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Fairview Hospital v. Leavitt

May 22, 2007


The opinion of the court was delivered by: Richard W. Roberts United States District Judge


Plaintiffs, three Massachusetts hospitals,*fn1 seek an order requiring the defendant, Secretary of the United States Department of Health and Human Services, to reopen cost reports from prior years and provide Medicare reimbursements for a state assessment under Medicare regulation 42 C.F.R. § 405.1885(d). Plaintiffs move for a stay of the proceedings pending the final resolution of Bradley Memorial Hospital v. Leavitt, Civil Action No. 04-416 (EGS) (D.D.C. filed Mar. 17, 2004). Because a stay of these proceedings would promote judicial economy and efficiency for the parties, plaintiffs' motion for a stay will be granted.


Plaintiffs seek reimbursement for costs incurred as a result of the Massachusetts Uncompensated Care Pool ("UCP") assessment. (Am. Compl. ¶ 39.) UCP "reimburse[s] hospitals and community centers for care provided to low-income, uninsured and underinsured residence of the commonwealth." Mass. Gen. Laws Ann. Ch. 118G, § 18(a). "The UCP is funded, in part, through [an assessment] against each hospital's private sector charges." (Am. Compl. ¶ 21.)

Plaintiffs claim that certain of defendant's intermediaries that processed plaintiffs' cost reports for Medicare reimbursements*fn2 maintained a policy that the UCP was not reimbursable for the plaintiffs and misled plaintiffs into believing that the UCP was not reimbursable while simultaneously reimbursing the UCP for other Massachusetts hospitals. Plaintiffs argue that this "dual policy" constitutes "similar fault" under § 405.1885(d), requiring that their cost reports be reopened under the regulation. Plaintiffs filed a motion for a stay of proceedings until Bradley has been fully resolved, including any appeal. Defendant's oppose plaintiffs' motion.


"A trial court has broad discretion to stay all proceedings in an action pending the resolution of independent proceedings elsewhere." Marsh v. Johnson, 263 F. Supp. 2d 49, 52 (D.D.C. 2003) (citing Landis v. N. Am. Co., 229 U.S. 248, 254 (1936)); see McSurely v. McClellan, 426 F.2d 664, 671 (D.C. Cir. 1970) ("[T]he District Court has a broad discretion in granting or denying stays so as to coordinate the business of the court efficiently and sensibly." (internal quotations omitted)). The court "must weigh competing interests and maintain an even balance," when determining whether to stay a proceeding. Landis, 299 U.S. at 254. "[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Id. A party may be required "to submit to delay not immoderate in extent and not oppressive in its consequences if . . . convenience will thereby be promoted." Id. at 256. "Indeed, '[a] trial court may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case." IBT/HERE Employee Representatives' Council v. Gate Gourmet Div. Ams., 402 F. Supp. 2d 289, 292 (D.D.C. 2005).

Plaintiffs argue that a stay of proceedings in the instant case pending final resolution of Bradley is warranted because it would "promote efficiency and conserve party and judicial resources." (Pls.' Mem. in Support of Mot. for Stay of Proceedings ("Pls.' Stay Mot.") at 11.) Given that the legal defenses are nearly identical in both cases and mostly involve pure issues of law, plaintiffs contend that "success on [these defenses] before the Court of Appeals for this Circuit would likely obviate the need for further proceedings . . . ." (Id.) Plaintiffs point out that three previously filed Massachusetts lawsuits*fn3 have been stayed pending the outcome in Bradley for the same reasons argued by plaintiffs here. Further, plaintiffs claim that the parties' joint requests for stays in those cases are instructive in this case because, with the exception of the fiscal years at issue, the complaints in all four are identical. (Pls.' Reply Mem. in Support of Mot. for Stay of Proceedings ("Pls.' Reply") at 3.)

In Milton, Dana-Farber, and Berkshire, the parties jointly moved to stay the proceedings until final resolution, including any appeal, of Bradley. The parties represented that the stays were justified because the cases "raise[d] issues similar to those . . . in Bradley Memorial Hospital v. Thompson, D.D.C. No. 04-416 (EGS) (filed March 15, 2004)." (Joint Mot. for a Stay of Proceedings, Milton, at 1.)*fn4 In addition, the parties believed that the stays "would promote efficiency and conserve party and judicial resources." (Id.) Despite factual differences between the cases, the parties urged stays arguing that the claims raised in all three cases were "virtually identical to those raised in Bradley, and the defenses [were] likely to be the same." (Supplemental Mem. in Supp. of Joint Mot. for a Stay of Proceedings ("Supplemental Mem."), Milton, at 5.) Moreover, the parties postulated that "[e]ven if some issues remain for resolution after disposition in Bradley, . . . they are likely to be reduced to discrete factual questions. . . . Such a narrowing of the case[s] would facilitate more economical proceedings and/or possible settlement discussions in the future." (Id.)

When faced with the complaint filed in the instant case, instead of joining in the plaintiffs' motion for a stay as he had done in the prior three Massachusetts lawsuits, the defendant responded by filing a dispositive motion. (See Def.'s Mot. to Dismiss or, In the Alternative, for Summ. J.) Defendant argues that his prior positions in Milton, Dana-Farber, and Berkshire have no bearing on whether a stay should be granted in this case.

(Def.'s Opp'n to Pls.' Mot. for Stay of Proceedings ("Def.'s Opp'n") at 15.) However, given the similar nature of the cases and defendant's previous representations that staying those cases pending resolution of Bradley would promote convenience and efficiency, a stay in this case appears equally worthwhile. While defendant argues that the plaintiffs have not demonstrated that hardship or inequity would result if the case is not stayed (Def.'s Opp'n at 4), these considerations are not limitations upon a court's power to stay proceedings. See Landis, 299 U.S. at 255. This is especially so where simultaneous litigation may settle questions of law and simplify the proceedings. See id. at 256.

Defendant also claims that the Bradley plaintiffs' amended complaint has now changed the factual allegations of that case such that they "differ dramatically from those pled here." (Def.'s Opp'n at 8.) However, the defendant concedes that there are identical legal issues and defenses raised by the cases.*fn5

(Def.'s Opp'n at 12.) The amended complaint in Bradley contains the same legal theories as those contained in the initial complaint. (Compare Pls.' Stay Mot., Ex. 3, with Pls.' Stay Mot., Ex. 7.) Additionally, the amended complaints in Bradley and this case are strikingly similar (compare Pls.' Stay Mot., Ex. 7, with Pls.' First Am. Compl.), and the defenses raised in the dispositive motions filed in both cases are nearly identical.*fn6 Further, that the facts in Bradley and this case may be different is a particularly unpersuasive basis for denying a stay. The defendant has been aware for some time that the facts in Bradley, a case involving Connecticut hospitals seeking reimbursement for a state tax, were different from those of the Massachusetts lawsuits (see Supplemental Mem., Milton, at 4), where hospitals are seeking reimbursement of a state assessment. Knowing of these differences, the defendant still ...

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