Becerra v. Empire Health Foundation

Wikipedia · Justia (with opinion) · Docket · oyez.org

Argued on Nov 29, 2021.
Decided on Jun 24, 2022.

Petitioner: Xavier Becerra, Secretary of Health and Human Services.
Respondent: Empire Health Foundation, for Valley Hospital Medical Center.

Advocates:

• Jonathan C. Bond (for the Petitioner)

Facts of the case (from oyez.org)

In 2005, the U.S. Department of Health and Human Services promulgated a rule eliminating the word “covered” from 42 C.F.R. § 412.106(b)(2)(i), effectively amending HHS’s interpretation of the phrase “entitled to [Medicare]” in a subsection of the Medicare Act. This amendment affects the way HHS calculates its reimbursement to certain hospitals that serve low-income patients.

Plaintiff Empire Health Foundation challenged the 2005 Rule as part of a larger challenge to HHS’s calculation of its 2008 reimbursement. The district court granted partial summary judgment for Empire based on a finding that HHS did not follow correct procedures under the Administrative Procedure Act (APA) because of numerous mistakes that occurred during the notice-and-comment process. The U.S. Court of Appeals affirmed on different grounds, concluding that HHS did follow the correct procedures under the APA, but the rule is substantively invalid  because it directly conflicts with Ninth Circuit precedent holding that the phrase “entitled to [Medicare] is unambiguous.”

Question

Did the Department of Health and Human Services follow the correct procedures when it promulgated a rule changing the way it calculates Medicare reimbursement rates for hospitals?

Conclusion

HHS followed the correct procedures; in calculating the Medicare fraction, individuals “entitled to [Medicare Part A] benefits” are all those qualifying for the program, regardless of whether they receive Medicare payments for part or all of a hospital stay. Justice Elena Kagan authored the 5-4 majority opinion of the Court.

The phrase “entitled to benefits” means the same thing as “qualifying for benefits.” By counting everyone who qualifies for Medicare benefits in the Medicare fraction—and no one who qualifies for those benefits in the Medicaid fraction—HHS is following the statutory procedures that seek to capture two different segments of a hospital’s low-income patient population. Thus, HHS is correct in counting everyone regardless of whether they receive Medicare payments for part or all of a hospital stay.

Justice Brett Kavanaugh authored a dissenting opinion, in which Chief Justice John Roberts and Justices Samuel Alito and Neil Gorsuch joined. Justice Kavanaugh focused on the text of the statute, arguing that a patient who, by statute, cannot have payment made by Medicare that day is not “entitled to” have payment made by Medicare for that day.