LAWRENCE + MEMORIAL HOSPITAL, Plaintiff-Appellant, v. Sylvia Mathews BURWELL, Secretary, Department of Health and Human Services, Marilyn Tavenner, Administrator, Centers for Medicare and Medicaid Services, Robert G. Eaton, Chairman, Medicare Geographic Classification Review Board, Defendants-Appellees.
Docket No. 15-164-cv.
United States Court of Appeals, Second Circuit.
Argued: Nov. 4, 2015. Decided: Feb. 4, 2016.
812 F.3d 257
For the foregoing reasons, we conclude that Rule 13200 does not prohibit the enforcement of pre-dispute waivers of a FINRA arbitral forum. Accordingly, we AFFIRM the judgment of the district court.
Carolyn Ikari, Assistant United States Attorney, Hartford, CT (Marc H. Silverman, of counsel, on the brief), Assistant United States Attorney, for Deirdre M. Daly, United States Attorney for the District of Connecticut, for Defendants-Appellees.
Before HALL and LYNCH, Circuit Judges, and RAKOFF, District Judge.*
RAKOFF, District Judge:
Under the Medicare Act, a hospital‘s classification as “rural” or “urban” may affect the amount of reimbursement that the hospital receives for providing medical services, as well as the hospital‘s access to certain medical programs. But a hospital can reasonably be viewed as “rural” in some respects (e.g., it is situated in a rural area and attends to the needs of a rural population) and “urban” in other respects (e.g., it needs to attract trained staff from nearby urban areas and to do so must pay urban wage rates). To accommodate this possibility, the Medicare statute, through a complicated classification process, permits a hospital to be classified as urban for some purposes and rural for others. One such statutory provision,
Notwithstanding these statutory provisions, in 2000 the Secretary of Health and Human Services (the “Secretary“) issued a regulation, known as the “reclassification rule,”
We begin, as we must, with the text of the statute. The Medicare Act—Title XVIII of the Social Security Act,
As initially promulgated, however, this reimbursement determination system “yielded inequitable results for some hospitals,” for example when “a hospital in one area competed for the same labor pool as hospitals in a nearby, larger urban area but received a lower reimbursement” based on its geographical area‘s wage index. Robert Wood Johnson Univ. Hosp. v. Thompson, 297 F.3d 273, 276 (3d Cir.2002). Therefore, Congress in 1989 amended the Medicare Act to create the MGCRB. See Pub.L. No. 101-239, § 6003(h) (codified at
Pursuant to the Medicare statute, see
Furthermore, a rural hospital is eligible to be treated as a Rural Referral Center (“RRC“) pursuant to another provision of the Medicare statute, see
Particularly relevant to this case is the fact that RRCs more easily qualify for preferable drug pricing. The 340B Drug Discount Program, enacted by Section 602 of the Veterans Health Care Act of 1992,
While the MGCRB process provides a mechanism for hospitals—urban or rural—to seek reclassification to areas with higher wage indices (often, nearby urban areas), another amendment to the Medicare statute permits certain hospitals geographically located in urban areas to be designated as rural for other purposes. This amendment was enacted in 1999 as Section 401 of the Medicare, Medicaid, and SCHIP
(a) IN GENERAL. - Section 1886(d)(8) (
42 U.S.C. 1395ww(d)(8) ) is amended by adding at the end the following new subparagraph:(E)(i) For purposes of this subsection, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital described in clause (ii), the Secretary shall treat the hospital as being located in the rural area (as defined in paragraph (2)(D)) of the State in which the hospital is located.
(ii) For purposes of clause (i), a subsection (d) hospital described in this clause is a subsection (d) hospital that is located in an urban area (as defined in paragraph (2)(D)) and satisfies any of the following criteria:
(I) The hospital is located in a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the Federal Register on February 27, 1992 (57 Fed.Reg. 6725)).
(II) The hospital is located in an area designated by any law or regulation of such State as a rural area (or is designated by such State as a rural hospital).
(III) The hospital would qualify as a rural, regional, or national referral center under paragraph (5)(C) or as a sole community hospital under paragraph (5)(D) if the hospital were located in a rural area.
(IV) The hospital meets such other criteria as the Secretary may specify.
Both sides in the instant litigation agree that “this subsection“—in the statement “[f]or purposes of this subsection, . . . the Secretary shall treat the hospital as being located in the rural area . . .“—refers to
The conference report accompanying the legislation enacting Section 401 states, in relevant part, that Section 401
[p]rovides that a hospital in an urban area may apply to the Secretary to be treated as if the hospital were located in a rural area of the State in which the hospital is located. Hospitals qualifying under this section shall be eligible to qualify for all categories and designations available to rural hospitals, including sole community, Medicare dependent, critical access, and referral centers. Additionally, qualifying hospitals shall be eligible to apply to the Medicare Geographic Reclassification Review Board for geographic reclassification to another area. The Board shall regard such hospitals as rural and as entitled to the exceptions extended to referral centers and sole community hospitals, if such hospitals are so designated.
H.R. Conf. Rep. 106-479 (Nov. 18, 1999).
After Section 401 was passed, the Secretary expressly recognized that this section “might create an opportunity for some urban hospitals to take advantage of the MGCRB process by first seeking to be reclassified as rural under [Section 401] (and receiving the benefits afforded to rural hospitals) and in turn seek reclassification through the MGCRB back to the urban area for purposes of their standardized amount and wage index and thus also
Against this background, we turn to the facts of this case, which are essentially undisputed. Plaintiff Lawrence + Memorial Hospital (“Lawrence“) is an acute care hospital located in New London, Connecticut. Lawrence‘s geographic location for Medicare reimbursement purposes was originally designated as part of the Norwich-New London, Connecticut urban area. On July 2, 2013, Lawrence sought reclassification under Section 401 from an urban to a rural hospital, as well as additional designation as an RRC. On August 13, 2013, the relevant authority, namely, the Centers for Medicare and Medicaid Services (“CMMS“), granted both of Lawrence‘s requests, and Lawrence was recognized as a rural hospital effective July 3, 2013. Immediately thereafter, however, on September 3, 2013, Lawrence applied to the MGCRB, seeking reclassification for wage reimbursement purposes to the Nassau-Suffolk, New York urban area, which
On December 6, 2013, the district court denied Lawrence‘s motion for a preliminary injunction. Consequently, on December 16, 2013, Lawrence requested cancellation (effectively under protest) of its rural status under Section 401. The request was approved on December 19, 2013, and the cancellation of rural status had the additional effect of cancelling Lawrence‘s RRC status. Because Lawrence‘s disproportionate share adjustment factor for the purposes of the 340B Drug Discount Program is greater than 8% (the threshold for RRCs) but less than 11.75% (the general threshold), Lawrence thus became ineligible to participate in the 340B Drug Discount Program. On January 27, 2014, the MGCRB, having found that Lawrence met all the relevant criteria, see supra, approved Lawrence‘s application to be reclassified to the Nassau-Suffolk, New York urban area.
Having thus been deprived (by virtue of the reclassification rule) of its eligibility to participate in the 340B Drug Discount Program, Lawrence filed an amended complaint on March 25, 2014, seeking a declaration that the Secretary‘s regulatory scheme violates the Medicare Act and the Administrative Procedure Act; a permanent injunction, an order of mandamus, or both, prohibiting the Secretary and other officials from applying the reclassification rule to any future MGCRB applications by Lawrence; and a permanent injunction, an order of mandamus, or both, ordering the Secretary and other officials to consider plaintiff (a) to be reclassified to the Nassau-Suffolk urban area; and (b) to be a rural hospital and an RRC.3 In June 2014, both parties moved for summary judgment. On December 23, 2014, the district court granted the defendants’ motion and entered judgment in favor of defendants.
The district court provided the reasons for her ruling in a memorandum issued on December 22, 2014. The district court noted that “[t]here do not appear to be any genuine issues of material fact here” and determined that the parties’ disagreement over the proper interpretation of Section 401 would be analyzed under the framework set out by Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The district court reasoned that under Chevron Step One—which, she held, requires the Court to consider “whether Congress has clearly spoken in Section 401 as to whether the Secretary is required to treat hospitals with acquired rural status as ‘rural’ for the purposes of an application to the MGCRB for geographic classification,” Lawrence & Memorial Hosp. v. Burwell, No. 13-1495, 2014 WL 7338859, at *5 (D.Conn. Dec. 22, 2014)—the statutory text was ambiguous, because Section 401 “does not discuss the intersection of
This Court reviews a grant of summary judgment by the district court de novo. See Allianz Ins. Co. v. Lerner, 416 F.3d 109, 113 (2d Cir.2005). At issue in the instant case is the Secretary‘s interpretation of the Medicare statute set forth in the Secretary‘s reclassification rule,
Turning to the Chevron Step One inquiry, “[t]o ascertain Congress‘s intent, we begin with the statutory text because if its language is unambiguous, no further inquiry is necessary. If the statutory language is ambiguous, however, we will resort first to canons of statutory construction, and, if the statutory meaning remains ambiguous, to legislative history.” Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 116 (2d Cir.2007) (internal citations and modifications omitted). Furthermore, “[i]f, in light of its text, legislative history, structure, and purpose, a statute is found to be plain in its meaning, then Congress has expressed its intention as to the question, and deference is not appropriate.” Li v. Renaud, 654 F.3d 376, 382 (2d Cir.2011) (internal quotation marks omitted). Here, we hold that the text of the statute unambiguously supports Lawrence‘s position that the MGCRB must review reclassification applications by Section 401 hospitals according to the standards applied to hospitals geographically located in a rural area. Thus,
Congress in Section 401 also used the mandatory term “shall.” See United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (“Congress could not have chosen stronger words [than ‘shall forfeit’ and ‘shall order‘] to express its intent that forfeiture be mandatory in cases where the statute applied . . .“). Congress did not grant the Secretary discretion in carrying out the provision “the Secretary shall treat the hospital as being located in the rural area,” as it did in other parts of Section 401. See, e.g., Section 401(a) (codified at
The Secretary urges that Section 401 does not directly address the interplay between reclassification under Section 401 and MGCRB reclassification. Accordingly, she argues, the agency may step in to fill the gap. The Secretary further argues that the statutory statement “[f]or purposes of this subsection . . . the Secretary shall treat the hospital as being located in the rural area . . . of the State in which the hospital is located,”
These arguments are unpersuasive for several reasons. Most significantly, the Secretary‘s reading defies the plain meaning of the Medicare statute. As defendants acknowledged at oral argument, a “geographically rural hospital“—that is, a hospital geographically located in a rural area—may apply to the MGCRB to use an urban wage index while retaining any RRC status or other benefits accruing to rural hospitals. This is precisely what Lawrence sought to do, and the Secretary‘s purported distinction between “geographically rural” hospitals and hospitals with “acquired rural status” for the purposes of an MGCRB application appears nowhere in the statute. Because “courts must presume that a legislature says in a statute what it means and means in a statute what it says there,” Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461-62, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002), we must presume that Congress intended hospitals with “acquired rural status” to be treated like “geographically rural” hospitals when applying for MGCRB reclassification. As for the Secretary‘s argument about conforming changes, Congress did not need to insert language directing conforming changes to specific parts of
The context of the statement “[f]or purposes of this subsection . . . the Secretary shall treat the hospital as being located in the rural area . . .” further reinforces the implausibility of the Secretary‘s proposed interpretation. See Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (“the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.“) (internal quotation marks omitted). Congress inserted Section 401 into the Medicare statute a decade after the MGCRB was formed. By using the broad language “for the purposes of this subsection,” Congress mandated that specified hospitals be treated as rural for the purposes of the entire section, including the already-existing MGCRB application process. A rule that required Congress to expressly reference the interplay between each aspect of the relevant subsection and Section 401 reclassification would hinder Congress‘s ability to amend statutes across wide swaths of legislative territory. See also Geisinger, 794 F.3d at 393 (“To comprehensively amend subsection (d)—which contains dozens of paragraphs and subparagraphs concerning inpatient reimbursement, many of which involve a hospital‘s rural or urban status—rather than each provision within it, Congress necessarily used broad language. Still, as a general matter of statutory construction, a term in a statute is not ambiguous merely because it is broad in scope.“) (internal quotation marks omitted).
While our view of the statute‘s plain meaning trumps any resort to legislative history, we further note that the legislative history of Section 401 strongly supports our interpretation, not the Secretary‘s. A congressional conference committee report is the highest form of legislative history. See Disabled in Action of Metro. New York v. Hammons, 202 F.3d 110, 124 (2d Cir.2000); see also Robert A. Katzmann, Judging Statutes 38, 54 (2014). Here, the conference report accompanying the legislation that enacted Section 401 corroborates that Congress expressly intended what its plain language clearly prescribes. In particular, the conference report states that hospitals qualifying under Section 401 “shall be eligible to apply to the Medicare Geographic Reclassification Review Board for geographic reclassification to another area” and, immediately thereafter, further states that “[t]he Board shall regard such hospitals as rural and as entitled to the exceptions extended to referral centers ... if such hospitals are so designated.” H.R. Conf. Rep. No. 106-479 (Nov. 18, 1999) (Conf.Rep.).6 This language shows that the treatment of Section 401 hospitals as rural for the purposes of MGCRB reclassification, far from being a mere oversight, was expressly contemplated when Section 401 was enacted.7
Although the Secretary claims that our reading of the statute leads to “anomalous” results, we see nothing anomalous, let alone absurd, in what the plain language of the statute here requires.8 Part of the Secretary‘s concern, as already noted, is simply that “some hospitals might inappropriately seek to be treated as being located in a rural area for some purposes and as being located in an urban area for other purposes.” 65 Fed.Reg. 47054, 47087-88. But this is simply a function of the many different roles that hospitals play and the many different contexts in which they operate. Indeed, hospitals that are geographically located in rural areas and that receive MGCRB reclassification to an urban area for wage index purposes are by that fact alone “treated as being located in a rural area for some purposes and as being located in an urban area for other purposes,” and defendants do not object to this longstanding state of affairs. Section 401 simply increases the number of situations in which hospitals can be treated as rural for some purposes and urban for others, but there is nothing “absurd” about such a measured approach. “[A]n agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.” Util. Air Regulatory Grp. v. E.P.A., — U.S. —, 134 S.Ct. 2427, 2446, 189 L.Ed.2d 372 (2014).
Since we find the statutory language to be plain and unambiguous, and at odds with the Secretary‘s reclassification rule,
JED S. RAKOFF
UNITED STATES DISTRICT JUDGE