Ruling Allows HHS to Consider Whether FOIA Requires Access to Treasure Trove of Data Offering Unique Insights Into Medicare Program

The U.S. District Court for the Middle District of Florida has vacated an injunction that for over 30 years restricted the release of physician-identifying Medicare reimbursement data by the Department of Health and Human Services (HHS) and its Center for Medicare Services (CMS).  The ruling removes a long-standing barrier that the press and public faced with regard to access to Medicare data that facilitates key insights into a federal program that accounts for more than an estimated half-trillion dollars, representing nearly 15% of all federal spending.

The ruling in Florida Medical Association v. Department of Health, Education, & Welfare comes nearly two-and-a-half years after Dow Jones & Company, and then Real Time Medical Data moved to intervene in the decades-old case to seek vacatur of the injunction.  Fla. Med. Ass’n v. Dep’t of Health, Educ., & Welfare, 2013 WL 2382270, at *7 (M.D. Fla. May 31, 2013).  The court issued the injunction in 1979, through then-Senior District Judge Scott (now deceased), after HHS-predecessor the Department of Health, Education and Welfare (HEW) released a 1977 list of doctors and physician groups that received $100,000 or more in Medicare reimbursements, correlated by named service provider.  See Fla. Med. Ass’n v. Dep’t of Health, Educ., & Welfare, 479 F. Supp. 1291 (M.D. Fla. 1979).

Florida Medical Association (FMA), later joined by the American Medical Association (AMA), sued to enjoin similar future releases, under the federal Privacy, Trade Secrets, and Freedom of Information Acts, and various constitutional theories.  Judge Scott held that physicians’ privacy interests in the amount of Medicare reimbursements received sufficiently outweighed the public interest in the information, so that the Privacy Act barred disclosure, which could thus not be required by or allowed under the FOIA.  The court therefore granted the injunction, which remained in place and was followed by HHS and CMS ever since, including as recently as FOIA litigation in 2007-2009 in Consumers’ Checkbook Center for the Study of Services v. HHS, 554 F.3d 1046 (D.C. Cir. 2009).  However, in Consumers’ Checkbook, at least one judge suggested that, upon a sufficient showing of how, e.g., physician-identifying CMS data would serve the public interest in targeting Medicare fraud and waste, a release of records might be possible.

Dow Jones and Real Time Medical moved to intervene in the case over 30 years later, after the Eleventh Circuit Court of Appeals held the injunction could not be challenged collaterally, but rather could be lifted only by the court, and in proceedings in the case, from which it originally issued.  See Alley v. HHS, 590 F.3d 1195 (11th Cir. 2009).  The district court allowed FMA v. HEW to be reopened, and re-assigned it to Judge Howard, who granted intervention motions and allowed intervenors to seek vacation or modification of the 1979 injunction under Federal Rule of Civil Procedure 60(b).  See FMA v. HEW, 2011 WL 4459387 (M.D. Fla. Sept. 26, 2011).

In moving to vacate, Dow Jones explained how, in the decades since 1979, Medicare fraud mushroomed into what former Attorney General Janet Reno called the nation’s second leading crime problem, with HHS estimating 8.6% of all Medicare spending is illegitimate.  Dow Jones proffered declarations by its editors and investigative reporters detailing research and reporting behind the Wall Street Journal’s Secrets of the System news series, a 2011 Pulitzer Prize finalist that used limited CMS data to expose suspicious Medicare billing activity.  The Journal was able to purchase only 5% of the data, subject to restrictions, dictated by the 1979 injunction, that individual doctors could not be identified.  The Journal staff detailed in their declarations how these restrictions limited what they could uncover and what they could report.  Nonetheless, the series was able to bring to light the government’s often inadequate efforts to mine its data to prevent improper Medicare billing, and to identify regulatory loopholes and other economic incentives that encourage some doctors to disregard patients’ best interests in favor of unnecessary or high-cost procedures.  Dow Jones also offered the Declaration of Malcolm Sparrow, Professor of the Practice of Public Management at Harvard University’s John F. Kennedy School of Government.  Based on over a decade-and-a-half Medicare fraud study, Dr. Sparrow explained the value that the data in CMS’s files offered for providing a window into the efficacy of the Medicare program.

Following Dow Jones’s filing, HHS changed course and argued that the injunction should be lifted, to allow the agency to revisit the balance of privacy and public interests under current circumstances.  See generally FMA v. HEW, 2013 WL 2382270, at *6.  The court agreed.  Judge Howard granted the Rule 60(b) motions, holding vacatur was required because “it is beyond dispute” that, as precedent clarified after its issuance, the 1979 injunction provided relief not authorized by the Privacy Act, upon which Judge Scott relied.  Id. at *26.  Specifically, several years after the injunction issued, courts clarified that the Privacy Act allows injunctive relief in only two contexts, i.e., wrongful withholding of documents from a person to whom they pertain, and wrongful refusal to amend an individual’s record upon his/her request.  Id. at *19 (discussing Clarkson v. IRS, 678 F.2d 1368 (11th Cir. 1982), and Edison v. Dep’t of the Army, 672 F.2d 840 (11th Cir. 1982)).

The court also held that the 1979 injunction had not been grounded in the FOIA, and that neither the FOIA nor the Administrative Procedure Act (APA), which allow judicial relief from specific agency FOIA actions, authorize the kind of sweeping, forward-looking injunctive relief granted in FMA v. HEWId. at *24-25.  Rather, the court held, “while the APA authorizes a court to enjoin a specific final agency decision,” it “does not afford a vehicle for enjoining possible future agency actions.”  Id. at *25.  In this context, FOIA and/or APA review may control the release or withholding of only particular agency records.

The “broad, forward reaching” 1979 injunction, the court held, “which bars HHS from ever ‘disclosing any list of annual Medicare reimbursement amounts, for any years,’ goes far beyond the relief available under the APA.”  Id.  “Such far reaching relief was not authorized under the APA” in 1979, the court held, “nor is it appropriate now.”  Id.  Accordingly, as the analytical Privacy Act foundation on which the 1979 injunction rested had become bad law, its “continued enforcement, lacking in a legal basis, is no longer equitable.”  Id. at *26.

Lifting the 1979 injunction does not mean, however, that HHS and CMS will or must release immediately any physician-identifying Medicare reimbursement records.  Rather, the court held, vacatur simply leaves HHS free to determine whether factual circumstances and/or FOIA law or other legal standards and precedents have changed sufficiently since 1979 as to require releases of physician-identifying Medicare data.  The court instructed that Dow Jones, Real Time Medical, and/or others interested in the data “will have to submit a FOIA request for specified information.”

At that time, HHS can decide whether the balance of interests has sufficiently changed to require disclosure.  If HHS maintains its prior stance, the FOIA requestor can seek review in court to attempt to compel disclosure, and those with a privacy interest can intervene in favor of withholding, if desired.  Alternatively, if HHS believes changed circumstances warrant disclosure, it can order as much, and those with privacy interests can seek an injunction under the APA as to the information requested and designated for release.  Dow Jones showed, both in its series and in support of vacatur, the critical evidence of Medicare waste, fraud and abuse that access to CMS electronic data can help detect.  The advent of electronic billing, electronic data, and more sophisticated analytical tools have enhanced what the public can learn from the data.  At the same time, reimbursement is now based not on what individual physicians charge, but the rates set and published by HHS.  This evidence demonstrates that the balance of interests has changed significantly, not only since 1979, but even from the arguments advanced more recently in the Consumers’ Checkbook case. The AMA has until August 2, 2013, to appeal the vacatur decision.

Originally published in the June 2013 issue of the MLRC MediaLawLetter.