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Mercy General Hospital v. Azar

United States District Court, District of Columbia

October 17, 2019

MERCY GENERAL HOSPITAL, et al., Plaintiffs,
v.
ALEX M. AZAR II, in his official capacity as Secretary of the United States Department of Health and Human Services, Defendant.

          MEMORANDUM OPINION

          REGGIE B. WALTON UNITED STATES DISTRICT JUDGE

         The plaintiffs, eighty-one acute care hospitals located in California, seek judicial review of the final decision of the defendant, the Secretary of the United States Department of Health and Human Services (the “Secretary”), denying their claims for reimbursement of deductible and coinsurance payments that were not paid to the hospitals by Medicare beneficiaries. See Complaint (“Compl.”) ¶¶ 1-2. Currently before the Court is the Plaintiffs' Motion for Reconsideration and Renewal of Motion for Summary Judgment and Objections; or, in the Alternative, Motion for Scheduling Order and Retention of Jurisdiction (“Pls.' Mot.” or the “motion for reconsideration”), which seeks, inter alia, reconsideration of the Court's prior decision issued on September 29, 2018 (the “September 29, 2018 decision”) pursuant to Federal Rule of Civil Procedure 59(e), or alternatively, pursuant to Rule 60(b). See Pls.' Mot. at 2. Upon consideration of the parties' submissions, [1] the Court concludes that it must grant in part and deny in part the plaintiffs' motion for reconsideration.

         I. BACKGROUND

         The Court previously described the relevant statutory and regulatory framework and factual background in detail, see Mercy Gen. Hosp. v. Azar, 344 F.Supp.3d 321, 326-33 (D.D.C. 2018) (Walton, J.), and therefore will not reiterate these topics in full again.

         The Court will, however, discuss the procedural posture pertinent to the resolution of the pending motion. As the Court previously explained, see id. at 328, if Medicare patients fail to pay the deductible and coinsurance payments that they owe to providers, the providers may seek reimbursement from the Centers for Medicare & Medicaid Services (“CMS”) for these unpaid amounts, known as “bad debts, ” see 42 C.F.R. § 413.89(e). To obtain reimbursement for these bad debts, providers must demonstrate that the debt satisfies four criteria:

(1) The debt must be related to covered services and derived from deductible and coinsurance amounts.
(2) The provider must be able to establish that reasonable collection efforts were made.
(3) The debt was actually uncollectible when claimed as worthless.
(4) Sound business judgment established that there was no likelihood of recovery at any time in the future.

Id. Chapter 3 of CMS's Provider Reimbursement Manual (“PRM”) provides further instruction regarding the requirements for bad debt reimbursement.

         Here,

the [CMS] Administrator [(the “Administrator”)] denied the plaintiffs' claims for Medicare reimbursement of unpaid deductibles and coinsurance pursuant to the Secretary's “must-bill policy, ” which requires providers seeking Medicare reimbursement for bad debts associated with dual eligible[] [patients][2] to (1) bill the state Medicaid program (the “billing requirement”) and (2) obtain and submit to the [Medicare] intermediary [(the “intermediary”)] a remittance advice from the state Medicaid program (the “remittance advice requirement”).[3] The Administrator denied the plaintiffs' claims for failing to satisfy the remittance advice requirement. In opposition to this conclusion, the plaintiffs argue[d] that (1) “[t]he Secretary's purported must-bill policy . . . was not in place prior to August 1, 1987, and therefore violates the [Bad Debt] Moratorium, ” [(the “Moratorium”)][4] or, alternatively, even if the must-bill policy is lawful; (2) “the Secretary should be ordered to accept the alternative documentation the [p]laintiffs submitted” under “PRM [§] 1102.3L, which clearly provided that providers could submit proper alternative documentation in lieu of billing the State[] . . . and which was applicable to the [p]laintiffs' cost years at issue”; and (3) the plaintiffs' “EDS[5] [reports] were the equivalent of remittance advices from the State, and[, therefore, ] rejecting them was improper, ” Mercy Gen. Hosp., 344 F.Supp.3d at 335 (tenth, fourteenth through seventeenth, nineteenth, and twentieth alterations in original) (citations omitted).

         The Court, in its September 29, 2018 decision, partially granted the plaintiffs' summary judgment motion and

conclude[d] that the Administrator's finding that the Secretary's remittance advice requirement predated the Moratorium [was] not supported by substantial evidence, and thus, based on the administrative record before the Secretary, application of such a requirement to the plaintiffs' claims violated the Moratorium. Therefore, the Court [could not] affirm the Secretary's denial of the plaintiffs' claims on the basis that the plaintiffs failed to provide remittance advices to support their claims. Moreover, because the Administrator did not find that the plaintiffs failed to bill the state for all of the claims at issue, the Court [could not] affirm the Administrator's decision denying all of the plaintiffs' claims on the alternative ground that the plaintiffs failed to satisfy any billing requirement.

Id. at 354. Accordingly, the Court vacated the Administrator's decision and remanded the case to the Secretary for further proceedings. See Order at 1 (Sept. 29, 2018), ECF No. 49. Thereafter, on October 25, 2018, the plaintiffs filed their motion for reconsideration of the Court's September 29, 2018 decision, see Pl.'s Mot. at 1, which is the subject of this Memorandum Opinion.

         II. STANDARDS OF REVIEW

         A. Rule 59(e) Motion for Reconsideration

         Federal Rule of Civil Procedure 59(e) permits a party to file “[a] motion to alter or amend a judgment” within “[twenty-eight] days after the entry of the judgment.” Fed.R.Civ.P. 59(e). “Motions to alter or amend a judgment under Federal Rule of Civil Procedure 59(e) lie within the discretion of the Court.” AARP v. U.S. Equal Emp't Opportunity Comm'n, 292 F.Supp.3d 238, 241 (D.D.C. 2017) (citing Ciralsky v. Cent. Intelligence Agency, 355 F.3d 661, 671 (D.C. Cir. 2004)). However, motions under Rule 59(e) are “disfavored, ” and the moving party bears the burden of establishing “extraordinary circumstances” warranting relief from a final judgment. E.g., Niedermeier v. Office of Baucus, 153 F.Supp.2d 23, 28 (D.D.C. 2001) (citing Anyanwutaku v. Moore, 151 F.3d 1053, 1057 (D.C. Cir. 1998)). “Rule 59(e) motions need not be granted unless the district court finds that there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” Anyanwutaku, 151 F.3d at 1057-58 (citation and internal quotation marks omitted).

         B. Rule 60(b) Motion for Reconsideration

         Rule 60(b) provides that “‘upon such terms as are just, the [C]ourt may relieve a party . . . from a final judgment, order, or proceeding' for any of several specified reasons.” Twelve John Does v. District of Columbia, 841 F.2d 1133, 1138 (D.C. Cir. 1988) (quoting Fed.R.Civ.P. 60(b)). Clause (b)(6) of Rule 60 “grants federal courts broad authority to relieve a party from a final judgment ‘upon such terms as are just,' provided that the motion is made within a reasonable time and is not premised on one of the grounds for relief enumerated in clauses (b)(1) through (b)(5)” of the Rule. Salazar ex rel. Salazar v. District of Columbia, 633 F.3d 1110, 1116 (D.C. Cir. 2011) (quoting Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863 (1988)); see Fed.R.Civ.P. 60(b)(6) (permitting courts to “relieve a party . . . from a final judgment, order, or proceeding” for “any other reason that justifies relief”). “The Rule does not particularize the factors that justify relief, but . . . provides courts with authority ‘adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice.'” Liljeberg, 486 U.S. at 863-64 (quoting Klapprott v. United States, 335 U.S. 601, 614-15 (1949)). Although the Court “enjoys a large measure of discretion in deciding whether to grant or deny a [Rule] 60(b)[(6)] motion, ” Randall v. Merrill Lynch, 820 F.2d 1317, 1320 (D.C. Cir. 1987), the Supreme Court has held that Rule 60(b)(6) applies only in “extraordinary circumstances, ” Ackermann v. United States, 340 U.S. 193, 202 (1950), and “this [Circuit] has cautioned that Rule 60(b)(6) ‘should be only sparingly used, '” Twelve John Does, 841 F.2d at 1140 (quoting Good Luck Nursing Home. Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980)).

         III. ANALYSIS

         A. Whether Reconsideration is Appropriate

         The plaintiffs argue that reconsideration of the Court's September 29, 2018 decision and Order pursuant to Rule 59(e) is necessary “to correct a clear error or prevent manifest injustice, ” Pls.' Mot. at 9 (internal quotation marks omitted), “because the [decision] awards summary judgment to [the] [p]laintiffs with too limited a touch, ” id. at 1. Specifically, they argue that “the Court's analysis that the remittance advice component of the must bill policy violates the Moratorium applies equally to the billing component, ” id. at 9, and thus, the Court committed clear error “by effectively find[ing] [that the] [p]laintiffs are entitled to relief from [both components of] the must bill policy . . . but only grant[ing] relief as to the remittance advice requirement, ” id. at 8. The plaintiffs further argue that the Court's narrow ruling is “manifestly unfair” because “the [p]laintiffs likely will have to wait several more years for the [ ] Administrator either to recognize that the must bill component is meaningless without the remittance advice requirement or to deny reimbursement simply on the basis that the [p]laintiffs did not bill the State and force the [p]laintiffs to then seek judicial review of the Moratorium issue again.” Id. at 10. The plaintiffs further argue that the Court erred because it “did not rule on whether . . . []PRM[] [§] 1102.3L applied to [the] [p]laintiffs . . . [or] whether the EDS reports submitted by [the] [p]laintiffs effectively satisfied any valid billing requirement.” Id. at 1. ...


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