More Hospitals Sue HHS Over DSH Payment Calculations

The latest case comes as the U.S. Supreme Court mulls whether to take up a related case involving Allina Health Services.

Three more hospitals filed suit Tuesday against Health and Human Services Secretary Alex Azar over the way HHS calculated disproportionate share hospital (DSH) payments a decade ago.

The plaintiffs—East Carolina Health's Roanoke Chowan Hospital in Ahoskie, North Carolina; Baystate Wing Hospital and Medical Center in Palmer, Massachusetts; and Pitt County Memorial Hospital in Greenville, North Carolina—say HHS should be ordered to recalculate their DSH payments and promptly send them the additional funds they're owed, plus interest.

The suit accuses HHS of continuing to use a 2004 version of the formula despite court decisions repeatedly finding cracks in the formula's policymaking foundation.

"Although the D.C. Circuit has now twice ruled against the Secretary’s 2004 policy, the Secretary has not acquiesced in either of those decisions," the complaint filed Tuesday in the D.C. District Court states. "Instead, the Secretary’s agency has continued to apply the … policy adopted in the now-vacated 2004 rule, including in the payment determinations at issue for the plaintiff hospitals in this case."

The plaintiffs argue that HHS inappropriately shortchanged them in fiscal year 2008 (during former President George W. Bush's second term). Court records indicate that the reimbursement in question amounted to hundreds of thousands of dollars for each plaintiff.

Why HHS Hasn't Acquiesced

The reason why Azar hasn't implemented either of the D.C. Circuit decisions, both of which involve lead plaintiff Allina Health Services, is because he has asked the U.S. Supreme Court to review the matter, suggesting up to $4 billion in reimbursements for uncompensated care may be at stake.

Azar's petition for a writ of certiorari was filed April 27. Allina Health Services and its fellow respondents filed a brief in opposition June 19. And the court noted Tuesday that it will consider the HHS petition in a conference scheduled for September 24.

It is during this conference that the justices will decide whether to consider the case, though it's worth noting that the court grants certiorari in only about 1% of petitions filed each year.

The firm representing the three plaintiffs in the latest case, Akin Gump Strauss Hauer & Feld LLP, also represents more than 100 plaintiffs in a related suit filed in June 2017. That case has been stayed pending a decision by the Supreme Court on whether to grant Azar's petition.

The firm's website says it has represented a Massachusetts hospital in the first appellate decision that invalidated the HHS formula on DSH payments; represents more than 30 of the largest DSH hospitals in the lead case challenging the formula; and won the lead case among 270 consolidated federal lawsuits involving more than 600 hospitals seeking additional DSH payments.

An attorney with the firm could not immediately be reached Tuesday for comment.

More Hospitals Sue HHS Over DSH Payment Calculations by HLMedit on Scribd