backlog today is smaller than it was the last time this case was before court now all that said providers force it's also undisputed that providers are waiting far longer than ninety days for a hearing that's unacceptable an state of affairs that the district court has ordered the agency to resolve some three hundred fifty thousand appeals by the end of this calendar year alone the agency has the resources to adjudicate perhaps a quarter of that  now how is the agency expected to comply that the only suggestion that has ever been made by anybody is through mass settlements but perversely the district courts very order deters the kinds of merits based settlements hangs over the process of a settlement requires a willing counterparty and when there is an expectation on the part of the provider community that if you dish or we prescribe a remedy will provide higher compensation and anything  hospital industry what you have with in a given tranche as you put it is a fairly diverse set of claims from providers some of whom are much more scrupulous and have much higher success rates than others so when you start in gauging and has made available what is called settlement conference facilitation so on with individuals pacific providers the agency is very interested in resolving all of the claims of a provider on a fair basis that say in terms of going sending somebody to the back of the line the agency generally with the exception of benefit of putting beneficiaries the front the agency has sort of you can escalate your claim and forfeit your right to hearing the word if you think that we're acting in bad faith he knew back to the district court for some other relief well i hesitate to say that i think there would be significant consequences in if the agency was certainly hasn't been given the opportunity against the backdrop of this mandamus or they certainly can't do agency were come to a provider and say we will pay you thirty five cents on the dollar take it or leave it and if you don't take it you go to the back of the line i would imagine the providers would that that there would be significant resistance to that we told the district court was to balance the equities it seems to me that your argument is that the equities were appropriate we balance here because the and we don't have the resources to eliminate the basically been put in a position where we're going to have to so lease claims and disadvantage positions and i'm trying to test the norm use how disadvantaged position really  and it doesn't necessarily mean that you have to take an unreasonable position and so you take a leave but it could be that maybe you have some leverage that you're not recognizing hundred fifty thousand claims that never enter the backlog but if you create a system where the agency is required to settle any claim that reaches the third level all it does is incentivize providers to file lots more which just compounds the problem the other thing i would point out is this adverse selection as i think it's quite significant in order to be able to address this situation if you want to come up with a one size fits all settlement term for an entire group of providers the inevitable result is those terms will be most attractive to those claimants with the weakest claims but the claimants with stronger claims are going to view the offer as an adequate you're not even going to be able to settle those claims and all that's going to happen is medicare trust funds are going to be depleted by payouts for for the weaker claims so this isn't a very effective ultimately backlog production process and it jeopardizes the medicare trust fund by the vastly increase in the  j one forty six and a one fifty two to one fifty three a variety of alternative remedial measures that might be appropriate we have nick's committed to a particular deadline because we don't think we could do that in good faith given that there was a continuing mismatch between the resources for education and the workload about eighty thousand appeals or one thousand deals can be decided each year north of one hundred fifty thousand are being fired every year going over so given this sort of though you just said if if we could get all the providers to come in you've got one provider durable medical equipment that's responsible for twenty four percent of all pending appeals that does a quarter of the appeals if you took the top ten providers and concentrated on them and this particular one who has a twenty five percent also has an error rate of only twenty five percent which means he has a success rate i would say his hearing out of seventy five percent offer him seventy five cents on the dollar so that you can't you do that so that error rate actually is and this is in his or we raise in the declaration as it should be with that error rate means is not error rate at the third level for you it's not that they prevail seventy five times seventy percent of the time hearings twenty five percent of the claims  and i want to be clear i'm not talking specifically about this one twenty four percent provider or any other specific but the other thing the agency needs to take into account our program integrity concerns and on horsemeat concerns medicare fraud is a real claimants where there are these major program integrity got one more question and i think you alluded to it in response to judge welcomes question you said you put the beneficiaries at the front is this the system this of a level not just to the providers but to also medicare patients who are disputing whether medicare has paid the eighty percent or whatever it is your honor  that's of a smaller fraction of the workload i think it's somewhere between five and ten percent but it will be there if there's wrong that scale the agency from the get go recognize that these were the most vulnerable population so they prioritize them actually get this right now for the questions thank you the morning your honour's name please the court i'm kate stenson representing the teles judge wilkins i'm going to start with the colonies that you've had with the governing council because i think they framed the two pairs of questions that are at issue here the first p is the sort of broader questions and then name this issue which is what the first d c circuit panel decided and then the second question is should mandamus issue which is what the district court decided and that's what gives rise to the abuse of discretion standard of of you that's the first pair the second pair is the colloquy that you were having a first which is the difference between can't and won't what the government is saying at this stage in may of twenty seventeen is  it can't meet the four year plan that the district court set forth in its order i would suggest that one place to start with this is to go back in fact to the first henderson posed to government counsel which is the government counsel didn't essentially offer any other alternative timelines and that's the first issue the second response is the district court concluded upon reviewing the suggested timeframe  discretionary processes of the secretary that leads me to the second pass which is these these reductions in the bath and what the district court found was in those background what that that that those who used productions were tell me the j o o j one sixty five i'm sorry said the third to last defender nonetheless argues that imposing such a timetable would require her to make payment on medicare claims regardless of the merit of those claims and that is the crux of what the government  agency to do something that it is statutorily prohibited from doing right imagine there are ten billion claims and congress provides one dollar but congress also says you must resolve every single claim in a week where you would agree under those circumstances that whether or not available that it would not be granted by a court you prove that or not in those circumstances i would agree because i think under alabama power versus casio under sierra club versus e p a under n r d c versus training the agency would be in a position to say or what those cases called the heavy burden of demonstrating in possibility so judge garland the fact that judge those were didn't specifically say i best the court can give them that we gave the instruction that says on the one hand and on the other and which is all we provided but i don't see a finding that it's not whatever the burden is whatever the burden on the government may be training requires that a district court not order an agency to do something that's not possible and that requires a finding it seems to me by the district court that what the government says is impossible i thirty percent reduction by the end of this year the government's position is that is completely impossible and the district court didn't say why it's not impossible that this recorder says figure out a way to do it now that may be the pressure that we put on the district court by the kind of opinion that was issued but we certainly didn't direct that and if you agree that the court can't compel something impossible why isn't there a requirement that there be a hearing at which the terminations made of whether each stage of the timetable is possible because that hearing what is then premature in december of two thousand and sixteen what was in front of the judge in december twenty sixth teen was that question whether the agency should be maintains he answered that question of course in the affirmative if the agency in the beginning of twenty eighteen comes in to the district court presumably on our motion to enforce the mandamus comes into the district court with proof not just supposition not just prediction there speculation but actual proof that it could not satisfy that benchmark would be having a very different conversation or conversation it would be the having see their under threat of contempt contempt here there is not a automatic contempt you want you ask for that and the district court refused that but they're still under threat of that's a pretty big threat at this stage unless there is some pop some possibility that they can achieve that and i understand all the different points you make about different ways that might be possible but that this record never said that any of those was actually possible and to put the agency under the threat of contempt under those circumstances both seems problematic but also raises the unintended consequences for that saying look this is where i'm proposing i want the status reports and in those status reports i don't think h h s can just wait until the november status report and say guess what we're not only clock not even close right that what he had his mind was that as that deadline gets closer and closer if the status reports not only said we're not going to make it but have some alternative we can do this but we can't and the district court have which is we are talking about addictions and we heard in government counsel's response i think to each of your questions the accommodation that there may be ways you mentioned the top ten you mentioned  agency to move more quickly to think of the things that didn't before and to solve the problems in front of it so for the district court to impose on the district court in twenty sixteen the obligation to resolve at that time whether the agency could or could not by twenty twenty complying with a mandate that he declined to put any specifics on correctly we think that that to me is imposing too much of a burden on the district judge when they do understand her or her view the district  would have to find is actual factual findings presumably backed by not just speculation from the government about an inability to comply with a settlement but data showing for example that hundreds of thousands of these claims are potentially fraudulent data showing that they are not susceptible to mass settlement there is no such data in this record what you find in the government's brief are these kind of somewhat hedgy state something in fact what you see over and over again in that trio of cases that i've mentioned is that it is that the court says we understand that you are speculating about a possibility but the burden is especially heavy on you in that circumstance to show that something is actually factually impossible not just to posit that this is going to be very difficult that's why each of those courts said come back to us or go back to the district court in the first  was a speculation on the part of the declarant in fact there hasn't been a credible settlement offer since the main damus issued working backwards still the of course there is an incentive to settle and that's in t respects the first is we are talking about hospitals including one of these plaintiffs baxter who didn't have enough money to fix its roof baxter is confronting a situation where it is considering taking for example sixty eight cents on the dollar which was the last settlement for it by the way three hundred eighty thousand claims is going to take sixty eight cents on the dollar now or is it going to play out the string for the next four years on the theory that maybe at the end of those four years  everybody it wants it needs to peel off thirty percent at a time which puts the hospitals that are contemplating whether to settle in an interesting position because if a hospital decides that it's going to hold out and wait for a better offer but thirty one percent of hospitals get in front of it it has forfeited that opportunity so i need to push back strongly on the issue that there is some kind of a perverse incentive for all of these hospitals simply to wait until the end mentioned in the beginning of his argument that the backlog today is smaller than it was that is also something that he said to the panel last week in the classical arena case but he then went on to say and this is about seventeen minutes and i do not want to dilute your honour's it's going to get worse so even the government understands that the backlog is going to get we're not sure which way that comes so that contract cuts in to do either but just you know when you have a congress saying you must do something by a certain date and then you have congress clearly not providing enough money for the kind of hearings that everybody originally contemplated at least then this is not congress versus the courts just like congress versus the agency this is congress versus congress and congress can decide that amongst itself but the congress also if we talked about congress and the rats we talked about congress and the budget one thing that hasn't come up this congress and the statute that pertains to consent settlements between h h s and the providers of this is thirty nine forty two u s c thirteen ninety five triple d f five and this is the statute that says that the h h s can compromise claims with providers and they can do so using less than a statistically valid sample of claims so there is no clear indication in the statute itself that the agency is in a position to settle these claims if it wants to if the agency at the end of these phased processes comes in and demonstrates to the satisfaction of the district judge that it was actually factually impossible to comply then the agency presumably will seek and obtain a modification of this mandamus but right now all it's doing is saying that it predicts it can't do something the answer is it has to holding out for ninety nine five percent of the dollar and the agency comes in and submitted that to david saying this is the offer on the table this is what we were attempting to do this is the set of circumstances we were targeting and this is the response that came that to us then the which is presupposing and possibility speculating about it rather than asking any agency to do its part in good faith to try to settle these claims which it plainly has both the statutory and the regulatory processes to do accepted it would be agency would say i think is that it wasn't accepted in the numbers that it expected in part that's because as i understand it a lot of the hospitals that were subject to that offer actually had taken the prior deal had taken the sixty six cents on the dollar deal that had been offered them that took care of three hundred eighty thousand claims but the last point i would like to make is one just about this statutory and talkin possibility one of the government's primary arguments here is that it cannot pay for claims  the statute instructed not to pay there are two responses the first is the statute also clearly allows for compromise of those claims and the second is again in mr saltsman argument of last week one of the points that he made to the panel was most of these appeals have to do with documentation requirements documentation requirements are not a statutory requirement they are in the regulations and they are in the policies and they can be altered  can't supplement the record he came in hearing and see you don't get to novo review at that stage and if we escalate review before the board you know it's not nothing in a fine balancing equity in if one of your complaints is where we can supplement the record well you're the claim that in you should know what you're standard review of course is the kicker if you're up on judicial review you've needed to escalate all the way up to get a judge to hear your case and you're on abuse of discretion review or just your deference to the agency i should say that puts the  escalator appellant in a particularly poor position but more to the point this this argument about escalation of force was the core argument that the government proffered in the first ha appeal where the government said there's an adequate alternative remedy and if you look back like the american hospital association bringing a systemic claim and the answer cannot be you all can escalate all of your appeals so you know we also have you know record a declaration if they escalate and take their chances put it that the it's not like the agency has created claims everyone agrees including us that the forty six forty two c f r for a one point six zero one essentially strips out from any need for compromise claims that our claim weighted is bogus doesn't that require them to be able to evaluate claims on the merits no i don't think it does i think what it does is it permits them if there is an indicator of fraud in the face of  salton said last week from documentation problems but that can be resolved by settlement so the idea that we are going to get into a situation where there's a superior perverse incentive i think is not true the other thing i would say is that they are mystery does a good job of pointing out that where you're talking about this adverse incentives question there are statistics of course that will aid both the agency and the company and it's good business practices in deciding how much on the dollar to offer that company to make its claims go away if the company has for example a significant error rate and it is significantly getting pared back in the appeals process that company to look at it has to do these kind of broad subtle that that is what we've been reduced to saying because because the agency hasn't come forward with a solution remember where we're now talking about a case that's over three years old  and one more sir finer point on that judge and she can judge marilyn you mentioned a few minutes ago that we had suggested x y or z it's not our burden to suggest or establish the routes that the agency can take to cure say anything about whether the escalation provisions should be balanced or how it should be balanced and i asked this question because it is in title consequences of failure to meet deadlines and congress said that the consequence of the failure was escalation of the l j and when i look at it didn't say the consequences consent settlement or anything else right and so in effect doesn't of fact the jurisdiction of that mass escalation which after would just kind of move this bolus of claims all the way up to the district court if you could meet the amount of controversy requirement and with the deferential standard of review that comes along with it district court clearly concluded that that was not sufficient to count against mandamus the district court at this stage has simply ordered the agency to try to come into compliance thirty sixty ninety one hundred percent over the next four years if the agency again wishes to come back with actual crew not just speculation but who then the district court at that stage can assess that  decide whether it's going to modify the injunction but this is not the time to have that conversation because all the all the agency is telling you right now is that it thinks it can't do that the agency should be instructed to try that's the point of manda as opposed to at the time of the last appeal isn't because i want to give a false sense that everything is fine or everything is fixed it's to show that the agency is struggling against the backlog that we usually see has not adopted what our were the district court so say would say we said that deadlines themselves are appropriate but we also didn't think status hearing status reports were appropriate what are the other kinds of and in light of that fact and it is precisely because that's true but i think for example if a women eating crack would cause it would lead to a marginal improvement in the back let's say it was five percent better but suggest that the agency is best positioned to do that that being said if and we do think status reports here is a would be sufficient to ensure that the agency doesn't adopt a position of defeatism to show that to make sure the agency it would be unadvisable we think would be to strip the rap program too much advocacy without sufficient benefit to the backlog but those are changes that we could live with so that is something that we put forward as as an affirmative possibility now you have one question about the rack are we going to see another bump in the backlog through renegotiation of contracts i mean can't you do something or maybe you already have to extend the contract because as i understand it that was part of the cause of the huge multi hundred thousand dollars increase after a delay or a pause of a couple years so so here's the t activity now in october twenty six teen new contracts were finalized but so there is no known more rack activity for those new contracts involve several new provisions that are designed precisely to prevent what happened in the past so one thing that from the start of this litigation the plaintiffs were asking for was that racks be given stronger incentives to be accurate and in fact these new are rather contracts as you'll see a j one forty