Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 1 of 16
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
`
`Civil Action No. 21-513
`
`COMPLAINT
`
`BOURBON COMMUNITY HOSPITAL, LLC
`d/b/a Bourbon Community Hospital
`9 Linville Drive
`Paris, KY 40361
`
`GEORGETOWN COMMUNITY HOSPITAL, LLC
`d/b/a Georgetown Community Hospital
`1140 Lexington Road
`Georgetown, KY 40324
`
`OSF HEALTHCARE SYSTEM
`d/b/a OSF Healthcare Little Company of Mary Medical
`Center
`d/b/a OSF Little Company of Mary Medical Center
`2800 95th Street
`Evergreen Park, IL 60805
`
`GOTTLIEB MEMORIAL HOSPITAL
`701 W. North Avenue
`Melrose Park, IL 60160
`
`GOTTLIEB COMMUNITY HEALTH SERVICES
`CORPORATION
`d/b/a MacNeal Hospital
`3249 S. Oak Avenue
`Berwyn, IL 60402
`
`LOYOLA UNIVERSITY MEDICAL CENTER
`2160 S. 1st Avenue
`Maywood, IL 60153
`
`NORTHWESTERN MEMORIAL HOSPITAL
`251 E. Huron Street
`Chicago, IL 60601
`
`ADVENTIST MIDWEST HEALTH
`d/b/a AMITA Health Adventist Medical Center, La Grange
`5101 S. Willow Springs Road
`La Grange, IL 60525
`
`PRESENCE CHICAGO HOSPITALS NETWORK
`d/b/a AMITA Health Saint Francis Hospital Evanston
`355 Ridge Avenue
`Evanston, IL 60202
`
`1
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 2 of 16
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`PRESENCE CHICAGO HOSPITALS NETWORK
`d/b/a AMITA Health Resurrection Medical Center Chicago
`7435 W. Talcott Avenue
`Chicago, IL 60631
`
`PRESENCE CHICAGO HOSPITALS NETWORK
`d/b/a AMITA Health Saints Mary and Elizabeth Medical
`Center Chicago
`2233 West Division Street
`Chicago, IL 60622
`
`PRESENCE CHICAGO HOSPITALS NETWORK
`d/b/a AMITA Health Saint Joseph Hospital Chicago
`2900 N. Lake Shore Drive
`Chicago, IL 60657
`
`ALEXIAN BROTHERS MEDICAL CENTER
`d/b/a AMITA Health Alexian Brothers Medical Center,
`Elk Grove Village
`800 Biesterfield Road
`Elk Grove Village, IL 60007
`
`ST. ALEXIUS MEDICAL CENTER
`d/b/a AMITA Health St. Alexius Medical Center, Hoffman
`Estates
`1555 Barrington Road
`Hoffman Estates, IL 60169
`
`THE UNIVERSITY OF CHICAGO MEDICAL CENTER
`5841 South Maryland Avenue
`Chicago, IL 60637
`
`THE BOARD OF TRUSTEES OF THE UNIVERSITY
`OF ILLINOIS
`a body corporate and politic of the State of Illinois, for and
`on behalf of its University of Illinois Hospital
`1740 W Taylor Street
`Chicago, IL 60612
`
`SANTA BARBARA COTTAGE HOSPITAL
`400 W. Pueblo Street
`Santa Barbara, CA 93105
`
`CHRISTUS HEALTH NORTHERN LOUISIANA
`d/b/a CHRISTUS Highland Medical Center
`d/b/a CHRISTUS Health Shreveport - Bossier
`One Saint Mary Place
`Shreveport, LA 71101
`
`2
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 3 of 16
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`ST. JOSEPH’S HOSPITAL HEALTH CENTER
`301 Prospect Avenue
`Syracuse, NY 13203
`
`PRESBYTERIAN MEDICAL CENTER OF THE
`UNIVERSITY OF PENNSYLVANIA HEALTH S
`d/b/a Penn Presbyterian Medical Center
`51 N. 39th Street
`Philadelphia, PA 19104
`
`Plaintiffs,
`
`v.
`NORRIS COCHRAN, in his official capacity as Acting
`Secretary, United States Department of Health and Human
`Services,
`200 Independence Ave, S.W.
`Washington, D.C. 20201
`
`ELIZABETH RICHTER, in her official capacity as Acting
`Administrator, Centers for Medicare and Medicaid
`Services,
`7500 Security Boulevard
`Baltimore, MD 21244
`
`Defendants.
`
`This action involves a statute clear on its face and in its intent, and a regulatory scheme
`
`designed by the United States Department of Health and Human Services to deny Plaintiffs their
`
`statutory rights.
`
`PARTIES
`
`1.
`
`Plaintiffs are acute care hospitals with their respective principal places of
`
`businesses located at the addresses set forth in the caption and the following respective Medicare
`
`Provider numbers:
`
`a. Bourbon Community Hospital, LLC (d/b/a Bourbon Community Hospital), 18-
`0046;
`
`b. Georgetown Community Hospital, LLC (d/b/a Georgetown Community
`Hospital), 18-0101.
`
`3
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 4 of 16
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`c. OSF Healthcare System (d/b/a OSF Healthcare Little Company of Mary
`Medical Center; d/b/a OSF Little Company of Mary Medical Center), 14-0179;
`
`d. Gottlieb Memorial Hospital, 14-0008;
`
`e. Gottlieb Community Health Services Corporation (d/b/a MacNeal Hospital),
`14-0054;
`
`f. Loyola University Medical Center, 14-0276;
`
`g. Northwestern Memorial Hospital, 14-0130;
`
`h. Adventist Midwest Health (d/b/a AMITA Health Adventist Medical Center, La
`Grange), 14-0065;
`
`i. Presence Chicago Hospitals Network (d/b/a AMITA Health Saint Francis
`Hospital Evanston), 14-0080;
`
`j. Presence Chicago Hospitals Network (d/b/a AMITA Health Resurrection
`Medical Center Chicago), 14-0117;
`
`k. Presence Chicago Hospitals Network (d/b/a AMITA Health Saints Mary and
`Elizabeth Medical Center Chicago), 14-0180;
`
`l. Presence Chicago Hospitals Network (d/b/a AMITA Health Saint Joseph
`Hospital Chicago), 14-0224;
`
`m. Alexian Brothers Medical Center (d/b/a AMITA Health Alexian Brothers
`Medical Center, Elk Grove), 14-0258;
`
`n. St. Alexius Medical Center (d/b/a AMITA Health St. Alexius Medical Center,
`Hoffman Estates), 14-0290;
`
`o. The University of Chicago Medical Center, 14-0088;
`
`p. The Board of Trustees of the University of Illinois (a body corporate and politic
`of the State of Illinois, for and on behalf of its University of Illinois Hospital),
`14-0150;
`
`q. Santa Barbara Cottage Hospital, 05-0396;
`
`r. CHRISTUS Health Northern Louisiana (d/b/a CHRISTUS Highland Medical
`Center; d/b/a Christus Health Shreveport – Bossier), 19-0041;
`
`s. St. Joseph’s Hospital Health Center, 33-0140;
`
`
`
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`
`
`
`
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`4
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 5 of 16
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`t. Presbyterian Medical Center of the University of Pennsylvania Health S (d/b/a
`Penn Presbyterian Medical Center), 39-0223.
`
`2.
`
`Defendant Norris Cochran, Acting Secretary (“Secretary”) of the United States
`
`
`
`Department of Health and Human Services (“HHS”), is the federal official responsible for
`
`administering the Medicare Program. References to the Secretary herein are meant to refer to
`
`him, his subordinates, his official predecessors or successors, and the Department and its
`
`components that he oversees, as the context requires.
`
`3.
`
`Defendant Elizabeth Richter is Acting Administrator, Centers for Medicare &
`
`Medicaid Services (“CMS”). CMS is an agency within HHS, delegated by the Secretary with
`
`responsibility for the day-to-day administration of the Medicare program.
`
`JURISDICTION AND VENUE
`The Court has jurisdiction in this matter pursuant to 28 U.S.C. § 1331 (federal
`
`4.
`
`question jurisdiction); 28 U.S.C. § 1361 (jurisdiction over “any action in the nature of mandamus
`
`to compel an officer or employee of the United States or any agency thereof to perform a duty
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`owed to plaintiff”); and 5 U.S.C. § 701 et seq. (Administrative Procedure Act). This Court may
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`issue a declaratory judgment pursuant to 28 U.S.C. §§ 2201-2202.
`
`5.
`
`A.
`
`6.
`
`Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391.
`STATUTORY AND REGULATORY BACKGROUND
`
`The Medicare Program
`
`The Medicare Program establishes a system of health insurance for the aged and
`
`disabled. Medicare Part A pertains to “inpatient hospital services” and payment for such services.
`
`7.
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`Unless exempt, hospitals participating in Medicare are paid under an inpatient
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`prospective payment system (“IPPS”). Because labor costs vary in different regions, CMS adjusts
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 6 of 16
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`Medicare payments to hospitals by a “wage index” that reflects the relation between the local
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`average of hospital wages and the national average.
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`8.
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`A comparable system, the Hospital Outpatient Prospective Payment System
`
`(OPPS), classifies hospital outpatient services into Ambulatory Payment Classifications (APCs),
`
`with payments based on CMS's estimates of the costs associated with providing services assigned
`
`to an APC. These outpatient payments also are adjusted for geographic wage variations.
`
`9.
`
`The wage index is a significant factor in determining a hospital’s reimbursement
`
`under both the IPPS system and the OPPS system.
`
`
`
`B.
`
`10.
`
`The Origin and a Partial History of the Wage Index
`
`Congress recognizes that hospitals’ labor costs vary widely depending on
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`geographic location and the market in which a hospital competes for labor. In 42 U.S.C. §
`
`1395ww(d)(3)(E), Congress requires an adjustment to the federal reimbursement rate to account
`
`for such wage differences:
`
`[t]he Secretary shall adjust the proportion … of hospitals' costs which are attributable
`to wages and wage-related costs … for area differences in hospital wage levels by a
`factor (established by the Secretary) reflecting the relative hospital wage level in the
`geographic area of the hospital compared to the national average hospital wage level.
`
`11.
`
`The adjustment is recomputed annually to reflect changes in local labor costs
`
`
`
`compared to the national average. Hospitals in areas with labor costs above the national average
`
`receive a higher reimbursement rate than the standard federal rate. Hospitals in areas with
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`comparatively lower labor costs receive less than the federal rate.
`
`12.
`
`HHS annually determines a separate wage index for each urban Core Based
`
`Statistical Area (CBSA). HHS also determines a single wage index per state for rural areas.
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`6
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 7 of 16
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`13.
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`The wage index used to adjust Medicare inpatient service payments for an
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`individual hospital is the wage index that HHS determines and assigns to the area in which the
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`hospital is treated as being located.
`
`
`
`C.
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`14.
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`Reclassification by the MGCRB
`
`In 1989, Congress established the Medicare Geographic Classification Review
`
`Board (“MGCRB”) to review and make determinations on geographic reclassification requests of
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`certain Medicare participating hospitals that wish to reclassify to a different wage area for purposes
`
`of receiving a higher payment rate. 42 U.S.C. § 1395ww(d)(10). The MGCRB provides a
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`mechanism for a hospital to be reclassified from the area in which it is treated as located to another
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`area for certain Medicare reimbursement purposes. Id. HHS’s regulations regarding the MGCRB
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`are codified at 42 C.F.R. § 412.230–235.
`
`15. Whether a hospital is treated as located in an urban area or a rural area can be very
`
`important for the MGCRB application and reclassification process.
`
`16.
`
`A hospital applying to the MGCRB generally must prove three things: (1) its wages
`
`are higher than other hospitals in the area in which the applicant is treated as being located; (2) its
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`wages are comparable to other hospitals in the area to which the applicant seeks to be reclassified;
`
`and (3) it is proximate to the area to which it seeks to be reclassified. For each of these things, the
`
`requirements for rural hospitals are less stringent than the requirements for urban hospitals. If a
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`hospital proves these things, the MGCRB must reclassify the hospital to the new area.
`
`17.
`
`For the first element, the hospital's three-year average hourly wage ("AHW") must
`
`be at least 108% of the AHW of other hospitals in the area in which the hospital is located if the
`
`hospital is located in an urban area or 106% of the AHW of other hospitals in the area in which
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`the hospital is located if the hospital is located in a rural area. 42 C.F.R. § 412.230(d)(1)(iii)(C).
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 8 of 16
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`18.
`
`For the second element, the hospital's three-year AHW must be at least 84% of the
`
`AHW applicable to the area to which the hospital is applying if the hospital is located in an urban
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`area or 82% of the AHW if the hospital is located in a rural area. 42 C.F.R. § 412.230(d)(1)(iv)(E).
`
`19.
`
`For the third element, the hospital must be within 35 miles of the area to which it
`
`is applying if the hospital is in a rural area, or within 15 miles of the area to which it is applying if
`
`the hospital is in an urban area. 42 C.F.R. § 412.230(b)(1).
`
`20.
`
`The Medicare system also recognizes certain hospitals with “special” status,
`
`including rural referral centers (RRCs). An RRC does not have to demonstrate close proximity to
`
`the area to which it seeks reclassification. 42 C.F.R. § 412.230(a)(3). Any hospital that was ever
`
`an RRC is exempt from the 106%/108% requirement of 42 C.F.R. § 412.230(d)(1)(iii)(C) and 42
`
`C.F.R. § 412.230(d)(3)(i). Also, any hospital that ever was an RRC need only pay 82% of the
`
`AHW applicable to the area to which the hospital is applying, just like hospitals located in rural
`
`areas of the State. 42 C.F.R. § 412.230(d)(1)(iv)(E) and 42 C.F.R. § 412.230(d)(3)(ii).
`
`D.
`
`There is no Judicial Review of a Final Agency Decision by the CMS
`Administrator Regarding a Hospital’s Reclassification Application.
`21. MGCRB decisions may be appealed to the Secretary, but the Secretary’s decision
`
`regarding appeals from the MGCRB “shall be final and shall not be subject to judicial review.” 42
`
`U.S.C. § 1395ww(d)(10)(C)(iii)(II).
`
`22.
`
`Thus, if a hospital’s MGCRB application is denied, there is no appeal to any court
`
`from the denial. The only opportunity for a hospital to challenge unlawful regulations affecting
`
`the MGCRB process is a direct challenge to the regulations themselves.
`
`E.
`23.
`
`Hospitals Treated as Located in a Rural Area Pursuant to Section 401
`In 1999, Congress enacted Section 401 of the Medicare, Medicaid and SCHIP
`
`Balanced Budget Refinement Act of 1999 ("Section 401"). Pub. L. No. 106-113, H.R. 3194, 106th
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 9 of 16
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`Cong. § 401 (1st Sess. 1999) (codified in part at 42 U.S.C. § 1395ww(d)(8)(E)). Section 401
`
`created a mechanism by which some hospitals located in urban areas are treated as being located
`
`in a rural area for certain Medicare reimbursement purposes. Hospitals that qualify to be treated as
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`located in the rural area of the state pursuant to Section 401 are often called Section 401 hospitals.
`
`24.
`
`Section 401 provides in full as follows:
`
`SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN URBAN
`HOSPITALS AS RURAL HOSPITALS.
`
`(a)
`
`In General.--Section 1886(d)(8) (42 U.S.C. 1395ww(d)(8)) is amended by
`adding at the end the following new subparagraph:
`
`
`
`
`
`
`
```(E)(i) For purposes of this subsection, not later than 60 days after the receipt of
`an application (in a form and manner determined by the Secretary) from a
`subsection (d) hospital described in clause (ii), the Secretary shall treat the
`hospital as being located in the rural area (as defined in paragraph (2)(D)) of the
`State in which the hospital is located.
`
```(ii) For purposes of clause (i), a subsection (d) hospital described in this
`clause is a subsection (d) hospital that is located in an urban area (as defined
`in paragraph (2)(D)) and satisfies any of the following criteria:
`
`
`
`
`
```(I) The hospital is located in a rural census tract of a metropolitan
`statistical area (as determined under the most recent modification of the
`Goldsmith Modification, originally published in the Federal Register on
`February 27, 1992 (57 Fed. Reg. 6725)).
`
```(II) The hospital is located in an area designated by any law or
`regulation of such State as a rural area (or is designated by such State as
`a rural hospital).
`
```(III) The hospital would qualify as a rural, regional, or national
`referral center under paragraph (5)(C) or as a sole community hospital
`under paragraph (5)(D) if the hospital were located in a rural area.
`
```(IV) The hospital meets such other criteria as the Secretary may
`specify.''
`
`
`(b) Conforming Changes.--(1) Section 1833(t) (42 U.S.C. 1395l(t)), as amended by
`sections 201 and 202, is further amended by adding at the end the following
`new paragraph:
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 10 of 16
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```(13) Miscellaneous provisions.--
`
`
```(A) Application of reclassification of certain hospitals.--If a hospital is
`being treated as being located in a rural area under section 1886(d)(8)(E),
`that hospital shall be treated under this subsection as being located in that
`rural area.''.
`
`(2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-4(c)(2)(B)(i)) is amended, in the
`matter preceding subclause (I), by inserting ``or is treated as being located in a
`rural area pursuant to section 1886(d)(8)(E)'' after ``section 1886(d)(2)(D))''.
`
`
`(c) Effective Date.--The amendments made by this section shall become effective
`on January 1, 2000.
`
`25.
`
`Section 401 refers to the definition of “rural area” in “paragraph (2)(D).” Paragraph
`
`
`
`(2)(D) was adopted well in advance of Section 401 when Congress adopted the IPPS system and
`
`provides in relevant part as follows:
`
`The term “urban area” means an area within a Metropolitan Statistical Area (as defined
`by the Office of Management and Budget) or within such similar area as the Secretary
`has recognized under subsection (a) by regulation … and the term “rural area” means
`any area outside such an area or similar area… 42 U.S.C. § 1395ww(d)(2)(D).
`
`26.
`
`“Rural area” is in essence a default definition: if a hospital is not located in an
`
`
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`“urban area,” the hospital is considered to be located in a “rural area.”
`
`27.
`
`Under Section 401, a hospital located in an urban area may qualify to be treated as
`
`if it were located in a rural area for purposes of certain aspects of Medicare reimbursement if the
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`hospital meets one of several specified criteria.
`
`28.
`
`Section 401 uses mandatory language in directing that if a hospital qualifies for
`
`redesignation under Section 401, “the Secretary shall treat the hospital as being located in the rural
`
`area … of the State in which the hospital is located” (emphasis added). Id.
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`29.
`
`In addition to that explicit language, in the conference report accompanying the
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`Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999, Congress explained
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`that the benefits of a hospital qualifying under Section 401 would be very broad:
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 11 of 16
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`Hospitals qualifying under this section shall be eligible to qualify for all categories and
`designations available to rural hospitals, including sole community, Medicare dependent,
`critical access, and referral centers. Additionally, qualifying hospitals shall be eligible to
`apply to the Medicare Geographic [Classification] Review Board for geographic
`reclassification to another area. The Board shall regard such hospitals as rural and as
`entitled to the exceptions extended to referral centers and sole community hospitals, if
`such hospitals are so designated.
`
`H.R. Conf. Rep. No. 106-479, at Title IV § 401 (1999).
`
`
`
`F.
`
`30.
`
`Defendants’ Different Treatment of Section 401 Hospitals in the
`Reclassification Process
`Defendants have historically refused to treat Section 401 hospitals as located in the
`
`rural area of the state in which they are located for certain aspects of the MGCRB reclassification
`
`process. Despite repeatedly being told by courts that such treatment is unlawful, Defendants
`
`continue this unlawful treatment of Section 401 hospitals in at least two ways.
`
`31.
`
`First, hospitals located in the rural area of a state (as all Section 401 hospitals must
`
`be treated) must prove as part of their MGCRB reclassification application that their wages are at
`
`least 106 percent of the three-year average hourly wage of all other hospitals in the rural area of
`
`the state in which the hospital is located. In this Complaint, Plaintiffs refer to this comparison as
`
`the “106% Comparison.”
`
`32.
`
`In implementing the 106% Comparison, HHS refuses to apply the rural standard to
`
`Section 401 hospitals. HHS requires that the MGCRB compare Section 401 hospitals’ wages to
`
`urban hospitals, not rural hospitals as required of all other hospitals treated as rural.
`
`Second, an HHS regulation at 42 C.F.R. § 412.230(a)(5)(i) prohibits a hospital from
`33.
`being reclassified by the MGCRB to a CBSA with a lower three-year AHW:
`
`An individual hospital may not be redesignated to another area for purposes of the wage
`index if the pre-reclassified average hourly wage for that area is lower than the pre-
`reclassified hourly wage for the area in which the hospital is located.
`
`
`In this Complaint, Plaintiffs refer to this comparison as the “3-year AHW Comparison.”
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 12 of 16
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`34.
`
`In applying 42 C.F.R. § 412.230(a)(5)(i) to rural hospitals, Defendants compare the
`
`3-year AHW of the state’s rural area with the 3-year AHW of the area to which the hospital seeks
`
`reclassification. Assuming the hospital otherwise meets MGCRB reclassification requirements, as
`
`long as the 3-year AHW of the state’s rural area is lower than the 3-year AHW of the area to which
`
`the hospital seeks reclassification, the hospital’s MGCRB application will be approved.
`
`35.
`
`In applying 42 C.F.R. § 412.230(a)(5)(i) to a hospital that acquires rural treatment
`
`pursuant to Section 401, however, Defendants compare the 3-year AHW of the urban area in which
`
`the hospital is physically located (not the 3-year AHW of the rural area as used for all other
`
`hospitals treated as located in a rural area) to the 3-year AHW of the area to which the hospital
`
`seeks reclassification. This is the same comparison Defendants use for urban hospitals.
`
`36.
`
`The practical consequences of HHS’s unlawful regulatory scheme can be
`
`substantial. For Plaintiffs, the failure to be treated like other rural hospitals in the MGCRB
`
`reclassification process for the 106% Comparison and the 3-year AHW Comparison results in each
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`Plaintiff annually losing hundreds of thousands or millions of dollars of reimbursement to which
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`it is statutorily entitled.
`
`G.
`
`37.
`
`Courts’ Previous Rejections of Defendants’ Efforts to Deny Section 401
`Hospitals Their Statutory Rights
`In three cases to date, courts have ruled against Defendants when hospitals
`
`challenged the unlawful regulatory scheme.
`
`38.
`
`In both Geisinger Cmty. Med. Ctr. v. Sec’y HHS, 794 F.3d 383 (3d Cir. 2015) and
`
`Lawrence + Mem’l Hosp. v. Burwell, 812 F.3d 257 (2d Cir. 2016), hospitals challenged
`
`Defendants’ refusal to allow Section 401 hospitals to be reclassified by the MGCRB to a different
`
`area for wage index purposes. In both cases, the courts ruled against Defendants.
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 13 of 16
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`39.
`
`In Bates County Mem’l Hosp. v. Azar, 464 F. Supp. 3d 43 (D.D.C. 2020), hospitals
`
`challenged Defendants’ refusal to apply to Section 401 hospitals the rural standards during the
`
`MGCRB reclassification process. At issue in that case was the requirement that hospitals located
`
`in the rural area of a state must prove as part of their MGCRB reclassification application that their
`
`wages are at least 106 percent of the three-year average hourly wage of all other hospitals in the
`
`rural area of the state in which the hospital is located. For Section 401 hospitals, HHS required
`
`that the MGCRB compare Section 401 hospitals’ wages to urban hospitals, not rural hospitals as
`
`required of all other hospitals treated as rural. The court ruled against Defendants.
`
`H.
`
`40.
`
`The Current Reclassification Application Cycle
`
`Each Plaintiff is physically located in an urban CBSA. Each Plaintiff has applied
`
`and been approved pursuant to Section 401 to be treated as being located in the rural area of the
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`state in which the respective Plaintiff is located.
`
`41.
`
`Each Plaintiff filed a
`
`timely application with
`
`the MGCRB requesting
`
`reclassification to one or more different geographic areas for purposes of receiving the area’s wage
`
`index beginning October 1, 2021.
`
`42.
`
`Each Plaintiff was denied reclassification by the MGCRB to one or more of the
`
`geographic areas to which the Plaintiff applied based on the unlawful regulatory scheme set forth
`
`in the preceding paragraphs applying the 106% Comparison or the 3-year AHW Comparison, or
`
`both, differently to hospitals that acquire rural status by way of Section 401 compared to hospitals
`
`that acquire rural status by other means. Each Plaintiff has or will appeal the MGCRB denial or
`
`denials to the CMS Administrator as authorized by statute and regulation.
`
`43.
`
`If the agency is allowed to continue its unlawful regulatory scheme, Plaintiffs’
`
`applications will be denied by the CMS Administrator.
`
`13
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 14 of 16
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`44.
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`Absent this court’s intervention, there is no opportunity for Plaintiffs to challenge
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`the unlawful regulatory scheme. Absent this court’s intervention, HHS will continue to deny
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`Plaintiffs the statutory rights to which Plaintiffs are entitled, resulting in hundreds of thousands
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`or millions of dollars in lost Medicare reimbursement to which each Plaintiff is entitled by statute.
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`INADEQUACY OF REMEDY AT LAW AND PROPRIETY
`OF ISSUANCE OF A WRIT OF MANDAMUS
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`The Mandamus Act provides that “[t]he district courts shall have original
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`45.
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`jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United
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`States or any agency thereof to perform a duty owed to the plaintiff.” 28 U.S.C. § 1361.
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`46.
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`Plaintiffs will suffer irreparable injury by reason of the unlawful regulations, which
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`will result in the denial of the current and any future MGCRB applications where the application
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`of the 106% comparison or the 3-year AHW Comparison is relevant. Not only will Plaintiffs be
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`denied the right to reclassify to a CBSA to which each Plaintiff is lawfully entitled to reclassify,
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`but Plaintiffs have no other opportunity to challenge the unlawful regulation and actions.
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`47.
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`Plaintiffs have no adequate remedy at law. Only the declaratory, injunctive, and
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`mandamus relief that this Court can provide will prevent the harm Plaintiffs will imminently suffer.
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`48.
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`Plaintiffs have a clear right to the relief sought. There is no other adequate remedy
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`to correct an otherwise unreviewable decision by the MGCRB and the Secretary. The Secretary
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`has a plainly defined statutory, nondiscretionary duty to provide the relief Plaintiffs seek.
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`COUNT ONE
`Violation of the Medicare Statute and the Administrative Procedure Act
`HHS’s Regulatory Scheme is Contrary to Law
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`Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
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`49.
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`50.
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`Defendants are required to comply with the Medicare Act.
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 15 of 16
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`51.
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`Under the Administrative Procedure Act (“APA”), Defendants may not act in a way
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`that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, 5
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`U.S.C. § 706(2)(A), or that is in excess of statutory jurisdiction, authority, or limitations, or short
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`of a statutory right. 5 U.S.C. § 706(2)(C).
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`52.
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`In applying the 106% Comparison and the 3-year AHW Comparison to a Section
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`401 hospital, Defendants fail to treat such hospitals as though the hospitals are located in the rural
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`area of their respective states. This difference in treatment of hospitals that acquire rural treatment
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`by way of Section 401 compared to hospitals that acquire rural treatment by another means is
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`contrary to Section 401 and violates the Medicare Act and the APA.
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`COUNT TWO
`Violation of the Medicare Act and Administrative Procedure Act
`HHS’s Regulatory Scheme is Arbitrary, Capricious, and an Abuse of Discretion
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`Plaintiffs incorporate the preceding paragraphs as if fully set forth herein.
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`53.
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`54. When adjudicating reclassification applications by hospitals that acquire rural
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`treatment through Section 401, HHS requires the MGCRB and CMS to do so using different
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`standards than used for hospitals that acquire rural treatment by another means.
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`55.
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`The use of this different standard requires the denial of reclassification applications
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`by Section 401 hospitals that would otherwise be, and should be, approved.
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`56.
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`By using that different standard when adjudicating reclassification applications,
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`HHS’s regulatory scheme violates the APA and the Medicare Act in that, among other things, the
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`regulations and actions taken pursuant to those regulations are arbitrary, capricious, an abuse of
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`discretion, or otherwise not in accordance with law; contrary to constitutional right, power,
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`privilege, or immunity; in excess of statutory jurisdiction, authority, or limitations, or short of a
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`statutory right; and constitutes agency action unlawfully withheld.
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`Case 1:21-cv-00513 Document 1 Filed 02/26/21 Page 16 of 16
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`REQUEST FOR RELIEF
`WHEREFORE, Plaintiffs request that this Court:
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`1.
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`Declare that the Secretary’s regulatory scheme and policies violate the Medicare
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`Act and the Administrative Procedure Act.
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`2.
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`Grant a permanent injunction, an order of mandamus, or both:
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`a. prohibiting Defendants; their successors in office, agents, and employees;
`and all persons acting in concert with Defendants, from applying the
`unlawful regulatory scheme to deny any application by Plaintiffs to the
`MGCRB to reclassify to a different CBSA for wage index purposes;
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`b. ordering Defendants; their successors in office, agents, and employees; and
`all persons acting in concert with Defendants, when reviewing any MGCRB
`applications by Plaintiffs, to apply the requirements applicable to hospitals
`located in the rural area of the state in which Plaintiffs are located, including
`for purposes of the 106% Comparison and the 3-year AHW Comparison.
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`Maintain jurisdiction over this matter to ensure Defendants comply with the terms
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`3.
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`of this Court’s Order.
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`4.
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`5.
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`Require Defendants to pay all legal fees and costs of suit incurred by Plaintiffs.
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`Provide such other and further relief as the Court deems just and proper.
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`Respectfully submitted,
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`s/ Joseph D. Glazer
`Joseph D. Glazer (D.C. Bar No. 1007072)
`THE LAW OFFICE OF JOSEPH D. GLAZER, P.C.
`116 Village Boulevard, Suite 200
`Princeton, New Jersey 08540
`Telephone: (609) 951-2262
`Facsimile: (609) 921-7370
`jdg@jdglazerlaw.com
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`Counsel for Plaintiffs
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`Dated: February 26, 2021
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