Opinion ID: 163810
Heading Depth: 5
Heading Rank: 1

Heading: Mandatory Reopening

Text: The Plaintiffs’ first argument for a clear, non-discretionary duty is based on the “mandatory reopening” provision—42 C.F.R. § 405.1885(b). This provision states that: A determination or a hearing decision rendered by the intermediary shall be reopened and revised by the intermediary if, within the aforementioned 3- year period, the Health Care Financing Administration notifies the intermediary that such determination or decision is inconsistent with the applicable law, regulations, or general instructions issued by the Health Care Financing Administration in accordance with the Secretary’s agreement with the intermediary. Id. (emphasis added). Plaintiffs argue that the Secretary 7 notified the intermediaries that the instant NPRs were “inconsistent with the applicable law” on two separate occasions: 1) when the Secretary issued Ruling 97-2, and 2) when the district court issued its order in Anadarko Municipal Hosp. v. Shalala, No. Because the HCFA is the Secretary’s agent, they are interchangeable for 7 purposes of this section. See generally 42 C.F.R. ch. IV, subch. A, pt. 400. - 19 - CIV-97-288-A, 1998 WL 34007421 (W.D. Okla. Apr. 13, 1998). Thus, argue Plaintiffs, after receiving this notification, the intermediaries owed Plaintiffs a clear, non-discretionary duty to reopen and revise the NPRs. In response, the Secretary argues that the NPRs were not “inconsistent with the applicable law” and, even if they were, the Secretary never notified the intermediaries that they were. Thus, the intermediaries had no duty to reopen and revise. We find that neither Ruling 97-2 nor the Anadarko decision constituted notification under § 405.1885(b). Therefore, the fiscal intermediaries had no clear, non-discretionary duty to reopen.
Plaintiffs allege that Ruling 97-2 constituted notification to the intermediaries that the instant NPRs were “inconsistent with the applicable law” and must be reopened and revised in accordance with § 405.1885(b). We hold that this Ruling did not constitute notification under subsection 1885(b). The language of Ruling 97-2 clearly evinces both the Secretary’s belief that his prior interpretation of the DSH provision was not inconsistent with the applicable law and his intent that no NPRs be reopened on that basis. First, the Ruling nowhere uses the phrase “inconsistent with the applicable law.” See Monmouth, 257 F.3d at 813 (the Secretary “studiously avoided” using the language “inconsistent with the applicable law” in Ruling 97-2 to avoid - 20 - notification to the intermediaries under (b)). Instead, the Ruling merely concedes that the Secretary’s interpretation was “contrary to the applicable law in four judicial circuits.” Ruling 97-2 (emphasis added). Second, the Ruling clearly asserts the Secretary’s belief that his DSH regulation was a permissible interpretation of the applicable statute and that the purpose of changing his interpretation was to ensure national uniformity in calculation of DSH reimbursement, not a concession that his prior interpretation was inconsistent with the applicable law. Third, Ruling 97-2, rather than notifying the fiscal intermediary to reopen and revise the challenged NPRs, expressly forbade it from doing so. Given the unambiguous language of the Ruling, we cannot find that it constitutes the kind of notification that would require mandatory reopening as contemplated by § 405.1885(b). 8 In so holding, we part company with the District of Columbia Circuit, which held that Ruling 97-2 did constitute notification under § 405.1885(b). Monmouth, 257 F.3d at 813-14. Although it observed as we do that the Ruling 8 The Secretary also argues at length that the NPRs at issue in this case were not decided inconsistently with the applicable law of the Western District of Oklahoma because at the time they were decided, the Secretary’s regulation was “the applicable law” in that jurisdiction. Because we conclude that, regardless of whether the decisions were inconsistent with the applicable law, the Secretary never notified the fiscal intermediaries that they were, we do not resolve this issue. - 21 - “studiously avoid[s] using the magic words ‘inconsistent with the applicable law,’ and instead call[s] the earlier interpretation ‘contrary to the applicable law in four judicial circuits,’” id., the D.C. Circuit nevertheless went on to find that Ruling 97-2 implicitly notified the intermediaries that the prior interpretation was “inconsistent with the applicable law” because it was issued as an interpretive ruling without notice and comment. Id. Monmouth reasons as follows. First, it observes that if Ruling 97-2 effected a substantive legal change, notice and comment rulemaking would have been required for its promulgation. Id. at 813-14; see 42 U.S.C. § 1395hh(a) (stating that “[n]o rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard” may take effect unless it is promulgated consistently with that subchapter); id. § 1395hh(b)(1). The D.C. Circuit then concluded that because Ruling 97-2 changed a substantive legal standard, it failed to satisfy the notice and comment requirements of § 1395hh(b). However, even if the D.C. Circuit were correct so far in its analysis (which we do not have to resolve in this case), we do not agree with how the Court proceeds from that point to the conclusion that the Secretary had given the notice of invalidity required for mandatory reopening under 42 C.F.R. § 405.1885(b). One would have assumed that the logical conclusion from the D.C. Circuit’s - 22 - reasoning to this point would be to hold that Ruling 97-2 was invalid because of its failure to comply with notice and comment procedures. Instead, however, the Court peculiarly concluded that notice and comment was not required for Ruling 97-2. It reached this conclusion by finding that Ruling 97-2, in fact did not effect a substantive legal change—because instead of changing the prior regulation, Ruling 97-2 merely conceded that the prior regulation was a nullity. Finally, the D.C. Circuit concluded, Ruling 97-2’s implicit admission that the prior regulation was a nullity constituted notification to the intermediaries that their decisions under the prior regulation were “inconsistent with the applicable law” and triggered their duty to reopen under § 405.1885(b). Monmouth, 257 F.3d at 814 (“Concluding that the Secretary did in fact give notice of the interpretation’s inconsistency with applicable law, we also find that § 405.1885(b) imposed a clear duty on intermediaries to reopen DSH payment determinations for the hospitals.”). We find this reasoning unsound because it makes assumptions about the premises and intended effect of Ruling 97-2 that do not comport with fact or with the clear intention of the Secretary. Unlike the D.C. Circuit, we believe the concept of “notification” requires some level of intent by the Secretary. The Medicare Act provides no statutory right to reopen—the reopening regulations exist merely at the grace of the Secretary, and the Secretary has complete - 23 - discretion as to when to employ the mandatory reopening regulation. 42 U.S.C. § 1395ff(b)(1)(G) (“The Secretary may reopen or revise any initial determination or reconsidered determination described in this subsection under guidelines established by the Secretary in regulations.”). Because it is purely at the Secretary’s discretion to issue a notification requiring mandatory reopening, we cannot follow the D.C. Circuit’s lead and eradicate that discretion by holding that the Secretary may inadvertently notify the intermediaries to reopen and revise NPRs, contrary to his own clearly expressed intent not to allow reopening.
Plaintiffs also contend that the intermediaries were notified by the Secretary that their prior decisions were inconsistent with the applicable law when the District Court for the Western District of Oklahoma ordered the Secretary to revise the NPRs at issue in Anadarko. We hold that this order does not constitute notification under § 405.1885(b). In Anadarko Municipal Hosp. v. Shalala, No. CIV-97-288-A, 1998 WL 34007421 (W.D. Okla. Apr. 13, 1998), the Western District of Oklahoma held that the Secretary’s regulation interpreting the statutory DSH provision was invalid ab initio and ordered him to recalculate the DSH reimbursement in the NPRs at issue in that case. Id. at . All of those NPRs had been appealed within 180 days to the PRRB and then timely appealed in federal court—and therefore - 24 - none needed to be reopened under the reopening regulation. Plaintiffs argue that the district court’s order constituted notification that the intermediary’s prior decisions were inconsistent with the applicable law and necessitated mandatory reopening. We disagree. First, Anadarko was a decision issued by the district court and therefore cannot constitute notification by the HCFA or by the Secretary, as required under § 1885(b). See 42 C.F.R. § 405.1885(b) (stating that an NPR must be reopened if “the Health Care Financing Administration notifies the intermediary . . .”) (emphasis added). Second, the district court in Anadarko expressly refused to address the issue of reopening. After the court had issued its first order invalidating the Secretary’s regulation, the Anadarko plaintiffs moved to enforce that judgment by asking the court to order the Secretary to withdraw Ruling 97-2. The court refused this request, stating that “this issue as it relates to reopening of finalized cost reports is not before this Court.” Anadarko Municipal Hosp. v. Shalala, No. CIV-97-288-A, at 3 (W.D. Okla. Nov. 2, 1998) (order denying motion to enforce judgment). Indeed, the court in Anadarko concluded that “HCFA Ruling 97-2 does not recognize that its prior interpretation was invalid.” Id. For these reasons, the Anadarko orders simply cannot constitute notification under § 405.1885(b). - 25 - Plaintiffs also contend that the Secretary was required to notify the intermediaries of the Anadarko decision in order to effectuate the court’s judgment in that case and that the “Secretary’s own regulations and policy manuals create a duty to inform intermediaries of the applicable laws to which they are bound.” Assuming that the Secretary has a duty to inform the intermediaries regarding the applicable law, that duty can apply only prospectively. Plaintiffs point to no provision in the regulations that indicates the Secretary is ever required to order reopening. For these reasons, we conclude that the Secretary never notified the intermediaries that their decisions were inconsistent with the applicable law. Thus, the mandatory reopening provision creates no clear, non-discretionary duty that would satisfy the requirements of mandamus jurisdiction.