REGIONS HOSPITAL v. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES
No. 96-1375
Supreme Court of the United States
Argued December 1, 1997-Decided February 24, 1998
522 U.S. 448
Ronald N. Sutter argued the cause and filed briefs for petitioner.
Lisa Schiavo Blatt argued the cause for respondent. With her on the brief were Acting Solicitor General Waxman, Assistant Attorney General Hunger, Deputy Solicitor General Kneedler, Deputy Assistant Attorney General Preston, Barbara C. Biddle, Neil H. Koslowe, Harriet S. Rabb, Henry R. Goldberg, and Thomas W. Coons.
JUSTICE GINSBURG delivered the opinion of the Court.
Section 9202(a) of the Medicare and Medicaid Budget Reconciliation Amendments of 1985,
I
A
Under the Medicare Act and its implementing regulations,
By regulation, the Secretary may reopen, within three years, any determination by a fiscal intermediary, the PRRB, or the Secretary herself “to revise any matter in issue at any such proceedings.”
In April 1986, Congress changed the method for calculating reimbursable GME costs. See
In September 1988, the Secretary published a proposed regulation to implement the GME Amendment. At that
The Secretary made clear that the reaudit rule permitted no recoupment of excess reimbursement for years in which the reimbursement determination had become final. 54 Fed. Reg. 40302 (1989). Rather, the rule sought to prevent future overpayments and to permit recoupment of prior excess reimbursement only for years in which the reimbursement determination had not yet become final. Id., at 40301, 40302;
B
Regions Hospital (Hospital), the petitioner, is a teaching hospital eligible for GME cost reimbursement.1 On February 28, 1986, the Hospital received from its intermediary an NAPR for the 1984 reporting period which reflected total 1984 GME costs of $9,892,644. A reaudit commenced in late
On appeal to the PRRB, the Hospital challenged the validity of the reaudit rule. The PRRB responded that it lacked authority to invalidate the Secretary‘s regulation, and the Hospital sought expedited judicial review under
The Court of Appeals for the Eighth Circuit affirmed in a per curiam opinion, following Tulane. St. Paul-Ramsey Medical Center, Inc. v. Shalala, 91 F. 3d 57 (1996). In a similar case, the Sixth Circuit, rejecting Tulane, saw no ambiguity in the GME Amendment and alternately held that even if the provision lacked clarity, the Secretary‘s interpretation was unreasonable. Toledo Hospital v. Shalala, 104 F. 3d 791, 797-801, (1997), cert. pending, No. 96-2046. We granted certiorari to resolve this conflict, 520 U. S. 1250 (1997), and now affirm the Eighth Circuit‘s judgment.
The Hospital argues that the Secretary‘s reaudit regulation is an impermissible retroactive rule and, on that account alone, is invalid. It is an argument we need not linger over. Landgraf v. USI Film Products, 511 U. S. 244 (1994), explained that “‘the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place,‘” id., at 265 (quoting Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U. S. 827, 855 (1990) (SCALIA, J., concurring)), but further clarified that a prescription “is not made retroactive merely because it draws upon antecedent facts for its operation,” 511 U. S., at 270, n. 24 (quoting Cox v. Hart, 260 U. S. 427, 435 (1922)). The reaudit rule accords with Landgraf‘s instruction. The rule calls for application of the cost-reimbursement principles in effect at the time the costs were incurred. A correct application of those principles, not the application of any new reimbursement principles, is the rule‘s objective. Cf. Bowen v. Georgetown Univ. Hospital, 488 U. S. 204, 207 (1988) (regulation at issue impermissibly invoked a new substantive standard as a basis for recouping sums previously paid to hospitals). Furthermore, the Secretary‘s reaudits leave undisturbed the actual 1984 reimbursements and reimbursements for any later cost-reporting year on which the three-year reopening window had closed. The adjusted reasonable cost figures resulting from the reaudits are to be used solely to calculate reimbursements for still open and future years. See supra, at 454.
Understandably, there is no Circuit split on this issue. Although holding against the Secretary on other grounds, the Sixth Circuit concisely stated why the reaudit rule “does not amount to an impermissibly retroactive regulation“: The rule “require[s] a determination based upon events occurring in the base year,” but “it does not change the standards under which the base year costs are to be determined.” Toledo Hospital v. Shalala, 104 F. 3d, at 795.
We turn, next, to the question that has divided the Circuits: Is the Secretary‘s interpretation of
A
We must decide whether Congress, under
Separate provisions of the Medicare Act speak clearly to the timing of other “recognized as reasonable” determinations. For example,
Section
The Hospital urges that Congress could not have intended “recognized as reasonable” to mean two separate amounts: one for 1984 itself; and a lower, recalculated amount once the Secretary, cognizant that 1984 had become the base year for subsequent determinations, checked and discovered miscalculations. Why this must be so is not apparent. As the Secretary said, it is “hard to believe that Congress intended that misclassified and nonallowable costs [would] continue to
We face these choices. Congress meant either for the Secretary to calculate future reimbursements using the figure emerging through regular NAPR review and the three-year reopening window, or for the Secretary to use the figure recognized as reasonable at a later time, informed by a more careful assessment. The Secretary realized, tardily, that the Hospital‘s reimbursement for 1984 (like that granted many other providers) was inconsistent with the reasonableness standards under the Medicare Act and its implementing regulations. Congress likely assumed that the Secretary would act in time to adjust the 1984 costs to achieve accuracy both in 1984 reimbursements and in future calculations.3 Had Congress contemplated that the Secretary would not have responded to the 1986 GME Amendment swiftly enough to catch 1984 NAPR errors within the Secretary‘s
While the Hospital‘s reading of the GME Amendment is plausible, it is not the “only possible interpretation.” See Sullivan v. Everhart, 494 U. S. 83, 89 (1990). As Judge Wald wrote in her opinion for the D. C. Circuit: “Context is all, and ... we believe the use of the 1984 figures for the indefinite future cautions ... against a reading of [‘recognized as reasonable‘] that allows no elbow room for adjustments [to correct] prior miscalculations or errors.” Tulane, 987 F. 2d, at 796.4 Because the Hospital‘s construction is not an inevitable one,5 we turn to the Secretary‘s position, examining its reasonableness as an interpretation of the governing legislation.
B
The purpose of the GME Amendment was to “limit payments to hospitals” for GME costs. See H. R. Conf. Rep.
Until the GME Amendment in 1986, GME costs were determined annually; one year‘s determination did not control a later year‘s reimbursement. The GME Amendment, which called for a base-year GME cost determination that would control payments in later years, became law at a time when other Medicare changes were underway, including installation of a new prospective payment system (PPS).6 See 54 Fed. Reg. 40301 (1989) (acknowledging that GME costs were not given prompt scrutiny “because of the many changes that were taking place in Medicare generally“). The GME Amendment introduced the new statutory concept of per-resident GME costs; it was this innovation that caused the Secretary “to examine GME costs that ha[d] been reimbursed in the past and to question the significant variation in costs that ha[d] been allowed.” 53 Fed. Reg. 36593 (1988).
Concerned that providers may have been reimbursed erroneously, the Secretary attempted to assure reimbursement in future and still open years of reasonable costs, but no more. To accomplish this, the Secretary endeavored to strip from the base-period amount improper costs, e.g., physician costs for activities unrelated to the GME program, malprac-
The Hospital maintains it is “irrational” to assume Congress intended the Secretary to reaudit 1984 GME costs outside the three-year reopening window of
The GME Amendment necessitated comprehensive regulations, and the reaudit rule was formulated and issued as part of the full set of regulations. Viewed in the context of other, contemporaneous changes in Medicare and the Secretary‘s decision not to pursue recoupment of 1984 GME reimbursements, the three-year gap from the 1986 enactment of the GME Amendment to release of the Secretary‘s final regulations in 1989 was not exorbitant. As the D. C. Circuit said, three years is “not an unreasonable period for developing, proposing, permitting comment, and finalizing a regulatory framework for a complex statutory scheme.” Tulane, 987 F. 2d, at 797.
The Hospital also contends Congress would not have endorsed reauditing as a fair measure, because fading memories, changes in personnel, and discarded records make it
Finally, the Hospital argues that because
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*
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In sum, we agree with the Secretary that the reaudit rule is not impermissibly retroactive, and that it “reflects a reasonable interpretation of the law.” Thus, it “merits our approbation.” Holly Farms Corp. v. NLRB, 517 U. S. 392, 409 (1996). The judgment of the Court of Appeals is accordingly
Affirmed.
JUSTICE SCALIA, with whom JUSTICE O‘CONNOR and JUSTICE THOMAS join, dissenting.
The Medicare Act requires the Secretary to reimburse teaching hospitals for the Graduate Medical Education (GME) costs attributable to Medicare services. See
On April 7, 1986, the enactment date of the provision tying future GME reimbursements to 1984 GME costs, the Secretary had in place a longstanding procedure for determining a hospital‘s reasonable GME costs. Under that procedure, the three-year window during which the Secretary could revise the 1984 determinations had not yet closed for any hospital entitled to reimbursement, see
In light of the procedures already in place for determining a hospital‘s reasonable 1984 GME costs when
To begin with, it should be borne in mind that
It is impossible to imagine, moreover, how the words “recognized as” found their way into the provision unless they were meant to refer to the recognition of reasonableness already made under the pre-existing system. The interpretation that the Court accepts treats them “essentially as surplusage-as words of no consequence,” Ratzlaf v. United States, 510 U. S. 135, 140-141 (1994), which, of course, we avoid when possible.
“We are not at liberty to construe any statute so as to deny effect to any part of its language. It is a cardinal rule of statutory construction that significance and effect shall, if possible, be accorded to every word. As early as in Bacon‘s Abridgment, sect. 2, it was said that ‘a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.’ This rule has been repeated innumerable times.” Market Co. v. Hoffman, 101 U. S. 112, 115-116 (1879).
See also United States v. Nordic Village, Inc., 503 U. S. 30, 36 (1992); Federal Election Comm‘n v. National Conservative Political Action Comm., 470 U. S. 480, 486 (1985). If
That “recognized as” refers to a determination under the pre-existing regime is strongly confirmed by another provision of the statute that enacted
Most judicial constructions of statutes solve textual problems; today‘s construction creates textual problems, in order to solve a practical one. The problem to which the Secretary‘s implausible reading of the statute is the solution is simply this: Though the Secretary had plenty of time, after
“Had Congress contemplated that the Secretary would not have responded to the 1986 GME Amendment swiftly enough to catch 1984 NAPR errors within the Secretary‘s three-year reopening period, what would the Legislature have anticipated as the proper administrative course? Error perpetuation until Congress plugged the hole? Or the Secretary‘s exercise of authority to effectuate the Legislature‘s overriding purpose in the Medicare scheme: reasonable (not excessive or unwarranted) cost reimbursement?” Ante, at 459-460.
The answer to that question is easy. But it is the wrong question. Of course it can always be assumed that Congress would prefer whatever would preserve, in light of unforeseen eventualities, “the Legislature‘s overriding purpose.” We are not governed by legislators’ “overriding purposes,” however, but by the laws that Congress enacts. If one of them is improvident or ill conceived, it is not the province of this Court to distort its fair meaning (or to sanction the Executive‘s distortion) so that a better law will result. The immediate benefit achieved by such a practice in a particular case is far outweighed by the disruption of legal expectations in all cases-disruption of the rule of law-that government by ex post facto legislative psychoanalysis produces.
I would pronounce the Secretary‘s reaudit regulation ultra vires and reverse the Court of Appeals.