United States Court of Appeals
For the First Circuit
No. 01-1614
JORDAN HOSPITAL, INC.,
Plaintiff, Appellant,
v.
DONNA E. SHALALA, ETC., ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Selya, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lynch, Circuit Judge.
Bruce A. Singal, with whom Paul M. Barrett, William C.
Athanas, and Donoghue, Barrett & Singal, P.C., were on brief for
appellant.
Anita Johnson, Assistant United States Attorney, with whom
James B. Farmer, United States Attorney, was on brief for
appellee.
January 10, 2002
STAHL, Senior Circuit Judge. Plaintiff-Appellant,
Jordan Hospital, Inc. ("Jordan"), filed this lawsuit challenging
the dismissal of its request for reclassification into a
neighboring geographic region. Success in obtaining
reclassification would have entitled Jordan to an additional
$1.8 million in Medicare reimbursements for the fiscal year in
question. The district court dismissed Jordan's complaint for
lack of subject matter jurisdiction under 28 U.S.C. § 1331, and
Jordan now appeals.
First, Jordan disputes the district court's conclusion
that judicial review of this administrative decision is
precluded by law. Second, Jordan challenges the validity of the
implementing regulations underlying the reclassification
process, see 42 C.F.R. § 412 et seq., as inconsistent with the
statutory scheme set forth in 42 U.S.C. § 1395ww, and alleges
that its procedural due process rights have been violated.
Finally, Jordan posits that the district court erred because the
statutory deadline for filing a reclassification application is
subject to the doctrine of equitable tolling. Finding all of
Jordan's arguments meritless, we affirm.
I.
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Jordan, a participating provider in the Medicare
program,1 is located in Plymouth, Massachusetts, but has
regularly applied, under the prospective payment system ("PPS"),
for reclassification to the Barnstable-Yarmouth (Cape Cod) area.
Under the PPS, reimbursement rates are determined by using
factors that include (1) the average standardized amount of
allowable individual hospital inpatient operating costs, and (2)
the area wage index applicable to the hospital.
Reclassification allows a hospital to utilize the standardized
operating costs or wage index, or both, of a neighboring region
if higher than the prevailing rate in its own geographic area,
to calculate its prospective reimbursement. A hospital
requesting reclassification must submit average hourly wage
("AHW") data obtained from the Health Care Financing
Administration ("HCFA") hospital wage survey, which is "used to
construct the wage index in effect for prospective payment
purposes during the fiscal year prior to the fiscal year for
which the hospital requests reclassification." 42 C.F.R. §
412.230(e)(2)(i)(A). The criteria for obtaining wage index
reclassification are set forth in 42 C.F.R. § 412.230(e), and
include, inter alia, a requirement that the hospital's AHW be at
1Medicare provides for the payment of inpatient hospital
and other health services furnished to eligible aged and
disabled individuals. See 42 U.S.C. § 1395 et seq.
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least 108% of the AHW of the hospitals in the area in which the
hospital is located, and the hospital's AHW be at least 84% of
the AHW of hospitals in the area to which it seeks to be
redesignated. Id. § 412.230(e)(1).
Prior to the promulgation of the final PPS rates for
an upcoming fiscal year, HCFA is required to adjust the rates to
incorporate the effects of any reclassifications that have been
approved. The agency's initial task is to recompute the wage
index for such year. Once the necessary wage index adjustments
have been completed, the agency must ensure that the effects of
the reclassification process are "budget neutral."2
Pursuant to 42 U.S.C. § 1395ww(d)(10), the Medicare
Geographic Classification Review Board ("Board") is authorized
to rule on applications submitted by hospitals seeking
reclassification to an adjacent geographical area. A hospital
seeking reclassification for a fiscal year must submit its
application to the Board "not later than the first day of the
13-month period ending on September 30 of the preceding fiscal
year." Id. § 1395ww(d)(10)(C)(ii). The Board is required to
render its decision on the application "not later than 180 days
2The "budget neutrality" principle requires that HCFA make
any adjustments necessary to ensure that the aggregate payments
to be made under the PPS as a result of any reclassifications
are equal to the aggregate payments that would have been made
absent these reclassifications. 42 U.S.C. § 1395ww(d)(8)(D).
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after [this] deadline . . . ." Id. § 1395ww(d)(10)(C)(iii)(I).
If dissatisfied with the Board's decision, a hospital has 15
days to appeal the decision to the Administrator of HCFA, who is
required to issue a decision on the appeal "not later than 90
days after the appeal is filed." Id. §
1395ww(d)(10)(C)(iii)(II). HCFA's decision, which becomes the
final decision of the Secretary of Health and Human Services
("HHS"),3 "shall be final and shall not be subject to judicial
review." Id.
Jordan filed its application for reclassification, for
wage-index purposes, to the Cape Cod Massachusetts Metropolitan
Statistical Area ("Cape Cod MSA") for Fiscal Years (“FYs”) 1998
and 1999 in a timely manner and these requests were approved by
the Board. As a result, Medicare reimbursed Jordan for those
fiscal years according to the wage-index value calculated for
the Cape Cod MSA rather than that of Jordan's own geographic
area. However, Jordan did not timely file a request for
3
Although the statute states that the Secretary of Health
and Human Services (“Secretary”) shall hear any appeals from
adverse decisions by the Board, the Secretary has delegated this
function to the Administrator of HCFA. See 55 Fed. Reg. 36,766
(1990), as amended June 4, 1991 (“The Secretary has delegated
this authority to the HCFA Administrator in cases in which an
unsuccessful hospital appeals the MGCRB's decision. Thus, in
these cases the Administrator's review is the final Department
review of MGCRB decisions provided for in section
1886(d)(10)(C)(iii)(II) of the Act.”); see also 57 Fed. Reg.
39,826 (1992).
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reclassification to the Cape Cod MSA for FY 2000 by the
statutory September 1, 1998 deadline because the hourly wage
data published in the July 31, 1998 Federal Register indicated
that Jordan did not qualify.
As it turned out, the wage data published in the July
31, 1998 Federal Register had been incorrectly calculated
because the Cape Cod Hospital had submitted inaccurate wage data
to HCFA. Upon learning of this error, Jordan filed a
reclassification application for FY 2000 on August 23, 1999,
almost a year after the expiration of the statutory filing
deadline and 24 days after the publication of the final PPS
rates for FY 2000. On August 24, 1999, the Board dismissed
Jordan's application on the basis that the request was untimely,
rendering Jordan ineligible to receive the additional $1.8
million in Medicare program reimbursement to which it would have
been entitled had it been reclassified. Jordan appealed, and
the HCFA Administrator affirmed the dismissal on September 28,
1999. On October 7, 1999, Jordan requested that the
Administrator amend her decision, but this request was denied on
October 12, 1999.
On April 7, 2000, after exhausting all administrative
remedies, Jordan filed a complaint in the district court,
alleging a violation of its due process rights under the Fifth
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and the Fourteenth Amendments, and seeking a declaration that
HCFA's rules and regulations are invalid, both facially and as
applied to it. On August 18, 2000, the defendants filed a Rule
12(b)(1) motion to dismiss on the ground that the district court
lacked subject matter jurisdiction under 28 U.S.C. § 1331. On
March 21, 2001, the district court granted the defendants'
motion. Jordan filed a timely notice of appeal.
II.
We review de novo a district court's dismissal for lack
of subject matter jurisdiction. Corrada Betances v. Sea-Land
Serv., Inc., 248 F.3d 40, 44 (1st Cir. 2001).
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A.
Defendants argued, and the district court agreed, that
Jordan's claim was barred by the "no review" provision of the
Medicare Act, 42 U.S.C. § 1395ww(d)(10)(C)(iii)(II), which
specifically states that "[t]he decision of the [Administrator]
shall be final and shall not be subject to judicial review." On
appeal, Jordan contends that § 1395ww(d)(10)(C)(iii)(II), when
examined in conjunction with related statutes and regulations,
does not bar its claim, emphasizing the fact that there is a
"strong presumption that Congress intends judicial review of
administrative action." Bowen v. Mich. Acad. of Family
Physicians, 476 U.S. 667, 670 (1986).
This presumption, however, is not irrebuttable, and can
be overcome when specific statutory language or legislative
history indicates otherwise, or where congressional intent to
preclude judicial review is "'fairly discernible' in the detail
of the legislative scheme." Id. at 673 (quoting Block v. Cmty.
Nutrition Inst., 467 U.S. 340, 349, 351 (1984)). To prove that
Congress has shielded administrative decisions from judicial
scrutiny, an agency must show by “clear and convincing evidence”
that this was Congress’s intent. Abbott Labs. v. Gardner, 387
U.S. 136, 141 (1967) (internal quotations omitted). Jordan
insists that HCFA has not satisfied this heavy burden. We
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disagree. The unequivocal language of the "no review" provision
clearly indicates that Congress intended to preclude judicial
review of this matter. Section 1395ww(d)(10)(C)(iii)(II)
explicitly provides that reclassification decisions "shall not
be subject to judicial review." By using such plain and
unambiguous language, Congress made its intent perfectly clear.
Furthermore, the rationale for nonreviewability is eminently
logical. First, HCFA's strict, yet manageable, deadlines ensure
that each hospital's classification for a fiscal year is firmly
in place in time to allow HCFA to make any necessary wage index
revisions and budget neutral adjustments. See 62 Fed. Reg.
45,966, 45,987 (1997). Second, adherence to these strict dates
allows HCFA to publish the rates in final form sixty days prior
to the start of a fiscal year. See 56 Fed. Reg. 25,458, 25,466
(1991) ("[C]ongress specified these very tight time frames in
order to ensure that the effects of reclassifications could be
reflected in the new standardized amounts and wage index values
. . . that go into effect on October 1 of each year.").
Subjecting the Administrator's untimeliness decision to judicial
review would frustrate this expressly articulated congressional
interest in finality, which is particularly crucial for planning
purposes.
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In a further attempt to bypass the "no review"
provision, Jordan posits that there is a material difference
between "decisions" on the merits and "dismissals" of
applications for untimeliness, rendering "dismissals" reviewable
even though all other "decisions" are immune from judicial
scrutiny. We reject Jordan's attempt to draw a meaningful
distinction between these two terms. In the section outlining
the procedures for obtaining administrative review of an adverse
ruling by the Board, the regulations offer the right to appeal
either a Board “decision” on the merits, or a “dismissal” for
untimeliness, to the Administrator. See 42 C.F.R. § 412.278(a)
(“A hospital . . . dissatisfied with the MGCRB's decision
regarding its geographic designation may request the
Administrator to review the MGCRB decision. (A hospital . . .
may also request that the Administrator review the MGCRB's
dismissal of an application as untimely filed or incomplete, as
provided in § 412.256(d).)”). A decision by the Administrator
issued pursuant to § 412.278(a) is a "final Departmental
decision . . . . not subject to judicial review." Id. §
412.278(f)(3). Consequently, there is no basis for any
distinction between the terms “dismissal” and “decision.”
Moreover, we note as a policy matter that the distinction Jordan
proposes would not only disrupt HCFA’s efforts to review
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applications promptly but would also undermine its ability to
publish final payment rates under the PPS in a timely manner.
Accordingly, we find that Jordan is precluded from seeking
judicial review of the dismissal of its application for
redesignation.4
4 Jordan also alleges that it is entitled to judicial
review of its claim under the Administrative Procedure Act, 5
U.S.C. § 701 et seq. ("APA"). "In the absence of a contrary
statutory provision, the APA entitles a person aggrieved by a
final agency action to judicial review . . . ." Conservation
Law Found., Inc. v. Busey, 79 F.3d 1250, 1260-61 (1st Cir. 1996)
(citing inter alia 5 U.S.C. § 702). The APA does not, however,
provide “an independent source of subject matter jurisdiction.”
Id. In this case, § 1395ww clearly precludes judicial review of
these types of administrative decisions, and the regulations are
consistent with that mandate. Therefore, the APA does nothing
to bolster Jordan’s position.
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B.
In the face of this clear congressional mandate against
review, Jordan lodges a constitutional challenge, arguing that
its procedural due process rights were violated because it was
denied an opportunity to be heard on the merits of its
reclassification application. More specifically, Jordan alleges
that HCFA's publication of erroneous information gave it
inadequate notice of its eligibility, thus causing Jordan to
file late. Defendants, on the other hand, claim that Jordan has
merely attempted to "cloak" its statutory argument with a
constitutional one, and insist that, although a gate-closing
statute may not preclude consideration of a colorable
constitutional claim, a party may not avoid an unambiguous no
judicial review provision simply by asserting a challenge
"cloaked in constitutional terms." Sugrue v. Derwinski, 26 F.3d
8, 11 (2d Cir. 1994).
To prevail on its procedural due process claim, Jordan
must show both that it had a recognized liberty or property
interest, 5 and was deprived of that interest without adequate
5
To date, no federal court has decided whether a physician
who provides Medicare services has any type of property interest
in receiving payment for those services. The Second Circuit has
suggested, in cases involving state Medicaid providers, that
some form of property interest may exist under these
circumstances. See Tekkno Labs. v. Perales, 933 F.2d 1093,
1099-1100 (2d Cir. 1991) (Oakes, C.J., concurring) (suggesting
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notice or a meaningful opportunity to be heard. Mathews v.
Eldridge, 424 U.S. 319, 332-35 (1976). Assuming, without
deciding, that Jordan has a legitimate property interest in
receiving reimbursement payments,6 we must then determine whether
Jordan raises a colorable constitutional claim. We find that it
has not.
HCFA's regulatory scheme provides hospitals with a
meaningful opportunity to be heard on reclassification, and
accords them sufficient procedural protections. HCFA's
publication of erroneous data, while unfortunate, did not
deprive Jordan of its rights. HCFA takes significant steps to
insure that the wage data obtained from hospitals subject to PPS
are reasonably accurate. See 63 Fed. Reg. 25,576, 25,587
(1998); 63 Fed. Reg. 40,954, 40,966-74 (1998) (discussing the
development of the FY 1999 wage index). Jordan could not
that Medicaid provider has a property interest in reimbursement
for Medicaid services already performed) (quoting Oberlander v.
Perales, 740 F.2d 116, 120 (2d Cir. 1984)); but see Yorktown
Med. Lab., Inc. v. Perales, 948 F.2d 84, 89 (2d Cir. 1991)
(holding Medicaid provider did not have property interest in
payments under Medicaid Act or New York Department of Social
Service regulations for claims that were pending investigation).
6
But see Painter v. Shalala, 97 F.3d 1351, 1358 (10th Cir.
1996) ("Although [a physician] may have a recognizable property
interest in receiving payment in accordance with the fee
schedule . . . there is nothing in the Medicare Act which would
have led a reasonable physician to believe that he might be
entitled to a greater payment than was outlined in the
Secretary’s fee schedule.”).
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realistically have assumed that the wage index information would
always be accurate, and that if an error were found, it would be
remedied in time to permit a reclassification request. Cf. Your
Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449, 455-
56 (1999) ("given the administrative realities . . . . [t]he few
dozen fiscal intermediaries often need three years within which
to discover overpayments in the tens of thousands of
[reimbursement determinations] that they issue"). If anyone is
to "blame" in this case, it would seem to be Cape Cod Hospital
for reporting incorrect data, rather than HCFA. Accordingly, we
find that Jordan’s constitutional challenge to the reimbursement
scheme was properly rejected by the district court.
C.
Lastly, Jordan asserts that the court should rely upon
equitable tolling principles to excuse its tardiness. Jordan
relies heavily upon Bowen v. City of New York, 476 U.S. 467
(1986), a class action challenging an internal policy of the
Secretary of Health and Human Services that had resulted in the
denial or termination of the class members' benefits.
Specifically, the Court addressed the issue of whether equitable
tolling applied to save the claims of class members that had
been filed outside the 60-day time limit as provided for by 42
U.S.C. § 405(g). Id. at 480. The Court found that equitable
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tolling was permissible in that case because it would be fully
consistent with the overall congressional purpose (i.e.,
ensuring that disabled citizens received their benefits), and
that tolling would promote the interests of both the claimants
and the government. Id. at 480-81.
Bowen, however, does not bear the weight of Jordan's
argument in this case. First, the statute in Bowen mandated the
action be filed "within sixty days . . . or within such further
time as the Secretary may allow." Id. at 472 n.3. Although the
statute in this case afforded Jordan a longer time to file an
application for reclassification, it did not provide for
discretionary extensions, except for "good cause." 42 C.F.R. §
412.256(c)(2). Jordan still would have had to submit its
application by September 1 to be eligible for any discretionary
extension for good cause, which it did not do. Second, while
the statutory language in Bowen expressed Congress's clear
intent to allow tolling in some cases, in this case tolling
would be antithetical to the accomplishment of the statute's
objectives. Congress apparently found it preferable to allow an
occasional unfairness in an individual case to go unaddressed in
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order to maintain a more workable hospital reclassification
process as a whole.7
An examination of two pivotal Supreme Court decisions
further reinforces our view that equitable tolling would be
inappropriate here. In Irwin v. Dep't of Veterans Affairs, 498
U.S. 89 (1990), the Court considered the timeliness of an
employee's lawsuit charging his government employer with
discrimination, in violation of Title VII of the Civil Rights
Act of 1964, 42 U.S.C. § 2000e et seq. In considering Irwin’s
claims, the Court made clear that the "same rebuttable
presumption of equitable tolling applicable to suits against
private defendants should also apply to suits against the United
States." Irwin, 498 U.S. at 95-96. The Court reached this
decision after determining that a rule making equitable tolling
applicable to both public and private defendants alike was
“likely to be a realistic assessment of legislative intent as
7
We note that Cape Cod Hospital's reporting mistakes may,
in fact, have erroneously rendered Jordan eligible for
reclassification in FY 1999. Consistent with its interest in
finality, however, HCFA has apparently not attempted to recover
any excessive reimbursements paid to Jordan for that year.
Jordan's underpayment in FY 2000 would seem to compensate
somewhat for any windfall it enjoyed in FY 1999.
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well as a practically useful principle of interpretation.” Id.
at 95.8
In United States v. Brockamp, 519 U.S. 347 (1997), the
Supreme Court reviewed the case of a taxpayer who had submitted
an administrative refund claim several years after the
applicable filing period set forth in § 6511 of the Internal
Revenue Code of 1986 had elapsed. The Court considered whether,
under Irwin, the statutory filing deadline could be extended for
an "equitable" reason, which in the petitioner's case was the
fact that his mental disability had caused the delay. Id. at
348. The Court concluded that, in contrast with its generosity
for Title VII claims, Congress did not intend for the "equitable
tolling" doctrine to apply to § 6511's time limitations for
filing tax refund claims. Id. at 352-53. The Court noted that
§ 6511 sets forth its time limitations in a highly detailed and
technical manner, reiterates them several times in different
ways, imposes substantive limitations, and delineates explicit
exceptions to its basic time limits, and equitable tolling is
not included among them. Id. at 350-52.
8
The Court ultimately ruled, however, that equitable
tolling was inappropriate in Irwin’s case because his late
filing was caused by “what [was] at best a garden variety claim
of excusable neglect.” Irwin, 498 U.S. at 96.
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Likewise, in this case, there are strong reasons to
believe that Congress did not want the equitable tolling
doctrine to apply. First, the statute states in an "unusually
emphatic form," id. at 350, that a "hospital requesting a change
in geographic classification . . . for a fiscal year shall
submit its application to the Board not later than the first day
of the 13-month period ending on September 30 of the preceding
fiscal year." 42 U.S.C. § 1395ww(d)(10)(C)(ii). Nothing in
this language can be construed as creating or even inferring an
implied equitable tolling exception. Irwin, 498 U.S. at 352;
see also Becton Dickinson & Co. v. Wolckenhauer, 215 F.3d 340,
350 (3d Cir. 2000) ("the emphatic, non-permissive nature of the
[statutory] language . . . suggests that the time limitation at
issue cannot be equitably tolled"). We find it implausible that
Congress would have wanted the courts to expand the statute's
limitation period whenever equitable concerns were present. See
United States v. Beggerly, 524 U.S. 38, 48 (1998) ("Equitable
tolling is not permissible where it is inconsistent with the
text of the relevant statute."). Second, §
1395ww(d)(10)(C)(iii)(I) requires the Board to decide a
reclassification request within a strict 180-day time frame in
order to avoid eroding HCFA's ability to incorporate the final
rates into the wage-index revisions and budget-neutral
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adjustments. Reading an "equitable tolling" exception into the
statute would also create "serious administrative problems" for
the agency. Brockamp, 519 U.S. at 353. Therefore, we conclude
that equitable tolling is not available to Jordan in this case.
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III.
For the foregoing reasons, we affirm the district
court's dismissal of Jordan’s complaint for lack of subject
matter jurisdiction.
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