Court Opinion

ID: 9000042
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:58:59.747074+00
Date Added: 2024-06-11T17:11:08.946119
License: Public Domain

SCIRICA, Circuit Judge,
concurring in part and dissenting in part.
I concur in the majority’s decision to remand this case to allow the Medical Center to assert 28 U.S.C. § 1331 as a basis for jurisdiction in the district court. However, I respectfully dissent from the majority’s conclusion that the Medical Center has failed to meet the jurisdictional requirements of 42 U.S.C. § 1395oo(a).
The Secretary’s regulations provide, in part:
(e) Hospital requests regarding applicability of the rate of increase ceiling. A hospital may request an exemption from, or exception or adjustment to, the rate of cost increase ceiling imposed under this section_ HCFA’s decision is subject to review under Subpart R of Part 405 of this chapter [i.e., by the PRRBJ.
42 C.F.R. § 413.40(e) (emphasis added).
The Secretary’s regulations further provide:
(h) Adjustments — (1) Comparability of cost reporting periods, (i) HCFA may adjust the amount of the operating costs considered in establishing cost per case for one or more cost reporting periods, including both periods subject to the ceiling and the hospital’s base period, to take into account factors that could result in a significant distortion in the oper*1118ating costs of inpatient hospital services....
42 C.F.R. § 413.40(h)(l)(i) (emphasis added).
The Medical Center seeks, under 42 C.F.R. § 413.40(h), an adjustment to the base year costs that establish its cost per case and TEFRA increase ceilings. It contends that its base year costs were distorted by: (1) the inclusion of patients who were subsequently transferred to an acute care facility; and (2) the exclusion of physical expansion costs. In requesting an adjustment to its base year costs to account for these distortions, the Medical Center seeks to increase its reimbursable cost ceilings in subsequent years. It seems to me that the amount in controversy analysis in requests for such base year cost adjustments necessarily includes subsequent years, because the effect of granting the adjustment would be to increase reimbursable costs in subsequent years. Reimbursements in the base year would not be affected, because the adjustment is to “the amount of the operating costs considered in establishing cost per case” — not to the amount of operating costs actually reimbursed in the base year.
In cases involving group appeals, both the Fourth and Ninth Circuits have considered effects upon reimbursement in subsequent years in determining whether the amount in controversy requirement for PRRB jurisdiction was met. White Memorial Medical Ctr. v. Schweiker, 640 F.2d 1126, 1128 (9th Cir.1981); Cleveland Memorial Hosp. v. Califano, 594 F.2d 993, 996 (4th Cir.1979). As the United States Court of Appeals for the Fourth Circuit noted:
The Board’s distinction, by which one figure determines the scope of the appeal and another determines jurisdiction, is without foundation in either the statute or the applicable regulation. It is also unrelated to the purpose of the amount in controversy requirement, which is to ensure the substantiality of issues raised before the Board.
Cleveland Memorial Hosp., 594 F.2d at 996 (footnote omitted).
The Secretary contends that these cases are inapposite because the amount in controversy requirement in group appeals is “fundamentally different” from that in individual appeals. The PRRB has jurisdiction over group appeals from HCFA decisions if “the matters in controversy involve a common question of fact or interpretation of law or regulations and the amount in controversy is, in the aggregate, $50,000 or more.” 42 U.S.C. § 1395oo(b).
The amount in controversy requirement for group appeals differs from that for individual appeals only in the increase of the jurisdictional amount from $10,000 to $50,000, and by the addition of the phrase, “in the aggregate.” Compare 42 U.S.C. § 1395oo(b) (group appeals) with 42 U.S.C. § 1395oo(a)(2) (individual appeals). The Secretary contends that it is only the phrase “in the aggregate” that permits consideration of effects in subsequent years to meet the amount in controversy requirement. A less strained construction of this statutory language would read “in the aggregate” to refer to the aggregation of the claims of multiple providers. I can discern no reason why the jurisdictional requirements in group appeals should be met by consideration of effects of requested adjustments upon reimbursement in subsequent years, whereas the jurisdictional requirements in individual appeals can be met by consideration only of the year for which the adjustment is requested.
Moreover, the Secretary’s interpretation appears to contravene Congress’s intent in enacting the amount in controversy requirement. “The legislative history of § 1395oo, although relatively brief, shows a clear intent to provide independent review of reimbursement decisions by fiscal intermediaries which involve significant issues.” Cleveland Memorial Hosp., 594 F.2d at 996. The purpose of § 1395oo was to allow the PRRB (and the federal courts) “to review and decide upon substantial reimbursement issues raised by providers of services.” Id. (quoting H.R.Conf.Rep. No. 1407, reprinted in 1974 U.S.C.C.A.N. 5992, 5995-96) (Fourth Circuit’s emphasis omitted). The Medical Center contends that the requested adjustment would result in its *1119receipt of additional reimbursements of approximately $2,000,000 for the years 1986-88, and of approximately $700,000 for 1986 alone. These amounts appear to me to be both “significant” and “substantial.”
Additional statutory support for the Medical Center’s position is provided by 42 U.S.C. § 1395x(v)(l)(A) (entitled “Reasonable costs”).1 “Numerous courts have construed section 1395x(v)(l)(A) as imposing a statutory duty upon the Secretary to make suitable corrective adjustments whenever the amount of reimbursement determined by the chosen method of cost calculation fails to adequately reimburse all reasonable costs.” Regents of the Univ. of Cal. v. Heckler, 771 F.2d 1182, 1188 (9th Cir.1985) (citing and following cases imposing this duty). The Secretary’s interpretation circumvents this statutory duty.
Finally, the Secretary’s interpretation may well have the unfortunate consequence of preventing the kind of capital improvements that are largely responsible for the current controversy. Had the Medical Center not undertaken to improve its facility, it would not need an adjustment to its base year costs to correct the distortion caused by expenses stemming from capital improvements incurred in subsequent years. Congress cannot have intended such a result.

. Title 42 U.S.C. § 1395x(v)(l)(A) provides, in pertinent part:
The reasonable cost of any services shall be the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services, and shall be determined in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, agencies, and services
42 U.S.C. § 1395x(v)(l)(A).