Forrest General Hospital v. Alex Azar, Secr, 926 F.3d 221

Two Mississippi hospitals challenged HHS’s exclusion of Hurricane Katrina Uncompensated Care Pool (UCCP) inpatient days from the Medicaid fraction numerator used to calculate Disproportionate Share Hospital (DSH) payments.
The Medicaid fraction numerator includes patient days for those eligible for Medicaid and—per the Deficit Reduction Act (2005)—may include days for patients “regarded as such” because they “receive benefits under a demonstration project” (§ 1115).
Mississippi obtained a § 1115 waiver for Katrina evacuees and a UCCP to reimburse uncompensated care; hospitals reported all waiver-related inpatient days (including UCCP days) on 2005–2006 cost reports.
The Medicare Administrative Contractor and HHS Administrator excluded UCCP days, analogizing them to charity/state-only assistance days that prior cases held not to qualify under the first phrase of the statute.
The Provider Reimbursement Review Board and then the district court sided with HHS; the hospitals appealed to the Fifth Circuit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether UCCP inpatient days must be included in the Medicaid-fraction numerator for DSH (i.e., do UCCP patients “receive benefits under a demonstration project” and thus are "regarded as" Medicaid-eligible?)	Hospitals: UCCP was part of the approved §1115 demonstration; patients received benefits under the demonstration, so their days must be included.	HHS: UCCP days are like state-only charity/uncompensated-care days; the approval letters and program mechanics show UCCP was separate and not a §1115 demonstration benefit for numerator purposes.	Included. Court held the statute and regulation unambiguously require inclusion of §1115 waiver/waiver-related (UCCP) days.
Whether Chevron/Auer deference applies to HHS’s contrary interpretation	Hospitals: statute and regulation are unambiguous; agency interpretations get no deference.	HHS: its interpretations of statute/regulation deserve deference under Chevron/Auer.	No deference. Court held both the statute and 42 C.F.R. §412.106(b)(4) are unambiguous; Chevron and Auer do not apply.

Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (establishes judicial deference to reasonable agency statutory interpretations when statute is ambiguous)
Auer v. Robbins, 519 U.S. 452 (1997) (agency deference to an agency’s interpretation of its own ambiguous regulation)
Marbury v. Madison, 5 U.S. 137 (1803) (judiciary’s duty to interpret the law)
HealthAlliance Hospitals, Inc. v. Azar, 346 F. Supp. 3d 43 (D.D.C. 2018) (persuasive district-court decision holding §1115 waiver days count in the DSH numerator)
Owensboro Health, Inc. v. U.S. Dep’t of Health & Human Servs., 832 F.3d 615 (6th Cir. 2016) (interpreted the first phrase of the DSH statute; distinguishable because it did not address the post‑DRA “regarded as such” clause)