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 Heal th 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. 

1 
I. Background 

A. Factual Overview1 

In Allina 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 

particular manner, rather than simply remanding. See Allina Health 

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); Shear v. Nat'l Rifle Ass'n of Am., 606 F.2d 1251, 1253 (D.C. 

Cir. 1979). Therefore, the facts set forth herein are taken from 

Plaintiffs' Complaint [Dkt. No. 1]. 

2 
Plaintiffs allege that after the D.C. Circuit's opinion, the 

Secretary published 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 bound by agency 

regulation and rulings, id., and cannot decide "question[s] of law 

or regulations." 42 U.S.C. § 1395oo(f) (1). Section 1395oo(f) gives 

providers "the right to obtain judicial review of any action . 

which involves a question of law or regulations . . . whenever the 

[PRRB] determines . . . that it is without the authority to decide 

the question." Id. 

2 Although the calculations are for the 2012 fiscal year, they were 

published on June 30, 2014, after the Court of Appeals vacated the 

2004 Final Rule. Compl. ~ 36. 

3 
By letter dated August 13, 2014, the PRRB granted Plaintiffs' 

request for expedited judicial review, finding that "it is without 

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 

related case designation on May 18, 2015, and the case was 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 

for Lack of Jurisdiction or in the Alternative for Voluntary Remand 

[Dkt. No. 15] ("Motion") . Plaintiffs filed their Opposition on 

November 10, 2014 [Dkt. No. 16] ("Opp'n"), and Defendant filed her 

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 

4 
directly by the U.S. Constitution. Kokkone~ v. Guardian Life Ins. 

Co. of Arn., 511 U.S. 375, 377 (1994). The plaintiff bears the 

burden of establishing by a preponderance of the evidence that the 

Court has subject matter jurisdiction to hear the case. See Shuler 

v. United States, 531 F.3d 930, 932 (D.C. Cir. 2008). In deciding 

whether to grant a motion to dismiss for lack of jurisdiction under 

Rule 12 (b) (1), the court must "accept all of the factual 

allegations in [the] complaint as true [.] " Jerome Stevens 

Pharmaceuticals, Inc. v. Food & Drug Adrnin., 402 F.3d 1249, 1253-54 

(D.C. Cir. 2005) (internal quotation marks omitted) (citing United 

States v. Gaubert, 499 U.S. 315, 327 (1991)). The Court may also 

consider matters outside the pleadings, and may rest its decision 

on its own resolution of disputed facts. See Herbert v. Nat'l Acad. 

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. 

5 
In 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. 

Plaintiffs oppose Defendant's Motion, 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 

voluntary remand is improper. The Court will address each argument 

in turn. 

A. The Court Has Authority to Review the PRRB Expedited 

Judicial Review Determination 

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 obtain judicial review of any final decision of the [PRRB] ." 42 

U.S.C. § 1395oo(f) (1) (emphasis added). In the same paragraph, 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 to review by the Secretary." Id. Consequently, the statute 

is clear that the PRRB' s authority determination is a final 

decision and therefore subject to judicial review. Id. 

6 
The Seventh Circuit reached the same conclusion in Edgewater 

Hosp. , Inc. v. Bowen, stating that " [Section 13 9500 ( 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 

Providence Yakima Medical Center v. 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 only case 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 should review the PRRB's determination of its own authority 

at th[at] time." Lion Health, 689 F. Supp. 2d at 856 n.6. 

Lion Health lends 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. 

7 
Plaintiffs 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 . § 13 9 5 00 ( f ) ( 1) ("the [expedited judicial review] 

determination shall be considered a final decision and not subject 

to review by the Secretary") . Plaintiffs are correct that the 

Secretary may 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 

Necessary Authority 

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. Motion at 5. The crux of the Secretary's argument is, because 

the 2004 Final Rule was vacated, it no longer existed and th_erefore 

the PRRB "could not have been 'bound by' that nonexistent rule." 

3 Plaintiffs also argue that the Court "cannot look behind the 

[PRRB' s] determination of its own authority to grant relief." Opp' n 

at 10 (citing Affinity Healthcare 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. 

8 
Id. 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'n at 14-15. Therefore, Plaintiffs contend that 

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 immediately becomes nonbinding or if it remains binding until 

the Secretary affirmatively acquiesces to it, because Plaintiffs 

allege that the Secretary did in fact apply the vacated 2004 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 

Calculations is a legal question that the PRRB correctly determined 

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 application of the vacated 

9 
2004 Final Rule, then the 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 

the legal questions brought by Plaintiffs. Because the PRRB's grant 

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 

10 
Rule 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 expedited judicial review. However, the Court has 

already concluded that expedited judicial review was appropriate. 

In addition, any error by the PRRB in its expedited judicial 

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). Granting voluntary remand in this instance, 

by reason of the Secretary's determination that the PRRB's decision 

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 in determining 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 

Upon consideration of the Motion, Opposition, Reply, the entire 

record herein, and for the foregoing reasons, it is hereby 

ORDERED, that Defendant's Motion to Dismiss for Lack of 

Jurisdiction or in the Alternative for Voluntary Remand is denied; 

and it is further 

ORDERED, that an Initial Scheduling Conference shall be held 

on this matter on November 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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