917 F. Supp. 2d 688
S.D. Ohio2013Background
- Cross-motions for summary judgment filed by Atrium Medical Center et al. and Kathleen Sebelius.
- Dispute concerns Medicare Part A PPS wage-index calculations for inpatient hospital services.
- Key issue is whether paid hours recorded in payroll (short-term disability and Baylor Plan hours) should be included in the wage index.
- CMS Administrator reversed PRRB’s decision, ruling paid time off must be included in the wage index.
- Courts review agency action deferentially under APA; Chevron framework applies where statute is ambiguous.
- Court grants Secretary’s motion for summary judgment; hospitals’ motion denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether paid hours must be included in wage index under 1395ww(d)(3)(E). | Atrium argues paid hours (disability and Baylor) should be excluded. | Sebelius contends paid hours reflect wage costs and thus belong in the index. | Secretary’s interpretation sustained; paid hours included. |
| Consistency with Adventist GlenOaks and potential estoppel arguments. | Hospitals claim inconsistency with Adventist GlenOaks precludes inclusion. | Secretary’s positions align; no estoppel. | No estoppel; positions are consistent under the statutory framework. |
| Whether the agency decision is entenched by Chevron deference or Skidmore persuasion. | Court should re-evaluate the agency’s interpretation. | Agency’s interpretation is entitled to Chevron deference where statute is ambiguous. | Agency interpretation entitled to deference; not arbitrary or capricious. |
Key Cases Cited
- Adventist GlenOaks Hosp. v. Sebelius, 663 F.3d 939 (7th Cir. 2011) (disallowing paid lunch hours in wage index similar to paid time off)
- Battle Creek Health Sys. v. Leavitt, 498 F.3d 401 (6th Cir. 2007) (narrow APA review in Medicare reimbursement cases)
- Jewish Hosp., Inc. v. Sec’y of Health & Human Servs., 19 F.3d 270 (6th Cir. 1994) (statutory interpretation and deference standards)
- Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87 (U.S. 1995) (interpretive rules and agency interpretation weight)
- Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (S. Ct. 1984) (deference to agency interpretations unless contrary to clear intent)
- National Ass'n of Home Builders v. Defenders of Wildlife, 551 U.S. 644 (U.S. 2007) (arbitrary and capricious standard guidance)
- Marsh v. Oregon Natural Res. Council, 490 U.S. 360 (U.S. 1989) (arb and cap standard for agency decisions)
- Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (U.S. 1983) (arbitrary and capricious review)
- Alaska Dept. of Env’t Conservation v. EPA, 540 U.S. 461 (U.S. 2004) (agency decision review considerations)
- Clark Reg'l Med. Ctr. v. U.S. Dept. of Health & Human Servs., 314 F.3d 241 (6th Cir. 2002) (PRM interpretive guidance persuasive)