On Feb. 9, 2016, the D.C. Circuit found that the lower court has the authority to order the Department of Health & Human Services (HHS) to resolve the massive backlog of Medicare appeals tied up in the administrative law process. Four key takeaways include:

1. The D.C. Circuit rejected the District Court’s merger of the jurisdictional inquiry into the equitable inquiry because the two inquiries have different standards of review. It then found that the District Court does have jurisdiction to review the Mandamus action, finding that the Social Security Act “imposes a clear duty on the Secretary to comply with the statutory deadlines, that the statute gives the Association a corresponding right to demand that compliance, and that escalation – the only proposed alternative remedy – is inadequate [given the massive backlog].”

2. The D.C. Circuit remanded the case back to the District Court to consider whether “compelling equitable grounds” now exist to issue a Writ of Mandamus, stating that, while the District Court conducted just such an analysis in 2014, the “record on appeal makes clear that the situation has worsened”.

a. The writ’s extraordinary and intrusive nature weigh against issuance; the backlog and delays have their origin in the political branches, and ideally the political branches should resolve them.

b. The delay’s negative impact on human health and welfare weigh in favor of issuance.

3. On remand, the D.C. Circuit opined as to which factors weigh most heavily for or against the District Court issuing a Writ of Mandamus in this case, as follows:

4. Finally, The Circuit Court stated that Congress’s allowance of wide discretion to the Secretary of how it carries out the RAC program is “critical” to its thinking about this case; if the District Court finds that the Secretary and Congress have not made significant progress toward a solution, then a Writ may be proper because Congress’s mandatory requirement of meeting appeal deadlines trumps the Secretary’s discretionary requirement of implementing the RAC program.

Providers with claims still pending in the administrative appeals process should continue to closely monitor the status of the case on remand, as it could have significant implications for the future of the program.

Background

The court’s decision is a victory for the American Hospital Association (AHA) in its ongoing battle against HHS over significant delays that AHA, and three other hospital co-appellants, argue have cost hospitals billions in necessary funds.

District Court Decision

The appeal arose out of a 2014 decision by the U.S. District Court for the District of Columbia, in which the court ruled that it did not have the jurisdiction to order HHS to resolve the backlog, and found that judicial intervention would be improper. AHA argued that it had “significant funds” tied up in the Medicare appeals process, which included the appeals that already surpassed the statutory time frame. However, the court held that it lacked jurisdiction because the agency’s delay was not “so unreasonable as to justify mandamus,” and further, that it would take additional time to address whether or not judicial intervention would be necessary.

Appeal

On appeal, the Circuit Court first found that the District Court improperly merged the jurisdictional inquiry and the equitable merits inquiry, because review of mandamus jurisdiction is de novo, whereas review of “the equities” of the matter is for an abuse of discretion in the lower court. Therefore, it found that the statute, which sets specific deadlines for each stage of the appeals process, established a clear duty on HHS to comply. In analyzing the appropriateness of judicial intervention, the court found that the AHA had demonstrated that the threshold requirements for mandamus jurisdiction, which would compel HHS to meet its statutory deadline, were met. Further, the court was persuaded that further payment delays “will affect hospitals’ willingness and ability to provide care.”

The court remanded the case to the district court, stating that “the district court...might find it appropriate to issue a writ of mandamus…on the other hand, if the district court determines on remand that Congress and the Secretary are making significant progress toward a solution, it may conclude that issuing the writ is premature.” The court found that the district court may also order the agency to submit status reports, or other relevant information.

The AHA released a statement that it expects a victory at the district court level.

The case is: Am. Hosp. Ass’n. v. Burwell, Case No. 1:14-cv-00851 (D.C. Cir. 2016).