Azar v. Allina Health Services

Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Administrative Law
  • Date Filed: June 3, 2019
  • Case #: 17–1484
  • Judge(s)/Court Below: GORSUCH, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ., joined. BREYER, J., filed a dissenting opinion. KAVANAUGH, J., took no part in the consideration or decision of the case.
  • Full Text Opinion

Under 42 U.S.C. § 1395hh(a)(2), the implementation of new policy by the Department of Health and Human Services without statutory notice and comment results in the policy being vacated.

Petitioner (the government) determined that the fraction of additional payments to be paid to qualifying institutions through Medicare is calculated based on including Part C enrollees. The Court of Appeals for the D.C. Circuit agreed with Respondents (hospitals) that Petitioner did not provide the required 60-day notice, as required by the Medicare Act when there is a change in “substantive legal standards.” 42 U.S.C. § 1395hh(a)(2). The Supreme Court affirmed, holding that there is no “lawful excuse” for noncompliance with the notice requirements and “that the policy cannot stand.” The Court stated that the policy changed a substantive legal standard and rejected Petitioner’s definition under the Administrative Procedure Act (APA), which defines “‘substantive rules” as “those that have the force and effect of law.” Perez v. Mortgage Bankers Assn., 575 U.S. 92 (2015). The Court reasoned that the rejection of Petitioner’s interpretation is better aligned with the Medicare Act’s contemplation of “statements of policy.” Furthermore, Petitioner’s interpretation would “introduce incoherence” into the statute. The Court also rejects Petitioner’s argument that Congress is attempting to “exempt interpretive rules and policy statements from notice and comment.” The Court states that it will not side with Petitioner’s “unlikely reading.” AFFIRMED.

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