Sebelius

The Secretary of Health and Human Services (“the Secretary”) appeals a summary judgment in favor of Los Angeles Haven Hospice, Inc. (“Haven Hospice”), in this action challenging the so-called “hospice cap regulation,” 42 C.F.R. § 418.309 , pursuant to which Haven Hospice was ordered to repay more than $2.3 million it received in excess of the annual cap on reimbursement for hospice care it provided to Medicare beneficiaries in fiscal year 2006 (“FY 2006”). The district court declared the hospice cap regulation to be arbitrary, capricious, and contrary to law and, thus, invalid. It then set aside the FY 2006 repayment demand, ordered HHS to return the amounts Haven Hospice had already paid to satisfy that demand, and entered an injunction barring further enforcement of the unlawful regulation against Haven Hospice and all other certified hospice service providers nationwide.

The Secretary contends that Haven Hospice lacks standing to mount a facial challenge to the hospice cap regulation, and that the regulation is, in any event, a reasonable interpretation of the “hospice cap statute,” 42 U.S.C. § 1395f(i)(2). The Secretary further contends that the district court…