                                                                         F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                         DEC 23 1999
                            FOR THE TENTH CIRCUIT
                                                                     PATRICK FISHER
                                                                               Clerk

    JOHN DAVID GILCHRIST, JR.;
    SOUTH DAVIS COMMUNITY
    HOSPITAL, a Utah Non-Profit
    Corporation,
                                                        No. 99-4056
                Plaintiff-Appellant,                (D.C. No. 96-CV-130)
                                                          (D. Utah)
    v.

    NATIONAL ASSOCIATION OF
    LETTER CARRIERS; UNITED
    STATES OFFICE OF PERSONNEL
    MANAGEMENT,

                Defendants-Appellees.




                            ORDER AND JUDGMENT           *




Before EBEL , LUCERO , and MURPHY , Circuit Judges.



         Plaintiffs John David Gilchrist, Jr. and South Davis Community Hospital,

Inc. (SDCH) appeal the district court’s decision (1) affirming the denial of



*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
insurance coverage for room and board expenses incurred at SDCH for the care of

Gilchrist’s daughter, Rebekah, during 1993 and 1994, and (2) dismissing the

claims for room and board for the years 1995 and 1996 because they were

incurred under a negotiated agreement and therefore not subject to review by the

Office of Personnel Management (OPM).     1
                                               Because SDCH was not a covered

facility as defined in the insurance policy, we affirm.

      As a federal employee, plaintiff Gilchrist and his dependents were insured

under the National Association of Letter Carriers Health Benefit Plan (NALC

Plan) at all times relevant to this case. Gilchrist’s daughter, Rebekah, was born

in May 1987 with severe chronic health problems, resulting in her death on

August 23, 1996. During most of the period between September 14, 1993, and

August 21, 1996, Rebekah was cared for at SDCH.

      Gilchrist submitted claims to the NALC Plan for his daughter’s care during

1993 and 1994. Although the NALC Plan paid approximately $600.00 per day for

Rebekah’s care during this period, it denied coverage for her room and board

except for the period between March 25 and April 26, 1994. The NALC Plan’s

primary reason for denying coverage was that SDCH was a skilled nursing facility


1
      After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.


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and therefore not covered under the Plan.     See A.R. at 147, 151, 153, 155, 157,

169-70. 2 The period between March 25 and April 26, 1994 was covered because

it followed a hospital stay at a different facility.

      Gilchrist requested reconsideration pursuant to the Plan. On April 13,

1994, the NALC Plan confirmed that coverage for room and board expenses was

not available for the period between September 14, 1993 and February 28, 1994,

on the ground that hospitalization was not medically necessary. Gilchrist

appealed this denial to the OPM. In response to an inquiry by the OPM, the

NALC Plan returned to its original rationale that SDCH was not a covered facility

under the Plan. The federal agency affirmed NALC’s ultimate decision to

deny benefits on the ground that SDCH did not meet the Plan’s definition of

a covered facility.

      Plaintiffs Gilchrist and SDCH brought an action to review the OPM’s

decision pursuant to the Administrative Procedures Act, 5 U.S.C. §§ 701-06. The

district court affirmed the OPM’s decision to deny coverage for 1993 and 1994,

finding (1) the decision that SDCH was a skilled nursing facility and not a

hospital was not arbitrary or capricious, and (2) the claims for room and board for

1995 and 1996 were not properly before the court because the claimed expenses



2
       Coverage for the month of October 1993 was denied on the grounds that
custodial care was not covered by the Plan. See A.R. at 149.

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were incurred pursuant to a “large case management/flexible services option”

which was not reviewable under the Plan. This appeal followed.

       We examine a final agency decision only to determine whether it is

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with

law.” 5 U.S.C. § 706(2).    Under this standard, “[o]ur review is narrow and

deferential; we must uphold the agency’s action if it has articulated a rational

basis for the decision and has considered relevant factors.”    Mountain Side

Mobile Estates Partnership v. Secretary of Housing & Urban Dev.       , 56 F.3d 1243,

1250 (10th Cir. 1995) (quotation omitted). An agency’s decision is arbitrary and

capricious if the agency “entirely failed to consider an important aspect of the

problem, offered an explanation for its decision that runs counter to the evidence

before the agency, or is so implausible that it could not be ascribed to a difference

in view or the product of agency expertise.”      Colorado Envtl. Coalition v.

Dombeck , 185 F.3d 1162, 1167 (10th Cir. 1999) (quotation omitted).

       In this case, we must determine whether the OPM’s final decision that

SDCH is not a hospital as defined by the NALC Plan is arbitrary, capricious, or

contrary to law. During 1993, 1994, 1995, and 1996, the NALC Plan defined

a “hospital,” with minor variations, as follows:

       An institution which (1) is accredited as a hospital under the Hospital
       Accreditation Program of the Joint Commission on Accreditation of
       Healthcare Organizations; or (2) any other institution which is
       licensed as a hospital, under the supervision of a staff of doctors and

                                            -4-
       with 24 hour a day registered nursing service, and which is primarily
       engaged in providing general inpatient care and treatment of sick and
       injured persons through medical, diagnostic and major surgical
       facilities, all of which facilities must be provided on its premises or
       under its control.

A.R. at 6 (1993 Plan); see id. at 43 (1994 Plan); at 77 (1995 Plan); at 113 (1996

Plan). The 1994, 1995, and 1996 Plans also included within their coverages

care in a “skilled nursing facility,” defined as “[a] facility licensed or certified

by the State or eligible for payment under Medicare that provides continuous

non-custodial inpatient skilled nursing care by an organized medical staff for

post-hospital patients.”       Id. at 43 (1994 Plan); at 77 (1995 Plan); at 113 (1996

Plan). Coverage for this type of facility was limited, however, to a maximum of

thirty days, and only if admission into the facility immediately followed a hospital

stay of at least three days.     See id. at 60 (1994 Plan); at 88 (1995 Plan); at 124

(1996 Plan).

       Plaintiffs argue that the OPM’s decision was arbitrary and capricious

because the care Rebekah received was “hospital care,” as opposed to “custodial

care.” This, however, is not the issue. Plaintiffs’ entitlement to room and board

benefits under the NALC Plan turns strictly on whether SDCH met the Plan’s

definition of a “hospital.” Based on the evidence before the agency, we conclude

the OPM’s decision that it did not was not arbitrary, capricious, or an abuse of

discretion.


                                               -5-
      SDCH did not meet the first part of the Plan definition because the facility

was not accredited “as a hospital” under the Hospital Accreditation Program of

the Joint Commission on Accreditation of Healthcare Organizations.        See A.R. at

587. Plaintiffs also have not shown that SDCH met the second part of the

definition, specifically, that SDCH was “primarily engaged in providing general

inpatient care . . . through medical, diagnostic and major surgical facilities . . . on

its premises or under its control.” A.R. at 6. Instead, the evidence supports the

OPM’s conclusion that SDCH was a long term care facility rendering specialized

medical care to chronically ill patients. SDCH was accredited as a long term care

facility; it was not listed as a hospital by the American Hospital Association; it

was not licensed as a “general acute hospital” by the State of Utah; Rebekah’s

physicians and the respiratory care director characterized SDCH’s care as

“sub-acute,” in contrast to the acute care provided at the Primary Children’s

Medical Center; SDCH’s billing code characterized its facility as skilled nursing

rather than a hospital; no physician was on premises at night; and SDCH did not

have a laboratory, pharmacy, diagnostic x-ray, operating room, delivery room,

recovery room, or electrocardiography equipment. The fact that Rebekah was

transferred to the Primary Children’s Medical Center whenever her condition

deteriorated further supports the conclusion that SDCH was not a “hospital” as

defined by the Plan. Because there is a rational basis for the OPM’s decision, we


                                           -6-
must uphold the denial of benefits in this case.   See Northwest Pipeline Corp. v.

FERC , 61 F.3d 1479, 1486 (10th Cir. 1995).

       Plaintiffs also argue that the district court erred in finding their claims for

room and board expenses incurred in 1995 and 1996 unreviewable because

Rebekah’s care was negotiated pursuant to a large case management/flexible

services option. They note that this issue was not raised by the NALC Plan or the

OPM as a reason for denying benefits or precluding OPM jurisdiction until the

case was before the district court. We need not decide whether the district court

erred in making this determination as we conclude, for the reasons stated above,

that Rebekah’s 1995 and 1996 room and board expenses at SDCH were not

covered under the Plan. That is, because SDCH was not a covered facility as

defined in the NALC Plan, the OPM did not abuse its discretion in denying

plaintiffs’ claims for this period.   3



         Finally, plaintiffs argue that the NALC Plan never contested SDCH’s

eligibility as a hospital in denying coverage, arguing that this was raised only by

the OPM, and thus the agency’s adjudication of its own rationale violated due

process. We note initially that this argument is factually incorrect, as set out



3
      There is some question whether plaintiffs exhausted their remedies
concerning the 1995 and 1996 benefits. Because OPM’s 1997 reconsideration
included a review of supplemental documentation from 1995 and 1996, we
conclude the agency’s final decision covered these years as well.

                                             -7-
above. More importantly, because the issue was not raised to the district court,

we will not consider it on appeal.   See Crow v. Shalala , 40 F.3d 323, 324

(10th Cir. 1994).

       The judgment is AFFIRMED.

                                         ENTERED FOR THE COURT



                                         Carlos F. Lucero
                                         Circuit Judge




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