for my presentation today before this court i was mindful of the court's guidance can concerning preparing for oral argument in the th circuit and which suggested that i stayed up front the issues that i plan to address in case the court would have me address something different so i'm and i don't like to proceed in that in that way i see basically two purposes for the appellant in the oral argument this morning the st one is that we are available to answer any questions that the court might have about the medicare processes that are involved we believe that we covered them in our brief medicare reimbursement negation has been the focus of  practice for thirty one years including the st five working for the agency and i know that sometimes these medicare processes can be quite daunting so we are here that answer any questions that that the panel may have about how the medicare program works but what i would like to do in the time that i have this morning with you is to review the cases that involve the medicare wage index we say in our papers that this is a case of st impression and we believe that that's accurate based on the facts but thank you there were previously been thirteen wage index cases around the country eight when deciding to circuit court level previously decided by the th th th circuit and there been five wage index cases decided by the  circuit the secretary won five of those cases on the merits the secretary lost three of those cases on the merits in two of the cases that the secretary lost the remain and the order from the from the court was a  a to understand it's legal error i mean there's no dispute about the error in the computation is it sarah so we're looking at an air of law by the district court with respect to the cases you're citing since you say it's a matter of district court wrote the district court did not give any explanation about its reasoning but it did say one thing that was quite important and helpful and we think accurate it said if the hospital notices an error as we said in our reply brief the threshold question in this case is whether the requirement to review the may nd two thousand and fourteen wage in the next list was a requirement that the hospital had to exhaust in order to get judicial review before it before the courts and what the what we said is clearly it is not because of the language and that the court you didn't choose because the language that the secretary use was should and as in the flip case and as in the palisades case the courts held that that's just not mandatory language you need shall or must not may or should they explicitly addressed those different words but the district court said if the hospital correctly said if a hospital notice is an error it doesn't say that the hospitals was required to the district court then one to say that under those circumstances there were required deadlines that needed to be better and we agree with that entirely but those requirements on triggered unless the hospital actually reviews and that's a requirement that didn't come into place in two thousand and seventeen in the secretary's conceded that it can't by lack of argument that it can't be applied which will actively two thousand notices given to the hospitals in a particular geographic area once those values or rates have been set is there any notification that would trigger them to double check it out should they just do that as a business practice oh by the way check it now because you may be bound by it once we get past  index errors that were not related to correction in other words post correction errors like we have here it certainly would have been a good idea there's no question about that but the question here is whether it was required and what happened here is that there was this back and forth that went on for seventeen months between the secretaries contract and the hospital to get this thing right and then they finally got it right and then the hospital thought ok we're good we're good and then what happened is the contractor sent wrong  ac collects the wage data are there whatever the values and can't does a calculation of what the rates are going to be is there any dispute that the fall to use the term in quotes fault or negligence is really that but the nd mistake was refusing to admit its error right in other words we brought it to the secretary's attention and it was like hey listen i think is a problem your contractor sent the wrong information slowly expecting them to say no problem will publication but the point is that the it is undisputed that the payments here were based on incorrect information and if the correct information had been use hendrik medical center where they got the dish and two million dollars which is untitled we're not asking for something that they're not entitled to that's the right answer and the secretary used the wrong data that the secretary raises questions about budget neutrality of the wage index and retroactive correction of the wage index those in other nations those are nonissues as a matter of law said to the to the contractor that maque well why didn't you tell the hospital that you were changing the data and then we would have you know checked it to make sure it was correct and the answer was well we didn't even realize we changed it it just kind of happened because they didn't i don't know they didn't handle their files properly and that is the reason that they sent the wrong information and then there was no notice to be given because in their mind they didn't realize that they had negligently made that or one of the question in terms of review i believe the secretary's brief prominently features some discussion of this one thousand nine hundred and ninety seven procedure that it says you could have a client could have availed itself you want to comment on that exhaust you have no right to come into our court and the court in that case focused on the words must saying it that's different from should or may find our case a palisades case came soon after that we knew what was going on in foot and so we exhausted and then what happened in that case is there was we didn't go the one last step which is to ask cns with the agency was called something different back then to correct and and so the p to provide a reimbursement review board the review panel below dismissed the claim goes to the district court the district court dismiss the firms the dismissal then we go up to the court of appeals and it was kind of unusual at least in my practice the secretary refused to defend judge kessler's the system they said that you know what we use the word mate so we agreed that it was a a voluntary level of review and that's our position here that the review of the may nd two thousand and fourteen public use file of wage data was a voluntary level of review now what happened after that there were three more wage data collection a cases at the site in the brief adventists dignity health and bay state franklin but in each of those cases and unlike here the hospital that had the incorrect greta never even saw it at all to try to get it corrected never at all and other hospitals came in and said hey look we're prejudiced by your failure to correct your  data and the government said well you know it's too late and in fact the oral argument in that they see franklin case was just heard by the d c circuit on october th just a you know month or so ago and you can hear in the judge's places the concern about the fact that the that incorrect data was used to calculate the payments that were made to the to the hospitals to the hospitals in that case but the so the distinguishing factors in one of those cases was dismissed because the hospital failed to because it failed to appeal one aspect of the administrative decision one of them was settled for seven million dollars by the secretary the papers are in the car in the other record year and then the other one is on appeal before the d c circuit after having been after the final decision upholding the wage index was it was affirmed by the district court but the point is to say there has never been a case there is never been a case where a hospital used to wage data correction process provision that precluded judicial there's no there's no provision like that there was no status statute in the only statute that the secretary is operating under requires the secretary to have a wage index th ceremony what is the arab law what is the specific holding you're seeking from from this plan a thank you for asking that judge to the st holding is to reverse the finding by the provider me embarrassment review board  that has no jurisdiction because of the hospital's failure to suss its administrative remedies finding that the hospital did exhaust the administrative remedies and having done that to order payment because there are no facts in dispute this does not need to go back to the secretary except for payment with interest of the amount that was not paid that should have been paid based on the correct facts so that the death of this record how you're not an exhaustion requirement wasn't duly pro with respect to the wage data correction process it has never been adopted and in a regulation to the notice in time it will making process it's only been in preambles of the room making and it's never been in bodied in the final it's only been addressed in the the federal wedges the preamble of a federal register notice a proposed rule making not a final value or argument then narrow it down to the interpretation of this particular  which is your best case to get the relief that you seek based on my question of the specific holding that you're asking the pound what's the best case for you to get that hold well i think our palisades case  two thousand and five d c circuit that is where the secretary refused to defend on appeal the concept that a that a part of the wage data correction process that used the word may was was mandatory for exhaustion process thank you your honor may it please the court my name is brian stoltz on behalf of the secretary i'd like to st address the argument that council made that there has never been any sort of procedure adopted by regulation to deal with this issue we we  disagree with that and i can explain why there's been multiple notice and comment rule makings in which the cycle terry has promulgated a procedure and deadlines for exactly this situation district court was on very firm ground to make it used here including whereby there is a may there's a file that's issued in may and the rule in one thousand nine hundred and seven said that if if the the hospital is supposed to check this photo to make sure that the wage data is not incorrect due to an that a so called need to your correction to the wage index in other words a correction after the wage index has already been said can only be made if the hospital can show so the burden is expressed on the hospital the hospital must show that the contractor or the c m s made an error and that the hospital could not have known about or did not have the opportunity to correct that error so this is a separate regulation that likewise makes clear that the hospital must show that there was no way for it and know about or correct the of your order of the hospital is to learn there it's made by checking the final public use file that's published or that's it's released in may of the year and for example at seventy nine federal register twenty in this manner for example at seventy nine federal register you had already corrected that some numbers of that would been generated correct there were two corrections that were made so when  was released in the proceeding september there was an error that had been spotted and there was back and forth between the contractor hostile better was corrected who's been a downer my understanding is that the hospital spotted that air the  the contractor noticed that there was another error in the data that hendrick had supplied there was missing data there was not any data for the food costs essentially of their food service personnel in the hospital so there's an email exchange in effect this is that around pa and sixty one in the record where the contractor raises this issue hendrickson supplies the missing data and there's an e mail saying ok now we have it now the problem is so hendrick hendrik knew as of march two thousand and fourteen that its data was going to be changed logically then in the may two thousand and fourteen final file that's where it would have seen that this data was in fact in put it correctly in transmitted correctly when that made two thousand and fourteen file because of an error by the contractor the data was not included in transferred correctly so that's where the error occurred but again and again it was an error but if you look at the you know what the federal register says about this is the whole purpose of  connection with the may nd posting is there any type of transmission to claimants such as hendrick that says we have now finalized and it's here for all to see in other words to would have like a check an hour or two bad later yes your honor there's there's a couple different ways that notices provided so one at the very beginning of this process there's as whips and not interrupt you again but when you answer that if you could also tell us if there's any notice that's mandated and where it's mandated  so just what notices are given at the very beginning of the process there's what's referred to as a timetable that's posted on the c m s website this is discussed it page one hundred and ninety five dollars of the record the timetable sets forth all the deadlines that are going to be in effect for the whole knew about the timetable and knew about the deadlines in the timetable because again that they used the timetable a nd form of notice is from the contractor itself for fifty six dollars through seventy eight dollars of the record and also a page for sixteen of the record there's an explanation that the contractor post what they call informational alerts during this process on their website to basically a by you know advise the hospitals again that these you know this new file has been posted you can now check this new file if there's any errors you know let us know so that's another form of notice another form or notice is of course the federal register itself which was very explicit same we're posting this file if you believe there's an error due to contractor or c m s data entry or transmission which is exactly what occurred here there's a deadline of june nd two thousand and fourteen for you to notifies in the federal register including in the final rule which is at seventy nine  challenge later before the board the failure to make some revision and that's exactly recourse whatsoever have to change nd or they don't that's the die is cast and they have to live with those figures right to you have you have a thirty day period to object to the figures  focus for a moment on the trigger of the thirty days we've talked about multiple publications and each of these publications to a good thirty days are several sources about which they should have known to there's rules that are published in advance it including at the very beginning that in the time save that it's posted and a timetable says in september of the prior year we're going to release the st public use file if you think there's an error in that file with respect deadline we do some more iterations we continue to audit the data and then you get to the final file which is may nd and there's a deadline that's june nd so these deadlines that june nd deadline had been established in two thousand and thirteen at the very beginning of the process does that answer the question that lists all these deadlines including the june nd deadline and at page two hundred and two of the record is hendricks explanation that with respect to one of the earlier files they had reviewed the in accordance with the timetable so hendrick was aware of the timetable which included the june nd deadline and they took advantage of the process earlier because they didn't review the file they simply failed to review it you know when the may two thousand and fourteen fall was posted  the secretary has a strong interest in maintaining the efficiency of the misrepresenting we're talking about here my understanding is that has said that it would be approximately two million dollars there's two million dollars to that hospital west texas that's geographic areas under different provisions and they were one of them was a wage in texas so there's there's a problem if there's an if there's a lack of finality in the wage index the burden of the burden aarons being dropped on the hospital for an hour of your contract or the government's contract and that's that's the mistake that's might and then you say well you didn't catch us and that you didn't catch us governments us you didn't catch on fire so therefore you lose two i would have i would say two things in response that your honor one is i don't think it matters i don't think at the end of the it matters who did the way it was assigned to for there and we fully admit that the contractor did transmit the error date in or i will say though that it's not as if the hospital has entirely you know there was an error that they had made that prompted the secretary that the contractor caught in march saying you didn't give us all these dietary cost when you were supposed to have given them to us earlier massachusetts hospitals that were asking you know dispute that if money would otherwise do on the line i don't dispute that well i'm not sure about that because i don't know what some money would have been if the wage index had been higher for there would have been destroyed money paid to his house but i certainly don't dispute that i do dispute the notion that it's just a matter of writing a two million dollars check and that's all and in the bay state case the massachusetts hospitals were asking to raise their index i mean alabama and i think they estimated at approximately two million dollars and i don't disagree with that at all but what i'm saying is for example in the bay state case the massachusetts hospitals were asking the court to raise their wage and it's the alabama hospital association came into the cases in amicus and said if you do this alabama hospitals will lose millions of dollars because it's a zero sum game if you're taking money from one you're giving it to somebody else and so and then alabama hospitals the court in the bay state case cited the fact that these alabama hospitals came in and said well wait a minute if you change there is it's going to result in these huge decreases for us so the secretary has an interest that would that have happened here that's corr that the secretary has created this process to resolve all these wage data issues in advance of the of the deadline because after you've set the wage index it's extremely disruptive to change it and the secretary recognizes that it can be changed under certain very limited circumstances and in accordance with that regulation only if there's an error by the contractor or c m s and the hospital could not have known about the air and didn't have a chance to correct it you know unfortunately does not meet that criteria in this case and that that regulation that's a perfectly valid exercise of the secretary's authority to require you know part of medicare is you require the hospitals to record things they have to give cost records they have to give there's all kinds of data they have to supply if they want to participate in medicare and part of participating in medicare is you have to meet these deadlines and if you don't there are consequences it's no different choice charted three course for years one of the argument was the error was the government's contractor the exhaustion requirement should not should not apply and then what gets tied to that argument was that business of the rules saying to hone in on the specific facts in this case a what's the case that result harsh or not what's the best case that fits i think that arming what you what you're asking us to for your are that the little company of mary case from the th circuit is a very similar case now the distinction that hendrick is trying to draw is they're saying that the contractor made an error here i don't think that distinction matters because among other things the regulations contemplate that there might be an error by the contractor we're dealing with massive amounts of data here in the little company of mary case the hospital had submitted some information to the contractor the contractor setbacks saying ok well this is what we think reimbursement will be based on what you sent us and under the rule that a sixty day period to you know basically to say no we don't think that's right they didn't object within sixty days they later tried to object and the board says we don't have jurisdiction because you know there was determination exhaustion remain what what would the consequences of that be given this whole labyrinth process against him of course so i'm going to say the question is if  layers we've got it up on some judgment but it's to noble review who got the record so we don't where we do we don't have to go through the winter and breath and we've got this sort of narrow issue he says shoed you say back to the agency away i think would have to go back to the agency you would essentially be reversing the agency's determination that it did not have jurisdictions entertain the administrative deal and if it went back to the agency with holding eight you know you know the agency more doesn't have jurisdiction then the agency board would take it from there presumably they could attempt to implement some kind of equivalent of a mid year correction to the wage index which as we discussed rule at seventy nine federal register forty nine thousand nine hundred and eighty six there is that's where these this should language comes from and it does say if there's an error you should contact c m s or the contractor it goes on to say  though in very clear terms you know that you're required to do this by june nd if you don't do it by june nd you waive the right to submit a request later so i think this should issue isn't you know that the language is very clear that this is a mandatory requirement if you want to preserve your right you know to later do anything with it so and in fact in the case in the case where the should think on comes from if you look at if you look at that federal register which is  and sixty four volume at page twenty four thousand seven hundred and thirty one with respect to this may deadline that version of the federal reserve also had very similar language about if you find an error in the may data you should notify and ninety three that is a final rule after notice and comment rule making agency specifically said we're thinking of changing our process so that we're going to publish a file in may and there'll be a deadline in june to a request correction they received comments on proposal they discussed the comments they adopted this procedure in one thousand nine hundred and seven and then it's been reiterated every year since and all the annual wage index rulemaking it's so that it's let me ask you what one thing about that and i think this is p what you you were just talking about with regard to the wage index timetable you've referred to it several times on the record on appeal at age ninety five which is part of the stipulations that were entered into to decide the case it says notice must be forwarded by f i o s and macy's to alert hospitals to the availability of the final wage index  that there is a must as opposed to a should was there any type of individual eyes notice sent to hendrick or any other provider pursuant to this language i don't contractor's way of providing this notice is that the same as you saying that's the same as notice must be forwarded to alert hospitals to the availability of the final wage index i think if starting at page four  the record there's copies of these alerts that the that the contractor put out and the the provider reimbursement review board made a finding that you know that notice was provided and that hendrix in fact had notice of the timetable and in fact they've admitted that they had notice of the timetable they talk on page two of two about how they reviewed things in accordance with the timetable so that's you know the the board found that they had notice that they didn't notice that they had actual notice we would submit that that finding is certainly under the differential standard you know that applies to that finding should be affirmed so we don't ask the court to affirm the district court's decision that the correct that from the secretary's perspective what it says must that's not binding on the secretary but if it says should that's what's binding of a belated entity and that's just not how the how the a p a works with respect to  consequences of this case is a one off case i have not aware of any case where there had been you know lateral contractor like this that the secretary has refused to correct so that there is no consequence with respect to this concept that is going to have to be a revisiting of this wage billion there ten billion but it makes clear that just what kind of retroactive relief is is we're not looking to have the wage index we calculated we're looking to have the money that we're entitled  does a different facts narrowed so much and i didn't know i got an earlier load they didn't send it to me that's not at play here it's all the cards on the table there's your client saying it doesn't matter if they are these deadlines because the contract has error exhaustion shouldn't be required is that is is it is that the argument i mean i get it you know it's to me here but it's saint and we think about other knowing about it but and the consequence of no response i mean what's with the our oh well let me say but st of all it wasn't a requirement until two million one thousand rooming so there was a deadline but it didn't become a requirement until should language in a in a preamble of a regulation but let me explain what's going on here factual because i can judge to it you're touching on something that's extremely important here and may nd two thousand and fourteen the final data comes out ok now data to wrong data and then by the time it checked it when the final came out the government says well it's too late and psycho may be too late but this was the right data you have the right data the whole time well it's too late and so that's why we're making all these kind of technical legal arguments about should and exhaustion and taking away the right but what's going on here fundamentally is that the hospital corrected its state or the proposed rule had the correct data and it the secretary through its contractor changed that data and the hospital thought it was home free turns out it wasn't and that we don't believe as a matter a flaw but that's reasonable and there was a question about whether there is a process whether there is a need a governmental interest at work there is no governmental interest to allowing