United States District Court, D. Nebraska
E. STROM, Senior Judge
matter is before the Court on cross-motions for summary
judgment with regard to the April 9, 2014, denial of Kearney
Regional Medical Center's (“plaintiff” or
“KRMC”) application to participate in the
Medicare program. Filing Nos. 17, 26, 28. The Centers for
Medicare and Medicaid Services (“CMS”), a federal
subagency of the United States Department of Health and Human
Services (“HHS”), denied KRMC's application.
See Filing No. 17 at 1, Filing No.
18 at 2. These motions have been fully briefed, and
the administrative record (“record”) has been
provided to the Court. Filing Nos. 19, 27, 29, 34. After a
review of the motions, briefs, the entire administrative
record, and relevant law, the Court finds as follows.
time of plaintiff's application to the Medicare program,
KRMC was a new facility that obtained a Certificate of
Occupancy from the city of Kearney, Nebraska on September 27,
2013. Filing No. 19-2 at 9. On December 9, 2013,
KRMC received a state operating license. Id.
“Between December 9 and December 30, 2013, [KRMC]
admitted 21 inpatients.” Id. From January 13
to 15, 2014, the American Osteopathic Association Healthcare
Facilities Accreditation Program (“AOA”)
conducted a survey by reviewing the medical records for prior
inpatients admitted in December 2013. Id. at 9-10. On
February 7, 2014, AOA granted KRMC full accreditation and
recommended to CMS that KRMC be given “deemed
status.” Id. at 10.
December 30, 2013, to February 10, 2014, no inpatients were
treated at KRMC. Id. KRMC asserts that this was due
to the head of the AOA survey team informing KRMC that it was
not necessary to have inpatients present in the hospital to
conduct the survey. Id. Plaintiff asserts, and the
Administrative Law Judge (“ALJ”) concluded that
from February 10, 2014, to May 7, 2014, KRMC cared for
fifty-one inpatients. Id. at 4.
April 9, 2014, KRMC's application was denied by CMS.
Id. at 10. On April 17, 2014, after reconsideration,
CMS affirmed its decision to deny plaintiff's
application. Id. Following CMS's denial of
plaintiff's application, AOA withdrew its February 7,
2014, accreditation. Id. AOA conducted a second
accreditation survey between April 28 and 30, 2014.
Id. Following the second survey, AOA again
recommended to CMS that KRMC receive deemed status.
Id. CMS subsequently granted KRMC “deemed
status to participate in Medicare effective May 8,
requested an ALJ hearing contesting CMS's April 17, 2014,
denial of KRMC's application. Id. at 11. The ALJ
disposed of the case in favor of defendants through cross
motions for summary judgment. See Filing No.
19-2 at 3, 8, 11. The ALJ granted summary judgment
in favor of defendant. Id. at 8. Plaintiff sought
review through the HHS Departmental Appeals Board
(“DAB”) which conducted a hearing on February 25,
2015. See Filing Nos. 19-2 at 9, 19-5 at 1. On May
25, 2015, DAB affirmed the ALJ's grant of summary
judgment. Filing No. 19-2 at 17. On July 29, 2015,
plaintiff filed a complaint with this Court seeking review of
defendants' final agency action. Filing No. 1.
a motion for summary judgment will be granted by the Court,
“if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to a
judgment as a matter of law.” Fed.R.Civ.P. 56(a). A
“material” fact is one that “might affect
the outcome of the suit under the governing law, ” and
a genuine issue of material fact exists when “the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
91 L.Ed.2d 202 (1986).
Review of Agency Action
provider of services may seek judicial review of final agency
action denying an application to enroll in the Medicare
program subject to 42 U.S.C. § 405(g). See 42
U.S.C. §§ 1395cc(j)(8), 1395cc(h)(1)(A). The Social
Security Act states that “[t]he findings of the
[Secretary of Health and Human Services] as to any fact, if
supported by substantial evidence shall be conclusive . . .
.” 42 U.S.C. § 405(g).
argues that the Court should review this case under both the
substantial evidence standard pronounced by § 405(g) and
the arbitrary and capricious standard of the Administrative
Procedure Act (“APA”). Filing No. 27 at
11-12. See also 5 U.S.C. § 706. To support
review under the APA's arbitrary and capricious standard,
plaintiff relies on Friedman v. Sebelius, 686 F.3d
813 (D.C. Cir. 2012)(holding that the language of §
405(g) does not preclude review under the APA's arbitrary
and capricious standard). Defendants assert that 42 U.S.C.
§ 405(h) adopted § 405(g) as the sole method of
review, thereby precluding the application of the arbitrary
and capricious standard to review of final agency action in
this context. Filing No. 29 at 11. The Court need
not resolve the dispute over which standard of review is
appropriate under the circumstances, because the result under
both the substantial evidence and arbitrary and capricious
standards is the same.
reviewing court shall “hold unlawful and set aside
agency action, findings, and conclusions found to be (A)
arbitrary, capricious, an abuse of discretion, or otherwise