934 F.3d 812
8th Cir.2019Background
- Kearney Regional, a new physician-owned hospital in rural Nebraska, was licensed Dec. 9, 2013 and admitted 21 inpatients through Dec. 30, 2013.
- To bill Medicare, a provider must have an agreement with HHS and meet the statutory definition of a “hospital,” including being “primarily engaged in providing” inpatient care. 42 U.S.C. § 1395x(e)(1).
- Kearney sought accreditation; an AOA survey occurred Jan. 13–15, 2014 (no inpatients present); AOA recommended deeming on Feb. 7, 2014; Kearney resumed admissions Feb. 10, 2014.
- CMS denied Medicare participation, concluding Kearney was not “primarily engaged” in inpatient care because it had no inpatients at the time of the survey and had been without inpatients for a period before the survey.
- The ALJ and the Departmental Appeals Board (DAB) affirmed; they relied on varying time frames (survey dates alone; survey plus periods before and after) in concluding Kearney was not primarily engaged in inpatient care.
- District court applied Chevron deference, upheld the agency on substantial-evidence review; this court reverses and remands because the DAB failed to explain the legal time frame it applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper legal standard/time frame for determining whether a facility is “primarily engaged” in providing inpatient services under 42 U.S.C. § 1395x(e)(1) | Board applied shifting/impermissible standards and cherry-picked date ranges; required clear rule and reliance on provider’s history through accreditor recommendation | Agency relied on lack of inpatients at survey and surrounding periods as basis for denial; ALJ/DAB considered broader periods that bore on the statutory requirement | Reversed and remanded: DAB failed to explain which temporal frame it applied, so court cannot assess statutory interpretation or reasonableness; agency must clarify and explain its legal standard |
Key Cases Cited
- SEC v. Chenery Corp., 332 U.S. 194 (1947) (agency must adequately explain legal basis for its decision)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (deference to reasonable agency statutory interpretation when statute ambiguous)
- Sullivan v. Everhart, 494 U.S. 83 (1990) (courts generally defer to agency interpretation in cases of true ambiguity)
- Beeler v. Astrue, 651 F.3d 954 (8th Cir. 2011) (standards for § 405(g) review of agency decisions)
- Horras v. Leavitt, 495 F.3d 894 (8th Cir. 2007) (reviewing Appeals Board as final agency decision)
- Kidney Ctr. of Hollywood v. Shalala, 133 F.3d 78 (D.C. Cir. 1998) (remand required where agency fails to explain basis of decision)
- Hazardous Waste Treatment Council v. EPA, 886 F.2d 355 (D.C. Cir. 1989) (agency explanation requirement and remand principles)
- Wiggins v. Schweiker, 679 F.2d 1387 (11th Cir. 1982) (remand when agency action inadequately explained)
- Friedman v. Sebelius, 686 F.3d 813 (D.C. Cir. 2012) (application of Chevron and deference framework)