Source: https://law.justia.com/cases/federal/appellate-courts/F3/80/379/627711/
Timestamp: 2020-07-06 17:42:08
Document Index: 517078609

Matched Legal Cases: ['§ 1395', '§ 1395', '§ 412', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1291', '§ 1395', '§ 1395', '§ 1395']

50 Soc.sec.rep.ser. 417, Medicare & Medicaid Guidep 44,119,96 Cal. Daily Op. Ser v. 2328,96 Daily Journal D.a.r. 3921skagit County Public Hospital District No. 2, D/b/a Islandhospital, Plaintiff-appellant, v. Donna E. Shalala, Secretary of Health and Human Services;united States Health and Human Services; Medicaregeographic Classification Review Board;et al., Defendants-appellees, 80 F.3d 379 (9th Cir. 1996) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1996 › 50 Soc.sec.rep.ser. 417, Medicare & Medicaid Guidep 44,119,96 Cal. Daily Op. Ser v. 2328,96 Daily Jo...
50 Soc.sec.rep.ser. 417, Medicare & Medicaid Guidep 44,119,96 Cal. Daily Op. Ser v. 2328,96 Daily Journal D.a.r. 3921skagit County Public Hospital District No. 2, D/b/a Islandhospital, Plaintiff-appellant, v. Donna E. Shalala, Secretary of Health and Human Services;united States Health and Human Services; Medicaregeographic Classification Review Board;et al., Defendants-appellees, 80 F.3d 379 (9th Cir. 1996)
US Court of Appeals for the Ninth Circuit - 80 F.3d 379 (9th Cir. 1996) Argued and Submitted Feb. 6, 1996. Decided April 5, 1996
The wage index measures the ratio of the average hourly wage (AHW) of hospitals in a given geographic area with the nationally calculated AHW. 42 U.S.C. § 1395ww(d) (3) (E). Each hospital is assigned to a particular geographic area, and an area wage rate is computed for all participating hospitals in that area. The wage index is used to adjust Prospective Payment System rates to reflect local variations in labor costs.
In 1989, Congress recognized that the classification system resulted in inequitable hospital reimbursements in cases where a rural hospital is located on the edge of an urban metropolitan area and competes for employees with the urban hospitals. As a result, Congress directed the Department of Health and Human Services (DHHS) to establish a reclassification system whereby a rural hospital could be reclassified to a nearby urban area and receive reimbursements based on the higher area wage rate. 42 U.S.C. § 1395ww(d) (10). Congress established the Medicare Geographic Classification Review Board (MGCRB or Classification Board) to adjudicate hospital requests for reclassification. HCFA required the Classification Board to base its decisions for reclassification requests effective for the years 1992-1994 on 1988 hospital wage data.
In September 1992, the DHHS adopted revised reclassification guidelines effective for reclassification requests for the fiscal year 1994. 57 Fed.Reg. 39,746 (Sept. 1, 1992). The revised guidelines imposed a new criterion for reclassification called the "108 percent" threshold test. 42 C.F.R. § 412.230(e) (1) (iii). That test requires a hospital seeking reclassification to show that its actual average hourly wage (based on 1988 data) is at least 108 percent of the average hourly wage of the hospitals in its own geographic area.
HCFA allows hospitals to invoke the wage data corrections process in making their applications for reclassification to the Classification Board.1 Once HCFA completes its review of the hospital's wage data correction request, it transmits the data (corrected or uncorrected) to the Classification Board for use in its review of the hospital's reclassification application. The Classification Board is required to make its determination as to a hospital's application for geographic reclassification within 180 days of the hospital's application, which must be submitted by October 1 of the year prior to the fiscal year for which reclassification is sought. 42 U.S.C. § 1395(d) (10) (C) (iii) (I).
The Classification Board has until the end of March to make its determination on reclassification applications, and the Secretary has until the end of June to review those determinations. 42 U.S.C. § 1395ww(d) (10) (C) (iii). A hospital can appeal the reclassification decision of the Classification Board to the Secretary. The Secretary's decision upon review is final and is not subject to judicial review. 42 U.S.C. § 1395ww(10) (C) (iii) (II). These strict time frames enable HCFA to meet the statutory requirement that Prospective Payment System rates, and the methodology and data used to compute the rates, are published by September 1 of each year. 42 U.S.C. § 1395ww(d) (6). The Prospective Payment System rates for hospitals in individual areas are based on the area wage index, which in turn is based on the hospital's geographic classification. HCFA cannot compute the Prospective Payment System rates until all reclassification decisions are finalized. When HCFA incorporates the effects of reclassification decisions into its computation of the Prospective Payment System rates, the impact must be budget neutral. 42 U.S.C. § 1395ww(d) (8) (D).
As explained above, the wage index in a specific locality affects the amount of Medicare reimbursements. A hospital may appeal a final determination as to the amount of payment due to a hospital under the Prospective Payment System to the Provider Reimbursement Review Board (PRRB or Reimbursement Board). 42 U.S.C. § 1395oo(a). To qualify for review by the Reimbursement Board, the amount in controversy must be at least $10,000. 42 U.S.C. § 1395oo(a) (2). If the hospital is dissatisfied with the Reimbursement Board's decision, it can seek judicial review of that administrative decision. 42 U.S.C. § 1395oo(f) (1).
In determining whether the district court's remand order is final and appealable, this court will give 28 U.S.C. § 1291 "a practical construction." Kaho v. Ilchert, 765 F.2d 877, 880 (9th Cir. 1985). Island's complaint before the district court clearly focussed on the wage data correction process insofar as it related to Island's application for reclassification for fiscal year 1994. Specifically, the complaint sought: 1) a judgment that the Secretary had erred in disallowing the claimed fringe benefit costs as wage-related costs; 2) a judgment declaring that the Secretary violated the APA by basing her decision on an improperly promulgated, substantive rule; 3) a judgment vacating the Classification Board's decision and directing it to grant Island's request for reclassification to the Seattle urban area; and 4) an order directing the Secretary to reimburse Island on the basis of the Seattle urban wage index. The complaint did not assert any other wage index claims or seek damages therefrom.
The district court's determination that it lacks subject matter jurisdiction is a question of law reviewed de novo. Seven Resorts, Inc. v. Cantlen, 57 F.3d 771, 772 (9th Cir. 1995). A strong presumption favors judicial review of administrative action, and such review will not be cut off unless there is "clear and convincing evidence" that such was the purpose of Congress. Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 670-71, 106 S. Ct. 2133, 2135-36, 90 L. Ed. 2d 623 (1986). Here, we find precisely such clear congressional intent to preclude judicial review.
42 U.S.C. § 1395ww(d) (10) (C) (iii) (II).
The Medicare statutory scheme requires such restrictions on judicial review. The payment rates for hospitals in individual areas are based on the area wage index, which in turn is based on the hospital's geographic classification. HCFA cannot compute the payment rates until all reclassification decisions are finalized. The impact of the classifications decisions and the ensuing payment rate must be "budget neutral." 42 U.S.C. § 1395ww(d) (8) (D). The preclusion of judicial review makes the reclassification decisions final, and not subject to later modification by courts, thus allowing the Secretary to determine payment rates and ensure budget neutrality.
Island admits that reclassification decisions are not subject to judicial review, but attempts to characterize its action as one challenging a process, not the final reclassification decision. Specifically, Island claims that it is challenging HCFA's "collateral" decision disallowing most of the claimed fringe benefits corrections to Island's 1988 wage data survey and the "methods" by which the reclassification decision was reached. Island relies on the Supreme Court's distinction between a challenge to a "determination" that is statutorily unreviewable and a challenge to the procedures utilized in reaching that determination, which are reviewable. See Bowen, 476 U.S. 667, 106 S. Ct. 2133, 90 L. Ed. 2d 623; McNary v. Haitian Refugee Center, Inc., 498 U.S. 479, 111 S. Ct. 888, 112 L. Ed. 2d 1005 (1991).
In Bowen, the Supreme Court addressed judicial review of Medicare regulations related to physician payments. In that case, physicians challenged the validity of a regulation authorizing the payment of different amounts for similar physicians' services. The district court found, and the court of appeals agreed, that the regulation was inconsistent with the plain language of the Medicare statute. In the petition before the Supreme Court, the Secretary asserted that "Congress has forbidden judicial review of all questions affecting the amount of benefits payable under Part B of the Medicare program." Id. at 669, 106 S. Ct. at 2135. The Court disagreed and affirmed the court of appeals, holding that while the Medicare statute precluded judicial review of individual determinations of benefit amounts, challenges to the Secretary's instructions and regulations were not insulated from judicial review. Id. at 678, 106 S. Ct. at 2140.
In McNary, the Haitian Refugee Center filed a class action alleging that the application review process in a Special Agricultural Workers' (SAW) amnesty program was conducted in an arbitrary manner that violated the applicants' statutory and due process rights. 498 U.S. at 487, 111 S. Ct. at 893-94. The district court accepted jurisdiction because the complaint did not challenge an unreviewable individual determination, but rather challenged the manner in which the INS was implementing the program. The district court found that the INS practices violated the Immigration Reform and Control Act (Reform Act) and were unconstitutional, and the court of appeals affirmed. Id. at 489, 111 S. Ct. at 894. The INS petitioned the Supreme Court to review whether the Reform Act precluded judicial review or whether the district court had jurisdiction over an action alleging a practice of due process violations by the INS in its administration of the SAW amnesty program. The Court held that the Reform Act precluded judicial review of individual denials of SAW status, not general collateral challenges to unconstitutional practices, and affirmed the district court's and the court of appeals' exercise of jurisdiction. Id. at 492, 111 S. Ct. at 896. The Court explained that the individual respondents "do not seek a substantive declaration that they are entitled to SAW status.... Rather, if allowed to prevail in this action, respondents would only be entitled to have their case files reopened and their applications reconsidered in light of the newly prescribed INS procedures." Id. at 495, 111 S. Ct. at 898.
Accordingly, if a procedure is challenged only in order to reverse the individual reclassification decision, judicial review is not permitted. The qualification is important: HCFA's wage correction procedure and the allowable expense determinations are not unreviewable for all purposes, but only in relation to the reclassification decision. They would be reviewable in reference to other agency determinations. For example, if Island had pursued an appeal to the Reimbursement Board to review the wage correction determination by HCFA in terms of its effect on the wage index and Medicare reimbursements, judicial review of the Reimbursement Board's determinations would have been appropriate. See 42 U.S.C. § 1395oo(f) (1). Or, if the appeal related to review of the wage correction process guidelines for potential declaratory or injunctive relief as in Bowen, this court would have had subject matter jurisdiction.
A related district court opinion illustrates the distinction between precluded judicial review of final reclassification decisions, such as that sought here, and judicial review of "methods" and other collateral issues. In Universal Health Servs. of McAllen, Inc. v. Sullivan, 770 F. Supp. 704 (D.D.C. 1991), aff'd, 978 F.2d 745 (D.C. Cir. 1992), the court found that judicial review of the 35 mile proximity requirement for reclassification was not precluded, stating "the Medicare Act's preclusion of review of the Board's and Secretary's reclassification decisions does not preclude judicial inquiry into the validity of the Secretary's guidelines." Id. at 712. The hospital did not seek an outright reversal of a past reclassification decision or monetary damages. In discussing the appropriateness of judicial review, the court specifically noted that "UHS' challenges to the validity of the guidelines will not interfere with individual reclassification decisions, the reclassification timetable created by the Act, or the Secretary's duty to ensure budget neutrality in each fiscal year." Id. at 714-15. Ultimately, the court upheld the proximity requirement, finding it compatible with congressional intent. Id. at 719. In doing so, the court emphasized the importance of deference to the Secretary's discretion because of the budget neutrality requirement. Id. at 716-18.