Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-03954/USCOURTS-ca8-03-03954-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

 No. 03-3954

___________

State of North Dakota, ex rel. Carol K. *

Olson, Executive Director, North *

Dakota Department of Human Services, *

*

Appellee, *

*

v. * Appeal from the United States 

* District Court for the District

Centers for Medicare and Medicaid * of North Dakota.

Services; Thomas A. Scully, in his *

official capacity as Administrator of *

the Centers for Medicare and Medicaid *

Services; United States Department of *

Health and Human Services; Tommy *

G. Thompson, in his official capacity *

as Secretary of the United States *

Department of Health and Human *

Services, *

*

Appellants. *

___________

 No. 03-4036

___________

James W. Ellenbecker, Secretary, *

South Dakota Department of Social *

Appellate Case: 03-3954 Page: 1 Date Filed: 04/06/2005 Entry ID: 1887660 
-2-

Services; State of South Dakota *

Department of Social Services, *

*

Appellees, *

*

v. * Appeal from the United States

* District Court for the District

Centers for Medicare and Medicaid * of South Dakota.

Services; Thomas A. Scully, in his *

official capacity as Administrator of *

the Centers for Medicare and Medicaid *

Services; United States Department of *

Health and Human Services; Tommy *

G. Thompson, in his official capacity *

as Secretary of the United States *

Department of Health and Human *

Services, *

*

Appellants. *

___________

Submitted: October 22, 2004

Filed: April 6, 2005 

___________

Before MORRIS SHEPPARD ARNOLD, GIBSON, and SMITH, Circuit Judges.

___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

The Centers for Medicare and Medicaid Services (CMS), an agency of the

Department of Health and Human Services (HHS) that (along with the states)

administers Medicaid, appeals from summary judgments entered against it in district

courts in North and South Dakota. North and South Dakota had claimed 100 percent

federal reimbursement for some Medicaid services provided to Native Americans by

Appellate Case: 03-3954 Page: 2 Date Filed: 04/06/2005 Entry ID: 1887660 
-3-

non-Indian Health Service facilities. CMS reduced the reimbursement percentage,

disallowing some of the states' claims. The Department of Appeals Board of HHS

(DAB) upheld CMS's decisions, but the district courts reversed. We reverse and

remand to the district courts for entry of judgments upholding the decisions of the

DAB.

I.

Prior to the enactment of the Indian Health Care Improvement Act of 1976

(IHCIA), the Indian Health Service (IHS) was ineligible to receive payments from

Medicaid for Medicaid services provided at IHS facilities. To increase funding for

health-care services and facilities for Native Americans, the IHCIA made IHS eligible

for Medicaid reimbursement. See 42 U.S.C. § 1396j(a). Normally a state pays for

Medicaid services not covered by private insurance, and the federal government

reimburses the state for a percentage of its cost, known as the federal medical

assistance percentage (FMAP). Because IHS facility services were entirely federally

funded before the IHCIA, Congress increased to 100 percent the FMAP applicable

to Medicaid services "received through an Indian Health Service facility." 42 U.S.C.

§ 1396d(b). Thus the IHCIA avoided shifting the federal government's pre-IHCIA

responsibility for Native American health care onto the states. 

The scope of the Medicaid services reimbursed at the 100 percent FMAP

depends on the meaning of "received through an Indian Health Service facility."

North and South Dakota argue that the 100 percent FMAP applies to referred services

that constitute IHS facility services, as defined in two Medicaid regulations, and that

are provided by referred service providers with which IHS facilities have service

contracts. In support of their position, the states cite a 1997 CMS memorandum from

the acting director of the Medicaid Bureau. According to the memorandum,

"[r]eferred services, provided through a contractual arrangement, can also be

considered provided 'through an IHS facility' and reimbursed at the 100 percent

FMAP rate as long as these are services that could be provided as a 'facility service,'

Appellate Case: 03-3954 Page: 3 Date Filed: 04/06/2005 Entry ID: 1887660 
-4-

as referenced by [42 C.F.R. §§ 440.10, 440.20]." The DAB, however, interpreted the

CMS memorandum as requiring a contractual relationship in which the non-IHS

provider is an independent contractor, a relationship that a contract of negotiated rates

for referrals fails to create. See 42 U.S.C. § 1395x(w)(1). 

II.

In interpreting the scope of the phrase "received through an Indian Health

Service facility," we need not consider the 1997 CMS memorandum or any other

agency pronouncement if the language of the IHCIA or its legislative history

addresses the question. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,

467 U.S. 837, 843 n.9, 845 (1984); Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d

933, 936 (8th Cir. 2000). Only when statutory language is ambiguous and its

accompanying legislative history unclear do we decide whether to defer to an

agency's policy for implementing a statute's requirements. Chevron, 467 U.S. at 845.

In the case of the IHCIA, the statute suggests that there is no requirement that

services be provided physically within an IHS facility to qualify for the 100 percent

FMAP, but the language does not compel any particular interpretation. In the same

section of the IHCIA in which Congress used the phrase "received through" to

identify the services eligible for 100 percent FMAP, IHCIA § 402(c) (codified at

42 U.S.C. § 1396d(b)), Congress described the IHS services newly eligible to receive

Medicaid funds as "services provided in Indian Health Service facilities," IHCIA

§ 402(b) (codified at 42 U.S.C. § 1396j(c)) (emphasis added). Given the proximity

of the phrase "received through" and the phrase "provided in," they might convey two

different meanings, with the latter phrase being the more limited of the two.

Nevertheless, even if "received through" has a broader connotation than "provided

in," the statute does not specify how far "received through" should extend. Thus the

statutory language is susceptible to multiple interpretations and does little to resolve

the present controversy. 

Appellate Case: 03-3954 Page: 4 Date Filed: 04/06/2005 Entry ID: 1887660 
-5-

The legislative history, on the other hand, is clear and consistent when it

discusses the scope of the 100 percent FMAP. Nowhere does it suggest that the

100 percent FMAP applies to services provided outside of IHS facilities, such as the

referrals at issue in this case. Instead, each committee report that discusses the scope

of the 100 percent FMAP, which includes reports from one Senate committee and two

House of Representatives committees, says that the special FMAP applies to services

provided in IHS facilities. H.R. Rep. No. 94-1026, pt. 1, at 108 (1976), reprinted in

1976 U.S.C.C.A.N. 2652, 2746; id., pt. 3, at 7, reprinted in 1976 U.S.C.C.A.N. at

2782; S. Rep. No. 94-133, at 128 (1975). Further, the report from the Interstate and

Foreign Commerce Committee of the House of Representatives explains that the

"Committee approved [the 100 percent FMAP] because ... since the 100 percent

matching is limited to services in IHS facilities, it is clearly being paid for Indians ...

who are already eligible for full Federal funding of their services." H.R. Rep. No. 94-

1026, pt. 3, at 21, reprinted in 1976 U.S.C.C.A.N. at 2796 (emphasis added). Given

the legislative history's unequivocal stance, we conclude that Congress's use of

"received through" rather than "provided in" does not cover referred services such as

those at issue in this appeal.

Because our inquiry stops if the legislative history explains the statutory

language, even when that language would otherwise be ambiguous, cf. Davis v.

United States, 495 U.S. 472, 479-81 (1990), we do not reach the matter of what

deference we might owe to the relevant agencies' interpretation of the statute. Based

on the legislative history alone, we reverse the district courts' judgments. 

III.

North and South Dakota argue that, in the event that we reverse the district

courts' interpretation of the IHCIA, we still should not require them to repay the

difference between the 100 percent FMAP and the regular FMAP for referred services

that they billed to CMS prior to the DAB's decisions. The 1997 CMS memorandum,

they contend, authorized a 100 percent FMAP for referred services, and the DAB's

Appellate Case: 03-3954 Page: 5 Date Filed: 04/06/2005 Entry ID: 1887660 
-6-

decisions should not be applied retroactively to defeat North and South Dakota's

reasonable reliance. 

Because our construction of the scope of the 100 percent FMAP stems from the

IHCIA's legislative history and not from past agency interpretations, ordering North

and South Dakota to disgorge past overpayments simply implements the IHCIA's

requirements, which are unchanged. If our interpretation of the IHCIA causes a

change in policy toward referred services, that is only because CMS's prior policy

was unauthorized by the IHCIA. Thus what North and South Dakota really ask us to

do is to estop CMS from seeking repayment, since the states allegedly relied to their

detriment on the advice CMS offered in its 1997 memorandum and failed to repudiate

in subsequent audits of North and South Dakota's Medicaid billing practices.

Equitable estoppel is granted against the government only in extraordinary situations,

however. See Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 423 (1990); Conforti

v. United States, 74 F.3d 838, 841 (8th Cir. 1996), cert. denied, 519 U.S. 807 (1996).

Further, when funds that belong to the United States treasury are at stake,

constitutional principles embodied in the separation of powers doctrine and the

appropriations clause of the Constitution, U.S. Const., Art. I, § 9, cl. 7, strongly

militate against estoppel. "If agents of the Executive were able, by their unauthorized

oral or written statements to citizens, to obligate the Treasury for the payment of

funds, the control over public funds that the [Appropriations] Clause reposes in

Congress in effect could be transferred to the Executive." Richmond, 496 U.S. at 428;

see also Microcomputer Tech. Inst. v. Riley, 139 F.3d 1044, 1052 (5th Cir. 1998).

North and South Dakota consequently must return to CMS the amounts that the

agency overpaid them when it reimbursed them at the 100 percent FMAP for referred

services provided by non-IHS facilities.

Appellate Case: 03-3954 Page: 6 Date Filed: 04/06/2005 Entry ID: 1887660 
-7-

IV.

We therefore reverse the district courts' judgments and remand the cases to the

district courts with instructions to enter judgments upholding the decisions of the

DAB.

JOHN R. GIBSON, dissenting.

I respectfully dissent. I would affirm on the basis articulated in the district

court’s order.

______________________________

Appellate Case: 03-3954 Page: 7 Date Filed: 04/06/2005 Entry ID: 1887660