Sebelius v. Auburn Reg’l Med. Ctr. (Summary)

REIMBURSEMENT APPEALS

Sebelius v. Auburn Reg’l Med. Ctr., No. 11-1231 (U.S. Jan. 22, 2013)

In a suit brought by several hospitals against the Department of Health and Human Services (“DHHS”), seeking adjustment of disproportionate share payments that were incorrectly calculated over a period of several years, the Supreme Court of the United States (“Court”) held that the lawsuits were barred by the statute of limitations because they involved appeals of Medicare claims that were over 10 years old and, by statute and regulation, reimbursement appeals must be filed within 180 days following notification of the intermediary’s reimbursement calculation or, when good cause has been shown, within three years.

The hospitals in this case had filed appeals with the Provider Reimbursement Review Board (“PRRB”) after learning of the success of another hospital which challenged its disproportionate share payments.  Because CMS had previously released only the results of its calculations and not the underlying data, the hospitals did not have definitive evidence of the miscalculation until they learned of the success of the other hospital.  Accordingly, they argued that the 180-day/three-year limitations should be subject to equitable tolling and should begin to run only once the PRRB’s ruling in the other matter became available to the public.  The PRRB rejected the hospitals’ appeals, noting that it had no authority to extend the statute of limitations, by equitable tolling or otherwise.  Accordingly, the hospitals filed suit.

Several such lawsuits made their way through federal trial and appellate courts, with a number of appeals courts divided on whether equitable tolling could apply in Medicare reimbursement appeals to the PRRB.  Accordingly, the Court decided to hear one such case and issue a ruling.

The Court held that the statute which sets a 180-day statute of limitations for appeals to the PRRB is not “jurisdictional” by nature and, accordingly, it does not serve as a complete bar to extensions of the statute of limitation for such appeals.  In turn, the Court held that the DHHS was entirely within its discretion to promulgate a regulation allowing the PRRB to extend the statute of limitations to three years upon a showing of good cause by the party requesting the appeal.

The Court rejected the notion that equitable tolling should apply to appeals to the PRRB, however.  In reaching this conclusion, the Court noted that equitable tolling has never been applied to an agency’s internal appeal deadline (as opposed to claims in courts of law).  Perhaps more importantly, the Court noted that equitable tolling is a concept that is generally applied because it is consistent with legislative intent.  But, in the case of the Medicare Act, it was never the legislature’s intent to allow expansive administrative or judicial review.  In fact, the Court noted, until 1972, the Act provided no avenue for such review and only after Congress ordered the PRRB was such review available and, at that time, the review was specifically subject to a 180-day filing deadline.  Lastly, the Court made it clear that the statutory scheme that allows Medicare reimbursement reviews through the PRRB was never intended to be unusually protective of provider claimants.  The Court noted that Medicare-participating providers tend to be sophisticated organizations with legal counsel and resources sufficient to internally identify errors in reimbursement and timely file challenges to such errors.