Lead Opinion
Ought implies can.
The District Court was then confronted with the unenviable task of defining the scope and substance of the mandamus order. In an effort to minimize the judiciary’s intrusion on the political branches’ prerogatives, the Court adopted an ends-oriented approach of setting targets for HHS to hit, leaving to the Secretary the choice of means for hitting those targets. But what were the appropriate targets to set? The Healthcare Providers proposed an ambitious four-year timetable. The Secretary criticized that timetable as impossible to achieve lawfully and potentially counterproductive, but offered no alternative. Lacking a competing proposal, the District Court adopted the timetable suggested by the Healthcare Providers. In doing so, however, the Court declined to seriously grapple with the Secretary’s assertion that lawful compliance with such a mandamus order would be impossible. That is, the Court commanded the Secretary to perform an act—clear the backlog by certain deadlines—without evaluating whether performance was possible. We conclude that, notwithstanding the District Court’s earnest efforts to make do with what the parties presented, the failure to seriously test the Secretary’s assertion of impossibility and to make a concomitant finding of possibility was an abuse of discretion. The Court declared that a party ought without regard for whether the party can.
I.
A.-
“Medicare provides federally funded health insurance to disabled persons and those aged 65 or older .... ” Council for Urological Interests v. Burwell,
From start to finish, the administrative appeals process is designed to take less than one year. To keep things moving, the statute sets specific time frames for each of the four levels of the process: sixty days for the first level, 42 U.S.C. § 1395ff(a)(3)(C)(ii); another sixty days for the second level, id. § 1395ff(c)(3)(C)(i); ninety days for the third level, id. § 1395ff(d)(l)(A); and another ninety days for the fourth level, id. § 1395ff(d)(2)(A). “For years, the administrative appeal process functioned largely as anticipated, with its various stages typically completed with
But starting in fiscal year 2011, an unexpected and dramatic uptick in appeals produced a jam in the process. The uptick was attributable to multiple causes, including “a large increase in the number of new beneficiaries as members of the 'baby boom’ generation began to reach 65 and become eligible for Medicare,” and “a growing sense, among at least some members of the provider community, that it is a good business practice to appeal every denied claim.” Decl. of Ellen Murray, Chief Fin. Officer of the Dep’t of Health and Human Servs., J.A. 91-92. Furthermore, as we stressed in our previous decision, much of the increased workload -can be traced back to the congressionally mandated Medicare Recovery Audit Program. AHA I,
As those appeals moved through the process, they piled up at the third level, where an administrative law judge (“ALJ”) reviews the matter de novo. Instead of waiting in line, providers stuck at the ALJ level may skip to the next, through a process called “escalation.” 42 U.S.C. § 1395ff(d)(3). But that choice comes at a cost: the provider must forfeit certain procedural rights, such as a hearing before an independent ALJ. Id. § 1395ff(d)(l), (2). Many claimants, therefore, have been reluctant to “escalate” their appeals, and the ALJ backlog continues to grow. As of June 2, 2017, there was a backlog of 607,402 appeals awaiting review at this level. Status Report of Def. Thomas Price at 2, No. 14-cv-851 (June 5, 2017), ECF No. 56. On its current course, the backlog is projected to grow to 950,520 by the end of fiscal year 2021, id., and “some already-filed claims could take a decade or more to resolve,” AHA I, 812 F,3d at 187. This is, of course, far outside the ninety-day timeframe set by statute. 42 U.S.C. § 1395ff(d)(l)(A).
B.
In 2014, the Healthcare Providers filed suit seeking a mandamus order to compel the HHS Secretary to clear the backlog and comply with the ninety-day statutory timeframe for ALJ hearings.
The Healthcare Providers moved for summary judgment, and the Secretary simultaneously moved to dismiss for lack of subject-matter jurisdiction. Am. Hosp. Assoc. v. Burwell,
On appeal, we reversed the District Court’s dismissal. AHA I,
On remand, the District Court balanced the equities to determine whether mandamus was appropriate. After considering our guidance regarding the factors that counseled for and against the writ’s issuance, the District Court evaluated the political branches’ progress—and potential for progress—toward a solution. But by the Court’s estimation, the current measures were unlikely to yield meaningful progress, and so it concluded that the equities weighed in favor of mandamus.' Having concluded that some relief was warranted, the District Court ordered further briefing and a status conference to determine the scope and substance of that relief.
The Healthcare Providers proposed two sets of options: either a means-oriented plan requiring the Secretary to take specific actions, or an ends-oriented plan setting a timetable for clearing the backlog. The District Court opted for a timetable,
Arguing against the Healthcare Providers’ proposed timetable, the Secretary advanced three contentions relevant here. First, although this Court indicated that curtailment or complete suspension of the RAC program would go a long way to clearing the backlog, AHA I,
The District Court brushed aside the Secretary’s contentions. According to the Court, it “need[ed] not dive into the parties’ debate” over the “legality and propriety” of the reforms .necessary -to comply with the timetable, since it was not ordering any particular reforms. Mandamus Op. at 5. Furthermore, compliance with the timetable would not require violations of the Medicare statute, but rather “simply demanded] that the Secretary figure out how to undertake proper claim substantiation within a reasonable timeframe.” Id. (internal quotation marks omitted). •
Since the Secretary refused to engage with the premise of setting a timetable at all, proposing no alternative targets, the District' Court adopted the Healthcare Providers’ four-year plan: the Secretary was ordered to reduce the current backlog of cases pending at the ALJ level by 30% by December 31, 2017; 60% by December 31, 2018; 90% by December 31, 2019; and 100% by December 31,2020.
After filing an unsuccessful motion for reconsideration, the Secretary appealed the District Court’s order.
II.
“Our consideration of any mandamus petition ‘starts from the premise that issuance of the writ is an extraordinary remedy, reserved only for the most transparent violations of a clear duty to act,’ ” In re Core Commc’ns, Inc.,
We -previously explained that the decision to issue mandamus relief involved two distinct inquiries: one jurisdictional, and one regarding the equitable merits. AHA I,
Instead, we focus now on the equitable merits inquiry, along with the relief that the inquiry produced. We review this part of the District Court’s analysis for abuse of discretion. In re Medicare Reimbursement Litig.,
We conclude that since the Secretary represented that lawful compliance with the mandamus order was impossible, it was an error of law, and therefore an abuse of discretion, to nonetheless order the Secretary to render that performance without first finding that lawful compliance was indeed possible.
Once the District Court determined that an ends-oriented approach of setting targets was the best course of action, it adopted the timetable proposed by the Healthcare Providers. Because it was mandating the ends, not the means, the Court believed that it “needled] not dive into the parties’ debate over” the “legality and propriety” of the reforms necessary to clear the backlog. Mandamus Op. at 5. But this was a misstep. Although true that the Court was mandating no particular reforms, the Secretary would, of course, need to adopt.some reforms to meet the mandated timetable. After all, that was the point of mandamus relief. But if, as the .Secretary insisted, no lawful reforms could be implemented to meet the timetable, then it was an error of law to order the timetable met.
The Secretary first contends that, given changing patterns in appeals, the tools within his discretion—most notably, curtailment or suspension of the RAC program—are not enough to clear the backlog. A major reason, according to the Secretary, is that the RAC program is no longer the.principal cause of the backlog: only 9.5% of new appeals in 2016 were RAC-related, compared to more than 50% in 2013 and 2014. Appellant’s Br. at 18.
This contention is, at best, suspect. Those statistics coincide with a two-year suspension of most of the RAC program, which was instituted while new contracts were being negotiated. See Suppl. Deck of Ellen Murray, Chief Fin. Officer of the Dep’t of Health and Human Servs., J.A. 140-41 (“RAC activity decreased temporarily while [the Centers for Medicare and Medicaid Services] was negotiating a new Statement of Work (SOW) with the RACs, but several other changes took place that are expected to make lasting and continuing reductions to RAC-related appeal receipts.”); see also U.S. Gov’t Accountability Office, GAO-16-366, Medicare Fee-for-Service: Opportunities Remain To Improve Appeals Process 38 n.64 (2016) (explaining that the RAC program was temporarily suspended); id. at 38 (“HHS reported that it expects the number of incoming appeals to increase again when the new [RAC] contracts are awarded and the [RAC] program resumes full operation.”). We are not sold on the Secretary’s suggestion that concerns regarding the RAC program are behind us, and the District Court should scrutinize that claim on remand.
We also share the District Court’s skepticism of the Secretary’s assertion that he has done all he can to reduce RAC-related appeals. As the Court explained, there are “around 300,000 RAC-related appeals pending ALJ review, which constituted a sizable portion—31%—of all pending ... appeals.” Mem. Op. at 13, No. 14-851 (D.D.C. Sept. 19, 2016), ECF No. 38. “Yet the only RAC-related action the Secretary reports to be undertaking or planning to
Nevertheless, the record supports the Secretary’s principal contention that reform of the RAC program and other programmatic tweaks may not be enough. At oral argument, the Healthcare Providers conceded that ALJs currently have the capacity to review only about 90,000 appeals per year. Oral Arg. at 27:05, Am. Hosp. Assoc. v. Price (May 15, 2017) (No. 17-5018). Even in the years when the RAC program was temporarily suspended, HHS received between 200,000 and 250,000 appeals. Therefore, although more reforms of the RAC program may help, even a complete suspension is likely to leave an annual disposition gap of - over 100,000 appeals—appeals that will be piled onto the existing backlog, frustrating HHS’s efforts to comply with the statute’s timeframe and the Court’s mandamus order.
So what could the Secretary do to close the disposition gap and clear the backlog of over a half-million pending appeals? There appears to be ho dispute that mass settlements would play a central role. But the Secretary repeatedly insisted that the type of mass settlement necessary to comply with the Court’s timetable would be illegal. Specifically, the Secretary argued that the Healthcare Providers’ proposal required him “to make payment on Medicare claims regardless of the merit of those claims,” which would “squarely conflict with the Medicare statute.” Defi’s Mot. for Summ. J. at 23, No. 14-cv-851 (Nov. 7, 2016), ECF No. 41 (discussing 42 U.S.C. §§ 1895f, 1395g(a), 1395y(a)(l)(A)). The Court declined to seriously grapple with the Secretary’s contention, explaining matter-of-factly that the timetable “simply demands that the Secretary figure out how to undertake proper claim substantiation within a reasonable timeframe.” Mandamus Op. at 5 (internal quotation marks omitted). But that response gave short shrift to the Secretary’s proffer that “proper claim substántiation within a reasonable timeframe” was impossible.
The, Secretary essentially asserted that the timetable placed him between a rock and a hard place: either violate the Medicare statute by settling reimbursement claims en masse without regard for their merit, or violate the Court’s mandamus order by missing the court-ordered deadlines. By declining to evaluate the Secretary’s claims, the Court was, in effect, saying: “hit the targets by any means necessary.” But if the necessary means were unlawful, the Court could not have mandated them; equity courts, like any other, may not order parties to break the law. See INS v. Pangilinan,
But if only lawful reforms were implemented, the Secretary claimed, compliance with the timetable would be impossible. And just as a court may not require an agency to break the law, a court may not require an agency to render performance that is impossible. See Ala. Power Co. v. Costle,
This principle extends to cases where the impossibility is the result of insufficient congressional appropriations. See, e.g., Morton v. Ruiz,
The District Court made no such finding. The Court also did not evaluate the Secretary’s assertion that the timetable would increase, not decrease, the number of backlogged appeals. The Secretary posited that because strict deadlines would require settlements en masse, the timetable would generate an incentive for claimants to file .additional appeals and hold out for big payouts. By. the Secretary’s account, the mandamus relief would prove counterproductive; the relief would exacerbate the risk of the Court’s order amounting to a command to do the impossible. The Court did not address this claim, perhaps because, as a counterfactual, such an assertion is difficult to test. But the claim was .plausible enough that, as a matter of crafting an equitable remedy, the Court should address it. -
On remand, the Court should determine in the first instance whether, in fact, lawful compliance with the timetable is impossible. We note, however, that the Secretary bears the “heavy burden to demonstrate the existence of an impossibility.” Ala. Power,
Our dissenting colleague believes such a finding is unnecessary, Dissenting Op. at 174-78, and amounts to a hypertechnical procedural .requirement for the District Court to “incant magic words,” id. at 171. But possibility is a necessary , and antecedent condition for the writ’s issuance, according to both our precedent and the collected wisdom of our sister courts. See, e.g., Newman,
We are also not asking for a magic incantation. There is nothing mystical or punctilious about the judiciary giving due consideration to an executive agency’s central argument—made repeatedly and emphatically across three sets of'motions, not solely with allegations but with proffers'of evidence
In sum, it was an abuse of discretion to tailor the mandamus relief without tackling the Secretary’s claims that lawful compliance, would be impossible. We emphasize, however, that the District' Court was assigned an exceptionally difficult project. The Secretary presented a flurry of
⅝ ⅝ ⅜
For the foregoing reasons, we vacate the mandamus order and the order denying reconsideration, and remand to the District Court to evaluate the merits of the Secretary’s claim that lawful compliance would be impossible.
So ordered.
Dissenting Opinion filed by Circuit Judge HENDERSON.
Notes
. This principle-is attributed to the 18th century German philosopher, Immanuel 'Kant. See, e.g., Immanuel Kant, Critique of Pure Reason 548 (Norman Kemp Smith trans., Macmillan 1953) (1781) ("The action-to which the 'ought’ applies must indeed be possible under natural conditions.”); Immanuel Kant, Religion Within- the Limits.of Reason Alone 43 (Theodore M. Greene and Hoyt H, Hudson trans., Harper and Row 1960) (1793) ("[D]uty demands nothing of us which we cannot do.”).
. Fun fact: Even though we refer. to the "writ” of mandamus, both in past decisions and here, the writ was technically abolished. FED. R. CIV. P, 81(b). As a matter of convenience and habit, we continue to refer to the "writ” because the remedy continues to exist in character, if not in name. 28 U.S.C. § 1361 ("The district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer ....” (emphasis added)); see also 33 Charles Alan Wright & Charles H. Koch, Ju„ Federal Practice & Procedure'§ 8299, at 41 (2006) ("Although [Rule 81] abolishe[d] the remedy formally known as mandamus, mandamus in character was not abolished by the rule change.”); id. at 42 ("[C]ou'rts in interpreting [§ 1361] brought over all the old mandamus restrictions and applied them in § 1361 actions.”). Consequently, when we refer to the "writ of mandamus” in this opinion, we mean the remedy provided for in 28 U.S.C. § 1361.
. See, e.g., Def.’s Mot. for Summ. J. at 23, No. 14-CV-851 (Nov. 7, 2016), ECF No. 41 (“It is telling that Plaintiffs are unable to identify a remedy that would not cause the Secretary to violate her other obligations under the Medicare statute.”); id. at 1, 7-8, 11-24; Def.’s Reply in Support of Summ. J. at 9, No, 14-cv-851 (Nov. 23, 2016), ECF No. 45-1 ("Plaintiffs' deadlines indeed would be impossible for the Secretary to meet absent augmentation of her resources and authorities, which only Congress can provide.”); id. at 1-2, 7-11; Def.'s Opp’n to Pis’ Mot. for Summ. J, at 1, 7-8, 11-24, No. 14-CV-851 (Nov. 7, 2016), ECF No., 42; Def.'s Mot. for. Recons, at 1, No. 14-cv-851 (Dec. 15, 2016), ECF No. 49 ("Specifically, the ruling errs in ordering scheduled percentage reductions in the Medicare appeals backlog that the Secretary cannot achieve unless she were to pay pending claims without regard to their merit, which would violate her statutory obligation to pro- ' tect the Medicare Trust Funds.”); id. at 2-3; Def.'s Reply in Support of Mot. for Reconsideration at 2, No. 14-CV-851 (Dec. 23, 2016), , ECF No. 51 ("And notably, Plaintiffs do not and cannot deny that it is impossible for the Secretary to comply with the benchmarks set forth in this Court’s [timetable] unless she offers settlements without regard to the merits of the claims .... ”).
. We note that if, despite his burden, the Secretary fails to offer information that would aid the crafting of mandamus relief, the Court has options. See, e.g., Fed. R. Civ. P. 56(e) (providing that courts may order parties to address facts or "issue any other appropriate order”); Fed. R. Civ. P. 53(a) (authorizing courts to appoint special masters).
Dissenting Opinion
dissenting:
Just 18 months ago, we reversed the district court for holding that it lacked jurisdiction to compel the Department of Health Human Services (HHS), via mandamus, to comply with statutory deadlines for resolving Medicare reimbursement appeals. Am. Hosp. Ass’n v. Burwell,
Why the change of direction? It is not because the district court miscalculated the equities. Maj. Op. 162 (court “thoughtfully and scrupulously weighed the equities”). It is not because the court lacked a basis for issuing the writ. Maj. Op. 168 (court “could potentially reissue the mandamus order”). It is not even because HHS cannot lawfully comply with the court’s order; impossibility is HHS’s primary argument but my colleagues do not consider it. Maj. Op. 168 (reserving issue for district court). Instead they send the case back because of a perceived procedural error: “since [HHS] represented that lawful compliance with the mandamus order was impossible, it was an error of law, and therefore an abuse of discretion, to nonetheless order the [agency] to render that performance without first finding' that lawful compliance was indeed possible.” Maj. Op. 166 (emphasis altered). On both law and fact, I disagree.
A district court need not make a finding of possibility as a precondition to mandamus relief unless the agency makes a strong threshold showing of impossibility. HHS has not met its burden: lawful compliance with the mandamus order here, even if difficult, is not demonstrably impossible. The district court expressly found as much in rejecting HHS’s impossibility claim. And by necessary implication, it
I. BACKGROUND
The majority recounts much of the legal, factual and procedural background, Maj. Op. 161-65, but I offer some additional context.
A. The Backlog
Under Title XVIII of the Social Security Act—formally named the Health Insurance for the Aged Act, Pub. L. No. 89-97, 79 Stat. 286 (July 30, 1965), and better known as the Medicare Act (Act), 42 U.S.C. §§ 1395 et seq.—a healthcare provider (e.g., a hospital) that treats a Medicare patient may seek government reimbursement by filing a claim with an HHS contractor overseen by the agency’s Center for Medicare and Medicaid Services (CMS). 42 U.S.C. § 1395ff(a)(l)-(2); 42 C.F.R. § 405.904(a)(2). If the initial contractor denies reimbursement, the hospital can seek further review from other CMS contractors. 42 U.S.C. § 1395ff(a)(3), (c); 42 C.F.R. § 405.904(a)(2). At the end of the CMS process, a dissatisfied hospital may seek a de novo hearing before an ALJ in HHS’s Office of Medicare Hearings and Appeals (OMHA). 42 U.S.C. § 1395ff(d)(l); 42 C.F.R. § 405.904(a)(2).
Under the Act, the OMHA ALJ “shall”—not merely “ought” to, Maj. Op. 161-62, 169 (emphasis omitted)—“render a decision” within 90 days of the hospital’s request for a hearing. 42 U.S.C. § 1395ff(d)(l)(A). “The word ‘shall’ is ordinarily the language of command.” Alabama v. Bozeman,
The point is obvious but critical. The deadline is not a guideline. HHS has been violating it every day for years on end in failing to timely decide administrative appeals. It now takes an OMHA ALJ an average of nearly three years—more than eleven times longer than permitted—to process a Medicare appeal. HHS, Office of Medicare Hearings and Appeals: Workload Information and Statistics—Average Processing Time by Fiscal Year (May 24, 2017), www.hhs.gov/about/agencies/omha/ about/current-workload/average-processing-time-by-fiscal-year/index.html. As a result, appeals are badly backlogged. At last count, more than 600,000 of them are pending ALJ review. Status Report, Dkt. No. 56, Ex. at 2 (June 5, 2017). HHS projects that the backlog will grow worse with time, snowballing to nearly one million appeals by the end of September 2021. Id. at 8. Absent drastic action, then, it will soon take an ALJ significantly longer than three years to resolve a Medicare appeal.
Granted, the ALJ delays and backlog are not a simple matter of agency lassitude. As the majority explains, Maj. Op. 162-63, the number of appeals has risen sharply since the 2011 fiscal year, largely because (1) much of the baby boom generation has reached age 65 and enrolled in Medicare, Joint Appendix (JA) 84, 91, and (2) the Congress authorized implementation of an allegedly cost-saving but time-consuming program under which Recovery Audit Contractors (RACs) identify and re
B. The Plaintiffs
Even the most conservative statistics show that a considerable number of all appeals, not only appeals from adverse RAC decisions, are “[fjully” meritorious.
The upshot is that hospitals are forced to wait years to receive reimbursements to which the law entitles them now. And they are waiting for quite a lot of money. HHS acknowledges that “[t]he combined billed amounts of the outstanding claims total approximately $6,6 billion.” Br. of Appellant 2. Breaking that number down a bit, plaintiff American Hospital Association (AHA) in 2014 surveyed more than 1,000 of its approximately 5,000 member hospitals and learned that “[t]he value of appealed ... RAC-denied claims” for those hospitals alone exceeded $1.8 billion. JA 48. Considering the appellate success rate, especially in RAC.cases, I believe it is fair to say that on any given day the AHA hospitals. represented in this lawsuit are collectively out of pocket nearly a billion dollars of their own money.
The delays are causing real-world problems. For plaintiff Baxter Regional Medical Center in Arkansas, Medicare reimbursements represent about two-thirds of gross revenue. In 2014, with millions of dollars tied up in Medicare appeals delayed at the ALJ level, Baxter lacked the cash for essentials such as “[purchasing .., beds for its intensive care unit,” “[replacing a failing roof over its surgery department” and “[replacing its twenty-year-old catheterization laboratory,” JA 38. Plaintiffs Rutland Regional Medical Center- in Vermont and Covenant Health in Tennessee face similar, problems, • For them, Medicare reimbursements represent about half of gross revenue. Collectively, they too have millions of dollars tied up in appeals delayed at the ALJ level. Partly because of the delays, Rutland has had to eliminate 32 jobs and Covenant is contemplating whether to cut back patient services.
C. AHA I
Based on HHS’s serial statutory violar tions and with no end in sight, AHA, Baxter, Rutland and Covenant sought relief in district court under the Mandamus Act, 28 U.S.C. § 1361. The court dismissed the complaint for lack of mandamus jurisdic
First, we held that the plaintiffs have a “right to demand ... compliance” with the Act’s “mandatory” “deadlines.” AHA I,
Second, we pointed out that the Act gives HHS “substantial discretion” to limit the scope of the RAC program. AHA I,
Third, although recognizing the district court’s “broad discretion in weighing the equities,” we also suggested that “the unique circumstances of this case” and “the clarity of the statutory duty likely will require issuance of the writ” absent “meaningful progress” by “the close of the next full appropriations cycle”—i.e., by the end of September 2017. AHA I,
D. The Mandamus Order
We issued our mandate in April 2016. Mistaking defeat as victory, HHS sought an 18-month stay of the proceedings on remand so that it could “continue to make meaningful progress in resolving the OMHA backlog.” Defi’s Mot. for Stay, Dkt. No. 30 at 2 (May 25, 2016). Discerning no such progress,
The plaintiffs moved for summary judgment and proposed specific methods for
In December 2016, the district court granted summary judgment to the plaintiffs, concluding that HHS did “not provide enough evidence of progress” to alter the court’s earlier calculation of the equities.
Accordingly, and in an attempt to “intrude as little as possible on [HHS’s] specific decisionmaking processes and operations,” the district court adopted the plaintiffs’ proposed timetable but did not dictate any particular method for eliminating the backlog.
II. ANALYSIS
We review issuance of the writ of mandamus for abuse of discretion, AHA I,
A. The District Court Did Not Have To Make a Finding of Possibility.
My colleagues hold that the district court had to, and failed to, make a “finding” that HHS can lawfully comply with the mandamus order. Maj. Op. 165. Their primary authority appears to be NRDC v. Train,
1. HHS’s burden
At issue in Train were statutory deadlines by which the Environmental Protection Agency (EPA) had to issue guidelines on “the quantity of pollutants that may be discharged into the nation’s waters.”
We vacated and remanded in part. Train,
In light of the failure of the agency to meet its acknowledged duty [as to Group I sources], the District Court’s decision to incorporate a timetable into the order constituted a reasonable step to facilitate supervision of the decree and to ■assure early efforts by the delinquent defendant toward eventual discharge of its statutory responsibility. ... The authority to set enforceable deadlines both of an ultimate and an intermediate nature is an appropriate procedure for exercise of the court’s equity powers to vindicate the public interest.
Id. at 704-05 (footnotes omitted).
Turning to the December 1974 statutory deadline for certain Group II sources, we found—before the deadline had passed— “no present failure on the part of the [EPA] Administrator to meet his responsibility.” Train,
In the majority’s telling, because HHS “represented” that compliance is impossible, the district court had to make a finding of possibility before it could impose a timetable on the agency. Maj. Op. 165; see id. at 168 (district court must make finding of possibility when agency “insists” compliance is not lawfully possible). But nowhere in Train did we suggest that, before ordering phased fulfillment of a statutory obligation an agency is then violating, a court must make a finding of possibility if the agency merely asserts impossibility and makes no threshold “demonstration]” of it.
Not only is the majority’s requirement a new one; it is contrary to sound practice. True, a district court should not hold agen
2. HHS’s arguments
HHS has not made a sufficient threshold “demonstration]” of impossibility to trigger any finding on the matter. Train,
First, although HHS is not authorized to reimburse providers for items and services that are not medically “reasonable and necessary,” 42 U.S.C. § 1395y(a)(l)(A)-(E), its own regulations permit it to settle claims that are less than certain to prove meritorious on a case-by-case basis. For example, CMS may “compromise” some kinds of claims, including ones relating to overpayment, based on “[l]itigative probabilities” and related considerations. 42 C.F.R. §§ 401.613(c)(2), 405.376(d), (h). HHS offers no good reason to reject the statutory interpretation embodied in the regulations. Nor does it cite any other relevant authority prohibiting it from adopting the plaintiffs’ 'primary proposal: offering systematic settlements based on the provider, the type of claim or both. The proposal is a sound one. It does not ask HHS to authorize payments without regard to merit. It asks HHS to evaluate merit “at a higher level of generality” based on statistical sampling. Br. of Appel-lees 23. In district court, HHS’s then-chief financial officer acknowledged that the agency can “resolve pending appeals at OMHA by applying an individualized payment percentage” based on the specific provider’s “historic success rate.” JA 152. Similarly, HHS acknowledges in this Court that it has “globally settled” claims before, dispatching some 380,000 of them based on type without case-by-case adjudication. Br. of Appellant 9.
HHS says the remaining claims in the backlog are not appropriate for “bulk settlements” because they do not appear “homogeneous” enough. Br, of Appellant 26. The agency needs to look more closely. HHS’s chief financial officer admitted that a single durable medical equipment supplier is responsible for “more than 24% of all pending appeals” at the.ALJ level. JA 138. Suppose, hypothetically, that the supplier’s historic success rate with the ALJs is 50
'Granted, bulk settlement poses hazards. If HHS, under the thumb of a mandamus order, looks too willing to settle outside the parameters of case-by-case adjudication, it weakens its bargaining position; enables “hospitals with below-average success rates [to] accept at disproportionately high rates”; and may incidentally encourage the filing of baseless claims. Reply Br. of Appellant 9; see Status Report, Dkt, No. 55, Ex. at 4 (Mar. 5, 2017) (according to acting chief financial officer, some claimants are delaying settlement “in the anticipation that relief mandated by the [district court] will yield a higher payout”). Indeed, the percentage of fully successful ALJ appeals has declined in recent years, see HHS, Decision Statistics, supra pp. 4-5, which might indicate that some bad actors have injected dubious claims into the backlog in hopes of artificially favorable settlements imposed by the courts. .
' But bargaining power is a two-way street. Subjecting the average claimant to a waiting period more than eleven times longer than the statute permits—and thereby ..choking off. cash flow for basic operational needs—unfairly weakens the claimant’s position, giving it every incentive to settle for only a fraction of what it might win after-years of litigation. In other words, the backlog undermines both parties. Thus, if done right, a bulk settlement could well be negotiated in near equipoise. HHS has offered nothing better than rapk speculation for concluding otherwise. And the burden, remember, is on HHS.
In any event, the district court did not mandate settlement, let alone dictate particulars. HHS is therefore free to mitigate hazards based on its expertise and experience. One way to do so is to focus on high-volume claimants: as mentioned, just a handful account for hundreds of thousands of appeals in the backlog, JA 138, and each is presumably a sizable company with a long-term reputational stake and a predictive success rate rooted in a meaningful sample size. To further ensure a level playing field and to dissuade bad actors, the plaintiffs reasonably suggest that HHS “requir[e] a provider to settle all eligible appeals and ... exténd[ ] an offer only to those claims pending at a particular date,” Br. of Appellees 26. The agency has undertaken such measures before. CMS, Frequently Asked Questions—Hospital Appeals Settlement for Fee-for-Service Denials Based on Patient Status Reviews for Admissions Prior to October 1, 2013, at 3, https://gqo.gl/YH5cC6.
■ Second, although major RAC reform might not alone resolve the backlog, see Br. of Appellant 18, it will go further than HHS lets on. The program was mostly
As of April 2016, as many as 300,000 appeals from adverse RAC decisions were pending ALJ review. True, that number dipped to about 156,000 by the end of September 2016, before new RAC contracts took effect in October. But even that artificially low number represents a good chunk of the backlog, which supports the supposition—voiced in our earlier decision—that cutting back the discretionary RAC program will go some distance toward statutory compliance. AHA I,
Like the majority, Maj. Op. 166, I view HHS’s RAC-related efforts to date as “weak medicine for an agency facing mandamus.” Perhaps HHS should suspend the RAC program altogether until it eliminates the backlog. The district court properly left that decision to the agency.
B. Even If The District Court Had To Make A Finding, It Did.
Assume arguendo the district court was required to make a finding of possibility. The point of such a requirement, I take it, is to ensure that the court does not punish agency officials with contempt until it satisfies itself that they can rightly be blamed
First, and most importantly, the district court in fact made a finding of possibility. What else could it have meant in expressly rejecting HHS’s claim of impossibility? Specifically, the court rebuffed HHS’s contention that the timetable requires the agency to ‘“make payment on Medicare claims regardless of ... merit’ ” and therefore ‘“conflicts] with the Medicare statute.’ ”
Other aspects of the district court’s decision reinforce the point. My colleagues reaffirm that a district court “contemplating the equities” “may not require an agency,” on pain of contempt, “to render performance that is impossible.” Maj. Op. 167; see Train,
Second, even if HHS violates the timetable, the order does not make contempt an automatic consequence. At that point, rather, the “[plaintiffs may move for default judgment or to otherwise enforce the writ of mandamus.”
C. Even If the District Court Failed To Make A Required Finding, Vacatur And Remand Are Unwarranted.
In my estimation, even if the majority were right to find error, its remedy would nonetheless be wrong. Because we review a district court’s judgment, not its rationale, we can sometimes “sustain a ‘right-result, wrong-reason’ decision.” People’s Mojahedin Org. of Iran v. Dep’t of State,
My colleagues acknowledge that HHS will at some point have the “heavy burden” of proving impossibility. Maj, Op. 168 (quoting Ala. Power,
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This case is not about' the difference between ought and cannot. It is about the difference between shall and will not. The district court correctly rejected the agency’s assertion of impossibility. Accordingly, I respectfully dissent.
. If there is a “growing sense” among providers “that it is a good business practice to appeal every denied claim,” Maj. Op. 163 ' (quoting JA 92), it is probably because they often prevail.
. The chief financial officer’s declaration suggests the rate is higher, JA 138, but at oral argument HHS said the declaration is not "artfully phrased” in that regard, Oral Arg. Recording 12:45-13:41. The particular number is immaterial for my purpose; the agency can offer the supplier a settlement commensurate with the supplier’s historic success rate, whatever it is.
. I recognize that, if not for today's remand, the timetable's first deadline would be only a few months away.
r In response, the majority repeats with string parentheticals that (1) the district court cannot, by mandamus, demand the- impossible, Maj, Op, 168; and (2) HHS asserted that compliance with the court’s timetable is impossible, Maj, Op. 169 n. 3. I do not dispute either component of that analysis. But an assertion is not a " demonstration].” Train,