MILLS PENINSULA HEALTH SERVICES v. XAVIER BECERRA (2025)

MEMORANDUM OPINION AND ORDER

Mills Peninsula Health Services and seven other Medicare and Medicaid service providers (the “Providers”) bring this action against Secretary of Health and Human Services Xavier Becerra. ECF No. 1. The Providers assert that the Department of Health and Human Services (“HHS”) acted arbitrarily and capriciously when its Provider Reimbursement Review Board (“Board”) dismissed two of their appeals seeking payment for rendered services. Id. ¶¶ 22-25. Currently before the court is the Providers’ motion for leave to supplement the administrative record, ECF No. 15, the resolution of which is, in the Providers’ view, a prerequisite to the submission of the full administrative record and resolution of the parties’ pending cross-motions for summary judgment. For the reasons explained below, the court denies the Providers’ motion.

I. FACTUAL BACKGROUND

A. The Medicare and Medicaid Program Structure and Reimbursement Process

The Medicare statute, 42 U.S.C. § 1395 et seq., covers certain medical care costs for eligible aged and disabled persons. The Centers for Medicare and Medicaid Services Division (“CMS”) within HHS administers the program. Relevant here, Medicare Part A covers acute care in hospitals like the Providers. The Medicaid statute, 42 U.S.C. § 1396 et seq., on the other hand, finances medical care for low-income individuals, regardless of age. States that participate in Medicaid are entitled to have a percentage of their Medicaid-related expenses matched by the federal government. Id. §§ 1396b, 1396d.

CMS contracts with private insurance companies to help manage the operations of the Medicare program. Id. §§ 1395u, 1395kk-1. These so-called Medicare Administrative Contractors determine the amount of reimbursement available by reviewing each provider's annual cost report. See 42 C.F.R. §§ 413.20, 413.24. The contractor then issues a Notice of Program Reimbursement to the provider. See id. § 405.1803. Any providers that are unsatisfied with the amount of reimbursement can appeal to the Board. 42 U.S.C. § 1395oo(a). Board decisions with respect to reimbursement amounts are considered final unless the Secretary chooses to reverse, affirm, or modify the Board's ruling. Id. § 1395oo(f); 42 C.F.R. §§ 405.1868(d)(2). If the provider is still dissatisfied at the end of HHS's administrative process, it may seek judicial review within sixty days of the final decision. See 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1877(b).

B. The Board's Procedural Rules

Pursuant to the Medicare statute, the Board is vested with the “full power and authority to make rules and establish procedures, not inconsistent with” the statute or regulations, “which are necessary or appropriate to carry out” its duties. 42 U.S.C. § 1395oo(e). All of the Board's rules are available online. “PRRB Rules & Board Orders,” Centers for Medicare & Medicaid Services (Sept. 10, 2024), https://perma.cc/F2ZQ-HASG; see “Provider Reimbursement Review Board Rules,” Centers for Medicare & Medicaid Services (Dec. 15, 2023), https://perma.cc/S29W-Q38Z.

According to the Board's rules, “[i]f a provider fails to meet a filing deadline or other requirement established by the Board in a rule or order, the Board may ․ [d]ismiss the appeal with prejudice” or “[t]ake any other remedial action it considers appropriate.” 42 C.F.R. § 405.1868(b).

The Board may also issue orders, which are treated as “addenda to the Rules” and made available online. Provider Reimbursement Rev. Bd. R. 1.1. Beginning in November 2021, the Board required all filings to be made electronically via the Office of Hearings Case and Document Management System (“OH CDMS”), “a web-based portal for parties to electronically file and maintain their cases and to correspond with the Board.” Id. R. 2.1.1. If a party is unable to transmit a filing through the OH CDMS portal, the party may seek an “exemption to the mandatory electronic filing requirement” by submitting a hard-copy request at least ten days before the filing deadline. Id. R. 2.1.2(B). For time-sensitive requests, parties may “contact the Board at 410-786-2671 and PRRB@cms.hhs.gov.” Id. The Board does not accept email communications from providers or their representatives. See id. R. 3.2 (“CAUTION: The Board does not accept appeals or other correspondence submitted by email or fax.”).

C. The Providers’ Reimbursement Appeals

The Providers are eight hospitals in California that have furnished acute medical care to patients entitled to benefits under both the Medicare and Medicaid programs. ECF No. 1 ¶¶ 4-12. At some point before July 2012, the Providers submitted payment requests for rendered services to its Medicare Administrative Contractor. See ECF No. 13, at 3-4. Dissatisfied with the contractor's reimbursement decision, they appealed to the Board in July 2012.¹ See ECF No. 1-1, at 3. Shortly thereafter, the Board notified the Providers that “[u]pon full formation of the group appeal[,] you must so advise the Board in writing.” ECF No. 11, at 4 (alterations in original). The appeals remained dormant for about a decade because one of the Providers had not been issued a Notice of Program Reimbursement from the contractor—a prerequisite to full group formation. ECF No. 11, at 1.

On three separate occasions, the Board asked the Providers for updates on the group's formation status. First, in October 2014, the Board asked the Providers to notify it within thirty days whether the group was fully formed in both appeals. ECF No. 12-1, at 10. The Providers’ representative responded via U.S. mail that the group was not yet complete. Id. Second, in May 2020, the Board issued another status request on group formation and warned that a lack of response could result in the appeals’ dismissal. Id. The Providers did not respond by the specified deadline, but—due to the COVID-19 pandemic—the Board had suspended its deadlines and thus took no action after the original deadline expired. Id. Third, on May 12, 2023, the Board informed the Providers in both appeals that “no later than June 11, 2023, you must advise the Board whether this group is fully formed based on the existing group participants” and further explained that “[f]ailure to submit a timely response to th[ese] request[s] will result in the dismissal of the case[s].” ECF No. 1-1, at 3. The requests came in the form of two email attachments from “noreply@salesforce.com on behalf of PRRB .” See ECF No. 16, at 2 (acknowledging that the request came from a “noreply” email address). The email address “prrb_ohcdms@cms.hhs.gov” was listed in the carbon copy, or “cc:,” field for both emails. ECF Nos. 1-1, 1-2.

Three days later, the Providers’ group representative replied to the email and put “prrb_ohcdms@cms.hhs.gov” in the “to” field. ECF No. 1-3. He explained that the group was not fully formed because the Medicare Administrative Contractor had not yet issued a Notice of Program Reimbursement for one of the Providers. Id. He further stated that he “was unable to respond to these emails through [OH CDMS,] apparently because the group is not fully formed.” Id. Finally, he asked the Board to “[p]lease respond to this email to inform me that this response is sufficient or give me further instructions on how to respond.” Id.

The Board never replied to the representative's email. Then, on June 16, 2023, the Board sent the Providers letters dismissing both appeals. ECF Nos. 1-4, 1-5. The letters explained: “[on] May 12, 2023, the Board advised that the Group was required to file a status report regarding the full formation of the group by June 11, 2023. Since the documentation was not submitted to the Board by the due date, the Board hereby dismisses th[ese] case[s].” Id.

On June 19, 2023, the Providers asked the Board to reconsider the dismissals and reinstate the appeals, claiming that they had timely responded to the May 12 request by email. ECF No. 11, at 5. As part of the reinstatement request, the Providers included their representative's email as evidence. ECF No. 18, at 2. The Board denied the requests on September 15. Id. The bases for its denials are not before the court.

II. PROCEDURAL HISTORY

On August 11, 2023, the Providers filed this action seeking judicial review of the Board's dismissal decisions. ECF No. 1. In February 2024, HHS furnished a proposed administrative record. ECF No. 9. The proposed record included the Board's denials of the Providers’ reinstatement requests and—as an attachment to those denials—the representative's May 2023 email. See id.; ECF No. 15, at 2 (“The original administrative record contained the Provider Representative's May 15, 2023 email, not as a standalone document, but rather as an attachment to a document that was improperly in the administrative record.”).

In April 2024, the Providers moved for summary judgment and argued that the Board's reinstatement denials were “improperly in the administrative record” because they contained post-hoc rationalizations for the Board's original dismissals. ECF No. 11, at 16-19. In its cross-motion for summary judgment, HHS agreed to remove the reinstatement denials from the proposed administrative record. ECF No. 12, at 22. But by omitting the reinstatement denials, HHS also omitted the representative's May 2023 email that had been attached to the denials. See ECF No. 15, at 2. Believing that the email should have remained in the record as a standalone document, the Providers moved to supplement the administrative record and re-add the email in July 2024. ECF No. 15. The motion to supplement is now fully briefed. ECF Nos. 18, 21.²

III. LEGAL STANDARDS

Under the Administrative Procedure Act, 5 U.S.C. § 701 et seq., a court shall “set aside agency action, findings, and conclusions” if they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Id. § 706(2). The court's review of agency action must “be based on the full administrative record that was before the [agency] at the time [it] made its decision.” Am. Bioscience, Inc. v. Thompson, 243 F.3d 579, 582 (D.C. Cir. 2001) (second alteration in original) (quoting Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971)). As another judge on this court has explained:

A reviewing court “should have before it neither more nor less information than did the agency when it made its decision.” Reviewing “less than the full administrative record,” might “allow a party to withhold evidence unfavorable to its case,” while reviewing “more than the information before the agency at the time of its decision,” risks “requiring administrators to be prescient or allowing them to take advantage of post hoc rationalizations.”

Univ. of Colo. Health at Mem'l Hosp. v. Burwell, 151 F. Supp. 3d 1, 12 (D.D.C. 2015) (first quoting IMS, P.C. v. Alvarez, 129 F.3d 618, 623 (D.C. Cir. 1997), then quoting Walter O. Boswell Mem'l Hosp. v. Heckler, 749 F.2d 788, 792 (D.C. Cir. 1984)).

An agency's “designation of the [a]dministrative [r]ecord ․ is entitled to a presumption of administrative regularity.” Oceana, Inc. v. Ross, 920 F.3d 855, 865 (D.C. Cir. 2019) (quoting Bar MK Ranches v. Yuetter, 994 F.2d 735, 740 (10th Cir. 1993)). Therefore, the court assumes “that an agency has properly designated the administrative record absent clear evidence to the contrary.” Nat'l Ass'n of Chain Drug Stores v. U.S. Dep't of Health & Hum. Servs., 631 F. Supp. 2d 23, 27 (D.D.C. 2009). To overcome the presumption, the party seeking to supplement the administrative record must show one of three “unusual circumstances”: that (1) “the agency deliberately or negligently excluded documents that may have been adverse to its decision”; (2) that “background information was needed to determine whether the agency considered all the relevant factors”; or (3) that “the agency failed to explain administrative action so as to frustrate judicial review.” City of Dania Beach v. Fed. Aviation Admin., 628 F.3d 581, 590 (D.C. Cir. 2010) (internal quotation marks omitted) (quoting Am. Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C. Cir. 2008)). Additionally, the moving party must “introduce non-speculative, concrete evidence to support their belief that the specific documents allegedly missing from the administrative record were directly or indirectly considered by the actual decision makers involved in the challenged agency action.” Dist. Hosp. Partners, L.P. v. Sebelius, 971 F. Supp. 2d 15, 20 (D.D.C. 2013).

IV. DISCUSSION

The Providers’ motion to supplement turns on whether the Board was aware of the May 2023 email when it rendered its dismissal decisions. There is little dispute that the information contained within the email—had it been received by the Board prior to its decisions—is relevant to the challenged dismissals. But if the email was not before the Board at that time, then supplementation is not warranted because the Board could not have been influenced by what it did not know.

The Providers argue that the email “was surely before the Board when it made its June 16, 2023 dismissal decisions at issue in this case.” ECF No. 15, at 5. HHS counters that the email was never received, processed, or considered during the administrative process. ECF No. 18, at 5. Based on the available information, the court concludes that the Providers cannot rebut the presumption in favor of HHS.

When the Board requested a status update from the Providers on May 12, 2023, its letter did not specify the precise manner in which the Providers should have responded. It simply stated that the Providers needed to “advise the Board whether this group is fully formed” and that a failure to do so would result in dismissal. ECF Nos. 1-1, 1-2. The Providers’ representative replied three days later and supplied the requested information. ECF No. 15-1, at 4. But the Board's letter came from a “noreply” email address, suggesting that a responsive email would not be processed. See ECF No. 16, at 2 (the Providers acknowledging that the request came from “noreply@salesforce.com on behalf of PRRB ”). Seemingly in an attempt to address this issue, the Providers’ representative deleted the “noreply” address and typed “prrb_ohcdms@cms.hhs.gov” in the “to” field when he responded three days later. ECF No. 15-1, at 4.³

But whether the representative sent the email is an entirely different matter from whether the Board actually received it. The Board's rules make clear that parties are expected to communicate with it by using the OH CDMS web portal. Provider Reimbursement Rev. Bd. R. 2.1.1. A party that is unable to use the portal must request an exemption by contacting the Board via U.S. Mail at least ten days prior to the filing deadline or, in time sensitive situations, by calling the Board and emailing “PRRB@cms.hhs.gov.” Id. R. 2.1.2(B). Importantly, the Board “does not accept ․ correspondence submitted by email.” Id. R. 3.2.

Based on these rules, the Providers and their representative should have known that emailing a response to the Board's inquiry was insufficient. Indeed, the representative himself seemed to recognize this, asking the Board to “[p]lease respond to this email to inform me that this response is sufficient or give me further instructions on how to respond.” ECF No. 15-1, at 4. The Board never replied to signal that it had received the email, yet the representative took no further action.

The representative also tried to explain that he was “apparently” unable to use the OH CDMS portal “because the group [was] not fully formed.” Id. But the Board rules provide for that exact contingency: the Providers needed to request an exemption by mail at least ten days before the deadline. Provider Reimbursement Rev. Bd. R. 2.1.2(B). At the time of the email on May 15, 2023, the Providers still had four weeks to answer the Board's inquiry, leaving sufficient time to seek an exemption. By sending a single email and doing nothing else, the Providers did not follow the proper procedure for communicating with the Board. Because they operated outside of the appropriate channels, the Providers cannot show that their response was actually received or processed by anyone at the Board before the Board dismissed their cases.

The Providers repeatedly assert that they directed the information to the correct location, but that is mere speculation. For support, they claim to have “uncontradicted evidence” in the form of a declaration from the group representative and copy of the email he sent. ECF No. 21, at 3-4. But even taking this evidence as accurate, it shows—at most—that some communication was dispatched. It is not proof that the communication was received in such a way that enabled the Board to consider it. The court does not doubt that the Providers’ representative addressed the email to “prrb_ohcdms@cms.hhs.gov.” But there is nothing to suggest that this address is capable of receiving incoming messages or that the Board monitors its inbox for communications. The Board's rules do not even list “prrb_ohcdms@cms.hhs.gov” as a valid address; in the extreme circumstance where a party needs to communicate with the Board by email, the rules instruct it to use “prrb@cms.hhs.gov,” an entirely different address.⁴ Id.

Considering all these factors together, the Providers’ argument for supplementation relies on the assumption that the Board received and processed the representative's email before it dismissed their cases. It is certainly possible that “prrb_ohcdms@cms.hhs.gov” is set up to receive emails, and it is certainly possible that someone at the Board read the response. But it is just as possible that the Board first learned about the email's existence when the Providers attached it to their reinstatement requests. The Providers bear the burden on a motion to supplement, and their mere speculation is insufficient to overcome the “strong presumption ․ that [the agency] properly designated the administrative record.” Pac. Shores Subdivision, Cal. Water Dist. v. U.S. Army Corps of Eng'rs, 448 F. Supp. 2d 1, 5 (D.D.C. 2006).⁵

V. CONCLUSION

For the foregoing reasons, it is hereby ORDERED that the Providers’ motion for leave to supplement the administrative record, ECF No. 15, is DENIED. The parties shall file the joint appendix on or before January 24, 2025.

SO ORDERED.

FOOTNOTES

1.   Upon the Providers’ request, the Board divided the group appeal into two parts: one for inpatient services and one for outpatient services (case numbers 12-0452GC and 12-0453GC). ECF No. 12-1, at 9; ECF No. 1 ¶ 15.

2.   While not directly relevant to the motion to supplement, both parties continued to brief summary judgment. In June 2024, HHS opposed the Providers’ motion for summary judgment at the same time it filed its cross-motion. ECF No. 13. In July 2024, the Providers opposed HHS's cross-motion for summary judgment, ECF No. 16, and filed a reply in support of their own motion for summary judgment, ECF No. 17. And in September 2024, HHS filed a reply in support of its cross-motion for summary judgment. ECF No. 22.

3.   HHS argues that the Providers’ representative responded to the “noreply” address, ECF No. 18, at 5, but that is belied by the proffered supplemental record, which reflects that the response was directed to “prrb_ohcdms@cms.hhs.gov,” ECF No. 15-1, at 4.

4.   This email address is even listed on the cover page of the most recent version of the Board rules. See “Provider Reimbursement Review Board Rules,” Centers for Medicare & Medicaid Services (Dec. 15, 2023), https://perma.cc/S29W-Q38Z.

5.   HHS further argues that the Providers “fail to even examine the elements necessary to overcome this presumption.” ECF No. 18, at 4-5. Even assuming the Providers addressed the American Wildlands scenarios directly, it does not matter because the Providers cannot establish that the proffered supplement was before the Board at the time it dismissed their cases. See, e.g., Heckler, 749 F.2d at 792 (explaining that the administrative record furnished to the reviewing court should contain “neither more nor less information than [what was before] the agency when it made its decision”).

LOREN L. ALIKHAN United States District Judge