Episode description

In  2005, the U.S. Department of Health and Human Services promulgated a  rule eliminating the word “covered” from 42 C.F.R. § 412.106(b)(2)(i),  effectively amending HHS’s interpretation of the phrase “entitled to  [Medicare]” in a subsection of the Medicare Act. This amendment affects  the way HHS calculates its reimbursement to certain hospitals that serve  low-income patients.

Plaintiff Empire Health Foundation challenged the 2005 Rule as part  of a larger challenge to HHS’s calculation of its 2008 reimbursement.  The district court granted partial summary judgment for Empire based on a  finding that HHS did not follow correct procedures under the  Administrative Procedure Act (APA) because of numerous mistakes that  occurred during the notice-and-comment process. The U.S. Court of  Appeals affirmed on different grounds, concluding that HHS did follow  the correct procedures under the APA, but the rule is substantively  invalid  because it directly conflicts with Ninth Circuit precedent  holding that the phrase “entitled to [Medicare] is unambiguous.”

The case was decided on June 24, 2022. The Court held that in calculating the Medicare fraction, individuals “entitled to Medicare Part A benefits” are all those qualifying for the program, regardless of whether they receive Medicare payments for part or all of a hospital stay. Justice Kagan delivered the opinion of the Court, in which Justices Thomas, Breyer, Sotomayor, and Barrett joined. Justice Kavanaugh filed a dissenting opinion, in which Chief Justice Roberts and Justices Alito and Gorsuch joined.

Credit: Oyez, LII Supreme Court Resources, Justia Supreme Court Center, available at: https://www.oyez.org/cases/2021/20-1312