Commty Mntl Hlth Ctr, et al v. Social Sec Admin

* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
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United States Court of Appeals
Fifth Circuit
F I L E D
February 17, 2004
Charles R. Fulbruge III
Clerk
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 03-30294
__________________
COMMUNITY MENTAL HEALTH CENTER
OF ALEXANDRIA; COMMUNITY MENTAL
HEALTH CENTER OF MONROE; COMMUNITY
MENTAL HEALTH CENTER OF BATON ROUGE
Plaintiffs-Appellants,
versus
SOCIAL SECURITY ADMINISTRATION,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
(01-CV-1791-A)
_________________________
Before EMILIO M. GARZA, DeMOSS and CLEMENT, Circuit Judges.
PER CURIAM:*
Three Community Mental Health Centers (“CMHCs”) applied for participation in the
Medicare program in late 1995 and early 1996. On their application, the CMHCs requested that the
Center for Medicare and Medicaid Services (“CMS”) classify them as “provider-based” participants

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for reimbursement purposes. The CMS mistakenly classified the CMHCs as “free standing”
participants. The error was later corrected, but the CMS refused to apply the correction
retroactively.
The CMHCs appealed to the Department of Health and Human Services Departmental
Appeals Board (“DAB”). The DAB dismissed the appeal for lack of jurisdiction on the grounds that
the dispute did not involve an appealable “initial determination” pursuant to 42 C.F.R. § 498.3. The
DAB Appellate Division and the District Court for the Eastern District of Louisiana affirmed. The
CMHCs timely appealed to this Court.
The CMHCs first contend that the CMS’s mistaken classification of the CMHCs as “free
standing” Medicare participants was an appealable “initial determination.” The classification of the
CMHCs as “free standing” only affected the CMHCs’ eligibility for Medicare reimbursements. At
the time of the CMHCs’ claim, the Medicare regulations did not enumerate reimbursement
classification disputes as appealable “initial determinations.” The classification of the CMHCs as
“free standing” Medicare participants was thus not an appealable “initial determination.”
The CMHCs further assert that their procedural due process rights were violated because the
DAB dismissed the case without considering an outcome-determinative issue. The CMHCs argue
that the DAB should have considered whether the CMHCs’ application had been unilaterally altered
by the CMS. Because this issue was wholly irrelevant to the DAB’s jurisdictional analysis, the DAB
did not fail to consider an outcome-determinative issue.
The CMHCs finally argue that the DAB’s denial of jurisdiction was arbitrary and capricious
since the DAB had previously exerted jurisdiction over two reimbursement classification disputes.

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See Memorial Hosp. at Easton v. CMS, DAB CR 634, 1999 WL 1292903 (H.H.S. Dec. 16, 1999);
Johns Hopkins Health Sys. v. CMS, DAB CR 598, 1999 WL 596463 (H.H.S. June 7, 1999). In those
two cases, the DAB emphasized that parties on both sides had requested DAB review. In the matter
sub judice, however, the CMS did not seek DAB review. The DAB’s denial of jurisdiction over the
CMHCs’ dispute was not arbitrary and capricious because it did not contravene its earlier rulings.
For these reasons, the judgment of the district court is hereby AFFIRMED.

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