UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

New Hampshire Hospital Association et al.

v. Civil No. 17-cv-349-LM Opinion No.

Alex M. Azar,1 Secretary, U.S. Department of Health and Human Services et al.

O R D E R

In November 2015, several New Hampshire hospitals2 and the

New Hampshire Hospital Association (“NHHA”), a non-profit trade

association, brought suit in this court against the Secretary of

Health and Human Services, the Centers for Medicare and Medicaid

Services (“CMS”), and the Administrator of CMS. See New

Hampshire Hosp. Ass’n v. Burwell, No. 15-cv-460-LM (D.N.H.

2015). Plaintiffs alleged in that suit that defendants set

forth certain “policy clarifications” regarding the method of

calculating supplemental payments to certain hospitals. They

alleged these policy clarifications were issued in responses to

1 Alex M. Azar became Secretary of the U.S. Department of Health and Human Services on January 29, 2018, replacing Thomas Price. See Fed. R. Civ. P. 25(d).

2 Plaintiff hospitals are Mary Hitchcock Memorial Hospital, LRGHealthcare, Speare Memorial Hospital, and Valley Regional Hospital, Inc. frequently asked questions posted on medicaid.gov, and that both

the policies themselves and the manner in which they were

promulgated contradict the plain language of the Medicaid Act

and violate the Administrative Procedure Act (“APA”). This

court granted plaintiffs’ motion for summary judgment, holding

that defendants’ enforcement of the policy clarifications set

forth in the responses to frequently asked questions violated

the APA. New Hampshire Hosp. Ass’n v. Burwell, No. 15-cv-460-

LM,

, at *8-14 (D.N.H. Mar. 2, 2017), aff’d sub

nom. New Hampshire Hosp. Ass’n v. Azar,

(1st Cir.

2018). The court permanently enjoined defendants from enforcing

the policies in the responses to the frequently asked questions,

but took no position as to whether those policies could be

enforceable if set forth in a validly promulgated rule or

regulation.

at *12 n.16.

After the court issued its order, defendants published a

final rule regarding the calculation of the supplemental

payments. See Medicaid Program: Disproportionate Share Hospital

Payments—Treatment of Third Party Payers in Calculating

Uncompensated Care Costs, 82 Fed. Reg. 16114–02, 16117 (Apr. 3,

2017) (“Final Rule”). The Final Rule expressly included within

its text the policies that had been set forth in the responses

to the frequently asked questions.

2 Plaintiffs brought this suit, seeking declaratory and

injunctive relief to prevent defendants from enforcing the Final

Rule. Plaintiffs represented that they would suffer irreparable

harm once the Rule became effective, and the court set an

expedited briefing schedule for the parties’ cross-motions for

summary judgment so that it could rule on the motions prior to

the date the Final Rule went into effect.

On March 5, 2018, after the parties filed their briefing in

support of their cross-motions for summary judgment but before

oral argument, plaintiffs submitted a “Notice of Supplemental

Authority Invalidating the Final Rule.” Doc. no. 38. In that

notice, plaintiffs stated: “On March 2, 2018, the Court in

Children’s Hosp. Assoc. of Texas v. Price, No. 17-844 (D.C.

Cir.), which also has been considering the validity of the Final

Rule based on cross motions for summary judgment, issued an

order invalidating and vacating that rule.” Id. at 1.

Plaintiffs included with their notice a copy of the order in

Children’s Hospital Ass’n of Texas and noted that a memorandum

opinion explaining the order’s reasoning had not yet been

issued. Plaintiffs also stated: “By vacating the Final Rule,

the Order is dispositive of the issues pending before this

Court.” Id. at 2.

On March 7, 2018, plaintiffs submitted a “Notice of

Supplemental Authority Vacating the Final Rule,” doc. no. 39, to

3 which they attached a copy of the March 6, 2018 memorandum

opinion in Children’s Hospital Ass’n of Texas. That opinion

described the basis for the court’s March 2, 2018 order. See

Children’s Hosp. Ass’n of Texas v. Azar, No. CV 17-844 (EGS),

(D.D.C. Mar. 6, 2018) (Sullivan, J.). In this

notice, plaintiffs stated that they “believe that the vacatur of

the Final Rule is dispositive of the issues pending before this

Court.” Id. at 2.

On March 19, 2018, the parties submitted a status report

concerning the impact of the Children’s Hospital decision. See

doc. no. 40. In the status report, the parties stated that they

agree that the Children’s Hospital Ass’n of Texas ruling has the effect of vacating the [Final Rule] in a way that prevents its application anywhere, including with respect to the plaintiffs in this case. The defendants have indicated that they intend to act accordingly and will not enforce the rule as long as the Children’s Hospital Ass’n of Texas decision remains operative in its current form.

Id. at ¶ 2. The parties also stated:

Nevertheless, the parties agree that the Children’s Hospital Ass’n of Texas ruling does not affect this Court’s jurisdiction to independently rule on the validity of the [Final Rule] in this case. The plaintiffs in this case are not parties to the judgment in Children’s Hospital Ass’n of Texas, and the Government is considering whether to appeal the Children’s Hospital Ass’n of Texas ruling. Given the possibility of an appeal in Children’s Hospital Ass’n of Texas, the plaintiffs also do not wish to voluntarily dismiss this case.

Id. at ¶ 3.

4 On March 28, 2018, in response to the parties’ status

report, the court issued a procedural order. See doc. no. 42.

In that order, the court stated:

Judge Sullivan’s ruling in Children’s Hospital Ass’n of Texas vacating the Rule at issue in this case appears to render the parties’ dispute moot. See, e.g., D.H.L. Assocs., Inc. v. O’Gorman,

(1st Cir. 1999) (holding that the court lacked jurisdiction to enjoin the enforcement of ordinances that were no longer in effect). That is particularly true in light of defendants’ statement in the parties’ joint status report that the ruling prevents application of the Rule and they will not enforce it so long as the Children’s Hospital Ass’n of Texas decision remains operative in its current form. Therefore, it does not appear that a favorable ruling from this court would redress any actual injury suffered by plaintiffs.

Id. at 3-4. The court also stated: “any party asserting that

this court continues to have jurisdiction over this case shall

file a brief showing cause why this case should not be dismissed

in light of the Children’s Hospital Ass’n of Texas decision.”

Id. at 4.

On April 2, 2018, defendants filed a response to the

court’s procedural order, asserting that that the Children’s

Hospital “order does not make this case moot because the

Government is considering whether to appeal [that] ruling, and

the vacated rule could be reinstated on appeal.” Doc. no. 43 at

1. The government has since appealed the Children’s Hospital

ruling, and the appeal remains pending.

5 On April 6, 2018, plaintiffs filed a response to the

court’s order, in which they state that they “agree that Judge

Sullivan’s ruling in Children’s Hospital renders the parties’

dispute moot because the Final Rule has been vacated.” Doc. no.

44 at 2 (citing cases). Plaintiffs noted that circumstances

could change if defendants successfully appealed the Children’s

Hospital ruling, and requested that the court administratively

stay the matter.

“Under Article III of the Constitution, federal courts may

adjudicate only actual, ongoing cases or controversies.” Lewis

v. Cont’l Bank Corp.,

(1990) (internal

citations omitted). “To satisfy the Article III case or

controversy requirement, a litigant must have suffered some

actual injury that can be redressed by a favorable judicial

decision.” Iron Arrow Honor Soc’y v. Heckler,

(1983). “If events have transpired to render a court opinion

merely advisory, Article III considerations require dismissal of

the case.” Mangual v. Rotger-Sabat,

(1st Cir.

2003).

As the court stated in its procedural order, the ruling in

Children’s Hospital vacating the Final Rule renders the parties’

dispute moot, particularly in light of defendants’ statement

that the ruling prevents application of the Final Rule and they

will not enforce it so long as the ruling remains operative in

6 its current form. Although defendants have appealed that

ruling, at this stage, and particularly in light of defendants’

representations, any decision by this court would be merely

advisory.

For that reason, the court denies without prejudice the

parties’ cross-motions for summary judgment. To the extent the

Children’s Hospital ruling is reversed on appeal, plaintiffs may

file a new action seeking expedited relief. See 13C Charles

Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure § 3553.2.1 (3d ed. 2008) (“Mootness may

be denied because the decision is subject to reopening or

appeal, at least if there is a realistic prospect of reopening,

although the prospect may instead be met by finding mootness,

perhaps on terms that contemplate revival if the decision is in

fact reopened.”); see also Nationwide Mut. Ins. Co. v. Burke,

(4th Cir. 1990) (ordering dismissal of

district court action on mootness grounds without prejudice to

plaintiffs filing a new action if the relevant judgment were

reversed on appeal).

CONCLUSION

For the foregoing reasons, plaintiffs’ motion for summary

judgment (doc. no. 31) and defendants’ cross-motion for summary

judgment (doc. no. 33) are denied without prejudice and the case

7 is dismissed. The clerk of court shall enter judgment

accordingly and close the case.

SO ORDERED.

__________________________ Landya B. McCafferty United States District Judge

September 25, 2018

cc: Counsel of Record.

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