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By Mikhail Petrov

On March 7, 2016, in the published civil case of Cumberland County Hospital v. Burwell, the Fourth Circuit reviewed the decision of the district court to deny Cumberland County Hospital System’s (“the Hospital”) request for a writ of mandamus to compel the Secretary of the Department of Health and Human Service (“HHS”) to adjudicate immediately the Hospital’s administrative appeals on claims for Medicare reimbursement. The Forth Circuit agreed with the district court, finding that (1) the Hospital  did not have a clear and indisputable right to a hearing within a ninety-day time frame, and (2) that the political branches are best suited to address the backlog in the administrative process.

Facts

Both the Hospital and the Secretary agree that, as of February 2014, HHS had 480,000 appeals awaiting assignment to an Administrative Law Judge (“ALJ”), and the Secretary conceded in her brief that the number had already climbed to more than 800,000 appeals, creating a ten-year backlog. While acknowledging the unacceptability of the backlog, the Secretary attributes it to an increased number of appeals within the Medicare system and inadequate funding by Congress to hire additional personnel.

The Hospital operates a number of facilities in eastern North Carolina, delivering medical services to beneficiaries of Medicare. In 2012 and 2013, the Secretary denied payment to the Hospital on over 900 claims for reimbursement for Medicare services that she had initially authorized. By September 2014, the Hospital had over 750 appeals on these claims that had been pending for more than ninety days before the Office of Medicare Hearings and Appeals (“OMHA”) within HHS. Those appeals related to claims for some $12.3 million in reimbursement. Because reimbursement of such a large sum is essential to the Hospital’s operations, the Hospital commenced this action for a writ of mandamus.

Rule of the Case

The Hospital asked the district court for a writ of mandamus to require the Secretary to docket, assign to an ALJ, and decide an appeal within ninety days, as required by the Medicare Act. See 42 U.S.C. § 1395ff(d)(1)(A). A writ of mandamus is a “drastic” remedy that must be reserved for “extraordinary situations” involving the performance of official acts or duties. Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426 U.S. 394, 402 (1976). Accordingly, to show that it is entitled to mandamus relief, a plaintiff must show, among other things, that it has a “clear and indisputable right to the relief sought” and that the responding party has a “clear duty to do the specific act requested.” United States ex rel. Rahman v. Oncology Assocs., P.C., 198 F.3d 502, 511 (4th Cir. 1999).

Reasoning of the Fourth Circuit

As bleak as the circumstances appeared to be, the Fourth Circuit was unpersuaded that Article III treatment of the ailing Article II issue in the manner the Hospital urged was the answer or, indeed, even possible or desirable.

The Hospital asserts that the Secretary’s delay violates the congressional mandate that its appeals be heard and decided by an ALJ within ninety days as per 42 U.S.C. § 1395ff(d)(1)(A). The Fourth Circuit agreed with the district court and dismissed the Hospital’s complaint, relying on two independent grounds. It held (1) that the Hospital does not have a clear and indisputable right to an ALJ hearing within a 90-day time frame, as required for issuance of a mandamus order, and (2) that the political branches, rather than the courts, are best suited to address the backlog in the administrative process.

First, the Hospital contends that the Medicare Act gives it a clear and indisputable right to have its appeals decided within ninety days and that it imposes on the Secretary a clear duty to accomplish that. In support of this contention, the Hospital emphasizes the mandatory language of the Act, which provides that an ALJ “shall conduct and conclude a hearing . . . and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.” 42 U.S.C. § 1395ff(d)(1)(A). The Secretary, by contrast, maintains that the Medicare statute does not confer on the Hospital a right to a hearing within ninety days that is enforceable through mandamus, emphasizing that the statute provides that the consequence of failing to adjudicate an appeal within ninety days is that the provider (the Hospital) may escalate that appeal to the Departmental Appeals Board.

The Fourth Circuit agreed with the Secretary in that, instead of creating a right to go to court to enforce the ninety day deadline, Congress specifically gave the healthcare provider a choice of either waiting for the ALJ hearing beyond the ninety day deadline or continuing within the administrative process by escalation to the next level of review at the Departmental Appeals Board. The Hospital’s argument focuses on only the provision creating the ninety day time frame and fails to account for its context in the comprehensive administrative process. Thus, while the Act gives the Hospital the clear and indisputable right to this administrative process, it does not give it a clear and indisputable right to adjudication of its appeals before an ALJ within ninety days.

Second, the Fourth Circuit agreed with the district court’s conclusion that to grant mandamus relief would inappropriately “inter-meddle” with the agency’s problem-solving efforts and would fail to recognize HHS’s comparative institutional advantage in crafting a solution to the delays in the adjudication of appeals.

The Fourth Circuit concluded that if it were to interfere in the administrative process, it would be undermining important separation-of-powers principles. In the Medicare Act, Congress required healthcare providers to engage in an Executive Branch administrative process in making claims for Medicare reimbursement, thus precluding court suits in the first instance that would bypass the process. But, in doing so, it did not deny healthcare providers judicial review; indeed, it guaranteed such review, but only after the Secretary is given the opportunity to grant or deny the claims in accordance with the specified process. A writ of mandamus would have courts interrupt the specified administrative process and cross the lines of authority created by statute. Additionally, even if the backlog was fully attributable to the Secretary’s mismanagement, a court must “respect the autonomy and comparative institutional advantage of the executive branch” and must be “slow to assume command over an agency’s choice of priorities.” In re Barr Labs., Inc., 930 F.2d 72, 74 (D.C. Cir. 1991). Moreover, it is unlikely that any judicial intervention into HHS’s administrative process, as urged by the Hospital, would improve anything. Thus, the political branches are best-suited to alleviate OMHA’s crippling delays.

Holding

The Fourth Circuit agreed that the delay in the administrative process for Medicare reimbursement is incontrovertibly grotesque. Still, the Fourth Circuit held that the Medicare Act does not guarantee a healthcare provider a hearing before an ALJ within ninety days, and affirmed the decision of the district court to dismiss the case.

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