UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) DISTRICT HOSPITAL PARTNERS, L.P., ) d/b/a The George Washington University ) Hospital, et al. , ) ) Plaintiffs, ) ) v. ) Civil Action N o. 16-528 (ESH) ) SYLVIA M. BURWELL, ) Secretary, Department of Health and ) Human Services, ) ) Defendant. ) )

MEMORANDUM OPINION Plaintiffs own and operate 186 hospita ls that provide medical s ervices under the federal Medicare program. They have sued the Secretary of the Departme nt of Health and Human Services (the “Secretary”) in he r official capacity, challengin g as “arbitrary, capricious, [and] in violation of the Medicare Act” t he Inpatient Prospective Paymen t System rules setting fixed-loss thresholds for Medicare outlier payments to thei r hospitals for federal fiscal years (“FFYs”) 2004, 2005, and 2006. (Compl. ¶ 39, ECF No. 1.) In essence, p laintiffs argue that the fixed-loss thresholds for Medicare outlier r eimbursements were set too hig h, and that the hospitals therefore should have recouped more money for the treatment they provided under the Medicare program. Before this Court are the Secr etary’s motion to dismiss in part for failure to state a claim (Def.’s Mot., May 27, 2016, ECF No. 8), plaintiffs’ opposition (Pls.’ Opp’n, June 24, 2016, ECF No. 14), and defendant’s reply (Def.’s Reply, June 27, 2016 , ECF No. 15). The Secretary argues that, with the exception of one issue properly before th e Court relating to the Secretary’s2 determination of outlier payments for FFY 2004, plaintiffs’ cla ims “were either resolved or forfeited in [] earlier litiga tion and should be dismissed from this case based on principles of issue preclusion and claim preclus ion.” (Def.’s Mot. at 1.) T he Court agrees with the Secretary, and, for the reasons that follow, the motion will be granted. BACKGROUND The relevant contours of the Med icare program at issue here, as well as the facts underlying plaintiffs’ challenge , have been detailed in this Co urt’s opinion granting summary judgment in favor of the Secretar y in the prior lawsuit between the same parties, Dist. Hosp. Partners, L.P., et al. v. Sebelius , 973 F. Supp. 2d 1, 8–18 (D.D.C. 2014) (“ Dist. Hosp. I ”), aff’d in part, rev’d in part sub nom. Dist . Hosp. Partners, L.P., et al. v. Sebelius , 786 F.3d 46 (D.C. Cir. 2015) (“ Dist. Hosp. II ”), and in the D.C. Circuit’s opinion reviewing that decision, Dist. Hosp. II , 786 F.3d at 49–54. The prior lawsuit between the parties inv olved the same cause of action and the same issues t hat plaintiffs raise in this cas e. On January 19, 2011, plaintiffs file d their original lawsuit ag ainst the Secretary, challenging the final rules sett ing the fixed-loss thresholds f or FFYs 2004, 2005, and 2006. See Dist. Hosp. Partners, L.P. v. Sebelius , 794 F. Supp. 2d 162, 167 (D.D.C. 2011) (granting in part and denying in part the Secr etary’s motion to dismiss). I n that action, plaintiffs claimed that the Secretary’s “determinati on of outlier payments from 2004–20 06 was ‘arbitrary, capricious, an abuse of discretion or otherwis e not in accordance with law. ’” Id. at 167 (citation omitted). Specifically, plaintiffs alleged that when setting the outlier threshol ds and calculating outlier pay ments for federal fiscal years 2004, 2005 and 2006,” the S ecretary: 1) “failed to take into account the established pattern of declin ing cost-to-charge ratios . . . despite this problem being repeatedly pointed out in c omments and despite proposed m ethods to account for this phenomenon and to more accurately estimate out lier payments;” 2) “failed to consider use of t he ‘cost methodology,’ rather th an the ‘charge3 methodology,’ in setting the outlie r thresholds” even though th e cost methodology had been more accurate in the past; 3) “failed to require mid-y ear adjustments;” and 4) “failed to consider adjus tments to the reconciliation pr ocess.” Id. (citations omitted). This Court granted in part a nd denied in part the Secretary’s motion to dismiss, id. at 172, before ruling in favor of the S ecretary on the parties’ cross-m otions for summary judgment, Dist. Hosp. I, 973 F. Supp. 2d at 23. In finding for the Secretary, the Cou rt “conclude[d] that the Secretary made reasonable met hodological choices in determining the fixed-loss threshold for FFYs 2004–2006.” Id. at 5. Plaintiffs appealed, and the D.C. Circuit affirmed in p art and reversed in part thi s Court’s decision. Dist. Hosp. II , 786 F.3d at 63. The Court of Appeals held that this Court properly reject ed plaintiffs’ challenges to the fixed loss thresholds for FFYs 2005 and 2006. Id. However, the Court of Appeals he ld that “the Secretary’s promul gation of the 2004 outlier threshold violated the [Administrative Procedure A ct].” Id. at 58. Accordingly, the D.C. Circuit or dered that the case be remanded to the agency and ordered the Secretar y to provide additiona l explanations in thr ee areas: the Secretary should explain w hy she corrected for only 50 turb o-charging hospitals in the 2004 rulemaking r ather than for the 123 she ha d identified in the NPRM. She should also explain wha t additional measures (if any ) were taken to account for the distorting effect that turbo-charging hospitals had on the dataset for the 2004 rulemaking. And if she decides that it is appropr iate to recalculate the 2004 outlier threshold, she should also decide what effect (if any) the recalculation has on the 2005 a nd 2006 outlier and fixed loss t hresholds. Id . at 60. Following the issuance of the mandate, this Court rem anded the matter to the Department of Health and Human S ervices for further proceedings consistent with the opinion of the Court of Appeals. (Or der, August 13, 2015, Civil Action No . 11-116, ECF No. 129). The Court did not expressly or imp licitly retain jurisdiction over the case. ( See id. )4 On January 22, 2016, the Secretary published an explanation to address the deficiencies identified by the Court of Appeal s. Medicare Program; Explanat ion of FY 2004 Outlier FixedLoss Threshold as Required by Court Rulings, 81 Fed. Reg. 3727 (Jan. 22, 2016). Plaintiffs then moved for a new briefing schedul e to consider the then-complete administrative proceedings. Because this Court had not retai ned jurisdiction, it denied the motion, reasoning that the prior lawsuit “was terminated upon rem and” to the agency, but that pl aintiffs were “free to ‘come back to the district court’ when the y file[d] a new civil action.” (Order, February 22, 2016, Civil Action No. 11-116, ECF No. 133). On March 18, 2016, Plaintiffs file d the present civil action. Like the 2011 lawsuit, plaintiffs again allege that “[t ]he Secretary’s final determina tions of the outlier thresholds for FFYs 2004–2006 . . . are arbitrary, c apricious, in violation of the Medicare Act and/or otherwise in violation of the law.” (C ompl. at 41). Specifically, plain tiffs contend that the Secretary (1) “failed to consider relevant factors and data,” (2) “failed to consider alternative methodologies,” and (3) “failed to d emonstrate a reasonable con nection between the thresholds and the factors considered.” ( Id. ) The issue before the Court is whether these claims as to FFY s 2005 and 2006 are barred by the doctrines of issue and claim pr eclusion. ANALYSIS
I. LEGAL STANDARD Claim preclusion and issue preclu sion are affirmative defenses that “prevent[] repetitious litigation involving the same cau ses of action or the same issu es.” I.A.M. Nat. Pension Fund, Ben. Plan A v. Indus. Gear Mfg. Co. , 723 F.2d 944, 946 (D.C. Cir. 1983). “By ‘preclud[ing] parties from contesting matters that they have had a full and f air opportunity to litigate,’ these two doctrines protect against ‘t he expense and vexation attendi ng multiple lawsuits, conserv[e]5 judicial resources, and foste[r ] reliance on judicial action by minimizing the possibility of inconsistent decisions.’” Taylor v. Sturgell , 553 U.S. 880, 892 (2008) (alte ration in original) (quoting Montana v. United States, 440 U.S. 147, 153–154, (1979)). “Under the doctrine of claim pr eclusion, a final judgment forec loses ‘successive litigation of the very same claim, whether or not relitigat ion of the clai m raises the same issues as the earlier suit.’” Id. (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)). A subsequent lawsuit is barred by claim preclus ion “if there h as been prior litigation (1) involving the same claims or cause of action, (2) be tween the same parties or thei r privies, and (3) there has been a final, valid judgment on the mer its, (4) by a court of competen t jurisdiction.” Nat. Res. Def. Council v. E.P.A ., 513 F.3d 257, 260 (D.C. Cir. 2008) (citing Smalls v. United States, 471 F.3d 186, 192 (D.C. Cir. 2006)). Claim pr eclusion “precludes the re litigation of claims , not just arguments .” Id. Thus, the doctrine also “preven t[s] litigation of matters tha t should have been raised in an earlier suit.” Id. (quoting SBC Commc'ns Inc. v. FCC, 407 F.3d 1223, 1230 (D.C. Cir. 2005)). “Whereas claim preclusion foreclos es all that which might have been litigated previously, issue preclusion treats as final only those questions actually and necessarily decided in the prior suit.” I.A.M. Nat. Pension Fund , 723 F.2d at 949 (citing Brown v. Felsen, 442 U.S. 127, 139 n.10 (1979)). Under the doctrine of issue preclusion, “a final judgment on the merits in a prior suit precludes subsequent relit igation of issues actually litig ated and determined in the prior suit, regardless of whether the subs equent suit is based on the same cause of action.” I.A.M. Nat. Pension Fund , 723 F.2d at 947. In order for issue preclusion to apply, the following conditions must be met: First, the same issue now being r aised must have been contested by the parties and submitted for judicial determination in the prior case. Sec ond, the issue must6 have been actually and necessari ly determined by a court of com petent jurisdiction in that prior case . Third, preclusion in the secon d case must not work a basic unfairness to the party bound by the first determinatio n. Yamaha Corp. of Am. v. United States , 961 F.2d 245, 254 (D.C. Cir. 1992).
II. APPLICATION The Secretary argues that the pr ior lawsuit between the parties bar plaintiffs’ current challenges as to the 2005 and 2006 outlier determinations, eith er because plaintiffs failed to raise the arguments in the earlier law suit (claim preclusion) or because plaintiffs previously raised those arguments and lost on the m erits (issue preclusion). Pla intiffs respond that the D.C. Circuit’s opinion “does not prec lude [plaintiffs] from arguing . . . that the Secretary’s supplemental explanation with r egard to the FY 2004 threshold a lso affects the FYs 2005 and 2006 thresholds,” and that they “h ave every right to include th eir challenges to the Secretary’s refusal to adjust the FYs 2005 and 2006 thresholds in the 2016 Notice.” (Pls.’ Opp’n at 3.) Both the parties and the subjec t matter in the 2011 lawsuit and the present lawsuit are identical, and the 2011 lawsuit wa s decided on the merits by a court of competent jurisdiction. Thus, the doctrine of claim precl usion bars plaintiffs from rai sing any new claims or arguments that could have been raised i n the prior action but were not, and the doctrine of issue preclusion prevents this Court from revisit ing any issues that were actual ly decided on the merits in the prior action. The narrow and cl ear mandate of the Court of App eals in the 2011 action forecloses plaintiffs’ arguments that it s hould be allowed to challenge th e 2005 and 2006 outlier determinations again. The D.C. Circuit explained tha t, on remand, the Secretary was t o provide an additional explanation of two matters relat ed to the Secretary’s determina tion of the 2004 outlier thresholds. Dist. Hosp. II , 786 F.3d at 60. The Secretary provid ed those explanations. See 81 Fed. Reg. 3727. Further, the D.C. Cir cuit mandated that, “ if [the Secretary] decide [d] that it is appropriate7 to recalculate the 2004 outlier threshold , she should also decide wha t effect (if any) the recalculation has on the 2005 a nd 2006 outlier and fixed loss t hresholds.” Dist. Hosp. II , 786 F.3d at 60 (emphasis added). The Secretar y did not decide to recalculate the 2004 outlier threshold. See 81 Fed. Reg. 3727 (“We are not recalculating the FY 2004 fixed- loss threshold.”). Thus, there was no effect on t he 2005 and 2006 outlier-payment calculations that the Secretary needed to address. In sum, the Court agrees with t he Secretary that only one issue remains in this case– whether on remand the Secretary a dequately explained the outlie r-threshold determination for FFY 2004 by addressing the deficien cies identified by the Court of Appeals. ( See Def.’s Mot. at 1). The Court of Appeals’ decision as to the 2005 and 2006 outlier thresholds is final and cannot be relitigated in this ma tter. To the extent that plain tiffs raise new arguments as to the outlier thresholds for FFYs 2004–2006, those new arguments are also foreclosed by principles of claim preclusion. CONCLUSION Accordingly, and for the reasons stated above, the Secretary’s motion to dismiss in part for failure to state a claim is GRANTED . A separate Order accompanies this Memorandum Opinion.

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/s/ Ellen Segal Huvelle ELLEN SEGAL HUVELLE United States District Judge Date: November 18, 2016