The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge
Re Document Nos.: 12, 17, 18, 19
GRANTING THE PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT;DENYING THE DEFENDANT'S MOTION FOR PARTIAL REMAND OR, IN THE ALTERNATIVE, FOR PARTIAL SUMMARY JUDGMENT;GRANTING THE DEFENDANT'S MOTION FOR PARTIAL DISMISSAL BASED ON A LACK OF SUBJECT MATTER JURISDICTION;DENYING THE DEFENDANT'S MOTION TO STRIKE EXHIBITS IN THE PLAINTIFF'S "APPENDIX"
The plaintiff is a hospice care provider participating in Medicare, a federal program administered by the Department of Health and Human Services ("HHS"). It commenced this action pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq., challenging HHS's demands for the repayment of funds distributed to the plaintiff in fiscal years 2006 and 2007 purportedly in excess of the lawful cap on such distributions. The plaintiff contends that the regulation pursuant to which HHS calculated these repayment amounts conflicts with the governing statute and must be set aside. The plaintiff has moved for summary judgment on its challenge to the fiscal year 2007 repayment demand, seeking an order declaring that the regulation is unlawful and enjoining HHS from enforcing it. In response, the defendant has moved to remand the plaintiff's claims regarding the fiscal year 2007 repayment to the agency for additional fact-finding. In the alternative, the defendant moves for summary judgment as to the plaintiff's 2007 repayment demand. Furthermore, the defendant has moved to dismiss the plaintiff's claims regarding the 2006 repayment demand for lack of subject matter jurisdiction.
For the reasons discussed below, the court grants the plaintiff's motion for summary judgment regarding the 2007 repayment demand and denies the defendant's motion to remand that claim or, in the alternative, for partial summary judgment. The court, however, grants the defendant's motion to dismiss the plaintiff's claims regarding the 2006 repayment demand based on the absence of subject matter jurisdiction.*fn1
A. The Statutory and Regulatory Framework
Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payment made on their behalf for the care and services rendered by health care providers. See 42 U.S.C. §§ 1395 et seq. Providers, in turn, are reimbursed by insurance companies, known as "fiscal intermediaries," that have contracted with the Centers for Medicare and Medicaid Services ("CMS") to aid in administering the Medicare program. See id. § 1395h. Fiscal intermediaries determine the amount of reimbursement due to providers under the Medicare statute and applicable regulations. See id. § 1395kk-1. If the provider disagrees with a fiscal intermediary's determination, it may appeal that determination to the Provider Reimbursement Review Board ("PRRB"). Id. § 1395oo(a). A decision of the PRRB constitutes a final agency ruling, unless appealed to the CMS Administrator. Id. § 1395oo(f)(1).
If the intermediary's action involves a question of law that it lacks the authority to address, the Medicare statute provides that the PRRB may grant expedited judicial review of that question. See id. Specifically, the statute states that "[p]roviders shall... have the right to obtain judicial review of any action of the fiscal intermediary which involves a question of law or regulations relevant to the matters in controversy whenever the Board determines... that it is without authority to decide the question, by a civil action commenced within sixty days of the date on which notification of such determination is received." Id.
Among other services, Medicare covers hospice care for individuals who are "terminally ill,"*fn2 reimbursing hospices for services such as nursing care, physical and occupational therapy, home health aide services, medical supplies and counseling. Id. § 1395x(dd)(1). An individual remains entitled to hospice care benefits so long as he or she is certified as being "terminally ill."*fn3 See id. § 1395d(d)(1) (establishing that reimbursement for hospice care may be provided "during two period of 90 days each and an unlimited number of subsequent period of 60 days each during the individual's lifetime").
The Medicare statute, however, places a cap on the total amount that Medicare may distribute to a hospice provider in a single fiscal year (November 1 through October 31). See id. § 1395f(i)(2)(A). Payments made to a hospice care provider in excess of the statutory cap are considered overpayments that the hospice care provider must refund to the government. Id.
More specifically, the statute provides that the total yearly payment to a hospice provider may not exceed the product of the annual "cap amount"*fn4 and the "the number of [M]edicare beneficiaries in the hospice program in that year." Id. For purposes of this calculation, the "number of [M]edicare beneficiaries" in a hospice program in an accounting year is equal to the number of individuals who have made an election under subsection (d) of this section with respect to the hospice program and have been provided hospice care by (or under arrangements made by) the hospice program under this part in the accounting year, such number reduced to reflect the proportion of hospice care that each such individual was provided in a previous or subsequent accounting year or under a plan of care established by another hospice program.
Id. § 1395f(i)(2)(C) (emphasis added). Thus, the Medicare statute directs HHS to account for the fact that an individual may receive care in more than one fiscal year by requiring HHS to count that individual as a beneficiary in each year in which he or she receives hospice care benefits, with that number proportionally reduced to reflect care provided in previous or subsequent years. See id.
To implement the statutory cap provision, HHS promulgated a reimbursement regulation governing the calculation of the statutory cap amount. See 42 C.F.R. § 418.309. In pertinent part, the regulation provides that the "number of beneficiaries" portion of the statutory cap calculation includes
[t]hose Medicare beneficiaries who have not previously been included in the calculation of any hospice cap and who have filed an election to receive hospice care... from the hospice during the period beginning on September 28 (35 days before the beginning of the cap period) and ending on September 27 (35 days before the end of the cap period).
Id. § 418.309(b) (emphasis added). The regulation does not provide for the proportional allocation of beneficiaries, providing instead that an individual is counted as a beneficiary only in a single year, depending on when he or she first elects to receive hospice benefits. See id.
HHS's justification for the regulation begins with the observation that the average length of a hospice stay is seventy days. See Def.'s Mot. at 7 n.7. If a patient elects hospice care on or before September 27 of a particular year (thirty-five days before the end of the fiscal year), the hospice care provider will receive 100% of the statutory cap amount attributable to that beneficiary in the current fiscal year because in the average case, the majority of the patient's hospice care will be provided in that fiscal year. See 42 C.F.R. § 418.309(b)(1). If, on the other hand, the patient elects hospice care after September 27, the hospice care provider will receive 100% of the statutory allowance for that patient in the following fiscal year, because in the average case, the majority of the patient's hospice will be provided in the following year. Thus, although the regulation does not provide for the proportional allocation of cap amounts, it attempts to approximate the proportional allocation by setting up a system in which beneficiaries are, on average, counted in the year in which they receive the majority of their hospice care. See id.
B. The Plaintiff's Claims
The plaintiff is a Medicare-certified hospice care provider operating in El Reno, Oklahoma. Compl. ¶ 1. In September 2008, the plaintiff received a demand for repayment of $946,732 for funds distributed to it in fiscal year 2006 purportedly in excess of the statutory cap. Id. ¶ 3. In April 2009, the plaintiff received a repayment demand of $398,630 for funds distributed to it in fiscal year 2007 purportedly in excess of the statutory cap. Id. ¶ 9. The plaintiff appealed both repayment demands to the PRRB in September 2009, challenging the validity of 42 C.F.R. § 418.309(b)(1). Id. ¶¶ 7-9.
In an October 2009 ruling, the PRRB denied the plaintiff's appeal of the fiscal year 2006 repayment demand, concluding that the appeal was untimely and that the plaintiff had not demonstrated good cause for its failure to comply with the filing deadline. Id. ¶ 11; Pl.'s Mot., Ex. G. In a separate ruling, however, the PRRB granted the plaintiff's request for expedited ...