2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-23-2015

Geisinger Community Medical Ce v. Secretary

United States Depart

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

No. 15-1202

______

GEISINGER COMMUNITY MEDICAL CENTER,

 Appellant

v.

SECRETARY UNITED STATES DEPARTMENT OF 

HEALTH AND HUMAN SERVICES;

MARILYN TAVENNER, Administrator, Centers for 

Medicare and Medicaid Services; 

ROBERT G. EATON, Chairman, Medicare Geographic 

Classification Review Board

______

On Appeal from United States District Court 

for the Middle District of Pennsylvania

(M.D. Pa. No. 3-14-cv-01763)

District Judge: Honorable Malachy E. Mannion

______

Argued Tuesday, April 21, 2015

Before: FISHER, CHAGARES and COWEN, Circuit Judges

(Filed: July 23, 2015)
2

Mary Kay Brown, Esq.

Brown Wynn McGarry Nimeroff

2001 Market Street

Two Commerce Square, Suite 3420

Philadelphia, PA 19103

Joseph D. Glazer, Esq. (ARGUED)

Suite 200

116 Village Boulevard

Princeton, NJ 08540

Counsel for Appellant

Kate L. Mershimer, Esq.

D. Brian Simpson, Esq.

Office of United States Attorney

228 Walnut Street, P.O. Box 11754

220 Federal Building and Courthouse

Harrisburg, PA 17108

Tara S. Morrissey, Esq. (ARGUED)

Michael S. Raab, Esq.

United States Department of Justice

Room 7262

950 Pennsylvania Avenue, N.W.

Washington, DC 20530

Counsel for Appellees

______

OPINION OF THE COURT

______
3

FISHER, Circuit Judge.

Hospitals that are disadvantaged by their geographic 

location may reclassify to a different wage index area for 

certain Medicare reimbursement purposes by applying for 

redesignation to the Medicare Geographic Classification 

Review Board (“Board”). Section 401 of the Medicare, 

Medicaid, and SCHIP Balanced Budget Refinement Act of 

1999, Pub. L. No. 106-113, 113 Stat. 1501 (1999) (“Section 

401”), enacted ten years after the Board was established, 

creates a separate mechanism by which qualifying hospitals 

located in urban areas “shall [be] treat[ed] . . . [as] rural” for 

the same reimbursement purposes. To avoid supposed 

strategic maneuvering by hospitals, the Secretary of the U.S. 

Department of Health and Human Services issued a 

regulation providing that hospitals with Section 401 status 

cannot receive additional reclassification by the Board on the 

basis of that status. See 42 C.F.R. § 412.230(a)(5)(iii) 

(“Reclassification Rule”).

Geisinger Community Medical Center (“Geisinger”), a 

hospital located in an urban area, received rural designation 

under Section 401 but was unable to obtain further 

reclassification by the Board pursuant to the Reclassification 

Rule. Geisinger sued the Secretary, Sylvia Matthews 

Burwell; the Administrator of the Centers for Medicare and 

Medicaid Services (“CMS”), Marilyn Tavenner; and the 

Chairman of the Board, Robert G. Eaton, in their official 

capacities (collectively, “Appellees”), challenging the 

Reclassification Rule as unlawful. The District Court upheld 

the regulation under Chevron, U.S.A., Inc. v. Natural Res. 

Def. Council, Inc., 467 U.S. 837 (1984), and granted 

summary judgment in favor of Appellees. Because we 

conclude that Section 401 is unambiguous, we will reverse.
4

I.

A.

The Medicare program provides a system of federallyfunded health insurance for eligible elderly and disabled 

individuals under Title XVII of the Social Security Act, 42 

U.S.C. § 1395 et seq. Under § 1395ww(d), or “subsection 

(d),” hospitals are reimbursed for inpatient costs at fixed rates 

for categories of treatment through an inpatient prospective 

payment system (“IPPS”). Calculating inpatient 

reimbursement payments under IPPS is a multi-step process. 

First, the Secretary establishes a nationwide standardized rate 

for all subsection (d) hospitals located in an “urban” or 

“rural” regional area. 42 U.S.C. § 1395ww(d)(2)(A)-(D). 

Second, among other variables, CMS adjusts the standardized 

rate by a “wage index” that reflects the difference between 

hospitals’ local wages and wage-related costs and the national 

average. Id. § 1395ww(d)(3)(E). 

A hospital’s wage index is the wage index the 

Secretary assigns to the specific geographic area where the 

hospital is located. Hospitals located in rural areas receive a 

wage index that applies to all rural areas in their state. 

Hospitals located in urban areas are grouped and treated as a 

single labor market based on the area, known as the Core 

Based Statistical Area (“CBSA”), in which they are 

physically located. Higher wage indices, which reflect higher 

labor costs in relation to the national average, correspond to 

higher reimbursement rates. Thus, the wage index is a 

significant determinant of the way hospitals are reimbursed 

for inpatient care costs.

IPPS may yield inequitable results where, for instance, 

a rural hospital’s lower wage index does not accurately reflect 

its labor costs because it competes for the same labor pool as 

hospitals in a nearby but higher wage-index urban area. 
5

Thus, in 1987 and 1988, Congress amended the Medicare Act 

to allow a hospital to seek reclassification from its 

geographically-based wage index area to a nearby wage index 

area if it meets certain criteria. See Robert Wood Johnson 

Univ. Hosp. v. Thompson, 297 F.3d 273, 276 (3d Cir. 2002) 

(explaining the history of the Board reclassification system). 

And in 1989, because only a limited number of hospitals were 

reclassified under those laws, Congress established the Board 

to systematically decide hospitals’ various reclassification 

requests. See 42 U.S.C. § 1395ww(d)(10). “The Board shall 

consider the application of any subsection (d) hospital 

requesting that the Secretary change the hospital’s geographic 

classification for purposes of determining” the hospital’s 

average standardized rate or wage index. Id. 

§ 1395ww(d)(10)(C). Congress gave the Secretary authority 

to formulate guidelines to be used by the Board in rendering 

its decisions. Id. § 1395ww(d)(10)(D)(i) (“The Secretary 

shall publish guidelines to be utilized by the Board in 

rendering decisions on applications submitted under this 

paragraph . . . .”). 

Under those guidelines, which are generally listed at 

42 C.F.R. § 412 et seq., a hospital seeking reclassification 

must show (1) proximity to the area to which it seeks

redesignation, 42 C.F.R. § 412.230(a)(2), (b)(1); (2) that the 

hospital’s three-year average hourly wage (“AHW”) is higher 

than other hospitals’ in the area in which it is located, id.

§ 412.230(d)(1)(iii); and (3) that the hospital’s AHW is 

comparable to hospitals’ in the area to which it seeks 

redesignation, id. § 412.230(d)(1)(iv). For all three criteria, 

there are more relaxed standards for hospitals located in rural 

areas. For instance, the proximity rule requires that urban 

hospitals be located within 15 miles of the area to which it 

seeks reclassification, but only requires rural hospitals to be 
6

within 35 miles. Id. § 412.230(b)(1). In addition, certain 

“special” status hospitals, such as rural referral centers 

(“RRCs”), are exempt from the first and second requirements. 

See 42 U.S.C. § 1395ww(d)(10)(D)(iii); 42 C.F.R. 

§ 412.230(a)(3), (d)(3).

In 1999, ten years after the Board was established, 

Congress enacted Section 401. Section 401 allows hospitals 

located in urban areas to be treated as hospitals located in 

rural areas for the purpose of determining three aspects of 

Medicare reimbursement: inpatient reimbursement, 42 

U.S.C. § 1395ww(d)(8)(E); outpatient reimbursement, id.

§ 1395l(t); and critical access hospital eligibility, id. § 1395i4(c)(2)(B)(i). Only the first component, which amends 

subsection (d), is at issue here. It reads in full:

42 U.S.C. [§] 1395ww(d)(8)[] is amended by 

adding at the end the following new 

subparagraph:

(E)(i) For purposes of this subsection, not later 

than 60 days after the receipt of an application 

(in a form and manner determined by the 

Secretary) from a subsection (d) hospital 

described in clause (ii), the Secretary shall treat 

the hospital as being located in the rural area (as 

defined in paragraph (2)(D))

1 of the State in 

which the hospital is located.

(ii) For purposes of clause (i), a subsection 

(d) hospital described in this clause is a 

 

1 Pursuant to 42 U.S.C. § 1395ww(d)(2)(D), “the term 

‘rural area’ means any area outside [] an [urban] area.”
7

subsection (d) hospital that is located in an 

urban area (as defined in paragraph (2)(D)) 

and satisfies any of the following criteria:

(I) The hospital is located in a rural 

census tract of a metropolitan statistical 

area (as determined under the most 

recent modification of the Goldsmith 

Modification, originally published in the 

Federal Register on February 27, 1992 

(57 Fed. Reg. 6725)).

(II) The hospital is located in an area 

designated by any law or regulation of 

such State as a rural area (or is 

designated by such State as a rural 

hospital).

(III) The hospital would qualify as a 

rural, regional, or national referral center 

under paragraph (5)(C) or as a sole 

community hospital under paragraph 

(5)(D) if the hospital were located in a 

rural area.

(IV) The hospital meets such other 

criteria as the Secretary may specify.

Id. § 1395ww(d)(8). In the Conference Report accompanying 

Section 401, Congress highlighted several benefits of a 

hospital receiving Section 401 status:
8

Hospitals qualifying under this section shall be 

eligible to qualify for all categories and 

designations available to rural hospitals, 

including sole community, Medicare dependent, 

critical access, and referral centers. 

Additionally, qualifying hospitals shall be 

eligible to apply to the Medicare Geographic 

[Classification] Review Board for geographic 

reclassification to another area. The Board shall 

regard such hospitals as rural and as entitled to 

the exceptions extended to referral centers and 

sole community hospitals, if such hospitals are 

so designated.

H.R. Conf. Rep. No. 106-479, 512 (1999). 

The Secretary, in implementing Section 401, was 

concerned that the statute would “create an opportunity for 

some urban hospitals to take advantage of the [Board] 

process.” See 65 Fed. Reg. 47,054, 47,087 (Aug. 1, 2000). 

She was afraid that some hospitals, claiming to be 

disadvantaged by their urban status, could first be reclassified 

as rural under Section 401 and thereby “receiv[e] the benefits 

afforded to rural hospitals,” and then subsequently claim 

disadvantage from that rural status and “seek reclassification 

through the [Board] back to the urban area for purposes of 

their standardized amount and wage index.” Id. As a result, 

the Secretary issued the Reclassification Rule:

An urban hospital that has been granted 

redesignation as rural under § 412.103 [the 

regulation implementing Section 401] cannot 

receive an additional reclassification by the 

[Board] based on this acquired rural status for a 

year in which such redesignation is in effect.
9

42 C.F.R. § 412.230(a)(5)(iii). Under the Reclassification 

Rule, a hospital with Section 401 status cannot be reclassified 

by the Board to a different wage index area for any year the 

hospital maintains that status. To seek reclassification by the 

Board, therefore, a subsection (d) hospital must cancel its 

Section 401 designation. 

B.

Geisinger is a not-for-profit, general, acute care 

hospital physically located in the Scranton-Wilkes-BarreHazelton, PA CBSA. It applied for designation as a Section 

401 hospital and was approved, effective June 11, 2014. It 

also applied for designation as an RRC and was approved, 

effective July 1, 2014.2 On August 26, 2014, Geisinger 

cancelled its Section 401 status, effective October 1, 2015. 

On August 28, 2014, Geisinger submitted two 

applications to the Board to redesignate to a different urban 

area, effective October 1, 2015: (1) on the basis of its Section 

401 status, a primary application as a rural hospital to 

reclassify to the Allentown-Bethlehem-Easton, PA-NJ CBSA 

(“Allentown CBSA”); and (2) on the basis of its cancelled 

Section 401 status, effective October 1, 2015, a secondary 

application as an urban hospital to reclassify to the East 

Stroudsburg, PA CBSA (“East Stroudsburg CBSA”), which 

would be considered only if the former was denied. 

Geisinger estimates that reclassification to the Allentown 

CBSA would increase its reimbursement payments by 

approximately $2.6 million per year and to the East 

Stroudsburg CBSA by approximately $1.3 million per year. 

 

2 See 42 U.S.C. § 1395ww(d)(5)(C)(i) (providing that 

to earn status as an RRC a hospital must first be classified as 

rural). 
10

The 27-mile distance between Geisinger and the 

Allentown CBSA fails to meet the proximity requirement 

under the Secretary’s rules for hospitals located in urban 

areas, but it meets the more relaxed criteria for hospitals 

located in rural areas. See id. § 412.230(b)(1). But for the 

Reclassification Rule, therefore, Geisinger’s primary 

application as a hospital with Section 401 status would be 

considered by the Board using the rural standards. However, 

because it was “[l]eft with no choice but to try to comply with 

the Secretary’s illegal regulatory scheme or lose millions of 

dollars in reimbursement,” Geisinger cancelled its Section 

401 status so that the Board could alternatively consider its 

application to the East Stroudsburg CBSA, whose 

requirements it could meet as an urban hospital.3 Appellant’s 

Br. at 14. 

C.

On September 10, 2014, while its applications were 

pending before the Board, Geisinger filed a complaint in the 

U.S. District Court for the Middle District of Pennsylvania. 

Count I alleged that the Reclassification Rule violates Section 

401. Count II alleged that the Reclassification Rule violates 

the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et 

seq.

 Geisinger sought a declaratory judgment that the 

Reclassification Rule was unlawful and a permanent 

 

3 Geisinger’s application to the East Stroudsburg 

CBSA relied on a rule that allows a hospital with current 

status as an RRC (as of the date of the Board’s review) to 

reclassify to the nearest urban area without satisfying 

proximity requirements. See 42 C.F.R. § 412.230(a)(3). 

Geisinger is located 15.7 miles away from the East 

Stroudsburg CBSA, which is the nearest urban area to 

Geisinger.
11

injunction, an order of mandamus, or both, prohibiting the 

agency from applying the Reclassification Rule to its pending 

applications and ordering it to apply the rural standards. 

The parties filed cross-motions for summary judgment 

and the District Court granted Appellees’ motion on 

December 22, 2014. See Geisinger Cmty. Med. Ctr. v. 

Burwell, Civ. A. No. 3:14-1763, 2014 WL 7338751 (M.D. Pa. 

Dec. 22, 2014). The District Court first explained that it had 

subject matter jurisdiction because Geisinger challenged the 

legality of the Reclassification Rule itself and not the 

agency’s decisions on its applications, over which the 

Medicare Act precludes judicial review. See 42 U.S.C. 

§ 1395ww(d)(10)(C)(iii)(II) (providing that Board decisions 

may be appealed to the Secretary and that “[t]he decision of 

the Secretary shall be final and shall not be subject to judicial 

review”). On the merits, the District Court held that because 

Congress did not expressly provide that Section 401 extends 

to the Board reclassification process, and because Congress 

granted the Secretary broad authority to administer that 

process, Section 401 was ambiguous at Step One of Chevron, 

467 U.S. at 842-43. At Step Two, the District Court 

concluded that the Secretary’s decision to eliminate the 

potential for “inconsistent reclassifications of the same 

hospital for the same period” and other “unintended 

consequences” vis-à-vis the Reclassification Rule was a 

reasonable accommodation of Section 401 and therefore 

should be upheld. Geisinger, 2014 WL 7338751, at *10. 

Geisinger timely appealed. 

On February 23, 2015, the Board did not treat 

Geisinger as located in the rural area of Pennsylvania and 

denied Geisinger’s primary application for reclassification to 

the Allentown CBSA. It approved Geisinger’s secondary 

application for reclassification to the East Stroudsburg CBSA 
12

on the basis that Geisinger had cancelled its Section 401 

status. Reinforcing the application of the Reclassification 

Rule, the Administrator of CMS affirmed the Board’s 

decision on June 1, 2015.4

II.

The District Court exercised jurisdiction under 28 

U.S.C. §§ 1331 and 1361 and 5 U.S.C. § 701 et seq. We 

exercise appellate jurisdiction under 28 U.S.C. § 1291.

The Court reviews the District Court’s grant of 

summary judgment de novo. Montone v. City of Jersey City, 

709 F.3d 181, 189 (3d Cir. 2013). Under the APA, a 

reviewing court may “hold unlawful or set aside agency 

action, findings, and conclusions” that are found to be, inter 

alia, “not in accordance with law.” 5 U.S.C. § 706(2). While 

we usually afford deference to an agency’s interpretation of a 

statute it is charged with administering, “when we are called 

upon to resolve pure questions of law by statutory 

 

4 Because Geisinger does not seek judicial review of 

the denial of its applications, this Court maintains jurisdiction 

over the appeal. See ParkView Med. Assocs., L.P. v. Shalala, 

158 F.3d 146, 148 (D.C. Cir. 1998) (explaining that 

“hospitals [are] free to challenge the general rules leading to 

denial” where the Secretary affirmed the Board’s denial of 

plaintiff’s reclassification request); Universal Health Servs. v. 

Sullivan, 770 F. Supp. 704, 710 (D.D.C. 1991) (“The 

[Medicare] Act does not . . . expressly preclude judicial 

review of the guidelines utilized by the Board and the 

Secretary in deciding upon reclassification requests.”); cf. 5 

U.S.C. § 702 (conferring a general cause of action upon 

persons “suffering legal wrong because of agency action” and 

withdrawing it where the relevant statute precludes judicial 

review). 
13

interpretation, we decide the issue de novo without deferring 

to [the] agency.” Port Auth. Trans-Hudson Corp. v. Sec’y, 

U.S. Dep’t of Labor, 776 F.3d 157, 161 (3d Cir. 2015) 

(internal quotation marks omitted).

III.

Because this case concerns a challenge to an agency’s 

construction of a statute, we use the familiar two-step analysis 

set forth in Chevron. “First, always, is the question whether 

Congress has directly spoken to the precise question at issue. 

If the intent of Congress is clear, that is the end of the matter; 

for the court, as well as the agency, must give effect to the 

unambiguously expressed intent of Congress.” Chevron, 467 

U.S. at 842-43. We proceed to Step Two “if the statute is 

silent or ambiguous with respect to the specific issue.” Id. at 

843. Then, “the question for the court is whether the 

agency’s answer is based on a permissible construction of the 

statute,” and the regulation must be given deference unless it 

is “arbitrary, capricious, or manifestly contrary to the statute.” 

Id. at 843, 844. 

The “precise question at issue” here is whether the 

Secretary is required to treat hospitals with Section 401 status 

like hospitals physically located in rural areas for purposes of 

Board reclassification. Id. at 842. Based on the plain 

language of the statute, we conclude that Congress has 

unambiguously expressed its intent that the Secretary shall do 

so. Because Congress’s intent is clear, we complete our 

analysis at Step One and do not proceed to Step Two to 

determine whether the Reclassification Rule is a permissible 

construction of Section 401. 

A.

To determine whether a statute is unambiguous under 

Step One, “court[s] should always turn first to one, cardinal 
14

canon before all others[:] We have stated time and again that 

courts must presume that a legislature says in a statute what it 

means and means in a statute what it says there.” Conn. Nat’l 

Bank v. Germain, 503 U.S. 249, 253-54 (1992). That is, 

because we presume Congress expresses its intent through the 

ordinary meaning of the words it uses, an exercise of statutory 

interpretation must begin by examining the plain and literal 

language of the statute. See United States v. Geiser, 527 F.3d 

288, 294 (3d Cir. 2008). And “[w]here the statutory language 

is plain and unambiguous, further inquiry is not required.” 

Rosenberg v. XM Ventures, 274 F.3d 137, 141 (3d Cir. 2001); 

In re Price v. Del. State Police Fed. Credit Union, 370 F.3d 

362, 368 (3d Cir. 2004) (“We are to begin with the text of a 

provision and, if its meaning is clear, end there.”).

While we also read the language in its broader context 

of the statute as a whole, see id. at 369-70, this Court made 

clear in United States v. Geiser that “legislative history 

should not be considered at Chevron [S]tep [O]ne,” 527 F.3d 

at 294; In re Phila. Newspapers, LLC, 599 F.3d 298, 304 (3d 

Cir. 2010) (“Where the statutory language is unambiguous, 

the court should not consider statutory purpose or legislative 

history.”). Following the Court’s established precedent on 
15

this matter, we will not consider legislative history in our Step 

One analysis.5

With this framework in mind, we turn to the text of 

Section 401. The relevant portion reads: “For purposes of 

this subsection . . . the Secretary shall treat the hospital [with 

Section 401 status] as being located in the rural area (as 

defined in paragraph (2)(D)) of the State in which the hospital 

is located.” 42 U.S.C. § 1395ww(d)(8)(E)(i). The parties 

make several quasi-textual and -structural arguments 

supporting their interpretation of the statute that we group 

into three categories and discuss in turn. 

1.

Geisinger’s first argument relates to Section 401’s 

opening clause, “[f]or purposes of this subsection.” Id. The 

 

5 Geisinger argues that the Supreme Court’s recent 

plurality decision in Lawson v. FMR LLC, which cited to the 

legislative record to determine whether a provision of the 

Sarbanes-Oxley Act was ambiguous, mandates that legislative 

history should now be considered at Step One. 134 S. Ct. 

1158, 1169-71 (2014). However, the Supreme Court has 

often oscillated between considering and then refusing to 

consider legislative history at Step One. We explicitly noted 

the Supreme Court’s “ambiguous guidance” in this regard and 

nonetheless firmly staked our position in Geiser. 527 F.3d at 

293. If the Supreme Court had intended to clarify the 

widespread confusion around this issue, we imagine that it 

would say so clearly. And even if it had, it bears emphasis 

that the decision was a plurality opinion. In any event, this 

Court has spoken clearly on its refusal to consider legislative 

history at Step One, see id., and we see no reason to revisit 

that decision because some members of the Supreme Court 

considered legislative history in passing in Lawson.
16

subsection to which the statute indisputably refers is 

subsection (d), which, as discussed, addresses a wide range of 

rules for inpatient care reimbursement under the Medicare 

program, including the requirements for calculating the 

standardized rate for rural and urban regional areas, id. 

§ 1395ww(d)(2)(D); adjusting the wage index on the basis of 

a hospital’s local geographic area, id. § 1395ww(d)(3); and 

administering the Board reclassification process, id. 

§ 1395ww(d)(10). Geisinger alleges that this clause, which 

explicitly directs the Secretary to apply Section 401 for 

purposes of subsection (d), requires the Secretary to apply 

Section 401 to subsection (d)(10), i.e., the Board 

reclassification process. We agree. 

One of our “most basic interpretive canons” is that “[a] 

statute should be construed so that effect is given to all its 

provisions, so that no part will be inoperative or superfluous, 

void or insignificant.” Corley v. United States, 556 U.S. 303, 

314 (2009) (alteration in original) (internal quotation marks 

omitted); see also Rosenberg, 274 F.3d at 142 (“[T]he 

preferred construction of a statute and its regulations is one 

that gives meaning to all provisions.”). Here, Congress must 

have intended that Section 401 apply comprehensively over 

subsection (d), including subsection (d)(10), because the 

language “[f]or purposes of this subsection” would not have 

any purpose or meaning if it did not. 

Appellees counter that because Section 401 is not 

applicable to every paragraph within subsection (d), whether 

Section 401 must apply to the Board reclassification process 

is ambiguous. For instance, the command that a hospital shall 

be treated as rural is not applicable to subsection (d)(6), 

which requires the Secretary to make certain publications in 

the Federal Register, 42 U.S.C. § 1395ww(d)(6); or 

subsection (d)(7), which limits administrative and judicial 
17

review, id. § 1395ww(d)(7). In other words, there are some 

subsection (d) provisions for which the hospital’s rural status 

is irrelevant. 

But this does not contravene Congress’s intent—

demonstrated by using the clause “[f]or purposes of this 

subsection”—that Section 401 governs everywhere it is

applicable; it does not contravene Congress’s intent that 

Section 401 governs everywhere a hospital’s rural status is

relevant. Cf. Babbitt v. Sweet Home Chap. of Cmtys. for a 

Great Or., 515 U.S. 687, 722 (1995) (“[T]he definition of 

‘take’ in [a provision of the Endangered Species Act] applies 

‘[f]or the purposes of this chapter,’ that is, it governs the 

meaning of the word as used everywhere in the Act.”). As 

discussed, a hospital’s urban-rural geographic location has a 

dispositive effect on the hospital’s designated standardized 

rate and wage index. In turn, it has a dispositive effect on the 

Board reclassification process, the statutory purpose of which 

is to redesignate the hospital from rural to urban or vice versa 

for purposes of receiving a new standardized rate or wage 

index. See 42 U.S.C. § 1395ww(d)(10)(C). This bolsters our 

conclusion that Congress intended Section 401 to apply to 

these specific processes. Thus, we must read Section 401 as 

mandating that for purposes of Board reclassification, which 

is inextricably intertwined with a hospital’s rural or urban 

designation, the Board shall treat the hospital as rural.

The District Court disagreed with this construction, 

concluding that “the statute does not discuss the Board 

reclassification process at all, nor does it discuss the 

intersection of redesignation and geographic reclassification 

under the Medicare Act.” Geisinger, 2014 WL 7338751, at 

*8; see also Appellees’ Br. at 23 (arguing that Section 401 is 

“silent” with regard to Board reclassification). Appellees 

further contend that if Congress had intended that subsection 
18

(d) hospitals be able “to take advantage of both

reclassification procedures almost simultaneously, piling 

exception on top of exception,” then it would have done so 

more clearly. Appellees’ Br. at 25. 

In other words, the District Court and Appellees read 

ambiguity into the statute because of what it does not say, 

rather than read it for what it plainly says. To be sure, 

Congress did not explicitly provide that Section 401 applies 

to subsection (d)(10). But it did explicitly provide that 

Section 401 applies for purposes of subsection (d), which 

covers subsection (d)(10) and had covered it for ten years 

before Section 401 was amended. To comprehensively 

amend subsection (d)—which contains dozens of paragraphs 

and subparagraphs concerning inpatient reimbursement, many 

of which involve a hospital’s rural or urban status—rather 

than each provision within it, Congress necessarily used 

broad language. Still, “[a]s a general matter of statutory 

construction, a term in a statute is not ambiguous merely 

because it is broad in scope.” See In re Phila. Newspapers, 

599 F.3d at 310; see also Diamond v. Chakrabarty, 447 U.S. 

303, 315 (1980) (“Broad general language is not necessarily 

ambiguous when congressional objectives require broad 

terms.”). If the phrase was not intended to cover subsection 

(d)(10), contrary to the literal reading of the text, then 

Congress would have noted which paragraphs of subsection 

(d) were specifically excluded or included. It did not. And 

despite Appellees’ attempt to infer intent against layering the 

two reclassification processes, the Court cannot ignore the 

plain language of the statute. “Our task is to apply the text, 

not to improve upon it.” Pavelic & LeFlore v. Marvel Entm’t 

Grp., 493 U.S. 120, 126 (1989).
19

2.

Next, Geisinger points to the portion of the text 

mandating that hospitals with Section 401 status be treated 

“as being located in the rural area (as defined in paragraph 

(2)(D)) of the state where the hospital is located.” 42 U.S.C. 

§ 1395ww(d)(8)(E)(i). Paragraph (2)(D) defines “rural area” 

as “any area outside” an urban area. Id. § 1395ww(d)(2)(D). 

Because there is only one definition of “rural” within 

subsection (d), Geisinger argues, Congress must have 

intended that the Board evaluate applications from hospitals 

with acquired-rural status under Section 401 in the same way 

it evaluates applications from hospitals physically located in 

rural areas. 

Appellees argue, however, that Geisinger’s 

interpretation is permissible under the plain language of the 

statute, but it is not compelled. Another interpretation of 

Section 401, they reason, is that the Secretary must treat 

Section 401 hospitals as rural for all inpatient reimbursement 

purposes and, therefore, must not reclassify those hospitals as 

urban under the Board reclassification process. 

To be sure, “[a] provision is ambiguous only where the 

disputed language is reasonably susceptible of different 

interpretations.” In re Phila. Newspapers, 599 F.3d at 304 

(internal quotation marks omitted). “But just because a 

particular provision may be, by itself, susceptible to differing 

constructions does not mean that the provision is therefore 

ambiguous. . . . Rather, a provision is ambiguous when, 

despite a studied examination of the statutory context, the 

natural reading of a provision remains elusive.” In re Price, 

370 F.3d at 369. Here, the natural reading of Section 401 and 

the statutory scheme reinforces Geisinger’s view. 

Section 401 does not say that we cannot reclassify the 

Section 401 hospital as urban. It says we must treat the 
20

Section 401 hospital as rural for purposes of subsection (d), 

including subsection (d)(10). This means that Section 401 

hospitals must be able to participate in the Board 

reclassification process and seek redesignation from their 

current location to another location for purposes of receiving 

a new standardized rate or wage index. To this end, Section 

401 mandates that hospitals with Section 401 status be treated 

as rural, which has well-settled meaning and implications 

under the Medicare Act. See supra Part I.A. Thus, hospitals 

with Section 401 status should apply as being located in the 

rural area of their state and be evaluated by the Board under 

the more relaxed standards regularly applied to rural 

hospitals. Considering this “broader, contextual view” 

together with the text, In re Price, 370 F.3d at 369, we find 

the statute unambiguous. Appellees’ view that Section 401 

hospitals cannot be reclassified as urban would, in effect, 

prohibit hospitals with Section 401 status from reclassifying 

under subsection (d)(10), contrary to the plain and natural 

reading of the statute.

3.

Third, and finally, Geisinger focuses on Section 401’s 

command that “the Secretary shall treat” hospitals with 

Section 401 status as rural. 42 U.S.C. § 1395ww(d)(8)(E)(i) 

(emphasis added). Geisinger argues that the “shall” language 

in Section 401 must be viewed as mandatory. See, e.g., 

United States v. Monsanto, 491 U.S. 600, 607 (1989). 

Indeed, “[t]he word shall is ordinarily the language of 

command.” Alabama v. Bozeman, 533 U.S. 146, 153 (2001) 

(internal quotation marks omitted). 

Appellees do not dispute that Section 401 uses 

mandatory language, nor do we. Appellees argue, rather, that 

because Congress granted the Secretary authority to 

promulgate guidelines for the Board reclassification process, 
21

see 42 U.S.C. § 1395ww(d)(10)(D), the Reclassification Rule 

was a permissible and necessary exercise of that authority in 

the supposed gap that Section 401 created. Appellees 

emphasize that “[n]othing in Section 401 constrains the 

Secretary’s broad discretion to establish criteria for Board 

reclassification,” which “‘is precisely the type of legislative 

gap-filling that [courts] entrust to an agency’s sound 

discretion.’” Appellees’ Br. at 23 (quoting Santomenno ex 

rel. John Hancock Trust v. John Hancock Life Ins. Co. 

(U.S.A), 768 F.3d 284, 299 (3d Cir. 2014)). 

But this authority was granted in subsection (d)(10), 

which, again, covers the Board reclassification process. 

While the Secretary is unquestionably authorized to issue 

guidelines regarding Board reclassification, e.g., to design the 

proximity standards for urban versus rural hospitals, it does 

not follow that the Secretary is authorized to disregard the 

plain language of Section 401. Rather, Section 401’s 

mandate that the Secretary shall treat Section 401 hospitals as 

rural without adding any discretionary language as Congress 

used in subsection (d)(10) and elsewhere in Section 401 itself, 

see 42 U.S.C. § 1395ww(d)(8)(E)(i) (referencing the receipt 

of an application “in a form and manner determined by the 

Secretary”); id. § 1395ww(d)(8)(E)(ii)(IV) (establishing as 

the last criterion for Section 401 eligibility any “other criteria 

as the Secretary may specify”), lends itself to the opposite 

conclusion. “[W]here Congress includes particular language 

in one section of a statute but omits it in another section of the 

same Act, it is generally presumed that Congress acts 

intentionally and purposely in the disparate inclusion or 

exclusion.” Russello v. United States, 464 U.S. 16, 23 (1983) 

(alteration in original) (internal quotation marks omitted). 

Congress could have granted the Secretary discretion to 

administer Section 401. It did not. Rather, it used 
22

commanding language and the Court must give that language 

effect, notwithstanding the Secretary’s independent authority 

to develop guidelines used in the Board reclassification 

process. 

B.

Section 401 refers to subsection (d) in its entirety, 

which includes the Board reclassification process; requires 

the Secretary to treat Section 401 status hospitals as rural, 

which has a singular definition and well-settled implications 

under the Medicare Act; and uses mandatory language 

(“shall”). Altogether, we read Section 401 to reflect 

Congress’s unambiguous intent on the “precise question at 

issue,” Chevron, 467 U.S. at 842: for subsection (d) 

purposes, including administering Board applications for 

wage index reclassification, the Secretary shall treat Section 

401 hospitals as located in the rural area of the state. Because 

Congress’s intent is clear, we end our inquiry here and do not 

reach Chevron Step Two. See id. at 843 n.9 (“If a court, 

employing traditional tools of statutory construction, 

ascertains that Congress had an intention on the precise 

question at issue, that intention is the law and must be given 

effect.”). 

IV.

Congress has unambiguously expressed its intent that

the Secretary shall treat Section 401 hospitals as rural for 

Board reclassification purposes. See 42 U.S.C. 

§ 1395ww(d)(8)(E)(i). We conclude, therefore, that the 

Reclassification Rule is unlawful and reverse the District 

Court’s order granting Appellees’ summary judgment motion.
1

COWEN, Circuit Judge, dissenting

The majority offers a well-reasoned reading of Section 401. 

In fact, the majority may even offer the most persuasive 

interpretation of this statutory provision. However, it is not this 

Court’s job to adopt what it believes to be the best reading of the 

statute. Instead, we must “use the familiar two-step analysis set 

forth in Chevron.” (Majority Opinion at 12.) Under this doctrine, 

we must first decide whether or not “Congress has directly spoken 

to the precise question at issue.” Chevron, U.S.A., Inc. v. Natural 

Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). If we 

conclude that the statute is silent or ambiguous with respect to the 

specific question at issue, the Court must then consider whether the 

agency’s approach is based on a permissible construction of the 

statute. See, e.g., id. at 843. “‘Chevron deference is premised on 

the idea that where Congress has left a gap or ambiguity in a 

statute within an agency’s jurisdiction, that agency has the power 

to fill or clarify the relevant provisions.’” Santomenno ex rel. John 

Hancock Trust v. John Hancock Life Ins. Co. (U.S.A.), 768 F.3d 

284, 299 (3d Cir. 2014) (quoting Core Commnc’ns, Inc. v. Verizon 

Pa. Inc., 493 F.3d 333, 343 (3d Cir. 2007)), cert. denied, 135 S. Ct. 

1860 (2015). Accordingly, the Court must leave undisturbed “‘a 

reasonable accommodation of conflicting policies that were 

committed to the agency’s care by the statute . . . unless it appears 

from the statute or its legislative history that the accommodation is 

not one that Congress would have sanctioned.’” Chevron, 467 

U.S. at 845 (citation omitted). We must defer to an agency’s 

reasonable construction of a statute—“whether or not it is the only 

possible interpretation or even the one a court might think best.” 

Holder v. Martinez Gutierrez, 132 S. Ct. 2011, 2017 (2012) (citing 

Chevron, 467 U.S. at 843-44 & n.11). Because I believe that 

Section 401 is ambiguous and that the Reclassification Rule 

constitutes a permissible interpretation of this statutory provision, I 

must respectfully dissent.
2

“Section 401 refers to subsection (d) in its entirety” (which 

includes subsection (d)(10)), expressly requires the Secretary to 

treat a Section 401 hospital as being located in the rural area (as 

defined in subsection (d)(2)(D)) of the State in which the hospital 

is located, and, in the process, “uses mandatory language” (i.e., 

provides that the Secretary “shall” treat the hospital as being 

located in a rural area). (Id. at 21.) Even if Section 401 

unambiguously requires that a Section 401 hospital be treated as 

though it were a hospital located in a rural area for purposes of 

subsection (d)(10), it does not follow that this statutory provision 

unambiguously requires the Secretary and the Board to consider 

applications filed by Section 401 hospitals under the same exact 

criteria the Secretary adopted to govern reclassification 

applications filed by hospitals physically located in rural areas.

I agree with the District Court (as well as the United States 

District Court for the District of Connecticut) that Section 401 is 

silent as to whether hospitals reclassified as rural under Section 

401 must be considered eligible for Board reclassification pursuant 
3

to subsection (d)(10).1 See Lawrence & Mem’l Hosp. v. Burwell, 

Civ. No. 3:13cv1495 (JBA), 2014 WL 7338859, at *6 (D. Conn. 

Dec. 22, 2014); Geisinger Cmty. Med. Ctr. v. Burwell, --- F. Supp. 

3d ---, 2014 WL 7338751, at *8 (M.D. Pa. 2014); Lawrence & 

Mem’l Hosp. v. Burwell, 986 F. Supp. 2d 124, 135 (D. Conn. Dec. 

6, 2013). Section 401 does not expressly address the specific 

criteria that must be satisfied in order to obtain Board 

reclassification. Even though it contains mandatory language, this 

statutory provision does not expressly direct the Secretary or the 

Board to treat Section 401 hospitals exactly the same as hospitals 

physically located in rural areas as part of the Board 

reclassification process. In fact, the provision does not address the 

Board reclassification process at all—nor does it take into account 

the intersection or relationship between Board reclassification 

 

1

It appears that, although the Reclassification Rule 

was promulgated in 2000, only two lawsuits have been filed 

(to date) challenging the lawfulness of this rule. In addition 

to the current proceeding filed by Geisinger in 2014, 

Lawrence & Memorial Hospital commenced an action in the 

District of Connecticut in 2013 attacking the Reclassification 

Rule as unlawful under the terms of Section 401. The 

Lawrence & Memorial Hospital court initially denied the 

hospital’s motion for a preliminary injunction (enjoining 

defendants from acting on its application for Board 

reclassification under subsection (d)(10) until the district 

court could hold a hearing on the merits of its action). See

Lawrence & Mem’l Hosp., 986 F. Supp. 2d at 127-38. It 

subsequently granted summary judgment in favor of the 

defendants. See Lawrence & Mem’l Hosp., 2014 WL 

7338859, at *1-*10. Lawrence & Memorial Hospital’s 

appeal is currently pending before the Second Circuit. 
4

under subsection (d)(10), on the one hand, and Section 401 

reclassification, on the other hand.

According to the majority, the District Court and Appellees 

have read ambiguity into the statute based on what it does not say, 

as opposed to what it plainly says. However, “what it does not 

say” (id. at 17) is of special significance here given Congress’s 

creation of two reclassification mechanisms. Both Section 401 and 

subsection (d)(10) effectively serve as exceptions to the general 

principle that a hospital’s reimbursement is tied to its physical 

location. Does Section 401 unambiguously grant hospitals like 

Geisinger the right “to take advantage of both reclassification 

procedures almost simultaneously, piling exception on top of 

exception”—and to do so under the same Board reclassification 

standards that otherwise apply to hospitals physically located in 

rural areas? (Appellees’ Brief at 25.) Given the statutory silence, 

the answer to this question must be “No.” According to Appellees, 

Section 401 could reasonably be read as a directive for the 

Secretary to treat Section 401 hospitals as rural for all purposes, 

thereby prohibiting any further reclassification under subsection 

(d)(10). While this may not be the best reading of the statutory 

provision, the majority goes too far by claiming that it is contrary 

to the plain and natural reading of this provision. After all, Section 

401 broadly applies to subsection (d) and states, inter alia, that the 

Secretary “shall treat” the hospital as being located in the “rural” 

area of the State. Congress, in any event, left what could only be 

considered a “‘gap’” between two distinct reclassification 

mechanisms, which the Secretary attempted “‘to fill’” by adopting 

the Reclassification Rule. Santomenno, 768 F.3d at 299 (citation 

omitted). In fact, Congress delegated to the Secretary broad 
5

discretionary authority over the Board reclassification process.2

Subsection (d)(10)(D)(i) provides that “[t]he Secretary shall 

publish guidelines to be utilized by the Board in rendering 

decisions on applications submitted under this paragraph.” The 

majority acknowledges that “the Secretary is unquestionably 

authorized to issue guidelines regarding Board reclassification, 

e.g., to design the proximity standards for urban versus rural 

hospitals,” but it underestimates the scope and significance of this 

delegation of authority. (Majority Opinion at 20.) This Court has 

recognized that Congress established the Board to pass on 

applications for reclassification “according to certain standards and 

guidelines” and then “gave the Secretary the authority to formulate 

the guidelines to be used by the [Board].” Robert Wood Johnson 

Univ. Hosp. v. Thompson, 297 F.3d 273, 276 (3d Cir. 2002) (citing 

subsection (d)(10)(D) and 42 C.F.R. § 412.230 et seq.); see also, 

e.g., Athens Comty. Hosp., Inc. v. Shalala, 21 F.3d 1176, 1179 

(D.C. Cir. 1994) (indicating that Congress delegated to Secretary 

authority to determine degree to which Board’s discretion should 

 

2

I further note that the majority also relies on what 

Section 401 “does not say” at several points in its opinion. 

(See Majority Opinion at 17 (“If the phrase was not intended 

to cover subsection (d)(10), contrary to the literal reading of 

the text, then Congress would have noted which paragraphs 

of subsection (d) were specifically excluded or included.”), 

19 (“Section 401 does not say that we cannot reclassify the 

Section 401 hospital as urban.”), 20-21 (“Rather, Section 

401’s mandate that the Secretary shall treat Section 401 

hospitals as rural without adding any discretionary language 

as Congress used in subsection (d)(10) and elsewhere in 

Section 401 itself, lends itself to the opposite conclusion.” 

(citations omitted)). 
6

be limited); Universal Health Servs. of McAllen, Inc. v. Sullivan, 

770 F. Supp. 704, 716-17 (D.D.C. 1991) (explaining that Congress 

intended to grant Secretary power to establish substantive criteria 

for Board reclassification), aff’d mem., 978 F.2d 745 (D.C. Cir. 

1992). “The broad deference of Chevron is even more appropriate 

in cases that involve a ‘complex and highly technical regulatory 

program,’ such as Medicare, which ‘require[s] significant expertise 

and entail[s] the exercise of judgment grounded in policy 

concerns.’” Robert Wood Johnson, 297 F.3d at 282 (quoting 

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)); see 

also, e.g., Universal Health Servs., 770 F. Supp. at 718 (“Judicial 

deference is particularly appropriate because the Secretary’s 

obligation to promulgate reclassification guidelines involves an 

‘“accommodation of conflicting policies that were committed to 

the agency’s care by statute, . . .”’ [Chevron, 467 U.S. at 845] 

(citations omitted). As previously discussed, the Secretary’s duty 

to ensure budget neutrality is at odds with his duty to reclassify 

hospitals so that they may receive increased Medicare 

reimbursement. The Secretary, as sole administrator of the 

Medicare Act, is in a unique position to evaluate and reconcile the 

competing policy concerns within the Medicare program.”).

Most of the substantive standards or criteria that the Board 

uses to dispose of reclassification applications are set forth in the 

Secretary’s own regulations. Congress did expressly direct the 

Secretary to include guidelines for, inter alia, “comparing wages” 

in the area in which the hospital is classified and the area in which 

the hospital is applying to be classified. § 1395ww(d)(10)(D)(i)(I). 

It also specified that the guidelines shall provide for the Board to 

base any comparison of the “average hourly wage” on the average 

of the AHW in the most recently published data and such amount 

from each of the two immediately preceding surveys. § 

1395ww(d)(10)(D)(vi). “Under the guidelines published by the 

Secretary under clause (i), in the case of a hospital which has ever 
7

been classified by the Secretary as a rural referral center under 

paragraph (5)(C), the Board may not reject the application of the 

hospital under this paragraph on the basis of any comparison 

between the average hourly wage of the hospital and the average 

hourly wage of hospitals in the area in which it is located.” § 

1395ww(d)(10)(D)(iii). In turn, it was the Secretary—and not 

Congress—that then adopted the specific criteria that a hospital 

must meet, i.e., a basic proximity requirement as well as standards 

for comparing the hospital’s AHW with the AHW of other 

hospitals located in the area in which the hospital is located and 

with the AHW of hospitals in the area to which it seeks to 

reclassify. See, e.g., Universal Health Servs., 770 F. Supp. at 706-

22 (rejecting challenge to Secretary’s proximity requirement). It 

was also the Secretary that chose to treat urban and rural hospitals 

differently for purposes of these criteria by, among other things, 

specifying disparate proximity criteria for urban and rural 

hospitals. I note that subsection (d)(10) does not even use the 

terms “urban hospital,” “hospital located in an urban area,” or 

“rural hospital.” Although it does refer to RRCs, the subsection 

expressly mentions “hospitals located in a rural area” only once, 

and it does so to specify that two Board members shall be 

representatives of such hospitals. § 1395ww(d)(10)(B)(i).

The majority appears to suggest that this delegation of 

authority is entitled to little, if any weight, in the current inquiry 

because it was set forth in subsection (d)(10)—and not Section 

401. According to the majority, “Section 401’s mandate that the 

Secretary shall treat Section 401 hospitals as rural without adding 

any discretionary language as Congress used in subsection (d)(10) 

and elsewhere in Section 401 itself lends itself to the opposite 

conclusion [that the Secretary is not “authorized to disregard the 

plain language of Section 401”].” (Id. at 20-21 (citations 

omitted).) As the majority recognized, we nevertheless must read 

the language of a statutory provision in its broader context. See, 
8

e.g., FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 

132-33 (2000).

Section 401 itself purportedly amends subsection (d)(10) 

(which was enacted ten years earlier). It is this subsection (and not 

Section 401) that establishes the Board and grants the Secretary the 

power to develop guidelines for the Board. It is reasonable to 

conclude that Congress believed there was no need to add 

additional language expressly granting the Secretary power to 

adopt regulations regarding the eligibility of Section 401 hospitals 

for Board reclassification (and the criteria to be used in assessing 

their applications for Board reclassification) because Congress had 

already delegated to the Secretary broad discretionary authority 

over the entire Board reclassification process. In subsection 

(d)(10)(D)(iii), Congress expressly prohibited the Secretary from 

adopting any guideline allowing the Board to reject an application 

filed by a hospital that has at any time been classified as an RRC 

on the basis of a comparison of its AHW to the AHW of hospitals 

in the area in which it is located. Congress similarly could have 

amended subsection (d)(10) to add, for instance, language directing 

the Secretary to publish a guideline requiring the Board to consider 

applications filed by Section 401 hospitals under the same exact 

criteria that govern reclassification applications filed by hospitals 

physically located in rural areas. It did not do so, and I find that 

this fact strongly weighs against the majority’s conclusion that 

Congress unambiguously expressed its intent that the Secretary 

shall treat Section 401 hospitals as rural for Board reclassification 

purposes. (Cf., e.g., id. at 20-21 (“‘[W]here Congress includes 

particular language in one section of a statute but omits it from 

another, it is generally presumed that Congress acts intentionally 

and purposefully in the disparate inclusion or exclusion.’ Russello 

v. United States, 464 U.S. 16, 23 (1983) (alteration in original) 

(internal quotation marks omitted).”).)
9

Because I conclude that Congress has not “directly spoken 

to the precise question at issue” in this case, Chevron, 467 U.S. at 

842-43, I must consider whether the Reclassification Rule 

constitutes a permissible construction of Section 401. Given the 

statutory ambiguity, it was the Secretary’s task—exercising the 

broad discretionary authority granted under subsection (d)(10)—to 

attempt to fill the gap that exists between two reclassification 

mechanisms. See, e.g., Santomenno, 768 F.3d at 299. It is then 

our obligation to decide whether this “‘interpretation is reasonable 

in light of the language, policies, and legislative history’” of 

Section 401 and the statutory scheme as a whole. United States v. 

McGee, 763 F.3d 304, 315 (3d Cir. 2014) (quoting GenOn REMA, 

LLC v. EPA, 722 F.3d 513, 522 (3d Cir. 2013), cert. denied, 135 S. 

Ct. 1402 (2015). In light of the fact that Chevron deference is 

especially appropriate in the Medicare context, see, e.g., Robert 

Wood Johnson, 297 F.3d at 282, I believe that the Reclassification 

Rule satisfies Chevron Step Two.

As the District Court aptly pointed out in its ruling, “[i]t 

cannot be said that the Secretary’s regulation, which was 

promulgated to avoid permitting a hospital to be treated as rural for 

some purposes and as urban for others allowing the hospital to 

receive inappropriate reimbursements, was unreasonable, even if 

the plaintiff can point to other reasonable policy choices.” 

Geisinger, 2014 WL 7338751, at *11. In the respective preambles 

to the proposed and final rules implementing Section 401, the 

Secretary addressed the statutory language, identified her primary 

concern about this legislation (e.g., that hospitals physically 

located in urban areas might try to take advantage of Section 401 

by obtaining reclassification under this statutory provision and the 

various benefits accorded to rural hospitals and then seek 

reclassification under subsection (d)(10) back to urban areas for 

standardized amount and wage index purposes), explained why 

such a result would be inappropriate, and considered but rejected 
10

alternative approaches. Medicare Program; Changes to the 

Hospital Inpatient Prospective Payment Systems & Fiscal Year 

2001 Rates, 65 Fed. Reg. 47,054, 47,087-89 (Aug. 1, 2000); 

Medicare Program; Changes to the Hospital Inpatient Prospective 

Payment Systems & Fiscal Year 2001 Rates, 65 Fed. Reg. 26,282, 

26,308 (May 5, 2000); see also, e.g., Lawrence & Mem’l Hosp., 

2014 WL 7338859, at *8 (“[T]he record shows that the Secretary’s 

decision was deliberate, logical, and considered.”). She expressly 

addressed the Conference Report accompanying Section 401. 65 

Fed. Reg. at 47,087-89; 65 Fed. Reg. at 26,308. By stating that the 

Section 401 hospitals shall be eligible for Board reclassification 

and that “[t]he Board shall regard such hospitals as rural,” the 

report does weigh in favor of Geisinger’s reading of this statutory 

provision. H.R. Conf. Rep. No. 106-479, 512 (1999). However, 

this report (which did not mention subsection (d)(10)’s delegation 

of authority to the Secretary and did not expressly consider the 

potential problems that could arise from the existence of two 

distinct reclassification mechanisms) is insufficient to establish 

that Congress would never have sanctioned the Secretary’s 

Reclassification Rule. See, e.g., Chevron, 467 U.S. at 845. In the 

end, the Secretary appropriately exercised the power she was 

granted by Congress so as to reconcile the distinct reclassification 

mechanisms created by Congress.

For the foregoing reasons, I would affirm the order of the 

District Court granting Appellees’ motion for summary judgment.