UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

 

FILED

 

)
SAINT VINCENT INDIANAPOLIS ) SEP 2 9 2015
HOSPITAL, ) Clerk, U.S. Distrch 8: Bankruptcy
) Courts for the District of Columbia
Plaintiff, )
)
v. ) Case No 1:13-cv-01768-RDM
)
KATHLEEN SEBELIUS, SECRETARY, )
US. DEPARTMENT OF HEALTH AND )
HUMAN SERVICES )
)
Defendant. )
)
MEMORANDUM OPINION

Plaintiff Saint Vincent Hospital and Health Care Center, Inc, (“plaintiff”) ﬁled suit against
Defendant Kathleen Sebelius, Secretary of the Department of Health and Human Services
(“defendant”), alleging agency error in limiting the scope of administrative review to issues
identiﬁed by providers in cost reports under the Medicare program established by Title XVIII of
the Social Security Act, as amended. Compl, ECF No. 1. Defendant ﬁled an answer, generally
denying all factual allegations and referring the Court to statute and relevant case law for
interpretations of legal points raised in the complaint. Answer, ECF No. 11. Plaintiff then ﬁled
this motion for Summary Judgment. Mot. Summ. J ., ECF No. 17. Defendant ﬁled a cross motion
for summary judgment and memorandum in support of summary judgment and in opposition to
plaintiff’s motion for summary judgment. Cross-Mot. Summ. J ., ECF No. 18, Mem. Supp. Mot.
Summ. J Opp’n P1.’s Mot. Summ. J., ECF No. 18—1. Plaintiff then ﬁled a reply in opposition.
Reply Opp’n Mot. Summ. J., ECF No. 20. Lastly, defendant ﬁled a reply. Reply Opp’n. Mot.

Summ. J. Combined Opp’n. Pl.’s Mot. Summ. J., ECF No. 23.

I. BACKGROUND

Plaintiff ﬁled suit appealing the decisions of the Provider Reimbursement Review Board
(“PRRB”) under 42 U.S.C. § 139500. Compl., ECF No. 1. Speciﬁcally, plaintiff alleges that the
PRRB has improperly limited the scope of administrative review to several issues that plaintiff
raised with regard to its ﬁscal year 1999 Medicare reimbursement. Id Throughout the
administrative appeal process, plaintiff raised six issuesl, the procedural history of which is
outlined in the complaint. Id. Ultimately, the PRRB ruled that plaintiff had not adequately
established the dissatisfaction element required under § 139500(a) for the ﬁrst three issues. Id
The PRRB further found that the second three issues were not timely added to the appeal and
therefore were not preserved for stand-alone appeal. Id.

Plaintiff requests the Court ﬁnd that plaintiff met the dissatisfaction requirement under §
139500(a), that the amount in controversy is $10,000 or more, that plaintiff timely ﬁled a request
for hearing before the PRRB, that plaintiff is entitled to a hearing before the PRRB with respect to
the ﬁscal year 1999 program reimbursement, and that the PRRB has jurisdiction over all issues
raised by plaintiff. Id

Defendant generally and speciﬁcally denies all conclusions of law and most statements of
fact advanced by plaintiff in its answer. Answer, ECF No. 11. Defendant ﬁirther asserts that the

Court’s subject matter jurisdiction is limited to review of any ﬁnal agency actions within the scope

1 All six issues raised by plaintiff on appeal of the fiscal intermediary relate to the Hospital’s “total Medicare
reimbursement for FY 1999”. Compl., ECF No. 1 at 3. Plaintiff ﬁrst raised three issues in the initial appeal, "(a)
Indirect Medical Education ("IME") Full Time Equivalent (“Fl'E”) Count; (b) Ambulatory Surgery Costs; and (c) Organ
Acquisition Costs.” Compl. ECF No. 1 at 3. Plaintiff further notes that it claimed costs related to (a) and (b) on its
initial FY 1999 cost report, but not (c). These issues were raised within the 180 day limit set forth in § 139500(a).
Plaintiff raised three additional issues for appeal (enumerated as (dl-(f) in Compl., ECF No. 1 at 4) outside of the
180 day period and requested their transfer to the initial appeal.

2

of § l39500(f)(1) and that the complaint fails to state a claim upon which relief can be granted.
Answer, ECF No. 11 at 1.

Plaintiff then ﬁled its motion for summary judgment in which, pursuant to Fed. R. Civ. P.
56, plaintiff alleges there is no genuine issue of material fact and that plaintiff is therefore entitled
to judgment as a matter of law on each of its claims. Mot. Summ. J., ECF No. 17 at 1. Defendant
ﬁles a cross-motion for summary judgment and her memorandum in support of her cross-motion
and in opposition of plaintiffs motion. Cross—Mot. Summ. J., ECF No 18, and Mem. Supp. Mot.
Summ. J. Opp’n. P1.’s Mot. Summ. J., ECF No 18—1. The remaining ﬁlings are outlined above.

The Court now turns to analyze the matters presented in both parties’ motions.

1]. ANALYSIS

The crux of the matter before the Court surrounds defendant’s interpretation of the
dissatisfaction provision found in § 139500(a). The Court’s determination on this point informs
and guides the Court in ruling on each party’s (cross-)motion for summary judgment. This Court’s
review of the case at bar is guided by the Administrative Procedures Act (“APA”). 5 U.S.C. §§
701-706. The Court notes that the APA provides a decidedly narrow standard of review. Mem.
Supp. Cross—Mot. Summ. J., ECF No. 18—1 at 12 (citing Southern Co. Servs., Inc. v. FCC, 313
F.3d 574, 580 (DC. Cir. 2002), Hillcrest Riverside, Inc. v. Sebelius, 680 F. Supp. 2d 30, 35 (D.D.C.
2010). The Court’s analysis under APA provisions requires the two tier analysis outlined in
Chevron, USA, Inc. v. Natural Resources Defense Council, Inc, to determine whether
defendant’s interpretation warrants deference. 467 US. 837 (1984). The Court applies the DC.
Circuit’s rationale that, “to the extent HHS has based its decision on the language of the Medicare

Act itself, we owe deference under Chevron USA. Inc. v. Natural Resources Defense Council,

467 US. 837, 843—845 (1984).” Marymount Hosp, Inc. v. Shalala, 19 F.3d 658, 661 (DC. Cir.
1994)
a. Plaintiff’s Motion for Summary Judgment
i. A Medicare Provider’s Right to Administrative Hearing
Plaintiff primarily relies upon a provider’s right to an administrative hearing under §
139500. Mem. Supp. Mot. Summ. J., ECF No. 17-1 at 4-8. Plaintiff asserts that Congress “has
clearly established conditions under which a Medicare Provider is entitled to challenge an
FI/MACZ’S determination of reimbursement.” Id. at 4. Plaintiff identiﬁes three criteria to obtain
a hearing before the PRRB under § 139500(a); dissatisfaction with the total program
reimbursement to the provider, the amount in controversy being $10,000 or more, and the provider
ﬁling for a hearing within 180 days after notice. Id. As the Court has identiﬁed, the crux of this
matter lay in the ﬁrst criteria related to the dissatisfaction requirement found in § 139500(a),
although the third criteria is implicated as well.
ii. Dissatisfaction Requirement
Section 139500(a) sets forth requirements to be heard before a PRRB. The requirements
require that, in part:
(1) such provider--
(A)(i) is dissatisﬁed with a ﬁnal determination of the organization serving as its
ﬁscal intermediary pursuant to section 1395h of this title as to the amount of
total program reimbursement due the provider for the items and services
ﬁirnished to individuals for which payment may be made under this subchapter

for the period covered by such report, or

(ii) is dissatisﬁed with a ﬁnal determination of the Secretary as to the amount
of the payment under subjection (b) or (d) of section 1395ww of this title...

2 Fiscal intermediaries and/or Medicare administrative contractors. See Compl., ECF No. 1 at 2. See generally
Bethesda Hosp. Ass’n v. Bowen, 485 US. 399 (1988).

Plaintiff contends that the only issue in applying this dissatisfaction requirement is whether
plaintiff “must have ﬁrst claimed each cost in issue on its cost report for the ﬁscal year in
controversy.” Mem. Supp. Mot. Summ. J ., ECF No 17—1 at 4-5. The leading case cited by both
parties appears to be Bethesda Hosp. Ass ’n v. Bowen, 485 US. 399 (1988). From the outset, the
Court notes one signiﬁcant factual distinction that informs the present analysis. Speciﬁcally, the
provider in Bethesda self-disallowed3 costs that were not allowed by the current regulations, then
later challenged the validity of those regulations. Id. Conversely, plaintiff here has no such claim.
Plaintiff relies upon this Court’s rationale in applying the Bethesda analysis where the Court
“rejected the Secretary’s position that the Board’s4 jurisdiction was limited to review of matters
speciﬁcally claimed in a provider’s relevant cost reports.” UA/IDNJ—University Hosp. v. Leavitt,
539 F. Supp. 2d 70 (D.D.C. 2008) (Sullivan, J). In WDNJ, as plaintiff notes, Judge Sullivan
reviewed a circuit split on whether Bethesda mandates an exhaustion requirement before the
FI/MAC prior to a hearing before the PRRB. Mem. Supp. Mot. Summ. J ., ECF No 17-1 at 6 (citing
WDNJ—University Hosp. v. Leavitt, 539 F. Supp. 2d 70, 75-76 (D.D.C. 2008) (citations omitted».
Plaintiff then argues that Judge Sullivan, consistent with the First and Ninth Circuit, rejected the
proposition advanced by defendant here, and the Seventh Circuits, and held that the provider need
not express dissatisfaction with each individual claim to preserve the matters for appeal to and
hearing before the PRRB. Mem. Supp. Mot. Summ. J ., ECF No. 17—1 at 6-7 (citing WDNJ—
University Hosp. v. Leavitt, 539 F. Supp. 2d 70, 75 (D.D.C. 2008) (citing Loma Linda University

Medical Center v. Leavitt, 492 F.3d 1065 (9th Cir. 2007) and MaineGeneral Medical Center v.

3 As explained in Bethesda, this effectively means that provider did not claim certain costs. Bethesda Hosp. Ass’n v.
Bowen, 485 U.S. 399, 401 (1988).

4 Provider Reimbursement Review Board.

5 See Little Company of Mary Hosp. and Health Care Centers v. Shalala, 24 F.3d 984 (7th Cir. 1994) (“Little Co. I”)
and Little Company of Mary Hosp. and Health Care Centers v. Shalala, 165 F.3d 1162 (7th Cir. 1999) ("Little Co. ll”).

5

Shalala, 205 F.3d 493 (lst Cir. 2000)». The Court, however, ﬁnds that whether plaintiff claimed
each individual cost is not the dispositive determination. Rather, the question before the Court is
whether plaintiff’s claims were timely in expressing dissatisfaction.

Conversely, defendant argues that plaintiff failed to comply with the dissatisfaction
requirement, making plaintiff’s appeal wholly untimely, and therefore has no further cause of
action. Defendant notes that PRRB determined that it (the PRRB) lacked jurisdiction over “the
only reimbursement matters that St. Vincent timely appealed from its FY 1999 cost report...”
Mem. Supp. Cross-Mot. Summ. J ., ECF No. 18—1 at 15. This refers to the three initial issues raised
for appeal by plaintiff before the PRRB and discussed above. The PRRB determined that plaintiff
“failed to meet the jurisdiction prerequisite of being ‘dissatisﬁed’ with the amount of Medicare
payment because the ‘errors and omissions’ alleged by the provider in its appeal stemmed from its
own ‘negligence in understanding the Medicare regulations governing the reimbursement of such
costs” rather than the FI/MAC’s action. Mem. Supp. Cross-Mot. Summ. J ., ECF No. 18-1 at 15.
In fact, defendant notes that FI/MAC did not change or adjust plaintiff s cost report, rather it

,3

“accepted the provider’s cost accounting and paid St. Vincent what it asked for. Mem. Supp.
Cross—Mot. Summ. J., ECF No. 18-1 at 15. Therefore, defendant asserts that the PRRB’s dismissal
is consistent with Bethesda Court’s ruling. Mem. Supp. Cross-Mot. Summ. J., ECF No. 18—1 at
16. Defendant further notes that in Bethesda the Court “careﬁilly limited its decisions to situations
where a provider first claimed on its cost report all the payment available to it under the Medicare

7’

statute, regulations, formal rulings, and program manual instructions. Mem. Supp. Cross-Mot.
Summ. J., ECF No. 18-1 at 17 (citing Bethesda Hosp. Ass ’11. v. Bowen, 486 US. 399, 405-406
(1988)). The defendant therefore concludes that the PRRB properly dismissed plaintiffs appeal

because its appeal amounted to an attempt to impermissibly correct its own mistake in not claiming

costs that may have been due. Defendant also notes that this interpretation, and the PRRB’s
dismissal in this case, are both consistent with the post-Bethesda cases from the Seventh Circuit
discussed above". Finally, defendant argues that plaintiﬁ" 5 citation of another decision from this
Court is inapposite7.

Having analyzed the parties’ position on the dissatisfaction requirement of § 139500(a),
the court now turns to whether defendant’s interpretation warrants this Court’s deference
consistent with Chevron8.

iii. Chevron Analysis

In Chevron, the Court established a two tier analysis to determine whether to grant

deference to an agency’s determination or interpretation of a statute:

First, always, is the question whether Congress has directly spoken to the precise
question at issue. If the intent of Congress is clear, that is the end of the matter; for the
court, as well as the agency, must give effect to the unambiguously expressed intent of
Congress. If, however, the court determines Congress has not directly addressed the
precise question at issue, the court does not simply impose its own construction on the
statute, as would be necessary in the absence of an administrative interpretation.
Rather, if the statute is silent or ambiguous with respect to the speciﬁc issue, the
question for the court is whether the agency’s answer is based on a permissible
construction of the statute.

Chevron, USA, Inc. v. Natural Resources Defense Council, Inc, 467 US. 837, 842-3 (1984).
The Court ﬁrst turns to whether Congress has spoken clearly on the matter of the dissatisfaction
requirement under § 139500(a). If the Court ﬁnds, as it does here, that Congress has not spoken
clearly on the matter, then it turns to the second tier of the Chevron analysis to determine whether

deference to defendant’s interpretation.

6 See Little Company of Mary Hosp. and Health Care Centers v. Shula/a, 24 F.3d 984 (7th Cir. 1994) (“Little Co. I”)
and Little Company of Mary Hosp. and Health Care Centers v. Shalala, 165 F.3d 1162 (7th Cir. 1999) ("Little Co. ll”).
7 Arguing that this Court’s ruling in UMDNJ—University Hosp. v. Leavitt, 539 F. Supp. 2d 70 (D.D.C. 2008) is factually
distinct and not binding precedent. Mem. Supp. Cross—Mot. Summ. J., ECF No. 18—1 at 21.

8 The Court notes that it speciﬁcally is not called upon to rule whether, in the Court’s judgment, plaintiff or
defendant prevails on their interpretation of the dissatisfaction requirement.

7

The ﬁrst tier in the Chevron analysis requires this Court to consider whether Congress has
spoken clearly on the matter. In Little Co. II, the Seventh Circuit noted, “while the statute is
curiously worded, the intent is plain” with regard to the dissatisfaction requirement here at issue.
Little Co. ofMary Hosp. and Health Care Centers v. Shalala, 165 F.3d 1162, 1165 (7th Cir. 1999)
(“Little Co. II”) (citations omitted). As suggested in Little Co. II, both parties have potentially
valid, but incongruent, interpretations of the statutory language setting forth the dissatisfaction
requirement as applied in the instant case. Plaintiff argues that this Court has previously held that
“‘the language of the Medicare statute is clear and unambiguous; a provider may invoke the
Board’s jurisdiction under 139500(a) by claiming dissatisfaction with the total amount of
reimbursement...”’ Reply Supp. Summ. J . Opp’n. Cross-Mot. Summ J ., ECF No 20 at 9. The
Court notes that this is not the issue before the Court as to the Chevron analysis. This issue is not
whether claiming dissatisfaction is sufﬁcient to invoke the PRRB’s jurisdiction, rather the issue is
whether plaintiff properly claimed dissatisfaction. Given that ambiguity as to application, the
Court ﬁnds that the intent of Congress is not clear on this point, and turns to the second tier of the
Chevron analysis.

The second Chevron question before the court is “whether the agency’s answer is based on

)7

a permissible construction of the statute. Chevron, USA, Inc. v. Natural Resources Defense

Council, Inc, 467 US. 837, 842—3 (1984). As noted previously, the Court applies the DC.
Circuit’s rationale that, “to the extent HHS has based its decision on the language of the Medicare
Act itself, we owe deference under Chevron USA. Inc. v. Natural Resources Defense Council,
467 US. 837, 843—845 (1984).” Marjymount Hosp, Inc. v. Shalala, 19 F.3d 658, 661 (DC. Cir.
1994). In reviewing defendant’s analysis, the Court ﬁnds that it is applying the language of the

Medicare Act, and therefore the Court grants defendant’s interpretation deference. In so doing,

the Court now turns to whether the PRRB’s ruling is based upon “a permissible construction of
the statute.” Id. After reviewing the PRRB’s ruling, as diSCussed in more detail above, the Court
ﬁnds that it is based upon a “permissible construction of the statute,” and therefore the Court must

rule in favor of defendant on the plaintiff’s motion for summary judgment.

b. Defendant’s Cross-Motion for Summary Judgment
The necessary conclusion borne of this Court’s ﬁnding above regarding plaintiff” s motion
for summary judgment is that defendant’s cross-motion for summary judgment must be granted.
After ﬁnding that defendant’s interpretation of the issue at bar is warranted deference, and
prevails alter given such deference, the Court must necessarily ﬁnd that plaintiff’ 5 claim has
been so eviscerated as to render it failing to state a claim. Therefore, the Court will rule in favor

of defendant on defendant’s motion for summary judgment.

III. CONCLUSION
In light of the Court’s analysis, plaintiff’s motion for summary judgment will be DENIED,
defendant’s cross-motion for summary judgment will be GRANTED, PRRB’s ﬁnal decision on
behalf of the Secretary will be AFFIRMED, and plaintiff’ s complaint will be DISMISSED with

prejudice by separate order issued this date.

DATED: September 29, 2015 @C' W

Royce C. Lamberth
United States District Judge

 

