Opinion ID: 513483
Heading Depth: 2
Heading Rank: 2

Heading: Interest on Unlawfully Delayed TEFRA Bonus Payments

Text: 57 The Hospitals contend that they are entitled to receive interest on any TEFRA bonuses that should have been paid at the tentative settlement stage of the Medicare reimbursement process rather than at the final settlement stage. The district court did not decide the interest question because it determined that the Secretary's policy of paying TEFRA bonuses at the final settlement stage was procedurally and substantively valid. 58 The Hospitals allege that the Secretary made the following statement to the district court in support of his motion to dismiss the Hospitals' first complaint: 59 Under plaintiffs' argument, if they must wait ... before they can obtain judicial review, they will, by definition, not receive the relief they seek, i.e., immediate payment of their bonuses. Plainly, however, full relief can be obtained even several years hence. If, upon judicial review, after a final decision of the Secretary under 42 U.S.C. Sec. 1395oo(f), the Court agrees with plaintiffs that the incentive bonuses should have been paid at the time the cost reports were filed, the Court need simply order that interest be paid computed from the date the cost reports were filed. 60 Thus, the Secretary represented to the district court that interest would be available to the Hospitals if it turned out that TEFRA bonus payments should have been made at the tentative settlement stage of the reimbursement process. This representation was made in an effort to induce the district court to delay the Hospital's case by requiring the Hospitals to pursue administrative proceedings that turned out to be unavailable. 61 In the brief submitted to this panel, the Secretary has completely reversed his position. The Secretary now asserts that the Hospitals may not collect interest on the TEFRA bonus payments, even if this court finds that they were unlawfully delayed. 62 Because of the Secretary's complete reversal of his position, the Hospitals argue that if this court does not award interest under one of the relevant Medicare statutory provisions, the court should at least award interest under Fed.R.Civ.P. 11 as a means of imposing sanctions on the Secretary for his inconsistent pleadings. 63 Rather than assess the truthfulness of pleadings submitted to the district court, we remand the entire question of interest to the district court. The district court should consider (1) whether the Medicare Act authorizes interest payments on the delayed TEFRA bonus payments; (2) if the Act does not authorize the payment of interest, whether interest should be awarded as a Fed.R.Civ.P. 11 sanction against the Secretary for his inconsistent pleadings; and (3) how much, if any, interest should be awarded to the Hospitals.