Health Law Daily Court must decide whether to clear the RAC appeal logjam with mandamus
Wednesday, February 10, 2016

Court must decide whether to clear the RAC appeal logjam with mandamus

By Michelle L. Oxman, J.D., LL.M.

The D.C. Circuit Court of Appeals ruled that the district court must consider the merits of the American Hospital Association’s request for mandamus ordering HHS to decide claims appeals within the statutory deadlines. The district court incorrectly conflated the question of jurisdiction with the merits when it dismissed the AHA’s complaint (see Court refuses to break the “logjam” of Medicare appeals, December 22, 2014) (American Hospital Association v. Burwell, February 9, 2016, Tatel, D.).

Statutory deadlines. The AHA’S mandamus action sought to enforce the deadlines set in 42 U.S.C. §1395ff for the completion of each stage of the administrative review process. In particular, review by an administrative law judge (ALJ) is required to be completed within 90 days of timely filing of a petition for review, and review by the Departmental Appeals Board (DAB) must be completed within 90 days of receipt of the request for review.

Burgeoning RAC appeals. When HHS implemented the recovery audit contractor (RAC) program, appeals from overpayment determinations by RACs were added to the existing load of claims appeals. The number of appeals filed for ALJ review went from about 59,600 in federal fiscal year (FFY) 2011 to more than 384,000 in FFY 2013. By July 2014, the number of pending appeals reached 800,000. Even with increased staffing and streamlined procedures, the ALJs can process only about 72,000 appeals per year. In December 2013, the agency suspended the assignment of new appeals to the dockets for at least the next two years.

Jurisdiction. The Court of Appeals explained that there are three elements necessary to support jurisdiction over a mandamus claim: (1) a clear, indisputable right to relief; (2) violation by the government of a clear duty to act; and (3) the existence of no other adequate remedy. Once jurisdiction has been established, in challenges to agency delays, the court must consider six other related factors to determine whether the delay is egregious. The trial court had considered all of these issues together.

The existence of a clear duty to act and a corresponding clear right to relief were established because the deadlines are set forth in the statute. HHS argued that the ability to escalate an appeal to the next level, including judicial review, either made the duty a direction or provided an adequate remedy. The court rejected both of these contentions, however. The existence of a consequence for noncompliance did not negate the existence of the duty to timely dispose of cases. Escalation was not an adequate remedy because review by the ALJ is de novo, a fresh look at the record, while judicial review is highly deferential to the agency’s actions. Therefore, the court ruled that the district court had jurisdiction over the mandamus claims. It then addressed the factors that the court should consider when it decides the merits.

Addressing the merits. When it decides whether the agency’s delay is egregious enough to justify mandamus, the district court must consider the current backlog rather than the situation as it was when the original hearing was held. The court anticipates that the backlog will be much worse. Factors that might weigh against mandamus include: (1) the extraordinary, intrusive nature of the writ; (2) the extent to which Congress is attending to the issue; (3) the availability of escalation; and (4) the agency’s good faith efforts to solve the problem. Factors weighing for mandamus include: (1) the impact on human health and welfare, as hospitals must defer repairs, cut services, or decline certain patients who may be more likely to trigger an audit; (2) the discretion given to the Secretary over the details of implementation of the RAC program; and (3) the extent to which Congress and the agency are making progress toward elimination of the backlog.

The court noted that regardless of the limits on its resources, the agency could not delay appeals indefinitely. Although the RAC program is successful, the statutes make timely processing of appeals mandatory and the extent of implementation of the RAC program discretionary. The statutory mandates must prevail over discretionary actions. Finally, the court strongly suggested that the district court might require the agency to make periodic status reports so that it could monitor progress and, if needed, order mandamus if necessary.

The case is No. 15-5015.

Attorneys: Jaclyn DiLauro (Hogan Lovells US LLP) for American Hospital Association, Baxter Regional Hospital, Inc., d/b/a Baxter Regional Medical Center, Rutland Hospital, Inc., d/b/a Rutland Regional Medical Center and Covenant Health. Joshua Marc Salzman, U.S. Department of Justice, for Sylvia Mathews Burwell.

Companies: American Hospital Association; Baxter Regional Hospital, Inc., d/b/a Baxter Regional Medical Center; Rutland Hospital, Inc., d/b/a Rutland Regional Medical Center; Covenant Health

MainStory: TopStory IPPSNews CMSNews ClaimsAppealsNews RACNews DistrictofColumbiaNews

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