United States District Court, District of Columbia
P. MEHTA, UNITED STATES DISTRICT JUDGE
appeal, or not to appeal? That is the question Plaintiff
Oakland Physicians Medical Center faced in the fall of 2014,
after a Medicare administrative contractor
(“MAC”) issued two Notices of Program
Reimbursement (“NPR”) for the fiscal years ending
in 2010 and 2011, which Plaintiff viewed as under-reimbursing
it for eligible Medicare costs. How and when Plaintiff could
have challenged those determinations is at issue in this
Medicare statute gives a dissatisfied provider the right to
appeal a MAC's final decision to the Provider
Reimbursement Review Board, so long as that provider files a
request for review “within 180 days after notice of the
intermediary's final determination.” 42 U.S.C.
§ 1395oo(a)(3). Medicare regulations, however,
confer some discretion on the Board to extend the 180-period.
If the provider files the request for review no more than
three years from the date of the NPR and can show “good
cause” for the delay in filing, the Board
“may” exercise jurisdiction over the appeal. 42
C.F.R. § 405.1836(b)-(c). The regulations define
“good cause” to mean “extraordinary
circumstances beyond [the provider's] control (such as a
natural or other catastrophe, fire, or strike).”
Id. § 405.1836(b).
did not file a request for Board review within 180 days of
the 2010 and 2011 NPRs. Instead, Plaintiff moved the MAC to
reopen those decisions-a request that the MAC initially
granted. But months later, the MAC shut the door on the
prospect of a correction by closing the reopenings. In doing
so, the MAC found that Plaintiff had contracted away its
right to challenge the reimbursement decisions by virtue of a
settlement that Plaintiff had reached with the Centers for
Medicare and Medicaid Services (“CMS”). Stunned
by the MAC's about face, Plaintiff scrambled and filed
appeals with the Board, arguing that Plaintiff had good cause
to file beyond the 180-day period. The Board disagreed. It
refused to extend the 180-day filing period, finding that
Plaintiff's decision not to appeal from the 2010 and 2011
NPRs was within its control and therefore Plaintiff had not
met the good-cause standard.
now asks this court for two types of relief. First, Plaintiff
asks the court to reverse the Board's no “good
cause” determination. Second, it asks the court to
order the MAC to “complete the reopenings.” The
court declines to do either. The court concludes, contrary to
Defendant's argument, that it has jurisdiction to review
the Board's refusal to extend the filing deadline, but
ultimately finds that the Board's decision that Plaintiff
failed to show good cause was neither arbitrary and
capricious nor contrary to law. As to Plaintiff's request
to compel the MAC to complete the reopenings, the court lacks
jurisdiction to do so. Accordingly, for the reasons that
follow, the court grants Defendant's Motion for Summary
Judgment and denies Plaintiff's Motion for Summary
Statutory and Regulatory Background
Medicare Act, 42 U.S.C. § 1395 et seq.,
establishes a federal health insurance program for the
disabled and the elderly. A hospital or other provider of
medical services participates in the Medicare program under a
“provider agreement” with the Secretary of Health
and Human Services (“HHS”), the named Defendant
in this case. Id. § 1395cc. Part A of the
Medicare program provides insurance for participating
hospitals and pays them for covered medical services
furnished to Medicare-eligible individuals. Id.
§§ 1395c to 1395i-4.
1983, Medicare has reimbursed hospitals for covered services
through a prospective payment system. Id. §
1395ww(d); see also UMDNJ-Univ. Hosp. v. Leavitt,
539 F.Supp.2d 70, 71-72 (D.D.C. 2008). Under this system,
Medicare payments to hospitals are made using predetermined
flat rates for each of more than 450 diagnosis-related groups
of treatments and services. See generally 42 C.F.R.
§ 412 et seq. Among the add-ons to a
hospital's reimbursement are the costs associated with
graduate medical education. See 42 U.S.C. §
1395ww(d)(5)(B)(iv)(II); id. § 1395ww(h).
Reimbursement for such costs is determined in part based on a
provider's three-year rolling average of full-time
equivalent residents. See Id. §
1395ww(h)(4)(G)(i); 42 C.F.R. § 413.79(d)(3).
the sub-agency of HHS that administers the Medicare program,
uses “Medicare administrative contractors, ” or
“MACs, ” to calculate and disburse reimbursement
amounts. See 42 U.S.C. § 1395kk-1. After the
close of each fiscal year, a Medicare provider submits to the
MAC an annual cost report that sets out in detail the covered
services rendered by the provider to Medicare-eligible
patients. 42 C.F.R. §§ 413.20(c), 413.24(f). The
MAC then reviews the cost report, audits items in the report
if necessary, and issues a written Notice of Program
Reimbursement, or “NPR, ” containing its
determination as to the total amount owed to the provider for
Medicare-covered services provided for the year in question.
See 42 C.F.R. § 405.1803.
that are dissatisfied with the reimbursement amounts awarded
by a MAC have a way to seek redress. The first level of
review is to file an appeal, also known as a request for
hearing, with the Provider Reimbursement Review Board. The
prerequisites to Board review are set forth in 42 U.S.C.
§ 1395oo(a). As relevant here, that statute
states that a provider of services may obtain a hearing
before the Board if the provider:
(1)(A)(i) is dissatisfied with a final determination of the
organization serving as its fiscal intermediary . . . as to
the amount of total program reimbursement due the provider .
. . for the period covered by such [cost] report, . . .
(2) the amount in controversy is $10, 000 or more, and
(3) such provider files a request for a hearing within 180
days after notice of the intermediary's final
determination . . . .
42 U.S.C. § 1395oo(a); see also 42
C.F.R. § 405.1835. As to the last of the three
requirements- requesting a hearing within 180 days after
notice of the final determination-the Supreme Court has held
that the timeliness requirement is not a jurisdictional
limitation, but a claims-processing rule. See Sebelius v.
Auburn Reg'l Med. Ctr., 568 U.S. 145, 153-56 (2013).
Nevertheless, missing the 180-day deadline can have severe
consequences. Medicare regulations provide that if the Board
receives a request for hearing “after the applicable
180-day time limit, ” the appeal generally “must
be dismissed by the Board.” 42 C.F.R. §
405.1836(a); see also Id. § 405.1840(a)(2)
(requiring the Board to review the timeliness of a request
not totally lost if a provider misses the 180-day filing
deadline, but a provider in that circumstance faces a steep
uphill climb to secure Board review. Medicare regulations
provide that the Board “may extend the time limit upon
a good cause showing by the provider.” Id.
§ 405.1836(a). “Good cause” is defined quite
narrowly: “The Board may find good cause to extend the
time limit only if the provider demonstrates in writing it
could not reasonably be expected to file timely due to
extraordinary circumstances beyond its control[.]”
Id. § 405.1836(b). The regulation provides as
examples of good cause “natural or other catastrophe,
fire, or strike.” Id. The provider's
request for a good-cause extension must be filed within a
“reasonable time, ” and in no event three years
after the issuance of the MAC decision that is the subject of
the appeal. Id. § 405.1836(b), (c)(2).
after Board review, a provider remains dissatisfied, it may
proceed to a second level of review in federal court. As
pertinent here, the Medicare statute authorizes
“judicial review of any final decision of the
Board” by a federal court if the action is filed
“within 60 days of the date on which notice of any
final decision by the Board . . . is received.” 42
U.S.C. § 1395oo(f)(1). The Medicare
regulations, however, purport to remove a Board denial of a
“good cause” extension from the reach of a
federal court. Specifically, the regulations provide that
“[a] finding by the Board . . . that the provider did
or did not demonstrate good cause for extending the time for
requesting a Board hearing is not subject to judicial
review.” 42 C.F.R. § 405.1836(e)(4). As will be
seen, whether that regulation squares with the Medicare
statute's allowance of judicial review of “any
final decision of the Board” is a threshold question in
Medicare regulations provide one additional avenue to correct
a MAC reimbursement determination: going back to the source.
A provider can ask the MAC to reopen its reimbursement
determination. See Id. § 405.1885(a)(1). Such a
request must be made within three years. See Id.
§ 405.1885(b)(2)(i). In turn, a MAC may readdress a
specific factual or legal finding that arose in the cost
report that the provider requests be reopened. See
Id. § 405.1885(a)(1). And, importantly for this
case, a reopening may address a specific factual or legal
finding that “first arose in or was first determined
for a cost reporting period that predates the period at issue
. . ., and once determined, was used to determine an aspect
of the provider's reimbursement for one or more later
cost reporting periods.” Id. §
405.1885(a)(1)(iii). A reopening “may” result in
a revision of the specific finding challenged, but there is
no guarantee that a MAC will do so. See Id. §
Medicare regulations also address the interplay between a
request for reopening and an appeal to the Board.
Importantly, the regulations state that “[a] request to
reopen does not toll the time in which to appeal an
otherwise appealable determination or decision.”
Id. § 405.1885(b)(2)(ii) (emphasis added).
Furthermore, “[a] reopening by itself does not extend
appeal rights.” Id. § 405.1887(d). If a
MAC reopens a determination but refuses to revise it, that
decision is not subject to further administrative review.
See id.; cf. Id. § 405.1885(a)(5)
(providing only that a “revised determination or
decision” is appealable); id. §
405.1889(b)(1) (stating that “only those matters that
are specifically revised” are within the scope of an
appeal). A non-revised portion of a cost report may not be
appealed, even if other portions are revised and appealable.
See Id. § 405.1887(d); id. §
405.1889(b)(2) (“Any matter that is not specifically
revised (including any mater that was reopened but not
revised) may not be considered in any appeal of the revised
determination or decision.”). And, lastly, the Medicare
regulations provide, and the Supreme Court has confirmed,
that the decision of a MAC not to reopen an NPR is not
subject to judicial review. See Id. §
405.1885(a)(6); Your Home Visiting Nursing Servs. v.
Shalala, 525 U.S. 449, 454-58 (1999).
Oakland Physicians Medical Center, which operates as Pontiac
General Hospital, is an acute care inpatient hospital located
in Pontiac, Michigan. Compl., ECF No. 1, ¶¶ 1, 19.
Plaintiff runs an accredited residency program in family
medicine. Id. ¶ 48; Answer, ECF No. 9, ¶
48. For years, Plaintiff has sought and received
reimbursement from Medicare for direct and indirect eligible
costs associated with operating this program. Compl. ¶
48; Answer ¶ 48.
October 17, 2014, the MAC issued to Plaintiff an NPR for the
fiscal year ending 2010. Administrative R., ECF No. 24
[hereinafter AR], at 87. A month later, on November 17, 2014,
the MAC issued to Plaintiff an NPR for 2011. AR 1. As to both
the 2010 and 2011 NPRs, Plaintiff believes that it did not
receive reimbursement for the full amount of eligible costs
associated with its residency program during those years.
Compl. ¶ 51. That underpayment, according to Plaintiff,
resulted from an error made by the MAC with respect to the
2009 NPR. See Id. ¶¶ 50-51. Recall that
reimbursement for resident education is calculated in part
based on a provider's three-year rolling average of
full-time equivalent (“FTE”) residents.
See 42 U.S.C. § 1395ww(h)(4)(G)(i); 42 C.F.R.
§ 413.79(d)(3). For 2009, the MAC eliminated 100% of
Plaintiff's FTE count for purposes of determining
Plaintiff's residency program-associated costs due to
insufficient documentation. Compl. ¶ 50; Answer ¶
50. The MAC's elimination of the FTE count in the 2009
NPR adversely affected not only the reimbursements for that
fiscal year, but also for the two subsequent fiscal years,
2010 and 2011, because of ...