June 28th, 2011

On June 24, 2011, in Auburn Regional Medical Center, et al., v. Sebelius (“Auburn”), Civil Action No. 10-5115 (D.C. Cir.), the United States Court of Appeals for the District of Columbia Circuit held that:

(1)   federal courts have jurisdiction to hear disputes regarding any final determination of the Provider Reimbursement Review Board (“the PRRB”);
(2)   the 180-day appeal period to the PRRB can be tolled for equitable reasons, such as when the government withholds information regarding program underpayments.

The Court, therefore, remanded this case to the District Court for further proceedings on the question of whether equitable tolling applies under the facts of this case. Hooper, Lundy & Bookman represents all of the Auburn plaintiffs.   

This decision is important not just because it provides an appeal avenue for providers that originally did not appeal Medicare’s DSH-related adjustments but because it establishes conclusively that jurisdictional dismissals by the PRRB are subject to judicial review.  Perhaps most importantly, however, it establishes that the time for filing an appeal with the PRRB and, perhaps, by extension to other Medicare appeal deadlines, can be tolled for equitable reasons. 

The Secretary has the right to:

  • ask the panel that issued the decision for rehearing,
  • seek en banc review by the full Court, or 
  •  petition the Supreme Court to review this decision. 

At this point, it is unclear what future review, if any, the Secretary may seek.  Because all Medicare-participating hospitals have the right to seek review of agency action in the D.C. Circuit, this decision is potentially applicable to all such hospitals.

Auburn concerns the Medicare disproportionate share hospital (“DSH”) adjustment, which provides additional reimbursement to hospitals serving large numbers of low income patients.  The plaintiffs in this case, 18 Medicare-participating hospitals, allege that the Secretary calculated their DSH payments for fiscal years 1987-1994 using information hidden from the hospitals, which the Secretary knew was incomplete or incorrect, while unlawfully concealing that the information was, in fact, inaccurate.  After the inaccuracy of the concealed information was disclosed in 2006, many years after the close of the first fiscal year at issue, the hospitals filed administrative appeals seeking recalculation of their DSH payment, arguing that the 180-day time period for appealing Medicare payments should be equitably tolled.

The District Court dismissed the hospitals’ complaint for lack of subject matter jurisdiction, finding that the decision of the PRRB dismissing appeals that are filed after the 180-day deadline for filing such appeals are not “final decisions” for purposes of judicial review under 42 U.S.C. §1395oo(a)(1).  Auburn Regional Medical Center v. Sebelius, 686 F.Supp. 2d 55, 63-65 (D.D.C. 2010).  In addition, the District Court held that equitable tolling is not available to toll the 180-day requirement for filing Medicare appeals with the PRRB.  Id. at 70-71. 

 The Court of Appeals reversed the District Court on both counts.  With respect to the “final decision” issue, the Court said:

According to the Secretary and the district court, the Board’s dismissal
of an untimely claim is not a final decision.  We fail to see how this could
be the case.

Slip Op. at 4.   The Court went on to say:

Such a dismissal is final in any sense of the word.  It is not pending,
interlocutory, tentative, conditional, doubtful, unsettled, or otherwise indeterminate.  It is done.

Slip Op. at 5. 

With respect to the equitable tolling claim, the Court stated:

The district court rejected equitable tolling on the ground that “plaintiffs
have proffered nothing suggesting that . . . Congress intended to authorize
equitable tolling for provider claims.”

Slip Op. at 6. 

The Court pointed out that equitable tolling presumptively applies unless there is Congressional intent that it not apply.  Then, after several pages of analysis, the Court concluded “we find that equitable tolling is available under § 1395oo(a).” 

Slip Op. at 10. 

The Court, however, hastened to add that the question of whether tolling “is appropriate in this particular case . . . is a different question that cannot be answered without further factual development” and that “that question is for the District Court on remand.” 

Slip Op. at 10. 

To view the Court’s Opinion: 
 June 24, 2011 Opinion

If you would like more information about this decision and how it could be helpful to your hospital, please contact Bob Roth in Washington, D.C. at  202.587.2590; John Hellow or Mark Hardiman in Los Angeles at 310.551.8111; Mark Reagan in San Francisco at 415.875.8500; or Mark Johnson in San Diego at 619. 744.7300.