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Cumberland Cnty. Hosp. Sys., Inc. v. Burwell

United States Court of Appeals, Fourth Circuit

March 7, 2016

CUMBERLAND COUNTY HOSPITAL SYSTEM, INC., d/b/a Cape Fear Valley Health System, Plaintiff - Appellant,
v.
SYLVIA MATHEWS BURWELL, in her official capacity as Secretary of Health and Human Services, Defendant - Appellee. FUND FOR ACCESS TO INPATIENT REHABILITATION, Amicus Supporting Appellant

Argued January 26, 2016.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. (5:14-cv-00508-BR). W. Earl Britt, Senior District Judge.

ARGUED:

Kathryn Frances Taylor, K& L GATES LLP, Morrisville, North Carolina, for Appellant.

Joshua Marc Salzman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

ON BRIEF:

Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Mark B. Stern, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Thomas G. Walker, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina; William B. Schultz, General Counsel, Janice L. Hoffman, Associate General Counsel, Susan Maxson Lyons, Deputy Associate General Counsel, Kirsten Friedel Roddy, Attorney, UNITED STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, Washington, D.C., for Appellee.

Ronald S. Connelly, POWERS PYLES SUTTER & VERVILLE, PC, Washington, D.C., for Amicus Curiae.

Before TRAXLER, Chief Judge, and WILKINSON and NIEMEYER, Circuit Judges. Judge Niemeyer wrote the opinion, in which Chief Judge Traxler and Judge Wilkinson joined.

OPINION

Page 49

NIEMEYER, Circuit Judge:

Cumberland County Hospital System, Inc., d/b/a Cape Fear Valley Health System (" Cape Fear Health System" or " the Hospital System" ), commenced this action to obtain a writ of mandamus compelling the Secretary of the Department of Health and Human Services (" HHS" ) to adjudicate immediately its administrative appeals on claims for Medicare reimbursement. With over 750 of its appeals on such claims awaiting assignment to an Administrative Law Judge (" ALJ" ) for more than 90 days, the Hospital System asserts that the Secretary's delay violates the congressional mandate that its appeals be heard and decided by ALJs within 90 days. See 42 U.S.C. § 1395ff(d)(1)(A).

The parties agree that, as of February 2014, the Secretary had 480,000 appeals awaiting assignment to an ALJ, and the Secretary conceded in her brief that the number had by then climbed to more than 800,000 appeals, creating a ten-year backlog. While acknowledging the unacceptability of the backlog, the Secretary attributes it to an increased number of appeals within the Medicare system and inadequate funding by Congress to hire additional personnel.

The district court dismissed the Hospital System's complaint, relying on two independent

Page 50

grounds. It held (1) that the Hospital System does not have a clear and indisputable right to an ALJ hearing within a 90-day time frame, as required for issuance of a mandamus order, and (2) that the political branches, rather than the courts, are best suited to address the backlog in the administrative process. We affirm.

While we agree that the delay in the administrative process for Medicare reimbursement is incontrovertibly grotesque, the Medicare Act does not guarantee a healthcare provider a hearing before an ALJ within 90 days, as the Hospital System claims. Rather, it provides a comprehensive administrative process -- which includes deadlines and consequences for missed deadlines -- that a healthcare provider must exhaust before ultimately obtaining review in a United States district court. Indeed, within that administrative process, a healthcare provider can bypass administrative reviews if such reviews are delayed, " escalating" for review by a United States district court within a relatively expeditious time. The issuance of a judicial order now, however, directing the Secretary to hear the Hospital System's claims in the middle of the administrative process, would unduly interfere with the process and, at a larger scale, the work of the political branches. Moreover, such intervention would invite other healthcare providers suffering similar delays to likewise seek a mandamus order, thereby effectively causing the judicial process to replace and distort the agency process.

I

Cape Fear Health System operates a number of facilities in eastern North Carolina, delivering medical services to, among others, beneficiaries of Medicare. The Medicare Act establishes a federally subsidized health insurance program for the elderly and disabled that is administered by the Secretary. See 42 U.S.C. § 1395 et seq.

In 2012 and 2013, the Secretary denied payment to the Hospital System on over 900 claims for reimbursement for Medicare services that she had initially authorized. By September 2014, the Hospital System had over 750 appeals on these claims that had been pending for more than 90 days before the Office of Medicare Hearings and Appeals (" OMHA" ) within HHS. Those appeals related to claims for some $12.3 million in reimbursement. The Secretary has not even acknowledged receipt of some of the appeals, and with respect to others, she has reported a delay of over two years in assigning them to an ALJ. Because reimbursement of such a large sum is essential to the Hospital System's operations, the Hospital System commenced this action for a writ of mandamus, ordering the Secretary to docket, assign to an ALJ, and decide its appeals within 90 days, ...


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