Document: 488 U.S. 204 109 S.Ct. 468 102 L.Ed.2d 493 Otis R. BOWEN, Secretary of Health and Human Services, Petitionerv.GEORGETOWN UNIVERSITY HOSPITAL et al. No. 87-1097. Argued Oct. 11, 1988. Decided Dec. 12, Syllabus Under the Medicare program, Government reimburses health care providers for expenses incurred in providing medical services to beneficiaries. The Act 42 U.S.C. § 1395x(v)(1)(A) authorizes Services (Secretary) promulgate cost-reimbursement regulations also provides that "[s]uch shall . (ii) provide making suitable retroactive corrective adjustments where, a provider any fiscal period, aggregate reimbursement produced by methods determining costs proves be either inadequate or excessive." In 1981, issued cost-limit schedule changed method calculating "wage index," factor used reflect salary levels hospital employees different parts country. prior rule, wage index given geographic area was calculated using average all hospitals area, but 1981 rule excluded from computation wages paid Federal hospitals. After District Court invalidated suit brought various Columbia, settled hospitals' cost reports applying pre-1981 wage-index method, 1984 reissued proceeded recoup sums previously hospitals, including respondents, as result Court's ruling. exhausting administrative remedies, respondents Court, claiming invalid under, inter alia, Act. court granted summary judgment Appeals affirmed. Held: 1. An agency's power is limited authority delegated Congress. As general matter, statutory grants rulemaking will not understood encompass rules unless conveyed express terms. Pp. 208-209. 2. reinstatement invalid. Pg. 209-216. (a) Section does authorize promulgation rules. structure language statute require conclusion clause applies only case-by-case payments where prescribing do reach correct individual cases. This interpretation consistent with Secretary's past implementation provision. 209-213. (b) Act's grant contains no authorization rulemaking. absence weighs heavily against position. Moreover, legislative history provision indicates Congress intended forbid rules, practice this statute. 213-216. 261 U.S.App.D.C. 262, 821 F.2d 750, KENNEDY, J., delivered opinion unanimous Court. SCALIA, filed concurring opinion, post, p. 216. Richard J. Lazarus, Washington, D.C., petitioner. Ronald N. Sutter, respondents. Justice KENNEDY 1 are reimbursed See Title XVIII Social Security Act, 79 Stat. 291, amended, 1395 seq. (the Act). has authorized setting limits on reimbursed. question presented here whether may exercise retroactive. 2 * adopt established 223(b) Amendments 1972, 86 1393, amending 1395x(v)(1)(A). first implemented 1974 services; new schedules were an annual basis thereafter. 3 On June 30, included technical changes limits. One these affected area; provided would computation. 46 Fed.Reg. 33637, 33638-33639 (1981). 4 Various Columbia United States seeking have invalidated. April 29, 1983, struck down concluding had violated Administrative Procedure (APA), 5 551 seq., failing notice opportunity public comment before issuing rule. Hospital Assn. v. Heckler, 82-2520, App. Pet. Cert. 49a (hereinafter DCHA ). did enjoin enforcement however, finding it lacked jurisdiction so because yet exhausted their remedies. court's order stated: "If wishes put place valid prospective index, she should begin proper proceedings; currently been promulgated without schedule." DCHA, 64a. 6 pursue appeal. Instead, after recognizing invalidity see 48 39998 (1983), method. 7 February 1984, published proposal reissue July 1, 1981. 49 6175 (1984). Because subsequently amended significantly procedures, readoption modified apply exclusively 15-month period commencing considering comments received, final form November 26, ruling DCHA. 46495 effect, retroactively, net if original never set aside. 8 Respondents, group seven who benefited invalidation schedule, required return over $2 million payments. they sought judicial review under applicable provisions APA, both APA 9 Applying balancing test enunciated Retail, Wholesale Department Store Union, AFL-CIO NLRB, 151 209, 466 380 (1972), held application justified circumstances case. 10 appealed Circuit, which 750 (1987). based its holding alternative grounds forbids rulemaking, specific terms, bars We certiorari, 485 903, 108 1073, 99 232 (1988), we now affirm. II 11 It axiomatic validity threshold 12 Retroactivity favored law. Thus, congressional enactments construed effect requires result. E.g., Greene States, 376 149, 160, 84 615, 621-622, 576 (1964); Claridge Apartments Co. Commissioner, 323 141, 164, 65 172, 185, 89 L.Ed. 139 (1944); Miller 294 435, 439, 55 440, 441-442, 977 (1935); Magnolia Petroleum Co., 276 162-163, 236, 237, 72 509 (1928). By same principle, not, Brimstone 104, 122, 282, 287, 487 (1928) ("The readjustments drastic. ought extended permit unreasonably harsh action very plain words"). Even some substantial justification presented, courts reluctant find such absent grant. 13 contends necessary unusual He rests grounds: first, "provide adjustments," 1395x(v)(1)(A)(ii); second, limit §§ 1395x(v)(1)(A), 1395hh, 1395ii. consider alternatives turn. A. 14 forth That subparagraph that: 15 "Such Ibid. 16 face permits action. cannot accept argument, To contrary, agree directs establish procedure retroactivity adjudication, rulemaking.1 17 part, (including rules) establishing reasonable "institutions" "providers" participate program. Clause (i) cost-method take into account direct indirect "providers." mandates include mechanism adjustments. These when, "a provider," "aggregate costs" too low high. then, contemplates adjusting received provider, while remainder speaks plural. distinction suggests (ii), rather than permitting modifications formulation, inquiry accuracy determinations providers. Indeed, difficult how adjustment could made provider" performing examination provider's expenditures retrospect. 18 Our buttressed statute's use term "adjustments." states adjustments." derive "adjustments" must of" themselves additional regulations. Had issuance further amendatory regulations, think intent explicit. 19 significant terms amount computed one costs. concedes, costs, therefore attempt change those methods. Yet nothing compute costs; rather, expressly amounts pursuant independent 20 immediately enactment remained essentially unchanged throughout periods relevant Compare CFR 405.451(b)(1), 405.454(a), (f) (1967), (1983).2 interim bring line actual 21 contemplate reissuance purport provision; indeed, context litigation expressed characterize (ii). 22 Despite novelty interpretation, entitled deference Young Community Nutrition Institute, 476 974, 980-981, 106 2360, 2364-2365, 90 959 (1986), Chemical Mfrs. Natural Resources Defense Council, Inc., 470 116, 125, 105 1102, 1107-1108, (1985), Chevron U.S.A. Inc. 467 837, 842-844, 104 2778, 2781-2783, 81 694 applied principle cases agency litigating positions wholly unsupported rulings, practice. declined give counsel's itself articulated position question, ground "Congress official appellate counsel responsibility elaborating enforcing commands." Investment Company Institute Camp, 401 617, 628, 91 1091, 1097, 28 367 (1971); cf. Burlington Truck Lines, 371 156, 168, 83 239, 245-246, 207 (1962) post hoc rationalizations [orders]"). sanction departure cases, here. Far being reasoned view scope current contrary narrow advocated argued "merely year-end monthly installments due year." Regents University California 771 1182, 1189 (CA9 1985); Whitecliff, 210 Ct.Cl. 53, 60, n. 536 347, 352, (1976), cert. denied, 430 969, 97 1652, 52 361 (1977). Deference what appears more convenient entirely inappropriate. Accordingly, upheld make B 23 contain rulemaking.3 Any light might shed matter suggestions contemplated. place, act discussed above, 1395x(v)(1)(A)(ii) procedures adjustmentss indication considered need action, 24 directly addresses issue retroactivity. discussing 1972 amendments, House Senate Committee Reports desire rules: "The proposed exercised prospective, retrospective, know advance recognition avoid having reimbursable." H.R.Rep. 92-231, S.Rep. 92-1230, 188 U.S.Code Cong. & Admin.News pp. 4989, 5070. 25 "[t]hese imposed prospectively. ." 405.460(a) (1975). Although dropped subsection regulation when revised 1979, continued refer "the applied," future Register "[p]rior beginning applied. 405.460(b)(2), (3) (1980). Finally, again 1982, reinserted requirement noting "inadvertently omitted" previous amendment reinsertion "have way develop limits." 47 43282, 43286 (1982); 405.460(a)(2) (1983). 26 Other examples similar statements abound. Every between example, statement 223 "prospective" Medicare.4 rulings understanding 223(b). Beth Israel Blue Cross Assn./Blue Cross/Blue Shield Massachusetts, CCH Medicaid Guide ¶ 31,645 (Nov. 7, 1981). 27 nonetheless that, whatever his normal course events, unique occurrence creates heightened need, thus justification, curative warns important goals frustrated can cured defect time periods. argument advanced countervailing reliance interests less compelling usual case original, at least individuals entities subject provisions. Whatever weight contentions other contexts, addressed us resolved particular scheme question. compels 29 30 Affirmed. 31 concurring. 32 I principles law suggest Service's write separately incomplete discuss reference basic structural legislation embodiment principles, 551-552, 553-559, 701-706, 1305, 3105, 3344, 5372, 7521. Circuit independently confirms reached. 33 part APA's definition "rule" 34 "means whole applicability designed implement, interpret, prescribe policy describing organization, procedure, requirements agency. 551(4) (emphasis added). 35 plausible reading italicized phrase legal consequences future. possibly mean merely future, though past, since description enable distinguished "orders," 551(6), destroy entire dichotomy upon most portions based. (Adjudication—the process formulating orders, 551(7)—has well consequences, announced adjudication departed adjudications reason. See, e.g., Local 32, American Federation Employees FLRA, 249 198, 202, 774 498, 502 (1985) (McGowan, J.); Greater Boston Television Corp. FCC, 143 383, 393, 444 841, 852 (1970) (Leventhal, J.), 403 923, 2233, 701 (1971)). 36 Nor "future effect" "taking future," is, effective date even though, once effective, altering past. reading, urged (Secretary), produces meaningless, obviously sense until made. (One argue, suppose, excludes immediately, opposed second promulgation. Apart facial silliness central hang thread, incompatible 553(d), makes clear certain complied with, immediately.) Thus like one, causes fail objective, distinguish orders. All orders promulgated. 37 short, there really except obvious meaning, If left doubt this, surely eliminated (which brief regrettably submerges ellipsis). portion continues 38 "includes approval prescription rates, wages, corporate financial structures reorganizations thereof, prices, facilities, appliances, allowances therefor valuations, accounting, practices bearing foregoing." 39 seems me "for future"—which refers operation date—is meant add contained earlier definition, repeat, particularized context, "of effect." And thought otherwise purposes present case, HHS "cost-limit" governing "prescription" "practices on" "allowances" "services." 40 takes out accord Government's own authoritative 1947 Attorney General's Manual (AG's Manual), repeatedly great weight. Steadman SEC, 450 91, 103, 22, 101 999, 1008, 67 69 (1981); Chrysler Brown, 441 281, 302, 31, 1705, 1717-1718, 60 208 (1979); Vermont Yankee Nuclear Power 435 519, 546, 98 1197, 1213, 460 (1978). document prepared Office Assistant Solicitor General advised latter stages enacting originally "as guide agencies Act." AG's 6. Its analysis plainly here: 41 "Of importance fact 'rule' includes class single person. implementing 43 "[T]he adjudication. Rule regulates conduct groups persons person; nature, operates primarily concerned considerations. Conversely, determination rights liabilities." Id., 13-14. 44 conceivably reconciled clarity disregarded sentence, elsewhere Manual, "[n]othing precludes accompanied section 4(c)." 37. What means (apart inexplicable 4(c), appear application, adopted), clarified following citation supporting it, namely, 1980, 79th Cong., 2d Sess., 49, (1946), Cong.Serv.1946, 1195. Report "[t]he 'future effect' preclude and, far legally authorized, dealing transactions future." Treasury prescribe, assessing income tax liability, trusts nontaxable taxable—whether regulation. here, i.e., actions. Rather, characterized "secondary" retroactivity, McNulty, Corporations Intertemporal Conflict Laws, Cal.L.Rev. 58-60 (1967). A (taxation trust income) unquestionably affect (rendering desirable future), reason cease APA. respect her formulas operating long-term labor supply contracts negotiated pre-existing But prescribed formula reimbursable function performable 45 unreasonable secondary retroactivity—for manner worthless investment rule—may "arbitrary" "capricious," 706, situations, found many "[w]here effects, sustained spite reasonable." Telephone Southwest 449 846, 863 (CA5 1971). National Independent Producers Distributors 249, 255 (CA2 1974) ("Any implication FCC reasonableness clearly wrong"). erroneous, extend "reasonableness" purported Quite simply, effect," and/or profound confusion characterizing approach exemplified our SEC Chenery Corp., 332 194, 1575, 1995 (1947). apart decided involved true permitted Secretary, correction procedural error caused initial reversal, 318 80, 63 454, 87 626 (1943), substantive utterly crucial permissible standard. Adjudication deals was; be. why said Chenery: "Since Commission, unlike court, ability prospectively through rule-making powers, rely ad formulate standards conduct. filling interstices performed, much possible, quasi-legislative U.S., S.Ct., 1580 just suggested opinions NLRB Wyman-Gordon 394 759, 1426, 709 (1969), obverse: purely constitute Both plurality joined four Justices, dissenting Justices Douglas Harlan accepted binding (without analysis) subsequent adjudications, achieved procedures. id., 764-766, 1428-1430 (plurality opinion); 777, 1435-1436 (Douglas, dissenting); 780-781, 1437-1438 (Harlan, dissenting). Side side two Wyman-Gordon, quite nicely "dichotomy adjudication" [APA] based." 14. enacted years ago, confronted casts useful instrument available agencies, expect occasion exercise. Supreme cites, pre-APA Addison Holly Hill Fruit Products, 322 607, 64 1215, 88 1488 (1944). stand enacted, 551(4). "area production" Administrator Wage Hour Division, exemption Fair Labor Standards 1938, 1060, 201 unlawful—but instead directing entry higher remanded "with instructions hold Administrator, deliberate speed, acts within him Congress." 619, 1222. declaratory hand. Where interpretive invalid, superseded, "make" retroactively routinely (and indicated Agriculture done Morgan, 307 183, 193, 59 795, 800-801, 1211 (1939)). Perhaps stands for. Arguably, obliged referred production (as defined Administrator)." 608, 1217. parenthetical requiring specification (rather adjudication), then authorizing doing situation commands superseded. circumstances, contravene promulgating regulation, else would, inaction, totally congressionally exemption. Something yield. involves all, asserted permissibility long reasonable, narrower unexceptional) proposition implicitly 50 disposed of, suggests, simply legislation, constitutional attack reasonable. Pension Benefit Guaranty R.A. Gray 717, 2709, 601 (1984); Baltimore Susquehanna Nesbit, How. 395, 469 (1851). generally Hochman, Constitutionality Retroactive Legislation, 73 Harv.L.Rev. 692 (1960). constitutionality, good says. For resolving follow possesses laws, possess always looked disfavor, Smead, Against Legislation: Basic Principle Jurisprudence, Minn.L.Rev. 775 (1936); Story, Commentaries Constitution 1398, 272 (5th ed. 1891), constitutionality conditioned rationality beyond supra, 730, 2718; Usery Turner Elkhorn Mining 428 16-17, 96 2882, 2892-2893, 752 (1976). unsurprising, therefore, wields itself, unwilling confer agencies. Given traditional attitude towards regime one: required, special authorization. says, it. 51 dire predicts ensue written interpreted it) credible. From jurisprudence cites (set footnote) sustaining Citizens Save Spencer County EPA, 195 600 844 Helium FEA, 569 1137, 1145, (Temp.Emerg.Ct.App.1977). They evidently device indispensable efficient government. note limitation hinge requirements, construing prevents acting Bell Aerospace 416 267, 293-294, 94 1757, 1771-1772, 134 (1974); 202-203, 1580-1581. believes extraordinary step crucial, persuade obtain implicit existing legislation. If, prescribes deadline misses deadline, despite (Such bear similarity Addison.) exceptions, law, exception cover evils associated "curative" rulemaking—that mistake proceeding. furnished "ample notice" standard applied, asserts unfair identical retroactively. assume ample notice, clear. difference. fair; undoubtedly be, structure. felt free construct my model assuredly fully acceptance "make mockery APA," "agencies violate impunity if, 'reissue' basis." 270, 758 53 reasons addition stated Courts spoken voice Some Tallahassee Memorial Regional Medical Center Bowen, 815 1435, 1453-1454 (CA11 1987), 1020, 1573, 888 (1988); Fairfax Nursing Center, Califano, 590 1297, 1300 (CA4 1979); Springdale Convalescent Mathews, 545 943, 954-955 1977). Third reached opposite conclusion, providers' accounts. Daughters Miriam Aged 1250, 1258, courts, deciding determinations. St. Paul-Ramsey 816 417, 419-420 (CA8 1987); 1188-1189 1985). implement (ii): "These submitted statistical reports. represent difference during year covered [the program] beneficiaries determined accordance apportionment rendered 405.451(b)(1) (1967); amendments state computing establishment overall items recognized estimates delivery needed insurance programs subchapter. 1395hh carry administration subchapter." 1395ii incorporates 405(a), full ., inconsistent subchapter, appropriate 48010 33637; 41868 (1980); 31806 43558 (1978); 53675 (1977); 26992 (1976); 23622 (1975); 20168 (1983) (notice schedule). concerning "authorizes Medicare." 6175, 6176 Interestingly, announcing schedule. 46495.

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