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Autumn Journey Hospice, Inc v. Kathleen Sebelius

December 3, 2010

AUTUMN JOURNEY HOSPICE, INC., PLAINTIFF,
v.
KATHLEEN SEBELIUS, IN HER OFFICIAL CAPACITY AS SECRETARY OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Re Document Nos.: 8, 9

MEMORANDUM OPINION

OVERRULING THE DEFENDANT'S OBJECTION TO THE PLAINTIFF'S RELATED CASE DESIGNATION;DENYING THE DEFENDANT'S MOTION TO DISMISS

I. INTRODUCTION

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. §§ 553 et seq., challenging HHS's demands for repayment of funds distributed to the plaintiff purportedly in excess of the lawful cap on such distributions. Because the plaintiff filed a notice indicating that this matter was related to a separate action before the undersigned judge, Russell-Murray v. Sebelius, No. 09-2033, the case was assigned to the undersigned judge as a related case.

The defendant, the Secretary of HHS, has filed an objection to the plaintiff's related case designation, arguing that this case is not related to the Russell-Murray matter under the Local Civil Rules and should be randomly reassigned. The defendant has also moved to dismiss the plaintiff's complaint without prejudice on jurisdictional grounds, arguing that the plaintiff has yet to receive a final decision from the agency on its administrative challenge. For the reasons discussed below, the court overrules the defendant's objection to the plaintiff's related case designation and denies the defendant's motion to dismiss.

II. BACKGROUND

A. Framework for Review of Medicare Reimbursement Disputes

Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payments made on their behalf for the care and services rendered by health care providers. See 42 U.S.C. §§ 1395 et seq. Providers are reimbursed for the care they provide to Medicare beneficiaries 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 is dissatisfied with a fiscal intermediary's determination, and the "amount in controversy is $10,000 or more," the provider may appeal that determination to the Provider Reimbursement Review Board ("PRRB") within 180 days of its issuance. Id. § 1395oo(a). A decision of the PRRB constitutes a final agency ruling, unless reviewed by the CMS Administrator, to whom the HHS Secretary has delegated the authority to review PRRB rulings. Id. § 1395oo(f)(1); see also 42 C.F.R. § 405.1875. If the Administrator exercises its authority to reverse, affirm or modify a PRRB ruling, the provider may seek judicial review of the Administrator's determination in a civil action. 42 U.S.C. § 1395oo(f)(1).

If the intermediary's action involves a question of law that the PRRB lacks the authority to address, the Medicare statute provides that the PRRB may grant expedited judicial review ("EJR") 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. The statute further provides that such a determination by the PRRB "shall be considered a final decision and not subject to review by the [Administrator]." Id.

B. The Hospice Care Reimbursement Cap

Medicare provides hospice care for individuals who are "terminally ill," reimbursing hospices for services such as nursing care, physical or occupational therapy, home health aide services, medical supplies and counseling. 42 U.S.C. § 1395x(dd)(1). 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 must be refunded by the hospice care provider. 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" 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 ...


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