Bethesda Health, Inc. v. Cohran

BETHESDA HEALTH, INC., et al., Plaintiffs, v. NORRIS COHRAN, in his official capacity as Acting Secretary of Health & Human Services,United States Department of Health & Human Services, Defendant.

Civil Action No. 18-cv-875 (BAH)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

February 16, 2021

Chief Judge Beryl A. Howell

MEMORANDUM OPINION AND ORDER

Plaintiffs, a group of hospitals in the State of Florida, initiated the instant action, on April 13, 2018, to overturn a final payment determination by the Provider Reimbursement Review Board ("Board"), an administrative tribunal within defendant Department of Health and Human Services ("HHS"), that denied inclusion of Florida Low Income Pool ("LIP") patients in the calculation of Medicare Disproportionate Share Hospital ("DSH") payments to each plaintiff hospital. Compl. ¶¶ 1-3, ECF No. 1. Following eighteen months of litigation, plaintiffs prevailed on summary judgment, see Bethesda Health, Inc. v. Azar ("Bethesda I"), 389 F. Supp. 3d 32, 53 (D.D.C. 2019), and on appeal, see Bethesda Health, Inc. v. Azar ("Bethesda II"), 980 F.3d 121, 123 (D.C. Cir. 2020). Now, when litigation on the merits of plaintiffs' claims is over, the Public Health Trust of Miami-Dade County, Florida, d/b/a Jackson Memorial Hospital ("JMH"), moves to intervene, pursuant to Federal Rule of Civil Procedure 24, see JMH Mot. Intervene ("JMH Mot."), ECF No. 35, despite having previously participated in this litigation as a plaintiff, until voluntarily dismissing its claims before disposition of summary judgment, see Stipulation of Dismissal Without Prejudice as to Jackson Memorial Hospital Only ("Stipulation of Dismissal"), ECF No. 25. For the reasons provided below, the motion to intervene is denied as wholly untimely.

I. BACKGROUND

Familiarity with the procedural history of this case, as comprehensively detailed in this Court's July 23, 2019 summary judgment decision, Bethesda I, 389 F. Supp. 3d at 34-40, is assumed and only briefly summarized here.

Plaintiffs provide uncompensated inpatient hospital services to uninsured and underinsured patients. Bethesda I, 389 F. Supp. 3d at 34. Congress has recognized that "any hospital that serves a disproportionately large percentage of low-income patients—known as a disproportionate share hospital (DSH) - should be reimbursed at a higher rate," based on the premise that "the more low-income patients a hospital treats, the more it costs on average to care for Medicare patients." Compl. ¶ 29 (quoting Adena Reg'l Med. Ctr. v. Leavitt, 527 F.3d 176, 177-78 (D.C. Cir. 2008)). To this end, acute-care hospitals are to receive upward adjustments to standard reimbursement rates for inpatient treatment of low-income patients. Id. ¶¶ 30-31 (citing 42 U.S.C. § 1395ww(d)(5)(F)). These adjustments are known as "DSH adjustments" or "DSH payments." Id. To calculate which hospitals qualify for DSH adjustments, the Centers for Medicare & Medicaid Services ("CMS") adds together two separate fractions to determine a hospital's "disproportionate patient percentage." Id. ¶ 31 (citing 42 U.S.C. §§ 1395ww(d)(5)(F)(i)(I); (d)(5)(F)(v); and 42 C.F.R. § 412.106(c)(1)). The first fraction, the "Medicare fraction," is based on the "inpatient days of individuals who are eligible for Supplemental Security Income ('SSI') and entitled to benefits under Medicare Part A." Id. (citing 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I)). The second fraction, the "Medicaid fraction," is based on "the number of Medicaid patients that the provider serves." Id. When combined, thesepercentages "provide a proxy for the total low-income patient percentage." Id. (quoting Catholic Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914, 916 (D.C. Cir. 2013)).

Relevant to calculating the Medicaid fraction, HHS and states have flexibility under the Social Security Act ("Act") to "explore different approaches to providing medical assistant to individuals not otherwise eligible for Medicaid," such that HHS may "'waive compliance with any of the requirements' of the Act and allow states to carry out 'experimental, pilot, or demonstration project[s]' that are 'likely to assist in promoting the objectives' of Medicaid . . . ." Id. ¶ 27 (quoting 42 U.S.C. § 1315(a), (e)). These waivers, known as "section 1115 waivers," id., help ensure that states receive federal matching funds for "medical assistance" provided to populations who are otherwise ineligible for "traditional" Medicaid, id. ¶ 28 (citing 42 U.S.C. § 1315(a)(2)(A)). To accommodate these waivers, the Medicare statute explicitly authorizes hospitals to incorporate "patient days of patients not eligible for medical assistance under an approved State plan but who are regarded as such because they receive benefits under a demonstration project approved under [a section 1115 waiver]." Id. ¶ 33 (citing 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II)). "In plain English, the Medicare DSH formula takes into account the number of patient days for those patients eligible for Medicaid, and may also include patient days for those patients ineligible for Medicaid, but who receive benefits under a Medicaid 'demonstration project.'" Id. (quoting Nazareth Hosp. v. Sec'y U.S. Dep't of Health & Human Servs., 747 F.3d 172, 175 (3d Cir. 2014)).

Pursuant to this statutory scheme, in 2006, the Florida legislature authorized, and HHS approved, a section 1115 waiver to reform Florida's Medicaid program. Id. ¶ 38 (citing FLA. STAT. § 409.91211 (2006)). Part of this reform included a provision to provide matching federal funds for medical assistance furnished to individuals in the State of Florida who "receivedinpatient services as members of [a] Low Income Pool Medicaid Eligibility Group ('LIP MEG') identified in the Special Terms and Conditions of the waiver." Id. ¶ 1. The LIP MEG provision of the waiver provides "direct payment and distributions to safety-net providers in Florida 'for the purpose of providing coverage to the uninsured through provider access systems,'" id. ¶ 39 (quoting CENTERS FOR MEDICARE & MEDICAID, U.S. DEP'T HEALTH & HUMAN SERVS., SPECIAL TERMS AND CONDITIONS NO. 11-W-00206/4, MEDICAID REFORM SECTION 1115 DEMONSTRATION 91 (2006)), and under the terms of this waiver, each of the hospitals in the provider access system, including plaintiffs, "agreed to provide inpatient services to the uninsured and underinsured as a condition of receiving LIP payments," id. ¶ 40.

At issue in plaintiffs' complaint was the degree to which calculation of the Medicaid fraction calculation was required to incorporate "LIP waiver days," i.e. the measure of services provided to "specific and identifiable uninsured and underinsured individuals in the fiscal years in question" under the LIP MEG provision. Id. ¶ 44. Plaintiffs each received a "year-end Medicare determination, issued by fiscal intermediaries working under the [HHS] Secretary's direction," which excluded LIP waiver days from the plaintiffs' DSH payment calculations, resulting in lower reimbursements. Id. ¶ 45. Plaintiffs appealed the fiscal intermediary's decisions to the Board, id. ¶ 46, which, on February 12, 2018, upheld the financial intermediary's decision to exclude the LIP waiver days from compensation, id. ¶ 48 (citing Compl., Ex. A, Board Decision No. 2018-D21 ("Board Decision") at 2, ECF No. 1-1). Pursuant to 42 C.F.R. § 405.1875(a) and (b), plaintiffs petitioned for review by the CMS Administrator, id. ¶ 50, which review was denied, prompting plaintiffs' claim before this Court that the Board's decision was arbitrary and capricious under the Administrative Procedure Act ("APA"), id.

JMH, a named plaintiff at the time the instant action was filed, participated in this litigation for fourteen months, until June 13, 2019, when JMH voluntarily stipulated to the dismissal of all claims against HHS. See Stipulation of Dismissal at 1. Six weeks later, on July 23, 2019, summary judgment was granted in plaintiffs' favor, concluding that LIP waiver days "should . . . [be] included in the relevant DSH calculations," and resulting in an order vacating the Board's decision and remanding the case for further proceedings before the agency consistent with the ruling. Bethesda I, 389 F. Supp. 3d at 34, 53. On HHS' appeal, the D.C. Circuit, on November 13, 2020, "embraced the district court's opinion as the law of this circuit" and affirmed. Bethesda II, 980 F.3d at 123.

On January 7, 2021, one day after the Circuit mandate issued, see Mandate, U.S. Court of Appeals for the District of Columbia Circuit, ECF No. 34, JMH moved to intervene due to concern that its "interests may not be adequately protected" without intervention, see JMH Mem. P&A Supp. Mot. Intervene ("JMH Mem.") at 1, ECF No. 35. The parties in this litigation all oppose this motion, see Pls.' Opp'n JMH Mot. Intervene ("Pls.' Opp'n") at 1, ECF No. 39; Def.'s Opp'n Mot. Intervene ("Def.'s Opp'n") at 1, ECF No. 40, which became ripe for resolution on January 28, 2021.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 24 provides that "[o]n timely motion," the Court "must permit anyone to intervene who . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest." FED. R. CIV. P. 24(a)(2). To qualify for intervention as of right, four requirements must be satisfied: "(1) the application to intervene must be timely; (2)the applicant must demonstrate a legally protected interest in the action; (3) the action must threaten to impair that interest; and (4) no party to the action can be an adequate representative to the applicant's interests." Karsner v. Lothian, 532 F.3d 876 (D.C. Cir. 2008) (quoting Sec. Exch. Comm'n v. Prudential Sec. Inc., 136 F.3d 153 (D.C. Cir. 1998)). A movant failing to meet the requirements to intervene as a matter of...