[00:00:00] Speaker 01: on Ingham Regional Medical Center versus the United States. [00:00:35] Speaker 04: It please the court, Diane Cooley for plaintiff's appellants. [00:00:53] Speaker 00: Could I understand what claims we have here before us? [00:00:57] Speaker 00: As I understand it, and correct me if I'm mistaken about this, you're saying with respect to the hospitals other than Hingham [00:01:05] Speaker 00: that there's a statutory claim because the Department of Defense hasn't complied with the statute. [00:01:12] Speaker 00: And the other claim is that with respect to Ingham that the release leads to breach of contract claims by Ingham. [00:01:24] Speaker 00: Is that a fair statement of what we have before us? [00:01:27] Speaker 04: Yes, Your Honor. [00:01:28] Speaker 04: And I thank you and I apologize. [00:01:31] Speaker 04: I thank you for bringing that point up because [00:01:34] Speaker 04: In my questions presented, I made a mistake. [00:01:38] Speaker 04: And in the third question presented, I limited it to Ingham. [00:01:43] Speaker 04: And in fact, as you point out, the money mandating claim, which is the third question presented, is actually not directed to Ingham, but rather to the other four plaintiffs. [00:01:54] Speaker 04: The breach of the release claim and the mutual mistake claims go to Ingham only. [00:01:59] Speaker 00: Okay, and with respect to the breach of the release claim, I understand the theory that the radiology reimbursement wasn't in accordance with the formula that was specified, but just put that to one side. [00:02:13] Speaker 00: As I understand it, also there's a mutual mistake claim saying that the release of the non-radiology claims should be ignored or voided or whatever. [00:02:27] Speaker 00: because there was a mutual mistake as to what the situation was with respect to those clients, correct? [00:02:33] Speaker 01: Correct. [00:02:34] Speaker 00: Okay. [00:02:35] Speaker 00: If we were to rule against you on the statutory claim, why would we need to reach the mutual mistake claim? [00:02:48] Speaker 00: Isn't the mutual mistake claim just a claim which allows [00:02:55] Speaker 00: him to pursue a statutory claim since there wouldn't have been any release of the non-radiology claims? [00:03:02] Speaker 00: Do you understand what I'm saying? [00:03:03] Speaker 04: I do. [00:03:04] Speaker 04: I do understand what you're saying. [00:03:05] Speaker 04: If you find that the statute did not require the Department of Defense to reimburse the hospitals [00:03:18] Speaker 04: using a reimbursement rule for hospitals, the pre-OPPS reimbursement rules for hospitals, then I believe you're correct that then there would be no claim for mistake because those services would not be reimbursable in any event. [00:03:38] Speaker 01: In other words, there would have been no original underpinning. [00:03:41] Speaker 01: I'm a little confused now. [00:03:43] Speaker 01: I thought you had said, maybe I misheard it, that the [00:03:46] Speaker 01: The breach of contract and Count 3 went to Ingham and only Ingham and that the final issue with respect to the statutory provisions went to all hospitals other than Ingham. [00:03:59] Speaker 04: Correct. [00:03:59] Speaker 04: The money mandating claim goes to all hospitals with the exception of Ingham because those hospitals did not sign a release, did not participate. [00:04:08] Speaker 04: Under the discretionary payment program, were never paid, never signed a release. [00:04:13] Speaker 00: But I think the point I was trying to make, and I thought you agreed with it, is that with respect to the non-radiology claims relating to the release, we don't have to reach the mutual mistake claim. [00:04:26] Speaker 00: That is the issue of whether the release is effective as to the non-radiology claims. [00:04:34] Speaker 00: If we rule against you on the statutory claims, because the only effect of succeeding [00:04:44] Speaker 00: argument as to the non-radiology claims is that you have a statutory claim that remains? [00:04:52] Speaker 04: I think that's correct. [00:04:55] Speaker 04: I'm a little confused frankly, but I think you're correct in that the claim under the statute is that the regulation failed to pay as the statute directed and it failed [00:05:09] Speaker 04: with regard to all outpatient services because it didn't pay them like hospitals. [00:05:15] Speaker 02: If we disagree with you on that, then it doesn't matter whether this release contract included properly, included, or excluded them because you can't say a claim whatsoever if you lose on the statutory construction argument. [00:05:31] Speaker 04: With regard to the other services other than radiology, correct. [00:05:35] Speaker 02: Correct. [00:05:37] Speaker 02: In that case, your view is even if [00:05:39] Speaker 02: The government could have won on the radiology because the interpretation essentially was right. [00:05:44] Speaker 02: They entered into a contract with you to actually provide for specific payment for the radiology service, provided specific steps, and that even if there's no underlying statutory right, there's now a contractual right to relief on that contract. [00:05:59] Speaker 04: That is correct. [00:06:00] Speaker 04: That is absolutely correct. [00:06:02] Speaker 00: Could you start maybe with that clarification? [00:06:05] Speaker 00: That was very helpful. [00:06:08] Speaker 00: why the statute should be read your way, because I understand that you're not contending that use of the ops methodology was practicable, right? [00:06:18] Speaker 04: That is correct. [00:06:19] Speaker 04: Oh, we do not dispute. [00:06:21] Speaker 04: OPPS was not practicable to adopt until 2009 for Tricara. [00:06:26] Speaker 00: Okay, so with that understanding then, how does the statute help you? [00:06:30] Speaker 00: How is the statute violated? [00:06:32] Speaker 04: The statute is clear. [00:06:34] Speaker 04: The language of the statute requires DOD to emulate reimbursement rules for hospitals to the extent practicable when it implements a rule to pay for hospital services. [00:06:51] Speaker 00: But how does that suggest that if a current rule is impracticable that you should go back to the earlier rule? [00:06:59] Speaker 04: It's a matter of how this court is going to construe the phrase to the extent practiced. [00:07:04] Speaker 04: What we contend in the way that the facts show DOD always construe the statute was it's a matter of degree. [00:07:14] Speaker 04: It's a continuum of obligations. [00:07:17] Speaker 04: So if they weren't able, if DOD was not able to fully adopt the then existing rule, OPPS, it was nevertheless [00:07:28] Speaker 04: required to adopt a rule for hospitals. [00:07:32] Speaker 04: And the statute says that. [00:07:33] Speaker 04: The statute is explicit that hospitals get paid like hospitals. [00:07:39] Speaker 04: Tricare hospitals get paid like Medicare hospitals. [00:07:42] Speaker 04: The phrase provider of services is limited to hospitals. [00:07:48] Speaker 04: But what we contend is there's a continuum of obligations where if you can't adopt this rule in [00:07:56] Speaker 04: You have to come as close as you can using a Medicare rule. [00:08:02] Speaker 04: You can't go off the reservation, so to speak, and pick a rule that is contrary to the entire reimbursement scheme. [00:08:11] Speaker 02: Medicare has never... How do we know that? [00:08:14] Speaker 02: And who's in the best position to judge that? [00:08:17] Speaker 02: I mean, they adopted a rule that they said is their best guess at what they can do. [00:08:22] Speaker 02: I don't want to use the word guess, but you know what I mean. [00:08:24] Speaker 02: their best attempt at what they can do until something else becomes more practicable, don't they get some kind of deference there, unless it's completely inconsistent with the statute? [00:08:35] Speaker 02: And I know what your point is, that they've adopted a rule that doesn't go to hospitals, it goes to individuals. [00:08:42] Speaker 02: But couldn't it be the case that the individual rule, even if it's not perfect, is the most practicable at that point in time? [00:08:51] Speaker 04: No. [00:08:53] Speaker 04: The fact that it was the most practical at the time, because it has to be both practicable and for hospitals. [00:09:05] Speaker 04: It can't just be practicable. [00:09:08] Speaker 04: It has to be for hospitals. [00:09:10] Speaker 04: Not just because the statute actually says it has to be for hospitals, but the entire [00:09:16] Speaker 04: Medicare and Tricare reimbursement scheme is based upon reimbursing based on the site of services. [00:09:24] Speaker 04: Every regulation relating to reimbursement distinguishes between the site of service. [00:09:32] Speaker 04: This is the only one ever that didn't. [00:09:35] Speaker 04: And there's a reason for that. [00:09:36] Speaker 04: There's not a reason why it didn't. [00:09:39] Speaker 04: There's a reason why they all do. [00:09:41] Speaker 04: And that's because treatment in a hospital is fundamentally different and costs more than treatment [00:09:47] Speaker 04: in a physician's office. [00:09:49] Speaker 00: So if I understand your argument, what you're saying is it might not have been practical. [00:09:55] Speaker 00: It wasn't practical to address the approach that Medicare was using, but that they were obligated to adopt a Medicare principle, which was that hospitals and individual doctors should not be treated the same way. [00:10:13] Speaker 04: That is exactly correct, Your Honor. [00:10:16] Speaker 02: We don't have to talk about deference or discretion. [00:10:20] Speaker 02: It's error as a matter of law when they adopted a private rule as opposed to a hospital rule. [00:10:27] Speaker 04: I think we can still talk about deference and whether you give that deference or not. [00:10:33] Speaker 04: It's such a departure from every other... But this makes me uneasy because if we're talking about deference, [00:10:45] Speaker 02: And even if you suggest that the statute says hospitals should be treated differently, if on the record, they say we've looked at all the rules possible and the only one we can use now until we can transition to this other system is the rule we adopted. [00:11:00] Speaker 02: Even if it's not a perfect fit, if deference is in play, why don't we give them deference? [00:11:05] Speaker 04: Because first of all, that is not what they said. [00:11:08] Speaker 04: When they implemented this rule, they said, well, [00:11:12] Speaker 04: We can't implement OPPS right now. [00:11:14] Speaker 04: So we're going to implement this rule. [00:11:16] Speaker 04: They never said that they looked at the universe of rules, of hospital-based rules, and that this was the only one. [00:11:23] Speaker 04: Nor could they say that, because this isn't a hospital-based rule. [00:11:27] Speaker 04: So what they didn't do was they didn't look at other practicable methodologies. [00:11:33] Speaker 04: And we know that pre-OPPS methodologies for outpatient services were practicable. [00:11:41] Speaker 04: And we know that because they turned around and used them to reimburse for the radiology shortfall. [00:11:49] Speaker 04: So there was no reason why they couldn't have gone to that blended rate in the first place. [00:11:56] Speaker 04: So if we look at what actually happened in the discretionary payment process, that is the best evidence of what was practicable. [00:12:05] Speaker 04: They turned around and said, oh, [00:12:09] Speaker 04: CMAC, we did a whole study to compare not how CMAC paid versus how OPPS paid, which, by the way, they could have done because it was 2010 and they were using OPPS. [00:12:22] Speaker 04: So they could easily have looked at CMAC versus OPPS, but they didn't. [00:12:27] Speaker 04: They looked at CMAC compared to pre-OPPS rules, which they describe as rules providing fair payment for federal health care. [00:12:37] Speaker 04: which CMAC, quote, was intended to emulate. [00:12:42] Speaker 02: I think I understand your argument. [00:12:46] Speaker 02: I don't mean to interrupt you, but before you're into your rebuttal time, I want to ask you about the release issue, because it seems to me that there are two ways of looking at this, this release issue. [00:12:58] Speaker 02: One favors you and one favors the government. [00:13:01] Speaker 02: I want to get your reaction. [00:13:06] Speaker 02: You look at this whole series of events as the government recognizing that they've underpaid. [00:13:11] Speaker 02: Here, we're going to set up this essentially claim fraud resolution process. [00:13:16] Speaker 02: At the end of it, we'll give you a number. [00:13:17] Speaker 02: If you agree with that number, accept it, sign a release, we're done. [00:13:23] Speaker 02: That seems to me to be in favor of a pretty broad release. [00:13:28] Speaker 02: We're talking about income now, obviously, that they accepted that number, they're out. [00:13:32] Speaker 02: The other way of looking at it, which I think is your way of looking at it, [00:13:36] Speaker 02: This was a settlement of statutory claims, essentially. [00:13:41] Speaker 02: And then the settlement was not just, we'll give you a number, you accept it. [00:13:45] Speaker 02: It was, the settlement gives us these various steps. [00:13:49] Speaker 02: And upon completion of every single one of those steps, the release will become effective. [00:13:54] Speaker 02: And since the government didn't complete some of those steps, they breached those, and the release is not effective. [00:14:01] Speaker 02: Do I have that right? [00:14:05] Speaker 02: the government can answer the other side of the question, but why isn't the way of looking at this as at the end of the day, you dig in a number, and with full knowledge that this is the number and there's a release out there, you sign it, why isn't that a good way of looking at the release would entitle the government to prevail on that? [00:14:26] Speaker 04: That way of looking at it has a lot of surface appeal. [00:14:30] Speaker 04: And I agree with you. [00:14:31] Speaker 04: It's a simple way of saying, you had a number, you agreed to the number, you signed the release, it's over. [00:14:37] Speaker 04: But the contract documents themselves said, we're going to give you a number calculated in this manner. [00:14:47] Speaker 04: And then they didn't calculate in that manner. [00:14:50] Speaker 04: And we didn't know that. [00:14:52] Speaker 04: So the release itself actually doesn't have a number in it. [00:14:57] Speaker 01: On the contrary... Yeah, but the release does call out any claims known or unknown. [00:15:02] Speaker 01: So why wouldn't that cover? [00:15:04] Speaker 01: You didn't know that the government really didn't follow accurately what they said they were going to do, but you've released them from any unknown, and you found that out later. [00:15:15] Speaker 01: But that's why we have in the release unknown claims that they released wrong. [00:15:20] Speaker 04: What I would say, Your Honor, is there was a prior material breach. [00:15:24] Speaker 04: And the way this is being, the way this was construed by the Court of Federal Claims, she said, you've alleged a breach by the government, but I'm sorry, you've released that claim. [00:15:36] Speaker 00: Well, now the contract, which is the release... You can't release her to release a claim based on a breach of the release. [00:15:43] Speaker 04: Thank you, Your Honor. [00:15:44] Speaker 04: That was my argument, which is that [00:15:46] Speaker 04: There's been a prior material breach and so now the breached contract is being enforced only against the non-breaching party, which to me turns contract law on its head. [00:15:58] Speaker 00: Before you sit down, I have one other question. [00:16:01] Speaker 00: There's the allegation here that the government didn't properly calculate this. [00:16:08] Speaker 00: Is it not the case that the documentation that showed the improper calculation by the government, in your view, [00:16:15] Speaker 00: were documents that were in your client's possession. [00:16:20] Speaker 04: Do you mean the claims, the claim data itself, the raw claim data itself? [00:16:24] Speaker 00: Well, I'm talking about the radiology claim, and I'm saying you say they didn't calculate the amounts owed properly. [00:16:30] Speaker 00: But the documentation that the government was relying on in making those calculations was your documentation, right? [00:16:38] Speaker 04: The problem is they didn't rely on our documentation, no. [00:16:41] Speaker 04: They specifically said, don't provide us with the claims data. [00:16:44] Speaker 04: We have it. [00:16:45] Speaker 00: Yeah, but it was data that you provided to them, right? [00:16:49] Speaker 04: Over the years, we submitted claims for reimbursement. [00:16:53] Speaker 04: And there was an agreement that we're going to include subset A and we're going to exclude subset B. And what they did was they systematically excluded certain claims that were in subset A. [00:17:08] Speaker 00: If you thought, they gave you a spreadsheet for Ingham, if you had the documentation that would have allowed you to check the accuracy of that calculation, correct? [00:17:22] Speaker 04: That is not in the record. [00:17:24] Speaker 04: For purposes of this argument, I will say, I will agree that we had that information. [00:17:29] Speaker 04: It's eight years old by the time this is happening. [00:17:32] Speaker 04: So I'm going to agree for purposes of the argument that we have it. [00:17:36] Speaker 04: And we can go from there. [00:17:38] Speaker 01: OK, all right. [00:17:40] Speaker 04: So if we had it, my point is the fact that we had it didn't require us to do it. [00:17:47] Speaker 04: The government said, we're going to do this. [00:17:50] Speaker 04: And we had a right to rely on that representation that came on DOD letterhead that said, don't give us data. [00:17:57] Speaker 04: We have it, and we're going to use it in this manner. [00:18:01] Speaker 01: OK, we'll restart for minutes. [00:18:04] Speaker 01: Thank you. [00:18:08] Speaker 03: May it please the court. [00:18:32] Speaker 00: This case arises out of the government's discretionary... It just seems to me this release is extremely badly drafted, which is why I suppose we're here today. [00:18:41] Speaker 00: And normally in a release you say, okay, we're giving you so much money and here's the number and you release your claims. [00:18:48] Speaker 00: For some reason, which escapes me, the release was not drafted that way. [00:18:53] Speaker 00: Instead it said, [00:18:55] Speaker 00: and you'll release your claims in exchange for an agreement that we will compute the amount according to this schedule and we'll give you the spreadsheet and we'll give you the number. [00:19:10] Speaker 00: Why should we interpret that as being a release that precludes them from questioning the accuracy [00:19:22] Speaker 03: Well, to answer the question on the last part of what you said, the steps, step number eight and the nine-step process not only called for but actually required the hospitals to do just that. [00:19:33] Speaker 03: If they thought there were errors in the calculation at all or had any anticipation of that, they were entitled to. [00:19:39] Speaker 03: In fact, the government encouraged them to ask questions about the calculations. [00:19:44] Speaker 03: They were provided all the calculations on the worksheet that was given to them. [00:19:48] Speaker 00: I understand. [00:19:49] Speaker 00: And they could have checked it. [00:19:51] Speaker 00: But I find it extremely strange that the release didn't say, by taking this amount of money, you release the claims. [00:20:00] Speaker 00: I mean, that's just a very, very strange release. [00:20:03] Speaker 03: Well, they knew the amount of money that they were going to get prior to executing the release. [00:20:07] Speaker 00: But most releases say, here's in exchange for $2 million, we release our claims. [00:20:13] Speaker 00: Why isn't the release drafted that way? [00:20:16] Speaker 03: I can't answer your question directly, Ryan, in terms of the way that this particular release was drafted. [00:20:20] Speaker 03: But in terms of the information the hospitals had, the hospitals knew prior to executing the release the amount of money, if any, that they would receive in this discretionary payment process. [00:20:30] Speaker 02: How does that matter if what they were entitled to was not just a specific amount of money, but was a number of different steps? [00:20:40] Speaker 02: And if the government didn't give all those steps in exchange, then the government breached the release agreement. [00:20:48] Speaker 03: The government didn't breach the release agreement, Your Honor, and the government did follow all the steps in the motion process. [00:20:52] Speaker 02: Well, that's a merits issue, though. [00:20:54] Speaker 02: And the Court of Federal Claims refused to get there because she found the release bar those claims. [00:20:58] Speaker 02: So I don't think that's a very useful answer. [00:21:01] Speaker 02: Let me give you a hypothetical, because I find these release language here a little bit confusing. [00:21:07] Speaker 02: But let's say we have an employment case where somebody is removed and files suit. [00:21:12] Speaker 02: And rather than litigating suit, [00:21:14] Speaker 02: the agency and the employee agree to a three-part relief. [00:21:21] Speaker 02: The employee gets reinstated, all the adverse references get removed from their files, and they get a sum of money in exchange for all of this. [00:21:29] Speaker 02: And they sign that, they get the money, they cash the check, they later find out, and they get reinstated, but they later find out that the agency refused to remove the adverse [00:21:43] Speaker 02: information in the file. [00:21:45] Speaker 02: Isn't that a breach of that settlement agreement? [00:21:47] Speaker 02: And doesn't that preclude the agency from relying on the release to bar the initial challenge to that address action? [00:21:56] Speaker 03: In that instance, perhaps that might be true, but not in this instance. [00:21:59] Speaker 02: But why is it different here? [00:22:00] Speaker 02: Because it's the same thing. [00:22:02] Speaker 02: This was not a simple bargain for pay a tax amount of money and we'll release you from claims. [00:22:07] Speaker 02: It was a bargain for performance of [00:22:10] Speaker 02: all these different steps, which included doing certain things under certain methodologies. [00:22:15] Speaker 02: And since they at least have made an allegation, which we have to accept is true for a motion to dismiss, that you didn't do that, then there is a claim that you have breached the agreement, and they're excused from being bound by the rules? [00:22:29] Speaker 03: If, Your Honor, I would explain it this way. [00:22:32] Speaker 03: If I understand this scenario you set up correctly, Your Honor, it sounds like there were issues in the employment, and the person [00:22:39] Speaker 03: uh... instead of litigating signed a settlement agreement that said they would do x, y, and z and be reassessed later something to that effect. [00:22:46] Speaker 02: Well that wasn't part of my hypothetical, they just got their job back and they got money involved with Bob. [00:22:50] Speaker 02: It doesn't really matter. [00:22:51] Speaker 03: Okay, no, but it's different. [00:22:53] Speaker 00: What Judge Hughes is asking you, the Court of Federal Plaint said [00:22:56] Speaker 00: that claims for breach of the release were surrendered by the release. [00:23:00] Speaker 00: That can't be right. [00:23:01] Speaker 00: That's got to be wrong. [00:23:03] Speaker 00: If there's a release that imposes an obligation, as in Judge Hughes' hypothetical, to do something and the government doesn't do it, it's liable. [00:23:15] Speaker 00: It can't say, oh, well, [00:23:17] Speaker 00: you know any claims based on a breach of the release were released by the release. [00:23:21] Speaker 03: It makes no sense, right? [00:23:24] Speaker 00: It makes no sense, right? [00:23:27] Speaker 02: The release is releasing their statutory claims. [00:23:31] Speaker 02: It's not releasing any claims for a breach of the release agreement itself. [00:23:37] Speaker 03: The release is, well, in order to say that there is a breach of the release, you have to show something like [00:23:43] Speaker 03: fraud or duress, which they did not allege, or you'd have to show that there's a talking stake. [00:23:47] Speaker 02: So you're talking about the merits again. [00:23:48] Speaker 02: We're not talking about the merits. [00:23:50] Speaker 02: I think that you didn't argue that they failed to state a claim. [00:23:54] Speaker 02: At least the Court of Federal Claims did not find that they failed to state a claim for breach of the release agreement. [00:23:59] Speaker 02: She found the opposite. [00:24:01] Speaker 02: But then she went on and inexplicably found that that's still entitled you to enforce the release, even when you breached the release agreement. [00:24:09] Speaker 03: Going back to the scenario you brought up, Your Honor, this is a lot like the Ling case, which the plaintiffs cite, but there's a difference between a release and a settlement agreement, because once you sign a release, the way that a release works is that's it, you're done, unless a certain condition needs to happen. [00:24:25] Speaker 00: It can't surrender claims for a breach of the release agreement. [00:24:30] Speaker 00: That's not the purpose of the release. [00:24:33] Speaker 00: But in this instance, once it releases... It may not... Your argument is there's no breach. [00:24:36] Speaker 00: We understand that. [00:24:38] Speaker 00: But if there was a breach of the release, suppose you say, in exchange for this release, we'll pay you $100,000, and you don't pay the $100,000, you can't very well say, oh, well, you released the claim with respect to the $100,000, right? [00:24:58] Speaker 00: Take my hypothetical. [00:24:59] Speaker 00: We agreed to pay you $100,000 [00:25:02] Speaker 00: in exchange for the release of these claims. [00:25:04] Speaker 00: And the government doesn't pay the $100,000. [00:25:06] Speaker 00: You can sue for breach of the release agreement, right? [00:25:09] Speaker 03: That would be true, Your Honor. [00:25:10] Speaker 03: But in this instance, it's very different. [00:25:12] Speaker 03: Because prior to signing the lease, a hospital's hospital in-room knew the amount of money it would receive. [00:25:17] Speaker 02: But they never actually didn't receive it. [00:25:19] Speaker 02: The problem is the release wasn't conditioned on a specific amount of money. [00:25:24] Speaker 02: The release was conditioned on the government doing a variety of things. [00:25:29] Speaker 02: And they were entitled to fulfillment of all those things, not just the payment of money, because of the way you worded the release. [00:25:36] Speaker 03: The Court of Federal Claims understood that and mentioned those kinds of things in its decision. [00:25:41] Speaker 03: But the Court of Federal Claims found, correctly, we believe, that the release on its face, you can't eviscerate the language of the release itself. [00:25:48] Speaker 03: It was unambiguous, and a release morally known. [00:25:50] Speaker 02: You can't breach the release. [00:25:51] Speaker 02: There was a prior breach by the government. [00:25:54] Speaker 02: How can a release excuse a breach by the government of the agreement itself? [00:26:00] Speaker 03: If the plaintiffs had alleged a mutual mistake of fact, that's a possibility. [00:26:03] Speaker 03: Or if the plaintiffs had alleged that there was duress or fraud, but they didn't allege in this instance. [00:26:07] Speaker 02: They allege breach. [00:26:08] Speaker 02: And the Court of Federal Claims found that that was a plausible claim. [00:26:12] Speaker 02: I'm tired of discussing whether there was a breach or not. [00:26:17] Speaker 02: Assume for purposes of all my questions that you breached two or three provisions of this agreement about how to calculate these damages. [00:26:27] Speaker 02: I know you don't think so, but assume you did. [00:26:29] Speaker 02: How can you possibly enforce [00:26:32] Speaker 02: a release when they were entitled to proper performance under those provisions. [00:26:36] Speaker 03: Because the release, with its unambiguous language, very clearly stated that the hospitals, in executing the release, which they did, would be required to extinguish all claims following, all of the claims prior, all of the things that happened prior to that, that would be extinguished upon executing the release and the condition of the government. [00:26:53] Speaker 02: If that's your answer, then your answer to Judge Dyke's hypothetical about the $100,000 should be the same. [00:26:59] Speaker 02: Once they executed the release, they extinguished all clients, including claims for breach of that. [00:27:05] Speaker 02: And so if they didn't get the $100,000, they'd breach it. [00:27:08] Speaker 02: That's nonsensical. [00:27:09] Speaker 03: But that's not the same, Your Honor. [00:27:10] Speaker 03: That's not the same. [00:27:11] Speaker 02: It is, though. [00:27:12] Speaker 02: That's the problem. [00:27:13] Speaker 02: You're trying to say that it's different because there's a firm dollar amount there that didn't get paid. [00:27:19] Speaker 02: But you didn't structure this agreement that way. [00:27:23] Speaker 02: You structured it in, not only are you entitled to a dollar amount, you're entitled to specific performance of these three or four obligations. [00:27:31] Speaker 02: And they alleged, and the court found that they at least made a plausible claim, that you didn't perform on some of those things. [00:27:39] Speaker 02: It's exactly equivalent to not paying a certain amount of money. [00:27:45] Speaker 03: I don't quite see it the same way, Your Honor, as presenting, but I understand your point, Your Honor. [00:27:48] Speaker 03: Our argument remains that once they executed the release, other than getting the check, which they knew they were going to get based upon the worksheet, which they knew prior to the release, they did relinquish all their rights for any of the other claims. [00:28:04] Speaker 03: Because of the nature of the release being so over, being broad. [00:28:08] Speaker 02: Can we move on to the statutory claims? [00:28:11] Speaker 03: Yes, Your Honor. [00:28:11] Speaker 02: It seems to me that, in fact, I'm a little confused, but it seems to me that the government [00:28:17] Speaker 02: by agreeing that at least some of these calculations were improper has provided enough evidence to get passed a motion to dismiss on their part that you were not following the statute and making these payments as practical as Medicare because the statute required you to pay hospital rates and not individual rates. [00:28:38] Speaker 03: The statute itself does not require the government to pay hospital rates, Your Honor. [00:28:42] Speaker 03: And in fact, the statute stated that the government was required to implement the OPPS, the Outpatient Prospective Payment System. [00:28:48] Speaker 03: That was all that the statute required, and that was what was done by Medicare. [00:28:54] Speaker 03: It didn't require the government to implement any particular pre-OPPS methodology, and that's what the plaintiffs wanted. [00:29:00] Speaker 03: This whole thing, Your Honor, is about overhead costs, because the government was moving in the direction of not paying all of the hospital overhead costs, and that's [00:29:10] Speaker 03: That's the issue. [00:29:11] Speaker 03: So the government did not implement a Medicare blended rate methodology in the interim, final, and final rules. [00:29:17] Speaker 03: What they said is they were going to pay for the services. [00:29:19] Speaker 03: They were not paying for the location, the site of the services. [00:29:22] Speaker 03: That was the rationale and the basis upon which they implemented the CMAC. [00:29:28] Speaker 02: But I get that. [00:29:29] Speaker 02: But then they seem to say that, oh, well, maybe that's actually wrong. [00:29:33] Speaker 02: And that's why we're going to give you additional amounts for radiology. [00:29:37] Speaker 03: Well, Your Honor, [00:29:38] Speaker 03: They weren't saying it was wrong. [00:29:40] Speaker 03: Plaintiffs would couch it that way and have people believe that. [00:29:42] Speaker 02: But they understood that the House... So again, we're on a motion to dismiss. [00:29:45] Speaker 02: So we have to take their claims, you know, as the best side optional. [00:29:50] Speaker 03: I understand, Your Honor. [00:29:52] Speaker 03: I understand. [00:29:52] Speaker 02: So if they have a facial allegation that the government has conceded they weren't paying properly, maybe you win on the merits at the end of the day, but how is that proper under a motion to dismiss? [00:30:02] Speaker 03: I understand your point, Your Honor. [00:30:03] Speaker 03: Let's assume for the purposes of this argument that they are correct in that regard. [00:30:08] Speaker 03: The government used a blended rate in the interim and final rules because they wanted to provide additional overhead costs that the hospitals alleged they had not received in the past. [00:30:18] Speaker 03: That was the reason for that. [00:30:19] Speaker 03: But that doesn't necessarily mean that in doing that, the hospitals believe that that was the proper rate that they should have used for the interim, final, and final rules. [00:30:28] Speaker 03: It just means it's what they're using this instance to resolve the issues. [00:30:31] Speaker 03: They wanted to go forward when the off-system was implemented with a clean slate so that [00:30:36] Speaker 03: The hospitals were challenging them. [00:30:38] Speaker 03: And the challenging is this overhead raid for years in other courts besides here. [00:30:42] Speaker 03: Not to their satisfaction, they keep challenging it. [00:30:45] Speaker 03: And the government wanted to be in the off system with a clean slate. [00:30:48] Speaker 03: So we start all over again. [00:30:49] Speaker 03: There's no challenge to that. [00:30:50] Speaker 03: And they wanted to, because they valued their relationship with the hospitals, they wanted to come up with something they could give them a little bit more money. [00:30:58] Speaker 03: They weren't offering them any more money for all of the outpatient services, only for one, radiology. [00:31:03] Speaker 03: That's it. [00:31:04] Speaker 03: Not for every one of them. [00:31:05] Speaker 03: just for one particular type of service that was provided. [00:31:08] Speaker 00: Can I ask you a question about the statute? [00:31:10] Speaker 03: Yes. [00:31:11] Speaker 00: The statute was amended, the statute that it was enacted in 2001, is that correct? [00:31:17] Speaker 03: 2000-2001, yes. [00:31:18] Speaker 00: But at the time of the enactment of the statute, OPS was not the exclusive Medicare approach. [00:31:26] Speaker 00: In fact, they were transitioning from the old approach to the new approach. [00:31:30] Speaker 00: So when the statute refers to the Medicare approach, [00:31:34] Speaker 00: Couldn't it be construed as referring not only to ops, but to the pre-existing approach as well, since that was still in effect? [00:31:43] Speaker 03: Well, it could, Your Honor, but the CMAC actually uses elements of ops. [00:31:48] Speaker 03: The difference between the CMAC and the blended rate is in the overhead charges. [00:31:52] Speaker 03: But what the government wanted to pay when they implemented the interim and final rules, excuse me, Your Honor, was the services provided. [00:31:59] Speaker 03: Doctors provide services in the hospitals. [00:32:01] Speaker 03: Doctors provide services [00:32:03] Speaker 03: in a clinic and other sites. [00:32:05] Speaker 03: So they wanted to pay for the services. [00:32:08] Speaker 03: They were not interested. [00:32:08] Speaker 03: They were interested in reducing the amount they get paid for this location. [00:32:13] Speaker 03: And the CNAC, they used the technical component of the CNAC charge, which is actually Medicare elements in there. [00:32:19] Speaker 03: They're just not the Medicare elements the plaintiffs wanted, Your Honor. [00:32:27] Speaker 02: Can I just follow up on a couple things? [00:32:30] Speaker 02: This case is very complicated in terms of what we do, and there's a lot of moving pieces, but let's assume we disagree with you on the release and that they've properly stated a breach, but that we agree with you on the statutory claims so that all that's issued is the breach of the release agreement. [00:32:53] Speaker 02: Their damages are going to be [00:32:56] Speaker 02: What? [00:32:57] Speaker 02: They get to a recalculation under the proper methodology in the settlement agreement. [00:33:02] Speaker 02: They don't get to go back and argue about statutory rights. [00:33:06] Speaker 03: They wouldn't. [00:33:07] Speaker 03: Well, no, they wouldn't. [00:33:08] Speaker 02: If we disagree with them on statutory rights. [00:33:10] Speaker 02: Now, here's the, let me twist it a little bit. [00:33:13] Speaker 02: Let's assume we actually agree with them on statutory rights, too. [00:33:17] Speaker 02: And I'm talking about Ingham now, not the non-Relese people. [00:33:22] Speaker 02: If we agree with them on both issues, does the fact that you breached the release agreement now mean that their damages could include the statutory rights as well to the non-radiology? [00:33:38] Speaker 03: I'm a little confused about what you mean by statutory rights, Your Honor. [00:33:40] Speaker 03: I don't understand what you mean. [00:33:42] Speaker 03: You're saying that if you agree that... The non-radiology stuff. [00:33:45] Speaker 03: Oh, the other outpatient services. [00:33:48] Speaker 02: So let me just be clear. [00:33:50] Speaker 02: What I'm saying is, we're going to find you breach a release agreement, and therefore the release is not enforceable against them. [00:33:57] Speaker 02: Can Ingram only sue for breach of that agreement, or does that mean since there's no release enforceable against them for anything that they can now sue for the statutory rights, too? [00:34:09] Speaker 03: Well, anybody could. [00:34:10] Speaker 03: Let's see. [00:34:11] Speaker 03: If you're talking about the statutory rights and the amount of payment, if you say that. [00:34:15] Speaker 02: It seems to me that they can. [00:34:17] Speaker 02: But I just want to make sure that you're not saying that the release is still effective as to the non-radiology claims, even because there is only a partial breach or something like that. [00:34:28] Speaker 02: This is very complicated for me. [00:34:30] Speaker 03: I'm not sure I understand your point, Your Honor. [00:34:31] Speaker 03: I'm sorry. [00:34:34] Speaker 00: I think the point has to do with whether they've repudiated the agreement and can treat it as though it doesn't exist, which I think would be an option. [00:34:42] Speaker 00: But as I understand it, that's not an option that they've exercised. [00:34:48] Speaker 00: In other words, they're attempting to sue under the release and to keep the release still in effect, but say that you breached the release. [00:34:56] Speaker 03: That's their argument, yes, Your Honor. [00:34:58] Speaker 03: So in terms of the statutory effect, [00:35:01] Speaker 03: then it would seem like the hospitals that did not sign the release would be the hospitals that would come under the statutory effect. [00:35:09] Speaker 03: That's how I would interpret it. [00:35:10] Speaker 02: But the ones that signed it are still bound by the agreement and only get to seek breached damages for the agreement, can't repudiate it entirely, and seek statutory rights. [00:35:22] Speaker 03: I don't see how they're honored. [00:35:26] Speaker 02: Well, I think [00:35:27] Speaker 02: The way I would assume they're going to argue it is that once you breach the agreement, the release of claims is no longer enforceable for any reason whatsoever. [00:35:36] Speaker 02: But they haven't argued it that way. [00:35:40] Speaker 02: And maybe it's something the Court of Federal Claims should resolve because there's all these notions of partial breach or complete breach and things like that. [00:35:47] Speaker 02: I was just curious if you had an answer, but it clearly hasn't been briefed that way. [00:35:52] Speaker 03: It hasn't been briefed that way, Your Honor. [00:35:54] Speaker 03: For the reason set forth in our brief and discussed here today, Your Honors, we respectfully request that you affirm the decision of the Court of Federal Claims. [00:36:00] Speaker 03: Thank you. [00:36:04] Speaker ?: Thank you. [00:36:13] Speaker 04: I'd just like to. [00:36:14] Speaker 00: You haven't treated the government's breach as a total breach, which allows you to repudiate the agreement, right? [00:36:23] Speaker 04: brief that as has been pointed out. [00:36:26] Speaker 00: We haven't ever contended it. [00:36:28] Speaker 00: In fact, you're suing on the release as though it still existed. [00:36:32] Speaker 04: That's correct. [00:36:33] Speaker 04: And I think the point that was made, which is that I think that would be a matter for the Court of Federal Claims to determine the scope of what happens once we go back. [00:36:43] Speaker 00: I don't understand how you can repudiate an agreement that you're trying to enforce. [00:36:47] Speaker 00: I mean, I think you've made an election to enforce the agreement, and that's binding on you. [00:36:51] Speaker 00: I don't see how you can argue otherwise. [00:36:54] Speaker 00: In other words, to pursue your statutory claims with respect to the non-radiology, I think you'd have to win on your mutual mistake argument. [00:37:02] Speaker 04: I think that's correct. [00:37:05] Speaker 04: I did want to address... Council said... Can I just be clear? [00:37:11] Speaker 02: Yes. [00:37:11] Speaker 02: I think this is important because I know in this case we're only talking about Ingham as the only case that signed the release, but I understand this is a putative class action. [00:37:19] Speaker 02: Correct. [00:37:20] Speaker 02: there are likely a lot of other hospitals that did sign the release. [00:37:24] Speaker 02: So the amount of damages that differ between the breach of the release agreement versus reverting back to full statutory rights could be significant. [00:37:36] Speaker 02: And so if you haven't kind of preserved that argument as to partial or total breach, I think it's important. [00:37:43] Speaker 02: Maybe that we shouldn't decide that. [00:37:46] Speaker 02: It's not an insignificant question. [00:37:48] Speaker 04: It is not an insignificant question. [00:37:50] Speaker 04: And I agree with you, Judge Hughes, that if the contract has been breached, it's been breached. [00:38:00] Speaker 04: And one remedy would be to void the contract. [00:38:05] Speaker 02: But I didn't see that. [00:38:07] Speaker 02: It seems like you're seeking breached damages. [00:38:09] Speaker 02: Correct. [00:38:11] Speaker 04: I would like to just very quickly say [00:38:13] Speaker 04: A point was raised about radiology. [00:38:17] Speaker 04: And if no other claim in this case survives, I firmly believe that a case for outpatient radiology under the statute for every hospital that did not sign the release has to exist because DOD admitted that at least with respect to radiology, that their chosen rule, CMAP, [00:38:40] Speaker 04: did not emulate Medicare, quote, as well as it could have. [00:38:46] Speaker 04: That is an admission. [00:38:47] Speaker 04: And their entire process, pursuant to which they distributed $98 million, admits that the regulation failed to comply with the statute. [00:38:57] Speaker 04: So for all those hospitals that didn't sign the release, there has to be a radiology claim under the money mandate. [00:39:05] Speaker 01: Thank you. [00:39:05] Speaker 01: We thank both sides for cases submitted. [00:39:07] Speaker 01: That concludes our proceedings. [00:39:09] Speaker 02: All rise. [00:39:18] Speaker 00: And I'll record this adjourn until tomorrow morning at 10 a.m.