Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich.Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich.
Argued: October 26, 2021
Decided and Filed: April 25, 2022
Before ROGERS, STRANCH, and DONALD, Circuit Judges.
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COUNSEL
ARGUED: Perrin Rynders, VARNUM LLP, Grand Rapids, Michigan, for Appellants. Tacy F. Flint, SIDLEY AUSTIN LLP, Chicago, Illinois, for Appellee. ON BRIEF: Perrin Rynders, Herman D. Hofman, VARNUM LLP, Grand Rapids, Michigan, for Appellants. Tacy F. Flint, Abigail B. Molitor, Rebecca B. Shafer, SIDLEY AUSTIN LLP, Chicago, Illinois, for Appellee. James K. Nichols, THE JACOBSON
STRANCH, J., delivered the opinion of the court in which DONALD, J., joined. ROGERS, J. (pp. 21–26), delivered a separate opinion joining in Parts I and II, except Part II.B, of the majority opinion, and in the judgment for the reasons stated in his opinion.
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OPINION
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JANE B. STRANCH, Circuit Judge. The Saginaw Chippewa Indian Tribe and its Benefit Plan brought federal and common law claims against Blue Cross Blue Shield of Michigan (BCBSM or Blue Cross) for failing to fulfill its fiduciary duties in administering tribal health insurance plans. When we first encountered this dispute three years ago, we reversed the district court‘s dismissal of the Tribe‘s claims based on Blue Cross‘s alleged failure to insist on “Medicare-like rates” for care authorized by the Tribe‘s Contract Health Services1 program and provided to tribal members by Medicare-participating hospitals. On remand, the district court granted summary judgment to Blue Cross, concluding that the Tribe‘s payments for qualified CHS care through the Blue Cross plans were not eligible for Medicare-like rates. The district court interpreted the relevant federal regulations as limiting the requirement of Medicare-like rates to payments for care that was authorized by CHS, provided to tribal members by Medicare-participating hospitals, and directly paid for with CHS funds. Based on the plain wording of the applicable regulations, we REVERSE and REMAND the case to the district court for further proceedings consistent with this opinion.
I. BACKGROUND
A. Federal Law Regulating Tribal Healthcare Plans
The two health insurance plans at the heart of this appeal—both authorized by the Saginaw Chippewa Indian Tribe and administered by Blue Cross Blue Shield of Michigan—sit against a backdrop of federal law providing for American Indian healthcare. Persons of American Indian descent have access to federally funded healthcare through the Indian Health Service (IHS), an agency within the Department of Health and Human Services. IHS funds and operates direct healthcare facilities for tribes and funds Contract Health Services (CHS) programs. See
CHS programs are “health services provided at the expense of the Indian Health Service from public or private medical or hospital facilities other than those of the [Indian Health] Service,”
In nonemergency cases, a sick or disabled Indian, an individual or agency acting on behalf of the Indian, or the medical care provider shall, prior to the provision of medical care and services notify the appropriate ordering official
of the need for services and supply information that the ordering official deems necessary to determine the relative medical need for the services and the individual‘s eligibility.
The federal government does not act alone in this endeavor to provide healthcare to American Indians. The tribes themselves play a vital role in managing, funding, and providing healthcare to their members. In recognition of “the obligation of the United States to respond to the strong expression of the Indian people for self-determination by assuring maximum Indian participation in the direction of . . . Federal services to Indian communities,”
This framework, however, has not always ensured that healthcare is accessible or fully funded for those of American Indian descent. “The provision of health care for American Indians has historically been, and remains, plagued by chronic funding shortages and ineffective provision of services.” Rancheria v. Hargan, 296 F. Supp. 3d 256, 259 (D.D.C. 2017). To combat financial constraints, IHS health programs—whether operated by the IHS itself or a tribe—are “the payer of last resort” for healthcare costs.
CHS funding has faced particularly significant financial constraints, which amendments to federal law and regulation have sought to address. See Section 506 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003—Limitation on Charges for Services Furnished by Medicare Participating Inpatient Hospitals to Indians, 71 Fed. Reg. 25124, 25125 (Apr. 28, 2006) (“[H]istorically, purchase orders for CHS services have been for amounts at full billed charges that substantially exceeded the Medicare allowable rates and this problem could recur in the future.“). The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 authorized the Secretary of the Department of Health and Human Services to demand Medicare pricing from hospitals providing services to tribes
These federal regulations set a ceiling on payments that Medicare-participating hospitals receive for CHS care “authorized by IHS, Tribal, and urban Indian organization entities.”
The MLR regulations extend payor-of-last-resort status to include an “I/T/U” that “has authorized payment for items and services provided to an individual who is eligible for benefits under Medicare, Medicaid, or another third party payor.”
These regulations further identify the steps that an eligible tribal member must take to get CHS care and cause the provider to accept a Medicare-like rate for that care. In most situations, there must be notification of the proposed CHS care to “the appropriate ordering official” to determine the individual‘s eligibility and the necessity of the care.
B. The Tribe‘s Contract Health Services Program
The Saginaw Chippewa Indian Tribe of Michigan is a federally recognized Indian Tribe. The Tribe administers a CHS program under the Indian Self-Determination and Education Assistance Act using IHS and tribal funds. Pursuant to federal regulations, the Tribe requires individuals requesting CHS care to (1) show that they are a member of a federally recognized Indian tribe or a direct descendant of the Saginaw Chippewa Indian Tribe and (2) show proof of residency in one of the five counties that the Tribe‘s program covers. The Tribe explained to the district court:
[i]f the patient met the above criteria and the CHS program determined that the medical services being sought were deemed necessary, the Tribe‘s CHS program (as the “ordering official“) issued a “purchase order” or “referral,” authorizing the service in accordance with
42 C.F.R. 136.24(a) . The patient was then required to present the purchase order/referral from the CHS program to the provider at the time of service.
C. The Tribe‘s Contracts with Blue Cross Blue Shield of Michigan
In 2002, the Tribe contracted to have Blue Cross administer a self-funded health insurance policy for Tribe members (the “Member Plan“). Under the Administrative Services Contract (ASC), Blue Cross would receive a fee for its administrative work, including submitting healthcare claims, while the Tribe would pay directly for the healthcare services. Only enrolled members of the Saginaw Chippewa Tribe were eligible to participate in the Member Plan. In 2004, the Tribe executed another ASC with Blue Cross, this time for a self-funded plan for tribal employees (the “Employee Plan“). The Employee Plan covered Tribe employees regardless of their tribal membership status.
The administrative service contracts had substantially similar terms. The Member Plan ASC and the Employee Plan ASC both provided that Blue Cross “shall administer Enrollees’ health care Coverage(s) in accordance with BCBSM‘s standard operating procedures for comparable coverage(s) offered under a BCBSM underwritten program, any operating manual provided to the Group, and this Contract.” (R. 79-3, Admin. Servs. Contract, PageID 3163) The contracts limited Blue Cross‘s responsibilities “to providing administrative services for the processing and payment of claims.” (Id., PageID 3163) Blue Cross and the Tribe stated in their contracts that, to the extent ERISA applies, Blue Cross was “neither the Plan Administrator, the Plan Sponsor, nor a named fiduciary of the Group‘s health care program under ERISA.”2 (Id., PageID 3163–64)
As our court explained in the earlier appeal in this case, the Employee and Member Plans were separate and had separate funding sources. Saginaw Chippewa Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich., 748 F. App‘x 12, 15 (6th Cir. 2018). The Tribe originally funded the Member Plan with its Government Trust and later transitioned the funding to the Tribe‘s Gaming Trust. The Tribe used its Fringe Internal Service Fund to fund its Employee Plan. Over 98% of the Fringe Trust funds came from the Tribe‘s gaming revenue. Jacqueline Reger, the Tribal Controller, explained in a 2019 deposition that the Tribe‘s ledgers kept IHS funds “completely separate from anything used to fund the employee plan or the member plan.” (R. 173-4, Reger Depo. Excerpts, PageID 8985) The Tribе allocated its IHS funds “specifically to the clinic and its needed resources to run efficiently and then behavioral health to run efficiently.” (R. 79-22, Reger Depo., PageID 3631)
D. Procedural History
The Tribe sued Blue Cross in January 2016. Its amended complaint alleges that
In April 2016, the district court granted in part Blue Cross‘s motion to dismiss the Tribe‘s first amended complaint, concluding that the MLR regulations do not create a substantive fiduciary duty under ERISA. Accordingly, it dismissed the Tribe‘s counts alleging state and federal claims based on Blue Cross‘s failure to seek MLR. A year later, the Tribe and Blue Cross each moved for partial summary judgment. In granting both motions in part, the district court concluded that the Member and Employee Plans were separate for purposes of its ERISA analysis. The district court also ruled that ERISA is inapplicable to the Member Plan.
On appeal, we reversed the district court‘s dismissal of the Tribe‘s MLR claims. We concluded that the Tribe‘s allegations that Blue Cross‘s failure to take advantage of MLR for eligible claims violated its fiduciary duties was sufficient to state an ERISA claim. Saginaw Chippewa Indian Tribe of Mich., 748 F. App‘x at 21. Our court rejected Blue Cross‘s argument that “its administration of the Tribe‘s plan simply is not subject to the MLR regulations” because those regulations “apply only to the expenditure of IHS funds,” explaining that:
Although BCBSM asserts that the Tribe‘s MLR claim therefore fails as a matter of law, BCBSM‘s argument is better understood as contending that the Tribe cannot show as a factual matter, that the regulations apply to its ERISA plan. But since the Tribe has alleged that the BCBSM was aware of the MLR regulations, that BCBSM failed to ensure that the Tribe paid no more than MLR for MLR-eligible services, and that all other conditions precedent to the MLR claim were met, the Tribe has sufficiently pleaded that the MLR regulations аre applicable to BCBSM‘s administration of the Tribe‘s ERISA plan. We emphasize that we express no opinion on the ultimate merits of the Tribe‘s MLR claim, and we hold only that it would be premature to dismiss the Tribe‘s claim at this stage of the proceedings.
Id. at 21–22. We affirmed the district court‘s conclusions that the healthcare plans were separate and that ERISA is inapplicable to the Member Plan. Id. at 19.
On January 4, 2019, the district court entered a stipulated order reinstating the Tribe‘s three MLR claims. Count I alleges that Blue Cross breached its fiduciary duty pursuant to ERISA by “[p]aying excess claim amounts to Medicare-participating hospitals for services authorized by a tribe or tribal organization carrying out a CHS program.” Count IV alleges that the Tribe is a “health care insurer” pursuant to the Michigan Health Care False Claims Act and that Blue Cross violated the act by not seeking the Medicare-like rate for MLR-eligible claims under the Member Plan. Count VI alleges that Blue Cross breached its common law fiduciary duty under the Member Plan by not seeking MLR for MLR-eligible claims.
After discovery, Blue Cross moved for summary judgment. The distriсt court granted the motion, concluding that the insurer had no duty to seek MLR under
II. ANALYSIS
A. Standard of Review
We review a district court‘s grant of summary judgment de novo. Carter v. Univ. of Toledo, 349 F.3d 269 (6th Cir. 2003). Summary judgment is proper if there are no issues of material fact and the moving party is entitled to judgment as a matter of law.
B. Contract Health Services and Medicare-Like Rates
The Tribe‘s three MLR claims—breach of a fiduciary duty under ERISA, violation of the Michigan Health Care False Claim Act, and breach of a fiduciary duty under common law—are premised on the argument that Blue Cross, in administering both the Employee and Member Plans, should have demanded Medicare-like rates for CHS care provided to eligible Tribe members at Medicare-participating hospitals and pre-authorized by the Tribe‘s CHS program. The primary question on appeal, therefore, is whether Medicare-like rates were even available for services authorized by the Tribe‘s CHS program and billed through the Blue Cross plans. The district court granted Blue Cross summary judgment on these claims based on its determination that the regulation defining the applicability of Medicare-like rates does not extend those rates to payments made through insurance plans like the Member and Employee Plans. Instead, Medicare-like rates apply only to CHS-funded services. The district court reached this conclusion through its interpretation of some regulatory history, a few IHS guidance documents, and analysis of select district court cases.
We start at a different point because courts “begin [their] interpretation of the regulation with its text.” Green v. Brennan, 136 S. Ct. 1769, 1776 (2016). “[A] fundamental canon of statutory construction is that ‘when interpreting statutes, the language of the statute is the starting point for interpretation, and it should also be the ending point if the plain meaning of that language is clear.‘” Thompson v. Greenwood, 507 F.3d 416, 419 (6th Cir. 2007) (quoting United States v. Boucha, 236 F.3d 768, 774 (6th Cir. 2001)). The same logic applies to interpretation of regulatory language. See Kisor v. Wilke, 139 S. Ct. 2400, 2414 (2019). We therefore deploy the standard tools of interpretation. See, e.g., Nat‘l Ass‘n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 688–69 (2007) (invoking the canon against surplusage in the interpretation of regulatory language); Long Island Care Home, Ltd. v. Coke, 551 U.S. 158, 170 (2007) (using the canon that the specific controls the general in construing regulatory language). If a regulation‘s meaning is plain, the court must give the “it effect, as the court would any law,” Kisor, 139 S. Ct. at 2415, and the court‘s inquiry into the regulatory
The disputed regulatory language concerns
all levels of care . . . that is authorized under part 136, subpart C by a contract health service (CHS) program of the Indian Health Service (IHS); or authorized by a Tribe or Tribal organization carrying out a CHS program of the IHS under the Indian Self-Determination and Education Assistance Act, as amended, Pub. L. 93–638,
25 U.S.C. 450 et seq. ; or authorized for purchase under§ 136.31 by an urban Indian organization (as that term is defined in25 U.S.C. 1603(h) ) (hereafter “I/T/U“).
Although the parties parse various parts of the regulatory language, the focus of our analysis is on what it means for a Tribe to be “carrying out a CHS program of the IHS.” According to the Tribe, this language unambiguously does not require the use of CHS or IHS funds for authorized care to qualify for the Medicare-like rate. The Tribe‘s construction of
In contrast, Blue Cross insists that the regulation unambiguously requires payment from tribal CHS funds for MLR discounts to apply. Blue Cross points to subsections (e), (f), and (g), which discuss how MLR payments to Medicare-participating hospitals are calculated.
See
Neither argument provides a satisfactory answer as neither approach clearly defines “carrying out.” Implicitly, the Tribe argues that a “Tribe or Tribal organization carrying out a CHS program” is satisfied whenever there is authorization by the CHS program. In contrast, Blue Cross asserts that “carrying out” a CHS program must entail the use of that program‘s funds, but it offers no case law or other evidence to support that “carrying out” is typically construed that way. Neither the Tribe nor Blue Cross explains how they reached these constructions.
The proper beginning point is the text of the regulation. We apply the traditional tools of construction to decipher the meaning of the regulation. We first examine definitions of “carrying out.” The term is undefined in the regulation. As with statutory language, we therefore must “give the term its ordinary meaning.” Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560, 566 (2012). The Oxford English Dictionary offers as a relevant definition of “carry out“: “To bring (something) to completion or fruition; to bring to a conclusion” and “to put (something) into action or practice; to cause (something) to be implemented; to undertake.” To carry out, Oxford English Dictionary, https://www.oed.com/view/Entry/28252?rskey=kjPfNF&result=1&isAdvanced=false#eid1333136834 (last visited Apr. 20, 2022). Merriam-Webster provides a similar entry, defining to “сarry out” as “to put into execution” or “to bring to a successful issue.” Carry out, Merriam-Webster‘s Unabridged Dictionary, https://unabridged.merriam-webster.com/unabridged/carry%20out (last visited Apr. 20, 2022). Notably, neither definition suggests that “executing” or “undertaking” something requires the expenditure of funds, as the district court did in construing
A comparison to the first clause in
The statutory authority on which the regulation rests does not challenge this construction. The Medicare Modernization Act requires Medicare-participating hospitals to participate in “the contract health services program funded by the Indian Health Service and operated by the Indian Health Service, an Indian Tribe, or tribal organization” and accept Medicare-like rates as payment for “items and services that are covered under such program and furnished to an individual eligible for such items and services under such program.”
An “authorization” trigger also fits within the regulatory regime more obviously than a CHS funding requirement. Federal regulations contemplate that a tribe‘s CHS program might authоrize a service before determining the source of payment for that service. The CHS program is a payor of last resort, meaning that a provider must exhaust alternative sources of payment before the CHS program is required to pay.
Although arguing that the plain language of the regulation supports its interpretation, Blue Cross also relies on selected parts of guidance documents that it argues support its narrower reading of “a Tribe or Tribal organization carrying out a CHS program.” In particular, Blue Cross emphasizes the IHS‘s answers in a 2008 “FAQ” document that address a connection between CHS funds and the MLR payments. Under a section on Contract Health Services, question 10 of the 2008 FAQ states:
We use Third Party funds to pay costs for certain members who do not qualify for CHS funding. Do the Medicare-like rates apply to these services?
No. Medicare-like rates only apply for services payable through the CHS program, for individuals who are eligible for CHS coverage, as defined by
42 CFR Part 136 .
(R. 173-27, CHS Services FAQs, PageID 9276) A later question explains that the services “payable at Medicare-like rates . . . must be provided to a CHS eligible individual and paid by an IHS or tribal CHS program or by an Urban Indian program.” (Id., PageID 9278)
As a threshold matter, because we conclude that the plain meaning of the regulatory language does not impose a requirement for the exclusive use of CHS funds for MLR payment eligibility, we need not consider agency guidance. However, it is worth noting that the agency guidance is not as clear cut as Blue Cross claims.
Indeed, some of the 2008 FAQs support the Tribe‘s argument. FAQ No. 17 explains that if a tribe uses tribal funds to pay for patients outside its designated area, it may still pay Medicare-like rates “as long as they meet CHS eligibility requirements within the regulations and services are authorized by the CHS program.” (R. 173-27, PageID 9277) Similarly, FAQ No. 28 states that a local hospital must accept MLR “if the local hospital is a Medicare participating hospital and if [the Tribal] CHS program has authorized payment for the services.” (Id., PageID 9278) The FAQ states that the CHS program must “authorize” the payment, but it does not state that the payment must come directly from the CHS program itself. Other FAQ answers follow this pattern of explaining that Medicare-like rates apply as long as the individual seeking treatment is eligible for CHS and the CHS program authorizes the care. These guidance documents do not provide a definitive answer,
We offer a final word about the reach of this holding. One of the healthcare plans at issue in this case, the Employee Plan, covers Tribal employees regardless of whether they are members of the Saginaw Chippewa Indian Tribe. Our holding should not be construed as saying that MLR is available for care to all Employee Plan participants. The plain language of
We offer a final note on the parties’ debate over the role of the Indian canon of construction. The Supreme Court has instructed that “statutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit.” Montana v. Blackfeet Tribe, 471 U.S. 759, 766 (1985). The canon is also embodied in the Indian Self-Determination and Education Assistance Act of 1975, which instructs that all provisions of the statute and agreements entered under it are to “be liberally construed for the benefit of the Indian Tribe” and “any ambiguity shall be resolved in favor of the Indian Tribe.”
C. The Remaining Legal and Factual Disputes
Our conclusion that the district court erred in reading into the regulatory text a requirement that the Tribe use CHS funds to pay for MLR-eligible care does not resolve this appeal. Blue Cross argues that there are several alternative grounds on which we should affirm the district court‘s judgment. We group these arguments according to relevant issue.
In the prior appeal in this case, we recognized that the Tribe had stated a fiduciary duty claim under ERISA against Blue Cross regarding the Employeе Plan and a common law fiduciary duty claim for the Member Plan. ERISA was enacted “to protect contractually defined benefits,” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113 (1989), and creates a fiduciary relationship between the plan provider and the insured group. Under ERISA, “a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.”
Three primary duties attach to fiduciaries: “(1) the duty of loyalty, which requires ‘all decisions regarding an ERISA plan . . . be made with an eye single to the interests of the participants and beneficiaries‘; (2) the ‘prudent person fiduciary obligation,’ which requires а plan fiduciary to act with the ‘care, skill, prudence, and diligence of a prudent person acting under similar circumstances,’ and (3) the exclusive benefit rule, which requires a fiduciary to ‘act for the exclusive purpose of providing benefits to plan participants.‘” Pipefitters Local 636 Ins. Fund v. Blue Cross & Blue Shield of Mich., 722 F.3d 861, 867 (6th Cir. 2013) (omission in original) (quoting James v. Pirelli Armstrong Tire Corp., 305 F.3d 349, 448–49 (6th Cir. 2002)). Our prior decision explained that “[f]ailing to preserve assets can be actionable under ERISA,” which the Tribe had
Although Blue Cross may have violated a fiduciary duty in failing to seek MLR, significant questions of law and material fact remain as to whether Blue Cross‘s decision not to seek MLR amounted to “failing to preserve assets” of the Member and Employee Plans or a breach of its other fiduciary duties. Blue Cross asserts that its actions merely amounted to adherence to the terms of the Member and Employee Plans’ contracts, which it argues means there was no fiduciary act. Similarly, Blue Cross raises factual issues—such as “it lacked the necessary information to pursue MLR for any Employee Plan claims“—that it asserts show it could not have breached a fiduciary duty. The district court did not address this issue in the first instanсe, and the record before us suggests that the analysis of how the Administrative Services Contract defined Blue Cross‘s duties, what information was necessary for Blue Cross to insist on Medicare-like rates, and which party had the responsibility to seek or provide that information is best accomplished below.
Similar disputes of law and material fact as to whether Blue Cross violated the Michigan Health Care False Claim Act (HCFCA) exist. The district court did not fully consider whether Blue Cross is or could be liable under the HCFCA because it concluded that Blue Cross had no obligation to seek MLR under the Member and Employee Plans. Blue Cross and the Tribe dispute whether Blue Cross “presented” false claims as required under the Act or whether the claims were even false. Again, the district court did not address this issue, and a remand is necessary for the district court to consider it in the first instance.
A final dispute of material fact exists as to the application of statutes of limitations to the Tribe‘s claims. Blue Cross argues that the statutes of limitations applicable to both ERISA and Michigan HCFCA provide a separate basis for rejecting the Tribe‘s claims under those laws. ERISA requires that a plaintiff file suit within three years of acquiring “actual knowledge of the breach or violation.”
Resolving the statute of limitations issue requires significant analysis of the record and application of the law to the facts. Blue Cross asserts that the record supports concluding that the Tribe was aware of Blue Cross‘s decision not to insist on MLR to Medicare-participating hospitals as far back as 2008, which would put the Tribe‘s claims outside of the statute of limitations. The Tribe points to other parts of the record to support its argument that Blue Cross‘s actions amount to “fraud or concealment” such that the relevant date for the statute of limitations is substantially
On remand, the district court must proceed with the triable and threshold factual question of whether the Tribe‘s CHS program authorized the care for which they assert they were entitled to pay Medicare-like rates. If the record shows that the Tribe‘s CHS program authorized this care, the court should then move on to consider Blue Cross‘s alternative arguments discussed in this section.
III. CONCLUSION
For the reasons stated above, we REVERSE the district court‘s grant of summary judgment to Blue Cross Blue Shield of Michigan and REMAND for further proceedings consistent with this opinion.
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CONCURRING IN PART AND IN THE JUDGMENT
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ROGERS, Circuit Judge, concurring in the judgment. I concur in the judgment and in Parts I and II of the majority opinion except for Part II.B. Remand is warranted, but not for the reasons given in Part II.B of the majority opinion.
I.
SCIT‘s opening brief is limited to a single argument that, with respect, simply does not hold up. SCIT‘s brief argues that the MLR regulation,
On that one specific question of the meaning of the regulation in question, the district court was correct in holding that the regulation does not extend MLR to payments owed to hospitals for carе that was not authorized by CHS. The relevant language is as follows:
The payment methodology under this section applies to all levels of care furnished by a Medicare-participating hospital . . . that is authorized . . . by a Tribe or Tribal organization carrying out a CHS program of the IHS under the Indian Self-Determination and Education Assistance Act.
The text at issue is also cabined by limiting language: the regulation does not apply to any and all care authorized by a Tribe. Instead, the care to which the payment methodology applies is limited to care authorized by a Tribe carrying out a CHS program. The natural reading of “a Tribe . . . carrying out a CHS program” is that the relevant care was undertaken as part of a Tribe‘s CHS program. If the regulation was intended to grant MLR pricing to a Tribe while it executes any healthcare program, there would be no reason to include the limiting language that specifically states that the regulation only applies to the CHS program. In short, the regulatory language at issue in this case simply cannot be parsed to apply the payment methodology to care that is not authorized by a Tribe in carrying out a CHS program, such as care authorized by a Tribe carrying out some other program.
Nothing in the context of the promulgation of the regulation suggests any broader or unusual meaning of the language. For instance, the title of thе regulation is “Payment to Medicare-participating hospitals for authorized Contract Health Services.”
The amendment would prohibit hospitals that participate in Medicare and that provide Medicare covered inpatient hospital services under the contract health services program funded by the Indian Health Services from charging more than the Medicare established rates for these services. This provision would apply to contract health services programs operated by the Indian Health Service, an Indian tribe or tribal organization or an urban Indian organization.
H.R. Rep. No. 108-391, at 656 (2003). Furthermore, the district court noted that a post-promulgation letter from the Surgeon General‘s office announcing the regulation stated that the MLR rule “includes all IHS-funded health care programs,” and that the regulation “will reduce contract health expenses for hospital services and enable Indian health programs to use the resulting savings tо increase services to their beneficiaries.” Letter to Tribal Leaders and Urban Program Directors (July 19, 2007), https://www.ihs.gov/sites/prc/themes/responsive2017/display_objects/documents/mlri/Tribal%20Leader%20Letter.pdf (emphasis added).
In response to the reliance by a different district court on certain FAQs that the other court used to apply MLR to non-CHS plans, the district court in this case referred to other FAQs in the same IHS document that clearly limited the application of MLR to CHS-funded care. For example, the response to several questions emphasized that MLR only applies if CHS pays for the relevant care:
10. We use Third Party funds to pay costs for certain members who do not qualify for CHS funding. Do the Medicare-like rates apply for these services?
No. Medicare-like rates only apply for services payable through the CHS program, for individuals who are eligible for CHS coverage, as defined by
42 CFR Part 136 .
11. We use Third Party funds to add to our CHS funds. Do Medicare-like rates apply for these services? Yes, as long as the CHS pays for the services and follows the regulations that apply to CHS and client eligibility (
42 CFR Part 136 ).. . .
29. What services are payable at Medicare-like rates?
. . . [T]he service or supply must be provided to a CHS eligible individual and paid by an IHS or tribal CHS program or by an Urban Indian program.
Medicare-Like Rates for CHS Services (Consolidated) FAQ (updated May 10, 2008), https://www.ihs.gov/sites/prc/themes/responsive2017/display_objects/documents/mlri/MLR%20FAQs.pdf (emphasis added). Even if we generously interpret the FAQs in SCIT‘s favor, the FAQ document taken as a whole has, at best, elements that support both parties’ arguments.
Because the meaning of the regulation is plain, we need not resort to canons of construction such as the canon in favor of an agency‘s interpretation of its own regulation or the canon of construction in favor of Indian tribes.
II.
At oral argument, however, SCIT focused on a different argument instead of on its interpretation of the regulation. Although the regulatory interpretation urged in SCIT‘s brief would appear logically to extend MLR to all employees under the employee plan, including employees who are not members of the tribe, SCIT counsel at argument emphasized that its case concerned only healthcare for tribal members. SCIT counsel repeatedly stated that he was “not seeking MLR” for non-mеmber employees, and also added that non-member employees have “nothing to do with this case.” See, e.g., Oral Argument at 14:32. Then, in response to a question during rebuttal about the strength of SCIT‘s plain-meaning argument, SCIT counsel argued that it made no difference, because SCIT was arguing that it was entitled to MLR only for care for tribal members, authorized by the CHS program, and paid for from a bucket of funding that included some CHS dollars. See Oral Argument at 1:11:40.1 SCIT counsel stated that “that verb, ‘authorized by,’ makes it necessary that the person has gone to the CHS program to get approval in the first place, and so that means the person is a member, they are entitled to be part of the CHS program . . . .” Oral Argument at 1:11:43. In response to the follow-up question of whether the regulation also required the use of at least some CHS funding, counsel responded “yes,” and explained that “every dollar that went to Blue Cross, that Blue Cross then took custody and control of [to pay claims] . . . came from my client for the CHS program.”2 Oral Argument at 1:12:03.
SCIT later argued in its rebuttal that the district court disregarded this factual argument by denying аll relief based on a legal determination that did not entirely dispose of the case—namely, the district
The question, to be clear, is whether Blue Cross undertook the administration of CHS-authorized coverage, and if so, whether Blue Cross applied MLR to that coverage. This court‘s questioning at oral argument went directly to whether Blue Cross has undertaken in part to administer CHS coverage. If Blue Cross did so, then the district court‘s total dismissal of the case was unwarranted by its determination that MLR applied only to CHS-authorized coverage.
Thus on remand the district court must examine the facts that the parties still dispute—whether Blue Cross was in any way responsible for administering the CHS program, which was described by SCIT‘s counsel in its rebuttal argument as claims for care for tribal members, authorizеd by CHS, and paid for from a pool of money that included some CHS dollars. Even after oral argument, the parties cannot agree on the basic facts underlying SCIT‘s rebuttal argument. Counsel for Blue Cross submitted an additional citation after oral argument, stating that counsel for SCIT falsely “represented that BCBSM paid claims for the Employee and Member Plans using funds from the Tribe‘s CHS Program.” Blue Cross asserted that “[t]he undisputed record is clear; BCBSM did not use CHS or IHS funds to pay claims for the Employee or Member plan.” The factual murkiness here can be clarified on remand. If SCIT‘s version of the facts is correct and Blue Cross did in fact administer CHS-authorized claims that were paid for from a pool of funding that included CHS dollars, then the court should proceed to address the alternative arguments by Blue Cross, including good faith and the statute of limitations.