Adventist Glenoaks Hospital v. Sebelius
2011 U.S. App. LEXIS 24809
| 7th Cir. | 2011Background
- Medicare PPS uses wage index to adjust hospital payments; wage index based on MSAs and hospitals report all paid hours, including paid lunch, which lowers wage index.
- Hospitals in Chicago, Rhode Island, and rural Kentucky claim paid lunch hours distort relative wage levels and reduce reimbursements by about $20 million.
- Secretary includes all paid hours to maximize administrative simplicity and uniform application across all paid leave categories.
- District court granted summary judgment for Secretary; hospitals appeal, challenging conformity with 42 U.S.C. § 1395ww(d)(3)(E)(i).
- Seventh Circuit reviews for arbitrariness under APA; court upholds Secretary’s decision as rational and within statutory authority; AFFIRMED.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether paid lunch hours comply with the wage-index statute | Hospitals: inclusion violates §1395ww(d)(3)(E)(i). | Secretary: policy reflects relative wage levels and is administratively simple. | Yes, the decision is reasonable and within the statute. |
| Whether the Secretary's method is arbitrary or capricious | Policy distorts wage level and is not tied to actual hours worked. | Policy is a permissible bright-line rule ensuring uniform administration. | Not arbitrary or capricious; adequately explained and supported. |
| Whether alternatives (hours-worked) are preferable | An hours-worked approach would be more accurate. | Converting would raise administrative burdens and inconsistency. | Administrative practicality supports maintaining all-paid-hours approach. |
Key Cases Cited
- Mt. Sinai Hosp. Med. Ctr. v. Shalala, 196 F.3d 703 (7th Cir. 1999) (defer to agency interpretation of statutory framework)
- Bd. of Trs. of Knox Cnty. Hosp. v. Shalala, 965 F.2d 558 (7th Cir. 1992) (agency construction of wage-index statute favored)
- Sullivan v. Everhart, 494 U.S. 83 (1990) (Chevron deference and statutory interpretation principles referenced)
- Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (arbitrary-and-capricious review standard described)
- Anna Jaques Hosp. v. Sebelius, 583 F.3d 1 (D.C.Cir. 2009) (agency adequately explained wage-index decision)
- Sarasota Mem'l Hosp. v. Shalala, 60 F.3d 1507 (11th Cir. 1995) (fringe-benefit classification and wage calculations discussed)
- Centra Health, Inc. v. Shalala, 102 F. Supp. 2d 654 (W.D. Va. 2000) (addressed wage-index data exclusions; distinguishable)
- Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011) (commentary on congressional tacit endorsement of agency approach)