Case: 10-10414 Document: 00511408113 Page: 1 Date Filed: 03/11/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 11, 2011
No. 10-10414 Lyle W. Cayce
Clerk
LION HEALTH SERVICES, INC., a Texas corporation, doing business as
Lion Hospice,
Plaintiff–Appellee
v.
KATHLEEN SEBELIUS, Secretary, Health and Human Services,
Defendant–Appellant
Appeal from the United States District Court
for the Northern District of Texas
Before KING, DeMOSS, and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
This appeal concerns the validity of 42 C.F.R. § 418.309(b)(1) (the
“Regulation”), a regulation promulgated by the Secretary of the U.S. Department
of Health and Human Services (the “Secretary”). The Regulation purports to
implement 42 U.S.C. § 1395f(i)(2), which establishes a Medicare hospice-care
provider’s annual aggregate cap amount for reimbursement purposes. Lion
Health Services, Inc. (“Lion”) contends that § 1395f(i)(2) unambiguously requires
the Secretary to calculate a provider’s number of beneficiaries per year for
annual-reimbursement-cap purposes by allocating patient stays that fell into
multiple years proportionally into each year. The Regulation instead uses a
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formula that allocates these multi-year patients into only one year. The district
court granted summary judgment to Lion, finding that the Regulation was
unlawful. The court set aside the Regulation and enjoined its past, present, and
future use as to Lion. It also ordered the Secretary to refund Lion all monies
repaid by Lion to the Medicare program pursuant to the previously calculated
repayment obligations for fiscal years 2006 and 2007. We find that the district
court correctly held that the Regulation was unlawful and correctly enjoined its
use as to Lion. The district court abused its discretion, however, in ordering the
Secretary to refund all payment obligations for the 2006 and 2007 fiscal years,
because it should have remanded to the agency for a recalculation. We therefore
affirm in part, and reverse and remand in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Medicare Hospice Program
In 1965, Congress established Medicare under Title XVIII of the Social
Security Act, 42 U.S.C. § 1395 et seq. (the “Medicare Act”), and authorized the
Secretary to issue regulations defining the reimbursable costs and to otherwise
carry out the Medicare Act provisions. See 42 U.S.C. §§ 1395x(v)(1)(A) and
1395hh(a)(1). In 1982, Congress expanded the Medicare Act to include hospice
care for terminally ill beneficiaries. See Tax Equity and Fiscal Responsibility
Act of 1982, Pub. L. 97-248, § 122, 96 Stat. 356, 364. In order to initially classify
a patient as “terminally ill,” both the patient’s “attending physician” and the
hospice medical director must certify that the patient’s life expectancy is six
months or less. See 42 U.S.C. §§ 1395f(a)(7) and 1395x(dd)(3)(A). The hospice-
care program provides for two initial ninety-day benefit periods followed by an
unlimited number of sixty-day benefit periods. See id. § 1395d(a)(4). Either the
patient’s attending physician or the hospice medical director may re-certify the
patient as terminally ill at the end of each period, provided the doctor still deems
the patient to have less than six months to live. See 42 U.S.C. § 1395f(a)(7).
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While the Medicare Act allows each individual patient to receive hospice
care for as long as doctors re-certify the patient’s terminally-ill diagnosis, the
statute caps total reimbursement payments that hospice care providers may
receive from Medicare in a fiscal year.1 The relevant hospice-care statute
provides:
(A) The amount of payment made under this part for hospice care
provided by (or under arrangements made by) a hospice program for
an accounting year may not exceed the “cap amount” for the year
(computed under subparagraph (B)) multiplied by the number of
medicare beneficiaries in the hospice program in that year
(determined under subparagraph (C)).
....
(C) For purposes of subparagraph (A), the “number of medicare
beneficiaries” in a hospice program in an accounting year is equal
to the number of individuals who have made an election under
subsection (d) of this section with respect to the hospice program
and have been provided hospice care by (or under arrangements
made by) the hospice program under this part in the accounting
year, such number reduced to reflect the proportion of hospice care
that each such individual was provided in a previous or subsequent
accounting year or under a plan of care established by another
hospice program.
Id. § 1395f(i)(2) (emphasis added). The statute requires an annual recalculation
of the individual patient “cap amount” based on changes in the Consumer Price
Index. See id. § 1395f(i)(2)(B).
In 1983, the Secretary promulgated 42 C.F.R. § 418.309, a regulation
purporting to implement 42 U.S.C. § 1395f(i)(2), the portion of the Medicare Act
concerning the calculation of a hospice-care provider’s annual aggregate cap
amount. The annual aggregate cap amount restricts the maximum dollar
amount that Medicare may reimburse a hospice care provider in any given fiscal
year, calculated based on the number of individual patients treated in that fiscal
1
A Medicare fiscal year (“FY”) runs from November 1 to October 31 (e.g., November 1,
2005, to October 31, 2006, is considered FY06).
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year multiplied by the individual patient cap amount. The Regulation provides
in relevant part:
For purposes of [the cap amount] calculation, the number of
Medicare beneficiaries includes—
(1) Those Medicare beneficiaries who have not previously
been included in the calculation of any hospice cap and who
have filed an election to receive hospice care, in accordance
with § 418.24, from the hospice during the period beginning
on September 28 (35 days before the beginning of the cap
period) and ending on September 27 (35 days before the end
of the cap period).
42 C.F.R. § 418.309(b).
Thus, the Regulation deals with patients whose hospice care stay extends
into more than one fiscal year by using a single-year allocation
method—allocating each individual patient cap amount to a single fiscal year
based upon the date on which the patient elects for hospice care—rather than
a proportional allocation method. A proportional method would allocate each
individual patient cap amount to different fiscal years based on the exact
proportion of care received by a patient in each relevant fiscal year. Under the
Regulation’s single-year approach, a patient who elects to receive hospice care
on or before September 27, 2005, would be counted as receiving care only in
FY05, even if the patient continues to receive hospice care in FY06. A patient
who elects to receive hospice care on September 28, 2005, however, would be
counted as receiving care only in FY06, even though she may have started
receiving hospice care during FY05.
A hospice-care provider’s Medicare bills are calculated and paid by a
Medicare contractor called a “fiscal intermediary” shortly after the provider
submits them. See 42 U.S.C. § 1395g(a); see also 42 C.F.R. §§ 413.64(b) and
418.302(d)–(e). Then, at the close of each fiscal year, the intermediary uses the
Regulation to calculate a hospice care provider’s aggregate cap amount for that
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fiscal year. See 42 C.F.R. § 418.308(c). If a provider’s total reimbursement
payments received from the intermediary over the course of the fiscal year
exceed its aggregate cap amount for that year, the intermediary demands that
the provider refund the amount of the overpayments to Medicare. See id.
§ 418.308(d).
If a hospice-care provider is not satisfied with the intermediary’s refund
demand and the amount in controversy is at least $10,000, the provider may
administratively challenge that demand before the Provider Reimbursement
Review Board (the “PRRB”). See 42 U.S.C. § 1395oo(a). When the provider
challenges the validity of a regulation itself, however, the PRRB lacks the
authority to declare regulations invalid. See Bethesda Hosp. Ass’n v. Bowen, 485
U.S. 399, 406 (1988) (“Neither the fiscal intermediary nor the Board has the
authority to declare regulations invalid.”). In this situation, once the PRRB has
determined “that it is without authority to decide the question” because the
“action of the fiscal intermediary . . . involves a question of law or regulations,”
the provider may obtain “expedited judicial review.” 42 U.S.C. § 1395oo(f)(1).
Thus, the provider brings an action against the Secretary in federal district
court, which the court tries pursuant to the standards of the Administrative
Procedure Act, 5 U.S.C. § 701 et seq. (the “APA”). See id. § 1395oo(f)(1); 42
C.F.R. § 405.1842.
B. Lion’s Lawsuit
Lion is a Medicare-certified hospice-care provider based in Hurst, Texas.
It is one of dozens of hospice-care providers that over the past several years have
filed lawsuits in district courts nationwide challenging the validity of the
Secretary’s single-year allocation method of calculation prescribed by 42 C.F.R.
§ 418.309(b)(1). On October 22, 2008, a fiscal intermediary notified Lion that
calculations made pursuant to the Regulation indicated that Lion had exceeded
its aggregate cap amount by $1,137,113 for FY06. In a similar letter dated July
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8, 2009, the intermediary informed Lion that it had also exceeded its aggregate
cap amount by $1,214,637 for FY07. Each letter demanded that Lion make
refund payments to Medicare in the stated amounts, which Lion has been
repaying on a monthly extended repayment schedule.
Lion timely filed administrative appeals with the PRRB and sought
expedited judicial review on the question of whether the Regulation is invalid
because it conflicts with Congress’s unambiguous intent as provided in its
authorizing statute, 42 U.S.C. § 1395f(i)(2)(C). The PRRB granted the requests
for expedited judicial review for both FY06 and FY07. On August 18, 2009, Lion
timely filed its Complaint in the U.S. District Court for the Northern District of
Texas, challenging the validity of the Regulation and requesting various forms
of relief. On October 26, 2009, Lion filed a motion for summary judgment,
claiming that Congress expressly required that its annual aggregate cap
amounts be determined using a proportional method of calculation and that the
single-year allocation method was therefore in direct conflict with Congress’s
mandate. Lion attached to its motion for summary judgment a “hypothetical
spreadsheet” showing that a “proportional allocation” would have resulted in
Lion owing $217,862.43 less in refunds for FY06 and $441,877.33 less in refunds
for FY07. On February 22, 2010, the district court granted Lion’s motion for
summary judgment. In its order, the district court: (1) declared the Regulation
to be unlawful and set aside; (2) enjoined the Secretary from enforcing against
Lion any overpayment determinations calculated using the Regulation; (3)
enjoined the Secretary from using the Regulation to calculate Lion’s annual
aggregate cap amount for any past, present, or future accounting year; and (4)
ordered the Secretary to refund to Lion all monies paid by Lion to the Medicare
program pursuant to previously calculated repayment obligations for FY06 and
FY07. The Secretary timely appealed.
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II. DISCUSSION
The Secretary raises several issues on appeal. First, while acknowledging
that Lion has standing in this case because it offered evidence to show a
financial injury from the Regulation’s application, she claims that the district
court improperly found that the Regulation’s alleged invalidity itself creates an
injury for Article III standing purposes. Second, the Secretary argues that the
Regulation provides a reasonable interpretation of an ambiguous authorizing
statute, 42 U.S.C. § 1395f(i)(2), by using a method that reflects proportionality.
Finally, the Secretary contends that the district court granted Lion improper
relief. She maintains that even if the Regulation is invalid, the district court
lacked jurisdiction to award Lion relief for fiscal years that have not yet been
administratively exhausted. She further argues that the district court abused
its discretion by ordering the Secretary to return all money collected in
satisfaction of her overpayments to Lion, rather than remanding to the agency
for a redetermination of monies owed using Lion’s suggested proportional
method.
A. Standing
As a first matter, the Secretary challenges the district court’s method for
determining standing in this case. This Court reviews determinations of
standing de novo. See United States v. $500,000.00 in U.S. Currency, 591 F.3d
402, 404 (5th Cir. 2009). In its opinion, the district court stated that Lion
suffered an injury “because the amount of its overpayments were calculated
according to an unlawful regulation.” Lion Health Servs., Inc. v. Sebelius, 689
F. Supp. 2d 849, 855 (N.D. Tex. 2010). The Secretary contends that the
application of an allegedly unlawful regulation does not itself constitute an
injury in fact for Article III standing purposes, but that a plaintiff must
demonstrate that striking down the regulation would reduce its overpayment
amount.
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Lion undisputedly established standing by demonstrating that it has
suffered an actual and concrete financial injury due to the Secretary’s use of the
Regulation, and that setting aside the Regulation and using a proportional
method will redress its injury. See Lujan v. Defenders of Wildlife, 504 U.S. 555,
560–61 (1992) (noting the requirements for Article III standing). Because Lion
has established standing through a showing of financial harm, we need not
decide whether a hypothetical plaintiff who alleges that the Regulation is invalid
but cannot show financial harm would have standing.
B. Validity of the Regulation
This Court reviews a grant of summary judgment de novo, using the same
standard as the district court. Apache Corp. v. W & T Offshore, Inc., 626 F.3d
789, 793 (5th Cir. 2010). Summary judgment is appropriate when “there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” F ED. R. C IV. P. 56(a). Here, it is undisputed that the
questions at issue are purely legal determinations and that there are no issues
of fact in dispute.
The Secretary argues that the district court should have deferred to the
Regulation as a “permissible construction” of the enacting statute, 42 U.S.C.
§ 1395f(i)(2), when Congress did not unambiguously express its intent. She
notes that the statute requires that the number of Medicare beneficiaries be
reduced “to reflect the proportion of hospice care that each such individual was
provided in a previous or subsequent accounting year.” Id. (emphasis added).
Because the statute only requires that the reduction reflect the portion of care
that a patient receives in the current accounting year, she argues, a strictly
proportional calculation is not required. The Secretary contends that an
empirical study conducted by the Department of Health and Human Services
(“HHS”) shows that in the aggregate, the Regulation’s single-year allocation
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method reasonably approximates the number that a strictly proportional method
would produce.
Lion argues that Congress has spoken to the precise question at issue, and
that the statute unambiguously requires a proportional calculation. It notes
that the text refers to “the proportion of hospice care that each such individual
was provided,” and not an aggregate approximation. Id. § 1395f(i)(2) (emphasis
added). Lion also directs us to commentary that HHS issued when it proposed
the Regulation:
Although section 1814(i)(2)(C) of the Act specifies that the cap
amount is to be adjusted “to reflect the proportion of hospice care
that each such individual 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 died or exhausted his or her hospice
benefits. We believe that the proposed alternative of counting the
beneficiary in the reporting period where the beneficiary used most
of the days of covered hospice care will achieve the intent of the
statute without being burdensome.
48 Fed. Reg. 38146, 38,158 (Aug. 22, 1983). This comment, Lion asserts,
indicates that HHS acknowledged that it was not following the letter of the
statute in enacting the Regulation but instead was striving for administrative
convenience.
Neither party disputes that the Supreme Court’s two-step Chevron test
governs this Court’s review of the question of whether the Regulation conflicts
with its enacting statute. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837 (1984). Under this test, we first ask “whether Congress has
directly spoken to the precise question at issue.” Id. at 842. If so, we “must give
effect to the unambiguously expressed intent of Congress.” Id. at 843. Only if
we find that the statute is “silent or ambiguous with respect to the specific issue”
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do we then ask whether the regulation is “based on a permissible construction
of the statute.” Id.
We find that Congress has “spoken directly to the precise question at
issue” with the text of § 1395f(i)(2)(C), and that only a proportional calculation
method based on each individual patient is permitted by the statute. The text
of the statute explicitly refers to “the proportion of hospice care that each such
individual was provided,” which cannot be accomplished through a single-year
allocation that only seeks proportionality on the aggregate level across several
years. That the statute unambiguously requires a proportional calculation is
further borne out by HHS’s comments in proposing the Regulation, where it
acknowledged that the single-year allocation method was an “alternative” to the
proportional requirement in the statute’s text.
The Secretary contends that the statute’s use of the word “reflect” creates
ambiguity and allows flexibility in its calculation so long as a multi-year
aggregate approximates what a proportional calculation achieves. In particular,
she cites a Seventh Circuit opinion where the court found that one stock index
“reflected” a broader portfolio when the two had a 92% correlation. See Bd. of
Trade of City of Chi. v. SEC, 187 F.3d 713, 719 (7th Cir. 1999). In that case, the
Seventh Circuit looked at a statute that required that one index “shall reflect,
the market for all publicly traded equity or debt securities or a substantial
segment thereof.” Id. (quoting 7 U.S.C. § 2(a)(ii) (internal quotation marks
omitted)). That court then noted that “[t]he index must ‘reflect’ a substantial
segment; § 2a(ii)(III) does not require that the index be a substantial segment.”
Id.
The Seventh Circuit’s analysis using the word “reflect,” however, is
inapposite to the case before us. The statute at issue speaks directly in terms
of the proportion of care that each such individual was provided. See 42 U.S.C.
§ 1395f(i)(2)(C). A regulation that assigns an individual patient’s care to a single
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year cannot possibly “reflect” the portion of a fiscal year that the individual
spent at the hospice. Allocating 100% of an individual patient’s cap amount to
FY06 does not “reflect” the proportion of care that patient received when the
actual proportion of care received by that patient was 10% in FY06 and 90% in
FY07. Because the statute requires the Secretary to calculate the proportion of
care in a fiscal year on an individual level, only a proportional calculation
method meets this requirement.
Therefore, we agree with the district court that the statute unambiguously
requires the Secretary to use a strict proportional method of calculation, and the
Regulation therefore contradicts Congress’s expressed intent.
C. Remedies
The Secretary avers that the district court granted several remedies in
error. First, she claims that the district court lacked jurisdiction to order relief
that applies to any years other than FY06 and FY07, arguing that it did not have
the authority to prospectively enjoin her from using the invalid Regulation.
Second, she claims that the district court should have remanded Lion’s FY06 and
FY07 claims to the agency rather than ordering her to reimburse Lion the
entirety of the refunds already collected from those fiscal years.
1. Jurisdiction to Issue Prospective Relief
This Court reviews questions of the district court’s jurisdiction de novo.
See Texas v. United States, 497 F.3d 491, 495 (5th Cir. 2007).
While the Secretary agrees that Lion timely exhausted its administrative
remedies as to its repayment demands for FY06 and FY07, she claims that the
district court lacked subject-matter jurisdiction to set aside the Regulation and
enjoin her from using it to calculate Lion’s cap for future years. She notes that
decisions by both this Court and the Supreme Court make apparent that there
is no general federal question jurisdiction under 28 U.S.C. § 1331 for Medicare
Part A reimbursement cases. See Shalala v. Ill. Council on Long Term Care,
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Inc., 529 U.S. 1, 10–20 (2000); Dr. John T. MacDonald Found., Inc. v. Califano,
571 F.2d 328, 331 (5th Cir. 1978) (en banc). Therefore, she claims, Lion can only
seek review of the action of the fiscal intermediary’s actions as contrary to law
under 42 U.S.C. § 1395oo(f)(1), and only after exhausting those claims
administratively. Finally, the Secretary argues that even if the district court
has the power to set aside “agency action” pursuant to the APA, the Regulation
itself is not such an “agency action,” and the district court may only regard the
refund demands as such.
Lion claims that once the Regulation’s validity was properly before the
district court pursuant to § 1395oo(f)(1), its review over the question was
governed by the APA, notwithstanding restrictions in the Medicare Act. See 5
U.S.C. § 706 (providing that “the reviewing court shall decide all relevant
questions of law” and shall “hold unlawful and set aside agency action” that was
“arbitrary, capricious, . . . or otherwise not in accordance with law” or “in excess
of statutory . . . authority”). It asserts that the promulgation of the Regulation
is itself “agency action” that the district court can set aside pursuant to a
prospective injunction.
The Secretary correctly notes that there is no general federal question
jurisdiction under 28 U.S.C. § 1331 in Medicare reimbursement cases. See Dr.
John T. MacDonald Found., 571 F.2d at 331. The district court may only hear
a claim and grant relief pursuant to the specific jurisdictional provisions of the
Medicare Act. See 42 U.S.C. § 1395oo(f)(1); Califano v. Sanders, 430 U.S. 99, 105
(1977) (holding that the APA provides no independent grant of subject matter
jurisdiction to review agency actions). The Medicare Act states that district
courts have jurisdiction to review “any action of the fiscal intermediary which
involves a question of law or regulations relevant to the matters in controversy
whenever the Board determines . . . that it is without authority to decide the
question.” 42 U.S.C. § 1395oo(f)(1). Each of these prerequisites to judicial
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review was met for FY06 and FY07—Lion was dissatisfied with the fiscal
intermediary’s calculations made pursuant to the Regulation and properly
obtained the PRRB’s determination that it was without authority to resolve the
question of the Regulation’s validity.
Once the question of the Regulation’s validity was before the district court,
the APA provided the district court with the authority to hold the Regulation
unlawful and set it aside. See 5 U.S.C. § 706. Because the question of the
Regulation’s validity was properly before the district court pursuant to 42 U.S.C.
§ 1395oo(f)(1), no statute precludes judicial review under the APA. See 5 U.S.C.
§ 701(a). The Secretary, however, cites a number of cases for the proposition
that a district court never has authority to provide prospective relief for
non-administratively exhausted years, even if it finds the underlying regulation
to be invalid. See Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 891 (1990); Hosp.
Ass’n of R.I. v. Sec’y of Health & Human Servs., 820 F.2d 533, 539–40 (1st Cir.
1987); Riley Hosp. & Benevolent Ass’n v. Bowen, 804 F.2d 302, 305 (5th Cir.
1986); Charter Med. Corp. v. Bowen, 788 F.2d 728, 732–35 (11th Cir. 1986);
Abington Mem’l Hosp. v. Heckler, 750 F.2d 242, 244 (3d Cir. 1984); Pac. Coast
Med. Enters. v. Harris, 633 F.2d 123, 137–39 (9th Cir. 1980).
We find that none of these cases compel the conclusion that the Regulation
itself cannot be the “agency action” challenged, or that the district court may not
set aside such an invalid regulation. In fact, the APA has defined “agency
action” to include “the whole or part of an agency rule.” See Nat’l Wildlife Fed’n,
497 U.S. at 882 (“The meaning of ‘agency action’ for purposes of § 702 is set forth
in 5 U.S.C. § 551(13) . . . which defines the term as ‘the whole or a part of an
agency rule, order, license, sanction, relief, or the equivalent or denial thereof,
or failure to act.’” (internal citations omitted)). In National Wildlife Federation,
the Supreme Court noted that a challenge to a specific order or regulation is
quite different than a “generic challenge” to a “program,” and therefore that the
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program of operations did not qualify as “agency action” within the meaning of
the APA. Id. at 890 & n.2. Here, however, Lion challenged the facial validity of
a specific regulation promulgated by the Secretary and enforced against Lion,
not simply a general and amorphous “program” of operations performed by an
agency.
Further, this Court’s decision in Riley does not preclude the district court’s
injunction. In Riley, we affirmed the district court’s finding that it was without
jurisdiction to compel the Secretary to pay interest for years in which the
plaintiff has not exhausted its claims before the PRRB. 804 F.2d at 305. This
relief would have required the district court to order the agency to compute
interest for years in which the plaintiff had not yet exhausted its claims. This
is distinct from the relief ordered by the district court here, which merely
forbade the Secretary from continuing to apply an invalid regulation. The other
cases cited by the Secretary also involve situations where the plaintiffs asked the
district court to affirmatively order reimbursement or interest payments for
unexhausted years. See Hosp. Ass’n of R.I., 820 F.2d at 539–40; Charter Med.
Corp., 788 F.2d at 732; Abington Mem’l Hosp., 850 F.2d at 243–44; Pac. Coast
Med. Enters., 633 F.2d at 138–39. In this case, the district court, acting
pursuant to the APA, merely enjoined enforcement of an invalid regulation
rather than making premature refund determinations for unexhausted years.
Here, Lion challenged the validity of a specific regulation, the
promulgation and enforcement of which qualifies as “agency action.” Further,
the question of the regulation’s validity was properly before the district court
pursuant to 42 U.S.C. § 1395oo(f)(1). Therefore, the district court had the
authority under § 706 of the APA to enjoin the Secretary from using the
Regulation to calculate Lion’s aggregate cap amount for any past, present, and
future year.
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2. Failure to Remand
Where an injunction is not based upon an error of law, this Court reviews
the injunction for an abuse of discretion. See Overstreet v. El Paso Disposal,
L.P., 625 F.3d 844, 850 (5th Cir. 2010).
The Secretary urges that the district court should not have ordered her to
refund to Lion all monies paid by Lion to the Medicare program pursuant to the
previously calculated repayment obligations for FY06 and FY07. She claims
that the only appropriate remedy is remand to the agency so that the PRRB can
recalculate Lion’s potential liability for refund payments using the proportional
method urged by Lion. Specifically, the Secretary points us to this Court’s
decision in Presbyterian Hospital of Dallas v. Harris, where we stated the
following:
Where an error of law has been corrected by a reviewing court, and
the only issues remaining in the case are questions which have not
yet been considered by the administrative agency but are
nevertheless within the agency’s authority, the appropriate action
is a remand to the agency so that it may exercise its authority.
638 F.2d 1381, 1389 (5th Cir. Unit A Mar. 1981). The Secretary states that the
PRRB must perform additional fact-finding and data collection in order for it to
recalculate Lion’s FY06 and FY07 refund liability.
Lion claims that to the extent such a remand would permit the Secretary
to retain Lion funds collected pursuant to an invalid regulation, such a remedy
should be rejected. It also claims that the Supreme Court’s decision in Bowen
v. Massachusetts stands for the proposition that the APA allows the district
court to order refund of all monies that Lion has paid because such relief does
not constitute money damages. See 487 U.S. 879, 893 (1988). Because the
district court properly set aside the Regulation, Lion argues, the injunction to
order a full refund of monies collected pursuant to it was proper in order to
effectuate full relief. Lion also notes that nothing in the district court’s
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judgment precludes further action by the Secretary, the PRRB, or the fiscal
intermediary with respect to issuing a new regulation which implements a strict
proportionality method of calculation, recalculating Lion’s repayment liability
amounts for FY06 and FY07, or issuing new repayment demands once such
calculations are performed.
As a general principle, “injunctive relief should be no more burdensome to
the defendant than necessary to provide complete relief to the plaintiffs.”
Califano v. Yamasaki, 442 U.S. 682, 702 (1979). Additionally, “a court of appeals
should remand a case to an agency for decision of a matter that statutes place
primarily in agency hands.” I.N.S. v. Orlando Ventura, 537 U.S. 12, 16 (2002).
Therefore, even if the APA provides authority for the district court to order the
Secretary to refund all monies paid by Lion for FY06 and FY07, we must
consider whether there are “questions which have not yet been considered by the
administrative agency but are nevertheless within the agency’s authority.”
Presbyterian Hosp., 638 F.2d at 1389.
Under the principle articulated in Yamasaki, the relief ordered by the
district court is broader and more burdensome than necessary to afford Lion full
relief. See 442 U.S. at 702. Even using Lion’s proportional calculation method,
it still owes a substantial amount of refund to the Secretary for FY06 and FY07.
Additionally, the determination of the amount of refund owed to Lion is a matter
properly within the agency’s authority. Therefore, the district court’s decision
to order a full refund rather than remanding for recalculation of the refund
amount was an abuse of discretion.
III. CONCLUSION
We join a unanimous group of district courts around the country in finding
that 42 C.F.R. § 418.309(b) is invalid, because it directly contradicts Congress’s
unambiguously expressed intent. Further, we find that the district court had
subject-matter jurisdiction to declare the Regulation invalid, set it aside, and
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Case: 10-10414 Document: 00511408113 Page: 17 Date Filed: 03/11/2011
No. 10-10414
enjoin the Secretary from enforcing it against Lion in the future. The district
court did abuse its discretion, however, in failing to remand to the agency to
recalculate Lion’s refund amount in proper accordance with 42 U.S.C.
§ 1395f(i)(2). We therefore direct the district court to remand this case to the
Secretary for proceedings consistent with this opinion.
AFFIRMED IN PART and REVERSED IN PART with DIRECTIONS TO
REMAND.
17