thanks for accommodating what was a little bit of an unusual scheduling for us to start at three thirty in the afternoon but it was a death case earlier as you know in this court at the four we call the first case judge kathleen jen i would like to think judge william o bertelsmann from the eastern district of kentucky who's sitting by does ignition with us today and tomorrow the presence of district judges and other visiting judges are really helpful to us in trying to keep current with their documents so thank you judge you may call it one four one three eight three covenant medical center incorporated versus the secretary of health and human services arguments not to exceed fifteen minutes for side mr issue is which is on the statute or interpretation question and as to the collateral stop wishes rely on the briefs of course all addressing the question might have but i want to get to the heart of it and i think the issue squared squarely presented as what  fifty four zero four zero four mean and does it say what the hospital says it means which is that a reopening is required when you have the jurisdiction improper pending appeal as to g i me and i am me and we the hospital says that it does and we say that principally because that's what the statute says and what i mean by that is that when you look at the text of the statute fifty five zero four which was amended to revise existing law all it has three subsections a b and c and if you hone in on c c application and that or prefers to language and that language is pretty clearly stated there and let me have you pause right there for just a moment if you would i freely admit that i should know the answer to this question but i don't see appears in the act the act modifies the whole bunch of different sections in the social security act weird wife i can't thirteen ninety five w w note so this is a no this is the note and if you go back to the statute in the public law that's where you find c is an overlay of am i wrong here or haven't the parties really been treating c in the act which you've just conceded is a note as as statutory language but it's not what is statutory language it's just not codified there are times when there are provisions i think that govern things like the scope of application that don't actually get built into the code itself but it is still an active lol and here we have parties i don't think anybody disputes the validity of it and the agency in this case has built regulations around it as well just trying to find out what what is the significance of it being not codified and being a note as opposed to having been codified i don't know that attaches any significance other than that the people codified the statutes didn't include this particular subsection in the code itself when they purely didn't do that because it says no that's right it is not in the code correct ok so if we look at that the text of that section you look at it and it says application and you review that to ghent am being you say what is the section mean and it says the amendments made by the section shall not be applied in a manner that requires reopening of settled possible calls reports as to which there is not a jurisdiction we proper appeal pending as of the date of the naacp and of the a c s who took a snapshot as of the date of the night and which is march twenty third two congress sometimes doesn't they say things as well as they could and sometimes even say things that have unintended consequences that doesn't mean that it isn't binding and you have to look in imply the traditional statutory canons to figure out what the section means and when you look at the section you say why is it there now the government is advanced a position that says it's essentially superfluous it was designed to reinforce the fact that the the agency has discretion but actually and happens from times right i mean  really exhaust every possibility and possibility i mean that is an acceptable conclusion here it's theoretically proper although all say that you still do need to look at the law and understand what it means but when you look at those you say ok are there any other possibilities and when you look at this statute you say there are no and the reason for that is that if you need to reopen there's no other circumstances in which you would reopen except to go back and to to apply this  well i will say that as your honor if that were really what it meant then i think congress could have stopped writing they could have dropped the pen at the word settled cost reports they could have just said the moment made by this section shall not be applied in a manner that requires reopening of any settled hostile caught reports period they went on however and described a very specific set of circumstances that specific set of  you have a snapshot on march twenty three two thousand and ten so it's what comes after yes that you say becomes and that's really the challenge is that the government is advance an argument that says well it's not superflu superfluous but they don't account for that language because it could have congress could have said nothing and the cut government would be right they could have dropped the pen where i said they could have dropped the pen and the government might be right but they don't explain away the latter part of that section you really do have to do that and judge catholics to your point oh no this is well the case law in which the government relies and the case all that talks about superfluous language is a little bit more limited i think than we might give it credit for if you look at some of those cases they they talk in terms of doublets which i understand to be things like null and void cease and desist things that sound good together but really mean the same things they also talk about overlapping sections in a code or statute in this case where the same language is employed in different spots it doesn't address this circumstance you have a body of case law under medicare that was revised to give more to the hospitals because there was this that the hospitals were having to bear and congress intended this and there's no dispute about that now what do you do when congress actually drafts a specific subsection that wasn't there before i don't think the case all contemplates a circumstance where that is considered superfluous note you have to drive down and figure out what that language mean but once you give it back to digital question once you have to drive down to figure out what it meant and you have to draw inferences from that why is that say to my cheap locklear i don't interview any candidates for next year don't have a v ever that doesn't mean i want to interview everybody who does have a b average well and again and i see why that's so and that's why when you get exam in the circumstances the really the only reason why you do this is because you've taken a snapshot of the entire universe of what's out there there's no reason to have done that unless you're saying to reopen but to deal with your question of articular groener chevron  two i think it's often used as a crutch it shouldn't be but it often is that you're not really trying to figure out how to apply the canons of construction to figure out what the languages but there are circumstances of course where you do get to chevron two i'm not sure that this  it and the reason why i say that is that in your typical agency administration administrate of law case what you're trying to do is chevron and its progeny says well the agency needs to figure this out because only they know how this statute operates and how the medicare regime works and the like this is a question about what is the what are the words mean in context and i don't know that that's a chevron two discussion but let's say we do get into chevron two we talk about well we're going to have to ford some discretion although the governments have done something to deserve the discretion that's given interest to it or that the deference excuse me that's given to it and here you have to look at the record in the body you say have the advanced a position is actually plausible reason the law on its face it folds back into the chevra want to nelson's how do they explain away why congress included the additional language they don't do that they don't do that they rely upon this notion that there can be voluminous statute and a very long law let me ask you i mean we also have a and b and a person just as a factual question i assume that the so jack to the pending appeals that you're focused on here  were last reported periods from before july first two thousand that that's ok so we have a in be in it so darn hard to figure out where these match up with this act but  i think it's a says that this what you call clarifying rule is effective for cost reporting periods beginning on or after july one two thousand and ten because the way breaks out it appears an a and b but you're right so there's the says you don't have to reopen these things and so you want us to apply a positive there that you do have to reopen ones that are subject of a pending appeal but it would seem like that in turn a gate say so well aren't we doing more violence to the statute than then simply then we would if we saw some of it to be superb i don't think so i don't think we're doing violence to we're trying to understand what  he means we're trying to understand what it means in context but to your point and maybe to judge bertelsmann point and part of that you've got to figure out well why would you ever reopen anything what did congress in ten when they provided a provision on reopening and if you had an appeal pending that dealt with those prior cost reporting period and that's the only part that we're dealing with here you would have been under the old law so why would you go back in the old law to something be a futile exercise the other piece of this is i don't follow you on that point why would it be an old exercise to apply the law that by the terms of these other sections would be a political to these cost reporting periods because the only reason why you would go back and reopen would be to apply the new standard because the old law was applied before to what you have so would be a futile exercise to do that and the opposite part of this your honor is this of march twenty third two thousand and ten there wouldn't be any cost reports on appeal for july one two thousand and four so you're stuck with a snapshot but can really only address our situation ok runners i'm out of time we'll have your whether settled cost reports should or should not be reopened the issue in this case is what is the effective date of the new payment standard established by section five five zero four of the a question is answered not by looking at subsection c which addresses reopening which is not an issue here it is instead answered by the clear language in a and b and  p congress did two things the first thing it did was they created a new payment standard and it made that new payment standard expressly a political only prospectively to cost to discharges and cost reporting periods that are after july fifth on or after beginning on or after july first two thousand and ten and the second thing it did was it said that the it written expressly retained the old payment standard that had been in effect for a number of years for cost reporting periods and discharge years that existed that that were prior to july first two thousand and ten so it's quite clear congress not so congress not only specified the new standards perspective it said that the old standard remains in effect and that's why covenant is asking for retroactive application of a statutory standard the congress made expressly perspective i'm missing something i don't understand why the argument that you just made isn't any more or less conclusory than the argument that was made by your opposing counsel just saying it's true doesn't make a true stuff to figure out what c means well no no i think if it i c is a is a is a case where your honor i'm trying to do is make a distinction between procedure and substance c is about procedure c addresses reopening reopening is not at issue here if if it were true that the provision is retroactively a political ball in this case there would be no need to reopen the cost reports you could just apply the standard on appeal and that is what happens that's what happened in other instances under the affordable care act that are indeed ret example in the following subsection section five five zero five there are aspects of that were congress in stark contrast to a and b in five five zero four did make the substantive standard retroactive and in the court decisions applying five five zero five the court does not want to reopening it just applies the new payment standard to the cases that are pending on appeal and so it's not in the hospital world and what is contractor reconsider a a settled cost report the reimbursement do is settle cos report it doesn't necessarily mean the cost report will be revised necessarily revise it just means it can be reconsidered and so what congress said in five five or four c is that there is no requirement to reconsider it didn't it in time but the supreme court said that and th why isn't mr o'reilly correct that if they wanted to do that belt and suspenders they could have stopped after the words hospital cost reporters well i think that no that's not quite true your honor but the principle but but well i think that once congress said that you can't you you do are not required to reconsider and settle cost reports i think it also wanted to avoid any inference that when you do have a jurisdictionally pending appeal which are by definition they're open at issue jurisdictionally pending appeals that that whatever substantive standards may apply to those appeals it was leaving those procedures undisturbed so congress was given the secretary something but at the same time he didn't want to take away something from the providers namely that whatever substantive standards and procedures would normally apply in pending appeals would apply notwithstanding the fact that it's creating this this standard that says you can't reconsider these subtle cross reports they can be reconsidered subtle appeal it just so happens that the law that is a political to these of these impending appeals you'd have to apply the payment standards in the years that congress specified i could be wholly off base here but if that was their concern wouldn't they just take the word not out of this word says to which there's proper appeal well i guess if congress didn't have that in there your honor there might be some inference that you could draw that you you could not reconsider even in the context of a jurisdictionally pending appeal but we keep in mind your honor as i was as i tried to say the outset even though they're reading that language is somewhat superfluous because again even in the context of a jurisdictionally put reopening is not necessary not not really necessary even in the context of a jurisdictionally pending appeal if there is indeed a telling things that even if the provision isn't doing much it's a lot better to read congress as creating this provision as maybe not doing very much it's a lot better to read the statute to do that than to override the unqualified effective date provisions which again stand in stark contrast to the immediately succeeding subsection of the statute where congress did make it retroactive and it didn't and it didn't do it in this backhanded indirect way that covenant is suggesting it did in five five zero four no it said the statutory standard is affective for prior cost reporting periods and it pointedly did not do that in five five or four so and i just want to stress the person is doing something i mean what i'm still i have no idea what it's doing your honor even if the provision is soley prospective it could be doing two things first as your honor pointed out i think to my coll congress could have wanted to address the contractors discretion with under the old statutory standard saying that no reopening is required because it's not true that the only reason you want to reopen is to apply the new statutory standard it's possible that you might want to reopen two to reconsider something under the old statutory standard and again five five zero five also modified the old statutory standard by by creating an effective date for prior cross periods that's point one so is doing now the other thing it could be doing even as to the prospect of standard established the new standard it establishes is that for future camembert reopening you can go back three years to reopen so let's say a a a year on a year on some intermediary makes it a mistake under the new statutory standard that you can go back and reopen that under the regulations and the reopening can happen on a there is a there is a retrospective aspect to reopening and so even on a go even if the standard is wholly prospective that could be instances where there would be the issue about whether you want to reopen under the new perspective standard so it does have meaning but i mean doesn't this all assume that something else somewhere in the code or this act would  otherwise tell the department you must reopen i mean is there a single provision in the us code or this act and you know this much better than  the court in that case said that our own regulations required reopening an instance there and we've since revised the regulations to clean that up but there have been courts that have said that in some instances we have them on with case but there's nothing else that let's say let's say we had made the statute this congress had made the statute retroactive the providers no doubt would argue that the intermediaries would have to reopen in lieu of that now we would we would resist that conclusion but there would be an issue and so congress could reasonably think that that again congress could reasonably take a belt and suspenders approach and and create some phonology here again and these this provision is actually the irony of government's position is that this provision is actually designed to limit the retrospective effect as a general which of the statute is it is quite frankly in our favor because literally speaking the statute says nothing about a requirement of reopening still less the still last what the effective date of the statute is but at a minimum at a minimum the statute  surely is sufficiently ambiguous to make the secretary's interpretation of it reasonable of course to work pretty hard before we throw in the towel and just hand it over to the agency that told us what to do right i mean why is that why are they right that you know there is this negative implication here and that would give this a purpose that it otherwise doesn't have namely that you are supposed to this is creating an instance where you're supposed to reopen i don't negative implications of proceed wholly procedural provision that has nothing to do with the effective date of the statute could possibly override the explicit effective dates that congress provided for in  b congress said in unqualified terms that the new payment standard is pro spectrum only does it matter in that sense that this is apparently not codified and is preceded by the word note what significance no no your honor i don't think that that's actually of any significance that you know i think that as as as counsel said the public law is a statute and acted by congress i mean sometimes congress does it does have pro purely procedural provisions that are in kata five but are nonetheless negative implication controls and they are required to reopen if there is a jurisdictionally proper appeal how would a hospital even know that how would they find it if if this is not a codified where would they go to find it aside from pouring through the act itself well it's in the note to the code the note is in the code your honor so i mean if you did a search actually this is how i found it in the name of no if you do westlaw search for the language in the us code annotated you'd find it in the contractor can reopen stuff that's right your honor and that's how this is we're just it just says that we're not required to but in fact the secretary's practice we don't reopen the issue isn't here isn't whether whether they can it's a question of whether they have to and your interpretation is that while they have the discretion to reopen they're not required to and she choses just exercise or discretion actually i don't think that's the issue your honor again i don't think the issue is whether the hospital required to reopen the issue is what the effective date of the statute is which is a different issue that's a substantive issue all the stuff in c is procedural only and it's very it would be very odd to read a procedural only provision to somehow override to create an exception to the explicit explicitly proof prospective substantive provision and if that's if that's not plain language it certainly has the circumstances under which somebody would want to reopen if it wasn't to prospectively to retroactively apply this change in reimbursement well as i said your honor i mean there could be a circumstance a year on where there's a question about whether the intermediary has properly applied the new standard and i suppose you could ask for reopening in that instance but i think the more fundamental point is that the surplusage can and is not the end all be all of statutory construction the more fundamental canon actually an issue here is you follow the plain language of the statute where congress creates unqualified unqualified the prospect of a term you have to honor that and you can't look to the negative implications from a purely procedural provision that is not sufficient to overcome congress's plain language but little minimum it is reasonable i see my time is has expired your honor but i'd be happy to answer questions in particular section would you tell us we need to look at is that the new four thirteen seventy eighty six yes i think it i think that is the operative regulation your honor is as you know we in response to professed confusion over what the anything but ok now that's fine but what i mean we said in the in the in the but when we probably give that regulation we said look we think that the prior regulation is absolutely clear but we're clarifying this because there have been questions raised about the application of our regulations and so i mean and if we can do that mean it's regulatory clarification it's not applying the regulation retroactively it's clarifying it and which rip which agencies are entitled to do ok get to the point particularly when the word there proceeds at the captions as it's applications talk about how you apply those sections so i don't think you can leap as quickly as he'd slipped into the notion that this is procedural and that frankly is where  whole lot of his argument sort of fall down why would when you say how how to apply something let's say that something is substantive you have something substantive and then you talk about how to apply that substantive provision what why wouldn't that by almost definition be procedural i'm not sure that it quite grasp but i can i can see something having bowl and they can have a procedural aspect to it and also substantive aspect to it when i look at that provision i see that it tells us what to do with the specific body of cost reports that are out there and how to apply the rest of the law to  grasp what the secretary says that statute me i mean there is no there is a there's a body he started out with a regulation that to me at least says pretty clearly that you have to reopen and then there's four after quite a bit of the right i negation is more clear on this point we've got to that point i mean we we have to take the rule as it is and not sort of discounted because in these changes of position who are right well i'm not sure that completely right i'll admit that when you have a circumstances such as this where you have a case that's been going on for some period of time some of the traditional canons of deference and the reason why you reduce the amount of deference don't come into play because it's not a brief it's gone through this procedure but i would say this that you still need to look at how it is they came to that position what it does and does it still make sense and does it still give you anything and at the end of the day what they're left with with is a statute that there they say is superfluous i find that to be somewhat dangerous ground to go down congress said something they meant something when they said it and we need to figure out what it is and in agency cases i'm not sure that we can see parents say the congress does we can just write that out but that's effectively well let's let's grant your point hypothetical or for argument that it was their interpretation does render see superfluities from the point that you've marked again that the opposite contrary concern is that a and b to unequivocally say that this new standard does not apply to your cost reports that are subject to the appeal and you want us to read a negative implication if i understand your argument and see to create an exception to that express effective date in a in a to carve out o year cost reporting that is still the subject of a pending appeal is that a fair assessment that is fair except all added additional point to the owner and that congress didn't say everything have challenges and i think that that's what they did in that portion of c and it's not overreaching it's not overbroad it's not without limits it covers something in particularly and doesn't cover just a procedural how do you get in the door it's covering a snapshot of existing cost reports that are out there would it be fair to say that in the generally speaking congress is trying to treat this like situated applicants in this case hospitals equally and fairly  well i think that's probably correct though what would be the point of congress having intended the negative implication that you're suggesting that you then end up treating those hospitals that for whatever fortuitous reason happened to have an open appeal at the time of the act differently than those that for whatever reason don't what why would they do that so you've got to like hospitals one gets it one doesn't for the exact same  i'm not sure that i can dive all that people into what congress intended but i can say that whenever congress makes the switch in the law which is undisputed here under spitter that congress wanted to do this they wanted to improve the position of the hospitals it would have been a  rather enormous thing to say you go back to back in time as far as you want if you didn't have an appeal go back to one thousand nine hundred six when we started doing this and we're going to change the law they didn't do that and there's no indication that they did that but they said for this circumstance we're going to require the reopening in the negative room for it so you said except in the way that i interpret it your honor you have to apply this can and figure out that they mean anything else other than what we've offered and i still haven't heard it and frankly of federal register writing on this i think there are position is still changing i'm not sure hundred of those circumstances you can give chevron deference to interpretation all right thank you counsel sure will be litigating the a ca at this level and others for time to come