596 U.S. 880
SCOTUS2022Background
- Medicare Secondary Payer Act (MSPA) makes Medicare secondary when an individual has other group coverage and includes two anti-circumvention rules for end‑stage renal disease (ESRD): plans may not "differentiate in the benefits" between those with and without ESRD and may not "take into account" Medicare eligibility for ESRD. 42 U.S.C. §1395y(b)(1)(C).
- Marietta Memorial Hospital Employee Health Benefit Plan (the Plan) covers outpatient dialysis at the same, but relatively limited, reimbursement terms for all participants.
- DaVita (major dialysis provider) sued, alleging the Plan (1) impermissibly differentiates against ESRD patients (including via a disparate‑impact theory and a "proxy" theory targeting dialysis), and (2) impermissibly "takes into account" Medicare eligibility for ESRD.
- The district court dismissed DaVita’s claims; a divided Sixth Circuit reversed, endorsing disparate‑impact liability and finding dialysis limits disparately harmed ESRD patients.
- The Supreme Court reversed: it held MSPA §1395y(b)(1)(C) does not authorize disparate‑impact liability and that uniformly applied limits on dialysis benefits do not violate the anti‑differentiation or take‑into‑account clauses.
Issues
| Issue | Plaintiff's Argument (DaVita) | Defendant's Argument (Marietta) | Held |
|---|---|---|---|
| Whether §1395y(b)(1)(C) authorizes disparate‑impact liability | Uniform limits that disproportionately burden ESRD patients are unlawful under the statute | The statute prohibits only differential treatment of individuals, not uniform limits with disparate effects | No; statute does not authorize disparate‑impact claims |
| Whether a uniform reimbursement limit for outpatient dialysis "differentiates in the benefits" between ESRD and non‑ESRD individuals | Limiting dialysis coverage effectively targets ESRD patients (dialysis is a near‑perfect proxy for ESRD) | The Plan provides the same benefits to all participants, so it does not differentiate by ESRD status | No; uniform terms do not "differentiate" under the text |
| Whether a uniform limit "takes into account" Medicare eligibility for ESRD | Limiting dialysis coverage is effectively taking Medicare eligibility into account because ESRD patients will rely on Medicare | The Plan’s uniform terms do not consider or target Medicare eligibility | No; uniform application cannot be said to "take into account" Medicare eligibility |
| Whether courts can assess adequacy of dialysis benefits as a benchmark | Courts can and should examine effects to prevent circumvention of MSPA | There is no textual benchmark and judicial assessment would be unworkable; CMS has not adopted a disparate‑impact approach | The Court refused to adopt a judicially manageable adequacy standard and declined to create disparate‑impact liability |
Key Cases Cited
- DaVita, Inc. v. Marietta Memorial Hospital Employee Health Benefit Plan, 978 F.3d 326 (6th Cir. 2020) (Sixth Circuit endorsed disparate‑impact theory and reversed dismissal)
- DaVita Inc. v. Amy’s Kitchen, Inc., 981 F.3d 664 (9th Cir. 2020) (Ninth Circuit disagreed with Sixth Circuit and largely rejected disparate‑impact approach)
- Christian Legal Soc. Chapter of Univ. of Cal., Hastings College of Law v. Martinez, 561 U.S. 661 (2010) (discusses when conduct/status operate as proxies)
- Lawrence v. Texas, 539 U.S. 558 (2003) (example that regulation of conduct can operate as a regulation of persons)
- Bray v. Alexandria Women’s Health Clinic, 506 U.S. 263 (1993) (analogy that a tax or restriction on an item can function as one on a group)