Title Co., 314 F.3d 875, 878-79 (7th Cir. 2002).

The Secretary’s interpretation reflects the longstanding interpretation of the outlier payment
program by the HHS. In response to comments on whether 42 U.S.C. § 1395ww(d)(5)(A)(iv)
required that actual outlier payments fall between 5 - 6 percent of projected DRG prospective
payments, the Secretary of HHS responded:

[T]here is no necessary connection between the amount of estimated outlier

payments and the actual payments made to hospitals for cases that actually meet the

outlier criteria. While we expect that under these criteria outlier payments will

approximate six percent of total payments, we will pay for any outlier that meets the

criteria, even if aggregate outlier payments result in more than six percent of total
payments, Under such circumstances, we will continue to make these payments for

the remainder of the Federal fiscal year without adjusting the DRG rates to

compensate for the additional payments. Similarly, if we overestimate the amount of

outlier payments, we will not adjust the DRG rates to compensate hospitals for funds

that were not actually paid for outlier cases.
49 Fed. Reg. 234, 265-66 (January 3, 1984) (emphasis added). This interpretation has been
consistent over the past nineteen years, the entire duration of PPS. See e.g., 57 Fed. Reg. 39746,
39783 (September 1, 1992) (stating, “we do not believe that it is appropriate to make an adjustment
in prospective payment system payments to account for the difference between the estimated and
actual FY 1991 outlier payments, just as we have not made adjustments in earlier years” (citations
‘omitted)). A court “will normally accord particular deference to an agency interpretation of
‘longstanding’ duration.” See Barnhart, 122 S.Ct, at 1270 (citing North Haven Bd. of Educ. v. Bell,
456 U.S. 512, 522 n. 12 (1982)).

Further, the Secretary’s interpretation is reasonable in light of the basic objectives of the

Medicare program. In 1983, Congress replaced the “reasonable costs” system of reimbursement with

PPS, a system which reimbursed Medicare providers at prospectively fixed rates without regard to

13


1395ww(d)(5)(A)Qi - ii), Congress established two classes of outliers, “day outliers” and “cost
outliers.” The clause concerning “day outliers” provided:

The Secretary shall provide for an additional payment for a subsection (d) hospital

for any discharge in a diagnosis-related group, the length of stay of which exceeds

the mean length of stay for discharges within that group by a fixed number of days

or exceeds such mean length of stay by some number of standard deviations,

whichever is the fewer number of days.
42 U.S.C. § 1395ww(d)(5)(A)(Gi). The provision concerning “cost outliers” provided: “For cases
which are not included in clause (i), a subsection (d) hospital may request additional payments in any
case where charges, adjusted to cost, exceed either a fixed multiple of the applicable DRG
prospective payment rate, or exceed such other fixed dollar amount, whichever is greater.” 42
USS.C. § 1395ww(d)(5)(A)(ii).. The third clause, concerning outlier payments generally, provided:
“The amount of such additional payment under clauses (i) and (ii) shall be determined by the
Secretary and shall approximate the marginal cost of care beyond the cutoff point applicable under
clause (i) or (ii).” 42 U.S.C. § 1395ww(d)(5)(A)(iii). The fourth clause, concerning outlier
payments generally, and the clause at issue in this case, provided:

The total amount of the additional payments made under this subparagraph for

discharges in a fiscal year may not be less than 5 percent nor more than 6 percent of

the total payments projected or estimated to be made based on DRG prospective

payment rates for discharges in that year.
42 U.S.C. § 1395ww(d)(5)(A)(iv). The Secretary has interpreted this clause as mandating that he
prospectively establish the fixed thresholds beyond which hospitals will qualify for outlier payments
at levels likely to result in outlier payments between 5 - 6 percent of the projected DRG prospective

payments for that year, and that any shortages need not be reimbursed. See e.g,, 49 Fed. Reg. 234,

265-66 (January 3, 1984) (stating Secretary’ s position that “there is no necessary connection between


as reasonable” referred to the time when the hospital originally sought reimbursement. See id, at
457-58. The Secretary, in contrast, interpreted the words “recognized as reasonable” to refer to the
time when the Secretary was conducting the reaudit. See id, The Court stated that “the phrase
‘recognized as reasonable’ might mean costs the Secretary (1) has recognized as reasonable for 1984
GME cost-reimbursement purposes, or (2) will recognize as reasonable as a base for future GME
calculations.” See id, at 458 (emphasis in original), The Court found the words “recognized as
reasonable” to be ambiguous since the statute was silent as to the matter of time, and thus, the words
had no clear temporal significance. See id, Therefore, the Court deferred to the Secretary’s
interpretation of the statute. See id.

This situation is the same as that considered by the Court of Appeals for the District of

Columbia in County of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999), where that court

interpreted the exact phrase at issue in the present case. In that case, that court found that “{s]tanding
alone, the phrase ‘payments made’ hardly conveys a single meaning.” Id, at 1013. Further, that
court indicated that “[a]s it is employed in paragraph (5)(A)(iv), ‘payments made’ is ‘simply an
adjectival phrase, not a verbial phrase indicating the past tense, and hence allows alternate temporal
readings.” Jd, (citing United States Dep’t of the Treasury v. FLRA, 960 F.2d 1068, 1072 (D.C. Cir.
1992)).

This court agrees with the reasoning of the Court of Appeals for the District of Columbia,
and finds the phrase “payments made” ambiguous, since it is silent on the matter of time. Cf
Regions Hosp. v. Shalala, 522 U.S. 448, 458 (1998). Viewing the phrase “payments made” in
isolation, the phrase imports no clear meaning, and could be construed in each of the manners

suggested by the parties. As aptly stated by the Court of Appeals for the District of Columbia:


not be reimbursed. Thus, the parties disagree as to whether, as a matter of law pursuant to 42 U.S.C.
§ 1395(d)(5)(A)(iv), the Secretary is required to retroactively change the outlier payment amount if
the actual payments do not match the outlier thresholds set by the Secretary.
I. DISCUSSION

a. Standard of Review

A grant of summary judgment is permissible when “there is no genuine issue as to any
material fact and . . . the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(c). The fact that the parties have filed cross-motions for summary judgment does not affect the
applicable standard. See LA.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir. 1996). “*We therefore
apply the traditional standard that summary judgment will not lie unless, construing all inferences
in favor of the party against whom the motion is made, no genuine issue of material fact exists.””
Id, (citing Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349
(7th Cir. 1983)). In the present case, the material facts relevant to the parties’ motions are not in
dispute. The case turns on the interpretation of a statute, and is therefore properly resolved on a
motion for summary judgment. See LTV Steel Co., Inc, v. Northwest Eng’ g & Constr. Inc., 41 F.3d
332, 334 (7th Cir. 1994),

b. Proper Analytic Framework for Statutory Interpretation of 42 U.S.C.

§1395(d)(5)(A)Giv)

This court’s review of the Secretary’s interpretation of 42 U.S.C. § 1395ww(d)(5)(A)(iv) is
governed by the analysis set forth in Chevron U,S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984). Under the analysis in Chevron, this court must decide: (1) whether the

statute unambiguously forbids the Secretary’s interpretation, and, if not, (2) whether the Secretary’s


the amount of estimated outlier payments and the actual payments made to hospitals for cases that
actually meet the outlier criteria”),

For the years at issue in this case, the Secretary set the outlier thresholds at levels estimated
to approximate 5.1 percent of DRG payments. For those years, the actual outlier payments made,
represented as percentages of projected DRG prospective payments, were as follows: 1991 - 4.2;
1992 - 3.6; 1993 - 4.2; 1994 - 3.5; and 1996 - 4.2. Thus in each year at issue in this case, actual
outlier payments fell short of the outlier thresholds set by the Secretary. Rush timely appealed the
Secretary’s final determination of payments for each of the years at issue, seeking retroactive
reimbursements to make up the difference, and the Provider Reimbursement Review Board certified
the cases for “expedited judicial review.” See 42U.S.C. § 1 395oo(f)(1). Rush filed separate actions
for each of the years at issue’, and later filed a motion to consolidate and reassign the cases, which
was granted, The matter is properly before this court, fully briefed and ready for ruling.

The parties’ dispute is focused on one sentence within the complex statutory framework that
establishes the Medicare program, It is the contention of Rush that, based on the plain meaning of
42 U.S.C. § 1395ww(d)(5)(A)(iv), the actual outlier payments for a given year must fall within the
5 - 6 percent range of the DRG prospective payments for that year, and that any shortages must be
retroactively reimbursed. In response, it is the contention of the Secretary that, pursuant to 42 U.S.C.
§ 1395ww(d)(5)(A)(iv), the Secretary must prospectively establish the fixed thresholds beyond
which hospitals will qualify for outlier payments at levels likely to result in outlier payments between

5 - 6 percent of the projected DRG prospective payments for that year, and that any shortages need

> The cases filed by Rush are as follows: 02 C 5375 (challenging outlier payments for FFY 1991), 02 C
8347 (challenging outlier payments for FFY 1992), 02 C 8348 (challenging outlier payments for FFY 1996), 02 C
8349 (challenging outlier payments for FFY 1993), 02 C 8350 ( challenging outlier payments for FFY 1994),

5


1. The Plain Meaning of the Statutory Text

First, Rush argues that by indicating in paragraph (5)(A)(iv) that “[t]he total amount of the
additional payments made . . , may not be less than 5 percent nor more than 6 percent of the total
payments projected or estimated to be made based on DRG prospective payment rates for discharges
in that year,” 42 U.S.C. § 1395ww(d)(5)(A)(iv) (emphasis added), Congress intended the actual
outlier payments for a given year must fall within the 5 - 6 percent range of the projected DRG
prospective payments for that year, and that any shortages must be retroactively reimbursed.
Specifically, Rush argues that based on the plain meaning of the statute, the phrase “payments made”
clearly denotes a past tense, or retrospective look, since a past tense verb was utilized.

In response, it is the contention of the Secretary that, pursuant to 42 U.S.C. §
1395ww(d)(5)(A)(iv), the Secretary must prospectively establish the fixed thresholds beyond which
hospitals will qualify for outlier payments at levels likely to result in outlier payments between 5 -
6 percent of the projected DRG prospective payments for that year, and that any shortages need not
be reimbursed. Specifically, the Secretary responds that the phrase “payments made” does not
clearly denote a past tense. The Secretary argues that the word “made” is not used as a past tense
verb, but rather as a part of an adjectival phrase, the tense of which is subject to alternative temporal
meanings, and thus ambiguous.

This situation is similar to that confronted by the United States Supreme Court in Regions
Hosp. v. Shalala, 522 U.S. 448, 458 (1998), where the Court was called on to interpret whether the
words “recognized as reasonable” in 42 U.S.C. § 1395ww(h)(2)(A) had any temporal significance.
In Regions, the petitioner challenged the validity of a reaudit rule for Medicare program

teimbursements for graduate medical education costs (“GME”), arguing that the words “recognized


= -
imate Order Form (06/97)

United States District Court, Northern District of Dlinois

serrate | Cares R.Norie | Sanne
CASE NUMBER 02 C 5375 DATE 8/20/2003
CASE Rush-Presbyterian-St. Luke’s Med. Ctr. vs. Thompson
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd pasty plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented]
Cross-motions for Summary Judgment
DOCKET ENTRY:
(ly a Filed motion of [ use fisting in “Motion” box above.]
Q) Qa Brief in support of motion due
(3) Qa Answer brief to motion due. . Reply to answer briefdue__
(4) im} Ruling/Hearing on setfor at
(5) Q Status hearing[held/continued to] [set for/re-set for]on__——sset for at
(()) Qo Pretrial conference{held/continued to] [set for/re-set for]on___—_ssetfor at.
(o)) q Trial(set for/re-set for]on__—__at.
(8) im {Bench/Jury trial] [Hearing] held/continued to at
9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
CUFRCP4(m) OC) Local Rule 41.1. CIFRCP4i(a)(1) © FRCP41(a)(2).
qo) =@ [Other docket entry] Plaintiff’s motion for summary judgment [16-1] is denied and Defendant’s

motion for summary judgment [18-1] is granted.

Beat ff hog

a) [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required.
Notices mailed by judge’s staff.
Notified counsel by telephone.
X _} Docketing to mail notices.
Mail AO 450 form. 4ynba L9ULSIC sin
Copy to judge/magistrate judge. a)
courtroom mR Rd 22 ony eo date riled noticn
depuny’s ONL duces Modes
4-03 BateAinie received in 7 _
central Clerk’s Office nailing deputy initia



The Secretary shall reduce each of the average standardized amounts determined

under subparagraph (A) by a factor equal to the proportion of payments under this

subsection (as estimated by the Secretary) based on DRG prospective payment

amounts which are additional payments described in paragraph (5)(A) (relating to

outlier payments).

Specifically, the Secretary indicates that 42 U.S.C. § 1395ww(d)(3)(B), which directs the Secretary
to reduce the DRG prospective payment rate by the estimated proportion of outlier payments, refers
to outlier payments to be made under paragraph (5)(A) as being estimated by the Secretary - with no
mention of actual outlier payments being required to reach a certain percentage of projected DRG
prospective payments.

While Rush’s argument is in line with principles of statutory construction, another pertinent
section of the statute refers to outlier payments as being estimations. This language indicates that
outlier payments are to be estimated by the Secretary, and is consistent with the Secretary’s
interpretation that he must prospectively establish the fixed outlier thresholds beyond which
hospitals will qualify for outlier payments at levels likely to result in outlier payments between 5 -
6 percent of the projected DRG prospective payments for that year. Therefore, viewed in its
statutory context, the meaning of the phrase “payments made” becomes no clearer. In short, with
no clear pronouncement of Congressional intent within 42 U.S.C. § 1395ww(d)(5)(A)(iv) or
elsewhere within the relevant statutory context, the meaning of the phrase “payments made” is
ambiguous.

3. The Meaning of the Statutory Text Based on Legislative History
Lastly, Rush also argues that the pertinent legislative history supports its position.

Specifically, Rush argues that the Conference Report accompanying the final form of the legislation

clearly demonstrated Congress’ intent that the Secretary ensure that actual outlier payments in a

11


In other words, instead of embodying a retrospective inquiry into the amount of
outlier payments that have been made, the phrase ‘payments made under this
subparagraph’ might just as plausibly reflect a prospective command to the Secretary
about how to structure outlier thresholds for payments fo be made in advance of each
fiscal year.

County of Los Angeles, 192 F.3d at 1013 (emphasis in original).
2. The Meaning of the Statutory Text Within Its Context

Next, Rush contends that by viewing paragraph (5)(A)(iv) in context the phrase “payments
made” clearly shows Congress’ mandate that actual outlier payments be between 5 - 6 percent of
projected DRG prospective payments. Rush’s argument is that paragraph (5)(A)(iv) establishes a
calculation for outlier payments, with the numerator of this calculation being the phrase “[tJhe total
amount of payments made under this subparagraph for discharges in a fiscal year” and the
denominator of this calculation being the phrase “the total payments projected or estimated to be
made based on DRG prospective payment rates for discharges in that year.” 42 U.S.C. §
1395ww(d)(5)(A)(iv). Thus, based on a principle of statutory construction, since the statute used
different language for the numerator and the denominator of this calculation, a different meaning
must have been intended for that different language. According to Rush, since Congress used words
of estimation in the denominator, referring to projected DRG prospective payments, and did not use
similar words of estimation in the numerator, referring to outlier payments, Congress must have
intended that actual outlier payments made would be between 5 - 6 percent of projected DRG
prospective payments.

In response to Rush’s statutory context argument, the Secretary argues that the context only
creates further ambiguity when the phrase is interpreted in light of 42 U.S.C. § 1395ww(d)(3)(B).

The text of 42 U.S.C. § 1395ww(d)(3)(B) provides:

10


interpretations based ona permissible construction of the statute. See Chevron, 467 U.S. at 842-43;
see also Barnhart v. Walton, — U.S. -, 122 S.Ct. 1265, 1269 (2002); Wood y. Thompson, 246 F.3d
1026, 1029 (7th Cir. 2001).

ce Analysis

The arguments of both parties in the present case are nearly identical to the arguments
advanced in a similar case. See County of Los Angeles v. Shalala, 1998 WL 24123 (D.D.C. 1998),
rev'd by 192 F.3d 1005 (D.C. Cir. 1999), certiorari denied by 530 U.S. 1204 (May 30, 2000). In

County of Los Angeles, numerous hospitals brought suit against the Secretary challenging the
Secretary’s interpretation of 42 U.S.C. § 139Sww/(d)(5)(a)(iv), and his alleged failure to provide

retroactive payments to make actual outlier payments fall within the 5 - 6 percent range of the DRG
prospective payments each year. See id, at * 1. The District Court for the District of Columbia
interpreted 42 U.S.C. § 1395ww(d)(5)(a)(iv) as plainly commanding the Secretary to ensure that
actual outlier payments fall within the 5 - 6 percent range of the DRG prospective payments each
year. See id, at * 4 (finding “no ambiguous wording in subsection (iv) that is susceptible to more
than one meaning”). However, on appeal, the Court of Appeals for the District of Columbia
reversed, finding that the wording in subsection (iv) was ambiguous, and therefore, the Secretary’s
interpretation was entitled to deference. See 192 F.3d at 1015 - 19.

The parties’ arguments in support of their respective motions for summary judgment track
the arguments advanced in County of Los Angeles. The parties’ advance three main arguments,
which require this court to attempt to determine: (1) the plain meaning of the statutory text, (2) the
meaning of the statutory text within its context, and (3) the meaning of the statutory text based on

legislative history. The court will address each argument in turn.


Secretary must then publish these prospective rates. See 42 U.S.C. § 1395ww(d)(6). To generalize,
these prospective rates are derived from a statutory formula, which is based ona standard nationwide
cost rate based on, inter alia, the average operating costs of inpatient hospital services, see 42 U.S.C.
§ 1395ww/(d)(2), and how an individual patient is classified by diagnosis related group (“DRG”), see
42 U.S.C. § 1395ww(d)(3). This reimbursement amount is referred to as the DRG prospective
payment rate. In short, the DRG prospective payment rate reflects the average costs associated with
treating a patient for a specific condition, and encourages hospitals to keep costs within these
prospectively set reimbursement rates.

In reaction to this prospective payment system, hospitals argued that they would not be
compensated for services rendered to patients in cases where the treatment exceeded the
prospectively set costs of hospitalization. See Hearings Before the Comm. on Ways and Means, H.
Hrg. No. 98-3, at 218 (1983). In order to mitigate the financial burdens on hospitals in situations
where actual costs would far exceed PPS rates for a given patient based on that patient’s DRG,
Congress provided for the Secretary to make supplemental “outlier” payments. See 42 U.S.C. §
1395ww(d)(5)(A). Like the PPS rate, prior to the beginning of every federal fiscal year, the
Secretary sets the thresholds for determining what constitutes an “outlier.” Once the applicable
outlier thresholds are reached, a hospital receives payment for a percentage of its costs that exceed
the outlier thresholds.

In this case, Rush is challenging the Secretary’s determination of outlier payments for the
years of 1991, 1992, 1993, 1994, and 1996.” In the years at issue in this case, the outlier payment

clauses were set forth in 42 U.S.C. § 1395ww(d)(5)(A)(i - iv). In the first two clauses, 42 U.S.C. §

2 Rush failed to perfect its appeal for the federal fiscal year of 1995.

3


actual costs incurred. In recognizing that an argument for retroactive reimbursement has no place
under PPS, the Court of Appeals for the District of Columbia stated:
One of the touchstones of the Prospective Payment System, as its name suggests, is
prospectively determined reimbursement rates that remain constant during the fiscal
year. In setting, prior to each fiscal year, fixed outlier thresholds and per-diem
reimbursement rates that are not later subject to retroactive correction, the Secretary
promotes certainty and predictability of payment for not only hospitals but the federal
government -- concerns that played a prominent role in Congress's decision to adopt
PPS.
County of Los Angeles, 192 F.3d at 1019 (citing H.R. Rep. No. 98-25, at 132). The impetus for PPS
was to curb perceived inefficiencies within the “reasonable costs” system, and to encourage hospitals
to keep costs down. The Secretary’s interpretation is consistent with those purposes, while Rush’s
interpretation is contrary to those purposes.
Finally, Congress has amended the statutory provisions at issue in this case without any
change to the Secretary’s longstanding interpretation. Such action by Congress serves as evidence

that the Secretary’s interpretation was intended or viewed as statutorily permissible. See Barnhart,

122 S.Ct. at 1271 (citing Commodity Futures Trading Comm. v. Schor, 478 U.S. 833, 845-46

(1986).

Therefore, the court finds the Secretary’s interpretation of 42 U.S.C. § 1395ww(d)(5)(A)(iv)
is based on a permissible construction of the statute.

In conclusion, this court finds that 42 U.S.C. § 1395wow(dy(5)(AY(iv) is ambiguous and that
the Secretary’s interpretation is based on a permissible construction of the statute, See Chevron, 467

U.S. at 842-43; see also Barnhart, 122 S.Ct. at 1269; Wood, 246 F.3d at 1029. Therefore, the

Secretary is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c).

14


402, 404 (1993), which reimburses qualifying hospitals for services provided to eligible patients.
See 42 U.S.C. § 1395 et seg. Hospitals may choose to participate in the Medicare program by filing
an agreement with the Secretary. See 42 U.S.C. § 1395cc.

Plaintiff Rush-Presbyterian-St. Luke’s Medical Center (“Rush”) is a large hospital located
in Chicago, Illinois. At all pertinent times, Rush was duly qualified as a provider of inpatient
services under the Medicare program in accordance with 42 U.S.C. § 1395ec.

From the inception of the Medicare program in 1965, until 1983, hospitals were reimbursed
for the “reasonable costs” of inpatient services that were rendered. See County of Los Angeles v.
Shalala, 192 F.3d 1005, 1008 (D.C. Cir. 1999), “This system, it was argued, ‘was like giving
hospitals a blank check to cover the cost of care . ..,’ because increased costs were simply forwarded

to Medicare.” Little Company of Mary Hosp. and Health Care Ctrs. v. Shalala, 24 F.3d 984, 987

(7th Cir. 1994) (citing Judith R. Lave, The Impact of the Medicare Prospective Payment System an
Recommendations for Change, 7 Yale J, Reg. 499, 501 (1990)). To curb these perceived
inefficiencies, Congress replaced the “reasonable costs” system with the “Prospective Payment
System” (“PPS”) by passing the Social Security Amendments of 1983, Pub. L. No. 98-21, 97 Stat.
65. See id. Subsequent to 1983, qualifying hospitals have been reimbursed under PPS at
prospectively fixed rates, regardless of actual costs incurred by the hospitals in rendering services.
See generally 42 U.S.C. § 1395 ww (discussing payments to hospitals for inpatient hospital services
under PPS).

The determination of these prospectively fixed rates under the Medicare program involves
a complex calculus. Prior to the beginning of every federal fiscal year, the Secretary conducts a

rulemaking proceeding to determine the prospective rates for the coming fiscal year, and the


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
Rush-Presbyterian-St. Luke’s )
Medical Center, ) No. 02 C 5375
) (consolidated 02 C 8347, 02 C 8348, 02 C
) 8349, 02 C 8350)
)
Plaintiff, +?)
) .
v. } Judge Charles R. Norgle a
) .
Tommy G. Thompson, ) gs NS
Secretary of the United States Department ) 12
of Health and Human Services } w
)
Defendant. .)
OPINION AND ORDER

CHARLES RONALD NORGLE, Judge.

Before the court are cross-motions for summary judgment brought by Plaintiff, Rush-
Presbyterian-St. Luke’s Medical Center (“Rush”), and Defendant, Tommy G. Thompson, Secretary
of the United States Department of Health and Human Services (the “Secretary”), seeking
determination of whether certain Medicare program payments were properly made pursuant to 42
USS.C. § 1395ww(d}(5)(A\(iv).

I. BACKGROUND!

Medicare is a federal health insurance program, which was enacted in 1965 in Title XVII
of the Social Security Act, which provides hospitalization and other benefits for the aged and
disabled. See 42 U.S.C. § 1395 et seg. In essence, the Medicare program provides these services

through a “complex statutory and regulatory regime,” Good Samaritan Hosp. v. Shalala, 508 U.S.

' The court takes the facts from the parties’ Local Rule 56.1 statements and accompanying briefs. NX


given federal fiscal year fall within a specified range. See H.R. Conf. Rep. No. 98-47, at 188-89
(1983). However, this argument is rejected because the legislative history is generally ambiguous,
and where it appears to be unambiguous, the interpretation advanced by the Secretary is more
convincing.

In general, “the committee reports explaining [legislation] may have considerable
significance in guiding interpretation.” American Hosp. Ass’n. v. NLRB, 899 F.2d 651, 657 (7th
Cir, 1990). However, the committee reports concerning outlier payments, provide no explanation.
The committee report simply states: “The Conference agreement follows the Senate amendment.”

H.R. Conf. Rep. No. 98-47, at 189. As concerns the Senate amendment, the committee report
simply states: “Under the Senate amendment, the Secretary would be required to provide additional
payments for outlier cases mounting to not less than 5 percent, and not more than 6 percent, of total
projected or estimated DRG related payments.” Id, The committee report sheds no light on the
specific text at issue in the present case, and what it does illuminates tends to support the Secretary’s
interpretation by use of the terms “projected or estimated.” Id.

In summation, the court finds the statutory text ambiguous, and under Chevron, proceeds
to determine whether the Secretary’s interpretation is based on a permissible construction of the
statute. 467 U.S. at 842-43; see also Bamhart, — U.S. -, 122 S.Ct. at 1269; Wood, 246 F.3d at 1029.

In determining whether the Secretary’s interpretation of 42 U.S.C. § 1395ww(d)(5)(A)(iv)
is permissible, the court is guided by the Seventh Circuit’s instruction that “[t]he more technical the
issue is, the less guidance the statute provides to its correct resolution, the more sensible-seeming
the agency's decision, and the more deliberative and empirical the procedures employed in arriving

at that decision, the greater the deference that a reviewing court will give it.” Krzalic v. Republic

12


III. CONCLUSION
For the foregoing reasons, the Plaintiff's motion for summary judgment is denied and
Defendant’s motion for summary judgment is granted.
IT IS SO ORDERED.

ENTER:

Lewtec’,

CHARLES RONALD NORGLE, Judge 7
United States District Court

DATED: 3b “2/ OF

15