Source: http://dc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20040326_0000335.DDC.htm/qx
Timestamp: 2017-03-29 09:18:36
Document Index: 737374464

Matched Legal Cases: ['§ 1395', '§ 413', '§ 405', '§ 1395', '§ 1395', '§ 1395', '§ 412', '§ 405', '§ 405', '§ 1395']

| In re Medicare Reimbursement Litigation
This document relates to: Baystate Heath System v. Thompson, Civil Action No. 02-0601
Plaintiff hospitals in Baystate Heath System v. Thompson, Civil Action No. 02-0601 (PLF), bring suit for declaratory and injunctive relief in the nature of mandamus, asking the Court to compel defendant, the Secretary of Health and Human Services, through the Centers for Medicare and Medicaid Services ("CMS"), to reopen certain final payment decisions issued by the Secretary's payment agents that pertain to the Secretary's reimbursement of plaintiffs for services they rendered to indigent clients.*fn1 Defendant filed a motion to dismiss and plaintiffs moved for summary judgment. These two motions are currently before the Court for consideration. The Court heard oral argument on the motions on August 11, 2003.
The operating costs of inpatient hospital services are reimbursed by Medicare primarily through the Prospective Payment System ("PPS"). See 42 U.S.C. § 1395ww(d). The regulations governing the PPS require a provider of inpatient hospital services to file an annual cost report with a "fiscal intermediary." 42 C.F.R. § 413.20(b).*fn2 The fiscal intermediary --typically an insurance company that acts as the Secretary's agent -- then audits the report and makes a final determination of the total amount of payments owed by Medicare to the provider for that fiscal year. The total amount to which a provider is entitled is set forth by the intermediary in an initial Notice of Program Reimbursement ("NPR"). See 42 C.F.R. § 405.1803. Under the statute, a provider that is dissatisfied with any aspect of the total payment amount set forth in the initial NPR may timely request a hearing before the Provider Reimbursement Review Board ("Board"), an administrative body composed of five members appointed by the Secretary. See 42 U.S.C. § 1395oo(a) and (h). If the provider objects to the Board's conclusion, it may seek judicial review, provided that the provider files suit within 60 days of the Board's determination. See 42 U.S.C. § 1395oo(f)(1).
The computation of the numerator of the "Medicaid" fraction is at the heart of this action. This numerator is calculated by determining the total number of a hospital's inpatient days attributable to patients who "were eligible for medical assistance under a State plan approved under subchapter XIX [ i.e., eligible for Medicaid], but who were not entitled to benefits under Part A of this subchapter [Medicare]." 42 U.S.C. 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II). From 1986 through 1997, the Secretary construed the first portion of this numerator calculation to include only those patients who were both eligible for Medicaid payments under the relevant state Medicaid plan and who actually received such payments from the state. See 42 C.F.R. § 412.106(b)(4). Providers challenged this interpretation, and every circuit court that considered the Secretary's interpretation rejected it. The courts of appeals uniformly concluded that the numerator calculation must include all patient days for which a patient was eligible for Medicaid assistance regardless of whether a state Medicaid program actually paid the hospital for services provided to the patient. See Cabell Huntington Hospital, Inc. v. Shalala, 101 F.3d 984, 988 (4th Cir. 1996); Legacy Emanual Hospital and Health Center v. Shalala, 97 F.3d 1261, 1266 (9th Cir. 1996); Deaconess Health Services Corp. v. Shalala, 83 F.3d 1041, 1041 (8th Cir. 1996); Jewish Hospital, Inc. v. Sec'y of Health and Human Services, 19 F.3d 270, 276 (6th Cir. 1994).
[a] determination or decision... may be reopened with respect to findings on matters at issue in such determination or decision... either on motion of such intermediary officer or panel of hearing officers, Board, or Secretary, or on the motion of the provider affected by such determination or decision to revise any matter in issue at any such proceedings. Any such request to reopen must be made within 3 years of the date of the notice of the intermediary or Board hearing decision, or where there has been no such decision, any such request to reopen must be made within 3 years of the date of notice of the intermediary determination. No such determination or decision may be reopened after such 3-year period except as provided in paragraphs (d) and (e) of this section.
42 C.F.R. § 405.1885(a). Second, the regulations directed that a determination or decision "shall be reopened and revised by the intermediary if, within the aforementioned 3-year period, the HCFA notifies the intermediary that such determination or decision is inconsistent with the applicable law, regulations, or general instructions issued by the HCFA in accordance with the Secretary's agreement with the intermediary." 42 C.F.R. § 405.1885(b).*fn3 These review methods are in addition to the direct appeals process of NPRs provided for by the statute. See 42 U.S.C. §§ 1395oo(a)-(f).
The court of appeals also reviewed the steps the Monmouth plaintiffs had taken in seeking relief under Subsection 405.1885(a), noting that "we think it insignificant that, because of the Secretary's own three year limitation, reopening would not be available if sought today. Although mandamamus [ sic ] is classified as a legal remedy, its issuance is largely controlled by equitable principles. Since both hospitals were within the three-year mark when they made their requests for reopening, they are entitled to the reopening that was due them at that time." Monmouth Medical Center v. Thompson, 257 F.3d at 815 (internal quotation and citation omitted). The court rejected as irrelevant the Secretary's contention that the hospitals had failed to exhaust their remedies by failing to file proper appeals of their final decisions under Section 1395oo(a) within 180 days of the decisions, concluding that the plaintiffs were challenging the reopening prohibition of the Ruling, which plaintiffs could not have pursued until the Ruling was issued, which occurred more than 180 days after the original NPRs. See id. The court expressly noted that "the question is whether [plaintiffs] have done all they can to vindicate their rights to reopening. We have already shown above how all other avenues of relief [including appeal through Section 1395oo(a)] are either foreclosed or futile." Id.
In this action, plaintiffs filed suit for declaratory and injunctive relief in the nature of mandamus. Plaintiffs argue, inter alia, that the Monmouth decision requires this Court to direct the intermediaries to reopen and recalculate their NPR's for the three years prior to the Ruling, notwithstanding plaintiffs' failures (1) to request reopenings pursuant to Subsection 405.1885(a); and (2) to proceed through the administrative review channels provided for in the statute and regulations. Defendant filed a motion to dismiss under Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that plaintiffs should be denied mandamus relief on timeliness and equitable grounds, thereby defeating plaintiffs' asserted basis of subject matter jurisdiction under the mandamus statute. *fn4 In response plaintiffs moved for summary judgment. Upon careful consideration of the pleadings and ...