United States: Supreme Court Rules Equitable Tolling Cannot Be Used To Extend Deadline For Filing Medicare Part A Reimbursement Appeals

On January 21, 2013, the U.S. Supreme Court unanimously held in Sebelius v. Auburn Regional Medical Center that the Medicare statute does not permit the time period for filing an appeal with the Provider Reimbursement Review Board (PRRB) following a payment determination by a fiscal intermediary to be extended under the principle of equitable tolling. In Auburn, a number of hospitals argued that the statutorily prescribed 180-day time period for filing an appeal with the PRRB should be extended under the principle of equitable tolling because the hospitals did not know, and could not have known, that the Centers for Medicare & Medicaid Services (CMS) had used incomplete data in calculating the hospitals' eligibility for, or amount of payment under, the disproportionate share hospital (DSH) adjustment. The Supreme Court rejected the hospitals' argument and held that equitable tolling does not apply to administrative Medicare reimbursement appeals that are filed with the PRRB.

Background

In its calculation of the amount of a hospital's DSH adjustment, CMS depends on Supplemental Security Income (SSI) data supplied by the Social Security Administration (SSA). CMS matches the SSI data against Medicare inpatient hospital stay data to determine the number of inpatient hospital days provided to Medicare patients who are indigent, as shown by their receipt of SSI.

For a period of time, until 1995 when CMS corrected the problem, the SSI data supplied by SSA was incomplete. The fact that the SSA data was incomplete was not publicly known until the PRRB issued its decision in the Baystate Medical Center case in March 2006. Within 180 days of the public release of the Baystate decision, the Auburn plaintiffs filed appeals with the PRRB in which they challenged their DSH payments for fiscal years 1987 to 1994 based on their belief that those payments were lower than required due to the incomplete SSA data. The hospitals argued that the 180-day period specified in the statute should be equitably tolled due to CMS' failure to notify the hospitals about the computation error.

The PRRB rejected the hospitals' appeals based on its conclusion that it did not have jurisdiction in the case because the appeals were filed beyond the 180-day period set forth in the statute. The PRRB concluded that it has no equitable powers not specifically granted by statute or regulation. The district court affirmed the PRRB's decision. However, the Court of Appeals for the District of Columbia Circuit concluded that the presumption that statutory limitations periods are generally subject to equitable tolling applies to the 180-day time limit, and that there is nothing in the Medicare statute that indicates that the U.S. Congress intended to disallow such tolling with respect to PRRB appeals. Therefore, the Court of Appeals reversed the district court's decision.

Discussion

The first issue considered by the Supreme Court in Auburn was whether the 180-day appeal period in the statute was (1) "jurisdictional," meaning that the 180-day time limit could not be waived or extended, whether on equitable tolling or other grounds, or (2) a "period of limitations," in which case it could be waived or extended. The hospitals contended that the 180-day appeal period was a period of limitations and pointed out that CMS regulations allow the period to be extended for good cause. The Supreme Court noted that in decisions issued prior to 2008, when the good cause regulation was revised, two circuit courts of appeal had ruled that the good cause regulation was invalid because the 180-day period prescribed by statute was jurisdictional and could not be extended, even by regulation, while one circuit court had ruled that the good cause regulation was a valid exercise of the Secretary's authority.
The Court found no clear intent by Congress that the 180-day period was to be jurisdictional in nature and noted that the Court in its past decisions had established the general rule that filing deadlines are not jurisdictional. Thus, the Supreme Court ruled that the 180-day appeal time period in the statute should be treated as a period of limitations, which could be waived or extended in certain cases.

The Court in Auburn then proceeded to consider whether Congress intended that the 180-day filing deadline would be subject to extensions based on equitable tolling. The Court noted that if equitable tolling were allowed, it would essentially gut the existing regulation that allows for the filing of appeals within three years when there is good cause for the late filing. The Auburn Court said that although there is a presumption that Congress intends to permit equitable tolling with respect to statutes governing the time for seeking judicial review, this presumption does not apply to statutes governing the time for seeking administrative review.

The Court then concluded, based on several factors, that Congress did not intend equitable tolling to apply to the statutory provisions that set forth the 180-day period for filing appeals with the PRRB. The Court pointed to the fact that for nearly 40 years the regulations have prohibited the PRRB from extending the time for requesting a hearing, except as allowed in the good cause regulation, and that no previous court decision has ever read equitable tolling into the Medicare statute. The Court also noted that the statute has been amended several times, and that Congress never disturbed the regulatory time limit for filing administrative appeals. The Court stated that this fact demonstrated that Congress must have agreed with the agency's interpretation of the statute.

The Court noted that, unlike the situation with respect to many of its decisions on equitable tolling, the Medicare statute's provisions on PRRB review were not designed to be unusually protective of claimants or designed for laypersons, but rather applied to sophisticated providers who are assisted by legal counsel and who are generally capable of identifying underpayments.

Finally, the Court dismissed the hospitals' argument that it was fundamentally unfair to allow CMS and its contractors an unlimited amount of time to reopen payment determination when there was fraud or similar fault by a provider, but not to allow hospitals a similar right when they allege that CMS knowingly used incorrect data in its payment determinations. The Court first stated that this was not unfair because CMS has only a few dozen intermediaries, who must adjudicate tens of thousands of payment determinations, whereas each provider can concentrate on its own payment determination. Second, the Court observed that the fraud exception allowing indefinite reopening does apply to an intermediary if it "procured" a Board decision by "fraud or similar fault." The Court noted that although an intermediary is not a party to its own determination, it does rank as a party in proceedings before the Board.

Conclusion

The Supreme Court's decision in Auburn is based on the Court's conclusion that Congress did not intend for equitable tolling to apply to the statutory time limit for filing appeals to the Provider Reimbursement Review Board. As indicated by the concurring opinion, the Court's decision may leave open the possibility that a provider that has discovered evidence of government misconduct more than three years from the date of the notice of program reimbursement may be able to obtain a PRRB hearing, despite the three-year limitation in the good cause regulation, by challenging the regulation.

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