UNITED STAT ES DIS TRICT COURT F OR THE DIS TRICT OF COLUM BIA

) ADIRONDA CK

MEDICAL CENTER, et al., ) ) ) P laintif fs, )

) v. ) Civil Action No. 11-313 (RMC) ) KA THLE EN SEB ELIUS , Secre tary, Depart m ent of Health an d Hu m an Service s, ) ) ) ) Defendan t. ) )
MEMORAN DUM OP INION Plaintiff Hospitals challeng e the Sec reta ry of He alth and Human Ser vices’ calc ulation of hospital-specif ic Medica re pa y ment rate s after

J anuar y 1, 2009. The Sec reta

ry moves to dismis s and re mand, ar g uing that the case is not in a proper pr ocedur al posture f or this Court’s revie w. The motion will be denied a s the course sug g ested by the Secr etar

y will waste administrative and c ourt resour ces.

The pa y ment calc ulations that are the subject of this suit are pa rt of Medic are ’s Inpatient Prospective Pay ment Sy stem, throug h which the Sec reta ry sets Medica

re pa y ment rate s in advanc e. The rate s g overn hospital re imbursements for inpatient operating c osts in any g iven fiscal year . See42 U.S.C. §§ 1395 et seq . Challeng es to hospital pay ments are channe led throug h the Provider Reimburse ment Review B oard ( “PRRB”). See id . § 1395oo; 42 C.F.R. §§ 405.1801-.1871. When a pa y ment is challeng ed, PRRB deter mines whether

it has jurisdiction, see42 C.F.R. § 405.1840, and if so, proc eeds to the me rits of the cla im. Id
.§ 405.1843-.1871. Withi n 60 day s, a PRRB decision is subject to revie w by the CMS 1 Administrator; if the Administrator take s no action or de clines to revie w the dec ision, P RRB’s decision stands as the f

inal ag ency

action. 42 U.S.C. § 1395oo(f)( 1); 42 C.F.R. §§ 405.1875(a) (2), .1877( a)( 2), (3)
.

Instead of making a

finding on the merits, PRRB may deter mine that it lacks authority to decide the underlying que stion of law and e x pedited judicial re view (“ EJ R”) is appropr iate. 42 U.S.C. § 1395oo(f)( 1); 42 C.F.R. §§ 405.1842(a) . An EJRdeter mination is a final dec ision not subj ect to re view by the Secr etar

y , but instead judicial revie w is available . 42 U.S.C. § 1395oo(f)(1) ; 42 C.F.R. §§ 405.1842(a).

Her e, Plaintiffs are Medica re- participating hospitals who filed a challeng e to pay ment rate s with PR RB and sought EJ R. On Dec ember 9, 2010, PRR B de termined that it lacke d jurisdiction over Plaintiffs’ appe als. Def .’s Mot. to Dismis s and Remand [Dkt. # 8] (“D ef.’ s Mot.”), Ex. A (“PRRB Dec ision”) at 3. Anticipatingthat its jurisdi ctional dec ision would be re verse d, PRR B r uled in the alter

native that if it did have jurisdiction, it lacke d authority to decide the underlying le g al question and EJR was appropriate. Id ., PRR B D ecision at 7-8. PRR B pr edicted tha t its j urisdictional decision would be r ever sed bec ause, a t least since 2008, the Sec reta

ry has maintained that PR RB’s inter pretation of 42 C.F.R. § 405.1804 as prec luding jurisdiction is in error
. See CapeCod Hosp. v. Leavitt , 565 F. Supp. 2d 137, 139 (D.D.C. 2008) ( g rantingSecre tary ’s motion to dis miss and remand; Sec reta ry declined to de fend

“CMS” is the Centers for Medica re & Medica id Services, a n operating c omponent of 1 the Depa rtment of He alth and Human Ser vices. -2-PRR B’ s decision re g ardingjurisdiction). After Cape Cod , the Administrator has r epea tedly
reve rsed jurisdictional dismissals by PRR B. SeeCompl. [ Dkt. #1] ¶ 110, Armstrong Cty. Mem’ l Hosp. v. Se belius , Civ. No. 11-565 (RCL ) (f iled Mar. 18, 2011) ; Compl . [Dkt. #1] ¶ 108, Banner Baywood Heart Hosp. v . Sebelius , Civ. No. 10-1799 (RCL ) (D.D .C.) (filed Oc t. 25, 2010); Am. Compl. [ Dkt. #6] ¶ 109, Highland Hosp. v. Sebe lius , Civ. No. 10-1064 (RCL ) (D.D .C.) (filed Aug . 10, 2010).

In this case, PRRB’s de cision stands as the fina l decision of the a g ency beca use the CMS Admini strator did not take a ny action on the de cision within 60 day s. The Secr etar y now indicates that “the PRRB’s jurisdictional dec ision is i n err or and [the Secr etar y ] does not wish to defend that decision in this case.” Def .’s Mot. at 6. Plaintiff Hospitals ag ree that PRR B
err ed in findingit lacked jurisdiction. The Sec reta ry seeks dismissal and re mand to permit the Secre tary (via the CMS Administrator) to reve rse PRRB’s de cision that it lacked jurisdiction. The Sec reta

ry alre ady had the oppor

tunity to reve rse PRRB’s de cision, but failed to do so within the 60-da y time period. The pr ocess that the Sec reta ry sug g ests is unnece ssary , time-consuming , and inef ficient. It would merely

serve to delay

the re solution of this case on the merits. PRRB’s decision constitutes final ag ency action, and it is proper ly

befor e this Court. The Sec reta

ry contends that this case is analog ous to Cape Cod and should simil arly be subjec t to dism issal and re mand. In Cape Cod , the district court re viewed a PRR B decision that it lacke d jurisdiction to consider Medica re pr oviders’ a dminist rative a ppeals. The Administrator failed to take action within the 60-da y window for r eview. A fter the 60-day period had expired, the Sec reta

ry deter mined that PRR B’ s jurisdictional determination was inc orre ct. 565 F. Supp. 2d at 140. The Secre tary moved for dismissal and re mand, and the district c ourt -3-g rante d the motion, concludingthat PRR B “ must be aff orded a n opportunity

to consider the merits of plaintiff’s c laims before the substantive issues may be prope rly

befor e this Court.” Id
. at 141. I t is true that this case is like Cape Cod in that PR RB dec ided it lacked jurisdiction, the Administ rator f ailed to take a ction within the 60-day time period, and the Secre tary subsequently

decide d that it wanted to re verse PRR B. B ut PR RB’s de cision in this
case is critically

differ ent. Her e, PRRB dec ided in the alter native and “ in the interest of judicia l economy” that, if it had jurisdiction (fully expecting that the Secre tary would reve rse its jurisdictional determination), it lacke d authority to decide the underly

ing issue of

law and E J R
was re quired. PRRB Dec ision at 8. Unlike Cape Cod , here there is no need to provide PRRB the opportunity

to addre ss the substantive issues. PRR B a lrea dy did so and found that EJRwas require d. Dismissal and remand w ill be denied, as this Court cannot c ountenanc e the squander ing of

adjudicative r esourc es that would re sult from the proce dure sug g ested by the Secre tary . The Court will deny the Secr etar

y ’s Motion to Dismi ss and Remand [Dkt. # 8]
. The pa rties shall file a joint proposed dispositive motion briefingschedule no later tha n Fe bruar y 22, 2012. A memorializing Or der a ccompa nies this Memorandum Opinion.
Date: January

31, 2012 /s/ ROSEMARY M. COL L YER United States District J udg e

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