Dch Regional Medical Center v. Burwell

MOTION to Dismiss for Lack of Jurisdiction

D.D.C.December 6, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) DCH REGIONAL MEDICAL CENTER, ) ) Plaintiff, ) ) Civil Action No. 1:16-cv-212 (KBJ) v. ) ) SYLVIA MATHEWS BURWELL, ) in her official capacity as Secretary of ) Health and Human Services, ) ) Defendant. ) __________________________________________) DEFENDANT’S MOTION TO DISMISS Pursuant to Federal Rule of Civil Procedure 12(b)(1), Defendant, Sylvia Mathews Burwell in her official capacity as Secretary of the United States Department of Health and Human Services, hereby moves to dismiss Plaintiff’s complaint for lack of subject-matter jurisdiction. The reasons supporting Defendant’s motion are set forth in the accompanying memorandum of law. A proposed order is attached. Dated: December 6, 2016 Respectfully submitted, BENJAMIN C. MIZER Principal Deputy Assistant Attorney General CHANNING D. PHILLIPS United States Attorney JOEL McELVAIN Assistant Branch Director /s/ Daniel Schwei DANIEL SCHWEI Trial Attorney (N.Y. Bar) United States Department of Justice Civil Division, Federal Programs Branch Case 1:16-cv-00212-KBJ Document 14 Filed 12/06/16 Page 1 of 3 20 Massachusetts Ave. NW Washington, DC 20530 Tel.: (202) 305-8693 Fax: (202) 616-8470 Email: daniel.s.schwei@usdoj.gov Mailing Address: Post Office Box 883 Washington, D.C. 20044 Courier Address: 20 Massachusetts Avenue N.W. Washington, D.C. 20001 Counsel for Defendant Case 1:16-cv-00212-KBJ Document 14 Filed 12/06/16 Page 2 of 3 CERTIFICATE OF SERVICE I hereby certify that on December 6, 2016, a copy of the foregoing Motion to Dismiss was filed electronically. Notice of this filing will be sent by email to all parties by operation of the Court’s electronic filing system. Parties may access this filing through the Court’s CM/ECF System. /s/ Daniel Schwei Daniel Schwei Case 1:16-cv-00212-KBJ Document 14 Filed 12/06/16 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) DCH REGIONAL MEDICAL CENTER, ) ) Plaintiff, ) ) Civil Action No. 1:16-cv-212 (KBJ) v. ) ) SYLVIA MATHEWS BURWELL, ) in her official capacity as Secretary of ) Health and Human Services, ) ) Defendant. ) __________________________________________) DEFENDANT’S MEMORANDUM IN SUPPORT OF MOTION TO DISMISS Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 1 of 29 -i- TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................................................. i TABLE OF AUTHORITIES ........................................................................................................... ii INTRODUCTION .......................................................................................................................... 1 BACKGROUND ............................................................................................................................ 3 I. Statutory and Regulatory Framework. ................................................................................ 3 A. Overview of Medicare Part A. ................................................................................ 3 B. The Disproportionate Share Adjustment. ................................................................ 4 C. HHS’s Rulemaking Governing the Uncompensated Care Payment. ...................... 7 II. Factual and Procedural History. .......................................................................................... 9 STANDARD OF REVIEW ...........................................................................................................11 ARGUMENT .................................................................................................................................11 I. Judicial Review Over Plaintiff’s Claim Is Statutorily Precluded. .................................... 12 A. The Preclusion Statute’s Plain Text Bars Plaintiff’s Claim Here, as Recently Confirmed by the D.C. Circuit. ............................................................................. 12 1. Plaintiff’s Claim is Precluded According to the Statute’s Plain Text. ................................................................................................. 12 2. The D.C. Circuit Has Unequivocally Held that Claims Like Plaintiff’s Are Precluded................................................................... 14 B. The DSH Statute’s Overall Purpose, and the Case Law Surrounding Medicare Preclusion Provisions, Also Confirm that Plaintiff’s Claim is Precluded............................................................................................................... 17 II. Even Assuming Judicial Review Were Available, Plaintiff’s Claim Must Be Dismissed as Premature. ................................................................................................... 21 CONCLUSION ............................................................................................................................. 24 Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 2 of 29 -ii- TABLE OF AUTHORITIES Cases All Florida Network Corp. v. United States, 82 Fed. Cl. 468 (2008) .............................................................................................................. 20 Am. Soc’y of Cataract & Refractive Surgery v. Thompson, 279 F.3d 447 (7th Cir. 2002) ............................................................................................... 18, 20 Am. Soc. of Anesthesiologists v. Shalala, 90 F. Supp. 2d 973 (N.D. Ill. 2000) .......................................................................................... 20 Amgen, Inc. v. Smith, 357 F.3d 103 (D.C. Cir. 2004)................................................................................................... 18 Ass’n of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150 (1970) .................................................................................................................. 12 Block v. Cmty. Nutrition Inst., 467 U.S. 340 (1984) .................................................................................................................. 12 Carolina Med. Sales, Inc. v. Leavitt, 559 F. Supp. 2d 69 (D.D.C. 2008) ............................................................................................ 20 Cty. of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999)................................................................................................. 18 Edwards v. Freeman, 951 F. Supp. 2d 120 (D.D.C. 2013) ...........................................................................................11 Fl. Health Scis. Ctr., Inc. v. Sec’y of Health & Human Servs., 830 F.3d 515 (D.C. Cir. 2016)............................................................................................ passim Good Samaritan Hosp. v. Shalala, 508 U.S. 402 (1993) .................................................................................................................... 3 Jordan Hosp. v. Leavitt, 571 F. Supp. 2d 108 (D.D.C. 2008) .......................................................................................... 21 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) ...................................................................................................................11 Methodist Hosp. of Sacramento v. Shalala, 38 F.3d 1225 (D.C. Cir. 1994)................................................................................................... 18 Monmouth Med. Ctr. v. Thompson, 257 F.3d 807 (D.C. Cir. 2001)................................................................................................... 23 Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 3 of 29 -iii- Painter v. Shalala, 97 F.3d 1351 (10th Cir. 1996) ............................................................................................. 14, 20 Palisades Gen. Hosp. Inc. v. Leavitt, 426 F.3d 400 (D.C. Cir. 2005)................................................................................. 13, 14, 16, 20 Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817 (2013) .................................................................................................................. 5 Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1 (2000) ...................................................................................................................... 23 Skagit Cty. Pub. Hosp. Dist. No. 2 v. Shalala, 80 F.3d 379 (9th Cir. 1996) ....................................................................................................... 20 Sullivan v. Zebley, 493 U.S. 521 (1990) .................................................................................................................... 5 Texas Alliance for Home Care Servs. v. Sebelius, 681 F.3d 402 (D.C. Cir. 2012)....................................................................................... 15, 19, 20 Washington Hospital Center v. Bowen, 795 F.2d 139 (D.C. Cir. 1986)............................................................................................. 22, 23 Statutes 42 U.S.C. § 1381 ............................................................................................................................. 5 42 U.S.C. § 1395 ............................................................................................................................. 3 42 U.S.C. § 1395h ........................................................................................................................... 3 42 U.S.C. § 1395kk-1 ..................................................................................................................... 3 42 U.S.C. § 1395oo(a) .................................................................................................. 4, 21, 22, 23 42 U.S.C. § 1395oo(d) .................................................................................................................... 4 42 U.S.C. § 1395oo(f) ..................................................................................................................... 4 42 U.S.C. § 1395ww(d) .................................................................................................... 3, 4, 5, 18 42 U.S.C. § 1395ww(r) .......................................................................................................... passim Patient Protection and Affordable Care Act, Pub. L. No. 111-148 ................................................................................................................ 5, 6 Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 4 of 29 -iv- Rules Federal Rule of Civil Procedure 12(b)(1) ......................................................................................11 Regulations 42 C.F.R. § 405.1842 ...................................................................................................................... 4 42 C.F.R. § 405.1842(g) .................................................................................................................. 4 42 C.F.R. § 405.1842(f) .................................................................................................................. 4 42 C.F.R. § 405.1867 ...................................................................................................................... 4 42 C.F.R. § 412.106(h) .................................................................................................................. 23 78 Fed. Reg. 50,496 ............................................................................................................... passim 78 Fed. Reg. 27,486 ........................................................................................................................ 7 Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 5 of 29 -1- INTRODUCTION As part of the Affordable Care Act, Congress fundamentally transformed the Medicare adjustment paid to disproportionate share hospitals, commonly known as the DSH payment. Specifically, Congress reduced the funding for the traditional DSH payment—which is calculated retrospectively based on hospitals’ actual patient data—and then created a new type of DSH payment to reflect uncompensated care costs borne by hospitals. The Secretary of Health and Human Services (HHS) calculates these new uncompensated care payments on a prospective basis according to three factors, which are based on certain estimates made by the Secretary at the beginning of each year. In connection with these new payments, Congress saw fit to preclude all judicial (and administrative) review of certain decisions made by the Secretary—including “[a]ny estimate of the Secretary for purposes of determining the [uncompensated care payment] factors[.]” 42 U.S.C. § 1395ww(r)(3)(A). Undeterred, Plaintiff now seeks precisely the review that Congress expressly precluded. The Plaintiff here—DCH Regional Medical Center (hereinafter Plaintiff or “DCH”)— seeks to challenge the Secretary’s calculation of its uncompensated care payment. In DCH’s view, one of the Secretary’s estimates for its fiscal year 2014 (FY2014) DSH payment is incorrect: although DCH merged with another hospital during the relevant time period, see Compl. (ECF No. 1) ¶ 34, HHS calculated the third factor (which reflects DCH’s estimated share of uncompensated care) using only the surviving hospital’s data, rather than data from both the surviving hospital and the merged hospital (as DCH would have preferred). Id. ¶ 30. Accordingly, DCH has filed this lawsuit seeking to compel the Secretary to increase her estimate (and DCH’s FY2014 uncompensated care payment) by using data from both hospitals. Id. at 16, request (iv). For two reasons, however, DCH’s lawsuit must be dismissed for lack of subject-matter jurisdiction. First and most fundamentally, DCH’s claim is precluded by statute. DCH is Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 6 of 29 -2- challenging the Secretary’s estimate of its uncompensated care, used to determine the third factor. But such a challenge is precisely what Congress intended to preclude: “There shall be no administrative or judicial review . . . of . . . [a]ny estimate of the Secretary for purposes of determining the [uncompensated care payment] factors[.]” 42 U.S.C. § 1395ww(r)(3) (emphasis added). The plain text of this provision confirms that DCH’s claim is precluded, as does a recent, binding decision from the D.C. Circuit recognizing the breadth of this preclusion provision. See Fl. Health Scis. Ctr., Inc. v. Sec’y of Health & Human Servs., 830 F.3d 515 (D.C. Cir. 2016). Fundamentally, DCH is challenging the Secretary’s estimate by disputing her choice of data—i.e., DCH asserts that the Secretary erred by basing her estimate on only the surviving hospital’s data, rather than both the surviving and the merged hospitals’ data. That type of claim is exactly what the D.C. Circuit held to be precluded. See id. at 521 (“Because the data here are inextricably intertwined with the Secretary’s estimate of uncompensated care, [a hospital] cannot challenge the Secretary’s choice of data in court.”). This Court therefore lacks subject-matter jurisdiction over Plaintiff’s claim. Second, even assuming Plaintiff could avoid preclusion, this Court would still lack subject- matter jurisdiction because Plaintiff’s claim is premature. DCH seeks to challenge its DSH payment for FY2014. As the Hospital itself has admitted, however, that payment is not yet final— it is contingent upon DCH being determined eligible for any DSH payment for FY2014. Accordingly, there has been no “final determination” regarding DCH’s FY2014 uncompensated care payment, which is a pre-requisite to federal jurisdiction. Even assuming judicial review were available, therefore, Plaintiff’s claim must still be dismissed as premature. The Court need not even reach this issue, however, because Plaintiff’s claim is squarely precluded by statute and should be dismissed on that basis alone. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 7 of 29 -3- BACKGROUND I. STATUTORY AND REGULATORY FRAMEWORK. A. Overview of Medicare Part A. The Medicare program is a “complex statutory and regulatory regime,” Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 404 (1993), established in 1965 by Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq. Medicare pays for certain medical services provided to elderly and disabled patients entitled to benefits under the program. Part A of the Medicare program provides insurance for covered inpatient hospital and related post-hospital services. Under the Inpatient Prospective Payment System (IPPS), hospitals providing inpatient Medicare services are paid at a fixed amount for each patient discharged, regardless of actual costs incurred. See 42 U.S.C. § 1395ww(d). To obtain payment, hospitals and other Part A providers submit cost reports at the end of each fiscal year to contractors acting on behalf of HHS. See 42 U.S.C. §§ 1395h, 1395kk-1. The contractors were formerly known as fiscal intermediaries, but are now known as Medicare Administrative Contractors (MACs). After reviewing a provider’s year-end cost report, the MAC issues a final payment determination through a Notice of Program Reimbursement (NPR), informing the provider how much it will be paid for the fiscal year at issue. The NPR also reconciles any difference between the final amount of Part A payments due to the provider, and the sum of interim payments made to the provider throughout the fiscal year. See Good Samaritan Hosp., 508 U.S. at 406-07. If a provider is dissatisfied with its Part A payments, generally the provider may obtain administrative review by requesting a hearing with the Provider Reimbursement Review Board (PRRB or “the Board”). A provider that has timely filed its cost report may obtain a PRRB hearing if the provider is dissatisfied with the MAC’s “final determination . . . as to the amount of total Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 8 of 29 -4- program reimbursement due the provider”—i.e., the amount set forth in the NPR—subject to certain other conditions being met.1 42 U.S.C. § 1395oo(a)(1)(A)(i). But a provider may also obtain a hearing prior to receiving its NPR if the provider has timely filed the required reports and is “dissatisfied with a final determination of the Secretary as to the amount of the payment under subsection (b) or (d) of section 1395ww of this title”—which are the primary subsections governing the IPPS—subject to the same other conditions. Id. § 1395oo(a)(1)(A)(ii). After conducting a hearing, the PRRB has the authority to affirm, modify, or reverse the final determination of the MAC. See id. § 1395oo(d). Any such PRRB determination becomes final unless the Secretary of HHS, within 60 days of the Board’s decision, acts to reverse, affirm, or modify the Board’s decision. Id. § 1395oo(f)(1). Following such a final decision, the provider may obtain judicial review in federal district court. Id. The PRRB lacks authority, however, to decide the constitutionality of a statute, or to decide the validity of an HHS regulation or ruling. Id.; see also 42 C.F.R. §§ 405.1842(f), 405.1867. When presented with such a challenge that the Board lacks authority to decide, the provider may request that the Board grant “expedited judicial review” over the legal question presented. See 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1842. If the Board grants expedited judicial review, the provider may then bypass a hearing and immediately file a civil action in federal district court. 42 C.F.R. § 405.1842(g)(2). B. The Disproportionate Share Adjustment. Under Medicare Part A’s IPPS, hospitals generally receive a fixed amount per inpatient stay, subject to certain hospital-specific adjustments. See 42 U.S.C. § 1395ww(d)(5). One such 1 Those other conditions are that the amount in controversy must be $10,000 or more, and the request for a hearing must be filed within 180 days of the final determination (e.g., the NPR). See 42 U.S.C. § 1395oo(a)(2)-(3). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 9 of 29 -5- upward adjustment is for hospitals that “serve[] a significantly disproportionate number of low- income patients,” id. § 1395ww(d)(5)(F)(i)(I), referred to as a “disproportionate share hospital,” or DSH, adjustment. “This adjustment is made because hospitals with an unusually high percentage of low-income patients generally have higher per-patient costs; such hospitals, Congress therefore found, should receive higher reimbursement rates.” Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 822 (2013). Whether a hospital qualifies for the Medicare DSH adjustment and the amount of any such adjustment depend on the particular hospital’s “disproportionate patient percentage.” 42 U.S.C. § 1395ww(d)(5)(F)(v). The disproportionate patient percentage for a given hospital is the sum of two components, commonly known as the “Medicaid” fraction and the “Medicare/SSI” or “SSI” fraction. See id. § 1395ww(d)(5)(F)(vi). The Medicaid fraction reflects the number of hospital inpatient days attributable to patients eligible for medical assistance under a state Medicaid plan, but not entitled to Medicare Part A benefits. See id. § 1395ww(d)(5)(F)(vi)(II). The SSI fraction reflects the number of hospital inpatient days attributable to patients entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits. See id. § 1395ww(d)(5)(F)(vi)(I).2 Prior to the enactment of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (collectively known as the Affordable Care Act or ACA), the entire DSH adjustment was calculated retrospectively, based on annual cost reports containing the actual patient data for that year. 2 The SSI program is a federal assistance program, administered by the Social Security Administration, for low-income individuals who are aged, blind, or disabled. See 42 U.S.C. §§ 1381 et seq.; Sullivan v. Zebley, 493 U.S. 521, 524 (1990). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 10 of 29 -6- In the ACA, however, Congress fundamentally transformed the DSH program, effective October 1, 2013 (the beginning of fiscal year 2014). See ACA § 3133, codified at 42 U.S.C. § 1395ww(r). Congress made two broad changes to the DSH adjustment. First, hospitals continue to receive the traditional, retrospective DSH payments, but they are paid only 25% of the amount they would have received prior to the ACA (referred to as the “empirically justified DSH payment”). See 42 U.S.C. § 1395ww(r)(1). Second, Congress created a separate DSH payment based on each provider’s amount of uncompensated care (referred to as the “uncompensated care payment”). Unlike the traditional DSH payments—calculated at the time of the provider’s cost-report settlement, based on actual inpatient-day data—the ACA authorized this new payment to be calculated using certain estimates, made by the Secretary of HHS. Specifically, each provider’s uncompensated care payment is the product of three factors, which are designed to: (1) estimate the remaining 75% of DSH payments that would have been made in the absence of the ACA; (2) reduce that total amount by a percentage, estimated to be the decrease in the national uninsured rate; and then (3) distribute that money to all DSH-eligible hospitals on a pro rata basis, according to each hospital’s estimated share of uncompensated care (out of the overall amount of uncompensated care for all DSH- eligible hospitals). See id. § 1395ww(r)(2)(A)-(C). This third factor—the calculation of each hospital’s share of uncompensated care—is the subject of this lawsuit (hereinafter referred to as “Factor Three”). The full text of the provision governing Factor Three is as follows: Factor three. A factor equal to the percent, for each subsection (d) hospital, that represents the quotient of-- (i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 11 of 29 -7- available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (ii) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under this subsection for such period (as so estimated, based on such data). Id. § 1395ww(r)(2)(C). In other words, Factor Three is a fraction where the numerator is an estimate of the particular provider’s amount of uncompensated care; and the denominator is the Secretary’s estimate of the sum of all DSH-eligible hospitals’ uncompensated care. The resulting fraction yields a percentage, which determines the amount of the provider’s uncompensated care payment (after being multiplied by the amount resulting from Factors One and Two). When Congress created this new DSH program, Congress also enacted a statutory provision precluding judicial (and administrative) review over certain determinations of the Secretary. That preclusion provision states: Limitations on review. There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise of the following: (A) Any estimate of the Secretary for purposes of determining the factors described in paragraph (2). (B) Any period selected by the Secretary for such purposes. Id. § 1395ww(r)(3). C. HHS’s Rulemaking Governing the Uncompensated Care Payment. In order to implement the uncompensated care payment (and numerous other aspects of the IPPS) for FY2014, the Secretary of HHS promulgated a proposed rule. See 78 Fed. Reg. 27,486 (May 10, 2013) (hereinafter FY2014 IPPS Proposed Rule). After receiving and responding to public comments, the Secretary then promulgated a final rule. See 78 Fed. Reg. 50,496 (Aug. 19, 2013) (hereinafter FY2014 IPPS Final Rule). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 12 of 29 -8- Several aspects of the Final Rule are relevant here. First, the Final Rule made clear that HHS was implementing the uncompensated care payment on a prospective basis—in contrast to the empirically justified DSH payment—and thus the FY2014 factors were calculated as part of the rulemaking process and were not subject to reconciliation. See id. at 50,646 (“In other words, we did not propose to include a reestimation of Factor 1, Factor 2, or Factor 3 in the [cost-report] reconciliation process. Rather, Factor 1, Factor 2, and Factor 3 are estimates determined prospectively using methodologies we establish through rulemaking.”); id. at 50,645 (“We do not intend to reconcile Factor 3 using data from the FY 2014 cost reports because we believe that the statute provides the authority to make these payments on the basis of estimates for Factors 1, 2, and 3, and that it is preferable to do so.”). Second, HHS made clear that a provider’s entitlement to an uncompensated care payment is contingent upon that provider’s eligibility for the empirically justified DSH payment, which will not be determined until that provider’s cost report is settled, some two or three years later. See id. at 50,624. Accordingly, if a hospital receives interim payments for its uncompensated care payment but is later (at the time of cost-report settlement) found to be ineligible for DSH for that cost-report year, the uncompensated care payments would be recouped. FY2014 IPPS Final Rule, 78 Fed. Reg. at 50,646. Finally, with respect to the calculation of Factor Three, HHS finalized its proposed policy to use low-income insured patient days as a proxy for uncompensated care—meaning HHS would estimate uncompensated care based on the numerators of the Medicaid and Medicare/SSI fractions (that are also used for determining traditional DSH payments). See id. at 50,639. In choosing the underlying data for calculating Factor Three, HHS made clear that if two hospitals merged during the relevant time period, then “consistent with the treatment of other IPPS payment factors,” HHS Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 13 of 29 -9- would calculate Factor Three using data only from the surviving hospital. See id. at 50,642 (“[I]n the case of a merger between two hospitals, Factor 3 will be calculated based on the low-income insured patient days (that is, Medicaid days and SSI days) under the surviving [hospital’s certification number], based on the most recent available data for that [hospital certification number] from the cost report for 2011 or 2010.”).3 II. FACTUAL AND PROCEDURAL HISTORY. According to the Complaint, DCH is a hospital located in Tuscaloosa, Alabama, and participates in Part A of the Medicare program. See Compl. ¶ 4. As discussed above, this lawsuit seeks to challenge the Secretary’s calculation of DCH’s uncompensated care payment for FY2014. See id. ¶ 46. Specifically, DCH merged with Northport Regional Medical Center on May 1, 2011, and continued operating under DCH’s Medicare provider agreement and certification number. See id. ¶ 34. As a result, DCH’s FY2014 Factor Three was calculated using only data from DCH but not Northport, which allegedly “result[ed] in a substantial reduction in DCH’s reimbursement.” Id. ¶ 35. Plaintiff accordingly submitted an appeal to the PRRB challenging its FY2014 uncompensated care payment. In the appeal, DCH claimed that HHS used a total of 36,981 Medicaid and Medicare/SSI days for Factor Three’s numerator, whereas HHS should have used 42,810 days for the numerator. See PRRB Administrative Record for Case No. 14-2097 (hereinafter “Board AR”) at 00064.4 According to DCH, this difference in Factor Three’s 3 During the following year’s rulemaking, HHS changed its policy regarding merged hospitals. The new process involved identifying mergers with the assistance of MACs, and then calculating Factor Three using different data depending on the details of the merger. See FY2015 IPPS Final Rule, 79 Fed. Reg. 49,854, 50,020-21 (Aug. 22, 2014). Only in certain circumstances are the Medicaid and Medicare/SSI fractions calculated using data from both hospitals. See id. 4 Consistent with Local Civil Rule 7(n), the Secretary is filing herewith a certified list of the contents of the PRRB Administrative Record. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 14 of 29 -10- numerator—i.e., the Secretary’s estimate of DCH’s amount of uncompensated care—resulted in the Secretary calculating DCH’s Factor Three to be 0.103066%, rather than 0.119312%. Id. DCH estimates that the difference between these Factor Three values resulted in a loss of $1,334,926. Id. During the PRRB proceedings, DCH acknowledged the jurisdiction preclusion provision, but argued that there was “a distinction between an appeal of the agency’s computation itself (no jurisdiction) and an appeal of the agency’s procedures or process for deciding how the computation should be made (jurisdiction).” Id. at 00024. The PRRB rejected that distinction, however, stating that “no matter how DCH attempts to characterize its issue, the heart of its appeal is a challenge to the Secretary’s determination of uncompensated care costs, i.e., Factor 3, for FY 2014.” Id. at 00020. Accordingly, the PRRB held that it lacked jurisdiction over the appeal. Id. at 00022. DCH then filed the present Complaint on February 8, 2016. The Complaint contains a single claim, alleging that “[t]he methodology adopted by the Secretary . . . for calculation of Factor 3 of qualifying hospitals’ DSH adjustment for Fiscal Year 2014 is arbitrary and capricious, constitutes an abuse of discretion, and is otherwise not in accordance with law[.]” Compl. ¶ 53. Throughout the Complaint, DCH again seeks to characterize its claim as challenging the methodology by which the Secretary calculated its Factor Three, rather than a challenge to Factor Three itself. See, e.g., Compl. ¶¶ 22, 28, 32, 35. Following the filing of the Complaint, the Secretary moved to stay this case pending the D.C. Circuit’s resolution of the appeal in the Florida Health Sciences Center litigation. See Mot. to Stay Proceedings (ECF No. 11). That appeal has now been resolved, and the Government now moves to dismiss DCH’s Complaint. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 15 of 29 -11- STANDARD OF REVIEW The Secretary moves to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction. Federal courts are courts of limited jurisdiction, “possess[ing] only that power authorized by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Id. (citation omitted). When considering a motion under Rule 12(b)(1), “the court is not limited to the allegations of the complaint” and “may consider such materials outside the pleadings as it deems appropriate to resolve the question of whether it has jurisdiction to hear the case.” Edwards v. Freeman, 951 F. Supp. 2d 120, 124 (D.D.C. 2013) (internal quotation marks and modifications omitted). ARGUMENT Plaintiff has failed to establish subject-matter jurisdiction over this case. First and most fundamentally, Plaintiff’s claim is precluded from judicial review by statute. DCH’s lawsuit seeks to overturn the Secretary’s estimate of its uncompensated care, which is precisely what Congress insulated from judicial review: “Any estimate of the Secretary for purposes of determining the [three] factors[.]” 42 U.S.C. § 1395ww(r)(3)(A) (emphasis added). And the substance of DCH’s challenge—that the Secretary chose the wrong data in formulating her estimate—is exactly what the D.C. Circuit recently held to be precluded under this statutory provision. See Fl. Health Scis. Ctr., 830 F.3d at 521 (holding that “we have no jurisdiction to review the Secretary’s choice of data” because “[t]he data and the estimate are so closely intertwined that we cannot review either”). This Court therefore lacks jurisdiction over Plaintiff’s claim. That conclusion is further confirmed by the DSH statute’s overall purpose, as well as the surrounding case law interpreting other Medicare preclusion provisions. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 16 of 29 -12- Second, even assuming judicial review were available for Plaintiff’s claim, such review would be premature. Judicial review under the Medicare scheme requires a “final determination,” and here DCH has not received a final determination that it is entitled to any DSH payment at all. As DCH itself acknowledges, the final determination regarding DSH payment does not occur until after FY2014 cost-report settlement, which has not yet occurred. See Board AR at 00028 (“The Provider is not appealing its DSH calculation for FY 2014 - indeed it has not even received it because it has not received its Notice of Program Reimbursement for its 2014 cost year.”). Thus, Plaintiff’s claim is premature even assuming judicial review were available. I. JUDICIAL REVIEW OVER PLAINTIFF’S CLAIM IS STATUTORILY PRECLUDED. A. The Preclusion Statute’s Plain Text Bars Plaintiff’s Claim Here, as Recently Confirmed by the D.C. Circuit. Plaintiff here claims that the Secretary erroneously estimated DCH’s uncompensated care using data from one hospital rather than two hospitals. This claim is squarely foreclosed by the statutory preclusion provision and the D.C. Circuit’s recent decision confirming the breadth of that provision. 1. Plaintiff’s Claim is Precluded According to the Statute’s Plain Text. As the Supreme Court has explained, “[w]hether and to what extent a particular statute precludes judicial review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved.” Block v. Cmty. Nutrition Inst., 467 U.S. 340, 345 (1984). While courts employ a presumption in favor of permitting review of administrative action, that presumption is defeated when “congressional intent to preclude judicial review is ‘fairly discernible in the statutory scheme.’” Id. at 351 (quoting Ass’n of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 157 (1970)). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 17 of 29 -13- Here, the intent to preclude judicial review is not only “fairly discernible,” but is actually stated expressly in rather broad terms. See Fla. Health Scis. Ctr., 830 F.3d at 518 (noting that “the presumption in favor of review can be overcome by specific language in the statute that is a reliable indicator of Congress’s intent to bar review,” and stating that “[w]e find such a reliable indicator here” based on the statutory language). With respect to Factor Three’s numerator (which is what DCH challenges here), the ACA requires the Secretary to calculate it as follows: [T]he amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data))[.] 42 U.S.C. § 1395ww(r)(2)(C)(i) (emphasis added). The preclusion provision then states: There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise of the following: (A) Any estimate of the Secretary for purposes of determining the factors described in paragraph (2). (B) Any period selected by the Secretary for such purposes. Id. § 1395ww(r)(3) (emphasis added). Reading these provisions together, it is difficult to see how DCH’s challenge would not be precluded. Plaintiff is challenging the Secretary’s estimate of DCH’s “amount of uncompensated care for such hospital” for purposes of determining Factor Three, which is one of the factors described in paragraph (2). Stated at a more granular level, Plaintiff is arguing that, when the Secretary calculated DCH’s Factor Three, the numerator—itself an estimate—should have been 42,810 rather than 36,981. This challenge is squarely precluded as attacking “[a]n[] estimate of the Secretary for purposes of determining the factors described in paragraph (2).” Id. § 1395ww(r)(3)(A). The “plain text of the Act alone is enough” to determine that judicial review is precluded under § 1395ww(r)(3)(A). Palisades Gen. Hosp. Inc. v. Leavitt, 426 F.3d 400, 403 Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 18 of 29 -14- (D.C. Cir. 2005). Indeed, there is “little that Congress could have said to make the plain and unambiguous language of the statute, and its corresponding intent, more clear.” Painter v. Shalala, 97 F.3d 1351, 1356 (10th Cir. 1996). The relief sought by Plaintiff in this lawsuit likewise confirms that DCH is challenging the Secretary’s estimate of uncompensated care. The Complaint requests that this Court “[v]acate the Secretary’s Fiscal Year 2014 Factor 3 calculation for Plaintiff,” and then compel the Secretary “to recalculate the Fiscal Year 2014 disproportionate share adjustment owed to Plaintiff . . . consider[ing] data associated with both the surviving and non-surviving hospitals that underwent a merger during the relevant time period[.]” Compl. at 16, requests (iii)-(iv). Granting such relief would necessarily overturn an estimate made by the Secretary for purposes of calculating Plaintiff’s Factor Three, which is precisely what Congress sought to insulate from review. The plain text of the preclusion provision, therefore, confirms its applicability here. See Palisades Gen. Hosp., 426 F.3d at 403-04 (holding that “because a hospital is not entitled to seek review to overturn a reclassification decision of the Secretary,” the hospital also cannot ask a court “either to order the Secretary to reconsider his reclassification decision or to direct a reimbursement payment that would reflect such a reclassification” (emphasis added)). 2. The D.C. Circuit Has Unequivocally Held that Claims Like Plaintiff’s Are Precluded. Plaintiff’s claim is also precluded according to the D.C. Circuit’s recent, binding decision in Florida Health Sciences Center. There, the D.C. Circuit expressly rejected the plaintiff hospital’s attempt to challenge its Factor Three numerator. Although the plaintiff attempted to characterize its claim as challenging something other than its estimate—i.e., the Secretary’s “choice of data,” or different aspects of the Secretary’s “methodology” that were not precluded— the D.C. Circuit rejected those distinctions, and held that the hospital was squarely challenging an Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 19 of 29 -15- estimate. See Fl. Health Scis. Ctr., 830 F.3d at 518-21. Like the plaintiff hospital in that case, therefore, DCH’s claim here is likewise precluded from judicial review. In the Florida Health Sciences Center litigation, the plaintiff hospital advanced a similar claim—that HHS had used the wrong data for estimating the hospital’s amount of uncompensated care. Specifically, the plaintiff hospital argued that HHS should have based its estimates on more recent data from April 2013, rather than data from March 2013. 830 F.3d at 517-18. Using the more recent data, the hospital claimed, would have increased its uncompensated care payment by approximately $3 million. Id. at 518. To avoid the preclusion provision, the hospital argued that courts “can review the underlying data on which the Secretary relied, because an ‘estimate’ is not the same thing as the ‘data” on which it is based.” Id. at 519. The D.C. Circuit rejected that artificial distinction, however, relying on a prior Medicare preclusion decision holding that “we could not review a decision that was ‘indispensable’ or ‘integral’ to, or ‘inextricably intertwined’ with, the unreviewable agency action.” Id. (citing Texas Alliance for Home Care Servs. v. Sebelius, 681 F.3d 402, 409-10 (D.C. Cir. 2012)). The D.C. Circuit thus held that judicial consideration of Plaintiff’s claim was precluded: Following that reasoning, we cannot review the data that underlie the Secretary’s estimate of [the plaintiff hospital’s] amount of uncompensated care in 2014. . . . A challenge to the data would eviscerate the bar on judicial review. . . . [T]he underlying data here are “indispensable” and “integral” to, and “inextricably intertwined” with, the Secretary’s estimate of [the hospital’s] amount of uncompensated care. Indeed, the data are the entire basis for the estimate. The bar on judicial review in section 1395ww(r)(3) therefore expressly precludes [the hospital’s] challenge to the data, and we lack jurisdiction to consider it. Fl. Health Scis. Ctr., 830 F.3d at 519 (citations, modifications omitted). The D.C. Circuit similarly rejected the hospital’s other attempts to characterize its claim in a way that would permit judicial review. For example, the hospital sought to argue that “Congress Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 20 of 29 -16- shielded from judicial challenge only two components of HHS’s methodology—the estimates and periods—rather than the entire methodology or the ultimate determination.” Id. at 521. Even accepting that premise arguendo, however, the D.C. Circuit held that the hospital’s challenge to the data underlying Factor Three’s numerator was still precluded. See id. (“But even viewing the bar here narrowly, the selection of data fits squarely within it. The data and the estimate are so closely intertwined that we cannot review either.”). Additionally, the hospital sought to characterize its claim as “a challenge to HHS’s general rules leading to the estimate rather than as a challenge to the estimate itself.” Id. The D.C. Circuit again rejected this characterization: “The proposition that hospitals may challenge the general rules leading to denial” is “inapplicable” where “the hospital’s challenge is no more than an attempt to undo” a shielded determination. That fits what Tampa General is trying to do in this case. Tampa General has not brought a challenge to any general rules leading to the Secretary’s estimate. Tampa General is simply trying to undo the Secretary’s estimate of the hospital's uncompensated care by recasting its challenge to the Secretary’s choice of data as an attack on the general rules leading to her estimate. Id. at 522 (quoting Palisades Gen. Hosp., 426 F.3d at 405, citations omitted). Thus, the court concluded that the plaintiff hospital was simply challenging an estimate, and thus the claim was precluded. This binding decision is conclusive of Plaintiff’s claim here. For all the same reasons, Plaintiff here cannot challenge the Secretary’s estimate of DCH’s uncompensated care. The Secretary’s decision to use only the surviving hospital’s data is “indispensable” and “integral to,” and “inextricably intertwined with,” the Secretary’s estimate of DCH’s uncompensated care. Indeed, just like in Florida Health Sciences Center, there is no difference at all between the challenged “data” and the Secretary’s “estimate”—the challenged data (36,981 days versus 42,810 days) comprises the estimate itself (i.e., the numerator of Factor Three). Thus, DCH is squarely seeking to challenge one of the Secretary’s estimates, which is shielded from judicial review. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 21 of 29 -17- In an attempt to avoid preclusion, DCH similarly attempts to characterize its claim as a challenge to the Secretary’s “methodology” rather than a challenge to an estimate. But again, this very argument was rejected by the D.C. Circuit. See Fl. Health Scis. Ctr., 830 F.3d at 521 (holding that “even viewing the bar here narrowly” to permit some methodological challenges, the hospital’s claim is still precluded because “[t]he data and the estimate are so closely intertwined that we cannot review either”). Just as in Florida Health Sciences Center, DCH is attempting to challenge the Secretary’s choice of data—here, the Secretary’s decision to estimate uncompensated care using data from only the surviving hospital, rather than both the surviving hospital and the merged hospital. That “choice of data” is “inextricably intertwined with the Secretary’s estimate of uncompensated care,” and therefore the claim is precluded. Id. Because DCH is “is simply trying to undo the Secretary’s estimate of the hospital’s uncompensated care,” DCH cannot avoid preclusion “by recasting its challenge” as something else. Id. at 522. No matter how DCH seeks to characterize its challenge, the claim is squarely precluded under binding D.C. Circuit precedent. B. The DSH Statute’s Overall Purpose, and the Case Law Surrounding Medicare Preclusion Provisions, Also Confirm that Plaintiff’s Claim is Precluded. In addition to the statute’s plain text and the D.C. Circuit’s Florida Health Sciences Center decision, several additional considerations also confirm that Plaintiff’s claim here is precluded. The overall purpose of the DSH statute, and the case law surrounding other Medicare preclusion provisions, further underscore that Plaintiff cannot obtain judicial review. The new DSH statute’s purpose and structure highlight why Congress decided to preclude judicial review. To implement the uncompensated care payment, the Secretary calculates all three factors at once. A change to any of the three factors would result in changes to every single provider’s DSH payment; and for FY2014, HHS estimated that there would be 2,437 DSH-eligible hospitals receiving DSH payments. See FY2014 IPPS Final Rule, 78 Fed. Reg. at 50,641-42. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 22 of 29 -18- Given this volume of DSH payments, it is obvious why Congress would insulate the Secretary’s upfront DSH calculations from subsequent judicial review. See FY2014 IPPS Final Rule, 78 Fed. Reg. at 50,645 (discussing how “it would be administratively difficult to recompute Factor 3 values for all hospitals”); see also Amgen, Inc. v. Smith, 357 F.3d 103, 112 (D.C. Cir. 2004) (“That Congress would use such language of prohibition [of judicial review] is unsurprising, for piecemeal review of individual payment determinations could frustrate the efficient operation of the complex prospective payment system.”).5 Indeed, any alternative system—permitting challenges to the Secretary’s prospective DSH estimates—would result in significant uncertainty and disruption to the overall DSH program. See Methodist Hosp. of Sacramento v. Shalala, 38 F.3d 1225, 1233 (D.C. Cir. 1994) (discussing how making changes to payments that are calculated collectively, where a change in one payment would affect everyone else’s payments, could pose “a significant, if not debilitating, disruption to the Secretary’s administration of the already-complex Medicare program”); Cty. of Los Angeles v. Shalala, 192 F.3d 1005, 1019 (D.C. Cir. 1999) (rejecting an interpretation of the outlier statute that would force HHS either to reconcile its estimated payments at the end of a fiscal year, or to monitor and adjust its estimates throughout the course of the year). Under DCH’s view of the statutory scheme governing the uncompensated care payment, the disruption would be never-ending. The Secretary performs all hospitals’ Factor Three calculations at a single moment in time. But if DCH can effect a change in its Factor Three 5 The concern about an efficient program is particularly apt here, given that the Secretary’s DSH estimates are made annually, under a statutory deadline of August 1. See 42 U.S.C. § 1395ww(d)(6); cf. Am. Soc’y of Cataract & Refractive Surgery v. Thompson, 279 F.3d 447, 454 (7th Cir. 2002) (“The fee schedule is updated yearly and each year’s schedule is established by November 1 of the preceding year. As respondents highlight, this tight time frame demands that the Secretary’s decisions . . . be made quickly and efficiently.”). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 23 of 29 -19- estimates—by challenging the “methodology” used by the Secretary when calculating those estimates—presumably every other hospital could seek a similar change. The estimates for all hospitals would thus remain in constant flux, resulting in significant uncertainty and disruption to the overall program. Under Plaintiff’s approach, the DSH payments—which are calculated at a single moment in time—could never be finalized until all potential litigation concluded. This continual revision and second-guessing of the Secretary’s estimates is precisely what Congress sought to avoid by precluding review. Moreover, DCH’s interpretation would deprive the preclusion provision of any meaningful effect. In DCH’s view, hospitals are precluded only from challenging the Secretary’s narrow, uncontroversial actions (i.e., her arithmetic when calculating an estimate), but are permitted to challenge the many complicated decisions leading up to that calculation (i.e., the Secretary’s methodology for deciding how to estimate uncompensated care). See, e.g., Board AR at 00025 (DCH contrasting its “methodology” claim with other types of claims that would be precluded, such as “claiming that CMS added her figures incorrectly or that its estimate of Factor 3 was off- kilter based on the data it used”). Such a cramped interpretation of the preclusion provision makes little sense. Congress would not have intended to preclude review over ministerial acts, but still permit review over the Secretary’s most discretionary decisions—e.g., the methodology for estimating uncompensated care—which rely on the Secretary’s expertise in administering the exceedingly complex Medicare program. Cf. Tex. Alliance, 681 F.3d at 410 (reasoning that it would not make sense for Congress to preclude some claims but not others, because “[i]n either case, permitting review would delay the costs savings the Congress sought to realize”). DCH’s exceedingly narrow interpretation of the preclusion provision cannot be correct. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 24 of 29 -20- In numerous other cases involving Medicare preclusion provisions, courts have repeatedly rejected such narrow interpretations. A hospital cannot escape preclusion by attempting to parse its claim into a separate type of challenge that exists outside the preclusion provision. See, e.g., Am. Soc’y of Cataract & Refractive Surgery, 279 F.3d at 452-54 (rejecting “review of a systemic challenge” to how the Secretary administers certain fee schedules, because “such a challenge is not a procedural challenge, but rather a substantive challenge”); Painter, 97 F.3d at 1356 (“[W]e conclude the language of the ‘no review’ provision clearly indicates Congress’ intent to preclude administrative and judicial review of the manner in which the conversion factor is calculated by the Secretary.”); Skagit Cty. Pub. Hosp. Dist. No. 2 v. Shalala, 80 F.3d 379, 386 (9th Cir. 1996) (“[I]f a procedure is challenged only in order to reverse the individual reclassification decision, judicial review is not permitted.”); Carolina Med. Sales, Inc. v. Leavitt, 559 F. Supp. 2d 69, 79 (D.D.C. 2008) (“To allow a civil litigant to parse the definition of ‘items and services’ into individually challengeable sub-components would frustrate Congress’s intent and potentially hamstring the Secretary’s ability to expeditiously implement the bidding program.”); see also, e.g., Tex. Alliance, 681 F.3d at 409-11; Palisades Gen. Hosp., 426 F.3d at 403-04; Am. Soc. of Anesthesiologists v. Shalala, 90 F. Supp. 2d 973, 976 (N.D. Ill. 2000); All Florida Network Corp. v. United States, 82 Fed. Cl. 468, 474 (2008). In short, regardless of how DCH seeks to characterize its claim here, the claim still fundamentally seeks to challenge the Secretary’s estimate of uncompensated care used to calculate DCH’s Factor Three. Because that is precisely what Congress precluded, see 42 U.S.C. § 1395ww(r)(3), and allowing Plaintiff’s claim to proceed would create significant disruption and uncertainty for the Secretary’s ability to administer the uncompensated care payments, this Court therefore lacks subject-matter jurisdiction over DCH’s claim. Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 25 of 29 -21- II. EVEN ASSUMING JUDICIAL REVIEW WERE AVAILABLE, PLAINTIFF’S CLAIM MUST BE DISMISSED AS PREMATURE. Not only does DCH seek review of a decision as to which review is precluded, as shown above, but DCH seeks premature review as well. The Medicare statute limits judicial review only to “final determinations” of payment. 42 U.S.C. § 1395oo(a). Here, final eligibility for the uncompensated care payment is not determined until the time of FY2014 cost-report settlement. And as DCH itself admits, no final determination has yet been made here. See Board AR at 00028 (“The Provider is not appealing its DSH calculation for FY 2014 - indeed it has not even received it because it has not received its Notice of Program Reimbursement for its 2014 cost year.”). Accordingly, any challenge is premature and must be dismissed for lack of jurisdiction. See Jordan Hosp. v. Leavitt, 571 F. Supp. 2d 108, 114 (D.D.C. 2008) (“A provider must have received a final decision to invoke the jurisdiction of the federal courts.”). As discussed above (Background Part I.A), the Medicare statute offers providers several ways to administratively appeal their payments. In particular, a provider may request a PRRB hearing if it is dissatisfied with the MAC’s NPR, which sets forth the “final determination . . . as to the amount of total program reimbursement due the provider[.]” 42 U.S.C. § 1395oo(a)(1)(A)(i). A provider need not await an NPR, however, if the NPR is not timely issued, or if the provider is dissatisfied with a final determination regarding an IPPS payment amount— i.e., if the provider “is dissatisfied with a final determination of the Secretary as to the amount of the payment under subsection (b) or (d) of section 1395ww of this title[.]” Id. § 1395oo(a)(1)(A)(ii). Here, DCH has sought to avail itself of the last option, which does not require an NPR but still requires “a final determination of the Secretary as to the amount of the payment[.]” Id. (emphasis added). There has not been a final determination regarding DCH’s uncompensated care Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 26 of 29 -22- payment, however, because that does not occur until after FY2014 cost-report settlement. See FY2014 IPPS Final Rule, 78 Fed. Reg. at 50,624 (“Final eligibility determinations would be made at the end of the cost reporting period at settlement[.]”); id. at 50,646 (noting that even if a hospital receives interim uncompensated care payments, “the hospital may then be determined to be ineligible for such payments at cost report settlement” and those interim payments would be recouped). Because the uncompensated care payment does not become final until FY2014 cost- report settlement, it cannot be challenged until that time. To be sure, to the extent a provider receives an uncompensated care payment for FY2014, the amount of that payment was fixed as of the FY2014 Final Rule’s publication. But that amount is still not final because the Secretary has not yet determined the provider’s eligibility to receive such an amount. Instead, the provider must wait until FY2014 cost-report settlement for a final determination regarding its eligibility for payment. The mere calculation of the uncompensated care payment amount, without a final determination as to eligibility, is therefore insufficient to constitute “a final determination of the Secretary” within the meaning of § 1395oo(a)(1)(A)(ii). This point is well illustrated by the case that DCH relied on at the administrative level, Washington Hospital Center v. Bowen, 795 F.2d 139 (D.C. Cir. 1986); see Board AR at 00023. There, the D.C. Circuit allowed providers to challenge certain per-patient payment amounts prior to an NPR, because HHS had finally determined those amounts. See Wash. Hosp. Ctr., 795 F.2d at 148 (stating that the per-patient amount “is final once the Secretary has published the DRG amounts (as he has) and finally determined the hospital’s target amount”). The court went on to note that, even under the Secretary’s own regulations, the per-patient payment amount was finally established. See id. at 148 n.11 (noting that “the Secretary’s own regulations characterize the fiscal intermediary’s setting of the hospital-specific rate as final”). Thus, the court concluded there was Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 27 of 29 -23- no impediment to the pre-NPR challenge. See also Monmouth Med. Ctr. v. Thompson, 257 F.3d 807, 811 (D.C. Cir. 2001) (describing the decision as “determin[ing] that a pre-NPR challenge could be brought where the Secretary had firmly established ‘the only variable factor in the final determination as to the amount of payment under § 1395ww(d)’” (quoting Wash. Hosp. Ctr., 795 F.2d at 147)). But here, unlike in Washington Hospital Center, HHS has not finalized “the only variable factor” regarding the uncompensated care payment. Although DCH may know the specific amount it could receive as an uncompensated care payment, DCH does not know whether it is even eligible to receive that amount. Furthermore, unlike in Washington Hospital Center, HHS’s regulations make unequivocally clear that the uncompensated care payment is not final until the time of cost- report settlement: (1) Interim payments are made during the payment year to each hospital that is estimated to be eligible for payments under this section at the time of the annual final rule for the hospital inpatient prospective payment system, subject to the final determination of eligibility at the time of cost report settlement for each hospital. (2) Final payment determinations are made at the time of cost report settlement, based on the final determination of each hospital’s eligibility for payment under this section. 42 C.F.R. § 412.106(h) (emphasis added). Accordingly, because DCH has sought to challenge its payment prior to receiving a final determination, its claim is premature and inconsistent with the Medicare review scheme set forth in 42 U.S.C. § 1395oo(a). DCH’s claim must therefore be dismissed. See Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 13 (2000) (discussing how the Medicare Act “demands the ‘channeling’ of virtually all legal attacks through the agency” and provides the exclusive review scheme for claims arising under the Act). Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 28 of 29 -24- CONCLUSION For the foregoing reasons, Defendant’s motion to dismiss should be granted. Dated: December 6, 2016 Respectfully submitted, BENJAMIN C. MIZER Principal Deputy Assistant Attorney General CHANNING D. PHILLIPS United States Attorney JOEL McELVAIN Assistant Branch Director /s/ Daniel Schwei DANIEL SCHWEI Trial Attorney (N.Y. Bar) United States Department of Justice Civil Division, Federal Programs Branch 20 Massachusetts Ave. NW Washington, DC 20530 Tel.: (202) 305-8693 Fax: (202) 616-8470 Email: daniel.s.schwei@usdoj.gov Mailing Address: Post Office Box 883 Washington, D.C. 20044 Courier Address: 20 Massachusetts Avenue N.W. Washington, D.C. 20001 Counsel for Defendant Case 1:16-cv-00212-KBJ Document 14-1 Filed 12/06/16 Page 29 of 29 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA DCH Regional Medical Center, ) ) Plaintiff, ) ) ) vs. ) Case No. 1:16-cv-00212-KBJ ) ) SYLVIA M. BURWELL, SECRETARY, ) DEPARTMENT OF HEALTH AND ) HUMAN SERVICES, ) ) Defendant. ) CER Tl_ElCA Tl ON I, Jacqueline R. Vaughn, Attorney Advisor, Centers for Medicare and Medicaid Services, Department of Health and Human Services, under authority delegated by the Secretary, certify that the documents attached constitute a true and accurate transcript of the official file as furnished by the Provider Reimbursement Review Board (PRRB ). These documents are the record of the PRRB's proceedings and actions concerning the DCH Regional Medical Center's request for hearing, under Title XVIII of the Social Security Act, as amended. Date:~ U-J~ Case 1:16-cv-00212-KBJ Document 14-2 Filed 12/06/16 Page 1 of 2 OCH Regional Medical Center PRRB Case No. 14-2097 COURT TRANSCRIPT INDEX Page No(s). Email, dated December 11, 2015, regarding Expedited Judicial Review (EJR) decision 1-12 PRRB's Decision, dated December 10, 2015 13-22 Provider's Request, dated November 12, 2015, for EJR 23-29 Correspondence regarding submission of Intermediary's Preliminary Position Paper 30-35 PRRB Notice, dated November 10, 2014, granting the Intermediary's request to extend the submission of preliminary position paper 36 Intermediary's Letter, dated October 30, 2014, regarding Position Paper Leveling 37-38 PRRB's Notice, dated October 22, 2014, regarding designated due dates pending for Intermediary's Position Papers 39-40 Correspondence regarding submission of Provider's Preliminary Position Paper 41-43 Intermediary's Letter, dated September 18, 2014, regarding request for leveling 44 PRRB's Acknowledgment and Critical Due Dates 45-51 Provider's Request, date January 24, 2014, for Hearing with Exhibits 1-3 52-64 1 Case 1:16-cv-00212-KBJ Document 14-2 Filed 12/06/16 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) DCH REGIONAL MEDICAL CENTER, ) ) Plaintiff, ) ) Civil Action No. 1:16-cv-212 (KBJ) v. ) ) SYLVIA MATHEWS BURWELL, ) in her official capacity as Secretary of ) Health and Human Services, ) ) Defendant. ) __________________________________________) [PROPOSED] ORDER Upon consideration of Defendant’s motion to dismiss, and any response and reply thereto, it is hereby ORDERED that Defendant’s motion is GRANTED and that the action is dismissed for lack of subject-matter jurisdiction. Dated: ________________________ ____________________________________ KETANJI BROWN JACKSON United States District Judge Case 1:16-cv-00212-KBJ Document 14-3 Filed 12/06/16 Page 1 of 1