was having difficulty filing a request because of the
intermediary's inaction and he pointed out that the hospital was
able to compile an estimate in August 1994 even though the agency
had still not ruled (AR 17). In response to the hospital's
argument that it would only have been able to file an inaccurate
estimate in September 1993, the Administrator stated that the
regulations and the word "estimate" contemplate inaccurate and
unaudited requests (AR 17). He concluded that in light of this,
the provider is not harmed if the intermediary does not rule on
the obligated capital request before the request for
redetermination is due (AR 17). Finally, the Administrator held
that the Board was incorrect in concluding that the August 1994
request was timely under equitable tolling principles (AR 18).
The Administrator's reasons for this conclusion will be set forth
in more detail below.
Bradford filed a Complaint with this Court on May 14, 1999. It
seeks judicial review of the Administrator's decision, which is
the final decision of the Secretary of Health and Human Services.
Both parties have since filed motions for summary judgment.
II. STANDARD OF REVIEW
Judicial review of the Secretary's decision is governed by
42 U.S.C. § 1395oo(f), which incorporates the standard of review of
the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq.
See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 511, 114
S.Ct. 2381, 129 L.Ed.2d 405 (1994); Butler County Mem'l Hosp. v.
Heckler, 780 F.2d 352, 355-56 (3d Cir. 1985). Accordingly, we
must uphold the agency determination unless it is "arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with the law." 5 U.S.C.A. § 706(2)(A) (West 1996 &
In determining whether the agency acted arbitrarily and
capriciously, "a court may not substitute its judgment for that
of an agency, but must determine whether the agency's decision
was based on a consideration of the relevant factors and whether
there has been a clear error of judgment." State of New York
Dep't of Soc. Servs. v. Shalala, 21 F.3d 485, 492 (2d Cir. 1994)
(quoting Citizens to Preserve Overton Park, Inc. v. Volpe,
401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971) and Motor
Vehicle Mfrs. Ass'n of the United States v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443
(1983)). "Grounds for concluding that the agency acted
arbitrarily and capriciously include its reliance on factors
outside those Congress intended for consideration, a complete
failure by the agency to consider an important aspect of the
problem, or an agency's explanation that is contrary to, or
implausible in light of the evidence." Harrisburg Hosp. v.
Shalala, 48 F. Supp.2d 467, 472 (M.D.Pa. 1999) (citing
Fertilizer Institute v. Browner, 163 F.3d 774, 777 (3d Cir.
The Court must give substantial deference to an agency's
interpretation of its own regulations. See Commonwealth of
Pennsylvania v. United States Dep't of Health and Human Servs.,
101 F.3d 939, 944 (3d Cir. 1996) (quoting Elizabeth Blackwell
Health Ctr. for Women v. Knoll, 61 F.3d 170, 183 (3d Cir.
1995)). We must defer to the agency's interpretation "unless an
`alternative reading is compelled by the regulation's plain
language or by other indications of the Secretary's intent at the
time of the regulation's promulgation." Thomas Jefferson Univ.,
512 U.S. at 512, 114 S.Ct. 2381; see Commonwealth of
Pennsylvania, 101 F.3d at 944. Deference to the agency's
interpretation "is all the more warranted when . . . the
regulation concerns `a complex and highly technical regulatory
program,' in which the identification and classification of
relevant `criteria necessarily require significant expertise and
entail the exercise of judgment grounded in policy concerns.'"
Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381
(quoting Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 697,
111 S.Ct. 2524, 115 L.Ed.2d 604 (1991)).
Moreover, "[w]e may overturn the Secretary's decision if his
factual determinations are not supported by substantial
evidence." City of Camden v. United States Dep't of Labor,
831 F.2d 449, 450 (3d Cir. 1987). "Substantial evidence is `such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion.'" Seidman v. Office of Thrift
Supervision, 37 F.3d 911, 924 (3d Cir. 1994) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct.
206, 83 L.Ed. 126 (1994)). It is "`more than a mere scintilla'
but `less than the weight of the evidence.'" Passaic Valley
Sewerage Comm'rs v. United States Dep't of Labor, 992 F.2d 474,
480 (3d Cir. 1993) (quoting Consolidated Edison, 305 U.S. at
229, 59 S.Ct. 206).
Plaintiff argues that we must consider and give deference to
the Board's determination, as well as that of the Administrator.
It cites Central Washington Health Services Association v.
Harris, 497 F. Supp. 1143, 1152 (E.D.Wash. 1980), for the
following proposition: "[I]n determining whether the
Administrator's decision in turn is supported by substantial
evidence, the Court should consider and review the decision of
the P.R.R.B." Id. at 1152 (citing Fairfax v. Califano,
585 F.2d 602 (4th Cir. 1978) and Universal Camera Corp. v. NLRB,
340 U.S. 474, 496, 71 S.Ct. 456, 95 L.Ed. 456 (1951)).
In accordance with the cases cited by the Plaintiff, we will
consider the findings of fact of the Board and the Administrator,
as well as the entire administrative record, in assessing whether
the Secretary's decision is supported by substantial evidence. We
stress, however, that our standard of review of the factual
findings of the Secretary remains the same; we review the final
decision of the Secretary — the Administrator's decision — and
consider whether it is supported by substantial evidence. See
Universal Camera, 340 U.S. at 496, 71 S.Ct. 456 ("The
`substantial evidence' standard is not modified in any way when
the Board and its examiner disagree."); Saint Mary of Nazareth
Hosp. Ctr. v. Shalala, 96 F. Supp.2d 773, 776 (N.D.Ill. 2000)
("The fact that the PRRB and the Secretary may have reached
different conclusions in this case does not diminish the
deference due to the Secretary's final decision."); Spartanburg
Gen. Hosp. v. Heckler, 607 F. Supp. 635, 641 (D.S.C. 1985)
("[T]he deferential standard in this case is not lessened because
the decision of the PRRB differed from that of the Secretary. The
decision under review is the final agency determination, not that
of the subordinate hearing officers.").
Additionally, we note, however, that the issue in this case
turns primarily on conclusions of law rather than factual
determinations. More specifically, the case essentially turns on
the agency's interpretation of its own regulations. To the extent
that the Board and the Administrator arrived at differing legal
conclusions, our review and its corresponding deference must be
confined to the final decision of the Secretary, that of the
Plaintiff argues that we should reverse the Administrator's
decision because it is arbitrary and capricious, contrary to law
and not supported by substantial evidence. It urges this Court to
vacate the decision of the Administrator and reinstate that of
the Board. We will address each of the Plaintiff's arguments in
turn. Before we do, however, we reiterate that two dates are
relevant to the issue before us. Pursuant to
42 C.F.R. § 412.302(c)(1)(vii)(B), the intermediary was required to advise
Bradford Hospital by the end of June 1993 whether it would
recognize the obligated capital as old capital. Pursuant to
42 C.F.R. § 412.328(f)(1)(iii), the hospital was required to submit
its request for redetermination of the hospital-specific rate by
September 30, 1993.
A. Whether the September 1993 Letter Was a Redetermination
Plaintiff first argues that the Administrator erred in holding
that the September
1993 letter was not a timely request for redetermination of the
hospital-specific rate. The letter provides, in pertinent part:
Please note that the cost report was prepared under
the "fully prospective payment methodology" for
capital costs. However, Bradford Hospital requested
to be reimbursed under the "hold harmless
methodology" since we had a construction project that
was obligated prior to December 31, 1990. Details
pertaining to the project were submitted to the
auditors during their base year capital audit. We are
in the process of requesting revised capital payment
methodology for fiscal year 1993, since it is the
first full year with the obligated capital costs. To
that end, I would like to protect our right to appeal
our capital payment methodology for fiscal year 1993.
Again, the Administrator held that although the letter was
filed on September 30, 1993, the regulatory deadline, it did not
constitute a complete redetermination request because (1) it
merely stated that the hospital was "in the process of requesting
revised capital payment methodology" and (2) it did not include
an estimate of the redetermined rate (AR 16). The Administrator
concluded that the hospital did not file a complete
redetermination request until August 30, 1994, long after the
applicable deadline (AR 16).
Plaintiff maintains that contrary to the Administrator's
holding, the letter did constitute a redetermination request
because it "clearly requested a change" in the payment
methodology when it stated, "Bradford Hospital requested to be
reimbursed under the `hold harmless methodology' since we had a
construction project that was obligated prior to December 31,
1990." (AR 1054) It also argues that "if Bradford was still `in
the process' of making a request, it was only because the
intermediary had not fulfilled its regulatory duty of advising
Bradford whether it was going to recognize as old capital
Bradford's claimed obligated capital costs." Plaintiff's Reply
Br. at 8. Further, Plaintiff acknowledges that the "request" was
incomplete in that it did not contain an estimate; it appears to
argue, however, that the omission is excused since it was caused
by the intermediary's own failure to issue an obligated capital
We hold that the Administrator's conclusion was reasonable. The
letter does not request that the intermediary redetermine the
hospital-specific rate. As the Administrator noted, it merely
indicates that the hospital is "in the process" of doing so.
Further, the portion of the letter relied upon by Plaintiff does
not request a change in the payment methodology; rather, it
suggests that such a request was made in the past.*fn5 The
Administrator's decision in this regard was not arbitrary or
B. Equitable Tolling
Next, Plaintiff argues that the Administrator erred in refusing
to equitably toll the deadline for filing the redetermination
request and thereby render the August 30, 1994 submission timely.
The Administrator reversed the Board's decision in this regard
for three separate reasons, each of which we will address below.
1. Whether Equitable Tolling Applies to Regulatory Deadlines
First, citing Irwin v. Veterans Affairs, 498 U.S. 89, 111
S.Ct. 453, 112 L.Ed.2d 435 (1990), the Administrator held that
the equitable tolling doctrine is inapplicable to regulatory
filing deadlines. He concluded that the doctrine is limited to
deadlines for judicial rather than administrative proceedings.
In Irwin, the Supreme Court reversed a long-standing
principle that equitable tolling was never available against the
government. See id. at 93-96, 111 S.Ct. 453. It held that the
statute of limitations applicable to Title VII employment
discrimination suits could be equitably tolled against the United
States in the same manner as it could be tolled against a private
employer. See id. The Court concluded that this rule did not
infringe upon the doctrine of sovereign immunity. See id. at
95-96, 111 S.Ct. 453. It stated, "Once Congress has [waived
sovereign immunity], we think that making the rule of equitable
tolling applicable to suits against the Government, in the same
way that it is applicable to private suits, amounts to little, if
any, broadening of the congressional waiver." Id. at 95, 111
S.Ct. 453 (emphasis added).
In support of the Administrator's conclusion, Defendant argues
that the Supreme Court's use of the term "suit" in Irwin
limited its application to lawsuits in court so that it does not
extend to administrative proceedings. We agree with the
Plaintiff, however, that despite the use of the word "suit", the
Court in Irwin did not distinguish between lawsuits in court
and administrative proceedings. The issue simply did not arise in
Moreover, our research has revealed that numerous courts have
applied equitable tolling to regulatory filing deadlines. See,
e.g., Rager v. Dade Behring, Inc., 210 F.3d 776, 779 (7th Cir.
2000) (holding that equitable tolling is applicable to a Family
and Medical Leave Act regulation which requires the employee to
submit physician certification within 30 days); Von Eye v.
United States, 92 F.3d 681, 684 (8th Cir. 1996) (concluding that
equitable tolling applies to Food Security Act regulation which
requires that conversion activities be completed by January 1,
1995); Johnson v. Runyon, 47 F.3d 911, 914 (7th Cir. 1995)
(applying equitable tolling to EEOC regulation that requires
claimant to "initiate contact with a Counselor within 45 days of
the date of the matter alleged to be discriminatory."); Bayer v.
United States Dep't of Treasury, 956 F.2d 330, 332 (D.C.Cir.
1992) (holding that EEOC regulation that requires complaint to be
filed with counselor within 30 days of alleged discriminatory
event is subject to equitable tolling); Weber v. Henderson, No.
Civ. A. 99-2574, 2000 WL 217676, at *1 (E.D.Pa. 2000) (holding
that equitable tolling may apply to EEOC regulation which
requires claimant to bring claim to attention of counselor within
45 days of the date of the discriminatory event). Therefore, we
disagree with the Administrator and conclude that equitable
tolling is generally applicable to regulatory filing deadlines.
2. Whether Section 412.328(f)(1)(iii) is Subject to Equitable
The Administrator also held, relying on United States v.
Brockamp, 519 U.S. 347, 117 S.Ct. 849, 136 L.Ed.2d 818 (1997),
that equitable tolling does not apply to section 412.328(f) of
the Medicare regulations because that provision "sets forth its
limitations in a highly detailed technical manner that,
linguistically speaking, cannot be easily read as containing
implicit exceptions." (AR 21)
The issue in Brockamp was whether the courts can toll "the
statutory time . . . limitations for filing tax refund claims set
forth in § 6511 of the Internal Revenue Code of 1986[.]" Id. at
348, 117 S.Ct. 849. The plaintiff taxpayers in that case had
overpaid on their taxes. See id. at 348, 117 S.Ct. 849. Several
years after the relevant statutory time period had ended, the
each filed an administrative claim for a refund of the
overpayment. See id. When the administrative claim was denied
as untimely, they filed suit in federal court and asked the court
to equitably toll the limitations period due to the existence of
a mental disability. See id. Plaintiffs, relying on Irwin,
argued that equitable tolling applied to suits against the
government. See id.
The Supreme Court held that Congress did not intend the
equitable tolling doctrine to apply to the limitation periods
contained in section 6511. See id. at 352, 117 S.Ct. 849. The
Court concluded that unlike most time limitation provisions,
section 6511 is very complicated and convoluted. See id. at
350, 117 S.Ct. 849. "It sets forth its limitations in a highly
detailed technical manner, that, linguistically speaking, cannot
easily be read as containing implicit exceptions." Id. at 351,
117 S.Ct. 849. According to the Court, the provision "reiterates
its limitations several times in several different ways",
including in both procedural and substantive forms. Id. at
351-52, 117 S.Ct. 849. It also "sets forth explicit exceptions to
its basic time limits, and those very specific exceptions do not
include `equitable tolling.'" Id. at 351, 117 S.Ct. 849. The
Court concluded that "[t]o read an `equitable tolling' exception
into § 6511 could create serious administrative problems by
forcing the IRS to respond to, and perhaps litigate, large
numbers of late claims, accompanied by requests for `equitable
tolling' which, upon close inspection, might turn out to lack
sufficient equitable justification." Id. The Court stated: "The
nature and potential magnitude of the administrative problem
suggest that Congress decided to pay the price of occasional
unfairness in individual cases . . . in order to maintain a more
workable tax enforcement system." Id.
Section 412.328(f)(1)(iii), the regulation at issue in this
case, provides as follows:
The hospital must request a redetermination in
writing no later than the date the cost report must
be filed for the first cost reporting period
beginning on or after October 1, 1991 or the cost
reporting period that will serve as the new base
period, whichever is later. The hospital's
redetermination request must include the cost report
for the new base period and an estimate of the
revised hospital-specific rate indicating that the
new rate exceeds the hospital's current
42 C.F.R. § 412.328(f)(1)(iii) (1999). We agree with the
Plaintiff that section 412.328(f)(1)(iii) is distinguishable from
the provision in Brockamp. Unlike the tax code provision in
that case, section 412.328(f)(1)(iii) is not complicated. It
simply requires that the request for redetermination be filed by
the date that the first cost report is due after October 1, 1991.
See id. Indeed, the medicare regulation at issue in this case
is more analogous to the Title VII limitation provision in
42 U.S.C. § 2000e-16, which requires that a lawsuit for employment
discrimination be filed within ninety days of receipt of a notice
of final EEOC action. Again, in Irwin, the Supreme Court held
that the Title VII provision is subject to equitable tolling.
See Irwin, 498 U.S. at 95-96, 111 S.Ct. 453.*fn6 Therefore, we
disagree with the Administrator and hold that the medicare
regulation is not so detailed and technical that it cannot be
read as containing an implicit exception for equitable tolling.
3. Whether Plaintiffs Meet the Requirements for Equitable
Finally, the Administrator held that even if section
412.328(f)(1)(iii) lent itself to the application of equitable
tolling, the Plaintiff is not entitled to have the period tolled
because (1) it did not actively pursue the timely filing of its
redetermination request and (2) the record does not support a
finding that the Bradford Hospital was induced or tricked by the
agency's misconduct into allowing the filing deadline to pass.