PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PRESSLEY RIDGE SCHOOLS, a
Pennsylvania corporation,
Plaintiff-Appellee,

v.

R. PHILIP SHIMER, Acting
                                                                   No. 97-1049
Commissioner, West Virginia
Bureau for Medical Services;
GRETCHEN O. LEWIS, Secretary,
Department of Health & Human
Resources,
Defendants-Appellants.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-95-970-2)

Argued: December 4, 1997

Decided: January 27, 1998

Before MURNAGHAN and MOTZ, Circuit Judges, and
BUTZNER, Senior Circuit Judge.

_________________________________________________________________

Dismissed by published opinion. Judge Motz wrote the opinion, in
which Judge Murnaghan and Senior Judge Butzner joined.

_________________________________________________________________

COUNSEL

ARGUED: Stephen Jay Small, Senior Assistant Attorney General,
BUREAU FOR MEDICAL SERVICES, Charleston, West Virginia,
for Appellants. Charles Marvin Johnson, Jr., Charleston, West Vir-
ginia, for Appellee. ON BRIEF: Darrell V. McGraw, Jr., Attorney
General, BUREAU FOR MEDICAL SERVICES, Charleston, West
Virginia, for Appellants. David R. Bungard, Charleston, West Vir-
ginia, for Appellee.

_________________________________________________________________

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Two West Virginia officials attempt to appeal the district court's
judgment holding that the State violated Medicaid regulations and the
Due Process and Equal Protection clauses of the United States Consti-
tution in handling various Medicaid claims submitted by a Medicaid
provider. Subsequent to the district court's decision, the parties
entered into a written settlement agreement, which at their request the
district court entered as a consent order. Pursuant to the settlement
agreement, the parties purported to permit the State to appeal two
issues. However, because the settlement agreement renders this case
moot, we must dismiss the appeal.

I.

Pressley Ridge Schools, Inc. (Pressley Ridge), a nonprofit corpora-
tion providing behavioral health care services to children, entered into
an agreement with the Bureau for Medical Services (the Bureau), the
state agency responsible for implementing, overseeing and regulating
the Medicaid program in West Virginia, authorizing Pressley Ridge
to participate as a Medicaid provider. Pressley Ridge thus became eli-
gible to receive reimbursement through the Bureau for behavioral
health services rendered to Medicaid-eligible clients in West Virginia.
As a Medicaid provider, Pressley Ridge agreed to make all of its
records and documents available and to participate in evaluations and
audits authorized by the State Department of Health and Human
Resources (the Department) to ensure that Pressley Ridge's services
and program complied with the applicable Medicaid regulations. The
Department, in turn, agreed to provide an appeal process permitting
Pressley Ridge to challenge any adverse decisions by the Department.

                    2
In August 1995, the Bureau informed Pressley Ridge that all Med-
icaid reimbursements to it would be suspended indefinitely. The
Bureau conducted an on-site review of Pressley Ridge for all Medic-
aid services billed from January 1 through June 20, 1995, and disal-
lowed reimbursement to Pressley Ridge for those services due to lack
of "quantified baseline data" in Pressley Ridge's behavior manage-
ment plans. The Bureau also instituted a prepayment review for Med-
icaid claims made by Pressley Ridge for services delivered after
October 31, 1995.

Pressley Ridge then brought this action in which it sought various
forms of injunctive relief. Specifically, Pressley Ridge asked the dis-
trict court to order the State to reimburse Pressley Ridge for behavior
management services it had already provided to Medicaid-eligible cli-
ents and to prohibit the State from adopting the prepayment review
procedure without notice or hearing. After a four day bench trial, the
district court granted Pressley Ridge the requested injunctive relief.
The court reasoned that the Bureau's requirement of"quantified base-
line data" did not accord with the requirements set forth in the
Bureau's Medicaid Provider Manual and, therefore, violated federal
regulations requiring the Bureau to provide for notice and comment
of "any significant proposed change in its methods and standards for
setting payment rates for services." 42 C.F.R.§ 447.205. In addition,
the court ruled that the State's institution of prepayment review of
Pressley Ridge's behavior management services, without notice or
hearing, violated state and federal regulations. Finally, the court held
that these regulatory violations denied Pressley Ridge its constitu-
tional Due Process and Equal Protection rights.

The State noted an appeal. While the appeal was pending, but
before the case had been briefed or argued, the parties entered into a
written settlement agreement. The agreement settled"all disputed
claims" between the parties with regard to the adequacy of the ser-
vices provided by Pressley Ridge for the periods in question, and
determined how Pressley Ridge would be compensated for past and
future behavior management services provided to Medicaid-eligible
clients in West Virginia. The agreement purported to permit the State
to maintain an appeal as to whether the Bureau must submit its
requirement of "quantitative baseline data" to"notice and comment"
before it was utilized, and whether the Bureau must provide an

                    3
administrative review hearing upon adopting prepayment review. The
settlement agreement stated, however, that "[r]egardless of the out-
come of any appeal, the financial impact of this agreement shall
remain intact."

II.

On appeal, the State attempts to challenge the district court's hold-
ing that it violated Pressley Ridge's rights by retroactively applying
quantitative baseline data to behavior management plans submitted by
Pressley Ridge and by refusing to grant Pressley Ridge an administra-
tive hearing to appeal the State's decision to impose prepayment
review. Because the parties have entered into a settlement, however,
no live dispute between them currently exists. Accordingly, we lack
jurisdiction to consider this case.

Article III of the United States Constitution limits the jurisdiction
of the federal courts to "actual, ongoing controversies." Honig v. Doe,
484 U.S. 305, 317 (1988); see U.S. Const. art. III, § 2, cl. 1. "To qual-
ify as a case fit for federal-court adjudication, an actual controversy
must be extant at all stages of review, not merely at the time a com-
plaint is filed." Arizonans for Official English v. Arizona, ___ U.S.
___, 117 S. Ct. 1055, 1068 (1997) (citation and internal quotation
omitted). Thus, a federal court has no "power to render advisory opin-
ions [or] . . . decide questions that cannot affect the rights of litigants
in the case before them." Honig, 484 U.S. at 317; see also Preiser v.
Newkirk, 422 U.S. 395, 401 (1975).

At oral argument, the State cited two cases assertedly supporting
its contention that, despite the settlement agreement, the issues raised
in this appeal are not moot. See Havens Realty Corp. v. Coleman, 455
U.S. 363, 369 (1982); Reeves Bros., Inc. v. United States Envtl. Pro-
tection Agency, 956 F. Supp. 665, 675 (W.D. Va. 1995). Both cases
are clearly distinguishable from the one at hand. In Havens, although
the parties had entered into a settlement agreement,"one of the parties
continue[d] to seek damages" and the agreement simply set forth a
means to liquidate those damages. 455 U.S. at 371. The Supreme
Court concluded that "[g]iven respondents' continued active pursuit
of monetary relief, this case remains `definite and concrete, touching
the legal relations of parties having adverse legal interests.'" Id.

                     4
(quoting Aetna Life Ins., Co. v. Haworth, 300 U.S. 227, 240-41
(1937)). Similarly, in Reeves Bros., although the parties entered into
a consent order, the order was "in the nature of a preliminary injunc-
tion" and explicitly stated that its enforcement was entered "pending
the ultimate resolution of the case." 956 F. Supp. at 675. The plaintiff
continued to seek a permanent injunction and, for this reason, the
court concluded that the parties sought "further concrete relief," creat-
ing "a live controversy." Id.

Unlike Havens and Reeves Bros., here no party seeks any further
concrete relief. No live dispute between the parties exists as to either
prepayment review or quantitative baseline data. The settlement
agreement expressly states that "[i]n lieu of prepayment review as to
claims submitted by Pressley Ridge . . . [the Bureau] agrees to con-
duct a technical or post-payment, compliance review." Similarly, the
agreement establishes that the parties have totally settled their dis-
agreement regarding the requirement of quantitative data.

Nor does this appeal involve issues "capable of repetition, yet
evading review." In such cases, a court can address issues despite
their apparent mootness. See Nebraska Press Ass'n v. Stuart, 427 U.S.
539, 546 (1975). Here, prior to trial, the Bureau amended its regula-
tions to require that quantitative baseline data be included in behavior
management plans in order to qualify for Medicaid reimbursement.
This change obviously diminishes the potential for repetition of the
dispute that brought about this litigation. Moreover, as the State quite
properly conceded at oral argument, the issues in this case are not the
sort that would evade judicial review because of their short-lived
nature. Cf. id. at 546-47 (since restrictive orders in question were "by
nature short-lived," they would evade judicial review if Court
declined to address them on mootness grounds).

For these reasons, we lack jurisdiction over this case and must dis-
miss the appeal.

III.

The State asks that, if we determine that the issues raised on appeal
are moot, we vacate the district court's judgment. It wishes to elimi-

                     5
nate the precedent established by the district court. See Brief of
Appellants at 10.

Generally, when a case becomes moot on appeal, an appellate court
vacates the judgment below. See, e.g., Arizonans For Official English,
117 S. Ct. at 1071. Vacatur "clears the path for future relitigation of
the issues between the parties and eliminates a judgment, review of
which was prevented by happenstance." United States v. Munsing-
wear, Inc., 340 U.S. 36, 39 (1950). Recently, however, in U.S. Ban-
corp Mortgage Co. v. Bonner, 513 U.S. 18, 23 (1994), the Supreme
Court "clarified that vacatur is an equitable remedy, not an automatic
right." National Black Police Ass'n v. District of Columbia, 108 F.3d
346, 351 (D.C. Cir. 1997).

In U.S. Bancorp, the parties settled their dispute but specifically
agreed to seek vacatur of the lower court judgment. The Supreme
Court refused to provide this relief, reasoning that to grant vacatur as
a matter of course in such instances would be to regard "judicial pre-
cedents" as "the property of private litigants" and "would -- quite
apart from any considerations of fairness to the parties -- disturb the
orderly operation of the federal judicial system." U.S. Bancorp, 513
U.S. at 27. The Court held that "mootness by reason of settlement
does not justify vacation of a judgment under review." Id. at 29. The
Court explained:

          Where mootness results from settlement . . . the losing party
          has voluntarily forfeited his legal remedy by the ordinary
          processes of appeal or certiorari, thereby surrendering his
          claim to the equitable doctrine of vacatur.

Id. at 25. Thus, barring "exceptional circumstances," an appellate
court should not vacate the judgment of a trial court at the behest of
a losing party that has mooted a case by agreeing to settle it. Id. at
29.

In our view, the case at hand presents no "exceptional circum-
stances" and the parties have suggested none. Rather, as in U.S.
Bancorp, mootness in this case resulted from the losing party's deci-
sion to settle the case. By doing so, that party (the State) "surrender-
[ed] [its] claim to the equitable remedy of vacatur." Id. at 25; cf.

                     6
Motta v. District Dir. of I.N.S., 61 F.3d 117, 119 (1st Cir. 1995) (court
found special circumstances rendering vacatur of lower court's judg-
ment proper because parties had only agreed to settlement at prompt-
ing of First Circuit itself).

We note, however, that in U.S. Bancorp, the Supreme Court con-
cluded with the following comment:

          Of course even in the absence of, or before considering the
          existence of, extraordinary circumstances, a court of appeals
          presented with a request for vacatur of a district-court judg-
          ment may remand the case with instructions that the district
          court consider the request, which it may do pursuant to Fed-
          eral Rule of Civil Procedure 60(b).

U.S. Bancorp, 513 U.S. at 28. Given that the State has not requested
this precise relief, we will not remand with specific instructions that
the district court consider a request for vacatur. But, because neither
side seems cognizant of U.S. Bancorp or its teachings, we do observe
that our dismissal of this appeal is without prejudice to the right of
any party to move the district court, under Federal Rule of Civil Pro-
cedure 60(b), to vacate its judgment. See Nahrebeski v. Cincinnati
Milacron Mktg. Co., 41 F.3d 1221, 1222 (8th Cir. 1994).

DISMISSED

                    7
