Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-11-05077/USCOURTS-caDC-11-05077-0/pdf.json

Nature of Suit Code: 151
Nature of Suit: Overpayments under the Medicare Act
Cause of Action: 

---

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 18, 2011 Decided December 20, 2011

No. 11-5077

GUNDERSEN LUTHERAN MEDICAL CENTER, INC.,

APPELLANT

v.

KATHLEEN SEBELIUS,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:06-cv-02195)

Jeffrey A. Lovitky argued the cause and filed the briefs for

appellant.

Ian Samuel, Attorney, U.S. Department of Justice, argued

the cause for appellee. With him on the brief were Tony West,

Assistant Attorney General, Ronald C. Machen, Jr., U.S.

Attorney, and Michael S. Raab, Attorney. R. Craig Lawrence,

Assistant U.S. Attorney, entered an appearance.

Before: KAVANAUGH, Circuit Judge, and SILBERMAN and

GINSBURG, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

SILBERMAN.

USCA Case #11-5077 Document #1348627 Filed: 12/20/2011 Page 1 of 5
2

SILBERMAN, Senior Circuit Judge: Gundersen Lutheran

Medical Center, Inc. appeals the district court’s grant of

summary judgment to the Secretary of the Department of Health

and Human Services. Gundersen, which sought review under

the APA, claimed the Secretary’s delegee failed to

“disapprove[]” Gundersen’s reimbursement request within 60

working days, as required by the Medicare Act, because the

delegee did not notify Gundersen of its asserted disapproval

within the 60-day time period. We conclude that notification of

Gundersen within 60 days was not necessary for the disapproval

to be effective, and therefore affirm the district court.

* * *

Under the Medicare Act, the Secretary, acting through the

Department’s Centers for Medicare and Medicaid Services,

reimburses health care providers like Gundersen who provide

dialysis treatments to individuals with end stage renal disease. 

The Act sets a “composite rate” for reimbursements for each

dialysis treatment a provider furnishes, but a provider can seek

an exception by submitting an application to one of the

Department’s fiscal intermediaries (insurance companies) who

then must pass on the application to the Department (the

Centers). The Act states – and this is the disputed language –

that “[e]ach application for such an exception shall be deemed

to be approved unless the Secretary disapproves it by not later

than 60 working days after the date the application is filed.” 42

U.S.C. § 1395rr(b)(7). 

Gundersen sought such an exception on July 2, 2001,

making the 60th working day September 25, 2001. The Centers,

on September 21, 2001, informed the fiscal intermediary in

writing that the exception was denied. But the fiscal

intermediary did not notify Gundersen of the Secretary’s (the

USCA Case #11-5077 Document #1348627 Filed: 12/20/2011 Page 2 of 5
3

Centers’s) disapproval until October 1, i.e. after the 60th

working day.

Gundersen argues that the Secretary’s decision to

“disapprove[]” an application is not effective until it is

communicated to the provider. It is claimed that communication

to the fiscal intermediary – an agent of the Secretary – is not

adequate because the Secretary’s decision (the Centers’s) could

be altered at any time. Moreover, since by regulation the

provider has only 180 days to appeal the Centers’s decision up

through the Department, if a disapproval decision was not

communicated to the provider, its appeal rights could be

jeopardized. Gundersen buttresses its Medicare statutory

argument by recourse to the Freedom of Information Act,

pointing out that 5 U.S.C. § 552(a)(2) prohibits an agency from

relying on or using final administrative orders unless they have

been “made available,” published in an agency’s reading room,

or a party has actual and timely notice of its terms. According

to Gundersen, because the agency did not publish the letter in its

reading room and Gundersen only received notice of the

Secretary’s denial after the 60-day period ended, the Centers

could not rely on it before then to make the disapproval

effective.

The government responds – which is true – that the disputed

statutory language, unlike other provisions of the Medicare Act,

does not call for notice of the Secretary’s disapproval decision

within a specific time period. The government argues that even

if the word “disapproves” was thought ambiguous, the

government is entitled to Chevron deference, and the

government’s interpretation that the Secretary “disapproves” an

application when the decision is “rendered” is permissible. Yet

the government never suggested just how a disapproval is to be

manifested in order to qualify as “rendered” – and the

USCA Case #11-5077 Document #1348627 Filed: 12/20/2011 Page 3 of 5
4

government’s brief implied that a decision of disapproval could

be in the mind of the decision maker. 

We agree with Gundersen’s premise that “disapproves” is

a meaningless concept unless disapproval is communicated in

some fashion. At oral argument, the government essentially

conceded that point by acknowledging that there would have to

be some evidence that a disapproval decision was rendered in an

official way, at a certain time. We take it that implies something

in writing. After all, the statute imposes an obligation on the

Secretary to disapprove a request within the 60-day period; the

default position, if the government does not act, is approval. 

Because silence is therefore approval, the Secretary (the

Centers) must demonstrate the contrary. Although the statute

does not address the question of how a disapproval is to be

manifested, and so Chevron deference is called for, it seems to

us that it would be an unreasonable interpretation for the

government to claim that an oral statement uttered only within

the Centers is an adequate demonstration.

Be that as it may, in this case, the Centers communicated

the disapproval to the fiscal intermediary – in writing – within

the 60-day period. As such, the decision to disapprove was

clearly memorialized. As to Gundersen’s argument that FOIA

requires actual notice to the appellant, the government points out

that FOIA can be satisfied alternatively by making an order

“available.” By sending a denial letter to the fiscal intermediary,

the Centers have certainly made it available to Gundersen. All

Gundersen needed do was to call the fiscal intermediary – or

even the Centers – to determine whether the Centers

disapproved within 60 working days. 

Gundersen nevertheless argues that a decision

communicated only to an agent of the Department – the fiscal

intermediary – cannot be thought a reasonable interpretation of

USCA Case #11-5077 Document #1348627 Filed: 12/20/2011 Page 4 of 5
5

the word “disapproves” because the decision could be altered

before it was communicated to an applicant. That argument –

when one thinks about it – is rather twisted. The only way the

decision could be altered would be to revoke the disapproval,

and that could only be to the benefit of an applicant. Which

means, of course, no applicant would have standing to complain

about such an action.

Gundersen’s more substantial argument is based on a

provider’s appeal rights. By regulation, an applicant must

appeal the Centers’s decision “within 180 days of the date of the

decision.”1 If the Centers’s purported disapproval was not

communicated to an applicant in a timely manner, Gundersen

argues, an applicant’s appeal rights could be jeopardized. That

strikes us as only a theoretical problem because, as in this case,

once the disapproval is communicated to the fiscal intermediary

within the 60-day period, it is available to the applicant. But if,

for some hypothetical reason, the Centers’s decision was not

available to the applicant in a timely manner, the relevant

question would be how to interpret the appeal regulation – not

the statute. Presumably it would be unreasonable (arbitrary and

capricious) to apply the regulation to an applicant who failed to

appeal in a timely manner through no fault of its own.

For the foregoing reasons we affirm the district court.

So ordered.

1

 42 C.F.R. § 413.194(c) (2001).

USCA Case #11-5077 Document #1348627 Filed: 12/20/2011 Page 5 of 5