United States District Court, District of Columbia
E. BOASBERG United States District Judge.
best medicine can sometimes be hard to swallow. More than two
years ago, a set of Medicare service providers asked the
Court to issue a writ of mandamus to compel the Secretary of
Health and Human Services to process their long-pending
claim-reimbursement appeals in accordance with statutory
timelines. The Court declined to do so, believing the matter
best left to the political process. The Court of Appeals
disagreed, holding that this Court has jurisdiction to grant
mandamus relief and remanding the case here for a
determination on the merits. In response, the Secretary now
moves to stay the proceedings until September 30, 2017, to
allow HHS to move forward on various administrative and
legislative efforts designed to tackle the backlog of
reimbursement appeals. As was true two years ago, the Court
is reluctant to intervene. But the backlog and delays have
only worsened since Plaintiffs first sought the Court's
help, and the Secretary's proposed solutions are unlikely
to turn the tide. The Court accordingly will deny the
Secretary's Motion for Stay.
Court offered a primer on Medicare reimbursement in its first
Opinion in this case. See Am. Hosp. Ass'n v.
Burwell (AHA I), 76 F.Supp.3d 43, 46-48 (D.D.C.
2014), rev'd, Am. Hosp. Ass'n v.
Burwell (AHA II), 812 F.3d 183 (D.C. Cir.
2016). It now briefly reviews the aspects of the
administrative-appeals process relevant to the instant
providers and suppliers submit an extraordinary number of
Medicare fee-for-service claims on behalf of the
program's beneficiaries - 1.2 billion in fiscal year
2014. See Gov't Accountability Office,
Medicare Fee-for-Service: Opportunities Remain to Improve
Appeals Process 1 (May 2016),
Report). A Medicare Administrative Contractor (MAC) processes
each claim for reimbursement and decides whether to pay it or
deny it as invalid or improper. See 42 U.S.C. §
1395kk-1(a). If the claim is denied, the provider may appeal.
Medicare Act sets out a sequential four-step
administrative-appeal process, each of which must be
completed within a statutorily provided deadline: (1)
redetermination by the MAC, which must be completed within 60
days, id. § 1395ff(a)(3)(A), (a)(3)(C)(ii); (2)
on-the-record reconsideration by a Qualified Independent
Contractor (QIC), which must be completed within 60 days,
id. §1395ff(c)(3)(C)(i); (3) review, including
a hearing, by an administrative law judge in HHS's Office
of Medicare Hearings and Appeals (OMHA), which, absent a
waiver, must be completed within 90 days, id. §
1395ff(d)(1)(A); and (4) review by the Medicare Appeals
Council within the Departmental Appeals Board (DAB), which
must render a decision or remand to the ALJ within 90 days.
Id. § 1395ff(d)(2)(A). If the provider's
claim is worth at least $1, 500, the DAB's decision is
subject to judicial review. Id. §
1395ff(b)(1)(E)(i), (b)(1)(E)(iii); 42 C.F.R. §
405.1006(c); 80 Fed. Reg. 57, 827 (Sept. 25, 2015). When a
statutory deadline lapses before a decision has been made,
moreover, a provider may leapfrog its appeal to the next
stage through a process referred to as
“escalation.” See 42 U.S.C. §§
1395ff(c)(3)(C)(ii), (d)(3)(A), (d)(3)(B); 42 C.F.R.
§§ 405.1104, 405.1108(d), 405.1132(b).
the statutory deadlines together, a Medicare-reimbursement
claim should proceed through all four steps of the
administrative-appeal process within one year - “and
for years they did.” AHA I, 76 F.Supp.3d at
46. Recently, however, a massive accumulation of backlogged
cases has triggered significant delays, particularly at step
three - ALJ review. Between fiscal years 2010 and 2014, the
number of appeals filed at step three grew 936% - from 41,
733 to 432, 534. See GAO Report at 11. By the end of
FY2014, 767, 422 appeals were pending at step three,
see Mot., Exh. 1 (Projections Chart) at 26, and 96%
of ALJ decisions were issued well after the 90-day statutory
deadline. See GAO Report at 18. In FY2014, it took
OMHA an average of 415 days to process a step three appeal;
it now takes 935 days. See HHS, Office
of Medicare Hearings and Appeals (OMHA): Current Workload -
Decision Statistics (July 25, 2016),
point to the Recovery Audit Program, which was “fully
implemented” in 2010, AHA II, 812 F.3d at 186,
as the “primary culprit in creating and
sustaining” the backlog. See Opp. at 5.
Congress required the Secretary to set up the Program to
identify under- and overpayments and recoup the latter.
See 42 U.S.C. § 1395ddd(h)(1). To do so, the
Secretary contracts with Recovery Audit Contractors (RACs),
who are private entities that “audit provider-favorable
MAC decisions in ‘post-payment' review.”
AHA I, 76 F.Supp.3d at 47 (citing 42 U.SC. §
1395ddd(f)(7)(A)). RACs are paid on a contingent basis - they
“receive a cut of any improper payments they
recover” - “and can challenge claims going back
as far as three years.” Id. (citing 42 U.S.C.
§ 1395ddd(h)(1); Statement of Work for the Medicare
Fee-for-Service Recovery Audit Program 9-10,
Because a RAC's decision to deny payment of a
reimbursement claim is “appealable through the same
administrative process as initial denials, the RAC program
has contributed to a drastic increase in the number of
administrative appeals.” AHA II, 812 F.3d at
Secretary agrees that the RAC Program is a contributor to the
backlog, but also points to other sources: an increase in
Medicare beneficiaries; a growing practice among some
providers to appeal virtually every claim denial through ALJ
review; and a significant rise in the number of appeals filed
by Medicaid state agencies. See Mot., Exh. A
(Declaration of Ellen Murray), ¶¶ 10-13.
by the long delays, Plaintiffs - the American Hospital
Association, Baxter Regional Medical Center, Covenant Health,
and Rutland Regional Medical Center - filed suit in May 2014.
They asked the Court to grant mandamus relief to compel the
Secretary to adjudicate their pending administrative appeals
in compliance with the statutory deadlines, as well as to
comply with the statutory deadlines in administering the
appeals process for all hospitals. See ECF
No. 1 (Complaint) at 21-22. Plaintiffs then filed a motion
for summary judgment, see ECF No. 8, and the
Secretary moved to dismiss for lack of jurisdiction.
See ECF No. 12.
Court concluded that the jurisdictional and merits inquiries
at issue merged and thus resolved the parties' motions
together. AHA I, 76 F.Supp.3d at 50. It analyzed six
factors to determine whether the agency's delay was
“‘so egregious' as to warrant relief, ”
id. (quoting Telecomm. Research & Action
Ctr. v. FCC, 750 F.2d 70, 79 (D.C. Cir. 1984)), and
concluded that because of “HHS's budgetary
constraints, its competing priorities, and its incipient
efforts to resolve the issue, ” as well as
Congress's awareness of the problem, mandamus was not
warranted. Id. at 56. It thus denied Plaintiffs'
motion for summary judgment and granted the Secretary's
motion to dismiss for lack of jurisdiction. Id.
appealed, and the D.C. Circuit reversed and remanded with
instructions for further proceedings. The Court of Appeals
explained that the jurisdictional and merits inquiries are
distinct and should be approached separately. See AHA
II, 812 F.3d at 190. It then addressed only the former,
concluded that “the threshold requirements for mandamus
jurisdiction are met, ” and reversed this Court's
dismissal for lack of jurisdiction. Id. at 192. The
Court of Appeals further directed this Court, on remand, to
“determine whether ‘compelling equitable
grounds' now exist to issue a writ of mandamus, ”
id., and identified factors weighing in favor of and
against mandamus. See id. at 192-93.
remand, this Court held a status hearing at which the
Secretary submitted that a stay of proceedings would be
appropriate. The Court requested briefing, and the Secretary
has now moved to stay this action until September 30, 2017,
the close of the next full appropriations cycle.