Lion Health Services, Inc. v. Sebelius
635 F.3d 693
| 5th Cir. | 2011Background
- Lion challenges 42 C.F.R. § 418.309(b)(1), the Regulation implementing 42 U.S.C. § 1395f(i)(2)’s hospice cap calculation.
- Statute requires annual cap based on proportion of care per beneficiary; Lion contends proportional allocation across years is mandatory.
- Regulation uses single-year allocation for multi-year stays, counting a beneficiary entirely in one fiscal year.
- District court granted summary judgment, declared Regulation unlawful, enjoined enforcement against Lion, and ordered refund of prior Lion repayments for FY06 and FY07.
- Secretary appeals, arguing proper deference to an agency interpretation and limited remedial scope; Lion argues plain statutory language and requires remand for recalculation.
- Issue involves APA review of agency action and whether remand or refund is appropriate given invalid regulation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue | Lion has concrete financial injury from Regulation. | Standing requires redressability from striking Regulation, not mere injury from its application. | Lion has standing; injury redressable by invalidating Regulation. |
| Statutory interpretation of § 1395f(i)(2)(C) | Statute unambiguously requires proportional allocation to reflect each patient's care. | Regulation is a permissible interpretation using a practical, aggregate reflectivity approach. | Statute unambiguously requires proportional, per-patient allocation; Regulation conflicts with Congress. |
| Remedies and agency remand | District court should set aside Regulation and remand for recalculation under proportional method. | Remand is appropriate to let agency recalculate, not full refund of all prior payments. | Remand required for recalculation; district court abused by ordering full refunds without remand. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requirements for injury in fact)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (1999) (Medicare jurisdiction and review limitations)
- Califano v. Sanders, 430 U.S. 99 (1977) (agency action and statutory review framework)
- Bowen v. Massachusetts, 487 U.S. 879 (1988) (APA relief and administrative-remedies context)
- Presbyterian Hospital of Dallas v. Harris, 638 F.2d 1381 (5th Cir. 1981) (remand when agency should consider issues within its authority)
- National Wildlife Federation v. Clark, 497 U.S. 871 (1990) (agency action includes rules; distinction from program challenges)