Physicians ACO, LLC et al v. Burwell, Sec HHS (in her official capacity) et al
MEMORANDUM AND ORDER denying 43 Opposed MOTION to Compel Production of documents, 40 MOTION for Reconsideration of 36 Order, (Signed by Judge Keith P Ellison) Parties notified.(arrivera, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
PHYSICIANS ACO, LLC, et al,
SYLVIA MATHEWS BURWELL, et al,
August 02, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. 4:15-CV-00803
MEMORANDUM AND ORDER ON PLAINTIFF’S
MOTION FOR RECONSIDERATION AND MOTION TO COMPEL
Plaintiffs Physicians ACO LLC and ACO Triple Aim Providers d/b/a Physicians ACO
(collectively, “PACO”) have filed a Motion for Reconsideration (Doc. No 40) and a Motion to
Compel Discovery (Doc. No. 43). After considering the motions, responses thereto, oral
argument, and applicable law, the Court finds that both motions must be denied.
This is an Administrative Procedures Act case. PACO is an accountable care organization
participating in the Medicare Shared Savings Program that is run by the Centers for Medicare
and Medicaid Services (“CMS”) of the U.S. Department of Health and Human Services. The
Shared Savings Program is part of the Affordable Care Act. The Program’s purpose is to
improve the level and value of care for Medicaid beneficiaries by promoting the accountability
of providers, requiring coordinated care for all services, and encouraging providers to redesign
their care processes. The Program plans to achieve these goals by rewarding providers who
voluntarily participate in accountable care organizations with a share of CMS’s savings. To
receive the rewards, the organizations must meet performance standards.
CMS set a deadline of 11:59 PM on March 21, 2014, for accountable care organizations
to submit data on their Medicaid beneficiaries through CMS’ web portal. From this data, the
agency would determine whether the organizations met their performance standards. PACO did
not submit all of its data by the deadline. PACO attributes its untimeliness to a failure of the web
portal. (Defendants dispute that there was a portal failure on that date.) PACO requested that
CMS accept its data late, but CMS refused to do so. As a result, PACO filed suit against
Defendants Sylvia Burwell, the Secretary of the Department of Health and Human Services (in
her official capacity) and the Department of Health and Human Services (collectively,
“Defendants”). PACO sought an order from the Court requiring CMS to accept PACO’s data, to
then make a determination about whether PACO met performance standards.
In April 2016, this Court ruled that it lacked jurisdiction over PACO’s first two claims for
relief—seeking review under the Administrative Procedures Act, and relief from CMS’s
arbitrary and capricious action—because the applicable law does not provide for judicial review
of CMS’s administrative action. (Doc. No. 36.) In April 2017, PACO filed its motion for
reconsideration of that decision. (Doc. No. 40.) PACO also filed a motion to compel discovery of
documents related to the purported portal failure in 2014. (Doc. No. 43.)
The Court may look to Federal Rules of Civil Procedure 54(b) and 59(e) for motions for
reconsideration. “Rule 59(e) governs motions to alter or amend a final judgment; Rule 54(b)
allows parties to seek reconsideration of interlocutory orders and authorizes the district court to
‘revise at any time’ ‘any order or other decision that does not end the action,’” Austin v. Kroger
Texas, L.P., No. 16-10502, 2017 WL 1379453, at *8 (5th Cir. Apr. 14, 2017) (quoting Fed. R.
Civ. P. 54(b)). As a final judgment has not been entered in this case, the Court applies Rule
54(b). “Under Rule 54(b), ‘the trial court is free to reconsider and reverse its decision for any
reason it deems sufficient, even in the absence of new evidence or an intervening change in or
clarification of the substantive law.’” Id. (quoting Lavespere v. Niagara Mach. & Tool Works,
Inc., 910 F.2d 167, 185 (5th Cir. 1990)).
A. Motion for Reconsideration
In 2016, this Court dismissed the first two counts in PACO’s complaint, finding that
CMS’ decision to deny review for PACO was precluded from judicial review, per the language
of the Affordable Care Act. PACO now requests reconsideration of that decision, based in part
on a purported change in CMS’ policies. Specifically, when CMS’s portal failed in March 2017,
it chose to extend the deadline for accountable care organizations to submit their records.
PACO argues that CMS’s decision to extend the deadline in 2017 shows that CMS had
discretion to accept a late submission in 2014. Although both parties discuss whether the 2017
evidence constitutes grounds on which to reconsider the dismissal, the Court finds such an
inquiry irrelevant. First, under Rule 54(b), the Court can review the decision “even in absence of
new evidence or an intervening change in or clarification of the substantive law.” Austin, 2017
WL 1379453 at *9. Second, CMS’s discretion or arbitrariness is irrelevant to the outcome of this
case because the Court is barred from reviewing CMS’ decision.
To reach a different conclusion than before, the Court must find that judicial review
applies. 42. U.S.C. 1395jjj(g)(4) prohibits judicial review of “the determination of whether an
[accountable care organization] is eligible for shared savings under subsection (d)(2).” 1 CMS
Subsection (d)(2), entitled “Payments for shared savings” provides: “Subject to performance
with respect to the quality performance standards established by the Secretary under subsection
(b)(3), if an [accountable care organization] meets the requirements under paragraph (1), a
percent (as determined appropriate by the Secretary) of the difference between such estimated
determined that PACO was not eligible for shared savings because it did not completely report
its data by the deadline. PACO counters that that it seeks review of an issue not listed under 42
U.S.C. § 1395jjj(g)—CMS’s denial of its “request for additional time or for an additional
opportunity to submit data due to technological malfunctions.” (Doc. No. 48 at 5.)
CMS’s decision is unreviewable under § 1395jjj(g)(4) only if it constitutes a
“determination.” PACO understands “determination” to involve a substantive decision, and
insists that a denial of a submission to CMS based on a technology failure is not substantive.
(Doc. No. 48 at 3.) PACO relies on CMS’ letters on July 22, 2014 and February 6, 2015, which
both stated that PACO’s request for reconsideration in June 2014 was premature because CMS
had not issued an initial determination at that time. (Doc. No. 14 at 10, 550.) According to
PACO, these letters show that CMS has never made a determination, and thus CMS’ decision is
not covered by 42 U.S.C. § 1395jjj(g). However, CMS also stated in the February 2015 letter
that “the Administrator finds that the CMS ‘initial’ determination from which appeal rights are
granted . . . is the final quality and financial results, released to ACOs on September 12, 2014.”
(Doc. No. 14 at 10.) The Court finds that the September 12, 2014 decision is an initial
determination, and thus is precluded from review by 42 U.S.C. § 1395jjj(g)(4) and 42 C.F.R
Despite the “strong presumption that Congress intends judicial review of administrative
action,” Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986), Congress made
clear that the decisions such as the one in this suit are not subject to judicial review. “[T]here is
average per capita Medicare expenditures in a year, adjusted for beneficiary characteristics,
under the [accountable care organization] and such benchmark for the [organization] may be
paid to the [organization] as shared savings and the remainder of such difference shall be
retained by the program under this subchapter. The Secretary shall establish limits on the total
amount of shared savings that may be paid to an [organization] under this paragraph.”
no room for employing that presumptive approach where . . . Congress has been so explicit in
stating a prohibition against judicial review—federal courts are not, after all, superlegislatures
entitled to invoke a generalized presumption to trump an express ‘hands off’ direction from
Congress.” Am. Soc. of Anesthesiologists v. Shalala, 90 F. Supp. 2d 973, 975 (N.D. Ill. 2000)
(emphasis in original). Although the Court laments this harsh outcome for PACO, the Court must
respect Congress’ direction on this question. The Court maintains that it lacks jurisdiction over
Counts I and II of PACO’s complaint, and denies PACO’s motion for reconsideration.
B. Motion to Compel
PACO has also requested an “order requiring Defendant to produce a limited set of
documents and allowing PACO to take depositions of certain individuals employed by
Defendant or under Defendant’s control germane to Count III [regarding PACO’s records
request under the Freedom of Information Act (“FOIA”)] and by comparison to demonstrate
CMS’ arbitrary action in 2014 is within the Court’s Administrative Procedures Act jurisdiction.”
(Doc. No. 43 at 1-2.) CMS responds that PACO is not entitled to discovery on the dismissed
claims, and that discovery is “rare and disfavored in FOIA cases.” (Doc. No. 44 at 7.)
Because the Court now affirms its prior decision to dismiss PACO’s first two claims for
relief, the Court must deny PACO’s motion to compel discovery regarding those claims. The
Court further finds that PACO’s request for discovery pursuant to its FOIA claim is premature.
Courts typically do not compel FOIA discovery “until the government has first had a chance to
provide the court with the information necessary to make a decision on the applicable
exemptions.” Miscavige v. I.R.S., 2 F.3d 366, 369 (11th Cir. 1993). See also Lane v. Dep’t of
Interior, 523 F.3d 1128, 1134 (9th Cir. 2008) (“courts may allow the government to move for
summary judgment before the plaintiff conducts discovery”); Broaddrick v. Exec. Office of
President, 139 F. Supp. 2d 55, 63 (D.D.C. 2001) (“discovery is not typically a part of FOIA and
Privacy Act cases”). The Court denies PACO’s motion to compel, without prejudice to refiling,
should it become appropriate at a later stage of litigation.
The Court DENIES PACO’s Motion for Reconsideration (Doc. No. 40) and Motion to
Compel (Doc. No. 43).
IT IS SO ORDERED.
SIGNED at Houston, Texas on the 1st of August, 2017.
KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE
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