Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA )
DISTRICT HOSPITAL PARTNERS, L.P., )
d/b/a The George Washington University )
Hospital, et al. )
)
Plaintiffs, )
)
v. ) Civil Action No. 11-0116 (ESH) )
KATHLEEN SEBELIUS, )
Secretary, Department of Health and )
Human Services )
)
Defendant. )
)
MEMORANDUM OPINION AND ORDER
Before this Court are plaintiffs’ motions to compel the Secretary to complete the administrative record by including six classes of materials, and to stay the briefing of the parties’ cross-motions for summary judgment. For the reasons stated herein, the motion to compel is granted in part with regard to the public comment submitted by the Federation of American Hospitals and the February 13, 2003 Outlier Correction Interim Final Rule, and the motion to stay is denied as moot.
BACKGROUND Plaintiffs, who own and operate 186 hospitals that participate in the Medicare program, sued the Secretary of the Department of Health and Human Services (“Secretary”) in her official capacity, alleging that her methodology for setting thresholds for outlier payments to their hospitals, under the Medicare Act, 42 U.S.C. § 1395 et seq. , was arbitrary and capricious for the Inpatient Prospective Payment System (“IPPS”) rules for federal fiscal years (“FFYs”) 2004, 2005, and 2006. ( Mem. Op., July 5, 2011 [Dkt. No. 14] at 1.) The factual and procedural *2 history of this case is laid out in this Court’s earlier Memorandum Opinions, and it need not be repeated here. ( See id. at 6-7; see also Mem. Op. and Order, Sept. 10, 2013 [Dkt. No. 111] at 2- 5.)
Plaintiffs seek to compel the Secretary to include in the administrative records the following materials:
1. Other than those already designated, the complete and “trimmed” version of all MedPAR files (such as the FFYs 2000 and 2001 MedPAR files), Impact files, and other data files (including HCRIS files) before the Secretary when she established the outlier thresholds for FFYs 2004-2006; 2. All public comments received by the Secretary addressing the outlier thresholds for FFYs 2004-2006, including the Federation of American Hospitals’ FFY 2004 comment seeking a threshold of $25,375 for that FFY, or other evidence confirming that she properly considered all such comments during the Rulemakings;
3. The data used by the Secretary to “approximate” the CCRs from tentatively-settled hospital cost reports for the purpose of setting the FFY 2004 threshold;
4. All data used by HCDI, the Secretary’s contractor, to develop the outlier thresholds for FFYs 2004-2006 on the Secretary’s behalf, or other evidence describing such data and the results of HCDI’s analysis of such data;
5. The Secretary’s Outlier Correction Interim Final Rule (“IFR”) received by the Office of Management and Budget for review on February 12, 2003, and all non-privileged communications between the Secretary and OMB relating to the outlier thresholds for FFYs 2004-2006; and 6. The March 11, 2003 testimony of then CMS Administrator Thomas Scully, to Congress regarding outlier payments.
(Pls.’ Mot. to Compel Def. to Complete the Admin. Rs. (“Mot.”), May 22, 2013 [Dkt. No. 97] at 3.) In addition, plaintiffs seek to compel the Secretary to produce a log of documents she has withheld on the grounds of privilege. ( Id. at 39-42.) The Court first addresses several overarching legal issues, and then it will consider each of the above classes of materials that plaintiffs seek to compel.
ANALYSIS
I. LEGAL STANDARD
The statutory framework governing this case is set forth in this Court’s July 5, 2011
Memorandum Opinion, and the law governing this motion is presented in detail in a companion
case.
See Banner Health v. Sebelius
, -- F. Supp. 2d. --,
Judicial review of plaintiffs' claims under the Medicare Act rests on 42 U.S.C. §
1395oo(f)(1), which incorporates the Administrative Procedure Act (“APA”). 42 U.S.C. §
1395oo(f)(1) (“Such action[s] . . . shall be tried pursuant to the applicable provisions under
chapter 7 of Title 5.”). Review of agency rulemakings under the APA requires a court to
“review the whole record or those parts of it cited by a party.” 5 U.S.C. § 706. “The ‘whole’
administrative record . . . consists of all documents and materials directly or indirectly
considered by agency decision-makers and includes evidence contrary to the agency's position.”
Stainback v. Sec’y of Navy
,
“[A]n agency is entitled to a strong presumption of regularity that it properly designated
the administrative record.”
Pac. Shores Subdivision, Cal. Water Dist. v. U.S. Army Corps of
Eng’rs
,
“An administrative record may be ‘supplemented’ in one of two ways – either by (1)
including evidence that should have been properly a part of the administrative record but was
excluded by the agency, or (2) adding extra-judicial evidence that was not initially before the
agency but the party believes should nonetheless be included in the administrative record.”
WildEarth Guardians v. Salazar
,
Supplementation on this ground is appropriate only under three “unusual circumstances”:
“(1) if the agency deliberately or negligently excluded documents that may have been adverse to
its decision, (2) if background information was needed to determine whether the agency
considered all the relevant factors, or (3) if the agency failed to explain administrative action so
as to frustrate judicial review.”
See City of Dania Beach v. F.A.A.
,
II. DISCUSSION
A. GENERAL ISSUES
Before turning to the specific requests, the Court must address several general arguments raised by the parties.
1. Timeliness of the Motion The Secretary first argues that plaintiffs’ motion to compel is untimely because the plaintiffs waited until mid-way through summary judgment briefing to file their motion. (Secretary’s Opp’n to Pls.’ Mot. to Compel (“Opp’n”), June 20, 2013 [Dkt. No. 102] at 12-13.) Although plaintiffs’ filing of their motion to compel after they filed their cross-motion for summary judgment (which cites to several of the documents at issue in their motion to compel) is somewhat perplexing, any late filing of this motion was harmless, and thus, the Secretary’s argument that the motion should be denied in full as untimely is rejected.
2. Duty to Confer The Secretary also argues that six of plaintiffs’ requests within their motion to compel should be denied because plaintiffs failed to confer with the Secretary regarding those requests in accordance with Local Civil Rule 7(m). (Opp’n at 11-12.) In particular, the Secretary points out that plaintiffs did apprise the Secretary of their intent to compel production of the six classes of materials, but failed to confer with the Secretary regarding their intent to seek to compel the Secretary to (1) “provide further information about documents the Secretary has not been able to *6 locate;” (2) “‘reconstitute’ the administrative record for the fiscal year 2004 fixed loss threshold determination;” (3) create a privilege log; (4) produce “data employed in formulating proposed rules;” (5) produce “underlying source material used to generate other data;” and (6) produce “data supposedly provided to the Secretary by the Office of Management and Budget or by ‘CMS actuaries.’” (Opp’n at 12; see also e-mail from Robert L. Roth to James Luh, May 20, 2013 [Dkt. No. 102-1] (listing documents plaintiffs would seek in their motion to compel).)
In reply, plaintiffs admit that they did not discuss the specifics with the Secretary of every request prior to their filing of the motion. (Reply at 24-25.) Nonetheless, plaintiffs urge the Court to consider the motion as to those requests, arguing, inter alia , that Local Rule 7(m) does not require that “every detail of every specific request contained within a nondispositive motion be discussed in its entirety with opposing counsel” and that, in any event, the Secretary was in fact on notice of plaintiffs’ belief that the materials now sought belong in the administrative records. ( Id. at 24-25 & n.26.)
Local Civil Rule 7(m) states that “[b]efore filing any nondispositive motion in a civil
action, counsel shall discuss the anticipated motion with opposing counsel . . . in a good-faith
effort to determine whether there is any opposition to the relief sought and, if there is opposition,
to narrow the areas of disagreement.” L. Civ. R. 7(m). The rule requires that the parties “try[] in
good faith to achieve its objectives,” which means they must take “real steps to confer.”
U.S. ex
rel. K & R Ltd. P’ship v. Mass. Hous. Fin. Agency
,
Although some of plaintiffs’ requests have, or should have, been known to the Secretary
for some time, the Court is concerned by plaintiffs’ lack of candor in providing full notice to the
Secretary of exactly what they intended to compel. Considering the lengthy and voluminous
history of this case and the well-established rule that motions to compel must identify the
materials sought to be compelled with “sufficient specificity,” , 2013 WL
2112169, at *10, the function of the Rule 7(m) to “narrow the issues that must be brought to the
court,”
Ellipso
,
That the Secretary would have opposed all of the undisclosed requests (Reply at 24) is
beside the point. The purpose of the Rule is to “promote,”
not
“ensure,” the resolution of as
many issues as possible without court intervention.
See Ellipso
,
Thus, the Court concludes that plaintiffs’ counsel should have conferred with the Secretary pursuant to Rule 7(m) regarding the additional forms relief plaintiffs would seek through their motion to compel. Accordingly, plaintiffs’ motion as to those additional requests is denied as violating both the spirit and text of the Local Civil Rule 7(m). [2]
3. Presumption of Regularity Plaintiffs repeatedly assert that supplementation of the administrative records with the requested materials is appropriate – indeed, required – because they have rebutted the presumption of regularity for the administrative records. ( See, e.g. , Mot. at 10-11, 25-26, 27, 28, 47; Reply at 1-6, 8, 15, 23.) In addition, plaintiffs seek a general order from this Court compelling the Secretary to “complete” the FFYs 2004-2006 administrative records by including “[a]ll [m]aterials [n]ecessary to [p]ermit [m]eaningful [j]udicial [r]eview” of the outlier threshold determinations. (Mot. at 23; see also id. at 38 (requesting order compelling Secretary to “produce the full [administrative records] for FFYs 2004-2006”).) Contrary to plaintiffs’ belief, *9 they have not rebutted the presumption of regularity, and thus, the Court denies plaintiffs’ general request.
Plaintiffs first recycle their previously rejected argument that Magistrate Judge Robinson
has already found that the presumption of regularity had been rebutted. (
See
Mot. at 10-11.) As
this Court noted in its September 10, 2013 Memorandum Opinion, the magistrate judge
expressly rejected that position during a March 13, 2013 hearing. (
See
9/10/13 Mem. Op. and
Order [Dkt. No. 111] at 6 n.1 (citing 3/13/13 Mot. Hr’g Tr. at 38 (“[T]he Court has made no
finding that the record which was filed by the Defendant is incomplete, and the Court has made
no finding with respect to whether or not any presumption of completeness is or is not warranted.
The Court’s findings concerned only the very narrow matter which this Court was asked to
address, and that is whether there was a basis upon which to allow discovery as to whether or not
the administrative record is complete.”).)
See also
,
Plaintiffs’ arguments that this Court should find that the presumption of regularity has
been rebutted fare no better. Of course, the presumption of regularity “is just that – a
presumption – and may be overcome.”
Fund for Animals v. Williams
,
First, the only administrative record that is “indisputably” incomplete is that for FFY 2004, which the Secretary has designated as a “partial administrative record” and for which an unidentifiable number of public comments remain missing. (Opp’n at 18-21.) However, plaintiffs have not pointed to any evidence that the Secretary failed to act with due diligence in searching for the missing comments or has otherwise improperly omitted comments. Moreover, plaintiffs have failed to demonstrate that the loss of these comments necessarily renders the record so bear as to make effective judicial review impossible. See Banner Health I , 2013 WL 2112169, at *13. And, even more importantly, plaintiffs provide no authority for the proposition that the Secretary’s acknowledged loss of some public comments from one year in a massive administrative record covering three years constitutes grounds for jettisoning the presumption of regularity. See id. (declining to rebut the presumption of regularity on account of missing comments in FFY 2004 IPPS administrative record).
Nor do plaintiffs provide authority for the proposition that the Secretary’s failure to “certify” that she has filed a complete administrative record defeats the presumption of regularity. Indeed, courts have consistently held the opposite. id. at *11 (denying the claim that a “purportedly inadequately worded certification – or even the complete absence of a certification – defeats the presumption of regularity”); cf. Ravulapalli v. Napolitano , 840 F. *11 Supp. 2d 200, 206 (D.D.C. 2012) (“The lack of certification, without more, certainly does not rise to the level of ‘clear evidence’ necessary to overcome the presumption of regularity.”).
Accordingly, plaintiffs have not rebutted the presumption of regularity, nor will the Court
compel the Secretary to “complete” the record by adding any and all documents necessary to
permit meaningful judicial review.
Banner Health I
,
B. MATERIALS PLAINTIFFS SEEK TO COMPEL 1. Data Files
Plaintiffs seek to compel the Secretary to produce several different data files as part of
the FFY 2004 administrative record. “[D]ata files and data analysis considered during agency
rulemaking are necessarily subject to the same standards governing supplementation of the
administrative record as reports, draft rules, or any other item of information.” ,
First, plaintiffs seek to compel the Secretary to produce the FFYs 2000 and 2001 MedPAR data files. (Mot. at 29.) The Secretary’s Rule 30(b)(6) designee, Tzvi Hefter, stated that the Secretary used the FFY 2000 MedPAR data file to determine the FFY 2004 outlier threshold. ( Tzvi Hefter Dep. Tr. (“Hefter Dep.”), Nov. 1, 2012 [Dkt. 84-1] at 15.) Similarly, Mr. Hefter stated that the Secretary used the FFY 2001 MedPAR to calculate the outlier threshold in the FFY 2004 IPPS proposed rule, and the Secretary now concedes that the data had been used to “calculate the inflation factors employed for the fiscal year 2004 fixed loss threshold determination.” ( Id. at 61-62.) Thus, there is no doubt that the Secretary utilized the FFYs 2000 and 2001 MedPAR data as part of the FFY 2004 IPPS rulemaking process.
Nonetheless, the Secretary correctly argues that she need not produce the FFYs 2000 and
2001 MedPAR files because she “is not required to include in the administrative records . . . the
underlying source data used . . . to generate the inflation adjustments employed in the [her]
projections.” (Opp’n at 35.) Generally, “the Court does not need to examine the raw data in
order to determine whether or not the [Secretary’s] decision was arbitrary and capricious or
otherwise not in accordance with law,”
Todd
,
Plaintiffs also seek the inclusion of “trimmed” versions of those MedPAR data files the Secretary has already included in the FFYs 2004-2006 administrative records. ( See Mot. at 30- 31.) During his deposition, Mr. Hefter testified that the Secretary would “clean[]” the MedPAR data before calculating outlier thresholds, and that this process of “cleaning of the data isn’t specifically addressed in the rule itself.” (Hefter Dep. at 126-27.) Plaintiffs argue that Mr. Hefter’s testimony as to “cleaning” or “trimming” data indisputably demonstrates that the Secretary, by producing “un-trimmed” MedPAR files, provided data that “irrefutably was not the data that was ‘before the decision makers with respect to the challenged rulemakings,’” because it is impermissibly over-inclusive. (Mot. at 30; Reply at 12.) They explain: “Simply put, while the data produced in the records includes data that the Secretary drew from to calculate the thresholds at issue, it was not the actual data subsets that the Secretary incorporated into her calculations, formulas, and algorithms for this purpose.” (Mot. at 30.)
Plaintiffs misrepresent Mr. Hefter’s testimony. His testimony actually clarifies that the process of “trimming” involved neither the modification of the MedPAR files currently in the administrative record, nor the creation of new MedPAR files not in the record. ( See Hefter Dep. at 149 (“[T]he file doesn’t change. We don’t change the data.”) Instead, it is merely a description of an analytical process that excludes certain data points from the ultimate analysis without expunging them from the data set. ( id. at 160.) Indeed, Mr. Hefter stated explicitly that “[t]he MedPAR file is . . . the file that we gave to you. That entire file is used in a data run. In that data run certain elements are pulled from that. But the data file that you were presented is the data that was before the decision maker.” ( Id. at 53-54.)
Considering Mr. Hefter’s clarifications about the “trimming” process, plaintiffs fail to
provide any non-speculative basis for a finding that distinct, smaller “trimmed” versions of
MedPAR files in fact exist. Accordingly, as held in
Banner Health I
,
Plaintiffs also seek to compel the Secretary to produce “Impact files, and other data files
. . . before the Secretary when she established the outlier thresholds for FFYs 2004-2006.” (Mot.
at 3.) This generic request fails for two reasons. First, plaintiffs fail to identify with any
specificity the data they request, but instead, they rely only on the generic – and circular –
argument that the Secretary must provide all data “before” her when she made her threshold
determinations.
See
,
2. Public Comments Plaintiffs next seek to compel the Secretary to produce “ all public comments” submitted as part of the FFY 2004 IPPS rulemaking proceedings. (Mot. at 28.) On October 31, 2011, the Secretary admitted that she was had been unable to locate three boxes of public comments received for the FFY 2004 IPPS rulemaking process and therefore filed only a partial administrative record for the FFY 2004 threshold determinations. ( Def.’s Notice of Filing Admin. R., Oct. 31, 2011 [Dkt. No. 30]; see also Decl. of Jim Wickliffe, Oct. 28, 2011 [Dkt. No. 30-1].) The parties now debate precisely how many public comments for the FFY 2004 IPPS rulemaking the Secretary has been unable to find, as well as how many of those public comments *15 need to be part of an administrative record relating to the outlier threshold determination. ( See Mot. at 28; Opp’n at 20-21.)
Despite the Secretary’s concession that she considered at least one of the lost comments
when making her FFY 2004 outlier threshold determination (Opp’n at 19-20), plaintiffs have
failed to demonstrate any “unusual circumstances” to require the Court to compel the Secretary
to engage in the useless task of producing what she appears not to be able to locate. Plaintiffs do
not question the Secretary’s efforts to find these comments. ( 6/22/12 Status Hr’g Tr. [Dkt.
No. 81] at 12 (“[W]e now know definitively that the Secretary has tried with a fair amount of
diligence to produce all the comments and hasn’t been able to do that.”).) Likewise, plaintiffs
have not pointed to any evidence – beyond the missing comments themselves – that the
Secretary has improperly omitted comments because of their adversity to her decision.
[5]
Nor
have plaintiffs provided any evidence to support their assertion (Mot. at 28) that the loss of these
comments renders the record so bear as to make effective judicial review impossible.
See
,
However, plaintiffs’ motion is granted with respect to the public comment submitted by
the Federation of American Hospitals (“FAH”) for the FFY 2004 IPPS rulemaking. (Mot. at 29.)
*16
The Secretary argues that since she “has already agreed that [the FAH comment] can be
introduced by the plaintiffs and cited in summary judgment proceedings,” plaintiffs’ request to
compel production of the document is “immaterial.” (Opp’n at 16.) The Secretary’s argument is
beside the point. The point is that if a document is in fact part of the administrative record, “the
Court shall . . . compel the Secretary to file [it] as part of the administrative record and for the
Court’s convenient reference.” ,
The Secretary next asserts that the FAH comment is not part of the administrative record
because “she has not been able to confirm that the comment was in fact submitted” during the
FFY 2004 IPPS rulemaking proceedings. (Opp’n at 17.) However, the Court finds that plaintiffs
have carried their burden to show the FAH comment was before the Secretary. Plaintiffs filed
with their motion to compel a date-stamped copy of the FAH comment provided to the Secretary
on July 8, 2003. ( Mot., Exh. A [Dkt. No. 97-1].) The FAH comment extensively discusses
the outlier threshold determination, criticizes the Secretary’s then-proposed outlier threshold, and
proposes that the outlier threshold should be set at $25,375. (
Id.
at 1-4.) Furthermore, the Final
Rule discusses an un-identified public comment that proposed setting the outlier threshold at
$25,375. S
ee Medicare Program; Changes to the Hospital Inpatient Prospective Payment
Systems and Fiscal Year 2004 Rates
(“
FFY 2004 IPPS Final Rule
”), 68 Fed. Reg. 45346, 45477
(Aug. 1, 2003). Considering the fact that no comment in the FFY 2004 administrative record
filed by the Secretary proposed a specific outlier threshold of $25,375, it is reasonable to infer
*17
that the FAH comment was considered by the Secretary during her FFY 2004 outlier threshold
determination.
[9]
See Pac. Shores
,
Moreover, plaintiffs have made a sufficient showing that “unusual circumstances”
warrant supplementation of the record with the FAH comment. Because plaintiffs have
produced a copy of the FAH comment, the Secretary cannot avoid supplementation merely
because she cannot locate her own copy. And considering the FAH comment’s relevance and
adversity to the Secretary’s FFY 2004 outlier threshold determination, the Secretary’s continued
refusal to include the comment as part of the FFY 2004 administrative record is tantamount to
the deliberate exclusion of a document “that may have been adverse to [her] decision.”
Banner Health I
,
3. Data Used to Approximate FFY 2004 CCRs
During the FFY 2004 IPPS rulemaking, the Secretary approximated cost-to-charge ratios
because her normal data source (
i.e.
, tentative settled hospital cost reports) were unavailable at
*18
that time.
See FFY 2004 IPPS Final Rule
,
4.
HCDI Contractor Data
Plaintiffs next move to compel supplementation of the FFYs 2004-2006 administrative
records with information used or produced by HCDI, a contractor hired by the Secretary to
develop outlier thresholds for those years. (Mot. at 31-32.) Within this broad request, plaintiffs
fail to identify with “sufficient specificity” data, or even types of data, that HCDI used or
produced that is not included within the administrative records.
See Banner Health
, 2013 WL
2112169, at *10. Thus, plaintiffs’ unbounded request for all information considered by HCDI
fails for lack of specificity.
See id.
at *21-22;
see also Blue Ocean
,
Moreover, even if plaintiffs had identified specific data before HCDI, they have not demonstrated any “unusual circumstances” justifying a departure from the general rule against *19 supplementation. Plaintiffs’ suggestion that the Secretary used HCDI as a “surrogate agency performing rulemaking functions” and that she now attempts to “‘cabin’ or conceal data that was before her at the time of the Rulemakings on the grounds that it was before” HCDI (Mot. at 32), lacks any basis in the record. ( See Michelle Short Dep. Tr., Sept. 28, 2012 [Dkt. No. 102-2] at 51-53.) Accordingly, the Court denies plaintiffs’ request for an order compelling the Secretary to add information used or produced by HCDI.
5.
Outlier Correction Interim Final Rule
Plaintiffs also move to compel the Secretary to supplement the FFYs 2004-2006
administrative records with the Outlier Correction Interim Final Rule (“IFR”) that the Secretary
sent to the OMB for review in February 2003. (Mot. at 33-36.) In the IFR, the Secretary
proposed an immediate reduction of the outlier threshold from $33,560 to $20,760 to account for
outlier policy changes made to combat “turbo-charging” and other abuses of the outlier
program. (
See
IFR, Feb. 13, 2003 [Dkt. No. 84-4] at 33-38.) However, the Outlier Correction
Final Rule did not include any adjustments to the outlier threshold to account for the outlier
policy changes.
See Medicare Program; Change in Methodology for Determining Payment for
Extraordinarily High-Cost Cases (Cost Outliers) Under the Acute Care Hospital Inpatient and
Long-Term Care Hospital Prospective Payment Systems
, 68 Fed. Reg. 34494, 34504-06 (June 9,
2003) (“maintaining the fixed-loss outlier threshold at $33,560 for the remainder of FY 2003”).
And the FFY 2004 IPPS outlier threshold (determined only two months after the Final Outlier
*20
Correction Rule) was set at $31,000 – over $10,000 higher than the Secretary proposed in the
IFR.
See FFY 2004 IPPS Final Rule
,
Plaintiffs accordingly argue that the IFR was “before” the Secretary during her FFY 2004 IPPS rulemaking, and that supplementation is appropriate because the IFR demonstrates the Secretary’s consideration of significant alternatives to the methodologies used for setting outlier thresholds for FFYs 2004-2006, and, therefore, the IFR’s exclusion from those administrative records would prevent meaningful judicial review. (Mot. at 34-35.)
The Secretary first responds that the IFR is properly excluded from the administrative
records solely because it is a “deliberative, predecisional document.” (Opp’n at 27.) Although
the IFR was predecisional, its public availability in accordance with Executive Order 12,866
undermines any claim of privilege. (
Id.
at 28 (conceding the IFR does not fall under the
deliberative process privilege).)
See also Banner Health I
,
The Secretary next argues that the IFR does not belong in the administrative record
because it is an interim version of a rule that is not challenged here and therefore was not
“before” the Secretary when she made the challenged decisions. (Opp’n at 28-29.) The Court
disagrees. In
Banner Health I
, the Court compelled the Secretary to supplement one of the
administrative records in dispute with the IFR because,
inter alia
, the “Interim Final Rule reflects
views adverse to those finally adopted by the Secretary and . . . the Secretary considered – and
indeed proposed to OMB – the Interim Final Rule as an alternative in its path to promulgation of
the 2003 [Outlier Correction Rule] now challenged by Plaintiffs.”
Further, the unacknowledged differences between the outlier threshold determinations in
the IFR and the FFY 2004 IPPS Final Rule suggests that by excluding the IFR from the FFY
2004 administrative record, the Secretary “deliberately or negligently excluded documents that
may have been adverse to [her] decision.”
City of Dania Beach,
6. Administrator Scully’s March 11, 2003 Testimony Plaintiffs also seek to compel the Secretary to supplement the FFYs 2004-2006 administrative records with the March 11, 2003 statement and testimony of Thomas Scully, then- Administrator of the Centers for Medicare and Medicaid Services (“CMMS”), before the Senate Subcommittee on Appropriations. (Mot. at 18, 36.) In that testimony, Administrator Scully noted that he had “argued strongly within the administration that we should lower the [outlier] threshold” from $33,560 “back to $22,000 or $23,000” to account for the Secretary’s plans to address “program abuses” by turbo-charging hospitals in the Outlier Correction Rule. Medicare Outlier Payments to Hospitals: Hearing Before a SubComm. of the S. Comm. on Appropriations , 108th Cong. 12-13 (2003) (statement of Thomas A. Scully, Admin., CMMS, Dep’t of Health and Human Servs.) (“Scully Testimony”). Plaintiffs argue that this Court should compel the Secretary to supplement the administrative records in this case with the Scully testimony because that “testimony confirms that, as of early March 2003, when the Secretary was in the process of preparing the FFY 2004 IPPS Proposed Rule regarding outlier thresholds, the Secretary believed that publication of the Outlier Correction Final Rule required a simultaneous significant reduction of the outlier threshold to comply with Congress’s directives regarding outlier reimbursement.” (Mot. at 36.)
However, the Court will not compel supplementation of the administrative records with
the Scully testimony because, unlike the IFR, plaintiffs fail to provide concrete evidence that the
Scully testimony was considered by the Secretary during the challenged rulemakings. Like the
IFR, Administrator Scully’s testimony referenced the Outlier Correction Rule and was given a
few months before FFY 2004 IPPS rulemaking began. However, the Scully testimony
specifically concerned the March 5, 2003 Outlier Correction Proposed Rule, which, unlike the
IFR, contained no proposal for a mid-year downward adjustment of the outlier threshold. (
See
Scully Testimony at 9-11.) Administrator Scully’s references to downward adjustments of the
outlier threshold to account for changes in outlier policy were his personal opinions (s
ee id.
at 12
(“I feel strongly that . . . we should lower the threshold back to $22,000 or $23,000.”);
id.
at 13
(“I happen to believe . . . that the correct number probably is in the midtwenties, if we fix the
program abuses . . . .”);
id.
at 13 (“And so I do think the outlier threshold – my personal opinion
is that it probably, if we fix the abuses, would be too high . . . .”), and not – as plaintiffs suggest –
the “belie[fs]” of the Secretary. (
See
Mot. at 36.) An official’s personal testimony regarding an
earlier rulemaking constitutes no more than speculative evidence that the testimony was before
the Secretary at the time of her later decisions.
See Marcum v. Salazar
,
*24 7. Privilege Log
Finally, plaintiffs also seek to compel the Secretary either to produce a privilege log
documenting any materials withheld from the administrative record on the grounds of the
deliberative process privilege or submit those materials for
in camera
review by the Court.
(Mot. at 39.)
[15]
On this issue, “[t]he law is clear: predecisional and deliberative documents ‘are
not part of the administrative record to begin with,’ so they ‘do not need to be logged as withheld
from the administrative record.’”
Oceana, Inc. v. Locke
,
Plaintiffs nonetheless argue that a privilege log is necessary in this case “to properly
identify what records were before the decision maker related to the calculation of the outlier
adjudicative fact subject to judicial notice that is
not
part of the administrative record if it qualifies for
supplementation as extra-record evidence under
Esch v. Yeutter
,
Plaintiffs argue in passing that the Court should compel the Secretary to supplement the
administrative record with the Scully testimony as extra-record evidence under
Esch
. (
See
Mot. at 35
n.37.) However, plaintiffs have not demonstrated that the Secretary either “(1) acted in bad faith in
reaching [her] decision, (2) engaged in improper behavior in reaching [her] decision, (3) failed to examine
all relevant factors, or (4) failed to adequately explain [her] grounds for decision.”
Oceana, Inc. v. Locke
,
2004-2006 administrative records “in accordance with instructions delineating predecisional/deliberative
privilege and requiring inclusion of relevant materials from the proposes rules.” (Reply at 4;
see also id.
at 3-6.) To the extent that plaintiffs mean something more than “supplement,” the Court denies plaintiffs’
request because plaintiffs failed to seek “regeneration” of the records in their opening brief.
Lindsey
v. Dist. of Columbia
,
privilege log absent a “clear command from the court of appeals, particularly in light of the unequivocal statement by that court that such [privileged] materials are not a part of the administrative record when an agency decision is challenged as arbitrary and capricious”).
thresholds in the rulemaking.” (Mot. at 42) “However, the argument that a plaintiff and the
Court should be permitted to participate in an agency's record compilation as a matter of course
contravenes the standard presumption that the agency properly designated the Administrative
Record.”
Nat’l Ass’n of Chain Drug Stores
,
C. MOTION TO STAY
Plaintiffs also move to stay briefing of the parties’ cross-motions for summary judgment. ( See Mot. at 43; Pls.’ Mot. to Stay the Briefing on the Parties’ Cross-Mots. for Summ. J., May 22, 2013 [Dkt. No. 98].) On July 24, 2013, the parties completed their briefing on the cross- motions for summary judgment in this case. The Court therefore denies plaintiffs’ motion to stay as moot.
CONCLUSION For the foregoing reasons, the Court grants plaintiffs’ motion to compel [Dkt. No. 97] is in part. The Secretary shall supplement the FFY 2004 administrative record for her outlier threshold determination with: (1) the FAH Comment [Dkt. No. 97-1] and (2) February 13, 2003 Outlier Correction Interim Final Rule [Dkt. No. 84-4] by September 30, 2013; and plaintiffs’ motion to stay the briefing of cross-motions for summary judgment [Dkt. No. 98] is denied as moot. The parties shall contact chambers on October 2, 2013, at 3:30 p.m. to discuss further proceedings.
/s/ ELLEN SEGAL HUVELLE United States District Judge Date: September 19, 2013
Notes
[1] This is not to say parties must discuss every detail of a forthcoming non-dispositive motion during a Rule 7(m) conference, but rather that the issues discussed must fairly encompass all issues ultimately raised in the motion, such that the parties have a genuine opportunity to resolve or narrow the issues brought to the court.
[2] The Court, however, does not deny plaintiffs’ request for a privilege log on this ground. In its September 10, 2013 Memorandum Opinion, the Court withheld judgment on the merits of plaintiffs’ request for a privilege log until its consideration of the motion to compel. ( 9/10/13 Mem. Op. and Order [Dkt. No. 111] at 11-12 & n.4.) In accordance with that decision, the Court will consider plaintiffs’ request for a privilege log on the merits, despite plaintiffs’ failure to comply with Local Civil 7(m). See infra at 24-25. The Court also notes that even if plaintiffs had complied with Local Civil Rule 7(m), it would deny those requests on the merits. Plaintiffs’ requests either seek further discovery (which has been closed), underspecified or speculative materials, or raw data unnecessary for effective judicial review, and plaintiffs have failed to demonstrate the “unusual circumstances” required for supplementation of an administrative record.
[3] Plaintiffs assertion that, because the Secretary could not find all of the comments submitted as part of the FFY 2004 IPPS rulemaking process, this Court “should draw the reasonable inference that the Secretary did not in fact properly consider all public comments relating to her FFY 2004 rulemaking” (Mot. at 29) lacks any basis in the record. The Secretary’s loss of comments does not support any inference that the Secretary failed to consider those comments in the first instance. See infra at 15.
[4] Plaintiffs’ argument for “trimmed” MedPAR data files also fails for the more fundamental reason that the Secretary was not required to include MedPAR files in the administrative record in the first instance. See supra at 12-13.
[5] For this reason, the Court also denies plaintiffs’ request for an order requiring the Secretary to “attempt to find alternative sources from which to obtain copies of the missing comments and CMS’ responses to such comments.” (Mot. at 38.)
[6] Further, plaintiffs provide no authority to support the issuance of an order compelling the Secretary to produce those lost comments. Indeed, without evidence that the Secretary is withholding, or failed to search diligently for, the missing comments, it is unclear what redress such an order would even afford.
[7] Plaintiffs also request in the alternative that the administrative record be deemed to include
“other evidence confirming that [the Secretary] properly considered all such comments during the
Rulemakings.” (Mot. at 3.) The Court denies this request on the ground that plaintiffs have offered no
authority to suggest that such “evidence” should be treated as part of the administrative record.
See
Banner Health I
,
[8] Indeed, since a court’s review of agency action necessarily is limited to the administrative
record,
see Boswell Mem’l Hosp.
,
[9] The Secretary contends that the FAH comment cannot be verified because plaintiffs earlier filed another copy of the FAH comment, and a comparison of the two versions reveals that “attachments at the end of the document are arranged in a different order, and the line and page breaks within the attachements differ between the two documents.” (Opp’n at 17-18 n.2.) Nonetheless, the Court finds that the text of the attachments to each version is identical, and there is therefore no basis for concluding that either “version” of the FAH comment is illegitimate.
[10] In contrast, the Court denies plaintiffs’ specific request to compel the Secretary to produce a full version of the public comment filed by the National Association of Public Hospitals and Health Systems. (Mot. at 20, 37.) Although only the first page of the comment is included in the FFY 2005 administrative record filed by the Secretary ( see FFY 2005 Admin. R. at 1979.233), the Secretary states that she has reinspected the copy of the comment in her records, and that it does not contain any additional pages. (Opp’n at 21-22.) Because plaintiffs provide no evidence that the Secretary is withholding the remaining pages of the document to prevent effective judicial review, and in any event, the comment’s summary line does not suggest that the comment discussed outlier threshold determinations, plaintiffs have failed to demonstrate any “unusual circumstances” to justify supplementation.
[11] Although plaintiffs seem to suggest that the Secretary’s failure to use the tentative settled
hospital cost reports calls into question whether the Secretary “considered all the relevant factors,”
City of
Dania Beach
,
[12] “Turbo-charging” refers to “abusive, excessive charging practices” (Def.’s Mem. of P. & A. in Support of Mot. for Summ. J., April 15, 2013 [Dkt. No. 91-1] at 10.), in which “rapid increases in charges by certain hospitals . . . resulted in their cost-to-charge ratios being set too high” and caused “excessive outlier payments to these hospitals.” Medicare Program; Change in Methodology for Determining Payment for Extraordinarily High-Cost Cases (Cost Outliers) Under the Acute Care Hospital Inpatient and Long-Term Care Hospital Prospective Payment Systems , 68 Fed. Reg. 34494, 34496 (June 9, 2003).
[13] Of course, the same cannot be said for the FFYs 2005 and 2006 IPPS rulemakings, which are
separated from the IFR by one and two years, respectively. Plaintiffs have failed to offer concrete, non-
speculative evidence that the Secretary actually reconsidered her tentative methodologies or conclusions
from the IFR during those rulemakings.
Marcum v. Salazar
,
[14] The Secretary concedes that although the Scully testimony is not part of the administrative
record, plaintiffs may cite the testimony in their merits briefs, and this Court may consider the testimony
in its merits determination, because it is a public document subject to judicial notice. ( Opp’n at 16-
17.) The Court, however, notes that taking judicial notice is typically an inadequate mechanism for a
court to consider extra-record evidence when reviewing an agency action. Because review of an agency
decision is limited to the administrative record before the agency at the time of the decision,
see Boswell
Mem’l Hosp.
,