The U.S. Supreme Court has eliminated the possibility of a provider trying to claim additional Medicare cost report reimbursement under the legal theory of equitable tolling in its opinion published today: Sebelius v. Auburn Regional Medical Center (“Auburn”). The result of this opinion places even more importance on ensuring providers adhere to the statutorily imposed deadlines when filing Medicare cost report-based appeals. This decision does not affect Hall Render appeals of Medicare Disproportionate Share Hospital (“DSH”) issues as all of the firm’s appeals were filed within the 180-day Provider Reimbursement Review Board (“PRRB”) deadline.
Discussion
The U.S. Supreme Court unanimously sounds the death knell for using the legal theory of equitable tolling to bring an appeal of Medicare costs following the expiration of time allotted in statute and regulation: “We further hold that the presumption in favor of equitable tolling does not apply to administrative appeal of the kind here at issue.” Auburn, at 2. In Auburn, a group of providers attempted to recoup DSH payments using this theory of equitable tolling, more than three years after the issuance of their final cost report settlements, on the heels of the publication of a PRRB decision that exposed systemic and long-existing errors in the process CMS used to compute a key component of providers’ DSH reimbursements. While the Auburn Regional hospitals acknowledged they filed appeals sometimes more than ten years after the 180-day deadline to file appeals after finalization of cost reports, they argued equitable tolling should apply because CMS knowingly and unlawfully failed to disclose that the DSH payments were understated.
The PRRB held that it did not have jurisdiction to apply equitable powers, and it was bound by the regulation allowing late appeals for good cause for up to three years past the filing deadline. The District Court for the District of Columbia also dismissed the providers’ complaint, stating that Congress did not intend to allow equitable tolling. 686 F.Supp. 2d 55, 70 (D.D.C. 2010).
The providers appealed, and on June 24, 2011, the United States Court of Appeals for the District of Columbia released a decision in Auburn Regional Medical Center v. Sebelius (“Auburn Regional”). 642 F. 3d 1145 (C.A.D.C. 2011). The decision reversed the district court decision, ruling that the statutory deadline to file appeals with the PRRB could be subject to the doctrine of “equitable tolling.” In reversing, the Court of Appeals held that the law creates a presumption in favor of the potential for equitable tolling unless the statute specifically bars it. With no such bar in the statute, the Court of Appeals remanded the case back to the district court to determine if the rigid criteria for equitable tolling applied. The government petitioned under a writ of certiorari for U.S. Supreme Court review, which was granted.
On December 4, 2012, the U.S. Supreme Court held oral arguments in the Auburn Regional case. Much of the discussion focused on whether CMS had the authority to extend reopening periods to three years or whether the three-year limitation was arbitrary and capricious. The court also challenged the government on “good cause” exceptions to filing deadlines, with Justice Sotomayor asking, “What is good cause if not equitable tolling?”
In Auburn Regional, the district court refused to consider whether the appealing hospitals met these criteria, holding that the law did not permit equitable tolling in any circumstances for Medicare reimbursement appeals of this nature. In reversing, the Court of Appeals held that the district court’s reasoning was backwards. Instead of looking for permission in the law for whether the equitable tolling criteria can even be tested, the Court of Appeals held the proper approach is to presume the criteria should be tested unless the law expressly forbids it. The U.S. Supreme Court today struck down the Court of Appeals ruling, holding that equitable tolling cannot be used in PRRB appeals.
Practical Takeaways
- Equitable tolling cannot be used for PRRB Administrative appeals.
- Today’s decision by the U.S. Supreme Court reinforces the existing deadlines for hospitals wishing to file a Medicare Cost Report Appeal.
- Current Medicare Cost Report Appeal Filing deadlines remain: Within 180 days of the issuance of the “final determination” (typically, the final determination is the Notice of Program Reimbursement that accompanies the cost report settlement); or within three years of the final determination upon a showing of good cause.
- This U.S. Supreme Court decision does not affect Hall Render appeals of DSH issues as all of the firm’s appeals were filed within the 180-day PRRB deadline.
If you have any questions, please contact Liz Elias at eelias@wp.hallrender.com or 317.977.1468, Keith Barber at kbarber@wp.hallrender.com or 317.977.1428, Maureen O’Brien Griffin at mgriffin@wp.hallrender.com or 317.977.1429 or your regular Hall Render attorney.
