EDWARD M. CHEN, United States District Judge.
The issue in this case is whether Kaiser must pay for emergency care provided to its Medicare enrollee by an out-of-network hospital until the treating physician determines the enrollee is stable to be transferred even if Kaiser believes the physician was mistaken. The dispute centers on the governing Medicare regulation which provides: "[t]he physician treating the enrollee must decide when the enrollee may be considered stabilized for transfer or discharge, and that decision is binding on
Medicare is a federal medical insurance program for the elderly and disabled. See 42 U.S.C § 1395 et seq.; Compl. ¶ 9. The Secretary of Health and Human Services is responsible for the administration of Medicare through its Centers for Medicare & Medicaid Services ("CMS"). 42 U.S.C § 1395b-9; Compl. ¶ 9. Medicare consists of three parts of insurance: Parts A, B, and C. 42 U.S.C § 1395 et seq. Medicare Part C gives qualified Medicare individuals the option of participating in the Medicare Advantage ("MA")
Medicare payment decisions involve a multi-layer review beginning with a request with a provider, such as a hospital, for payment from the MAO organization. If dissatisfied with the initial determination, a provider may file with the MAO a request for standard reconsideration. 42 C.F.R. § 422.582. A provider dissatisfied with the MAO's decision on reconsideration may appeal the adverse redetermination to a private independent contractor for a reconsideration. 42 C.F.R. § 422.592. After the contractor renders its decision, a party may appeal an adverse reconsideration decision and request a hearing before an administrative law judge ("ALJ"). 42 C.F.R. § 422.600. Subsequently, a party may request that the Medicare Appeals Council ("MAC")
Congress authorized the Secretary to establish guidelines to promote the "efficient
Section 1395w-22(d)(1)(E) of the Social Security Act
Although the regulation sets forth certain limitations on the MAO's financial responsibilities,
42 C.F.R. § 422.113(b)(2).
The regulation defines an emergency medical condition as:
Id. at 422.113(b)(1)(i). Emergency services are "covered inpatient and outpatient services that are — (A) Furnished by a provider qualified to furnish emergency services; and (B) Needed to evaluate or stabilize an emergency medical condition." Id. at 422.113(b)(1)(ii).
The regulation further addresses care services provided after an emergency medical condition is stabilized: "Post-stabilization care services means covered services, related to an emergency medical condition, that are provided after an enrollee is stabilized in order to maintain the stabilized condition, or, under the circumstances described in [422.113(c)(2)(iii)], to improve or resolve the enrollee's condition." Id. at 422.113(c)(1). Section 422.113(c)(2)(iii) states:
42 C.F.R. § 422.113(c)(2)(iii).
Kaiser is a Medicare Advantage Organization ("MAO") that provides Medicare-covered services to its enrollees through a Medicare Advantage ("MA") plan. Compl. ¶ 5. Defendant Sylvia Mathews Burwell is the Secretary of the Department of Health and Human Services, which is statutorily responsible for the administration of the Medicare Program under the Social Security Act. Compl. ¶ 6. The Medicare Appeals Council acts under a delegation of authority from the Secretary. Compl. ¶ 6. See Title 42 of the Code of Federal Regulations § 405.1138 ("When a Federal district court remands a case to the Secretary for further consideration, unless the court order specifies otherwise, the MAC, acting on behalf of the Secretary, may make a decision, or it may remand the case to an ALJ with instructions to take action and either issue a decision, take other action, or return the case to the MAC with a recommended decision."). See also 42 U.S.C. §§ 1395ff(b)(1)(C), (b)(2), f(1)(v) (describing the MAC's decision as the "Secretary's final decision" and "final agency action."); 42 C.F.R. § 405.1130 (stating that "[t]he MAC's decision is final and binding on all parties....").
Non-party provider Prime Healthcare Services, Inc. ("Prime") owns and operates acute care hospitals, including Chino Valley Medical Center ("Chino Valley"). Compl. ¶ 7. Kaiser's affiliate, Kaiser Foundation Hospitals, owns and operates "in-plan" hospitals through which Kaiser members are served. Compl. ¶ 13. Chino Valley does not belong to Kaiser's network.
In the case at bar, Kaiser's enrollee was enrolled in Kaiser's Senior Advantage
Madahar, M. D. Decl. ¶¶ 5-8.
When Chino Valley billed Kaiser for the enrollee's treatment, Kaiser refused to pay for services after the point it believes the patient was stable and could have been transferred to a Kaiser's in-network facility. According to Kaiser, "[t]hat point was nearly 24 hours before the hospital ultimately deemed him stable and sent him home." Docket No. 43 at 2. ("Kaiser's MSJ"). Kaiser paid Chino Valley for emergency stabilization services provided on May 7th, but refused to pay for inpatient services provided on May 8th. AR 220. Kaiser explained: "[p]er our physician review, the member was clinically stable for transfer in-Plan after evaluation and treatment in the emergency room. We did not authorize the hospital to provide the post-stabilization inpatient care received after that." AR 220.
Chino Valley disputed Kaiser's decision with Kaiser. AR 206. Kaiser rejected Chino Valley's claim. AR 223. Chino Valley appealed Kaiser's denial to Maximus Federal
The ALJ concluded that the enrollee was stable in advance of what was indicated by Chino Valley's physician. AR 76. Thus, Kaiser did not have to pay Chino Valley for the unapproved post-stabilization care provided from May 7, 2011 through May 8, 2011. AR 76. In her decision, the ALJ questioned the credibility of the Chino Valley' stability assessment form and determined that the enrollee was admitted to telemetry in stable condition. AR 76. The ALJ did not discuss the regulation 42 C.F.R. § 422.113(b)(3). AR 66-77.
Chino Valley requested review by the Medicare Appeals Council. AR 35. Chino Valley set forth two reasons for its appeal: (1) the ALJ should have deferred to the documented judgment of the physician; and (2) the ALJ ignored that there were specific contemporaneous statements by the emergency room physician that the enrollee was unstable for transfer. AR 40-41. The MAC reversed the ALJ's decision. AR 16.
The MAC held that "the MA plan must pay for the enrollee's care until her treating physician determined that she was stable and could safely be transferred." AR 4. Accordingly, Kaiser was "responsible for the costs of the pre-stabilization emergency received by its enrollee from [Chino Valley] based on the treating physician's binding determination that the enrollee was not stable for transfer until 3:58 P.M. on May 8, 2011, at which point the enrollee was discharged." AR 16. In reaching the decision, the MAC stated:
AR 11-12 (emphasis in original).
The MAC's decision is the final decision of the Secretary from which Kaiser now appeals and seeks judicial review in this Court. Docket No. 43; Heckler v. Ringer, 466 U.S. 602, 607, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984); 42 U.S.C. § 405(g).
The crux of the parties' dispute involves the interpretation and application of the regulation relating to the physician's determination that the patient is stabilized. 42 C.F.R. § 422.113(b)(3). The issue is whether that termination by the treating physician is binding on Kaiser in respect to
At the outset, it should be noted that Congress granted the Secretary broad authority to prescribe such regulations as necessary to effectuate the administration of the Medicare program. 42 U.S.C. § 1395hh(a)(1) ("The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this subchapter."). In carrying out that mandate, the Secretary established a clear rule that the treating physician "must decide when the enrollee may be considered stabilized for transfer or discharge, and that decision is binding on the [MAO]." 42 C.F.R. § 422.113(b)(3). Further, the Secretary through the MAC's decision in this case made clear that the provision on stabilized condition should be read to create financial responsibility on the part of the MA plan whenever a treating physician determines that a patient is not stable. 42 U.S.C. §§ 1395ff(b)(1)(C), (b)(2), f(1)(v) (describing the MAC's decision as the "Secretary's final decision" and "final agency action."); 42 C.F.R. § 405.1130 (stating that "[t]he MAC's decision is final and binding on all parties...."); AR 13. As noted above, 42 C.F.R. § 422.113(b) and (c) sets forth the MAO's financial responsibility during and after a medical emergency which is marked by the patient's stability.
Kaiser takes issue with the Secretary's interpretation. The parties dispute the level of deference owed to the Secretary. Kaiser challenges the Secretary's interpretation of its own regulation, and argues the agency's construction of its regulation, which implements a statute, is not entitled to deference. Kaiser's MSJ at 13 n.9. By contrast, the Secretary argues that the Court "`must give substantial deference to an agency's interpretation of its own regulations.'" Secretary's MSJ at 10, 23 (citing Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994)). As discussed below, the more deferential standard applies.
When Congress explicitly leaves a gap for an agency to fill, "there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation"; any ensuing regulation is generally entitled controlling weight unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In United States. v. Mead Corp., 533 U.S. 218, 226-27, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), the Supreme Court reiterated this principle:
Furthermore, as the Supreme Court has repeatedly recognized, courts may properly resort to the views of an agency implementing a statute for guidance and should in fact afford considerable weight to an agency's construction of a statutory scheme it is entrusted to administer because the agency's interpretations are founded upon a body of experience and informed judgment. Id. at 227-28, 121 S.Ct. 2164 (citations omitted). That is the case here. Congress has bestowed broad authority upon the Secretary to promulgate regulations as may be necessary to
Moreover, as here, an agency interprets its own regulations, that interpretation receives "substantial deference." Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381 (citation omitted). In Thomas, petitioner challenged the Secretary's interpretation of 42 C.F. R. §§ 413.859(c) under the Administrative Procedure Act, 5 U.S.C. § 551 et seq. The Supreme Court held in Thomas Jefferson Univ., 512 U.S. at 506, 114 S.Ct. 2381:
Id. at 521, 114 S.Ct. 2381. The Court concluded that "[t]he Secretary's reading" was "a plausible interpretation of the regulation" and "faithful to the regulation's plain language." Id. at 514, 518, 114 S.Ct. 2381. See Conahan v. Sebelius, 659 F.3d 1246, 1249 (9th Cir.2011) (upholding the MAC's decision and stating that [t]he agency's interpretation of its own regulations receives "substantial deference" (citing Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381 (1994)).
The Court's language in Thomas Jefferson has been described as "an indulgent if not downright abject standard of deference." Robert A. Anthony, Which Agency Interpretations Should Bind the Courts?, 7 Yale J. on Reg. 1, 4 (1990). It is more deferential than the Chevron doctrine. Cf. Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ("Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.").
See Gose v. U.S. Postal Serv., 451 F.3d 831, 837 (Fed.Cir.2006) ("We defer even more broadly to an agency's interpretations of its own regulations than to its interpretation of statutes, because the agency, as the promulgator of the regulation, is particularly well suited to speak to its original intent in adopting the regulation."); Cathedral Candle Co. v. U.S. Int'l Trade Comm'n, 400 F.3d 1352, 1363-64 (Fed.Cir.2005) ("[I]t is well settled that an agency's interpretation of its own regulations is entitled to broad deference from the courts. Deference to an agency's interpretation of its own regulations is broader than deference to the agency's construction of a statute, because in the latter case the agency is addressing Congress's intentions, while in the former it is addressing its own."); Am. Express Co. v. United States, 262 F.3d 1376, 1382-83 (Fed.Cir. 2001) (holding that because "we are not dealing with an agency's interpretation of a statute and issues of Chevron deference, but with the IRS's interpretation of an ambiguous term in its own Revenue Procedure... substantial deference is paid to an agency's interpretations reflected in informal rulings"); Dir., Office of Workers' Comp. Programs, U.S. Dep't of Labor v. E. Associated Coal Corp., 54 F.3d 141, 147 (3d Cir.1995) ("We accord greater deference to an administrative agency's interpretation of its own regulations than to its interpretation of a statute.").
Although courts give deference to the agency's interpretation of relevant
Kaiser first challenges the "impermissible interpretation and application of 42 C.F.R. § 422.113(b)(3)." Kaiser's MSJ at 1. In the alternative, Kaiser argues that even if the MAC's reading of the regulation is permissible, the Secretary exceeded her authority in promulgating the regulation inconsistent with the Medicare Act. MSJ at 25.
Kaiser argues that the MAC acted arbitrarily and contrary to the plain language of 42 C.F.R. § 422.113(b)(3) when it (1) determined that the provision on stabilized condition should be read to create financial responsibility on the part of the MA plan whenever a treating physician determines that a patient is not stable and (2) categorically precluded the consideration of relevant evidence as to whether the physician rendered an actual medical decision. Kaiser's MSJ at 13, 18. In challenging the Secretary's interpretation, Kaiser contends that the plain text of the regulation does not support the MAC's reading. Instead, according to Kaiser, section 422.113(b)(3) limits its application to transfer disputes and requires the MAO to defer only to the decision of the treating physician to physically transfer or discharge a patient; it does not determine whether the enrollee is stable for purposes of Kaiser's financial responsibility. Kaiser's MSJ at 14.
Kaiser's attempt to divorce the duty of assuming the provision of emergency care without prior authorization from the obligation to pay for that care runs counter to the regulatory scheme. The MAC's interpretation is a reasonable construction of the application regulation. As the Secretary contends, the language of 42 C.F.R. § 422.113(b)(3) which makes the treating physician's determination of stability binding on the MAO applies to the MAO's financial responsibility for emergency medical care. As noted above, the MAO "may not require the provider to call for approval of services prior to the point of stabilization" during the provision of emergency medical services. 65 Fed Reg. 40, 201 (June 29, 2000). By implication, such approval refers to approval in order to secure the MAO's financial responsibility for that care. Moreover, § 422.113(b)(3) must be viewed in the context of the regulatory scheme of which it is a part, a scheme that explicitly addresses MAO's financial responsibility for emergency services and post-emergency services. See 42 C.F.R. § 422.113(b)(2) (establishing MAO financial responsibility for emergency services) and § 422.113(c)(2) (addressing MAO financial responsibility after stabilization).
The regulation and the MAC's interpretation thereof is consistent with the governing statutes as well. Section 1395w-22(d)(1)(E) of Title 42 of the U.S. Code provides that a MAO organization offering a MA plan may select the providers "so long as" coverage is provided for emergency services (as defined in [1395w-22 (d)(3)(A)]) without regard to prior authorization or the emergency care provider's contractual relationship with the MAO organization:
42 U.S.C. § 1395w-22(d)(1)(E).
Under section 1395w-22 (d)(3)(A), Congress defined "emergency services" as: "covered inpatient and outpatient services that — (i) are furnished by a provider that is qualified to furnish such services under this subchapter, and (ii) are needed to evaluate or stabilize an emergency medical condition (as defined in [§] 1395w-22 (d)(3)(B))." 42 U.S.C. § 1395w-22(d)(3)(A).
These statutory provisions thus link the MAO's duty to provide "coverage" for emergency services for stabilization of the enrollee. "Coverage" can fairly be read as implying the obligation of the MAO to pay for such emergency services. And emergency services is statutorily defined in part by stability of the medical condition. Hence, the regulation is consistent with the statute.
In sum, Kaiser's attempt to distinguish between medical transfer and financial responsibility in interpreting the stability requirement of 42 C.F.R. § 422.113(b)(3) ignores "the obvious fact that transfer disputes between the MAO and the out-of-network emergency provider ... will invariably be based on concerns about payment." Secretary's MSJ at 17. Once an enrollee's emergency medical condition stabilizes, the MA's financial responsibility for out-of-network services that are not authorized becomes very limited. See 42 C.F.R. § 422.113(c). Accordingly, the Secretary's interpretation of the regulations is neither plainly erroneous nor inconsistent with the regulation or governing statutes; it is well within the bounds of reasonable interpretation. Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381.
Kaiser also argues that the regulation 42 C.F.R. § 422.113(b)(3) conflicts with the Medicare statute 42 U.S.C. § 1395w-22(d)(2). Kaiser's MSJ at 25. Section 1395w-22 (d)(2) ("Guidelines respecting coordination of post-stabilization care") states that MAOs "shall comply with such guidelines as the Secretary may prescribe relating to promoting efficient and timely coordination of appropriate maintenance and post-stabilization care of an enrollee after the enrollee has been determined to be stable under section 1395dd of this title." 42 U.S.C. § 1395w-22(d)(2).
Kaiser reads this provision to impose an affirmative obligation on the treating physician to apply EMTALA's definition of "stability." Kaiser's MSJ at 18. Under the Federal Emergency Medical Treatment and Active Labor Act ("EMTALA"), any hospital that accepts payment from Medicare must treat patients who seek emergency services without inquiry into the patient's insurance coverage or ability to pay until the patient's condition has been stabilized. 42 U.S.C. § 13955dd. Section 1395dd prohibits transfer of emergency patients not yet stabilized. Id. EMTALA states that with respect to an emergency medical condition, "the term `stabilized' means ... that
Title 42, United States Code, § 1395w-22 (d)(2) provides:
42 U.S.C. § 1395w-22.
Title 42, United States Code, § 1395dd(e)(3)(B) provides:
42 U.S.C. § 1395dd(e)(3)(B).
In this case, the Chino Valley physician used the Transfer Stability Assessment Form that borrowed its factors from Medi-Cal.
Kaiser argues had EMTALA been applied, the enrollee would have been deemed stable for transfer. Kaiser's MSJ at 19. More specifically, Kaiser challenges a "rote application of inflexible, pre-determined factors" from Chino Valley's "Emergency Department's Transfer Stability Assessment" checklist. AR 225, Ex. D.
There are two problems with Kaiser's argument. First, even if the treating physician erred in applying the precise legal standard for stabilization, the regulations discussed above make clear that the treating physician's determination of stability is "binding" on the MAO. As the Secretary properly contends:
Secretary's MSJ at 3.
Second, in any event, it is not clear that the treating physician's utilization of a different standard of stabilization materially affected the outcome. Consistent with the main thrust of EMTALA's definition of "stabilized," the treating physician in this case was "of the impression that the patient was unstable for transfer at the time of admission on May 7, 2011 due to the likelihood and/or potential of material deterioration. [He] discussed the case with admitting physician and the patient was ultimately admitted." Madahar, M. D. Decl. ¶ 7; AR 136 (emphasis added).
In sum, the MAC's interpretation of the Medicare regulation 42 C.F.R. § 422.113(b)(3) promulgated under the broad Congressional authority, is neither plainly erroneous nor inconsistent with the regulation. See Thomas Jefferson Univ., 512 U.S. at 512, 114 S.Ct. 2381. The regulation clearly indicates that the binding effect of the treating physician's determination of stabilization applies to Kaiser's financial obligation. Although the Court recognizes the serious policy concerns raised by Kaiser about potentially perverse financial incentives for a provider to prolong medical emergency status at the expense of MAOs, the Court cannot conclude that the agency's interpretation of existing regulations and governing statute is unreasonable. Kaiser's concerns are thus better addressed to the regulatory process and/or Congress.
Alternatively, Kaiser contends even if the Court accepts the MAC's interpretation, the lack of any meaningful administrative or judicial review of the treating physician determination of stabilization when the determination is contemporaneously documented, violates Kaiser's due process rights. Compl. ¶ 82; Kaiser's MSJ at 24 (citing Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976)).
To bring a constitutional procedural due process claim, a plaintiff must show (1) a deprivation by the government, (2) of a liberty or property interest, (3) without due process of law. See Lightfoot v. District of Columbia, 273 F.R.D. 314, 319 (D.D.C.2011). Accordingly, such a claim requires the Court first to determine whether plaintiffs have asserted a liberty or property interest protected by the due process clause, and, if they have, next to determine whether a state actor caused any deprivation of that interest (before deciding what, if any, process was due). See Simms v. District of Columbia, 699 F.Supp.2d 217, 224 (D.D.C.2010). Thus, Kaiser must first establish it has a property interest sufficient to trigger due process protection. Schroeder v. McDonald, 55 F.3d 454, 462 (9th Cir.1995); see also Guzman v. Shewry, 552 F.3d 941, 953 (9th Cir.2009).
In its pleadings, Kaiser does not describe its property interest and cites no cases applicable to the situation here. In this case at bar, there is no cognizable property interest because the government is regulating Medicare funding it provides. Participation in the Medicare program is a voluntary undertaking. Livingston Care Ctr., Inc. v. United States, 934 F.2d 719,
The federal government pays Kaiser a flat fee per enrollee, which means that Kaiser assumes the risk of providing covered services to the beneficiary. Compl. ¶ 11; 42 U.S.C. §§ 1395w-23(a)(1) to -(a)(3). MAOs, however, have no property interest in Medicaid or Medicare payments. See Guzman v. Shewry, 552 F.3d 941, 950, 953 (9th Cir.2009) (holding that because there is no constitutionally-protected property right to Medicaid payments, there is no right to a pre-suspension hearing). As a corollary, MAOs have no constitutionally cognizable property interest in preventing the expenditure of such funds where mandated as a condition of receipt of such funds.
Furthermore, a regulation granting broad discretion to a decision-maker does not create a property interest. Jacobson v. Hannifin, 627 F.2d 177, 180 (9th Cir. 1980). "To have a property interest in a benefit, a person `must have a legitimate claim of entitlement to it.' `Entitlements are created by rules or understandings from independent sources, such as statutes, regulations, and ordinances, or express or implied contracts.'" Erickson v. United States ex rel. Dep't of Health & Human Serv., 67 F.3d 858, 862 (9th Cir. 1995) (internal citations omitted). "Whether an expectation of entitlement is sufficient to create a property interest will depend largely upon the extent to which the statute contains mandatory language that restricts the discretion of the decisionmaker." Allen v. City of Beverly Hills, 911 F.2d 367, 370 (9th Cir.1990) (internal quotation marks and brackets omitted). Here, the regulation states that the physician "must decide" when the enrollee may be considered stabilized and that determination is "binding on the MA organization." 42 C.F.R. § 422.113(b)(3). This wide discretion resting with the physician negates Kaiser's claim to a protectable property interest created by the State. Jacobson, 627 F.2d at 180. In short, Kaiser has failed to establish any property interest, the deprivation of which is entitled to due process of law.
Similarly, no taking of property without just compensation has occurred on this record. Compl. ¶ 83. The "Takings Clause" of the Fifth Amendment provides that private property shall not "be taken for public use, without just compensation." U.S. Const. Amend. V. The threshold question in any takings case is whether the plaintiff has a protected property interest. See Turnacliff v. Westly, 546 F.3d 1113, 1118-19 (9th Cir.2008) (internal citations omitted). As discussed above, Kaiser was unable to make this showing. Even if Kaiser could establish a property interest, there is no compulsion to participate in the Medicare program. "Where a service provider voluntarily participates in a price regulated program or activity, there is no legal compulsion to provide service and thus there can be no taking." Garelick v. Sullivan, 987 F.2d 913, 916 (2d Cir.1993) (citations omitted).
In sum, the challenged Medicare regulation does not violate the Fifth Amendment.
For the foregoing reasons, the Court
42 C.F.R. § 422.113(c)(3)(ii)(iv).
