828 F. Supp. 2d 473
N.D.N.Y.2011Background
- Kingston and Benedictine Hospitals seek judicial review of the Secretary’s denial of Medicare reimbursements for offsite resident training costs for 2000 and 2001.
- Intermediary NGS issued NPRs disallowing time spent by residents in non-hospital settings, leading to substantial disallowances.
- The Medicare statute requires counting resident time in patient care if the hospital bears most training costs; regulations impose a written agreement requirement to show such costs.
- The Review Board upheld the NPRs, finding the written agreement requirement properly prescribed and not satisfied by the hospitals’ historical undertakings.
- The court consolidates Kingston and Benedictine’s appeals; it grants the Secretary’s motion in part, remands for remand-specific determinations, and denies relief to Kingston/Benedictine on some points.
- The action is remanded to determine whether the April 26, 2001 Affiliation Agreement satisfied the written agreement requirement for July 1, 2001–December 31, 2001; and, if so, whether Kingston incurred all or substantially all training costs in the nonhospital setting for that period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the written agreement rule | Kingston argues the rule is contrary to law. | Secretary’s rule is a valid interpretation under Chevron. | The rule is valid and properly prescribed. |
| Sufficiency of 1983/2001 agreements | The 1983 undertaking and 2001 agreement should satisfy the rule. | Record shows deficiencies under the rule. | As to 1983 agreement insufficient; remand on 2001 agreement merits. |
| Effect of 2001 Affiliation Agreement timing | Affiliation Agreement was effective before rotations began and should satisfy the rule. | Timing as of July 1, 2001; Board relied on Hallmark; remand proper. | Remand to assess whether the 2001 agreement satisfies the rule for July 1–Dec 31, 2001. |
| Section 713 exemption applicability | Section 713 exemption should apply to pre-2004 training if intermediaries found reimbursable in 2004. | Secretary reasonably construed Section 713 to apply to 2004 calendar year and prior-stage conditions. | Section 713 does not grant relief here; exemption denied. |
| Chevron deference and interpretation of Section 713 | Secretary’s interpretation deemed reasonable; upheld. |
Key Cases Cited
- Covenant Med. Ctr., Inc. v. Sebelius, 424 Fed.Appx. 434 (6th Cir. 2011) (agency interpretation remanded for further analysis under Chevron)
- Cottage Health Sys. v. Sebelius, 631 F.Supp.2d 80 (D.D.C. 2009) (statutory interpretation and written agreement framework sustained)
- Mayo Found. for Med. & Research v. United States, 131 S. Ct. 704 (2011) (Chevron step two reasonableness in agency interpretation)
- St. Mary’s Hosp. of Troy v. Blue Cross & Blue Shield Ass’n, 788 F.2d 888 (2d Cir. 1986) (arbitrary-and-capricious review applying APA standards)
- Fla. Power & Light Co. v. Lorion, 470 U.S. 729 (1985) (fundamental APA standard for agency decision review)
- Mei Fun Wong v. Holder, 633 F.3d 64 (2d Cir. 2011) (Chevron two-step framework applied to agency interpretations)