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St. Vincent's Medical Center v. Burwell

United States District Court, District of Columbia

October 21, 2016

ST. VINCENT'S MEDICAL CENTER, Plaintiff
v.
SYLVIA M. BURWELL, in her official capacity as Secretary of Health and Human Services, Defendant.

          MEMORANDUM OPINION

          AMY BERMAN JACKSON, UNITED STATES DISTRICT JUDGE

         Plaintiff St. Vincent's Medical Center has brought this action against defendant Sylvia M. Burwell in her official capacity as Secretary of Health and Human Services ("HHS"), seeking judicial review of the dismissal of plaintiff s appeal of a Medicare reimbursement determination. Compl. [Dkt. # 1]. Specifically, plaintiff alleges that the Provider Reimbursement Review Board ("the Board") erred when it determined that it was required to dismiss plaintiffs appeal - which was received one day late - as untimely, when the regulations state only that "the Board may dismiss a late-filed appeal. Id. ¶¶ 17-20, 24. The parties have filed cross-motions for summary judgment, which have been fully briefed. PL's Mot. for Summ. J. [Dkt. # 16] ("PL's Mot."); Mem. of P. & A. in Supp. of PL's Mot. [Dkt. # 16] ("PL's Mem."); Def's Cross-Mot. for Summ. J. & Opp. to PL's Mot. [Dkt. # 17] ("Def's Mot."]; Mem. in Supp. of Def's Mot. [Dkt. # 17] ("Def's Mem.").

         Because the relevant regulations and rules make clear that the Board "may" - not "must" -dismiss an appeal if a provider fails to meet a filing deadline, the Court agrees with plaintiff that the Board's conclusion that it was required to dismiss the appeal was not in accordance with law and must be set aside. See 5 U.S.C. § 706(2)(A). Accordingly, the Court will deny defendant's motion for summary judgment and grant plaintiffs motion on Count I, and remand this matter to the agency for further proceedings consistent with this opinion.

         BACKGROUND

         The following facts are not in dispute. Plaintiff is a hospital eligible to participate in the Medicare program, which reimburses participants for the operating costs of certain inpatient hospital services. Compl. ¶¶ 5, 8. Those reimbursements are calculated based on a number of factors, using a mathematical formula. Id. ¶¶ 8-12. A provider that is dissatisfied with the reimbursement determination may appeal to the Board within 180 days of receiving notice of its reimbursement amount. Id. ¶ 14.

         In this case, plaintiff timely appealed from a reimbursement determination, and on January 8, 2015, the Board established a schedule of proceedings for the appeal which required plaintiff to submit a final position paper no later than September 1, 2015. Compl. ¶¶ 15-16; see also Sept. 16, 2015 Board Letter, Ex. A to Compl. [Dkt. # 1-1] ("Board Letter") at 1. On August 31, 2015, one day before the position paper was due, plaintiff sent the Board a copy of its position paper "via UPS guaranteed overnight delivery service." Compl. ¶ 17. However, on September 1, 2015, UPS informed plaintiff that "the position paper would not be delivered on that day due to a late UPS trailer arrival delaying the delivery" Id. ¶ 18; see also UPS Receipt, Ex. B to Compl. [Dkt. # 1-2] at 2. So plaintiff emailed a copy of the position paper to the Director of the Board's Division of Jurisdiction and Case Management that day. Compl. ¶ 19; see also Sept. 1, 2015 Email, Ex. C to Compl. [Dkt. # 1-3]. The position paper was delivered by UPS on September 2, 2016 and the Board received it the same day. Compl. ¶¶ 18, 20; see also UPS Receipt at 2.

         In a letter dated September 16, 2015, the Board notified plaintiff that it had dismissed its appeal "for failure to timely file the final position paper." Board Letter at 1. Citing to 42 C.F.R. § 405.1868 and Board Rule 27.1, [1] the Board explained that "[t]he applicable regulation and rule provide that the Board is to dismiss an appeal if the Provider does not timely file its position paper." Id. at 1; see also Id. at 2 ("The language in the Board rule is clear that an appeal will be dismissed if a position paper is not timely filed.").

         Plaintiff initiated this action on November 15, 2015, seeking judicial review of the Board's decision to dismiss its appeal. Compl. The complaint contains three counts. In Count I, plaintiff argues that the Board's dismissal decision was inconsistent with the relevant regulations and the Board's rules because those rules "state that the Board may dismiss an appeal when the position paper is not timely filed, " not that it must do so. Id. ¶ 24. So, plaintiff alleges, the Board's decision was contrary to law and must be set aside pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2)(A). Id. ¶ 26. In Count II, because "[t]he Board's rules do not explicitly prohibit filing of position papers in electronic format, " plaintiff maintains that defendant acted arbitrarily and capriciously in violation of the APA by dismissing the appeal despite the fact that the position paper "was timely filed electronically." Id. ¶¶ 28-29. And in Count III, plaintiff argues that the Board cannot rely on its rule, which lists the permissible methods of submitting documents to the Board, as a basis for dismissing plaintiffs appeal, because that rule was not listed or published in the Federal Register and was not subject to notice and comment rule making. Id. ¶¶ 31-33.

         Plaintiff filed its motion for summary judgment on May 15, 2016, PL's Mot., and defendant filed its combined opposition and cross-motion two months later. Def's Mot. Plaintiff filed its reply on August 29, 2016, PL's Mem. in Opp. to Def.'s Mot. & Reply in Supp. of PL's Mot. [Dkt. # 21] ("PL's Reply"), and defendant filed its cross-reply on October 17, 2016. Def.'s Reply in Supp. of Def.'s Mot. [Dkt. # 22] ("Def.'s Reply").

         STANDARD OF REVIEW

         Under the APA, a court must "hold unlawful and set aside agency action, findings, and conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, " 5 U.S.C. § 706(2)(A), in excess of statutory authority, id. § 706(2)(C), or "without observance of procedure required by law, " id. § 706(2)(D). However, the scope of review is narrow. See Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The agency's decision is presumed to be valid, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971), and the court must not "substitute its judgment for that of the agency." State Farm, 463 U.S. at 43. A court must be satisfied, though, that the agency has "examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made." Alpharma, Inc. v. Leavitt, 460 F.3d 1, 6 (D.C. Cir. 2006), quoting State Farm, 463 U.S. at 43.

         ANALYSIS

         I. Plaintiff did not fail to exhanst any mandatory administrative remedy prior to initiating this action.

         In its cross-motion for summary judgment, defendant appears to argue that plaintiff failed to exhaust its administrative remedies prior to bringing this lawsuit. See Def.'s Mot. At 3-4. ...


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