*1 has stated a deciding whether defendant just
fair and reason to allow withdrawal ST. FRANCIS HEALTH CARE CENTRE, plea, the factors to be considered are: Plaintiff- Appellant, 1) elapsed of time that be- the amount with- v. plea tween the and the motion to 2) (or absence) it; presence draw SHALALA, Defendant-Appellee. Donna a valid reason for the failure move No. 98-3965. proceedings; withdrawal earlier 3) whether the defendant has asserted United Appeals, States Court of 4) innocence; or maintained his the cir- Sixth Circuit. entry underlying cumstances of the Argued: Oct. 1999. 5) plea; guilty the defendant’s nature 6) background; degree to which Decided and Filed: Feb. prior experience the defendant has had 7) justice system;
with the criminal
potential prejudice government granted. motion to withdraw is Bashara,
United States F.3d (6th Cir.1994). applied pre
The district court determined,
ceding within factors
discretion, inappropri that withdrawal was (J.A. 84-85).
ate. The district court 1) given:
did not abuse its discretion
length entry of time of time between plea
defendant’s and his motion for with (almost 2) year),
drawal one the absence of 3) plea breach of agreement, de 4) guilt,
fendant’s confession of the careful
reading plea agreement’s terms 5) plea hearing,
defendant at the de (Id.). history. criminal
fendant’s
CONCLUSION reasons, foregoing opinion
For the
the district court is AFFIRMED. *2 (briefed), P. A. Dennis
Jenifer Belt briefed), Shumaker, (argued Witherell Toledo, Ohio, Kendrick, for Plain- Loop & tiff-Appellant. Cavalier, Reed, Fox, C. Gina M.
Thomas DC, Smith; Shaw, McClay, Washington, & for Amicus Curiae. of the U.S. Sydlow,
Holly Taft Office Toledo, Ohio, Division, Attorney, Western briefed), De- U.S. (argued Ted Yasuda Services, Human & partment of Health V, Counsel, Region of the General Office Illinois, DefendanL-Appellee. Chicago, JONES, Thus, MOORE, patient’s total costs Before: than less GILMAN, they would at other Judges. Circuit facilities. facilities,' many Like health care a num- JONES, J., NATHANIEL R. delivered ber of patients St. Francis’s are Medicare MOORE, court, in which opinion *3 recipients. Consequently, Medicare reim- GILMAN, 948-951), J., (pp. joined. J. burses St. Francis for the reasonable costs separate dissenting opinion. a delivered provided patients.1 of services to Medicare 1395x(u) (v)(l)(A). See U.S.C. & Pur- OPINION regulations, suant to Medicare rules and JONES, R. NATHANIEL Circuit from 1983 to St. Francis was reim- Judge. bursed for such reasonable actual costs of provided. Because St. Francis’s Plaintiff-Appellant St. Francis Health (“St. Francis”) actual costs exceeded the routine appeals Centre Care (“RCLs”) limits for each of these grant summary judg- district court’s years, requested, St. Francis and was Defendant-Appellee ment for Donna Sha- granted, “upward adjustment” an lala, to its Secretary Department However, cost limits. in the 1991 and 1992 Human (“Secretary”). Health and Services periods, cost reporting the Medicare inter- Secretary St. Francis contends that mediary requests denied St. Francis’s in denying request erred for Medicare “upward adjustment.”2 an ap- St. Francis hospi- reimbursement for the pealéd to the Provider Reimbursement Re- tal-based skilled services. For the nursing (“PRRB”), herein, view Board which reversed the reasons stated we AFFIRM. Thereafter, intermediary’s decision. Administrator of the Health Financ- Care I. (“HCFA”), Administration the Secre- A. tary’s delegate, reviewed and reversed the PRRB’s decision. Pursuant to 42 operates St. Francis a rehabilitation hos- 1395oo(f)(l), St. Francis thereafter filed pital, hospital-based nursing a skilled facil- (“HB-SNF”), Complaint in federal district court seek- ity general nursing facility, ing review of the decision. and a in rural HCFA’s St. living transitional center Secretary Francis and the filed cross mo- Only Ohio. is rele- St. HB-SNF summary judgment. tions for The district purposes appeal. vant for this goal motion, rehabilitate, court denied St. Francis’s of St. Francis’s is to HB-SNF granted Secretary’s motion. simply patients. rather than maintain See St Shalala, Thus, Francis Health Care Centre v. routinely provides St. Francis “com- 1998). (N.D.Ohio F.Supp.2d 887 This prehensive therapy” rehabilitation for the appeal timely ensued. majority patients. Although vast of its St. therapy Francis’s intensive rehabilitation B. in higher per per pa-
results diem costs compared peers, plan tient therapy to its this Medicare reimbursement de- patient stays. veloped by also results shorter has been refined over per 1. The initial decision of whether the health 2. The 1991 and 1992 diem amounts were terminology as follows. The used in this foot- provider care should reimbursed is made explained note is by "intermediary,” usually pri- which is infra: company. yearly vate health insurance basis, On a $120.94 $139.06 $136.11 $143.98 $110.58 $116.90 ActualCosts Francis's intermediary determines of Mean HB-SNF Costs 112% amount which Medicare must reimburse the Statutory HB-SNF RCL poli- in accordance with Medicare J.A. at 120-21. The concluded procedures. 1395g, §§ cies and See U.S.C. per day is less [St. Francis's] cost "[s]ince 1395h(c)(l). cost, peer group excep- than the uniform no is allowed.” J.A. at 442. tion the cost Act which addressed Secretary. the Medicare Congress and by years HB- FS-SNFs differences faced between Congress, Beginning the two limits for costs, adjusting the cost recognized that Medicare rising HB-SNFs, of em- instead payment For groups. Medicare cost-based original (112% of level pro- previous 112% ploying little incentive provided structure peer costs of the efficiently. Congress per diem operate viders amount Congress lowered that group), Act the Medicare amended the 112% under of the difference reimbursable 50% costs” “reasonable and FS-SNFs. “any part of in- level for HB-SNFs should exclude Medicare costs)— ((112% x per diem unnecessary in the HB-SNF to be cost found curred costs))). (112% per x diem Still ser- FS-SNF health delivery needed efficient 1395x(v)(l)(A). *4 established the cost limits § dissatisfied with vices.” U.S.C. DEFRA, since enacted Congress has by which HCFA cost limits original The and to costs further measures to contain SNFs as free- categorized established HB- and of differing treatment reduce or and as urban hospital-based or standing FS-SNFs; post-date changes latter these rural, for permitted reimbursement case, Despite of this however.4 the events of of the mean cost up to 115% SNFs to the medicare changes plethora this group.” category, “peer or respective their always has plan, Congress reimbursement the cost limit subsequently reduced HCFA Secretary’s authority to intact left mean peer group costs. to 112% adjustments to cost limits “to make Therefore, entitled facility each was while appropriate.” extent the deems peer group 112% of to receive § 1395yy(c). 42 U.S.C. costs, peer types different the four had means, type of and therefore each group C. limit. The cost facility a different had cost history in the back- legislative this With were significantly limits for HB-SNFs a Medicare Act this case involves (FS- ground, free-standing SNFs higher than for (42 a regu- provision 1395yy(a)), U.S.C. SNFs). cost limits of separate Advocates (42 provision interpreting lation higher incurred argued that HB-SNFs 413.30), provision and a PRM care of the more intensive costs because (PRM 2534.5) regula- interpreting rendered, higher cost lim- justifying However, tion. opponents argued all its. of care provide the same standard
SNFs Statutory 1395yy: The 1. 42 U.S.C. separate cost limits not warrant- were Limits for Cost Framework ed. be the RCLs to Congress established from several Congress, aware results in 42 to different SNFs U.S.C. applied costs,3 HB-SNF en- higher studies of § 1395yy: (DEFRA), Act acted the Deficit Reduction determining 2319(b), Secretary, 98-369, § The 98 Stat. 494 Pub.L. may be (1984). payments amount of added new section to DEFRA Medicare cost only for costs concluded that associated 3. Several studies 50% essentially rejected process. difference HB-SNFs and allocation This cost to variations in the and FS- differing was attributable for HB- FS-SNFs reimbursement Inefficiency intensity of care or case-mix. SNFs. likely of the other was cause deemed Budget Act recently, in the More Balanced of the cost difference. 4432(a), 105-33, § 111 Stat. of 258, Pub.L. (1997), Congress eliminated 414-20 Budget Reconciliation Act In the Omnibus as the system cost as well two-tiered limits 103-66, § 107 Stat. Pub.L. plan. retrospective cost-based reimbursement (1993), Congress limits at froze cost prospective place, Congress In their enacted year levels for the next two fiscal fiscal per system diem payment based on federal years provision eliminated the authoriz- to HB-SNFs rate. additional reimbursement subchapter respect particular provid- under this needs or situations of made 413.30(a). routine costs of extended care ers.” Id. at regulation service recognize provides as reason- as follows: services shall (in delivery able the efficient of health % H* services) per diem costs of such services (a)(2) principle. General Reimbursable per to the extent that such diem costs may costs not exceed the costs following per exceed the diem limits.... necessary estimated HCFA to be § 1395yy(a). then delivery efficient of needed health establishes that the RCL for FS-SNFs may services. HCFA establish estimat- equal per to” 112% of the “mean “shall ed cost limits for direct or indirect over- diem routine service costs” of FS-SNFs. all or specific for costs of items or HB-SNFs, § 1395yy(a)(l). Id. at For groups services or items equal RCL “shall be to” the sum of the These imposed prospec- limits will be following: plus the FS-SNFs cost limit tively may per be calculated on a percent 50% of the amount which 112% admission, beneficiary, per per dis- per of the HB-SNFs mean diem routine diem, visit, charge, per per or other exceeds the service cost FS-SNFs basis. 1395yy(a)(3). Despite limit. Id. at ‡ ^ # # H* *5 limits, Congress, recogniz- these (f) Exceptions. Limits established under area, Secretary’s expertise the in this may adjusted upward this section be for Secretary afforded the the discretion to provider a under the circumstances “upward adjustments” make to these stat- (f)(1) specified in paragraphs through utory RCLs: (f)(5) adjustment of An this section. is Secretary may adjustments The make in only made to the extent the costs are (a) the limits set forth in subsection of reasonable, attributable to the circum- respect any this section with skilled specified, separately stances identified facility nursing [SNF] to the extent the provider, by the and verified the Secretary appropriate, deems based intermediary. upon mix beyond case or circumstances (1) Atypical provider services. The can the facility. control of the The Secre- show that the— publish tary shall the data and criteria (i) Actual of or fur- cost items purposes to be used for of this subsec- provider appli- nished a exceeds the tion on an annual basis. cable limit because such items or ser- § 1395yy(c). 42 U.S.C. scope, vices are in nature and compared gener- to the items or services Secretary’s 2. 42 The C.F.R. 413.30: ally by providers similarly furnished Regulation Adjusting for Cost classified; and Limits ’ (ii) Atypical items or fur- services are Pursuant to the discretion af- special nished because of the of needs forded in 42 Secretary the patients necessary the treated and are 1395yy(c), Secretary implemented the delivery in the efficient of needed health 413.30, which forth the “set[s] care. general may rules under which es- HCFA added). (emphasis 42 C.F.R. 413.30 recognized on tablish limits costs as in determining reasonable Medicare 3. PRM5 program payments” and “also sets forth a. The Provision governing exemptions, exceptions, rules adjustments July to limits established un- In HCFA established new exception der this section that may methodology handling HCFA make as for re- appropriate special methodology in of Fran- quests consideration which St. —the PRM, guidance 5. The or Provider Reimbursement in order to Man- issues ual, non-binding ais set of rules that the cost limit or disaggregated methodol- in this case.6 challenges cis per hospital-based percent of the No. in Transmittal forth is set ogy per diem cost If the SNF’s (“Determination cost. Reason- diem § 2534.5 per diem cost peer group Limit or exceeds of Cost Excess Costs in able center, must higher cost Cost”) for cost pertains to Mean percent per diem costs Excess explained. July after 1984: periods reporting cost the circum- attributable to are not which cost, pro- determining reasonable In re- exception is upon which stances excess per diem costs vider’s re- justified may cannot be quested a test for low subject to cost limit in the amount in either a reduction sult per compared occupancy and are excep- exception a denial of or similarly peer group7 costs of diem tion. providers. classified % ^ [*] [*] [*] v PRM 2534.5 short, for HB-SNF costs (emphasis above the added). RCL, permits reimbursement methodology periods begin- reporting ... cost With of 112% of only those costs excess 1, 1984-,for free- July each ning prior which are attribut- per the mean diem hospital-based each group standing atypical services. the HB-SNF’s able to applied ratio is each cost center’s group, “gap” approach creates [ie., applica- RCL] cost limit level within the 112% HB-SNF RCL and reporting period the cost ble to any of cannot recover HB-SNFs which For requested. exception propri- It is the above the RCL. their re- group with cost hospital-based each conse- as well ety “gap,” of this periods beginning porting after Francis facilities like St. quences has on 1,1984, applied to 112% July the ratio is *6 it, is at fall within which happen to (not cost per diem group’s the mean in this case. issue limit), adjusted by wage the the cost adjust- year reporting cost index and PRM b. Illustration 2584-5 the re- applicable factor to cost ment exception is the porting period for which operation of PRM is the the Because requested. following illustra- complex, the somewhat court, help- tion, is provided by the district ... is per diem actual The SNF’s component the ful: compared appropriate to = = mean statutory $80 112%of FS-SNF RCL
Assume: FS-SNF
mean
112%of the HB-SNF
Assume:
$120
=
=
(112%
+
FS-SNF mean
50%
statutory
112%of the
Then:
RCL
HB-SNF
mean)
of the FS-SNF
HB-SNF mean—-112%
=
=
,50($120 $80)
+
+
$20
$80
$80
—
= $100
directly
would be entitled
above
statuto-
the RCLs
the aforementioned
Based on
corresponding maximum reimburse-
to
with
HB-SNF
ry/regulatory language,
and ment rates:
listed below
per diem actual costs
groups:
peer
clarify
different SNF
7. There are four
providers and
and
to
intermediaries
(2)
policies
(1)
Free-
Secretary's
Hospital-based;
Urban
Urban
the
regulations.
reimbursement
(4)
(3)
Hospital-based; and
standing;
Rural
2534.5(B).
Freestanding. See PRM
Rural
pertain
fis-
exceptions at
to
issue
6. While
Hospital-
peer group is Urban
St. Francis's
1992, they
governed
are
years
cal
based.
were filed
2534.5 because
PRM
22, 1994,
December
1994.
August
Maximum
Actual Costs
Reimbursement
$150
$140
$130
$130
$120
$110
($120)
112% of HB-SNF mean
$120
$100
(the “gap”)
<—
$110
$100
—>
($100)
statutory
HB-SNF
RCL
$100
$100
90
80
90
80
$
$
$
$
($80)
112%of FS-SNF
(ie.,
RCL)
statutory
FS-SNF
(6th Cir.1996). Summary judgment
Note that
with actual costs between
is
SNFs
(the
RCL)
(the
appropriate
pleadings, depositions,
“if the
HB-SNF
$100
$120
level),
interrogatories,
answers to
and admissions
only recompensed
112%
$100
file,
amount).
affidavits,
(the
together
any,
“gap”
This is the
RCL
show that there is no
issue
to
genuine
decries.
Francis
moving par
material fact and that the
way
conceptualize
to
this for-
Another
ty
judgment
is entitled to
as a matter of
possible
mula
that there are three
cate-
is
56(c);
law.” Fed.R.Civ.P.
accord Terry
provider’s
actual
gories of actual costs:
Barr,
Moreover,
F.3d at
“the
(1)
than
equal
costs can be
less
or
to
underly
inferences to be drawn from the
(2)
RCL;
or
statutory
greater
equal
than
...
light
facts
must be viewed
statutory
to the
RCL but less than 112%
party opposing
most favorable to the
(3)
mean;
peer group
greater
of its
or
than
motion.” Matsushita Elec. Indus. Co. v.
peer group
of its
mean.
equal
574, 587,
Corp.,
Zenith Radio
475 U.S.
2534.5,
provid-
if the
Pursuant
(1986) (citation
S.Ct.
II.
applying
agency’s regulation
cause
reviews an order
complex
changing
This Court
circumstances calls
or
summary judgment
unique expertise
de novo and
and
granting
upon
agency’s
piresume
we
legal
policymaking prerogatives,
uses the same
standard as used
authoritatively
interpret
Terry
power
court. See
Barr Sales
that the
district
Co.,
component
is a
regulations
Inc. v. All-Lock
96 F.3d
its own
Agency,
costs,
regardless
their
reasonable
lawmaking powers.”);
delegated
agency’s
a HB-
they are a FS-SNF or
(“The
whether
Harris,
Secretary’s
at 221
F.3d
Br.
29.
SNF. See St.
Francis’s
at
Sec-
regulations
Medicare
interpretation of
ond,
§
argues that PRM 2534.5
Francis
St.
weight
plainly
unless it is
controlling
given
policy grounds because
is unreasonable on
regula
or inconsistent
erroneous
dispa-
and HB-SNFs
it treats FS-SNFs
omitted).
tion.”)(internal
quotations
regime places FS-SNFs
rately. The
inter
sum,
regulatory
if “it is a reasonable
at a distinct ad-
provide atypical services
must defer to it.” Shala
... we
pretation
all their
reimbursing them for
vantage,
Guernsey
Hosp.,
Memorial
U.S.
la
hand, HB-SNFs re-
costs. On the other
94-95,
the Medicare Act § 1395yy in 42 Congress Neither U.S.C. report Finance Committee which Senate § Secretary nor the 42 C.F.R. 413.30 like it claims makes clear that facilities St. be reimbursed mandated that HB-SNF recover all statutory RCL set amount above Francis should be able to of
945
between 112% of the mean
therefore
the difference
1395yy.
§in
St. Francis
forth
per diem costs for HB-SNFs
FS-
it claims the lan-
its case when
overstates
course, just
Congress
Of
as
did
SNFs.
provisions “dictates
that a
guage of these
Secretary
gen-
should
not address how
that its costs
who demonstrates
adjustments in reim-
erally grant upward
1)
limit are
due to
in excess of its cost
bursements,
specify
it also did not
how the
2)
rea-
of
light
do so in
of this new
Secretary should
sonable, attributable,
and veri-
identified
for
ineffici-
regime accounting
HB-SNFs’
fied,
in full
is entitled
to reimbursement
ency.
again,
granted
Yet
she was
discre-
Br. at
limit.”
above the cost
make this determination.
tion to
added).
Instead,
provi-
(emphasis
both
statute,
of
aspects
Given these
we
mere-
phrased
permissive,
in the
sions are
agree with the district court that the Sec-
Secretary “may” adjust
ly
that the
stating
retary’s interpretation
regulation
§
upward.
1395yy(c);
U.S.C.
cost limits
reasonable,
in the PRM is
and statute
413.30(f). Moreover,
§
neither
42 C.F.R.
First,
agree with
arbitrary.
we
the Secre-
guidance as to the level
provision provides
way
tary
the best
to characterize the
Secretary must make.
adjustment
applies
the PRM is that
effect of
provides
Specifically,
C.F.R.
all
to ac-
“discount factor” to
HB-SNFs
adjusted
“may” be
although
limits
for the “unreasonable costs” above
count
only be ad-
“atypical,” they
when
should
As the district court
those of FS-SNFs.
the costs are
justed upward “to the extent
for
unrea-
recognized, discounting
these
413.30(f).
As
reasonable.”
C.F.R.
comports
general
sonable costs
explicitly placed
Secretary argued,
this
sys-
recognition by Congress that “certain
“typicality”
ser-
the determination
un-
... associated with
temic inefficiencies
of costs
vices versus “reasonableness”
reasonable costs
associated
[]
within her discretion.8
Francis,
HB-SNFs.” St
F.Supp.2d
at
Having
what the statute does
noted
fact,
PRM calculation reduces
what it does do.
do,
important
it is
to note
by the
the reimbursement
to HB-SNFs
supra,
Congress responded
As discussed
very
proportion
same
demonstrating that about half
to studies
be inefficient—half of the dif-
deemed to
cost of HB-SNFs was due
greater
ference in costs between FS-SNFs and
sys-
two-tier
inefficiency by establishing a
Likewise,
guideline
com-
HB-SNFs.9
being
from
prevents
413.30,
tem which
HB-SNFs
al-
ports with 42
C.F.R.
Secretary
for
those inefficient costs.
the extent
reimbursed
to determine
lows
Hence,
HB-SNFs, Congress
set the
services are
to which costs
413.30(f).
fifty percent of
“reasonable.”
statutory cost limit at
new
Guernsey,
determining
parts
reasonable
costs.”
with other
8. This is consistent
Act,
which also
(quoting
]
Medicare
PRM when it attacks Policy Arguments policy grounds. on being irrational 2. that the Specifically, St. Francis believes agree also with the district We it regime is irrational because deems policy arguments Francis’s that St. court unreasonable, be below the 112% level to unavailing. PRM 2534.5 are against they reasonable when exceed but First, con given Congressional the clear But Francis’s Br. at 34. amount. See St. general suffer from that HB-SNFs clusion accurate characterization of this is not an inefficiencies, through Secretary, court the PRM’s effect. As the district intermediary, required should stated, applies to the costs the “discount” provider’s submitted reim to review each RCL; all have of all above the HB-SNFs if its costs request bursement to determine unreason- costs which are deemed to be light Particularly reasonable. were able, “systematically and all are undercom- patient vastly different services and SNFs’ pensate[d] exactly the same manner.” im populations, requirement such a would Francis, F.Supp.2d at 894. The pose high burden and cost on the Secre once ex- only difference rendered is that tary' required by span beyond the statute the 112% thresh- burden cess costs —a old, resulting portion of the excess costs arbitrary It was regulation. or the neither from services can be reimbursed. capricious for the instead to nor factor “un- reflecting Yet the discount discount account for introduce a factor to still im- reasonable” costs of HB-SNFs systemic cost inefficiencies identified pacts upon all the 112% HB-SNFs above by Congress, allowing while still HB level; words, in other there is still an SNFs to obtain reimbursement when which, amount of their costs deemed un- demonstrate that costs above the 112% PRM, reasonable those HB-SNFs threshold are due supra cannot recover. See n. 9. Second, argues errs it St. Francis when unfairly disadvantages
that PRM 2534.5 Argument APA St. Francis’s relative to for “no HB-SNFs FS-SNFs legitimate reason.” St. Francis’s Br. at 32. agree Finally, we can not with St. simply Congress’s argument that PRM 2534.5 is ignores This assertion Explanation agree Secretary's arguments Act of 1984: of Provi- 10. We duction First, regarding legislative history. histo- Approved by sions 21, the Committee on March inconclusive, sparse ry generally (Comm. 1984) Vol. 1 at 947 Print given weight little when the should be text of 2534.5, added). through (emphasis clearly dispute. the statute so resolves this Secretary by granted the discretion Second, history even the to which St. Francis Act, plain is indeed con- text of the Medicare Secretary's points does not contradict provides sistent with this directive because reading guage statutory language. The lan- determining general formula for the extent report from the Senate that St. Francis costs are "reason- to which an HB-SNF's "[fjacilities emphasizes ceptions eligible ex- is that able.” receive, justified, up could where Comm, all their reasonable costs.” Senate Finance, Sess., Cong., 2d Re- 98th Deficit
947
interpretive rule. The rule
nition of an
pursu
adopted
not
it was
invalid because
reimburse
not effect new substantive
does
procedures
and comment
the notice
ant to
553(b).
prior
inconsistent with
ment standards
APA,
the
5 U.S.C.
in
set forth
central characteristic of a
regulations
another
the
sustained
Guernsey,
In
Court
—the
Guernsey,
rule.
514 U.S.
substantive
See
concerning reim
PRMs
Secretary’s
of the
1232;
Shalala,
99,
Warder v.
at
115 S.Ct.
so,
stated
doing
the Court
bursement.
Cir.1998).
(1st
Rather,
73,
149 F.3d
subject to
was not
the PRM at issue
that
in
above,
reasonably
explained
the
requirement of
and comment
the notice
terprets
regulation
a statute and
“prototypical
APA
it was
the
because
general
terms
placed the determination
interpretive
an
rule.”
example of
as the “reasonableness” of costs
such
99,
1232. See 5 U.S.C.
115 S.Ct.
at
in
hands of
“typicality”
the
of services
the
553(b)(A)
(establishing that notice
Secretary.
agree
We
Secre
“interpretive
required
are not
comment
partially performs this
tary that the PRM
rules,
policy, or
general statements
by
means which HB-
by providing
role
procedure
organization,
agency
rules of
are ac
systemic unreasonable costs
SNFs’
the Court defined
Specifically,
practice”).
exceptions.
in determining
counted
an
as those “issued
interpretive rules
Thus,
Friedrich,
in
PRM “cre
just as
agency’s
public
advise the
agency to
F.2d at 837.
ates no new law.” 894
rules
statutes
of the
construction
“Rather,
interprets
it
lan
U.S.
Guernsey, 514
which it administers.”
applied
particular
... as
to a
medi
guage
(citation omitted).
at
115 S.Ct.
Id.;
of treatment.”
cal service or method
the force and
“do not have
Such rules
Warder,
(finding
an
also
149 F.3d
see
are not accorded
of law and
effect
interpretive
be
ruling
administrative
adjudicatory process,” and
in the
weight
ambiguity”
“it
an area of
addresse[d]
cause
change” which
not effect a “substantive
do
ground
and did not “stake out
existing regulations.
with
is inconsistent
already
of which
not
[was]
basic tenor
Secretary
also Friedrich v.
Id. See
itself’) (internal quota
in the law
outlined
Cir.1990)
(6th
HHS,
(holding
F.2d 829
omitted).
tions and citation
coverage determination
that a national
contrary
are anchored
arguments to
rule).
interpretive
Secretary
was
that PRM 2534.5
prior argument
at PRMs
looking
Lower court decisions
ap
plain language
“contradicts
Guernsey, con
with
have been consistent
in
purports
it
plicable regulation that
interpretive
are
rules
cluding
35, a
Francis’s Br. at
conten
terpret,” St.
and comment
require
notice
and do
Similarly,
disagree.
which we
tion with
See,
Mary’s Hosp. v.
rulemaking.
e.g., St.
argument
APA
dissenting opinion’s
& Blue Shield
Blue Cross
Ass’n/Blue
underlying view that
emerges from its
also
(2d
Shield,
F.2d
& Blue
Cross
an inter
be considered
the PRM cannot
that PRM rules “have
Cir.1986)(stating
because
of 42 C.F.R.
pretation
‘interpretive
consistently
held to be
been
regulation
key
terms of that
“confuses”
rules,’
notice
exempt from the
and thus
unrelated to the reasonableness
and is
Columbus
requirements”);
and comment
Again, based
atypical service costs.
Califano,
Inc. v.
Community Hosp.,
light
and in
supra
discussion
our
Cir.1980)
(8th
(stating
F.2d
interpreting
agency
to an
deference owed
rules).
interpretive
PRMs are
simply disagree
we
regulations,
its own
Thus,
simple fact that
this conclusion.
beyond the
Even
APA’s
comply with the
required
as inter
generally categorized
was
PRMs
issuing
procedures
notice and comment
by PRM 2534.5
pretive, the work done
PRM 2534.5.11
Guernsey
defi-
it within the
Court’s
places
regulations. As this
interpretation
of its
tent”
unpersuasive
St. Francis’s
also find
11. We
stated,
agencies
"[a]dministrative
Secretary’s
Court has
argument
regarding the
"inconsis-
*11
HB-SNFs,
average per
diem cost of
IV.
2,
limit
HB-
and
is Level
the cost
$100
find PRM 2534.5 to
do not
Because we
represent the
All of these numbers
SNFs.
interpretation
capricious
arbitrary
be an
cost,
daily
per person,
operat-
average
issue,
we
regulation
of the statute
nursing facilities.
ing various skilled
AFFIRM.
services,
provide atypical
that
Facilities
GILMAN,
dissenting.
Judge,
Circuit
expensive, may
which tend to be more
upward adjustments
expenditures
Ad-
requirement of the
seek
A fundamental
(APA)
Act
is that
Procedure
above their cost limits. Under
reim-
ministrative
pro-
given
up
notice of
persons
process originally
review
set
interested
bursement
op-
regulations
413.30(f),
and an
posed
substantive
the Health Care
comment. See 5 U.S.C.
portunity to
Financing
granted upward
Administration
that
majority
concludes
553. The
adjustments
that demon-
to HB-SNFs
Provider Reimbursement
question,
rule
(1)
strated that
their costs were
reason-
(the
rule),
is ex-
Manual
(2)
able,
services,
atypical
attributable to
APA’s notice and comment
empt from the
(4)
(3)
identified,
indepen-
separately
“interpretive”
an
because it is
requirement
413.30(f).
dently verified. See C.F.R.
553(b)(A).
I believe that
rule.
id.
See
1984-1990,
years
In the
Francis re-
St.
Because the
the PRM rule is substantive.
compensation
regula-
full
this
ceived
under
without notice and
rule was enacted
tion for its direct service costs
exceed-
comment, it should there-
opportunity for
limit,
having
ed its cost
demonstrated
invalid.
fore be declared
expenses
reasonable and
its extra
were
legitimately
providing
due to the costs of
I. BACKGROUND
if
atypical
example,
services. For
majority,
gov-
by the
explained
As
averaged
Francis’s routine costs had
$100
different cost
erning statute establishes
per
per person
day during
years,
those
hospital-
free-standing
limits for
versus
atypical
and its
direct service costs had
Free-
nursing
based skilled
facilities.
per day,
facility
totaled
then the
would
$30
(FS-
standing
nursing
skilled
facilities
have recovered the
above its cost limit
$30
SNFs)
112% of
equal
have a cost limit
upon making
showing
called for in the
FS-SNFs,
per
the mean
diem costs of all
regulation.
1.
parties
which the
Level The
refer
as
changed
system.
The PRM rule
this
nursing
hospital-based
cost limit for
skilled
rule,
atypical
Under the PRM
St. Francis’s
(HB-SNFs)
computed through
facilities
expenditures
only
service
are recoverable
first,
step process:
one
two
determines
to the extent
its total costs exceed
all
per
112% of the mean
diem costs of
num-
Using
Level 3.
the same illustrative
HB-SNFs,
parties refer
which the
to as
before,
bers
St. Francis’s routine
3,
compared
Level
that number is then
atypical
service
costs are
its
ser-
$100
midway
with Level 1. The amount
$30,
only
vice costs are
it would recover
HB-
Levels 1 and
limit for
3 is the cost
3))
(($130
eosts)-($120
total
Level
SNFs,
$10
parties
which the
refer to as Level
expended
Thus,
majority’s
$30
illustrative sce-
nario,
1,
provider’s
When a
total costs do not ex-
limit for
is Level
the cost
FS-
$80
SNFs,
3,
3,
equaling
is Level
112% of
ceed Level
none of its
service
$120
Workers,
335, 351,
prior construction
Iron
98 S.Ct.
are not bound
their own
(1978) (stating
We
review the
ICC,
Cir.1986)
(6th
(cit-
de novo and with-
781 F.2d
construction issue
regard
ing NLRB
out
to the administrative understand-
v. Local Union No.
Internation-
statutes”)).
Bridge,
Ornamental
al Ass'n
Structural &
four reimbursement
Thus,
requirement
in 1991 and
are recoverable.
*12
At a
42
413.30.
C.F.R.
requests for
criteria set out
1992,
Francis’s
when St.
under maximum,
were evaluated
PRM rule conflicts
adjustment
the
upward
case,
not recov-
rule,
facility
impos-
could
the
In either
it
PRM
prior regulation.
the
cost
above its
expenditures
any of its
HB-
er
on the
restrictions
es new financial
2)
did
(Level
total costs
its
limit
because
requiring no-
regulates,
it
thus
that
SNFs
true even
This was
Level 3.
exceed
not
to
enactment.
prior
tice and comment
that
acknowledges
Secretary
the
though
§ 553.
5See U.S.C.
legitimate-
were
expenditures
promulgated,
PRM rule was
Before the
atypical ser-
provision
the
ly spent for
HB-
to reimburse
Secretary was free
the
vices.
atypical services for
provided
that
SNFs
costs,
those costs
including
all of their
ANALYSIS
II.
Indeed, applicable
the
limit.
above
PRM
is substantive
A. The
rule
1991,
Secretary rou-
the
years prior
the
following
has set out
court
This
adjustments to St.
upward
tinely granted
na-
determining the
guidelines
broad
Francis,
all
direct ex-
reimbursing
of its
inter-
rule: “An
an administrative
ture of
Under
atypical services.
penditures for
what the admin-
simply states
pretive rule
however,
rule,
no
the PRM
means,
only reminds
agency
istrative
spent
whether amounts
longer determines
On
existing duties....
parties of
affected
2 and
Levels
services
hand,
action the
by its
other
if
The costs
compensated.
3 should be
duties,
law, rights or
new
intends to create
services,
other-
even
such
to be a
considered
properly
the rule is
four requirements
to the
wise conform
Thomas,
v.
Michigan
rule.”
legislative
413.30(f),
recovera-
are never
42 C.F.R.
Cir.1986) (cita-
(6th
176, 182-83
F.2d
805
ble.
omit-
marks
quotation
tions and internal
to a
requirement
adds a new
A rule that
ted).
rules
interpretive
exemption for
The
substantive,
requirements is
existing
set of
by the courts
narrowly construed
must be
comment before
notice and
requires
important purposes served
in view
Human
Dep’t
See Ohio
can be enacted.
requirements.
procedural
APA’s
by the
Svcs.,
& Human
Health
Dep’t
v.
186, Svcs.
Reich,
See,
11 F.3d
v.
e.g., Caraballo
Cir.1988)
(6th
(holding
1228, 1235
F.2d
862
(D.C.Cir.1993).
195
a “main-
adoption of
department’s
that the
its conclusion that
defending
In
ceiling” for noninstitution-
tenance amount
than sub-
interpretive rather
PRM rule is
Medicaid
of institutionalized
spouses
alized
stantive,
emphasizes that
majority
comment
notice
required
recipients
statute,
§ 1395yy,
42 U.S.C.
controlling
that was
requirement
a
added
because it
process
exemption-granting
leaves
existing
implicit in
compelled by or
depart-
Her
Secretary’s discretion.
Sullivan,
v.
Perales
see also
regulations);
pre-
subject
on the
prior regulation
ment’s
(deter-
Cir.1991)
(2d
1348, 1354
F.2d
948
discretion, subject
four
to the
that
serves
when it
rule was substantive
mining
a
that
above. See
listed
requirements
submissions
state Medicaid
required
413.30(f).
main-
majority therefore
possessed
state
guide
simply
rule is
a
assurance
tains that the PRM
documentation);
v.
Linoz
of discretion.
Secretary’s exercise
supporting
Cir.1986)
(9th
871,
Heckler,
rule
“the
does
F.2d
[PRM]
It concludes
reimbursement
department
a
new substantive
(concluding
effect
regula-
prior
inconsistent
service
for ambulance
payment
standards
excluding
sub-
of a
characteristic
solely
central
to ob-
tions—the
to another
hospital
from one
Op. at 947.
rule.”
physician
stantive
specialty
of a
tain
where “instead
rule
minimum, was
substantive
At a
disagree.
respectfully
I
regulation,
pre-existing
clarifying
fifth,
simply
unwaivable
rule
adds
per
exception”).
carved out a
se.
remaining
[it]
cases
cited
the Sec-
Guernsey
v.
retary,
case of Shalala
Memorial
the challenged modification was an
1232,
Hosp.,
adjudicative
115 S.Ct.
ruling
specific
as to a
party
(1995),upon
majori-
L.Ed.2d 106
which the
general legislative
rather than a
rule. See
relies,
ty
just
is consistent with the cases
Montana Power
Co.
Environmental
(“We
(9th
cited.
See id. at
S.Ct. 1232
Agency,
Protection
608 F.2d
Cir.1979)
agree
can
that APA rulemaking would still
(affirming an Environmental
*13
required
adopted
be
PRM 233
a new Protection Agency
determining
order
position
inconsistent with
when
power
Secre-
construction of a
plant “com-
tary’s existing regulations”).
menced,” even though the order was incon-
prior adjudicative
sistent with
rulings of
Moreover, other courts have held that
103,
agency);
NLRB v. Local
Int’l
rule,
rules like the PRM
which impose
Bridge,
Ass’n
Structural and Ornamen-
binding
on an agency’s
constraints
existing
Workers,
335,
tal Iron
98 S.Ct.
discretion,
generally
are
considered sub-
651,
(1978)
inefficiency of accord- atypical
imbursement Op. at 945-946.
ingly. See America, STATES UNITED analysis reveals Closer Plaintiff-Appellee, sys- two-tier analogous rule aas not function PRM rule does tem. factor,” “discount commonly understood Connie David LANZOTTI compensation denies completely because Hughes, Defendants- L. atypical spent on first amounts Appellants. words, an HB-SNF In other 98-2728, Nos. 98-2750. ser- routine spends $100 Appeals, Court from States anywhere $1 $20 United vices and no reimburse- Circuit. will receive Seventh atypical services costs. service its all for ment at 27, 1999 Oct. Argued deemed arbitrarily expenditures are These 15, 2000 Feb. Decided or, alternatively, in efficient to be 100% factor.” “discount subjected to raises hospital same that the the extent To however, it $20, above