Metropolitan Hospital v. United States Department of Health & Human Services
2013 U.S. App. LEXIS 6068
| 6th Cir. | 2013Background
- Challenge to regulation 42 C.F.R. § 412.106(b) implementing the DPP formula for DSH payments.
- Regulation counts dual-eligible exhausted benefit days in the Medicare fraction, excluding them from Medicaid fraction.
- Metro’s cost reports in 2005 used dual-eligible exhausted days in Medicaid fraction; CMS intermediary reduced Metro’s DPP and overpayment recouped.
- District court ruled regulation invalid as contrary to the DPP statute; district remanded for damages and interest calculation.
- Court reverses, holds the Secretary’s interpretation permissible under Chevron, and remands with judgment for HHS; Metro’s cross-appeal moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dual-eligible exhausted days belong in the Medicaid fraction. | Metro: exhausted days must be counted in Medicaid, not Medicare. | HHS: exhausted days are not counted in Medicaid and may be counted in Medicare. | Chevron step two: permissible construction; regulation sustained. |
| Whether Jewish Hospital controls the interpretation as stare decisis. | Jewish Hospital provides a binding Chevron step-one holding. | Brand X limits stare decisis; Jewish Hospital may be distinguishable. | No binding Chevron step-one mandate; Brand X controls. |
| Whether the Secretary’s interpretation is consistent with the statute’s purpose. | Metro: interpretation defeats Congressional goal to count all low-income days. | HHS: interpretation aligns with proxy purposes and avoids double-counting. | Statutory purpose supports deference to the Secretary; regulation permissible. |
| Whether the 2004 amendment was arbitrary rulemaking. | Metro: amendment lacked justification and relied on comments. | Rulemaking rationale adequate; comments relevant and considered. | Rulemaking not arbitrary; a permissible construction under Chevron. |
Key Cases Cited
- Jewish Hospital v. Secretary of Health & Human Services, 19 F.3d 270 (6th Cir.1994) (distinguishes 'eligible' vs 'entitled' in Medicaid proxy; Chevron step-one/Two discussion)
- Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) (establishes Chevron framework for agency interpretations)
- Brand X Internet Services v. NCTA, 545 U.S. 967 (2005) (stare decisis effect of prior judicial construction under Chevron Step One)
- Northeast Hosp. Corp. v. Sebelius, 657 F.3d 1 (D.C. Cir.2011) (discusses Jewish Hospital; notes card on entitlements vs eligibilities)
- Home Concrete & Supply, LLC v. United States, 132 S. Ct. 2364 (2012) (discusses binding effect of judicial construction under Brand X/Chevron)
- Hilton v. South Carolina Public Railways Comm’n, 502 U.S. 197 (1991) (compelling justification for departing from precedent in stare decisis)