American Hospital Association v. Thomas Price , 867 F.3d 160 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 15, 2017 Decided August 11, 2017
No. 17-5018
AMERICAN HOSPITAL ASSOCIATION, ET AL.,
APPELLEES
v.
THOMAS E. PRICE, IN HIS OFFICIAL CAPACITY AS SECRETARY
OF HEALTH AND HUMAN SERVICES,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:14-cv-00851)
Joshua M. Salzman, Attorney, U.S. Department of Justice,
argued the cause for appellant. With him on the briefs were
Mark B. Stern, Attorney, Janice L. Hoffman, Associate General
Counsel, U.S. Department of Health & Human Services, and
Susan Maxson Lyons, Deputy Associate General Counsel.
Catherine E. Stetson argued the cause for appellees. With
her on the brief was Morgan L. Goodspeed. Adam K. Levin
entered an appearance.
Ronald S. Connelly was on the brief for amicus curiae
Fund for Access to Inpatient Rehabilitation in support of
appellees.
2
Before: GARLAND, Chief Judge, and HENDERSON and
WILKINS, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKINS.
Dissenting Opinion filed by Circuit Judge HENDERSON.
WILKINS, Circuit Judge: Ought implies can. 1 That is, in
order for law – man-made or otherwise – to command the
performance of an act, that act must be possible to perform.
This lofty philosophical maxim, ordinarily relevant only to
bright-eyed college freshmen, sums up our reasoning in this
case.
Congress established an administrative appeals process for
denied Medicare reimbursement claims, and directed the U.S.
Department of Health and Human Services (“HHS”) to
complete that process within a specified timeframe. Buried
under an ever-growing backlog of over a half-million appeals,
HHS failed – and continues to fail – to comply with the
statutorily mandated deadlines. Consequently, the American
Hospital Association and three healthcare providers (together,
“Healthcare Providers”) sought a mandamus order to force the
HHS Secretary to clear the backlog and adhere to the statute’s
timeframe. The District Court, in turn, thoughtfully and
scrupulously weighed the equities, concluding that the scales
tipped in favor of mandamus.
1
This principle is attributed to the 18th century German philosopher,
Immanuel Kant. See, e.g., IMMANUEL KANT, CRITIQUE OF PURE
REASON 548 (Norman Kemp Smith trans., Macmillan 1953) (1781)
(“The action to which the ‘ought’ applies must indeed be possible
under natural conditions.”); IMMANUEL KANT, RELIGION WITHIN
THE LIMITS OF REASON ALONE 43 (Theodore M. Greene and Hoyt
H. Hudson trans., Harper and Row 1960) (1793) (“[D]uty demands
nothing of us which we cannot do.”).
3
The District Court was then confronted with the
unenviable task of defining the scope and substance of the
mandamus order. In an effort to minimize the judiciary’s
intrusion on the political branches’ prerogatives, the Court
adopted an ends-oriented approach of setting targets for HHS
to hit, leaving to the Secretary the choice of means for hitting
those targets. But what were the appropriate targets to set? The
Healthcare Providers proposed an ambitious four-year
timetable. The Secretary criticized that timetable as impossible
to achieve lawfully and potentially counterproductive, but
offered no alternative. Lacking a competing proposal, the
District Court adopted the timetable suggested by the
Healthcare Providers. In doing so, however, the Court declined
to seriously grapple with the Secretary’s assertion that lawful
compliance with such a mandamus order would be impossible.
That is, the Court commanded the Secretary to perform an act
– clear the backlog by certain deadlines – without evaluating
whether performance was possible. We conclude that,
notwithstanding the District Court’s earnest efforts to make do
with what the parties presented, the failure to seriously test the
Secretary’s assertion of impossibility and to make a
concomitant finding of possibility was an abuse of discretion.
The Court declared that a party ought without regard for
whether the party can.
I.
A.
“Medicare provides federally funded health insurance to
disabled persons and those aged 65 or older . . . .” Council for
Urological Interests v. Burwell, 790 F.3d 212, 215 (D.C. Cir.
2015) (discussing 42 U.S.C. §§ 1395 et seq.). After a
healthcare provider (e.g., a hospital) performs a service it
believes is covered by Medicare, it submits a claim for
4
reimbursement to the Centers for Medicare and Medicaid
Services, an agency within HHS. 42 U.S.C. §§ 1395ff(a)(1)-
(2), 1395kk-1(a); 42 C.F.R. §§ 405.904(a)(2), 405.920-
405.928. When a provider is denied reimbursement, or is
otherwise “dissatisfied” with the initial determination, it is
entitled to a four-level administrative appeals process, followed
by judicial review. See generally 42 U.S.C. § 1395ff. We
previously described the process in greater detail. See Am.
Hosp. Ass’n v. Burwell, 812 F.3d 183, 185-87 (D.C. Cir. 2016)
(hereinafter, “AHA I”).
From start to finish, the administrative appeals process is
designed to take less than one year. To keep things moving,
the statute sets specific time frames for each of the four levels
of the process: sixty days for the first level, 42 U.S.C.
§ 1395ff(a)(3)(C)(ii); another sixty days for the second level,
id. § 1395ff(c)(3)(C)(i); ninety days for the third level, id.
§ 1395ff(d)(1)(A); and another ninety days for the fourth level,
id. § 1395ff(d)(2)(A). “For years, the administrative appeal
process functioned largely as anticipated, with its various
stages typically completed within the statutory time frames.”
AHA I, 812 F.3d at 186 (citing Am. Hosp. Ass’n v. Burwell, 76
F. Supp. 3d 43, 46 (D.D.C. 2014)).
But starting in fiscal year 2011, an unexpected and
dramatic uptick in appeals produced a jam in the process. The
uptick was attributable to multiple causes, including “a large
increase in the number of new beneficiaries as members of the
‘baby boom’ generation began to reach 65 and become eligible
for Medicare,” and “a growing sense, among at least some
members of the provider community, that it is a good business
practice to appeal every denied claim.” Decl. of Ellen Murray,
Chief Fin. Officer of the Dep’t of Health and Human Servs.,
J.A. 91-92. Furthermore, as we stressed in our previous
decision, much of the increased workload can be traced back to
5
the congressionally mandated Medicare Recovery Audit
Program. AHA I, 812 F.3d at 186-87. Under that program,
recovery audit contractors (“RACs”) would review
reimbursement claims that have already been paid, “identify[]
underpayments and overpayments,” and “recoup[]
overpayments.” 42 U.S.C. § 1395ddd(h)(1). When a RAC
flags an overpayment, the healthcare provider could either
repay the difference or appeal the RAC’s decision through the
four-level administrative appeals process, as though the claim
were denied at the outset. Id. § 1395ddd(f)(2)(A). Instead of
repaying the difference, many providers elected to avail
themselves of the administrative process. After the program
was implemented, “the number of appeals filed ballooned from
59,600 in fiscal year 2011 to more than 384,000 in fiscal year
2013.” AHA I, 812 F.3d at 187.
As those appeals moved through the process, they piled up
at the third level, where an administrative law judge (“ALJ”)
reviews the matter de novo. Instead of waiting in line,
providers stuck at the ALJ level may skip to the next, through
a process called “escalation.” 42 U.S.C. § 1395ff(d)(3). But
that choice comes at a cost: the provider must forfeit certain
procedural rights, such as a hearing before an independent ALJ.
Id. § 1395ff(d)(1), (2). Many claimants, therefore, have been
reluctant to “escalate” their appeals, and the ALJ backlog
continues to grow. As of June 2, 2017, there was a backlog of
607,402 appeals awaiting review at this level. Status Report of
Def. Thomas Price at 2, No. 14-cv-851 (June 5, 2017), ECF
No. 56. On its current course, the backlog is projected to grow
to 950,520 by the end of fiscal year 2021, id., and “some
already-filed claims could take a decade or more to resolve,”
AHA I, 812 F.3d at 187. This is, of course, far outside the
ninety-day timeframe set by statute. 42 U.S.C.
§ 1395ff(d)(1)(A).
6
B.
In 2014, the Healthcare Providers filed suit seeking a
mandamus order to compel the HHS Secretary to clear the
backlog and comply with the ninety-day statutory timeframe
for ALJ hearings.
The Healthcare Providers moved for summary judgment,
and the Secretary simultaneously moved to dismiss for lack of
subject-matter jurisdiction. Am. Hosp. Assoc. v. Burwell, 76 F.
Supp. 3d 43, 45 (D.D.C. 2014). The District Court first
grappled with whether it faced a jurisdictional question – i.e.,
whether, pursuant to 28 U.S.C. § 1361, the threshold
mandamus requirements were met, United States v. Monzel,
641 F.3d 528, 534 (D.C. Cir. 2011) – or a merits question – i.e.,
whether mandamus would be equitable, Telecomms. Research
& Action Ctr. v. FCC, 750 F.2d 70, 80 (D.C. Cir. 1984). The
Court concluded that the jurisdictional and equitable merits
inquiries were one and the same (“merged”), and so resolved
the summary judgment and dismissal motions together. Am.
Hosp. Assoc., 76 F. Supp. 3d at 49-50. Based on this merged
analysis, the District Court granted the Secretary’s motion to
dismiss, reasoning that “HHS’s budgetary constraints, its
competing priorities, and its incipient efforts to resolve the
issue together dictate that mandamus is not warranted.” Id. at
56. “Congress,” furthermore, was “aware of the situation and
[was] in a position to address the problem.” Id.
On appeal, we reversed the District Court’s dismissal.
AHA I, 812 F.3d at 194. We first clarified that “the distinction
between the jurisdictional inquiry and the equitable merits
inquiry matters, especially because it affects our standard of
review.” Id. at 190. As for the jurisdictional inquiry, we held
that the Healthcare Providers “ha[d] demonstrated that the
threshold requirements for mandamus jurisdiction [were] met.”
7
Id. at 192. We then left the equitable merits inquiry to the
District Court to consider but, in an effort to help guide the
Court’s “difficult decision,” we “set out the factors that weigh
most strongly for and against mandamus in this case.” Id.
Counseling for mandamus, we highlighted the backlog’s real
impact on human health and welfare, and, “critically to our
thinking,” the Secretary’s substantial discretion over the RAC
program, which contributed significantly to the backlog. Id. at
193. Counseling against mandamus, we highlighted the risk of
“infringing on the authority and discretion of the executive
branch;” the legislative branch’s awareness of the problem and
its capacity to furnish a comprehensive solution; the
Secretary’s incipient but good-faith efforts to reduce the
backlog; and the availability of some, albeit incomplete,
alternative relief in the form of “escalation.” Id. at 192-93.
Ultimately, “the clarity of the statutory duty,” we remarked,
“likely will require issuance of the writ if the political branches
have failed to make meaningful progress within a reasonable
period of time – say, the close of the next full appropriations
cycle.” 2 Id. at 193.
2
Fun fact: Even though we refer to the “writ” of mandamus, both in
past decisions and here, the writ was technically abolished. FED. R.
CIV. P. 81(b). As a matter of convenience and habit, we continue to
refer to the “writ” because the remedy continues to exist in character,
if not in name. 28 U.S.C. § 1361 (“The district courts shall have
original jurisdiction of any action in the nature of mandamus to
compel an officer . . . .” (emphasis added)); see also 33 CHARLES
ALAN WRIGHT & CHARLES H. KOCH, JR., FEDERAL PRACTICE &
PROCEDURE § 8299, at 41 (2006) (“Although [Rule 81] abolishe[d]
the remedy formally known as mandamus, mandamus in character
was not abolished by the rule change.”); id. at 42 (“[C]ourts in
interpreting [§ 1361] brought over all the old mandamus restrictions
and applied them in § 1361 actions.”). Consequently, when we refer
to the “writ of mandamus” in this opinion, we mean the remedy
provided for in 28 U.S.C. § 1361.
8
On remand, the District Court balanced the equities to
determine whether mandamus was appropriate. After
considering our guidance regarding the factors that counseled
for and against the writ’s issuance, the District Court evaluated
the political branches’ progress – and potential for progress –
toward a solution. But by the Court’s estimation, the current
measures were unlikely to yield meaningful progress, and so it
concluded that the equities weighed in favor of mandamus.
Having concluded that some relief was warranted, the District
Court ordered further briefing and a status conference to
determine the scope and substance of that relief.
The Healthcare Providers proposed two sets of options:
either a means-oriented plan requiring the Secretary to take
specific actions, or an ends-oriented plan setting a timetable for
clearing the backlog. The District Court opted for a timetable,
reasoning that such an approach would “intrude as little as
possible on the Secretary’s specific decisionmaking processes
and operations.” Mem. Op. at 5, No. 14-851 (D.D.C. Dec. 5,
2016), ECF No. 48 (hereinafter, “Mandamus Op.”). Because
it adopted the ends-oriented approach, the Court believed that
it “need[ed] not dive into the parties’ debate over” the means.
Id.Arguing against the Healthcare Providers’ proposed
timetable, the Secretary advanced three contentions relevant
here. First, although this Court indicated that curtailment or
complete suspension of the RAC program would go a long way
to clearing the backlog, AHA I, 812 F.3d at 193, the facts had
since changed: few of the newly generated appeals were RAC-
related. Second, since even dramatic changes to the RAC
program would not enable compliance with the timetable,
hitting the court-ordered targets would be impossible without
settling unsubstantiated claims en masse, which the Secretary
alleged would violate the Medicare statute. Third, the
9
timetable would only exacerbate the backlog: hard deadlines
would counterproductively incentivize claimants to file
meritless appeals and hold out for settlement.
The District Court brushed aside the Secretary’s
contentions. According to the Court, it “need[ed] not dive into
the parties’ debate” over the “legality and propriety” of the
reforms necessary to comply with the timetable, since it was
not ordering any particular reforms. Mandamus Op. at 5.
Furthermore, compliance with the timetable would not require
violations of the Medicare statute, but rather “simply
demand[ed] that the Secretary figure out how to undertake
proper claim substantiation within a reasonable timeframe.”
Id. (internal quotation marks omitted).
Since the Secretary refused to engage with the premise of
setting a timetable at all, proposing no alternative targets, the
District Court adopted the Healthcare Providers’ four-year
plan: the Secretary was ordered to reduce the current backlog
of cases pending at the ALJ level by 30% by December 31,
2017; 60% by December 31, 2018; 90% by December 31,
2019; and 100% by December 31, 2020.
After filing an unsuccessful motion for reconsideration,
the Secretary appealed the District Court’s order.
II.
“Our consideration of any mandamus petition ‘starts from
the premise that issuance of the writ is an extraordinary
remedy, reserved only for the most transparent violations of a
clear duty to act.’” In re Core Commc’ns, Inc., 531 F.3d 849,
855 (D.C. Cir. 2008) (quoting In re Bluewater Network, 234
F.3d 1305, 1315 (D.C. Cir. 2000)); accord Power v. Barnhart,
292 F.3d 781, 784 (D.C. Cir. 2002) (“The remedy of
10
mandamus is a drastic one, to be invoked only in extraordinary
circumstances.” (internal quotation marks omitted)).
We previously explained that the decision to issue
mandamus relief involved two distinct inquiries: one
jurisdictional, and one regarding the equitable merits. AHA I,
812 F.3d at 190. In that previous appeal, we settled the former
question, holding that the threshold requirements for
mandamus jurisdiction were met, id. at 192, although one of
our sister circuits has since thought otherwise, Cumberland
Cnty. Hosp. Sys., Inc. v. Burwell, 816 F.3d 48, 52-57 (4th Cir.
2016). We, of course, do not revisit our previous conclusion
regarding mandamus jurisdiction. See LaShawn A. v. Barry,
87 F.3d 1389, 1395 (D.C. Cir. 1996) (en banc) (“One three-
judge panel . . . does not have the authority to overrule another
three-judge panel.”).
Instead, we focus now on the equitable merits inquiry,
along with the relief that the inquiry produced. We review this
part of the District Court’s analysis for abuse of discretion. In
re Medicare Reimbursement Litig., 414 F.3d 7, 10 (D.C. Cir.
2005). And “[a] district court by definition abuses its
discretion when it makes an error of law.” Koon v. United
States, 518 U.S. 81, 100 (1996).
We conclude that since the Secretary represented that
lawful compliance with the mandamus order was impossible, it
was an error of law, and therefore an abuse of discretion, to
nonetheless order the Secretary to render that performance
without first finding that lawful compliance was indeed
possible.
Once the District Court determined that an ends-oriented
approach of setting targets was the best course of action, it
adopted the timetable proposed by the Healthcare Providers.
Because it was mandating the ends, not the means, the Court
11
believed that it “need[ed] not dive into the parties’ debate over”
the “legality and propriety” of the reforms necessary to clear
the backlog. Mandamus Op. at 5. But this was a misstep.
Although true that the Court was mandating no particular
reforms, the Secretary would, of course, need to adopt some
reforms to meet the mandated timetable. After all, that was the
point of mandamus relief. But if, as the Secretary insisted, no
lawful reforms could be implemented to meet the timetable,
then it was an error of law to order the timetable met.
The Secretary first contends that, given changing patterns
in appeals, the tools within his discretion – most notably,
curtailment or suspension of the RAC program – are not
enough to clear the backlog. A major reason, according to the
Secretary, is that the RAC program is no longer the principal
cause of the backlog: only 9.5% of new appeals in 2016 were
RAC-related, compared to more than 50% in 2013 and 2014.
Appellant’s Br. at 18.
This contention is, at best, suspect. Those statistics
coincide with a two-year suspension of most of the RAC
program, which was instituted while new contracts were being
negotiated. See Suppl. Decl. of Ellen Murray, Chief Fin.
Officer of the Dep’t of Health and Human Servs., J.A. 140-41
(“RAC activity decreased temporarily while [the Centers for
Medicare and Medicaid Services] was negotiating a new
Statement of Work (SOW) with the RACs, but several other
changes took place that are expected to make lasting and
continuing reductions to RAC-related appeal receipts.”); see
also U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-16-366,
MEDICARE FEE-FOR-SERVICE: OPPORTUNITIES REMAIN TO
IMPROVE APPEALS PROCESS 38 n.64 (2016) (explaining that the
RAC program was temporarily suspended); id. at 38 (“HHS
reported that it expects the number of incoming appeals to
increase again when the new [RAC] contracts are awarded and
12
the [RAC] program resumes full operation.”). We are not sold
on the Secretary’s suggestion that concerns regarding the RAC
program are behind us, and the District Court should scrutinize
that claim on remand.
We also share the District Court’s skepticism of the
Secretary’s assertion that he has done all he can to reduce RAC-
related appeals. As the Court explained, there are “around
300,000 RAC-related appeals pending ALJ review, which
constituted a sizable portion – 31% – of all pending . . .
appeals.” Mem. Op. at 13, No. 14-851 (D.D.C. Sept. 19, 2016),
ECF No. 38. “Yet the only RAC-related action the Secretary
reports to be undertaking or planning to undertake consist of
three modifications to RAC contracts that will reduce the
number of appeals that reach [the ALJ level] by [fiscal year]
2020 by just 22,000.” Id. The Secretary’s RAC-related
interventions appear to be curiously weak medicine for an
agency facing mandamus.
Nevertheless, the record supports the Secretary’s principal
contention that reform of the RAC program and other
programmatic tweaks may not be enough. At oral argument,
the Healthcare Providers conceded that ALJs currently have the
capacity to review only about 90,000 appeals per year. Oral
Arg. at 27:05, Am. Hosp. Assoc. v. Price (May 15, 2017) (No.
17-5018). Even in the years when the RAC program was
temporarily suspended, HHS received between 200,000 and
250,000 appeals. Therefore, although more reforms of the
RAC program may help, even a complete suspension is likely
to leave an annual disposition gap of over 100,000 appeals –
appeals that will be piled onto the existing backlog, frustrating
HHS’s efforts to comply with the statute’s timeframe and the
Court’s mandamus order.
13
So what could the Secretary do to close the disposition gap
and clear the backlog of over a half-million pending appeals?
There appears to be no dispute that mass settlements would
play a central role. But the Secretary repeatedly insisted that
the type of mass settlement necessary to comply with the
Court’s timetable would be illegal. Specifically, the Secretary
argued that the Healthcare Providers’ proposal required him “to
make payment on Medicare claims regardless of the merit of
those claims,” which would “squarely conflict with the
Medicare statute.” Def.’s Mot. for Summ. J. at 23, No. 14-cv-
851 (Nov. 7, 2016), ECF No. 41 (discussing 42 U.S.C.
§§ 1395f, 1395g(a), 1395y(a)(1)(A)). The Court declined to
seriously grapple with the Secretary’s contention, explaining
matter-of-factly that the timetable “simply demands that the
Secretary figure out how to undertake proper claim
substantiation within a reasonable timeframe.” Mandamus Op.
at 5 (internal quotation marks omitted). But that response gave
short shrift to the Secretary’s proffer that “proper claim
substantiation within a reasonable timeframe” was impossible.
The Secretary essentially asserted that the timetable placed
him between a rock and a hard place: either violate the
Medicare statute by settling reimbursement claims en masse
without regard for their merit, or violate the Court’s mandamus
order by missing the court-ordered deadlines. By declining to
evaluate the Secretary’s claims, the Court was, in effect,
saying: “hit the targets by any means necessary.” But if the
necessary means were unlawful, the Court could not have
mandated them; equity courts, like any other, may not order
parties to break the law. See INS v. Pangilinan, 486 U.S. 875,
883 (1988) (“[I]t is well established that courts of equity can
no more disregard statutory and constitutional requirements
and provisions than can courts of law.” (alterations and
internal quotation marks omitted)).
14
But if only lawful reforms were implemented, the
Secretary claimed, compliance with the timetable would be
impossible. And just as a court may not require an agency to
break the law, a court may not require an agency to render
performance that is impossible. See Ala. Power Co. v. Costle,
636 F.2d 323, 359 (D.C. Cir. 1979); NRDC v. Train, 510 F.2d
692, 713 (D.C. Cir. 1974). A century ago, we explained that
“[t]he writ of mandamus will not issue to compel the
performance of that which cannot be legally accomplished.”
United States ex rel. Newman v. City & Suburban Ry. of Wash.,
42 App. D.C. 417, 420-21 (D.C. Cir. 1914). The reasoning is
simple and intuitive: it is not appropriate for a court –
contemplating the equities – to order a party to jump higher,
run faster, or lift more than she is physically capable.
This principle extends to cases where the impossibility is
the result of insufficient congressional appropriations. See,
e.g., Morton v. Ruiz, 415 U.S. 199, 230-31 (1974) (recognizing
that an agency may balance competing statutory commands to
cope with insufficient appropriations); Ala. Power, 636 F.2d at
359 (same); Train, 510 F.2d at 710-14; see also In re Aiken
Cnty., 725 F.3d 255, 259 (D.C. Cir. 2013) (“Under Article II of
the Constitution and relevant Supreme Court precedents, the
President must follow statutory mandates so long as there is
appropriated money available and the President has no
constitutional objection to the statute.” (emphasis added)). For
example, in Train, we considered the prospect that practical
challenges, such as resource constraints, might prevent the
EPA Administrator from meeting a statutory deadline for
publishing certain guidelines. 510 F.2d at 710-14. In light of
those challenges, like the possibility that “budgetary
commitments and manpower” would render performance
“beyond the agency’s capacity or would unduly jeopardize the
implementation of other essential programs,” we remarked that
“courts cannot responsibly mandate flat guideline deadlines
15
when the Administrator demonstrates that additional time is
necessary.” Id. at 712. “The sound discretion of an equity
court,” we concluded, “does not embrace enforcement through
contempt of a party’s duty to comply with an order that calls
him ‘to do an impossibility.’” Id. at 713 (quoting Maggio v.
Zeitz, 333 U.S. 56 (1948)). By extension, where a party insists
that resource constraints render lawful compliance with a
court’s order impossible, an equity court must examine that
claim and, prior to issuing the order, find that lawful
compliance is indeed possible.
The District Court made no such finding. The Court also
did not evaluate the Secretary’s assertion that the timetable
would increase, not decrease, the number of backlogged
appeals. The Secretary posited that because strict deadlines
would require settlements en masse, the timetable would
generate an incentive for claimants to file additional appeals
and hold out for big payouts. By the Secretary’s account, the
mandamus relief would prove counterproductive; the relief
would exacerbate the risk of the Court’s order amounting to a
command to do the impossible. The Court did not address this
claim, perhaps because, as a counterfactual, such an assertion
is difficult to test. But the claim was plausible enough that, as
a matter of crafting an equitable remedy, the Court should
address it.
On remand, the Court should determine in the first
instance whether, in fact, lawful compliance with the timetable
is impossible. We note, however, that the Secretary bears the
“heavy burden to demonstrate the existence of an
impossibility.” Ala. Power, 636 F.2d at 359 (discussing Train,
510 F.2d at 713). The burden serves to prevent an agency from
shirking its duties by reason of mere difficulty or
inconvenience. As we explained before, although “[a]n equity
court can never exclude claims of inability to render absolute
16
performance, . . . it must scrutinize such claims carefully since
officials may seize on a remedy made available for extreme
illness and promote it into the daily bread of convenience.”
Train, 510 F.2d at 713. Therefore, on remand, if the Court
finds that the Secretary failed to carry his burden of
demonstrating impossibility, it could potentially reissue the
mandamus order without modification. But given the
Secretary’s claim of impossibility, the Court must make the
predicate finding of possibility.
Our dissenting colleague believes such a finding is
unnecessary, Dissenting Op. at 10-17, and amounts to a hyper-
technical procedural requirement for the District Court to
“incant magic words,” id. at 2. But possibility is a necessary
and antecedent condition for the writ’s issuance, according to
both our precedent and the collected wisdom of our sister
courts. See, e.g., Newman, 42 App. D.C. at 420-21 (“The writ
of mandamus will not issue to compel the performance of that
which cannot be legally accomplished.” (emphasis added)); 52
AM. JUR. 2D § 24 (2017 Update) (“To warrant the issuance of
a writ of mandamus, the act sought to be performed must be
capable of being performed. Mandamus will not issue if the
performance of the requested action is impossible, or beyond
the physical, mental, or financial power of the respondent.”
(emphasis added)); 55 C.J.S. Mandamus § 19 (2017 Update)
(“The writ of mandamus will not lie where performance of the
duty is impossible. Thus, the court will not grant the writ
unless the law afford the means by which the officer may
discharge the prescribed duty.” (emphasis added)); id. § 20
(“[A] public officer or public body will generally not be
required to do an act when it is impossible through a want of
funds and inability to raise them.”).
We are also not asking for a magic incantation. There is
nothing mystical or punctilious about the judiciary giving due
17
consideration to an executive agency’s central argument –
made repeatedly and emphatically across three sets of motions,
not solely with allegations but with proffers of evidence 3 –
before issuing extraordinary relief with multi-billion-dollar
stakes, Suppl. Decl. of Ellen Murray ¶ 6, J.A. 170 (amount-in-
controversy for pending appeals is approximately $6.6 billion).
Such a requirement is neither onerous nor trivial, and the
interests of alacrity and expedition do not excuse its
satisfaction. See Albemarle Paper Co. v. Moody, 422 U.S. 405,
416 (1975) (“That the court’s discretion is equitable in nature
hardly means that it is unfettered by meaningful standards or
shielded from thorough appellate review.” (citation omitted)).
In sum, it was an abuse of discretion to tailor the
mandamus relief without tackling the Secretary’s claims that
3
See, e.g., Def.’s Mot. for Summ. J. at 23, No. 14-cv-851 (Nov. 7,
2016), ECF No. 41 (“It is telling that Plaintiffs are unable to identify
a remedy that would not cause the Secretary to violate her other
obligations under the Medicare statute.”); id. at 1, 7-8, 11-24; Def.’s
Reply in Support of Summ. J. at 9, No. 14-cv-851 (Nov. 23, 2016),
ECF No. 45-1 (“Plaintiffs’ deadlines indeed would be impossible for
the Secretary to meet absent augmentation of her resources and
authorities, which only Congress can provide.”); id. at 1-2, 7-11;
Def.’s Opp’n to Pls’ Mot. for Summ. J. at 1, 7-8, 11-24, No. 14-cv-
851 (Nov. 7, 2016), ECF No. 42; Def.’s Mot. for Recons. at 1, No.
14-cv-851 (Dec. 15, 2016), ECF No. 49 (“Specifically, the ruling errs
in ordering scheduled percentage reductions in the Medicare appeals
backlog that the Secretary cannot achieve unless she were to pay
pending claims without regard to their merit, which would violate
her statutory obligation to protect the Medicare Trust Funds.”); id. at
2-3; Def.’s Reply in Support of Mot. for Reconsideration at 2, No.
14-cv-851 (Dec. 23, 2016), ECF No. 51 (“And notably, Plaintiffs do
not and cannot deny that it is impossible for the Secretary to comply
with the benchmarks set forth in this Court’s [timetable] unless she
offers settlements without regard to the merits of the claims . . . .”).
18
lawful compliance would be impossible. We emphasize,
however, that the District Court was assigned an exceptionally
difficult project. The Secretary presented a flurry of arguments
as to what cannot be mandated, but a paucity of proposals
regarding what can be. With little assistance from the party
best positioned to furnish crucial information, the Court needed
to craft workable relief while negotiating both the on-the-
ground realities and the guidance offered in our past decision.
An unenviable task. 4 Difficult as it was, however, courts must
ensure that it is indeed possible to perform the act being
commanded. Ought, after all, implies can.
***
For the foregoing reasons, we vacate the mandamus order
and the order denying reconsideration, and remand to the
District Court to evaluate the merits of the Secretary’s claim
that lawful compliance would be impossible.
So ordered.
4
We note that if, despite his burden, the Secretary fails to offer
information that would aid the crafting of mandamus relief, the Court
has options. See, e.g., FED. R. CIV. P. 56(e) (providing that courts
may order parties to address facts or “issue any other appropriate
order”); FED. R. CIV. P. 53(a) (authorizing courts to appoint special
masters).
KAREN LECRAFT HENDERSON, Circuit Judge, dissenting:
Just 18 months ago, we reversed the district court for holding
that it lacked jurisdiction to compel the Department of Health
Human Services (HHS), via mandamus, to comply with
statutory deadlines for resolving Medicare reimbursement
appeals. Am. Hosp. Ass’n v. Burwell, 812 F.3d 183, 192 (D.C.
Cir. 2016) (AHA I). Further, we indicated that mandamus
would “likely” be “require[d]” by the end of September 2017
unless HHS, with congressional assistance if necessary, made
“meaningful progress” toward reducing a backlog of hundreds
of thousands of appeals filed with the agency’s administrative
law judges (ALJs). Id. at 193. Seeing no such progress, the
district court on remand issued a mandamus order directing
HHS to eliminate the backlog by December 31, 2020, and to
meet reduction targets in the interim. Today my colleagues
overturn the district court again, this time concluding that it
abused its discretion in too readily imposing a schedule for
statutory compliance.
Why the change of direction? It is not because the district
court miscalculated the equities. Maj. Op. 2 (court
“thoughtfully and scrupulously weighed the equities”). It is
not because the court lacked a basis for issuing the writ. Maj.
Op. 16 (court “could potentially reissue the mandamus order”).
It is not even because HHS cannot lawfully comply with the
court’s order; impossibility is HHS’s primary argument but my
colleagues do not consider it. Maj. Op. 15 (reserving issue for
district court). Instead they send the case back because of a
perceived procedural error: “since [HHS] represented that
lawful compliance with the mandamus order was impossible,
it was an error of law, and therefore an abuse of discretion, to
nonetheless order the [agency] to render that performance
without first finding that lawful compliance was indeed
possible.” Maj. Op. 10 (emphasis altered). On both law and
fact, I disagree.
2
A district court need not make a finding of possibility as a
precondition to mandamus relief unless the agency makes a
strong threshold showing of impossibility. HHS has not met
its burden: lawful compliance with the mandamus order here,
even if difficult, is not demonstrably impossible. The district
court expressly found as much in rejecting HHS’s impossibility
claim. And by necessary implication, it found as much in its
careful equities analysis. Remanding so that the court can
incant magic words—“lawful compliance [is] indeed
possible,” Maj. Op. 10 (emphasis in original)—will tell us only
what we already know and almost certainly produce a third
appeal. The process will waste time, punishing blameless
Medicare providers who await billions of dollars of delayed
payments essential to their operations.
I. BACKGROUND
The majority recounts much of the legal, factual and
procedural background, Maj. Op. 2-9, but I offer some
additional context.
A. THE BACKLOG
Under Title XVIII of the Social Security Act—formally
named the Health Insurance for the Aged Act, Pub. L. No. 89-
97, 79 Stat. 286 (July 30, 1965), and better known as the
Medicare Act (Act), 42 U.S.C. §§ 1395 et seq.—a healthcare
provider (e.g., a hospital) that treats a Medicare patient may
seek government reimbursement by filing a claim with an HHS
contractor overseen by the agency’s Center for Medicare and
Medicaid Services (CMS). 42 U.S.C. § 1395ff(a)(1)-(2); 42
C.F.R. § 405.904(a)(2). If the initial contractor denies
reimbursement, the hospital can seek further review from other
CMS contractors. 42 U.S.C. § 1395ff(a)(3), (c); 42 C.F.R.
§ 405.904(a)(2). At the end of the CMS process, a dissatisfied
hospital may seek a de novo hearing before an ALJ in HHS’s
3
Office of Medicare Hearings and Appeals (OMHA). 42
U.S.C. § 1395ff(d)(1); 42 C.F.R. § 405.904(a)(2).
Under the Act, the OMHA ALJ “shall”—not merely
“ought” to, Maj. Op. 2-3, 18 (emphasis omitted)—“render a
decision” within 90 days of the hospital’s request for a hearing.
42 U.S.C. § 1395ff(d)(1)(A). “The word ‘shall’ is ordinarily
the language of command.” Alabama v. Bozeman, 533 U.S.
146, 153 (2001) (some internal quotations omitted). And so it
is here. Because the Act uses mandatory language and refers
to the 90-day time limit as a “[d]eadline[],” 42 U.S.C.
§ 1395ff(d), the time limit is a “congressionally imposed
mandate[]” that HHS “must obey,” AHA I, 812 F.3d at 193.
The point is obvious but critical. The deadline is not a
guideline. HHS has been violating it every day for years on
end in failing to timely decide administrative appeals. It now
takes an OMHA ALJ an average of nearly three years—more
than eleven times longer than permitted—to process a
Medicare appeal. HHS, Office of Medicare Hearings and
Appeals: Workload Information and Statistics—Average
Processing Time by Fiscal Year (May 24, 2017),
www.hhs.gov/about/agencies/omha/about/current-workload/
average-processing-time-by-fiscal-year/index.html. As a
result, appeals are badly backlogged. At last count, more than
600,000 of them are pending ALJ review. Status Report, Dkt.
No. 56, Ex. at 2 (June 5, 2017). HHS projects that the backlog
will grow worse with time, snowballing to nearly one million
appeals by the end of September 2021. Id. at 8. Absent
drastic action, then, it will soon take an ALJ significantly
longer than three years to resolve a Medicare appeal.
4
Granted, the ALJ delays and backlog are not a simple
matter of agency lassitude. As the majority explains, Maj. Op.
4-5, the number of appeals has risen sharply since the 2011
fiscal year, largely because (1) much of the baby boom
generation has reached age 65 and enrolled in Medicare, Joint
Appendix (JA) 84, 91, and (2) the Congress authorized
implementation of an allegedly cost-saving but time-
consuming program under which Recovery Audit Contractors
(RACs) identify and recoup alleged overpayments of Medicare
reimbursements, 42 U.S.C. § 1395ddd(h)(1). The government
pays RACs “on a contingent basis for collecting
overpayments.” Id. § 1395ddd(h)(1)(B)(i). A hospital can
appeal a finding of overpayment through the same process by
which it appeals a denial of reimbursement. Not surprisingly,
statistics show that the contingent pay structure gives RACs
strong incentive to find overpayments that do not exist. See,
e.g., JA 47-48 (in first quarter of 2014, surveyed hospitals
collectively reported 66 per cent success rate in appealing
adverse RAC decisions). And the incentive to find
overpayments has produced a counter-incentive to appeal.
B. THE PLAINTIFFS
Even the most conservative statistics show that a
considerable number of all appeals, not only appeals from
adverse RAC decisions, are “[f]ully” meritorious. 1 HHS,
Office of Medicare Hearings and Appeals: Workload
Information and Statistics—Decision Statistics (Jan. 27, 2017)
(53 per cent of appeals in fiscal year 2012 resulted in fully
favorable disposition; in fiscal 2013, number was 44 per cent;
in fiscal 2014, 37 per cent; in fiscal 2015, 34 per cent; in fiscal
1
If there is a “growing sense” among providers “that it is a
good business practice to appeal every denied claim,” Maj. Op. 4
(quoting JA 92), it is probably because they often prevail.
5
2016, 26 per cent; and so far in fiscal 2017, 25 per cent),
www.hhs.gov/about/agencies/omha/about/current-workload/
decision-statistics/index.html.
The upshot is that hospitals are forced to wait years to
receive reimbursements to which the law entitles them now.
And they are waiting for quite a lot of money. HHS
acknowledges that “[t]he combined billed amounts of the
outstanding claims total approximately $6.6 billion.” Br. of
Appellant 2. Breaking that number down a bit, plaintiff
American Hospital Association (AHA) in 2014 surveyed more
than 1,000 of its approximately 5,000 member hospitals and
learned that “[t]he value of appealed . . . RAC-denied claims”
for those hospitals alone exceeded $1.8 billion. JA 48.
Considering the appellate success rate, especially in RAC
cases, I believe it is fair to say that on any given day the AHA
hospitals represented in this lawsuit are collectively out of
pocket nearly a billion dollars of their own money.
The delays are causing real-world problems. For plaintiff
Baxter Regional Medical Center in Arkansas, Medicare
reimbursements represent about two-thirds of gross revenue.
In 2014, with millions of dollars tied up in Medicare appeals
delayed at the ALJ level, Baxter lacked the cash for essentials
such as “[p]urchasing . . . beds for its intensive care unit,”
“[r]eplacing a failing roof over its surgery department” and
“[r]eplacing its twenty-year-old catheterization laboratory.”
JA 38. Plaintiffs Rutland Regional Medical Center in
Vermont and Covenant Health in Tennessee face similar
problems. For them, Medicare reimbursements represent
about half of gross revenue. Collectively, they too have
millions of dollars tied up in appeals delayed at the ALJ level.
Partly because of the delays, Rutland has had to eliminate 32
jobs and Covenant is contemplating whether to cut back patient
services.
6
C. AHA I
Based on HHS’s serial statutory violations and with no end
in sight, AHA, Baxter, Rutland and Covenant sought relief in
district court under the Mandamus Act, 28 U.S.C. § 1361. The
court dismissed the complaint for lack of mandamus
jurisdiction. 76 F. Supp. 3d 43, 56 (D.D.C. 2014). As noted,
we reversed. AHA I, 812 F.3d at 189-94. My colleagues
summarize the decision in AHA I, Maj. Op. 6-7, and they take
pains not to disturb it, Maj. Op. 10 (“One three-judge
panel . . . does not have the authority to overrule another three-
judge panel[.]” (quoting LaShawn A. v. Barry, 87 F.3d 1389,
1395 (D.C. Cir. 1996) (en banc))). Without purporting to
provide a full summary of my own, I recap three important
points.
First, we held that the plaintiffs have a “right to
demand . . . compliance” with the Act’s “mandatory”
“deadlines.” AHA I, 812 F.3d at 190, 192. We
acknowledged HHS’s argument that it “lacks the resources to
render decisions within the statutory time frames.” Id. at 191.
But we observed that “however modest [an agency’s]
personnel and budget resources may be, there is a limit to how
long it may use these justifications to excuse inaction in the
face of a statutory deadline.” Id. (internal quotation omitted).
Second, we pointed out that the Act gives HHS
“substantial discretion” to limit the scope of the RAC program.
AHA I, 812 F.3d at 193. Because “congressionally imposed
mandates . . . trump discretionary decisions,” we held that HHS
“will have to curtail the RAC program or find some other way
to meet” the 90-day ALJ-level deadline. Id.
Third, although recognizing the district court’s “broad
discretion in weighing the equities,” we also suggested that
“the unique circumstances of this case” and “the clarity of the
7
statutory duty likely will require issuance of the writ” absent
“meaningful progress” by “the close of the next full
appropriations cycle”—i.e., by the end of September 2017.
AHA I, 812 F.3d at 193.
D. THE MANDAMUS ORDER
We issued our mandate in April 2016. Mistaking defeat
as victory, HHS sought an 18-month stay of the proceedings on
remand so that it could “continue to make meaningful progress
in resolving the OMHA backlog.” Def.’s Mot. for Stay, Dkt.
No. 30 at 2 (May 25, 2016). Discerning no such progress, 209
F. Supp. 3d 221, 227-30 (D.D.C. 2016), and carefully weighing
the equities that would also guide its mandamus decision, id. at
225-26; see id. at 225 (noting that “stay and mandamus
inquiries . . . overlap[]”), the district court denied the stay
motion, id. at 230. It was unmoved by the agency’s modest
restructuring of RAC contracts, its tinkering with appeals
procedures, its proposal to “facilitate settlement conferences”
and its recall of retired ALJs. Id. at 227-28. Even with those
initiatives, the agency projects that its ALJ-level backlog will
exceed 800,000 appeals by the end of fiscal year 2020. Status
Report, Dkt. No. 56, Ex. at 3. Without the initiatives, the
backlog would likely balloon to nearly two million appeals by
the end of fiscal 2020. 209 F. Supp. 3d at 228. Noting the
statistics, the court reasoned that “significant progress toward
a solution . . . has to mean real movement toward statutory
compliance,” not merely “that things get worse more slowly
than they would otherwise.” Id. (internal quotation marks
omitted). The court was especially “concern[ed]” about
HHS’s RAC proposals, which are projected to “reduce the
number of appeals . . . by just 22,000” before fiscal year 2020.
Id. at 228-29. The court also saw no legislative fix on the
horizon. It emphasized that the Congress, although armed
with “ample knowledge of the backlog,” has repeatedly failed
8
to provide significant assistance through appropriations or
other means. Id. at 230.
The plaintiffs moved for summary judgment and proposed
specific methods for eliminating the backlog. They suggested
the district court compel HHS to offer broad-based settlement
of pending claims, defer repayment of overpayments and
penalize RACs for high reversal rates. Alternatively, they
proposed that the court order a four-year timetable for
eliminating the backlog. HHS opposed all of the plaintiffs’
suggestions. As relevant here, it argued that their proposed
timetable “conflict[s] with the Medicare statute” by requiring
the agency “to make payment on Medicare claims regardless
of . . . merit.” Def.’s Opp., Dkt. No. 41 at 23 (Nov. 7, 2016)
(citing 42 U.S.C. §§ 1395g(a), 1395y(a)(1)(A)). HHS
proposed no methods of its own that can eliminate the backlog
absent legislative action. Nor did it offer an alternative
timetable. Instead it touted the modest measures it is already
taking and claimed that they will improve the situation “if
Congress increases HHS’ authorities and funding.” Id. at 6.
In December 2016, the district court granted summary
judgment to the plaintiffs, concluding that HHS did “not
provide enough evidence of progress” to alter the court’s
earlier calculation of the equities. 2016 WL 7076983, at *2
(D.D.C. 2016); see id. (“[HHS] does not point to any
categorically new administrative actions and, critically,
continues to promise the elimination of the backlog only ‘with
legislative action’—a significant caveat.” (quoting Def.’s Opp.
6)). Recognizing that the plaintiffs “could have chosen to
demand immediate relief,” the court commended them for
instead “offer[ing] a thoughtful and reasonable four-year plan
for this complex problem.” Id. at *3. Also, it expressly
rejected HHS’s argument that lawful compliance with the
plaintiffs’ timetable is not possible. Id. It reasoned that the
9
timetable “demands . . . ‘proper claim substantiation’ within a
reasonable timeframe” but does not require the agency to
“‘make payment on Medicare claims regardless of . . . merit.’”
Id. (quoting Def.’s Opp. 22-23).
Accordingly, and in an attempt to “intrude as little as
possible on [HHS’s] specific decisionmaking processes and
operations,” the district court adopted the plaintiffs’ proposed
timetable but did not dictate any particular method for
eliminating the backlog. 2016 WL 7076983, at *3. The court
mandated a 30 per cent reduction of the backlog by December
31, 2017; a 60 per cent reduction by December 31, 2018; a 90
per cent reduction by December 31, 2019; and 100 per cent
elimination by December 31, 2020. Id. The court added that,
“if [HHS] fails to meet the above deadlines, [p]laintiffs may
move for default judgment or to otherwise enforce the writ of
mandamus.” Id. (citing FED. R. CIV. P. 55(d)).
II. ANALYSIS
We review issuance of the writ of mandamus for abuse of
discretion, AHA I, 812 F.3d at 190, which means “[w]e must
give the benefit of every doubt to the judgment of the trial
judge,” Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415,
438-39 (1996) (internal quotation omitted). I see no abuse
here, nor any legal error tantamount to one, contra Maj. Op. 10
(citing Koon v. United States, 518 U.S. 81, 100 (1996)).
A. THE DISTRICT COURT DID NOT HAVE TO
MAKE A FINDING OF POSSIBILITY.
My colleagues hold that the district court had to, and failed
to, make a “finding” that HHS can lawfully comply with the
mandamus order. Maj. Op. 10. Their primary authority
appears to be NRDC v. Train, 510 F.2d 692 (D.C. Cir. 1974).
But to the extent that Train applies, it supports the district
10
court’s judgment. At most it requires a finding of possibility
if an agency makes a strong threshold showing of impossibility.
HHS has not done that.
1. HHS’s burden
At issue in Train were statutory deadlines by which the
Environmental Protection Agency (EPA) had to issue
guidelines on “the quantity of pollutants that may be
discharged into the nation’s waters.” 510 F.2d at 695. It had
to issue guidelines for what we called “Group I” sources of
pollutants by October 18, 1973. Id. at 704-05. It had to issue
guidelines for certain “Group II” sources by December 31,
1974. Id. at 706-11. The first deadline came and went
“without the publication of a single . . . guideline.” Id. at 704.
The National Resources Defense Council sued in an effort to
compel the EPA to act. Id. at 695. In November 1973, the
district court ordered the EPA “to comply with a detailed
timetable for publication of guidelines” for both Group I and
Group II sources “beginning on January 15, 1974, and ending
on November 29, 1974.” Id. at 697-98.
We vacated and remanded in part. Train, 510 F.2d at 705,
713-14. We first held that the district court “acted reasonably”
as to Group I sources:
In light of the failure of the agency to meet its
acknowledged duty [as to Group I sources], the
District Court’s decision to incorporate a
timetable into the order constituted a reasonable
step to facilitate supervision of the decree and
to assure early efforts by the delinquent
defendant toward eventual discharge of its
statutory responsibility. . . . The authority to set
enforceable deadlines both of an ultimate and an
intermediate nature is an appropriate procedure
11
for exercise of the court’s equity powers to
vindicate the public interest.
Id. at 704-05 (footnotes omitted).
Turning to the December 1974 statutory deadline for
certain Group II sources, we found—before the deadline had
passed—“no present failure on the part of the [EPA]
Administrator to meet his responsibility.” Train, 510 F.2d at
711. Seeing “no violation of a statutory duty,” we thought it
appropriate “to give the Administrator latitude to exercise his
discretion in shaping the implementation of the [statute],” id.
at 711-12, and we vacated the district court’s timetable insofar
as it required early issuance of guidelines for Group II sources,
id. at 705, 714. We acknowledged the EPA’s “apprehension”
that “manpower or methodological constraints” might prevent
compliance as to Group II sources. Id. at 712-13. We
instructed the district court that it could not “responsibly
mandate flat . . . deadlines” for those sources on remand if “the
Administrator demonstrates that additional time is necessary.”
Id. at 712 (emphasis added). Our reasoning was that a court’s
equitable discretion does not include the authority to punish,
through contempt, a party who has “demonstrated that he [is]
powerless to comply” with a court order. Id. at 713 (emphasis
added).
In the majority’s telling, because HHS “represented” that
compliance is impossible, the district court had to make a
finding of possibility before it could impose a timetable on the
agency. Maj. Op. 10; see id. at 15 (district court must make
finding of possibility when agency “insists” compliance is not
lawfully possible). But nowhere in Train did we suggest that,
before ordering phased fulfillment of a statutory obligation an
agency is then violating, a court must make a finding of
possibility if the agency merely asserts impossibility and
12
makes no threshold “demonstrat[ion]” of it. 510 F.2d at 712-
13.
Not only is the majority’s requirement a new one; it is
contrary to sound practice. True, a district court should not
hold agency officials in contempt “for omitting an act [they are]
powerless to perform.” Maggio v. Zeitz, 333 U.S. 56, 72
(1948); see Maj. Op. 15. But private parties have a “right to
demand . . . compliance” with a statute’s “mandatory”
“deadlines.” AHA I, 812 F.3d at 190, 192. It follows that a
court is ordinarily entitled to presume, absent a contrary
showing, that the agency can comply. After all, the doctrine
of administrative impossibility is a narrow one reserved for
“extreme” circumstances. Train, 510 F.2d at 713. If the
agency cannot at the threshold meet its “heavy burden to
demonstrate . . . impossibility,” Ala. Power Co. v. Costle, 636
F.2d 323, 359 (D.C. Cir. 1979), the court should be permitted
to act immediately. Saddling it with a finding requirement—
which in some cases might also impose a hearing requirement,
see Oral Arg. Recording 21:22-21:35—simply slows the
process for issuing time-sensitive relief. In the meantime,
faultless private parties bear the costs of the agency’s ongoing
statutory violations.
2. HHS’s arguments
HHS has not made a sufficient threshold
“demonstrat[ion]” of impossibility to trigger any finding on the
matter. Train, 510 F.2d at 712-13. For starters, its burden is
“especially heavy” because it seeks “prospective exemption”
from a four-year timetable “based upon [its] prediction” of
impossibility. Ala. Power, 636 F.2d at 359 (emphasis added).
Its prediction rests on two premises: (1) it “has a statutory
obligation to ensure that non-meritorious claims are not paid,”
Br. of Appellant 20 (citing 42 U.S.C. § 1395y(a)); and (2)
13
“curtailment of the RAC program cannot resolve the backlog,”
id. at 18. The first point is true as far it goes and the second
may prove true eventually. But HHS oversells the importance
of both points.
First, although HHS is not authorized to reimburse
providers for items and services that are not medically
“reasonable and necessary,” 42 U.S.C. § 1395y(a)(1)(A)-(E),
its own regulations permit it to settle claims that are less than
certain to prove meritorious on a case-by-case basis. For
example, CMS may “compromise” some kinds of claims,
including ones relating to overpayment, based on “[l]itigative
probabilities” and related considerations. 42 C.F.R.
§§ 401.613(c)(2), 405.376(d), (h). HHS offers no good reason
to reject the statutory interpretation embodied in the
regulations. Nor does it cite any other relevant authority
prohibiting it from adopting the plaintiffs’ primary proposal:
offering systematic settlements based on the provider, the type
of claim or both. The proposal is a sound one. It does not ask
HHS to authorize payments without regard to merit. It asks
HHS to evaluate merit “at a higher level of generality” based
on statistical sampling. Br. of Appellees 23. In district court,
HHS’s then-chief financial officer acknowledged that the
agency can “resolve pending appeals at OMHA by applying an
individualized payment percentage” based on the specific
provider’s “historic success rate.” JA 152. Similarly, HHS
acknowledges in this Court that it has “globally settled” claims
before, dispatching some 380,000 of them based on type
without case-by-case adjudication. Br. of Appellant 9.
HHS says the remaining claims in the backlog are not
appropriate for “bulk settlements” because they do not appear
“homogeneous” enough. Br. of Appellant 26. The agency
needs to look more closely. HHS’s chief financial officer
admitted that a single durable medical equipment supplier is
14
responsible for “more than 24% of all pending appeals” at the
ALJ level. JA 138. Suppose, hypothetically, that the
supplier’s historic success rate with the ALJs is 50 per cent. 2
As far as I can tell, nothing but obstinance is stopping HHS
from offering the supplier 50 cents on the dollar—or less, to
account for the time, litigation expenses and uncertainty it
spared the supplier—to resolve the supplier’s claims. Just that
one approach to one repeat claimant has the potential to
dispatch nearly a quarter of the appeals from HHS’s backlog.
If the agency were to take the same approach with other high-
volume claimants based on each claimant’s historic success
rate, the record manifests that it would put a tremendous dent
in the backlog. See id. (noting that “top ten appellants” within
backlog “comprise more than 40% of all pending appeals”).
Granted, bulk settlement poses hazards. If HHS, under
the thumb of a mandamus order, looks too willing to settle
outside the parameters of case-by-case adjudication, it weakens
its bargaining position; enables “hospitals with below-average
success rates [to] accept at disproportionately high rates”; and
may incidentally encourage the filing of baseless claims.
Reply Br. of Appellant 9; see Status Report, Dkt. No. 55, Ex.
at 4 (Mar. 5, 2017) (according to acting chief financial officer,
some claimants are delaying settlement “in the anticipation that
relief mandated by the [district court] will yield a higher
payout”). Indeed, the percentage of fully successful ALJ
appeals has declined in recent years, see HHS, Decision
Statistics, supra pp. 4-5, which might indicate that some bad
2
The chief financial officer’s declaration suggests the rate is
higher, JA 138, but at oral argument HHS said the declaration is not
“artfully phrased” in that regard, Oral Arg. Recording 12:45-13:41.
The particular number is immaterial for my purpose; the agency can
offer the supplier a settlement commensurate with the supplier’s
historic success rate, whatever it is.
15
actors have injected dubious claims into the backlog in hopes
of artificially favorable settlements imposed by the courts.
But bargaining power is a two-way street. Subjecting the
average claimant to a waiting period more than eleven times
longer than the statute permits—and thereby choking off cash
flow for basic operational needs—unfairly weakens the
claimant’s position, giving it every incentive to settle for only
a fraction of what it might win after years of litigation. In
other words, the backlog undermines both parties. Thus, if
done right, a bulk settlement could well be negotiated in near
equipoise. HHS has offered nothing better than rank
speculation for concluding otherwise. And the burden,
remember, is on HHS.
In any event, the district court did not mandate settlement,
let alone dictate particulars. HHS is therefore free to mitigate
hazards based on its expertise and experience. One way to do
so is to focus on high-volume claimants: as mentioned, just a
handful account for hundreds of thousands of appeals in the
backlog, JA 138, and each is presumably a sizable company
with a long-term reputational stake and a predictive success
rate rooted in a meaningful sample size. To further ensure a
level playing field and to dissuade bad actors, the plaintiffs
reasonably suggest that HHS “requir[e] a provider to settle all
eligible appeals and . . . extend[] an offer only to those claims
pending at a particular date.” Br. of Appellees 26. The
agency has undertaken such measures before. CMS,
Frequently Asked Questions—Hospital Appeals Settlement for
Fee-for-Service Denials Based on Patient Status Reviews for
Admissions Prior to October 1, 2013, at 3,
https://goo.gl/YH5cC6.
Second, although major RAC reform might not alone
resolve the backlog, see Br. of Appellant 18, it will go further
16
than HHS lets on. The program was mostly dormant for the
better part of two years from 2014 to 2016 while the agency
negotiated new RAC contracts. See Maj. Op. 11 (citing, inter
alia, U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-16-366,
MEDICARE FEE-FOR-SERVICE: OPPORTUNITIES REMAIN TO
IMPROVE APPEALS PROCESS 38 n.64 (2016) (GAO Report)).
Citing statistics from the lull, HHS misleadingly suggests that
RAC appeals are no longer a major contributor to the backlog.
See, e.g., Br. of Appellant 18 (“In 2015, . . . RAC appeals
comprised just 14.1% of new appeals to OMHA, and in 2016,
this figure fell to 9.5% (fewer than 16,000 appeals).”). In
2016, however, HHS itself “reported that it expects the number
of incoming appeals to increase again when new [RAC]
contracts are awarded and the [RAC] program resumes full
operation.” GAO Report 38.
As of April 2016, as many as 300,000 appeals from
adverse RAC decisions were pending ALJ review. True, that
number dipped to about 155,000 by the end of September 2016,
before new RAC contracts took effect in October. But even
that artificially low number represents a good chunk of the
backlog, which supports the supposition—voiced in our earlier
decision—that cutting back the discretionary RAC program
will go some distance toward statutory compliance. AHA I,
812 F.3d at 185, 193. And if simple contractual reasons are
enough justification to put the RAC program on hold, even
more so is compliance with a statutory deadline. Id. at 193
(deadline “trump[s]” RAC program and “dictate[s] that [HHS]
will have to curtail the RAC program or find some other”
method of compliance).
Like the majority, Maj. Op. 12, I view HHS’s RAC-related
efforts to date as “weak medicine for an agency facing
mandamus.” Perhaps HHS should suspend the RAC program
altogether until it eliminates the backlog. The district court
17
properly left that decision to the agency. 2016 WL 7076983,
at *3. It suffices to say that HHS’s ability to limit the program,
see AHA I, 812 F.3d at 186, 193, combined with its ability to
negotiate bulk settlements, see 42 C.F.R. §§ 401.613(c)(2),
405.376(d), (h), means the agency has not shown that it cannot
lawfully comply with the court’s timetable. 3
B. EVEN IF THE DISTRICT COURT HAD TO
MAKE A FINDING, IT DID.
Assume arguendo the district court was required to make
a finding of possibility. The point of such a requirement, I
3
I recognize that, if not for today’s remand, the timetable’s
first deadline would be only a few months away. 2016 WL
7076983, at *3 (mandating 30 per cent reduction of backlog by
December 31, 2017). Complying would no doubt be a heavy lift.
But much of the difficulty in meeting the first deadline is HHS’s own
doing. It offered the district court no alternative to the plaintiffs’
phased reduction targets. Nor does it offer us one: primarily it
proposes to give the district court status updates in which it will
“attest to its ongoing attention to the backlog.” Br. of Appellant 30;
see Oral Arg. Recording 12:15-12:19 (“[W]e certainly couldn’t tie
ourselves or commit to a specific date . . . .”). And HHS has fought
the mandamus order tooth and nail from the moment it issued in
December 2016. Had the agency instead committed immediately to
bulk settlements and major RAC reform, it would now be much
closer to a 30 per cent reduction. The district court did not have to
assume in December 2016 that the agency would use fewer than all
viable methods. Because the agency did not make a threshold
showing of impossibility when the first deadline was still 13 months
away, the court was not required to make an express finding of
possibility. See Old Chief v. United States, 519 U.S. 172, 182 n.6
(1997) (“It is important that a reviewing court evaluate the trial
court’s decision from its perspective when it had to rule and not
indulge in review by hindsight.”).
18
take it, is to ensure that the court does not punish agency
officials with contempt until it satisfies itself that they can
rightly be blamed for failing to do something they are both
obligated and able to do. Maj. Op. 14-15; see Maggio, 333
U.S. at 72; Train, 510 F.2d at 713. For two reasons, any worry
about rashly punishing blameless officials is absent here.
First, and most importantly, the district court in fact made
a finding of possibility. What else could it have meant in
expressly rejecting HHS’s claim of impossibility?
Specifically, the court rebuffed HHS’s contention that the
timetable requires the agency to “‘make payment on Medicare
claims regardless of . . . merit’” and therefore “‘conflict[s] with
the Medicare statute.’” 2016 WL 7076983, at *3 (quoting
Def.’s Opp. 22-23). Granted, other language in the order
suggests that the court—apart from concluding that the
timetable does not demand reimbursement regardless of
merit—did “‘not dive into the parties’ debate’ over the ‘legality
and propriety’ of the reforms necessary to comply with the
timetable.” Maj. Op. 9 (quoting 2016 WL 7076983, at *3).
But because we are to “give the benefit of every doubt to the
judgment of the trial judge” in this realm of broad district court
discretion, Gasperini, 518 U.S. at 438-39 (internal quotation
omitted); see AHA I, 812 F.3d at 193, I can only conclude that
the court considered and rejected the agency’s impossibility
claim, see Sprint/United Mgmt. Co. v. Mendelsohn, 552 U.S.
379, 386 (2008) (on abuse-of-discretion review, “[a]n appellate
court should not presume that a district court intended an
incorrect legal result when the order is equally susceptible of a
correct reading”).
Other aspects of the district court’s decision reinforce the
point. My colleagues reaffirm that a district court
“contemplating the equities” “may not require an agency,” on
pain of contempt, “to render performance that is impossible.”
19
Maj. Op. 14; see Train, 510 F.2d at 713 (it is “unjust” to do so).
At the same time, they recognize that the district court here
“thoughtfully and scrupulously weighed the equities” and only
then “conclud[ed] that the scales tipped in favor of mandamus.”
Maj. Op. 2. If impossibility goes to the equities and if a court
carefully contemplates the equities before issuing the writ, we
have no reason to assume it has erroneously required an
impossibility. See Sprint/United Mgmt. Co., 552 U.S. at 386.
That goes double where, as here, the district court repeatedly
characterizes its own demands as “reasonable.” 2016 WL
7076983, at *3 (expressing “appreciat[ion]” for plaintiffs’
“thoughtful and reasonable four-year plan”); id. (noting
timetable requires HHS “to undertake proper claim
substantiation within a reasonable timeframe” (internal
quotation omitted)).
Second, even if HHS violates the timetable, the order does
not make contempt an automatic consequence. At that point,
rather, the “[p]laintiffs may move for default judgment or to
otherwise enforce the writ of mandamus.” 2016 WL 7076983,
at *3 (citing FED. R. CIV. P. 55(d)). The order thus includes a
failsafe for revisiting impossibility as developments dictate.
That is precisely how the writ is supposed to work: “The
court’s injunction should serve like adrenalin, to heighten the
response and to stimulate the fullest use of resources. This
may run the risk of overstimulating the organism, but palliative
measures may be taken . . . if indicated at a later date.” Train,
510 F.2d at 712. Under the order here, if HHS were truly
unable to comply despite deploying its “fullest . . .
resources”—which it has not yet done—the court in its
discretion could undertake “palliative measures” well short of
contempt. Id. Again, we have no reason to assume the court
would abuse its discretion. To the contrary, its prudence to
date should give us the strongest confidence.
20
C. EVEN IF THE DISTRICT COURT FAILED TO
MAKE A REQUIRED FINDING,
VACATUR AND REMAND ARE UNWARRANTED.
In my estimation, even if the majority were right to find
error, its remedy would nonetheless be wrong. Because we
review a district court’s judgment, not its rationale, we can
sometimes “sustain a ‘right-result, wrong-reason’ decision.”
People’s Mojahedin Org. of Iran v. Dep’t of State, 182 F.3d 17,
23 n.7 (D.C. Cir. 1999). In some cases, for example, “[t]here
is . . . no need for remand if an intelligent review of the record
can be made.” Am. Emp’rs Ins. Co. v. Am. Sec. Bank, 747 F.2d
1493, 1498 (D.C. Cir. 1984). This case strikes me as just such
a case.
My colleagues acknowledge that HHS will at some point
have the “heavy burden” of proving impossibility. Maj. Op.
15 (quoting Ala. Power, 636 F.2d at 359). I see no reason to
postpone the inevitable. For all the record-based reasons
already discussed, we can say here and now that the agency has
not met its burden. We should do so. Much like the district
court, we are to consider the equities in arriving at our
disposition. 28 U.S.C. § 2106 (appellate court may affirm or,
inter alia, vacate and remand with an eye toward what is “just
under the circumstances”). Today’s remand gets the equities
backwards: it punishes providers with further delay and
rewards an obdurate agency. It cannot be the result we had in
mind when we suggested that “the clarity of the statutory duty
likely will require issuance of the writ” absent “meaningful
progress” the political branches still have not made. AHA I,
812 F.3d at 193.
*****
This case is not about the difference between ought and
cannot. It is about the difference between shall and will not.
21
The district court correctly rejected the agency’s assertion of
impossibility. Accordingly, I respectfully dissent. 4
4
In response, the majority repeats with string parentheticals
that (1) the district court cannot, by mandamus, demand the
impossible, Maj. Op. 16; and (2) HHS asserted that compliance with
the court’s timetable is impossible, Maj. Op. 17 n.3. I do not dispute
either component of that analysis. But an assertion is not a
“demonstrat[ion].” Train, 510 F.2d at 712-13. And by no means
do I suggest that, if an agency in fact makes the requisite threshold
showing, it is “hypertechnical” to require a ruling on impossibility.
Contra Maj. Op. 16. My point is that HHS did not make a threshold
showing and, in any event, the court did rule on impossibility. The
needless technicality here is requiring the court to be any more
specific than it was.