Catholic Health Initiatives Iowa Corp. v. Sebelius
405 U.S. App. D.C. 264
| D.C. Cir. | 2013Background
- Medicare Part A and Part E provide inpatient hospital coverage and prospective payment adjustments including DSH payments based on a hospital's DPP, which sums Medicare and Medicaid fractions.
- Dispute centers on whether dual-eligible exhausted days count in the Medicaid fraction when computing DPP for 1997 cost reports.
- Edgewater decision (2000) held such exhausted days should not be included in the Medicaid fraction, later reiterated by federal rulemaking in 2004.
- Intermediary initially included exhausted dual-eligible days, then excluded them after Edgewater; Catholic Health challenged the intermediary’s decision and later the Board sided with inclusion, while the Secretary reversed.
- District court found the Secretary’s retroactive application of the 2004 rulemaking unlawful; the appeal argues the 2004 rule reiterates Edgewater and Chevron deference supports the interpretation.
- Court concludes Edgewater announced the policy before 2004, the 2004 rulemaking merely reiterated it, and the agency’s interpretation is permissible under Chevron; retroactivity concerns do not render the decision arbitrary and capricious.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ‘entitled to benefits’ in the Medicaid fraction is ambiguous. | Catholic Health argues it means right to payment when Medicare benefits exist. | Secretary argues entitlement is meeting statutory criteria, not payment status. | Ambiguity exists; Chevron supports agency interpretation. |
| Whether applying Edgewater interpretation to 1997 retroactively was lawful. | Prevailing policy relied on Edgewater and should not be retroactively applied. | Edgewater policy predated 2004 rulemaking and is a valid retroactive adjudication. | Retroactive application permissible because Edgewater predated and policy was reiterated by 2004 rulemaking. |
Key Cases Cited
- Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir. 2011) (Ambiguity in the phrase entitlement to benefits under Part A; Chevron analysis applied later)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (Defer to agency's reasonable interpretation of ambiguous statute)
- NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969) (Adjudications are inherently retroactive; rulemaking differs)
- SEC v. Chenery Corp., 332 U.S. 194 (1947) (Classic retroactivity/adjudication framework)
- Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988) (Retroactivity of agency action requires congressional authorization)
- Adena Reg’l Med. Ctr. v. Leavitt, 527 F.3d 176 (D.C. Cir. 2008) (DSH adjustment context; interpretation of Medicare/Medicaid fractions)
- Metro. Hosp. v. U.S. Dep’t of Health & Human Servs., 712 F.3d 248 (6th Cir. 2013) (Affirms Chevron deference in similar DSH/Medicare interpretation)