Gundersen Lutheran Med. Center v. Kathleen Sebeliu

Filing

OPINION filed [1348627] (Pages: 5) for the Court by Judge Silberman [11-5077]

USCA Case #11-5077

Document #1348627

Filed: 12/20/2011

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 18, 2011

Decided December 20, 2011

No. 11-5077
GUNDERSEN LUTHERAN MEDICAL CENTER, INC.,
APPELLANT
v.
KATHLEEN SEBELIUS,
APPELLEE

Appeal from the United States District Court
for the District of Columbia
(No. 1:06-cv-02195)

Jeffrey A. Lovitky argued the cause and filed the briefs for
appellant.
Ian Samuel, Attorney, U.S. Department of Justice, argued
the cause for appellee. With him on the brief were Tony West,
Assistant Attorney General, Ronald C. Machen, Jr., U.S.
Attorney, and Michael S. Raab, Attorney. R. Craig Lawrence,
Assistant U.S. Attorney, entered an appearance.
Before: KAVANAUGH, Circuit Judge, and SILBERMAN and
GINSBURG, Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.

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SILBERMAN, Senior Circuit Judge: Gundersen Lutheran
Medical Center, Inc. appeals the district court’s grant of
summary judgment to the Secretary of the Department of Health
and Human Services. Gundersen, which sought review under
the APA, claimed the Secretary’s delegee failed to
“disapprove[]” Gundersen’s reimbursement request within 60
working days, as required by the Medicare Act, because the
delegee did not notify Gundersen of its asserted disapproval
within the 60-day time period. We conclude that notification of
Gundersen within 60 days was not necessary for the disapproval
to be effective, and therefore affirm the district court.
* * *
Under the Medicare Act, the Secretary, acting through the
Department’s Centers for Medicare and Medicaid Services,
reimburses health care providers like Gundersen who provide
dialysis treatments to individuals with end stage renal disease.
The Act sets a “composite rate” for reimbursements for each
dialysis treatment a provider furnishes, but a provider can seek
an exception by submitting an application to one of the
Department’s fiscal intermediaries (insurance companies) who
then must pass on the application to the Department (the
Centers). The Act states – and this is the disputed language –
that “[e]ach application for such an exception shall be deemed
to be approved unless the Secretary disapproves it by not later
than 60 working days after the date the application is filed.” 42
U.S.C. § 1395rr(b)(7).
Gundersen sought such an exception on July 2, 2001,
making the 60th working day September 25, 2001. The Centers,
on September 21, 2001, informed the fiscal intermediary in
writing that the exception was denied. But the fiscal
intermediary did not notify Gundersen of the Secretary’s (the

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Centers’s) disapproval until October 1, i.e. after the 60th
working day.
Gundersen argues that the Secretary’s decision to
“disapprove[]” an application is not effective until it is
communicated to the provider. It is claimed that communication
to the fiscal intermediary – an agent of the Secretary – is not
adequate because the Secretary’s decision (the Centers’s) could
be altered at any time. Moreover, since by regulation the
provider has only 180 days to appeal the Centers’s decision up
through the Department, if a disapproval decision was not
communicated to the provider, its appeal rights could be
jeopardized. Gundersen buttresses its Medicare statutory
argument by recourse to the Freedom of Information Act,
pointing out that 5 U.S.C. § 552(a)(2) prohibits an agency from
relying on or using final administrative orders unless they have
been “made available,” published in an agency’s reading room,
or a party has actual and timely notice of its terms. According
to Gundersen, because the agency did not publish the letter in its
reading room and Gundersen only received notice of the
Secretary’s denial after the 60-day period ended, the Centers
could not rely on it before then to make the disapproval
effective.
The government responds – which is true – that the disputed
statutory language, unlike other provisions of the Medicare Act,
does not call for notice of the Secretary’s disapproval decision
within a specific time period. The government argues that even
if the word “disapproves” was thought ambiguous, the
government is entitled to Chevron deference, and the
government’s interpretation that the Secretary “disapproves” an
application when the decision is “rendered” is permissible. Yet
the government never suggested just how a disapproval is to be
manifested in order to qualify as “rendered” – and the

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government’s brief implied that a decision of disapproval could
be in the mind of the decision maker.
We agree with Gundersen’s premise that “disapproves” is
a meaningless concept unless disapproval is communicated in
some fashion. At oral argument, the government essentially
conceded that point by acknowledging that there would have to
be some evidence that a disapproval decision was rendered in an
official way, at a certain time. We take it that implies something
in writing. After all, the statute imposes an obligation on the
Secretary to disapprove a request within the 60-day period; the
default position, if the government does not act, is approval.
Because silence is therefore approval, the Secretary (the
Centers) must demonstrate the contrary. Although the statute
does not address the question of how a disapproval is to be
manifested, and so Chevron deference is called for, it seems to
us that it would be an unreasonable interpretation for the
government to claim that an oral statement uttered only within
the Centers is an adequate demonstration.
Be that as it may, in this case, the Centers communicated
the disapproval to the fiscal intermediary – in writing – within
the 60-day period. As such, the decision to disapprove was
clearly memorialized. As to Gundersen’s argument that FOIA
requires actual notice to the appellant, the government points out
that FOIA can be satisfied alternatively by making an order
“available.” By sending a denial letter to the fiscal intermediary,
the Centers have certainly made it available to Gundersen. All
Gundersen needed do was to call the fiscal intermediary – or
even the Centers – to determine whether the Centers
disapproved within 60 working days.
Gundersen nevertheless argues that a decision
communicated only to an agent of the Department – the fiscal
intermediary – cannot be thought a reasonable interpretation of

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the word “disapproves” because the decision could be altered
before it was communicated to an applicant. That argument –
when one thinks about it – is rather twisted. The only way the
decision could be altered would be to revoke the disapproval,
and that could only be to the benefit of an applicant. Which
means, of course, no applicant would have standing to complain
about such an action.
Gundersen’s more substantial argument is based on a
provider’s appeal rights. By regulation, an applicant must
appeal the Centers’s decision “within 180 days of the date of the
decision.”1 If the Centers’s purported disapproval was not
communicated to an applicant in a timely manner, Gundersen
argues, an applicant’s appeal rights could be jeopardized. That
strikes us as only a theoretical problem because, as in this case,
once the disapproval is communicated to the fiscal intermediary
within the 60-day period, it is available to the applicant. But if,
for some hypothetical reason, the Centers’s decision was not
available to the applicant in a timely manner, the relevant
question would be how to interpret the appeal regulation – not
the statute. Presumably it would be unreasonable (arbitrary and
capricious) to apply the regulation to an applicant who failed to
appeal in a timely manner through no fault of its own.
For the foregoing reasons we affirm the district court.
So ordered.

1

42 C.F.R. § 413.194(c) (2001).

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