Supreme Court Decides Sebelius v. Auburn Regional Medical Center

On January 22, the U.S. Supreme Court decided Sebelius v. Auburn Regional Medical Center, No. 11-1231. The Court held that the 180-day time limit for administrative appeals to the Provider Reimbursement Review Board ("PRRB"), contained in 42 U.S.C. §1395oo(a)(3), is not jurisdictional. The Secretary of the Department of Health and Human Services permissibly issued 42 CFR 405.1841(b), authorizing the PRRB to extend the 180-day limit, for good cause, up to three years; but the doctrine of equitable tolling cannot be applied in this context to further extend the time limit.

Auburn Regional Medical Center and the other respondent hospitals are providers of inpatient services to Medicare beneficiaries. Because these particular hospitals serve a disproportionate share of low-income patients, they are entitled to an upward adjustment of the standard Medicare reimbursement rates. After another hospital successfully appealed the calculation of its so-called "SSI fraction" – a factor in the calculation of the upward adjustment – Auburn and the other respondent hospitals decided to do the same. Their appeals to the PRRB, however, were filed more than a decade late under the governing statute and regulation. The PRRB held that it lacked jurisdiction over the appeals, and the District Court dismissed the hospitals' claims for relief upon judicial review. The United States Court of Appeals for the District of Columbia reversed, finding that the doctrine of equitable tolling should be applied in this context.

The Supreme Court reversed. 42 U.S.C. §1395oo(a)(3) establishes a 180-day time limit for appeals to the PRRB in this context. In the absence of a clear Congressional statement that the time limit is jurisdictional, however, the Court declined to characterize it as such. The Secretary previously had issued a regulation, 42 CFR 405.1841(b), that gave the PRRB authority to extend the 180-day time limit for good cause, but imposed a maximum time limit of three years for such appeals. The Court noted that the Secretary allowed only a "distinctly limited extension of time" because the PRRB "is burdened by an immense caseload," and "procedural rules requiring timely filings are indispensable devices for keeping the machinery of the reimbursement appeals process running smoothly." The Court upheld the Secretary's regulation, finding that it was not arbitrary, capricious, or manifestly contrary to the statute.

The Court went on to consider whether the doctrine of equitable tolling could be applied to the deadline for appeals to the PRRB in this context. In holding that it could not, the Court noted that it has never applied equitable tolling to an agency's internal appeal deadlines, and doing so in this instance would "essentially gut" the Secretary's regulation. When Congress first directed the Secretary to establish the PRRB in 1972, it simultaneously imposed the 180-day deadline. "For nearly 40 years the Secretary has prohibited the [PRRB] from extending that deadline, except as provided by regulation." Moreover, although Congress has amended §1395oo(a)(3) six times in the intervening years, it has never disapproved of the three-year outer time limit established by the Secretary. Nor was the Court persuaded by any alleged inequities in the system, noting that "[t]he Medicare payment system in question applies to ‘sophisticated' institutional providers assisted by legal counsel."

Justice Ginsburg delivered the opinion for a unanimous Court. Justice Sotomayor filed a concurring opinion.

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