Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 1 of 27 Page ID #:1
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`Alan J. Sedley, Esq. Bar# 103801
`asedley@sedleyhealthlaw.com
`ALAN J. SEDLEY LAW CORPORATION
`18880 Douglas, Suite 404
`Irvine, CA 92612
`Phone: 818.601.0098
`
`Attorneys for Plaintiffs
`
`
`
`UNITED STATES DISTRICT COURT
`FOR THE CENTRAL DISTRICT OF CALIFORNIA
`
`
`
`Case No.
`
`
`PLAINTIFFS’
`COMPLAINT FOR
`DECLARATORY,
`RESTITUTIONARY,
`AND INJUNCTIVE
`RELIEF AND FOR SUMS
`DUE UNDER THE
`MEDICARE ACT FROM
`FINAL PRRB DECISION
`IN CASES 13-3155GC et
`al.
`
`
`CLEVELAND CLINIC;
`PARADISE VALLEY HOSPITAL;
`ENCINO HOSPITAL MEDICAL CENTER;
`GLENDORA OAKS BEHAVIORAL HEALTH
`HOSPITAL;
`GARDEN GROVE HOSPITAL & MEDICAL
`CENTER;
`WEST ANAHEIM MEDICAL CENTER;
`HUNTINGTON BEACH HOSPITAL;
`LA PALMA INTERCOMMUNITY HOSPITAL;
`CHINO VALLEY MEDICAL CENTER;
`SAN DIMAS COMMUNITY HOSPITAL;
`DESERT VALLEY HOSPITAL;
`CENTINELA HOSPITAL MEDICAL CENTER;
`SHERMAN OAKS HOSPITAL;
`ALVARADO HOSPITAL MEDICAL CENTER;
`MONTCLAIR HOSPITAL MEDICAL CENTER;
`SHASTA REGIONAL MED CENTER;
`INDIAN RIVER MEDICAL CENTER;
`SOUTHERN REGIONAL MED CENTER;
`THE QUEEN’S MEDICAL CENTER;
`
`NORTH HAWAII COMMUNITY HOSPITAL;
`SAINT JOHN HOSPITAL;
`PROVIDENCE MEDICAL CENTER;
`LAFAYETTE GENERAL MEDICAL CENTER;
`1
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 2 of 27 Page ID #:2
`Case 2:22-cv-02648 Document1 Filed 04/20/22 Page 2o0f27 Page ID #:2
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`NemNeNoreNeeNuNeeNeeNeeeNeeNeNeeeeNeNeeeeeeeeeeNeeeeeeNee”eeeeee”ee”ee”ee”ee”eeee”ee”ee”ee”ee”ee”ee”ee”ee”
`
`UNIVERSITY HOSPITALS & CLINICS;
`UNIVERSITY HOSPITALS & CLINICS;
`ACADIA GENERAL HOSPITAL;
`ACADIA GENERAL HOSPITAL;
`WILLIS KNIGHTON MEDICAL CENTER;
`WILLIS KNIGHTON MEDICAL CENTER;
`WILLIS KNIGHTON BOSSIER HEALTH
`WILLIS KNIGHTON BOSSIER HEALTH
`CENTER;
`CENTER;
`LAKE HURON MEDICAL CENTER;
`LAKE HURON MEDICAL CENTER;
`SAINT MARY’S REGIONAL MED CENTER;
`SAINT MARY’S REGIONAL MED CENTER;
`SAINT MICHAEL’S MEDICAL CENTER,
`SAINT MICHAEL’S MEDICAL CENTER,
`INC.;
`INC.;
`AKRON GENERAL MEDICAL CENTER;
`AKRON GENERAL MEDICAL CENTER;
`FAIRVIEW HOSPITAL;
`FAIRVIEW HOSPITAL;
`EUCLID HOSPITAL;
`EUCLID HOSPITAL;
`LUTHERAN HOSPITAL;
`LUTHERAN HOSPITAL;
`HURON HOSPITAL;
`HURON HOSPITAL;
`MARYMOUNTHOSPITAL;
`MARYMOUNT HOSPITAL;
`SOUTH POINTE HOSPITAL;
`SOUTH POINTE HOSPITAL;
`LAKEWOOD HOSPITAL;
`LAKEWOOD HOSPITAL;
`HILLCREST HOSPITAL;
`HILLCREST HOSPITAL;
`LOWER BUCKS HOSPITAL;
`LOWER BUCKS HOSPITAL;
`SUBURBAN COMMUNITY HOSPITAL;
`SUBURBAN COMMUNITY HOSPITAL;
`ROXBOROUGH MEMORIAL HOSPITAL;
`ROXBOROUGH MEMORIAL HOSPITAL;
`LANDMARKMEDICAL CENTER;
`LANDMARK MEDICAL CENTER;
`PAMPA REGIONAL MED CENTER;
`PAMPA REGIONAL MED CENTER;
`KNAPP MEDICAL CENTER;
`KNAPP MEDICAL CENTER;
`MISSION REGIONAL MED CENTER;
`MISSION REGIONAL MED CENTER;
`DALLAS MEDICAL CENTER;
`DALLAS MEDICAL CENTER;
`HARLINGEN MEDICAL CENTER;
`HARLINGEN MEDICAL CENTER;
`PROVIDENCE ALASKA MEDICAL CENTER;
`PROVIDENCE ALASKA MEDICAL CENTER;
`LITTLE COMPANY OF MARYHOSPITAL —
`LITTLE COMPANY OF MARY HOSPITAL –
`SAN PEDRO;
`SAN PEDRO;
`SAN GABRIEL VALLEY MEDICAL CENTER;
`SAN GABRIEL VALLEY MEDICAL CENTER;
`AMH ANAHEIM REGIONAL MED CENTER;
`AMH ANAHEIM REGIONAL MED CENTER;
`
`PROVIDENCE SAINT JOSEPH MEDICAL
`PROVIDENCE SAINT JOSEPH MEDICAL
`CENTER;
`CENTER;
`PROVIDENCE HOLY CROSS MEDICAL
`PROVIDENCE HOLY CROSS MEDICAL
`CENTER;
`CENTER;
`PROVIDENCEST. JOHN’S HOSPITAL;
`PROVIDENCE ST. JOHN’S HOSPITAL;
`LITTLE COMPANY OF MARYHOSPITAL —
`LITTLE COMPANY OF MARY HOSPITAL –
`TORRANCE;
`TORRANCE;
`
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 3 of 27 Page ID #:3
`Case 2:22-cv-02648 Document1 Filed 04/20/22 Page 3of27 Page ID#:3
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`WHITTIER HOSPITAL MEDICAL CENTER;
`WHITTIER HOSPITAL MEDICAL CENTER;
`MONTEREY PARK HOSPITAL;
`MONTEREY PARK HOSPITAL;
`GARFIELD MEDICAL CENTER;
`GARFIELD MEDICAL CENTER;
`GREATER EL MONTE COMMUNITY
`GREATER EL MONTE COMMUNITY
`HOSPITAL;
`HOSPITAL;
`TARZANA PROVIDENCE HEALTH SYSTEM;
`TARZANA PROVIDENCE HEALTH SYSTEM;
`CHARLOTTE HUNGERFORD HOSPITAL;
`CHARLOTTE HUNGERFORD HOSPITAL;
`MIDSTATE MEDICAL CENTER;
`MIDSTATE MEDICAL CENTER;
`WINDHAM COMM MEMORIAL HOSPITAL
`WINDHAM COMM MEMORIAL HOSPITAL
`& HATCH HOSPITAL;
`& HATCH HOSPITAL;
`WILLIAM W. BACKUS HOSPITAL;
`WILLIAM W. BACKUS HOSPITAL;
`HARTFORD HOSPITAL;
`HARTFORD HOSPITAL;
`THE HOSPITAL OF CENTRAL
`THE HOSPITAL OF CENTRAL
`CONNECTICUT (NEW BRITAIN GENERAL
`CONNECTICUT (NEW BRITAIN GENERAL
`HOSPITAL);
`HOSPITAL);
`ELBERT MEMORIAL HOSPITAL;
`ELBERT MEMORIAL HOSPITAL;
`COVENANT MEDICAL CENTER;
`COVENANT MEDICAL CENTER;
`VIA CHRISTI HOSPITAL IN PITTSBURG;
`VIA CHRISTI HOSPITAL IN PITTSBURG;
`VIA CHRISTI REGIONAL MED CENTER;
`VIA CHRISTI REGIONAL MED CENTER;
`ST. LUKE’S CUSHING;
`ST. LUKE’S CUSHING;
`MERCY REGIONAL HEALTH CENTER;
`MERCY REGIONAL HEALTH CENTER;
`ST. LUKE’S NORTHLAND HOSPITAL;
`ST. LUKE’S NORTHLAND HOSPITAL;
`ST. LUKE’S HOSPITAL OF KANSASCITY;
`ST. LUKE’S HOSPITAL OF KANSAS CITY;
`ST. LUKE’S EAST HOSPITAL;
`ST. LUKE’S EAST HOSPITAL;
`SAINT PATRICK HOSPITAL;
`SAINT PATRICK HOSPITAL;
`SCOTLAND MEMORIAL HOSPITAL;
`SCOTLAND MEMORIAL HOSPITAL;
`HARRIS REGIONAL HOSPITAL,INC.;
`HARRIS REGIONAL HOSPITAL, INC.;
`CLEVELAND COUNTY HEALTHCARE
`CLEVELAND COUNTY HEALTHCARE
`SYSTEM;
`SYSTEM;
`KINGS MOUNTAIN HOSPITAL;
`KINGS MOUNTAIN HOSPITAL;
`WILKES REGIONAL MED CENTER;
`WILKES REGIONAL MED CENTER;
`
`COLUMBUS REGIONAL MEDICAL CENTER;
`COLUMBUS REGIONAL MEDICAL CENTER;
`GRACE HOSPITAL,INC.;
`GRACE HOSPITAL, INC.;
`ANSON HEALTHCARE;
`ANSON HEALTHCARE;
`MERCY HOSPITAL,INC.;
`MERCY HOSPITAL, INC.;
`CAROLINAS MEDICAL CENTER;
`CAROLINAS MEDICAL CENTER;
`STANLY REGIONAL MED CENTER;
`STANLY REGIONAL MED CENTER;
`UNION MEMORIAL REGIONAL MED
`UNION MEMORIAL REGIONAL MED
`CENTER;
`CENTER;
`
`3
`3
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 4 of 27 Page ID #:4
`Case 2:22-cv-02648 Document1 Filed 04/20/22 Page 4of27 Page ID#:4
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`CMS — LINCOLN;
`CMS – LINCOLN;
`MURPHY MEDICAL CENTER;
`MURPHY MEDICAL CENTER;
`CMC — UNIVERSITY;
`CMC – UNIVERSITY;
`HAYWOOD REGIONAL MED CENTER;
`HAYWOOD REGIONAL MED CENTER;
`ASANTE THREE RIVERS MED CENTER;
`ASANTE THREE RIVERS MED CENTER;
`PROVIDENCE SAINT VICENT MED
`PROVIDENCE SAINT VICENT MED
`CENTER;
`CENTER;
`ASANTE ROGUE REGIONAL MED CENTER
`ASANTE ROGUE REGIONAL MED CENTER
`(ROGUE VALLEY MEDICAL CENTER);
`(ROGUE VALLEY MEDICAL CENTER);
`PROVIDENCE NEWBERG MED CENTER;
`PROVIDENCE NEWBERG MED CENTER;
`WILLIAMETTE FALLS HOSPITAL;
`WILLIAMETTE FALLS HOSPITAL;
`PROVIDENCE PORTLAND MED CENTER;
`PROVIDENCE PORTLAND MED CENTER;
`PROVIDENCE MEDFORD MED CENTER;
`PROVIDENCE MEDFORD MED CENTER;
`ANMED HEALTH;
`ANMED HEALTH;
`BON SECOURSST. FRANCIS XAVIER;
`BON SECOURS ST. FRANCIS XAVIER;
`ROPER HOSPITAL,INC.;
`ROPER HOSPITAL, INC.;
`MOUNT PLEASANT HOSPITAL;
`MOUNT PLEASANT HOSPITAL;
`UNICOI COUNTY MEMORIAL HOSPITAL;
`UNICOI COUNTY MEMORIAL HOSPITAL;
`WELLMONTBRISTOL REGIONAL MED
`WELLMONT BRISTOL REGIONAL MED
`CENTER;
`CENTER;
`HOLSTON VALLEY MED CENTER;
`HOLSTON VALLEY MED CENTER;
`SYCAMORE SHOALS HOSPITAL;
`SYCAMORE SHOALS HOSPITAL;
`WELLMONT HAWKINS COUNTY
`WELLMONT HAWKINS COUNTY
`MEMORIAL HOSPITAL;
`MEMORIAL HOSPITAL;
`JOHNSON CITY MEDICAL CENTER;
`JOHNSON CITY MEDICAL CENTER;
`JOHNSON CITY SPECIALITY HOSPITAL;
`JOHNSON CITY SPECIALITY HOSPITAL;
`INDIAN PATH MEDICAL CENTER;
`INDIAN PATH MEDICAL CENTER;
`FRANKLIN WOODS COMMUNITY
`FRANKLIN WOODS COMMUNITY
`HOSPITAL;
`HOSPITAL;
`THE METHODIST HOSPITAL;
`THE METHODIST HOSPITAL;
`SAN JACINTO METHODIST HOSPITAL;
`SAN JACINTO METHODIST HOSPITAL;
`METHODIST SUGAR LAND HOSPITAL;
`METHODIST SUGAR LAND HOSPITAL;
`METHODIST WILLOWBROOKHOSPITAL;
`METHODIST WILLOWBROOK HOSPITAL;
`NORTON COMMUNITY HOSPITAL;
`NORTON COMMUNITY HOSPITAL;
`RUSSELL COUNTY MEDICAL CENTER;
`RUSSELL COUNTY MEDICAL CENTER;
`LEE REGIONAL MED CENTER;
`LEE REGIONAL MED CENTER;
`MOUNTAIN VIEW REGIONAL MED
`MOUNTAIN VIEW REGIONAL MED
`CENTER;
`CENTER;
`SMITH COUNTY MEMORIAL HOSPITAL;
`SMITH COUNTY MEMORIAL HOSPITAL;
`
`—_4_4)_4_4_444NmNeNoreNeeNeeNeNeNeNeNeeNeeNeeeNeeNeeeeee”eeeeeeee”eeee”ee”ee”ee”ee”ee”ee”ee”ee”
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`

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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 5 of 27 Page ID #:5
`Case 2:22-cv-02648 Document1 Filed 04/20/22 Page5of27 PageID#:5
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`_4_4_4_4)_4_4)_4_44)_4)_4_4)_4)_4>—4
`CWOHNTDNDNNnBWNY
`NoweNeNoreNeeNeeNeNeeNeeNeeNeeNeeNeeeeee”eeee”ee”ee”ee”ee”ee”ee”ee”
`
`JOHNSTON MEMORIAL HOSPITAL;
`)
`JOHNSTON MEMORIAL HOSPITAL;
`LONESOME PINE HOSPITAL;
`)
`LONESOME PINE HOSPITAL;
`SAINT MARY MEDICAL CENTER;
`)
`SAINT MARY MEDICAL CENTER;
`PROVIDENCE REGIONAL MEDICAL
`)
`PROVIDENCE REGIONAL MEDICAL
`CENTER;
`)
`CENTER;
`PROVIDENCE SAINT PETER HOSPITAL;
`)
`PROVIDENCE SAINT PETER HOSPITAL;
`SWEDISH MEDICAL CENTER / CHERRY
`)
`SWEDISH MEDICAL CENTER / CHERRY
`HILL;
`
`)
`HILL;
`STEVENS HEALTHCARE;
`
`)
`STEVENS HEALTHCARE;
`SWEDISH MEDICAL CENTER/ FIRST HILL;
`
`)
`SWEDISH MEDICAL CENTER / FIRST HILL;
`SACRED HEART MEDICAL CENTER;
`SACRED HEART MEDICAL CENTER;
`)
`
`KADLEC MEDICAL CENTER;
`
`KADLEC MEDICAL CENTER; )
`
`HOLY FAMILY HOSPITAL;
`HOLY FAMILY HOSPITAL;
`)
`
`PROVIDENCE HEALTH & SERVICES;
`PROVIDENCE HEALTH & SERVICES;
`)
`
`WEST VIRGINIA UNIVERSITY;
`WEST VIRGINIA UNIVERSITY;
`)
`
`UNITED HOSPITAL CENTER;
`UNITED HOSPITAL CENTER;
`)
`
`CITY HOSPITAL;
`CITY HOSPITAL;
`
`ST. FRANCIS HOSPITAL;
`ST. FRANCIS HOSPITAL;
`ALL SAINTS MED CENTER (WHEATON
`ALL SAINTS MED CENTER (WHEATON
`FRANSISCAN HEALTHCARE);
`FRANSISCAN HEALTHCARE);
`SAINT JOSEPH’S REGIONAL MED CENTER;
`SAINT JOSEPH’S REGIONAL MED CENTER;
`METHODIST WEST HOUSTON HOSPITAL;
`METHODIST WEST HOUSTON HOSPITAL;
`YALE-NEW HAVEN HOSPITAL SAINT
`YALE-NEW HAVEN HOSPITAL SAINT
`RAPHAEL CAMPUS;
`RAPHAEL CAMPUS;
`LAWRENCE & MEMORIAL HOSPITAL;
`LAWRENCE & MEMORIAL HOSPITAL;
`BRIDGEPORT HOSPITAL;
`BRIDGEPORT HOSPITAL;
`YALE-NEW HAVEN HOSPITAL;
`YALE-NEW HAVEN HOSPITAL;
`NORTH OAKS MEDICAL CENTER, LLC;
`NORTH OAKS MEDICAL CENTER, LLC;
`SHANNON MEDICAL CENTER;
`SHANNON MEDICAL CENTER;
`DALLAS REGIONAL MEDICAL CENTER;
`DALLAS REGIONAL MEDICAL CENTER;
`MONROEREGIONAL HOSPITAL;
`MONROE REGIONAL HOSPITAL;
`GARDEN CITY HOSPITAL;
`GARDEN CITY HOSPITAL;
`COMMUNITY HEALTH CENTER OF
`COMMUNITY HEALTH CENTER OF
`BRANCH COUNTY;
`BRANCH COUNTY;
`LIMA MEMORIAL HEALTH SYSTEM;
`LIMA MEMORIAL HEALTH SYSTEM;
`METROHEALTH MEDICAL CENTER;
`METROHEALTH MEDICAL CENTER;
`THE TOLEDO HOSPITAL;
`THE TOLEDO HOSPITAL;
`FLOWERHOSPITAL;
`FLOWER HOSPITAL;
`UH PORTAGE MEDICAL CENTER;
`UH PORTAGE MEDICAL CENTER;
`UH ELYRIA MEDICAL CENTER;
`UH ELYRIA MEDICAL CENTER;
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`5
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 6 of 27 Page ID #:6
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`MEMORIAL HOSPITAL;
`BAY PARK COMMUNITY HOSPITAL;
`ASPIRUS WAUSAU HOSPITAL;
`YAVAPAI REGIONAL MED CENTER – EAST;
`PARKVIEW COMMUNITY HOSPITAL MED
`CENTER;
`TORRANCE MEMORIAL MED CENTER;
`LODI MEMORIAL HOSPITAL;
`SONOMA VALLEY HOSPITAL;
`NORTH VISTA HOSPITAL;
`FAYETTE MEDICAL CENTER;
`RIVERVIEW REGIONAL MED CENTER;
`EMMA L. BIXBY MED CENTER;
`
` Plaintiffs,
`
`v.
`
`XAVIER BECERRA, SECRETARY OF
`HEALTH AND HUMAN SERVICES,
`
` Defendant.
`
`_______________________________________
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 7 of 27 Page ID #:7
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`INTRODUCTION
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`I.
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`1.
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`Plaintiffs (also referred to hereinafter as the “Hospitals”) were, at all
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`relevant times, hospitals that participated in the Medicare and Medicaid programs.
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`The Hospitals challenge the policy of Defendant Xavier Becerra, Secretary of Health
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`and Human Services (the “Secretary”) of treating patient days for which no payment
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`was received under Medicare Part A as nonetheless “entitled to benefits under part
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`A” for purposes of calculating both fractions of the Disproportionate Share Hospital
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`(“DSH”) payment adjustment. See 42 U.S.C. §1395ww(d)(5)(F)(vi) (the “Medicare
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`DSH Statute”). If the Secretary’s treatment of unpaid Part A days as “days entitled
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`to benefits under part A” is upheld, the Hospitals contend that the Secretary must at
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`least apply that interpretation of the word “entitled” consistently by also treating
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`days for which no supplemental security income payments were received as days
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`“entitled
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`to supplemental security
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`income benefits” under 42 U.S.C. §
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`1395ww(d)(5)(F)(vi)(I).
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`As explained below,
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`the Secretary’s policy of applying different
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`interpretations to the same term, “entitled,” used in the same sentence of the statute
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`is the epitome of arbitrary and capricious agency action and must be reversed. See
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`Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1, 20 n.1 (D.C. Cir. 2011) (Kavanagh,
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 8 of 27 Page ID #:8
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`J., concurring) (“HHS thus interprets the word “entitled” differently within the same
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`sentence of the statute. The only thing that unifies the Government’s inconsistent
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`definitions of this term is its apparent policy of paying out as little money as possible.
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`(“I appreciate the desire for frugality, but not in derogation of law.”); see also Walter
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`O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788, 799 (D.C. Cir. 1984) (“It would
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`be arbitrary and capricious for [the Secretary] to bring varying interpretations of the
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`statute to bear, depending upon whether the result helps or hurts Medicare’s balance
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`sheets …. “).
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`In Empire Health Found. v. Price, 334 F.Supp. 3d 1134 (E.D. Wash. 2018),
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`the court found that the Secretary’s notice failed to satisfy the procedural rulemaking
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`requirements of the APA and that the regulation is procedurally invalid. The decision
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`in Empire Health Found. was appealed to the United States Court of Appeals for the
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`Ninth Circuit, which held that the regulation was substantively invalid. Empire
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`Health Found. v. Price, 958 F3d. 873; 2020 WL 2123363; 20 Cal. Daily Op.
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`Serv.4283. The United States Supreme Court has granted the Secretary’s petition
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`for certiorari, Xavier Becerra, Secretary of Health and Human Services v. Empire
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`Health Foundation, Case No. 20-1312, and conducted oral argument on November
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`29, 2021. The decision of the United States Supreme Court may narrow the issues
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`or be dispositive of the instant case. and Torrance Memorial Medical Center.
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`PLAINTIFFS’ COMPLAINT FOR DECL, REST. AND INJ. RELIEF
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 9 of 27 Page ID #:9
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`II.
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`JURISDICTION AND VENUE
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`2.
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`This action arises under Title XVIII of the Social Security Act, as
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`amended (“Medicare Act”) (42 U.S.C. §§1395 et. seq.), and the Administrative
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`Procedure Act (“APA”), 5 U.S.C. §§551 et seq.
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`3.
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`This Court has jurisdiction under 42 U.S.C. §1395oo(f)(1) to review a
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`final decision of the Provider Reimbursement Review Board ("PRRB"). Plaintiffs
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`timely commenced their appeals before the PRRB. Plaintiffs challenged the
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`Secretary’s regulation regarding the DSH adjustment. The PRRB lacks authority to
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`decide the validity of the Secretary’s DSH adjustment regulation. See, supra,
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`Empire Health Found. v. Price, 334 F.Supp. 3d 1134 (E.D. Wash. 2018). When as
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`here a regulation is in dispute, the appropriate procedure is for the PRRB to order
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`expedited judicial review(“EJR”) as provided by 42 U.S.C. §1395oo(f)(1), which
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`enables the Plaintiffs to proceed before this Court. Accordingly, the Plaintiffs
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`requested that the PRRB grant orders for EJR. See exhibits, A, B, C, D and E. The
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`statute 42 U.S.C. §1395oo(f)(1) requires the PRRB to decide an EJR request within
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`thirty days. To the best of Plaintiffs’ knowledge, no requests for EJR have thus far
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`been granted, nor has the PRRB rendered its decision(s) on any such request. In
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`response to several of the Plaintiffs’ requests for EJR, the Medicare contractor has
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`opposed such requests. See exhibits F and G. To date, however, the PRRB has not
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`issued its ruling on any of the contractor’s opposition to any such request. The
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 10 of 27 Page ID #:10
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`
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`statute allows a hospital to initiate an action in this Court if the PRRB determines that
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`expedited judicial review is appropriate or fails to make a determination as to its
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`authority within 30 days after receipt of a request for such a determination. See 42
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`U.S.C. § 1395oo(f)(1); Clarian Health W., LLC v. Hargan, 878 F.3d 346, 354 (D.C.
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`Cir. 2017) (“The expedited judicial review provision makes it clear that ‘if the Board
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`fails to render [a] determination’ on its authority within 30 days, ‘the provider may
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`bring a civil action . . . with respect to the matter in controversy contained in such
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`request for a hearing.’”).
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`4.
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`Based upon the information and belief of the Plaintiffs, the PRRB has
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`in virtually every instance wherein the specific issues set forth below (and each based
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`upon the Empire case, infra.) are pled, granted expedited judicial review upon the
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`basis that the Board, “… is without the authority to decide the legal question of
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`whether 42 C.F.R. §412.106(b)(2)(i) (as modified by the FY 2005 IPPS Final Rule)
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`is valid, and if successful, what policy should then apply which necessarily would
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`determine the appropriate relief, namely whether to simply exclude such non-
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`covered Part A days from both the SSI and Medicaid fraction (as was done prior to
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`the FY 2005 IPPS Final Rule) or to count only those non-covered Part A days
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`involving patients who are also eligible Medicaid in the Medicaid fraction.” (as
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`quoted from the Board’s letter dated March 17, 2022 in the appeals matters of Case
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 11 of 27 Page ID #:11
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`No’s. 13-1376GC and 14-4030GC, such appeals consisting of the identical issues
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`and arguments set forth in the instant case.)
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`5.
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`Pursuant to 42 U.S.C. §1395oo(f)(1), venue is proper in this judicial
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`district because the greatest number of Hospitals are located in this judicial district.
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`III. PARTIES
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`6.
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`The Hospitals in this action and Hospital fiscal years at issue are
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`identified in the caption and the Lists of Cases included with the requests for EJR
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`submitted by Plaintiffs attached as Exhibits A, B, C, D and E.
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`7.
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`Defendant, XAVIER BECERRA is the Secretary of the Department of
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`Health and Human Services, 200 Independence Avenue, S.W., Washington D.C.
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`15
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`20201, the federal agency responsible for the administration of the Medicare and
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`Medicaid Programs. Defendant BECERRA is sued in his official capacity.
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`References to the Secretary herein are meant to refer to him, to his subordinates, and
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`to his official predecessors or successors as the context requires.
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`8.
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`The Center for Medicare and Medicaid Services (“CMS”) is a
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`component of the Department of Health and Human Services (“HHS”) with
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`responsibility for day-to-day operations and administration of the Medicare
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`program. References to CMS herein are meant to refer to the agency and its
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`predecessors.
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 12 of 27 Page ID #:12
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`
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`IV. THE MEDICARE PROGRAM
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`9.
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`Congress enacted the Medicare Program (Title XVIII of the Social
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`Security Act) in 1965. As originally enacted, Medicare was a public health insurance
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`program that furnished health benefits to the aged, blind and disabled. Over the
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`years, the scope of benefits and covered individuals has been expanded.
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`10. Among the benefits covered by Medicare are inpatient hospital
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`services. For cost reporting years beginning prior to October 1, 1983, the Medicare
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`Program reimbursed inpatient hospital services on a “reasonable cost” basis. 42
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`U.S.C. §1395f(b). Effective with cost reporting years beginning on or after October
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`1, 1983, Congress adopted a prospective payment system (“PPS”) to reimburse most
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`acute care hospitals, including Plaintiffs, for inpatient operating costs. 42 U.S.C.
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`§1395ww(d). Under PPS, hospitals are paid a fixed amount for services rendered
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`based upon diagnosis-related groups (“DRGs”), subject to certain payment
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`adjustments, such as the DSH payment at issue here.
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`11. The Secretary has delegated much of
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`the responsibility for
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`administering the Medicare Program to CMS, which was formerly known as the
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`Health Care Financing Administration. The Secretary, through CMS, contracted out
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`many of the audit and payment functions for inpatient hospital care furnished to
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`Medicare program beneficiaries to organizations known as fiscal intermediaries or
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`Medicare administrative contractors (“Medicare contractor”). 42 U.S.C. §1395h.
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 13 of 27 Page ID #:13
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`12. At the close of the fiscal year, a hospital provider of services must
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`submit to its Medicare contractor a cost report showing the allowable costs incurred
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`and amounts due from Medicare for the fiscal year and the payments received from
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`Medicare. The Medicare contractor is required to audit the cost report and inform
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`the hospital provider of a final determination of the amount of Medicare
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`reimbursement through a Notice of Program Reimbursement (“NPR”). 42 CFR
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`§405.1803.
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`13. A hospital provider dissatisfied with its Medicare contractor’s
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`determination may file an appeal to the Provider Reimbursement Review Board
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`(“PRRB”) as long as the amount in controversy is $10,000 or more and the request
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`for hearing is within 180 days of the date the hospital provider receives the NPR. 42
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`U.S.C. §1395oo(a). The PRRB was established by the Social Security Amendments
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`of 1972 (Pub. L. 92-603) as a national, independent forum for hearing and deciding
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`payment disputes between hospital providers and their Medicare contractors.
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`14. Upon filing a timely hearing request, a hospital provider may add
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`specific Medicare payment issues to the original hearing request by submitting a
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`written request to the PRRB within no later than 60 days after the expiration of the
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`applicable 180-day period to file the initial hearing request. 42 C.F.R. §405.1835(e).
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`15.
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`Pursuant to PRRB Rule 16 a hospital provider may transfer a specific
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`issue from an individual appeal to an existing group appeal when there is a single
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 14 of 27 Page ID #:14
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`common issue to be resolved. The PRRB Rules set out the documentation
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`requirements for such a transfer.
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`16.
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`The decision of the PRRB is a final administrative decision, unless the
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`Secretary, through the Administrator of CMS, reviews the PRRB’s decision; the
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`Administrator may reverse, affirm or modify the PRRB’s decision. 42 U.S.C.
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`§1395oo(f).
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`17.
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`The Medicare statute authorizes the PRRB to determine that it is
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`without authority to decide a question of law or regulations relevant to a matter in
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`controversy in an appeal before the PRRB and to grant the right to expedited judicial
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`review. 42 U.S.C. § 1395oo(f)(1). Pursuant to the Secretary’s regulations, the PRRB
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`is bound by agency rules and rulings, like the 2004 rule at issue. 42 C.F.R. §
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`405.1867. Accordingly, the statute allows a hospital to request a PRRB
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`determination as to its authority to decide a question of law or regulations and to
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`initiate an action in this Court if the PRRB determines that expedited judicial review
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`is appropriate or fails to make a determination as to its authority within 30 days after
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`receipt of a request for such a determination. See 42 U.S.C. § 1395oo(f)(1); Los
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`Angeles Haven Hospice, Inc. v. Sebelius, 638 F.3d 644 at 652 (Ninth Cir.2011)
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`(PRRB lacks authority to decide purely legal issue); Empire Health Found. v. Price,
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`334 F.Supp. 3d 1134 (E.D. Wash. 2018) (EJR granted over plaintiffs’ challenge to
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`DSH adjustment regulation): Clarian Health W., LLC v. Hargan, 878 F.3d 346, 354
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 15 of 27 Page ID #:15
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`
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`(D.C. Cir. 2017) (“The expedited judicial review provision makes it clear that ‘if the
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`Board fails to render [a] determination’ on its authority within 30 days, ‘the provider
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`may bring a civil action . . . with respect to the matter in controversy contained in
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`such request for a hearing.’”); Allina Health Services v. Price, 863 F.3d 937 at 941
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`(“A provider may bring suit in the district court even when the Board fails to make
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`a timely determination of its authority to decide a case.”). Accord Methodist Hosp.
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`of Memphis v. Sullivan, 799 F. Supp. 1210, 1216 (D.D.C. 1992) rev’d on other
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`grounds, Adm’rs of Tulane Educ. Fund v. Shalala, 987 F.2d 790 (D.C. Cir. 1993).
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`18. The regulation implementing the expedited judicial review (“EJR”)
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`statute, 42 C.F.R. § 405.1842(f), sets forth an additional requirement for granting
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`EJR, not found in the statute, that the Board have “jurisdiction to conduct a hearing
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`on the specific matter at issue.” When presented with a request for EJR, the
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`regulations require that the Board “must make a preliminary determination of the
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`scope of its jurisdiction (that is, whether the hearing request was timely, and whether
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`the amount in controversy has been met).” Id. § 405.1840(a)(2). The regulation does
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`not create any further conditions beyond those in the statute to establish jurisdiction
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`for a Board appeal. See 42 C.F.R. §§ 405.1835, 405.1837. Under the EJR
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`regulations, only after finding that the statutory requirements for jurisdiction have
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`been met, as set forth in 42 C.F.R. § 405.1840(a)(2), does the Board then proceed to
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 16 of 27 Page ID #:16
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`determine if it has the authority to decide a legal question relevant to a matter at
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`issue. Id. § 405.1842(e)(1).
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`19. When the PRRB grants a hospital provider’s request for EJR because it
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`has jurisdiction over an appeal but lacks the authority to grant the relief requested,
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`the Administrator of CMS may only review the jurisdictional component of the
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`PRRB’s EJR decision. The Administrator of CMS may not review the PRRB’s
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`determination of its authority to decide the legal question.
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` 42 C.F.R.
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`§405.1842(g)(1)(i) and (ii).
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`20. A hospital provider has the right to obtain judicial review of any final
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`decision of the PRRB, or of the Secretary, by filing a civil action within 60 days of
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`the date on which notice of any final decision by the PRRB, or of any reversal,
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`affirmance, or modification by the Secretary, is received. 42 U.S.C. §1395oo(f).
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`Pursuant to 42 C.F.R. §405.1801 the date of receipt for a decision of the PRRB is
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`presumed to be 5 days after the date of issuance of such decision. If the PRRB grants
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`EJR, the hospital provider may file a complaint in Federal district court in order to
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`obtain review of the legal question. 42 C.F.R. §405.1842(g)(2).
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`V. THE MEDICARE DISPROPORTIONATE SHARE PAYMENT
`ADJUSTMENT
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`21.
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`In 1986, Congress amended Title XVIII of the Social Security Act to
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`require the Secretary to make additional payments to hospitals that serve “a
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`significantly disproportionate number of low-income patients ....” 42 U.S.C.
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`Case 2:22-cv-02648 Document 1 Filed 04/20/22 Page 17 of 27 Page ID #:17
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`§1395ww(d)(5)(F)(i)(1). Eligibility for these “disproportionate share” (DS1-1)
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`payments, and the level of these payments, is based on the calculation or a
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`“disproportionate share percentage” that considers the number of low-income
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`patients a hospital serves. See 42 U.S.C. §§1395ww(d)(5)(F)(v) and (vi).
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`22. As the Ninth Circuit observed in Portland Adventist Medical Ctr. v.
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`Thompson, 399 F.3d 1091, 1095 (9th Cir. 2005) (quoting Legacy Emanuel Hosp. &
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`Health Ctr. v. Shalala, 97 F.3d 1261, 1265 (9th Cir. 1996)):
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`Congress “overarching intent” in passing the [Medicare]
`disproportionate share provision was to supplement the
`prospective payment system payments of hospitals serving
`“low income” persons . . . Congress intended the Medicare
`and Medicaid fractions to serve as a proxy for all low-
`income patients.
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`23. To be eligible for the DSH payment, a hospital must meet certain
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`systemic criteria, including a disproportionate patient percentage that exceeds the
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`threshold. The amount of the DSH payment then depends upon the extent to which
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`the disproportionate patient percentage exceeds the threshold.
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`24. The disproportionate patient percentage is statutorily defined as the
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`sum of two fractions expressed as a percentage for a hospital’s cost reporting period.
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`These fractions are commonly known as the “SSI fraction” and the “Medicaid
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`fraction,” respectively, and are defined as follows:
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`The fraction (