In Re Consolidated Hospital Surcharge Appeals of GILLETTE CHILDREN’S SPECIALTY HEALTHCARE, St. Luke’s Hospital, North Memorial Health Care, HealthEast Care System, Park Nicollet Health Services, Fairview Health Services, and Children’s Hospitals and Clinics of Minnesota, 883 N.W.2d 778

Minnesota imposed a 1.56% surcharge on hospitals’ net patient revenue (excluding Medicare) under Minn. Stat. § 256.9657; DHS calculates and invoices monthly based on prior-year reported data.
Seven hospitals appealed multiple monthly surcharge assessments (Aug 2010–Feb 2013); DHS consolidated the appeals into a contested-case proceeding under MAPA and selected two representative hospitals (North Memorial and Park Nicollet) for disposition.
Hospitals argued the surcharge is preempted by federal law insofar as it falls on revenue from FEHBA and TRICARE carriers, because FEHBA § 8909(f) and DoD/TRICARE rules preempt state taxes/fees imposed directly or indirectly on carriers with respect to payments from the FEHBA Fund.
DHS denied the appeals; the ALJ and the DHS Commissioner granted DHS’s motion for summary disposition, finding no preemption because the surcharge is not imposed on carriers.
The court of appeals affirmed; the Minnesota Supreme Court granted review on preemption and DHS cross-petitioned on standing.

Issue	Hospitals' Argument	DHS' Argument	Held
Standing to challenge surcharge assessments	Statutory right to appeal the assessed amount under Minn. Stat. § 256.9657, subd. 6, gives standing	§ 256.9657 only permits challenges to technical calculation of amounts, not to surcharge validity	Hospitals have standing under the statute to challenge the amount (including legal basis) of assessed surcharges
Whether FEHBA/TRICARE preempt the surcharge when hospitals pass cost to carriers	A surcharge that hospitals pass through via higher prices is an indirect imposition on FEHBA/TRICARE carriers and thus preempted under 5 U.S.C. § 8909(f) and DoD preemption rules	FEHBA/TRICARE preempt only taxes/fees compulsorily imposed on carriers; voluntary pass-through by hospitals does not mean the State imposed the charge on carriers	No preemption: Minn. Stat. § 256.9657 does not impose the surcharge directly or indirectly on carriers because carriers are not compelled by state law to pay it; hospitals voluntarily pass costs to carriers

Pietsch v. Minn. Bd. of Chiropractic Exam’rs, 683 N.W.2d 303 (Minn. 2004) (summary disposition is administrative analogue to summary judgment)
In re Gillette Children’s Specialty Healthcare, 867 N.W.2d 513 (Minn. Ct. App. 2015) (court of appeals decision affirming DHS)
Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (congressional intent controls preemption analysis)
CSX Transp., Inc. v. Easterwood, 507 U.S. 658 (1993) (interpretation of express preemption clauses starts with plain text)
N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (presumption against preemption; textual analysis)
De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806 (1997) (burden to overcome presumption favoring state regulation)
Altria Group, Inc. v. Good, 555 U.S. 70 (2008) (congressional structure and purpose can indicate preemptive intent)
Northwest Airlines, Inc. v. County of Kent, Michigan, 510 U.S. 355 (1994) (context for indirect-charge preemption in federal aviation statute)
Am. Trucking Ass’ns v. City of Los Angeles, 569 U.S. 641 (2013) (local regulation may be preempted when it effectively compels regulated intermediaries to alter conduct of federally protected entities)
United States v. West Virginia, 339 F.3d 212 (4th Cir. 2003) (analogous discussion of FEHBA preemption and state surcharges)