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Jimmo v. Burwell

United States District Court, D. Vermont

August 17, 2016

GLENDA JIMMO, et al., Plaintiffs,
SYLVIA MATHEWS BURWELL, Secretary of Health and Human Services, Defendant.


          Christina Reiss, Chief Judge United States District Court

         This matter comes before the court on Plaintiffs' motion for resolution of noncompliance with Settlement Agreement (Plaintiffs' "motion to enforce") (Doc. 94), in which Plaintiffs assert that Defendant Sylvia Mathews Burwell, Secretary of Health and Human Services (the "Secretary"), has breached the parties' settlement agreement dated October 16, 2012 (the "Settlement Agreement"), which the court entered as a judgment on January 24, 2013 (the "Judgment"). As grounds for their motion to enforce. Plaintiffs point to the Secretary's refusal to make certain revisions to the Medicare Benefit Policy Manual (the "MBPM") and her allegedly deficient educational campaign designed to implement the Settlement Agreement.

         The Secretary opposes Plaintiffs' motion, asserting that the court lacks jurisdiction to adjudicate the pending motion because Plaintiffs' notices of noncompliance are not timely. In the alternative, if jurisdiction exists, the Secretary asserts that Plaintiffs fail to establish a breach of the Settlement Agreement and their proposed remedial measures extend beyond the court's limited jurisdiction.

         The court heard oral argument on May 26, 2016, at which point it took the pending motion under advisement. Plaintiffs are represented by David J. Berger, Esq., Matthew R. Reed, Esq., the Center for Medicare Advocacy, Inc., and Vermont Legal Aid, Inc. The Secretary is represented by Assistant United States Attorney M. Andrew Zee, Assistant United States Attorney Steven Y. Bressler, and Special Assistant United States Attorney Tamra Moore.

         I. Factual and Procedural Background.

         A. The Jimmo Class Action.

         On January 18, 2011, six individual Medicare beneficiaries (the "Individual Plaintiffs") and seven national organizations (the "Organizational Plaintiffs") (collectively, "Plaintiffs") filed a class action suit in the District of Vermont against the Secretary, alleging, among other things, that the Secretary "impose[d] a covert rule of thumb that operate[d] as an additional and illegal condition of coverage and result[ing] in the termination, reduction, or denial of coverage for thousands of Medicare beneficiaries annually." (Doc. 13 at 2, ¶ 1.) Plaintiffs alleged this covert rule of thumb improperly imposed an "Improvement Standard, " whereby coverage for certain home health care services was denied if a beneficiary's condition had not improved. Id. at ¶ 2. Plaintiffs further alleged that because of the Improvement Standard, Medicare contractors and adjudicators were denying Medicare coverage merely because a patient was unlikely to improve, or in retrospect failed to improve, even when the patient needed skilled care to maintain his or her condition or prevent or slow further deterioration.

         The Secretary moved to dismiss Plaintiffs' claims on a number of grounds, including that they failed to allege a plausible ground for relief. The court granted the motion to dismiss in part and denied it in part. See Jimmo v. Sebelius, 2011 WL 5104355, at *1 (D. Vt. Oct. 25, 2011). Thereafter, without admitting liability or any wrongdoing, after several months of arms-length negotiations, the Secretary agreed to settle Plaintiffs' claims in accordance with the terms and conditions of the Settlement Agreement. The court approved the Settlement Agreement at a January 24, 2013 fairness hearing under Fed.R.Civ.P. 23(b)(2).

         B. The Settlement Agreement.

         Pursuant to the Settlement Agreement, the parties agreed to a "maintenance coverage standard" which provides that "[s]killed nursing services would be covered where such skilled nursing services are necessary to maintain the patient's current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided." (Doc. 82-1 at 13, § IX. 7.a.) [1] The parties agreed to implement the maintenance coverage standard in two ways that are relevant to Plaintiffs' pending motion to enforce.

         First, the Settlement Agreement required certain revisions to the MBPM in order "to clarify the coverage standards for the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) benefits when a patient has no restoration or improvement potential but when that patient needs skilled SNF, HH, or OPT services" and to state that Medicare coverage "does not turn on the presence or absence of an individual's potential for improvement from the nursing care, but rather on the beneficiary's need for skilled care." Id. at 8-9, 12, §§ IX. 1, IX.7. The Secretary further agreed to "revise or eliminate any [MBPM] provisions . . . that [the Secretary] determines are in conflict" with the agreed-upon maintenance coverage standard for nursing services. Id. at9, §IX.3.

         The Settlement Agreement provides that the Secretary:

will take any recommendations from Plaintiffs' Counsel under advisement and will make a good faith effort to utilize Plaintiffs' Counsel's reasonable recommendations that are limited to the coverage standards as clarified in Sections IX.6 through IX.8 and that are consistent with those coverage standards as well as all other statutory and regulatory requirements.

Id. at 10, § IX.4. Under the Settlement Agreement, the Secretary "retain[s] final authority as to the ultimate content of [MBPM] provisions." Id. at 9, § IX.2.

         Second, the Settlement Agreement required the Secretary to engage in certain educational activities designed to implement the changes to the MBPM and to educate stakeholders regarding the maintenance coverage standard. Specifically, the Settlement Agreement requires the Secretary to "engage in a nationwide educational campaign" through the Centers for Medicare and Medicaid Services ("CMS"), and in this "Educational Campaign, " "use written materials and interactive forums with providers and contractors, to communicate the SNF, home health, and OPT maintenance coverage standards and the [inpatient rehabilitation facility] coverage standards[.]" Doc. 82-1 at 14, § IX.9. The Settlement Agreement provides that "CMS shall retain final authority as to the ultimate content of the written educational materials" and the "PowerPoint slides" used in the Educational Campaign. Id. at 16, § IX. 12.

         The Settlement Agreement states that:

The Parties recognize that Defendant's obligations are met under the Settlement Agreement once it has complied with the terms of this Settlement Agreement, and that Defendant is not guaranteeing to Plaintiffs that certain results will be achieved once the steps set forth in this Settlement Agreement have been implemented.

Id. at 23, § IX. 18.

         The Settlement Agreement further provides that the court will retain jurisdiction for thirty-six months after the conclusion of the Educational Campaign to "enforc[e] the provisions of the Settlement Agreement in the event that one of the Parties claims that there has been a breach of any of those provisions[.]" Id. at 6, § VI.3. Under the Settlement Agreement, before an aggrieved party may file a motion with the court alleging noncompliance, it must follow the dispute resolution process described in § VIII of the Settlement Agreement. The first step is to provide written notice detailing the alleged noncompliance, which must include;

(a) a reference to all specific provisions of the Settlement Agreement that are involved; (b) a statement of the issue; (c) a statement of the remedial action sought by the Initiating Party; and (d) a brief statement of the specific facts, circumstances, and any other arguments supporting the position of the Initiating Party; and (e) if there is a good faith basis for expedited resolution, the circumstances that make expedited resolution appropriate, and the proposed date for a reasonable expedited response.

Doc. 82-1 at 7, § VIII. 1. Notice of noncompliance "must be provided promptly." Id. Under the Settlement Agreement, "[n]otice that is not provided promptly because of a lack of diligence on the part of the Initiating Party shall not serve as a basis for the [c]ourt to exercise jurisdiction[.]" Id. In its Judgment, the court retained "jurisdiction over this matter for the limited purposes and time period set forth in Section VI of the [Settlement] Agreement." (Doc. 92 at 2.)

         C. The Parties' Efforts to Implement the Settlement Agreement.

         The Secretary made substantial revisions to chapters seven and eight of the MBPM, although many of the revisions were unrelated to the maintenance coverage standard or the Settlement Agreement and were instead made "pursuant to CMS's general authority to provide guidance on Medicare policy and implementation." (Doc. 94-5 at 2.) The Secretary issued an article regarding the revised MBPM provisions, which was disseminated to Medicare Administrative Contractors, Medicare Advantage Organizations, Qualified Independent Contractors ("QICs"), Qualified Improvement Organizations, the Chief Administrative Law Judge, the Chair of the Departmental Appeals Board, providers, suppliers, and others. The article was also posted on CMS's website.

         The Secretary issued a Health Plan Management System memorandum, a Program Transmittal, and a Transmittal of Policy Systems memorandum, about the revised MBPM provisions and revised the relevant 1-800-MEDICARE customer service scripts to reflect them. The Secretary posted the Program Transmittal on CMS's website.

         The Secretary conducted five open door forums and two national conference calls for the purpose of communicating the MBPM revisions and the maintenance coverage standard. The open door forums involved over 3, 900 participants. During the national calls, the Secretary utilized a PowerPoint presentation that was provided to Plaintiffs' counsel in advance for comment and review. The December 19, 2013 national call was one hour in length, and approximately 3, 428 participants were on the call. The Secretary used CMS's regular communication channel and its website to provide notice that the calls would take place and posted an audio recording and written transcript of the call on CMS's website. The parties also discussed implementation of the Settlement Agreement during biannual meetings that occurred in January 2014, September 2014, April 2015, and September 2015.

         Pursuant to the Settlement Agreement, the Secretary conducted a random sampling of 100 decisions by QICs to identify potential errors and found that fifty-six QIC decisions contained potential errors. The Secretary then determined that twenty-one of the fifty-six decisions reflected actual errors, although not all of the identified errors involved the incorrect application of the maintenance coverage standard. Another sampling identified thirty-two QIC decisions with potential errors, with four of those errors involving the incorrect application of the maintenance coverage standard.

         Since publication of the MBPM revisions on December 6, 2013, Plaintiffs have repeatedly raised concerns regarding the adequacy of the revisions to reflect the maintenance coverage standard and the Secretary's allegedly deficient Educational Campaign.[2] In conjunction with their concerns. Plaintiffs have submitted to the Secretary additional proposed revisions to the MBPM, provided examples of alleged continued application of an Improvement Standard to deny Medicare coverage, and have proposed Frequently Asked Questions to be posted on CMS's website. The Secretary has responded to most of Plaintiffs' proposals, but has not agreed to adopt the vast majority of them, contending they are either unnecessary or are not required by the Settlement Agreement.

         Plaintiffs, through counsel, also formed a Jimmo Implementation Council (the "Council"), a multi-disciplinary group of providers and advocates to monitor progress with the implementation of the Settlement Agreement. The Council conducted a survey of sixty interested providers, advocates, and other stakeholders, which revealed that "46% were not aware of the Education[al] Campaign provided by CMS and only 36% participated in the education efforts." (Doc. 94-50 at 4.) When asked about how the Jimmo settlement could be best implemented, "more education from CMS was most frequently mentioned." Id.

         In an August 3, 2015 email, the Secretary, through counsel, stated that she had no new information to report regarding additional outreach or education. Three days later, on August 6, 2015, Plaintiffs' counsel served the Secretary with two notices of noncompliance: one addressing Plaintiffs' proposed MBPM revisions and the other identifying alleged deficiencies in the Secretary's Educational Campaign. On September 25, 2015, the Secretary responded to the notices of noncompliance. The parties then unsuccessfully attempted to resolve their differences. On November 10, 2015, the Secretary advised Plaintiffs' counsel in an email that the Secretary would engage in no additional educational activities.

         On March 1, 2016, Plaintiffs filed their motion to enforce. In support of their motion, Plaintiffs submitted several coverage decisions which they contend demonstrate the persistence of confusion over the maintenance coverage standard and application of an Improvement Standard. They also submitted the declarations of certain stakeholders who opine that the Secretary did not adequately disseminate the maintenance coverage standard and conducted a confusing and inadequate Educational Campaign, and that little has changed as a result of the Jimmo class action settlement. As relief. Plaintiffs ask the court to require the Secretary "to revise or eliminate the specific language in the MBPM that conflicts with the maintenance nursing coverage standard." (Doc. 94-1 at 25.) Plaintiffs also request that the court require the Secretary "to carry out additional educational activities to address the inaccuracies and inadequacies of the original [Educational] Campaign." Id.

         II. Legal Analysis and Conclusions.

         A. Whether the Court has Jurisdiction to Hear the Motion.

         As a threshold issue, the Secretary contends that the court lacks jurisdiction to adjudicate the motion to enforce because Plaintiffs did not provide "timely" and "prompt" notice of alleged noncompliance as required by the Settlement Agreement. The Secretary points out that the allegedly deficient MBPM revisions were completed on December 6, 2013 and the Educational Campaign was completed on January 23, 2014. She asserts that Plaintiffs allowed over nineteen months to elapse before filing their notices of noncompliance. Plaintiffs counter that the record establishes ...

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