Opinion ID: 71971
Heading Depth: 2
Heading Rank: 1

Heading: Fairness of Secretary's Decision

Text: University submits, in essence, that the Secretary's decision in this case is unfair. This argument consists of three facets: (1) the Secretary's decision is based on an unreasonable 1 Although the Secretary also takes issue with the district court's analysis with respect to equitable estoppel, University does not squarely present this argument in its brief and appears to not rely on it as a basis for affirming the district court's judgment. We note, in addition, that equitable estoppel against the government does not serve as an appropriate legal theory on which to base reversal of the Secretary's decision in this case. We therefore deem this argument to be abandoned and, more importantly, without merit. 5 interpretation of the governing interpretive rules; (2) the Secretary's retroactive disallowance of the reimbursement claim constitutes retroactive rulemaking and, thus, is arbitrary and not entitled to deference; and (3) the decision is not supported by substantial evidence and, if permitted to stand, would conflict with the policy underlying the applicable Medicare regulation. We disagree. The administrative guidelines germane to this action are found in PRM §§ 310 and 310.2, outlined above. These rules guide both a provider and intermediary as to what constitutes reasonable collection efforts, on the one hand, and the point in time at which a debt may be deemed uncollectible, on the other hand. The only issue in this case is whether University pursued reasonable collection efforts with respect to its Medicare accounts; this is the subject solely of PRM § 310, which unambiguously directs providers to treat similarly uncollected charges of Medicare and non-Medicare patients. University contends that PRM § 310 read in tandem with PRM § 310.2, which deems a debt uncollectible if unpaid beyond 120 days after the last activity on an account, is subject to only one logical interpretation: that is, once a provider has pursued Medicare and non-Medicare accounts equally for the first 120 days, it then may deem both accounts to be uncollectible and refer only non-Medicare accounts to a collection agency.2 Under the Secretary's reading of the two relevant provisions, however, PRM § 310 requires similar treatment of all patient accounts of comparable size regardless of the point in time at which the collection effort is measured. PRM § 310.2 does not come into effect unless the provider has complied with PRM § 310 in treating identically all Medicare and non-Medicare accounts and has ceased collection efforts with regard to all accounts after 120 days. 2 University further suggests that a provider may engage in this debt collection practice if the decision to do so is supported by sound business reasons. In adding this requirement, University appears to concede that its practice of treating uncollected Medicare and non-Medicare accounts dissimilarly, in the absence of a financial justification, see 42 C.F.R. § 413.80(e)(4), does not comply with PRM § 310. Assuming that a showing of sound business judgment may, in certain circumstances, justify non-compliance with the rule at issue but does not alter our reading of that rule. At any rate, the Secretary determined that University had failed adequately to demonstrate that its practice was supported by sound business judgment. We discuss this aspect of the Secretary's decision in greater detail below. 6 We find the Secretary's interpretation of PRM §§ 310 and 310.2 to be entirely plausible and consistent with the regulation's directive that a provider expend reasonable collection efforts before claiming and receiving reimbursement from the Medicare program for uncollected charges. The undisputed purpose of this requirement is to ensure that a provider treat similarly those accounts for which the provider has no guarantor as those for which the government acts as guarantor. Compliance with this policy presumably prevents Medicare from being used as a payor for unpaid bills that might yet be paid by the responsible party. We cannot conclude that the Secretary's interpretation of the PRM guidelines drafted pursuant to the reasonable collection effort regulation is arbitrary, plainly erroneous, or inconsistent with Medicare policy. We therefore are bound to give controlling weight to the Secretary's interpretation of the governing regulation and accompanying guidelines. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 2386, 129 L.Ed.2d 405 (1994). We similarly are unpersuaded by University's suggestion that, because the intermediary previously had allowed University's claims for reimbursement, the Secretary's subsequent disallowance of the claim constitutes unfair, retroactive rulemaking. It is undisputed that the PRM guidelines relevant to this case were available to University prior to the 1986 fiscal year. It also is undisputed that Blue Cross first discovered University's bad debt collection practices and its concomitant non-compliance with PRM § 310 in its 1989 full audit of the 1986 cost year; there is no allegation or indication that Blue Cross had been supplied with the necessary information to discover University's practices prior to the audit. The intermediary thus discovered new, material information previously unavailable to it that informed its decision to disallow certain claims not in conformity with governing Medicare rules and policies. University fails to demonstrate how this decision constitutes a substantive change or a different application of the Secretary's policy 7 prohibiting dissimilar treatment of Medicare and non-Medicare accounts as embodied in PRM § 310.3 Finally, we note briefly that the Secretary's decision not to credit University's business reasons as justifying non-compliance with the similar-treatment policy with respect to Medicare and non-Medicare accounts is supported by substantial evidence. In support of its business-related justification, the Secretary found that University relied principally on (1) historical evidence showing that the Provider was more successful in collecting amounts due from Medicare accounts than from non-Medicare accounts; and (2) a generalized perception that the Medicare patients would likely either pay their deductible and coinsurance obligations during the initial 120-day collection period or would not be inclined or able to pay. R2-11 (footnote omitted). In addition, the Secretary considered evidence submitted by University indicating that costs with respect to collection efforts increased in the 1989-1991 fiscal years, during which University referred both Medicare and non-Medicare accounts to its collection agency. Significantly, the Secretary determined that, although University had provided some financial rationale for its decision to treat 3 In support of the proposition that its 1986 bad debt collection efforts were reasonable, University points to a memorandum issued in 1990 by the Health Care Financing Administration clarifying PRM § 310.2 in light of the OBRA moratorium. The memorandum states, in relevant part: We believe that an intermediary could reasonably have interpreted the title of section 310.2, Presumption of Noncollectibility, to provide that an uncollectible account could be presumed to be a bad debt if the provider has made a reasonable and customary attempt to collect the bill for at least 120 days even though the claim has been referred to a collection agency. Such an interpretation is reasonable unless it is apparent that the debt is not a bad debt, for example, because the beneficiary is currently making payments on account, or has currently promised to pay the debt. University contends that this passage ratifies University's interpretation of the applicable guidelines and confirms that the language of the PRM is ambiguous. However, as noted by the Secretary, the clarifying memorandum refers expressly to PRM § 310.2, which is not at issue in this case. The memorandum also explicitly emphasizes that, notwithstanding any possible confusion with regard to PRM § 310.2, the bad debt policy is otherwise unaffected by the above discussion. Contrary to University's position, we do not find that the above-memorandum shows either that the Secretary has acted arbitrarily here or that the provider is not necessarily required to treat similarly Medicare and non-Medicare accounts. 8 dissimilarly Medicare and non-Medicare accounts after 120 days, its stated reasons were largely speculative, inconclusive, and inconsistent. We need not express a view as to whether we agree or disagree with the Secretary's determination. Our review of the record reveals that the Secretary's conclusion that University failed adequately to show that it had engaged in reasonable collection efforts based on sound business judgment is supported by substantial evidence. See Bama Tomato Co. v. U.S. Dept. of Agric., 112 F.3d 1542, 1546 (11th Cir.1997) (Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' ) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)). Although University submitted evidence of some increased costs in the 1989-1991 fiscal years, it did not conclusively demonstrate that these increased costs would have been incurred in 1986 if Medicare accounts had been referred along with non-Medicare accounts. Moreover, the Secretary noted but dismissed as speculative University's assertion that, based on its experience in the community, pursuit of Medicare patients who had not paid their accounts after 120 days was not likely to result in further recovery; we cannot say that the Secretary's conclusion in this regard is insupportable.4 In sum, we find that the Secretary's determination that University had failed adequately to support its dissimilar 4 At oral argument, University argued that two former PRRB decisions, St. Francis Hosp. and Med. Ctr. v. Blue Cross and Blue Shield Ass'n/Kansas Hosp. Ass'n, PRRB Decision No. 86-D21 (Nov. 12, 1985), and Reed City Hosp. v. Blue Cross and Blue Shield Ass'n, (Feb. 20, 1986), in which the PRRB found that sound business judgment justified dissimilar treatment of Medicare and non-Medicare bad debt claims, constitute the Secretary's expression of policy and, thus, mandate that the Secretary reach the same determination with respect to the facts of this case. Although it is true that, given the facts and records presented in connection with St. Francis Hospital and Reed City Hospital, the Secretary found that the providers had engaged in reasonable business practices notwithstanding their dissimilar treatment of Medicare and non-Medicare accounts, these decisions constitute specific applications of the relevant regulations and guidelines and, therefore, do not dictate a given result in light of the specific circumstances presented here. Stated differently, the records in St. Francis Hospital and Reed City Hospital apparently supported the providers' contentions that sound business judgment justified their respective treatment of Medicare accounts; in this case, the Secretary found that the record and hearing testimony were inadequate to support the same claim. Because we cannot say the Secretary's decision is inconsistent with the weight of the administrative record in connection with this case, any further inquiry regarding University's sound-business-judgment justification necessarily must end. 9 treatment of Medicare and non-Medicare accounts is supported by the record and, therefore, must be affirmed on that basis.