Court Opinion

ID: 2810607
Source: CourtListenerOpinion
Date Created: 2015-06-22 19:04:31.318028+00
Date Added: 2024-06-11T12:15:18.642374
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

GEORGIA DEPARTMENT OF
COMMUNITY HEALTH,

                 Plaintiff,

       v.                                               Civil Action No. 13-1281 (GK}

UNITED STATES DEPARTMENT OF
HEALTH & HUMAN SERVICES,
et al.,

                 Defendants.

                                      MEMORANDUM OPINION

       Defendant          United      States      Department     of   Health     and   Human

Services      ("HHS"), through its operating division, the Centers for

Medicare     &   Medicaid Services ("CMS")               (collectively, "Defendants") ,

has   filed      a   Rule    59 (e)     Motion        to Alter or Amend the        Judgment

("Motion")        [Dkt.     No.   29]   issued by the Court partially granting

Plaintiff        Georgia     Department          of    Community Heal th' s     ("Georgia")

Motion for Summary Judgment and ordering CMS to return $90, 050, 230.

See Memorandum Opinion on the Motions for Summary Judgment                             [Dkt.

No. 27].

      Upon consideration of the Motion, Opposition ("Opp' n")                          [Dkt.

No.   30],    Reply       ("Reply")      [Dkt.    No.    31],   Sur-Reply     ("Sur-Reply")

[Dkt. No. 34], the entire record herein, and for the reasons stated

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below, Defendants' Motion to Alter or Amend the Judgment is granted

in part and denied in part.

I .     BACKGROUND

        A brief recitation of the facts is necessary. For a detailed

summary of the facts,        see this Court's Memorandum Opinion on the

Motions for Summary Judgment [Dkt. No. 27].

        In 2003,    Georgia launched a         new system to process claims

submitted by medical providers. It suffered from severe problems

that resulted in significant delays in paying the providers, who

were threatening to stop caring for patients. In response to this

crisis, Georgia and CMS agreed that Georgia could make "advance"

payments to providers until the new system was fixed. Between April

1, 2003, and June 30, 2005, Georgia made approximately $2 billion

in advance payments to providers under this arrangement. Georgia

Dep't of Cmty. Health, HHS Departmental Appeals Board                 ("DAB" or

"the Board")       No.   2521,   6   (Jun.   28,   2013)   [hereinafter DAB No.

2521]

        For its own internal accounting purposes, Georgia classified

the advance payments as "provider receivables"                (i.e. money to be

recouped from Medicaid providers).             However,    for purposes of its

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Quarterly Statement of Expenditures ("QSE") 1 that it submitted to

CMS,     Georgia          reported    the   advance   payments      as    current-quarter

expenditures. Id.

        In        the   process   of    preparing     its   State    fiscal    year   2005

financial statements, Georgia inadvertently included the federal

share        of     its    provider     receivables     balance            $45,025,115.09

    ("$45 million") -- in its decreasing adjustment on the QSE for the

quarter ended September 30, 2005 ("September 2005 QSE"). Id. This

error had the effect of mistakenly crediting $45 million to CMS.

Of particular note for the issues raised in this motion, Georgia

"netted the $45,025,115.09 provider receivables adjustment against

an unrelated transaction in the amount of $15,289,462 (an increase

in expenditures)." AR 63 (Georgia DAB Br. at 10, n.9). It was the

net     of    the       two   amounts   ($29,735,653)       that    was   reported    as   a

reduction in expenditures (i.e., a credit to CMS). Id.

        While preparing its             financial     statements for State fiscal

year 2006,          Georgia 2 again inadvertently credited $45 million to

1 The QSE is an "accounting of actual recorded expenditures" for
the quarter, which details and reconciles how the federal grant
award monies were spent.
2 While the number of employees involved in making the two $45

million errors is not relevant to the outcome of the case,
Georgia has indicated that it was a single employee who made the
mistakes. See Georgia Motion for Summary Judgment [Dkt. No. 13)
at 14-16 (referencing errors made by "a State employee").
                                              -3-
CMS, this time on the QSE for the quarter ended June 30, 2006. DAB

No. 2521 at 7-8.

      Combined,        Georgia        erroneously   credited        CMS     $90,050,230

between 2005 and 2006 ("$90 million"). Georgia did not realize its

errors until 2008. Once Georgia discovered the errors, it attempted

to reclaim the $90 million by including the amount in the QSE for

the quarter ended June 30, 2009. DAB No. 2521 at 8. CMS ultimately

disallowed    the      $90    million adjustment.      Georgia        appealed     CMS' s

decision to the Board. On June 28, 2013, the Board sustained the

entire $90 million disallowance. See generally DAB No. 2521.

      Georgia then filed its Complaint with this Court on August

23, 2013 [Dkt. No. 1]. The parties filed cross-Motions for Summary

Judgment   [Dkt.      Nos.     13,    14].   On February 10,        2015,   this Court

upheld DAB's decision to disallow the $90 million adjustment, but

also found that CMS had been unjustly enriched and ordered CMS to

return the $90 million to Georgia. See Order on Motions for Summary

Judgment     [Dkt.      No.     26]    and    accompanying     Memorandum       Opinion

("Opinion")    [Dkt . No. 2 7] .

II.   STANDARD OF REVIEW

      Defendants seek relief under Fed.               R.     Civ.    P.   59(e),   which

provides that        " [a]    motion to alter or amend a            judgment must be

filed no later than 28 days after entry of the judgment."                       Fed. R.

Civ. P. 59(e).        A district court may grant a Rule 59(e) motion if
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there       is     "an    intervening        change     of   controlling    law,     the

availability of new evidence, or the need to correct a clear legal

error       or     prevent     manifest        injustice."     Ciralsky     v.     Cent.

Intelligence Agency, 355 F.3d 661, 671 (D.C. Cir. 2004)                      (internal

quotation and citation omitted). "[A] Rule 59(e) motion may not be

used to             . raise arguments .                that could have been raised

prior to the entry of judgment." GSS Grp. Ltd. v. Nat' 1 Port Au th. ,

680 F.3d 805, 812 (D.C. Cir. 2012)                  (citation and internal quotation

marks omitted) .

        The Court has discretion in deciding a Rule 59 (e)                       motion.

Firestone v. Firestone, 76 F.3d 1205, 1208                    (D.C. Cir. 1996)      (per

curiam),         although such relief "is an extraordinary remedy which

should be used sparingly."                  Charles Alan Wright et al.,          Federal

Practice and Procedure              §   2810.1 (3d ed. 2004).

     III. ANALYSIS

       A.        Adequate Legal Remedy

        In its Opinion, the Court found that Georgia did not have an

adequate remedy at law,                 a prerequisite to considering equitable

relief. The remedy at law was inadequate because, under the Board's

interpretation           of   the       relevant     Regulations,    the   limitations

periods for recuperating credits made erroneously were cut short.

In    some        instances,    Georgia        was     actually     time-barred     from

recovering the mistaken credits the moment they were made.
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       Defendants argue that Georgia has not offered any evidence

showing what portion of the credits were immediately time-barred,

that     the    portion       is    "likely                  quite     small,"    and     that

accordingly, "Georgia has not shown that the rationale underlying

the Court's ruling                   . applies to a significant portion of its

claims." Motion at 5.

       Defendants'        argument          is    not     persuasive.     As     the    Court

explained in its Opinion,                  under the Board's interpretation,               the

two-year limitations period was shortened for all the mistaken

credits.        Defendants         support       their     argument     by     focusing     on

Georgia's negligence and CMS's                     initial disallowance,         Motion at

5-7.    However,       this        focus    is    misplaced       as   neither    Georgia's

negligence nor the disallowance affects whether Georgia had an

adequate remedy at law.

       In their Reply,             Defendants argue,        for the first time,           that

the two-year limitation is actually a statute of repose,                               rather

than a     statute of         limitations.         Not only was this argument not

raised     in    the   cross-Motions             for    Summary    Judgment,     Defendants

failed to even raise it in their opening Motion to Alter or Amend.

As mentioned previously, a Rule 59(e) motion "may not be used to

       . raise arguments .                 . that could have been raised prior to

the entry of judgment." Nat'l Port Auth., 680 F.3d at 812 (internal

quotation and citation omitted). In addition, "[c]ourts ordinarily
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decline to consider arguments that are raised for the first time

in a reply to an opposition." Taitz v. Obama, 754 F. Supp. 2d 57,

61    (D.D.C.    2010).     Accordingly,      the    Court   will    not    consider

Defendants'      belated argument that the two-year limitation is a

statute of repose.

      B.     Equitable Relief

      Defendants       next   argue   that     the    Supreme   Court's       recent

decision in Armstrong v.          Exceptional Child Center,          Inc.,    135 S.

Ct.   1378   (2015),      prohibits this Court from providing equitable

relief. See generally Reply at 2-8. In Armstrong, private medical

providers       alleged    that   Idaho's     reimbursement     rates       violated

Section 30(A)      of the Medicaid Act and sought "to enjoin                   [Idaho

Health and Welfare Department officials] to increase these rates."

Armstrong at 1382. The Court held that the Medicaid Act implicitly

precludes private enforcement of Section 30(A), and therefore, the

medical providers could not invoke the Court's equitable powers.

Id. at 1385.

      Defendants read Armstrong too broadly when they suggest that

"a party that fails to obtain relief under the Medicaid Act through

the   prescribed       administrative      process     cannot   then       resort   to

equity." Reply at 2 (emphasis omitted). Georgia does not rely on

an implied cause of action, nor does it ask the Court to provide

injunctive relief to enforce a federal statute.                     The rationales
                                        -7-
relied on by the Armstrong Court are simply not analogous to the

case at hand.

      Defendants also argue,            again for the first      time,        that the

Supreme Court's decision in Sebelius v. Auburn Regional Medical

Center,    133 S.    Ct.   817    (2013)·,   controls and prevents the Court

from "resort[ing]      to equitable principles." See Motion at 7-9. A

Rule 59 (e)    motion may not be used as "a vehicle for presenting

theories    or arguments         that   could have    been advanced earlier."

Turkmani v. Republic of Bolivia,               273 F. Supp.   2d 45,     49    (D.D.C.

2002) . Defendants have offered no justification for their failure

to raise this argument- -which rests on a two-year old opinion.

Once again,     the Court declines to consider Defendants'                     belated

argument which could have been advanced in CMS's original Motion

for Summary Judgment.

      C.      Adjustment and Clarification of Remedy

      As discussed previously, in its September 2005 QSE, Georgia

netted the $45,025,115 mistaken credit against an unrelated amount

of   $15, 289, 462   (an   increase     in claimed expenditures          for     prior

quarters). See supra at 3; AR 63; Motion at 12-13. It was the net

of the two amounts, $29,735,653, which was reported as a credit to

CMS. See supra at 3.

      Defendants contend that the $90,050,230 judgment in Georgia's

favor should be reduced by the $15, 289, 462 ( "$15 million") because,
                                         -8-
as a result of the netting, Georgia never actually made a request

for Federal financial participation ("FFP")3 for the $15 million.

Georgia does not directly dispute that claims for the $15 million

in FFP were not timely filed, but rather argues that the Court's

finding of unjust enrichment                   is equally applicable to the                      $15

million.

      As to this claim, Georgia's right to receive FFP for the $15

million in expenditures is subject to the                               two-year statute of

limitations.        This     is    not    an    instance             where     Georgia     had    an

inadequate remedy at law for claiming FFP for the expenditures,

and   therefore,       equitable         remedies         are    not        available.     Because

Georgia netted the mistaken $45 million credit against the $15

million in intended expenditure claims,                              it never submitted its

claims for these expenditures and only included $29,735,653 of the

mistaken credit on the September 2005 QSE.

      While    it    is    not     disputed      that,          at    the     end   of   the    day,

Georgia's     errors       cost     the     state         $90        million,       Georgia     only

mistakenly    credited        CMS    with      $74,760,768.             The     netting    of    the

mistaken credit resulted in Georgia failing to timely file claims

for $15,289,462        in FFP,      and therefore $15,289,462                       in unclaimed

expenditures        cannot    be    included         in    the       $90     million     judgment.

3 FFP is the federal share of a state's Medicaid expenditures.
                                               -9-
Accordingly,    the Court grants Defendants' Motion with regard to

reducing    this    Court's      prior     judgment   from    $90,050,230    to

$74,760,768.

      Defendants also ask the Court to clarify the remedy ordered.

Georgia    shall   submit   an    upward    adjustment   in   the   amount   of

$74, 760, 768 on a future QSE as soon as is reasonably possible,

which CMS shall allow, to effectuate the return of the erroneous

credits.

IV.   CONCLUSION

      For all of the foregoing reasons, Defendants' Motion to Alter

or Amend shall be granted in part and denied in part.                An Order

shall accompany this Memorandum Opinion.

June 22, 2015

                                    United States District Judge

Copies via ECF to all counsel of record

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