Shands Jacksonville Medical Center, Inc. et al v. Sebelius

MOTION for Summary Judgment , MOTION to Vacate

D.D.C.April 28, 2017

4831-3332-6149.3 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SHANDS JACKSONVILLE MEDICAL CENTER, INC., et al., Plaintiffs, v. THOMAS E. PRICE, in his official capacity as Secretary of the United States Department of Health and Human Services, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 14-cv-263 (RDM) (cons.) BAKERSFIELD PLAINTIFFS’ RENEWED MOTION FOR SUMMARY JUDGMENT The Bakersfield Plaintiffs1 move the Court for summary judgment to vacate the Secretary’s rate reduction in the FY 2014 IPPS Final Rule. Vacatur is appropriate because the Secretary failed on remand to cure the rate reduction rule’s deficiencies and because the Secretary has abdicated any claim to the rule’s legitimacy. The Secretary’s deficient attempt to remedy his wrong in the FY 2017 IPPS Final Rule does not counsel against vacatur and does not 1 “Bakersfield Plaintiffs” refers to all Plaintiffs represented by Foley & Lardner LLP in the following consolidated, related cases: Shands Jacksonville Medical Center v. Price, Civil Action No. 14-cv-0263 (RDM); Bakersfield Heart Hospital v. Price, Civil Action No. 14-0976 (RDM); St. Helena Hospital v. Price, Civil Action No. 14-cv-1477 (EGS); Shannon Medical Center v. Price, Civil Action No. 15-1800 (RDM); St. Helena Hospital v. Price, Civil Action No. 16-cv- 0030 (RDM); Asante Rouge Valley Medical Center v. Price, Civil Action No. 16-0032 (RDM); Palmerton Hospital-Carbon v. Price, Civil Action No. 16-1543 (RDM); Auburn Medical Center v. Price, Civil Action No. 16-2301 (RDM); St. Helena Hospital v. Price, Civil Action No. 17-cv- 0039 (RDM); Antelope Valley Hospital v. Price, Civil Action No. 17-0175 (RDM). In this Motion and supporting Memorandum, “Plaintiffs” refers to the Bakersfield Plaintiffs. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 1 of 30 2 4831-3332-6149.3 moot this case. Plaintiffs respectfully request the rate reduction be vacated and the Secretary be required to pay hospitals the amount of money hospitals lost for FY 2014-2016 due to the 0.2 percent payment reduction, with interest to Plaintiffs. In the alternative to vacatur, Plaintiffs seek payment of the amounts they lost under the payment reduction, minus any amounts paid to Plaintiffs by the Secretary in his deficient attempt to remedy his wrong, also with interest. As another alternative, Plaintiffs join the request for relief sought by the Plaintiffs Athens Regional et al. in their separate motion for summary judgment and supporting memorandum. This motion is supported by an accompanying memorandum of points and authorities. Date: April 28, 2017 Respectfully submitted, /s/ Lori A. Rubin _____________ Lori A. Rubin, D.C. Bar No. 1004240 Foley & Lardner LLP 3000 K Street, N.W., Suite 600 Washington, D.C. 20007-5143 Telephone: (202) 672-5300 Fax: (202) 672-5399 Email: larubin@foley.com Attorney for Bakersfield Plaintiffs Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 2 of 30 4831-3332-6149.3 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SHANDS JACKSONVILLE MEDICAL CENTER, INC., et al., Plaintiffs, v. THOMAS E. PRICE, in his official capacity as Secretary of the United States Department of Health and Human Services, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 14-cv-263 (RDM) (cons.) BAKERSFIELD PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF RENEWED MOTION FOR SUMMARY JUDGMENT Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 3 of 30 4831-3332-6149.3 TABLE OF CONTENTS I. INTRODUCTION............................................................................................................. 1 II. LEGAL STANDARD ....................................................................................................... 1 III. ARGUMENT ..................................................................................................................... 2 A. The Payment Reduction Should Be Vacated Because The Secretary Failed On Remand To Cure The Rule’s Deficiencies. ....................................... 2 1. The Remand Order ................................................................................... 3 2. The Secretary’s Deficient Response To The Remand Order ................ 4 B. The Allied-Signal Factors Are Inapplicable But, Even If Considered, They Urge Vacatur. .............................................................................................. 8 1. The Allied-Signal Factors Are Inapplicable. .......................................... 8 2. Factor 1: The Seriousness Of The Rate Reduction’s Deficiencies .............................................................................................. 10 3. Factor 2: Disruptive Consequences ....................................................... 11 C. The Secretary’s Deficient Attempt To Remedy His Wrong Does Not Counsel Against Vacatur. ................................................................................... 13 1. There Is No Evidence The 0.6 Percent Increase Makes The Plaintiffs Whole, Nor Could There Be. ................................................. 14 2. The Case Is Not Moot Because The Parties Still Have A Concrete Interest In The Outcome. ....................................................... 16 3. The FY 2017 Final Rule Did Not Supersede The Rate Reduction Rule And Is Not Before This Court. ................................... 18 D. In The Alternative, The Secretary Should Be Ordered To Pay Each Plaintiff The Amount Each Plaintiff Lost Under The Payment Reduction To The Extent Not Compensated By The 0.6 Percent One- Time Positive Adjustment. ................................................................................. 21 IV. CONCLUSION ............................................................................................................... 22 Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 4 of 30 i 4831-3332-6149.3 TABLE OF AUTHORITIES Page(s) Cases Ad Hoc Metals Coalition v. Whitman, 227 F. Supp. 2d 134 (D.D.C. 2002) .........................................................................................15 Allied-Signal, Inc. v. U.S. Nuclear Regulatory Commission, 988 F.2d 146 (D.C. Cir. 1993) ...........................................................................1, 3, 8, 9, 10, 11 C.F. Communs. Corp. v. FCC, 128 F.3d 735 (D.C. Cir. 1997) .................................................................................................19 Calderon v. Moore, 518 U.S. 149 (1996) ...........................................................................................................14, 17 Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011) .................................................................................................18 Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971) .................................................................................................................14 Comcast Corp. v. FCC, 579 F.3d 1 (D.C. Cir. 2009) ...........................................................................................2, 10, 11 Ellis v. Brotherhood of Ry., Airline & S.S. Clerks, 466 U.S. 435 (1984) .................................................................................................................17 Fox Television Stations v. FCC, 280 F.3d 1027 (D.C. Cir. 2002) .................................................................................................9 Heartland Regional Medical Center v. Sebelius, 566 F.3d 193 (D.C. Cir. 2009) .................................................................................................12 Himmler v. California, 611 F.2d 137 (6th Cir. 1979) .............................................................................................20, 21 Hosp. of the Univ. of Pa. v. Sebelius, 847 F. Supp. 2d 125 (D.D.C. 2012) ...........................................................................................2 Knox v. Serv. Employees Int’l Union, Local 1000, 567 U.S. 298 (2012) ...........................................................................................................17, 18 Los Angeles Cty. v. Davis, 440 U.S. 625 (1979) .................................................................................................................14 Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 5 of 30 ii 4831-3332-6149.3 In re Medicare Reimbursement Litigation, 414 F.3d 7 (D.C. Cir. 2005) ...............................................................................................12, 13 Nat’l Indep. Coal Operators’ Ass’n v. Kleppe, 423 U.S. 388 (1976) .................................................................................................................20 Nw. Envtl. Def. Ctr. v. Gordon, 849 F.2d 1241 (9th Cir. 1988) .................................................................................................17 Prairie State Generating Co. LLC v. Sec’y of Labor, 792 F.3d 82 (D.C. Cir. 2015) ...................................................................................................15 Resolute Forest Prod., Inc. v. U.S. Dep’t of Agric., 187 F. Supp. 3d 100 (D.D.C. 2016) ...........................................................................................2 Schnitzler v. United States, 761 F.3d 33 (D.C. Cir. 2014) ...................................................................................................17 Shands Jacksonville Medical Center, Inc. v. Burwell, No. 14-263 (D.D.C.) ................................................................................................................10 Tallahassee Memorial Regional Medical Center v. Bowen, 815 F.2d 1435 (11th Cir. 1987) .........................................................................................20, 21 United States Lines, Inc. v. Federal Maritime Com., 584 F.2d 519 (D.C. Cir. 1978) .................................................................................................19 United States v. Nixon, 418 U.S. 683 (1974) .................................................................................................................19 Statutes 5 U.S.C. § 706(2) .............................................................................................................................2 42 U.S.C. § 1395oo ....................................................................................................................2, 10 Social Security Act § 1878(f) ....................................................................................................1, 10 Other Authorities 78 Fed. Reg. 27,486 (May 10, 2013) ...............................................................................................4 78 Fed. Reg. 50,496 (Aug. 19, 2013)...............................................................................................3 80 Fed. Reg. 75,107 (Dec. 1, 2015) .....................................................................................4, 5, 7, 8 81 Fed. Reg. 24,946 (Apr. 27, 2016) .............................................................................................19 81 Fed. Reg. 56,762 (Aug. 22, 2016).........................................9, 10, 12, 13, 14, 15, 16, 18, 19, 21 Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 6 of 30 iii 4831-3332-6149.3 Fed. R. Civ. P. 56 .............................................................................................................................2 Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 7 of 30 1 4831-3332-6149.3 I. INTRODUCTION This Court remanded the payment reduction rule at issue in this case to the Secretary to permit him an attempt to cure the rule’s deficiencies. The Secretary’s opportunity to cure the deficiencies has come and gone, and the Secretary failed to cure, instead choosing to abandon his defense of the rule. In its September 21, 2015 Memorandum Opinion (“Memorandum Opinion,” Dkt. 50),2 the Court warned the Secretary that vacatur may be appropriate if the Secretary failed to correct the deficiencies on remand. The failure of the Secretary to cure the deficiencies warrants vacatur, and the Secretary must pay Plaintiffs the amounts of money they lost for FY 2014-2016 due to the payment reduction, with interest. Moreover, the Allied-Signal test weighs in favor of vacatur as well. And, the Secretary’s deficient attempt to address the effects of the rate reduction in a later rulemaking does not moot this case. There is no evidence that the later rulemaking makes each Plaintiff whole, nor could there be. Where, as here, the parties still have a concrete interest in the outcome of a case (here, the amount of money that would make Plaintiffs whole, with interest), the case is not moot. Moreover, the later rulemaking is not before this Court. In the alternative of vacatur, Plaintiffs seek payment of the amounts they lost under the payment reduction, minus any amounts paid to Plaintiffs by the Secretary in his deficient attempt to remedy his wrong, also with interest. II. LEGAL STANDARD Under the Medicare Act, review of the Secretary’s action is governed by the judicial review provisions of the Administrative Procedure Act (“APA”). Social Security Act § 2 The Memorandum Opinion is cited herein as “Mem. Op.” Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 8 of 30 2 4831-3332-6149.3 1878(f)(1); 42 U.S.C. § 1395oo(f)(1). Under the APA, courts are to hold unlawful and set aside final rules that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” as well as rulemakings accomplished “without observance of procedure required by law.” 5 U.S.C. §§ 706(2)(A), (D). In a case involving review of final agency action under APA standards, summary judgment “serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review.” Hosp. of the Univ. of Pa. v. Sebelius, 847 F. Supp. 2d 125, 133 (D.D.C. 2012). The summary judgment standard in Federal Rule of Civil Procedure 56 does not apply to cases challenging agency actions under APA standards “because of the limited role of a court in reviewing the administrative record.” Id. III. ARGUMENT A. The Payment Reduction Should Be Vacated Because The Secretary Failed On Remand To Cure The Rule’s Deficiencies. This Court granted the Secretary an alternative to the normal remedy of vacatur for his rate reduction, but the Secretary fell far short of fixing the rule’s deficiencies on remand. The Secretary should not be given another chance to salvage his unsalvageable rule. Comcast Corp. v. FCC, 579 F.3d 1, 9 (D.C. Cir. 2009) (vacating rule after defendant failed on remand to remedy deficiencies in the rule identified in remand order); Resolute Forest Prod., Inc. v. U.S. Dep’t of Agric., 187 F. Supp. 3d 100, 102 (D.D.C. 2016) (setting aside rulemaking after defendants failed to provide a reasonable explanation on remand, noting “[t]he agency still has not been able to offer a coherent explanation for its estimate”). The rate reduction rule should be vacated, as the Court warned may occur if the Secretary failed to remedy his procedural violations on remand. Notwithstanding the language of the APA that directs courts to set aside agency rules that are substantively or procedurally deficient, under D.C. Circuit law, a court may, under Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 9 of 30 3 4831-3332-6149.3 appropriate circumstances remand a rule to the agency to try again. See, e.g., Allied-Signal, Inc. v. U.S. Nuclear Regulatory Commission, 988 F.2d 146 (D.C. Cir. 1993). However, vacatur of a deficient agency rule is the norm, and remand the exception, Mem. Op., A.R. at 1214; Pls.’ Supp. Vacatur Br. (Dkt. 42) at 2-3 (collecting cases), and there is no basis in law to remand a rule that is beyond redemption. Post remand events (and non-events) have made clear that the rate reduction cannot be salvaged. Vacatur is the appropriate consequence. 1. The Remand Order In this case, Plaintiffs challenge the across-the-board hospital payment reduction rule contained in the FY 2014 Final Rule3 on procedural and substantive grounds. In its Memorandum Opinion, the Court agreed with Plaintiffs that the rate reduction rule has serious procedural deficiencies, deferred ruling on whether the rule is also substantively invalid, and granted Plaintiffs’ summary judgment motions in relevant part. Mem. Op., A.R. at 1204, 1221. In particular, the Court found “the Secretary did not provide sufficient notice of the actuarial assumptions and methodology she employed and that the disclosure of this information was essential to communicate the basis for the proposed adjustments and to permit meaningful public comment.” Mem. Op., A.R. at 1204. However, although the Court granted the Plaintiffs’ dispositive motions, the Court denied Plaintiffs’ request to vacate the payment reduction rule, and instead remanded the rule to the Secretary. Id. at 1221. In remanding the rule, the Court ordered the Secretary to publish a notice in the Federal Register to give the Secretary the opportunity to provide the critical information the Court found missing from the Secretary’s 3 The “FY 2014 Final Rule” refers to the FY 2014 hospital inpatient prospective payment system (“IPPS”) final rule, 78 Fed. Reg. 50,496 (Aug. 19, 2013). Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 10 of 30 4 4831-3332-6149.3 initial notice, in response thereto interested parties would have an opportunity to submit comments, the significant ones to which the Secretary was to “give meaningful consideration.” Dkt. 50 at 50; Dkt. 53 at 2-3. The Court’s decision to remand the rule was not without reservation: the Court noted it was not convinced the Secretary would be able to justify the payment reduction rule on remand. Mem. Op., A.R. at 1216. Instead of assuming the Secretary would be able to correct the deficiencies, the Court adopted a wait-and-see approach, and cautioned: “to the extent the Secretary fails on remand to give meaningful consideration to significant comments, vacatur may be appropriate in a future proceeding.” Mem. Op., A.R. at 1221. Now, the wait is over, and the Secretary failed on remand to even address the comments in response to her flawed explanation as to why she ignored all medical MS-DRGs when predicting a net increase of 40,000 inpatient discharges each year. Vacatur is appropriate now more than ever. 2. The Secretary’s Deficient Response To The Remand Order The Secretary did respond to the remand order by publishing a notice in the Federal Register providing some scant additional explanation for the payment reduction. 80 Fed. Reg. 75,107 et seq. (Dec. 1, 2015); A.R. at 61 et seq. However, the notice was deficient in that it still did not provide the “critical material” the agency had omitted from the initial FY 2014 IPPS Proposed Rule, 78 Fed. Reg. 27,486 (May 10, 2013), the omission of which caused the Court to determine the rule’s flaws were serious enough to weigh in favor of vacatur. Mem. Op., A.R. at 1216-1217. Moreover, the Secretary failed to give meaningful response to significant comments on his flawed notice. And, what explanation the Secretary did provide on remand demonstrates that his decision to exclude all medical MS-DRGs was arbitrary and capricious. For example, although the Court rejected the Secretary’s argument that it was “self- evident” that medical MS-DRG cases would be unaffected by the new rule and, accordingly, Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 11 of 30 5 4831-3332-6149.3 could be excluded when calculating the number of cases that would shift from inpatient to outpatient, Mem. Op., A.R. at 1210, the Secretary’s explanation on remand failed to provide any support for why the proposition was “self-evident” and did not provide any cogent explanation for why he ignored all 750,000 medical MS-DRG cases. The Secretary’s Federal Register notice stated that his actuaries excluded medical MS–DRGs because they believed that “due to behavioral changes by hospitals and admitting practitioners,” most inpatient medical encounters spanning less than two midnights before the current 2-midnight policy was implemented might be reasonably expected to extend past two midnights. 80 Fed. Reg. at 75,110; A.R. at 64. The Secretary thus appears to have assumed that hospitals and admitting practitioners would purposefully keep “most” patients with medical admissions past the two midnights mark simply to game the system and obtain Part A payment. There is no reasoned basis for CMS to have made such an assumption. What evidence did CMS have to support such an assumption, and to what “behavioral changes” was the Secretary referring? Commenters asked this and other questions of the Secretary, see e.g., A.R. at 5619-5621, and they have not received answers. Other unanswered questions were, what ability does a hospital, as opposed to the admitting physician or other practitioner, have to prolong the stay of the patient, and what financial or other motive does the admitting practitioner have to prolong a patient’s stay? A.R. at 5619-5620. Given that most patients want to leave the hospital as soon as possible and that practitioners are concerned about hospital-acquired infections, why were these factors not taken into account? A.R. at 5620. Moreover, the Secretary’s response does not even say that the actuaries believed that there would be “behavioral changes” – only that there “might” be behavioral changes. How does one’s belief that something “might” happen form the basis for excluding 750,000 short-stay medical admissions from consideration? A.R. at 5620. And if Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 12 of 30 6 4831-3332-6149.3 CMS thought that it was reasonable to assume that “most” (whatever that means) short stay medical encounters would extend to at least two midnights, why did CMS exclude from consideration all such medical encounters? Finally, if CMS thought that hospitals and admitting practitioners would purposefully extend the length of short stay medical encounters to at least two midnights, why did it not believe this would also happen for surgical patients? In other words, why did CMS assume that none of the surgical cases lasting less than two midnights would be extended to at least two midnights in response to the rule? A.R. at 5620. The Federal Register notice was seriously deficient for not providing answers to the above questions raised by comments. Moreover, if it is true that the length of stay for medical cases is unpredictable, the Secretary should have assumed that medical case patients would be treated as outpatients because the 2-midnights policy requires the admitting physician or other practitioner have a reasonable belief that the patient will need to cross two midnights in the hospital, and that such belief be articulated in the medical record. See 78 Fed. Reg. at 50,946, 50,949, 50,951, 50,965 (42 C.F.R. §412.3(e)(1)). The Federal Register notice does not explain whether or how in 2013 CMS considered generally the impact of this requirement on its prediction that there would be a net increase of 40,000 inpatient cases – let alone whether or how it considered such a requirement specifically in light of its belief that medical cases are unpredictable. The Secretary cannot have it both ways. Either medical cases generally do not have unpredictable lengths of stay, in which case there was no basis for the actuaries to have excluded medical cases from consideration (putting aside the larger issue of whether there is some logical reason in the first place for excluding cases with unpredictable lengths of stay), or, medical cases generally do have unpredictable lengths of stay, in which case one should assume that hospitals and admitting Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 13 of 30 7 4831-3332-6149.3 physicians will follow the dictates of the regulation and not admit the patient or bill under Part A for such admission. A.R. at 5620-21. The Federal Register notice also states that “[t]he increased variability in the medical protocols is influenced by the fact that, for planned surgical admissions, more of the branching takes place in the process of selecting a specific surgical intervention before the patient is admitted, while for medical admissions more of the branching takes place after admission.” 80 Fed. Reg. at 75,110; A.R. at 64. Even if this statement were true and germane, it speaks only to “planned” surgical admissions. The Secretary apparently did not take into account that (as he well knows) a large proportion of surgical patients are admitted through the emergency department, and that the surgeons operating on such patients may have had no previous relationship with the patients, let alone the opportunity to have sent the patient for diagnostic testing and review the results of such testing and select a specific surgical intervention prior to admission. Thus a patient who may have had one type of surgery (e.g., laparoscopic) had the surgery been planned, may end up coming to the hospital as an emergency patient and having another type of surgery (e.g., because the organ became inflamed). Presumably, CMS would say that the length of stay for emergency surgeries are less predictable than for planned surgeries, but it does not appear that CMS excluded from consideration any or all unplanned surgeries when making its estimate of how many cases would move from one setting to another. It would have been easy enough to identify unplanned surgeries, as the claims form indicates the area of the hospital from which the patient is admitted (line 20 on the UB-92 claim form and line 15 on the UB-04 claim form). A.R. at 5621. The APA requires an agency to “articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Mem. Op., A.R. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 14 of 30 8 4831-3332-6149.3 at 1203 (quotation marks and citation omitted). “The agency must also provide the public with a meaningful opportunity to comment on a proposed rule and must offer reasoned responses to significant comments.” Id. at 1204; see also id. at 1203-1213. Here, the Secretary still has not articulated a satisfactory explanation of the factors he took into account for his rate reduction, and he has therefore not provided the public with a meaningful opportunity to comment. Because the Secretary failed to remedy the procedural deficiencies this Court identified, and because what explanation the Secretary did provide on remand demonstrates that his decision to exclude all medical MS-DRGs was arbitrary and capricious,4 the Court now should vacate the rate reduction, in accordance with its Memorandum Opinion, and the Secretary must pay hospitals the amount of money hospitals lost for FY 2014-2016 due to the 0.2 percent payment reduction, with interest to Plaintiffs. B. The Allied-Signal Factors Are Inapplicable But, Even If Considered, They Urge Vacatur. 1. The Allied-Signal Factors Are Inapplicable. Whatever legal justification there may be for remanding a rule rather than vacating it, there is no legal basis for not vacating a rule that is hopelessly invalid. In its initial analysis as to whether to remand or vacate the FY 2014 Final Rule’s rate reduction, this Court in its Memorandum Opinion applied the two-part test articulated in Allied-Signal. Mem. Op., A.R. at 1215-1221. That is, the Court “weigh[ed] (1) the seriousness of the [rule’s] deficiencies (and 4 In its Memorandum Opinion, the Court deferred ruling on whether the rate reduction rule was also substantively invalid. Mem. Op., A.R. at 1204. For the reasons the Plaintiffs argued in their Memorandum of Points and Authorities in Support of Motion for Summary Judgment (Dkt. 15 at 13-29), and for the reason that the Secretary failed on remand to offer a valid explanation for omitting all medical MS-DRGs from consideration, the rate reduction is substantively invalid. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 15 of 30 9 4831-3332-6149.3 thus the extent of doubt whether the agency chose correctly) and (2) the disruptive consequences of an interim change that may itself be changed.” Mem. Op., A.R. at 1215 (quotation marks omitted). These factors are no longer applicable. In Allied-Signal, the Court found that it was conceivable the Commission could explain its rulemaking choice on remand. 988 F.2d at 715. There is nothing to suggest that the court would have had any choice but to vacate had the court been convinced that the agency could not provide a reasoned explanation on remand. Here, the Secretary abandoned defense of the rate reduction, in recognition that attempting to defend the payment reduction on remand was futile. After soliciting comments in the December 1, 2015 Federal Register notice and having been excoriated by the commenters, the Secretary decided not to respond to comments but rather decided to throw in the towel. The Secretary conceded, “For many of the reasons commenters presented to us in prior rulemaking, we no longer are confident that the effect of the 2-midnight policy on the number of discharges paid under the IPPS may be measured in this context.” 81 Fed. Reg. 56,762, 57,060 (Aug. 22, 2016) (the “FY 2017 Final Rule”); A.R. at 750. Because the Secretary lost confidence in the purported basis for his rate reduction, he proposed and finalized a policy in the FY 2017 Final Rule to include a one-time positive 0.6 percent adjustment to the hospital payment rate to “remove” prospectively the effects of the 0.2 percent payment reduction imposed by the FY 2014 Final Rule for each of the fiscal years 2014-2016. 81 Fed. Reg. at 57,059; A.R. at 749 (third column). If the Secretary himself does not believe in the rate reduction rule, there is no reason for the Court to do so. See Fox Television Stations v. FCC, 280 F.3d 1027, 1053 (D.C. Cir. 2002) (“half-hearted attempt to defend [the agency’s] decision in this court is but another indication that the [rule] is a hopeless cause”). Therefore, there is no basis to apply the Allied- Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 16 of 30 10 4831-3332-6149.3 Signal factors: vacatur is now the only appropriate remedy, given the Secretary’s abandonment of his rationale. Moreover, the Secretary went beyond refusing to defend the rate reduction and affirmatively represented that Plaintiffs are prevailing parties in their challenge to the rate reduction: “We will not contest that hospitals that are party to the Shands Jacksonville Medical Center, Inc. v. Burwell, No. 14-263, (D.D.C.) and other currently pending cases that challenge the -0.2 percent adjustment should receive interest under section 1878(f)(2) of the Act.” 81 Fed. Reg. at 57,060; A.R. at 750. This statement is an acknowledgement that Plaintiffs are prevailing parties in their challenge to the rate reduction: Section 1878(f)(2) of the Social Security Act provides that a “prevailing party” in litigation against the United States in a case brought under section 1878(f)(2) is entitled to interest. 42 U.S.C. § 1395oo(f)(2). The Secretary thus admits his rate reduction cannot survive and has not survived this litigation. Thus, the Allied-Signal test has no relevance where the rule at issue is indisputably invalid as here where the Secretary has abdicated any claim to the rate reduction’s legitimacy. However, if the Court wishes to consider the Allied-Signal factors at the current case posture anyway, the factors urge vacatur. 2. Factor 1: The Seriousness Of The Rate Reduction’s Deficiencies The first Allied-Signal factor is the seriousness of the rule’s deficiencies (and thus the extent of doubt whether the agency chose correctly). Because there is not an “extent of doubt” but rather no doubt at all that the Secretary cannot justify the approach he took (see supra Section III.B.1), this factor indisputably urges vacatur. The case of Comcast Corp. v. FCC is instructive in this regard. In Comcast, the named plaintiff and others involved in the cable television industry challenged a rule in which the Federal Communications Commission (FCC) capped at 30% of all subscribers the market share Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 17 of 30 11 4831-3332-6149.3 any single cable television operator may serve. The D.C. Circuit previously remanded the rule, and directed the FCC to consider how the increasing market share of direct broadcast satellite companies (such as DirecTV and Dish Network) diminished cable operators’ ability to determine the economic fate of programming networks. This the FCC failed to do on remand. When the case returned to the D.C. Circuit, the court considered the plaintiff’s renewed attempt to have the rule vacated. The Court considered the first Allied-Signal factor, and based on the FCC’s failure to follow the court’s direction on remand, found that this factor weighed in favor of vacatur: The Commission’s dereliction in this case is particularly egregious. In the previous round of this litigation we expressly instructed the agency on remand to consider fully the competition that cable operators face from DBS companies. The omission of this consideration was a major failing of the FCC’s prior attempt to justify the 30% cap. The Commission nonetheless failed to heed our direction and we are again faced with the same objections to the rationale for the cap. It is apparent that the Commission either cannot or will not fully incorporate the competitive impact of DBS and fiber optic companies into its open field model. We have no trouble concluding, therefore, that vacatur is indicated by the first factor in Allied-Signal. 579 F.3d at 9 (citation omitted). In the instant case, it is similarly apparent that the Secretary “either cannot or will not” defend his rate reduction. Given the Secretary’s stated own lack of confidence in the rate reduction, the first Allied-Signal factor mandates vacatur. 3. Factor 2: Disruptive Consequences The second Allied-Signal factor, if applicable at all, also now weighs in favor of vacatur. Here again Comcast is instructive. There the Court stated that “the second Allied-Signal factor is weighty only insofar as the agency may be able to rehabilitate its rationale for the regulation.” 579 F.3d at 9. Again, if a rule is beyond rehabilitation, as Plaintiffs—and apparently the Secretary too—believe is true of the rate reduction, the second Allied-Signal factor is simply inapplicable. However, should the Court engage in analysis of the second factor, the Court’s Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 18 of 30 12 4831-3332-6149.3 analysis in the Memorandum Opinion is no longer applicable now that the Secretary has abandoned the rate reduction. In the Memorandum Opinion, the Court found instructive the analysis in Heartland Regional Medical Center v. Sebelius, 566 F.3d 193 (D.C. Cir. 2009). The Heartland court considered that vacatur could result in payments being made to hospitals that the Secretary would have trouble recouping if the Secretary were later successful in reinstating that which was vacated, and the Heartland court concluded that “substantial doubt about HHS’s ability to recoup payments it made for years prior to reinstatement” was sufficient to find “disruptive consequence under Allied Signal.” Mem. Op., A.R. at 1218-19. However, in the instant case, the Secretary is no longer interested in imposing the payment reduction. 81 Fed. Reg. at 57,060; A.R. at 750 (finding it “appropriate to” “prospectively remove . . . the 0.2 percent reduction”). Because there is no possibility that payments made to hospitals after vacatur would need to be recouped by the Secretary in the future (given his abandonment of the rate reduction), Heartland cannot save the Secretary this time. In re Medicare Reimbursement Litigation, 414 F.3d 7 (D.C. Cir. 2005), also counsels in favor of vacatur. In that case, the Secretary had “conceded that [he] had a clear statutory duty to pay plaintiff hospitals those funds,” and thus the Court of Appeals observed, “having to pay a sum one owes can hardly amount to an equitable reason for not requiring repayment.” Mem. Op., A.R. at 1220 (quotation marks omitted). In its Memorandum Opinion, the Court distinguished the rate reduction at issue here because, at that point in time, the Secretary “ha[d] not conceded that the hospitals have a right to additional inpatient compensation . . . , but rather maintain[ed] that the 0.2 percent reduction is justified and that it would be contrary to the public interest to pay hospitals at the pre-reduction level.” Id. Well, the Secretary has now made the Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 19 of 30 13 4831-3332-6149.3 concession that hospitals are entitled to additional inpatient compensation. 81 Fed. Reg. at 57,060; A.R. at 750 (“[W]e believe it would be appropriate to . . . prospectively remove . . . the 0.2 percent reduction” and to “temporarily increase the rates, only for FY 2017, to address the effect of the 0.2 percent reduction to the rates in effect for FY 2014 . . . FY 2015 . . . and . . . FY 2016”). Therefore, this case is no longer distinguishable from In re Medicare Reimbursement Litigation. Moreover, any disruption to the Secretary would be a self-inflicted wound. The Secretary argued to the Court that remand was the correct remedy. In his brief opposing vacatur, he argued, “it would be straightforward for the Secretary to cure any procedural deficiencies in her rulemaking record on remand . . . . [The] likelihood that the adjustment will ultimately stand is itself a reason to remand without vacatur.” Dkt. 43 at 2. He also argued, “if the Court were to find that the Secretary denied Plaintiffs an opportunity to comment on [the] actuaries’ methodology, the ‘cure’ would entail a process whereby, after a renewed comment period, the Secretary would offer a renewed explanation and response to comments.” Dkt. 43 at 6. Yet the Secretary knew or should have known that the rate reduction rule was not salvageable, and having chosen not to refund the 0.2 percent payment reduction (which would have been easy enough to do), but instead providing for a faulty close-is-close enough adjustment in the form of the 0.6 percent positive adjustment, the Secretary should not be heard to complain about any disruptive consequences of vacatur. C. The Secretary’s Deficient Attempt To Remedy His Wrong Does Not Counsel Against Vacatur. The Secretary’s attempt to address the effects of the rate reduction in the FY 2017 Final Rule does not counsel against vacatur. The law is consistent and clear: the government has the burden to show that unilateral action taken by it has rendered a case moot. A case is moot if two Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 20 of 30 14 4831-3332-6149.3 conditions are satisfied: (1) “it can be said with assurance that there is no reasonable expectation that the alleged violation will recur” and (2) “interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” Los Angeles Cty. v. Davis, 440 U.S. 625, 631 (1979) (quotation marks and citations omitted); see also Calderon v. Moore, 518 U.S. 149, 150 (1996) (a case “should . . . be dismissed as moot when, by virtue of an intervening event, a court . . . cannot grant any effectual relief whatever”). “The burden of demonstrating mootness is a heavy one.” Los Angeles Cty., 440 U.S. at 631. There is nothing with which the Secretary can shoulder his “heavy burden” of supporting his flawed position that this case is moot. This is particularly so because there is no evidence the 0.6 percent positive adjustment “completely and irrevocably eradicated the effects” of the FY 2014 rate reduction, nor could there be. Rather, there is effectual relief that can be granted to make Plaintiffs whole. Thus, there is still a concrete interest in this case, and the FY 2017 Final Rule does not moot the case. 1. There Is No Evidence The 0.6 Percent Increase Makes The Plaintiffs Whole, Nor Could There Be. Despite the Secretary’s insistence that certain administrative material related to the FY 2017 Final Rule is pertinent to this case (despite that this case does not challenge the FY 2017 Final Rule, see Dkt. 65 at 9-10), the Secretary has not included any documents in the “administrative record”5 he served that were considered by the Secretary in determining why and 5 Plaintiffs use the term “administrative record” only as a matter of convenience for the Court. The Secretary uses this term as part of his effort to convince the Court that Plaintiffs are required to challenge the FY 2017 Final Rule in order to obtain the loss of reimbursement they were wrongly deprived by the rate reduction. The term “administrative record” as applied by the Secretary is a misnomer. An administrative record refers to documents that (1) existed at the time of the rulemaking, and (2) were considered by the agency in issuing the rule. Citizens to Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 21 of 30 15 4831-3332-6149.3 how the 0.6 percent increase “completely and irrevocably” compensates hospitals for the 0.2 percent decrease. Nor could such documents exist. The administrative record compiled by the Secretary contains no evidence that the 0.6 percent positive adjustment in the FY 2017 Final Rule will make Plaintiffs whole. For example, there are no documents in the record that contain any prediction of how the aggregate total of dollars paid under the 0.6 percent positive adjustment will relate to the aggregate total of dollars taken from hospitals under the 0.2 percent payment reduction, let alone any prediction of such relation with respect to the individual Plaintiffs, or any prediction that uses actual data (which could not exist at this time because the Plaintiffs have not received all of their FY 2017 payments). At the time the FY 2017 Final Rule was issued, FY 2017 had not even begun and thus there was no actual data concerning FY 2017 discharges. At best, the Secretary could have made only a prediction based on assumptions concerning the aggregate number of discharges that might take place in FY 2017 and how the 0.6 percent positive adjustment for a predicted number of discharges might relate to the 0.2 percent negative adjustment for FYs 2014-2016. Given the trend of declining admissions (which the Secretary did not deny in the FY 2017 Final Preserve Overton Park v. Volpe, 401 U.S. 402, 420 (1971) (review of agency action under the APA “is to be based on the full administrative record that was before the Secretary at the time he made his decision”) (emphasis added); Prairie State Generating Co. LLC v. Sec’y of Labor, 792 F.3d 82, 93–94 (D.C. Cir. 2015) (“the ‘focal point’ in arbitrary-and-capricious review is the administrative record already in existence”) (citation omitted); Ad Hoc Metals Coalition v. Whitman, 227 F. Supp. 2d 134, 139-40 (D.D.C. 2002) (document properly part of administrative record where known to and considered by agency prior to rule promulgation) (emphasis added). Here, the Secretary has submitted documents that satisfy neither criterion with respect to the rate reduction that is challenged in this case. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 22 of 30 16 4831-3332-6149.3 Rule6), it would seem that any plausible prediction of discharges for FY 2017 would, everything else be equal, be of insufficient size that, when the 0.6 percent adjustment is taken into account, the hospitals would still be shorted by the 0.2 percent payment reduction imposed over three years. In other words, the outcome of the amount of the 0.6 percent increase was unlikely to be at least 3 x 0.2. And of course, whatever aggregate prediction would not take into account the specific circumstances of each and every Plaintiff. Even if the effect of the 0.6 percent adjustment would be to create some rough justice for hospitals in the aggregate, that is neither solace nor sufficient legal redress for any Plaintiff that was shorted by the 0.2 percent payment reduction. Because the Secretary has not carried his “heavy burden” of showing Plaintiffs have been made whole, this case is not moot. 2. The Case Is Not Moot Because The Parties Still Have A Concrete Interest In The Outcome. By the Secretary’s reasoning, it is acceptable to reduce illegally a hospital’s reimbursement, and then when challenged in court and when unable to prevail, simply issue a national rule that has, at best, the effect of a too-rough approximation of what was taken from the hospital. There is no support in law for the idea that a defendant—even if the government— 6 In response to the FY 2017 Proposed Rule, commenters pointed out that, for reasons that included the recent trend of a decline in inpatient admissions, the 0.6 percent adjustment would not make hospitals whole. 81 Fed. Reg. at 57,060; A.R. at 750 (middle column). The Secretary did not deny this effect, but instead retreated to his all-purpose response that, given his goal to adopt an expedient and administratively feasible approach, any shorting of the hospitals was “an appropriate consequence.” 81 Fed. Reg. at 57,060; A.R. at 750 (middle and third columns). Whether the FY 2017 Final Rule’s 0.6 percent positive adjustment was an appropriate response to the botched FY 2014 rulemaking with respect to those hospitals that did not challenge the 0.2 percent payment reduction in this or other litigation—which issue is not before the Court—has nothing to do with whether the hospitals that are before the Court have been made whole for the purposes of a mootness analysis. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 23 of 30 17 4831-3332-6149.3 which owes a plaintiff $1.00 can pay the plaintiff 90 cents and call it even. That does not work in mathematics and does not work under our system of justice. Where parties still have a concrete interest in the outcome of a case, a case is not moot. The parties still have a concrete interest in the outcome of this case: the amount of money that would make Plaintiffs whole, with interest. The law is clear that a case is not moot if the parties still have a concrete interest in the outcome of a case. Calderon, 518 U.S. at 150 (“even the availability of a partial remedy is sufficient to prevent [a] case from being moot”) (quotation marks and citation omitted); Ellis v. Brotherhood of Ry., Airline & S.S. Clerks, 466 U.S. 435, 442 (1984) (while the decertification of the defendant union nullified the lion’s share of the plaintiffs’ claims, the case was not moot because there were still claims for money damages and interest, though the remaining “amount at issue [was] undeniably minute”); Schnitzler v. United States, 761 F.3d 33, 39 (D.C. Cir. 2014) (plaintiff’s claim was not moot “[b]ecause he ha[d] not received all the relief he sought, and because [the court] d[id] not yet know to what relief [plaintiff] may be entitled”); Nw. Envtl. Def. Ctr. v. Gordon, 849 F.2d 1241, 1245 (9th Cir. 1988) (“The fact that the alleged violation has itself ceased is not sufficient to render a case moot. As long as effective relief may still be available to counteract the effects of the violation, the controversy remains live and present.”). The Supreme Court has explained that “[a] case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Knox v. Serv. Employees Int’l Union, Local 1000, 567 U.S. 298, 307 (2012). “As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” Id. at 308 (internal quotation marks and brackets omitted). In Knox, state employees challenged dues and a fee increase imposed by the defendant union. Id. at 305. After the Supreme Court granted Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 24 of 30 18 4831-3332-6149.3 certiorari, the union effectively threw in the towel: it sent out a notice that offered a full refund to all class members, and moved to dismiss based on mootness. Id. at 307. The Supreme Court held the case was not moot because a question remained regarding whether the refund notice was sufficient. Id. A case is not moot when controversy remains live and there is possible relief yet to be granted. In Cape Cod Hosp. v. Sebelius, the Secretary made an upward adjustment to the standardized amount (the starting point from which Medicare payments to hospitals for inpatients are calculated) in 2008 to reverse the effect of the challenged 2007 adjustment. 630 F.3d 203, 209-10 (D.C. Cir. 2011). The district court found the upward adjustment mooted the case, but the D.C. Circuit disagreed. Id. The D.C. Circuit noted that the Secretary “d[id] not defend” the district court’s finding on appeal, noted that the 2008 rule did not compensate the plaintiffs for any underpayments that might have been made in 2007, and therefore held that “a live controversy remain[ed] regarding the hospitals’ objection to the 2007 rule.” Id. at 210. Like in Cape Cod, the Secretary in this case has not defended why or to what extent the FY 2017 Final Rule compensated the Plaintiffs for any underpayments that might have been made in FY 2014, 2015, and 2016, and this is because she cannot do so (see supra subsection III.C.1, infra). A live controversy remains, and this case is not moot. 3. The FY 2017 Final Rule Did Not Supersede The Rate Reduction Rule And Is Not Before This Court. It should be an obvious point that the mere fact that the FY 2017 Final Rule seeks to address the effects of the rate reduction in the FY 2014 Final Rule does not mean that the FY 2017 Final Rule supersedes the FY 2014 rate reduction, nor does that fact render this case a challenge to the FY 2017 Final Rule. The FY 2017 Final Rule is forward-looking and does not repeal, amend, or supersede the FY 2014 Rule. 81 Fed. Reg. at 56,772; A.R. at 462 Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 25 of 30 19 4831-3332-6149.3 (acknowledging the 0.2 percent reduction to the rate is still “in effect for FYs 2014, 2015, and 2016”). The 0.6 percent increase does not change that the 0.2 percent negative adjustment is still in force for 2014, 2015, and 2016. The Secretary did not even attempt to “supersede” the rate reduction. There is no statement in the FY 2017 Proposed Rule, let alone an actual proposal, to the effect that the rate reduction rule would be withdrawn, cancelled, amended, or superseded by the FY 2017 Final Rule, and no such statement appears in the FY 2017 Final Rule. To the contrary, in the FY 2017 Final Rule, the Secretary does not claim that the 0.6 percent positive adjustment was removing the effect of the 0.2 percent negative adjustment for FYs 2014-2016; rather, the Secretary stated that the 0.6 percent adjustment was meant to only “address” the 0.2 percent negative adjustment. 81 Fed. Reg. at 57,059; A.R. 749 (third column); see also FY 2017 IPPS Proposed Rule, 81 Fed. Reg. 24,946, 24,956 (Apr. 27, 2016); A.R. at 84 (same).7 It is axiomatic that a legislative rule has the force and effect of law and agencies cannot simply choose to ignore their own rules when convenient to do so. See e.g., United States v. Nixon, 418 U.S. 683, 693-96 (1974). Until a rule has been formally amended by the agency or vacated by a court of competent jurisdiction, it remains in effect. See, e.g, C.F. Communs. Corp. v. FCC, 128 F.3d 735, 739 (D.C. Cir. 1997) (in order to amend its rule, agency was required to comply with notice and comment procedures of the APA); United States Lines, Inc. v. Federal Maritime Com., 584 F.2d 519, 527 n. 20 (D.C. 7 The Secretary’s use of “address” was intentional due to his recognition that he could not claim that the 0.6 percent adjustment removed the effects of the 0.2 percent negative adjustment, and is in contrast to his use of “remove” when speaking of the prospective repeal of the 0.2 percent negative adjustment. See 81 Fed. Reg. at 57,060; A.R. at 750 (first column) (“we proposed to remove the -0.2 percent adjustment we did make and address the effect of that adjustment for FYs 2014 through 2016 (emphasis added); see also id. at 57,059; A.R. at 749 (middle column) (“prospectively remove, beginning in FY 2017, the 0.2 percent reduction to the rates”). Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 26 of 30 20 4831-3332-6149.3 Cir. 1978) (although it is within the power of the agency to amend or repeal its own regulations, the agency is not free to ignore those regulations while they remain in effect). The fact that the Secretary may think he has come up with a better policy going forward and a way of ameliorating his past mistakes does not change the fact that the rate reduction is still in effect for purposes of FYs 2014-2016. Moreover, a case is not mooted just because the substance of the contested promulgation is later revised or amended. Nat’l Indep. Coal Operators’ Ass’n v. Kleppe, 423 U.S. 388, 394 n.4 (1976) (although contested regulations had been “reissued,” “the case [was] not moot because there [were] assessments under the contested regulations awaiting enforcement”); Himmler v. California, 611 F.2d 137, 149 (6th Cir. 1979) (although the Secretary argued certain of plaintiffs’ concerns were moot because later amendments “fully satisf[ied] any concerns which plaintiffs ha[d] raised,” the court declined to accept the Secretary’s argument, noting, “the same kinds of concerns [raised by plaintiffs], albeit to a lesser degree, may [have been] present under the amended statute”). In Tallahassee Memorial Regional Medical Center v. Bowen, the Secretary tried the same tactic she attempts here, and failed. 815 F.2d 1435 (11th Cir. 1987) (overruled in part on other grounds). In that case, the Secretary owed plaintiffs money after the district court invalidated the challenged regulation. Instead of paying plaintiffs the money owed, the Secretary promulgated a new rule to replace the invalidated rule, asserted that the new rule would “substantially benefit most Medicare providers,” and declared the matter moot. 815 F.3d at 1447. The new rule “d[id] in fact provide to most hospitals a higher reimbursement than permitted under the [challenged] rule,” but it was still less than to what the hospitals were entitled due to the invalid regulation. Id. at 1450. The Eleventh Circuit therefore held the new regulation did not moot the case Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 27 of 30 21 4831-3332-6149.3 because the parties still had an interest in the litigation. Id. at 1446. The Secretary’s argument here is the same as the Secretary’s argument in Tallahassee Memorial in that the Secretary is arguing that the matter is moot even though Plaintiffs would receive less reimbursement for their outstanding claims under the new rule. As in Tallahassee Memorial, this argument fails, as damages are still on the table. Also as in Tallahassee Memorial and other cases, the validity of the new regulation—in this case, the FY 2017 Final Rule—is not before the Court. See Himmler, 611 F.2d at 149 (“we do not consider it appropriate to comment extensively on the validity or even the construction of [the] amendments”); Tallahassee Memorial, 815 F.2d at 1447 (holding the case was not moot “[w]ithout attempting to decide the validity of the [later] regulation”). The FY 2017 Final Rule is not before the Court, does not supersede the rate reduction, and does not “completely and irrevocably eradicate[] the effects” of the rate reduction. Live controversy remains, and this case is not moot. D. In The Alternative, The Secretary Should Be Ordered To Pay Each Plaintiff The Amount Each Plaintiff Lost Under The Payment Reduction To The Extent Not Compensated By The 0.6 Percent One-Time Positive Adjustment. Should the Court decide not to vacate the rate reduction rule, Plaintiffs request that, as soon as practicable following the conclusion of FY 2017 (October 1, 2017), the Secretary be required to compare (i) the dollar amount that was deducted from each Plaintiff’s FY 2014-2016 discharges as a result of the 0.2 percent reduction with (ii) the dollar amount realized from the 0.6 percent adjustment to its FY 2017 discharges. For Plaintiffs for which the 0.6 percent upward adjustment does not satisfy their loss resulting from the 0.2 percent reduction, the Secretary should be ordered to pay those Plaintiffs the difference, with interest. If the Court should take this approach, Plaintiffs further request the Court impose strict deadlines for making the calculation and for making payment. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 28 of 30 22 4831-3332-6149.3 IV. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request the rate reduction be vacated and the Secretary be required to pay hospitals the amount of money hospitals lost for FY 2014-2016 due to the 0.2 percent payment reduction, with interest to Plaintiffs.8 In the alternative, Plaintiffs seek the payment of the amount they lost under the payment reduction, minus any amounts already paid or due to be paid to Plaintiffs by the Secretary in his attempt to remedy his wrong, with interest.9 8 See Plaintiffs’ Motion for Interest Payments (Dkt. 70) and supporting Reply (Dkt. 73). 9 Also in the alternative, Plaintiffs join the request for relief sought by the Plaintiffs Athens Regional et al. in their separate motion for summary judgment and supporting memorandum. Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 29 of 30 4831-3332-6149.3 Date: April 28, 2017 Respectfully submitted, _/s/ Lori A. Rubin___ Lori A. Rubin, D.C. Bar No. 1004240 Foley & Lardner LLP 3000 K Street, N.W., Suite 600 Washington, D.C. 20007-5143 Telephone: (202) 672-5300 Fax: (202) 672-5399 Email: larubin@foley.com Attorney for Bakersfield Plaintiffs Case 1:14-cv-00263-RDM Document 82 Filed 04/28/17 Page 30 of 30 4820-1982-0614.1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA SHANDS JACKSONVILLE MEDICAL CENTER, INC., et al., Plaintiffs, v. THOMAS E. PRICE, in his official capacity as Secretary of the United States Department of Health and Human Services, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 14-cv-263 (RDM) (cons.) [PROPOSED] ORDER Upon consideration of the Bakersfield Plaintiffs’ Renewed Motion for Summary Judgment and supporting Memorandum, it is by the Court this ___ day of ___________, 2017: ORDERED that the MOTION is GRANTED; ORDERED that rate reduction rule contained in the FY IPPS 2014 Final Rule is VACATED; and therefore, ORDERED that the Secretary must pay Plaintiffs the amounts of money they lost for FY 2014-2016 due to the invalid rate reduction rule, with interest. _______________________ United States District Judge Case 1:14-cv-00263-RDM Document 82-1 Filed 04/28/17 Page 1 of 1