Update and Thoughts on Lawsuit Over Medicare Hearing Backlog

Several months ago, I promised to post my thoughts on the viability of the American Hospital Association’s threatened lawsuit against the Secretary of Health and Human Services challenging the growing backlog of coverage appeals.  (See my post here).  That issue has become timely, because the AHA and several providers filed suit in May in the District of Columbia, and a few days ago filed a motion for summary judgment.   (See here).  There has been some coverage of the suit.  (See here and here.)  In short, their argument is that the statute says that a hearing must be held in 90 days and Medicare officials admit that the plaintiffs will not get a hearing for years, so therefore the court should order “mandamus,” forcing compliance with the 90 day deadline.

When I was in practice before moving to academia, I represented the Secretary in cases like this, so keep in mind my view might be biased.  But the government’s response to the complaint is due (by my calculation) Monday, July 28, so I wanted to offer my quick reactions about the case and what sort of response we might hear from the government.  I’ve just read over the AHA’s motion for summary judgment and I think that in a case like this, with an admitted violation of a statutory requirement, you have to start with the presumption that things could go bad for the government.  But with that said, I don’t think that the government’s case is as gloomy as it might at first appear, so this could be an interesting case to watch going forward.

The AHA is seeking mandamus, which courts are very reluctant to grant.  The plaintiff must, among other things, show that there is “no adequate remedy at law” for Medicare’s violation of the 90 day requirement.  That is going to be hard to do, because the statute itself provides a remedy for violation of the deadline.  In a section titled “consequences for failure to meet deadlines” the statute provides that, after waiting 90 days for a hearing, a provider can escalate its claim to the Departmental Appeals Board, and then (after 90 days), to federal district court.  See 42 U.S.C. § 1395ff.

That language, and option, are problematic for the AHA for two reasons. First, a civil action in district court is undoubtedly an “adequate remedy” for an allegedly erroneous Medicare coverage decision.  So the hospitals cannot argue they are being denied their entitlement to Medicare payment.  Instead, they have to argue that they are being denied an independent process right–to a hearing.  That is what they do in their motion, but they don’t cite any caselaw actually on point for whether such a move can work in mandamus.  And that characterization of the injury raises its own standing questions, because it is not self-evident that being denied an ALJ hearing (when you can still obtain judicial review) is itself the sort of cognizable injury that can support standing.  The AHA winds up in the position of having to argue that judicial review would be worse for member hospitals than an ALJ hearing, and I do not see a federal judge being particularly receptive to that argument.  Without doing much more substantive research, all I can say is that the “adequate remedy” element of the mandamus test is not an open-and-shut case.

There is an even more serious problem for the AHA that they do not address in their motion, however.  Not only does the possibility of escalation mean that there is an adequate remedy for the denial of payment, but the fact that Congress has provided a specific remedy for violations of the deadline, under the heading “consequences of failure to meet deadlines,” makes for a strong argument that the statute actually precludes remedies (like mandamus) other than escalation.  In other words, that Congress thought about and crafted a flexible remedy for violation of the deadline it put in place, and that the court would interfere with that remedial scheme by ordering mandamus.  Such a question of statutory interpretation, about whether the statute’s remedial scheme itself precludes judicial interference, could provide an independent grounds for the Secretary to move to dismiss the hospitals action.

So those are the two issues, as I see them, that make the legality of Medicare’s hearing delays a somewhat closer question than it appears at first.  I expect we will get to learn more about these issues once we see the government’s response, though in light of recent congressional hearings and other attention to this issue, it is also possible the government will either seek more time or try to dismiss on ripeness grounds.


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