adopted april third two thousand and seventeen and it goes through quite a few pages addressing comments that were received by various hospitals making some of the same arguments that we see here  on the supreme court in mendoza explained that in the principle that not mutual collateral estoppel does not apply to the government the government can litigate the same issue in multiple courts and in conflict and then we go to the supreme court and that may be lovely for the workers but it's terror to do sure well your honor at the supreme court him and those that did say that the benefit of allowing the government to litigate issues in different courts is that it provides the supreme their complaint to challenge the final rule that's a separate claim and the district court ruled against us the government is facing an injunction ok that each state has a limited pool of federal dish funds and the hospital gets a share of those funds only if it has uncompensated costs the final rule tries to direct these limited funds to the hospitals that need them the most and it does so by recognising that payments by private insurance and medicare are compensation if i could give an example of two hypothetical hospitals to illustrate the consequences of the district court's approach of ignoring these payments hospital as a service privately insured medicaid patients  spends one million dollars on treating those patients and it receives one million dollars from private insurance for those patients it has been fully compensated and suffered no shortfall meanwhile hospital b serves medicaid only patients it spends the same amount but it's reimbursed at the lower medicaid rate so receives say six hundred thousand dollars now hospital b unlike a has suffered a shortfall and you would think that it would be truman hospital truman medical center hospital hill had twenty seven million dollars in overpayment meanwhile other hospitals in the state and we noted too including  children's mercy in st john's mercy washington had a shortfall even after receiving these supplemental dish payments now under missouri planned those overpayments to trim and medical center and other hospitals that got overpayments would be redistributed to other hospitals in the state that have that actually have uncompensated costs and that's the purpose of the dish payment is to provide supplemental payment that helps fill the gap because congress recognized that hospitals serving a large number of medicaid and uninsured patients often have a gap that or there is a shortfall council i'm less concerned with sort of the policy and more concerned with the taxed and i thought judge catholics in a six circuit opinion from a year or two ago made a pretty good point i want to hear the government's response about there's costner's payments mares now and how do those things relate to each other and that the secretary has the authority to determine cost incurred a term that accounts for both costs and payments so there's no basis for thinking that congress for clothes the secretary from accounting for other type medicaid payments as a limitation on the secretary's authority the secretary mocked in a cup and determining cost incurred at a minimum deduct medicaid payments and and uninsured payments but merely a limitation on an otherwise broad authority it doesn't foreclose the secretary from accounting for other types of payments especially when we have several touch tool to use here congress titled the calculation uncompensated costs it came back ten years later and said that only the uncompensated care costs should be included in the calculation what's the what's the significance of that i actually looked into that so the statute says uncompensated cost that was in the incurred means and certainly in paragraph j to see which is the auditing and reporting provision where it says only the uncompensated care costs shall be included in this very calculation  that that is clear text your honor that the calculation should reflect uncompensated costs there's also a stunt i was just to say what about the meaning of the word incurred i mean i find it interesting that the statute includes the word doesn't just include the example if the provider make the tax payment and then has later reimbursed it did not actually incur any cost because those payments functionally reduce the cost so incurred paid by private insurers or medicare and so is and isn't the incurred point really a question of timing whether you look at after reimbursement over for reimbursement because it doesn't happen simultaneously when they actually i have the car you  party payment that tells us that congress presumed that the secretary may account for other types of third party payment and it carved out a specific type of payment that it did not want the secretary t intended for dish payments to help hospitals meet the costs of treating these patients the plaintiffs approach does exactly the opposite by allowing them to ignore the costs that help them meet the meet  sorry ignore the payments but help them meet those costs this is not the final rule does not aim to get more money back for the federal government it's about making sure that these funds the limited pool in the story for example go to the hospitals that need them t the role the first year that we saw that audits were required that actually had financial consequences for the hospitals were for services provided in two thousand and eleven and those audits were submitted in two thousand and fourteen so that medicare payments should be considered and in two thousand and ten issue but in two thousand and in two thousand and ten the secretary issued informal guidance explaining that these payments should be  i don't think the secretary had to say this isn't a change from our policy that that we've had and that's written down but even if it were our then this would be a reasonable that the supreme court has provided as an example of that this policy is exhausted only explained in the final rule and all of the arguments are addressed the policy reasons the reading of the statute and it's not a change in position disallowance to disallow the federal federal funds if if the role is up held unlawful it can enforce a morning we have a couple of visuals we would like to use during during our discussion this morning so if it please the court my name is barbara i'm and i'm here representing the missouri hospital would get refunded to the federal government but the point here really is that the association itself has decided and its board had has voted on bringing this lawsuit because of the the  hospitals in the associations membership and by the district i would like is where the association with no actual injury to total membership is allowed to proceed on behalf of some ts incurred so incurred to me seems to be pretty significant because if the if the hospital's position is right congress easily could've just used the word cost but they used the word costs incurred which indicates liability in some dictionaries it implies losses that it's actually costs that are that are losses and so i'm just trying to figure out how that's consistent with your position i had a conversation with opposing counsel about it right so incurred is the verb in the sentence it's the costs that are incurred or experienced by the hospitals incurred there is a separate reference to the concept of net and that's different from the reference to costs incur catholics made in a six or could opinion which is he used he talked about costs in a vacuum right he didn't really talk about costs incurred and you said it's the losses to the hospital while the loss of a hospital if they're paid back by private insurance and medicare those aren't boces to the hospital are they those are costs that the hospital experiences in the first instance and then it's reimbursed through payments which in this case unlike the cases the government sites in this case  rebates or refunds so it offset the costs incurred it wasn't a payment for services provided and in fact in the kindred case i would submit that was precisely the question at issue was were these medica payments in which case one hundred percent of the costs would have been incurred or were they rebates at the pleasure of sec the problem i'm having with this is that i didn't fully appreciate this intel opposing counsel brought it up is that and i realize there were auditing requirements but the the requirements three years later and three years later all the medicare payments and all of the private insurance payments we made i think there's even rules that say the private insurance has to pay within a certain period of time six months or a year and so those costs will not the bottom line when there's a that's where the concept of net appears is at the bottom line because you had net expenditures at the end of the day doesn't mean that those expenditures weren't real in the first starts i get if i pay to fight if i give somebody two thousand dollars a hospital and then i get reimbursed in this doesn't happen by a private insurer for two thousand dollars the whole amount though you would still say that you get reimbursement from the federal government for the two thousand dollars potentially that in terms of the cap of  medicaid payments well so so that's i think where the government has a fundamental misunderstanding of what the hospital specific limit is and in fact what dishes dish is not reimbursement for specific services provided in the legislative history makes this very clear dish is required is was intended to be supplemental funding for hospital serving a large number of low income patients who incur extra costs in serving that population and these are costs that aren't necessarily included in the h s l the legislative history mentioned social service costs public health costs these are extra expenditures that these hospitals and current congress wanted to encourage these hospitals to continue to keep doors wide open to these pay there's another tax will probably you haven't and that's the uncompensated payments having sometimes the headings are added by that's not the revise or statutes but whatever the federal equivalent has this was actually statute or well if you look at it if you look at the term cost uncompensated costs throughout the health care statute it's going to have different meaning in different contexts medicare context the term uncompensated c net of payments under this subchapter payments are under this subchapter and that language under this subchapter limits the understanding of payments it's not let net of payments in which case the secretary would have full discretion to determine what payments mean here that congress added limiting language under this subchapter and the secretary's interpretation would read that language right out of the statute now now the third point which i think you're going to get to is as being something different the interior on the parentheses so you have cost incurred as determined by the secretary and then the netting happens separately from the cost incurred again that term is not net cost its costs incurred net of payments under this subchapter and it's only those payments under this subchapter for the secretary's interpretation to work they have to  define costs incurred as being cost less medicare and commercial payments but not less medicaid pain but see textually i don't think that works because you're argument would work if the net of payments was outside payments if costs incurred can be determined by the secretary as being net of whatever funding the secretary wants to put in their charitable donations would that be a reason well but that's the superfoods argument and i don't think that works either because the problem with that argument is one could conceivable way where you say net of payments net of paint medicaid payments is actually just a command to the secretary that when they determine costs incurred they have to include medicaid payments they conclude other things but they have to also children of third thirteen years of age are also admitted free you don't need to go outside you don't need to add the word only to that phrase in order to make it clear that it's only children under twelve that are permitted but that's not precisely right either that's a that's a false analogy because you could have a situation where the secretary determines the cost incurred let's say the secretary just as private insurers payments of medicare i don't know why the secretary would do that while congress says no i want medicaid payments to be part of the nat as well and so what they're doing is they're setting out that the secretary has to include medicaid payments so that would make i mean that doesn't really make sense because it's very clear that if you're going to net out payment any payments you're going to net out medicaid payments and the secretary the government admits that itself so why specify why add those words under this subchapter if they didn't have the limiting of fact just here are the payments that were being reduced you know the congress knew how to refer to third by yeah that's a different type of payment that's a rebate payment first scoff but our brief is payments that are reimbursement for services fair market exchange of value it's not we're not talking about rebate secretaries added medicare and commercial insurance and says that reduces the cost incurred when it doesn't those costs remain on the expense side of the ledger that those reimbursements come in if there was a manufacturer rebate at making sure that these hospitals and truman medical center truly is the sort of posterboard child that the type of hospital that congress was trying to protect that truman could a hospital like truman could continue to serve low income patient and incur all those extra costs that are necessary to encourage serving the population originally dish did not have a limit on it and states were free to pay hospitals as much as they wanted to and the legislative history describes how you know some hospitals were paid you know more than their total cost of operations so congress wanted to come in and put a limit on it but it's just a limit it's not it's not a rate setting exercises and that's how the government treats it here why why why would congress and and the secretary to exercise sophisticated discretion in that equalizing test well i think you've articulated the secretary's policy preferences here clearly their part that's their policy preference but that's not what the words of the statute says and even if congress intended something different were the words of the statute words even if we believe the words lead to a harsh outcome is longstanding it results from deference to the supremacy of the legislature as well as recognition that congressman typically vote on the language of the bill if congress enact it into law something different than what it intended and it should amend the statute to conform its intent the secretary here is making its argument to the wrong branch of government these are arguments if they truly believe their policy position they should make their arguments to congress they were close suppose that we you know we think that there's two reasonable interpretations here there's your interpretation the government's interpretation the government's interpretation we conclude is reasonable for many of the reasons i've stated  government still when under chevron the only way you when least from my point of view and you can correct me if i'm wrong is if you say the plain language of the statute is or if only your protg should that is reasonable well i i think it very clearly is a step one analysis and i do believe that the plain language of the statute is cleared but even if you get to step to the government's argument the government's interpretation is unreasonable see ten of the statute define i see my time is up thank you very much thinking on or i think judge struck me the important point that the parentheses do not and after as determined by the secretary and that makes it quite clear that the secretary's authority is not limited to a determination  secretary to ignore this a very substantial compensation that hospitals receive from medicaid patients who have additional insurance this does result in that double payments and i out that you mentioned straw resources are allocated to hospitals that have a net financial shortfall in serving medicaid patients that's a reasonable interpretation and we would ask the court to reverse the judgment of the district court