Borgess Medical Center v. Sebelius
966 F. Supp. 2d 1
D.D.C.2013Background
- Plaintiffs Borgess and Bronson challenge the Secretary's denial of reimbursements for offsite resident training costs (2000–2004) under the Medicare Act.
- The Nonhospital Site Statutes were amended to include nonhospital training time in GME/IME calculations, with an All or Substantially All Requirement and no explicit definition of the second requirement.
- Secretary's 1998 regulation defined All or Substantially All to include resident salaries/fringe benefits and part of teaching physicians' costs, plus a Written Agreement Requirement.
- Hospitals had Affiliation Agreements with KCMS to rotate residents through KCMS clinics; they claim they funded the program jointly with KCMS.
- NOS denied reimbursements; PRRB found compliance with All or Substantially All and Written Agreement, but CMS Administrator reversed.
- Court reviews under APA, applying Chevron and substantial evidence standards to determine reasonableness of agency interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether cost-splitting across hospitals satisfies All or Substantially All. | Borgess asserts cost-splitting satisfies the requirement. | Sebelius adopts Single Hospital Interpretation, disallowing shared costs. | Secretary's Single Hospital Interpretation upheld. |
| Whether the Affiliation Agreements satisfy the Written Agreement Requirement. | Affiliations adequately obligate hospitals to incur training costs. | Agreements fail to specify all or substantially all costs and supervisory compensation. | Written Agreement Requirement not satisfied; denial affirmed. |
| Whether the Secretary's interpretation of the statute/regulation is reasonable and entitled to deference. | Agency interpretation should permit cost-sharing where appropriate. | Deference to reasonable agency construction; deference applicable here. | Court defers; interpretation considered reasonable under Chevron and related standards. |
Key Cases Cited
- FCC v. National Citizens Comm. for Broad.,, 436 U.S. 775 (U.S. 1978) (court defers to agency interpretations in regulatory contexts)
- Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (U.S. 1994) (deference to agency interpretation of regulations when reasonable)
- Your Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449 (U.S. 1999) (statutory interpretation and deference in Medicare context)
- Consolo v. Fed. Mar. Comm'n, 383 U.S. 607 (U.S. 1966) (substantial evidence standard and review limitations)
- Overton Park v. Volpe, 401 U.S. 402 (U.S. 1971) (arbitrary and capricious review framework)
- Udall v. Tallman, 380 U.S. 1 (U.S. 1965) (deference principles in regulatory interpretation)