Source: http://dc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19990325_0000035.DDC.htm/qx
Timestamp: 2017-07-21 22:42:50
Document Index: 225939362

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

| TRANSITIONAL HOSPITALS CORP. v. SHALALA
TRANSITIONAL HOSPITALS CORPORATION OF LOUISIANA, INC., AND TRANSITIONAL HOSPITALS CORPORATION OF TEXAS, INC., PLAINTIFFS,v.DONNA E. SHALALA, SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT.
Pursuant to Fed.R.Civ.P. 58 and for the reasons stated by the
court in its memorandum docketed this same day, it is this 25th
day of March, 1999 hereby
ORDERED AND ADJUDGED that judgment is entered in favor of the
plaintiffs; and it is further
ORDERED AND ADJUDGED that the defendant's regulations at
42 C.F.R. § 412.22(d) and 412.23(e) are declared to be invalid to
the extent that they preclude newly participating long-term care
hospitals from securing an exemption from the Medicare
Prospective Payment System for inpatient hospital services
pursuant to 42 U.S.C. § 1395ww(d)(1)(B)(iv)(I); and it is further
ORDERED AND ADJUDGED that within 30 days of the date of this
order, that the defendant shall cause its fiscal intermediaries
to reimburse the plaintiffs on the basis of their reasonable
costs of providing inpatient hospital services for their 1993
fiscal years; and it is further
ORDERED AND ADJUDGED that the defendant pay to the plaintiffs
the interest on the contested amount, pursuant to
42 U.S.C. § 1395oo(f)(2), and pay to the plaintiffs their costs and
reasonable attorney's fees herein.
The federal legislation that established Medicare requires the
Secretary of the United States Department of Health and Human
Services to exempt any hospital in which patients have an average
length of stay greater than 25 days ("long-term care hospitals")
from the Medicare Prospective Payment System ("PPS" or
"Prospective Payment System"). 42 U.S.C. § 1395ww(d)(1)(B)(iv).
The plaintiffs, Transitional Hospitals Corporation of Louisiana,
Inc., and Transitional Hospitals Corporation of Texas, Inc.,
operate two long-term care hospitals that furnish acute care
services. They contend that the Secretary's regulations which
implement the exemption from PPS for long-term care hospitals,
42 C.F.R. § 412.22(d), 412.23(e), are unlawful because they do not
allow long-term care hospitals to be reimbursed in accordance
with the mandate of the Medicare statute.
Before the court are the parties' cross motions for summary
judgment. Upon consideration of the motions, the oppositions
thereto, and the record of this case, the court concludes that
the plaintiffs' motion for summary judgment must be granted. The
regulations at issue in this case are invalid because they do not
conform to Medicare's payment scheme for long-term care
hospitals, the precise issue Congress addressed when it exempted
long-term care hospitals from the Prospective Payment System.
Moreover, even were it determined that Congress has not addressed
the precise question at issue, the Secretary's regulations are
not the product of a reasonable interpretation of the legislation
they purport to implement.
The Medicare Program is a federal health insurance program that
pays for medical care for people 65 years or older, certain
younger disabled people, and people
with kidney failure. 42 U.S.C. § 1395 et seq. Medicare insurance
coverage is divided into two parts, Part A and Part B. Part A
provides coverage for care in health care institutions, Part B
provides coverage for physicians' services and other services.
Only Part A of the Medicare Program is at issue in this case.
The Secretary of Health and Human Services is responsible for
administering the Medicare Program. However, part of the
administration of the Medicare Program has been delegated to the
Health Care Financing Administration (HCFA) and to "fiscal
intermediaries," which generally are private insurance companies.
42 U.S.C. § 1395h.
When the Medicare Program was first established, hospitals were
reimbursed for the "reasonable costs" of providing services,
subject to certain limits. 42 U.S.C. § 1395f(b)(1), 1395x(v)
(1982). In 1983, in an effort to contain the increasing costs of
the health care system, Congress enacted a new reimbursement
system, the Prospective Payment System. Pub.L. No. 98-21 (1983)
(codified at 42 U.S.C. § 1395ww(d)). Under the Prospective
Payment System, hospitals are paid a predetermined rate, which is
based upon the "diagnostic related group" classification of the
patient's illness at the time of admission. Certain types of
hospitals were excluded from the Prospective Payment System,
however. 42 U.S.C. § 1395ww(d)(1)(B)(i)-(v). Congress provided
that these hospitals would continue to be paid based upon the
"reasonable costs" of services provided. 42 U.S.C. § 1395f
(b)(1), 1395x(v)(1)(A).
The Medicare statute sets out which hospitals will be exempt
from the Prospective Payment System as follows:
As used in this section, the term `subsection (d)
hospital' means a hospital located in one of the
fifty States or the District of Columbia other than &mdash;
(i) a psychiatric hospital (as defined in section
1395x(f) of this title),
(ii) a rehabilitation hospital (as defined by the
(iii) a hospital whose inpatients are predominantly
(iv)(I) a hospital which has an average inpatient
length of stay (as determined by the secretary) of