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Geisinger Community Medical Center v. Burwell

United States District Court, M.D. Pennsylvania

December 22, 2014

GEISINGER COMMUNITY MEDICAL CENTER, Plaintiff
v.
SYLVIA MATHEWS BURWELL, Secretary, Department of Health and Human Services; MARILYN TAVENNER, Administrator, Centers for Medicare and Medicaid Services; and ROBERT G. EATON, Chairman, Medicare Geographic Classification Review Board, Defendants

For Geisinger Community Medical Center, Plaintiff: Joseph D Glazer, LEAD ATTORNEY, The Law Office of Joseph D. Glazer, P.C., Princeton, NJ; Mary Kay Brown, LEAD ATTORNEY, Brown Wynn McGarry Nimeroff LLC, Philadelphia, PA.

For Sylvia Mathews Burwell, Secretary, Department of Health and Human Services, Marilyn Tavenner, Administrator, Centers for Medicare and Medicaid Services, Robert G Eaton, Chairman, Medicare Geographic Classification Review Board, Defendants: D. Brian Simpson, U.S. Attorney's Office, Harrisburg, PA.

Page 508

MEMORANDUM

MALACHY E. MANNION, United States District Judge.

Pending before the court are the defendants' motion for summary judgment, (Doc. 15), and the plaintiff's cross-motion for summary judgment, (Doc. 17). Upon consideration of the motions and related materials, the defendants' motion for summary judgment will be granted and the plaintiff's cross-motion for summary judgment will be denied.

I. PROCEDURAL HISTORY

By way of relevant procedural background, the plaintiff commenced the instant action on September 10, 2014. (Doc. 1). In the action, the plaintiff challenges a regulation promulgated under the Medicare program by the Secretary of the Department of Health and Human Services, (" Secretary" ), 42 C.F.R. § 412.230(a)(5)(iii), which the plaintiff claims would unlawfully prevent the Medicare Geographic Classification Review Board, (" Board" ), from considering its application to be reclassified to the Allentown-Bethlehem-Easton, PA-NJ urban area for purposes of payment under Medicare's inpatient hospital prospective payment system, (" IPPS" ). The regulation at issue precludes a hospital that has been redesignated as rural under 42 U.S.C. § 1395ww(d)(8)(E), which was enacted by Section 401 of the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999, (" Section 401" ), Pub. L. No. 106-113, H.R. 3194, 106th Cong. § 401 (1st Sess. 1999), from " receiv[ing] an additional reclassification by the Board based on this acquired rural status for a year in which such redesignation is in effect." 42 C.F.R. § 412.230(a)(5)(iii). The plaintiff alleges by way of the instant action that it is entitled to participate in the Board reclassification process, which is governed by 42 U.S.C. § 1395ww(d)(10), on the same basis as a geographically rural hospital and, as such, the Secretary's regulation which disallows such reclassification is invalid. Count One of the complaint alleges a violation by the defendants of Section 401. Count Two alleges a violation by the defendants of the Administrative Procedure Act, 5 U.S.C. § 701, et seq.

In accordance with the court's scheduling order, (Doc. 12), on October 24, 2014, the defendants filed a motion for summary judgment, (Doc. 15), along with a supporting brief, (Doc. 16). On the same day, the plaintiff filed a cross-motion for summary judgment, (Doc. 17), along with a supporting brief, (Doc. 19).

Page 509

On October 28, 2014, a statement of material facts was filed in support of the defendants' motion for summary judgment, (Doc. 20), followed by a statement of material facts in support of the plaintiff's cross-motion for summary judgment on October 29, 2014, (Doc. 21). On November 20, 2014, the defendant filed a statement of facts responsive to that of the plaintiff's, (Doc. 23). On the following day, the plaintiff filed a statement of facts responsive to that of the defendants'. (Doc. 25). In addition, the parties each filed their briefs opposing the others' motion for summary judgment. (Doc. 24, Doc. 26).

II. LEGAL STANDARD

Summary judgment is appropriate " if the pleadings, the discovery [including, depositions, answers to interrogatories, and admissions on file] and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Aetna Cas. & Sur. Co. v. Ericksen, 903 F.Supp. 836, 838 (M.D. Pa. 1995). At the summary judgment stage, " the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249; see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (a court may not weigh the evidence or make credibility determinations). Rather, the court must consider all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007).

To prevail on summary judgment, the moving party must affirmatively identify those portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323-24. The moving party can discharge the burden by showing that " on all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non-moving party." In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003); see also Celotex, 477 U.S. at 325. If the moving party meets this initial burden, the non-moving party " must do more than simply show that there is some metaphysical doubt as to material facts," but must show sufficient evidence to support a jury verdict in its favor. Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). However, if the nonmoving party " fails to make a showing sufficient to establish the existence of an element essential to [the non-movant's] case, and on which [the non-movant] will bear the burden of proof at trial," Rule 56 mandates the entry of summary judgment because such a failure " necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23; Jakimas v. Hoffmann-LaRoche, Inc., 485 F.3d 770, 777 (3d Cir. 2007).

The summary judgment standard does not change when the parties have filed cross-motions for summary judgment. Applemans v. City of Phila., 826 F.2d 214, 216 (3d Cir. 1987). When confronted with cross-motions for summary judgment, as

Page 510

in this case, " the court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the summary judgment standard.[1] " Marciniak v. Prudential Financial Ins. Co. of America, 184 F.App'x 266, 2006 WL 1697010, at *3 (3d Cir. 2006) (citations omitted) (not precedential). If review of cross-motions reveals no genuine issue of material fact, then judgment may be entered in favor of the party deserving of judgment in light of the law and undisputed facts. Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir. 1998) (citation omitted). See Nationwide Mut. Ins. Co. v. Roth, 2006 WL 3069721, at *3 (M.D. Pa. Oct. 26, 2006) aff'd, 252 F.App'x 505 (3d Cir. 2007).

III. DISCUSSION

As indicated above, the parties have each filed a statement of material facts in support of their respective motions for summary judgment. Based upon a review of those statements, as well as the opposing parties' responses thereto, the following are the facts which are undisputed[2]

The plaintiff, Geisinger Community Medical Center, (" Geisinger" ), is a not-for-profit, general, acute care hospital located at 1800 Mulberry Street, Scranton, Pennsylvania. Scranton is classified as an urban area. Geisinger is a provider of services as defined in the Medicare Act, 42 U.S.C. § 1395x(u), and has entered into an agreement with the Secretary to provide services to Medicare beneficiaries pursuant to 42 U.S.C. § 1395cc. Geisinger is a subsection (d) hospital under the Medicare Act and receives reimbursement for services rendered to Medicare beneficiaries.

With respect to the Medicare Program, unless exempt, hospitals in Medicare, such as Geisinger, are paid under Medicare's IPPS as provided for in 42 U.S.C. § 1395ww(d). Calculating IPPS rates begins with a standard nationwide rate based on average operating costs of inpatient hospital services. The Centers for Medicare and Medicaid Services, (" CMS" ), determines the proportion of the standardized amount attributable to wages and wage-related costs, and multiplies that proportion by a " wage index" that reflects the relation between the local average of hospital wages and the national average. Another variable reflects the disparate hospital resources required to treat illnesses. Medicare inpatients are classified into groups based on diagnosis. Each " diagnosis-related group," is assigned a " weight" representing the relationship between the cost of treating patients within that group and the average cost of treating all Medicare patients.

Medicare generally pays providers for outpatient services in accordance with Medicare's Outpatient Prospective Payment System, (" OPPS" ), as set forth in 42 U.S.C. § 1395l(t). Payments for each outpatient Ambulatory Payment Classification, are based, in part, on CMS's estimates of the costs associated with providing services assigned to an APC. Typically, payments for procedures are adjusted for geographic wage variations.

With respect to the Medicare Wage Index Adjustment, in 42 U.S.C. § 1395ww(d)(3)(E),

Page 511

Congress required an adjustment to the federal reimbursement rate to account for differences in labor costs based on geographic location and the market in which the hospitals compete for labor:

[t]he Secretary shall adjust the proportion . . . of the hospitals' costs which are attributable to wages and wage-related costs . . . for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level.

The wage index adjustment is recomputed annually to reflect changes in local labor costs compared to the national average. Hospitals in areas with labor costs above the national average receive a higher reimbursement rate, while hospitals in areas with lower labor costs receive a lower rate.

In 1983, the Secretary established hospital labor markets by grouping hospitals according to Metropolitan Statistical Areas, (" MSAs" ). Hospitals in the county or counties that make up an MSA are grouped together and treated as a single labor market for wage index purposes. Following the 2000 census, CMS adopted Core Based Statistical Areas, (" CBSAs" ), to replace MSAs. The Secretary determines a separate wage index for each CBSA, and one wage index per state for rural areas. Whether a hospital is considered located in an urban area or rural area can significantly impact a hospital's Medicare reimbursement. A hospital's wage index is the wage index the Secretary assigns to the area where the hospital is physically located. According to a June 2007 report issued by the Medicare Political ...


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