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Swedish American Hospital v. Kathleen Sebelius

February 29, 2012

SWEDISH AMERICAN HOSPITAL, PLAINTIFF,
v.
KATHLEEN SEBELIUS, SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT.



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

Re Document No.: 44

MEMORANDUM OPINION

DENYING THE PLAINTIFF'S MOTION FOR RECONSIDERATION

I.INTRODUCTION

This matter comes before the court on the plaintiff's motion for relief upon reconsideration pursuant to Federal Rule of Civil Procedure 59(e). The plaintiff, a hospital in Rockford, Illinois, seeks review of an administrative ruling made by the Department of Health and Human Services ("HHS") that required the plaintiff to repay several million dollars to the Medicare program for the training of its medical residents. The court granted in part and denied in part the parties' respective motions for summary judgment. The plaintiff now moves for relief upon reconsideration, reasserting its arguments that the administrative ruling violates the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq. Because the plaintiff has not presented any new evidence or argument that would prompt the court to provide relief upon reconsideration, the court denies the plaintiff's motion.

II. BACKGROUND

A. Legal Framework

1. Medicare Reimbursement of Medical Education Costs

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, in turn, are reimbursed by insurance companies, known as "fiscal intermediaries," who have contracted with the DHS to aid in administering the Medicare program. See id. § 1395h. Fiscal intermediaries determine the amount of reimbursement due to providers under the Medicare Act and applicable regulations. See id.

Providers that train residents in approved residency programs may be reimbursed for the costs of "graduate medical education" ("GME") and "indirect medical education" ("IME"). See 42 U.S.C. § 1395ww. One variable used to calculate the reimbursable GME and IME costs that are allocable to a provider is the number of full-time equivalent ("FTE") residents in that provider's training program. See 42 U.S.C. § 1395ww. A high GME or IME FTE resident count yields a correspondingly high GME or IME payment for the provider. See id.

To receive reimbursement for these services rendered to Medicare beneficiaries, a provider must submit a yearly "cost report" to its fiscal intermediary, in which it demonstrates the costs incurred during the previous fiscal year and the portion of those costs that is allocable to Medicare. See 42 C.F.R. § 413.20. The fiscal intermediary may audit the cost report before determining the total amount of reimbursement to which the hospital is entitled; this amount is then memorialized in a Notice of Program Reimbursement ("NPR"). See id. § 405.1803. The fiscal intermediary may also reopen and revise a cost report within three years after the date of the NPR. Id. § 405.1885.

2. The FTE Resident Cap

In the Balanced Budget Act of 1997 ("BBA"), Congress capped the number of residents that a hospital may count for purposes of calculating the IME adjustment and GME payments.

42 U.S.C. ยงยง 139ww(d)(5)(B). More specifically, for cost reporting periods beginning on or after October 1, 1997, the BBA limited the number of GME FTEs and IME FTEs that a hospital could count for the purpose of calculating GME and IME payments to the FTEs in "the hospital's most recent cost ...


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