The opinion of the court was delivered by: Sporkin, District Judge.
This matter comes before the Court on the following motions
filed by the plaintiffs: (1) Motion to Compel Defendants to
Comply With Representations Made to the Court and (2) Motion for
Summary Judgment. The defendants have also filed a Cross-Motion
for Summary Judgment and a Motion for Judgment on the Pleadings.
Plaintiffs are the District of Columbia Hospital Association
("DCHA") and its non-public member hospitals that serve a
disproportionate share of low-income patients. Defendants, the
District of Columbia and the Deputy Director for Health Care
Finance of the Medical Assistance Administration, are responsible
for the administration of the District of Columbia Medicaid
program. In accordance with Title XIX of the Social Security Act,
commonly known as the Medicaid statute, the
District of Columbia has devised a plan to reimburse qualifying
hospitals for inpatient services furnished to individuals meeting
Medicaid eligibility requirements.*fn1 Hospitals that serve a
disproportionate share of low-income patients are known as a
disproportionate share hospital ("DSH") and are entitled to an
additional Medicaid payment. This adjustment is commonly referred
to as a DSH payment.
Under the Medicaid statute, states must choose one of three
payment options for calculating the DSH adjustments.
42 U.S.C. § 1396r-4 (c). In 1992 the agency in charge of the District's
Medicaid program, the Medical Assistance Administration ("MAA"),
choose option (c)(1), which is still in effect today. Under this
option the DSH adjustment equals at least the product of (A) a
base amount times (B) a percentage. The base amount is "the
amount paid under the [Medicaid] State plan to the hospital for
operating costs for inpatient hospital services . . ."
42 U.S.C. § 1396r-4 (c)(1)(A). The percentage is "the hospital's
disproportionate share adjustment percentage" established under
Section 1886(d)(5)(F) (iv) of the Social Security Act,
42 U.S.C. § 1395ww (d)(5)(F)(iv). 42 U.S.C. § 1396r-4 (c)(1)(B).*fn2
In 1992, the District of Columbia enacted legislation requiring
those who qualify for Medicaid under the Aid to Families with
Dependent Children program be enrolled in Medicaid managed care
plans.*fn3 The Medicaid managed care program was implemented in
late 1993 and early 1994. Following the implementation of this
legislation, defendants advised the plaintiffs that, pursuant to
the new legislation, they did not intend to make any DSH payments
with respect to Medicaid managed care services. On April 26,
1994, plaintiffs filed suit in this Court challenging the
legality of this policy. Specifically, the plaintiffs asserted
that the District's failure to ensure direct DSH payments to DSHs
for services furnished to Medicaid managed care patients
conflicted with the Medicaid statute.
Shortly after the filing of the plaintiffs' suit, the
defendants reversed their position. At a May 2, 1995 hearing, the
defendants represented to this Court that managed care costs
would be included in the DSH calculation. In making this
representation the defendants relied on the deposition testimony
of then acting Medicaid Commissioner, A. Sue Brown, whose sworn
testimony disavowed the defendants' original litigation position.
Specifically, Ms. Brown testified that the District's Medicaid
plan did not exclude medical care services provided in
conjunction with the Managed Care program for the purpose of
disproportionate share calculations. The defendants subsequently
informed the court that Ms. Brown's deposition testimony
represented the policy of the district, and that, from that point
on there would be no exclusions for Medicaid managed care when
DSH payments. Acting on these representations, and with the
consent of the plaintiffs, the court dismissed the action without
prejudice as moot.
In the Fall of 1997, the MAA calculated the Medicaid DSH
payments for qualifying hospitals for fiscal years 1992-1997
using the formula agreed to by the parties in the 1994
litigation. The District subsequently made one payment to the
hospitals based on the agreed upon formula in September 1997. In
the Spring of 1998, the MAA recalculated and adjusted the DSH
payments using a new formula that excluded Medicaid managed care
services in the base amount.
On August 26, 1998, plaintiffs filed the instant action. In it
they challenge the defendants' failure to make DSH payments for
Medicaid managed care services on two grounds. First, they claim
defendants' failure breaches the representations the District
made to the Court and to the plaintiffs in the prior litigation
concerning the inclusion of Medicaid managed care payments in the
DSH calculation. Second, they claim defendants failure to include
Medicaid managed care payments in the base amount of the DSH
calculation is a violation of the plain language of the Medicaid
statute and the District's Medicaid State plan. They seek a
declaration that the defendants' current policy of excluding
Medicaid managed care payments from their calculations of
plaintiffs' DSH entitlements is contrary to law and an order
requiring defendants to recompute the plaintiffs' Medicaid DSH
entitlements and pay them all additional amounts to which they
are entitled under the revised calculations. Plaintiffs also ask
for the award of costs, attorneys fees and any additional relief
the court deems appropriate.
I. Defendants' Judgment on the Pleadings
After the first day of hearings in July 1999 Defendants filed a
Motion for Judgment on the Pleadings. In it they assert the
plaintiffs are barred from presenting their claims by the
doctrine of res judicata and by Fed.R.Civ.P. Rule 60. They also
claim this court lacks subject matter jurisdiction over
plaintiffs' breach claim.
The doctrine of res judicata precludes a party from
"relitigating issues that were or could have been raised" in a
previous action dismissed pursuant to a final judgment on the
merits. Allen v. McCurry, 449 U.S. 90, 94 (1980). Res Judicata
does not, however, bar a party or parties from relitigating a
previously asserted claim dismissed on justiciability grounds.
Cutler v. Hayes, 818 F.2d 879, 888 (D.C.Cir. 1987). This Court
dismissed the plaintiffs' prior lawsuit as moot after being
advised by the defendants that there was no need to proceed
farther as plaintiffs' demands had been met. The merits of
plaintiffs' claims were never tested. Accordingly, as the prior
lawsuit was dismissed on justiciability grounds, plaintiffs are
not barred from relitigating the issue of whether defendants'
exclusion of Medicaid managed care payments from the DSH
calculation is lawful.
Defendants' second ground for dismissal is that plaintiffs
exclusive remedy for asserting the breach of representations
claim is a motion for relief from judgment or order made pursuant
to Fed.R.Civ.P. Rule 60(b). Rule 60(b) allows a court to relieve
a party from a final judgment or order on the basis of
"misrepresentation, or other misconduct of an adverse party".
Rule 60 motions must be made within one year of the entering of
the judgment. Defendants maintain that since plaintiffs failed to
bring a Rule 60 motion within the statutory time period, they may
not now bring an independent action to enforce the defendants'
previously asserted representations to the court.