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.