Vista Health Plan v. HHS ( 2022 )

Case: 20-50963 Document: 00516287344 Page: 1 Date Filed: 04/20/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
April 20, 2022
No. 20-50963 Lyle W. Cayce
Clerk
Vista Health Plan, Incorporated; Vista Service
Corporation,
Plaintiffs—Appellants,
versus
United States Department of Health and Human
Services; Xavier Becerra, Secretary, U.S. Department of Health and
Human Services; Centers for Medicare and Medicaid
Services; Seema Verma, Administrator of the Centers for Medicare and
Medicaid Services,
Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:18-CV-824
Before Higginbotham, Stewart, and Wilson, Circuit Judges.
Cory T. Wilson, Circuit Judge:
Our prior panel opinion, Vista Health Plan, Inc. v. United States
Department of Health and Human Services, 29 F.4th 210 (5th Cir. 2022), is
WITHDRAWN and the following opinion is SUBSTITUTED therefor.
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No. 20-50963
The United States Department of Health and Human Services (HHS)
implements a risk-adjustment program under the Patient Protection and
Affordable Care Act (ACA) in states that choose not to implement the
program themselves. Vista Health Plan, Inc., a small health insurance
company in Texas, was assessed risk-adjustment fees that exceeded its
premium revenue, causing the company to cease operations. The company
and its parent, Vista Service Corporation, (collectively, Vista) sued HHS,
HHS Secretary Alex Azar, the Centers for Medicare and Medicaid Services
(CMS), and CMS Administrator Seema Verma (collectively, the HHS
Defendants), challenging the risk-adjustment program and two rules
promulgated pursuant to the program. The district court granted summary
judgment for the HHS Defendants on eight of nine claims asserted by Vista
and remanded the only remaining claim to HHS. Because the district court
partially remanded the case to HHS for further proceedings, we conclude
that there was no appealable final judgment disposing of all Vista’s claims.
Thus, we dismiss the appeal for lack of jurisdiction.
I.
A.
The underlying facts are undisputed. Among other provisions, the
ACA prohibits insurers from denying coverage or charging higher premiums
based on health status. See generally King v. Burwell, 576 U.S. 473, 479–84
(2015) (summarizing the background and purpose of the ACA). Because
sicker individuals generally incur higher costs for insurers, insurers are
disincentivized from enrolling such individuals without charging higher
premiums. To counteract this, Congress enacted 42 U.S.C. § 18063, which
directs HHS to establish a risk-adjustment program.
Under the risk-adjustment program, fees are assessed against plans
with healthier-than-average enrollees in a given state, and then payments are
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made to plans with sicker-than-average enrollees in that state to redistribute
actuarial risk. Congress designed the risk-adjustment program to be
administered by the States. Some states opted not to do so, and in those
states, Congress directed HHS to operate the program. 42 U.S.C.
§ 18041(c)(1)(B)(ii).
To assess actuarial risk, Congress directed HHS to “establish criteria
and methods” for the risk-adjustment program. 42 U.S.C. § 18063(b). In
turn, HHS created a three-step risk-adjustment methodology: First, for each
individual enrolled in an insurer’s plan, an actuarial risk score is computed
using demographic and diagnostic data to determine the predicted cost of
insuring that enrollee. 78 Fed. Reg. 15,410, 15,419 (Mar. 11, 2013). Second,
the risk scores for each enrollee in a plan are aggregated to determine the
plan’s average risk score. Id. at 15,432. Third, a plan’s risk score is
multiplied by the statewide average premium, yielding the dollar amount that
a given insurer will pay as a charge or receive as a payment, for that plan for
that year. See id. at 15,430–34; N.M. Health Connections v. U.S. Dep’t of
Health & Hum. Servs., 946 F.3d 1138, 1148–50 (5th Cir. 2019) (detailing the
risk adjustment program methodology). HHS has used an annual rulemaking
process to refine its risk-adjustment rules, but it has not reconsidered its
overarching methodology anew each year.
In March 2018, a district court in New Mexico vacated HHS’s risk-
adjustment rules for benefit years 2014 through 2018 to the extent they relied
on the statewide average premium (the third step of the risk-adjustment
methodology). See Minuteman Health, Inc. v. U.S. Dep’t of Health & Hum.
Servs., 312 F. Supp. 3d 1164, 1207–12 (D.N.M. 2018), rev’d, 946 F.3d 1138(10th Cir. 2019). Just prior, in January 2018, a district court in Massachusetts
ruled in favor of HHS on the same issue. See Minuteman Health, Inc. v. U.S.
Dep’t of Health & Hum. Servs., 291 F. Supp. 3d 174, 198–205 (D. Mass. 2018).
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Addressing the conflicting judgments, HHS issued a press release on
July 7, 2018, advising insurers that “the New Mexico district court’s
ruling . . . bar[red] [HHS] from collecting or making payments under the
current methodology, which uses the statewide average premium.” Two
days later, HHS stated it “w[ould] not collect or pay the specified amounts,”
but it “w[ould] inform stakeholders of any update to the status of collections
or payments at an appropriate future date.” HHS added that “[a]dditional
guidance w[ould] be issued in the near future regarding 2017 benefit year
appeals and reporting of risk adjustment transfer amounts by issuers.”
Urged by members of Congress (among various other entities) “to act
with the utmost urgency to resolve the $10.4 billion hold on the risk
adjustment program,” HHS issued a memorandum on July 27, 2018, stating
that it would republish the previously adopted risk-adjustment program rule
for the 2017 benefit year. The republished rule “utilize[d] statewide average
premium for the 2017 benefit year as set forth in the rules published on March
23, 2012 . . . and March 8, 2016.” Three days later, HHS published the 2017
Final Rule, which adopted “the HHS-operated risk adjustment methodology
previously published at 81 [Fed. Reg.] 12204 for the 2017 benefit year with
an additional explanation regarding the use of statewide average premium
and the budget neutral nature of the program.” HHS clarified that the “rule
d[id] not make any changes to the previously published HHS-operated risk
adjustment methodology for the 2017 benefit year.” HHS did not follow the
notice-and-public-comment procedures outlined in the Administrative
Procedure Act (APA) when it republished the 2017 rule. See 5 U.S.C. § 553.
For the 2018 benefit year, HHS published a proposed rule on August
10, 2018, following the APA’s notice-and-public-comment procedures. The
2018 rule was finally promulgated on December 10, 2018. The 2018 Final
Rule adopted “the same methodology that [HHS] had previously published
for the 2018 benefit year.”
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B.
Vista Health Plan, Inc., began as a small health maintenance
organization that was approved by the Texas Department of Insurance (TDI)
to enter the health insurance market in May 2016. Vista Health Plan, Inc.,
and its parent company, Vista Service Corporation, sued the HHS
Defendants on September 28, 2018. Vista challenged the promulgation of
the 2017 and 2018 Final Rules, HHS’s calculation of Vista’s risk-adjustment
charges, and the risk-adjustment program more generally. Vista contended
that the charges assessed against it “far exceeded Vista’s gross receipts” for
the 2017 and 2018 benefit years, which “caused Vista to be placed under
supervision by [TDI],” and ultimately resulted in TDI directing Vista to
cease “sell[ing] policies in 2019.”
After filing an administrative record that included “the non-privileged
administrative records of the rulemaking proceedings” for the 2017 and 2018
Final Rules, the parties filed cross-motions for summary judgment. The
district court granted the HHS Defendants’ motion for summary judgment
on eight of nine claims alleged by Vista. See Vista Health Plan, Inc. v. United
States Department of Health and Human Services, No. 1:18-CV-824, 2020 WL
6380206 (W.D. Tex. Sept. 21, 2020). 1
As for the remaining claim—Vista’s procedural due process claim—
the district court found “a genuine dispute of material fact concerning
Vista’s right to administrative appeal that is not adequately resolved by
reference to the administrative record.” Id. at *15. Furthermore, it
concluded that the parties should have addressed 45 C.F.R. § 156.12201
The district court “deduce[d] nine distinct claims against HHS” alleged in
Vista’s somewhat scattershot complaint. Vista Health Plan, 2020 WL 6380206, at *4. In
discerning Vista’s claims, the court noted that its review was limited “to those issues
briefed” and that it would “not reach every allegation brought in Vista’s complaint.” Id.5
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(2016), which allows an issuer to “file a request for reconsideration
concerning the amount of a risk-adjustment payment or charge if the amount
in dispute exceeds one percent of the applicable charge and the request is
filed ‘within 30 calendar days of the date of the notification under
§ 153.310(e).’” Id. at *14 (quoting 45 C.F.R. § 156.1220(a)(1)(ii)). Because
a request under § 156.1220(a)(1)(ii) must first be reviewed by a “CMS
hearing officer,” and subsequently appealed to the “Administrator of
CMS,” id. (quoting 45 C.F.R. § 156.1220(b)(1)–(2), (b)(3), (c)(2)) (internal
quotation marks omitted), and because there was no record of whether
Vista’s request for reconsideration was reviewed by a CMS hearing officer,
the district court remanded the issue to HHS for determination, id. at *15.
Vista now appeals the district court’s ruling on five of its nine
claims—notably not including the remanded procedural due process claim.
II.
Instead, as to its due process claim, Vista raises an eleventh-hour
contention that this court lacks jurisdiction over this appeal because of the
district court’s partial remand to HHS. Because we have an obligation to
ensure that this court has jurisdiction, our analysis starts—and ultimately
stops—with that issue. See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 95 (1998) (“[E]very federal appellate court has a special obligation to
satisfy itself . . . of its own jurisdiction . . . .” (quoting Arizonans for Off.
English v. Arizona, 520 U.S. 43, 73 (1997)) (internal quotation marks and
citations omitted)).
Vista first raised the issue of jurisdiction in its reply brief, an awkward
posture made even more so by the fact that Vista appealed the district court’s
judgment. Vista then spent most of its time at oral argument discussing
jurisdiction rather than the substantive issues it raised in its opening brief.
To little avail—neither Vista, nor the HHS Defendants for their part, could
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clearly explain why this court lacks jurisdiction, or has it. The question
revolves around whether the district court’s “Final Judgment” was truly an
appealable judgment, i.e., disposing of all claims, because the district court
denied summary judgment as to Vista’s procedural due process claim but
then remanded it to HHS. At the very least, the HHS Defendants correctly
stated at oral argument that this case “is a complete jumble that has landed
in [our] laps.” Revisiting our prior effort to unclutter the jumble, see Vista
Health Plan, 29 F.4th at 219–20, we conclude that we do not have jurisdiction
to decide Vista’s appeal, such that we must dismiss the case.
This court is vested with “jurisdiction of appeals from all final
decisions of the district courts of the United States.” 28 U.S.C. § 1291.
“Generally, district court orders remanding to an administrative agency are
not final orders.” Adkins v. Silverman, 899 F.3d 395, 400 (5th Cir. 2018); see
15B Wright & Miller, Fed. Prac. & Proc. Juris. § 3914.32 (2d
ed.) (“The general rule is that a remand is not appealable as a final
decision, even if the court of appeals fears that the remand was ill-advised. A
partial remand is even more clearly not final.”). This court has recognized
an exception to the general rule and determined it had jurisdiction “when the
agency would be unable to later appeal the issue that is the subject of the
remand order,” such as when “all that is left for remand is a ministerial
accounting . . . .” Adkins, 899 F.3d at 401. Even though it is unclear exactly
what remained to be done by HHS on remand, what can be gleaned from the
record indicates that the district court’s partial remand was more than
“ministerial” in nature.
The district court granted summary judgment for the HHS
Defendants on all but one of Vista’s claims. And though it denied summary
judgment as to Vista’s procedural due process claim, the court then explicitly
entered a “Final Judgment” that stated that “nothing remains to resolve”
and that “the case is hereby CLOSED”—suggesting that the court “end[ed]
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the litigation on the merits and [left] nothing for the court to do but execute
the judgment.” Lewis v. E.I. Du Pont De Nemours & Co., 183 F.2d 29, 31 (5th
Cir. 1950). But the district court also remanded Vista’s procedural due
process claim to HHS for further proceedings based on the requirements of
45 C.F.R. § 156.1220. 2 While HHS reasonably contends that Vista
abandoned its procedural due process claim by failing to challenge the district
court’s remand decision on appeal, the inescapable bottom line is that the
district court, in denying summary judgment on Vista’s procedural due
process claim and then remanding it for further proceedings, did not yet fully
dispose of the case. Accordingly, there was no appealable final judgment, and
we lack jurisdiction to reach the substance of Vista’s appeal.
APPEAL DISMISSED.
2
It may well be that those requirements have been met by HHS while this appeal
was pending. The HHS Defendants invite this court to take judicial notice of two letters
HHS sent to Vista, on November 12, 2019, and July 19, 2021, that purportedly address
Vista’s procedural due process claim post remand. The July, 19, 2021 letter recites that
“[a]lthough the [district] court indicated that it was unaware of the status of Vista’s request
for reconsideration, CMS had in fact already resolved Vista’s request for reconsideration
in its letter dated November 12, 2019.” Defendants’ motion was not contested by Vista.
But the district court has not yet had the opportunity to address the letters, and “we are a
court of review, not first view.” United States v. Houston, 792 F.3d 663, 669 (5th Cir. 2015).
At this juncture, HHS’s further action on Vista’s remanded claim, including the import of
the proffered letters from HHS, should first be addressed by the district court. We thus
deny the HHS Defendants’ motion to take judicial notice of the letters and do not further
address them.
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