United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
JAMES
E. BOASBERG UNITED STATES DISTRICT JUDGE.
This
Court has previously observed that disputes involving
Medicaid's intricacies can be “significantly more
difficult to describe than to decide.” Cooper
Hosp./Univ. Med. Ctr. v. Burwell, 179 F.Supp.3d 31, 36
(D.D.C. 2016) (citation omitted). Having read the
parties' briefs here, however, the Court does not believe
that this aphorism applies with full force in this case.
Indeed, to ultimately resolve the pending Cross-Motions for
Summary Judgment, it will require supplemental briefing.
I.
Background
Plaintiff
Missouri Department of Social Services seeks to amend three
of its reports to the federal government detailing the
State's Medicaid expenditures on “disproportionate
share hospital” (DSH) payments. These are payments that
states make to hospitals serving a large number of
Medicaid-eligible and uninsured patients. See 42
U.S.C. § 1396a(a)(13)(A)(iv). That money helps to offset
the losses such institutions generally face, since the
payments they receive for furnishing specific services to
individuals on Medicaid generally fall short of the cost.
Reflecting Medicaid's status as a cooperative
federal-state program, the federal government generally
reimburses a percentage of a state's Medicaid
expenditures, including its DSH payments. See 42 U.S.C.
§ 1396b(a); id § 1396r-4(f). The federal
government's share is called “federal financial
participation” of “FFP.” 42 C.F.R. §
400.203; 45 C.F.R. § 95.4.
Missouri's
problem here arises because, as the State openly
acknowledges, it made an administrative mistake almost 25
years ago. In its FY 1995 report, it listed approximately $10
million worth of expenditures on the wrong line, thus
underreporting its DSH spending on institutions for mental
disease (IMDs). Unwittingly locking in this error, Congress
passed a law in 1997 capping federal reimbursement for IMD
DSH payments at ¶ 1995 levels. Missouri has thus been
stuck with the wrong number since that time. So when this
error came to light some two decades later, Missouri tried to
do something about it. The State petitioned the Centers for
Medicare and Medicaid Services - an agency that lies within
the auspices of Defendant Department of Health and Human
Services and that is responsible for administering Medicaid
-to allow it to make prior-period adjustments to its FY 1995,
FY 2014, and FY 2015 reports. In each year, the State seeks
increased FFP for DSH payments regarding IMDs and a
corresponding reduction in federal dollars for non-IMD DSH
payments. Missouri seeks no adjustment for years between 1995
and 2014, although it does hope that a correction here will
benefit it going forward.
CMS
determined that this request ran up against two distinct but
intertwined statutory provisions. First, § 1132(a) of
the Social Security Act requires that any state's
“claim . . . for payment” be made within a
“two-year period” of the calendar quarter in
which the payment was incurred. See 42 U.S.C. §
1320b-2(a). While the FY 2015 and most of the FY 2014
amendments were timely, this provision posed a problem for
the State's FY 1995 adjustment. Second, as noted just
above, Congress passed a law in 1997 providing a cap for IMD
DSH payments based on FY 1995 numbers. That is § 1923(h)
of the Act. See 42 U.S.C. 1396r-4(h). Both
Missouri's FY 2014 and FY 2015 expenditures exceed the FY
1995, as reported in that year. Were Missouri able to both
revise its FY 1995 numbers and then use those numbers as the
new baseline, however, it would be in the clear.
Relying
on both of these provisions, CMS denied Missouri's
request for amendment. In 2018, the Departmental Appeals
Board affirmed, prompting Missouri's request for judicial
review in this Court. The Board's decision proceeds by
fiscal year. For FY 1995, it concluded that the State's
desired adjustment constituted a “claim” subject
to the two-year limitation of § 1132(a), thus rendering
its request for amendment roughly two decades too late.
See ECF No. 14, Attach. 5 (Board Decision) at 9-13.
It thus affirmed the denial of the State's request for
approximately $5 million in federal financial participation
for IMD DSH payments for that year. (This payment, it should
be noted, would have been offset by a decrease by the same
amount for non-IMD DSH federal payments.)
Moving
to the next two fiscal years, the Board agreed that the
requested amendments for FY 2014 and FY 2015 were timely
under § 1132(a). See Board Decision at 14. (The
Court omits discussion of a nuance regarding the timeliness
of the first quarter of FY 2014 amendment, which the State
does not challenge. See ECF No. 15 (Pl. MSJ &
Opp.) at 15 n.3.) The request for a prior-period adjustment
for these years, however, ran up against the second statutory
provision. Here, the Board noted that, were it to grant the
request, then, per § 1923(h), the adjustments for those
years would push Missouri over the limit set by the FY 1995
numbers. See Board Decision at 14-15 (noting that
§ 1923(h) relies on numbers reported for FY 1995). Since
the Board had already determined that amendment to those 1995
numbers was not permitted under § 1132(a), Missouri
could not escape its error. Id. at 14-15
(“But, as we have just concluded, the claimed base-year
increasing adjustment is unallowable because it was not
timely filed in accordance with section 1132(a).”);
id. at 15 (noting that CMS's
“disapproval” of FY 1995 amendment under §
1132(a) “was legally valid for the reasons discussed
above”). Its disallowance of the State's increasing
adjustment for FY 2014 and FY 2015 thus turned on the
Board's prior conclusion regarding the FY 1995 report,
which constituted a sufficient reason to deny Missouri's
request.
The
Board declined to journey down a second road that could, it
seemed to suggest, serve as an alternate basis for denying
the State's request for increased FFP in FY 2014 and FY
2015. Even if the FY 1995 report could now be amended - i.e.,
if Plaintiff could amend consistent with § 1132(a) -
§ 1923(h) may still put up a bar to altering the
relevant cap for future years. That would be because that
statutory section also provides that the cap rests on numbers
reported “not later than January 1, 1997.” 42
U.S.C. 1396r-4(h)(2)(B), (C). The Board gestured at but did
not ultimately take up this issue. “Even if the
base-year (FY 1995) adjustment had been timely made under
section 1132(a), ” it said, “that fact would not
settle the separate issue of whether section 1923(h)”
would permit Missouri to amend the cap “in order to
account for the adjustment.” Board Decision at 15 n.9.
But it went no further and made no alternate holding.
II.
Analysis
Here
lies the puzzle on summary judgment: Defendant's
arguments in its brief do not appear to track those made by
the Board. HHS makes barely a mention of § 1132(a).
See ECF No. 14, Attach. 3 (Def. MSJ) at 8-10;
see also ECF No. 18 (Def. Reply) at 3-7. At present,
the Court discerns no clear defense of the Board's
conclusions regarding this statutory provision - i.e., that
the State's request for adjustment constitutes a
“claim” under that provision and its
corresponding regulations, see Board Decision at 9 -
which serves as the cornerstone of the Board's decision
to disallow the prior-period adjustment for all three fiscal
years. See In re Carvalho, 598 B.R. 356, 362 (D.D.C.
2019) (noting that it is party's obligation to
“spell out [its] arguments squarely and
distinctly”) (quoting Raines v. U.S. Dep't of
Justice, 424 F.Supp.2d 60, 66 n.3 (D.D.C. 2006)); see
also Cement Kiln Recycling Coal. v. EPA, 255 F.3d 855, 869
(D.C. Cir. 2001) (“A litigant does not properly raise
an issue by addressing it in a cursory fashion with only
bare-bones arguments.”) (internal quotation marks and
citation omitted). Instead, HHS focuses on the “January
1, 1997” language in § 1923(h), with several
policy arguments sprinkled in. See Def. MSJ at 8-10.
This
tack is perplexing for more than one reason. Right off the
bat, this argument only appears to apply to fiscal years 2014
and 2015. Section 1923(h), enacted in 1997, has no bearing on
the calculation of federal financial participation in DSH
payments for FY 1995, to which it does not apply. As far as
the Court can now tell, Defendant thus offers no meaningful
argument on whether amendment to the FY 1995 report is
permissible for the purpose of determining the federal
government's contribution to DSH payments for IMDs in
that year. This inquiry is governed - at least as the Board
described it and as Missouri appears to agree, see
Board Decision at 8 - solely by § 1132(a). And if HHS
does not defend the disallowance of amendment to FY 1995,
then the dominoes would appear to fall for FY 2014 and FY
2015, since the Board's decision on those years is
directly predicated on its conclusion regarding FY 1995.
See Board Decision at 14-15.
Turning
to those latter two years, HHS's argument appears to rest
on the alternate ground - mentioned above - that the Board
raises in a footnote. It argues in its briefing here that
§ 1923(h) places its own bar on amending base-year
numbers, since one of the cap's prongs refers to reports
made “not later than January 1, 1997.” Def MSJ at
8-10. The Court does not rule out the possibility that CMS
could have reasoned along these lines. But it did not.
Instead, the Board based its denial of the State's
request for FFP in FY 2014 and FY 2015 squarely on its
earlier decision that the State's time to amend its
base-year numbers had long run out under § 1132(a).
See Board Decision at 14-15. Its reference to §
1923(h) served the limited purpose of pointing out that this
provision relies on the reported FY 1995 numbers, which the
Board had already decided could no longer be amended.
Id Not once in the Board's lengthy analysis does
it mention the phrase “January 1, 1997” or, apart
from the footnote cited above, even hint at any time bar
within § 1923(h). Id at 8-15.
This
may be a problem for HHS. It is a tenet of administrative law
that a Court can only sustain an agency's decision on the
ground offered by the agency. See SEC v. Chenery Corp., 332
U.S. 194, 196 (1947) (“[A] reviewing court . . . must
judge the propriety of [agency] action solely by the grounds
invoked by the agency.”). The federal government's
brief here seems to ...