MedCenter One Health Systems v. Kathleen Sebelius, etc.
2011 U.S. App. LEXIS 3742
| 8th Cir. | 2011Background
- Hospitals sought Medicare reimbursement for training costs of residents at a nonhospital facility for 1999–2001.
- Nonhospital site was a jointly-operated family practice facility in Bismarck with University of North Dakota.
- Statute reimburses only if the hospital incurs all or substantially all training costs in the nonhospital setting.
- A written agreement with the nonhospital site is required by regulation to evidence those costs and compensation terms.
- Hospitals offered letters/agreements that did not clearly establish compensation for the resident salaries/benefits or operative deficits.
- District court granted summary judgment for Hospitals; Secretary appeals and this court reverses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lack of a compliant written agreement defeats reimbursement. | Hospitals maintained documentation satisfied the written-agreement requirement. | No compliant written agreement existed linking hospital costs to compensation for supervisory activities. | Yes; lack of a compliant written agreement bars reimbursement. |
| Whether the Secretary can be bound by intermediary concessions on the written-agreement issue. | Intermediary concessions should bind the Secretary. | Intermediary interpretations are not binding on the Secretary. | No; intermediary stance does not bind the Secretary. |
| Whether the district court properly resolved the issue using the statutory/regulatory framework. | Statutory/regulatory requirements supported Hospitals’ position. | Regulatory requirements control and were not met by Hospitals. | The regulation requires a written agreement; failure defeats reimbursement. |
Key Cases Cited
- Baptist Health v. Thompson, 458 F.3d 768 (8th Cir. 2006) (standard for reviewing agency action in Medicare cases; arbitrariness/abuse of discretion)
- Howard Young Med. Ctr., Inc. v. Shalala, 207 F.3d 437 (7th Cir. 2000) (agency position not bound by intermediary stipulations)
- Heckler v. Cmty. Health Servs. of Crawford County, Inc., 467 U.S. 51 (1984) (limits of agency flexibility; agency policy autonomy)
- County of Los Angeles v. Leavitt, 521 F.3d 1073 (9th Cir. 2008) (intermediary interpretations not binding on the Secretary)