Reply Brief — Your Home Visiting Nurse Services, Inc. v. Shalala

No. 97-1489 OFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1997

.

YOUR HOME VISITING NURSE SERVICES, INC.,

Petitioner,

Vv.

SECRETARY OF HHS,

Respondent.

+

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

SI

REPLY BRIEF FOR THE PETITIONER

S

Diana L. Gustin

Counsel of Record

11 Town Square

Post Office Box 1349

Norris, Tennessee 37828

(423) 494-3000

Counsel for Petitioner

COCKLE LAW 6RIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

PETITIONER’S REPLY TO RESPONDENT'S BRIEF

(a) Mandamus Jurisdiction, 28 U.S.C. 1361

(b) Statistics on pending cases at PRRB

(c) Regions Hosp. v. Shalala, 118 S. Ct. 909 (1998)...

(d) Due Process, United States Constitution,

(e) Equal Access to Justice Act, 5 U.S.C. 504 and

28 U.S.C. 2412

CONCLUSION

® ii

TABLE OF AUTHORITIES

Page(s)

Cases

Boynton v. Virginia, 364 U.S. 454 (1960)............... 5

Regions Hosp. v. Shalala, 118 S. Ct. 909 (1998)....... 1,4

U.S. v. Blue Cross/Blue Shield of Michigan, U.S.D.C.

(Maryland), No. L93-1794, Jan. 10, 1995............ 4

U.S. ex rel. Burr v. Blue Cross and Blue Shield of

Florida, Inc., U.S. District Court for the Middle

District of Florida, No. 91-134-Civ-J-16, Aug. 4,

PE aT hp eMAhd eel bn ves divckees ds dcesccbetecuecs 3

Statutes, CONSTITUTIONAL PROVISIONS, AND Rutes INVOLVED

a CUES ba Ct ob bee aUnecpies bs aueeers 6

Ss cas be daten seen bya cbaetesecnseceee 1

a visas RebbE Cash pees eehenee pees ans 6

et i poe e kk ce Ga ee eeteboaks becsbeue 1

i Mai cca dahelsveue ehoeeuasdbeseces 5

ee ey ee ED ks ccnwc nov bu dacoubeeweccer 1

Se es te So vd 5 bu oo nd 60's 60560 C0600 ceeds 1

PETITIONER’S REPLY TO RESPONDENT'S BRIEF

This reply brief is submitted in accordance with

United States Supreme Court Rule 15.6 which allows

petitioner to address new arguments first addressed in

respondent's brief. Accordingly, there are five matters

which petitioner will address herein: mandamus jurisdic-

tion, statistics regarding the pending cases at the Pro-

vider Reimbursement Review Board, the Regions Hosp. v.

Shalala, 118 S. Ct. 909 (1998) decision, due process argu-

ments and the right to attorneys fees under the Equal

Access to Justice.

(a) Mandamus Jurisdiction, 28 U.S.C. 1361

The Respondent's brief at page 13 noted that this

Court has declined to decide whether Section 405(h) pre-

cludes federal mandamus jurisdiction under 28 U.S.C.

1361 but also recognized that the Court has concluded

that mandamus jurisdiction is appropriate under the

Medicare program if the defendant owes the plaintiff a

clear non-discretionary duty. The respondent asserts

there is a discretionary decision at issue since the Secre-

tary’s reopening regulation vests the intermediary with

the exclusive jurisdiction to decide whether to reopen its

own prior determination. 42 C.F.R. 405.1885(c). The peti-

tioner however relies upon the non-discretionary duty

referenced in the regulation 42 C.F.R. 413.102(b)(2)(i)

which requires that owners compensation be “ . . . such

an amount as would ordinarily be paid for comparable

services by comparable institutions.” The refusal to

reopen the 1989 cost report to correct this error is a

violation of a duty which is NOT discretionary. In other

words, the intermediary does not have the discretion to

violate this regulation by choosing not to pay the owners

of the petitioner/home health agency an amount as

would ordinarily be paid for comparable services by com-

parable institutions, and yet, this is exactly what the

intermediary did. The regulation requires that payment

to owners be comparable to payment made for compara-

ble services by comparable institutions. Comparing a sin-

gle home health agency’s Administrator's salary to that

of a chain operation is not in accordance with this non-

discretionary regulation requirement. Therefore, man-

damus jurisdiction would be appropriate to provide fed-

eral court with authority to order the intermediary to pay

the owners in accordance with the regulation because the

respondent owes the petitioner a clear non-discretionary

duty in this regard.

(b) Statistics on pending cases at PRRB

The respondent points out administrative burden

which the reviewability of denials of requests to reopen

presents as an important and recurring issue for the

“already overburdened” Medicare program by citing sta-

tistics obtained from the Health Care Financing Adminis-

tration in the Department of Health and Human Services

which allegedly demonstrate PRRB has a backlog of

10,000 cases, that the Secretary estimates that the PRRB

has approximately 20 appeals pending, at any given time,

on reopening denials by providers located in the Ninth

Circuit. (See Respondent's brief at page 16, notes 8 and 9.)

While conscious of the administrative burden which

appeal rights create, the petitioner must nevertheless per-

sist in its pursuit of the right to appeal erroneous deter-

minations made by the intermediary. This is true even

when the wrongdoing of the intermediary is not discov-

ered until after the initial 180 day deadline to appeal the

NPR determination. The three-year time period within

which to request a reopening should still allow the pro-

vider who discovers the intermediary acted inap-

propriately to take action against the intermediary. In

support of this contention the petitioner would point out

that the intermediary is an insurance company which

could be guilty of wrongful action. Cases against the

insurance companies for wrongful conduct related to

Medicare program payments to the insurance companies

have been reported. Blue Shield of California was

ordered to pay $1.5 million following a guilty plea on

charges that it conspired to obstruct audits conducted

over a six-year period in connection with its Medicare

Part B contract with HCFA according to a May 1, 1996,

Department of Justice press release. (Reported in the

Commerce Clearing House Medicare and Medicaid Guide

Number 905, May 9, 1996.) Blue Cross and Blue Shield of

Florida, Inc., the Medicare Part B carrier for Florida,

agreed to pay the federal government $10 million pur-

suant to a settlement agreement executed by the parties

on August 3, 1993. U.S. ex rel. Burr v. Blue Cross and Blue

Shield of Florida, Inc., U.S. District Court for the Middle

District of Florida, No. 91-134-Civ-J-16, Aug. 4, 1993.

(Reported in the Commerce Clearing House Medicare

and Medicaid Guide Number 761, August 18, 1993, and at

Paragraph 41,578.) Blue Cross and Blue Shield of Michi-

gan has agreed to pay the government $27.6 million to

settle allegations that it defrauded the government while

acting as the fiscal intermediary in the state of Michigan.

U.S. v. Blue Cross/Blue Shield of Michigan, U.S.D.C. (Mary-

land), No. L93-1794, Jan. 10, 1995, settlement agreement

executed by the parties. (Reported in the Commerce

Clearing House Medicare and Medicaid Guide Number

839, February 2, 1995, and at Paragraph 43,019.) While the

administrative burden and a backlog of cases is always a

consideration, the right to seek redress for wrongful con-

duct should take precedence in this situation.

(c) Regions Hosp. v. Shalala, 118 S. Ct. 909 (1998)

The respondent states that the intermediary analyzes

the cost report, audits if necessary, and then issues the

written notice of the amount of Medicare program reim-

bursement to the provider, citing the recent decision of

Regions Hosp. v. Shalala, 118 S. Ct. 909 (1998). (Respon-

dent’s brief at pages 2-3.) It is interesting to note that this

case stands for the proposition that additional reopenings

beyond the normal three year time frame are acceptable

in order to perpetuate the Legislature’s overriding pur-

pose in the Medicare scheme: reasonable (not excessive or

unwarranted) cost reimbursement. Id. at page 905. There-

fore, the Secretary’s position in Regions Hospital creates

more administrative burden by allowing reopening and

reaudit beyond the three year time frame because this

allows the Secretary to recoup reimbursement from pro-

viders which may have received too much Medicare

money. However, when the provider-petitioner herein

seeks reopening within the three year time period

because it received too little Medicare reimbursement, the

<4 Wie

=,

Secretary fears the administrative burden such correc-

tions might produce. The Secretary is inconsistent. The

‘apparent goal is to recover Medicare reimbursement from

providers as opposed to the more appropriate goal of

paying the correct amount of reimbursement to pro-

viders.

(d) Due Process, United States Constitution,

Amendment V

The respondent asserts that it does not believe the

due process contentions should be considered by the

Court citing Youakim v. Miller, 425 U.S. 231, 234 (1976).

(Respondent's brief at page 16) However, the Court rec-

ognized that while it ordinarily does not decide questions

not raised or resolved in the lower court the rule is not

inflexible. Id. at page 234. In Boynton v. Virginia, 364 U.S.

454, 457 (1960) the Court found persuasive reasons why

the case should be decided on the Interstate Commerce

Act although the petition for certiorari presented only

two questions, one of which included the Due Process

clause of the Fourteenth Amendment. The Court rea-

soned that discrimination because of color was the core of

the two broad constitutional questions presented, just as

it is the core of the Interstate Commerce Act. Under those

circumstances, the Court found it appropriate not to

reach the constitutional questions but to proceed at once

to the statutory issue. While the petitioner believes the

Court can and will make its decision in the present case

based upon the statutory authorities presented, if that

cannot be done then the core argument, which is the due

process considerations of the complete deprivation of an

appeal process for a denial of a reopening request, should

be considered by the Court in deciding this case.

(e) Equal Access to Justice Act, 5 U.S.C. 504 and 28

U.S.C. 2412

The respondent asserts that there is no basis for the

petitioner’s request for a review of whether the Secre-

tary’s position in this case if “substantially justified”

under the Equal Access to Justice Act, 5 U.S.C. 504 and 28

U.S.C. 2412 because the petitioner has not filed a fee

application in this case and therefore the lower courts

had no occasion to address this question. Changes in

reimbursement for home health agencies which are occur-

ring during this cost reporting period now make the

question of an award of attorney’s fees appropriate at this

time. Therefore, the petitioner asserts the Court should

consider the question of whether or not the Secretary’s

position can be substantially justified in regard to the

attorney's fees related to this proceeding.

S

CONCLUSION

The petition for a writ of certiorari should be granted

and the questions presented for review as stated in the

petition should be addressed.

Respectfully submitted,

Diana L. Gustin

Counsel of Record

11 Town Square

Post Office Box 1349

Norris, Tennessee 37828

(423) 494-3000

Counsel for Petitioner