Medicare Underpayment Dispute Is Much Too Late

     WASHINGTON (CN) - The deadline has long since passed for hospitals to fight recently discovered, yet decades-old, Medicare underpayments, the Supreme Court ruled Tuesday.
     The Centers for Medicare & Medicaid Services miscalculated payments owed to 18 hospitals that treated Medicare patients from 1987 to 1994, but the mistake became public only through the resolution of an unrelated 2006 administrative appeal.
     Although the deadline for such claims had obviously passed long ago, the hospitals asked the Provider Reimbursement Review Board to provide equitable tolling and start the deadline 180 days from when they found out about the miscalculation.
     Equitable tolling can delay application of the statute of limitations when a plaintiff learns about an alleged injury after the deadline has already passed.
     The board concluded, however, that the lapsed deadline, and a three-year extension, removed jurisdiction.
     A federal judge agreed that the hospitals had failed to show any evidence in the Medicare statutes that Congress intended to authorize such tolling.
     But the D.C. Circuit reversed in June 2011, finding that precedent "made clear that the appropriate inquiry is just the opposite: whether there was good reason to think Congress did not want equitable tolling." (Emphasis in original.)
     In its petition for certiorari, the Department of Health and Human Services insisted that the court should not apply precedent favoring equitable tolling to a process that had gotten along without it for 40 years.
     When the high court took up the case in June 2012, it identified three issues in play: the allegedly "jurisdictional" nature of the 180-day deadline, the importance of the three-year extension and the call for equitable tolling in administrative appeals.
     The court unanimously decided these questions for the government on Tuesday.
     Casting the deadline as jurisdictional would mean that no agency or court could enlarge it, but the justices decided that the statute could be read in multiple ways and that precedent paints them as "quintessential claim-processing rules."
     Finding no jurisdictional bar, the court said it could uphold the three-year extension adopted by the secretary of Health and Human Services to excuse late appeals only for good cause.
     Equitable tolling cannot apply, however, to administrative matters, according to the 15-page ruling.
     "The presumption of equitable tolling was adopted in part on the premise that '[s]uch a principle is likely to be a realistic assessment of legislative intent,'" Justice Ruth Bader Ginsburg wrote for the court, quoting the 1990 decision Irwin v. Department of Veterans Affairs.
     "But that premise is inapt in the context of providers' administrative appeals under the Medicare Act," Ginsburg added. "The act, until 1972, provided no avenue for providers to obtain administrative or judicial review. When Congress first directed the Secretary to establish the PRRB, Con­gress simultaneously imposed the 180-day deadline, with no statutory exceptions. For nearly 40 years the secretary has prohibited the board from extending that dead­line, except as provided by regulation. And until the D. C. Circuit's decision in this case, no court had ever read equitable tolling into §1395oo(a)(3) or the secretary's implementation of that provision. Congress amended §1395oo six times since 1974, each time leaving untouched the 180-day administrative appeal provision and the secretary's rulemaking authority. At no time did Con­gress express disapproval of the three-year outer time limit set by the Secretary for an extension upon a showing of good cause."
     Furthermore, unlike other systems that are designed to be "unusually protective" of layman claimants, the Medicare payment system involves sophisticated institutional providers assisted by legal counsel.
     In a brief concurring opinion, Justice Sonia Sotomayor clarified that the majority has not established "that equitable tolling principles are irrelevant to internal administrative deadlines in all, or even most, contexts."
     "In this case, given the nature of the statutory scheme, which 'applies to "sophisticated" institutional providers' who are 'repeat players' in the Medicare system, and the statute's history, I agree that it would distort congres­sional intent to presume that the PRRB's administrative deadline should be subject to equitable tolling," Sotomayor wrote. "By contrast, with respect to remedial statutes designed to protect the rights of unsophisticated claimants, agencies (and reviewing courts) may best honor congressional intent by presuming that statutory deadlines for administrative appeals are subject to equitable tolling, just as courts presume comparable judicial deadlines under such statutes may be tolled. Because claimants must generally pursue administrative relief before seeking judicial re­view, a contrary approach could have odd practical consequences and would attribute a strange intent to Congress: to pro­tect a claimant's ability to seek judicial review of an agen­cy's decision by making equitable tolling available, while leaving to the agency's discretion whether the same claim­ant may invoke equitable tolling in order to seek an ad­ministrative remedy in the first place."
     Sotomayor pointed out that an agency would be hard-pressed "to enforce tight filing deadlines in cases where there are credible allegations that filing delay was due to the agency's own misfeasance."
     "While equitable tolling extends to circumstances outside both parties' control, the related doctrines of equitable estoppel and fraudulent concealment may bar a defendant from enforc­ing a statute of limitation when its own deception pre­vented a reasonably diligent plaintiff from bringing a timely claim," she added.
     The health care providers in this case, led by Auburn Regional Medical Center, claimed that agency actions prevented their timely discovery of the reimbursement determinations, but Sotomayor concluded that the three-year extension offered a reasonable accommodation.
     "We would face a different case if the secretary's regulation did not recognize an exception for good cause or defined good cause so narrowly as to exclude cases of fraudulent concealment and equitable estoppel," Sotomayor added.