Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Ingham Regional Medical Center v. United States

United States Court of Appeals, Federal Circuit

November 3, 2017

INGHAM REGIONAL MEDICAL CENTER, MCLAREN NORTHERN MICHIGAN, BAY REGIONAL MEDICAL CENTER, LAKEWOOD HEALTH SYSTEM, GIFFORD MEDICAL CENTER, INC., Plaintiffs-Appellants
v.
UNITED STATES, Defendant-Appellee

         Appeal from the United States Court of Federal Claims in No. 1:13-cv-00821-MBH, Judge Marian Blank Horn.

          Diane Elizabeth Cooley, Pires Cooley, Washington, DC, argued for plaintiffs-appellants. Also represented by Alexander John Pires, Jr.

          Phyllis Jo Baunach, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Steven J. Gillingham; Gerald Anthony Wesley, Defense Legal Services Agency, United States Department of Defense, Aurora, CO.

          Before Prost, Chief Judge, Dyk and Hughes, Circuit Judges.

          Hughes, Circuit Judge.

         Ingham Regional Medical Center, Mclaren Northern Michigan, Bay Regional Medical Center, Lakewood Health System, and Gifford Medical Center, Inc. brought suit against the Government alleging that they were underpaid for certain outpatient medical services. The Court of Federal Claims dismissed Appellants' complaint for failure to state a claim upon which relief can be granted. We find that Ingham may bring a claim for breach of contract but that Appellants may not bring money-mandating claims under 10 U.S.C. § 1079(j)(2) and 32 C.F.R. § 199.7(h)(2) because the Government's interpretation of the statute was reasonable. Accordingly, we reverse-in-part, affirm-in-part, and remand.

         I

         In 1956, Congress established TRICARE, a military health care system (previously called the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)). TRICARE provides medical and dental care for current and former members of the military and their dependents. The Secretary of Defense is responsible for contracting with outside health care providers to deliver medical care to TRICARE recipients. See 10 U.S.C. § 1073(a)(2); 32 C.F.R. § 199.1. Hospitals that provide TRICARE services are reimbursed in accordance with guidelines set forth by the Department of Defense (DoD). See 32 C.F.R. § 199.14.

         In 2001, Congress amended the TRICARE statute governing the reimbursements for outside healthcare providers. The statute previously permitted, but did not require, DoD to use Medicare reimbursement rules. The amendment replaced the permissive word "may" with "shall" such that the statute read:

The amount to be paid to a provider of services for services provided under a plan covered by this section shall be determined under joint regulations to be prescribed by the administering Secretaries which provide that the amount of such payments shall be determined to the extent practicable in accordance with the same reimbursement rules as apply to payments to providers of services of the same type under title XVII of the Social Security Act [Medicare].

10 U.S.C. § 1079(j)(2) (2002) (emphasis added).[1] Thus, § 1079(j)(2) required TRICARE to use the same reimbursement rules as Medicare to the extent practicable.

         DoD responded to the statutory change by issuing an Interim Final Rule, effective August 12, 2002. TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing Facility Benefit; Home Health Care Benefit; Adopting Medicare Payment Methods for Skilled Nursing Facilities and Home Health Care Providers, 67 Fed. Reg. 40, 597-02 (June 13, 2002). The Interim Final Rule noted that Medicare was phasing in a new Outpatient Prospective Payment System (OPPS) methodology for outpatient services and that DoD:

plan[ned] to follow the Medicare approach. However, because of complexities of the Medicare transition process and the lack of TRICARE cost report data comparable to Medicare's, it is not practicable for the Department to adopt Medicare OPPS for hospital outpatient services at this time.

Id. at 40, 601; J.A. 4. The Interim Final Rule adopted new methods of payment for four categories of hospital-based outpatient services. DoD issued a Final Rule in 2005, which provided a more detailed explanation of the payment rules for hospital-based outpatient services. See TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing Facility Benefit; Home Health Care Benefit; Adopting Medicare Payment Methods for Skilled Nursing Facilities and Home Health Care Providers, 70 Fed. Reg. 61, 368-01 (October 24, 2005). For most outpatient services, hospitals would receive payments "based on the TRICARE-allowable cost method in effect for professional providers or the CHAMPUS Maximum Allowable Charge (CMAC)." Id. at 61, 371. These payment rules applied until 2009, when TRICARE introduced a new payment system for hospital outpatient services that was similar to the Medicare OPPS rules.

         Hospitals complained that CMAC was only intended to be used for individual health care providers, not institutions with large overhead costs. TRICARE responded to these complaints by hiring a consultant, Kennel and Associates, Inc., to undertake a study of the accuracy of its payments to the hospitals. The Kennel Study compared CMAC payments to the payments that would have been made using Medicare payment principles, and determined that DoD "(1) underpaid hospitals for outpatient radiology but, (2) correctly paid hospitals for all other outpatient services." J.A. 5 (emphasis in original).

         Subsequently, DoD created a discretionary payment process and notified the hospitals via letter on April 25, 2011. The letter explained that DoD would permit the hospitals to request a review of their TRICARE reimbursements:

Based on the request, your hospital may be paid an adjustment, subject to the availability of appropriations, in return for your acceptance of DoD's offer of additional payment based on criteria established by the agency . . . . [P]ayment of the discretionary adjustments will also be contingent on the execution of a ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.