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January 22, 2013

Sup. Ct. holds 180-day deadline for PRRB appeals is not jurisdictional, "good cause" extension regulation is lawful, equitable tolling does not apply

By Susan L. Smith, MA, JD

In a much awaited opinion, the U.S. Supreme Court unanimously held that the 180-day statutory deadline for filing appeals to the Provider Reimbursement Review Board (PRRB) is not "jurisdictional," the Secretary's regulation providing for a three-year extension of the deadline for "good cause" is a permissible interpretation of the statute, and a presumption of equitable tolling does not apply in the context of administrative appeals by providers under the Medicare Act (Sebelius v Auburn Regional Medical Center, January 22, 2013, Ginsburg, R). Therefore, the District of Columbia Circuit Court's judgment (Auburn Regional Medical Center v. Sebelius, 642 F.3d 1145. June 24, 2011) was reversed and remanded.

Background. Hospitals appealed the fiscal intermediary's disproportionate share hospital (DSH) adjustments to their cost report to the PRRB more than ten years after expiration of the 180-day statutory deadline (see 42 U.S.C. sec. 1395oo(a)(3)), but asserted that the Secretary's failure to disclose information regarding miscalculations of the disproportionate share adjustment prevented them from appealing earlier. In 2006, in an unrelated case, after a hospital timely filed an appeal of its Supplemental Security Income (SSI) fraction, the PRRB found that there were flaws in the system used to calculate eligibility for DSH payments because errors in the data matching process resulted in a systematic undercalculation of the DSH adjustment and, therefore, underpayments to providers.

Within 180 days of the PRRB's determination in the unrelated case, the hospitals filed administrative appeals to challenge their adjustments for fiscal years 1987 through 1994. The PRRB ruled that it had no jurisdiction to hear the appeals because they were filed beyond the three-year limit for appeals for which providers had good cause for delay (see 42 C.F.R. 405.1841(b) (2007)). The PRRB rejected the providers' argument that the limitations period should not apply for equitable reasons because it lacks authority to apply equitable principles or to waive limitations periods. The providers then filed a lawsuit in federal district court for judicial review of the PRRB's decision. The district court determined that there was nothing in the statute that suggests that Congress intended to authorize equitable tolling. The appeals court rejected the conclusions of the district court, finding that the PRRB ruling that it had no jurisdiction to hear the appeal was a final decision subject to judicial review because there was no further action to be taken. As to the limitations period, the appeals court ruled that statutory limitation periods are generally subject to equitable tolling and that the principle of equitable tolling should apply to the government to the same extent as it applies to private parties.

Court's analysis. The Court considered what it would mean if the governing statute were "jurisdictional" and concluded that "under no circumstance could providers engage PRRB review more than 180 days after notice of the fiscal intermediary's final determination." In addition, there would be no equitable tolling and the Secretary's regulation (42 C.F.R. sec. 405.1841(b)) providing for a good-cause extension would fail. The Court noted that it has repeatedly held that filing deadlines ordinarily are not jurisdictional and have described them as "quintessential claim-processing rules." The Court also rejected arguments that if one provision of a statute is jurisdictional, other provisions are jurisdictional, noting that the language Congress used does not reveal a design to preclude any regulatory extension. The Court concluded that the time limitation in the statute is nonjurisdictional and, therefore, the limitation does not bar the extension contained in the regulation. The Secretary reasonably construed the statute to permit a regulation extending the time for a provider's appeal to the PRRB to three years upon a showing of good cause and survives inspection under a deferential standard, the Court said.

The Court noted that it had never applied the equitable tolling presumption relied upon by the appellate court to an agency's internal appeal deadline. The court explained that the presumption of equitable tolling was adopted on the premise that such a principle is likely to be a realistic assessment of legislative intent but determined that the premise is inapt in the contest of a provider's administrative appeal under the Medicare Act. The Court added that for nearly 40 years no court has ever read equitable tolling into the statute and Congress never touched the 180-day administrative appeals provision or the Secretary's rulemaking authority. Thus, the Court concluded that the equitable tolling presumption does not apply to administrative appeals of this kind.

Robert L. Roth, who argued the case in front of the Court on behalf of Auburn Regional Medical Center, informed Wolters Kluwer that the practical effect of this decision is that providers are now left without a remedy for DSH-related underpayments they might not be aware of. He hopes that Congress might address the issue of equitable tolling 180-day appeals limitation issue with legislation.

The case number 11-1231.

Attorneys: Donald B. Verrilli Jr. (Solicitor General) for Kathleen Sebelius, Secretary of Health and Human Services. Robert L. Roth (Hooper, Lundy & Bookman, P.C.) for Auburn Regional Medical Center, et al. John Marcus Faust (Law Office of John M. Faust, PLLC) for Southwest Consulting Associates, LP. Jeffrey A. Lovitky (Law Office of Jeffrey A. Lovitky) for Quality Reimbursement Services, Inc. Carlton M. Smith (Cardozo Tax Clinic) for Benjamin N. Cardozo School of Law Tax Clinic. Catherine E. Stetson (Hogan Lovells US LLP) for American Hospital Association.

Companies: Auburn Regional Medical Center; Southwest Consulting Associates, LP; Quality Reimbursement Services, Inc.; Benjamin N. Cardozo School of Law Tax Clinic; American Hospital Association

Cases: CaseDecisions DSHNews CostReportNews IPPSNews AppealsNews PartANews

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