Source: https://casetext.com/case/bethesda-hospital-assn-v-bowen
Timestamp: 2020-01-21 18:40:10
Document Index: 28222392

Matched Legal Cases: ['§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 1395', '§ 421', '§ 421', '§ 405']

Bethesda Hospital Assn. v. Bowen, 485 U.S. 399 | Casetext
Bethesda Hospital Assn.v.Bowen
U.S.Apr 4, 1988
485 U.S. 399 (1988)
Banner Heart Hosp. v. Burwell
In industry parlance, "self-disallowance" means that a provider should report to the fiscal intermediary…
Battle Creek Health System v. Leavitt
In essence, BCHS maintains that a provider can be dissatisfied with its intermediary's final determination…
holding that a provider could be "dissatisfied" when it "self-disallowed" a cost, i.e., it purposefully did not claim it, due to regulations that prohibited it, but indicating that providers who bypass an exhaustion requirement or fail to request reimbursement for all costs to which they are entitled under applicable rules may stand on different ground
Summary of this case from Linda Univ. v. Leavitt
finding that its conclusion was required by § 1395 oo but was supported by the design of the statute as a whole as well as by § 1395 oo(d), and observing of § 1395 oo(d) that it "allows the Board, once it obtains jurisdiction pursuant to subsection , to review and revise a cost report with respect to matters not contested before the fiscal intermediary" so long as the matter is covered by the cost report
Argued February 29, 1988 Decided April 4, 1988
Under the Medicare program of the Social Security Act, a qualified provider of health care services, in order to obtain reimbursement from the Secretary of Health and Human Services for its cost of providing covered services to Medicare patients, must submit an annual cost report to a fiscal intermediary, usually a private insurance company acting as the Secretary's agent. The intermediary then audits the cost report and determines the amount of reimbursement due to the provider. The statute, 42 U.S.C. § 1395 oo (1982 ed. and Supp. III), authorizes the provider to appeal to the Provider Reimbursement Review Board. The Board may affirm, modify, or reverse the intermediary's decision. The Secretary, either on his own motion or at the provider's request, may review the matter further, and a provider that remains dissatisfied with a final decision of the Board or Secretary may seek review in a federal district court. In their cost reports for 1980, petitioner providers, in apportioning malpractice insurance costs, followed a 1979 regulation of the Secretary that disallowed certain claims for malpractice insurance premium costs. Petitioners later filed a request for a hearing before the Board, challenging the validity of the malpractice regulation and seeking reimbursement for malpractice costs in accordance with the pre-1979 methodology. Because the amounts had been "self-disallowed" in the reports filed with the intermediary, however, the Board determined that it was without jurisdiction to hear petitioner's claims. In proceedings challenging the 1979 regulation, the District Court held that the Board should have exercised jurisdiction over the matter. The Court of Appeals reversed.
Held: The Board may not decline to consider a provider's challenge to a regulation of the Secretary on the ground that the provider failed to contest the regulation's validity in the cost report submitted to its fiscal intermediary. The plain language of § 1395 oo(a) demonstrates that the Board had jurisdiction to entertain this action. There is no merit to the Secretary's contention that a provider's right to a hearing before the Board extends only to claims presented to a fiscal intermediary because the provider cannot be "dissatisfied" with the intermediary's decision to award the amounts requested in the provider's cost report. The submission of a cost report in full compliance with the unambiguous dictates of the Secretary's rules and regulations does not, by itself, bar the provider from claiming dissatisfaction with the amount of reimbursement allowed by those regulations. Providers know that, under the statutory scheme, the intermediary is confined to the mere application of the Secretary's regulations, that the intermediary is without power to award reimbursement except as the regulations provide, and that any attempt to persuade the intermediary to do otherwise would be futile. While the express language of § 1395 oo(a) requires the conclusion reached here, that conclusion is also supported by the language and design of the statute as a whole. Neither the intermediary nor the Board has the authority to declare regulations invalid, but, as the predicate to the right of providers to obtain judicial review of an intermediary's action, the Board must first determine that it is without authority to decide the matter because the provider's claim involves a question of law or regulations. Pp. 403-408.
Page 400 Linda A. Tomaselli and Stuart M. Gerson filed a brief for the American Hospital Association as amicus curiae urging reversal.
A provider may appeal the intermediary's final determination to the Provider Reimbursement Review Board and, under certain circumstances, may obtain a hearing from the Board. The Board is authorized to affirm, modify, or reverse intermediary decisions. The Secretary, either on his own motion or on request of the provider, may review the matter further, and any provider that remains dissatisfied with a final decision of the Board or Secretary may seek review in a United States district court. §§ 1395 oo(a), (d), (f).
In their cost reports for 1980, petitioners followed the 1979 regulation in their apportionment of malpractice insurance costs and thereby effected, in the lexicon of the Medicare program, a "self-disallowance" of malpractice insurance costs in excess of those allowed by the 1979 regulation. Petitioners later filed a timely request for a hearing before the Board, challenging the validity of the malpractice regulation and seeking reimbursement for malpractice costs in accordance with the pre-1979 methodology. Because the amounts had been self-disallowed in the reports filed with the fiscal intermediary, however, the Board determined that it was without jurisdiction to hear petitioners' claims. The Board held, in essence, that a statutory condition to its jurisdiction had not been met, stating that its authority to grant hearings is limited to cases in which the provider is "dissatisfied with a final determination of the . . . fiscal intermediary," and reasoning that petitioners could not be dissatisfied when they had effected a self-disallowance of the claims. The District Court, in disagreement with the Board's reasoning, held that the Board should have exercised jurisdiction over the matter. Bethesda Hospital v. Heckler, 609 F. Supp. 1360, 1368 (SD Ohio 1985).
The Secretary appealed to the United States Court of Appeals for the Sixth Circuit, which reversed the District Court. The Court of Appeals stated that "[w]ere we considering this issue as a matter of first impression, we may well have reached a different conclusion as to the advisability of requiring submission of statutory and/or constitutional challenges to a private insurance company as a condition precedent to further administrative as well as judicial review of the Secretary's regulations." Bethesda Hospital v. Secretary of Health and Human Services, 810 F.2d 558, 562 (1987). The court found itself bound, however, by the decision of a prior panel in Baptist Hospital East v. Secretary of Health and Human Services, 802 F.2d 860 (1986), where it was held that the Board had properly "refused to exercise jurisdiction over those claims by providers who had self-disallowed reimbursement and had failed to challenge the Secretary's regulations before the fiscal intermediary." Bethesda Hospital v. Secretary of Health and Human Services, supra, at 561. We granted certiorari, 484 U.S. 813 (1987), to resolve a conflict among the Courts of Appeals. We now reverse.
The plain meaning of the statute decides the issue presented. See INS v. Cardoza-Fonseca, 480 U.S. 421, 432, and n. 12 (1987); Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984). The parties agree that § 1395 oo(a) addresses the circumstances in which a provider may invoke the Board's jurisdiction. To the extent pertinent here, § 1395 oo(a) states that a provider may obtain a hearing before the Board with respect to its cost report if
"(1) such provider —
"(2) the amount in controversy is $10,000 or more, and
"(3) such provider files a request for a hearing within 180 days . . . ." 42 U.S.C. § 1395 oo(a) (1982 ed. and Supp. III).
The strained interpretation offered by the Secretary is inconsistent with the express language of the statute. We agree that, under subsection (a)(1)(A)(i), a provider's dissatisfaction with the amount of its total reimbursement is a condition to the Board's jurisdiction. It is clear, however, that the submission of a cost report in full compliance with the unambiguous dictates of the Secretary's rules and regulations does not, by itself, bar the provider from claiming dissatisfaction with the amount of reimbursement allowed by those regulations. No statute or regulation expressly mandates that a challenge to the validity of a regulation be submitted first to the fiscal intermediary. Providers know that, under the statutory scheme, the fiscal intermediary is confined to the mere application of the Secretary's regulations, that the intermediary is without power to award reimbursement except as the regulations provide, and that any attempt to persuade the intermediary to do otherwise would be futile. Thus, petitioners stand on different ground than do providers who bypass a clearly prescribed exhaustion requirement or who fail to request from the intermediary reimbursement for all costs to which they are entitled under applicable rules. While such defaults might well establish that a provider was satisfied with the amounts requested in its cost report and awarded by the fiscal intermediary, those circumstances are not presented here. We conclude that petitioners could claim dissatisfaction, within the meaning of the statute, without incorporating their challenge in the cost reports filed with their fiscal intermediaries.
See 42 C.F.R. § 421.100 (1987) (stating that the intermediary can only pay claims that are "covered under Medicare Part A or Part B"); § 421.120 (directing that the Secretary shall periodically review an intermediary's audit procedures to ensure it is making "[c]orrect coverage and payment determinations" and is guarding the "proper management of administrative funds"); 42 C.F.R. § 405.460(a)(2) (1985) ("Reimbursable provider costs may not exceed the costs estimated by HCFA [Health Care Financing Administration] to be necessary for the efficient delivery of needed health services. HCFA may establish estimated cost limits for direct or indirect overall costs or for costs of specific items or services or groups of items or services").
While the express language of subsection (a) requires the result we reach in the present case, our conclusion is also supported by the language and design of the statute as a whole. Cf. Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 220-221 (1986). Section 1395 oo(d), which sets forth the powers and duties of the Board once its jurisdiction has been invoked, explicitly provides that in making its decision whether to affirm, modify, or reverse the intermediary's decision, the Board can "make any other revisions on matters covered by such cost report . . . even though such matters were not considered by the intermediary in making such final determination." This language allows the Board, once it obtains jurisdiction pursuant to subsection (a), to review and revise a cost report with respect to matters not contested before the fiscal intermediary. The only limitation prescribed by Congress is that the matter must have been "covered by such cost report," that is, a cost or expense that was incurred within the period for which the cost report was filed, even if such cost or expense was not expressly claimed.
Neither the fiscal intermediary nor the Board has the authority to declare regulations invalid. It does not follow, however, that the statute treats the two entities alike or that it requires the provider to announce its regulatory challenge at each level; for the Board has a statutory function that the fiscal intermediary does not have. Subsection (f)(1) grants providers the right to obtain judicial review of an action of the fiscal intermediary, but the predicate is that the Board must first make a determination that it is without authority to decide the matter because the provider's claim involves a question of law or regulations. It is this determination of the Board, or alternatively the Board's failure to act, that triggers the right of judicial review.
Section 1395 oo(d) only allows the Board to "affirm, modify, or reverse a final determination of the fiscal intermediary . . . ." Subsection (f)(1) recognizes that this limitation does not allow Board decisions with regard to the validity of rules or regulations. The subsection provides for judicial review of a challenged regulation when the Board determines it is "without authority to decide the question." See also n. 3, supra.