Court Opinion

ID: 8408340
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:42:13.551578+00
Date Added: 2024-06-11T16:47:33.942175
License: Public Domain

BRISCOE, Circuit Judge,
concurring and dissenting:
I concur in part and dissent in part. With respect to the issue of mandamus jurisdiction discussed in Part II of the majority opinion, I agree that we can consider mandamus jurisdiction in this case, that plaintiffs have exhausted their administrative remedies, and that the decision in Anadarko Municipal Hospital v. Shalala, 1998 WL 34007421 (W.D.Okla. Apr.13, 1998), did not impose a clear, non-discretionary duty on the fiscal intermediary to reopen and revise the notices of program reimbursement (NPRs) at issue in this case.1 I disagree, however, that the fiscal intermediary did not have a duty to reopen under 42 C.F.R. § 405.1885(b) in light of Ruling 97-2. Instead, I would adopt the position announced by the United States Court of Appeals for the District of Columbia in Monmouth Medical Center v. Thompson, 257 F.3d 807 (D.C.Cir.2001), and conclude that the fiscal intermediary has a clear, non-discretionary duty to reopen the NPRs at issue in light of Ruling 97-2. I also believe, contrary to the majority, that mandamus jurisdiction exists because of clear, non-discretionary duties on the part of the Secretary and the fiscal intermediary regarding the plaintiffs’ requests for discretionary reopening under 42 C.F.R. § 405.1885(a). Finally, with respect to Parts III and IV of the majority opinion, I agree that federal question jurisdiction exists over this matter, but disagree that there is no merit to plaintiffs’ claims. ■

Mandamus jurisdiction

“Applicable law” under § 4.05.1885(b)

Before outlining my disagreements with the majority’s conclusion that we lack mandamus jurisdiction, it is necessary to address a threshold argument asserted by the Secretary. The Secretary argues that the district court erred in holding “that Ruling 97-2 gave the fiscal intermediary notice that the hospitals’ DSH payments had been determined inconsistently with the applicable law within the meaning of the regulation.” Aplt. Br. at 30. According to the Secretary, none of the decisions from the four circuits overturning his interpretation of the DSH adjustment were binding in the Tenth Circuit. In other words, he argues, “[bjefore the effective date of Ruling 97-2, the ‘applicable law1 [in the Tenth Circuit] on the DSH question, for purposes of determining the hospitals’ DSH payment amounts, consisted of [his] DSH regulation.” Id. at 35. Thus, the Secretary argues, because “[i]t is undisputed that all of the cost reports at issue here were settled under the regulation,” the district court “erred in holding that the hospitals’ cost reports had been settled in a legally incorrect manner.” Id.
It appears that the Secretary is attempting to read the mandatory reopening regulation, § 405.1885(b), as requiring an intermediary to reopen only if an NPR was erroneous at the time it was issued. In other words, the Secretary wants to focus on the state of the law at the time an NPR *846was initially decided by the fiscal intermediary. Applying that rationale to the facts of this case, the Secretary asserts that at the time the NPRs at issue were decided by the intermediary, they were consistent with Tenth Circuit law (i.e., there were no Tenth Circuit cases on point so the law was defined by the Secretary’s regulations interpreting the DSH).
In my view, § 405.1885(b) is broader in scope than suggested by the Secretary. Although an agency’s interpretation of its own regulations is generally given controlling weight, we are not bound to do so if the agency’s interpretation is “plainly erroneous or inconsistent with the regulation.” Mission Group Kan., Inc. v. Riley, 146 F.3d 775, 780 (10th Cir.1998) (internal quotations omitted). Section 405.1885(b) provides that an NPR “shall be reopened and revised by the intermediary if ... [CMMS] notifies the intermediary that such determination or decision is inconsistent with the applicable law, regulations, or general instructions issued by ... [CMMS].” 42 C.F.R. § 405.1885(b) (emphasis added). The regulation’s use of the word “is,” rather than the word “was,” belies the Secretary’s proposed interpretation. More specifically, the use of the word “is” indicates that reopening will be triggered if, at the time the Secretary reviews an NPR, it is inconsistent with applicable law. If the regulation had used the word “was,” reopening would be limited to situations where the NPR was inconsistent with applicable law when issued. In sum, a plain reading of the language indicates the regulation is broad enough to encompass situations, such as the one presented here, where an NPR when issued was consistent with the Secretary’s regulations or instructions, but ultimately proved to be inconsistent with the applicable law, regulations, or general instructions as determined by the Secretary.

Duty to reopen under § 4.05.1885(b)

According to the majority, Ruling 97-2 “did not constitute notification under subsection 1885(b)” because its language “clearly evinces both the Secretary’s belief that his prior interpretation of the DSH provision was not inconsistent with the applicable law and his intent that no NPRs be reopened on that basis.” Maj. Op. at 838. For the reasons that follow, I conclude that Ruling 97-2 did, in fact, require the intermediary to reopen under § 405.1885(b).
Ruling 97-2 was issued by the Secretary without the benefit of notice and comment. The result is two-fold. First, the relative informality of the ruling, in combination with the existence of a prior interpretation on the same subject, raises questions about the validity of the ruling. Second, assuming the validity of the ruling, the informality by which it was issued means the ruling is not entitled to Chevron-type deference by this court. See Tax & Accounting Software Corp. v. United States, 301 F.3d 1254, 1260 (10th Cir.2002) (citing Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)). Instead, the positions announced therein by the Secretary are entitled to respect only to the extent they have the “power to persuade.” Christensen, 529 U.S. at 589, 120 S.Ct. 1655.
It is uncontroverted that at the time Ruling 97-2 was issued, the Secretary had in place an existing interpretation of the DSH provision of the Medicare Act. Significantly, Ruling 97-2 “purports to change [that] existing interpretation.” Monmouth, 257 F.3d at 813. Under Tenth Circuit law, “altering an interpretive rule (interpreting an agency regulation) requires notice and opportunity for comment unless, of course, the original interpretation was invalid and therefore a nullity.” Id. at 814; see Rocky Mountain Helicop*847ters, Inc. v. Federal Aviation Admin., 971 F.2d 544, 547 (10th Cir.1992) (suggesting that “a change in existing law, policy, or practice” would have to meet APA procedural requirements); Knutzen v. Eben Ezer Lutheran Hous. Center, 815 F.2d 1343, 1351 and n. 6 (10th Cir.1987) (noting courts have consistently required that agencies publish their rules and policy statements only if they constitute a change in existing law, policy, or practice); Dimension Fin. Corp. v. Bd. of Governors of Fed. Reserve Sys., 744 F.2d 1402, 1409 (10th Cir.1984) (suggesting a “procedural notice requirement” exists when an agency radically changes its position on statutory construction).2
Because it is uncontroverted that Ruling 97-2 was not the product of notice and comment rulemaking, we are left with two possible outcomes — either Ruling 97-2 is unlawful and thus invalid, or the Secretary’s prior interpretation was invalid.3 According to the majority, the most logical outcome is that Ruling 97-2 is invalid. While that might be true in normal circumstances, such a conclusion in this case would ignore entirely the long and troubled history of the Secretary’s prior interpretation of the DSH adjustment. It is well established that the Secretary has been “hostile from the start to the very idea of making the [DSH] payments” mandated by Congress. Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984, 990 (4th Cir.1996). Further, as noted in the background section of the majority opinion, the Secretary’s prior interpretation spawned numerous lawsuits, all of which were resolved against the Secretary on the grounds that the prior interpretation was invalid. E.g., Id. at 990-91; Legacy Emanuel Hosp. & Health Center v. Shalala, 97 F.3d 1261, 1266 (9th Cir.1996); Deaconess Health Servs. Corp. v. Shalala, 83 F.3d 1041, 1041 (8th Cir.1996); Jewish Hosp., Inc. v. Sec’y of Health & Human Servs., 19 F.3d 270, 272 (6th Cir.1994). In short, courts in at least 25 of the 50 states had declared the Secretary’s prior interpretation invalid. Given this history, I agree with the D.C. Circuit that, rather than invalidating Ruling 97-2, the more logical result is to conclude that Ruling 97-2 was the Secretary’s way of “conced[ing] the invalidity [of the prior interpretation] nationally.” Monmouth, 257 F.3d at 814; see Aplt. Br. at 29 (effectively acknowledging that Ruling 97-2 was intended “to acquiesce in [the] adverse decisions from the courts of appeals”).
Having concluded that Ruling 97-2 amounted to a concession of the invalidity of the Secretary’s prior interpretation of the DSH adjustment, I agree with the D.C. Circuit “that the Secretary,” by way of Ruling 97-2, “did in fact give notice of the [prior] interpretation’s inconsistency with applicable law.” Monmouth, 257 F.3d at 814 (emphasis in original). In turn, I also agree “that § 405.1885(b) imposed a clear duty on intermediaries to reopen DSH payment determinations.” Id.
*848It is true that the Secretary has strenuously attempted to prevent Ruling 97-2 from triggering § 405.1885(b). As noted by the majority, Ruling 97-2 “nowhere uses the phrase ‘inconsistent with the applicable law,’ ” and instead “merely concedes that the Secretary’s interpretation was ‘contrary to the applicable law in four judicial circuits.’ ” Maj. Op. at 839 (quoting Ruling 97-2). Likewise, Ruling 97-2 “asserts the Secretary’s belief that his DSH regulation was a permissible interpretation of the applicable statute and that the purpose of changing his interpretation was to ensure national uniformity in calculation of DSH reimbursement, not a concession that his prior interpretation was inconsistent with the applicable law.” Id. at 839. Lastly, Ruling 97-2 expressly forbids the fiscal intermediary from reopening and revising the challenged NPRs.
Unlike the majority, which defers completely to these statements with no mention of Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944), or other controlling standards, I find the quoted statements unpersuasive. In particular, the statements in my view are simply a continuation of the Secretary’s long history of resisting the DSH payments mandated by Congress in the Medicare Act. Indeed, I believe the statements are an attempt by the Secretary to finally bring his interpretation in line with Congressional intent and end a succession of litigation defeats, while at the same time prevent hospitals, such at the plaintiffs in this case, from recovering the amounts properly due them under the DSH provisions. Thus, I agree with the D.C. Circuit that the statements are “simply inapplicable” and without effect. Monmouth, 257 F.3d at 815.
Finally, and relatedly, I take issue with the majority’s discussion of “the concept of ‘notification’ ” under § 405.1885(b). See Maj. Op. at 840. At the time Ruling 97-2 was issued, § 405.1885(b) stated that “[a] determination ... rendered by the intermediary shall be reopened and revised ... if ... the [Secretary] notifies the intermediary that such determination or decision is inconsistent with the applicable law.” Because Ruling 97-2 amounts to notification by the Secretary that the NPRs at issue were decided by the intermediary under an invalid interpretation of the DSH provision, § 405.1885(b) automatically imposed a duty on the intermediary to reopen those NPRs. Whether the Secretary was actually desirous of having the NPRs at issue reopened is irrelevant (and, as outlined above, the Secretary’s statements on that point carry no weight under Skid-more ).

Discretionary reopening under § 405.1885(a)

I generally agree with the majority that the Secretary owes “no clear, non-discretionary duty not to pass rulings that would bind intermediaries to particular substantive principles on particular reopening requests” under § 405.1885(a). Maj. Op. at 843. Nevertheless, I would conclude that plaintiffs’ claim for discretionary reopening under § 405.1885(a) implicates two distinct non-discretionary duties. First, I believe the Secretary, in passing any such rulings regarding reopening, has a clear, non-discretionary duty to comply with federal law in general, and the Medicare Act in particular. In other words, the Secretary must refrain from imposing improper and unenforceable restrictions on fiscal intermediaries in deciding reopening requests. Second, I believe that § 405.1885(a) imposes on fiscal intermediaries a duty to comply with the applicable law in deciding reopening requests. See generally Monmouth, 257 F.3d at 813 (concluding intermediaries, as agents of the Secretary, “may properly *849be bound by a writ of mandamus against the Secretary”).
Having concluded the language of Ruling 97-2 prohibiting fiscal intermediaries from reopening and revising NPRs is without effect, I believe that both of the above-outlined non-discretionary duties were violated. In turn, I conclude mandamus jurisdiction would also lie on this basis.

Merits

For the reasons outlined above in my discussion of mandamus jurisdiction, I disagree with the conclusion in Part IV of the majority opinion that plaintiffs “have failed to state a claim on which they can succeed.” Maj. Op. at 844. With one exception, I would affirm the district court’s grant of summary judgment in favor of plaintiffs on their mandatory and discretionary reopening claims.
The one exception concerns plaintiffs’ claim that the Secretary acted illegally in forbidding intermediaries from reopening an NPR on the basis of Medicaid-eligible paid days that were improperly excluded from its calculation. The district court did not address the “paid days” issue in its October 22, 2001, order granting summary judgment in favor of plaintiffs. The district court did, however, address the “paid days” issue in its March 6, 2002, order addressing the parties’ Rule 59 motions:
Plaintiffs contend the Court erred in failing to address their contention that the NPRs for which reopening has been requested were improperly calculated on another basis, that is that the fiscal intermediary failed to include paid days as well as unpaid days. Plaintiffs contend that the Secretary’s regulations have always provided for reimbursement for paid days, and therefore, the reopening prohibition in Ruling 97-2 should not have been extended by the Secretary to cover challenges to calculations of Medicaid-paid days. In light of the above ruling and the October 22, 2002 Order, the Court need not address this contention.
App. at 76-77.
The question is what the district court intended by the above-quoted language. In its March 6, 2002, order, the court ordered the fiscal intermediary to reconsider whether nine of the NPRs at issue were subject to discretionary reopening. Perhaps the district court believed the intermediary’s reconsideration necessarily would include consideration of the “paid days” issue. However, according to plaintiffs, all six of the NPRs that the court concluded were subject to mandatory reopening also contained “paid days” issues. Because there was no direction by the district court to the intermediary to address the “paid days” issue in these NPRs, it appears likely that the issue will be overlooked, or at least left unresolved, by the intermediary. It is also possible, given language in the court’s October 22, 2001, order, that the district court concluded it had no jurisdiction over the “paid days” issue. See id. at 44. In light of these vagaries in the order, and because the precise underlying facts relevant to the “paid days” issue are difficult to discern from the limited record on appeal, I would remand the case to the district court for clarification of how it intended to resolve the “paid days” issue.

. It should be noted the Secretary concedes that those plaintiffs who were parties to the Anadarko case are entitled to’have their NPRs reopened regardless of whether Ruling 97-2 triggered § 405.1885(b) (since the district court in Anadarko struck down the Secretary’s regulations implementing the DSH adjustment). See Aplt. Br. at 37.

. Admittedly, the Tenth Circuit has "not had opportunity to decide whether the Medicare Act requirement of notice and comment for changes [of] a substantive legal standard creates a more stringent obligation [than does the APA] or whether it somehow changes the dividing line between legislative and interpretive rules.” Monmouth, 257 F.3d at 814 (internal quotations omitted). Nevertheless, I agree with the Monmouth court that it is unnecessary "to explore the possibility of a distinction here, as [Ruling] 97-2 appears to have none of the indicia that would lead [me] to think it a legislative rule under the APA.” Id.

. The majority suggests this analysis is unimportant to the outcome of the appeal. See Maj. Op. at 839 ("we do not have to resolve [the issue] in this case”).