ORDER

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25 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

ILLINOIS

- MASONIC MEDICAL CENTER , Plaintiff

v. KATHLEEN SEBELIUS, Secretary United States Department of Health a nd Human Services

. Defendant

.

__________________________________________ No. 11

- cv

- 00105 (BJR)

ORDER AND MEMORANDUM OPINION ON CROSS MOTIONS FOR SUMMARY JUDGMENT

I. INTRODUCTION

Before the court is plaintiff ’s Motion for Summary Judgment (Dkt. No. 12) and
defendant’s Cross Motion for Summary Judgment (Dkt. No. 13)

. Upon consideration of the
summary judgment motions, the memoranda in support thereof, the entire record, and the
applicable law, the Court will DE NY plaintiff’s motion for summary judgment and GRANT
defendant’s Motion for Summary Judgment. The court’s reasoning is set forth below.

II. BACKGROUND
In this action, p laintiff , Illinois

- Masonic Medical Center (“plaintiff” or the “provider”) ,
seeks rev iew of a final decision by the Secretary of Health and Human Services (theORDER

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25 “Secretary”) , affirming the Provider Reimbursement Review Board’s (“PRRB” or the “Board” )
determination that it lacked jurisdict ion over Medicaid eligible days that were not specifi cally
considered within the implementation of a revised Notice of Program Reim bursement.

A. Statutory and Regulatory Background
This action arises under Title XVIII of the Social Security Act, also known as the

Medicare statute. See 42 U.S.C. §§ 1395

– 13 95ggg. Relevant to this case is Part A of the
Medicare statute, which authorizes payment to hospitals. Part A services are furnished by
providers that have entered into a “provider agreement” with the Secretary. Id . §§ 1395x(u),
1395cc. The Secretary is re sponsible for determining reimbursement amounts and for issuing
regulations defining reimbursable costs. Thomas Jefferson Univ. v. Shalala , 512 U.S. 504, 506

–
07 (1994) (citing 42 U.S.C. § 1395x(v)(1)(A)).
Most hospitals, including plaintiff , are reimburse d for their operating costs of furnishing
inpatient hospital services to Medicare beneficiaries through the Pro spective Payment System
(the “P P S ”). In general, a hospital’s PPS pa yment is based on prospectively determined national
rates for each discharge, rather than on the act ual operating costs incurred by the hospital. Id

. at §
1395ww(d)(1)

- (4). The PPS also conta ins a number of provisions that adjust payments on the
basis of hospital

- specific factors. See
, e.g , . id . § 1395ww(d)(5). Relevant to the pres ent case , the
Medicare disproportionate share hospital adjustment (“DSH Ad justment”) provides increased
PPS payments to hospit als that serve a “significantly disproportionate number of low

- income
patients.” Id . at § 1395ww(d)(5)(F)(i)(I).

Whether a hospit al qualifies for the DSH A djustment, and how large an adjustment it
receives if it does qualify, depends primarily on the hospi tal’s “disproportionate patient
percentage.” Id . at § 1395ww(d)(5)(F)(v). In tur n, the disproportionate patient percentage is theORDER

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25 sum of two fractions, the “Medicare and Medicaid fractions.” The Medicaid fraction, which is

relevant to the underlying issues here, uses Medicaid eligibility as a proxy for low income;
generally speaking, it is based upon the number of patient days attri butable to individuals who

were “eligible for” Medicaid but not entitled to Medicare Part A benefits. Id

. at §
1395ww(d)(5)(F)(vi)(II). The numerator of the Medicaid fraction is frequently referred to as

“ Medicaid eligible days.”
Hospitals eligible for Pa rt A payments submit annual cost reports containing
reimbursement claims to a designated fiscal intermediary (“FI”) , who processes claims on behalf

of the Secret ary. On the basis of a hospital’ s cost report, the FI makes a final determination

known as a No tice of Program Reimbursement ( “ NPR ” ) regarding the amount the hospital
should be reimbursed for services rendered during the reporting period. 42 C.F.R. § 405.1803. If
a provider is dissatisfied with the FI’s determination, it may request a hearing before the PRRB.
42 U.S.C. § 1395 oo(a). In order to qualify for PRRB review, the provider must be dissatisfied
with the FI’s determination, request a hearing within 180 days of the determination, and the amount in controversy must be at least $10,000

. Id . If the PRRB holds a hearing, its decision is

sub ject to review by the Secretary’ s delegate, the Administrator of the Centers for Medicare and
Medicaid Services ( the “Administrator” or “ CMS ”). 42 U.S.C. § 1395 oo(f)(1).

T he Secretary has promulgated regulations that govern administrative finality and
reopening of NPRs

. See 42 C.F.R . §§ 405.1807, 1885, 1887. The FI may reopen specific
“findings on matters at issue” within three years of the NPR

. Id . at § 1885. When the reopening

results in a rev ision to the determ ination, the FI notifies the parties and explains the basis for the

revi sions

. Id

. at § 1887. A hospi tal may appeal the revised NPR pursuant to section 405.1889,
which, at the time of this appeal, stated :ORDER

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25 [w]here a revision is made in a determination or de cision on the amount of program reimbursement after such determination or decision has been reopened as provided by § 405.1885, such revision shall be considered a separate and distinct determination or decision to which the provisions of §§ 405.1811 [righ t to intermediary hearing] , 405.1835 [right to Board hearing], 405.1875 [CMS Administrator’s Review] and 405.1877 [judicial review] are applicable.
42 C.F.R. § 1889 (2007).

B

. On September 27, 2000, p laintiff’s FI issue d a NPR for fiscal year end (“FYE”) 1997.
( See Dkt. No. 10 , Administrative Record , (“AR ”) at 116. ). On March 24, 2001, plaintiff appealed

to the PRRB regarding the number of Medicaid eligible days included in its FYE 1997 DSH
Adjustment . ( Id . at 128

- 129.). Plaintiff raised the following issue in its appeal : Factual and Procedural Background

[T] he provider disagrees with the calculation of the second computation of the disproport ionate patient percentage set forth at 42 C.F.R. 412.106(b)(4) [governing calculation of the Medicaid fraction] of the Secretary’s regulations. The [FI] , contrary to regulation, failed to include as Medicaid

- eligible days services to patients eligible for Medicaid as well as patients e ligible for general assistance. 1

Id

. Thereafter, at plaintiff’s request, the matte r was transferred to the Medicaid Eligible Days

G roup Appeal, PRRB Case 98

- 2694G. Id

. On October 10, 2007, the FI and a number of providers involved in the Medicai d Eligible
Days Group Appeal , including p laintiff, entered into a Full Administrative Resol ution . (AR at

82

- 83

. ). The parties entered into the Resolution “for the purpose of setting forth the basis for
resolving the issues that are pending before the [PRRB]

. ” ( Id . at 82

. ). With respect to p laintif f’s
Medicaid eligible days, “ the parties agreed to resolve the case as follows...” :

1 “General assistance” days are patient days attributable to patients who are not Medicaid eligible but who receive benefits under state general assistance programs. The Secretary argues that plaintiff’s appe al raised two distinct issues because “whether Medicaid eligible days should be included in the Medicaid fraction is a separate issue from whether general assistance days should be included.” (Dkt. No. 13 at 7.). It is not necessary for this court to addre ss this issue because plaintiff later abandoned the “general assistance” claim. ( See AR 37 n. 7.).ORDER

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25 (c) 14

- 0132, FY June 30, 1997

– No later than October 31, 2007, QRS, the Provider’s Representative [,] will provide documentation to support the days [that provider] claim[s] are not exempt unit days. If documentation is no t provided, provider withdraws the appeal with no further action. If documentation is provided, the FI will complete the review and issue their [sic] findings by November 30, 1997. A Revised NPR will be issue [sic] by December 31, 2007, if appropriate.
( I

d . at 82, 83.)

. The parties also agreed that:
The provider’s signature serves as the provider’s request to withdraw this case from appeal. . . . The provider reserves its right to reinstate the appeal, consistent with the PRRB rules regarding reinstatement and withdrawal of appeals, should the intermediaries not meet the dates specified above.
( Id . at 83. ). Pursuant to the terms of the Resolution, p l aintiff submitted documentation regarding
230 Medicaid eligible days that it sought to include in the DSH Ad justment calculation

. ( Id . at

80. ).
By letter dated November 21, 2007, the FI noti fied p laintiff that it was reopening the
provider’s cost report “[t]o incorporate the administrative reso lution of [the Medicaid Eligible
Days Group Appeal] .” ( Id . at 119. ). On December 3, 2007, the FI issued a revised NPR,
reflecting an additional 24 Medicaid eligible days. ( Id . at 80, 116

- 118 .). The FI disallowed the
remaining 206 days for a variety of reasons, including claiming that some of the days had been

submitted on prior cost report s. ( Id . at 80. ). O n December 6, 2007, the PRRB dismissed p laintiff

from the Group Appeal “per prior Administrative Resolution.” ( Id . at 98

- 100. ). To date, plaintiff
has not sought to reinstate the appeal. (AR at 9.). 2

2 Plaintiff initially argued that the “only contingency for withdrawal of the Hospital’s appeal...was in the event it did not submit the documentation by the stated deadline.” (Dkt. No. 12 at 26.). Plaintiff has since conceded that its signature on the administrative resolution served as its request to withdra w the case from appeal ( See, generally , Dkt. No. 15 .).ORDER

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25 On May 28, 2008, p la intiff appeal ed the revised NPR

. ( Id . at 147. ). Plaintiff did not
challenge the FI ’s disallowance of the 206 days , rather, p laintiff sought to include an additional
2,244 Medicaid eligible days in its 1997 DSH Adjustment calculation. ( See AR at 149. ). 3

The FI contested the May 28, 2008 appeal , arguing that the Board did not have
jurisdiction over the additional days because the days had not been submitted to it for review as part of the Full Administrative Resolution. (AR at 5.). In a decision dated September 17, 2010 , the Majority of the Board agreed, finding that it lacked jurisdiction under section 1878 of the

Social Securi ty Act

. Pla intiff claimed that the 2,244 days included Medicaid eligible days for patients with Medicaid
coverage and /or infants who were covered by Medicaid through the ir mothers . ( Id . at 10.)

. The
additional days also included general assistance days. ( Id .)

4

Thereafter, on October 12, 2010, the Office of the Att orney Advisor of the Administrator

of CMS notified the parties that the Administrator wo uld review the September 17, 2010 PRRB

decision “on own motion ” and o n November 18, 2010, the Administrator affirmed the Board’s

decision . ( Id . at 5

- 12, 27

- 28. ). As an initial matter, the Administrator determined that the infant
and general assistance days included in the additional 2,244 days were not addressed in the
revised NPR, and as such, were outside the “issue specific” limitation on the scope of Board
review of a revised NPR. ( Id . at 10.). Next, the Administrator noted that the righ t to appeal a
revised NPR does not originate from section 1878 of the Social Security Act; rather , the r ight

resides in 42 CFR 405.1835 and 1889. ( Id .). Taken together, those regulations require that a
“[p]rovider be able to demonstrate dissatisfaction... ” i n order to maintain an appeal, and where a

3 Plaintiff asserts that was not until January 27, 2009 that it received the information necessary to identify all of the patients it served during 1997 who were Medicaid eligible. (Dkt. No. 12 at 13

- 14.).

4 One Board Member dissented with the Majority’s decision. ( Id . at 36

- 39.).ORDER

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25 provider challenges an agreed upon administrative resolution, the provider cannot, because of the
very existence of the agreement, demonstrate “dissatisfaction.” ( Id .) Finally, the Administrator

concluded t hat the “plain language of the [A]dministrative [R] esolution shows that it was
intended to resolve for all time all disputes raised in the FY 1997 appeal for [plaintiff].” ( Id . at
11.).
On January 14, 2011, p laintiff filed the present action

. (Dkt. No. 1.). Plai ntiff moved for

summ ary judgment on June 23, 2011 (Dkt. N o. 12) and the Secretary filed a cross motion for

summa ry judgment on August 8, 2011 (Dkt. N o. 13). The case was reassigned to this judge on
January 27, 2012. (Dkt. No. 19.). The matter is now ripe f or review. 5

5 On November 3, 20 11, plaintiff moved the court for leave to file a sur

- reply. (Dkt. No. 16.). The court denied the motion without prejudice by a minute order issued that same day. Plaintiff moved for rec onsideration on March 5, 2012 (Dkt. N o. 23); the Secretary opposed the motion (Dkt. N o. 24). The court finds that plaintiff has failed to demonstrate “’(1) an intervening change in the law; (2) the discovery of new evidence not previously available; or (3) a clear error in the first order.” Keystone Tobacco Co., Inc. v. US T obacco Co. , 217 F.R.D. 235, 237 (D.D.C. 2003). Accordingly, reconsideration of the court’s earlier decision is not warranted. The determination of whether to “grant or deny leave to file a sur

- reply is entrusted to the sound discretion of the district cour t.” Akers v. Beal Bank , 760 F. Supp. 2d 1, 2 (D.D.C. 2011) (quoting Am. Forest & Paper Ass’n, Inc. v. Envtl. Protection Agency , 1996 WL 509601 at *3 (D.D.C. Sept. 4 1996)); see also, Kifafi v. Hilton Hotels Retirement Plan , 736 F. Supp. 2d 64, 69 (D.D.C. 2 010) (noting that sur

- replies are generally disfavored). Plaintiff also filed two separate notices of supplemental authority. ( See Dkt. Nos. 20 and 27.). In the first notice, plaintiff refers the court to Catholic Health Initiatives v. Sebelius , 2012 W L 25 5275 (D.D.C. Jan. 30, 2012). Plaintiff cites this case for the proposition that administrative r esolutions are not necessarily “final.” Catholic Health involved a provider’ s chal lenge to a revised NPR. In the “background section” of the case, the cou rt sta ted that the parties had “reached an ‘ Admini strative Resolution’ of the reimbursement dispute...[h]o wever...the [FI] based upon...

--- ‘ a recent clarification received from CMS’

- -- announced that it would once again revis ed [the reimbursement dispute].” Id . at *3. That is the last time the administrative resolution is mentioned in the decision. The parties did not dispute its existence, its scope or the effect on the case. As such, Catholic Health has no persuasive value on the i ssue before this court. In the se cond notice of supplemental authority, plaintiff cites to a recently published PRRB decision, Norwalk Hospital v. Blue Cross Blue Shield Association/National Government Services, Inc. , Dec. No. 2012

- D14 (March 19, 2012), a decision that is still subject to CMS review and is, therefore, not a final decision of the Secretary. Accordingly, the decision has no precedential value and will not be reviewed by the court.ORDER

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25 III. DISCUSSION

A. Standard of Review
Review of the Secretary’ s decisions is governed by 42 U.S.C. § 1395 oo(f)(1), which
incorporates the Administrative Procedure Act ( “ APA ” ), 5 U.S.C. § 706. Accordingly, a court
may set aside a final agenc y action only when it is “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law” or “unsupported by substantial evidence.” 5 U.S.C. §
706(2)(A),(E). Under both the “arbitrary and capricious” and “substantial evidence” stand ards,
the scope of review is narrow and a court must not substitute its judgment for that of the agency.
Motor Veh. Mfrs. Ass’ n v. State Farm Mutual Ins. Co ., 463 U.S. 29, 43 (1983); Gen. Team ster

Local Union No. 174 v. Nat’ l Labor Relations Bd. , 723 F.2d 966, 971 (D.C. Cir. 1983). As long
as an agency has “examined the relevant data and articulated a satisfactory explanation for its
action including a rational connection between the facts found and the choice made,” a reviewing

co urt will not disturb the a gency’ s action. MD Pharm., Inc. v. Drug Enforcement Admin ., 133
F.3d 8, 16 (D.C. Cir. 1998). The b urden of showing that an agency’ s action violates the APA
falls on the provider. Diplomat Lakewood Inc. v. Harris , 613 F.2d 1009, 1018 (D.C. Cir. 1979).

To t he extent that the Secretar y’ s decision is based on the languag e of the Medicare
statute, the c ourt owes Chevron deference. Marymount Hosp., Inc. v. Shalala , 19 F.3d 658, 661
(D.C. Cir. 1994). The Co urt must defer to the Secretary’ s interpretation “wheneve r it is a
permissible construction of the statute.” HCA Health Servs. of Oklahoma v. Shalala , 27 F.3d
614, 617 (D.C. Cir. 1994). Similarly, the Secretary’ s interpretation of her own regulations is

entitled to substantial deference. Thomas Jefferson Univ ., 512 U.S. at 512 . The court must give
the Secretary’ s interpretation “controlling weight” unl ess it is “plainly erroneous or inconsistent
with the regulation.” Id . (citations omitted). “[B]road deference is all the more warranted when,ORDER

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25 as here, the regulati on concerns ‘a complex and highly technical regulatory program,’ in which
the identification and classification of relevant ‘criteria necessarily requires significant expertise
and entail the exercise of judgmen t grounded in policy concerns.’ ” Id . (quoting Pauley v.
BethEnergy Mines, Inc. , 501 U.S. 680, 697 (1991)).

B. Analysis

This court must determine wh ether the Secretary’s decision that the PRRB did not have
jurisdiction over the 2,244 Medicaid eligible days that were never prese nted to or considered by
the FI, is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the

law. The Secretary, in interp reting her regulations, limits the scope of the PRRB’s jurisdiction
over appeals of revised NPRs to the “matter at issue” in the revised NPR. Applying this
limitation to the present case , the Secretary concluded that the “ matter at issue ” in plaintiff’s

revised NPR was the 230 days reviewed by the FI pursuant to the administrative resolution
between the parties. Because none of the new 2,244 days were part of the original 230 days , the
Secretary determined that the PRRB did not have jurisdi ction over the additional days . For the
reasons discussed below, this court finds that t he Secretary’s decision is based on a reasonable

interpretation of her regulations , and thus, within the contours of 5 U.S.C. § 706 and the

Medicare statute.

1. The Secretary’s interpretation of section 405.1889 is reasonable and entitled to substantial deference.
The PRRB has jurisdiction to rev iew a provider’s challenge to an FI’s final

reimbursement determination if: (1) the provider is dissatisfied with the FI’s final determination;
(2) there is a minimum amount in controversy of at least $10,000; and (3) the appeal is filed
within 180 days of receipt of the final determination. 42 U.S.C. § 1395oo(a); HCA Health Servs. ,
27 F.3d at 617 . Section 1395oo(a) does not address the Board’s jurisdiction over revised NPR s

.ORDER

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25 Id . at 618

- 619. Therefore, courts look to the Medicare regulations for guidance. I d . at 618;
French Hospital Medical Center v. Shalala , 89 F.3d 1411, 1417 (9 th Cir. 1996). Two regulations,
read in tandem, allow a provider to appeal a revised NPR. 42 C.F.R. § 405.1835 parallels the
right of review under section 1395oo(a), allo wing a prov ider the right to a hearing, provided that:
(1) an FI determination has been made with respect to the provider; (2) the provider files a
written request with the PRRB within 180 days of the determination; and (3) the amount in controversy is at least $10,0 00. 42 C.F.R. § 405.1889 defines revised NPRs as “separate and
distinct” from initial NPRs, and provides that section 405.1835 hearing rights apply to revised

NPRs. HCA Health Servs. , 27 F.3d at 619; University of Cincinnati , 891 F. Supp. 1262, 1270
(S.D. Ohio 1995).
Because section 405.1889 expressly provides that a revision to a NPR is a “separate and
distinct determination” from the initial NPR, the D.C. Circuit has joined a number of other

C ircuits in holding that the right to appeal a revised NPR att aches only to the scope of the

revision. HCA Health Servs. , 27 F.3d at 622 (a revised NPR does not reopen the entire cost
report to appeal, it merely reopens those matters adjusted by the revised NPR); Anaheim
Memorial Hospital v. Shalala , 130 F.3d 845, 84 8 (9 th Cir. 1997) (PRRB has jurisdictions only
over those elements of the revised NPR that are reconsidered by the FI upon reopening);
University of Cincinnati , 891 F. Supp. at 1271

- 1272 (the PRRB must determine whether the FI
reopened the cost report to t he extent that such reopening encompassed the particular subject
matter upon which the provider’s appeal is premised); Albert Einstein Med. Ctr. v. Sullivan , 830
F. Supp. 846, 849 (E.D.Pa. 1992), aff’d , 6 F.3d 778 (3d Cir. 1993) (a provider has a right to a hearing only for issues which were addressed in the revi sed NPR)

.ORDER

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25 Applying this line of reasoning to the present case, the Administrator concluded that the

additional 2,244 Medicaid eligible days that pl aintiff sought to include in its appeal of the rev ised

NPR were “outside the ‘issue specific’ limitation on the scope of Board review of a revi sed

NPR

. ’” (AR at 10.). T he Administrator determined that the “matter at issue” in the revised NPR
was the “days raised and addressed in the administrative resolut ion....” Id . (AR at 9.). P er that
resolution, p laintiff submitted documentation for 230 days that it believed should have been

included in its 1997 DSH calculation. The FI reviewed the documentation, accepted 24 days,
rejected 206 days, adjusted t he DSH calc ulation, and issued the revised NPR specifically
incorporating the administrative resolution. ( Id . at 9

- 10.). The additional 2,244 days were never
presented to the FI for consideration. ( Id . at 10.) T he Administrator also noted that by signing the

administ rative resolution, plaintiff consented to the dismissal of its appeal before the Board. 6

In addition, the Admi nistrator determined that plaintiff failed to demonstrate that it was

“dissatisfied” with the FI’s determination in the revised NPR , another prerequisite to Board
jurisdiction under section 405.1835. ( Id . at 10.). The Secretary interpreted the scope of the
revised NPR to be limited by operation of the administrative resolution. Per the terms of the
resolution, plaintiff submitted documentation for 230 Medicaid eligible days and the FI made a
determination with respe ct to those days. P laintiff did not object to the FI’s treatment of th e 230
days. Therefore, the Secretary concluded, a provider who “agreed to the related
adjustments...cannot demonstrate that it was dissatisfied with the matters addressed on the
revised NPR.” ( Id . at 10.). Based on this, the Administrator concluded that the scope of the Board’s review is limited to the

FI’s determination regarding the 230 days. Id

.

6 Plaintiff does not dispute the Secretary’s assertion that it never sought reinstatement of t he appeal.ORDER

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25 The court finds this i nterpretation reasonable. On its face, section 405.1889 does not

address what effect a settlement agreement has on the scope of the PRRB’s review of a revised

NPR. The parties agree that the regulation is silent on this issue. ( See Dkt. No. 20 at 15; Dkt. No.
17 at 7.). As there is no conflict between the Secretary’s interpretation and the regulation’s plain
language, the interpretation is entitled to substantial deference. Baptist Memorial Hospital v.

Sebelius , 768 F. Supp. 2d 295, 300 (D.D.C. 2011) citing Thomas Jefferson Univ ., 512 U.S. at
512. As previously noted, section 405.1889 characterizes revisions as “separate and distinct
determinination[s]” for purposes of Board appeals. On the basis of this bifurcation, the D.C.

Circuit has held that the Board’ s review of a reopened reimbursement decision is limited to the
specific issues revisited on reopening. Baptist , 768 F. Supp. 2d at 300

- 301 citing HCA Health

Servs. , 27 F.3d at 620 (“[W]e do not think it impermissible for the Secretary to interpret the

‘in termediary determination’ on reopening as limited to the particular matters revisited on the
second go

- around.”). 7

The court is not persuaded by plaintiff’s argument that its appeal “ falls squarely within ”

the issue specific limitation set forth in HC A Health Servs. and the related cas es. First, in
advancing this argument, plaintiff misinterprets the Administrator’s decision, arguing that the Here, the FI expressly stated that it was revising the NPR “[t]o incorporate
the administrative resolution...into the cost report.” (AR at 119. ). Pursuant to that agreement,
plaintiff submitted documentation for 230 Medicaid eligible days, which the FI reviewed and
incorporated into the r evised cost report. Therefore, the court finds that is reasonable for the
Secretary to conclude that the “spec ific issue revisited” in the revised NPR was the 230 days that

the FI reconsidered.

7 The “issue

- specific limitation” was also reflected in the PRRB’s Instructions in effect during the relevant time period. Instructions , II.B.Ia.3 (p.3) (“The Board accepts jurisdiction over appeals from revised [NPRs] where the issue(s) in di spute were specifically adjusted by that NPR.”).ORDER

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25 Secretary’s interpretation of section 405.1889 requires that “an appeal from a revised NPR must
be of an appeal of a different issue than the issu e that was appealed, and settled from the original
NPR.” (Dkt. No. 15 at 17, 20) (emphasis added). The Administrator’s decision neither

announced n or applied such a rule. The Secretary’s view is that, on appeal of a revised NPR, a
provider may challenge on ly the issue(s) addressed in the revised NPR; however, if the provider
has already settled that same issue(s), an appeal is unavailable.
Second, p laintiff’s contention that its appeal addresses the very item that was

reconsidered an d adjusted in the revis ed NPR

— “ the number of eligible but unpaid days under

the Medicaid Fraction of the DSH Adjustment ”

— is similarly misplaced. ( Id . at 23.). Plaintiff use
of the term “issue” is far too broad. Furthermore, p laintiff fails to recognize that the Secretary is

inte rpreting the scope of the revised NPR in light of the administrative resolution. The Secretary
determined that the “matter at issue” in the revised NPR was the 230 days review by the FI per
the terms of the agreed upon resolution. Id . (AR at 9.). S ection 4 05.1889 is silent as to the effect

of such a settlement agreement and t he Secretary’s interpretation of the regulation resolves this
issue sensibly. As such, this court may not disturb the Administrator’s decision. See Thomas
Jefferson Univ ., 512 U.S. at 5 12 (the Secretary’s interpretation of her own regulations mu st be
given controlling weight)

. Courts in this district have rejected similar arguments from providers.

See St. Anthony’s Health Center v. Leavitt , 579 F. Supp. 2d 115 , 120

- 121 (D.D.C. 2008)
(rej ecting provider’s argument that adjusting part of provider’s cost limit in a revised NPR
opened up the entire cost limit issue to appeal); Baptist Memorial Hospital , 768 F. Supp. 2d at
301 (“[I]t was reasonable for the Secretary to apply [the] ‘issue

- speci fic’ approach to require that
an exception request made pursuant to a revised NPR be limited to costs affected by the revised
NPR.”).ORDER

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25 Furthermore, the court finds that plaintiff’s interpretation of section 405.1889 make s little
pragmatic sense . The postu re of this case illustrates the problem with allowing a provider to

“add” to an appeal. The 2,244 days that plaintiff seeks to include in the appeal have never been

present ed to or reviewed by the FI. Therefore, if the court were to accept plaintiff’s posi tion, the
Board would be forced to make a determination on days that have not been reviewed by the FI.

In addition , the regulations set a deadline of 180 d ays for a provider to appeal a cost report. 42
U.S.C. §1395oo(a). I f the court were to accept plainti ff’s interpretation of section 405.1889, a
provider could skirt the 180 day limit by seeking additional reimbursement within 180 days of a revised NPR, long after the time to appeal the original NPR had expired. In other words, if the

Board were to address the 2,244 additional days, yet another revised NPR would issue , and
plaintiff could use the revised NPR’s attendant appeal rights to introduce further days. This

would create a never

- ending cycle of appeals without a meaningful cut

- off point.

Plaintiff’ s argument that the Secretary has a non

- discretionary duty to include all
Medicaid eligible days in its 1997 DSH Adjustment is similarly misplaced. C iting Monmouth
Medical Center v. Thompson , 257 F.3d 807 (D.C. Cir. 2001) and In Re Medicare Reimbursement

L itigation , 414 F.3d 7 (D.C. Cir. 2005), plaintiff argues that the Secretary has a clear duty to

include a ll Medicaid eligible days in its DSH Adjustment, as provided by Health Care Financing
Administration (“HCFA”) 8 Rule 97

- 2 . (Dkt. No. 15 at 4.). 9

8 CMS was formerly known as HCFA. Plainti ff mischaracterizes the
holdings in these cases. Monmouth and In Re Medicare arose from the Secretary’s issuance of

HCFAR 97

- 2

. Prior to Rule 97

- 2, the HCFA interpreted the statutory formula set forth by

9 Plaintiff argues that the Secretary “neither denies the accuracy of th[e] number of [2,244 additional days] or that this additional number would increase the DSH Adjustm ent for the Hospital’s 1997 fiscal year....” (Dkt. No. 12 at 6.) . The Secretary counters that she has not considered the days, so of course, she has not opined on the merits of plaintiff’s claim for additional DSH reimbursement. (Dkt. No. 13 at 25.).ORDER

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25 Congress to determine DSH Adjustments to include on ly those days for which hospitals actually
received Medicaid payments. See Baptist Memorial Hospital v. Sebelius , 603 F.3d 57, 60 (D.C.
Cir. 2010). However, in 1997 the HCFA issued Rule 97

- 2, which instructed FIs to include all
Medicaid eligible days in DS H Adjustment calculations, regardless of whether the hospital
actually received payment for those days. Id . citing HCFA Ruling 97

- 2. In Monmouth , the D.C.

Circuit held that Rule 97

- 2 constituted notice under section 405.1885(b) that the Secretary’s

former method of calculating DSH adjustments was “inconsistent with applicable law.”

Monmouth , 257 F.3d at 814

- 815. Then, in In re Medicare , the Court clarified that because
section 405.1885(b) speaks in mandatory terms, it imposes a nondiscretionary duty on the
Secretary to reopen NPRs decided within the three years prior to the issuance of Ruling 97

- 2. Id

. at 61. Therefore, under Monmouth and In re Medicare , it is section 405.1885(b), not Ruling 97

- 2
as plaintiff argues, that creates the obligation to act. Bapti st, 603 F.3d at 62. Plaintiff is not
proceeding under section 405.1885(b), and even if it were, the cost report at issue here issued
after the regulation’s three

- year term expired. 10
Finally, both parties discuss Stormont

- Va il Regional Med. Ctr. V. Sebeli u s , a recent Tenth
Circuit case. 708 F. Supp. 2d 1178 (D. Kan. 2010), aff’d , 2011 WL 2438652 (10 th Cir. 2011).
The court is perplexed why the parties spend so much time discussing this case , particularly in
light of the fact that the issue for which the par ties cite Stormont

- Vail

— what a ffect a parti al

administrative reso lution has on a provider’s right to add new issue s to an appeal from an NPR

—

10 Cons istent with this line of reasoning , the court notes that several courts in this district have upheld the agency’s denial of DSH reimbursement due to provider’s failure to comply with the Secretary’s regulations and other requirements. See, e.g. Baptist Mem orial Hospital v. Sebelius , 566 F.3d 226, 229 (D.C. Cir. 2009) (affirming the PRRB’s refusal to hear provider’s appeal regarding DSH reimbursement when the provider failed to comply with the PRRB’s instructions); Baptist , 603 F.3d at 57 (provider not entit led to mandamus relief to compel Secretary to reopen final reimbursement determination to include Medicaid eligible days in DSH Adjustment).ORDER

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25 was not addressed by the district or Circuit courts

. Stormont

- Vail , 2011 WL at *2, *5 (noting that
the provider con ceded the issue in briefing). 11
Based on the foregoing, this court finds that, under these circumstances, the Secretary’s
decision to limit the scope of appeal of the revised NPR to the 230 days reviewed by the FI is not
arbitrary, capricious, an abuse o f discretion, or otherwise not in accordance with the law. 5
U.S.C. § 706(2)(A),(E). 12

11 In addition, plaintiff claims that the PRRB issued a “diametrically opposite” decision regarding jurisdiction c oncerning the provider’s challenge to its 1995 FYE reimbursement. Therefore, plaintiff argues, the Secretary’s action, by definition, is arbitrary and capricious. (Dkt. No. 15 at 23 fn. 11.). Plaintiff’s argument is a non sequitur . The PRRB’s decision was not the final decision of the Secretary. Instead, the Administrator reversed the Board’s decision finding that the Board did not have jurisdiction over the appeal. Plaintiff also claims that the Secretary ultimately entered into a settlement agreement with the provider in Stormont

- Vail , and by doing

so “acted entirely inconsistently with its position in the instant case, and thus the Secretary herself has displayed arbitrary and capricious conduct.” ( Id . at 25.). This argument also fails to advance plaintif f’s case. Parties settle cases for all s orts of reasons, and the court cannot and should not speculate as to the basis for the settlement . In any event, the settlement does not create a binding precedent. See, e.g., Baptist Mem’l

- Golden Triangle v. Sebeliu s , 566 F.3d 226, 230 (D.C. Cir. 2009); High Country Home Health, Inc. v. Thompson , 359 F.3d 1307, 1314

- 15 (10 th Cir. 2004) (“settlement agreements have no precedential weight, and the mere fact that the Secretary has settled other cases does not make it a rbitrary and capricious for him not to settle this one”).

12 Plaintiff argues that the administrative r esolution was never intended “as a release of [its] claim for inclusion of all Medicaid eligible days in the DSH Adjustment.” (Dkt. No. 15 at 10.). Rathe r, the resolution served as an “omnibus case management plan” for resolving the g roup appeal of which plaintiff was a part. (Dkt. No. 12 at 25.). In affirming the Board’s decision to deny jurisdiction, the Administrator stated: The [p]rovider agreed to a full resolution of the cost year ending 1997 appeal pursuant to the [Full Administrative Resolution]. The plain language of the administrative resolution shows that it was intended to resolve for all time all disputes raised in the FY 1997 appeal for this [p]rovider. Accordingly, as a matter of law and in the interest of finality which settlement agreements are to provide, the [p]rovider may not now revisit the fiscal year 1997 cost year pursuant to the appeal of this revised NPR, which implemented the sett lement agreed upon by the parties. (AR at 11.). The Administrator presented this argument as an alternative basis for denying Board jurisdiction over the appeal. (AR at 10.). Because the court finds that the Administrator’s decision to limit the scope of t he revised NPR to the 230 days considered by the FI is a reasonable interpretation of section 405.1889, the court need not address whether theORDER

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25 Barbara Jacobs Rothstein U.S. District Court Judge IV. CONCLUSION

T he court hereby DENIES plaintiff’s Motion for Summary J udgm ent and GRANTS the
Secretary’s Cross Motion for Summary J udgment.

DATED this 1 4 t h day of Ma y , 2012

. 

# A

administrative resolution unambiguously set forth the parties’ intent “to resolve for all time all disputes raise d in the FY 1997 appeal for this [p]rovider.” (AR at 11.).