The opinion of the court was delivered by: GREEN
MEMORANDUM OPINION AND ORDER
Pending before the Court are the parties' cross-motions for summary judgment in Civil Action No. 79-0616. Plaintiffs are subsidiaries of the Hospital Corporation of America ("HCA"),
a Tennessee corporation, operating in eleven states as providers of hospital services. The plaintiff hospitals participate in the Medicare program, codified at 42 U.S.C. § 1395 et seq., which offers elderly and disabled Americans free hospital and ancillary services, see id. §§ 1395d-1395f, and the option of low cost supplemental services such as physician visits if a monthly premium is paid, see id. §§ 1395j-1395s. Under Medicare, a provider of services is often reimbursed through a fiscal intermediary, such as Blue Cross, for its costs in offering free hospital and other services or its expenses in participating in the supplemental program.
Defendant initially filed a motion to dismiss for lack of subject matter jurisdiction or in the alternative, for summary judgment. In its reply memorandum, however, the defendants withdrew the motion to dismiss on the grounds that "recent formulations of agency policy" provided that district courts had jurisdiction in actions where providers challenge a decision of the Provider Reimbursement Review Board ("PRRB"), the arm of the Medicare program that attempts to resolve disputes between providers and fiscal intermediaries. See Cleveland Memorial Hospital, Inc. v. Califano, 444 F. Supp. 125 (E.D.N.C.1978), aff'd, 594 F.2d 993 (4th Cir. 1979). Indeed, under 42 U.S.C. § 1395oo(f)(1),
subject matter jurisdiction vests over this action.
To effectuate the Medicare program of reimbursing the providers of services through the fiscal intermediaries, government regulations require providers to file an annual cost report which sets forth the providers' expenses. In cases such as the instant ones where numerous providers belong to a single corporation, as the plaintiff hospitals are subsidiaries of HCA, the providers are reimbursed for costs incurred in operating the "home office." The providers may seek to amend their previously submitted cost reports to reflect some change in the calculation of expenses, see 42 U.S.C. § 1395x(v)(1)(A). In these cases, the gravamen of plaintiffs' complaints revolves around the refusal of the fiscal intermediary to supplement a cost report to reflect additional expenses for which the providers were seeking reimbursement and the decision of the PRRB that it lacked jurisdiction to review the intermediary's refusal to allow supplementation of the cost report.
Plaintiffs requested a hearing on the intermediary's action with the PRRB on September 27, 1978. By letter dated December 22, 1978, the PRRB declined to review the intermediary's decision not to reopen the home office cost statement. The PRRB denied plaintiffs' request for a hearing on the ground that it had no jurisdiction over the intermediary's action because the intermediary merely refused to reopen the cost reports, and did not make any adjustments or amendments on the reports. Plaintiffs contend that this refusal to exercise jurisdiction violates applicable statutes and regulations as well as one fundamental policy of the Medicare Act, that is, to reimburse providers for their expenses.
Some background as to the statutes and regulations affecting the instant controversy is important to a full understanding of the issues presented. The jurisdiction of the PRRB is established by 42 U.S.C. § 1395oo, which states, in pertinent part:
(a) Any provider of services which has filed a required cost report within the time specified in regulations may obtain a hearing with respect to such cost report by (the PRRB) ... if
(A) is dissatisfied with a final determination of the ... fiscal intermediary ... as to amount of total program reimbursement due the provider for the items and services furnished to individuals ....
(d) ... 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 (including revisions adverse to the provider of services) even though such matters were not considered by the intermediary in making such final determination.
Regulations establish the procedures for reopening a determination or decision. 42 ...