United States District Court, D. Columbia.
UNIVERSITY OF COLORADO HEALTH AT MEMORIAL HOSPITAL, et al., Plaintiffs,
SYLVIA M. BURWELL, Secretary, United States Department of Health and Human Services, Defendant
University of Colorado Health at Memorial Hospital, formerly
known as MEMORIAL HOSPITAL OF COLORADO SPRINGS, Banner Heart
Hospital, Banner Baywood Medical Center, Banner Estrella
Medical Center, Banner Gateway Medical Center, Banner Good
Samaritan Medical Center, Banner Thunderbird Medical Center,
Banner Desert Medical Center, Banner Mesa Medical Center,
Banner Del E. Webb Medical Center, Banner Boswell Medical
Center, Cape Coral Hospital, Charleston Area Medical Center,
Denver Health Medical Center, Boulder Community Hospital,
Halifax Community Health System, also known as HALIFAX
MEDICAL CENTER, Sarasota Memorial Hospital, West Virginia
University Hospitals, Allina Health, for benefit of ABBOTT
NORTHWESTERN HOSPITAL, for benefit of BUFFALO HOSPITAL, for
benefit of CAMBRIDGE MEDICAL CENTER, for benefit of MERCY
HOSPITAL, for benefit of OWATONNA HOSPITAL, for benefit of
UNITED HOSPITAL, for benefit of UNITY HOSPITAL, Banner
Health, for benefit of NORTH COLORADO MEDICAL CENTER, for
benefit of MCKEE MEDICAL CENTER, Lee Memorial, for benefit of
GULF COAST MEDICAL CENTER, Lee Memorial Hospital, Allina St.
Francis Regional Medical Center, Valley View Hospital,
Parkview Medical Center, Billings Clinic Hospital, Good
Samaritan Hospital Los Angeles, Cabell Huntington Hospital,
Plaintiffs: Stephen P. Nash, SQUIRE PATTON BOGGS, Denver, CO
Sylvia M. Burwell, Secretary, U.S. Department of Health and
Human Services, Defendant: Caroline Lewis Wolverton, LEAD
ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Civil Division, Federal
Programs Branch, Washington, DC USA.
Document No.: 29
OPINION Granting in Part and Denying in Part Plaintiffs'
Motion to Compel Production of the Complete Administrative
CONTRERAS, United States District Judge.
case is one in a series of cases in which various hospitals
have challenged regulations promulgated by the Department of
Health and Human Services (" HHS" ) to implement
the Outlier Payment System, which provides for supplemental
Medicare payments to hospitals when a particular
patient's hospitalization and care is unusually costly.
Plaintiffs here, a group of thirty-five acute care hospitals,
seek review of the Medicare reimbursements awarded to them
under that system. Before the Court is Plaintiffs' motion
to compel production of the complete administrative record
(ECF No. 29). This issue is well-traveled ground. In several
other cases challenging HHS's outlier payment
regulations, courts in this district have similarly
considered motions to supplement the administrative record
that sought many of the same materials Plaintiffs seek here.
See generally Lee Mem'l Hosp. v.
Burwell, No. 13-643, 109 F.Supp.3d 40, 2015 WL 3631811
(D.D.C. June 11, 2015); Dist. Hosp. Partners v.
Sebelius, 971 F.Supp.2d 15 (D.D.C. 2013),
aff'd, 786 F.3d 46 (D.C. Cir. 2015); Banner
Health v. Sebelius, 945 F.Supp.2d 1 (D.D.C. 2013). Upon
consideration of the parties' filings, and for the
reasons stated below, the Court will grant in part and deny
in part Plaintiffs' motion to compel production.
The Outlier Payment System
comprehend the parties' dispute about the administrative
record's contents, one must have a keen understanding of
the complex, and at times technical, Medicare Outlier Payment
System. Hospitals were originally reimbursed under Medicare
for the " reasonable costs" that they incurred when
treating patients. See Dist. Hosp. Partners,
L.P. v. Burwell, 786 F.3d 46, 49 (D.C. Cir. 2015). Under
that model, " [t]he more [hospitals] spent, the more
they were reimbursed." Id. (first alteration in
original) (quoting Cnty. of L.A. v. Shalala, 192
F.3d 1005, 1008, 338 U.S.App.D.C. 168 (D.C. Cir. 1999)). By
1983, however, Congress had determined that a reasonable cost
system failed to provide adequate incentives for hospitals to
operate efficiently. Id. To remedy the potential for
over-spending and to reward cost-effective hospital practices
Congress passed as section 1886(d) of the Social Security Act
(" Section 1886(d)" ) what is called the Inpatient
Prospective Payment System (" IPPS" ), administered
by the Centers for Medicaid and Medicare Services ("
CMS" ). See Cape Cod Hosp. v.
Sebelius, 630 F.3d 203, 205, 394 U.S.App.D.C. 59 (D.C.
Cir. 2011); see also 42 U.S.C. § 1395ww(d).
Instead of reimbursing a hospital simply for its reasonable
costs, Congress directed CMS to calculate a "
standardized amount" representing the average operating
cost for inpatient hospital services. Cape Cod
Hosp., 630 F.3d at 205. Section 1886(d) then provides
that Medicare reimbursements made to hospitals are to be
based on that standardized amount, regardless of the
particular costs a hospital incurs in an individual case.
did recognize that different illnesses may necessarily
involve more or less costly care, however. To account for
those variations, Congress also directed the Secretary of
Health and Human Services (the " Secretary" ) to
modify the standardized amount based on a number of
diagnosis-related groups (" DRGs" ). DRGs are
" group[s] of related illnesses to which the Secretary
assigns a weight representing 'the relationship between
the costs of treating patients within that group and the
average cost of treating all Medicare patients.'"
Dist. Hosp. Partners, 786 F.3d at 49 (quoting
Cape Cod Hosp., 630 F.3d at 205-06).
further recognized that, notwithstanding the standardized
reimbursement system, " health-care providers would
inevitably care for some patients whose hospitalization would
be extraordinarily costly or lengthy." Cnty. of
L.A., 192 F.3d at 1009. To account for those situations,
Congress created the Outlier Payment Program, which permits a
hospital to recoup an additional payment, referred to as an
" outlier payment," if the costs incurred during
the care of a particular patient exceed a certain dollar
amount. Id. As relevant here, section 1886(d)
provides that a hospital " may request additional
payments in any case where charges, adjusted to cost, . . .
exceed the sum of the applicable DRG prospective payment rate
. . . plus a fixed dollar amount determined by the
Secretary." 42 U.S.C. § 1395ww(d)(5)(A)(ii). That
fixed dollar amount--referred to as the " fixed loss
threshold" --" serves as the cutoff point
triggering eligibility for outlier payments." Banner
Health, 945 F.Supp.2d at 8.
1886(d) further mandates that the aggregate amount of outlier
payments made in any one fiscal year " may not be less
than 5 percent nor more than 6 percent of the total payments
projected or estimated to be made based on DRG prospective
payment rates for discharges in that year." 42 U.S.C.
§ 1395ww(d)(5)(A)(iv). During each fiscal year at issue
in this case, the Secretary has endeavored to establish
payment rates and policies that will produce outlier payments
equaling 5.1% of total projected IPPS payments.
it is somewhat of an understatement to say that "
calculating outlier payments is an elaborate process."
Dist. Hosp. Partners, 786 F.3d at 49. For
simplicity's sake " three particular numbers are
important: (1) the cost-to-charge ratio, (2) the fixed loss
threshold, and (3) the outlier threshold." Id.
The cost-to-charge ratio, or " CCR," is calculated
on an individual hospital level and represents the average
differential between the charges that a particular hospital
lists on a patient's invoice and the actual costs that
hospital incurs in treating a patient. In essence, the figure
represents the hospital's " average markup" on
its services. Id. at 50. To calculate a
hospital's CCR, the Secretary considers the
hospital's " most recent settled cost report or the
most recent tentative settled cost report, whichever is from
the latest cost reporting period." See 42
C.F.R. § 412.84(i)(2).
indicated above, the fixed loss threshold is the " fixed
dollar amount" above the DGR prospective payment rate
that the cost of a patient's care must exceed before a
hospital becomes eligible for an outlier payment. 42 U.S.C.
§ 1395ww(d)(5)(A)(ii). The fixed loss threshold "
'acts like an insurance deductible because the hospital
is responsible for that portion of the treatment's
excessive cost' above the applicable DRG rate."
Dist. Hosp. Partners, 786 F.3d at 50 (quoting
Boca Raton Cmty. Hosp., Inc. v. Tenet Health Care
Corp., 582 F.3d 1227, 1229 (11th Cir. 2009)). A hospital
is simply expected to absorb the additional costs that fall
above the DGR but below the fixed loss threshold. The fixed
loss threshold is calculated annually and a new threshold is
set for each fiscal year. Id. at 50.
third number, the " outlier threshold," is
calculated by adding the DRG rate for a particular illness to
the fixed loss threshold. Id. Any costs a hospital
incurs above the outlier threshold may be reimbursed through
an outlier payment, although CMS only reimburses a hospital
for a fixed percentage of the hospital's costs above that
outlier threshold. Since at least 2003, CMS has reimbursed
hospitals for 80% of their adjusted costs above the outlier
threshold. Id. (citing Medicare Program; Changes to
the Hospital Inpatient Prospective Payment System and Fiscal
Year 2004 Rates, 68 Fed.Reg. 45,346, 45,476 (Aug. 1, 2003);
42 C.F.R. § 412.84(k)).
important to note that outlier payments do not provide
hospitals with additional funding that is not already
allocated to the Medicare program. Instead, outlier payments
simply redistribute a portion of IPPS payments that would
normally flow to hospitals as reimbursement for typical DRG
patients to those hospitals that treat outlier patients.
See 42 U.S.C. § 1395ww(d)(3)(B). To compensate
for the anticipated percentage of outlier payments to be made
during the fiscal year, the reimbursements that hospitals
receive for ordinary cases under the IPPS program are
therefore subject to a percentage reduction " by a
factor equal to the proportion of [outlier] payments."
The Challenged Regulations
claims implicate two types of regulations that HHS has
promulgated to implement the outlier payment system. The
first is the 2003 Outlier Payment Regulations (the "
Payment Regulations" ), which establish the
general model for calculating whether a hospital's
treatment of a particular patient qualifies for an outlier
payment. See Medicare Program; Change in Methodology
for Determining Payment for Extraordinarily High-Cost Cases
(Cost Outliers) Under the Acute Care Hospital Inpatient and
Long-Term Care Hospital Prospective Payment Systems, 68
Fed.Reg. 34,494 (June 9, 2003) [hereinafter " 2003
Payment Regulations" ].
noted above, IPPS payments are based on the costs a hospital
incurs in treating a patient, not the charges as actually
listed on a patient's invoice. Dist. Hosp.
Partners, 786 F.3d at 49-50. CMS adjusts a
hospital's charges to reflect actual costs using a
hospital's cost reports. Id. at 49-50, 51. But
there is an inevitable time delay between the charges a
hospital incurs today and the point at which those charges,
as adjusted to cost, will be reflected in a cost report.
See 2003 Payment Regulations, 68 Fed.Reg. at 34,496.
By 2003, it became clear that several hospitals had learned
how to exploit this time lag. Id. Specifically, if a
hospital " dramatically increased charges between past
cost reports and the patient costs for which reimbursement is
sought, [that hospital's] cost-to-charge ratio would be
too high and would overestimate the hospital's
costs." Dist. Hosp. Partners, 786 F.3d at 51
(internal quotation marks omitted). Such overestimation
" may result in some cases receiving outlier payments
when th[ose] cases, in actuality, are not high-cost
cases." 2003 Payment Regulations, 68 Fed.Reg. at 34,497.
This practice is referred to as turbo-charging. Dist.
Hosp. Partners, 786 F.3d at 51.
effort to remedy this problem and to prevent turbo-charging
in the future, HHS modified its payment methodology in 2003
to, among other things, provide for the use of " the
most recent tentative settled cost report," in lieu of a
settled cost report, when calculating a hospital's CCR.
See 2003 Payment Regulations, 68 Fed.Reg. at 34,497.
HHS projected that the use of tentative reports would "
reduce the time lag for updating cost-to-charge ratios by a
year or more." Id. The Payment Regulations also
provided that " outlier payments would become subject to
reconciliation when hospitals' cost reports are
settled." Id. at 34,501. HHS did not propose to
retroactively adjust the fixed loss threshold for prior
fiscal years in light of the reconciled cost reports,
however. Id. Instead, HHS explained that it
continued to believe that the threshold " should be
based on projected payments using the latest available data
without retroactive adjustment." Id.
this updated methodology, HHS calculates a new fixed loss
threshold each fiscal year to govern hospitals'
eligibility for outlier payments during that fiscal year
(collectively, the " Threshold Regulations" ). The
Threshold Regulations for certain fiscal years (2007, 2008,
2011, and 2012) are the second type of regulations challenged
in this case. Using the fiscal year 2008 as an illustration,
HHS typically arrives at the upcoming fiscal year's fixed
loss threshold through the following process:
the agency " simulate[s] payments" that will be
made under the IPPS program during the upcoming fiscal year.
FY 2008 Final Rule, 72 Fed.Reg. at 47,267. In 2008, the
agency simulated payments with reference to the actual cases
and discharges made two years earlier (during fiscal year
2006); that data is set forth in what is called the "
MedPAR file," which contains " fully coded
diagnostic and procedure data for all Medicare inpatient
hospital bills." Id. Before simulating the
projected payments for the fiscal year, however, the agency
omits inaccurate data from the file--a process that is
referred to as " trimming" the data. Id.
The trimmed data forms the universe of cases upon which the
next fiscal year's projected payments will be based. The
agency then adjusts those charges for anticipated inflation.
For 2008, HHS " inflated the charges on the MedPAR
claims by 2 years, from FY 2006 to FY 2008."
Id. at 47,417. The agency calculates " the 1
year average annualized rate-of-change in
charges-per-case" by comparing the charges over the
first two quarters of the relevant fiscal year (e.g., 2006)
to charges over first two quarters of the following fiscal
year (e.g., 2007). Id. at 47,418. That average
annual rate of change is referred to as the " charge
inflation factor," and that factor is applied to the
2006 cases to determine the anticipated charges in 2008.
Id. at 47,417.
charges submitted for reimbursement will ultimately be
adjusted to costs, however, the agency also projects
hospitals' CCRs for the upcoming fiscal year. The agency
starts with the " most recent available data at the time
of the [proposed or final] rule," as contained in a
particular update to what is called the " Provider
Specific File (PSF)." Id. at 47,417, 47,418.
For the 2008 final rulemaking, the agency used the data
contained in the " March 2007 update to the PSF."
Id. at 47,418. That PSF data for all Medicaid
providers is compiled into a single, aggregated electronic
file referred to as an " Impact File." The Impact
File provides " a static snapshot of the actual
variables that CMS used in the rate-setting and payment
modeling work for the rule with which the impact file is
associated." See Cheng. Decl. ¶ 10, ECF
No. 32-1. Those CCRs are then adjusted for anticipated
inflation by applying what is called a " CCR adjustment
factor." FY 2008 Final Rule, 72 Fed.Reg. at 47,418.
2008, using the 2006 MedPAR charges and the March 2007 CCRs,
both as adjusted for inflation, HHS simulated payments for
the upcoming fiscal year and determined that a fixed loss
threshold of $22,635 would ensure outlier payments equaling
" 5.1% of total IPPS payments" during the fiscal
year. Id. at 47,419. Of course, the agency's
projections are dependent on tentative cost reports from
prior fiscal years, which may be subject to reconciliation
once a final cost report is finalized. See 2003
Payment Regulations, 68 Fed.Reg. at 34,501. Despite this
possibility, HHS has repeatedly elected not to adjust its
annual projections to account for the possibility that a
hospital's CCR and outlier payments might be reconciled
once the final cost reports are settled.
action, Plaintiffs have challenged both the 2003 Payment
Regulations and the Threshold Regulations for the 2007, 2008,
2011, and 2012 fiscal years. See Fourth Am. Compl.
¶ ¶ 4-5, ECF No. 41; see also
Pls.' Mem. Supp. Mot. to Compel Produc. at 15, ECF No. 29
[hereinafter " Pls.' Mem. Supp." ]. Plaintiffs
claim that the Threshold Regulations violate Section 1886(d)
of the Social Security Act because they fail to comply with
the statutory mandate that outlier payments fall between five
and six percent of all DRG-related payments, and that the
regulations are arbitrary and capricious in violation of the
Administrative Procedure Act (" APA" ).
See Fourth Am. Compl. ¶ ¶ 72-73, 75.
Plaintiffs also contend that the 2003 Payment Regulations are
procedurally invalid and that, because the later fiscal year
regulations are implemented using the 2003 methodology, those
regulations are also invalid. See id. ¶ 77.
Plaintiffs seek an order vacating the Payment Regulations,
remanding these appeals to the Secretary so that she can
" recalibrate and reset" the fixed loss threshold
for each fiscal year at issue, and allowing the Plaintiffs to
submit amended claims for outlier payments under the
recalibrated threshold levels. See Fourth Am. Compl.
initially produced to the Plaintiffs what HHS purported to be
the administrative record for the 2003 Payment Regulations
and the Threshold Regulations for fiscal years 2007, 2008,
2011, and 2012. See Certified List of Contents of
the Rulemaking Record, ECF No. 25. With respect to the
Threshold Regulations, the initial record included: the
Impact Files and MedPAR data files for each fiscal year
rulemaking, public comments related to those fiscal
years' proposed rules, the proposed and final rulemaking
notices, and, for some fiscal years, certain documents
specifically referenced in each rulemaking. Id. For
the 2003 Payment Regulations, the administrative record
included the MedPAR data file, the public comments related to
the proposed rule, and the proposed and final rulemaking
claim that these documents do not reflect the complete
administrative record that was before the agency when it
considered these regulations. Specifically, Plaintiffs have
moved to compel the production of nine documents or
categories of documents including: (1) an Interim Final Rule
considered at the time HHS promulgated the 2003 Payment
Regulations; (2) the Impact File for the 2003 Payment
Regulations; (3) the formulas used to calculate the fixed
loss threshold for each fiscal year at issue in this case;
(4) the formulas and data used to calculate estimated outlier
payments, made during the previous FYs; (5) the actuarial
analysis and data upon which HHS relied to calculate the CCR
adjustment factors; (6) purportedly missing data HHS used to
calculate the inflation factors; (7) purportedly missing and
incomplete Impact Files and related data; (8) materials
supporting HHS's regulatory impact analysis considered
when promulgating each Threshold Regulation; and (9)
materials supporting HHS's conclusion that it need not
consider reconciliation of outlier payments when setting the
fixed loss thresholds. See generally Pls.' Mem.
Supp. at 21-44.
court reviews an agency's action under the APA, it must
" review the whole record or those parts of it cited by
a party." 5 U.S.C. § 706; see also
Citizens to Preserve Overton Park, Inc. v. Volpe,
401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971)
(" [R]eview is to be based on the full administrative
record that was before the Secretary at the time he made his
decision." ). A reviewing court " should have
before it neither more nor less information than did the
agency when it made its decision." IMS, P.C. v.
Alvarez, 129 F.3d 618, 623, 327 U.S.App.D.C. 126 (D.C.
Cir. 1997). Reviewing " less than the full
administrative record," might " allow a party to
withhold evidence unfavorable to its case," while
reviewing " more than the information before the agency
at the time of its decision," risks " requiring
administrators to be prescient or allowing them to take
advantage of post hoc rationalizations." Walter O.
Boswell Mem'l Hosp. v. Heckler, 749 F.2d 788, 792,
242 U.S.App.D.C. 110 (D.C. Cir. 1984). Agencies bear the
responsibility of compiling the administrative record, which
must include all of the information that the agency
considered " either directly or indirectly."
Marcum v. Salazar, 751 F.Supp.2d 74, 78 (D.D.C.
2010). The record that an agency produces " is entitled
to a strong presumption of regularity." Id.
may seek to supplement the record produced by the agency,
however, in " one of two ways." WildEarth
Guardians v. Salazar, 670 F.Supp.2d 1, 5 n.4 (D.D.C.
2009). First, a party may seek to include " evidence
that should have been properly a part of the administrative
record but was excluded by the agency." Id.
Where a plaintiff follows this first route, as Plaintiffs do
here, supplementation is appropriate if the agency " did
not include materials that were part of its record, whether
by design or accident." Marcum, 751 F.Supp.2d
at 78. But to overcome the presumption of regularity, "
a plaintiff must put forth concrete evidence that the
documents it seeks to 'add' to the record were
actually before the decisionmakers." Id. To
make that showing, a plaintiff must do more than simply
assert " that materials were relevant or were before an
agency when it made its decision." Id. "
Instead, the plaintiff 'must identify reasonable,
non-speculative grounds for its belief that the
documents were considered by the agency and not
included in the record.'" Id. (emphasis in
original) (quoting Pac. Shores Subdivision Cal. Water
Dist. v. U.S. Army Corps of Eng'rs, 448 F.Supp.2d 1,
6 (D.D.C. 2006)). The plaintiff must also " identify the
materials allegedly omitted from the record with sufficient
specificity, as opposed to merely proffering broad categories
of documents and data that are 'likely' to exist as a
result of other documents that are included in the
administrative record." Banner Health, 945
F.Supp.2d at 17.
a party may seek to supplement the record with "
extra-judicial evidence that was not initially before the
agency but [which] the party believes should nonetheless be
included in the administrative record." WildEarth
Guardians, 670 F.Supp.2d at 5 n.4. In these
circumstances, a more stringent standard applies. To "
justify a departure from [the] general rule" that
review " is to be based on the full administrative
record that was before the Secretary at the time he made his
decision," a party must demonstrate one of three "
unusual circumstances." Am. Wildlands v.
Kempthorne, 530 F.3d 991, 1002, 382 U.S.App.D.C. 78
(D.C. Cir. 2008) (internal quotation marks omitted). Those
circumstances include: (1) when " the agency
'deliberately or negligently excluded documents that may
have been adverse to its decision,'" (2) when "
background information [is] needed 'to determine whether
the agency considered all the relevant factors,'"
and (3) when " the 'agency failed to explain
administrative action so as to frustrate judicial
review.'" City of Dania Beach v. F.A.A.,
628 F.3d 581, 590, 393 U.S.App.D.C. 353 (D.C. Cir. 2010)
(quoting Am. Wildlands, 530 F.3d at 1002).
Court agrees with another judge in this district in noting
that the dual use of the term " supplement" has
caused " some confusion" about the proper test to
apply when a party seeks to supplement the administrative
record. See The Cape Hatteras Access Pres.
Alliance v. U.S. Dep't of Interior, 667 F.Supp.2d
111, 113 (D.D.C. 2009). " Supplement" has been used
synonymously to refer to both a circumstance in which a party
argues that the administrative record does not actually
reflect the materials that the agency had before it when it
made its decision, and a circumstance in which a party seeks
to add extra-record or extra-judicial information to the
record that was concededly not before the agency.
Id. Perhaps because of that dual use, courts in this
district have regularly invoked the language from Dania
Beach and American Wildlands --and have asked
whether a party has shown the existence of one of the "
unusual circumstances" --even when considering claims
that an agency had not produced materials that it
actually had before it. Both parties similarly
invoke the Dania Beach and American
Wildlands language in this case. But this Court reads
those cases to set forth the test for supplementation only
with respect to extra-record information.
Accord Cape Hatteras, 667 F.Supp.2d at
114-15. For one thing, both cases--and the D.C. Circuit
precedent they rely on--involved a party's effort to
introduce information that had not been before the agency
when it considered the challenged rule. See, e.g.,
Dania Beach, 628 F.3d at 590 (seeking to introduce
documents from prior environmental impact statement
processes); Am. Wildlands, 530 F.3d at 1002 (seeking
to introduce letters that " were written after the [Fish
and Wildlife] Service issued its Reconsidered Finding"
and thus were " not part of the administrative
record" ); James Madison Ltd. by Hecht v.
Ludwig, 82 F.3d 1085, 1095, 317 U.S.App.D.C. 281 (D.C.
Cir. 1996) (seeking to introduce bank files that the party
conceded " were not part of the administrative record
compiled by the agency when the Senior Deputy Comptroller
declared the banks insolvent" ). For another, the Court
presumes that, for judicial review to be effective, materials
that were before the agency should be included in
the administrative record irrespective of whether those
materials are " adverse to [the agency's]
decision" or otherwise satisfy any of the three unusual
circumstances identified in American Wildlands and
Dania Beach. Similarly, the test's references to
" background information" or an agency's
failure to adequately explain its action both imply that the
information a court is considering adding to the
administrative record in those circumstances is information
that was not before the agency in the first instance. If a
party provides concrete, non-speculative evidence that
material an agency did actually consider " either
directly or indirectly" is absent from the record,
Marcum, 751 F.Supp.2d at 78, however, that should be
the end of the matter. In those circumstances a court need
not go on to ask whether one of the three " unusual
circumstances" has been shown.
Court acknowledges that in District Hospital
Partners the D.C. Circuit recently applied the
American Wildlands test when considering a
party's effort to supplement the administrative record
with materials similar to those the Plaintiffs seek to add to
the record in this case. See 786 F.3d at 55-56. Yet,
in that case the Circuit does not seem to have been
confronted with materials that the parties claimed had been
before the agency in the first instance. The Circuit's
recitation of the test suggests as much. After reiterating
that APA review must " be based on the full
administrative record that was before the
Secretary," the court explained that, to " ensure
that [courts] review only those documents that were
before the agency," a party may supplement the
record only if " they can demonstrate unusual
circumstances justifying a departure from this general
rule." Id. at 55 (emphasis added). Thus,
the Circuit appears to have been dealing with a situation in
which the parties sought to add extra-record information to
the administrative record. As a result, the Court does not
read the opinion to hold that, had the plaintiffs requested
to supplement the record with materials that had been before
the agency, the Circuit would nevertheless have required the
plaintiffs to show an " unusual circumstance"
here seek to supplement the administrative record with
materials that they claim were in fact before the agency.
See Pls.' Mem. Supp. at 17 (claiming, before
listing documents Plaintiffs seek, that " HHS has not
produced significant additional documents which were before
the agency during the rulemakings here at issue" ).
Consequently, the Court need only consider whether the
Plaintiffs have provided concrete, non-speculative
information that the agency directly or indirectly considered
the materials Plaintiffs seek in order to resolve this
have moved to supplement the administrative record with
materials they claim are relevant to both the 2003 Payment
Regulations and the annual Threshold Regulations. Generally,
Plaintiffs contend that " the administrative records
that HHS has produced contain only some of the data inputs
and none of the formulas that the agency actually used to set
the thresholds" and that " HHS had omitted a
critical document from the rulemaking record for its 2003
amendments to the outlier payment regulations."
Pls.' Mem. Supp. at 2. Without these materials,
Plaintiffs claim that " any explanation by HHS of the
path taken in arriving at the challenged agency actions will
necessarily be incomplete and will thus hinder the
Court's review." Id. For its part, HHS
responds that Plaintiffs are seeking materials " that