Irvine Medical Center v. Tommy G. Thompson, Secretary of the Department of Health & Human Services

275 F.3d 823 (9th Cir. 2002) IRVINE MEDICAL CENTER, PLAINTIFF-APPELLANT v. TOMMY G. THOMPSON, * SECRETARY OF THE DEPARTMENT OF HEALTH & HUMAN SERVICES, DEFENDANT-APPELLEE. ARIZONA REHABILITATION HOSPITAL, INC., (MEDICAL PROVIDER NO. 3-3026), DBA NOVACARE VALLEY OF THE SUN REHABILITATION HOSPITAL; ARIZONA REHABILITATION HOSPITAL, INC. (MEDICAL PROVIDER NO. 03-5212), DBA NOVACARE VALLEY OF THE SUN REHABILITATION HOSPITAL, PLAINTIFFS-APPELLANTS, AND NOVACARE MERIDIAN POINT REHABILITATION HOSPITAL, INC. (MEDICAL PROVIDER NO. 03-3025); TUCSON REGIONAL REHABILITATION HOSPITAL, INC. (MEDICAL PROVIDER NO. 03-3028); NOVACARE REHAB AGENCY OF GEORGIA, INC. (MEDICAL PROVIDER NO. 11-6533; NOVACARE REHAB AGENCY OF ILLINOIS, INC. (MEDICAL PROVIDER NO. 14-6518); NOVACARE TRI-STATE REGIONAL REHABILITATION HOSPITAL, INC. (MEDICAL PROVIDER NO. 15-3025); REHABILITATION CORPORATION OF VIRGINIA (MEDICAL PROVIDER NO. 49-3028)DBA NOVACARE REHABILITATION HOSPITAL OF VIRGINIA, PLAINTIFFS v. TOMMY G. THOMPSON, * SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT-APPELLEE Nos. 99-56319, 00-15757 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Argued and Submitted February 8, 2001…

Opinion by Judge CANBY; Dissent by Judge PREGERSON.

This is a consolidated appeal brought by Medicare service providers against the Secretary of the Department of Health and Human Services (“Secretar/’)- The plaintiffs contend that the Secretary acted unlawfully in repealing a regulation that had allowed providers to carry forward reasonable costs disallowed in a particular fiscal period to succeeding fiscal periods. In both actions, the district courts awarded summary judgment to the Secretary, on the ground that the repeal was based on a permissible interpretation of the underlying Medicare statute. We conclude that the repeal did not contravene a clearly expressed congressional mandate, was not based on an unreasonable interpretation of the Medicare statute, and was not an arbitrary or capricious agency action within the meaning of the Administrative Procedure Act, 5 U.S.C. § 706 (2)(A). We accordingly affirm the judgments of the district courts.

Statutory Background 1

The Medicare program, established by Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., provides payment for medical care for the aged and disabled. Eligible beneficiaries receive medical care…

dissenting:

I agree with the majority that, under step one of Chevron analysis, courts are required to consider “traditional tools of statutory interpretation.” Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. 2778 . Thus, the majority correctly considers the legislative history when determining if Congress has clearly spoken on the issue of whether a carry-forward provision is required under the Medicare statute. 42 U.S.C. § 1395 et seq. I disagree, however, with the majority’s and district court’s conclusion that the repeal did not violate Congress’ intent. I conclude that Congress expressed its clear *836 intent that the Medicare statute be implemented in a manner that avoids penalizing providers for short range discrepancies and does not create incentives for providers to set higher charges. The carry-forward provision satisfied these concerns and the regulation that repealed the carry-forward provision, without replacing it with another mechanism to respond adequately to Congress’ concerns, violates Congress’ clear intent, and thus is not entitled to deference. Accordingly, I respectfully dissent.

Step one of Chevron analysis begins with a consideration of the language of the…