H. Lee Moffitt Cancer Ctr. & Research Inst. Hosp., Inc. v. Azar
324 F. Supp. 3d 1
D.C. Cir.2018Background
- Moffitt Cancer Center sued HHS (Azar, head of HHS) under the APA, challenging HHS’s refusal to make a statutorily mandated OPPS payment adjustment for cancer hospitals effective for services furnished on or after January 1, 2011 (ACA § 3138 / 42 U.S.C. § 1395l(t)(18)).
- Section 3138 required HHS to study cancer-hospital outpatient costs and, if higher, to "provide for an appropriate adjustment" under 42 U.S.C. § 1395l(t)(2)(E) effective Jan. 1, 2011; adjustments must be budget-neutral.
- HHS’s 2010 proposed rule found cancer hospitals costlier and proposed large prospective OPPS increases offset by reduced payments to other hospitals; commenters raised concerns (TOPs interaction, beneficiary cost sharing, equity).
- HHS postponed finalizing an adjustment for 2011, then in Nov. 2011 finalized a different approach effective Jan. 1, 2012 (making aggregate adjustments at cost-report settlement and accounting for TOPs), explicitly declining to make the adjustment retroactive to 2011.
- Moffitt appealed provider reimbursement decisions, then filed this APA suit seeking judicial relief to make the adjustment effective for 2011 (seeking ~$7.4M), and both parties moved for summary judgment. The district court remanded for HHS to consider and adopt an appropriate 2011 adjustment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statute required HHS to make the adjustment effective Jan. 1, 2011 (including via retroactive application) | Moffitt: statutory language is mandatory—if HHS determined costs were higher it "shall provide for an appropriate adjustment ... effective for services furnished on or after Jan. 1, 2011." HHS must apply it to 2011 services. | HHS: statute is silent about missed timing; Congress likely assumed HHS would act by Jan 1, 2011; where silent, agency’s interpretation deserves Chevron deference and HHS reasonably deferred effective date to 2012. | Court: Statute unambiguous on effective date; HHS failed to comply and must provide an appropriate adjustment for 2011. |
| Whether the court has jurisdiction to review HHS’s refusal to make a 2011 adjustment given OPPS’s judicial-review bar | Moffitt: the bar applies to adjustments actually promulgated under § (t)(2)(E), but not to a refusal to consider or to comply with a separate statutory command; ultra vires review remains for facial statutory violations. | HHS: decisions not to make adjustments are equivalent to making an adjustment of zero and thus fall under the statutory bar; courts lack jurisdiction. | Court: Has jurisdiction to review refusal to make the 2011 adjustment (a facial statutory violation). But lacks jurisdiction to challenge the effective date of the 2012 adjustment HHS actually promulgated (that adjustment is covered by the statutory bar absent an ultra vires showing, which was not made). |
| Whether budget-neutrality or OPPS’s prospective nature requires refusing retroactivity | Moffitt: HHS’s equitable authority under § (t)(2)(E) and prior retroactive adjustments show HHS can achieve budget neutrality and retroactivity; no conflict shown. | HHS: retroactivity would conflict with budget neutrality and OPPS’s prospective design; retroactive offsets would disrupt administration. | Court: Budget neutrality and prospective features do not render the statutory effective date ambiguous; HHS failed to show retroactivity impossible or absurd here. |
| Appropriate remedy | Moffitt: vacate the rule’s Jan. 1, 2012 effective date, direct HHS to set Jan. 1, 2011 effective date, and order payment adjustments to Moffitt for FY2011/FY2012. | HHS: (implicit) court should defer to agency design and deny broad relief. | Court: Declined to order a specific retroactive payment or to change the 2012 rule’s effective date; remanded to HHS to consider and adopt an appropriate adjustment for calendar year 2011 and to act promptly. |
Key Cases Cited
- Univ. of Tex. M.D. Anderson Cancer Ctr. v. Sebelius, 650 F.3d 685 (discussing OPPS transition payments and implementation issues)
- Amgen, Inc. v. Smith, 357 F.3d 103 (precluding judicial review of adjustments under § (t)(2)(E) except for narrow ultra vires challenges)
- Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (agency deference framework)
- Landgraf v. USI Film Prods., 511 U.S. 244 (presumption against retroactivity)
- Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (limitations on retroactive rulemaking absent clear congressional authorization)
- Nat'l Petrochem. & Refiners Ass'n v. EPA, 630 F.3d 145 (agency delay and consequences for statutory deadlines)
- Mittleman v. Postal Regulatory Comm'n, 757 F.3d 300 (scope of ultra vires review)