                     UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF COLUMBIA

                                  )
ALEGENT HEALTH-IMMANUEL           )
MEDICAL CENTER et al.,            )
                                  )
               Plaintiffs,        )
                                  )
               v.                 )   Case No. 11-139 (EGS)
                                  )
KATHLEEN SEBELIUS,                )
                                  )
               Defendant.         )
                                  )

                                )
ST. ANTHONY’S HOSPITAL, et al., )
                                )
               Plaintiffs,      )
                                )
               v.               )     Case No. 11-1932 (EGS)
                                )
KATHLEEN SEBELIUS,              )
                                )
               Defendant.       )
                                )


                          MEMORANDUM OPINION

     In these related cases, over 100 hospitals and medical

centers participating in the Medicare and Medicaid program

(collectively, “plaintiffs”) filed suit against Kathleen

Sebelius in her official capacity as Secretary of the United

States Department of Health and Human Services.     Plaintiffs

claim that HHS miscalculated the payments owed to them as

Medicare disproportionate share hospitals (“DSH”) for services

furnished to low income patients.     Complaint ¶ 1.   As another
judge on this court explained in a substantially identical case,

although the statutory scheme is complex, “the fundamental

dispute between the parties is relatively simple: whether

patient days attributable to participants in the Medicare+Choice

program” or Medicare Advantage plan under Part C of Medicare

“should be included in the “Medicaid fraction” portion of

calculations for reimbursement pursuant to the DSH statute.”

Baptist Medical Center v. Sebelius, 855 F. Supp. 2d 1 (D.D.C.

2012).

     The D.C. Circuit resolved this dispute in Northeast

Hospital Corporation v. Sebelius, 657 F.3d 1 (D.C. Cir. 2011).

The Circuit held that HHS’ decision to exclude these patient

days from the Medicaid fraction prior to October 1, 2004

violates the rule against retroactive rulemaking.   See id. at

16-17.   Accordingly, the Circuit held that that HHS could not

count the patient days of individuals enrolled in Medicare Part

C in the Medicare fraction of the Medicare DSH calculation when

determining a provider’s DSH payment for fiscal years preceding

October 1, 2004.

     The parties agree that Northeast Hospital is controlling in

both cases before this Court, and further agree that the cases

should be remanded to HHS for recalculation of the reimbursement

amounts owed to plaintiffs, “which is the relief to which

Plaintiffs would be entitled if they were to prevail on the

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merits here.”   St. Anthony’s v. Sebelius, Case No. 11-1932,

Defendant’s Motion to Dismiss and Remand at 2, ECF No. 10.      The

only remaining issue is whether the Court should impose

additional obligations on the agency in its remand order.

Plaintiffs request the Court include several such obligations,

while defendant argues that the Court not include any.

     For the reasons set forth below, the Court will vacate and

remand the final decisions of the Secretary, and will further

order the Secretary to pay the plaintiff providers interest on

any additional amounts determined to be owing to plaintiffs

after recalculation.   The Court will not, however, issue any

other specific instructions to the Secretary to follow on

remand, nor will the Court retain jurisdiction.   Accordingly,

Defendant’s Motion to Dismiss and Remand in St. Anthony’s

Hospital and Plaintiffs’ Motion for Judgment in Alegent Health-

Immanuel Medical Center are GRANTED only insofar as consistent

with this Memorandum Order.

     Plaintiffs’ first request, that the Secretary’s decisions

be vacated and the cases remanded for further proceedings

consistent with Northeast Hospital, is not contested.     See

Def.’s Opp’n to Pls.’ Mot. for Judgment at 2, Alegent Health-

Immanuel Medical Center, ECF No. 18.   Accordingly, in light of

the parties’ agreement and for good cause shown, the Court will

grant this request.

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      The Court is also persuaded by plaintiffs’ argument that

the remand order should include an instruction that the

Secretary pay interest on any additional reimbursements owed

upon remand pursuant to 42 U.S.C. § 1395oo(f)(2).   The statute

provides, in pertinent part:

      Where a provider seeks judicial review [of certain
      decisions by the Secretary, including the ones at issue in
      these cases], the amount in controversy shall be subject to
      annual interest . . . to be awarded by the reviewing court
      in favor of the prevailing party.

Id.   Defendants do not dispute that plaintiffs are the

prevailing parties in these cases.   See Tucson Med. Ctr. v.

Sullivan, 947 F.2d 971, 982 (D.C. Cir. 1991) (describing a two-

part test for a prevailing party for purposes of section

1395oo(f)(2): whether the party “substantially received the

relief sought,” and whether the civil action was “a catalytic,

necessary or substantial factor in obtaining the relief.”); see

also St. Anthony’s, Case No. 11-1932, Def.’s Motion to Dismiss

and Remand at 2 (agreeing that the case should be remanded to

HHS for recalculation of the reimbursement amounts owed to

plaintiffs, “which is the relief to which Plaintiffs would be

entitled if they were to prevail on the merits here.”)     In

addition, “Section 1395oo(f)(2) is explicitly directed to the

judiciary.   It provides that interest shall “be awarded by the

reviewing Court in favor of the prevailing party.””   Tucson, 947

F.2d at 981 (quoting 42 U.S.C. § 1395oo(f)(2)).   Because the

                                 4
 
statutory provision is not directed at the agency’s

administration of the law on remand, but rather is a directive

to the reviewing court, this Court concludes it should be part

of the order dismissing and remanding these cases.1

              Plaintiffs seek two additional requirements in the remand

orders, namely, that the Court (1) issue instructions to the

Agency as to how to recalculate plaintiffs’ DSH payments on

remand, and order the Agency to act promptly in doing so; and

(2) retain jurisdiction pending the completion of the remand and

order the Secretary to file progress reports every 90 days.                             The

Court declines to include either.                                  Although the Court

sympathizes with Plaintiffs’ desire for clear directions to, and

prompt attention from, the agency, “[u]nder settled principles

of administrative law, when a court reviewing agency action

determines that an agency made an error of law, the court’s

inquiry is at an end: the case must be remanded to the agency

for further action consistent with the corrected legal

standards.”                           PPG Indus. Inc. v. United States, 52 F.3d 363, 365


                                                            
1
  The Secretary argues that it is premature to determine that
there are amounts due to plaintiffs at that time. See Alegent
Health-Immanuel Med. Ctr., Def.’s Opp’n to Pls.’ Mot. for
Judgment at 3. Defendant’s argument is misplaced. This Order
does not constitute a determination that additional amounts are
indeed owing to the plaintiffs after recalculation; that is to
be determined by the agency on remand, in accordance with
Northeast Hospital. However, to the extent that there are
amounts due, the Court awards interest on those amounts in
accordance with the statute.
                                                               5
 
(D.C. Cir. 1995) (citations omitted).   “Only in extraordinary

circumstances do courts issue detailed remedial orders.”

Baptist Med. Ctr., 855 F. Supp. 2d at 3 (quoting N.C. Fisheries

Ass’n v. Gutierrez, 550 F.3d 16, 20 (D.C. Cir. 2008)).

     Likewise, although courts have discretion to retain

jurisdiction pending completion of a remand and to order

progress reports in the meantime, this discretion is also

exercised only in unusual circumstances, not present here, such

as “cases alleging unreasonable delay of agency action or

failure to comply with a statutory deadline, or for cases

involving a history of agency noncompliance with court orders or

resistance to fulfillment of legal duties.”      Baystate Med. Ctr.

v. Leavitt, 587 F. Supp. 2d 37, 41 (D.D.C. 2008).     “The norm is

to vacate agency action that is held to be arbitrary and

capricious and remand for further proceedings consistent with

the judicial decision, without retaining oversight over the

remand proceedings.”   Id. (collecting cases).    The Court finds

no reason to depart from “the norm” in these cases, and

accordingly will not exercise its discretion to do so.

     For the foregoing reasons, it is hereby

     ORDERED Defendant’s Motion to Dismiss and Remand in St.

Anthony’s Hospital is GRANTED; and it is further




                                 6
 
     ORDERED that Plaintiffs’ Motion for Judgment in Alegent

Health-Immanuel Medical Center is GRANTED IN PART AND DENIED IN

PART; and it is further

     ORDERED that both these actions are dismissed without

prejudice; and it is further

     ORDERED that the final decisions of the Secretary in both

these cases is VACATED; and it is further

     ORDERED that both these matters are remanded to the

Secretary for further proceedings consistent with the holdings

in Northeast Hospital Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir.

2011); and it is further

     ORDERED that, in the event the Secretary determines

additional monies are due on remand, the Secretary shall pay

plaintiffs in both cases interest on the amount in controversy

calculated in accordance with 42 U.S.C. § 1395oo(f)(2), and it

is further

     ORDERED that plaintiffs’ motion is DENIED in all respects

not consistent with this memorandum order.

     An separate Order accompanies this Memorandum Opinion.


Signed:   Emmet G. Sullivan
          United States District Judge
          December 31, 2012




 

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