Hospital Claim Dismissed for Want of Redressability

The recent decision in Dignity v. Burwell is interesting for three reasons.  For one thing, it provides a reminder of the unfortunate fact that the acts (or inaction) of one party can adversely affect the fate of others—as when your dad punished all the kids for something only your stupid kid brother did.

In this case, the kid brother was one of the three hospitals in the Santa Cruz area.  The hospital allegedly failed, despite more than one request, to provide documentation to support its wage rates for the period in question.  The practical result was to make the Medicare wage index for all three area hospitals lower than it would otherwise be.

When all three hospitals requested a Provider Reimbursement Board hearing, the Board dismissed the appeal of the hospital that failed to provide the documentation (i.e., the kid brother) on failure-to-exhaust grounds but heard the appeals of the other two.  Ultimately, though, the Board concluded both that it lacked authority to provide any relief and also that on the merits the two remaining hospitals failed their burden of proof.

When one of the two hospitals took the matter to federal district court, the court dismissed the case because the plaintiff lacked standing.  This is the second reason the case is interesting.  The court rested its decision on the absence of an essential element of standing: redressability.   When’s the last time you heard or read that term?

Redressability is the capacity of the requested relief, if granted, to alleviate the alleged injury.  As the court saw it, the requested relief—ordering HHS to accept the kid bother’s documentation—wouldn’t necessarily redress the plaintiff’s injury because there was no evidence that the kid brother would supply it.  After all, the kid brother hadn’t complied with previous requests.

The court also found a second redressability problem: HHS regulations allow a hospital to challenge its own wage data but not the wage data of other hospitals.  And the court stated its unwillingness to infer a right of every hospital to challenge every other hospital’s wage data.

That brings us to the third point of interest: the astonishing length of time it can take to resolve   Medicare issues.  This case and the administrative proceedings before it concern wages for 2004.

 

The case is Dignity Health v. Price, Civil Action No. 15-804 (RDM) (D.D.C., opinion issued Mar. 21, 2017).

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