National Association for Home Care & Hospice, Inc. v. Sebelius
77 F. Supp. 3d 103
D.D.C.2015Background
- The ACA added a requirement that physicians “document” a face-to-face encounter with home health patients for Medicare payment; HHS regulations interpret “document” to require a written explanation (a “narrative”) linking clinical findings to homebound status and need for services.
- National Association for Home Care & Hospice (NAHC), representing ≈6,000 providers, sued challenging the narrative requirement as beyond HHS’s statutory authority, unconstitutionally vague (Fifth Amendment), and urging that HHS consider the full patient record. NAHC sought declaratory and injunctive relief, not payment for claims.
- Some NAHC members had claims denied for failing to meet the narrative requirement; NAHC identified Liberty Healthcare Corp. as a harmed member and provided a declaration to establish standing.
- HHS moved to dismiss for lack of standing, failure to exhaust administrative remedies/presentment under 42 U.S.C. § 405, and for failure to state an APA/Fifth Amendment claim.
- The court found NAHC has associational standing (identified an injured member), dismissed NAHC’s Fifth Amendment and record-based claims for lack of administrative exhaustion, but excused exhaustion as futile for NAHC’s facial statutory-authority challenge to the narrative requirement and reserved the statutory issue for summary judgment briefing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | NAHC represents members injured by denials; association may sue on members’ behalf | NAHC failed to identify specific injured members so lacks standing | NAHC has standing after identifying Liberty Healthcare by affidavit |
| Presentment (§405) | Members submitted claims denied due to narrative, satisfying presentment | NAHC must present constitutional/statutory objections to agency before suit | Presentment satisfied because members submitted claims and received denials; specific legal arguments need not be presented to agency |
| Exhaustion of administrative remedies | Exhaustion should be excused as futile and causing irreparable harm | §405 requires exhaustion; court should defer to agency and dismiss | Exhaustion excused for statutory-authority (facial) claim as futile; not excused for Fifth Amendment/vagueness and record-based claims, which were dismissed for lack of jurisdiction |
| Statutory-authority (APA) | Regulation exceeds Congress’s delegation; “document” does not authorize narrative requirement | Regulation reasonably interprets ambiguous statute to require narrative explanation | Court declined to resolve on motion to dismiss; permitted statutory claim to proceed to cross-motions for summary judgment |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (standing and redressability principles)
- Mathews v. Eldridge, 424 U.S. 319 (presentment and exhaustion requirements under §405)
- Heckler v. Ringer, 466 U.S. 602 (Medicare Act challenges must proceed under §405)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (channeling of Medicare challenges through agency; limits on judicial review)
- Summers v. Earth Island Inst., 555 U.S. 488 (associational standing requires identification of injured members)
- Bowen v. City of New York, 476 U.S. 467 (factors guiding waiver of exhaustion)
- Salfi v. Old Guard, 422 U.S. 749 (§405(g) and exhaustion context)
- Tataranowicz v. Sullivan, 959 F.2d 268 (D.C. Cir.) (excusing exhaustion for facial legal challenges to agency practice)