United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
P. MEHTA UNITED STATES DISTRICT JUDGE.
matter is before the court in an unusual posture. Strictly
speaking, the court has before it the parties'
cross-motions for summary judgment and a suggestion of
mootness filed by Defendant Secretary of Health and Human
Services. But it is not the merits of Plaintiffs' claims
that are at issue in these motions; rather, what the parties
vigorously contest is the proper remedy to afford these
are five acute care hospitals who brought this action to seek
review of a determination by the U.S. Department of Health
and Human Services' Provider Reimbursement Review Board
that it lacked jurisdiction to hear Plaintiffs' appeal.
Plaintiffs' appeal to the Board challenged the amount of
“outlier” payments Plaintiffs received in fiscal
years 2008, 2009, and 2012 on the ground that the federal
Medicare regulations governing those payments violated the
Administrative Procedure Act (“APA”) and, as
relevant here, requested that the Board grant
“expedited judicial review” of Plaintiffs'
APA challenge. The Board denied Plaintiffs' request
for expedited judicial review, however, under what is known
as the “self-disallowance”
regulation. It is this decision by the Board that
forms the basis for Plaintiffs' lawsuit, at least in its
current form. Plaintiffs' challenge to the outlier
regulations is not presently before the court.
does not seek to defend the Board's determination that it
lacked jurisdiction to grant Plaintiffs' request for
expedited judicial review. Instead, he asks the court-for a
second time-to remand this matter to the Board so that it can
confirm its jurisdiction and grant these Plaintiffs the
expedited judicial review finding that the Board previously
withheld. Plaintiffs, on the other hand, do not want a
remand. They ask for greater relief. They want the court to
vacate the self-disallowance regulation that the
Board relied upon to deny them expedited judicial review.
Such relief is warranted, they say, following this
court's decision in Banner Heart Hospital v.
Burwell, 201 F.Supp.3d 131 (D.D.C. 2016), in which the
court held that applying the self-disallowance regulation to
dissatisfied providers, like these Plaintiffs, who assert a
legal challenge to an agency regulation or policy that cannot
be addressed by a fiscal intermediary is contrary to the
Medicare statute. After the regulation is vacated, Plaintiffs
maintain, the court could retain jurisdiction, freeing
Plaintiffs to amend their Complaint to challenge the outlier
regulation on the merits.
court previously rejected Defendant's request for a
remand. See generally Bayshore Cmty. Hosp. v.
Hargan, 285 F.Supp.3d 9 (D.D.C. 2017). The court ruled
that a remand was inappropriate because (1) Defendant had not
offered a “substantial and legitimate” reason
warranting remand; (2) a remand would prejudice Plaintiffs by
causing extensive delay; and (3) remand would be futile, as
the law unambiguously requires the Board to grant expedited
judicial review. See Id. at 16. The landscape has
changed, however, since the court's ruling.
things have occurred. First, in his motion for summary
judgment and remand, Defendant has offered a more fulsome
explanation for why the Board did not apply Banner
Heart to Plaintiffs' appeal in the first instance.
Defendant explains that the Board had no choice but to apply
the self-disallowance regulation to Plaintiffs' appeal,
notwithstanding the court's decision in Banner
Heart, because “the Board is constrained by the
agency's existing regulations, which it lacks the power
to overrule.” Def.'s Cross-Mot. for Summ. J. &
Remand, ECF No. 29 [hereinafter Def.'s Mot.], at 19
(citing 42 C.F.R. § 405.1867). In other words, the Board
was not at liberty to apply Banner Heart even if it
wanted to do so. In denying Defendant's first motion for
remand, the court did not appreciate this limitation on the
Board's authority. Cf. Bayshore Cmty. Hosp., 285
F.Supp.3d at 16-17.
on April 23, 2018, the Centers for Medicare and Medicaid
Services (“CMS”) issued a ruling formally
acquiescing in the court's decision in Banner
Heart. See Notice of Suppl. Authority, ECF No.
33, Ex. 1, ECF No. 33-1 [hereinafter CMS Ruling No. 1727-R].
The ruling “states the policy of [CMS] concerning [its]
decision to follow the U.S. District Court for the District
of Columbia's holding in [Banner Heart] for
appeals of cost reporting periods that ended on or after
December 31, 2008[, ] and began before January 12, 2016[, ]
that were pending or filed on or after April 23, 2018.”
Id. at 1-2. In practical terms, the new CMS ruling
means that the Board, generally speaking, now has
jurisdiction to grant expedited judicial review to providers
who, like Plaintiffs, did not follow the self-disallowance
regulation by including a challenged item on a cost report
“due to a good faith belief that the [challenged] item
was subject to a payment regulation or other policy” as
to which the fiscal intermediary had “no authority or
discretion to make payment in the manner . . . sought.”
Id. at 2. Plaintiffs candidly acknowledge that
CMS' acquiescence to Banner Heart negates at
least one form of relief that they originally sought: an
injunction prohibiting the Board from applying the
self-disallowance regulation to similarly situated providers
in the future. See Pls.' Resp. to Def.'s
Suggestion of Mootness, ECF No. 37 [hereinafter Pls.'
Resp.], at 2 (“Although CMS Ruling 1727 does not moot
the request for vacatur, it does effectively remove the need
for injunctive relief barring prospective application of the
offending portions of the self-disallowance
the D.C. Circuit recently decided Billings Clinic v.
Azar, No. 17-5006, 2018 WL 3910505 (D.C. Cir. Aug. 10,
2018). In that case, multiple hospitals brought suit to
challenge the agency's methodology for calculating a
particular component of their Medicare reimbursements.
See Id. at *1. The Board granted expedited judicial
review to some hospitals, but declined to exercise
jurisdiction as to others, concluding that it lacked
jurisdiction to grant expedited review because those
hospitals failed to comply with the self-disallowance
regulation. See Id. at *8-9. With respect to the
hospitals in the former category, the Circuit found that
“the district court properly exercised jurisdiction
over [their] claims.” Id. at *9. With respect
to the hospitals in the latter category, however, the Circuit
observed that while the Secretary “ha[d] since
disavowed the Board's procedural objection to [their]
claims in that case, that [left] unanswered whether the
district court could proceed without first remanding for
either a final decision or certification for expedited review
from the Board.” Id. Ultimately, the Circuit
did not need to untangle this “jurisdictional quandary,
” because some of the hospitals did have
expedited-review certifications from the Board and because
“only non-individualized injunctive relief [was]
sought.” Id. Billings Clinic has obvious
relevance to this case. Although the Circuit passed on
resolving the jurisdictional inquiry, it clearly telegraphed
that jurisdictional complications might arise should a
substantive challenge to an agency policy or regulation
arrive on appeal without proper Board certification. Cf.
Id. It would be careless for this court not to heed the
of these events, and for the reasons that follow, the court
reconsiders its denial of Defendant's initial motion for
remand and finds that a remand to the Board, with
instructions to follow Banner Heart, as Defendant
has agreed to do, is the appropriate remedy in this case.
Rule of Civil Procedure 54(b) provides that “[a] court
may revise its own interlocutory orders at ‘any time
before the entry of a judgment adjudicating all the claims
and all the parties' rights and liabilities.'”
Ofisi v. BNP Paribas, S.A., 285 F.Supp.3d 240, 243
(D.D.C. 2018) (quoting Fed.R.Civ.P. 54(b)). Relief under Rule
54(b) is available “as justice requires, ” a
standard that reflects the flexibility afforded courts under
the rule. Cobell v. Jewell, 802 F.3d 12, 25 (D.C.
Cir. 2015) (internal quotation mark omitted). Reconsideration
“may be warranted where the court has patently
misunderstood the parties, made a decision beyond the
adversarial issues presented, made an error in failing to
consider controlling decisions or data, or where a
controlling or significant change in the law has
occurred.” U.S. ex rel. Westrick v. Second Chance
Body Armor, Inc., 893 F.Supp.2d 258, 269 (D.D.C. 2012)
(cleaned up). “These considerations leave a great deal
of room for the court's discretion and, accordingly, the
‘as justice requires' standard amounts to
determining ‘whether [relief upon] reconsideration is
necessary under the relevant circumstances.'”
Lewis v. District of Columbia, 736 F.Supp.2d 98, 102
(D.D.C. 2010) (alteration in original) (quoting Cobell v.
Norton, 224 F.R.D. 266, 272 (D.D.C. 2004)).
these principles in mind, the court turns to the factors that
a court must evaluate in deciding whether to grant an
agency's request for voluntary remand. “Courts have
found voluntary remand to be appropriate when new evidence
comes to light after the agency made its decision,
intervening events beyond the agency's control arise
after the agency has acted and could affect the validity of
the agency's decision, or other ‘substantial and
legitimate concerns' ...