Opinion ID: 3158926
Heading Depth: 2
Heading Rank: 4

Heading: proceedings in d.c. district court

Text: Canonsburg timely filed the instant suit in district court seeking judicial review of the CMS Administrator’s decision. As in Canonsburg I, Canonsburg argued that section 2534.5 is arbitrary and capricious because it is inconsistent with the governing statute and regulations, represents an arbitrary change to the Agency’s longstanding interpretation of the regulations, was promulgated without required notice and comment and discriminates in favor of freestanding SNFs. The Secretary answered, raising issue preclusion as an affirmative defense. See generally FED. R. CIV. P. 8(c)(1) (listing res judicata as an affirmative defense). The Secretary subsequently moved for summary judgment, repeating her issue-preclusion argument and defending section 2534.5 on the merits. Canonsburg opposed summary judgment, arguing that the Secretary had waived issue preclusion by failing to 6 The Secretary did not review the PRRB decision directly because her review authority is delegated under 42 U.S.C. § 1395oo(f) to the CMS Administrator. See generally 42 C.F.R. § 405.1875 (“Administrator . . . . may immediately review any decision of the Board . . . .”). The Administrator’s review represents HHS’s final action in Canonsburg’s appeal. 10 raise it during the administrative proceedings and that equity strongly disfavored application of issue preclusion in this case because none of the policy rationales that traditionally support issue preclusion applied to Canonsburg’s suit. 7 On October 17, 2013, the district court granted the Secretary’s motion for summary judgment on the issue preclusion ground. See Canonsburg II, 989 F. Supp. 2d at 30. The court noted that Canonsburg did not dispute that the validity of section 2534.5 had been raised and contested, and actually and necessarily decided, in Canonsburg I. See id. at 17. It rejected Canonsburg’s waiver and equity arguments. See id. at 18–19, 24–27. The court held “that, because the parties and issues are identical to those in Canonsburg I, . . . the plaintiff had a full and fair opportunity to litigate with adequate incentives to do so, and the application of issue preclusion would not inflict a fundamental unfairness on the plaintiff,” Canonsburg was barred from relitigating the issues resolved in Canonsburg I. Id. at 30. Canonsburg timely appealed.