Baptist Memorial Hospital-Golden Triangle v. Sebelius

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 6, 2009 Decided May 19, 2009

No. 08-5159

BAPTIST MEMORIAL HOSPITAL - GOLDEN TRIANGLE, ET AL.,

APPELLANTS

v.

KATHLEEN SEBELIUS, IN HER OFFICIAL CAPACITY AS

SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN

SERVICES,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:06-cv-01413-CKK)

Leslie D. Alderman III argued the cause for appellants.

With him on the briefs was Kenneth R. Marcus.

Jeffrey A. Lovitky was on the brief for amicus curiae

Quality Reimbursement Services in support of appellants.

Bridgette L. Kaiser, Attorney, U.S. Department of Health

& Human Services, argued the cause for appellee. With her

on the brief were Gregory G. Katsas, Acting Assistant

Attorney General, U.S. Department of Justice, Jeffrey A.

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Taylor, U.S. Attorney, Michael S. Raab, Attorney, and Janice

L. Hoffman, Attorney, U.S. Department of Health & Human

Services. R. Craig Lawrence, Assistant U.S. Attorney, and

Robert W. Balderston, Attorney, U.S. Department of Health

& Human Services, entered appearances.

Before: KAVANAUGH, Circuit Judge, and EDWARDS and

WILLIAMS, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge

KAVANAUGH.

KAVANAUGH, Circuit Judge: The Provider

Reimbursement Review Board is a governmental tribunal

within the Department of Health and Human Services. It

adjudicates disputes regarding hospitals’ Medicare

reimbursements. In this case, the Board denied

reimbursement claims submitted by three hospitals – Golden

Triangle, St. Joseph, and DeSoto. The hospitals contend that

the Board, in denying the claims, incorrectly interpreted and

enforced its own procedural rules. The District Court ruled

that the Board permissibly applied the relevant procedural

directives. The court therefore granted summary judgment to

the Board. Because the Board’s procedural rules mean what

they say and say what they mean, and because the hospitals

did not follow them, we affirm.

I

Three hospitals – Golden Triangle in Columbus,

Mississippi; St. Joseph in Memphis, Tennessee; and DeSoto

in Southaven, Mississippi – appealed to the Provider

Reimbursement Review Board regarding certain Medicare

decisions denying reimbursement for inpatient hospital

services. (We will spare the reader the numbing details of the

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reimbursement dispute, as they are not relevant to the

procedural issue here.) In 2003, the Board dismissed the

hospitals’ appeal because the hospitals had violated one of the

Board’s procedural rules, or “Instructions.” In particular, the

hospitals had failed to file their “preliminary position papers”

in a timely manner. See Instruction II.B.I., reprinted in Joint

Appendix (“J.A.”) 1322.

The Instructions allowed parties to try to reinstate

previously dismissed appeals by submitting explanations for

their failures to comply with Board procedures. Yet the

hospitals in this case did not seek reinstatement of their

dismissed appeal through that authorized route. Instead, the

hospitals simply attempted to raise the same issues anew in

separate appeals. The Board rejected the hospitals’ efforts to

circumvent the Instructions’ reinstatement procedures in this

way.

The hospitals then filed a civil action against the Board

pursuant to 42 U.S.C. § 1395oo(f)(1). The hospitals argued

that the Board’s Instructions permitted them to raise issues

from dismissed appeals in new appeals to the Board. In

response, the Board contended that the hospitals were

required to follow the Instructions’ reinstatement process but

failed to do so. In a thorough opinion, the District Court

granted summary judgment to the Board, finding that it had

permissibly applied its own procedures in rejecting the

hospitals’ appeals. The hospitals now appeal. Our review of

the District Court’s summary judgment decision is de novo.

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II

A

The parties agree that this case turns on the Board’s

interpretation of its procedural rules, known as Instructions.

As an initial matter, the hospitals contend that we should

afford no deference to the Board’s interpretation of its own

Instructions. Cf. Auer v. Robbins, 519 U.S. 452, 461 (1997).

We need not tackle the question of deference: We agree with

the Board’s interpretation of its Instructions regardless of

what, if any, deference we owe it in this case.

We begin with the text of the Instructions. Instruction

II.B.I provides: “If you fail to meet the preliminary position

paper due date and fail to supply the Board with the required

documentation, the Board will dismiss your appeal for failure

to follow Board procedure.” J.A. 1322 (emphasis added).

Under this provision, the Board dismissed the hospitals’

original appeal because – as all parties agree – the hospitals

did not timely file their position papers.

The Instructions also provide guidance about how to

reinstate a dismissed appeal. The reinstatement provision, or

Instruction I.C.XIII, states that the Board “may consider

provider requests to reinstate an appeal that it has dismissed.

These fall into two categories, both of which require you to

follow specific Board procedures.” J.A. 1309. The second

category – “Reinstatement of Appeal Dismissed by the

Board” – is relevant here. It states in part: “If you are

requesting reinstatement because the Board dismissed your

appeal for failure to comply with its procedures, you must

explain in detail the reasons why you failed to comply. In

general, this means the reasons you missed a position paper

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due date . . . .” Instruction I.C.XIII.b, J.A. 1309 (emphasis

added).

For whatever reason, the hospitals in this case did not

follow the authorized avenue for reinstating their appeal.

Their failure to do so poses a serious problem because the two

Instructions at issue here – one regarding dismissal and the

other relating to reinstatement – are textually and functionally

interrelated. The first provides a basis for the Board to

dismiss a hospital’s claim, and the second provides the means

for a hospital to reinstate its previously dismissed appeal. The

most natural reading of Instructions II.B.I and I.C.XIII

together is that a hospital must follow this precise procedure

in order to reinstate dismissed appeals. Indeed, the

Instructions bluntly reinforce the point, warning: “Your

appeal . . . must follow Board procedures.” See Instruction

II.B.I.a, J.A. 1296.

Notwithstanding the clear directions in the Instructions,

the hospitals gamely argue that they did not need to follow the

Instructions to reinstate a previously dismissed appeal. The

hospitals rely on a version of the expressio unius canon and

point to a separate provision, Instruction III.B.I.d. That

Instruction cautions that failure to appear at a Board hearing

without good cause will lead the Board to “dismiss your case

with prejudice.” Instruction III.B.I.d, J.A. 1331. According

to the hospitals, that Instruction’s use of the phrase “with

prejudice” means that the use of “dismiss” in the dismissal

Instruction at issue here means “dismiss without prejudice.”

The hospitals therefore contend that they were free to re-file a

new appeal bringing the same claims that had been raised and

dismissed in a previous appeal.

The hospitals cannot so easily evade the plain meaning of

the Instructions. The relevant reinstatement provision quite

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clearly explains how to reinstate appeals for failure to file a

timely position paper and lists certain requirements for doing

so – including that the party “explain in detail” its reason for

non-compliance. Instruction I.C.XIII.b, J.A. 1309. We do

not find it at all plausible to interpret the Instructions to allow

a party to ignore the reinstatement provision and instead just

file a new appeal raising the same claims.

The hospitals relatedly suggest that the reinstatement

provision does not apply to the kind of procedural violation

committed by the hospitals in this case – failure to file timely

position papers. That argument again flouts the plain text of

the Instructions. The reinstatement provision employs

expansive language and applies to parties “requesting

reinstatement because the Board dismissed your appeal for

failure to comply with its procedures.” Instruction I.C.XIII.b,

J.A. 1309. Furthermore, the reinstatement provision

specifically covers dismissals resulting, as in this case, from

failure to comply with a “position paper due date.” Id. It’s

hard to imagine language more directly on point.

The hospitals also note that the Secretary of Health and

Human Services has recently replaced these Instructions and

promulgated a new procedural rule, which states that if “a

provider fails to meet a filing deadline or other requirement

established by the Board in a rule or order, the Board may . . .

Dismiss the appeal with prejudice.” 42 C.F.R. § 405.1868(b).

Another new Board rule states that that “Once an issue is

dismissed or withdrawn, the issue may not be appealed in

another case.” Provider Reimbursement Review Board Rule

4.7 (2008). According to the hospitals, those new regulations

show that a dismissal under the previous Instructions was not

a dismissal with prejudice. But when a legislative or

executive body adopts a new clarifying law or rule, it does not

necessarily follow that an earlier version did not have the

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same meaning. Cf. Brown v. Thompson, 374 F.3d 253, 259

(4th Cir. 2004) (A “change in statutory language need not

ipso facto constitute a change in meaning or effect. Statutes

may be passed purely to make what was intended all along

even more unmistakably clear.”) (internal quotation marks

and alteration omitted); Piamba Cortes v. American Airlines,

Inc., 177 F.3d 1272, 1283 (11th Cir. 1999) (An “amendment

containing new language may be intended to clarify existing

law, to correct a misinterpretation, or to overrule wrongly

decided cases. Thus, an amendment . . . does not necessarily

indicate that the unamended statute meant the opposite of the

language contained in the amendment.”) (internal quotation

marks omitted).

This case is a good example. Even though the new Board

regulations are clearer and remove any possible ambiguity,

the earlier Instructions are nonetheless best read as the Board

interpreted them: A party whose appeal is dismissed for

failure to timely file a position paper must follow the

reinstatement provision in order to bring that same claim back

before the Board.

B

The hospitals raise a number of additional contentions

that warrant only brief discussion.

First, the hospitals insist that the administrative record in

this case is inadequate because it does not shed light on how

the Board has resolved similar cases. According to the

hospitals, the District Court therefore should have permitted

discovery into the Board’s treatment of analogous situations.

This argument misunderstands the proper judicial role in

reviewing administrative action under the Administrative

Procedure Act. See Fla. Power & Light Co. v. Lorion, 470

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U.S. 729, 744 (1985) (“The reviewing court is not generally

empowered to conduct a de novo inquiry into the matter being

reviewed and to reach its own conclusions based on such an

inquiry.”); Camp v. Pitts, 411 U.S. 138, 142 (1973) (“the

focal point for judicial review should be the administrative

record already in existence, not some new record made

initially in the reviewing court”); see also FED. R. APP. P. 16.

Although limited discovery in agency cases may be

appropriate “when there has been a strong showing of bad

faith or improper behavior or when the record is so bare that it

prevents effective judicial review,” those narrow exceptions

do not apply here. Commercial Drapery Contractors, Inc. v.

United States, 133 F.3d 1, 7 (D.C. Cir. 1998) (internal

quotation marks omitted). Therefore, the District Court

properly refused to grant discovery to the hospitals.

Second, the hospitals argue that the Board’s ruling

contravenes a decision by the Secretary of Health and Human

Services in a separate case, Rhode Island Hospital v. Leavitt,

No. 06-260, 2007 WL 294026 (D.R.I. Jan. 26, 2007). There,

the Secretary settled a suit involving whether certain issues

were part of a previously dismissed appeal. Here, by contrast,

it is quite clear that the issue the hospitals are seeking to raise

anew was part of their previously dismissed appeal. We see

no inconsistency between the Secretary’s decision in the

Rhode Island case and the Board’s action in this case. In any

event, the Rhode Island settlement does not create a binding

precedent that the Board must follow in this case. Cf. High

Country Home Health, Inc. v. Thompson, 359 F.3d 1307,

1314-15 (10th Cir. 2004) (“settlement agreements have no

precedential weight, and the mere fact that the Secretary has

settled other cases does not make it arbitrary and capricious

for him not to settle this one”).

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Third, the hospitals contend that the Board’s original

dismissal decision did not apply to the DeSoto Hospital

because DeSoto had withdrawn from the dismissed appeal.

But DeSoto did not comply with the withdrawal procedures

set out in Instruction I.C.XII, J.A. 1308-09. Therefore, the

Board appropriately deemed DeSoto part of the dismissed

appeal.

Fourth, the hospitals suggest that the original dismissals

should not apply to Golden Triangle and St. Joseph because

they had complied with relevant deadlines in earlier filed

appeals. However, satisfying one deadline obviously does not

excuse the violation of another.

Fifth, the hospitals argue that the dismissals were

improper because the Board’s decisions to dismiss were

rendered by one Commissioner and not by a quorum of the

Commission, as allegedly required under regulations then in

effect. See 42 C.F.R. § 405.1845(d) (2003). The hospitals

did not raise these arguments in the District Court, and we do

not consider them here. See District of Columbia v. Air Fla.,

Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984).

Finally, the Quality Reimbursement Services as amicus

curiae raises several contentions not raised in the District

Court or by the parties to this appeal. We will not consider

them. See id.; see also Lamprecht v. FCC, 958 F.2d 382, 389

(D.C. Cir. 1992).

***

We affirm the judgment of the District Court.

So ordered.