Document: 522 U.S. 448118 S.Ct. 909139 L.Ed.2d 895 REGIONS HOSPITAL, Petitioner,v.Donna E. SHALALA, Secretary of Health and Human Services. No. 96-1375. Supreme Court the United States Argued Dec. 1, 1997. Decided Feb. 24, 1998. Syllabus * Under Medicare Act its implementing regulations, a hospital (a provider) may obtain reimbursement for "allowable cost[s]'' (including costs certain graduate medical education (GME) programs interns residents) by preparing report at close each fiscal year filing it with "fiscal intermediary'' designated respondent Secretary. The intermediary examines cost report, audits when found necessary, issues written "notice amount program reimbursement'' (NAPR), which determines total payable services during reporting period. NAPR is subject to review Provider Reimbursement Review Board (PRRB), Secretary, ultimately courts. By regulation, reopen, within three years, any determination an intermediary, PRRB, or herself recoup excessive (or correct insufficient) given year. In 1986, Congress changed method calculating reimbursable GME costs. lieu discrete annual determinations "reasonable . actually incurred,'' 42 U.S.C. §1395x(v)(1)(A), "GME Amendment'' now requires "Secretary [to] determine, [a] hospital's period that began 1984, average recognized as reasonable under [the Act] direct [GME] full-time-equivalent resident,'' §1395ww(h)(2)(A), directs use 1984 amount, adjusted inflation, calculate subsequent §1395ww(h)(2). Based on indications some "questionable'' had been "erroneously reimbursed'' providers their base year, Secretary's "reaudit'' C.F.R. §413.86(e), interprets Amendment authorize intermediaries conduct second audit ensure accurate reimbursements in future years. reaudit rule permits no recoupment excess years has become final. Rather, seeks prevent overpayments permit prior only still three-year reopening window. Petitioner Regions Hospital (Hospital) eligible reimbursement. A commenced late 1990 yielded Hospital's allowable were $5,916,868, down from original $9,892,644. recomputed per-resident was $49,805, contrast $70,662. sought this determine past did not attempt paid costs, window already closed Appealing challenged validity rule. PRRB responded lacked authority invalidate On expedited review, District granted summary judgment, concluding §1395ww(h)(2)(A)'s language ambiguous, reasonably interpreted Congress' prescription, reauditing impose impermissible "retroactive rule.'' Eighth Circuit affirmed. Held: 1.The impermissibly retroactive. full accord Landgraf v. USI Film Products, 511 244, 114 1483, 128 229, explained legal effect should ordinarily be assessed law existing took place, id., 265, 1496-97, but further clarified prescription made retroactive merely because draws upon antecedent facts operation, 269, n. S.Ct., 1499, 24. calls application principles time incurred, new principles. Cf. Bowen Georgetown Univ. Hospital, 488 204, 207, 109 468, 471, 102 493. Furthermore, reaudits leave undisturbed actual later closed. figures resulting are used solely open Pp. ___-___. 2.The interpretation Amendment. (a) determining whether agency's statute entitled deference, court asks first intent clear precise question issue. Chevron U.S.A. Inc. Natural Resources Defense Council, Inc., 467 837, 842, 104 2778, 2781, 81 694. If, employing traditional statutory construction tools, 843, 9, 9 clear, ends matter, 2781. But if silent ambiguous specific issue, next answer based permissible statute. Id., 2781-82. An reading fills gap defines term way light Legislature's design controls, even would have reached instance. 11, 2782, 11. P. ___. (b) While other provisions speak clearly timing "recognized reasonable'' determinations, §1395ww(h)(2)(A) silent, therefore intended prohibit provider's statement eliminate errors, outside statute's instruction "amount does inevitably refer originally, reasonable, could plausibly read mean, methodology making critical all through process designed catch errors that, perpetuated, grossly distort reimbursements. There apparent support contention mean two separate amounts: one itself; lower, recalculated once cognizant checked discovered miscalculations. It hard believe misclassified nonallowable continue payment indefinitely. Thus, while plausible, possible interpretation. See Sullivan Everhart, 494 83, 89, 110 960, 964-65, 108 72. (c) merits Court's approbation reflects law. Holly Farms Corp. NLRB, 517 392, 409, 116 1396, 1406, 134 593. Amendment's purpose limit payments hospitals. brings base-year calculation line pervasive time-barred overpayment, enables carry out her responsibility reimburse uncovered, improperly classified, Until determined annually; year's control became many changes underway, so prompt scrutiny. introduced concept costs; innovation caused examine reimbursed significant variation allowed. Concerned erroneously, attempted assure more. To accomplish this, endeavored strip base-period improper e.g., physician activities unrelated program, malpractice administrative general service proceeded assumption Congress, system reimbursement, surely want cement into reimbursements, thus perpetuating literally million-dollar mistakes. Viewed context other, contemporaneous decision pursue 1986 enactment release final regulations 1989 exorbitant. rejects "fairness'' "issue preclusion'' arguments against rule's reasonableness governing legislation. 91 F.3d 57, GINSBURG, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, KENNEDY, SOUTER, BREYER, JJ., joined. SCALIA, filed dissenting opinion, O'CONNOR THOMAS, Ronald N. Sutter, Washington, DC, Petitioner. Lisa S. Blatt, Respondent. Justice GINSBURG Court. 1 Section 9202(a) Medicaid Budget Reconciliation Amendments 1985, Pub.L. 99-272, 100 Stat. 151, 171-175, §1395ww(h) (GME Amendment), provides: "The shall subchapter resident.'' §1395ww(h)(2)(A). though audited previously. §413.86(e) (1996). This case presents Secretary's"reaudit'' We conclude is. 2 3 §1395 et seq., educational residents, known programs, receive §413.85(a) At provider prepares "cost repor[t].'' §405.1801(b). That serves basis shows percentage those allocated services. §§413.20(b), 413.24(f ). files intermediary,'' usually insurance company, §1395h. (NAPR). period, §405.1803 (1996), §§1395oo (a), (b), (f )(1); §§405.1835, 405.1837 4 "to revise matter issue such proceedings.'' §405.1885(a). words, can long acts 5 April §1395ww(h). baseline i.e., serve figure directed dividing number residents working 1984. then "beginning after July 1985.'' Note following §1395ww. particular computed multiplying inflation-adjusted weighted §1395ww(h)(4), patient load, §1395ww(h)(3)(C). 6 September 1988, published proposed regulation implement time, reported reason continually 53 Fed.Reg. 36591 (1988). perpetuation mistakes cost-reimbursement methodology, give "accurate'' providers' 36591-36592. 1989, instructs verify residents; exclude "any including previously allowed chapter''; and, request, include operating §§413.86(e)(1)(ii)(A)-(C) 7 permitted 54 40302 (1989). yet 40301, 40302; §413.86(e)(1)(iii) B 8 petitioner, teaching reimbursement.1 February 28, received reflected $5,916,868. §405.1885. appeal judicial §1395oo (f)(1). cross-motions Minnesota ruled Adopting reasoning Appeals Columbia Administrators Tulane Educational Fund Shalala, 987 F.2d 790 (1993), cert. denied, 510 1064, 740, 126 703 (1994), concluded prescription. also held App. Pet. Cert. 7a-8a. 10 affirmed per curiam Tulane. St. Paul-Ramsey Medical Center, 57 similar case, Sixth Circuit, rejecting Tulane, saw ambiguity alternately provision clarity, unreasonable. Toledo 791, 797-801 (1997), pending, 96-2046. certiorari resolve conflict, 520 ----, 117 2406, 138 173 affirm Circuit's judgment. II 11 argues account alone, invalid. argument we need linger over. Products ""the existed place,''' 1497, 229 (1994) (quoting Kaiser Aluminum & Chemical Bonjorno, 827, 855, 1570, 1586, 842 (1990) (SCALIA, concurring)), ""is operation,''' U.S., 24 Cox Hart, 260 427, 435, 43 154, 157, 67 L.Ed. 332 (1922)). accords Landgraf's instruction. incurred. principles, objective. 493 (1988) (regulation invoked substantive standard recouping sums hospitals). cost-reporting supra, __. 12 Understandably, there split Although holding grounds, concisely stated why "does regulation'': "require[s] events occurring year,'' "it change standards determined.'' F.3d, 795. III 13 turn, next, divided Circuits: Is embodied rule, deference? formulation familiar, interpreting statute, ask "the clear'' issue.'' 694 (1984). "employing tools construction,'' "that end matter,'' "if respect statute.'' 2782. If design, controlling weight, initially arisen proceeding.'' 14 must decide ensuring Put another way, "shall determine'' reasonable; reimbursements? 15 Separate determinations. For example, §1395x(v)(1)(A) "provide establishment limits [on costs] estimates necessary efficient delivery needed health services,'' (emphasis added). 1395uu(c)(1)(B), concerns promote closing converting under-utilized facilities, proper "transitional allowance,'' acknowledge "outstanding portion debt obligations purposes reimbursement,'' 16 1395ww(h)(2)(A), contrast, therefore, think, ambiguous. agree phrase reasonable,' itself, tell us means action taken directions actions about taken.'' F.2d, 796. might (1) purposes, (2) will recognize calculations. 17 urges Why apparent. As said, "hard [would] indefinitely.'' 40301 (1989).2 18 face these choices. meant either using emerging regular window, informed more careful assessment. realized, tardily, (like providers) inconsistent regulations. likely assumed act adjust achieve accuracy both calculations.3 Had contemplated swiftly enough what Legislature anticipated course? Error until plugged hole? Or exercise effectuate overriding scheme: (not unwarranted) reimbursement? 19 "only interpretation.'' 964, 72 (1990). Judge Wald wrote D.C. Circuit: "Context all, indefinite cautions [ reasonable' ] allows elbow room adjustments [to correct] miscalculations errors.'' 796.4 Because inevitable one,5 turn position, examining 20 "limit hospitals'' H.R. Conf. Rep. 99-453, p. 482 (1985) official's 21 Amendment, called installation prospective (PPS).6 (1989) (acknowledging scrutiny "because taking place generally''). ha[d] allowed.'' 36593 22 23 maintains "irrational'' assume §405.1885(a) disagree. reassessing NAPRs closed, affect compute 1985 onward. effect, altered prescribed lengthening correction. enlarge agency seek repayment prescription; rather, extended due necessitated comprehensive formulated issued part set "not unreasonable developing, proposing, permitting comment, finalizing regulatory framework complex scheme.'' 797. 25 contends endorsed fair measure, fading memories, personnel, discarded records make demand "reprove'' note countervailing considerations. Providers challenge auditing individual cases. §413.86(e)(1)(v) dissatisfied who records, offered "an equitable solution'' them, reaudit, furnish documentation periods allocation compensation bas[e] period.'' 55 36063 (1990).7 request upward adjustment PPS hospital-specific rate revealed claimed classified §413.86(j)(1)(i) 26 Finally, §§405.1807 405.1885(a) (1996) render intermediary's "final binding'' violates preclusion. initial determination, however, pre-GME regime, referred year-by-year determination. (1984 only) same carried forward unlimited future. derived NAPR, without hearing before Absent adversarial litigation preclusion do hold fast. Cromwell County Sac, 94 351, 353, 195 (1877) (" [T]he judgment operates estoppel matters points controverted inquiry always point litigated. '') added); cf. Thomas Jefferson 512 504, 517, 2381, 2389, 129 405 (declining bind intermediary). 27 *** 28 sum, retroactive, "reflects law.'' "merits our approbation.'' 593 accordingly 29 Affirmed. 30 whom THOMAS join, dissenting. 31 hospitals Graduate Education attributable seq. 1965 costs'' incurred §§1395f(b)(1), 1395x(v)(1)(A). thereafter rates resident indexed subchapter,'' §1395ww(h)(2)(A).1 today subchapter'' construed authorization redetermine composite rather than reference determination; concludes, pursuant (1984), lawful, see (1996).2 See, ante, __-__. I respectfully dissent. 32 7, date tying longstanding procedure procedure, CFR (1985). Indeed, hospitals, like Regions, yet, barely, begun run, since recently, determined. Regions' §1395h, $9,892,644 (Regions amount); March 1989. Nonetheless, 1991, reopened (albeit limited rates), reducing them 33 procedures enacted, provision's cannot anew. true, out, isolation ambiguous: "might calculations.'' Ante, insisted, words isolation; "holistic endeavor,'' Sav. Assn. Tex. Timbers Inwood Forest Associates, Ltd., 484 365, 371, 626, 630, 98 740 Viewing entire context, they understood 34 begin with, borne mind provide directly reasonable.'' provides full-time reasonable. "recognition composite-cost reasonableness,'' speak, most oblique indirect authorization-so implausible. computation relatively mechanical averaging resident, major feature provision, expected something 35 impossible imagine, moreover, how as'' unless recognition pre-existing system. accepts treats "essentially surplusage-as consequence,'' Ratzlaf States, 135, 140-141, 655, 659, 615 which, course, avoid possible. 36 "We liberty construe deny language. cardinal significance shall, possible, accorded every word. early Bacon's Abridgment, sect. 2, said "a ought, whole, prevented, clause, sentence, word superfluous, void, insignificant.' repeated innumerable times.'' Washington Market Co. Hoffman, 101 112, 115-116, 782 (1879). 37 Nordic Village, 503 30, 36, 112 1011, 1015-16, 181 (1992); Federal Election Comm'n National Conservative Political Action Comm., 470 480, 486, 105 1459, 1463, 84 455 conferred cost-determination exercised future, sufficed (and normal) specification makes sense made) independent itself-i.e., "recognized'' superfluous positively misleading, being conferred. unacceptable causes text meaningless confusing. 38 refers regime strongly confirmed enacted law: [specified Committees Senate House Representatives], December 31, 1987, [§1395ww(h)] revised greater uniformity approved FTE amounts established [§1395ww(h)(2)], so, revisions implemented.'' §9202(e), 176 (emphases envisions know 1987-well revisiting revising amounts. assertion confers technically reconciled directive evaluation saying supposed date. date, entirely old authority. short, deadline, sense. 39 Most constructions statutes solve textual problems; today's creates problems, order practical one. problem implausible solution simply this: Though plenty erroneous revision she precisely predecessor) neglected so. obligingly pull chestnuts fire accepting question: 40 "Had reimbursement?'' 41 easy. wrong question. Of course prefer whatever preserve, unforeseen eventualities, purpose.'' governed legislators' "overriding purposes,'' laws enacts. improvident ill conceived, province meaning sanction Executive's distortion) better result. immediate benefit achieved practice far outweighed disruption expectations cases -disruption -that government ex post facto legislative psychoanalysis produces. pronounce ultra vires reverse Appeals. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Timber Lumber Co., 200 321, 337, 282, 287, 50 499. When petitioner petition briefs "St. Center.'' name "Regions Hospital'' 15, raises specter perpetually Here, compelling scheme, projected Administrative Procedure Act, 80 amended, §701 "hold unlawful aside action'' "arbitrary'' "capricious,'' §706(2)(A), protect performed legitimate reason. firmly instructed report'' Representatives inside §1395ww; post, Missing deadline file required 1992. failure meet uncommon occurrence heavy loads thrust administrators, official power beyond it. Brock Pierce County, 476 253, 260, 106 1834, 1839, 90 248 (1986) (even Labor "shall'' "would reluctant observe procedural requirement voids action''). delegate specifically express delegation "establish rules'' computing §1395ww(h)(4). mainstay [so] establish rulemaking determination.'' 795, (citations omitted). §§1395x(v)(1)(A), 1395hh(a)(1). dissent acknowledges "in ambiguous,'' __, finds clarity context,'' ibid. counts stress regard " [o]ver over'': ""In expounding guided single sentence member look whole law, object policy.''' Nat. Bank Ore. Independent Ins. Agents America, 508 439, 455, 113 2173, 2182, 124 402 (1993) Heirs Boisdore, How. 113, 122, 1009 (1849)). scheme fixed rates, diagnosis, furnishing in-patient care beneficiaries. §1395ww(d); Good Samaritan 402, 406, 3, 2151, 2155, 368 (1993). Costs connection excluded scheme. §§1395ww(a)(4) (d)(1)(A). fact, advantage "equitable solution.'' maintain reflecting students, studies endeavoring [t]he [i]f longer §405.1885 chapter, modify amount.''

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