UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ALLINA HEALTH SERVICES, ) et al., ) Plaintiffs, ) ) v. ) ) SYLVIA M. BURWELL, Secretary ) United States Department of ) Health and Human Services, ) ) Defendant. )**~~~~~~~~~~~~~~~~->** Civil Action No. 14-1415 (GK)

MEMORANDUM OPINION Plaintiffs Allina Health Services, et al. ("Plaintiffs"), bring this action against Sylvia M. Burwell, in her official capacity as Secretary of the United States Department of Health and Human Services ("Secretary" or "Defendant"), challenging the calculation of certain disproportionate share hospital ("DSH") payments as procedurally and substantively invalid. This matter is before the Court on the Defendant's Motion to Dismiss for Lack of Jurisdiction or in the Alternative for Voluntary Remand [Dkt. No. 15]. Upon consideration of the Motion, Opposition [Dkt. No. 16], Reply [Dkt. No. 18], the entire record herein, and for the reasons set forth below, the Motion shall be denied.

1I. Background A. Factual Overview1 

### InAllina Health Services v. Sebelius, a group of hospitals, including the Plaintiffs in the present case, challenged a 2004 rulemaking by the Secretary ("2004 Final Rule") pertaining to calculations for Disproportionate Share Hospital ("DSH") payment determinations under Medicare. See No. 10-cv-1463 (D.D.C.). In November 2012, the Court (Collyer, J.) granted summary judgment for the plaintiffs, finding that the 2004 Final Rule violated the procedural requirements of the Administrative Procedure Act ("APA") and vacating the rule. See Allina Health Servs. v. Sebelius, 904 F. Supp. 2d 75 (D.D.C. 2012) ("Allina I"). On appeal, our Court of Appeals affirmed the part of the Allina I Court's decision vacating the 2004 Final Rule. But, the Court of Appeals held that the Allina I Court erred when it directed the Secretary to calculate the DSH payments in a particularmanner, ratherthan simplyremanding. SeeAllinaHealth Servs. v. Sebelius, 746 F.3d 1102, 1111 (D.C. Cir. 2014).

1 

### For purposes of ruling on a motion to dismiss, the factual allegations of the complaint must be presumed to be true and liberally construed in favor of the plaintiff. Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 15 (D.C. Cir. 2008); Shearv. Nat'lRifleAss'nofAm., 606 F.2d 1251, 1253 (D.C. Cir. 1979). Therefore, the facts set forth herein are taken from Plaintiffs' Complaint [Dkt. No. 1]. 2Plaintiffs allege that after the D.C. Circuit's opinion, the Secretarypublished calculations for federal fiscal year 2012 DSH payments ("2012 DSH Calculations") 2 based on the 2004 Final Rule that had been vacated. Plaintiffs also allege that the new 2012 DSH Calculations are procedurally invalid. Compl.**~~** 47-49. Plaintiffs timely appealed to the Provider Reimbursement Review Board ("PRRB") challenging the 2012 DSH Calculations, see Compl.**~~** 36-39, and requested that the PRRB grant expedited judicial review. Id.**~** 41. The PRRB is an independent administrative tribunal that resolves disputes regarding hospital reimbursement determinations by Medicare contractors or the Centers for Medicare & Medicaid Services ("CMS"). See 42 U.S.C. § 1395oo(a). The PRRB may resolve certain payment disputes without following low-level policy guidance, see 42 C.F.R. § 405.1867; however, it is boundbyagency regulation and rulings, id., and cannot decide "question[s] of law
orregulations." 42 U.S.C. § 1395oo(f)(1). Section 1395oo(f) gives providers "the right to obtainjudicial review of any action
. which involves a questionof lawor regulations
. . . whenever the [PRRB] determines
. . . that it is without the authority to decide the question." Id.

2Althoughthe calculations are for the 2012 fiscal year, theywere publishedonJune 30, 2014, afterthe Court ofAppeals vacatedthe 2004 Final Rule. Compl.**~** 36. 3By letterdatedAugust 13, 2014, the PRRB grantedPlaintiffs' request for expeditedjudicialreview, finding that "it iswithout the authority to decide the legal question of whether the regulation regarding the [2012 DSH Calculations] is valid and whether the Secretary's actions subsequent to the decision in Allina [I] are legal. /1 Letter from the Provider Reimbursement Review Board to Stephanie Webster 6 (Aug. 13, 2014) [Dkt. No. 14- 1] ("PRRB Decision")
. B. Procedural Background On August 19, 2014, Plaintiffs filed their Complaint, pursuant to the PRRB's grant of expedited judicial review [Dkt. No. 1]. Plaintiffs filed a Notice of Related Case on the same day

[Dkt. No. 2]. Judge Collyer granted Defendant's objection to the relatedcasedesignationonMay 18, 2015, andthe casewas randomly reassigned to this Court. Minute Order dated May 18, 2015; Case Assignment [Dkt. No. 20]. On October 27, 2014, Defendant filed her Motion to Dismiss forLackofJurisdictionorintheAlternative forVoluntaryRemand [Dkt. No. 15] ("Motion")
. Plaintiffs filed their Opposition on November 10, 2014 [Dkt. No. 16] ("Opp'n"), andDefendant filedher Reply on November 20, 2015 [Dkt. No. 18] ("Reply"). II. Standard of Review Under Fed. R. Civ. P. 12{b)(1) As courts of limited jurisdiction, federal courts possess only those powers specifically granted to them by Congress or 4directlyby the U.S. Constitution.**Kokkone~** v. Guardian Life Ins. Co. of Arn., 511 U.S. 375, 377 (1994). The plaintiff bears the burdenof establishingbya preponderance of the evidence that the Court has subjectmatterjurisdictiontohear the case. See Shuler
v. United States, 531 F.3d 930, 932 (D.C. Cir. 2008). In deciding whethertogranta motiontodismiss for lackofjurisdictionunder Rule 12(b)(1), the court must "accept all of the factual allegations in [the] complaint as true[.]" Jerome Stevens Pharmaceuticals, Inc. v. Food

### &DrugAdrnin., 402 F.3d 1249, 1253-54 (D.C. Cir. 2005) (internal quotationmarks omitted) (citingUnited States v. Gaubert, 499 U.S. 315, 327 (1991)). The Court may also considermatters outside the pleadings, andmay rest its decision
onitsownresolutionof disputedfacts. SeeHerbertv. Nat'lAcad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992). III. Analysis The Defendant has moved to dismiss this case on the ground that the PRRB improvidently granted expedited judicial review. Defendant alleges the PRRB reached the conclusion that it was "without authority to decide" Plaintiffs' challenge to the 2012 DSH Calculations because it erroneously believed "it was 'bound' to apply the vacated 2004 Final Rule." Motion at 5. Dismissal, Defendant argues, will permit the PRRB to reconsider Plaintiffs' challenge. Id. at 1-2.

5In the alternative, Defendant requests that the Court "grant
a voluntary remand to the agency, which will allow the PRRB to adjudicate (P]laintiffs' claims without consideration of the vacated (2004 Final Rule]." Id. at 2. PlaintiffsopposeDefendant'sMotion, arguing that the PRRB's expedited judicial review determination is final and not subject to review. See Opp'n at 6-11. Plaintiffs also contend that, if subject to review, the PRRB's determination was correct, and that voluntaryremand is improper. The Courtwill address eachargument in turn. A. The Court Has Authority to Review the PRRB Expedited Judicial ReviewDetermination Plaintiffs argue that judicial review of the PRRB's lack of authority determination is improper. Opp'n at 7-8. Section 1395oo(f) itself makes plain that judicial review is available. Section 1395oo(f)(1) states that providers "shall have the right to obtainjudicial reviewof any final decisionof the [PRRB] ." 42 U.S.C. § 1395oo(f)(1) (emphasis added). Inthe sameparagraph, the statute designates the PRRB's determination of its authority to decide the question of law or regulations "a final decision": "[T]he determination shall be considered a final decision and not subject toreviewbythe Secretary." Id. Consequently, the statute is clear that the PRRB's authority determination is a final decision and therefore subject to judicial review. Id.

6The Seventh Circuit reached the same conclusion in Edgewater Hosp., Inc. v. Bowen, stating that "[Section 139500(f)] itself establishes a right to judicial review of the [PRRB's] determination that it lacks the authority to decide a question of law or regulations." 857 F.3d 1123, 1130 (7th Cir. 1989); accord ProvidenceYakimaMedical Centerv. Sebelius, 611 F.3d 1181, 1187- 88 (9th Cir. 2010) (appellate court held PRRB's lack of authority determination was incorrect and remanded to District Court with instructions to remand to PRRB)
. The onlycase Plaintiffs cite in support of their argument is Lion Health Servs., Inc. v. Sebelius, a case from the Northern District of Texas that is not binding on this Court. See Opp'n at 7 (citing 689 F. Supp. 2d 849 (N.D. Tex. 2010), rev'd in part
on other grounds, 635 F.3d 693 (5th Cir. 2011)). The Lion Health court addressed the issue of judicial review only in passing, stating in a footnote that its subject matter jurisdiction was premised on 42 U.S.C. § 1395oo(f)(1) and that it "s[aw] no reason why it shouldreviewthe PRRB's determinationof its own authority at th[at] time." Lion Health, 689 F. Supp. 2d at 856 n.6. LionHealthlends little support to Plaintiffs' argument. The Lion Health court did not engage in any in-depth analysis of the issue, nor did it definitively hold that judicial review was unavailable.

7Plaintiffs next argue that the Secretary is statutorily barred from interfering with the PRRB Decision. See Opp'n at 6-7; 4 2 

## u.s . c . § 139 500(f ) (1) ("the [expedited judicial review] determination shallbe considereda final decisionandnot subject to review by the Secretary")
. Plaintiffs are correct that the Secretarymay not directly overturn the PRRB's determination, but I that is not what the Secretary is attempting to do here--rather, the Secretary is asking the Court to review the PRRB's lack of authority determination. 3 For all the foregoing reasons, the Court concludes that it has the authority to review the PRRB's determination that it is without the authority to decide the legal questions at hand. B. The PRRB Correctly Determined that It Lacks the NecessaryAuthority The Secretary argues that the PRRB erroneously determined that it is without authority to decide Plaintiffs' case because the PRRB believed it was "bound" to apply the vacated 2004 Final Rule. Motionat 5. The cruxof the Secretary'sargument is, because the 2004 FinalRulewasvacated, itno longerexistedandth_erefore the PRRB "could not have been 'bound by' that nonexistent rule."

3Plaintiffs also argue that the Court "cannot look behind the [PRRB's] determinationof itsownauthoritytograntrelief." Opp'n at 10 (citingAffinityHealthcare Servs., Inc. v. Sebelius, 746 F. Supp. 2d 106, 115 (D.D.C. 2010)). Affinity Healthcare is not instructive here, as that case involved the CMS Administrator's reversal of the PRRB's authority determination, not judicial review of the determination. 8Id. at 6. The Secretary also argues that the PRRB was under "the misimpression that the Secretary had a policy of applying the regulation notwithstanding" the vacatur. Id. Plaintiffs argue that, despite her contentions in this case, the Secretary's usual position is that vacatur does not automatically eliminate the binding nature of a rule, and that a vacated rule remains binding until the Secretary affirmatively acquiesces. See Opp'nat 14-15. Therefore, Plaintiffs contendthat the PRRB correctly determined it was bound by the vacated 2004 Final Rule. The Court need not determine at this time whether a vacated rule immediatelybecomes nonbindingor if itremainsbindinguntil the Secretary affirmatively acquiesces to it, because Plaintiffs allege that the Secretarydid in fact apply the vacated2004 Final Rule in the 2012 DSH Calculations, so as to "constitute unlawful nonacquiecence [sic] of binding D.C. Circuit law." PRRB Decision at 5; Opp'n at 12. Even if the 2004 Final Rule became non-binding upon vacatur, Plaintiffs allege that the Secretary unlawfully continued to apply it. Therefore, the legality of the 2012 DSH Calculationsisa legalquestionthatthe PRRB correctlydetermined it does not have the authority to decide. Although the Secretary's Motion and Reply both ignore it, Plaintiffs brought a second allegation before the PRRB: if the 2012 DSH Calculations do not involve an applicationof thevacated
92004 Final Rule, thenthe 2012 DSH Calculations are a procedurally invalid adoption of a new rule. Specifically, Plaintiffs allege that the 2012 DSH Calculations violate the notice and comment requirements of the Medicare Act and the APA. Opp'n at 14. Plaintiffs correctly contend that the PRRB lacked the authority to decide this second issue, and Defendant has offered
no argument in opposition. Opp'n at 12-13 For the foregoing reasons, the Court finds that the PRRB properly determined that it was without the authority to decide thelegalquestionsbroughtbyPlaintiffs. BecausethePRRB'sgrant of expedited judicial review was proper, Defendant's Motion to Dismiss is denied. 

### c. Voluntary Remand Is Improper The Secretary argues that regardless of whether the PRRB Decision was proper, the case should be voluntarily remanded to the PRRB. The Secretary's sole rationale is that the PRRB erroneously concluded that it was bound to apply the 2004 Final Rule, and therefore the agency should be given the opportunity to
cure its own mistake. See Motion at 7. The Court finds that remand is not appropriate in this instance. The Secretary's voluntary remand argument is identical to its prior argument that the PRRB Decision was erroneous, which the Court has already rejected. See supra, Section III.B. To be clear, the Secretary is not conceding that the vacated 2004 Final 10Rule was mistakenly applied in the 2012 DSH Calculations, nor is she seeking to cure any alleged errors in the 2012 DSH Calculations--the only mistake identified by the Secretary is PRRB's grant of expeditedjudicial review. However, the Court has already concluded that expeditedjudicial review was appropriate. In addition, any errorby the PRRB in its expeditedjudicial review determination is not the Secretary's to cure. While the Secretary requests that this Court "allow the [PRRB] to cure its
own mistake," Mot. at 7 (citing Edward

## w. Sparrow Hosp. Ass'n v. Sebelius, 796 F. Supp. 2d 104, 207 (D.D.C. 2011)), the PRRB itself does not allege that it made any mistake at all. And Section 139500(f)(1) states that the PRRB's expedited judicial review determination is "not subject to review by the Secretary." 42 U.S.C. § 1395oo(f)(1). Grantingvoluntaryremandinthis instance, byreasonofthe Secretary'sdeterminationthatthePRRB'sdecision
was a mistake, would circumvent the statute. Finally, the Secretary's voluntary remand argument fails to address one of the bases for the PRRB's decision. The Secretary does not argue that the PRRB erred indetermining that it does not have the authority to decide whether the 2012 DSH Calculations violate procedural requirements. As there was no error on this question, voluntary remand would be inappropriate. For the foregoing reasons, the Secretary's request for voluntary remand is denied. 11

### IV. Conclusion Uponconsiderationof theMotion, Opposition, Reply, the entire record herein, and for the foregoing reasons, it is hereby ORDERED, that Defendant's Motion to Dismiss for Lack of Jurisdictionor in the Alternative forVoluntaryRemand is denied; and it is further ORDERED, that an Initial Scheduling Conference shall be held
on this matter onNovember 3, 2015, at 10:30 a.m.

October 29, 2015 

# Gla<Js

# ~&:J**{;~**

# "
United States District Judge

Copies to: attorneys on record via ECF

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