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Allina Health Services v. Burwell

United States District Court, District of Columbia

October 30, 2015

ALLINA HEALTH SERVICES, et al., Plaintiffs,
v.
SYLVIA M. BURWELL, Secretary-United States Department of Health and Human Services, Defendant.

MEMORANDUM OPINION

GLADYS KESSLER UNITED STATES DISTRICT JUDGE

Plaintiffs Allina Health Services, et al. ("Plaintiffs"), bring this action against Sylvia M. Burwell, in her official capacity as Secretary of the United States Department of Health and Human Services ("Secretary" or "Defendant"), challenging the calculation of certain disproportionate share hospital ("DSH") payments as procedurally and substantively invalid.

This matter is before the Court on the Defendant's Motion to Dismiss for Lack of Jurisdiction or in the Alternative for Voluntary Remand [Dkt. No. 15]. Upon consideration of the Motion, Opposition [Dkt. No. 16], Reply [Dkt. No. 18], the entire record j herein, and for the reasons set forth below, the Motion shall be; denied.

I. Background

A. Factual Overview[1]

In Allina Health Services v. Sebelius, a group of hospitals, including the Plaintiffs in the present case, challenged a 2004 rulemaking by the Secretary ("2004 Final Rule") pertaining to calculations for Disproportionate Share Hospital ("DSH") payment determinations under Medicare. See No. 10-cv-1463 (D.D.C.). In November 2012, the Court (Collyer, J.) granted summary judgment for the plaintiffs, finding that the 2004 Final Rule violated the procedural requirements of the Administrative Procedure Act ("APA") and vacating the rule. See Allina Health Servs. v. Sebelius, 904 F.Supp.2d 75 (D.D.C. 2012) ("Allina I").

On appeal, our Court of Appeals affirmed the part of the Allina I Court's decision vacating the 2004 Final Rule. But, the Court of Appeals held that the Allina I Court erred when it directed the Secretary to calculate the DSH payments in a particular manner, rather than simply remanding. See Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1111 (D.C. Cir. 2014).

Plaintiffs allege that after the D.C. Circuit's opinion, the Secretary published calculations for federal fiscal year 2012 DSH payments ("2012 DSH Calculations")[2] based on the 2004 Final Rule that had been vacated. Plaintiffs also allege that the new 2012 DSH Calculations are procedurally invalid. Compl. ¶¶ 47-49. Plaintiffs timely appealed to the Provider Reimbursement Review Board ("PRRB") challenging the 2012 DSH Calculations, see Compl. ¶¶ 36-39, and requested that the PRRB grant expedited judicial review. Id. ¶ 41.

The PRRB is an independent administrative tribunal that resolves disputes regarding hospital reimbursement determinations by Medicare contractors or the Centers for Medicare & Medicaid Services ("CMS"). See 42 U.S.C. § 1395oo(a). The PRRB may resolve certain payment disputes without following low-level policy guidance, see 42 C.F.R. § 405.1867; however, it is bound by agency regulation and rulings, id., and cannot decide "question[s] of law or regulations." 42 U.S.C. § 1395oo(f) (1) . Section 1395oo(f) gives providers "the right to obtain judicial review of any action . . . which involves a question of law or regulations . . . whenever the [PRRB] determines . . . that it is without the authority to decide the question." Id.

By letter dated August 13, 2014, the PRRB granted Plaintiffs' request for expedited judicial review, finding that "it is without the authority to decide the legal question of whether the regulation regarding the [2012 DSH Calculations] is valid and whether the Secretary's actions subsequent to the decision in Allina [I] are legal." Letter from the Provider Reimbursement Review Board to Stephanie Webster 6 (Aug. 13, 2014) [Dkt. No. 14-1] ("PRRB Decision").

B. Procedural Background

On August 19, 2014, Plaintiffs filed their Complaint, pursuant to the PRRB's grant of expedited judicial review [Dkt. No. 1]. Plaintiffs filed a Notice of Related Case on the same day [Dkt. No. 2] . Judge Collyer granted Defendant's objection to the related case designation on May 18, 2 015, and the case was randomly reassigned to this Court. Minute Order dated May 18, 2015; Case Assignment [Dkt. No. 20].

On October 27, 2014, Defendant filed her Motion to Dismiss for Lack of Jurisdiction or in the Alternative for Voluntary Remand [Dkt. No. 15] ("Motion"). Plaintiffs filed their Opposition on November 10, 2014 [Dkt. No. 16] ("Opp'n"), and ...


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