Opinion ID: 471343
Heading Depth: 2
Heading Rank: 3

Heading: The Secretary's Affidavits

Text: 10 The Secretary presented the affidavits of Doctors Fitzmaurice and Cromwell in order to show that non-Medicare patients incur higher routine costs, once they do receive routine care, than the average patient. 8 Therefore, according to the Secretary, counting labor/delivery patients even though they have received no routine services provides the necessary balancing for the later higher costs they incur when they do receive routine services. Appellant's Brief at 23. 11 The Secretary asserts that this is the first case to consider the data developed in response to the remands ordered by the other Circuits which have confronted this issue. 9 He further contends that, while the D.C. Circuit in St. Mary II, 760 F.2d at 1317-19, and the Ninth Circuit in Mount Zion Hospital and Medical Center v. Heckler, 758 F.2d 1346, 1348 (9th Cir.1985), have considered this data, they did not reach the merits, relying instead on the data in connection with their limited remands. 12 The Secretary's contention as to the validity of the affidavits is contingent upon a finding that there is a rational basis for HHS's labor/delivery room policy. However, the affidavits rest on an evaluation of the entire routine care reimbursement system. The issue before the court is whether the labor/delivery room policy is an irrational method of reimbursement with respect to Sioux Valley Hospital. See 42 C.F.R. Sec. 405.402(b)(3) (1980). Therefore, because they address nationwide patterns of reimbursement and not the labor/delivery room dispute concerning this hospital, the affidavits are of little relevance to the dispute before the court. In addition, the affidavits appear to be irrelevant to this case in light of the fact that the costs they compare are not the specific costs generated by labor/delivery patients, but the more general costs of patients who have been admitted to a routine care bed. 13 Even assuming that the affidavits are relevant, their impact must be circumscribed as post hoc rationalizations. The affidavits were introduced midway through the administrative process, some ten years after the instant policy had been established. HHS did not rely on these affidavits during the PRRB hearing. Once before the Deputy Administrator, who had reversed numerous previous PRRB decisions without considering the affidavits, HHS produced the evidence it now contends is central to its offsetting rationale to the ten-year-old labor/delivery room policy. The Deputy Administrator stated that the affidavits were merely further arguments justifying HHS's position. Deputy Administrator's Decision at 6, J.A. at 8. 14 An administrative agency's policy cannot be justified merely after-the-fact. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 419, 91 S.Ct. 814, 825, 28 L.Ed.2d 136 (1971). In this case, HHS did not consider the arguments it raises by way of the affidavits until recently, and only then in response to the holdings of courts that its policy is irrational. The sole purpose for submitting the affidavits is to justify a policy that HHS should have considered ten years ago. It is not therefore surprising that courts have invalidated the HHS affidavits on this basis. See St. Mary II, 760 F.2d at 1315, 1319; John Muir Hospital, slip op. at 4. 15 Furthermore, HHS's contention that the affidavits contain evidence that maternity and pediatric patients consume more routine care once they are admitted to a routine bed, therefore justifying an adjustment to the Medicare reimbursement, amounts to a violation by HHS of its own regulations. 42 C.F.R. Sec. 405.452(d)(7) (1980) provides the method of computing the average cost per diem for general routine services. Section 452(d)(7) states that the average cost per diem for general routine services is computed by dividing the total allowable inpatient cost for routine services by the total number of inpatient days of care   . Id. There is nothing in this computation which allows for the weighting of days spent in various sub-units of the general routine areas. Rather, 42 C.F.R. Sec. 405.403(d) (1980) expressly states that inpatient days are not to be weighted in this manner. Section 403(d) states in part: 16 This method, commonly referred to as the average per diem cost, does not take into account, variations in the amount of services which a day of care may represent and thereby assumes that patients for whom payment is made on this basis are average in their use of service. 17 By attempting for the first time in 1984 to argue that the weighting of labor/delivery room patients is needed to offset the higher routine costs they incur once they are admitted to the Hospital, HHS has contravened the clear language of its regulation. 18 The district court therefore correctly concluded that the affidavits were insufficient to support the Secretary's policy. For these same reasons it would not have been appropriate for the district court to remand this case to the PRRB to test the merits of the affidavits. 10 The data collected in the Fitzmaurice and Cromwell affidavits cannot salvage what is an irrational policy, and a remand would serve little purpose other than to delay the inevitable result this court would reach.