Opinion ID: 655359
Heading Depth: 2
Heading Rank: 2

Heading: Consistency with Statute and Legislative History.

Text: 27 Samaritan next argues that 42 C.F.R. § 412.92(a)(3) is inconsistent with the statute and legislative history because it excludes relevant factors such as market share and physician admitting practices for hospitals within twenty-five miles of a like hospital. Samaritan relies primarily on one statement from the legislative history of the 1983 amendments: 28 Therefore, the [Senate Finance] committee expects that the Secretary, in making such determinations for sole community providers ... will develop and take into account a much broader range of factors relating to beneficiary access to basic hospital services. 29 S.Rep. No. 23, supra n. 7, 1983 U.S.C.C.A.N. at 194. 30 1. As a matter of statutory construction, Samaritan's argument puts the cart before the horse. When reviewing an agency's interpretation of a statute, the court must first look to the statutory language. If the agency regulation is not in conflict with the plain language of the statute, a reviewing court must give deference to the agency's interpretation of the statute. K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 292, 108 S.Ct. 1811, 1818, 100 L.Ed.2d 313 (1988). 31 Here, 42 U.S.C. § 1395ww(d)(5)(C)(ii) (1989) defines a SCH as a hospital that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other hospitals (as determined by the Secretary) is the sole source of inpatient hospital services reasonably available to persons in its market area. Samaritan concedes that 42 C.F.R. § 412.92(a) addresses all of the enumerated statutory factors but argues that Congress by the use of such as plainly directed the Secretary to consider other factors as well. The Secretary responds that as determined by the Secretary is evidence of delegation of authority to determine whether or not to consider other factors. We cannot accept either textual argument. 32 The Secretary's argument is undermined by subsequent amendments to the statute. The relevant portion now reads, factors such as the time required for an individual to travel to the nearest alternative source of appropriate inpatient care (in accordance with standards promulgated by the Secretary), location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary). 42 U.S.C. § 1395ww(d)(5)(D)(iii)(II) (changes underscored). These changes, combined with the word order and punctuation of the earlier version, strongly suggest that as determined by the Secretary modifies other like hospitals (or other hospitals in the 1989 version), not the entire phrase factors such as. 33 However, so limiting the scope of as determined by the Secretary in § 1395ww(d)(5)(C)(ii) (1989) does not leave the Secretary lacking the discretion she has exercised. The statute begins by delegating authority to provide for such exemptions ... as [the Secretary] deems appropriate. § 1395ww(a)(2). That is a broad grant of discretion regarding all exemption questions. Further evidence of that broad discretion is found in the term factors such as in the subsection defining a SCH. We disagree with Samaritan that such as has the same meaning as including. Such as is a phrase of general similitude meaning for example or of the kind specified. Donovan v. Anheuser-Busch, Inc., 666 F.2d 315, 327 (8th Cir.1981). Unlike including, or its more specific, arguably redundant cousin, including, but not limited to, such as does not imply that there are necessarily more relevant factors than those Congress enumerated. Such as signifies a broader grant of discretion, one that permits but does not require the Secretary to conclude that there are other factors of the kind specified in the statute that are relevant to the determination she must make. 34 We conclude that the definition of a SCH adopted by the Secretary in § 412.92(a) is consistent with Congress's grant of discretion and with the substantive factors enumerated in the statute. Although the Senate Finance Committee suggested that the Secretary develop ... a much broader range of factors, it specified no factors in addition to those included in the statute. Thus, as in Good Samaritan, legislative history ... is of little, if any, assistance, --- U.S. at ---- n. 10, 113 S.Ct. at 2158 n. 10, and we must defer to the Secretary's interpretation of the statute. 35 2. Determining that the Secretary's regulation is not inconsistent with the statute does not end our inquiry; we must also determine whether her decision denying Samaritan SCH status was arbitrary and capricious. See Good Samaritan, --- U.S. at ---- & n. 16, 113 S.Ct. at 2162 & n. 16. Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2867. 36 Samaritan argues that § 412.92(a)(3) is arbitrary and capricious because it does not consider market factors such as physician admitting practices. However, the regulation does consider market factors, but only for a rural hospital located between twenty-five and fifty miles from another like hospital. See 42 C.F.R. § 412.92(a)(2)(i), (ii) (1988). Thus, Samaritan's real complaint is that the Secretary has arbitrarily placed too much emphasis on the distance factor by creating distance-based brackets and then excluding other relevant factors in the bracket that applies to Samaritan. 37 We cannot agree that the Secretary's emphasis on distance between like hospitals is arbitrary and capricious. The ultimate question under the statute is whether a hospital is the sole source of inpatient hospital services reasonably available to individuals in a geographic area. § 1395ww(d)(5)(C)(ii) (1989). Distance between hospitals is obviously a relevant measure of reasonable availability. The such as factors that Congress initially enumerated in the statute--isolated location, weather and travel conditions, and absence of other hospitals--all relate to physical proximity between hospitals, not economic or market factors. And Congress has more than once amended the statutory such as factors without either disturbing the Secretary's approach to the 15-25 mile distance bracket in § 412.92(a)(3) or adding non-physical market factors to the equation. 8 Finally, the rulemaking record demonstrates that the Secretary has continued to monitor her distance criteria to confirm their relevance to the statutory inquiry. 9 38 3. An additional question in this case is whether the Secretary's regulation is arbitrary as applied because it denies Samaritan SCH designation for missing the more liberal 25-50 mile distance bracket by less than a mile. However, bright-line tests are a fact of regulatory life, and the Supreme Court has declined to hold that an agency may never adopt a rule that lacks a waiver provision. F.C.C. v. WNCN Listeners Guild, 450 U.S. 582, 601 n. 44, 101 S.Ct. 1266, 1278 n. 44, 67 L.Ed.2d 521 (1981). The issue in this case is whether Samaritan is eligible for a government subsidy; as Judge Friendly observed in considering a far more sensitive regulatory question: 39 We are unable to understand why there should be any general principle forbidding an administrator, vested with discretionary power, to determine by appropriate rulemaking that he will not use it in favor of a particular class on a case-by-case basis, if his determination is founded on considerations rationally related to the statute he is administering. 40 Fook Hong Mak v. I.N.S., 435 F.2d 728, 730 (2d Cir.1970). Even if we would have adopted a different approach for borderline situations such as that posed by Samaritan, we cannot condemn as arbitrary and capricious the Secretary's decision to sacrifice some case-by-case precision in favor of a regime that is relatively easy to administer and promotes nationwide uniformity. 10 41