YALE NEW HAVEN HOSPITAL, Plaintiff-Appellee-Cross-Appellant, v. XAVIER BECERRA, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant-Appellant-Cross-Appellee.
Nos. 20-2115(L), 20-2151(XAP)
United States Court of Appeals For the Second Circuit
Decided: December 19, 2022
August Term 2021; Argued: September 22, 2021
Appeal from the United States District Court for the District of Connecticut No. 18-cv-1230, Janet C. Hall, Judge.
Before: WESLEY, SULLIVAN, Circuit Judges, and KOELTL, District Judge.+
Pursuant to Rule 43(c)(2) of the Federal Rules of Appellate Procedure, Secretary Becerra is automatically substituted as a Defendant-Appellant-Cross-Appellee for the former Secretary, Alex M. Azar II. The Clerk of Court is respectfully directed to amend the official case caption as set forth above.*
Yale New Haven Hospital (“YNHH“) receives federal funds under the Medicare Act,
The Secretary now appeals, disputing (1) the district court‘s ruling that it had jurisdiction to consider YNHH‘s procedural challenge, and alternatively (2) the district court‘s merits ruling that the Secretary‘s estimate was procedurally unlawful. YNHH defends the district court‘s rulings on both counts, also contending that, even if its challenge were barred by
As a result, we REVERSE the district court‘s denial of the Secretary‘s motion to dismiss YNHH‘s procedural challenge for lack of subject-matter jurisdiction; VACATE, for lack of subject-matter jurisdiction, the district court‘s grant of summary judgment for YNHH on its procedural challenge; REMAND the case to the district court with instructions to dismiss the remainder of YNHH‘s action for lack of subject-matter jurisdiction; and DISMISS AS MOOT YNHH‘s cross-appeal disputing the district court‘s chosen remedy.
REVERSED IN PART, VACATED IN PART, AND REMANDED; CROSS-APPEAL DISMISSED AS MOOT.
ROBERT L. ROTH, Hooper Lundy & Bookman, PC, Washington, DC (Patrick M. Noonan, Donahue, Durham & Noonan, P.C., Guilford, CT, on the brief), for Plaintiff-Appellee-Cross-Appellant Yale New Haven Hospital.
LEIF OVERVOLD, Appellate Staff Attorney (Jeffrey Bossert Clark, Acting Assistant Attorney General, Brian M. Boynton, Acting Assistant Attorney General, Alisa B. Klein, Appellate Staff Attorney, on the brief), Civil Division, U.S. Department of Justice, Washington, DC (Robert P. Charrow, General Counsel, Daniel J. Barry, Acting General Counsel, Janice L. Hoffman, Associate General Counsel, Susan Maxson Lyons, Deputy Associate General Counsel for Litigation, Jonathan C. Brumer, Staff Attorney, U.S. Department of Health and Human Services, Washington, DC, of counsel), for Defendant-Appellant-Cross-Appellee Xavier Becerra, Secretary of the U.S. Department of Health and Human Services.
Yale New Haven Hospital (“YNHH,” or the “Hospital“) receives federal funds under the Medicare Act,
Here, YNHH challenges the Secretary‘s estimate of its amount of uncompensated care for FFY 2014, the first FFY following YNHH‘s merger with the Hospital of Saint Raphael (“St. Raphael“), a nearby hospital that had historically treated a proportionally greater share of low-income patients than YNHH. YNHH contends that the Secretary failed to abide by adequate notice-and-comment rulemaking procedures before choosing to use only YNHH‘s historical data – and not St. Raphael‘s – to estimate YNHH‘s amount of uncompensated care for FFY 2014. The Secretary moved to dismiss this claim for lack of subject-matter jurisdiction, arguing that it was barred by
The Secretary now appeals, disputing (1) the district court‘s ruling that it had jurisdiction, notwithstanding
As a result, we REVERSE the district court‘s denial of the Secretary‘s motion to dismiss YNHH‘s procedural challenge for lack of subject-matter jurisdiction; VACATE, for lack of subject-matter jurisdiction, the district court‘s grant of summary judgment for YNHH on its procedural challenge; REMAND the case to the district
I. Background
Under the Medicare Act,
Prior to FFY 2014, the Secretary had calculated hospitals’ DSH payments under a statutory formula (the “Traditional DSH Formula“),
The Patient Protection and Affordable Care Act of 2010 (the “ACA“) implemented a new formula for calculating DSH payments from FFY 2014 onward (the “Adjusted DSH Formula“),
(i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is available which is a better proxy for the costs of [DSHs] for treating the uninsured, the use of such alternative data)) . . .
(ii) the aggregate amount of uncompensated care for all [DSHs] that receive a payment under this subsection for such period (as so estimated, based on such data).
About nine months after that merger, HHS announced a proposed rule to implement the Adjusted DSH Formula, specifying the “data sources and methodologies [to be used] for computing” the three UC DSH Payment factors for FFY 2014. Medicare Program 2014 Proposed Rule, 78 Fed. Reg. 27,486, 27,582 (May 10, 2013). The 2014 Proposed Rule stated that Factor Three would be calculated as the ratio of the aggregate number of days of inpatient care provided to Medicaid and Medicare-SSI patients at each DSH, divided by the total number of such days for all DSHs nationally, using recent historical cost-report data from HHS‘s own databases. See id. at 27,588–90. The 2014 Proposed Rule did not specify whether, for newly merged hospitals, HHS would calculate Medicare payments using combined data from both hospitals or only the data previously provided by the acquiring hospital.
In its 2014 Final Rule, HHS finalized the methodology and data selection it had previously announced. See Medicare Program 2014 Final Rule, 78 Fed. Reg. at 50,634-43. The 2014 Final Rule also explained that “in the case of a merger between two hospitals, Factor [Three] will be calculated based on the [data] under the surviving [hospital‘s HHS certification number]” and exclude “[d]ata associated with a[n HHS certification number] that is no longer in use” (i.e., data from the subsumed hospital). Id. at 50,642. Consistent with this explanation, Factor Three of YNHH‘s 2014 UC DSH Payment calculation was estimated using YNHH‘s historical share of uncompensated care, but not St. Raphael‘s.
YNHH filed an appeal with the Provider Reimbursement Review Board (the “PRRB“), which denied relief on the ground that
YNHH then filed this action in district court, arguing that the Secretary‘s calculation of the Hospital‘s 2014 UC DSH Payment should be set aside on both substantive and procedural grounds. Based on
YNHH and the Secretary subsequently cross-moved for summary judgment on
The parties now cross-appeal from the district court‘s judgment. The Secretary disputes (1) the district court‘s ruling that it had jurisdiction, notwithstanding
II. Standard of Review
We review a district court‘s determination of subject-matter jurisdiction de novo. See Tilton v. SEC, 824 F.3d 276, 281 (2d Cir. 2016). “The plaintiff[] bear[s] the burden of establishing jurisdiction,” including in cases where – as here – we are called upon to “interpret[] a provision that precludes judicial review.” Knapp Med. Ctr. v. Hargan, 875 F.3d 1125, 1128 (D.C. Cir. 2017) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).1 In interpreting such
While courts have “long recognized a strong presumption in favor of judicial review of final agency action,” Am. Hosp. Ass‘n v. Becerra, 142 S. Ct. 1896, 1902 (2022) (internal quotation marks omitted), “[t]he presumption of judicial review . . . may be overcome by, inter alia, specific language or specific legislative history that is a reliable indicator of congressional intent, or a specific congressional intent to preclude judicial review that is fairly discernible in the detail of the legislative scheme,” Bowen v. Mich. Acad. of Fam. Physicians, 476 U.S. 667, 673 (1986) (internal quotation marks omitted). Thus, “[w]hether and to what extent a particular statute precludes judicial review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved.” Block v. Cmty. Nutrition Inst., 467 U.S. 340, 345 (1984).
III. Discussion
A. Statutory Jurisdiction
The Medicare Act strips federal courts of jurisdiction to perform “judicial review . . . of . . . [a]ny estimate of the Secretary for purposes of determining the [three] factors,”
Here, the ultimate object of YNHH‘s challenge is – and has been since the beginning of this litigation – the Secretary‘s “estimate[]” of YNHH‘s “amount of uncompensated care” for FFY 2014,
1. Clarifying YNHH‘s Challenge
YNHH suggests – and the district court agreed – that the “review” it seeks is several analytical steps removed from the “estimate” that the statute explicitly shields from “judicial review.”
While YNHH implies that the review-preclusion provision applies only to the Secretary‘s bottom-line estimates of each qualifying hospital‘s “DSH [P]ayment,”
Thus, the Secretary‘s estimate of YNHH‘s amount of uncompensated care for FFY 2014 is not just “underlying data” for the relevant “estimate” – it is the “estimate.” Contra YNHH Br. at 38 (quoting J. App‘x at 49).
Relatedly, YNHH‘s contention that “the Secretary‘s choice of . . . data” is a distinct precursor to, rather than a part of, the “estimate” in question, id., overlooks the statutory definition of the “estimate” at issue here. According to that definition, “the amount of uncompensated care for [YNHH] for [FFY 2014] []as estimated by the Secretary” explicitly encompasses the Secretary‘s selection of “appropriate data,” “the Secretary[‘s] determin[ation] that alternative data is available which is a better proxy for the costs of [qualifying] hospitals for treating the uninsured,” and the Secretary‘s choice of whether or not to “use . . . such alternative data.”
Similarly confusing is YNHH‘s repeated invocation of the so-called “2014 Merged
2. Interpreting the Statute
Having cleared up YNHH‘s attempts to recast the nature of its challenge, we still are left with an honest (and evidently novel) question of statutory interpretation: where the Medicare Act precludes “judicial review” of “[a]ny estimate of the Secretary,” does its bar extend to a claim that such an “estimate” was the product of a defective notice-and-comment rulemaking process?
YNHH‘s argument focuses on a nearly metaphysical “separat[ion]” between “the ‘estimate‘” and the “promulgation” of policies “that result[] in the ‘estimate.‘” YNHH Br. at 42 (quoting J. App‘x at 51). Based on that putative separation, the Hospital contends that if “Congress [had] intended to preclude . . . otherwise valid request[s] for . . . judicial review of the Secretary‘s failure to use proper rulemaking procedures” when generating “estimates,” then
a. Plain Meaning
“[T]o determine whether the language at issue has a plain and unambiguous meaning,” Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA, 846 F.3d 492, 512 (2d Cir. 2017) (citation omitted), “[w]e begin, as we must, with the text of the statute,” Lawrence + Mem‘l Hosp. v. Burwell, 812 F.3d 257, 259 (2d Cir. 2016). The text of
An alleged procedural problem with the estimate, just like an alleged substantive problem with the estimate, is simply a putative reason why the estimate might be invalid. Indeed, YNHH‘s complaint seems to concede as much, as it invoked the estimate‘s alleged “procedural[]” deficiency relative to the APA and Medicare Act‘s notice-and-comment requirements right alongside its alleged “substantive[]” deficiency relative to the “purpose of the UC DSH [P]ayment.” J. App‘x at 9 ¶¶ 2-3. In essence, these alleged deficiencies are offered as parallel “reasons” why the Secretary‘s “exclusion of [the St. Raphael] data was . . . unlawful.” Id. Thus, whether we were to consider YNHH‘s substantive challenge or its procedural challenge to the Secretary‘s 2014 estimates, we would still be performing “judicial review” of the “estimate[s] of the Secretary.”
Accordingly, YNHH cannot carry its “burden of establishing jurisdiction,” Knapp Med. Ctr., 875 F.3d at 1128, simply by casting its challenge as one to “the promulgation of the Secretary‘s . . . policies” that “result[ed] in the ‘estimate,‘” YNHH Br. at 42 (quoting J. App‘x at 51). Rather, YNHH must explain how we could possibly entertain such a challenge “without reviewing the estimate itself.” DCH Reg‘l Med. Ctr., 925 F.3d at 506. That it has plainly failed to do. To the contrary, YNHH‘s own prayer for relief in its complaint makes clear that the Hospital “is simply trying to undo the Secretary‘s estimate of its uncompensated care by recasting its challenge to that estimate as an attack on the underlying [rulemaking procedures].” Id. at 508. That is made “explicit[]” by the fact that YNHH is “seeking vacatur of the calculation of its own DSH additional payment for fiscal year 2014 and an order requiring the Secretary to recalculate it.” Id.; see J. App‘x at 31 (“[T]he Hospital requests . . . [a]n order instructing the Secretary to recalculate the Hospital‘s FFY 2014 UC DSH [P]ayment after including the [St. Raphael] data[] and pay the Hospital the additional amount due . . . .“).2
b. Canons of Statutory Construction
Unable to rely on the plain language of
YNHH‘s second argument invokes the substantive “reviewability canon,” which carries the “strong presumption” that “[j]udicial review of final agency action in an otherwise justiciable case is traditionally available unless a statute‘s language or structure precludes judicial review.” Am. Hosp. Ass‘n, 142 S. Ct. at 1902 (internal quotation marks omitted). Neither of these arguments is persuasive.
i. The Canon of Meaningful Variation
As summarized above, YNHH argues that if “Congress [had] intended to preclude . . . otherwise valid request[s] for . . . judicial review of the Secretary‘s failure to use proper rulemaking procedures” when generating “estimates,” then Congress could and should have said so “explicitly.” YNHH Br. at 36, 44. In support of this contention, YNHH points us to another review-preclusion provision within the Medicare Act that bars “judicial review . . . of the process [whereby the Secretary may exempt physician-owned hospitals in medically underserved areas from otherwise-applicable restrictions on their ability to expand] (including the establishment of such process).”
Moreover, we reject the underlying premise of YNHH‘s meaningful-variation argument: that the words “including the establishment of” are the “magic words” that Congress “incant[s]” in any review-preclusion provision that it intends to bar procedural as well as substantive challenges to a given type of agency action. Sebelius v. Auburn Reg‘l Med. Ctr., 568 U.S. 145, 153 (2013); see also Donnelly v. Controlled Application Rev. & Resol. Program Unit, 37 F.4th 44, 54 (2d Cir. 2022). We are aware of nothing to suggest that the phrase “including the establishment of” (or simply “the establishment of“), as used in various review-preclusion provisions throughout the Medicare Act, has anything at all to do with the distinction between substantive and procedural challenges.
For its meaningful-variation argument, YNHH relies on the D.C. Circuit‘s decision in Knapp Medical Center v. Hargan. There, a hospital argued that “‘[the] process,’ as used in
Other decisions by our sister circuits cast further doubt on YNHH‘s proposed reading of the phrase, “the establishment of.” In Amgen, as in Knapp, the D.C. Circuit was tasked with interpreting a review-preclusion provision in the Medicare Act that included the “establishment of” language relied on by YNHH here. See Amgen, 357 F.3d at 111 (applying
And while it is true that the “establishment of” language does appear in some of the other review-preclusion provisions that the ACA inserted into the Medicare Act, see, e.g.,
In other substantive provisions that authorize or mandate agency actions subject to ACA-enacted review-preclusion provisions, however, the statutory language uses verbs other than “establish” to characterize the agency action at issue. These provisions direct the Secretary, for example, to “develop a methodology,” “determine[] appropriate” “condition[s],” “identif[y]”
Based on our survey of the review-preclusion provisions inserted into the Medicare Act by the ACA, we are confident that Congress‘s use of the phrase “the establishment of” does not signify an intent to preclude procedural challenges to a specified agency action. Rather, it simply - and unremarkably - reflects a preference for linguistic parallelism whereby Congress copied and pasted the term “establish” from certain substantive provisions into their corresponding review-preclusion provisions. And if the inclusion of the phrase “the establishment of” has nothing to do with congressional intent to preclude procedural challenges to pertinent agency actions, then it follows that the omission of that phrase surely does not signify congressional intent to allow procedural challenges.
ii. The Reviewability Canon
YNHH alternatively relies on the canon of construction known as the “reviewability canon,” which embodies the traditional presumption favoring judicial review of agency action. That is, “[w]hen a statute is reasonably susceptible to divergent interpretation, we adopt the reading that accords with traditional understandings and basic principles: that executive determinations generally are subject to judicial review.” Kucana v. Holder, 558 U.S. 233, 251 (2010) (internal quotation marks omitted). This substantive canon - upon which YNHH leans heavily, and to which the district court gave significant weight - does none of the work that YNHH needs it to do.
YNHH suggests that the traditional presumption favoring review of agency actions should put a thumb on the scale from the very outset of our interpretative process - i.e., that it should factor not only into our resolution of any ambiguity we might ultimately find in
To be sure, the Supreme Court stated over thirty-five years ago that “[w]e begin with the strong presumption that Congress intends judicial review of administrative action.” Mich. Acad. of Fam. Physicians, 476 U.S. at 670 (emphasis added). But the Court has more recently clarified that such a presumption kicks in only if there is “lingering doubt about the proper interpretation” of the review-preclusion statute at issue. Kucana, 558 U.S. at 251 (emphasis added). Like “any” of the substantive canons, then, the presumption favoring review should “only serve[] as an aid for resolving an ambiguity” at “the end of the process of construing what Congress has expressed.” Callanan v. United States, 364 U.S. 587, 596 (1961). It is not, as YNHH would suggest, “to be used to beget [an ambiguity],” or to “come[] into operation at . . . the beginning [of our interpretative process] as an overriding consideration.” Id.; see also Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 423 (2d Cir. 2005) (“Only if we discern ambiguity” after having considered “the [statutory] language itself, the specific context in which that language is used, and the broader context of the statute as a whole,” do we “resort . . . to canons of statutory construction.” (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997))).
And the Supreme Court has cautioned that even if some ambiguity remains “after seizing everything from which aid can be derived,” the “mere possibility of articulating a narrower construction” of a statute may not suffice to trigger substantive canons like the presumption favoring review. Muscarello v. United States, 524 U.S. 125, 138 (1998) (citations omitted). Rather, only a “grievous ambiguity or uncertainty in the statute” - a situation in which “we can make no more than a guess as to what Congress intended” - would suffice to trigger the presumption. Id. at 138-39 (emphasis added; internal quotation marks omitted).
Even more fundamental than YNHH‘s misunderstandings of when the presumption favoring review kicks in, or of the degree of ambiguity required for it to kick in, is YNHH‘s misunderstanding of the kind of ambiguity to which it pertains. In YNHH‘s view, the effect of the presumption is that
Here, the Hospital does not dispute that Congress expressed a clear intent to preclude judicial review of the category of agency action at issue: “estimate[s] of the Secretary.”
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At bottom,
Congress has “unequivocally preclude[d]” us, Fla. Health Scis. Ctr., 830 F.3d at 518, from performing “judicial review” of “[a]ny estimate of the Secretary,”
B. Ultra-Vires Jurisdiction
Finally, YNHH argues that even if its challenge is precluded by
when three requirements are met: (i) the statutory preclusion of review is implied rather than express; (ii) there is no alternative procedure for review of the statutory claim; and (iii) the agency plainly acts in excess of its delegated powers and contrary to a specific prohibition in the statute that is clear and mandatory.
DCH Reg‘l Med. Ctr., 925 F.3d at 509 (internal quotation marks omitted). Since
IV. Conclusion
For the foregoing reasons, we REVERSE the district court‘s denial of the Secretary‘s motion to dismiss YNHH‘s procedural challenge for lack of subject-matter jurisdiction; VACATE, for lack of subject-matter jurisdiction, the district court‘s grant of summary judgment for YNHH on its procedural challenge; REMAND the case to the district court with instructions to dismiss the remainder of YNHH‘s action for lack of subject-matter jurisdiction; and DISMISS AS MOOT YNHH‘s cross-appeal disputing the district court‘s chosen remedy of remand without vacatur.
