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HEARTLAND HOSPITAL v. THOMPSON

August 3, 2004.

HEARTLAND HOSPITAL, Plaintiff,
v.
TOMMY G. THOMPSON, Secretary of Health and Human Services, Defendant.



The opinion of the court was delivered by: RICARDO URBINA, District Judge

MEMORANDUM OPINION

DENYING THE PLAINTIFF'S MOTION TO ENFORCE JUDGMENT

I. INTRODUCTION

  This matter comes before the court upon the plaintiff's motion to enforce the court's judgment of June 15, 1998 ("the judgment"). Issued by the late Judge Harold L. Greene, the judgment in question, Heartland Hospital v. Shalala, No. 95-951, slip op. (D.D.C. Jun. 15, 1998) ("Heartland I") addressed challenges that the plaintiff ("Heartland") brought against the Department of Health and Human Services ("HHS") for its adoption of a regulation preventing Heartland from receiving Medicare reimbursements. The court held that the regulation was invalid and remanded the action to HHS for action consistent with the court's opinion. Claiming that HHS' subsequent action has been inconsistent with the court's judgment, the plaintiff now seeks Medicare reimbursements and interest payments. The defendant, styling its opposition to Heartland's motion to enforce judgment as a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), maintains that the plaintiff is misinterpreting Heartland I and that HHS is under no obligation to reimburse or provide interest payments to the plaintiff. For the reasons stated below, the court denies the plaintiff's motion to enforce the judgment.

  II. BACKGROUND

  A. Factual History

  Medicare reimburses certain hospitals for medical care provided to eligible elderly and disabled persons. 42 U.S.C. § 1395 et seq. Medicare places certain cost limits on participating hospitals, but a "sole community hospital" ("SCH") is exempt from such limits. Heartland I at 3. To qualify for SCH status, a hospital must meet requirements promulgated by the Secretary of HHS. Id. During all times relevant to this case, a hospital could receive SCH status if it was located in a rural area and met other criteria. Id. at 7. A hospital in an urban area could qualify as an SCH if it was more than 35 miles away from the nearest like hospital. Id. at 5. The Secretary defined "urban" as any area located within a "Metropolitan Statistical Area" ("MSA"), as determined by the Office of Management and Budget.*fn1 Id. at 5-6. "Rural" meant any area not within an MSA. Id.

  At the time of the judgment, the plaintiff was a hospital located in an urban area and less than 35 miles from the nearest like hospital. Id. at 2. Therefore, the Health Care Financing Administration ("HCFA") — an agency within HHS — denied the plaintiff SCH status in 1993. Id. at 1-2. The plaintiff subsequently appealed the denial of SCH status to the Provider Reimbursement Review Board ("the Board"). Id. at 2. After the Board determined that it lacked jurisdiction, it granted the plaintiff's request for expedited judicial review of its denial of SCH status. Id.

  B. Procedural History

  In 1995, the plaintiff filed suit in this court seeking reimbursement based on SCH status from 1992, plus interest. Pl.'s Mot. to Enforce J. ("Pl.'s Mot.") at 1-2. The plaintiff then moved for summary judgment, alleging that the rural requirement was arbitrary and capricious and, therefore, invalid under the Administrative Procedure Act ("APA"). Specifically, the plaintiff claimed that (1) the rural requirement was manifestly contrary to the Medicare statute; (2) the Secretary failed to provide an adequate basis or reasoned analysis for the regulation; and (3) the Secretary failed to consider reasonable alternatives when adopting the MSA as the relevant measure of an urban area. Heartland I at 2.

  In a 1998 opinion, Judge Greene rejected the first two arguments, holding (1) that the regulation was "well within the realm of permissible interpretations of" the Medicare statute and (2) that "the Secretary established, and has maintained, a rational basis for the rural location requirement." Id. at 15, 19.

  On the third argument, however, the court held for the plaintiff, stating that "[t]he failure of the Secretary to respond to the reasonable alternative[s] suggested during the comment period renders the adoption of the regulations arbitrary and capricious and, consequently, invalid." Id. at 23-24. In reaching this conclusion, the court noted that the Secretary had "at least three alternatives to MSAs as a method of identifying an urban area." Id. at 20. The principal alternative was the elimination of the rural requirement altogether. Id. at 21. The court also indicated that the determination of the urban/rural distinction could be made (1) by using the Census Bureau definition of "urbanized areas" and (2) by using health facility planning areas. Id. at 20. While HHS had "considered and rejected the principal alternative," the court held that "[r]esponding to only one alternative . . . is not enough to satisfy the APA." Id. at 21. Instead, the defendant "should have responded to [the other alternatives] and explained why they were not adopted." Id. at 22. Judge Greene granted the plaintiff's motion for summary judgment and remanded to HHS for "action consistent with the foregoing opinion." Order of Jun. 10, 1998.

  Upon remand, HHS issued "a final rule specifically explaining its adoption of an MSAbased definition of urban areas and rejecting the use of either Census Bureau urbanized areas or health facility planning areas for that purpose." Def.'s Opp'n at 5. HCFA interpreted Judge Greene's judgment to mean that the rural requirement was not vacated and that explanation of the MSA-based definition's superiority to its alternatives was sufficient to satisfy the judgment. Id. Consequently, HCFA issued its final decision on the Heartland matter in September 2000, again applying the rural requirement based on the MSA based definition of urban areas, and again denying Heartland SCH status. Id. at 5-6.

  After the case was reassigned to this judge, the plaintiff moved to enforce the judgment in November 2000, again seeking Medicare reimbursement consistent with SCH status starting in 1992. Pl.'s Mot. at 1-2. The defendant claims that the plaintiff's motion to enforce judgment is essentially "a request for judicial review of the Secretary's decision on remand," and responds with a motion to dismiss. Def.'s Opp'n at 15. After the plaintiff and defendant filed their motions, the court ...


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