Court Opinion

ID: 6985180
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:56:57.233408+00
Date Added: 2024-06-11T16:09:24.700360
License: Public Domain

CYR, Senior Circuit Judge
(dissenting).
The three rationales for the panel opinion are (i) St. Luke’s constitutes controlling First Circuit precedent, (ii) Bethesda is mere dicta, and (iii) no Chevron deference is due the Secretary’s interpretation of the term “dissatisfied,” see 42 U.S.C. § 1395oo(a). As each rationale is seriously flawed, I respectfully dissent.
First, the panel opinion interprets St. Luke’s too expansively, as asserting that the Board may review any cost item, whether or not mentioned in the cost report submitted by the healthcare provider. Moreover, its interpretation undermines the important maxim that judicial precedents must not be extrapolated beyond their respective factual contexts. See Williams v. Ashland Eng’g Co., 45 F.3d 588, 592 (1st Cir.1995) (noting that new panels are only “bound by prior panel decisions closely on point ”) (emphasis added).
The healthcare provider in St. Luke’s plainly understood that HHS regulations precluded any reimbursement for its 1979 sick leave benefits. Consequently, it listed the sick leave benefits in its cost report as “self-disallowed.” At that point, the Board declined to exercise jurisdiction over the claim, and the healthcare provider appealed to the district court. See St. Luke’s Hosp. v. Secretary of Health and Human Servs., 632 F.Supp. 1387, 1389-91 (D.Mass.1986).
Reversing the Board decision, the district court identified subsection 1395oo(d) as the sole provision “governing” the Board’s jurisdiction. Id. at 1392. Subsection (d) explicitly states that the Board “shall have the power to affirm, modify or reverse a final determination of the fiscal intermediary with respect to a cost report, and to make any other revisions on matters covered by such cost report ... even though such matters were not considered by the intermediary in making such final determination.” See id. (emphasis added).
The district court then identified two reasons for ruling that the Board possessed jurisdiction over “self-disallowed” costs. First, it noted that subsection (d) plainly contemplates that some “matters covered by [a] cost report” are not “considered by the fiscal intermediary,” and that self-disallowed costs fit into that category because they are mentioned in the cost report but not “considered” when the intermediary calculates the healthcare provider’s total reimbursement. Id. at 1393. Second, the district court pointed to the special administrative problem associated with self-disallowed costs, in that the only way a healthcare provider can preserve its objection to a current HHS regulation barring reimbursement for particular costs is to list those costs as nonreimbursable in its cost report until such time as the HHS regulation may be amended. Id.
After the Secretary appealed the district court decision, this court pointedly framed the question before it no less narrowly than the district court: “The question before us is whether this statute grants the Board the power to order reimbursement for costs identified in the cost repoH, but as to which the hospital did not specifically ask the intermediary for reimbursement.” St. Luke’s Hosp. v. Secretary of Health and Human Servs., 810 F.2d 325, 326 (1st Cir.1987) (Breyer, J.) (emphasis added). As a further precaution, this court noted once again:
The precise question before us is whether the Secretary’s legal view of the rele*503vant statute is correct. Does the Board lack the legal power to consider the hospital’s 1979 sick leave claim, a claim (1) in respect to a cost item mentioned in the cost report, (2) which cost report was properly before the Board on review, but (3) which claim was not specifically raised before the intermediary?
Id. at 327 (emphasis added).
Like the distinct court, in St. Luke’s we focused exclusively upon subsection 1395oo(d). See id. (“The Secretary of HHS now appeals only this last determination, arguing that 42 U.S.C. § 1395oo(d) denies the Board the power to decide any issues not first raised before the intermediary.”) (emphasis added). Thus, we addressed neither subsection 1395oo(a) nor its “dissatisfaction” criterion, which is a threshold jurisdictional provision. See Bethesda Hosp. Ass’n v. Bowen, 485 U.S. 399, 405, 108 S.Ct. 1255, 99 L.Ed.2d 460 (1988) (“Section 1395oo(d) ... sets forth the powers and duties of the Board once its jurisdiction has been invoked ... pursuant to subsection (a) ....”) (emphasis added).
The Secretary never asserted the alternative argument — that the healthcare provider in St. Luke’s had failed to meet the “dissatisfaction” requirement — since the healthcare provider’s cost report, unlike MaineGeneral’s in the present case, plausibly could not have supported such an argument. See infra note 2. In listing the disputed claim for sick-leave-benefits reimbursement on Worksheet A-8 of its 1979 cost report, St. Luke’s in no sense indicated its satisfaction with the Notice of Provider Reimbursement (NPR), but simply acknowledged that then-current HHS regt ulations granted neither the intermediary nor the Board the power to reimburse for such costs.
Moreover, normally one would expect that healthcare providers indeed would be dissatisfied with HHS regulations which require them to list their costs as nonreim-bursable. In stark contrast, however, where the healthcare provider itself omits a reimbursable cost item from its report it is not unreasonable for the Secretary to presume that the healthcare provider is not “dissatisfied,” especially since the healthcare provider has already been reimbursed by the intermediary for all amounts requested.1
For these reasons, I am unable to agree that St. Luke’s either controls our decision or precludes Chevron deference to the Secretary’s reasonable interpretation that the term “dissatisfied” does not apply to a healthcare provider which omits a cost claim from its report through its own inadvertence.2 Surely, it is not unreasonable *504for the Secretary to regard a healthcare provider which has omitted an item from its cost report as somewhat less deserving of agency sympathy than one which, in good faith, challenges Medicare regulations {viz., a provider which “self-disallows”), and otherwise would be deprived of a forum in which to air its dispute should the Board disclaim jurisdiction to review “self-disallowed ” costs.
Furthermore, and no less significantly, at the very least the interpretation proposed by the Secretary in the instant case arguably fosters important administrative policies: (i) affording healthcare providers an incentive to prepare their cost reports with care and (ii) maximizing their use of the intermediary’s expertise in cost assessment, as well as their utilization of the intermediary’s investigatory resources. See St. Luke’s Hosp., 810 F.2d at 331 (noting that Chevron deference normally is appropriate where “the question [of statutory construction] is interstitial, involves the everyday administration of the statute, implicates no special judicial expertise, and is unlikely to affect broad areas of the law ”) (emphasis added). Thus, the Secretary’s interpretation plainly falls well within the broad universe of plausible interpretations which may be given the term “dissatisfied,” especially since Congress has afforded hospitals an alternative mechanism for addressing these errors (i.e., reopening the NPR), see 42 C.F.R. § 405.1885(a), a mechanism MaineGeneral has yet to utilize.
Finally, further support for the reasonableness of the Secretary’s interpretation in this case may be found in Bethesda, where Mr. Justice Kennedy specifically distinguished healthcare providers who “self-disallow” from those “who fail to request from the intermediary reimbursement for all costs to which they are entitled under the rules.” See Bethesda Hosp. Ass’n, 485 U.S. at 404, 108 S.Ct. 1255. Ironically, the quoted observation is dictum simply because, like St. Luke’s, Bethesda did not involve a healthcare provider which inadvertently omitted costs. The quoted obiter dictum by the Supreme Court thus serves the Secretary well in the instant case, since it would seem — at the very least — to make it inarguable that reasonable minds might determine to treat these two categories of healthcare providers differently for jurisdictional purposes.
For the foregoing reasons, Chevron plainly dictates deference to the Secretary’s reasonable interpretation of the ambiguous statutory term “dissatisfied.” Accordingly, I respectfully dissent.

. The panel opinion suggests that St. Luke’s specifically declined to acknowledge a jurisdictional distinction between self-disallowed and omitted costs when it expressly disagreed with the holding in Athens Community Hospital, Inc. v. Schweiker, 743 F.2d 1 (D.C.Cir.1984). The Athens citation does not bear out the majority’s point, however. In St. Luke's, we found it necessary to reject Athens simply because it ruled, arguendo, that the Board would have no jurisdiction over both omitted and self-disallowed costs. See id. at 4-6 (holding that Board has jurisdiction to consider only costs specifically claimed as reimbursea-ble in cost report); id. at 10 (“At best, HCA’s claim with respect to the [omitted] income tax costs can be characterized as a 'self-disallowance.' ”). Thus, St. Luke's took no position on the discrete jurisdictional issue presently before us.

. In the case at bar, the panel majority mistakenly concludes that the contention — that St. Luke’s is not binding precedent because it construed subsection 1395oo(d) only, and not subsection 1395oo(a) — has been waived by the Secretary.
The Secretary distinguished Si. Luke’s in the very same section of the appellate brief in which she repeatedly focused on MaineGeneral's failure to meet the § 1395oo(a) "dissatisfaction” criterion. Then, in a footnote, the Secretary carefully distinguished the facts in Bethesda and St. Luke’s from those in the case at bar. Later, the Secretary stated: ”[s]ection 1395oo(d) cannot be used to 'bootstrap' an appeal that is otherwise deficient under § 1395(a),” then reiterated her interpretation of the holding in St. Luke's: “Because the intermediary had, by an earlier determination, prevented the provider from requesting reimbursement in its cost report, St. Luke's, 810 F.2d at 327, the provider satisfied the *504‘dissatisfaction’ requirement of paragraph (a).” See also Magistrate's Opinion, at p. 7 n. 5 ("In essence, like Bethesda, the provider in St. Luke’s omitted the costs on the report not through mere neglect, but because it intended to challenge an administrative decision.").
Finally, even if it were possible to find a waiver in these circumstances, the panel majority overlooks the fact that the Secretary is an appellee, not an appellant. Normally, of course, we affirm trial courts on any ground apparent from the record in these circumstances. See Plymouth Svgs. Bank v. United States Internal Revenue Serv., 187 F.3d 203, 209 (1st Cir.1999).