Warren E. Burger: Mr. Attorney, General, I think you may proceed wherever you're ready.
W. J. Michael Cody: Mr. Chief Justice, and may it please the Court: This is a case involving the interpretation and application of Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination against the handicapped in federally funded programs. At issue is whether the Tennessee Medicaid program discriminated against the handicapped by reducing the number of inpatient hospital days provided each Medicaid recipient in a fiscal year from 20 until 14. The district court ruled that the change did not violate Section 504. A three-judge panel of the Sixth Circuit in a split decision found a prima facie violation of Section 504, reversed and remanded in order to allow the state to rebut the prima facie case. The change which the Tennessee Medicaid program took in this case was an across-the-board deduction in inpatient hospital days from 14... from 20 days to 14 days. It excluded no one. It applied equally to the handicapped as well as the nonhandicapped. This change was necessary because the Tennessee constitution prohibits deficit spending, and our program was in a condition that it would run out of money unless certain changes were made in order to reduce the financial commitment of the state. And this change itself was made along with others which made the budget possible to have the Medicaid program run throughout the year and serve the public recipients. This change, the state submits, was authorized by the Medicaid statutes and the regulations. Congress has given the states discretion in setting benefit and service levels. There are two restrictions that Congress places on those levels of services. First, the level must be sufficient in amount, in duration, and in scope in order to achieve the purpose of the program; and secondly, the level must be set equally for everyone. In addition to the Medicaid law, the State of Tennessee submits that the charge is consistent with the purpose of Section 504 and the specific regulations under Section 504 which refer to benefits and services. The purpose of Section 504, we submit, is the evenhanded treatment of handicapped, not affirmative action in order to overcome disabilities which are caused by handicapped. In the regulations which particularly refer to benefits and services, the regulation says that services are required to be equally effective, but in order to be equally effective, the benefits are not required to produce the identical result or level of achievement for the handicapped and the nonhandicapped persons, but must afford handicapped persons equal opportunity to obtain the same result. In order to violate Section 504, we submit, we would have had to extend a lesser number of inpatient hospital days to the handicapped than to the nonhandicapped. The district court recognized this and found that there was no discrimination under 504 when an equal number of hospital days were provided. The court of appeals, however, felt that a prima facie case was made because on the statistics introduced, the 14 days limitation was unable to meet the hospital needs of the handicapped to the same extent as the nonhandicapped. So even if an effects test is applied, a violation or a prima facie violation of Section 504 requires a finding that the handicapped were affected unequally with respect to some program benefit. Here, the benefit which the state is providing, the 14 days of inpatient hospital care, is provided equally to all eligible for the program.
Sandra Day O'Connor: I'd like to ask, General Cody, if an effects test is appropriate in this case. How could you... how could you have the finding about whether the treatment is equal or unequal without letting it go to the hearing? In other words, is a prima facie case made out on the facts such as existed here with the resolution of the effect to be made thereafter?
W. J. Michael Cody: Justice O'Connor, we do not believe that that would be the result, and it's the error we think that the court of appeals made. They... we contend that the benefit which is provided in this service is a certain number of inpatient hospital days. And I might add as the Solicitor General points out in his brief, if you look at the studies, the disproportionate result is even greater at 19 days than it is at 14, so the cut... the figures would show that less handicapped needs proportional to nonhandicapped are met at 19 days than at what we cut it back to at 14. But what we think the statute does is it provides equal access to the program, to the benefits, equal opportunity to receive those benefits, and not an equal result. And that's what these figures really are dealing with; that it takes more hospital days to have certain handicappeds reach full recovery or to get all of their hospital benefits.
Sandra Day O'Connor: Do you... do you agree that the case decided by this Court last term, Consolidated Bail v. Darrone, if that is the correct pronunciation, indicates that Congress incorporated into Section 504 an effects standard... in other words, the standard adopted by HHS regulations?
W. J. Michael Cody: Justice O'Connor, I do not believe that it did, and we... we have made an argument in our brief that--
Sandra Day O'Connor: But there certainly is language to that effect in the opinion, isn't there?
W. J. Michael Cody: --Yes, there is, but I think the Darrone regulation--
Sandra Day O'Connor: So was that just wrong, in your view?
W. J. Michael Cody: --No. I think that... that Darrone, the regulations there relate to a different situation than we have here. Those are specific employment regulations. In the benefit and services regulation we have argued in our brief, first, that if you go back to Title VI or Section 504 and look at Bakke and this Court's majority opinion in Guardians, that Section 504, as Darrone indicates, is a mirror image of Title VI, and that Title VI only prohibits intentional discrimination. Justice Stevens, I think, went further, however, and said if... if that's correct, the regulations can provide an effects test even if the statute does not; but he qualified that to say if the regulations are in furtherance of the statute, and that's where we think there is a problem here in applying effects regulations to benefits and services afforded. The handicapped are not a homogenous group of people. There are many different subtypes of handicaps that require tremendous social services. And in this particular situation, any time that you have users of social welfare programs such as the handicapped in this case, if you place any limits on the benefit, you're going to have this disproportionate result occur. But we contend that that disproportionate result is not disparity or discrimination within the meaning of... of Section 504. And the important consideration, I think, for the Court to see is that 504 requires equal access to the services. As the respondent argues, is a person excluded from the program when he runs out of the 14 days? Isn't that lack of access to the program, or have we excluded that person from the program? I don't think that we have when it is merely a limit on the program and one which is consistent. When that service runs out or the benefit runs out, it's just been used up, and it doesn't mean that that person is excluded from the program. If this case... if we had to go to a prima facie finding just on the basis of disproportionate results that the handicappeds didn't receive as much health care as they might need and nonhandicapped did, then you would allow litigants every time that any change is made in a social welfare program such as this, that they could come in and if they are greater users, they would show this disproportion, and the state would have to litigate each and every one of those situations, and you would find that a very uncertain program would be present.
Byron R. White: You... you say that... that you should win because there's no discrimination. This is really not much different from what the United States argues, is it? They just say that even if you take an effects test, there's no difference in effect.
W. J. Michael Cody: That's... that's right, Justice White. We... we have only--
Byron R. White: Isn't that just as good a way of putting it?
W. J. Michael Cody: --I think it's a better way of putting it. I think the Solicitor General has put it better. And you never even need to reach these questions, because under the alternative argument there is no discrimination.
Warren E. Burger: Mr. Bator.
Paul M. Bator: Mr. Chief Justice, and may it please the Court: The Government's central concern here is to show why the particular version of the discriminatory impact theory that was adopted by the court of appeals in this case, why that version of this theory is really quite radically wrong. And for that purpose I'll start out by emphasizing that this case is not simply about the validity of the 14-day rule, or about the validity of a reduction from 20 to 14 days. Suppose Tennessee today abandoned its 14-day rule, went back to its previous 20-day rule. Would this quarrel be over? Not at all. It's perfectly clear from the record that a rule that limits reimbursements for inpatient hospital care to 20 days has a more severe differential impact on the handicapped than the 14-day rule; that is to say, the handicappeds form a larger percentage of those who need more than 20 days of hospitalization than of those who need 14 days. In fact, the odd thing about this case is that the higher the Tennessee limit went, if Tennessee had a 60-day limit, we might get to the point where those who have a... are excluded by such a limit may constitute 100 percent of the people with chronic and handicapped condition. Or take the alternative that the court of appeals seemed to find attractive, which is to limit not the number of days of inpatient care, but the number of admissions. It seems to the Government clear that that rule would be incredibly vulnerable to the theory of the court of appeals, because it would cut against all of those who suffer from those illnesses that need very frequent hospitalizations; that is, people who suffer from chronic and therefore handicapping conditions. And the respondents' own solution here, which is to have the limit set in terms of the number of days per admission, would that rule not have a disparate impact on the handicapped under the theory of the court of appeals? We don't think so. I think if you set a limit of three days in the hospital for an appendectomy, or six days in a hospital for a heart bypass, it seems clear that that's most likely to be insufficient for those who suffer from some other complicating chronic or handicapping condition. So the point here is that the court of appeals' version of the discriminatory impact is fatal to any across-the-board attempt to limit or allocate Medicaid funds. Any funding limit or allocation is going to entail some kind of differential in terms of result on some members of some protected group. That's why we think that there has to be something very fundamentally wrong with the theory of the court of appeals, and in our brief we try to clarify what has gone wrong here. We think that analytically what has gone wrong is that the court of appeals tried to solve the question of what is discrimination without first analyzing what is the relevant program or activity or benefit as to which 504 prohibits discrimination. We submit that that question cannot be answered by reference to 504. That question must be solved by looking at what program Tennessee has set up here and what program the Medicaid statute funds. The... Tennessee is free to set up whatever program it wants to. That program must, of course, be harmonious with the federal subsidy statute, here the Medicaid Act. Now, this is the matrix as to which 504 applies, and here we think the relevant program or benefit which has been undertaken and subsidized is not the satisfaction of health needs, but the provision of a given level of health services. Now, the other point I'd like to make, Your Honors, is that at a conceptual level what is troubling here is that the court of appeals' theory of discrimination simply dissolves all possible distinctions between nondiscrimination on the one hand and a major affirmative action program to aid the handicapped on the other.
John Paul Stevens: Mr. Bator--
Paul M. Bator: That's the very--
John Paul Stevens: --Can I ask you one question you answer whenever it's convenient in your argument? Could you state a test of discrimination under this statute that... in... in the shorthand fashion in some way that I could tell whether it applies to this case or not?
Paul M. Bator: --We feel, Your Honor, that insofar as the statute incorporates an impact test at all... a question which we, the government, has elided here... but on that assumption, assuming that no intentional discrimination needs to be proved, that a discriminatory impact within the meaning of 504 exists only if the effect of the practice adopted by the state bars the handicapped from equal access to or an equal opportunity to get the benefits of the program. Now, that may sometimes require special measures for the handicapped.
John Paul Stevens: When you say bars the handicapped, do you mean bars an individual handicapped person or the class of persons who fit the statutory definition of handicapped? Which are you saying?
Paul M. Bator: Well, I think either or--
John Paul Stevens: Because here it clearly seems--
Paul M. Bator: --Either or both. I think that if the practice is one which has the effect of saying a rampless hospital does not give the handicapped equal access to Medicaid funds. The Lau case establishes--
Thurgood Marshall: --Intentional or unintentional?
Paul M. Bator: --We are assuming that with that... with respect to that kind of practice, intention need not be shown. That's the assumption on which we write our brief. But that's not this case, because there is no barring of the handicapped from access to this program or from an equal opportunity, unless you reduce equal opportunity again to what we think is an unacceptable form of formulation, which is that there must be an equal satisfaction of all health maintenance, that the result has to be exactly the same. Now, as I say, we do admit that special measures for the handicapped, as the Lau case shows, may sometimes be necessary in order to create equal access or an equal opportunity; but again, that is not this case. I also want to reassure the Court about--
John Paul Stevens: May I just ask one... one other? Equal opportunity to get what?
Paul M. Bator: --Equal opportunity to receive the benefits that Tennessee has provided, which is a given measure--
John Paul Stevens: Well, that's... that's--
Paul M. Bator: --Of health care.
John Paul Stevens: --It's not equal opportunity to get the health care they need. Obviously you lose if that's the test. It's equal opportunity to get what Tennessee offers, as I see it.
Paul M. Bator: That form of words, Justice Stevens, makes the word "opportunity" totally inoperative.
John Paul Stevens: And if you say equal opportunity to get what they've offered, it seems to me you automatically win.
Paul M. Bator: Equal opportunity to take what they've offered and that the federal government has chosen to subsidize. Now, that means that the practice or measure adopted by Tennessee must satisfy the reasonableness and also the equality standards of the Medicaid Act, which do very carefully provide that equal provision with respect to scope, amount, et cetera, of service is required. So it is not the case that Tennessee here is wholly free to sort of gerrymander the handicapped out of this statute. That is not this case. We'll reserve the rest of our time.
Warren E. Burger: Mr. Bonnyman.
G. Gordon Bonnyman, Jr.: Mr. Chief Justice, and may it please the Court: Let me say first what this case is not about. It is not about whether the State of Tennessee can reduce its Medicaid program or any other federally-assisted program. The case is not about whether the state has to resort to affirmative action to satisfy Section 504. The case is simply whether when it does impose a reduction in social program it can do so in a manner which disproportionately imposes upon the handicapped or any other protected group a grossly... in this case grossly disproportionate burden of bearing the brunt of the cutback.
Warren E. Burger: How many days would it be required... would there be required to produce the result that you argue for?
G. Gordon Bonnyman, Jr.: Your Honor, I think the record is not... the record is not clear, but it suggests that an annual limit itself is problematic; that the... the evidence that was produced below suggests that... it doesn't just suggest; it is very clear that we were talking about a limitation that the State of Tennessee employs that very few other states employ, and that there are a range of other ways of defining the service. And I think this is critical. What is it that the Medicaid program funded by Congress is designed to give? And what it is designed to do if you look at the Medicaid Act itself is hospitalization. Now, the state and the Solicitor General--
William H. Rehnquist: Mr. Bonnyman, I think General Cody and the Solicitor General take the position that if your position is sustained, any across-the-board reduction in hospital services would at least be subject to a prima facie finding and an individualized hearing in court as to whether it could be sustained. Now, do you agree with that?
G. Gordon Bonnyman, Jr.: --I do not agree, Your Honor, and... and I think--
William H. Rehnquist: Okay. Now, what... what kind of an across-the-board reduction could Tennessee have made in this case? Could it have gone from 20 days to 18 days?
G. Gordon Bonnyman, Jr.: --No. Again... again, Justice Rehnquist, I think if you look at the evidence regarding an annual limit on the number of days... and keep in mind, there's nothing in the Medicaid Act under which these... these services are provided that enshrines an annual limit on the number of days. If you look at that particular method of limiting the care, it is probably problematic.
William H. Rehnquist: Well, when you say problematic, you mean bad under the Sixth Circuit's decision.
G. Gordon Bonnyman, Jr.: Yes, Your Honor, I do.
William H. Rehnquist: Now, would that be true if Tennessee imposed an initial limitation of 20 days for the first time if it had had no limitation before?
G. Gordon Bonnyman, Jr.: I think that... I think that is... is true, Your Honor. On the record in this case... and I should say preliminarily that... that the... that the record is uncertain, as we point out in our... in our brief, reply brief, because of the number of changes that have taken place in the program since it's been on appeal.
William H. Rehnquist: Well, now, how... how about if... the court of appeals said, didn't it, that the... Tennessee could have gotten by with limiting the number of visits per year?
G. Gordon Bonnyman, Jr.: Yes, Your Honor. That, frankly, is... is incorrect.
William H. Rehnquist: Yes. You don't agree with that, do you?
G. Gordon Bonnyman, Jr.: No. I think that what... and we are not proprietary about the particular alternative that we put on evidence.
William H. Rehnquist: Well, but I'm trying... I'm trying to find out from you exactly what the state might have done without having the court of appeals decide it if it had to go to court and sustain this on a hearing. How about the number of days per admission?
G. Gordon Bonnyman, Jr.: That would not be problematic, Your Honor. A... a... a limit that is based... that many other states use of screening--
William H. Rehnquist: Well, but... but the fact that many other states use... use it certainly wouldn't insulate it from the court of appeals' reasoning in this case.
G. Gordon Bonnyman, Jr.: --No, Your Honor, but I think... I only point to the experience of other states to make the point that it is feasible. And if you... if you look at the way this annual limit operates, it operates... we are not talking about degree; we are talking about kind. At a certain point in the fiscal year these people, overwhelmingly handicapped, are... are absolutely barred from the hospital.
William H. Rehnquist: But that's true of any... any limit on days in the hospital, isn't it?
G. Gordon Bonnyman, Jr.: Any annual limit on the number of days in the hospital. That is not true, Your Honor, with regard to most of the ways of calculating the hospitalization benefit afforded by this--
William H. Rehnquist: Well, supposing we turn to number of days per admission. Now, couldn't some showing be made in all probability that particular people, perhaps with different handicaps than those who made their showing in this case, would be discriminated against, in your view, by limiting the number of days per admission; the kinds who once they have admission perhaps need a fairly long stay in the hospital?
G. Gordon Bonnyman, Jr.: --Well, Your Honor, that may be why the Sixth Circuit said we had only established a prima facie case, and it ought to be remanded for that sort of justification, if it exists to be offered.
William H. Rehnquist: Well, but, I... I'm not talking about the... the plan that Tennessee actually went with here. I'm talking about what I thought was your submission of a proper plan, which would limit the number of days per admission.
G. Gordon Bonnyman, Jr.: With no limit on the number of admissions.
William H. Rehnquist: Yes.
G. Gordon Bonnyman, Jr.: Well, I think our point there is that if you look at the way... if you look at the expert testimony about the way the hospitals respond to these limits and the way the hospitals respond to these limits and the way Medicaid recipients gain admission to the hospital, that would afford access to hospitalization, as would the host of other alternatives used by other states.
William H. Rehnquist: But wouldn't it discriminate against some types of handicapped people who need fairly extensive stay in the hospital once they get admitted?
G. Gordon Bonnyman, Jr.: Well, the... the regulations, Your Honor, the HHS regulations on which we rely do not... and I think this is very important... do not, as the Solicitor General suggests we are arguing, guarantee an equal result. You couldn't legislate an equal result in terms of health care even if you wanted to.
William H. Rehnquist: Well, then you reject that part of the court of appeals' opinion, I take it.
G. Gordon Bonnyman, Jr.: No, Your Honor. I think the court of appeals' decision needs to be read more carefully than... than the way it is being read by the Government. And the court of appeals said only what the regulations which were upheld in the Darrone case say, and that is not that there have to be equal results, but that there has to be an equal opportunity to achieve the benefit for the results afforded by the program.
Sandra Day O'Connor: Well, doesn't that depend on how you define benefit?
G. Gordon Bonnyman, Jr.: Exactly, Your Honor.
Sandra Day O'Connor: Well, if you define the benefit as medical services, how can you prevail?
G. Gordon Bonnyman, Jr.: Well, I think if you define it in terms of hospital services... and I think that's the correct way to define it, because that's the way the Medicaid Act defines it... the state, after all, is not free to go out and make up another definition. If you define it in terms of hospital services, then what that means in terms of equal opportunity to gain the benefits of that service is an equal opportunity to gain admission to the hospital to receive that care.
Thurgood Marshall: Mr. Bonnyman?
G. Gordon Bonnyman, Jr.: Yes, Your Honor.
Thurgood Marshall: Can I get back to the Chief Justice's question? How many days are you opting for?
G. Gordon Bonnyman, Jr.: Your Honor, we would suggest on the record that there are probably... that this... this basic way of casting the coverage probably on the evidence adduced below... and again, that evidence may have changed with the changes in the program... that that particular way of casting the coverage is probably not acceptable under 504. That still leaves an array of alternatives available.
Thurgood Marshall: Let me be specific.
G. Gordon Bonnyman, Jr.: Yes, Your Honor.
Thurgood Marshall: Using the figures 1, 2, 3, 4, how many days?
G. Gordon Bonnyman, Jr.: We think that probably none of those days would be acceptable.
Thurgood Marshall: Well, let me put it this way. How many more days than a nonhandicapped person is entitled to is a handicapped person?
G. Gordon Bonnyman, Jr.: No more days, Your Honor, because--
Thurgood Marshall: Well, what are you arguing about?
G. Gordon Bonnyman, Jr.: --Well, what we are arguing about is that... that there are... and that's the whole problem with this particular method that Tennessee and... has chosen, because we are not asking for more days for the handicapped and the nonhandicapped. We are simply asking for a result which is fair in effect--
Thurgood Marshall: Like what?
G. Gordon Bonnyman, Jr.: --As well as in form.
Thurgood Marshall: Like what?
G. Gordon Bonnyman, Jr.: Like, for example--
Thurgood Marshall: I mean in words. What would the orders say that you want?
G. Gordon Bonnyman, Jr.: --It... it--
Thurgood Marshall: Now, the handicapped person is entitled to blank days?
G. Gordon Bonnyman, Jr.: --No, Your Honor. What we are looking--
Thurgood Marshall: The handicapped person is entitled to more consideration than another person?
G. Gordon Bonnyman, Jr.: --No, Your Honor.
Thurgood Marshall: Well, what do you want the handicapped person to have that he doesn't already have, which according to the state is equal access?
G. Gordon Bonnyman, Jr.: Well, according to the state--
Thurgood Marshall: I'm not arguing that; that's what the state's arguing.
G. Gordon Bonnyman, Jr.: --Right. The state can only make that claim by ignoring the reality of what happens once you reach 14 days, which is you simply do not... and we're talking about lifesaving care, as the record indicates... we do not have access to that care at day 14... after day 14. And what--
Thurgood Marshall: Was that brought before the legislature, a committee or anybody?
G. Gordon Bonnyman, Jr.: --Pardon me?
Thurgood Marshall: Did the handicapped people appear before anybody when these rules were set up?
G. Gordon Bonnyman, Jr.: There was a duly constituted Medicaid advisory committee which was comprised of patients and representatives and consumers, and... and it roundly condemned this particular... this particular cutback, and the state legislature has said it makes no sense because of its impact on hospitals.
Thurgood Marshall: Did the state legislature hold hearings?
G. Gordon Bonnyman, Jr.: It did, Your Honor.
Thurgood Marshall: It did not hold hearings?
G. Gordon Bonnyman, Jr.: It did hold hearings after the fact, and... and we cite a legislative finding there that the effect of this particular way of cutting has been--
Thurgood Marshall: Was there anything in the hearings that shows that the state intended to treat handicapped people differently from others? Is there any word in that?
G. Gordon Bonnyman, Jr.: --No, Your Honor. And... and that brings us to the nature of handicapped discrimination and the... the reason why 504 if it is not construed to reach discriminatory impact absent intent, is simply going to be meaningless; because the nature... we do not have a history of people burning crosses on the lawns of the handicapped or painting swastikas on the sides of rehabilitation centers.
Thurgood Marshall: Well, what does burning crosses on the lawn got to do with medical treatment?
G. Gordon Bonnyman, Jr.: Well, we would say in this case nothing, Your Honor. I mean that's my point; that... that we are not talking about malevolence. We are talking about simple obliviousness. The... the state was very candid in saying we never thought about the impact of this on the handicapped, never gave it a moment's thought, and we don't have to. We don't have to.
Sandra Day O'Connor: Well, even assuming an effects test is incorporated, that doesn't mean you necessarily prevail, because if the Solicitor General is correct, you don't look at the results; you look at the opportunity for a particular medical service.
G. Gordon Bonnyman, Jr.: Well, I... I think critical to the... to the Solicitor General's position are two fallacies. One is a characterization of our argument and the court of appeals' decision as mandating equal results. And again, we are not asking for that. We are only asking for what the regulations mandate, which is an equal opportunity. If... if someone, for example, is quadriplegic and has pneumonia, as is common among... commonly occurs among people who are quadriplegic, goes to the hospital in June, the chances are he's not going to be admitted. If he is not handicapped, the chances are very likely that he will be.
Sandra Day O'Connor: Well, you're equating the benefit with the particular advantages that one might gain from the benefit, and that's the point. Maybe you don't have to do that. And that's what the Solicitor General is saying.
G. Gordon Bonnyman, Jr.: Well, I think if you... if you adopt the Solicitor General's approach to impact tests, it's going to be very easy for any defendant in these case to resort to the tautology that the benefit, which is being distributed unequally, is whatever we define it to be. We have defined this benefit as 14 days. Well, clearly everybody has access to 14 days. But that is not the benefit that Congress was concerned about. Congress, when it put out the billion dollars of Medicaid dollars that this state had received had prior to the filing of the case in the district court, was concerned about meeting the health needs of people and mandated that states who receive this money provide hospital services. So they were... I think you'd have to turn the Medicaid Act on its head to say Congress wasn't concerned about the effect on treatment of patient conditions. It was only concerned that you pump out these dollars.
Sandra Day O'Connor: Only in a generic sense perhaps by the fact that Congress encouraged states to provide some medical services available to all. Isn't that true? And the overall effect of that for the nation as a whole might be improved care.
G. Gordon Bonnyman, Jr.: Well, it's clear that Congress did not mandate that they meet all of the needs of everyone, and... and that's why it's important to go back to our first concession from the moment the complaint was filed. We do not contend that the state cannot reduce its program. We're not trying to hamstring that part of their operation. We're simply saying when they do it, they have to do it in a way where the... I mean they've... they conceded in their brief to the Sixth Circuit the impact of this reduction falls with disproportionate effect on the handicapped as compared to the nonhandicapped.
John Paul Stevens: Mr. Bonnyman, may I ask you a question about the disparate impact? In your view does the disparate impact arise from the fact that a larger percentage of the people in the handicapped class need hospitalization for long periods of time or, alternatively, that if you have a person in the handicapped class and one in the nonhandicapped class with the same ailment that the nonhandicapped person by virtue of his handicap will need longer hospitalization? Do you understand what I'm asking?
G. Gordon Bonnyman, Jr.: Yes, Your Honor. And... and I think it is... it is both of those, but primarily the latter. I mean let's look again at the example of someone--
John Paul Stevens: It's primarily the latter, that if--
G. Gordon Bonnyman, Jr.: --That, in other words--
John Paul Stevens: --If a nonhandicapped person and a handicapped person both have pneumonia, the handicapped person may need to stay in the hospital longer than the--
G. Gordon Bonnyman, Jr.: --May have to stay longer and... but more importantly, given the fact that what we're concerned about is simply getting access to the hospital to begin with, he is more likely to have been in the hospital previously within the fiscal year so that he's already exhausted the state's--
John Paul Stevens: --But perhaps possibly for some other ailment then.
G. Gordon Bonnyman, Jr.: --Or the same one. I mean I cite pneumonia simply because that does tend to recur among people with quadriplegia or--
John Paul Stevens: But, see, if it's for some other ailment, then you'd really be in the other branch of my hypothetical.
G. Gordon Bonnyman, Jr.: --Yes, Your Honor.
John Paul Stevens: I mean if you're suggesting... I mean if... if your theory is that handicapped people as a class are more apt to need hospital care, I don't see how you can possibly lose the case.
G. Gordon Bonnyman, Jr.: Well, I... I don't--
John Paul Stevens: Even if they go back for--
G. Gordon Bonnyman, Jr.: --Well, Your Honor, I think... I think that... that the way we can lose the case is if we go back on remand--
John Paul Stevens: --Yes.
G. Gordon Bonnyman, Jr.: --And the state shows that there as no alternatives, as have been suggested here; there are no alternatives which won't have the same impact.
John Paul Stevens: No alternatives except giving the handicapped people say 28 days and the nonhandicapped 14.
G. Gordon Bonnyman, Jr.: Right. And we say we concede from ab initio that that is not required by 504 because--
John Paul Stevens: You do concede that.
G. Gordon Bonnyman, Jr.: --We concede that. This cut is gratuitous.
William H. Rehnquist: Well, where--
G. Gordon Bonnyman, Jr.: On the evidence now before the Court it's gratuitous.
William H. Rehnquist: --Where do you come up with this alternatives, because ordinarily I would have thought that if you... if the statute requires a showing of disparate impact, you show disparate impact, coming up with alternatives which might have been used and instead the state saying we have no alternative, then you say well, all right, then you're entitled to use this thing with disparate impact, that is not the kind of analysis we ordinarily engage in. What you're arguing for sounds more like an impact statement type of thing. The... show that you've considered the problem of the handicapped, that you thought it over and considered alternatives that might have done better them. And if you've considered it and say they aren't feasible, then you can go ahead and use something that has disparate impact. But that's kind of a hodgepodge of statutory requirement.
G. Gordon Bonnyman, Jr.: Well, Your Honor, I think if you just analyze this in... in... in the way impact, disparate impact cases go, we have... we have gone beyond our initial burden. I mean we have shown an alternative that... because we realized that the concern of any court was going to be... isn't, as Justice Stevens alluded... I mean the handicapped are going to need more health services generally, and it isn't anything subject to challenge. And we simply wanted, not because we're proprietary about a particular alternative, we just put on proof to show that there are a range of alternatives, that the one we've talked about being one of them, which are available. And the Sixth Circuit was obviously concerned that they got no response from the state on that.
William H. Rehnquist: But what... what makes you think that the alternative you have proposed which, as I understand it, is a limit on the number of days per admission but no limit on the number of admissions per year, that some group of handicapped people, perhaps unknown to you, couldn't show that that discriminated against them, because once they got admitted they needed to stay longer than most people, than unhandicapped people?
G. Gordon Bonnyman, Jr.: Well, I... I think if you look at the regulations and you look at our contentions, we are not talking about... we are... we're not talking again about degree; we're talking about kind. We are talking about not the sort of gradations that were at... at issue in the Rowley case, but an absolute bar to the benefits of this program. I mean that's the way this cut operates.
William H. Rehnquist: But a limit on the number of days per admission would mean you're thrown out of the hospital at the end of six days.
G. Gordon Bonnyman, Jr.: No, Your Honor. I mean that... again, that goes back to the evidence that was adduced at the trial, and the expert testimony was that that is not the way... that is not the way it works. You will not get into the hospital to begin with if you have exhausted your days, but you will be readmitted so long... the hospitals... and this goes into the question of bed vacancies and marginal economic gain to the hospital... but the hospitals are happy to have you, basically, if you have a few days available at the time that you apply for admission.
William H. Rehnquist: And they'll keep you as long as you have to stay?
G. Gordon Bonnyman, Jr.: Yes, Your Honor.
William H. Rehnquist: Well, then, really when you say there is a way of doing it, it's a way of doing it because the hospitals don't enforce what you say they might be entitled to enforce.
G. Gordon Bonnyman, Jr.: Right. And... and--
William H. Rehnquist: So there really is... there really is no way of doing it.
G. Gordon Bonnyman, Jr.: --No, Your Honor. You can't divorce... like all cases which are context specific, you can't divorce this... these questions from the record. And there is a very concrete record, none of which was contradicted by the state, about the way, the specific way in which this limit operated to bar access to the hospitals.
William H. Rehnquist: Well, but your suggestion that there is another limit that would have some bite to it, that would be acceptable, turns out on examination that the limit would have no bite to it at all.
G. Gordon Bonnyman, Jr.: I'm sorry. Would not have any bite to it, I don't--
William H. Rehnquist: Well, you... you... you say well--
G. Gordon Bonnyman, Jr.: --It would save the state the money, if that's what your concerned with.
William H. Rehnquist: --Well, you say the state could have used a limitation on the number of days per admission, but then as I understand your response to questions, the... the reason that works is because the hospitals don't enforce the number of days limitation.
G. Gordon Bonnyman, Jr.: Do not... once you're in the hospital, that is correct. That is correct. They do not get paid for that. Again, that goes to... it is in their interest to take you if you have even a few days and they know you're going to stay longer simply because there are a lot of vacant beds, and there is a marginal economic incentive for them to take you.
Lewis F. Powell, Jr.: Mr. Bonnyman, I'm still not 100 percent sure I understand your position. Tell me this. Before Tennessee reduced the 20 days to 14 days was its program invalid?
G. Gordon Bonnyman, Jr.: Well, we don't have evidence on that, Your Honor, because the way--
Lewis F. Powell, Jr.: Do you think it's a matter of evidence?
G. Gordon Bonnyman, Jr.: --Pardon me?
Lewis F. Powell, Jr.: I say would it turn on a matter of evidence?
G. Gordon Bonnyman, Jr.: It does.
Lewis F. Powell, Jr.: With respect to each claimant?
G. Gordon Bonnyman, Jr.: No. Well, with respect to the statistical impact on the class as a whole. In other words, we... simply do not because... because there are no records of use beyond 20 days, and everybody is lumped in at 20 days, there's... we don't know actually what the impact of 20 days per se.
Lewis F. Powell, Jr.: So that if this case were here from Florida that provides 45 days, you'd still have to have a litigation?
G. Gordon Bonnyman, Jr.: I... I don't know that, Your Honor. I mean one point we make in our brief again is that there have been a number of changes in the program.
Lewis F. Powell, Jr.: Yes.
G. Gordon Bonnyman, Jr.: And that when we go back on remand, we're going to have to reassess.
Lewis F. Powell, Jr.: Well, is it correct then that your position is not focused on the fact that there was a reduction from 20 to 14 days?
G. Gordon Bonnyman, Jr.: Well, I think again there... we... we did not have enough proof, I think, to challenge the 20 days.
Lewis F. Powell, Jr.: Yes, yes. But you didn't challenge it before, did you?
G. Gordon Bonnyman, Jr.: That's correct. And... and again, if you... excuse me.
Lewis F. Powell, Jr.: Well, I was simply going to repeat my question as to whether or not the change makes any difference. I suppose it does not in my understanding of it.
G. Gordon Bonnyman, Jr.: I don't think it does, Your Honor.
Lewis F. Powell, Jr.: Right.
G. Gordon Bonnyman, Jr.: I think this... and... there seems to be an inference to be drawn from the Solicitor General's position that somehow the... the annual limit was enshrined in the Medicaid Act, and that's a central fallacy. What's enshrined in the Medicaid Act is the meeting of patient needs through the delivery of hospital services; and they've created this tautology of--
William J. Brennan, Jr.: Mr. Bonnyman, could HHS by regulation impose a limitation on the state's authority to fix the number of days?
G. Gordon Bonnyman, Jr.: --It can and it has, Your Honor.
William J. Brennan, Jr.: It has?
G. Gordon Bonnyman, Jr.: Well, I mean it has... what it has said in the context of... it can do so in two ways. It can do so under its authority as administrator of the Medicaid program under Title 19 of the Social Security Act by saying there are certain services that you have to provide, and inpatient hospital care is one of those services.
William J. Brennan, Jr.: Without regard to the number of days it may take of hospitalization?
G. Gordon Bonnyman, Jr.: No, Your Honor. That has... that has never been finally resolved.
William J. Brennan, Jr.: No, but does HHS have that authority under the statute?
G. Gordon Bonnyman, Jr.: I think it probably does.
William J. Brennan, Jr.: But you say it has or has not?
G. Gordon Bonnyman, Jr.: Well, under... under the Medicaid Act it has not defined what would be minimally necessary in the number... in the amount of hospital services to satisfy the Medicaid Act. Our contention, of course, is that HHS under its regulatory authority under 504 has limited that. I mean that's central to our position; that the regulation which says the state cannot employ methods of administration which have the effect, if I may be permitted to read it, "methods of administration that have the effect of substantially impairing accomplishment of the objectives of the recipients program with respect to handicapped persons. " That's 45 CFF 84.4. And they are employing a method of administration that they... they are basically putting form above substance. The substance under the Medicaid Act is meeting the need for hospital service... again, not completely. It's not a guarantee that all needs will be met, but that is the focus, meeting that need. Section 504, which is attached to that as a funding condition, says in meeting that need or in imposing a limit on the extent to which you're going to meet that need, you may not employ a method of administration which impairs the accomplishment of the objectives of the program for the handicapped. And that's exactly what this annual limit does.
Thurgood Marshall: Suppose a nonhandicapped person needed more than the allotted days. Could he get action--
G. Gordon Bonnyman, Jr.: No, Your Honor, because he's not... Congress... Congress has not chosen to... to protect that person. Congress has enacted Section 504 specifically for the protection of the handicapped with knowledge of the needs of the handicapped, and we are here traveling under that statute.
John Paul Stevens: --May I ask you two questions? First, you argued about... earlier, I think, about the possible difference between the statutory command and the regulatory command which might, at least in my view, possibly go beyond the statute itself. Do you rely on a specific regulation in support of your position, and if so, what is it? Is there one regulation that you think really sheds a bright light on this issue?
G. Gordon Bonnyman, Jr.: Yes, Your Honor. It... it is Section... 45 CFR Section 84.4.
John Paul Stevens: 84.4.
G. Gordon Bonnyman, Jr.: 84.4. And there is a subpart--
John Paul Stevens: (b)(4)?
G. Gordon Bonnyman, Jr.: --(a)(4), the section I just read, and then there is a separate provision... I'm sorry. I said (a). It's subsection (b).
John Paul Stevens: You meant (b).
G. Gordon Bonnyman, Jr.: 84.4(b)(4), and 84.4(b)(1) and then small Roman numeral iii.
John Paul Stevens: Okay.
G. Gordon Bonnyman, Jr.: And it says, "You cannot provide a qualified"... that letter section that I had not read before... "provide a qualified handicapped person with a benefit or service that is not as effective as that provided to the others. " "For the purpose of this part you do not have to guarantee equal results. " --again, the argument which is being imputed to us by the defendants... "but must afford handicapped persons equal opportunity to obtain the same result, to gain the same benefit or to reach the same level of achievement in the most integrated setting appropriate to the person's needs. "
John Paul Stevens: And my second question is, because I've never quite understood, as I understand it, the court of appeals ordered a remand.
G. Gordon Bonnyman, Jr.: That's correct.
John Paul Stevens: Let the other side have a chance to rebut your case. How could they possibly rebut your case?
G. Gordon Bonnyman, Jr.: I think they could rebut our case by bringing in some of the proof that's been alluded to in some of the questions of showing that there are no alternatives that would not have a disparate--
John Paul Stevens: In other words, you would say the statute or regulations would not be violated even if there is the kind of discrimination that you rely on as long as there's nothing they can do about it.
G. Gordon Bonnyman, Jr.: --Right, exactly. I mean if... if you can't avoid this... this impact on the handicapped regardless of what you do--
John Paul Stevens: Well, you surely could avoid it by giving them a longer period in the hospital. You could have an affirmative action--
G. Gordon Bonnyman, Jr.: --Right. And we don't... we don't contend that that is necessary in this case. We are suggesting that there are in this case... again, each case is context specific... in this case there are alternatives which would not require differential treatment of the handicapped or the nonhandicapped.
John Paul Stevens: --But if they prove they in fact would result in differential treatment, then you lose the case.
G. Gordon Bonnyman, Jr.: Well, I think that gets into the question of... of how far do they clearly have some duty to accommodate.
John Paul Stevens: Well, but that's quite a different answer than you gave me 30 seconds ago.
G. Gordon Bonnyman, Jr.: Well, again, it... it involves anticipation of what--
John Paul Stevens: Well, which is your position? Is there any affirmative duty to accommodate or merely a duty to prove you can't avoid discrimination entirely?
G. Gordon Bonnyman, Jr.: --There is an affirmative duty to accommodate, Your Honor. Our--
John Paul Stevens: Then they can't possibly win the case.
G. Gordon Bonnyman, Jr.: --Pardon me?
John Paul Stevens: Then they can't possibly win the case.
G. Gordon Bonnyman, Jr.: Well, let me just say that... that... that the Court has already said in Southeast Community College v. Davis that a fundamental change in the program--
John Paul Stevens: Well, maybe you're right. I'm just trying to get your position. Your position is there is a duty to accommodate.
G. Gordon Bonnyman, Jr.: --There is a duty to accommodate, and let me just say that we are at the opposite poll from Southeast Community College v. Davis, because the proof on the record right now is that this... this impact is gratuitous in the sense that there are other alternatives which would not have this impact of barring people from the hospital, and they've offered no... no reason. They're simply saying we don't have to a reason.
John Paul Stevens: Well, maybe not have this impact, but I thought you were going to... you said they had to prove that their alternatives would not have any impact, any differential impact.
G. Gordon Bonnyman, Jr.: Well--
John Paul Stevens: If you base it--
G. Gordon Bonnyman, Jr.: --I'm... I'm sorry, Your Honor.
John Paul Stevens: --I just don't really know what would happen on remand if we were to affirm. I just don't... I have an awful difficult understanding of exactly what your position is.
G. Gordon Bonnyman, Jr.: Well, what would happen or remand if our were to affirm, Your Honor, is that they would be able to come forward and refute our case, if they can, by putting on proof showing, a) that... and again, the first question is the... the record says that we're not moot, but we are muddled because there have been changes in the statistical evidence since then because of changes in the program. They would come back and show the statistics are no longer valid. The other thing that they could do on remand is come back and say conceding the impact of the cut to 14 days, any of the other alternatives available to us would either have the same disparate impact or--
John Paul Stevens: Well, no, you say here there's a 5 percent disparate impact on the handicapped and 1 percent on the nonhandicapped, as I... the gross figure. Supposing they came back and said all right, we have an alternative that would have a 3 as opposed to 1 percent, then who wins? It's the only other alternative. There's some disparate impact, but not quite as severe as this one.
G. Gordon Bonnyman, Jr.: --Well, I think they would have to got with... with... with method which has, absent other factors, which has a lesser impact on the handicapped.
John Paul Stevens: Your time has expired now, counselor.
G. Gordon Bonnyman, Jr.: Thank you.
Warren E. Burger: Do you have anything further, Mr. Attorney General?
W. J. Michael Cody: I do not.
Warren E. Burger: Thank you, gentlemen. The case is submitted. We'll resume at 1:00.