Loma Linda University Kidney Center v. Burwell

MOTION for Summary Judgment

D.D.C.July 25, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _______________________________________ LOMA LINDA UNIVERSITY ) KIDNEY CENTER, et al. ) ) Plaintiffs, ) ) ) v. ) Civil Action No. 15cv1717 ) Consolidated with 15cv1721 ) (TFH) SYLVIA M. BURWELL, IN HER ) OFFICIAL CAPACITY AS SECRETARY ) OF HEALTH AND HUMAN SERVICES ) ) Defendant, ) _____________________________________) PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, Plaintiffs move for summary judgment on the basis that there is no genuine issue as to any material fact, and Plaintiffs are entitled to judgment as a matter of law. The reasons for this motion are fully set forth in the accompanying Memorandum of Points and Authorities. A proposed Order is attached. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 1 of 17 Respectfully submitted, /s/ ____________________ JEFFREY A. LOVITKY Attorney at Law 1776 K Street, NW, Ste. 800 Washington, DC 20006 Attorney for Plaintiff D.C. Bar No. 404834 Tel: (202) 429-3393 Lovitky@aol.com Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 2 of 17 - 1 - IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _______________________________________ LOMA LINDA UNIVERSITY ) KIDNEY CENTER, et al. ) ) Plaintiffs, ) ) ) v. ) Civil Action No. 15cv1717 ) Consolidated with 15cv1721 ) (TFH) SYLVIA M. BURWELL, IN HER ) OFFICIAL CAPACITY AS SECRETARY ) OF HEALTH AND HUMAN SERVICES ) ) Defendant, ) _____________________________________) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT I. INTRODUCTION There are two plaintiffs in this consolidated action, Loma Linda University Kidney Center (“LLKC”) and Loma Linda University Medical Center (“LLMC”), hereinafter referred to collectively as “Loma Linda.” LLKC is a non-profit freestanding outpatient dialysis facility located in Loma Linda, California. Loma Linda Kidney Center Administrative Record (hereinafter “LLKC AR”) at 236. LLMC operates a hospital based Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 3 of 17 - 2 - outpatient dialysis facility in Loma Linda, California. Loma Linda Medical Center Administrative Record (hereinafter “LLMC AR”) at 522. In this action, Loma Linda challenges the denial of their requests for an exception to the Medicare prospectively determined payment rate for dialysis treatments. The Secretary’s action in denying these exception requests was inconsistent with the requirements of 42 U.S.C. §1395rr(b)(7), mandating that an application for an exception “shall be deemed to be approved unless the Secretary disapproves it by not later than 60 working days after the date the application is filed.” II. LEGAL AND FACTUAL BACKGROUND Title XVIII of the Social Security Act provides health insurance protection to qualified individuals under the Part A (hospital insurance) and Part B (voluntary supplementary medical insurance) programs. 42 U.S.C. §§ 1395 et seq. This program, commonly referred to as the Medicare program, is administered by the Centers for Medicare & Medicaid Services (“CMS").1 The Administrator of CMS (“Administrator") functions under the general 1 The Centers for Medicare & Medicaid Services was until recently known as the Health Care Finance Administration ("HCFA"). Certain portions of the administrative record refer to CMS, and other portions refer to HCFA. For purposes of this brief, the terms CMS and HCFA are used interchangeably. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 4 of 17 - 3 - direction and supervision of the Secretary of Health and Human Services (the "Secretary"). Pursuant to Section 1881(b) of the Social Security Act, and implementing regulations, facilities providing End Stage Renal Dialysis (“ESRD”) under the Medicare program are reimbursed for outpatient dialysis services under the “composite rate” system. 42 U.S.C. § 1395rr(b)(7). The “composite rate” is a prospectively determined payment rate for each outpatient dialysis session. Id. Facilities are also authorized to obtain an exception to the composite rate. 42 U.S.C. § 1395rr(b)(7). An exception request will be deemed approved unless the Secretary disapproves it within 60 working days. Id. Plaintiffs submitted exception requests to the prospective payment rate for dialysis services to United Government Services, LLC ("intermediary") on August 28, 2000. Loma Linda Kidney Center Administrative Record (hereinafter “LLKC AR”) at 235; Loma Linda Medical Center Administrative Record (hereinafter “LLMC AR”) at 518. The intermediary acts as the Secretary’s agent for the purpose of administering the Medicare program. The intermediary subsequently forwarded plaintiffs’ request to the Centers for Medicare & Medicaid Services (“CMS”) for final disposition. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 5 of 17 - 4 - By letter dated November 15, 2000, CMS advised the intermediary that it had denied the exception requests. LLKC AR at 634; LLMC AR at 192. By letter dated November 29, 2000, the intermediary transmitted the exception request denial to LLKC, enclosing a copy of the CMS letter dated November 15, 2000. LLKC AR at 443. By letter dated December 11, 2000, the intermediary transmitted the exception request denial to LLMC, enclosing a copy of the CMS letter dated November 15, 2000. LLMC AR at 202. Pursuant to 42 U.S.C. §1395rr(b)(7), an application for an exception “shall be deemed to be approved unless the Secretary disapproves it by not later than 60 working days after the date the application is filed.” The 60th working day following August 28, 2000 is November 24, 2000. LLKC AR at 442. Plaintiffs appealed the denials of its exception requests to the Provider Reimbursement Review Board (“PRRB”). On June 11, 2002, Plaintiff submitted a Document Production Request to the fiscal intermediary, and to CMS, seeking “all documents, including, but not limited to, all worksheets, computer spreadsheets, and memo’s associated with, or attached to, or referencing, the above referenced letter from Mr. Joseph Logue of HCFA, dated November 15, 2000.” LLKC AR at 461; LLMC AR at 363. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 6 of 17 - 5 - On June 25, 2002, the fiscal intermediary, writing on CMS stationary and on behalf of CMS, stated as follows: “Regarding the worksheets, computer spreadsheets, and memo’s associated to CMS 11/15/2000 letter, at the time of this response the applicable files containing this information has not been located. Upon obtaining the documents, this will be forwarded to you.” LLKC AR at 501; LLMC AR at 387. The fiscal intermediary never supplemented this response during the PRRB proceedings. On September 19, 2005, the PRRB issued a subpoena duces tecum to the intermediary requesting the envelope containing the November 15, 2000 denial letter, as well as any other documents that would substantiate the date upon which CMS actually mailed the letter to the intermediary. LLKC AR at 791; LLMC AR at 977. On October 4, 2005, the intermediary responded that it was unable to find the November 15, 2000 denial letter. LLKC AR at 790. LLMC AR at 973. The PRRB ruled that the exception requests should be deemed approved pursuant to 42 U.S.C. §1395rr(b)(7), because the CMS denial was sent to the intermediary after the 60th working day. LLMC AR at 25; LLKC AR at 25. The CMS Administrator reversed this decision. LLMC AR at 2; LLKC AR at 2. Significantly, the CMS Administrator’s decision never disturbed the PRRB’s finding of fact that the “CMS determination was sent Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 7 of 17 - 6 - to the Intermediary after the 60 working day deadline.” Rather, the CMS Administrator contended that the decision was “made” or “rendered” within the 60 working day period. LLKC AR at 6-7; LLMC AR at 7. On April 4, 2007, while Loma Linda I was pending before this Court, plaintiffs submitted to defendant a Document Production Request seeking documents reflecting the date upon which the denial letter dated November 15, 2000 was signed, and the date upon which such letter was actually mailed to the intermediary.2 By letter dated April 26, 2007, defendant declined to produce the requested documents. Id. at ECF No. 39-6. The basis for its refusal was that such discovery was improper in record review proceedings under the APA. On November 17, 2008, plaintiffs filed in this Court a motion to compel the production of these documents. ECF No. 39, Case No. 06-cv- 1926. This motion was referred to a Magistrate Judge, who denied it by minute order dated January 9, 2009. Plaintiffs appealed the denial to the Court on January 13, 2009. By decision dated January 28, 2011, this Court denied plaintiffs’ discovery request. The Court held that the plaintiffs had not provided any 2 Loma Linda I, Case No. 06-cv-1926, ECF No. 39-5. Loma Linda 1 as used herein refers to the Complaints filed in this Court on November 13, 2006 on behalf of LLKC and LLMC, in Case No.’s 06-cv-1926 and 06-cv-1927. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 8 of 17 - 7 - evidence that the date on the November 15, 2000 denial letters was incorrect. Mem. Op., 17. The Court further upheld the Secretary’s interpretation that the denial was timely because the decision was “made” or “rendered” within the 60 working day period. LLKC AR at 6-7; LLMC AR at 7. The Court further remanded the case back to the agency for a determination on the merits of the exception request. On November 29, 2011, the CMS Administrator remanded this matter to the PRRB for further proceedings. LLKC AR 2627. The remand order issued by the CMS Administrator required the PRRB to issue a decision on the merits of the exception request. On February 3, 2012, plaintiffs filed another subpoena request with the PRRB for production of logs or any other documents indicating the date upon which the exception request was signed, and the date upon which it was mailed to the intermediary. LLKC AR at 2589. The PRRB denied this request by letter dated February 17, 2012. LLKC AR at 2585. On June 12, 2012, plaintiffs filed a final position paper with the Board arguing that the exception requests must be deemed approved because they were not timely disapproved with the 60-day period. LLKC AR at 1626. The plaintiffs’ request for an exception was denied by decision of the PRRB dated September 1, 2015. LLKC AR at 893. The PRRB did not address the Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 9 of 17 - 8 - plaintiffs’ argument that the exception request should be deemed approved because it was not disapproved within 60 days. By letter dated October 7, 2015, CMS advised plaintiffs that it would not further review the decision of the PRRB denying the exception request. LLKC AR at 889. As such, the PRRB’s September 1, 2015 decision is the final agency decision in this matter. This action was timely filed within sixty days of the September 1, 2015 final agency decision. On March 17, 2016, plaintiffs filed a motion for leave to conduct discovery and to supplement the administrative record. Loma Linda II, ECF No. 17. The purpose of this discovery was to determine “when the agency’s denial of plaintiffs’ claim for additional reimbursement was signed by CMS, and when that denial was communicated to the Secretary’s fiscal intermediary.” Id., at p. 2. Plaintiffs asserted that the Court’s ruling dated January 28, 2011 denying discovery should be revisited, in light of the decision in Gundersen Lutheran Med. Ctr., Inc. v. Sebelius, 666 F.3d 1335 (D.C. Cir. 2011). This Court denied plaintiffs’ motion by order dated May 12, 2016. The Court held that plaintiffs were seeking to re-litigate the identical issue that had already been decided by the Court in its order dated January 28, Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 10 of 17 - 9 - 2011. The Court further held that the Gundersen decision did not constitute an intervening change in the law that would warrant a different decision. ARGUMENT (a) Standard of Review An action under Section 1878 of the Social Security Act seeking judicial review of Medicare reimbursement determinations is subject to the Administrative Procedure Act ("APA"), 5 U.S.C. § 701; 42 U.S.C.§ 1395oo(f). Under the APA, a court must set aside agency action that is arbitrary or capricious, not consistent with the Medicare statute or regulations, or is unsupported by substantial evidence. 5 U.S.C. § 706(2). The APA requires the reviewing court to engage in a "thorough, probing, in- depth review." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971). For an agency decision to withstand the arbitrary and capricious standard of review, an agency must “examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-43, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S. Ct. 239, 9 L. Ed. 2d 207 (1962)). Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 11 of 17 - 10 - The court’s review is confined to the administrative record, and “not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 36 L. Ed. 2d 106, 93 S. Ct. 1241 (1973). The agency's decision may be upheld only on the basis of the specific grounds invoked by the agency itself. SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S. Ct. 1575, 91 L. Ed. 1995 (1947). (b) The Secretary Is Unable To Meet Her Burden of Demonstrating That The Exception Request Was Denied Within The Sixty Working Day Period Pursuant to 42 U.S.C. §1395rr(b)(7), an application for an exception “…shall be deemed to be approved unless the Secretary disapproves it by not later than 60 working days after the date the application is filed.” At a minimum, this requires that notice of such disapproval be communicated in some fashion within the sixty-day period.3 It is impossible to deny an exception request absent communication of such denial. An analogous situation involves decisions issued by courts. A court does not render a decision simply by signing a piece of paper. Only after that decision is communicated in some fashion has it been rendered. See e.g., Fed. R. Civ. P. 58(c), providing that a judgment is not deemed to be 3 Plaintiffs recognize that the Court has already ruled that the exception request was timely disapproved because it was “rendered” on November 15, 2000. This matter is again asserted in this brief to preserve plaintiffs’ right to file an appeal on this issue to the D.C. Circuit. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 12 of 17 - 11 - entered until such time as the appropriate notation is made by the clerk to the publicly available civil docket sheet. Inherent in the concept of adjudication is a decision that impacts the rights and obligations of other persons. A decision that has not been communicated to any person other than the decision-maker herself is little more than a mental exercise. It would be analogous to claiming that an official decision is effective when that decision is reflected as an entry into the personal diary of the decision-maker. Moreover, any decision that has not been communicated is inherently tentative. For example, an official could sign the disapproval on the 57th working day, and simply put the signed document on his or her desk. Then, on the next working day, the official could change his or her mind, and on the following working day change his or her mind for the third time. The point is that the decision cannot be final until such time as it has been communicated. Plaintiffs respectfully submit that this conclusion is strongly supported by the decision in Gundersen Lutheran Med. Ctr., Inc. v. Sebelius, 666 F.3d 1335 (D.C. Cir. 2011). Gundersen involved a situation in which the Secretary’s denial letter was sent to the fiscal intermediary prior to the expiration of the sixty-day period, and then transmitted to the plaintiff after Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 13 of 17 - 12 - the expiration of the sixty-day period. Id., at 1336. In Gundersen, the Court held that disapproval “is a meaningless concept unless disapproval is communicated in some fashion.” Id. However, the Court held that the communication requirement was satisfied by virtue of transmitting the letter within the sixty-day period to the fiscal intermediary. Id., at 1337. The D.C. Circuit could have held, as did the CMS Administrator, that the denial was effective on the date upon which the denial letter was signed. However, that was not the ruling of the court. Instead, the court required that the denial letter be communicated in some fashion. The mere signing of the denial letter cannot itself constitute a communication, because it is nothing more than a communication to oneself. In the instant case, there is no evidence to corroborate a finding that the denial letter was communicated prior to the date it was stamped received on Monday, November 27, 2000.4 This was one-working day after the expiration of the sixty working day period on Friday, November 24, 2000. 4 The date stamp appearing on the November 15, 2000 denial letters appears to be that of the fiscal intermediary. Compare LLKC AR at 791 with LLKC AR 878. However, this conclusion is called into question by virtue of the intermediary’s response to the Board’s subpoena, stating that the intermediary was unable to find the denial letters. LLKC AR at 790; LLMC AR at 973. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 14 of 17 - 13 - The PRRB explicitly held that the letter was sent to the intermediary after the expiration of the sixty-day deadline. AR 28. The CMS Administrator did not overturn this factual finding. The record is devoid of any evidence that the letter was ever mailed. Indeed, the intermediary was unable in response to the Board’s subpoena to produce the envelope containing the November 15, 2000 denial letter, or any other documents substantiating the date upon which CMS mailed the letter to the intermediary. LLKC AR at 790-791; LLMC AR at 973-977. It is in fact equally as plausible that the letter was transmitted to the intermediary through some other means on November 27, 2000, such as through facsimile, email, or same-day courier service. The mere fact that the letters themselves do not bear any indication of being faxed is not conclusive on this point. Indeed, the agency admitted in its answers that it without knowledge as to whether the denial letters might have been sent via facsimile. Kidney Center Answer, ¶34, Medical Center Answer, ¶33. The Secretary has had ample opportunity to supplement the administrative record in this case with additional information supporting the conclusion that the denial letter was mailed or otherwise transmitted within the sixty working day period. However, the Secretary has steadfastly Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 15 of 17 - 14 - refused to supplement the administrative record. As such, the Secretary alone bears the responsibility for any gaps in the administrative record. There is a temptation to give the benefit of the doubt to the government by virtue of the fact that it may have missed the deadline by only one working day. However, the government is not entitled to such an advantage. The statute does not distinguish between denials that are one working day late, or denials that are one hundred working days late. The statute imposes a strict standard of sixty working days, and imposes the severest of all possible sanctions by virtue of being only one day late. In Gundersen, the court noted that the default position is approval of the exception request, unless the government can “demonstrate the contrary.” 666 F.3d at 1336. As further noted in Gundersen, “silence is therefore approval.” Id. In the instant case, the Secretary cannot meet her burden of demonstrating that the denial letter was communicated in some fashion prior to the expiration of the sixty working day period. As such, the exception request must be deemed approved. CONCLUSION Plaintiffs respectfully request that the Court grant plaintiffs’ motion for summary judgment. A proposed Order is attached. Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 16 of 17 - 15 - Respectfully submitted, /s/ ____________________ JEFFREY A. LOVITKY Attorney at Law 1776 K Street, NW, Ste. 800 Washington, DC 20006 D.C. Bar No. 404834 Tel: (202) 429-3393 Lovitky@aol.com Attorney for Plaintiffs Case 1:15-cv-01717-TFH Document 24 Filed 07/25/16 Page 17 of 17 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA _______________________________________ LOMA LINDA UNIVERSITY ) KIDNEY CENTER, et al. ) ) Plaintiffs, ) ) ) v. ) Civil Action No. 15cv1717 ) Consolidated with 15cv1721 ) (TFH) SYLVIA M. BURWELL, IN HER ) OFFICIAL CAPACITY AS SECRETARY ) OF HEALTH AND HUMAN SERVICES ) ) Defendant, ) _____________________________________) ORDER AND JUDGMENT Pursuant to Fed. R. Civ. P. 58 and for the reasons stated by the Court in its memorandum, it is this ___ day of ________ hereby ORDERED AND ADJUDGED that Plaintiff’s Motion for Summary Judgment is granted and the Secretary’s Motion for Summary Judgment is denied; and it is further ORDERED AND ADJUDGED that the exception requests submitted by plaintiffs on August 28, 2000 shall be deemed approved pursuant to 42 U.S.C. §1395rr(b)(7); and it is further Case 1:15-cv-01717-TFH Document 24-1 Filed 07/25/16 Page 1 of 2 ORDERED AND ADJUDGED this case is remanded to the Secretary to compute the amounts due and owing to plaintiffs. _______________________________ Judge of the United States District Court Case 1:15-cv-01717-TFH Document 24-1 Filed 07/25/16 Page 2 of 2