A New York City-based orthopedic specialty hospital, the Hospital for Special Surgery, has lost a lawsuit against the U.S. Department of Health and Human Services alleging that it should have received an additional $51.2 million in funding from the COVID-19-related CARES Act.
Under the CARES Act, Congress approved $178 billion in funds to support healthcare institutions during the COVID-19 pandemic.
During COVID-19, HSS had to shut down elective surgeries, which accounted for 92 percent of its revenue, according to court documents. The hospital suffered $183 million in lost revenue in the first half of 2020.
During two rounds of CARES funding, HSS received $30.7 million in government funding, as well as $79.2 million in a third funding round. In total, it received around 88 percent of its adjusted revenue loss.
On Nov. 9, 2021, HSS requested a reconsideration of its award, which was denied by the state. In September 2022, it filed a lawsuit challenging the agency for not granting an additional $51.2 million in funding.
According to court documents, the hospital alleges that "the agency's actions related to this distribution of payments were arbitrary and capricious in violation of the Administrative Procedure Act."
The U.S. District Court for the District of Columbia ruled that HHS' decision on how to distribute CARES Act funds is non-reviewable. HHS was given the discretion to parse out funds as it saw fit. Since it was up to agency discretion, it was immune from judicial review under the Administrative Procedure Act, the court ruled.
Becker's reached out to the Hospital for Special Surgery for comment on Aug. 28.