206 F.Supp.3d 93
D.D.C.2016Background
- Mercy Hospital operates an inpatient rehabilitation facility reimbursed under Medicare’s prospective payment system (42 U.S.C. § 1395ww(j)).
- The Medicare contractor issued final reimbursement notices for fiscal years 2002–2004; Mercy challenged the contractor’s calculation of the Low-Income Percentage (LIP) adjustment, which affects final prospective payment rates.
- Mercy appealed to the Provider Reimbursement Review Board (PRRB); the PRRB sided with Mercy based on precedent addressing a related DSH measure for acute-care hospitals.
- The CMS Administrator vacated the PRRB decision, holding that 42 U.S.C. § 1395ww(j)(8) bars administrative and judicial review of the establishment of prospective payment rates under paragraph (3), and thus the PRRB lacked authority to decide the LIP dispute.
- Mercy sued in federal court seeking review of the Administrator’s decision; the Secretary moved to dismiss for lack of subject-matter jurisdiction based on § 1395ww(j)(8).
- The district court concluded § 1395ww(j)(8) unambiguously bars review of challenges to the LIP adjustment because that adjustment is part of the ‘‘prospective payment rates under paragraph (3),’’ and dismissed the case for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1395ww(j)(8) bars administrative or judicial review of the contractor’s LIP adjustment determination | Mercy: “prospective payment rates” in (8)(B) refers only to base/unadjusted federal per-discharge rates; adjustments under clause (v) (like LIP) remain reviewable | Secretary: The LIP is an ‘‘other factors’’ adjustment within paragraph (3); (8)(B) bars review of the establishment of the final prospective payment rates, including adjustments | Court: Held for Secretary—(8)(B) unambiguously bars review because paragraph (3) defines prospective payment rates as the final, post-adjustment rates |
Key Cases Cited
- Kucana v. Holder, 558 U.S. 233 (presumption in favor of judicial review of administrative action governs ambiguous statutes)
- Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (Congressional intent can rebut presumption of reviewability)
- Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir.) (related DSH/LIP methodology context relied on by PRRB)
- King v. Burwell, 135 S. Ct. 2480 (canons against surplusage are not absolute)
- Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (agency interpretation unsupported by reasoned analysis is not entitled to deference)
- RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065 (specific statutory provisions govern over general ones)