)
- Northeast Hospital Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir. 2011) (summarizes formulas for DSH fractions)
- Baptist Memorial Hospital–Golden Triangle v. Sebelius, 566 F.3d 226 (D.C. Cir. 2009) (PRRB may dismiss appeals that fail to meet statutory/regulatory requirements)
- Little Company of Mary Hospital v. Sebelius, 587 F.3d 849 (7th Cir. 2009) (RNPR that adjusts only one fraction does not permit appeal of another)
- American Bioscience, Inc. v. Thompson, 269 F.3d 1077 (D.C. Cir. 2001) (district court functions as an appellate tribunal in APA review)