## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 09

- 1665 L IT TLE C O M PA NY O F M ARY H OS PI T AL, P laint if f-A ppell ant, v.
K AT HL EE N S EB EL I US, S ecr eta ry, U
. S. Departm ent o f H eal th and H um an S er vi ces, D efend a nt-A pp ellee.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 06- C- 6430

—Wayn e R. Andersen, Judge
.
A RGUED S EP TE MBE R 15, 2009

— D ECI DE D N OVE MBE R 24, 2009

Befo re P OSNER, F LA UM, a nd R OV NER, C ircu it Judges . F LA UM, Ci r c u i tJ udg e . In20 03 , pla in tiff-a p p ella n t, L itt le Com pany ofM ar y Hosp ita l ( Lit tl e Com pany) , r equeste d th at th eir a ssigned M ed icare fina nc iali nt erm ed iary ( I nter m edi ar y) r eopen a nd r eco nsi der sev er ali ssues i n Li tt l e Comp an y’s c o str epo r t fr o m 1 99 8. W he n the I nter m edi ar y r eopened o nl y o ne o fthe chal l enged i ssues ,2 N o. 09

- 1665

The M edi c ai d Fr ac t i on i s the num ber ofho s pi t al pat i en tdays 1 for p a t ients elig ib le for m ed ical assistan ce u nd er a S tate M edicai d p lan but wh o are not ent it le d to M edicare Part I, divid ed b y th e t otal num ber ofhospit al patie nt days. 42 U .S.C . § 1 3 9 5 w w (d )(5)(F )(v i)(II ). Lit tl e Com pany appeal ed al l of the c hal l enged i ssues to th e Pr o vi derRe i m bu r se m en t Bo ar d ( PRRB)

. The PRR B d ism iss ed th e a p p ea l of th e n on -re op en ed iss u es . L itt le Com pany appeal ed the PRR B’s dism i ssa l to the di str i ct c ou rt . Th e d ist ric t c ou rtgra n te d su m m ar y jud gm en t in f avo r of t he defendant-a pp el l ee, the Se cre tar y o fH eal th and H um an S er vi ces ( Se creta ry)

. Thi s a pp ealf ol l ows. Fo r the r eas ons setf or th be l ow, w e a ffi rm the dist ri ct cour t’ s g ra nt o fsum m ar y j ud gm ent.

I . B a c kg r o und A . The M edica i d R ei m bu r semen tPro cess H ospi tal s that par ti ci pate in the M edi car e pr ogr am m ust e nteri nto a pro vi der a gr eem ent with the U
. S. Departm en t of H ealth a n d H um an Services to receive M ed icare r ei m bur se m en t. Those h o spi ta l s par ti ci pat i ngi n the M edi ca r e pr o g r am th ats er ve a di spr o po r ti o na te s ha re ofl ow inco m e pati ents ar e e nti tl ed to a D isp ro port i onate Sha re H osp ital (DSH ) p a y m en t adj us tm en t. T he DSH paym ent a dj ustm ent r equi re s the cal cul ati on o fthe dispr o po r t i o na t e p a t i e ntp e r c e nt a g e . T he di s pr o po r t i o nate pati ent per centag e i s the sum o fthe M edi cai d Fra cti on 1N o. 09

- 1665 3

The SS I Fr ac t i on i s the num b er of h ospi t al pat i en tdays f or 2 pat i en t s e nt i t l ed t o be ne fi t s unde r both M edi c ar e Par tA an d the SS I pr ogr am di vi ded by th e t ot al num ber ofho s pi t al pat i en t day s f or pa t i e nt s e nt i t l e d t o M e di c a r e P a r tA. 4 2 U. S

. C. § 13 9 5 w w (d )(5)(F )(v i)(I). I n 2 0 0 8 th e S e c r e t a r y s ub s t a n t i v e l y a me n de d 4 2 C

. F
. R. 3 § 4 05
. 18 85 . Thi s am en dm en tr es ul t ed i n a s i gni fi c antc han ge to the app eal s ri ghts ofa provider aftera re opening. Theref ore, (co n tin u ed ...) an d the S uppl ement alS ecu ri tyInc o m e ( S S I ) F r ac ti o n. 2 See 42 U
. S. C

. § 1395w w (d)(5)( F)(vi ). W he n fil ing for reim bu rsem en t from the M ed icare pr o g r a m, the pr o v i de r mus t fi r s t fi l e a n a nn ua l co st r epo r t wi tha n a ss i g ne d I nt er m edi ar y . The Int er m edi ar y then co nd ucts a n audit, acc ounts f ori nter i m paym ents to the pr ovi de r, a nd i ssues an ini ti al“no ti ce o fpro gr am r ei m bur se m en t” ( N PR)

. The pr o vi dermay appe althe i ni ti alN PR to the PRRB w i thi n 180 days i fatl eas t $1 0,0 00 is atis s u e . 4 2 U .S.C . § 13 95 oo (a). U p on ap p ea l, th e S ec r et ar y ’ s del eg at e, the Adm i ni st r at o r o fthe C en ters for M ed icare and M ed icaid Se rvices (CM S), m ay rev iew th e d ec isio n of th e P R R B
. Ift h e p ro vid er is d i s s a t i s fi e d w i th th e d e c i s i o n o fth e P R R B a n d th e C MS A dm i ni str ato r, the provi der m ay re quest that a fed eral d istri ct cou rt review th e d ecision. 42 U
. S. C

. § 1395oo(f)( 1). W he n a p roviderdo es no t fi l e a ti m ely a ppea l o fthe i ni ti alNPR, the NPR i s co ns i der ed fi na l i ze d. 4 2 C. F
. R. § 4 05. 1807( 2009)

. H owever, under 42 C. F. R. § 405. 1885 ( a) ( 2004 )

— a se t o fr egul at i o ns se par at e fr o m tho se g o ve r ni ng

34 N o. 09

- 1665

(

. . . c on t i nu e d) 3 throughou t this opinion al l ci tat ions to 42 C. F. R
. § 405. 1885 re fer en c e the r eg ul at i on as i twas i n 200 4, the ye ar r el eva nt t o thi s c as e. Al l othe r re fer en c es t o the C. F. R. ar e t o the c ur re nt versi on, w hich has rem ained subst anti vely u nchanged si nce 2004. the a pp eal s pro cess di sc u ssed above

— th e I nt erm ed iary m ay re op en sp ec ific find in gs on m at te rs at iss u e w ith in thre e y ear s o fthe i n itia l N PR based o n a r equest by th e pr o vi dero r o n i ts o wn i ni ti ati ve. A t the c l o se o fthe r e o p e n i n g, th e I n t e r me d i a r y i s s u e s a r e v i s e d NP R o n t he spe ci fi c i ss ue s r eo pen ed. The pa r ts o fthe NPR tha t th e I nt er m edi ar y di d no t r eo penr emai n fi na l i ze d i n the i ni t i a l NPR
. Wi th r e g a r ds t o the s pe c i fi c i s s ue s r e o pe ne d, the pr ovi der has the ri ghts ofap pealdi scusse d above

. 42 C

. F.R. § 405.1889 (2009 ).

B. The M edica i d R ei m bu r semen tPro cess I n Th i s Case Li tt l e Companyi s a ho spi ta l tha t par ti ci pat es i n the M edi ca r e pr o g r am an d i s en ti tl ed to a DS H pa y m en t ad j us tm en t. O n Sep tem ber 12, 2000, L ittl e C o m p an y’s as si g n e d In te rm ed iar y iss u ed an init ial N P Rfor L itt le Com pany’s co st r epor ti ng per i od endi ng J une 20, 19 98. The N PR w as fi nal i zed w h en Li ttl e Com pany f ai l ed to a p p e al t o th e P R R B or th e C M S A d m in ist ra to r w ith in 180 days. On Septe m ber5, 2 00 3, Lit tl e Com pany subm i tt ed a r eque stf o r reope ni ngo fthe fi na l i ze d 1 99 8 N PR r eg ar di ngthe c al cul ati on o fthe M edi ca i d F r ac ti o n a nd the S SIFr acti on. S hor tl y a fterthi s r equest, on N ove m ber3,N o. 09

- 1665 5 2 0 0 3 , a n e m a i l e x c h a n g e o c c u r r e d b e t w e e n t wo e mp loyees of th e I nt erm ed iary r egard ing L ittl e C o m p an y’s 1998 co st re port
. The em ai l s tated, “Chri s, Ij ust r eal i zed tha t the r e a r e o nl y P r i mar y, S e c o nd a r y a nd HM O s up p or ts
. C an yo u p lea se se n d su p p or ts for th e SSI E l i gib le D ay s a s w ell? T h an k y ou , M ar k K .” A l m ostexact l y a ye arafterthi s e m ail exchange, o n N ove m ber11, 20 04, the I nter m edi ar y i ssued a N oti ce o fR e o pe ning . T he No t i c e o fR e o pe nings t a t e d: I n ac cord an ce w ith th is Regu lation, w e h a ve d eterm i ne d tha t y o urc o strepo r t wi l l b e r eo pen ed f o r the f o l l o wi ngr ea so n( s) : The Int er m edi ar y no te s that th e Pr o v i de r h a s r e qu e s t e d a r e o pe ningt o i nc l ud e M edi cai d A dd i ti onalE l i gibl e Days ( 757) and Baby Ad di ti o na l Da y s ( 82 ) f o r the DS H c o m put at i o n. The Not i ce o fRe o pen i ngmade no ment i o n o fr eo pen i ng the S SIFr ac tio n and the I nter m edi ar y di d not i ssue a se par at e N o ti ce o fRe o pen ing r eg ar di ngthe S S IF r ac ti o n. OnNo v e mbe r 1 7, 2 0 0 4 , the Int e r medi a r y i s s ue d a r ev i se d NPR wi tha n a dj us te d M edi ca i d F r ac ti o n. On J an ua r y 2 6, 2 00 5, Li tt l e Companya pp eal ed th e r ev i se d NPR t o the PR RB. S pec i fi ca l l y, Li tt l e Company ap p ealed the revised M ed icaid Fract ion a n d th e fai lure to revise t h e S S I Fraction. On M arch 3, 2005, the Interm ed iary fil ed aj ur i sdi cti o na lcha ll en ge to L ittl e C om p an y’s ap p eal ofthe fail ure to a dj us t the SSIFraction. Th e I nt erm edi ar y c l ai m ed the SS IFr acti on was notr eopened and ther ef or e re m ain ed fi nal i zed fro m the N PR i ssued i n 2 00 0. On F eb r ua ry 1 5, 20 06 , the PRR B s us ta i ne d the I nter m edi ar y’ s chal l enge to Lit tl e Com pany’s appealo f the S SIFr acti on a nd di sm i sse d the i ssue.6 N o. 09

- 1665 O n N ov em b er 27, 200 6, L itt le C om p an y filed su it in th e N orthe rn D istri ct of I ll inois challenging th e PR R B ’s j u r i s d i c t i o n a l de c i s i o n . O n O c t o b e r 1 8 , 2 0 0 7, L i t t l e C o mpany fi l ed a m oti on t o perm i t d isc overyo fdeci si ons by the PRRB an d C M S A dm i ni str ato r i n si m i l aradm i ni str ative ap p eals. Th e d istr ict cou rt de nied this d iscovery m oti on, fi nd i ng tha t j ud icia l revi ew o fthe PRR B’s fi nal deci si on on Li ttl e Com pany’s appealsho uld be bas ed s o l e l y o n the c e r t i fi e d a dmi ni s t r a t i v e r e c o r d. Both part i es filed f orsum m ar y j ud gm ent. The di str i ct cour t g ra nted sum m ar y j ud gm ent in f avo r ofthe Se cre ta ry . Th e d ist ric t c ou rtfou n d th at th e e vid en c e in th e record sup p orted the P R R B ’s f in d ing tha t the Int erm edi ar y di d not r eopen the S SIFr acti on, and ther efor e, the PRRB p ro perl y di sm i sse d that i ssue. On app eal, L i ttl e Com pany chal l enges the dist ri ct cour t’ s g ra nt of s um m ar y j ud gm ent in f avo r ofthe Se cre t a r y a nd the di s t r i c t c o ur t ’ s de ni a l o f the mot i o n f or di s c o v e r y o ut s i de o fthe a dmi ni s t r a t i v e r e c o r d.

I I . Discussi on A. S umma ryJ udg me nt W e r evi ew a dist ri ct c ourt ’ s g ra nt o fsum m ar y j ud gm en t d e n ov o. Argyropou l ous v. Ci ty of Al t on , 53 9 F
. 3d 724, 73 2 ( 7th Ci r. 20 08)

. S um m ar y j ud gm en t i s pro per wher e “ th e r e i s n o g e n u i n e i s s u e o fma t e r i a l f a c ta nd the m ovin g p ar ty i s e nti tl ed to a j ud gm ent a s a m att er of l aw . ” Fed

. R. Civ. P. 56(c).N o. 09

- 1665 7 A s a pre l i m i narym att er, Li ttle Com pany chal l enges the di str i ct c ourt ’ s g ra nt o fsum m ar y j ud gm ent b y ar gui ng tha t t h e d i str i ct c ourtgr anted to o m uch d eferenc e to the P R R B ’s dec isi on be low

. T he d istri ct cou rt i nd i cate d that i t rev iew ed the PRR B’s deci si on under the s tandard o fr evi ew set for th i n the A dm i ni str ati ve Proc ed ure A ct (A PA ). Th e A PA requ ires that an agen cy’s deci si on be se t a si de onl y i fi t i s a rbi tr ar y, capr i ci ous, an ab u se of d isc re tio n, un su p p or te d by su b st an tia l ev id en c e in t h e c as e, or n otin a c c or d an c e w ith th e la w . See E dg ew a ter v. B o w en , 857 F.3d 112 3, 1129 (7 t h C ir. 1989). This i s the pro per sta nd ar d ofr evi ew f or d i str i ct c ourt s re vi ew i ng deci si on o fthe PRR B r ega rdi ng r ei m burse m ent. Lit tl e Com pany chal l enges thi s degr ee ofdefer ence ba se d o n thi s co ur t’ s st at ementi n E dg ew a terthat“a l es se r de g r ee o f defer en ce i s r equi r ed when r ev i ewi ngthe secret ar y’ s a cti ons und erthe M edi car e Act’s r ei m burse

m ent pr ovi si ons. ” 8 57 F. 2d at 1130

. H owever, relia nce on th is s ta t e m en t is m isp lac ed . Th is s ta te m en t in E dg ew a terr efer en ce s a se r i es o fc as es wh er e we f o und that the “ M ed icar e s tatute s peci fi cal l y c i rcum scr ibes the S ecr eta ry ’ s di scr eti on t o define ‘ re aso nabl e co st’

. ” See St. Ja m e s H o spita l v. Heck ler, 760 F.2d 146 0 (7th C ir. 1985); St. Fra nc is Ho spita l C enter v. Heck ler, 714 F .2 d 872 (7th C ir. 19 83 ); N or t hwe s tHos pi t al, Inc . v. Hos pi t al Se r vi ces Corp. , 68 7 F.2 d 98 5 (7 th C ir. 19 82 ); St. John’s H ickey M em orial Hospit al, Inc . v. C a l i

f ano , 59 9 F
. 2d 803 ( 7th Ci r. 19 79)

. These case s reas on th at th e highly sp ecifi c langu age in th e M ed icare A ct r ega rdi ng “r eas onabl e co st” l i m i ts the a m ount o f d eferenc e cou rts sho uld grant to th e Secretar y ’s inte rpreta ti on o fthatte rm . H owever, thi s co u rt h as neve r8 N o. 09

- 1665 d isavow ed the A PA stan d ard of revie w for M ed icare p ro vid er r e i m b u rs em en t d ec isio n s m or e b ro ad ly. See E dg ew a ter, 85 7 F
. 2d at 1 12 9 ( “W e deferto the deci si on o f th e S ecr eta ry ( acting thro ugh the PRR B) unle ss i t is f ound t o b e a rb i t r a r y, c a pr i c i o us , o r n o ti n a c c o r da nc e w i th th e l aw . ”)

. A s i s t rue ofdefer ence to any deci si on by an adm i ni str ati ve age ncy, thi s defe re nce i s l i m ite d by the c l earm eaning ofthe sta tute as re veal ed by i ts lan gu ag e, p u rp os e, an d h ist or y. Id. H o we v e r, L i t t l e C o mp an y d oe s n otad va n c e a n y a r g u m e n t t h at th e p lain l anguage o fthe sta tute an d regula ti ons m andate a n outco m e di ffer ent fro m wh at occur re d in the dist ri ct c ourt
. T he pa rties agree that w he th er the d istri ct cou rt proper l y g ra nted sum m ar y j ud gm ent hi nges on wh ether th e In te rm ed iar y re op en ed th e SS I Fra c tio n w h en it reop en ed the M ed ica id Fract ion. A n Interm ed iary’s deci si on to re open an annual re port i s i ssue- speci fi c. 42 C

. F.R. § 405.1885(a) (2004) ( “A de term in a t ion of an Int erm edi ar y o ffi cer. . . m ay be r eopened with re spect to fi nd i ngs o n m att er s a t i ssue i n such de te rm i nati on o r d ecision”). T he Secretary argu es, an d th e d istri ct cou rt agreed , that the Interm ed iary did n ot reop en the SSI Fr ac tio n an d th er efo re th e P R R B , an d s u b se q u en tly the di str i ct c ourt, di d not hav e j uri sdic ti on t o re vi ew the lack ofadj ustm ent o fthe SS IFr acti on. Based o n Your Hom e Visit ing N urs e Servic es v. Shalala , 52 5 U.S

. 44 9 (1999), ifthe Interm ed iary cho s e n ot to reope n th e SSI Fr acti on, that deci si on i s not appeal abl e and the i ni ti al SS I Fra c tio n d et er m in at i o n m u st st an d u n c h alle n ge d . In Yo u rHo me, the Su p rem e C ou rt up he ld th e Secretary’s i nter preta ti on o fthe M edi car e r egul ati on s: “A r efusalbyN o. 09

- 1665 9 th e I nt er m edi ar y t o g r an t a r eo pen i ngr eque stb y the pr o v i de r i s no t a pp e a l ab l e t o the Bo a r d, pu r s ua nt to 42 C .F.R . § 40 5.1 88 5(c ).” 5 25 U .S. at 4 52 . Th e C ou rtfou n d it i nstr ucti ve that “42 C.F

. R. § 405. 1889 says that an Inter m ediar y’ s a ffi rm ati ve deci si on t o re open and r evi se a r e i mbu r s e men tde t e r mi na t i o n ‘ s ha l l b e c o ns i de r e d a se par at e a nd di st i nc t det er m i na ti o n’ t o whi chr egul at i o ns au th or izin g a p p ea l to t h e B oa rd are ap p lica b le; bu t it say s no thi ng ab out appeal o fa refu sal to re open. ” Id. at 453. There f or e, bas ed on the r egulat ions and sett l ed Su p re m e C ou rtp re c ed en t, th e P R R B , an d su b s eq u en tly the di str i ct c ourt, d o not have j uri sdic ti on t o hearan appeal o f the SS IFr acti on i fthe I nter m edi ar y di d not re open i t. H ow e ve r, Yo u rHo meo ffer s no gui dance on what f acto rs the PRR B , a n d subse quentl y the di str i ct c ourt, sh o ul d c o ns i derwhendi st i ngui sh i ngb etwee n s i tu at i o ns wher e th e I nt er m edi ar y di d not r eo pena g i ve n i ss ue an d w he r e th e I nt er m edi ar y di d r eo pena n i ss ue b ut sim p ly d id n otad j u st th e c h alle n g ed iss u e. L itt le Com pany ar gues that Yo u rHo mei s not ap p li cab le here be ca us e th e I nt er m edi ar y di d r eo penb oth fr ac ti o ns b ut only chose to adj ust the M edi cai d Fra cti on. They ur ge th i s co ur t to f o cus o n E dg ew a t e rHo spita l v. B o w en , 85 7 F
. 2d 11 23 ( 7th Ci r . 1 98 9)

. In E dg ew a terwe hel d that si m pl y b ec au se th e I nt er m edi ar y di d no t adj us t ani ss ue does not m ean that the I nter m edi ar y did not re open th a ti s s ue . 8 5 7F
. 2 d a t1 1 3 6

- 3 7
. Li t t l e Co mpa nya tte m pts t o e xt e nd Edge waterto st and fo r the pr oposi ti on that a cour t s houl d consi der a l l ite m s chal l enged bythe provi der to b e reo pen ed i fthe Int er m edi ar y r eo pen s an y i ss ue10 N o. 09

- 1665 ch all en ged by the prov ide r. Th is r ead ing of E dg ew a ter o ve r st at es i ts ho l di ng . In E dg ew a terwe f o und, b as ed o n the speci fi c f acts i nvolve d i n that case , the re openi ng was a re consi derat i on o fal l co st i tem s c hal l enged bythe provid er . H ow ev er , E dg ew a terd oes notst and fo r a br oad sta nd ar d re q u iring co urts to l oo k t o the i tem s chal l enged t o de t e r mi ne wha t i s s ue s the I nt e r med i a ry r e o pe ne d. Ra th er, i n E dg ew a ter, w e lo oke d to the s peci fi c affi rm ati ve ac tio n s t h e In te rm ed iar y t oo k re ga rd in g t h e fo u r c h all enged i tem s t o m ake the f act- speci fi c dete rm i nati on that th e In te rm ed iar y d id reo p en all fou r ite m s. Id. a t 1 135. W e r ea soned tha t th e f o l l o wi nga ffi r m at i ve a ct i o ns am ounted to a re op en in g: ( 1) the I nter m edi ar y r eopened th e fi r st N PR; ( 2) th e I nt er m edi ar y se nt Edge w ater a l ett ero n M ar ch 22, 19 84 expla i ni ng th at it w oul d not ch an g e th r ee i te m s butha d b een pe r su ade d t o a l l o w the f o ur th cl ai m ; an d ( 3) th e I nt er m edi ar y se nt th e second N PR wi ththe r ev i se d c o str epo r ts i nc orp o r at i ngthe ad j u st m en t. Id. W e w en t on to ex p lai n, “the Int erm ed iary ackno w l edged thati t deci ded notto chang e three o f the c o sti te m s. Tha t dec i si o n i ts el fwas a r ec o ns i der at i o n, ana ffi r m at i ve a ct i o n . . . to r e- ex ami ne o r que st i o n the cor re ctness of a det er m i nati on o r deci si on o ther w i se fi nal

. ” Id. at11 36. I n thi s c a s e , the Int e r med i a r y di d n o tt a k e a ffi r mat i ve acti ons that w oul d d em onst ra te i t r eopened the S SIFr acti on. The Inter m edi ar y t oo k the affi rm ati ve ste p of se n d in g a r eopeni ng not i ce r ega rdi ng the M edi cai d Fra cti on, but did notta ke any s or t ofsi m i l araffi rm ati ve acti on r ega rdi ng the S SIFr acti on . L i ttl e Com pany ar gues that thi s s i l ence re gar ding the SS I F ra cti on i s no tN o. 09

- 1665 11 dispos i ti ve because a l ack ofadj us tm ent doe s no t e quate to a l ack of re openi ng. H owever, the re openi ng not i ce was no t a no ti ce of ad j us tmento n a ny i ss ue . Ins te ad, the r eo pen i ngno ti ce was the f o r m al s ta te m en t o fwhati ss ue the Inter m edi ar y had a greed to r eopen a nd r eco nsi der base d up on Li ttl e Com p an y’ s r equest. There f or e, unl i ke th e I nt er m edi ar y ’ s dec i si o n in E dg ew a tert o reope n the en tire first N PR, the facts he r e ind icate th e I nt erm ed iary dec i ded to r eop en the NPR o nl y wi thr es pec t to the M ed icaid Fract ion. Fu rthe rm ore, un li ke th e I nt erm ed iary i n E dgew a ter, whi chi ndi ca te d tha t i t ex ami ne d a l l f o ur i ssues upon re openi n g b ut chos e t o adj ust o nl y o ne, the Inter m edi ary i n thi s ca se m ade no re prese ntati on th atthe y e xa m i ne d the S S IF r ac ti o n. L ittl e C om p an y also argues th at th e d ist r ict cou rt pla ced to o m uch em phasi s o n the I nter m edi ar y’ s s i l ence re gar ding the S SIFr acti on in the wri tte n expla nati on o f th e r ev i se d NPR. Li tt l e Companypo i nt s to 4 2 C. F
. R. § 4 05 .18 87, req u irin g t h e In te rm ed iar y t o e x p lain on ly its d e c i sio n to m ak e re vis ion s, n otits reo p en in g d ec isions, to su p p ort i ts argu m en t tha t the Int erm ed iary’s si l ence i s no t dete rm i nati ve. H ow eve r, i n additi on t o re q u iring the Inter m edi ar y t o expla i n any re vi si ons, 42 C. F
. R. § 4 05
. 188 7 ex pl i ci tly s ta te s, “ Allpa r ti es t o a ny re openi ng described abov e shal l be gi ven wri tte n noti ce o f th e re op en i n g .” L itt le C om p an y’s arg u m en t ign or es th is re quir em ent that the Inter m edi ar y pr ovi de w ri tte n not ice ofthe reop en ing. I n th is case, th e I nt e r m e d iary pr o vi ded wri tt ennoti ce ofi ts i nt en t to r eo penthe M edi cai d Fra cti on but did notpro vi de w ri tte n noti ce o f i ts i nt en t to r eo penthe S S IF r action. Thi s si l en ce i n the12 N o. 09

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re openi ng not i ce ind i cate s that the Interm edi ar y di d not r eo penthe S S IF r ac ti o n. Fi nal l y, Li ttl e Com p an y poi nts t o the e m ai l exchange i n l ate Octobe r and ear l y Novem b ero f20 03 as affi rm ative eviden ce th a t t h e I nt erm ed iary r eop en ed the SSI F r ac ti o n. Be ca us e th i s emai l d iscus se s co l l ec tingthe d at a re lied on for th e SS I Fra c tio n d et er m in at ion, th is em aildoe s raise som e qu estions as t o w h e t he r the Interm edi ar y r eco nsi dered the S SIFr acti on. H oweve r, thes e em ail s w ere s e n t m ore tha n a year be fore the I nt erm edi ar y deci ded to r eopen a ny par t o fth e N PR. W hen consi dered wit h the I nter m edi ar y’ s Noti ce o fReopeni ng, w hi ch does not l i st the S SIFr acti on a s a n i ssue to be re opened, thi s e m ail ex change does not am ount t o an affi rm ati ve action suffi ci ent t o consi der the i ssue re o pen ed. Thi s emai l ex ch an g e m er ely i ndi ca te s that the I nter m edi ar y g ather ed i nfo rm ati on to deci de w hetherto re open the SS I Fr acti on. To consi der suc h inform ati on gath ering a sign tha t the Int erm ed iar y reope ne d the SSI Fr acti on would f or ce Inter m edi ar ies to choo se between bl i nd l y m ak i ng r eopeni ng deci si ons, r efusi ng to r eopen an y i ssu e in a reopen ing requ est, or g r an ting p rovide rs a w ay t o ci rcum vent the 1 80- day st atuto ryti m e l i m i t t o appeal byr equesting a re openi ng. The I nter m edi ar y in thi s ca se f ol l owed the prop er p roced ure w he n d eali ng wi th Li ttl e C om p an y’s re openi ng r equest. Fi rs t, the I n term edi ar y c onsi dered wh ich, i fa ny, i ss ue s sh o ul d b e r eo pen ed. Upon m ak i ng th atde ci si o n, the I nt er m edi ar y i ss ue d a Not i ce o fRe o pen i ngs pec i fi ca l l y i nfor m i ngLi tt l e Companytha t th eN o. 09

- 1665 13 M edi cai d Fra cti on was be ing r eopened. Final l y, bynot i nfo rm i ng Li ttl e Com pany thattheyi ntended to reo pen the S SIFr acti on, the In term edi ar y e ffecti vel y deni ed that re openi ng r equest.

B. T h e D i st r i ctCo ur t ’ s D eni alo fLi t t l e Co mpany’ s D i scov ery M ot i on I n additi on t o chal l enging the dist ri ct c ourt ’ s g ra nt o f su m m ar y j udg m en t, Li tt l e Co m pan y c l ai m s th atthe di st r i ctc o ur t er r ed by no t per m i tt i ngdi sc o ve r y o fthe PRR B’s prece dent i n si m i l arcas es and any affi rm ati ve act io n s taken by the Int erm ed iary to recon side r the SSI Fraction
. W e rev iew a district cou rt’s den ialof d iscovery u n d er an ab u se of d isc re tio n st an d ar d

. Wal ke rv. Sh e anha n , 526 F. 3d 973, 97 7- 78 ( 7th Ci r. 200 8). A s a ge nera l r ule , u n d er th e A P A , rev i e w of an ag en c y’s d ec isio n is c o n fi n e d t o th e a d mi n i s t r a t i v e r e c o r d t o d e t er m i ne whethe r, b as ed o n the i nform at i o n pr es en te d t o the adm i ni str ati ve age ncy, the age ncy’s deci si on i s a rbi tr ar y, c ap ric iou s, an ab u se of d isc re tio n, or ot h er w is e n o t in ac c or d an c e w ith th e la w . S m ith v. O ff iceof Civil ian Health & M e d. Pr ogram of

theU ni f or m e d S e r vi ce s , 9 7 F.3 d 950, 95 4- 55 (7th C ir. 1996). I n denyi ng Li ttl e Com pany’s r equest f ordi sco ver y o f th e PR R B ’s dec isi ons i n sim il ar cases , t h e d istri ct cou rt ap p li ed th e g en er alr ul e th atdi sc o ve r y o ut si de o fthe admi ni st r at i ve r ec o r d i s i na ppr o pr i at e. Addi ti o na l l y, the d ist ric t c ou rtrea so n ed th at d isc ov er y of d e c isio n s in si m i l arc as es woul d no t be r el ev an t t o the c as e atha nd a nd woul d i nj ec t co l l at er ali ss ue s i nt o the c as e. Li tt l e Company14 N o. 09

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ar g ue s th atthe i r situa ti o n f al l s wi th i n a n e xc ept i o n t o the ge n er al ru le. W e h av e re c og n ize d an ex c ep tio n t o th is gener alr ule wh en “di sco ver y is
. . . nece ssa ryto cr eat e a re cor d w i thout w hi ch the chal l enge to the age ncy’ s a cti on cannot be e val uated. ” Se eU SA Gr oup Loan Se r vi ce, Inc
. v. R iley, 82 F .3d 70 8, 71 5 (7 t h C ir. 19 96 ). H ow ev er , th is cour t has r ar el y found thi s e xcepti on t o apply and has ge n er al l y uphel d the r ule thatr evi ew o fan a dm i ni str ati ve deci si on s houl d be co nfined to the a dm i ni str ati ve re c or d

. Se ei d. (h old in g t h is e x c ep tio n ina p p l i c ab le despit e the cour t’ s re cogni ti on that the re cord was l ac king ce r ta i n inf o r m at i o n b ec au se o fthe na tu r e o fthe u n d er l yi ng pro ceedi ngs)

. The di str i ct c ourtdi d not abuse i ts disc retio n i n fi nd i ng tha t thi s e xcepti on di d not apply and rej ecting Li ttl e Com pany’s di sco ver y r equest. Wi th r e s p e c tt o th e d i s t r i c tc o u r t ’ s d e n i a l o fL i t t l e C o mpan y ’ s se cond di sc o ve r y r eque st, pl aint i ff

- appe l l an t ne ve r r eque st ed di sc o very o fthe Int er m edi ar y ’ s ac ti o ns r eg ar di ngi ts r eo pen i ngde ci si o n. Ins te ad, Li tt l e Company fi rst r a ised this i ssu e in their respon se to the Secretary’s M o t i o n f o r S ummar y J ud g men t
. T he di s t r i c tc o ur tma de n o e x p licitfind in g on th is re q u es t f o r d isc ov er y, bu t d id i m pli ci tly r u le o n thi s i ssue by gr anti ng sum m ar y j ud gm ent in f avo r ofthe Se cre tar y. Lit tl e Com pany ar gues that th e r ec o r d i s i nc o m pl et e be ca us e th e r ec o r d before the PRR B, w hi ch i s the r eco rd befor e the di str i ct c ourt, l acks an y evide nc e of th e affirm ativ e a ctions the Interm ed iary m ayha ve t aken i n mak i ngthe r eo pen i ngde te r m i na ti o n. H o we v e r, th i s a r g u me n t f a i l s t o r e c o g n i z e th a tt he di st r i ctc o ur t’ s r o l e i s to revie w the de ci si o n o fthe PRR B b as ed on th e e vid en c e p re se n te d to th e P R R B
. SeeSm ith ,N o. 09

- 1665 15 97F
. 3d at9 55
. Li tt l e Companya dm its tha t i t i s se ek i ng in for m at ion th at w as n otbe for e t h e P R R B , an d t h at it did notse ek to i ntro du ce b ef or e the PRRB , but does not expla in h ow obtaini ng thi s info rm ati on would as si st the di s t r i c tc o ur ti n e v a l ua t i ngthe de c i s i o n ofthe P RR B. T h e d ist ric t c ou rtd id n o t a b u se its d isc re tio n in denyi ng thi s r equest f ordi sco ver y.

I I I . Concl usio n W e a gr ee w i t h t h e d ist ric t c ou rtth at th e e vid en c e in th e r e c o r d s u p p o r t s th e P R R B ’ s d i s mi s s a l o fL i t t l e C o mpany’s c hal l en g e to the S S IF r ac ti o n. F o r the f o r eg o i ng re aso ns, we A FFIRM th e d i s t r i c t c o u r t ’ s g r a n to fs u mma r y j u d g me n ta n d d e n i a l o fL i t t l e C o mp a n y ’ s t wo disc ove rym oti ons.

11- 24- 09