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Case number 24-5188, University of Chicago Medical Center at Balance.

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This is Robert F. Kennedy, Jr., Secretary, U.S.

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Department of Health and Human Services.

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Mr. Collins for the balance.

[00:00:13] Speaker 00:
Mr. Lewis for the appellee.

[00:00:16] Speaker 03:
Good morning, counsel.

[00:00:17] Speaker 03:
Mr. Collins, please proceed when you're ready.

[00:00:19] Speaker 02:
Good morning, your honor.

[00:00:20] Speaker 02:
It's me at police court.

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I represent the University of Chicago Medical Center, which I'll refer to today as the hospital.

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And with me today at council table is my colleague, Bob Roth.

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The hospital has one of the largest resident training programs in the country.

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In this case involves Medicare's payment or indirect medical education costs, or IME as it's called, things like overhead rather than salary.

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Importantly, there's no dispute here about the correct amount of payment for IME that the hospital is due under the law.

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Instead, the dispute here is about whether the secretary should be able to pay less than the correct amount based on by dismissing portions of the claims for alleged lack of jurisdiction.

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The hospital appealed two components of its IME, the resident count and the bed count.

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And I'll start with the bed count issue here.

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It's indisputable that the hospital claimed IME on its cost report.

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It's indisputable that the hospital claimed its bed on the cost report.

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It's also indisputable that the contractor audited the cost report and audited IME.

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It's also indisputable that the contractor audited the bed count and adjusted the bed count on the cost report.

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And so the hospital's bed count appeal squarely falls into the line of cases stretching all the way back to Bethesda case holding their jurisdiction under 139500A.

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But the cost reports that the hospital submitted contained an irreconcilable conflict.

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And that is because the hospital mistakenly had included eight beds, which were from a non-reimbursable cost center that was called clinical research.

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But the hospital was only half wrong in its submission because it also identified the clinical research center as non-reimbursable and did not receive any payment for those costs related to those.

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And when the contractor audited and adjusted the bed count for other reasons, it failed to remove the eight non-reimbursable beds.

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And that left in place this irreconcilable conflict.

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The board dismissed the bed count issue stating it had no jurisdiction under 139500A.

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But even if it did, it would decline to exercise that jurisdiction under 139500D based on its

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its past decisions and cases routinely doing so when a hospital fails to claim costs on the cost report.

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The board's dismissal was unlawful, and it was pretty radical.

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Every court case the board relied on involved situations where hospitals did not claim costs on the cost report.

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And that's a situation where, of course, the contractor has no opportunity to award the costs, where it's not presented, which is

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what the Bethesda case talks about, it's never presented to the agency.

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But in contrast here, the hospital included its claim for IME in the cost report, it included its bed count in the cost report, and the contractor actually adjusted the very item that the hospital later appealed.

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The statute 1395- How much does that part of the factual background matter to you?

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I mean, in other words,

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Suppose that it's undisputed that had everybody been on notice about this bed count issue, then the contractor would have understood that, oh, actually, that's true.

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It's off by 8.

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We should reduce it by 8.

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And that will up the amount that you get back, that that would have happened.

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But that wasn't raised to the contractor.

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It wasn't raised in those terms.

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Yes, there was information given to the contractor from which the contractor could have made that conclusion on its own.

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But the particular point that there's an eight-bed discrepancy obviously wasn't flagged.

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That wasn't flagged in so many words.

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So if that's true, then is your argument that no matter what, regardless of this other information that was in the record from which the contractor could have drawn the correct conclusion,

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that the mere fact that there's this discrepancy and everybody understands that there's discrepancy and that the hospital was dissatisfied with the total amount that I received and therefore levied the requisite action, but that's enough.

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And then the board at that point was required to make the correction.

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Yes, that's correct, your honor.

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I mean, under under 00 or T9500A,

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The hospital met all the requirements for presentment.

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And in fact, the district court's decision mischaracterized the record in the district court's ruling.

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The district court said that the hospital did not present any facts forming the basis of its claim that it operated fewer than 417 beds.

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But in fact, the cost report on its face

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The beds are identified as from the Clinical Research Center, eight beds.

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The Clinical Research Center is identified as non-reimbursable.

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So the contractor gave the hospital the worst of both worlds.

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It accepted that it was non-reimbursable, reducing Medicare payment generally, but left in the eight beds and reduced the IME payment specifically.

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So that under the plain words of the statute, as interpreted by FESTA,

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The hospital satisfied its presentment requirement of its claim.

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So could the agency, is your view that because of the way the statute's worded, that the agency just period cannot have a rule that says, if you fail to present a discrepancy in some way to the contractor, then you're out of luck for the board?

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Well, first of all, the agency doesn't have that rule.

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We believe that, you know, in our papers.

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But I'm asking you, could the agency have that rule?

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I think that would override 1395-00A statutory language.

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I don't think they could.

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They could.

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There's no way that the agency could say, you have to present an issue to the contractor in order to preserve it for the board.

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Your Honor.

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Bethesda said you have to present an issue.

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And so I think this is very different than the situation where a hospital omits a claim, just completely omits information that the contractor and that the Medicare program could use to pay them correctly.

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But when the claim is submitted,

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on the cost report, there is an error when the contractor is obligated to audit and do a decent job providing correct Medicare payment.

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Medicare statute has to be read to provide an appeal right there.

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Because otherwise, hospitals literally have no opportunity to correct an error made that they make on their cost report.

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Because there is no obligation for a contractor to accept an amended cost report.

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There's no obligation for a contractor to reopen.

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That's purely discretionary.

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That's not statutory.

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That's something that they offer by grace.

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But if that opportunity is available,

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and it wasn't taken advantage of, then is the agency barred from having a rule that says, you had an opportunity to bring something before the contractor's attention, didn't take advantage of that opportunity, and having not taken advantage of that opportunity, it's not something that can be brought to the board?

[00:08:22] Speaker 02:
Well, there is not, you're assuming that you have that opportunity, you don't.

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you hypothetically could receive, you could submit us a new cost report and it could be accepted, but that's discretionary.

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You're not entitled to do that.

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So you can't, if a hospital makes a mistake, if the rule is, if there were a rule that said you can never correct it, I think that violates 139500A.

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I don't think that's permissible under Bethesda.

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And it would depend entirely on the caprice of the contractor.

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When the contractor reviews the cost report.

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I guess what I'd be envisioning is if there's an opportunity to present it to the contractor, and you may be right that the contractor doesn't have to look.

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Let's just suppose the contractor, for whatever reason, gets a corrected cost report that says, by the way, eight beds are off.

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There's more than $600,000 at stake.

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take account of that and the contract whatever reason declines to do that then the board might be hard-pressed to say because the contractor for whatever reason decided not to engage with it we don't have to engage with but it seems different to me to say for the board to say

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you at least have to raise it and give the contractor the opportunity to consider it.

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And if you didn't do that, then we don't have to take account of it.

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And the question is, what does it mean to raise it?

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And our position, and I believe it's the correct one, is submitting it on the cost report, demonstrating all the information is there for the contractor to come up with the right outcome.

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The contractor failed to come up with the right outcome.

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And that's where the appeal rights come in.

[00:10:02] Speaker 05:
So you're saying that Bethesda says providers who fail to request from the intermediary reimbursement for all costs to which they are entitled under applicable rules, that the failure to request the costs that they're entitled to might establish that they're satisfied.

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And you're saying that's not this case because the cost amount that you requested

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was only supported if the intermediary corrected the eight-bed error in the one part of the submission.

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In other words, you requested

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it doesn't establish that you were satisfied because it doesn't support the number that you asked for, the it being the erroneous bed count in the relevant part of the submission.

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Correct.

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So you're saying that you couldn't have been satisfied because the number should alert them together with the contrary treatment of

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bed counts in where the submission identifies non-reimbursable beds.

[00:11:12] Speaker 02:
That's correct.

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And also- Putting those three things together that, yeah, there's an error in the bed count, but elsewhere when reimbursable beds are tallied, it's correct.

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And the number that the hospital is requesting would only be the correct number if that correct bed count were consistent throughout.

[00:11:34] Speaker 02:
That's correct, your honor.

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I mean, it's a little bit tricky to understand.

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And really, the statute says you have to be dissatisfied with your total program reimbursement.

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I mean, the language says that.

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Bethesda read into that.

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And actually, that's the dict of Bethesda.

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Bethesda was not that case.

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It talks about the importance of presenting.

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That's the key.

[00:11:56] Speaker 04:
Let's suppose that you didn't

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even raise this argument before the board, right?

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And then you filed an action in district court.

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Would the district court be required to adjudicate the validity of counting the beds when it wasn't raised even before the board?

[00:12:17] Speaker 02:
No, your honor.

[00:12:18] Speaker 04:
No.

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I mean, that's clear.

[00:12:20] Speaker 02:
Yeah, that is very clear.

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And the reason is we have an exhaustion of administrative remedies rule.

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It's not written necessarily, some statutes write it.

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Why can't the board have the same kind of rule?

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Bethesda says that what's important is the hostage.

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This is exhaustion.

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It may be, as Judge Breyer said, there are situations in which it would be proper to consider it, but nevertheless, it's a general rule.

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the board is requiring exhaustion.

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You didn't exhaust your remedy before the intermediary.

[00:13:02] Speaker 02:
I disagree with that, that conclusion that we didn't exhaust because the hospital presented, the hospital sought its full IME payment.

[00:13:09] Speaker 02:
It presented the information to the contractor.

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It's all in the cost report.

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So that, Bethesda says, you must present.

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We presented

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I don't think the board can adopt its own separate pre-exhaustion requirement because there's nowhere in the statute that would support that.

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If the board, if there were to be a rule and the board has actually, CMS has created a rule that says you must claim items on the cost report that are reimbursable,

[00:13:42] Speaker 02:
That rule doesn't even say no mistakes are allowed.

[00:13:47] Speaker 03:
I thought there's a rule in place now on a going forward basis that requires presenting something to the contractor.

[00:13:52] Speaker 02:
It does.

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But it doesn't say, oh, and by the way, if you make a mistake, it's set in stone forever.

[00:13:58] Speaker 02:
It doesn't say that.

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It doesn't have a perfect.

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And if that were the rule, hospitals would have to invest even more money than they already invest in preparing their cost reports.

[00:14:07] Speaker 02:
I mean, they obviously try to be careful and avoid mistakes.

[00:14:11] Speaker 02:
The rule here makes no sense.

[00:14:13] Speaker 03:
So the rule that's in place now on a going forward basis that was promulgated through the federal register.

[00:14:19] Speaker 03:
Right.

[00:14:20] Speaker 03:
You think that that rule can't be enforced across the board?

[00:14:24] Speaker 02:
No, that rule is in place, but it doesn't have a no mistake rule.

[00:14:29] Speaker 02:
It says you have to claim items that you want reimbursement for.

[00:14:34] Speaker 02:
You claim an item, you can get subsequent reimbursement.

[00:14:37] Speaker 02:
So that rule does not say, if you make a mistake, you won't get reimbursed.

[00:14:43] Speaker 03:
So you think even if that rule were in place at the time that the facts of this case arose, it wouldn't result in your not being able to get the?

[00:14:52] Speaker 03:
Yes, I think we would have satisfied that rule.

[00:14:55] Speaker 02:
And just quickly, let me turn to the dismissal

[00:14:58] Speaker 02:
of the resident count sub issues.

[00:15:00] Speaker 02:
Most critically here, the government treats them kind of monolithically in its briefing, but the last three of them are all carry forward statistics from past years.

[00:15:10] Speaker 02:
Those are all inherent and indivisible from an appeal of IME.

[00:15:14] Speaker 02:
And the IME payments different than other issues like DISH, which this court considered in Battle Creek.

[00:15:20] Speaker 02:
It's all in the present year.

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All the statistics come from the present year.

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IME, it's all

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to state three statistics from past years, based year resident count, prior year resident count, and penultimate year resident count.

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All of those are statistics that you don't appeal in a current case.

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But fortunately, the secretary has the good sense to director contractors that they must automatically update those.

[00:15:48] Speaker 02:
in an open appeal.

[00:15:50] Speaker 02:
So here, when the University of Chicago Medical Center had appeals stretching from its base year 1996 to 2007, separate board appeal, each challenging its IME payment, the board held the cases in advance for 10 years, waited until the base year issue was determined,

[00:16:10] Speaker 02:
which was determined by the Seventh Circuit in 2010, that research time counts, which means the base year went up by almost 50 residents, and every year's resident count went up proportionately.

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And each prior year's resident's count impacted the successive year.

[00:16:32] Speaker 02:
So when the hospital filed its position paper, it just explained,

[00:16:35] Speaker 02:
Oh, and by the way, you will need to update the prior year statistics.

[00:16:40] Speaker 02:
The contractor out of the blue called these sub issues and the board agreed.

[00:16:46] Speaker 02:
It's unprecedented.

[00:16:47] Speaker 02:
This is not these aren't issues that the hospital was even permitted to appeal in its board case.

[00:16:53] Speaker 02:
The board rules specifically prohibit you from appealing.

[00:16:56] Speaker 02:
It's like it's kind of like claim splitting in court.

[00:17:00] Speaker 02:
You can't sue on challenging one transaction in one case, file a later case that says, oh, by the way, I'm also challenging that same transaction in the later case.

[00:17:11] Speaker 05:
But can't you say, we have an appeal pending on this, this would have to be adjusted accordingly to flag it for the...

[00:17:25] Speaker 05:
the Board on Appeal.

[00:17:26] Speaker 05:
The way that it's described in the record in this case and by the district court is that it just wasn't, there was a specific mention about the training time.

[00:17:39] Speaker 02:
Research and training.

[00:17:39] Speaker 05:
And the research time, but not about the rounds or whatever and the vacation time.

[00:17:47] Speaker 05:
And so that there's an inconsistency in terms of how specific.

[00:17:51] Speaker 05:
And is your point that all of those things were,

[00:17:54] Speaker 05:
were subject to the prior litigation or only the ones that the intermediary omitted?

[00:18:01] Speaker 02:
So two of them were the ones you just identified, the vacation and the additional rotations.

[00:18:08] Speaker 02:
Those were new

[00:18:10] Speaker 02:
time to be added to the present year.

[00:18:13] Speaker 02:
Those are different than the carry forward issues.

[00:18:16] Speaker 02:
The carry forward issues are ones that are not things that could be litigated, and they couldn't be raised as separate issues in the appeal in the first place.

[00:18:26] Speaker 02:
So it wouldn't make any sense to say, oh, and by the way, you have to follow the law later to update these statistics.

[00:18:35] Speaker 02:
When the hospital filed this appeal,

[00:18:39] Speaker 02:
I don't know, say 2005, those prior year statistics weren't in dispute.

[00:18:46] Speaker 02:
Those were being disputed in each case, but they were not improper.

[00:18:51] Speaker 02:
The contractor had applied the correct prior year statistics to determine the IME payment.

[00:18:58] Speaker 02:
The problem was those statistics later got updated through the court litigation.

[00:19:02] Speaker 04:
Mr. Collins, before you sit down, what is an IPPS?

[00:19:11] Speaker 02:
That's the inpatient prospective payment system.

[00:19:15] Speaker 04:
What is an ACA?

[00:19:17] Speaker 04:
That's the Affordable Care Act.

[00:19:19] Speaker 04:
And what is an NPR?

[00:19:21] Speaker 02:
That is a Notice of Program Reimbursement.

[00:19:24] Speaker 04:
And what is the CRC?

[00:19:27] Speaker 02:
That's the Critical Research Center.

[00:19:30] Speaker 04:
And what is a DSH?

[00:19:32] Speaker 02:
That is Disproportionate Share Hospital.

[00:19:34] Speaker 04:
They're all abbreviations.

[00:19:36] Speaker 04:
We have a rule here, and none of them are in your glossary.

[00:19:41] Speaker 04:
So your brief is in violation.

[00:19:45] Speaker 04:
You were talking about violating rules.

[00:19:47] Speaker 04:
Your brief is in violation of a court rule.

[00:19:51] Speaker 02:
Well, I'm sincerely sorry for that, Your Honor.

[00:19:53] Speaker 02:
I thought we had covered all our acronyms in our glossary.

[00:19:57] Speaker 04:
Well, you obviously didn't.

[00:19:59] Speaker 04:
Because each one of these abbreviations is in your brief, and they're not in the glossary.

[00:20:05] Speaker 04:
Well, that's a big oversight on our part.

[00:20:09] Speaker 04:
And annoying, too.

[00:20:11] Speaker 04:
I understand.

[00:20:12] Speaker 04:
In order for us to understand a sentence that uses an abbreviation, we have to memorize what that abbreviation means.

[00:20:22] Speaker 04:
And in reading all the briefs for today and for the other days, it's almost impossible to do that.

[00:20:29] Speaker 04:
So we have a rule, and the rule is the glossary.

[00:20:32] Speaker 04:
At least we can look at that quickly without having to go back 40 pages to see where you first defined it.

[00:20:41] Speaker 02:
You're absolutely right, Your Honor, and I take that under serious advisement.

[00:20:46] Speaker 02:
The last thing I'll just mention on the vacation time, that was Congress made that lawful to be included in the IME payment in the Affordable Care Act in 2010.

[00:21:00] Speaker 02:
So that wasn't something that could have been raised back when the appeal was filed originally.

[00:21:05] Speaker 05:
It could not have been raised when the appeal was filed.

[00:21:08] Speaker 05:
Correct.

[00:21:12] Speaker 05:
And it wasn't raised on, well, nevermind.

[00:21:17] Speaker 03:
We'll give you a little time for rebuttal.

[00:21:18] Speaker 03:
Thank you so much.

[00:21:28] Speaker 03:
Mr. Lewis.

[00:21:28] Speaker 01:
Thank you, Your Honor.

[00:21:33] Speaker 01:
May it please the court and Lewis for the government.

[00:21:36] Speaker 01:
Medicare Act gives the board the authority to establish procedures to carry out its responsibilities and the board properly enforced its procedural rules here.

[00:21:45] Speaker 01:
In addition, the board also properly declined to hear a claim in circumstances where the provider itself was responsible for providing incorrect information on its cost report.

[00:21:58] Speaker 01:
It's important to the board providers properly develop their claims and the provider did not do so here so the board decision should be a firm briefly on the resident count issue.

[00:22:11] Speaker 01:
On the carry forward items that the other side discusses, those are laid out on pages seven and eight of the appendix to our brief.

[00:22:20] Speaker 01:
And they're just additional statutory factors that bear on the resident account for the current fiscal year.

[00:22:26] Speaker 01:
So the first, for example, on page A7, that's the 1996 full-time equivalent residence cap that they discuss.

[00:22:35] Speaker 01:
And it says that full-time equivalent interns and residents, that the total numbers shall be capped with respect to the hospital's most recent cost reporting period ending on or before December 31st, 1996.

[00:22:50] Speaker 01:
The next two provisions deal with this kind of rolling average that they discuss where the 2002 resident count depends in part on 2001 and 2000.

[00:23:01] Speaker 01:
relevant provisions also discussed the resident to bed ratio that depends on the prior year.

[00:23:07] Speaker 01:
All of these things are just additional statutory factors that bear on the current resident count year.

[00:23:12] Speaker 01:
And they're not different in kind in any way from the research time or the training time or the vacation time or the clinical rotation time that may bear on the fiscal account for a current year.

[00:23:24] Speaker 01:
There's no reason why the other side couldn't have done it.

[00:23:27] Speaker 01:
I mean, where this is going is that this

[00:23:29] Speaker 01:
their information was there with which this issue could have been yes, the request for a hearing adequately presented the research and training time because it identified the resident count and then gave a reason why that count was an error.

[00:23:42] Speaker 01:
One sentence explanation because the contractor excluded the research time that bears on account they could have included the same type of one sentence explanation that has a because clause that says that we understand the resident count in 2002 to be an error because.

[00:23:59] Speaker 01:
the cap for fiscal year 1996 was inadequately calculated.

[00:24:06] Speaker 01:
And they had all the knowledge they needed at that time to present that claim.

[00:24:11] Speaker 01:
The other side is very forthcoming in their brief that it was only after consulting with a consultant about additional information that they might have raised that they decided to make these additional attempts at presenting claims of error.

[00:24:27] Speaker 05:
about the vacation time issue there you know they make a compelling case that the Congress retroactively allowed it to be included in the IME and so how and that happened after so

[00:24:41] Speaker 01:
My understanding of the record here is that there's no reason why they couldn't have presented a claim that, it's true that Congress conclusively said that the vacation count would have counted towards them.

[00:24:56] Speaker 01:
But if they thought, and I'm sure that hospitals were pressing this argument at the time, that residents should have, that vacation counts should count to the residents count.

[00:25:04] Speaker 01:
If they wanted to press that claim before the board, then it was appropriate for them to do so.

[00:25:10] Speaker 01:
I'm through the procedural.

[00:25:12] Speaker 05:
I mean, something that's not supported by current law and that you're probably your, you know, trade associations advocating for in Congress.

[00:25:21] Speaker 05:
And, you know, as you know, lawyers make credibility determinations.

[00:25:24] Speaker 05:
Am I going to make a weak argument that I know is a loser?

[00:25:29] Speaker 05:
That's the best you can do?

[00:25:30] Speaker 01:
Well, that's how they would get the law changed to the courts is through judicial review of the board decision.

[00:25:35] Speaker 01:
But to be frank, my understanding, I think, of this retroactivity point and what the record was at that time with respect to the vacation time is a little murky.

[00:25:44] Speaker 01:
So I don't want to get ahead of myself on exactly the status of how the agency considered vacation time.

[00:25:51] Speaker 01:
And to the extent that that is a crucial argument that bears in the court's analysis, we'd be happy to submit a supplemental brief on that specific question.

[00:25:59] Speaker 03:
I mean, it's sort of like a party preserving something to take it on bank, even though it's foreclosed by the president.

[00:26:04] Speaker 01:
Exactly.

[00:26:05] Speaker 01:
There's again, there's no reason why they couldn't have included one sentence in their request for a hearing.

[00:26:10] Speaker 01:
And these these rules are important to the board.

[00:26:14] Speaker 01:
They allow the board to

[00:26:15] Speaker 01:
narrow the disputes before the parties and for the parties to resolve issues before it gets to the board.

[00:26:20] Speaker 01:
And the board benefits greatly from having the most developed version of the argument before the board at that time.

[00:26:26] Speaker 01:
Just briefly on the argument that they couldn't have raised these issues before the board because the board's rules prevent duplicative litigation.

[00:26:36] Speaker 01:
That only applies to same issues for same fiscal years.

[00:26:40] Speaker 01:
It's commonplace for a provider to

[00:26:43] Speaker 01:
say in one litigation that it's challenging the research time as to fiscal year 2001 and then to say for fiscal year 2002 to bring the same type of claim that research time wasn't properly excluded by the contractor.

[00:26:57] Speaker 01:
There's nothing in the board's rule that would have prevented the other side from presenting these types of additional claims with respect to the residence count so long as they were properly presented.

[00:27:07] Speaker 01:
And just to be clear, the rules are quite clear here that the regulations in both the rules require not only the provider to identify the aspects of the determination which the provider is dissatisfied, but explain why the provider believes the determination is incorrect in such particulars.

[00:27:24] Speaker 01:
even setting aside their brief about why they have properly identified an issue, there's just nothing in any of their claims that would have put the board on notice that the reason why they thought the resident count was an error was because of these additional claims that they attempted to bring.

[00:27:42] Speaker 01:
Turning to the bed count issue, I think it would be useful to start by just clarifying the record on whether or not the contractor would have been on notice that the provider had made a mistake.

[00:27:57] Speaker 01:
So I think there's a little bit of confusion here.

[00:27:59] Speaker 01:
They rely on

[00:28:03] Speaker 01:
Worksheet A, they call it to say that the contractor would have known that there was an irreconcilable dispute between the bet count that they provided to the contractor and then what they had excluded as non-reimbursable in Worksheet A.

[00:28:18] Speaker 01:
Worksheet 8 does not have a line item that says that there are eight beds in the clinical research center that are not reimbursable.

[00:28:25] Speaker 01:
It's a list of different cost centers in the hospital, and there is a leftover bucket of non-reimbursable cost.

[00:28:34] Speaker 01:
It's not broken out into the level of granularity that would say that here are these beds that we think are non-reimbursable.

[00:28:42] Speaker 01:
And to be frank, it's not even broken out in terms of the non-reimbursable cost centers.

[00:28:46] Speaker 01:
the clinical research center itself is non-reimbursable.

[00:28:51] Speaker 01:
There's just a leftover bucket of non-reimbursable costs that the provider is not claiming.

[00:28:55] Speaker 01:
So there's nothing from worksheet eight that would have put the contractor on notice that there was a problem with the bet count.

[00:29:01] Speaker 01:
And then with respect to what they did submit for the bet count, this is on pages 250 to 260 of JA.

[00:29:08] Speaker 01:
It's in a couple of places in the JA, but the first two pages of that section are what the

[00:29:14] Speaker 01:
the contractor did on their worksheet and then the rest of it is what the provider submitted to the contractor.

[00:29:20] Speaker 01:
And if you look at it, there's nothing again on that sheet itself that would have indicated that any part of the bet count was non-reimbursable.

[00:29:28] Speaker 01:
And so from the contractor's perspective, they have a count from the provider

[00:29:32] Speaker 01:
And even assuming that there were a line item on worksheet A that said that there are eight nonreimbursable beds, they don't know, having received the count from the provider, whether those nonreimbursable beds have already been taken out or whether they're meant to be taken out by the contractor afterwards.

[00:29:48] Speaker 01:
There's nothing from the contractor's perspective that would put them on notice that there was some negligent information that they had received.

[00:29:55] Speaker 01:
And so I just think the other side is significantly overstating the ability for the contractor here to identify that the provider had made a mistake.

[00:30:03] Speaker 03:
So even if it was a situation in which I'm not going to.

[00:30:07] Speaker 03:
go through all the details to construct the exact hypo.

[00:30:09] Speaker 03:
But if it was a situation in which there's not a line item that puts the contractor immediately on notice, but a particularly perceptive contractor could look at various things in various places and think, wait a second, it's possible there's a discrepancy here.

[00:30:25] Speaker 03:
Maybe I should figure that out and pose some questions, which I assume that could happen.

[00:30:30] Speaker 01:
Yeah, even on those circumstances, we think the board's rules are.

[00:30:33] Speaker 03:
We still say that, no, that's not enough because

[00:30:36] Speaker 03:
per the board's decisional precedent and its adjudications, something has to be flagged to the contractor with enough specificity that the contractors then engage on it.

[00:30:46] Speaker 03:
So then the board will have the benefit of the contractors analysis.

[00:30:48] Speaker 01:
Yes, the board was perfectly reasonable to say even in a circumstance where the contractor would have been on notice that the fact that it's the provider that had been negligent in providing its information to the contractor is reason enough to not to hear the appeal.

[00:31:03] Speaker 01:
And I think the placing of the burden on the provider rather than the contractor makes perfect sense in these scenarios.

[00:31:11] Speaker 01:
It is the provider who has the best cost information and is making a reimbursement request for one year.

[00:31:17] Speaker 01:
The contractor is dealing with requests from many different hospitals for many different years.

[00:31:22] Speaker 01:
And from the contractor's perspective, its focus is not limited to the resident count or the bed count issue.

[00:31:29] Speaker 01:
it's dealing with all the full range of reimbursement requests that a hospital of this size is making.

[00:31:34] Speaker 03:
If I can just understand your position on how that intuition gets actualized under the statute.

[00:31:43] Speaker 03:
So suppose I know that there's an argument that there's a dissatisfied threshold

[00:31:49] Speaker 03:
and that this satisfied threshold can't be met where the provider itself has the wrong information in what it submits.

[00:31:58] Speaker 03:
Suppose that I'm not persuaded by that.

[00:32:00] Speaker 03:
Understood.

[00:32:01] Speaker 03:
Just assume that.

[00:32:01] Speaker 03:
Now you'll resist it, but just assume it for present purposes.

[00:32:04] Speaker 03:
Then there's the fallback position, which is that, and that's what the district court focused on, which is, look, still, this particular discrepancy wasn't flagged.

[00:32:15] Speaker 03:
Contract and in that circumstance what is it that?

[00:32:20] Speaker 03:
Actually, there's not jurisdiction.

[00:32:22] Speaker 03:
Is it that actually there's jurisdiction for the board to consider if it wants to but it doesn't have to it can have You know a processing rule that it puts in place via adjudication that says you got to flag things for the contractor if you don't

[00:32:37] Speaker 03:
We don't have to take them up.

[00:32:38] Speaker 03:
We might.

[00:32:39] Speaker 03:
We could.

[00:32:40] Speaker 03:
But we don't have to.

[00:32:40] Speaker 03:
And in the main, we're not going to.

[00:32:42] Speaker 03:
Is that where this is, that it's not that there's a lack of jurisdiction?

[00:32:47] Speaker 03:
Or even sometimes it's referred to as a refusal to exercise jurisdiction, to the extent that that's the same thing as saying we have a procedural default rule, that you have to bring it before the contractor.

[00:32:57] Speaker 03:
And if you don't, then we have the discretion just not to engage on it, then sure.

[00:33:00] Speaker 03:
But what exactly is your understanding of the fallback position?

[00:33:05] Speaker 01:
So, assuming that the provider has demonstrated that they're satisfied and that the jurisdiction of the board is met, jurisdiction in a colloquial sense, not in a judicial sense, that the statute authorizes the board to have discretion and to exercise that discretion of whether or not it wants to hear.

[00:33:27] Speaker 01:
an appeal that comes from section 1395 0, 0, D, which says that the board shall have the power to affirm, modify, reverse a final determination under certain circumstances.

[00:33:39] Speaker 01:
And as we explained in our brief through

[00:33:42] Speaker 01:
And the case law we cite, as well as the legislative history, that is a discretionary power for the board to exercise or decide whether or not to hear a claim by a provider.

[00:33:54] Speaker 01:
And that understanding that it's discretionary is also supported by surrounding language that says that it can accept

[00:34:04] Speaker 01:
such other evidence as may be obtained or received by the board.

[00:34:07] Speaker 01:
That also supports that it's a discretionary power.

[00:34:10] Speaker 01:
So they have this discretion.

[00:34:11] Speaker 01:
The other side's statutory argument that essentially the abstention of the board is contrary to the statute, I think, just fails in light of the plain language of the statute.

[00:34:20] Speaker 03:
And then their secondary argument that... Why are you relying on D for that and not E?

[00:34:29] Speaker 03:
Or she'll have full power and authority to make rules and establish procedures.

[00:34:32] Speaker 01:
In this context, the board decision, what it described was its practice.

[00:34:36] Speaker 01:
It had had adjudicated.

[00:34:37] Speaker 03:
You're saying EADS just has to do with actually adopting rules.

[00:34:40] Speaker 01:
Right.

[00:34:40] Speaker 01:
The board here, it didn't promulgate a rule.

[00:34:42] Speaker 01:
And it later did promulgate some rules that bear on this question.

[00:34:45] Speaker 01:
But at this time, through case by case adjudication, it said, we have a practice that we're not going to hear these kinds of disputes where the full request was not presented to the contractor.

[00:34:56] Speaker 01:
And there's no reason to depart from that practice under these circumstances because we understand the claim of the provider to be

[00:35:02] Speaker 01:
Based solely on information that it itself provided to the contractor It can't then go around afterwards and say actually we think that information was incorrect.

[00:35:11] Speaker 05:
It's a result of their negligence Some sort of rule even if it's a procedural rule.

[00:35:16] Speaker 05:
I don't read 1395 double-hc ones requirement of Federal Register publication as as limited to substantive standards, which I take it to be your argument

[00:35:29] Speaker 01:
So I think our top line argument on the notice and comment question is that it's just not a rule or regulation or the type of standard that those provisions are contemplating.

[00:35:40] Speaker 01:
If you read the board decision itself, it says that we have a practice under these circumstances to not to abstain and we're not going to depart from that practice.

[00:35:50] Speaker 01:
It's the same type of practice that I think

[00:35:52] Speaker 01:
a typical adjudicative body has to not hear a claim when it's not properly presented to the... But I thought the question was not about notice and comment, but it's about publication of the Federal Register.

[00:36:03] Speaker 01:
Oh, sorry, sorry.

[00:36:03] Speaker 01:
I apologize.

[00:36:04] Speaker 01:
Yes, so... I think the same argument applies to the Federal Register argument, but they say that, I think, briefly in their reply brief, that they are prejudiced by the failure to publish, and that just can't be true.

[00:36:22] Speaker 01:
There were prior board decisions that we cited in our brief that were available to them at the time that had already announced that practice.

[00:36:32] Speaker 01:
I believe affinity or.

[00:37:04] Speaker 03:
What are you looking for?

[00:37:06] Speaker 05:
Board decisions that would have put them on notice even in the absence of affinity.

[00:37:09] Speaker 01:
Affinity Medical Center versus Blue Cross Blue Shield Association National Government Services, which was precisely the scenario that, the same scenario that we have here where the.

[00:37:19] Speaker 05:
Where is that stated in your brief?

[00:37:20] Speaker 05:
I'm not seeing.

[00:37:21] Speaker 01:
I'm sorry, page 43 of the brief.

[00:37:23] Speaker 05:
In the table of contents.

[00:37:26] Speaker 01:
Yes, apologies for that.

[00:37:27] Speaker 01:
43 to 44, the discussions of the prior board adjudications.

[00:37:37] Speaker 01:
And so Affinity explained that where the hospital included a number of beds on its cost report and the intermediary did not adjust, the board declined to hear the appeal for the exact same reasons.

[00:37:50] Speaker 01:
And so at the very least, even if they would try to distinguish that case on its facts, the analysis looks very, very similar to what the analysis was here.

[00:38:00] Speaker 01:
The board announced a practice that it wasn't going to hear

[00:38:04] Speaker 01:
It wasn't going to hear these issues under similar circumstances.

[00:38:07] Speaker 03:
Do you read the Federal Register provision just not to apply to standards like this that are announced by adjudication?

[00:38:16] Speaker 01:
I do read the Federal Register.

[00:38:19] Speaker 01:
It refers to the promulgation of a list of all manual instructions, interpretative rules, statements, policy, and guidelines of general applicability, which

[00:38:31] Speaker 01:
are promulgated to carry out this chapter.

[00:38:33] Speaker 01:
There was no promulgation of the sense that that kind of provision is talking about.

[00:38:38] Speaker 03:
So your view is that the board just has inherent authority to adopt

[00:38:44] Speaker 03:
rules like this that, I'll call them rules.

[00:38:47] Speaker 03:
I get that that's a term of art, but to adopt standards like this that organize its consideration of issues so that it can do things in an informed way.

[00:38:57] Speaker 03:
And one of those standards is that, look, you got to present something to the contractor.

[00:39:02] Speaker 01:
Yeah, I wouldn't even call it a standard here.

[00:39:04] Speaker 01:
I think this is really a site-specific analysis for case-specific reasons based on the provider's negligence.

[00:39:10] Speaker 01:
And so it doesn't even fall.

[00:39:11] Speaker 03:
But one of your points is that the board consistently does this.

[00:39:14] Speaker 01:
And so in that way, it's not has done it before through case, but prior cases.

[00:39:18] Speaker 01:
But it's not as if that's binding precedent on the subsequent board and that the board couldn't depart from the practice for case specific reasons.

[00:39:27] Speaker 01:
And then, yes, I'd say our second line argument is.

[00:39:30] Speaker 03:
And so for that part of it, the board has the inherent discretion to do these kinds of things in adjudicating a particular case.

[00:39:37] Speaker 03:
D of the statute just kind of

[00:39:41] Speaker 03:
encapsulates the existence of that kind of discretion, but the board just has that kind of discretion as an inherent matter.

[00:39:46] Speaker 01:
Yes, I think even if there was no statute D provision that the board by virtue of being an adjudicative body can adopt that kind of practice that yes that as judges not subject to the Federal Register requirement because that one only in your view applies to the promulgation of rules by the agency not

[00:40:07] Speaker 03:
the decisions in adjudications by the board.

[00:40:10] Speaker 01:
Correct.

[00:40:10] Speaker 01:
In order to analyze and resolve disputes, the board has to decide whether an argument was adequately developed and whether it was adequately presented.

[00:40:18] Speaker 01:
And that often involves the kinds of judgments that are made here.

[00:40:22] Speaker 03:
Kind of like in your first brief, you've got to flag an issue otherwise.

[00:40:26] Speaker 01:
Exactly.

[00:40:27] Speaker 01:
And if all of those decisions were published in the Federal Registry, it would be even longer than it already is.

[00:40:33] Speaker 01:
If there are no further questions.

[00:40:34] Speaker 01:
Thank you.

[00:40:46] Speaker 03:
Mr. Collins will give you two minutes for a rebuttal.

[00:40:51] Speaker 02:
Thank you again, your honors.

[00:40:53] Speaker 02:
Just the first, the carry forward question that the secretary has never denied that the contractor is obligated to automatically update those factors.

[00:41:04] Speaker 02:
So he forgot to mention that.

[00:41:08] Speaker 05:
So obligated, even if it's not ever identified to them,

[00:41:15] Speaker 05:
something that's outstanding or that you're asking for.

[00:41:18] Speaker 02:
The secretary statement in the federal register is very clear.

[00:41:21] Speaker 02:
It says the contractor shall update those numbers and apply them to subsequent open cost reporting years.

[00:41:28] Speaker 02:
And that's cited on page 34, our brief federal register site.

[00:41:34] Speaker 05:
Is open cost reporting years, does that refer to

[00:41:42] Speaker 05:
matters that have not already been submitted to the fiscal intermediary or appeals to the board?

[00:41:49] Speaker 02:
It means if a matter has been, if it's open because it's not due yet, or if it's been submitted through a board appeal, that's considered open.

[00:42:00] Speaker 02:
And the appeal of the resident count

[00:42:07] Speaker 02:
You can't get a correct resident count in the present year without the past year statistics.

[00:42:12] Speaker 02:
So it has to encompass those past issues.

[00:42:14] Speaker 02:
The board's rules, in no way, shape, or form, told providers that they needed to delineate every single aspect, every variable, if they wanted to appeal the resident count.

[00:42:26] Speaker 02:
Never.

[00:42:26] Speaker 02:
And more recently, they've gotten more nuanced, but not at the time we filed our appeal.

[00:42:31] Speaker 02:
So they can't spring this on us when it's way too late.

[00:42:36] Speaker 02:
The vacation time and the additional rotations, those are not matters encompassed, but those are necessary to get the IME payments right.

[00:42:47] Speaker 02:
And the board is sitting here with an appeal where it's correcting numerous issues.

[00:42:53] Speaker 02:
That is the poster child situation where the board should exercise subsection D authority.

[00:42:59] Speaker 02:
That's an expansion of its authority.

[00:43:01] Speaker 02:
The board reads that as,

[00:43:03] Speaker 02:
off limits we will never use that for any provider in any situation they read that out of the statute but to the extent they rely on they also rely on discretion no right but and the board's the all of the board's precedent dealing with

[00:43:21] Speaker 02:
what providers have submitted on the cost report involves situations or what they had always involves unclaimed costs.

[00:43:31] Speaker 02:
And the one precedent that was in existence when the hospitals filed their appeal and when they filed their cost report was Mayo.

[00:43:39] Speaker 02:
The Mayo case permitted a hospital to correct, through a board appeal, an error that it made.

[00:43:46] Speaker 02:
In 2010, the affinity case that they referred to, that my friend on the other side referred to,

[00:43:54] Speaker 02:
That was 2010.

[00:43:55] Speaker 02:
The board changed its position.

[00:43:58] Speaker 02:
That was long after we had filed our appeal.

[00:44:01] Speaker 02:
So there was nothing, hospitals could not know that this was something that they needed to do.

[00:44:08] Speaker 02:
Likewise, just that when the contractor asserted the argument that these were, that you could not correct, you can't appeal an item that needs to be corrected.

[00:44:23] Speaker 02:
Taking the past decisions of Little Company Mary, all those decisions one step farther, that was after the hospital could even ask the contractor for reopening.

[00:44:36] Speaker 02:
They filed that issue out in 2006 when they were still within a three-year reopening window.

[00:44:42] Speaker 02:
The contractor waited until 2013 to spring that jurisdictional defense on the hospitals.

[00:44:48] Speaker 02:
Let me make sure my colleagues don't have

[00:44:50] Speaker 02:
May I just mention one important thing relating to the bed count.

[00:44:58] Speaker 02:
Council represented that it was completely

[00:45:02] Speaker 02:
hidden somehow.

[00:45:03] Speaker 02:
It was on worksheet A. But first of all, the board's decision references never addresses the fact that there's this conflict on the face of the cost report.

[00:45:14] Speaker 02:
We cited that.

[00:45:15] Speaker 02:
The administrative record actually shows the work papers that were filed with the cost report.

[00:45:21] Speaker 02:
It is delineated.

[00:45:23] Speaker 02:
There is a line

[00:45:24] Speaker 03:
Can you just point us to the page and then we'll do the rest?

[00:45:27] Speaker 02:
They're in the administrative record.

[00:45:28] Speaker 02:
They're not in the joint appendix.

[00:45:30] Speaker 02:
So in the administrative record, and we could submit this as supplement if the court would like, they're page 312 and 309.

[00:45:39] Speaker 02:
Those beds are specifically identified and the cost center is specifically identified as non-reimbursable.

[00:45:46] Speaker 02:
It's not just mixed in with everything else.

[00:45:50] Speaker 03:
Thank you, counsel.

[00:45:51] Speaker 03:
Thank you to both counsel.

[00:45:53] Speaker 03:
We'll take this case under submission.