Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 1 of 24
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`UNITED STATES DISTRICT COURT FOR
`THE DISTRICT OF COLUMBIA
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`NORTHWESTERN MEMORIAL HOSPITAL
`251 East Huron Street
`Chicago, Il 60611
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`and
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`
`
`Case No. 1:22-cv-313
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`MICHIGAN MEDICINE
`d/b/a University of Michigan Hospitals & Health
`Centers
`1500 E. Medical Center Dr.
`Ann Arbor, MI 48109
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`and
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`MILTON S. HERSHEY MEDICAL CENTER
`500 University Dr.
`Hershey, PA 17033
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`and
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`UH CLEVELAND MEDICAL CENTER
`3605 Warrensville Center Rd.
`Shaker Heights, OH 44122
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`and
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`UH REGIONAL HOSPITALS
`d/b/a UH Richmond Heights Hospital
`27100 Chardon Road
`Richmond Heights, OH 44143
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`
`
`vs.
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`
`
`XAVIER BECERRA
`Secretary of the United States Department of
`Health and Human Services
`200 Independence Ave., S.W.
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`Washington, DC 20201
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`
`
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`Defendant.
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`
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`Plaintiffs,
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 2 of 24
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`
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`COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF AND SUMS DUE
`UNDER THE MEDICARE ACT
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`INTRODUCTION
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`1.
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`This is a civil action brought to obtain judicial review of agency decisions
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`regarding Medicare reimbursements rendered by Xavier Becerra (the “Secretary” or
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`“Defendant”) in his official capacity as the Secretary of the United States Department of Health
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`and Human Services. Plaintiffs are hospitals that participate in the Medicare program and
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`qualify for direct graduate medical education (“DGME”) payments for training medical
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`residents. Plaintiffs seek an order setting aside the Secretary’s regulation at 42 C.F.R. §
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`413.79(c)(2)(iii), which unlawfully reduces Plaintiffs’ DGME payments by decreasing the
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`number of residents that Plaintiffs may claim during a fiscal year.
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`2.
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`Plaintiffs operate approved medical training programs for physician interns,
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`residents, and fellows (collectively, “residents”). Plaintiffs receive Medicare DGME payments,
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`which are calculated, in part, based on the number of full-time equivalent (“FTE”) residents that
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`train at each hospital. If a resident’s training time exceeds the number of years designated as the
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`“initial residency period” (“IRP”), the resident’s time is weighted at 0.5, which means that the
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`hospital may only count one-half of the resident’s time that exceeds the IRP. Also, the number
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`of FTEs that a hospital may claim for payment in any given year is generally capped at the
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`number of unweighted FTEs that it trained in its 1996 fiscal year.
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`3.
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`The regulation at 42 C.F.R. § 413.79(c)(2)(iii) is contrary to the Medicare statute
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`because it calculates a hospital’s DGME payments using a weighted FTE cap rather than an
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`unweighted FTE cap. 42 U.S.C. § 1395ww(h)(4)(F). The effect of the unlawful regulation is to
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`impose on Plaintiffs a weighting factor on residents that are within their IRP or, viewed
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`2
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 3 of 24
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`differently, results in a reduction of greater than 0.5 for many residents who are beyond the IRP,
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`which prevents Plaintiffs from claiming DGME reimbursement up to their full FTE caps
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`authorized by statute. Thus, the calculations of the current-year, prior-year, and penultimate-year
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`weighted DGME FTEs (all three of which are elements of a hospital’s DGME calculation in a
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`given year) and the FTE caps are contrary to the statutory provision at 42 U.S.C. § 1395ww(h),
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`and, as a result, Plaintiffs’ DGME payments are unlawfully understated.
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`4.
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`The Secretary’s application of this regulation violates the Administrative
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`Procedure Act, 5 U.S.C. § 551 et seq. (the “APA”), and is contrary to the Medicare statute, 42
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`U.S.C. § 1395ww(h). Accordingly, Plaintiffs asks this Court to reverse the Secretary’s decisions
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`and to order the Secretary to recalculate Plaintiffs’ DGME payments as required by statute.
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`JURISDICTION AND VENUE
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`5.
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`This action arises under Title XVIII of the Social Security Act, 42 U.S.C. § 1395
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`et seq. (the “Medicare statute”), which establishes the Medicare program, and the APA.
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`6.
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`This Court has jurisdiction under 42 U.S.C. § 1395oo(f)(1), which grants
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`Medicare providers the right to obtain expedited judicial review (“EJR”) of any action involving
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`“a question of law or regulations relevant to the matters in controversy” when the Secretary’s
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`Provider Reimbursement Review Board (the “Board”) “determines . . . that it is without authority
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`to decide the question, by a civil action commenced within sixty days of the date on which
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`notification of such determination is received.” The Board granted EJR to Plaintiffs in decisions
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`dated December 9, 2021, December 14, 2021, December 30, 2021, January 3, 2022, and January
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`31, 2022. Exhibits 1–5. Accordingly, this action is timely filed within the sixty-day limitations
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`period established at 42 U.S.C. § 1395oo(f)(1).
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`7.
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`Venue in this Court is proper under 42 U.S.C. § 1395oo(f)(1).
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`3
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 4 of 24
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`PARTIES
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`8.
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`Plaintiff Northwestern Memorial Hospital (“NMH”) is an academic medical
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`center located in Chicago, Illinois. NMH participates in the Medicare program and has been
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`assigned Medicare Provider Number 14-0281. NMH operates graduate medical education
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`programs and receives Medicare DGME payments. NMH contests the Medicare reimbursement
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`decisions for its fiscal years ending December 31, 2015 and December 31, 2019.
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`9.
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`Plaintiff Michigan Medicine is an academic medical center located in Ann Arbor,
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`Michigan. Michigan Medicine participates in the Medicare program and has been assigned
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`Medicare Provider Number 23-0046. Michigan Medicine operates graduate medical education
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`programs and receives Medicare DGME payments. Michigan Medicine contests the Medicare
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`reimbursement decision for its fiscal year ending June 30, 2015.
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`10.
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`Plaintiff Milton S. Hershey Medical Center (“MSHMC”) is an academic medical
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`center located in Hershey, Pennsylvania. MSHMC participates in the Medicare program and has
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`been assigned Medicare Provider Number 39-0256. MSHMC operates graduate medical
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`education programs and receives Medicare DGME payments. MSHMC contests the Medicare
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`reimbursement decision for its fiscal year ending June 30, 2018.
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`11.
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`Plaintiff UH Cleveland Medical Center is an academic medical center located in
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`Shaker Heights, Ohio. UH Cleveland Medical Center participates in the Medicare program and
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`has been assigned Medicare Provider Number 36-0137. UH Cleveland Medical Center operates
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`graduate medical education programs and receives Medicare DGME payments. UH Cleveland
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`Medical Center contests the Medicare reimbursement decisions for its fiscal years ending
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`December 31, 2018 and December 31, 2019.
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`4
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`12.
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`Plaintiff UH Regional Hospitals, d/b/a UH Richmond Heights Hospital, is an
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`academic medical center located in Richmond Heights, Ohio. UH Richmond Medical Center
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`participates in the Medicare program and has been assigned Medicare Provider Number 36-0075.
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`UH Richmond Medical Center operates graduate medical education programs and receives
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`Medicare DGME payments. UH Richmond Medical Center contests the Medicare
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`reimbursement decisions for its fiscal years ending December 31, 2018 and December 31, 2019.
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`13.
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`Defendant Xavier Becerra is the Secretary of the United States Department of
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`Health and Human Services and is the federal officer responsible for administering the Medicare
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`program pursuant to the Social Security Act. Defendant is sued in his official capacity.
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`BACKGROUND
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`I.
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`The Medicare Program and Payment for Hospital Services
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`14. Medicare is a public health insurance program that generally furnishes health
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`benefits to participating individuals once they reach the age of 65. 42 U.S.C. § 1395c. The
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`Secretary has delegated much of the responsibility for administering the Medicare program to the
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`Centers for Medicare and Medicaid Services (“CMS”), which is a component of the United
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`States Department of Health and Human Services.
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`15.
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`Under the Medicare statute, an eligible Medicare beneficiary is entitled to have
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`payment made by Medicare on his or her behalf for, inter alia, inpatient and outpatient hospital
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`services provided by a hospital participating in the Medicare program as a provider of health care
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`services. Id. The Medicare program consists of four Parts: A, B, C, and D. Inpatient hospital
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`services are paid under Part A of the Medicare statute. Id. § 1395d. Physician, hospital
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`outpatient, and certain other services are paid under Medicare Part B. Id. § 1395k. Medicare
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`Part C is an optional managed care program that pays for services that would otherwise be
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`5
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`covered under Medicare Parts A and B. Id. §§ 1395w-21–1395w-29. Medicare Part D is an
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`optional insurance program for prescription drugs. Id. §§ 1395w-101–1395w-154. This action
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`concerns Medicare Part A.
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`II.
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`Direct Graduate Medical Education
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`16.
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`The Medicare statute reimburses hospitals for the direct costs of graduate medical
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`education. Id. § 1395ww(h). The DGME payment is calculated by multiplying a hospital’s
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`“patient load” times its “approved amount.” Id. § 1395ww(h)(3)(A). The “patient load” is “the
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`fraction of the total number of inpatient-bed-days . . . during the period which are attributable to
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`patients with respect to whom payment may be made under [Medicare] part A.” Id. §
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`1395ww(h)(3)(C). The “approved amount” is the product of a hospital’s base-period per-
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`resident amount (“PRA”) and its weighted average number of FTE residents. Id. §
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`1395ww(h)(3)(B); 42 C.F.R. § 413.76(a). The weighted average number of FTEs is calculated
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`using the average of “the actual full-time equivalent resident counts for the cost reporting period
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`and the preceding two cost reporting periods.” 42 U.S.C. § 1395ww(h)(4)(G). The following is
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`the basic formula for calculating a hospital’s DGME payment:
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`PRA x (3-Year FTE Average) x (Medicare Patient Load) = DGME Payment
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`17.
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`The Medicare statute requires that residents who are training beyond their IRP are
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`weighted at 0.5, so that only half their time is counted. Id. § 1395ww(h)(4)(C)(iv). The IRP is
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`defined as the period necessary for board eligibility in the resident’s training program, not to
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`exceed five years. Id. § 1395ww(h)(5)(F). Most, though not all, residents who are training
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`beyond the IRP are participating in post-residency fellowship programs.
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`18.
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`For cost reporting periods beginning on or after October 1, 1997, Congress
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`established a cap on the number of unweighted DGME FTEs that a hospital may count, which is
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`6
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`set at each hospital’s number of unweighted FTEs during its most recent fiscal year that ended on
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`or before December 31, 1996. Id. § 1395ww(h)(4)(F). Thus, a hospital’s three-year FTE
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`average in the DGME formula is limited by the number of unweighted FTEs that the hospital
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`trained in its 1996 cost reporting period. The FTE cap is determined “before application of
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`weighting factors” based on the IRP. Id. § 1395ww(h)(4)(F)(i).
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`19.
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`In 1997, the Secretary promulgated an unlawful regulation to implement the 1996
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`cap that calculates a weighted 1996 FTE cap to be used in the payment calculation:
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`For purposes of determining direct graduate medical education payment, for cost
`reporting periods beginning on or after October 1, 1997, a hospital’s unweighted
`FTE count for residents in allopathic and osteopathic medicine may not exceed
`the hospital’s unweighted FTE count for these residents for the most recent cost
`reporting period ending on or before December 31, 1996. If the hospital’s number
`of FTE residents in a cost reporting period beginning on or after October 1, 1997,
`exceeds the limit described in this paragraph (g), the hospital’s weighted FTE
`count (before application of the limit) will be reduced in the same proportion that
`the number of FTE residents for that cost reporting period exceeds the number of
`FTE residents for the most recent cost reporting period ending on or before
`December 31, 1996.
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`42 C.F.R. § 413.86(g)(4) (1997).
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`20. When issuing this regulation, the Secretary stated, “We believe this proportional
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`reduction in the hospital’s unweighted FTE count is an equitable mechanism for implementing
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`the statutory provision.” Medicare Program; Changes to the Hospital Inpatient Prospective
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`Payment Systems and Fiscal Year 1998 Rates, 62 Fed. Reg. 45,966, 46,005 (Aug. 29, 1997);
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`Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal
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`Year 1998 Rates, 63 Fed. Reg. 26,318, 26,330 (May 12, 1998) [hereinafter the “FY 1998 IPPS
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`Rule”].
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`21.
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`On August 1, 2001, the Secretary amended the regulation to determine separate
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`weighted 1996 FTE caps for primary care residents and non-primary care residents, effective for
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`cost reporting periods beginning on or after October 1, 2001. 42 C.F.R. § 413.86(g)(4)(iii)
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`(2001); Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and
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`Rates and Costs of Graduate Medical Education: Fiscal Year 2002 Rates, 66 Fed. Reg. 39,828,
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`39,893-96 (Aug. 1, 2001) [hereinafter the “FY 2002 IPPS Rule”]. The Secretary did not change
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`the formula for determining the weighted 1996 FTE cap. Rather, the Secretary used the same
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`methodology as in the 1997 rule to calculate a primary care weighted 1996 FTE cap and a non-
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`primary care weighted 1996 FTE cap, which are then added together to determine an overall cap.
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`42 C.F.R. § 413.86(g)(4)(iii) (2001); FY 2002 IPPS Rule, 66 Fed. Reg. at 39,894.
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`22.
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`In 2004, CMS redesignated the regulation from 42 C.F.R. § 413.86(g)(4)(iii) to 42
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`C.F.R. § 413.79(c)(2)(iii). Medicare Program; Changes to the Hospital Inpatient Prospective
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`Payment Systems and Fiscal Year 2005 Rates, 69 Fed. Reg. 48,916, 49,112, 49,258-64 (Aug. 11,
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`2004).
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`23.
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`The regulation in effect during all fiscal years at issue in this action states as
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`follows:
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`If the hospital’s number of FTE residents in a cost reporting period beginning on
`or after October 1, 2001 exceeds the limit described in this section [i.e., the 1996
`unweighted cap], the hospital’s weighted FTE count (before application of the
`limit) for primary care and obstetrics and gynecology residents and nonprimary
`care residents, respectively, will be reduced in the same proportion that the
`number of FTE residents for that cost reporting period exceeds the number of
`FTE residents for the most recent cost reporting period ending on or before
`December 31, 1996.
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`42 C.F.R. § 413.79(c)(2)(iii) (2015-2019). This regulation is still in effect today.
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`24.
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`If a hospital’s unweighted FTE count exceeds its unweighted FTE cap, the
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`Secretary’s regulation at 42 C.F.R. § 413.79(c)(2)(iii) calculates the ratio of a hospital’s
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`unweighted FTE cap to the hospital’s current-year unweighted FTE count. Id. § 413.79(c)(2)(ii)-
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`(iii) (the “proportion that the number of FTE residents for that cost reporting period exceeds the
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`number of FTE residents for the most recent cost reporting period ending on or before December
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`31, 1996”). This ratio represents the percentage by which the hospital’s unweighted FTE cap is
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`below the current-year unweighted FTE count. The ratio is then multiplied by the current-year
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`weighted FTE count (both residents within and beyond their IRP) and, thereby, reduces that
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`already weighted FTE count. Id. The resulting number is the weighted 1996 FTE cap. The
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`Secretary’s methodology is expressed in the following equation:
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` (Unweighted FTE Cap)/(Unweighted FTEs) x Weighted FTEs = Weighted FTE Cap
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`The Secretary describes the result of this formula as “the hospital’s reduced cap.” FY 2002 IPPS
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`Rule, 66 Fed. Reg. at 39,894.
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`25.
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`The regulation calculates a hospital’s DGME payment based on its weighted
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`FTEs, which may not exceed its weighted 1996 FTE cap. 42 C.F.R. §§ 413.76(a),
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`413.79(c)(2)(iii).
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`26.
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`In Milton S. Hershey Medical Center. v. Becerra, No. 19-CV-3411, 2021 WL
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`1966572 (D.D.C. May 17, 2021), the plaintiff teaching hospitals sought an order setting aside the
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`Secretary’s regulation at 42 C.F.R. § 413.79(c)(2)(iii), asserting that the regulation is contrary to
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`the Medicare statute and is an arbitrary and capricious exercise of agency discretion under the
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`APA. The United States District Court for the District of Columbia held that the application of
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`42 C.F.R. § 413.79(c)(2)(iii) to compute the teaching hospitals’ FTE residents “was contrary to
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`law because the regulation effectively changed the weighting factors statutorily assigned to
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`residents and fellows.” Milton S. Hershey Med. Ctr., 2021 WL 1966572, at *1, 4-7. The court
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`stated that “the statue is clear: the Secretary’s rules ‘shall provide, in calculating the number of
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`full-time-equivalent residents in an approved residency program,’ that residents be weighted at
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`1.0 and fellows at 0.5.” Id. at *5 (quoting 42 U.S.C. § 1395ww(h)(4)(C). On July 16, 2021, the
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`Secretary filed a notice of appeal, which he subsequently withdrew. The United States Court of
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`Appeals for the District of Columbia Circuit dismissed the appeal on August 23, 2021. Milton S.
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`Hershey Med. Ctr. v. Becerra, No. 21-5169, 2021 WL 4057675 (D.C. Cir. Aug. 23, 2021).
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`III. Medicare Cost Report Appeals
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`27.
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`At the close of a hospital’s fiscal year, it is required to submit to its designated
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`Medicare Administrative Contractor (“MAC”) a “cost report” showing both the costs incurred by
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`the hospital during the fiscal year and the appropriate share of these costs to be apportioned to
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`Medicare. 42 C.F.R § 413.24(f). MACs are private companies under contract with the Secretary
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`to pay Medicare claims and audit hospital cost reports, among other duties. 42 U.S.C. §
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`1395kk-1.
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`28.
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`The MAC must analyze and audit the cost report and inform the hospital of a final
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`determination of the amount of Medicare reimbursement through a Notice of Program
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`Reimbursement (“NPR”). 42 C.F.R. § 405.1803(a). A hospital’s DGME payment is among the
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`components of the final payment determination reported in the NPR.
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`29.
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`A hospital may appeal a final determination of its Medicare reimbursement to the
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`Board. 42 U.S.C. § 1395oo(a). The Board has jurisdiction over appeals from MAC
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`determinations if the following requirements are met: (1) the hospital is dissatisfied with the
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`final determination, (2) the amount in controversy is at least $10,000, and (3) the hospital
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`requests a hearing within 180 days of receiving the final determination. Id.
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`30.
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`A group of hospitals may appeal a common dispute to the Board if the following
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`requirements are met: (1) the hospitals are dissatisfied with the final determination; (2) the
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`amount in controversy is, in the aggregate, at least $50,000; and (3) the hospitals request a
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`hearing within 180 days of the final determination. Id. § 1395oo(a), (b).
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`31.
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`In addition, for group appeals, the matter at issue must involve “a single question
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`of fact or interpretation of law, regulations, or CMS Ruling that is common to each provider in
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`the group.” 42 C.F.R. § 405.1837(a)(2).
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`32.
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`If the MAC fails to issue a timely final determination, the Medicare statute
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`entitles a provider to a Board hearing under the following conditions: (1) the provider has not
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`received a final determination from the MAC after filing an original or amended cost report, (2)
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`the provider’s cost report complied with the applicable rules and regulations, (3) the provider
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`filed a request for a hearing within 180 days after notice of the contractor’s determination would
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`have been received if the determination had been timely, and (4) the amount in controversy is at
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`least $10,000 (or at least $50,000 for a group appeal). 42 U.S.C. § 1395oo(a)(1)(B)-(C), (2)-(3).
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`The Secretary’s regulation implementing § 1395oo(a)(1)(B)-(C) states that a final determination
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`is deemed untimely if not received, through no fault of the provider, within one year after the
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`date of receipt by the contractor of the provider’s last-filed cost report for the period. 42 C.F.R.
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`§ 405.1835(c)(1).
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`33.
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`The Board lacks the authority to decide the validity of a Medicare regulation. Id.
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`§ 405.1867. If a hospital (or group of hospitals) appeals an issue that involves a question that is
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`beyond the Board’s authority, the Board may authorize EJR of the case. 42 U.S.C. §
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`1395oo(f)(1); 42 C.F.R. § 405.1842.
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`34.
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`The Board must grant EJR if it determines that (1) the Board does not have the
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`authority to decide the legal question because the question is a challenge either to the
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`constitutionality of a statute or to the substantive or procedural validity of a regulation or CMS
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`Ruling, and (2) the Board has jurisdiction to hold a hearing on the specific matter at issue. 42
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`U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1842(f)(1).
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`35.
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`If the Board issues an EJR decision, the CMS Administrator has the right to
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`“review the Board’s jurisdictional finding, but not the Board’s authority determination.” 42
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`C.F.R. § 405.1842(a)(3). The Board’s decision to grant EJR “becomes final and binding on the
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`parties unless the decision is reversed, affirmed, modified, or remanded by the Administrator.”
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`Id. § 405.1842(g)(1)(iii).
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`36.
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`If the Board grants the hospital’s request for EJR, the hospital may seek judicial
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`review of the action involving a question of law or regulations by commencing a civil action
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`within sixty days of the date on which notification of the Board’s determination is received. 42
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`U.S.C. § 1395oo(f)(l); 42 C.F.R. § 405.1842(g)(2).
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`FACTS SPECIFIC TO THIS CASE
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`37.
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`Plaintiffs are teaching hospitals that receive Medicare DGME payments.
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`Plaintiffs all trained residents in their fiscal year 1996 (“FY 1996”) cost reporting periods.
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`Accordingly, the Secretary established DGME FTE caps for each Plaintiff based on its FY 1996
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`resident FTE count.
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`38.
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`During the fiscal years at issue in this action, Plaintiffs’ unweighted FTE counts
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`exceeded their unweighted FTE caps. Plaintiffs’ FTE counts included residents who were both
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`within and beyond the IRP. The Secretary employed the methodology of the regulation at 42
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`C.F.R. § 413.79(c)(2)(iii) when applying the FTE weighting factors for residents beyond their
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`IRP to Plaintiffs’ DGME FTE caps.
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`I. Board Case Number 22-0450
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`39.
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`Plaintiff NMH contests the application of 42 C.F.R. § 413.79(c)(2)(iii) to its fiscal
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`year ending August 31, 2015. NMH filed an appeal with the Board pursuant to 42 U.S.C. §
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`1395oo(a)(1)(C) based on the failure of the MAC to issue a timely final determination
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`concerning NMH’s fiscal year ending August 31, 2015. NMH, through no fault of its own, did
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`not receive a final determination within one year after the date of receipt by the contractor of the
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`provider’s last-filed cost report for its fiscal year ending August 31, 2015. NMH filed an appeal
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`with the Board within the 180-day window following the one-year anniversary of the date of
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`receipt by the MAC of NMH’s cost report, and the amount in controversy was over $10,000.
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`The Board assigned case number 22-0450 to NMH’s appeal.
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`40.
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`On January 18, 2022, NMH requested that the Board grant EJR on the question of
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`the validity of the Secretary’s methodology for applying the FTE caps and weighting factors as
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`specified in 42 C.F.R. § 413.79(c)(2)(iii).
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`41.
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`By letter dated January 31, 2022, the Board granted EJR. The Board held as
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`follows:
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`1) It has jurisdiction over the matter for the subject year and that the Provider in
`this appeal is entitled to a hearing before the Board;
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`2) Based upon the Provider’s assertions regarding 42 C.F.R. § 413.79(c)(2)(iii),
`there are no findings of fact for resolution by the Board;
`
`3) It is bound by the applicable existing Medicare law and regulation (42 C.F.R. §
`405.1867); and
`
`4) It is without the authority to decide the legal question of whether 42 C.F.R.§
`413.79(c)(2)(iii) is valid.
`
`42.
`
`The Board’s January 31, 2022, EJR decision constitutes the Secretary’s final
`
`agency action in Board case number 22-0450.
`
`43.
`
`By filing this Complaint, NMH has timely sought EJR under 42 U.S.C. §
`
`1395oo(f)(1).
`
`II. Board Case Number 21-1525
`
`44.
`
`Plaintiff NMH contests the application of 42 C.F.R. § 413.79(c)(2)(iii) to its fiscal
`
`year ending August 31, 2019. NMH filed an appeal with the Board pursuant to 42 U.S.C. §
`
`
`
`13
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`

`

`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 14 of 24
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`1395oo(a)(1)(C) based on the failure of the MAC to issue a timely final determination
`
`concerning NMH’s fiscal year ending August 31, 2019. NMH, through no fault of its own, did
`
`not receive a final determination within one year after the date of receipt by the contractor of the
`
`provider’s last-filed cost report for its fiscal year ending August 31, 2019. NMH filed an appeal
`
`with the Board within the 180-day window following the one-year anniversary of the date of
`
`receipt by the MAC of NMH’s cost report, and the amount in controversy was over $10,000.
`
`The Board assigned case number 21-1525 to NMH’s appeal.
`
`45.
`
`On November 23, 2021, NMH requested that the Board grant EJR on the question
`
`of the validity of the Secretary’s methodology for applying the FTE caps and weighting factors
`
`as specified in 42 C.F.R. § 413.79(c)(2)(iii).
`
`46.
`
`By letter dated December 14, 2021, the Board granted EJR. The Board held as
`
`follows:
`
`1) It has jurisdiction over the matter for the subject year and that the Provider in
`this appeal is entitled to a hearing before the Board;
`
`2) Based upon the Provider’s assertions regarding 42 C.F.R. § 413.79(c)(2)(iii),
`there are no findings of fact for resolution by the Board;
`
`3) It is bound by the applicable existing Medicare law and regulation (42 C.F.R. §
`405.1867); and
`
`4) It is without the authority to decide the legal question of whether 42 C.F.R. §
`413.79(c)(2)(iii) is valid.
`
`47.
`
`The Board’s December 14, 2021, EJR decision constitutes the Secretary’s final
`
`agency action in Board case number 21-1525.
`
`48.
`
`By filing this Complaint, NMH has timely sought EJR under 42 U.S.C. §
`
`1395oo(f)(1).
`
`
`
`14
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 15 of 24
`
`III. Board Case Number 20-1772
`
`49.
`
`Plaintiff Michigan Medicine contests the application of 42 C.F.R. §
`
`413.79(c)(2)(iii) to its fiscal year ending June 30, 2015. Michigan Medicine filed an appeal with
`
`the Board pursuant to 42 U.S.C. § 1395oo(a)(1)(A) based on the MAC’s final determination
`
`concerning Michigan Medicine’s fiscal year ending June 30, 2015. Michigan Medicine filed an
`
`appeal with the Board within the 180-day window following receipt of the MAC’s final
`
`determination, and the amount in controversy was over $10,000. The Board assigned case
`
`number 20-1772 to Michigan Medicine’s appeal.
`
`50.
`
`On December 6, 2021, Michigan Medicine requested that the Board grant EJR on
`
`the question of the validity of the Secretary’s methodology for applying the FTE caps and
`
`weighting factors as specified in 42 C.F.R. § 413.79(c)(2)(iii).
`
`51.
`
`By letter dated January 3, 2022, the Board granted EJR. The Board held as
`
`follows:
`
`1) It has jurisdiction over the matter for the subject year and that the Provider in
`this appeal is entitled to a hearing before the Board;
`
`2) Based upon the Provider’s assertions regarding 42 C.F.R. § 413.79(c)(2)(iii),
`there are no findings of fact for resolution by the Board;
`
`3) It is bound by the applicable existing Medicare law and regulation (42 C.F.R. §
`405.1867); and
`
`4) It is without the authority to decide the legal question of whether 42 C.F.R. §
`413.79(c)(2)(iii) is valid.
`
`52.
`
`The Board’s January 3, 2022, EJR decision constitutes the Secretary’s final
`
`agency action as to 42 C.F.R. § 413.79(c)(2)(iii) in Board case number 20-1772.
`
`53.
`
`By filing this Complaint, Michigan Medicine has timely sought EJR under 42
`
`U.S.C. § 1395oo(f)(1).
`
`
`
`15
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 16 of 24
`
`IV. Board Case Number 22-0090
`
`54.
`
`Plaintiff MSHMC contests the application of 42 C.F.R. § 413.79(c)(2)(iii) to its
`
`fiscal year ending June 30, 2018. MSHMC filed an appeal with the Board pursuant to 42 U.S.C.
`
`§ 1395oo(a)(1)(A) based on the MAC’s final determination concerning MSHMC’s fiscal year
`
`ending June 30, 2018. MSHMC filed an appeal with the Board within the 180-day window
`
`following receipt of the MAC’s final determination, and the amount in controversy was over
`
`$10,000. The Board assigned case number 22-0090 to MSHMC’s appeal.
`
`55.
`
`On November 23, 2021, MSHMC requested that the Board grant EJR on the
`
`question of the validity of the Secretary’s methodology for applying the FTE caps and weighting
`
`factors as specified in 42 C.F.R. § 413.79(c)(2)(iii).
`
`56.
`
`By letter dated December 9, 2021, the Board granted EJR. The Board held as
`
`follows:
`
`1) It has jurisdiction over the matter for the subject year and that the Provider in
`this appeal is entitled to a hearing before the Board;
`
`2) Based upon the Provider’s assertions regarding 42 C.F.R. § 413.79(c)(2)(iii),
`there are no findings of fact for resolution by the Board;
`
`3) It is bound by the applicable existing Medicare law and regulation (42 C.F.R. §
`405.1867); and
`
`4) It is without the authority to decide the legal question of whether 42 C.F.R. §
`413.79(c)(2)(iii) is valid.
`
`57.
`
`The Board’s December 9, 2021, EJR decision constitutes the Secretary’s final
`
`agency action in Board case number 22-0090.
`
`58.
`
`By filing this Complaint, MSHMC has timely sought EJR under 42 U.S.C. §
`
`1395oo(f)(1).
`
`
`
`16
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`Case 1:22-cv-00313 Document 1 Filed 02/06/22 Page 17 of 24
`
`V.
`
`Board Case Numbers 20-1839GC and 22-0126GC
`
`59.
`
`Plaintiffs UH Cleveland Medical Center and UH Richmond Heights Hospital
`
`contest the application of 42 C.F.R. § 413.79(c)(2)(iii) to their fiscal years ending on December
`
`31, 2018. UH Richmond Heights Hospital timely filed an appeal with the Board following the
`
`receipt of its final determination from its MAC, pursuant to 42 U.S.C. § 1395oo. UH Cleveland
`
`Medical Center filed an appeal with the Board pursuant to 42 U.S.C. § 1395oo(a)(1)(C) based on
`
`the failure of the MAC to issue a timely final determination. Plaintiff UH Cleveland Medical
`
`Center, through no fault of its own, did not receive a final determination within one year after the
`
`date of receipt by the MAC of its last-filed cost report for its fiscal year ending December 31,
`
`2018. UH Cleveland Medical Center filed its appeal with the Board within the 180-day window
`
`following the expiration of the 12-month period for issuance of the final contractor
`
`determination.
`
`60.
`
`UH Cleveland Medical Center and UH Richmond Heights Hospital established a
`
`group appeal, with an aggregate amount in controversy of over $50,000, contesting the
`
`application of 42 C.F.R. § 413.79(c)(2)(iii) to their cost reports ending in 2018. The Board
`
`assigned case number 20-1839GC to these Plaintiffs’ group appeal.
`
`61.
`
`Plaintiffs UH Cleveland Medical Center and UH Richmond Heights Hospital also
`
`contest the application of 42 C.F.R. § 413.79(c)(2)(iii) to their fiscal years ending on December
`
`31, 2019. UH Cleveland Medical Center and UH Richmond Heights Hospital filed a group
`
`appeal with the Board pursuant to 42 U.S.C. § 1395oo(a)(1)(C) based on the failure of the MAC
`
`to issue timely final determinations. UH Cleveland Medical Center and UH Richmond Heights
`
`Hospital, through no fault of their own, did not receive final determinations within one year after
`
`the date of receipt by the MAC of these Plaintif