42 C.F.R. § 405.1885 to .1889. Any such request to request to reopen must be made within three years of the intermediary's decision, although this three-year limit is waived if it is established that the decision "was procured by fraud or similar fault of any party." Id. § 405.1885(a), (d). The Medicare regulations provide no express mechanism for appealing decisions denying a reopening request, and it is this lack of express authorization for such an appeal that is at the center of the controversy before us.
B. Setting the Stage: Medicare Reimbursement of Malpractice Insurance
Plaintiffs in this case seek a reopening of their 1980, 1981, and 1982 cost reports in order to increase the amount of reimbursement for their malpractice insurance expenses. The basis for their claim arises from a series of interrelated regulatory changes and court decisions, of which only a cursory summary is necessary.
Prior to October 1, 1983 (the period relevant to this case), the Medicare program reimbursed Part A providers on the basis of the provider's "reasonable cost" of furnishing covered services to beneficiaries, or the provider's customary charge for a particular service, whichever was lower. See 42 U.S.C. § 1395f(b)(1). Before 1979, one particular methodology (the "pre-1979 utilization method") was employed to calculate hospitals' malpractice insurance reimbursements. In 1979, the Secretary promulgated a new rule (the "1979 malpractice rule") which changed the method of calculating reimbursement for malpractice insurance costs in a manner which significantly reduced hospitals' reimbursement. The 1979 rule, however, was invalidated by the courts. See, e.g., Tallahassee Mem. Regional Med. Ctr. v. Bowen, 815 F.2d 1435 (11th Cir. 1987) (invalidating 1979 malpractice rule), cert. denied, 485 U.S. 1020, 99 L. Ed. 2d 888, 108 S. Ct. 1573 (1988). In response to this judicial invalidation, as well as to new data, the Secretary published a new rule, effective May 1, 1986 (the "1986 malpractice rule"). This 1986 rule replaced the 1979 rule with a new methodology for calculating hospital malpractice insurance costs, one which significantly increased hospitals' reimbursement for their malpractice insurance costs, but not to the level of pre-1979 reimbursement.
As first published, the 1986 malpractice rule applied retroactively to cost-reporting periods beginning July 1, 1979. See 51 Fed. Reg. 11142 (1986). The rule's retroactive effect, however, was overturned by the Supreme Court in 1988. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 102 L. Ed. 2d 493, 109 S. Ct. 468 (1988). In response, the Secretary discontinued the retroactive application of the 1986 rule and determined that claims for cost-reporting periods predating the 1986 rule would be reimbursed under the earlier, pre-1979 reimbursement method. HCFA Ruling 89-1, Medicare & Medicaid Guide (CCH) P 6139 (Jan. 26, 1989) at 2061-16. The Secretary agreed to settle all pending unsettled claims challenging reimbursement under the 1979 and 1986 rules, using the pre-1979 reimbursement method. See HHS Settlement Offer, Medicare & Medicaid Guide (CCH) P 6139 (May 11, 1988) at 2061-5.
C. Procedural History
Plaintiffs, who had filed timely cost reports with Empire for 1980, 1981, and 1982 using the now-invalidated 1979 malpractice rule, had accordingly been undercompensated for their malpractice insurance costs and were consequently eligible to participate in the Secretary's 1988 settlement offer. None of the plaintiff hospitals, however, attempted to participate in the settlement for the cost reports at issue in this suit. See September 27, 1993 Stipulation of matters not in dispute ("Stipulation") P 4. It was not until August 5, 1991 that the hospitals first petitioned Empire to reopen their 1980, 1981, and 1982 cost reports and to increase their reimbursement for malpractice costs based upon the pre-1979 reimbursement method. Administrative Record ("A.R.") at 287-94. On September 9, 1991, Empire denied the hospitals' reopening request on the grounds that plaintiffs' petitions were untimely because they were filed more than three years after the NPRs became final. A.R. at 296.
Plaintiffs then filed an appeal with the PRRB within 180 days of receiving Empire's denial of their reopening request. A.R. at 315-22. In their petition to the Board, plaintiffs argued that Empire's denial of their request should be overturned because Empire, by relying on a now-invalidated method of calculating reimbursement, had engaged in "fraud or similar fault," thus waiving the three-year time limit for reopening. A.R. at 3-6, 317-19. Plaintiffs argued that the Board could review Empire's refusal to reopen the cost reports as a final intermediary determination subject to administrative review under 42 U.S.C. § 1395oo(b). A.R. at 4. The Board, however, did not reach the merits of plaintiffs' reopening claim but held instead that it lacked jurisdiction over the appeal. In a one-page letter ruling, the Board held that, pursuant to 42 C.F.R. § 405.1885(c), jurisdiction to consider reopening was vested exclusively with the last administrative body to issue a decision, in this case Empire. A.R. at 1. Plaintiffs then filed this suit within 60 days of receiving the Board's decision.
Plaintiffs ask us to enter judgment: (1) directing the Board to exercise its jurisdiction to review Empire's refusal to reopen the cost reports; (2) reversing Empire's refusal to reopen the cost reports; and (3) declaring that plaintiffs are entitled to the requested modification of their cost reports, which would increase plaintiffs' compensation from Medicare for the 1980, 1981, and 1982 years.
As set out below, however, our jurisdiction under the Medicare statute is limited to addressing the first of these three claims, that is, to reviewing the PRRB's decision that it lacked jurisdiction to review Empire's reopening refusal. We have jurisdiction to review the PRRB decision under 42 U.S.C. 1395oo(f)(1). As set out in section C below, the courts have disagreed as to whether the Medicare statute confers jurisdiction on the PRRB to review intermediaries' refusals to reopen contested cost reports. Accordingly, we consider the regulations and other agency actions implementing the statutory scheme. We conclude that the regulations and the Medicare provider Reimbursement Manual clearly foreclose PRRB review of denials of reopening. As this is a reasonable interpretation of the Medicare statute, we will not overturn it. Accordingly, we conclude that the PRRB did not err in concluding that it lacked jurisdiction to review Empire's denial of plaintiffs' reopening request, and we grant summary judgment to defendants.
A. Applicable Standards of Review
Summary judgment is appropriate where there is "no genuine issue as to any material fact" and the moving party is entitled to "judgment as a matter of law." Fed. R. Civ. P. 56(c). In examining the record, the court must view the facts in the light most favorable to the non-moving party, and must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Maresco v. Evans Chemetics, 964 F.2d 106, 110 (2d Cir. 1992). In this case, no material facts are in dispute and the issue is solely one of statutory construction, so the matter may properly be disposed of by summary judgment.
"The starting point in interpreting a statute is its language, for 'if the intent of Congress is clear, that is the end of the matter.'" Good Samaritan Hosp. v. Shalala, 124 L. Ed. 2d 368, 113 S. Ct. 2151, 2157 (1993) (quoting Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984)); Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399, 403, 99 L. Ed. 2d 460, 108 S. Ct. 1255 (1988). If Congress has "directly spoken to the precise question at issue," the court need not defer to an agency interpretation but "must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-43.
If, on the other hand, the language of the statute is silent or ambiguous with respect to the specific issue under consideration, we must proceed to the second step of Chevron and address the construction put on the statute by the agency entrusted with its administration. Id. at 843-45. Judicial review of Medicare reimbursement decisions is conducted in accordance with the Administrative Procedure Act ("APA"), Chapter 7 of U.S.C. Title 5. 42 U.S.C. § 1395oo(f)(1). Pursuant to the APA, a court reviewing agency action will hold unlawful and set aside agency action, findings, and conclusions if they are found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A).
This standard of review is highly deferential. A court is to accord considerable weight to an agency's construction of a statutory scheme it is entrusted to administer. Chevron, 467 U.S. at 844; Atlantic States Legal Foundation v. Eastman Kodak Co., 12 F.3d 353, 358 (2d Cir. 1993). We "generally will defer to a permissible interpretation." Good Samaritan Hosp. v. Shalala, 124 L. Ed. 2d 368, 113 S. Ct. 2151, 2159 (1993). Deference is especially appropriate where Congress has delegated responsibility for a regulatory scheme as intricate as Medicare. Butler County Mem. Hosp. v. Heckler, 780 F.2d 352, 356 (3d Cir. 1985) (deference appropriate for complex Medicare reimbursement scheme); DeJesus v. Perales, 770 F.2d 316, 327 (2d Cir. 1985) (Friendly, J.) ("courts must exhibit particular deference to the Secretary's position with respect to legislation as intricate as [Medicaid]"), cert. denied, 478 U.S. 1007 (1986). The scope of the court's review of agency action is confined to the full administrative record before the agency at the time the agency action was taken. APA § 706, 5 U.S.C. § 706; Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 419-20, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971).
B. Plaintiffs' Reopening and Reimbursement Claims
Plaintiffs ask us to remand this case to Empire with directions to reopen the cost reports and make payments to the hospitals in accordance with the Secretary's revised policies for malpractice costs. They contend that the hospitals' request to reopen was not untimely, as Empire concluded, but instead falls under the exception in the Medicare reimbursement regulations which allows an NPR to be reopened after the three-year time limit has expired if the NPR "was procured by fraud or similar fault of any party." 42 C.F.R. § 405.1885(d). The Secretary's concession that its reimbursement policies at the time were invalid, plaintiffs contend, provides the necessary "similar fault."
Accordingly, they argue, Empire's refusal to reopen constitutes abuse of discretion.
This Court, however, lacks jurisdiction to explore the merits of these issues. Federal jurisdiction to review administrative decisions under the Medicare statute is sharply restricted by statute; Congress has expressly precluded general federal-question review of agency action arising under the statute and has made clear that judicial review is available only to the extent that the statute provides. See 42 U.S.C. § 1395ii (incorporating into the Medicare statute the jurisdiction-preclusion section of the Social security Act, 42 U.S.C. 405(h), which provides that "no findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided"); Heckler v. Ringer, 466 U.S. 602, 614-16, 80 L. Ed. 2d 622, 104 S. Ct. 2013 (1984); Califano v. Sanders, 430 U.S. 99, 108-09, 51 L. Ed. 2d 192, 97 S. Ct. 980 (1977); Weinberger v. Salfi, 422 U.S. 749, 760-61, 45 L. Ed. 2d 522, 95 S. Ct. 2457 (1975).
Under the Medicare statute, the sole route for a provider to obtain judicial review of disputed reimbursement claims is found in § 1395oo(f)(1). This subsection provides, in pertinent part:
Providers shall have the right to obtain judicial review of any final decision of the Board. . . by a civil action commenced within 60 days of the date on which notice of any final decision . . . is received . . . .
42 U.S.C. § 1395oo(f)(1) (emphasis added).
The PRRB's decision that it lacks jurisdiction is a "final decision of the Board" which triggers the right to judicial review. Edgewater Hosp. Inc. v. Bowen, 857 F.2d 1123, 1130-32 (7th Cir. 1988); St. Joseph's Hosp. v. Heckler, 786 F.2d 848, 851 (8th Cir. 1986); Saline Community Hosp. Ass'n v. Secretary of HHS, 744 F.2d 517, 519-20 (6th Cir. 1984). This Court's jurisdiction is limited, however, to a review of whether the PRRB erred in determining that it lacked jurisdiction. Saline, 744 F.2d at 520; Staten Island Hosp. v. Sullivan, No. 91-0733 (RCL), slip op. at 12 (D.D.C. Mar. 31, 1992). Since the Court does not have subject matter jurisdiction over the merits of plaintiffs' reopening claim or their underlying reimbursement claims, those claims are dismissed pursuant to Rule 12(b)(1).
C. Review of the PRRB's Decision
Plaintiffs ask us, alternatively, to reverse the Board's refusal of jurisdiction and to direct it to exercise its jurisdiction to review Empire's denial of reopening. In reviewing the Board's determination, we first consider the provisions in the Medicare statute which govern PRRB jurisdiction. Finding these provisions less than fully clear, we then turn to the regulations.
1. The Medicare Statute
Section 1395oo of the Medicare statute governs PRRB hearings as well as appeals of PRRB decisions. Subsection (a) confers jurisdiction on the Board to hear appeals from decisions by intermediaries, and it is to this provision that we turn first in considering the Board's jurisdiction to review denials of reopening requests. We turn subsequently to two other provisions which plaintiffs urge us to consider, and conclude that they do not confer jurisdiction on the Board.
a. Subsection 1395oo(a): Review of "Final Determinations" of Intermediaries
42 U.S.C. § 1395oo(a) confers jurisdiction on the PRRB to hear appeals. It provides, in pertinent part:
Any provider of services which has filed a required cost report within the time specified in regulations may obtain a hearing with respect to such cost report by a provider Reimbursement Review Board . . . if --