INOVA ALEXANDRIA HOSPITAL, Plaintiff-Appellant, v. DONNA E. SHALALA, Secretary, Department of Health and Human Services, Defendant-Appellee.
No. 00-1409
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
March 26, 2001
PUBLISHED. Argued: November 2, 2000. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Gerald Bruce Lee, District Judge. (CA-99-1102-A)
Affirmed by published opinion. Judge Michael wrote the opinion, in which Judge Williams and Chief Judge Anderson joined.
COUNSEL
ARGUED: Edith Sophia Marshall, POWERS, PYLES, SUTTER & VERVILLE, P.C., Washington, D.C., for Appellant. Janet Rehnquist, Assistant United States Attorney, Alexandria, Virginia, for Appellee.
OPINION
MICHAEL, Circuit Judge:
Inova Alexandria Hospital (the Hospital) contested its Medicare reimbursement for 1994 by filing an administrative appeal with the Provider Reimbursement Review Board (the Board) of the U.S. Department of Health and Human Services (HHS). The Board dismissed the appeal because the Hospital failed to file certain papers on time. The Hospital then challenged the Board‘s dismissal by suing the Secretary of HHS in federal court. The district court reviewed the Bоard‘s dismissal decision on the merits and granted summary judgment to HHS. We are presented with two questions: (1) whether the Hospital is entitled to judicial review and (2) whether, if judicial review is available, the Board acted properly in dismissing the Hospital‘s administrative appeal. We conclude that the Hospital is entitled to judicial review, but after considering the merits we affirm the award of summary judgment to HHS.
I.
The Hospital is a Medicare provider. To be reimbursed for the services it furnishes to Medicare beneficiaries, the Hospital submits an annuаl cost report to its fiscal intermediary (or paying agent), Trigon Blue Cross and Blue Shield (Trigon). As a fiscal intermediary Trigon acts under contract with the Secretary of HHS. See
The Hospital failed to file either a preliminary or a final position paper. The failure was due to internal confusion at the Hospital in the wake of a corporate acquisition, specifically, Inova Health System‘s acquisition of the Hospital, which occurred after the appeal was filed but before the position papers were due. David Eunpu, a hospital employee, was initially responsible for handling the appeal. After the acquisition many of Eunpu‘s duties changed, and he mistakenly assumed that someone else would be handling the appeal. Because the appeal remained Eunpu‘s responsibility, the Hospital failed to file the position papers. Because of this failure, the Board dismissed the Hospital‘s appeal. The Hospital requested that the Board reinstate the appeal on the grounds of innocent and inadvertent mistake, but the Board denied the request. The Board concluded that “administrative oversight is not a sufficient basis upon which to reinstate an appeal.” The Hospital next requested that the Health Care Financing Administration (HCFA) review the Board‘s decision denying the appeal, but the HCFA declined to undertake аny review.
The Hospital thereafter sued HHS in federal court, claiming that the Board‘s actions in dismissing and not reinstating the Hospital‘s administrative appeal were arbitrary and capricious, violated the Hospital‘s right to a hearing under the Medicare Act, and violated the Due Process Clause. The Hospital also asserted that the Board‘s rule regarding the dismissal of appeals is invalid because it was not promulgated under the APA‘s notice and comment procedure. HHS moved to dismiss for lack of jurisdiction, asserting that the Board‘s actions were discretionary and not subject to judicial review. In the alternative, HHS moved for summary judgment on the ground that the Board‘s actions were justified in the circumstances. As we read the district court‘s order, the court assumed jurisdiction and then granted summary judgment to HHS, concluding that the Board acted properly when it dismissed and refused to reinstate the Hospital‘s administrative appeal. The Hospital appeals the district court‘s order.
II.
We turn first to the matter of jurisdiction. In district court and in its brief to us, HHS argued that the Hosрital was not entitled to judi
As the Supreme Court has instructed, “We begin with the strong presumption that Congress intends judiсial review of administrative action.” Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986). Indeed, the APA provides for review “except to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law.”
Here, the Medicare Act provides the Board with broad authority to develop procedures for provider appeal hearings. Specifically, the Act grants to the Board “full power and authority to make rules and establish procedures, not inconsistent with the provisions of this subchapter or regulations of the Secretary, which are necessary or appropriate to carry out the provisions of this section.”
The question for us is whether there are manageable standards for judicial review of the Hospital‘s claims that the Board erred in dismissing the appeal for failure to file timely position papers. For starters, we clearly have manageable standards to review the Board‘s action in connection with three of the Hospital‘s claims: (1) that thе Board violated the Due Process Clause, (2) that the Board violated the Hospital‘s right to a hearing under the Medicare Act, and (3) that the Board‘s dismissal rule is invalid because it was not promulgated under the APA‘s notice and comment procedure. We may review the Hospital‘s due process claim because it is well settled that even if agency action is committed to its discretion by law, a court may still determine whether the action is constitutional. See, e.g., Padula v. Webster, 822 F.2d 97, 101 (D.C. Cir. 1987); Garcia v. Neagle, 660 F.2d 983, 988 (4th Cir. 1981). This is because the Due Process Clause provides a manageablе standard that allows for review. We may also review the Hospital‘s Medicare Act claim because the Act does not allow the Board to adopt rules or procedures that are inconsistent with the provisions of the Act. See
We interpret the Board‘s rule in this manner for several reasons. First, the decision to dismiss an appeal is not the kind of decision that is ordinarily committed exclusively to agency discretion by law. “Agency actions are more likely to be committed to agency discretion when they involve factual disputes, particularly those of a politically sensitive nature.” Bd. of Trs. v. Sullivan, 965 F.2d 558, 562 (7th Cir. 1992). The decision to dismiss an administrative appeal is similar to the kind of dismissal decisions that courts routinely review for error. See, e.g.,
We recognize that the language of the rule — “the Board may dismiss” — suggests that the Board intended to exercise discretion in
Again, we read the Board‘s rule as allowing dismissal only if the provider cannot show excusable neglect for its failure to file a timely position paper. Interpreting the Board‘s rule in this manner effectively balances two competing concerns: the Board‘s interest in efficiency and the provider‘s interest in fair treatment. The Board‘s interest in the efficient management of its docket is supported by its ability to dismiss the appeals of providers who miss deadlines. Providers, on the other hand, have an interest in having their appeals heard and in receiving fair treatment in the process. The rule thus allоws the Board to dismiss appeals, but only if the provider lacks a justifiable excuse for its failure to file.
The Board‘s discretion is limited by the excusable neglect standard. Excusable neglect is a manageable standard that makes judicial review possible. Cf. Dickson, 68 F.3d at 1403 (holding that “in the interest of justice” is a judicially manageable standard); W. Med. Enters., Inc. v. Heckler, 783 F.2d 1376, 1381 (9th Cir. 1986) (holding that the “standard of ‘good cause’ is not so broad that there ‘is no law to apply‘“). Accordingly, we may review the Hospital‘s claim that the Board acted in an arbitrary and capricious manner in dismissing the appeal.
III.
We proceed, therefore, to consideration of the district court‘s grant of summary judgment to HHS. The district court concluded that the Board‘s “actions in dismissing the [Hospital‘s] appeal were taken in accordance with its established procedures and statutory authority.” The dismissal, the court said, “was due to [the Hospital‘s] negligent failure to proceed within the very reasonable procedural process provided.” No material facts are in dispute, and we review the grant of summary judgment de novo. See Deans v. CSX Transp., Inc., 152 F.3d 326, 330 (4th Cir. 1998).
A.
The first of the Hospital‘s four claims is that the Board‘s dismissal of its appeal violated the provisions of the Medicare Act that give a provider the right to a hearing to challenge a fiscal intermediary‘s reimbursement determinations. See
The gist of the Hospital‘s argument appears to be that it has an absolute right to a hearing. The Medicare Act, however, cannot be read so broadly. Rather, the right to a hearing must be read in conjunction with the statutory provision that allows the Board to establish procedures to implement the section providing for appeаls (or hearings). See
B.
Second, the Hospital claims that even if the Medicare Act allows for a dismissal rule dealing with the failure to file papers on appeаl, the Board was required to promulgate the rule under the APA‘s notice and comment procedure. This is not the case. “[R]ules of agency organization, procedure, or practice” are exempt from the notice and comment provisions of the APA.
The D.C. Circuit case of JEM Broad. Co. v. FCC shows why the Board‘s apрeal dismissal rule is exempt from notice and comment. In JEM the plaintiff challenged an FCC rule that prohibited an applicant from amending its license application after submission. The rule allowed the FCC to reject incomplete submissions, and the plaintiff argued that the rule should have been promulgated under the APA‘s notice and comment procedure. The D.C. Circuit disagreed, concluding that the rule fell within the “agency organization, procedure, or practice” exception. The “critical fact,” acсording to the court, was that the rule did not alter the “substantive standards” by which the FCC evaluated license applications. Id. at 327. Like the FCC in JEM, the Board here adopted a rule that does not alter the substantive standards by which it reviews provider claims. Rather, it adopted a proce
C.
Third, the Hospital claims that the Board was arbitrary and capricious in dismissing the appeal. See
The Hospital challenges the timing as well as the adequacy of the Board‘s explanation for the dismissal of the appeal. The Hospital complains that the Board did not issue its explanation until the Hospital applied for reinstatement, which was after the Board had already dismissed the appeal. Normally, an agency must рrovide its explanation at the time of the agency action. See Chenery Corp., 318 U.S. at 87. In this case the Board considered the merits of whether dismissal was warranted at the time the Hospital applied for reinstatement
The Hospital argues that the Board‘s statement of explanation was inadequate because it was not based on “a considеration of the relevant factors.” State Farm, 463 U.S. at 43. The Board, however, gave adequate consideration to whether the Hospital could show excusable neglect for its failure to file timely position papers. The Board‘s decision began with a discussion of the circumstances that led to the Hospital‘s failure to file its papers on time. The Board then concluded that simple “administrative oversight” was not a sufficient excuse. The Board stressed that “[w]hen the Hospital was purchased, someone [in authority] should have сlarified who was responsible for this appeal and notified the Board as to whom to send correspondence.” Finally, the Board distinguished one of its prior decisions, cited by the Hospital, in which an appeal had been reinstated because of the death of the provider‘s representative. It is evident from the Board‘s explanation that it amply considered the Hospital‘s proffered excuse. The Hospital nevertheless argues that the Board should have considered whether a sanction less оnerous than dismissal might have been appropriate. As a general rule, the consideration of whether a lesser sanction might be adequate should be a step in the path to the ultimate decision that dismissal is a fair sanction for a particular litigant. But this does not mean that the Board‘s explanation had to include express consideration of possible alternatives to its decision. See State Farm, 463 U.S.
The Hospital also argues that the Board committed a “clear error in judgment” in dismissing the appeal. This occurs “only if the error is so clear as to deprive the agency‘s decision of a rational basis.” Wawszkiewicz v. Dep‘t of Treasury, 670 F.2d 296, 301 (D.C. Cir. 1981) (internal quotation marks omitted). The Hospital argues that the Board irrationally concluded that administrative oversight is not a valid excuse. We disagree. Because the Hospital‘s failure to file timely position papers was due to circumstances entirely within its own control, the Board had a rational basis for its decision. Cf. W. Med. Enters., 783 F.2d at 1381 (upholding agency‘s determination that administrative neglect does not excuse a party‘s late filing of a notice of appeal). The Hospital also argues that the Board acted irrationally because it has not enforced the dismissal rule consistently from case to case. The Hоspital claims that the Board has excused similar lapses in other appeals. Specifically, the Hospital claims that in other cases the Board has determined that dismissal for failure to file a timely position paper is proper only if the provider intended to abandon its appeal. However, the one case cited by the Hospital is from a period when the Board‘s rule specified that dismissal was only warranted if the provider intended to abandon its appeal. That was not the rule in place while the Hospital‘s appeal was pending. In short, the Hospital has given us no reason to conclude that the Board has been inconsistent in enforcing its dismissal rule. Therefore, it was not a clear error in judgment to dismiss the Hospital‘s appeal as a result of its neglect.
The Board provided an adequate explanation for its actions. It considered whether the Hospital could show excusable neglect, and it rationally concluded that the Hospital‘s excuse was inadequate. As a result, we hold that the Board‘s actions were not arbitrary and capricious.
IV.
Fourth, the Hospital claims that its due process rights were violated because it did not have the opportunity for a hearing to challenge the
V.
In conclusion, the Hospital is entitled to judicial review of the Board‘s actions in dismissing the Hospital‘s administrative appeal. However, because the Board‘s dismissal of the Hospital‘s appeal was appropriate in the circumstances, the district court‘s award of summary judgment to HHS is affirmed.
AFFIRMED