Supreme Court Overturns Auburn Equitable Tolling Decision, 9-0

by King & Spalding

In Sebelius v. Auburn Regional Medical Center, No. 11-1231 (Jan. 22, 2013), the Supreme Court reversed a decision of the D.C. Circuit which had held that the 180-day time limit for hospitals to file a cost report appeal with the Provider Reimbursement Review Board (Board) was susceptible to equitable tolling.  The providers in Auburn had filed appeals alleging that CMS had failed to use the best available data to calculate their SSI ratios and, as a result, they were underpaid Medicare DSH payments dating back to 1987.  The plaintiffs’ claims are similar to the claims successfully appealed in Baystate Medical Center v. Leavitt, 545 F.Supp.2d 20 (D.D.C. 2008).  Unlike the Baystate plaintiff, however, the Auburn plaintiffs did not file their appeal within either the statutory 180-day time limit or the regulatory three-year extension of the time limit for good cause.  The Auburn plaintiffs requested that the Board equitably toll the 180-day time period, arguing that they could not have filed a timely appeal because the government had concealed its failure to use the best available data.  The Board dismissed the appeal, holding that it did not have the power to toll the 180-day limit.  The D.C. Circuit had reversed the Board’s decision, finding that the 180-day time limit could be equitably tolled.

Justice Ginsburg wrote the decision for the majority, with Justice Sotomayor writing a concurring opinion.  In an unusual move, the Supreme Court had appointed amicus curie counsel to argue the position that the Medicare statute’s 180-day time limit was jurisdictional and allowed for no exceptions, including the Secretary’s regulation allowing for a three-year good cause extension.  In the majority opinion, the Court quickly dismissed this argument, however, pointing out that in the Court’s jurisprudence, to determine that a statutory limit is jurisdictional requires a clear statement from Congress.  The statute setting forth a provider’s right to request a Board appeal within 180 days of receiving a notice of program reimbursements was not framed in language that “reveals a design to preclude any regulatory extension.”  Slip Op. at 7.  The Secretary’s good cause regulation, therefore, stands.

The Court noted that equitable tolling of the 180-day time limit would effectively gut the Secretary’s requirement that all appeals be filed within 180 days unless the provider can establish good cause for an extension.  This construction of the statute is reasonable, according to the Court, because both the government and providers have an interest in payment finality and reaching a point at which program payments are no longer open to correction.  As for whether the statute requires equitable tolling, as providers argued, the Court concluded that the presumption of equitable tolling of statutory filing deadlines does not apply for the following reasons: this was an internal agency appeal deadline as opposed to a deadline for filing in federal court; for several years Congress did not allow any avenue for either administrative or judicial review for providers, showing no Congressional intent to allow for equitable tolling; the statute as interpreted by the Secretary for the last 40 years had been amended numerous times without correction by Congress; and the statutory scheme is not “unusually protective of claimants,” who are sophisticated institutional providers who are generally capable of identifying underpayments in their Notices of Program Reimbursement (NPRs).  Slip Op. at 12-13. 

Finally, Justice Ginsburg addressed providers’ argument that it was inequitable for the Secretary to limit providers’ ability to reach back several years to correct payment errors when the Secretary herself has an unlimited opportunity to reopen payment errors based in fraud and similar fault.  This is not inequitable according to Justice Ginsburg because there are only a few dozen intermediaries charged with issuing tens of thousands of NPRs while each provider can concentrate on its own NPR.  Slip Op. at 14.  This observation by the Court does not necessarily reflect the realities of the Medicare reimbursement system as the payment formulae under prospective payment systems are complicated and are growing more complex.  It is no easy task to detect a government error in the application of statutorily required formulae.  Computational errors can remain hidden for years, even to the most diligent. 

Click here to read the Supreme Court’s opinion. 

Reporter, Mark Polston, Washington, D.C., +1 202 626 5540,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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