Henry Ford Health System v. Department of Health & Human Services
2011 U.S. App. LEXIS 17115
6th Cir.2011Background
- Henry Ford Health System seeks Medicare indirect-cost reimbursements for teaching hospitals; dispute centers on whether resident pure research time is includable in FTE counts under PPACA §5505 and implementing regulation.
- Congress reclassified resident activities into patient-care vs non-patient-care; Secretary issued regulation excluding pure research from non-patient-care activities for FTE.
- District court ruled in hospital's favor on the issue; the government appealed.
- PPACA §5505(b) delegates definition of non-patient-care activities to the Secretary, who defined many such activities but excluded pure research; the government regulation is challenged as beyond or, alternatively, invalid.
- The court ultimately reverses the district court and upholds the Secretary's regulation as a valid interpretation of the statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §5505(b) directly answer whether pure research counts as non-patient care? | Henry Ford argues the statute requires counting all non-patient-care activities, including pure research. | Henry Ford Hosp. contends the statute either directly includes pure research or does not permit the exclusion. | No; statute is not self-defining on this point. |
| Is the Secretary's exclusion of pure research a permissible Chevron interpretation? | The hospital contends the regulation oversteps Congress by excluding research. | The Secretary reasonably defined non-patient-care activities and excluded pure research. | Yes; regulation is a permissible construction. |
| Can the regulation apply retroactively to cost reports 1983–2001? | Hospital argues retroactivity violates norms. | Congress authorized retroactive regulation in §5505(b). | Yes; retroactive effect is authorized. |
| Do related cases like University of Chicago influence the outcome? | Addressed as persuasive but not controlling; Court upholds regulation. |
Key Cases Cited
- Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (statutory retroactivity rules apply; presumption of prospectivity in regulation)
- Chevron, U.S.A., Inc. v. N.R.D.C., 467 U.S. 837 (1984) (agency deference for reasonable regulatory interpretations)
- Wint v. Yeutter, 902 F.2d 76 (D.C. Cir. 1990) (agency definition of terms under delegation can be upheld)
- University of Chicago Med. Ctr. v. Sebelius, 618 F.3d 739 (7th Cir. 2010) (Seventh Circuit recognized tension with regulation but not controlling)
- St. Mary's Hosp. v. Leavitt, 416 F.3d 906 (8th Cir. 2005) (illustrates indirect-cost calculations for education-related costs)