Court Opinion

ID: 185216
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:29:08+00
Date Added: 2024-06-11T12:06:40.957914
License: Public Domain

224 F.3d 776 (D.C. Cir. 2000)
The District of Columbia Hospital Association, et al.,Appelleesv.District of Columbia and Herbert Weldon, Deputy Director for Health Care Finance of Medical Assistance Administration, Appellants
No. 99-7239
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 4, 2000Decided July 21, 2000

Appeal from the United States District Court for the District of Columbia(No. 98cv02575)
Donna M. Murasky, Senior Assistant Corporation Counsel,  with whom Robert R. Rigsby, Corporation Counsel, and  Charles L. Reischel, Deputy Corporation Counsel, were on  the briefs, argued the cause for appellants.
Christopher L. Keough, with whom Ronald N. Sutter and  Kimberly N. Brown were on the brief, argued the cause for  appellees.
Before Silberman and Sentelle, Circuit Judges, and  Buckley, Senior Circuit Judge.
Opinion for the court filed by Senior Judge Buckley.
Buckley, Senior Judge:

1
The District of Columbia appeals  the district court's ruling that its method of computing certain  payments to hospitals violated the federal Medicaid statute. Because we agree that the District of Columbia's interpretation of the law is contrary to its plain meaning, we affirm the  district court's grant of summary judgment to the District of  Columbia Hospital Association.

I. Background
A. Regulatory Framework

2
The Medicaid statute, Subchapter XIX of the Social Security Act, establishes a cooperative plan between the federal  government and the States to provide medical services to low income individuals.  42 U.S.C. §§ 1396-1396v (1994 & Supp.  III 1997).  The program is jointly funded by the Federal and  State governments and is administered by the States pursuant to federal guidelines.  See generally id. §§ 1396a, 1396b;42 C.F.R. § 430.0-.25 (1999).  The statute treats the District  of Columbia ("District") as a State.  42 U.S.C. § 1396d(b)  (Supp. III 1997).  To qualify for federal funding, a State must  have its own Medicaid plan approved by the Health Care  Financing Administration ("HCFA") of the United States  Department of Health and Human Services.  Id. § 1396;  42  C.F.R. § 430.10.

3
All State plans are required to provide Medicaid beneficiaries with inpatient hospital services.  42 U.S.C.  §§ 1396a(a)(10)(A), 1396d(a)(1).  Because of the greater costs  it found to be associated with the treatment of indigent  patients, Congress has directed that hospitals providing inpatient care must be compensated under the Medicaid program at rates that "take into account ... the situation of hospitals  which serve a disproportionate number of low-income patients  with special needs."  Id.  § 1396a(a)(13)(A)(iv);  see also H.R.  Rep. No. 100-391(1), at 524, reprinted in 1987 U.S.C.C.A.N.  2313-1, 2313-344 (discussing adjustments in payments to  "disproportionate share hospitals" ("DSH")).  The adjustments mandated by Congress ("DSH adjustments" or "DSH  payments") are achieved through increases in the "rate or  amount of payment for such services."  42 U.S.C.  § 1396r-4(a)(1)(B).

4
States may select one of three complex formulae for calculating the DSH payments.  Id. § 1396r-4(c)(1), (2), (3).  Under the formula selected by the District ("(c)(1) formula"), see  D.C. Mun. Regs. tit. 29, § 908.4(b) (1999), the DSH adjustment must equal "at least the product of [ ] the amount paid  under the State plan to the hospital for operating costs for  inpatient hospital services" ("base amount"), multiplied by the  hospital's "disproportionate share adjustment percentage."42 U.S.C. § 1396r-4(c)(1).  Because this case hinges on the  calculation of the base amount, we will spare the reader the  labyrinthine process by which the disproportionate share  adjustment percentage is derived.  We simply observe that it  alone would justify the Supreme Court's description of the  Medicaid statute as "an aggravated assault on the English  language, resistant to attempts to understand it."  Schweiker  v. Gray Panthers, 453 U.S. 34, 43 n.14 (1981) (quoting Friedman v. Berger, 409 F. Supp. 1225, 1226 (S.D.N.Y. 1976)).

B. The District of Columbia's Plan

5
The District's Medicaid plan is administered by an agency  within the Department of Human Services that was called the  Commission on Health Care Finance ("CHCF") at the time  this controversy originated.  Although it has since been renamed the Medical Assistance Administration, the parties  have continued to refer to the agency as the CHCF, as will  we.

6
District of Columbia residents who qualify for Medicaid on  the basis of their eligibility for assistance under the Temporary Assistance for Needy Families program (formerly Aid to Families with Dependent Children) are required by the District's Medicaid Managed Care Amendment Act of 1992 to  enroll in managed care plans.  D.C. Code Ann. S 1-359(d)(2)  (1999 Repl. & Supp. 2000).  Other Medicaid beneficiaries  continue to receive services on a fee-for-service basis.  The  District pays the managed care organizations ("MCOs") that  administer the managed care plans a fixed pre-paid amount  per Medicaid enrollee.  The MCOs, in turn, are responsible  for providing these enrollees with all the health care services  to which they are entitled under the statute, including inpatient hospital services provided under contract between the  MCOs and participating hospitals.  Id. S 1-359(d)(2), (3).

C. The Litigation

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Without delving too deeply into the tortuous history of this  litigation, it suffices to say that the District and the District of  Columbia Hospital Association ("Association") have been engaged for the better part of the past decade in an argument  over the District's calculation of DSH payments.  In 1994, the  Association filed a suit in which it claimed, among other  things, that the District's method of computing DSH adjustments violated the Medicaid statute by failing to take into  account the services provided managed care patients through  the MCOs.  While the suit was pending, a newly appointed  Commissioner of the CHCF agreed to revise the District's  methodology.  Because the parties believed this would resolve their dispute, the district court dismissed the suit as  moot.  Subsequent to the dismissal of the case, it became  apparent that the parties were not in fact in accord as to how  DSH adjustments should be computed.  The bone remaining  in contention was the District's failure to include, in the (c)(1)  formula's base amount, the operating costs incurred by hospitals in providing inpatient services to Medicaid managed care  patients.

8
In 1998, the Association initiated the present action seeking  a declaratory judgment that the District's exclusion of Medicaid managed care patients from the base amount violated the  Medicaid statute.  The Association subsequently filed a motion requesting the district court to compel the District to comply with representations the Association claims the District made in settling the earlier litigation.  The court granted the Association's motion for summary judgment based on  its holding that the District's method of calculating DSH payments was contrary to law, and it granted the Association's motion to compel compliance with its version of the  earlier understanding.  District of Columbia Hosp. Ass'n v.  District of Columbia, 73 F. Supp. 2d 8 (D.D.C. 1999).  The  District filed a timely appeal, and we have jurisdiction to  review the district court's final order pursuant to 28 U.S.C.  § 1291.

II. Analysis

9
We review a grant of summary judgment de novo, applying  the same standard as the district court.  See, e.g., Everett v.  United States, 158 F.3d 1364, 1367 (D.C. Cir. 1998), cert.  denied, 526 U.S. 1132 (1999).  Summary judgment is appropriate where there is no genuine issue as to any material fact  and the moving party is entitled to judgment as a matter of  law.  Fed. R. Civ. P. 56(c).

10
The dispositive question in this case is one of statutory  interpretation.  Specifically, we are concerned here with the  proper application of the formula selected by the District for  the computation of the DSH adjustment.  That formula provides that the adjustment must

11
be in an amount equal to at least the product of (A) the amount paid under the State plan to the hospital for operating costs for inpatient hospital services (of the kind described in section 1395ww(a)(4) of this title), and (B)the hospital's disproportionate share adjustment percent-age (established under section 1395ww(d)(5)(F)(iv) of this title)[.]

12
42 U.S.C. § 1396r-4(c)(1) (emphasis added).

13
The controversy in this case centers on the meaning to be  given the word "under" in the quoted text.  The District  contends that it is not required to include the cost of providing inpatient services to Medicaid managed care patients in the base amount because the hospitals receive payments for  those services from MCOs rather than from the District. Because the payments are not made directly by the District,  it reasons that they are not made "under the State plan."

14
It is axiomatic that "[t]he starting point in statutory interpretation is the language of the statute itself."  Ardestani v.  INS, 502 U.S. 129, 135 (1991) (internal quotation marks and  brackets omitted).  The Supreme Court has observed that  "[t]he word 'under' has many dictionary definitions and must  draw its meaning from its context."  Id.  We see nothing in  the context of the Medicaid statute, however, that would  require us to give the word other than its ordinary meaning."Under" is defined as "required by[,] in accordance with[, or]  bound by."  Webster's Third New International Dictionary  2487 (1981);  see also Ardestani, 502 U.S. at 135 (finding "the  most natural reading" of "under" in context of Equal Access  to Justice Act to mean " 'subject [or pursuant] to' or 'by  reason of the authority of' ") (quoting St. Louis Fuel and  Supply Co. v. FERC, 890 F.2d 446, 450 (D.C. Cir. 1989)).

15
Although payments from MCOs to hospitals for the care of  Medicaid patients are not made directly by the District, they  are clearly made pursuant to, and under the authority of, the  District's Medicaid plan.  MCOs may not receive payment for  services to Medicaid patients unless they have completed a  Medicaid managed care provider agreement with the District. D.C. Mun. Regs. tit. 29, § 5308.1.  The contracts between the  MCOs and the hospitals that serve their Medicaid enrollees  are closely regulated by the District.  For example, District  regulations require MCOs to submit their contracts with  hospitals to the District for prior approval, id. § 5313.1;  to  notify the District before effecting any changes in such  agreements, id. § 5304.2-.3;  to contract only with hospitals  located in the District, id. § 5313.9;  and to assure that  financial and programmatic information maintained by the  hospital regarding Medicaid managed care patients will be  available for inspection by the MCO or the District.  Id.  § 5313.10(d).

16
Moreover, we can find nothing in the statute that would  require us to confine "the amount paid under [a] State plan to  [a] hospital" to that paid by the State itself.  To the contrary,  if Congress had so intended, it could have specified that only  a State's "direct" payments were to be taken into account, as  it did in the preceding subsection of the statute.  See 42  U.S.C. § 1396r-4(b)(3)(A)(i)(II) (referring to "the amount of  the cash subsidies for patient services received directly from  State and local governments") (emphasis added).  That it did  not do so here is compelling evidence that Congress did not  intend to limit the computation of payments to those made  directly by the District.  See Russello v. United States, 464  U.S. 16, 23 (1983) ("[W]here Congress includes particular  language in one section of a statute but omits it in another  section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.") (internal quotation marks and citation  omitted).

17
If more were required, our construction of the statutory  language is wholly consistent with Congress's purpose in  creating the DSH adjustment.  See Holloway v. United  States, 526 U.S. 1, 6 (1999) ("In interpreting the statute at  issue, we consider not only the bare meaning of the critical  word or phrase but also its ... purpose in the statutory  scheme.") (internal quotation marks and brackets omitted)."Congress's 'overarching intent' in passing the disproportionate share provision was to supplement the ... payments of  hospitals serving 'low income' persons."  Legacy Emanuel  Hosp. and Health Ctr. v. Shalala, 97 F.3d 1261, 1265 (9th Cir.  1996) (quoting Jewish Hosp. v. Secretary of Health & Human  Serv., 19 F.3d 270, 275 (6th Cir. 1994)).  As the Ninth Circuit  has noted, "[p]atients meeting the statutory requirements for  Medicaid do not cease to be low-income patients on days that  the state does not pay Medicaid inpatient hospital benefits."Id. at 1266.  Similarly, patients who must be enrolled in  MCOs pursuant to the District's Medicaid plan do not cease  to impose higher costs on the hospitals that serve them.

18
Finally, we are unpersuaded by the District's offer of a  letter from the General Accounting Office asserting that  States have the discretion to exclude Medicaid managed care  patients from their calculation of the maximum DSH adjustment a given hospital may receive under another section of  the Medicaid statute.  As the Supreme Court has recently  made clear, "[i]nterpretations  such as those in opinion letters--like interpretations contained in policy statements,  agency manuals, and enforcement guidelines, all of which lack  the force of law--do not warrant Chevron-style deference."Christensen v. Harris County, 120 S. Ct. 1655, 1662 (2000).This is a reference to Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), which  holds that courts must defer to an agency's permissible  construction of a statute it is charged with administering  when "the statute is silent or ambiguous with respect to the  specific issue" before the court.  Id. at 843.  Because the  provision at issue here is unambiguous, we owe no deference  to a contrary construction even if formally adopted by the  Secretary of Health and Human Services.

III. Conclusion

19
Because the District's interpretation is contrary to the  plain meaning and purpose of the Medicaid statute, we hold  that the District may not exclude the operating costs incurred  by hospitals in their service of Medicaid managed care patients in calculating DSH payments pursuant to the (c)(1)  formula.  We have no need, therefore, to reach the district  court's alternative holding based on the Association's motion  to compel.  The district court's grant of summary judgment  to the Association is therefore

20
Affirmed.