D.C. Circuit Refuses to Remedy Hospital Wage Data Errors by Medicare

By Robert L. Roth

Despite finding that the Centers for Medicare & Medicaid Services (“CMS”) had arbitrarily and capriciously denied the Palisades General Hospital's wage data correction requests and that the denials caused the Hospital not to qualify for $4 million from a geographic reclassification, the Court of Appeals for the D.C. Circuit in an October decision refused to grant relief restoring the hospital to the position it would have achieved had CMS acted properly. Palisades General Hospital Inc. v. Leavitt, 426 F.3d 400 (D.C. Cir. 2005).

"[T]he district court had jurisdiction only to vacate the Secretary's decision rejecting the hospital's revised wage data and to remand for further action consistent with its opinion," Court of Appeals Judge Judith W. Rogers wrote. "It did not, as the hospital contends, have jurisdiction to order either reclassification based upon those adjusted wage data or an adjusted reimbursement payment that would reflect such a reclassification." CMS has made clear that, on a remand, it would not provide the relief sought by the Hospital. Accordingly, the D.C. Circuit's decision seems to have effectively precluded the relief that the Hospital was seeking.

In light of this decision, hospitals that believe a CMS wage data determination will prevent them from properly qualifying for geographic reclassification need to act expeditiously so that a district court will have the authority to grant necessary relief.

Crowell & Moring partner Robert Roth represented the Hospital in the litigation.