Los Angeles Haven Hospice, Inc. v. Sebelius

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LOS ANGELES HAVEN HOSPICE, INC., 

a California corporation,

Plaintiff-Appellee, No. 09-56391

v. D.C. No.

KATHLEEN SEBELIUS, Secretary of  2:08-cv-04469-

United States Department of GW-R

Health and Human Services OPINION

Substituted for Michael O. Leavitt,

Defendant-Appellant.



Appeal from the United States District Court

for the Central District of California

George H. Wu, District Judge, Presiding

Argued and Submitted

October 6, 2010—Pasadena, California

Filed March 15, 2011

Before: Cynthia Holcomb Hall*, Raymond C. Fisher, and

Jay S. Bybee, Circuit Judges.

Opinion By Judge Hall

*Judge Hall fully participated in oral argument and the post-argument

conference of the panel. Prior to her death, she circulated the opinion in

which all judges concur.

3605

3610 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

COUNSEL

Nicholas Bagley and Benjamin M. Shultz, Department of Jus-

tice, Civil Division, Washington, D.C., for the defendant-

appellant.

Brian M. Daucher, Sheppard, Mullin, Richter & Hampton,

Costa Mesa, California, for the plaintiff-appellee.

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3611

OPINION

HALL, Circuit Judge:

The Secretary of Health and Human Services (“the Secre-

tary”) appeals a summary judgment in favor of Los Angeles

Haven Hospice, Inc. (“Haven Hospice”), in this action chal-

lenging the so-called “hospice cap regulation,” 42 C.F.R.

§ 418.309, pursuant to which Haven Hospice was ordered to

repay more than $2.3 million it received in excess of the

annual cap on reimbursement for hospice care it provided to

Medicare beneficiaries in fiscal year 2006 (“FY 2006”). The

district court declared the hospice cap regulation to be arbi-

trary, capricious, and contrary to law and, thus, invalid. It then

set aside the FY 2006 repayment demand, ordered HHS to

return the amounts Haven Hospice had already paid to satisfy

that demand, and entered an injunction barring further

enforcement of the unlawful regulation against Haven Hos-

pice and all other certified hospice service providers nation-

wide.

The Secretary contends that Haven Hospice lacks standing

to mount a facial challenge to the hospice cap regulation, and

that the regulation is, in any event, a reasonable interpretation

of the “hospice cap statute,” 42 U.S.C. § 1395f(i)(2). The Sec-

retary further contends that the district court exceeded its

jurisdiction and abused its discretion by entering an overly

broad injunction.

We conclude that Haven Hospice has Article III standing

to challenge the hospice cap regulation, and that the district

court had jurisdiction pursuant to 42 U.S.C. § 1395oo(f)(1) to

determine the validity of the hospice cap regulation. We fur-

ther conclude that the hospice cap regulation is facially

invalid under the first prong of the test prescribed by the

Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984) (“Chevron”), and

that the district court had the authority to enjoin further

3612 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

enforcement of the regulation. However, because the injunc-

tion entered by the district court is more burdensome to the

defendant than necessary to provide complete relief to the

plaintiff before the court, we vacate the injunction to the

extent it bars enforcement of the hospice cap regulation

against hospice providers other than Haven Hospice.

I.

A.

Since 1982, Medicare Part A has included a hospice benefit

for terminally-ill patients. See Tax Equity and Fiscal Respon-

sibility Act of 1982 (“TEFRA”), Pub. L. No. 97-248, 96 Stat.

324, 356-63 (1982) (codified as amended at 42 U.S.C.

§ 1395c, et seq.). A Medicare beneficiary may elect hospice

care if at least two physicians certify that he or she is termi-

nally ill, with a life expectancy of six months or less. See 42

U.S.C. §§ 1395f(a)(7)(A), 1395x(dd)(3)(A).

Medicare generally pays certified hospice providers a fixed

amount for each day they provide care to an eligible benefi-

ciary. 42 U.S.C. § 1395f(i)(1); see also 42 C.F.R. § 418.302

(establishing rates). When the hospice benefit was established

in 1982, beneficiaries were generally limited to six months of

hospice care. See TEFRA, § 122, 96 Stat. at 356. However,

under an amendment included in the Balanced Budget Act of

1997, Pub. L. No. 105-33, § 4443(a), 111 Stat. 251, 423

(1997), if a beneficiary lives longer than six months, coverage

may be extended for an unlimited number of sixty-day peri-

ods. See 42 U.S.C. § 1395d(d)(1).

To ensure that payments for hospice care for qualified ben-

eficiaries would not exceed the cost of care in a conventional

setting, Congress established a retrospective “cap” on the

aggregate amount that Medicare would reimburse hospice

providers each year. H.R. Rep. No. 98-333, at 1 (1983),

reprinted in 1983 U.S.C.C.A.N. 1043, 1043-44 (Jul. 28,

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3613

1983). To calculate the hospice cap for a provider for a partic-

ular fiscal year, a “cap amount” is multiplied by “the number

of [M]edicare beneficiaries in the hospice program in that

year.” 42 U.S.C. § 1395f(i)(2)(A). The cap amount initially

set by statute was $6,500 per beneficiary, subject to annual

adjustment to reflect any increase or decrease in the Con-

sumer Price Index for medical care expenditures. Pub. L. No.

98-90, 97 Stat. 606 (1983) (codified at 42 U.S.C.

§ 1395f(i)(2)(B)). Unsurprisingly, the cap amount per benefi-

ciary has steadily increased since 1983: for FY 2005, it was

$19,778; for FY 2006, it was $20,585; for FY 2009, it was

$23,015; and for FY 2010, it was $23,875.1

When it enacted the hospice cap statute, Congress defined

the term “number of Medicare beneficiaries” as follows:

[T]he “number of [M]edicare beneficiaries” in a hos-

pice program in an accounting year is equal to the

number of individuals who have made an election [to

enter hospice care] and have been provided hospice

care by . . . the hospice program under this part in

the accounting year, such number reduced to reflect

the proportion of hospice care that each such indi-

vidual was provided in a previous or subsequent

accounting year or under a plan of care established

by another hospice program.

42 U.S.C. § 1395f(i)(2)(C) (emphasis added).

In 1983, the Department of Health and Human Services

(“HHS”) promulgated and adopted the hospice cap regulation

1

The Centers for Medicare and Medicaid Services (“CMS”) publish an

annual update to their claims processing manual to provide information

about the aggregate cap amount for the fiscal year. See, e.g., Update to

Hospice Payment Rates, Hospice Cap, Hospice Wage Index, and the Hos-

pice Pricer for FY 2011 (July 23, 2010), https://www.cms.gov/

transmittals/downloads/R2004CP.pdf.

3614 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

challenged in this case, 42 C.F.R. § 418.309, and has used it

ever since to calculate each provider’s aggregate “cap” for

each accounting year. Under the regulation, the cap period

runs from November 1 to October 31 of the following year,

42 C.F.R. § 418.309(a), with the relevant “number of Medi-

care beneficiaries” who received hospice care from a single

provider defined as follows:

Those Medicare beneficiaries who have not previ-

ously been included in the calculation of any hospice

cap and who have filed an election to receive hos-

pice care . . . from the hospice during the period

beginning on September 28 (35 days before the

beginning of the cap period) and ending on Septem-

ber 27 (35 days before the end of the cap period).

42 C.F.R. § 418.309(b)(1). Thus, under the hospice cap regu-

lation, terminally ill beneficiaries who entered hospice

between September 28, 2005, and September 27, 2006, were

counted in the cap calculation for FY 2006.

The hospice cap regulation provides a different

methodology—one more in keeping with the statutory

mandate—for counting “the number of Medicare beneficia-

ries” who elected to receive care from more than one hospice

provider, as follows:

In the case in which a beneficiary has elected to

receive care from more than one hospice, each hos-

pice includes in its number of Medicare beneficiaries

only that fraction which represents the portion of a

patient’s total stay in all hospices that was spent in

that hospice.

42 C.F.R. § 418.309(b)(2) (emphasis added). The regulation

specifies that a hospice can obtain information to determine

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3615

the “fraction” of care it provided to a given beneficiary in a

given year by contacting its fiscal intermediary.2 Id.

When HHS first proposed rules to implement the hospice

cap in 1983, the agency acknowledged the statutory directive

to make a proportional allocation of the “number of Medicare

patients” across years of service, as follows:

The statute specifies that the number of Medicare

patients used in the calculation is to be adjusted to

reflect the portion of care provided in a previous or

subsequent reporting year or in another hospice.

48 Fed. Reg. 38146, 38158 (Aug. 22, 1983). HHS neverthe-

less declared that:

With respect to the adjustment necessary to account

for situations in which a beneficiary’s election over-

laps two accounting periods, we are proposing to

count each beneficiary only in the reporting year in

which the preponderance of the hospice care would

be expected to be furnished rather than attempt to

perform a proportional adjustment.

Id. (emphasis added). In other words, HHS proposed that the

regulation would not provide for the proportional allocation of

individual beneficiaries, as Congress directed, but would

instead count an individual only in a single year, the one in

which he or she first elected the hospice benefit.

HHS appears to have decided to deviate from the statutory

directive primarily as a matter of administrative convenience:

Although section 1814(i)(2)(C) of the Act specifies

2

Hospice care providers are reimbursed by “fiscal intermediaries,” typi-

cally insurance companies, that contract with CMS to aid in administering

the Medicare program. See 42 U.S.C. § 1395h.

3616 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

that the cap amount is to be adjusted “to reflect the

proportion of the hospice care that each such individ-

ual was provided in a previous or subsequent

accounting year . . . ,” such an adjustment would be

difficult in that the proportion of the hospice stay

occurring in any given year would not be known

until the patient dies or exhausted his or her hospice

benefits. We believe the proposed alternative of

counting the beneficiary in the reporting period

where the beneficiary used most of the days of cov-

ered hospice care will achieve the intent of the stat-

ute without being burdensome.

48 Fed. Reg. at 38158 (emphasis added). However, HHS at

least implicitly recognized that its method of limiting cap

allocations to the initial year of service would prejudice hos-

pices that provided some care in one fiscal year with the

majority of care in the next fiscal year. In an attempt to ame-

liorate this prejudice, HHS established the “shift” embodied

in 42 C.F.R. § 418.309(b)(1), under which the entire allow-

ance for any patient admitted to hospice within the last 35

days of any accounting year would be moved into the next fis-

cal year. This shift assumed that the average length of stay in

hospice care would be 70 days. See 48 Fed. Reg. 56008,

56020-22 (Dec. 16, 1983).

As we have noted, Medicare initially pays providers a pre-

determined amount for each day a beneficiary is in hospice.

42 U.S.C. § 1395f(i)(1). Sometime after the provider receives

those payments, however, its fiscal intermediary calculates

the hospice cap for the relevant accounting year. When it is

determined that a provider exceeded its aggregate cap for an

accounting year, the fiscal intermediary sends a letter

demanding a refund of any overpayments. See 42 C.F.R.

§ 418.308(d).3 If a hospice provider disagrees with the repay-

3

In its calculation of the hospice “cap” and any associated overpay-

ments, the fiscal intermediary is confined to “the mere application of the

Secretary’s regulations.” Bethesda Hosp. Ass’n v. Bowen, 485 U.S. 399,

404 (1988).

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3617

ment demand, and the amount in controversy is at least

$10,000, it may seek a hearing before the Provider Reim-

bursement Review Board (“PRRB”). 42 U.S.C. § 1395oo(a).

The PRRB has the authority to affirm, modify, or reverse a

final determination of the fiscal intermediary, 42 U.S.C.

§ 1395oo(d), and the Board’s decision constitutes a final

agency ruling, unless it is appealed to the Secretary, id.,

§ 1395oo(f)(1).

Where the provider’s challenge to the action of the fiscal

intermediary involves a strictly legal question, such as a claim

that a regulation is inconsistent with the Medicare statute, the

PRRB has no authority to decide that issue. Bethesda Hosp.

Ass’n, 485 U.S. at 406 (“Neither the fiscal intermediary nor

the Board has the authority to declare regulations invalid.”).

Rather, providers have the right to obtain direct, expedited

judicial review “of any action of the fiscal intermediary which

involves a question of law or regulations relevant to the mat-

ters in controversy whenever the Board determines . . . that it

is without authority to decide the question, by a civil action

. . . .” 42 U.S.C. § 1395oo(f)(1) (emphasis added). The

PRRB’s determination of its authority is a final agency deci-

sion, and is not subject to review by the Secretary. Id. In a

civil action under § 1395oo(f)(1), the validity of the fiscal

intermediary’s action is subject to judicial review using the

familiar standards of the Administrative Procedure Act

(“APA”)—i.e., whether the action was “arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with

law.” 5 U.S.C. § 706(2)(A).

B.

Since 2003, Haven Hospice has been a Medicare-certified

hospice provider in Los Angeles, California. Through May

2009, Haven Hospice has served approximately 1,500

patients. In support of its motion for summary judgment,

Haven Hospice presented evidence that the average length of

stay for its Medicare patients for FY 2006 was 246 days.

3618 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

Haven Hospice’s historical average length of stay, from 2003

through the date of filing its summary judgment motion, was

205 days.

In April 2008, based on a report by HHS that its payments

to Haven Hospice exceeded the hospice’s cap allowance by

$2,352,499, as calculated in accordance with the hospice cap

regulation, the fiscal intermediary demanded that Haven Hos-

pice repay that sum. Haven Hospice timely appealed the

repayment demand to the PRRB, citing a then recent unpub-

lished decision, Sojourn Care, Inc. v. Leavitt, Case No. 07-

CV-375-GKJ-PJC (N.D. Okla. Feb. 19, 2008), in which the

district court concluded that the hospice cap regulation is

inconsistent with the hospice cap statute and declared it to be

invalid.

In its administrative appeal, Haven Hospice did not dispute

the accuracy of the overpayment demand as calculated using

the hospice cap regulation, but asserted that the PRRB had

jurisdiction of the matter because it was not asking the Board

to determine the validity of the hospice cap regulation, only

to order the intermediary to withdraw a demand made pursu-

ant to a regulation that had been invalidated by the courts. In

the alternative, Haven Hospice requested expedited judicial

review if PRRB were to conclude that it was without jurisdic-

tion to determine whether the demand was made pursuant to

an invalid regulation.

Pursuant to 42 C.F.R. § 405.1842, the PRRB specifically

found that it had jurisdiction over Haven Hospice’s challenge

to the fiscal intermediary’s overpayment demand, and that the

estimated amount in controversy exceeded $10,000, but deter-

mined that it was without authority to decide the legal ques-

tion whether the hospice cap regulation is invalid.

Accordingly, it granted Haven Hospice’s request for expe-

dited judicial review “for the hospice cap issue and the subject

year.” See id., § 405.1842(f).

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3619

C.

In June 2008, Haven Hospice filed a civil action in the dis-

trict court for the Central District of California, alleging “on

information and belief that its cap liability for fiscal year 2006

would have been materially reduced” if Medicare had “fol-

lowed the Congressional mandate to allocate cap room across

years of service.” In May 2009, the parties filed cross-motions

for summary judgment. HHS argued that Haven Hospice

lacked standing to challenge 42 C.F.R § 418.309(b) because

the hospice offered no evidence showing that the current reg-

ulation caused it injury-in-fact in FY 2006, or that a new regu-

lation applying its preferred methodology would redress any

injury. HHS also defended the regulation on the ground that

it provided a reasonable means of calculating the hospice cap

and that it was, therefore, entitled to Chevron deference.

In July 2009, the district court granted Haven Hospice’s

summary judgment motion. The court first rejected the Secre-

tary’s standing arguments, ruling that “[t]he injury in fact in

this context” was that “HHS is operating an invalid regula-

tion, leading to accounting and payment inaccuracies.” The

court declined to address whether Haven Hospice suffered

any pecuniary injury, noting that “the injury question here is

not whether [Haven Hospice’s] liability is greater under the

operation of [the hospice cap regulation] than it would be

under some other regulation.” Turning to the merits, the dis-

trict court concluded that the hospice cap regulation, 42 C.F.R

§ 418.309(b), was contrary to the hospice cap statute, 42

U.S.C. § 1395f(i)(2)(C). As the district court explained:

Congress unquestionably required that the number of

[M]edicare beneficiaries be reduced to reflect “the

proportion” (not simply a proportion or an estimate,

as Defendant would apparently have “reflect” mean

in this context) of hospice care that “each such indi-

vidual” (not individuals in the aggregate) “was pro-

vided in a previous or subsequent accounting year.”

3620 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

The regulation in question runs counter to that direc-

tive. Congress has “directly spoken” to this “precise

question,” [and] “that is the end of the matter.”

(Emphasis in original).

Haven Hospice submitted a proposed form of judgment that

not only invalidated the 2006 overpayment demand and the

hospice cap regulation, but also stated that “HHS is hereby

enjoined prospectively from using the current [version of] 42

C.F.R. § 418.309(b)(1) to calculate hospice cap liability for

any hospice.” HHS objected, contending that federal courts

have jurisdiction to review only those claims exhausted before

the PRRB, and that the only claim presented to the PRRB

challenged the fiscal intermediary’s calculation of Haven

Hospice’s hospice cap for FY 2006. Thus, HHS argued, the

district court had jurisdiction only to overturn the calculation,

not to invalidate the regulation. After a hearing in August

2009, the district court entered the nationwide injunction pro-

posed by Haven Hospice without amendment.

Less than two weeks later, the Secretary filed a notice of

appeal and motion to stay the nationwide injunction pending

appeal. The district court granted the Secretary’s stay motion,

reasoning that “[t]here is conflicting case law on whether

injunctive relief (in a case where an agency’s regulation is

held to be improper or unconstitutional) should be broad (e.g.,

nationwide) or more limited,” and that the Secretary had

“made the requisite showing of likelihood of success as to the

issue of the nationwide scope of the injunctive relief.” Specif-

ically, the district court found that:

[The nationwide injunction] would significantly dis-

rupt the Medicare program because it would inhibit

the agency from implementing the statutorily man-

dated hospice caps as to the approximate[ly] 3000

hospice providers during the period while a new reg-

ulation is being promulgated and would concomi-

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3621

tantly create tremendous uncertainty for the

government, Medicare contractors and hospice pro-

viders.”

II.

We review de novo both the district court’s determination

that Haven Hospice has Article III standing, and its conclu-

sion that the regulation implementing the hospice cap is con-

trary to law. Wilderness Soc’y v. Rey, 622 F.3d 1251, 1254

(9th Cir. 2010) (Article III standing); Portland Adventist Med.

Ctr. v. Thompson, 399 F.3d 1091, 1095 (9th Cir. 2005) (sum-

mary judgment under APA standards).

We review the district court’s entry of a nationwide injunc-

tion for an abuse of discretion, or an erroneous application of

legal principles. United States v. AMC Entm’t, Inc., 549 F.3d

760, 768 (9th Cir. 2008). “[A] trial court abuses its discretion

by fashioning an injunction which is overly broad.” Id.

A.

Before turning to the merits, we must address the Secre-

tary’s contention that Haven Hospice lacks Article III stand-

ing to pursue the relief it seeks in this civil action—in

particular, a declaratory judgment that the hospice cap regula-

tion and the $2.3 million overpayment demand calculated

under the regulation are invalid, and an injunction barring fur-

ther enforcement of the regulation against both Haven Hos-

pice and all other hospice providers nationwide. The

Secretary concedes that if Haven Hospice has Article III

standing, the district court had subject matter jurisdiction pur-

suant to 42 U.S.C. § 1395oo(f)(1), but only as to Haven Hos-

pice’s challenge to the overpayment demand for FY 2006, and

not as to any other hospice provider or accounting year. We

conclude that Haven Hospice has Article III standing and that

the district court had jurisdiction pursuant to 42 U.S.C.

§ 1395oo(f)(1) to determine the validity of both the hospice

3622 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

cap regulation and the FY 2006 overpayment demand, and to

enjoin further enforcement of the regulation, at least as

against Haven Hospice.4

[1] To invoke the jurisdiction of the federal courts, a plain-

tiff must demonstrate that it has Article III standing—i.e., that

it has suffered an injury-in-fact that is both “concrete and par-

ticularized,” and “actual or imminent, not conjectural or hypo-

thetical”; that the injury is “fairly . . . traceable to the

challenged action of the defendant”; and that it is “likely, as

opposed to merely speculative, that the injury will be

redressed by a favorable decision” on the plaintiff’s claims for

relief. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61

(1992) (internal quotation marks omitted). The “gist of the

question of standing” is, of course, whether the plaintiff has

“alleged such a personal stake in the outcome of the contro-

versy as to assure that concrete adverseness which sharpens

the presentation of issues upon which the court so largely

depends for illumination of difficult [legal] questions[.]”

Baker v. Carr, 369 U.S. 186, 204 (1962) (emphasis added). A

plaintiff must demonstrate standing separately for each form

of relief sought, Friends of the Earth, Inc. v. Laidlaw Envi-

ronmental Services (TOC), Inc., 528 U.S. 167, 184 (2000),

but is not required to demonstrate that a favorable decision

will relieve “his every injury,” Larson v. Valente, 456 U.S.

228, 243 & n.15 (1982). Applying these standards, we con-

clude that Haven Hospice has made an adequate showing to

support its claim of Article III standing to pursue declaratory

and injunctive relief in this civil action.

[2] As the Lujan Court explained, a plaintiff is presumed

to have constitutional standing to seek injunctive relief when

it is the direct object of regulatory action challenged as unlaw-

ful:

4

We will discuss in greater depth the scope of the district court’s juris-

diction to enjoin further enforcement of the hospice cap regulation against

Haven Hospice in section II.C.1, post.

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3623

When the suit is one challenging the legality of gov-

ernment action or inaction, the nature and extent of

facts that must be averred (at the summary judgment

stage) or proved (at the trial stage) in order to estab-

lish standing depends considerably upon whether the

plaintiff is himself an object of the action (or forgone

action) at issue. If he is, there is ordinarily little

question that the action or inaction has caused him

injury, and that a judgment preventing or requiring

the action will redress it.

504 U.S. at 561-62 (emphasis added); see also Fund for Ani-

mals, Inc. v. Norton, 322 F.3d 728, 733-34 (D.C. Cir. 2003)

(a party’s standing to seek judicial review of administrative

action is typically “self-evident” when the party is the object

of the action); and cf. Summers v. Earth Island Inst., ___ U.S.

___, ___, 129 S.Ct. 1142, 1149 (2009) (where a regulation

under challenge neither requires nor forbids any action on the

part of the plaintiffs, “standing is not precluded, but is ordi-

narily ‘substantially more difficult’ to establish” (quoting

Lujan, 504 U.S. at 562)).

[3] In this case, there is no question but that Haven Hos-

pice was the object of the governmental action challenged in

its complaint—an individualized demand for repayment of

over $2.3 million for FY 2006, calculated pursuant to the

allegedly invalid hospice cap regulation—and that a favorable

judgment will relieve the alleged injury, at least in part.

Regardless of the precise extent to which invalidation of the

challenged regulation might ultimately affect its repayment

obligation, the fact that the allegedly unlawful regulation was

directly applied to Haven Hospice and exposed it to individ-

ual liability for the claimed overpayments, is sufficient to sup-

port its claim of Article III standing to pursue the declaratory

and injunctive relief sought in the complaint. See Lujan, 504

U.S. at 561-62.

[4] The Secretary contends, however, that absent specific

evidence that Haven Hospice’s cap liability for FY 2006

3624 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

would actually be reduced under a regulation drawn in con-

formity with the hospice cap statute, it cannot establish that

it has suffered an injury-in-fact redressable by the relief

sought in this litigation. We understand this argument to have

at least three related, and interlocking facets, and will address

each in turn.

First, to the extent the Secretary is suggesting that only eco-

nomic or pecuniary injury to Haven Hospice would qualify as

injury-in-fact in this case, she is mistaken. It is well estab-

lished that less tangible forms of injury, such as the depriva-

tion of an individual right conferred by statute, may be

sufficiently particularized and concrete to demonstrate injury-

in-fact. Lujan, 504 U.S. at 560 n.1 (violation of a legally pro-

tected interest must “affect the plaintiff in a personal and indi-

vidual way”); Warth v. Seldin, 422 U.S. 490, 500 (1975)

(“[t]he actual or threatened injury required by Article III may

exist solely by virtue of ‘statutes creating legal rights, the

invasion of which creates standing’ ” (quoting Linda R.S. v.

Richard D., 410 U.S. 614, 617 n.3 (1973))); see also Fernan-

dez v. Brock, 840 F.2d 622, 630-31 (9th Cir. 1988) (while a

mere violation of a statutory duty may not qualify as a consti-

tutional injury-in-fact, Article III may be satisfied by allega-

tions that the statute imposes a statutory duty and creates

correlative procedural rights in a particular plaintiff).

In the present context, Haven Hospice has a statutory right

to reimbursement for hospice care provided to eligible Medi-

care beneficiaries up to the limits of the aggregate annual

“cap,” calculated in accordance with 42 U.S.C. § 1395f(i)(2).

The Medicare statute also confers upon Haven Hospice (and

other certified hospice providers) procedural rights to chal-

lenge the fiscal intermediary’s cap calculation for any given

accounting year (in which at least $10,000 is in dispute) in an

administrative hearing before the PRRB, including judicial

review of PRRB’s decision and an initial judicial determina-

tion of any purely legal issue raised in the administrative

appeal. 42 U.S.C. § 1395oo(f)(1). As the district court

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3625

observed, it is sufficient that Haven Hospice’s “cap” for FY

2006, and the related repayment demand, were calculated

using a method other than that specified by Congress. See

Russell-Murray Hospice, Inc. v. Sebelius, 724 F.Supp.2d 43,

53 (D.D.C. 2010); Lion Health Servs., Inc. v. Sebelius, 689

F.Supp.2d 849, 855 (N.D. Tex. 2010) (“The legal right

asserted . . . [was] the right to have its cap and cap overpay-

ments calculated according to the method specified by law,

not the right to the return of a certain amount of money.”).

The Secretary further contends, however, that Haven Hos-

pice must prove that it suffered a “net” increase in its liability

for overpayments from the operation of the hospice cap regu-

lation in FY 2006, over and above the amount it would have

been required to pay for the same period under the hospice

cap statute or a hypothetical regulation drawn in conformity

with the statute. The Secretary’s argument on this point is not

entirely clear. She seems to suggest that, as compared to a cal-

culation utilizing the proportional allocation prescribed by the

hospice cap statute, any given hospice’s repayment liability

under the hospice cap regulation—with its 35-day “shift” and

its policy of giving a full cap allowance for each Medicare

beneficiary only in the initial year of service, in which he or

she is “likely to receive the bulk of her care”—will likely

“even out” (be mathematically neutral) across accounting

years, with no “net” effect on a hospice’s liability. The Secre-

tary further contends that operation of the hospice cap regula-

tion in any given year is “equally likely” to harm a hospice

provider (by decreasing its cap and increasing its repayment

obligation) as to help it (by increasing its cap and reducing its

repayment obligation), with the outcome in any given year

“turn[ing] entirely on whether the number of partial beneficia-

ries shifted out of that year exceeds the number of partial ben-

eficiaries shifted into that year.” At the same time, however,

the Secretary insists that the focus of our standing inquiry—

and, indeed, our jurisdiction—be narrowly confined to FY

2006.

3626 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

We reject this circular argument. Were we to accept the

Secretary’s logic in toto, no hospice provider could establish

standing to challenge either a specific overpayment demand

or the regulation under which all such demands have been

calculated since 1983. Even if a hospice could prove that it

would have been subject to a lesser demand in a given

accounting year if HHS had employed the proportional alloca-

tion prescribed by the hospice cap statute, its standing would

still be subject to challenge under the Secretary’s theory that

any benefit enjoyed in the year at issue was likely to have

been offset by a higher demand in a prior year or would be

offset in subsequent year.

Even narrowly focusing on the cap calculation for the

accounting year challenged in the plaintiff’s administrative

appeal, FY 2006, we believe the Secretary asks too much

when she contends that Haven Hospice must prove, with

mathematical precision and certainty, that its overpayment lia-

bility under the current hospice cap regulation was actually

greater in that year than it would have been under a regulation

drawn in conformity with 42 U.S.C. § 1395f(i)(2). First, such

an alternative calculation under a nonexistent regulation

would necessarily be hypothetical and speculative in nature.

See Natural Res. Def. Council v. EPA, 542 F.3d 1235, 1246

(9th Cir. 2008) (rejecting attack on environmental’s group

standing to require promulgation of pollution discharge regu-

lations, and specifically dismissing claim that plaintiffs had to

show that they would be better off under a new regulation,

because “one cannot demonstrate the efficacy of regulations

that have yet to be issued”).

[5] More importantly, however, we disagree with the Sec-

retary’s premise that a hospice provider may be found to have

standing to mount a facial challenge to the hospice cap regula-

tion only if it suffered a “net” increase in its overpayment lia-

bility within the accounting year at issue in its administrative

appeal. We have previously rejected a similar objection to the

Article III standing of parties challenging an administrative

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3627

decision. In Aluminum Company of America v. Bonneville

Power Admin., 903 F.2d 585 (9th Cir. 1989) (“Alcoa”), the

defendant agency argued that the plaintiffs, California electric

utility companies, lacked standing to challenge a portion of a

ratemaking decision that allegedly established excessive rates

(due to costs that should not have been included in the so-

called “nonfirm” rate schedules), because the utilities proba-

bly enjoyed a “net” benefit from the ability voluntarily to pur-

chase surplus energy from the BPA at below-market rates. Id.

at 590. We rejected the agency’s standing argument, saying

“[t]here is harm in paying rates that may be excessive, no

matter what the California utilities may have saved.” Id. As

to redressability, we further observed that “if the utilities are

correct, the relief sought would cure their injury: they will

receive a refund of overpayments with interest.” Id. As rele-

vant here, Alcoa implies that, so long as Haven Hospice can

point to some concrete harm logically produced by 42 C.F.R.

§ 418.309(b), it has standing to challenge the hospice cap reg-

ulation even though in a prior, current, or subsequent fiscal

year it may also have enjoyed some offsetting benefits from

the operation of the current regulation.

[6] In this case, although it did not present detailed patient

flow data or other evidence definitively showing that applica-

tion of the methodology prescribed by the hospice cap statute

would have netted a lower repayment demand than that calcu-

lated by the fiscal intermediary under the hospice cap regula-

tion, Haven Hospice points to several factors that support its

claim of redressable injury-in-fact.5 In particular, for hospices

5

We need not, and do not, decide whether the PRRB’s findings (without

objection by HHS) that there was more than $10,000 in dispute in this case

was sufficient, alone or together with other evidence before the district

court, to support Haven Hospice’s claim to Article III standing. We note,

however, that the “amount in controversy” requirement in 42 U.S.C.

§ 1395oo(a)(2) appears to be a jurisdictional provision, similar to the

$75,000 amount in controversy required to establish diversity jurisdiction

under 28 U.S.C. § 1332. See Beacon Healthcare Servs., Inc. v. Leavitt,

629 F.3d 981, 983-84 (9th Cir. 2010).

3628 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

with an average length of stay longer than the 70-day period

on which the hospice cap regulation was based, there is a mis-

match of allowances given by HHS in the initial year toward

that year’s “cap,” and revenue paid by HHS in later years—to

date, uniformly under a higher, inflation-adjusted per-patient

annual cap amount—resulting in overstated repayment

demands in later years. As Haven Hospice puts it, by counting

a whole beneficiary only in the initial year of service even

where the patient received the bulk of the care in a subsequent

year, a significant portion of the “cap room” that would be

available for that beneficiary under the hospice cap statute

becomes “trapped” in the earlier year.

A few simplified examples illustrate the problem. If a

hypothetical “average” Haven Hospice patient elected hospice

care the day before the 35-day “shift” period for FY 2006

began—i.e., on September 28, 2005—and then continued in

hospice for 246 days, that beneficiary would have been allo-

cated entirely to FY 2005 under the hospice cap regulation,

and Haven Hospice would have been credited with a total of

$19,778, the “cap amount” for that beneficiary, in the FY

2005 accounting year. By contrast, under the proportional

allocation methodology required by the hospice cap statute,

approximately 15 percent of the care the beneficiary received

in FY 2005 would have been included in the cap for that year

(0.15 x $19,778 = $2,967), but approximately 85 percent

(0.85 x $20,585 = $17,497) of the care the patient actually

received in FY 2006 would have been included in the cap for

that year at the higher $20,585 rate per-patient cap amount,

for a total of $20,464.6 A similarly beneficial effect of propor-

6

For simplicity’s sake, we use the number of days of hospice care pro-

vided to determine the proportional allocation across accounting years that

the hospice cap statute calls for. If specific reimbursement data were avail-

able, we could as easily allocate the beneficiary across years of service to

reflect the proportion of the total reimbursements collected by Haven Hos-

pice in each year for care it provided to the beneficiary. As Haven Hospice

notes, this is one of the many uncertainties in trying to demonstrate how

a valid hospice cap regulation might actually work. See Natural Res. Def.

Council, 542 F.3d at 1246.

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3629

tional allocation could be predicted for any “average” patient

who elected hospice care in 2005 between 36 and 123 days

before the start of FY 2006, for whom up to half of the benefi-

ciary’s “cap room” would be trapped in FY 2005 at the lower

cap amount for that year, while Haven Hospice received

between 50 to 85 percent of the reimbursement payments but

no cap room at all for those patients in FY 2006. At the other

end of the accounting year, only those patients who elected

hospice care between September 28 and October 31, 2006,

were shifted entirely out of FY 2006 by operation of the hos-

pice cap regulation and counted using the higher cap amount

for FY 2007, but Haven Hospice lost cap credit in FY 2006

only for that portion of their care provided during the 35-day

shift period.

Of course, if the regulation is invalidated as to FY 2006,

Haven Hospice also stands to lose the marginal benefit of the

35-day shift for those patients who elected hospice care

between September 27 and October 31, 2005. But having that

fraction of its FY 2005 patients counted using the higher FY

2006 cap amount for that period would yield only a small loss

compared to the benefit Haven Hospice—with an average

length of stay that is well above the norm and more than three

times higher than the 70-day national average that existed

when the regulation was promulgated in 1983—is likely to

garner from releasing substantial amounts of cap room

“trapped” in FY 2005.

Indeed, the existence of this marginal benefit from opera-

tion of the current regulation only serves to bolster Haven

Hospice’s case for Article III standing. Clearly, HHS itself

understood that hospices would be prejudiced or injured by its

adoption of a regulation allocating cap room only to the initial

year of service, rather than proportionally across years of ser-

vice as required by the hospice cap statute, and it attempted

to counteract this prejudice by adopting the 35-day shift in 42

C.F.R. § 418.309(b)(1). But while that “shift” might have

been sufficient to ameliorate the resulting prejudice in 1983,

3630 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

when the average length of stay in hospice was only 70 days,

it is plainly insufficient for providers with significantly higher

average lengths of stay in recent years.

As Haven Hospice explains, the assumptions implicit in the

“shift” adopted by HHS are twofold: (a) to be fair to hospices,

HHS would have to shift admissions forward into the next

year in proportion to the actual average length of stay;7 and

(b) if the average length of stay assumption is wrong, hos-

pices would be prejudiced by the misallocation of cap allow-

ances. In other words, by definition, the effectiveness of the

shift in ameliorating the prejudice depends upon the accuracy

of the length of stay assumption. For a hospice with a length

of stay longer than assumed, such as Haven Hospice, cap

room will be trapped in prior years because the shift will be

insufficient to even roughly match cap allowances and reve-

nue. This problem is then exacerbated by the fact that the per

beneficiary “cap amount” increases each year by inflation;

one unit allocated to 2005 is simply not as valuable as a unit

allocated to 2006.

[7] In these circumstances, we are satisfied that Haven

Hospice has established a substantial likelihood that applica-

tion of the hospice cap regulation resulted in an unlawful

increase in its FY 2006 cap liability, at least in part, and that

invalidation of the regulation would redress that portion of its

injury. Thus, we conclude that Haven Hospice has established

that it has Article III standing to pursue the declaratory and

injunctive relief prayed for in the complaint, and that the dis-

trict court had subject matter jurisdiction pursuant to 42

U.S.C. § 1395oo(f)(1) to determine the validity of the hospice

cap regulation.

7

In this regard, it is noteworthy that HHS specifically adopted the 35-

day shift based on the assumption that the average length of stay in hos-

pice would be 70 days, after that estimate was revised upward from an ini-

tial assumption of only 44 days, for which a 22-day shift period had been

proposed. Compare 48 Fed. Reg. at 38158; with 48 Fed. Reg. at 56020-22.

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3631

B.

[8] We turn now to the merits of Haven Hospice’s claim

that the hospice cap regulation, 42 C.F.R. § 418.309(b)(1),

impermissibly conflicts with the hospice cap statute, 42

U.S.C. § 1395f(i)(2)(C), and is, thus, facially invalid.8 The

parties agree that Chevron analysis is appropriate in reviewing

Haven Hospice’s claim that the hospice cap regulation is

facially invalid. The Chevron inquiry proceeds in two steps.

First, we must ask “whether Congress has spoken to the pre-

cise question at issue.” 467 U.S. at 843. In answering this first

question, no deference to the agency is due. See Medtronic,

Inc. v. Lohr, 518 U.S. 470, 512 (1996) (“[W]here the lan-

guage of the statute is clear, resort to the agency interpretation

is improper.”). If the agency interpretation conflicts with Con-

gress’s clearly expressed intent, “that is the end of the mat-

ter,” and the inquiry ends. Chevron, 467 U.S. at 843. Only if

the statute is ambiguous or silent do we proceed to the second

step, which requires us to defer to the agency’s interpretation

so long as it is reasonable. Id.

[9] As Judge Wu noted, the hospice cap statute plainly

states that in determining the “number of Medicare beneficia-

ries” served in a given accounting year, the fiscal intermedi-

ary and HHS are required to count every individual who

received care in that year, with “such number reduced to

8

This is an issue of first impression in the United States Courts of

Appeals. The issue has been previously considered in numerous published

decisions from the federal district courts, all of which to date have rejected

the Secretary’s position, and several of which are currently pending on

appeal. See, e.g., Russell-Murray Hospice, Inc. v. Sebelius, 724 F.Supp.2d

43, 57-59 (D.D.C. 2010), appeal docketed, No. 10-5115 (D.C. Cir., Apr.

19, 2010); IHG Healthcare v. Sebelius, 717 F.Supp.2d 696, 707-09 (S.D.

Tex. 2010), appeal docketed, No. 10-20531 (5th Cir., Aug. 11, 2010);

Hospice of New Mexico v. Sebelius, 691 F.Supp.2d 1275, 1288-93

(D.N.M. 2010), appeals docketed, Nos. 10-2136, 10-2168 (10th Cir., June

16 & July 28, 2010); Lion Health Servs., Inc. v. Sebelius, 689 F.Supp.2d

849, 856-57 (N.D. Tex. 2010), appeal docketed, No. 10-10414 (5th Cir.,

Apr. 24, 2010).

3632 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

reflect the proportion of hospice care that each such individ-

ual was provided in a previous or subsequent accounting

year.” 42 U.S.C. § 1395f(i)(2)(C). Under the hospice cap reg-

ulation, however, an individual patient is counted as a benefi-

ciary only in a single year, depending on when she elects

hospice care, regardless of how much care the patient actually

received that year, or whether she actually received the bulk

of her care in subsequent years. See 42 C.F.R.

§ 418.309(b)(1). The regulation is at odds with the plain lan-

guage of the statute in that it omits the individualized, propor-

tional allocation calculation expressly called for in the statute,

and substitutes an “alternative” that HHS considers more con-

venient and less burdensome. Indeed, when HHS first pro-

posed the challenged regulation in 1983, it acknowledged as

much. See 48 Fed.Reg. at 38158.

The Secretary contends, however, that Congress’s mandate

was ambiguous, and that the hospice cap regulation is a “rea-

sonable” interpretation of the statutory language. In particular,

the Secretary suggests that the words “reflect” and “propor-

tion” in 42 U.S.C. § 1395f(i)(2)(C) are, by their nature terms

of ambiguity and imprecision, allowing HHS to use a method-

ology that estimates the “number of Medicare beneficiaries”

to be counted toward an annual cap. We disagree.

When read in the context of the surrounding statutory lan-

guage, these terms are not ambiguous or imprecise. See NLRB

v. Federbush Co., 121 F.2d 954, 957 (2d Cir. 1941) (“Words

are not pebbles in alien juxtaposition; they have only a com-

munal existence; and not only does the meaning of each inter-

penetrate the other, but all in their aggregate take their

meaning from the setting in which they are used.”). The term

“reflect” as used in § 1395f(i)(2)(C) conveys Congress’s

intent that the number of beneficiaries should be reduced to

make apparent that a portion of hospice care for each individ-

ual was provided in a different fiscal year, or by another hos-

pice program. Moreover, by using the phrase “each such

individual,” Congress indicated its intent that the reduction is

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3633

to be carried out on an individualized basis for each hospice

patient, not estimated by allocating “whole” patients to a fis-

cal year based on the date they elected to receive hospice care.

The statute also specifically requires that the proportional

reduction of the number of beneficiaries be carried out to

reflect the amount of hospice care “provided in a previous or

subsequent year.” That is, each hospice patient’s benefit cap

allowance must be allocated across years of service, not

lumped into a single year in which some care was provided

without regard to the length of the beneficiary’s overall stay.

[10] In sum, we conclude that Congress’s language and

intent when it drafted § 1395f(i)(2)(C) were clear and unam-

biguous, and the district court did not err in finding that the

hospice cap regulation, 42 C.F.R. § 418.309(b)(1), is inconsis-

tent with the statute. By choosing to count beneficiaries only

in the year in which HHS “anticipated” that the majority of

hospice care would be furnished, it ignored Congress’s clear

statutory mandate. Thus, the regulation under which the Sec-

retary adopted that methodology was contrary to law, and was

properly declared invalid at step one of the Chevron inquiry.

C.

Having concluded that the hospice cap regulation is invalid,

we must address the Secretary’s further contention that the

district court acted in excess of its jurisdiction by entering the

injunction in this case or, at a minimum, abused its discretion

by barring enforcement of the hospice cap regulation against

all certified Medicare hospice providers nationwide. We con-

clude that the district court had jurisdiction to enjoin further

enforcement of the invalid regulation as against Haven Hos-

pice, but abused its discretion by entering a nationwide

injunction.

1.

[11] Both in its briefs on appeal and during oral argument,

the Secretary has mounted an elaborate argument that the dis-

3634 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

trict court exceeded its jurisdiction under 42 U.S.C.

§ 1395oo(f)(1) by issuing the injunction in this case, both as

to Haven Hospice and as to all other certified hospice provid-

ers. The Secretary contends that the court’s statutory jurisdic-

tion was limited to a determination whether the “action of the

fiscal intermediary” that was challenged before the PRRB—

i.e., its calculation of Haven Hospice’s FY 2006 cap and the

related overpayment demand—was erroneous and must be set

aside, and that the only proper disposition is a remand to the

PRRB for a recalculation of the amount Haven Hospice

received in excess of its hospice cap for FY 2006, not an

injunction against further enforcement of the hospice cap reg-

ulation. In support of this argument, the Secretary relies on

the Supreme Court’s decision in Shalala v. Illinois Council on

Long Term Care, 529 U.S. 1 (2000), and our decision in

Pacific Coast Medical Enterprises v. Harris, 633 F.2d 123

(9th Cir. 1980), contending that the only claim Haven Hos-

pice “channeled through” the special administrative review

procedures set forth in the Medicare statute was the narrow

claim that the hospice cap regulation was invalid as applied

to calculate its aggregate “cap” and overpayment liability for

FY 2006. See Shalala, 529 U.S. at 13; Pacific Coast, 633 F.2d

at 137-38. We disagree.

[12] Contrary to the Secretary’s contention, we believe it

is clear from the record that Haven Hospice’s claim that the

hospice cap regulation is invalid is a facial challenge.9 As

9

In its briefs on appeal, the Secretary seemed to suggest that Haven

Hospice did not, and could not, bring a facial challenge to the validity of

the hospice cap regulation. At oral argument, however, counsel for the

Secretary acknowledged that Haven Hospice’s complaint “could be read”

as bringing a facial challenge. Thus, the Secretary’s ultimate argument is

that “as a jurisdictional necessity,” Haven Hospice could not have brought

a facial attack, but only an as-applied challenge to the action of the fiscal

intermediary for a particular accounting year, here the overpayment

demand for FY 2006. To the extent the Secretary is suggesting that a facial

challenge to a Medicare regulation is never appropriate, except immedi-

ately upon adoption and before it is ever applied to any provider, she cites

no authority to support such a contention.

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3635

such, and because the Secretary is apparently unwilling to

give any assurance that she will voluntarily refrain from

enforcing the invalid regulation against Haven Hospice and

other hospice providers in the Ninth Circuit for accounting

years subsequent to FY 2006,10 the district court had both the

authority and discretion to enjoin future application of the

invalid regulation, at least as against Haven Hospice. See 42

U.S.C. § 1395oo(f)(1) (civil action for judicial review of an

action of the fiscal intermediary involving a question of law

or regulations shall be tried pursuant to applicable provisions

under Chapter 7 of Title 5, 5 U.S.C. §§ 701 et seq., notwith-

standing any other provision in 42 U.S.C. § 405); 5 U.S.C.

§ 702 (waiving sovereign immunity to suit by individuals suf-

fering a legal wrong because of agency action, and “seeking

relief other than money damages,” and prescribing proper

form for injunctive relief that is not otherwise prohibited); id.,

§ 703 (the form of proceeding under the APA is “any applica-

ble form of legal action, including actions for declaratory

judgments or writs of prohibitory or mandatory injunction . . .

in a court of competent jurisdiction”); see also Russell-

Murray Hospice, 724 F.Supp.2d at 60; Hospice of New Mex-

ico, 691 F.Supp.2d at 1295; Lion Health Services, 689

F.Supp.2d at 858.

[13] Nothing in the cases cited by the Secretary requires a

different conclusion. Haven Hospice fully complied with the

requirements of Illinois Council by proceeding through the

special administrative review procedures set forth in the Med-

10

At oral argument, counsel for the Secretary contended that but for the

injunction prohibiting use of the hospice cap regulation to compute Haven

Hospice’s cap and any repayment demand for accounting years after FY

2006, she “would not be risking contempt” sanctions if she continued to

enforce the regulation against Haven Hospice or other providers in the

Ninth Circuit. Counsel conceded only that the Secretary would probably

refrain from doing so, but only “as a practical matter” to avoid imposition

of fee awards under the Equal Access to Justice Act should the providers

find it necessary to bring a future civil action to set aside repayment

demands for subsequent accounting years.

3636 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

icare statute—specifically 42 U.S.C. § 1395oo(f)(1), which

was not at issue in Illinois Council—to challenge the fiscal

intermediary’s calculation of its hospice cap and determina-

tion of its overpayment liability for FY 2006.11 In this case,

Haven Hospice did not dispute that the overpayment demand

was correctly calculated by the fiscal intermediary pursuant to

the hospice cap regulation, but it gave the PRRB an opportu-

nity to correct the errors allegedly caused by application of a

regulation that at least one court had declared to be invalid.

Haven Hospice also gave the PRRB the opportunity to deter-

mine its authority to consider a challenge to the hospice cap

regulation, as required by § 1395oo(f)(1). Once the PRRB

determined that the fiscal intermediary’s action involved “a

question of law or regulations relevant to the matters in con-

troversy,” and that it was “without authority to decide the

question,” Haven Hospice exhausted all available administra-

tive avenues of redress and was free to bring a civil action

seeking a judicial determination of the validity of the hospice

11

Illinois Council involved claims of an association of nursing homes

that the regulations governing imposition of sanctions for deficiencies in

care provided by its members were unconstitutionally vague, violative of

statutory provisions that require enforcement consistency, inconsistent

with the Due Process Clause, and promulgated without complying with

APA requirements. 529 U.S. at 7. The plaintiff association did not comply

with the “special Medicare review” procedures established by statute for

administrative and judicial review of decisions of the Secretary regarding

sanctions, see 42 U.S.C. §§ 1395i-3(h)(2)(B)(ii), 1395cc(b)(2)(A),

1395cc(h)(1), which incorporate the general provisions for review of deci-

sions of the Commissioner of Social Security, see 42 U.S.C. §§ 405(b),

(g), (h). Illinois Council, 529 U.S. at 7. Instead, it alleged that the district

court had general federal question jurisdiction pursuant to 28 U.S.C.

§ 1331. Id. The Supreme Court held that federal question jurisdiction was

foreclosed in that case by 42 U.S.C. § 1395ii, which incorporates 42

U.S.C. § 405(h) and makes it applicable to the Medicare Act “to the same

extent” as it applies to the Social Security Act, except perhaps where

requiring a Medicare provider to “channel” its claims through the “special

Medicare review procedures” would result in no judicial review at all. 529

U.S. at 8-9, 19-24. In this case, the Secretary has conceded that, assuming

Haven Hospice has Article III standing, the district court had subject mat-

ter jurisdiction pursuant to 42 U.S.C. § 1395oo(f)(1).

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3637

cap regulation in the only forum authorized to decide that

question of law. Id.; see also Bethesda Hosp. Ass’n, 485 U.S.

at 406.

Because Haven Hospice’s claim is that the hospice cap reg-

ulation is inconsistent with the hospice cap statute and, thus,

facially invalid, this case is also distinguishable from Pacific

Coast. In that case, the plaintiff provider challenged the fiscal

intermediary’s action denying its claim for increased reim-

bursement in a hearing before the PRRB pursuant to 42

U.S.C. § 1395oo(a). 633 F.2d at 126-27. The PRRB ruled in

the plaintiff’s favor, but the Secretary reversed the decision of

the Board based upon his application of certain Medicare reg-

ulations to a particular type of transaction—a two-step acqui-

sition of a hospital by purchase of 100% of the stock of the

corporation that owned the hospital, followed by liquidation

of the corporation—and found that the transaction did not

qualify as a “purchase of an ongoing provider.” Id. at 127-28,

129. The plaintiff sought judicial review of the Secretary’s

decision pursuant to an earlier version of 42 U.S.C.

§ 1395oo(f), the relevant portion of which is retained in the

first and second sentences of § 1395oo(f)(1).12 633 F.2d at

128, 130-31.

12

As originally enacted in 1972, 42 U.S.C. § 1395oo(f) provided that:

A decision of the Board shall be final unless the Secretary, on his

own motion, and within 60 days after the provider of services is

notified of the Board’s decision, reverses or modifies (adversely

to such provider) the Board’s decision. In any case where such

a reversal or modification occurs the provider of services may

obtain a review of such decision by a civil action commenced

within 60 days of the date he is notified of the Secretary’s rever-

sal or modification.

See Pacific Coast, 633 F.2d at 130, n.25(quoting 42 U.S.C. § 1395oo(f)

(1980)). It was not until the statute was amended in 1980 that direct judi-

cial review was authorized for “any action of the fiscal intermediary which

involves a question of law or regulations relevant to the matters in contro-

versy,” as to which the PRRB determines it is without authority to decide

the question. See Pub. L. No. 96-499, § 955, 94 Stat. 2599 (Dec. 5, 1980).

3638 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

[14] In this case, by contrast, Haven Hospice sought judi-

cial review pursuant to the third sentence of § 1395oo(f)(1),

which did not and would not have applied to the decision of

the Secretary in Pacific Coast. On its face, that provision spe-

cifically authorizes the district courts to decide pure questions

of law, such as the claim that the hospice cap regulation is

inconsistent with the enabling statute, at least where, as here,

the plaintiff has complied with the presentment requirements

in § 1395oo(f)(1) before bringing a civil action, and notwith-

standing the fact that the legal question is raised in connection

with the plaintiff’s appeal of a repayment demand for a spe-

cific accounting year. Id.; see also Bethesda Hosp. Ass’n, 485

U.S. at 406. As there is no statutory or case law bar to declar-

atory or injunctive relief in such an action, we conclude that

the district court had the authority and acted within its discre-

tion to enjoin further application of the hospice cap regulation

against Haven Hospice.

2.

Finally, we turn to the Secretary’s contention that the dis-

trict court abused its discretion by entering a nationwide

injunction. We agree that it did.

[15] Our Supreme Court has cautioned that “injunctive

relief should be no more burdensome to the defendant than

necessary to provide complete relief to the plaintiffs” before

the court. Califano v. Yamasaki, 442 U.S. 682, 702 (1979).

This rule applies with special force where there is no class

certification. See Easyriders Freedom F.I.G.H.T. v. Hanni-

gan, 92 F.3d 1486, 1501 (9th Cir. 1996) (“[I]njunctive relief

generally should be limited to apply only to named plaintiffs

where there is no class certification.”); Meinhold v. U.S. Dep’t

of Defense, 34 F.3d 1469, 1480 (9th Cir. 1994) (district court

erred in enjoining the defendant from improperly applying a

regulation to all military personnel (citing Califano, 442 U.S.

at 702)); cf. Bresgal v. Brock, 843 F.2d 1163, 1170-71 (9th

Cir. 1987) (there is no bar against nationwide relief in the dis-

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3639

trict courts or courts of appeal, even if the case was not certi-

fied as a class action, if such broad relief is necessary to give

prevailing parties the relief to which they are entitled).

[16] The Supreme Court has also suggested that nation-

wide injunctive relief may be inappropriate where a regula-

tory challenge involves important or difficult questions of

law, which might benefit from development in different fac-

tual contexts and in multiple decisions by the various courts

of appeals. Califano, 442 U.S. at 702 (noting that nationwide

injunctions “have a detrimental effect by foreclosing adjudi-

cation by a number of different courts and judges”); United

States v. Mendoza, 464 U.S. 154, 160 (1984) (allowing only

one final adjudication deprives the Supreme Court of the ben-

efit it receives from permitting multiple courts of appeals to

explore a difficult question before it grants certiorari); see

also Virginia Soc’y for Human Life, Inc. v. Federal Election

Comm’n, 263 F.3d 379, 393 (4th Cir. 2001) (nationwide

injunction was an abuse of discretion where it was broader

than necessary to afford relief to the plaintiff, and would

“ ‘thwart the development of important questions of law by

freezing the first final decision rendered on a particular legal

issue’ ” (quoting Mendoza, 464 U.S. at 160)).

As we have noted, the district court initially agreed with

Haven Hospice that a nationwide injunction would be appro-

priate in this case because of the facial invalidity of the hos-

pice cap regulation. Ultimately, however, the district court

decided to stay that portion of the injunction granting nation-

wide relief while this appeal is pending. The district court

itself raised serious questions whether it should have entered

such a sweeping injunction in the first place. The district court

noted that a nationwide injunction would not be in the public

interest because it would significantly disrupt the administra-

tion of the Medicare program by inhibiting HHS from enforc-

ing the statutorily mandated hospice cap as to over 3,000

hospice providers, and would create great uncertainty for the

government, Medicare contractors, and the hospice providers.

3640 LOS ANGELES HAVEN HOSPICE v. SEBELIUS

The district court also observed that the same challenge to the

hospice cap regulation had been decided by other district

courts, and that there was thus “some prospect of the issue

reaching other circuit courts” in the near future.

[17] For reasons the district court acknowledged, the

national injunction was too broad. An order declaring the hos-

pice cap regulation invalid, enjoining further enforcement

against Haven Hospice, and requiring the Secretary to recal-

culate its liability in conformity with the hospice cap statute,

would have afforded the plaintiff complete relief. Indeed,

Haven Hospice conceded as much during oral argument. As

we have already noted, moreover, several other courts of

appeals are currently reviewing decisions of other district

courts that have found the hospice cap regulation to be

facially invalid and enjoined enforcement against the individ-

ual hospice care providers who have sued to set aside repay-

ment demands—in one case where the evidence suggested

that a demand of over $1 million was more than twice the

amount the hospice care provider would be obliged to repay

under a proper application of the hospice cap statute. Hospice

of New Mexico, 691 F.Supp.2d at 1288 & n.2. The Secretary’s

concerns about the potential for disruption in the process for

enforcing the hospice cap statute, and the great uncertainty

and confusion that would likely flow from a nationwide

injunction, are also legitimate and well-founded.

[18] In these circumstances, we conclude that the nation-

wide injunction must be vacated, and we remand the matter

to the district court for entry of an injunction that is no

broader, and no more burdensome to the defendant, than nec-

essary to provide complete relief to Haven Hospice.

III.

For all the foregoing reasons, we AFFIRM the judgment of

the district court insofar as it concluded that Haven Hospice

has Article III standing to mount a facial challenge to the hos-

LOS ANGELES HAVEN HOSPICE v. SEBELIUS 3641

pice cap regulation, and declared the hospice cap regulation

to be arbitrary, capricious, and contrary to law and, thus,

invalid. We also AFFIRM the injunction insofar as it barred

future enforcement of the hospice cap regulation against

Haven Hospice, but VACATE that portion of the injunction

barring enforcement of the regulation against hospice provid-

ers other than Haven Hospice, and REMAND for further pro-

ceedings consistent with this decision.

AFFIRMED IN PART; VACATED IN PART AND

REMANDED.

Haven Hospice shall recover its costs on appeal.