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Seventh Circuit Holds Remand By District Court To Agency Was Not Final Appealable Order


HLD, v. 32, n. 2 (February 2004)

Seventh Circuit Holds Remand By District Court To Agency Was Not Final Appealable Order

In early 1989, Edgewater Hospital, a Medicare provider, sold its buildings to Edgewater Property Co., its equipment, records, and ongoing operations to Edgewater Operating Co., and its receivables to Peter Rogan, the sole shareholder of Edgewater Property Co. and Edgewater Operating Co. Following the sale, Edgewater Hospital changed its name to Edgewater Foundation (Foundation). The Medicare accounts between the companies had to be settled because of the sale, and the parties agreed that on the date of the sale Medicare owed the hospital $6.4 million, and Edgewater Operating owed Medicare $4 million in overpayments for 1989 and 1990. After calculating the offset, Medicare paid the balance. However, the Foundation claimed it was entitled to interest on the $6.4 million between the sale in January 1989 and the time of the offset payment of $2.4 million. Specifically, the Foundation claimed the overpayments that were made after it sold the hospital should not be offset against underpayments that occurred before the sale. Following an administrative proceeding, the Health Care Financing Administration (HCFA, now the Centers for Medicare and Medicaid Services) Administrator determined that Medicare was entitled to treat the hospital as a single provider regardless of the arrangements between the Foundation and the Operating Co. The Foundation sued claiming it was entitled to interest on the $6.4 million. The district court remanded the matter for the Department of Health and Human Services (DHHS) to make certain determinations about the calculation of the $6.4 million. The Foundation appealed.

The Seventh Circuit dismissed the appeal for lack of jurisdiction. The Foundation requested that the appeals court directly review the Administrator's determination. The appeals court explained that review of the Administrator's decision must first be in the district court and in this case the remand to the administrator was not a final appealable decision by the district court. However, the Foundation argued that the Supreme Court, in a number of decisions, established that a remand to an agency is appealable. The appeals court examined the decisions and determined that some did not apply to the facts in this case, and of the remaining decisions, the rule that could be drawn from them was that if a court delays a final adjudication based on a remand for additional information, there has been no final decision. The fact that the district court noted at the end of the remand that it was a "final and appealable order" did not change the fact that the remand was not appealable.

Edgewater Found. v. Thompson, No. 03-1745 (7th Cir. Dec. 1, 2003).       

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