Southeast Arkansas Hospice v. Sylvia Burwell

Filing

OPINION FILED - THE COURT: Diana E. Murphy, Lavenski R. Smith and Duane Benton AUTHORING JUDGE:Duane Benton (PUBLISHED) [4376032] [15-1946]

United States Court of Appeals
For the Eighth Circuit
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No. 15-1946
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Southeast Arkansas Hospice, Inc.
lllllllllllllllllllll Plaintiff - Appellant
v.
Sylvia Burwell, Department of Health and Human Services
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Eastern District of Arkansas - Helena
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Submitted: January 14, 2016
Filed: March 10, 2016
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Before MURPHY, SMITH, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
Southeast Arkansas Hospice, Inc. (SEARK) operates two hospice-care
facilities. SEARK voluntarily entered into a provider agreement with the Secretary
of Health and Human Services to receive Medicare reimbursement. See 42 U.S.C.
§§ 1395c, 1395f(a)(7), 1395cc. SEARK agreed “to conform to the provisions of
section 1866 of the Social Security Act and applicable provisions in 42 CFR.” The
Act annually caps Medicare reimbursement. § 1395f(i)(2)(A). Any payment above

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the statutory cap must be refunded to the Medicare program. See 42 C.F.R.
§ 418.308(d). After notice, a provider may terminate its agreement with the
Secretary. 42 U.S.C. § 1395cc(b)(1). As a provider, SEARK can discharge a
hospice patient if the patient moves out of the service area, is no longer terminally ill,
or becomes so disruptive as to interfere with SEARK’s ability to provide care. 42
C.F.R § 418.26(a). However, SEARK cannot “discontinue the hospice care it
provides with respect to a patient because of the inability of the patient to pay for
such care.” 42 U.S.C. § 1395x(dd)(2)(D).
Invoking the reimbursement cap, the Secretary sent SEARK seven demands
for repayment. SEARK sued, arguing the cap violates the Takings Clause of the Fifth
Amendment. On a motion for summary judgment, the district court1 concluded
SEARK’s voluntary participation in the Medicare program precludes a takings claim.
Having jurisdiction under 28 U.S.C. § 1291, this court affirms.
This court reviews de novo the grant of summary judgment. Torgerson v. City
of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). The Fifth Amendment
prohibits the taking of private property “for public use, without just compensation.”
“[W]hile property may be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415
(1922). The Supreme Court considers three factors to distinguish regulation from a
regulatory taking: “the character of the governmental action, its economic impact,
and its interference with reasonable investment-backed expectations.” Ruckelshaus
v. Monsanto Co., 467 U.S. 986, 1006 (1984), quoting PruneYard Shopping Center
v. Robins, 447 U.S. 74, 83 (1980).

1

The Honorable Kristine G. Baker, United States District Judge for the
Eastern District of Arkansas.
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SEARK has not met its burden to prove the demands for repayment based on
the statutory cap are a taking. First, the reimbursement cap allocates the
government’s capacity to subsidize healthcare. See H.R. Rep. 98-333, at 1 (1983),
reprinted in 1983 U.S.C.C.A.N. 1043, 1043-44 (“The intent of the cap was to ensure
that payments for hospice care would not exceed what would have been expended by
Medicare if the patient had been treated in a conventional setting.”). Second, SEARK
presented no evidence to suggest the cap makes it impossible “to profitably engage
in their business.” Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470,
485 (1987). See also Minnesota Ass’n of Health Care Facilities, Inc. v. Minnesota
Dep’t of Public Welfare, 742 F.2d 442, 446 (8th Cir. 1984) (rejecting an argument
that “business realities” prevent a nursing home from leaving the Medicaid program).
Third, SEARK voluntarily chose to participate in the Medicare hospice
program. “This voluntariness forecloses the possibility that the statute could result
in an imposed taking of private property which would give rise to the constitutional
right of just compensation. . . .” Minnesota Ass’n of Health Care Facilities, Inc.,
742 F.2d at 446. Compare Ruckelshaus, 467 U.S. at 1007 (“[A]s long as Monsanto
is aware of the conditions under which the data are submitted, and the conditions are
rationally related to a legitimate Government interest, a voluntary submission of data
by an applicant in exchange for the economic advantages of a registration can hardly
be called a taking.”), with Horne v. Dep’t of Agriculture, 135 S. Ct. 2419, 2430
(2015) (“The taking here cannot reasonably be characterized as part of a similar
voluntary exchange.”).
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The judgment is affirmed.
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