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Roswell Park Cancer Institute v. Thompson

United States District Court, W.D. New York
Oct 30, 2002
00-CV-0611E(Sr) (W.D.N.Y. Oct. 30, 2002)

Opinion

00-CV-0611E(Sr)

October 30, 2002


MEMORANDUM ORDER

This decision may be cited in whole or in any part.


Plaintiff Roswell Park Cancer Institute ("Roswell") commenced this action seeking a declaration that the defendants' decision to disallow reimbursement of certain medical education costs to Roswell is contrary to law, arbitrary and capricious, an abuse of discretion, in excess of statutory authority and otherwise null and void. Defendants filed an Answer and then moved this Court for a judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure ("FRCvP"). Thereafter plaintiff filed a cross-motion for summary judgment. The undersigned referred this case to Magistrate Judge H. Kenneth Schroeder, Jr. pursuant to 28 U.S.C. § 636(b)(1)(B) for all proceedings necessary for a recommended determination of the factual and legal issues presented herein. Judge Schroeder issued a September 28, 2001 Report and Recommendation ("RR") in which he recommended to this Court that the defendants' motion for judgment on the pleadings be denied and that the plaintiff's motion for summary judgment be granted. Judge Schroeder further recommended that this Court issue a declaration that defendants' determination, entitled "Decision of the Administrator," is contrary to law and arbitrary and capricious and issue an Order directing defendant to adjust the amount of Roswell's reimbursable costs to include certain graduate medical expenses. Defendants, pursuant to FRCvP 72(b) and Rule 72.3(a)(3) of the Local Rules of Civil Procedure ("LRCvP"), timely filed objections to the RR. This Court has jurisdiction to review defendant Thompson's final decision pursuant to 42 U.S.C. § 1395oo(f)(1). Pursuant to FRCvP 72(b), the undersigned has conducted a de novo review of those portions of the RR to which defendants have objected. For the following reasons, defendants' objections will be overruled and the RR will be adopted in its entirety. Familiarity with the relevant facts and procedural history of this case is presumed. This case arises from a dispute over the provisions of a Medicare program that reimburses hospitals for their costs and expenses associated with graduate medical education ("GME"). In 1980 Congress passed legislation permitting a teaching hospital such as Roswell to receive Medicare reimbursements for GME costs in one of two ways. A hospital could choose either the "standard election" or the "teaching election" as a method of reimbursement. Under the standard election, a hospital claims reimbursement for GME costs under Medicare, Part A, while its individual physicians claim reimbursement under Part B for their professional services provided to Medicare beneficiaries during hospitalization — i.e., patient care. Alternatively, a hospital claiming reimbursement under the teaching election is reimbursed for all physician expenses collectively — both GME costs and patient care — provided that the hospital's individual physicians agree not to be reimbursed separately. See 42 U.S.C. § 1395x(b)(7) (1992). In 1981 Roswell claimed reimbursement under the teaching election thereby eliminating the need to separately record physician costs associated with patient care and physician supervisory costs. Such aggregated costs were recorded by Roswell on its annual hospital cost report and submitted to an intermediary for reimbursement on a "reasonable cost, pass-through basis."

A more detailed recitation of the facts in this case is set out in Magistrate Judge Schroeder's September 28, 2001 R R.

Part A of Medicare is a compulsory program which provides payment for hospital-related health care expenditures. Part B of Medicare is a voluntary program which provides payment for physicians' services.

The benefit to a hospital choosing reimbursement under the teaching election is that the hospital is relieved of certain record keeping requirements because it does not have to document a physician's allocated time spent on patient care as opposed to supervision.

Physician supervisory costs, a component of reimbursable GME costs, comprise a provider's expenses associated with the supervision and education of residents and interns within the hospital.

An intermediary, usually an insurance company, is designated by the Secretary to examine cost reports and issue notices regarding the amount of allowable costs that are reimbursable according to Medicare regulations.

In 1986 Congress changed the method for calculating reimbursable GME costs and directed the Secretary of the Department of Health and Human Services ("HHS") to determine a provider's reimbursable GME costs based on an "average amount recognized as reasonable" for each full-time resident, rather than on a reasonable cost basis. 42 U.S.C. § 1395ww(h)(2)(A) (hereinafter referred to as the "GME Amendment"). This per-resident amount, or average per resident amount ("APRA"), was to be calculated by dividing the amount of a hospital's GME costs recognized as reasonable for the base year of 1984 by the number of full-time residents working in that hospital. Id. This 1984 APRA, adjusted for inflation, would then be used to determine a hospital's GME reimbursements for each fiscal year after 1984. In 1988 HHS published its proposed regulations to implement the GME Amendment. See 53 Fed. Reg. 36589 (1988). The final regulations, published in 1989, instructed intermediaries to reaudit and verify each hospital's base year GME costs and to exclude any nonallowable or misclassified costs. 42 C.F.R. § 413.86(e)(1)(ii)(A)-(C) (2001) ("reaudit rule"). The purpose reaudits was to insure the accuracy of providers' reported 1984 GME costs so as to prevent future overpayments to hospitals by Medicare. See 53 Fed. Reg. 36589, 36591; 54 Fed. Reg. 40286, 40301 (1989). Following a reaudit, intermediaries were directed to issue a Notice of Average Per Resident Amount ("NAPRA") to each hospital. Hospitals were given 180 days to appeal from such a notice to a Provider Reimbursement Review Board ("PRRB"). 42 C.F.R. § 413.86(e)(1)(v).

Congress passed the GME Amendment as part of an overall regulatory scheme to give health care providers financial incentives to provide services to Medicare recipients in a more efficient manner. An important feature of this new scheme was the prospective payment system. Until 1983 hospitals were reimbursed retrospectively for the reasonable costs of patient care given to Medicare beneficiaries. In 1983 Congress established a prospective payment system of reimbursement for the costs of inpatient hospital care. 42 U.S.C. § 1395ww(d),(e). Under the new system, providers are reimbursed by Medicare prospectively for the costs of patient care based on predetermined fixed rates according to the type of services provided. GME costs were initially excluded from the prospective payment system until enactment of the GME Amendment in 1986.

To clarify, a hospital's reimbursable GME costs for each successive year after 1984 would be computed by multiplying its 1984 APRA by the number of full-time equivalent residents, as determined by § 1395ww(h)(4), working in the hospital during the year in question, and that product would be multiplied by the hospital's Medicare patient load in the same year. 42 U.S.C. § 1395ww(h)(3).

A problem with this reaudit rule was that, by 1990 and 1991, when the APRA audits were being performed, a provider may not have retained adequate records to support its claimed 1984 GME and physician supervisory costs. Thus HHS issued "further clarification" in 1990 with respect to such audits. HHS first noted that, in order for a provider to support the allocation and reimbursement of physician supervisory costs, providers are generally required to furnish a written physician allocation agreement to the intermediary that specifies the respective amount of time a physician spends on teaching and supervision as opposed to time spent on patient care. 55 Fed. Reg. 35990, 36063 (1990). HHS addressed the problem of inadequate documentation by allowing providers to utilize documentation from years after the 1984 base period. "As an equitable solution to the problem of the nonexistence of physician allocation agreements, time records, and other information, we are allowing providers to furnish documentation from cost reporting periods subsequent to the base period in support of the allocation of physician compensation costs in the GME based period." Id. HHS also provided that, "[i]n the event that the provider has no auditable documentation for any subsequent cost reporting period, the provider may perform a 3-week time study of all physicians' time ***" in order to support a provider's GME costs used to calculate its APRA. Id., at 36064. However, although HHS stressed that it was allowing providers to utilize this limited exception to its usual documentation requirements, HHS also stated that "[i]n no event will the results obtained from the use of the records from a cost reporting period later than the base period serve to increase or add physician compensation costs to the costs used to determine the per resident amounts." Id. (emphasis added).

Inasmuch as the calculation of reimbursable GME costs is based on a provider's 1984 allowable GME costs and adjusted thereafter based on inflation, any miscalculation or erroneous 1984 cost figure would result in incorrect reimbursements in perpetuity.

The PRRB is a statutorily created panel within HHS that is given the authority to "affirm, modify, or reverse a final determination of the fiscal intermediary" with respect to reimbursement determinations. 42 U.S.C. § 1395oo(c). All PRRB decisions are final; however, the Administrator or the Secretary may reverse, modify or affirm any such decision within 60 days of a hospital's receipt thereof. 42 U.S.C. § 1395oo(f)(1).

The dispute in this case arises from the fact that Roswell changed its method of reimbursement from the teaching election to the standard election after its 1984 APRA had been calculated. During the 1980s, Roswell was having difficulty recruiting and retaining high-caliber physicians because, as state employees, their physicians' salaries were limited by New York Law. In response to this problem, the Governor of the State of New York appointed a panel to address the issue. Following a recommendation by the panel, the State Legislature created the Physician Practice Plan ("PPP") for Roswell. According to the PPP, physicians could supplement their income by charging Medicare Part B directly for services rendered to Medicare beneficiaries. However, Roswell was forced to change its method of reimbursement from the teaching election to the standard election in order to implement the PPP. Therefore, in 1993, upon implementation of the PPP, Roswell changed its method of reimbursement from the teaching election to the standard election.

The change in election was necessary because, as mentioned previously, according to Medicare regulations a hospital choosing the teaching election had to ensure that all of its physicians waived their rights to bill Medicare Part B directly for patient services. See 42 U.S.C. § 1395x(b)(7).

Approximately two years before implementation of the PPP, Roswell was notified by an intermediary of its proposed APRA. Roswell appealed that notice to the PRRB. Roswell subsequently amended its appeal to include an argument that its APRA should be adjusted, commencing with its 1993 election change, to reflect its physician supervisory costs. The PRRB conducted a full hearing and issued a March 8, 2000 decision in which it held that the intermediary should adjust Roswell's APRA, commencing in 1993, to include physician supervisory costs that were excluded from its 1984 APRA. The Administrator of the Health Care Financing Administration ("HCFA") reversed the Board's determination. Roswell commenced the present action in this Court on May 8, 2000 seeking a declaration that defendant's decision is contrary to law, arbitrary and capricious, an abuse of discretion, in excess of statutory authority and otherwise null and void.

Prior to receiving notice of its proposed APRA, Roswell was granted permission from its intermediary to conduct a three-week time study in accordance with HHS's 1990 instructions. See supra note 9. The 1990 audit was conducted by Roswell and showed that almost 22 percent of its physician compensation was attributable to supervision of residents and interns. Applied to the 1985 physician salaries — which totaled $7,433,520 — Roswell calculated that it had incurred $1,614,013 in recognizable GME expenses that had not been included in the calculation of its APRA. Roswell Park Cancer Inst. v. Blue Cross and Blue Shield Assoc., 2000 WL 273978, *4 (P.R.R.B. 1997). Roswell submitted the 1990 time study to its intermediary; however the intermediary excluded the results of such audit from Roswell's proposed APRA.

At the time of Roswell's initial appeal in 1991 it had not adopted the PPP. Roswell amended the appeal because, by the time the Board had conducted a hearing on the matter, Roswell had adopted the PPP and the change in its reimbursement election. The problem facing Roswell, and the reason for its appeal, was that it had not separately recorded and identified its physician supervisory costs from other costs in 1984 because, at that time, Roswell was receiving reimbursement under the teaching election. Thus, when Congress enacted the GME Amendment, Roswell's physician supervisory costs were not included within its APRA but continued to be reimbursed on a reasonable cost basis. However, with the 1993 change to the standard election Roswell would no longer be compensated for any such costs because Roswell's 1984 GME costs, already calculated without utilizing Roswell's physician supervisory costs, would not be adjusted by its intermediary.

The PRRB found that it was improper for the intermediary not to adjust Roswell's APRA because such failure would result in no reimbursement for Roswell's physician supervisory costs. In addition, the PRRB found that the 1990 time study was acceptable documentation to make the necessary adjustments.

The Administrator acts on behalf of the Secretary of Health and Human Services in reviewing decisions of the PRRB. Any determination by the Administrator constitutes the final administrative decision of the Secretary.

The Administrator's reversal was based primarily on the fact that Roswell had presented no auditable and contemporaneous base year documentation to support the inclusion of its claimed physician supervisory costs for 1984. The Administrator reasoned that such failure was by several provisions within the preamble to the final GME regulations that governed the situation applicable to Roswell — viz., a teaching hospital that withdraws its teaching election after the 1984 fiscal year. The agency reasoned that, inasmuch as a hospital, such as Roswell would not have adequate documentation to separately identify its physician supervisory costs incurred in the base year, it would not be "possible to make the necessary adjustment to the GME base period ***." 54 Fed. Reg. at 40309. Further, in rejecting the argument that Roswell's 1990 time study could be used to adjust its 1984 APRA, the Administrator relied on the 1990 HHS directive that declared that under no circumstances could such documentation serve to increase or add physician compensation costs to Roswell's originally claimed base period costs. See Roswell Park Cancer Inst. v. Blue Cross/Blue Shield Assoc., 2000 WL 1146595, *10 (H.C.F.A. 2000).

The Administrator's decision to reverse the PRRB ruling with respect to Roswell's reimbursement of certain GME costs was based, in part, on his interpretation of the GME Amendment and of the regulations that Congress had authorized HHS to promulgate. Therefore, the undersigned must examine such an interpretation under the familiar standard declared in Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837 (1984). This Court must determine, first, "whether Congress has directly spoken to the precise question at issue" and, if it has, the inquiry must end and this Court must "give effect to the unambiguously expressed intent of Congress." Skandalis v. Rowe, 14 F.3d 173, 178 (2d Cir. 1994) (quoting Chevron, at 842-843). If, however, the statute is silent or ambiguous with respect to the specific issue, this Court "must defer to the agency's resolution of the matter if it is based on a permissible construction of the statute and is sufficiently reasonable." Skandalis, at 179 (internal citations and quotations omitted). In addition, the complexity of the Medicare Statute and the fact that this case involves an agency's interpretation of its own regulations gives rise to a heightened level of deference to the Secretary. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994). Nevertheless, this Court must set aside an agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law ***." 5 U.S.C. § 706(2)(A) (1996); 42 U.S.C. § 1395oo(f)(1) (1992).

Congress has not spoken to the precise issue in this case — viz., whether Congress intended to prohibit a provider, such as Roswell, that received Medicare reimbursement for its GME costs under the teaching election in 1984, from receiving any reimbursement for physician supervisory costs solely because that provider later had changed its method of reimbursement to the standard election. The Secretary's interpretation — embodied in the decision of the Administrator is that a provider in a situation like Roswell could not have its APRA adjusted because non-contemporanoeus documentation would be insufficient to support an increase in such calculation. This Court must defer to such an interpretation if it is based on a permissible reading of applicable law and if it is sufficiently reasonable. See Skandalis, at 179.

Such a review requires an analysis of the following statutes and regulations: (1) the "teaching election" provision of the Social Security Act, 42 U.S.C. § 1395x(b)(7); (2) the GME Amendment, 42 U.S.C. § 1395ww(h); (3) the reaudit rule, 42 C.F.R. § 413.86 et seq. and (4) the preamble to 42 U.S.C §§ 405, 412, and 413.

Judge Schroeder, in his RR, found the decision of the Administrator to be contrary to law because the agency's proposed regulations effectively prohibited Roswell from receiving any reimbursement for its physician supervisory costs after 1993. Judge Schroeder reasoned that, when Congress enacted the 1986 GME Amendment, it instituted a new manner of calculating the amount of a provider's reimbursable GME costs but that, in so doing, Congress did not limit the ability of teaching hospitals to change the means of recording such expenses. As such, Judge Schroeder found that the GME Amendment — with its new method of calculating reimbursable GME costs — could not reasonably be interpreted to prohibit reimbursement of such costs merely because a provider changed the manner of recording those expenses. "The proposed regulations clearly do not prohibit a hospital from changing from the teaching election to the standard election, and, because the statute permits such a change to be made, any regulation seeming to prohibit such a change likely would be contrary to existing law." RR, pp. 20-21. Defendants object to the RR on several grounds. First, defendants argue that Judge Schroeder misapplied the standard of review applicable to the Administrator's decision by failing to give due deference to it. According to defendants, the Magistrate Judge imposed his own judgment as to the propriety of the agency's regulations instead of examining the Administrator's decision to determine whether it was permissible based upon applicable law. Second, defendants object to Judge Schroeder's conclusion that the Administrator's decision is contrary to congressional intent. Such objections are without merit.

This Court finds no error in Judge Schroeder's review of the Administrator's decision. The Judge properly focused on whether such decision — and the Secretary's accompanying interpretation of the Medicare Statute and HHS regulations — was "a permissible reading of an ambiguous statute and is otherwise reasonable." RR, p. 19. Further, this Court agrees with Judge Schroeder that the Administrator's decision cannot be considered reasonable and in accordance with Congressional intent when such a decision precludes Roswell from receiving any Medicare reimbursement for physician supervisory costs that it undoubtedly incurred in the 1984 base-year. Congress enacted the GME Amendment in order to "`limit payments to hospitals' for GME costs." Regions Hospital v. Shalala, 522 U.S. 448, 460 (1998) (quoting H.R. Conf. Rep. No. 99-453, p. 482 (1985)).

Defendants mischaracterize the RR in arguing that Judge Schroeder misapplied the standard of review. Defendants argue that it was "improper for the Report to base its recommendation on whether or not the Magistrate `disagrees' with the Secretary's rationale or `agrees' with that of the plaintiffs or the PRRB. Defs.' Obj. to RR, p. 5. Defendants fail to see the proverbial forest through the trees. Judge Schroeder conducted a careful statutory and regulatory analysis of relevant law and then examined whether the Administrator's decision was reasonable in light of such. Judge Schroeder's recommendation that such decision was contrary to law and otherwise unreasonable was not grounded in the mere fact that he agreed or disagreed with a particular party.

In furtherance of that purpose, HHS promulgated the reaudit rule to ensure that GME costs were accurately reported. It is the Secretary's further interpretation of those provisions — and the resulting interpretive rule that non-contemporaneous documentation could not be used to increase physician compensation costs to a provider's APRA — as they apply to Roswell that renders the Administrator's decision arbitrary and capricious. Such an interpretation, while purporting to ensure an accurate determination of base year GME costs, is actually countervailing to an attempt at accuracy because it results in Roswell receiving no reimbursement for its physician supervisory costs. Defendants can offer nothing plausible to explain how no reimbursement for costs actually incurred is somehow reflective of an accurate determination for such costs. Such a decision is all the more unreasonable and inequitable considering that the sole reason for Roswell's inability to produce contemporaneous documentation is the fact that it chose a method of reimbursement in 1984 that was explicitly authorized by Congress. While the GME Amendment was intended to limit payments to hospitals for GME costs, there is nothing within such legislation to reasonably imply that Congress authorized the Secretary to prohibit payment for physician supervisory costs to providers that lawfully chose to be reimbursed under the teaching election in 1984. In addition, the plain language of the GME Amendment commands a different interpretation than the one offered by the Secretary. Section 1395 mandates the Secretary to "determine *** the average amount recognized as reasonable under this sub-chapter for direct graduate medical education costs of the hospital for each full-time-equivalent resident." 42 U.S.C. § 1395ww(h)(2). Direct graduate medical education costs of a hospital include physician supervisory costs. See 53 Fed. Reg. 36589; see also 54 Fed. Reg. 40286. Thus, in directing the Secretary to determine a hospital's APRA Congress clearly contemplated reimbursement for physician supervisory costs.

HHS was particularly concerned that misclassified and nonallowable costs, if reported in the base year and figured into a provider's APRA, would result in future and perpetual overpayments for GME costs. See 53 Fed. Reg. 36,589, 36591.

Moreover, the Secretary's decision is contrary to Congress's historical commitment to reimbursing teaching hospitals for the costs of their graduate medical expenses. See e.g., H.R. Rep. No. 99-241, p. 14 (1985) ("The medicare program has always provided reimbursement for both the direct and indirect costs of medical education incurred by teaching hospitals.").

Therefore, this Court cannot defer to the interpretation of the Secretary because an "alternative reading is compelled by the regulation's plain language." See Thomas Jefferson Univ., at 512.

Defendants further object to Judge Schroeder's RR on the grounds that the "Report contains an apparent misreading of Secretary's decision." Defs.' Obj. to RR, p. 5. Defendants object to Judge Schroeder's framing of the "crux of this controversy" as one of a dispute over the defendants' concern that Roswell has no contemporaneous documentation of physician supervisory costs for the base year of 1984. Defendants assert that "the Secretary's decision was not an arbitrary and capricious decision grounded in a mere concern over the absence of contemporaneous data." Id. Yet, an analysis of the Administrator's decision reveals that the Administrator's central reasoning in denying Roswell an adjustment to its APRA is based on Roswell's inability to identify its 1984 base year physician supervisory costs with acceptable documentation. As such, Judge Schroeder's RR properly articulated the primary reason offered by the Administrator in his decision — viz., the lack of contemporaneous documentation required to increase Roswell's APRA.

Defendants also object to Judge Schroeder's analysis with regard to the Administrator's interpretation of Presbyterian Med. Ctr. v. Shalala, 170 F.3d 1146 (D.C. Cir. 1999). Defendants argue that the RR failed to give deference to the Secretary's reasonable interpretation of Presbyterian in accordance with Chevron and also argues that the reasoning in Presbyterian nonetheless supports the Secretary's decision. This Court disagrees.

The Court in Presbyterian decided a more narrow issue than the one before this Court. The question before the Presbyterian Court was whether the Secretary's interpretive rule — in which he declared non-contemporaneous documentation insufficient to increase or add physician compensation costs to the costs used to determine the 1984 per resident amounts — was consistent with the Medicare Act and its implementing regulations. Presbyterian Hospital challenged the legality of the interpretive rule in an attempt to have its APRA increased to reflect GME costs that had allegedly been misclassified as operating costs in the base year. The Court upheld the interpretive rule and found that the rule was consistent with the regulatory goal of ensuring an accurate determination of providers' 1984 GME costs. The Court reasoned that Presbyterian's noncontemporaneous documentation was "inherently less reliable" and that the Secretary's interpretive rule — one that required contemporaneous documentation to support a provider's request to increase its 1984 APRA — furthered an accurate determination of GME costs. Presbyterian Med. Ctr. at 1150. However, this Court declines defendant's invitation to extend the reasoning of Presbyterian to the instant case for several reasons. Presbyterian was attempting to add misclassified costs to its 1984 APRA based on the justification that it erroneously claimed such costs as operating costs instead of GME costs. Roswell is not requesting that its APRA be adjusted to reflect previously misclassified costs; rather, Roswell is merely requesting an allocation and a recognition of physician supervisory costs that were accurately recorded and correctly reimbursed as reasonable costs in the base year. Presbyterian was legally obligated to record and segregate its physician supervisory costs in the base year; Roswell was not subject to the same recording requirements because it was receiving reimbursements under a different election than was Presbyterian. Thus, the interpretive rule was appropriate to deny Presbyterian's requested APRA increase because it should have kept more accurate records. However, the interpretive rule as it applies to Roswell is unreasonable because it severely penalizes Roswell for accurately and correctly recording its physician supervisory costs as required by the teaching election. The resulting perpetual underpayment to Roswell for its physician supervisory costs is unreasonable and contrary to law. The Presbyterian Court's reasoning simply fails to apply to the specific situation facing a provider like Roswell. This Court declines to expand such reasoning to sanction the Secretary's interpretation that Roswell is prohibited from receiving any reimbursement for its physician supervisory costs simply because of the method in which it legally chose to be reimbursed in the base year.

Presbyterian attempted to justify such an increase in GME reimbursement through the use of a 1990 time study. Presbyterian argued that, pursuant to 42 C.F.R. § 413.86(e)(1)(ii)(C), such non-contemporaneous data was an acceptable form of documentation to add the misclassified costs to its 1984 APRA.

Defendants' final objection is that the RR misconstrues the Secretary's 1990 documentation policy. According to defendants, Judge Schroeder failed to comport with the Chevron analysis by examining, and subsequently agreeing with, the PRRB's reasoning rather than with the Secretary's with regard to the 1990 documentation policy. Such an argument is another mischaracterization by defendants. There were two different and opposite interpretations of the GME Amendment offered to the Magistrate Judge by the opposing parties — viz., that of Roswell and the PRRB and that of defendants. Judge Schroeder first declared the Administrator's decision to be arbitrary and capricious and not in accordance with law based on the fact that such decision was contrary to congressional intent and the Medicare Act. Only after that initial determination did Judge Schroeder subsequently "agree" with the PRRB that Roswell's non-contemporaneous time study was "appropriate" and constituted a "reasonable alternative" to the Secretary's concerns. In doing so, Judge Schroeder explained that the PRRB's reasoning and decision — inapposite to the Secretary's decision and reasoning — was more consistent with congressional intent. Such analysis was distinct from the threshold question of whether the Administrator's decision was reasonable. Indeed, such comparison was necessary to illustrate how the Administrator's reasoning was inconsistent with applicable law. This Court finds nothing wrong with the Judge's approach in initially determining that the Administrator's decision was arbitrary and capricious and not in accordance with law and then consequently reasoning that the Board's approach is more consistent with the Medicare statutes.

Indeed, defendants acknowledge as much in their argument. See Defs.' Obj. to the RR, p. 10 ("What appears to be the deciding point of the Report is the conclusion that the Secretary's decision is manifestly contrary to Congressional will.").

Accordingly, it is hereby ORDERED that plaintiff's objections are overruled, that the RR is adopted in its entirety, that defendants' motion for judgment on the pleadings is denied, that plaintiff's motion for summary judgment is granted and that the Secretary shall instruct the intermediary to utilize the 1990 time study conducted by Roswell to reallocate GME costs in order to adjust Roswell's APRA to include physician supervisory costs in the base year and that such adjustments shall be calculated starting with the 1993 election change.


Summaries of

Roswell Park Cancer Institute v. Thompson

United States District Court, W.D. New York
Oct 30, 2002
00-CV-0611E(Sr) (W.D.N.Y. Oct. 30, 2002)
Case details for

Roswell Park Cancer Institute v. Thompson

Case Details

Full title:ROSWELL PARK CANCER INSTITUTE, Plaintiff, v. TOMMY G. THOMPSON, as…

Court:United States District Court, W.D. New York

Date published: Oct 30, 2002

Citations

00-CV-0611E(Sr) (W.D.N.Y. Oct. 30, 2002)