University Medical Center, Inc. v. Sebelius
856 F. Supp. 2d 66
D.D.C.2012Background
- Hospital seeking Medicare payments for off-site dental resident training costs in 1999; wrote agreement with off-site University of Louisville on Dec 20, 1999 retroactive to Jan 1, 1999.
- Secretary denied payments asserting the 1998 rule requires a contemporaneous written agreement in effect before training occurs.
- Intermediary counted only training after Dec 20, 1999, excluding earlier period, reducing reimbursement by about $122,000.
- Regulation 42 C.F.R. § 413.86(f)(4) requires a written agreement; 1999 amendment clarified costs related to supervisory activities.
- Court grants Secretary summary judgment, upholding requirement as reasonable, with adequate notice, and consistency with statute.
- Preamble and agency communications surrounding the rule supported the contemporaneous requirement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether written agreement requirement aligns with the statute | Cottage Health controls; written agreement not required before training | Secretary authorized written agreement to ensure proper costs | No violation; requirement reasonable and permissible under statute |
| Whether contemporaneous (pre-training) requirement is valid | Text does not mandate pre-training execution | Rule and preamble indicate need before counting training | Not plainly erroneous; Secretary entitled to deference under Chevron |
| Whether plaintiff had adequate notice of contemporaneous requirement | Notice deficiencies; preamble insufficient | Notice provided via regulation text and preamble; AAMC letter clarifies | Adequate notice; fair opportunity to comply |
Key Cases Cited
- Covenant Med. Ctr. v. Sebelius, 424 F. App'x 434 (6th Cir. 2011) (agency discretion to require written documentation upheld)
- Loma Linda Univ. Med. Ctr. v. Sebelius, 408 F. App'x 383 (D.C. Cir. 2010) (notice required before denial of Part A IME/GME payments)
- Medcenter One Health Sys. v. Sebelius, 635 F.3d 348 (8th Cir. 2011) (upholding agency interpretation granting reimbursement when criteria met)
- Thomas Jefferson Univ. v. Shalala, 512 U.S. 510 (1994) (Skilled deference to agency interpretation of its regulations)