Tennessee Hospital Association et al v. Burwell et al
MEMORANDUM OPINION signed by Chief Judge Waverly D. Crenshaw, Jr on 6/21/2017. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(ab)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
ASSOCIATION, et al.,
THOMAS PRICE, et al.,
CHIEF JUDGE CRENSHAW
Pending before the Court are the following motions:
Plaintiffs= Motion for Judicial Notice of Facts Not Subject to Reasonable Dispute
(Doc. No. 61), which will be GRANTED as unopposed; 1
Plaintiffs= Motion for Summary Judgment (Doc. No. 62); and
Defendants= Motion to Dismiss 2 or, in the Alternative, Cross Motion for Summary
Judgment (Doc. No. 67).
Plaintiffs are the Tennessee Hospital Association and three of its hospital members,
Takoma Regional Hospital, Delta Medical Center, and Parkwest Hospital. Defendants are Thomas
Price, the Secretary of the United States Department of Health and Human Services (AHHS@);
Seema Verma, Administrator of the Center for Medicare and Medicaid Services; and the Center
These facts deal with documents on state and federal government websites.
The parties rely on documents outside the pleadings. Accordingly, the Court treats
the cross-motions as motions for summary judgment.
for Medicare and Medicaid (ACMS@), the federal agency that administers the Medicaid program.
Price and Verma are sued in their official capacities only. 3
Plaintiffs contend that Defendants have violated the Medicaid Act (Athe Act@), 42 U.S.C.
' 1396, et seq., and the Administrative Procedures Act (AAPA@), 5 U.S.C. ' 500, et seq., by
instituting and enforcing Defendants= responses to certain Frequently Asked Questions (AFAQs@)
on their website and, as a result, Defendants have substantively amended the Medicaid statute and
regulations without authority and without complying with the proper processes under the APA.
Defendants maintain the FAQs are a reasonable interpretation of the Act entitled to deference.
II. MEDICAID ACT AND REGULATIONS
Medicaid is a cooperative federal-state program through which the federal government
provides financial assistance to the states so they may incentivize healthcare providers to furnish
medical care to needy individuals. Wilder v. Virginia Hospital Ass=n., 496 U.S. 498, 502 (1990).
Congress passed the Act in 1965 to provide medical services to those members of our society who,
because they lack the necessary financial resources, cannot otherwise obtain medical care. 42
U.S.C. ' 1396, et seq.
In 1981, Congress amended the Act to ensure that hospitals that serve a disproportionate
number of low-income patients, known as disproportionate share hospitals (ADSH@), receive an
appropriate increase in the amount of payment for healthcare services. 42 U.S.C. '1396r-4. The
DSH program helps reimburse DSH hospitals, through payment adjustments, for the additional
Price and Verma were not the originally named Defendants in this case (Doc. No.
1), but they took their respective offices during the course of the litigation and have been
substituted as parties herein.
costs they incur providing eligible services to Medicaid and uninsured patients. These
reimbursements, known as DSH payments, are supplements to the general funding that hospitals
receive from their respective states through the Medicaid program. Id.
States are not required to participate in the Medicaid program, but those choosing to do so
must comply with the Act and with regulations duly promulgated by the Secretary of HHS. Wilder,
496 U.S. at 502. Each state administers its own Medicaid program pursuant to a state plan. 4 If
CMS approves a state’s plan, the federal government provides federal financial participation
(AFFP@) to reimburse each state for a portion of the costs that the state incurs for Medicaid patient
healthcare. 42 U.S.C. ' 1396b. The remaining portion of a state’s Medicaid expenditures is funded
by the state. Id.
The statute at issue here provides, among other things, that DSH payments made to a
hospital cannot exceed:
the costs incurred during the year of furnishing hospital services (as determined by
the Secretary and net of payments under this subchapter, other than under this
section, and by uninsured patients) by the hospital to individuals who either are
eligible for medical assistance under the State plan or have no health insurance (or
other source of third party coverage) for services provided during the year.
42 U.S.C. ' 1396r-4(g)(1)(A).
In order to ensure that the hospital-specific DSH payment limit has been calculated
correctly for each DSH, the statute also provides that, as a condition of receiving DSH payments,
a state must meet certain reporting and audit requirements to verify, among other things, that
A[o]nly the uncompensated care costs of providing inpatient hospital and outpatient hospital
Tennessee participates in the Medicaid program through its TennCare program.
services to individuals . . . are included in the calculation of the hospital-specific limits under [the
statute].@ 42 U.S.C. ' 1396-4(j)(2)(C). This portion of the statute, captioned AAnnual reports and
other requirements requiring payment adjustments,@ sets forth reporting and auditing requirements
for states participating in the Medicaid program, particularly in the DSH program. For example,
Congress requires that each state provide to CMS an annual report and audit of its DSH program,
including an independent certified audit for each DSH hospital. 42 U.S.C. ' 1396r-4(j). Defendants
promulgated regulations in 2008 interpreting these reporting and auditing requirements. 42 C.F.R.
' 447.299. The 2008 regulations did not change the calculation of DSH payment limits as set forth
in the statute. 42 C.F.R. ' 447.299 and 42 U.S.C. ' 1396r-4.
The regulation at issue here requires that states annually submit to Defendants certain
information for each DSH hospital that has received a DSH payment. 42 C.F.R. ' 447.299(c).
States must submit, among other information, each DSH hospital=s total annual uncompensated
care costs. Congress defined Atotal annual uncompensated care costs@ as:
the total cost of care for furnishing inpatient hospital and outpatient hospital
services to Medicaid eligible individuals and to individuals with no source of third
party coverage for the hospital services they receive less the sum of regular
Medicaid FFS 5 rate payments, Medicaid managed care organization payments,
supplemental/ enhanced Medicaid payments, uninsured revenues, and Section 1011
payments for inpatient and outpatient hospital services. 6
42 C.F.R. ' 447.299(c)(16).
AFFS@ stands for Afee-for-service.@ 47 C.F.R. ' 447.299(c)(6).
These specifically named payments are also defined in ' 447.299. None of them
includes private insurance payments or Medicare payments, which Defendants attempt to add to
the list created by Congress.
In early 2010, CMS posted a document on its website entitled AAdditional Information on
the DSH Reporting and Audit Requirements,@ which contained answers to FAQs about the federal
audit and reporting requirements. Two of the responses to those FAQs, Nos. 33 and 34, are at issue
in this litigation.
The FAQs and responses at issue state as follows:
33. Would days, costs, and revenues associated with patients that have both
Medicaid and private insurance coverage (such as Blue Cross) also be included in
the calculation of the MIUR 7 percentage and the DSH limit in the same way States
include days, costs and revenues associated with individuals dually eligible for
Medicaid and Medicare?
Days, costs, and revenues associated with patients that are dually eligible for
Medicaid and private insurance should be included in the calculation of the
Medicaid impatient utilization rate (MIUR) for the purposes of determining a
hospital eligible for Medicaid and also enrolled in private health insurance. Section
1923(g)(1) 8 does not contain an exclusion for individuals eligible for Medicaid and
also enrolled in private health insurance. Therefore, days, costs and revenues
associated with patients that are eligible for Medicaid and also have private
insurance should be included in the calculation of the hospital-specific DSH limit.
As Medicaid should be the payer of last resort, hospitals should also offset both
Medicaid and third-party revenue associated with the Medicaid eligible day against
the costs for that day to determine any uncompensated amount.
34. The regulation states that costs for dual eligibles should be included in
uncompensated care costs. Could you please explain further? Under what
circumstances should we include Medicare payments?
Section 1923(g) of the Act defines hospital-specific limits on FFP 8 for Medicaid
DSH payments. Under the hospital-specific limits, a hospital=s DSH payment must
not exceed the costs incurred by that hospital in furnishing services during the year
to Medicaid and uninsured patients less payments received for those patients. There
is no exclusion in section 1923(g)(1) for costs for, and payment made, on behalf of
Medicaid Impatient Utilization Rate
42 U.S.C. ' 1396r-4(g)(1)
Federal financial participation
individuals dually-eligible for Medicare and Medicaid. Hospitals that include
dually-eligible days to determine DSH qualification must also include the costs
attributable to dual eligibles when calculating the uncompensated costs of serving
Medicaid eligible individuals. Hospitals must also take into account payment made
on behalf of the individual, including all Medicare and Medicaid payments made
on behalf of dual eligibles. In calculating the Medicare payment for service, the
hospital would have to include the Medicare DSH adjustment and any other
Medicare payments (including, but not limited to Medicare IME and GME) with
respect to that service. This would include payments for Medicare allowable bad
debt attributable to dual eligibles.
(Doc. No. 1-2 at 19.)
Beginning with payments made in Fiscal Year 2011, if an audit reveals any DSH payments
in excess of the hospital=s DSH payment limit, those overpayments must be recovered by the state
and returned to the federal government, unless they are redistributed by the state to other qualifying
DSH hospitals. New Hampshire Hosp. Ass=n. v. Burwell, 2017 WL 822094 (D. N.H. Mar. 2, 2017)
(citing 73 Fed. Reg. 77906). Any overpayments must be recouped by the state within one year of
their discovery or the federal government may reduce its future contribution. Texas Children=s
Hosp. v. Burwell, 76 F.Supp.3d 224, 230 (D. D.C. 2014).
On April 3, 2017, Defendants published the final version of a rule that specifically
incorporated the policies reflected in FAQs 33 and 34. The regulation now includes, in part, the
following provision, effective June 2, 2017:
(10) Total Cost of Care for Medicaid IP/OP Services. The total annual costs
incurred by each hospital for furnishing inpatient hospital and outpatient hospital
services to Medicaid eligible individuals. The total annual costs are determined on
a hospital-specific basis, not a service-specific basis. For purposes of this statute,
costs (i) Are defined as costs net of third-party payments, including, but not limited to,
payments by Medicare and private insurance.
42 U.S.C. ' 447.299(c)(10).
III. PROCEDURAL HISTORY
This action was filed on December 15, 2016. The next day, Plaintiffs filed a Motion for
Preliminary Injunction and for Stay under the Administrative Procedures Act. (Doc. No. 8.) On
December 22, 2016, Plaintiffs filed an Amended Complaint (Doc. No. 16) and a Motion for
Temporary Restraining Order and Amended Motion for Preliminary Injunction (Doc. No. 18.) The
Amended Complaint (Doc. No. 16) asserts causes of action for: (Count I) violation of 5 U.S.C.
' 706(2)(C) of the APA; (Count II) violation of 5 U.S.C. ' 706(2)(A) and (D) of the APA; and
(Count III) declaratory judgment that Defendants lack statutory authority to promulgate the 2016
A hearing on Plaintiffs= motions for injunctive relief was held on December 30, 2016. (Doc.
No. 19.) At that hearing, the Court requested additional information from the parties and continued
the hearing until January 5, 2017. The Court also ordered Plaintiffs to give formal notice of the
litigation to the Tennessee Attorney General. (Doc. No. 38.) Pursuant to notice from the parties,
the hearing set for January 5, 2017, was canceled, and the case was referred to the Magistrate Judge
for case management and to determine whether the motions for injunctive relief could be combined
with cross motions for summary judgment. (Doc. No. 49.)
The Initial Case Management Order (Doc. No. 57) provides that Plaintiffs will file a
combined motion for preliminary injunction and for summary judgment and Defendants will file
a combined response in opposition thereto and their own motion to dismiss or for summary
judgment. These motions are now fully briefed. The parties have agreed that Plaintiffs= claims turn
solely on legal issues of statutory and regulatory interpretation, so that Plaintiffs= claims may be
resolved without reference to any administrative record. (Doc. No. 57.) 9
On May 30, 2017, the Court held a hearing on whether to enter a status quo injunction until
it rules on these cross-motions for summary judgment. The Court ordered that, pending its decision
on the cross-motions for summary judgment, Defendants are enjoined from imposing or requiring
the State of Tennessee to impose DSH recoupment payment requirements on the Plaintiffs=
hospitals. (Doc. No. 82.)
IV. STANDARD OF REVIEW
Because this is a lawsuit for review of an agency action under the APA, the case can and
should be resolved on summary judgment. New Hampshire Hospital at * 1. In an APA action,
summary judgment becomes the mechanism for deciding, as a matter of law, whether the agency
action is supported by the administrative record or otherwise consistent with the APA standard of
review. Harkness v. Secretary of the Navy, 174 F.Supp.3d 990, 1004 (W.D. Tenn. 2016).
The usual rules governing summary judgment, however, do not apply. Integrity
Gymnastics & Pure Power Cheerleading, LLC v. U. S. Citizenship and Immigration Servs., 131
F.Supp.3d 721, 725 (S. D. Ohio 2015). Instead, a district court’s review is limited to whether the
agency=s action falls within certain categories enumerated in the statute. Id. Under the APA, a court
must hold unlawful and set aside agency findings, and conclusions found to be:
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
Similarly, the parties= Statements of Undisputed Facts are not necessary to the
Court’s decision, because only issues of law are posed.
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the
5 U.S.C. ' 706(2).
Plaintiffs seek both declaratory and permanent injunctive relief. Federal law provides
that, with certain exceptions not applicable here, any federal court, upon the filing of an appropriate
pleading, may declare the rights and other legal relations of any interested party seeking such
declaration, whether further relief is or could be sought. 28 U.S.C. ' 2201(a).
Although each of Plaintiffs= three causes of action in the Amended Complaint represents a
separate challenge to Defendants= actions, all three challenge Defendants= enforcement of the
policies set forth in the responses to FAQs 33 and 34 and allege violations of the APA. Count I
alleges violation of Section 706(2)(C) of the APA10 through the promulgation of FAQ responses
that are contrary to the plain language of the statute. Count II alleges violation of Section 706(2)(A)
and (D) of the APA11 through the promulgation of FAQ responses that are contrary to the
unambiguous language of the regulation and were not promulgated through the required noticeand-comment procedures. Count III seeks declaratory judgment that Defendants lack statutory
A court must hold unlawful and set aside agency findings and conclusions that are
found to be in excess of statutory jurisdiction or authority. 5 U.S.C. ' 706(2)(C).
A court must hold unlawful and set aside agency findings and conclusions that are
found to be arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law or
without observance of procedure required by law. 5 U.S.C. ' 706(2)(A) and (D).
authority to promulgate the 2016 proposed rule that included language similar to that of the FAQ
In December of 2016, each of the Plaintiffs received email notification from the State of
Tennessee that their 2012 audits revealed DSH overpayments that must be repaid.12 (Doc. No. 16
at & 51.) In this lawsuit, Plaintiffs assert that those overpayments were incorrectly calculated by
deducting private insurance and Medicare payments from each of their DSH payment limits.13
Plaintiffs contend that, through the responses to FAQs 33 and 34, Defendants arbitrarily and
unlawfully made substantive amendments to the Medicaid Act and regulations without
congressional authority and without observance of the procedures required by law. Defendants, on
the other hand, argue that the responses to FAQs 33 and 34 are merely clarifications to and
reasonable interpretations of the statute and regulation.
Plaintiffs rely on the statutory language in 42 U.S.C. ' 1396r-4(g)(1), and the words of the
regulation, 42 C.F.R. ' 447.299(c)(16), which Plaintiffs say unambiguously require only Medicaid
payments to be subtracted from the calculation of the DSH payment limit. Defendants claim,
however, that the same statute and regulation require the calculation of the DSH payment limit to
subtract all compensation received on behalf of Medicaid patients, including private insurance
payments and Medicare payments.
In order to determine whether Defendants= actions in enforcing the responses to FAQs 33
and 34 were in excess of their statutory and regulatory authority or otherwise violate the APA, the
There is no dispute that Plaintiffs are eligible to receive DSH payments.
If the FAQs are unenforceable as Plaintiffs contend, then the audit of fiscal year
2012, based on those FAQs, is not accurate. See New Hampshire Hospital at * 7.
Court must first determine whether the responses to FAQs 33 and 34 amended or merely
interpreted or clarified the existing statute (42 U.S.C. ' 1396r-4) and regulation (42 C.F.R. '
447.299). Recent decisions by two sister district courts are instructive.
The court in Texas Children=s Hospital granted a preliminary injunction in a challenge to
FAQ 33, finding, among other things, that the formula codified by the existing regulation did not
contemplate the inclusion of private-insurance payments for Medicaid-eligible services. Texas
Children=s Hospital, 76 F.Supp.3d at 236-37, 247 (citing 42 C.F.R. ' 447.299(c)(16)). The court
reasoned that the regulation makes no mention of payments from private insurance for Medicaideligible patients. (Id.)
Similarly, the court in New Hampshire Hospital granted a permanent injunction, finding
that the defendants violated the APA when they instituted the policies set forth in the responses to
FAQs 33 and 34. New Hampshire Hospital at * 5. That court held that FAQs 33 and 34 expressed
a new interpretation of the DSH limit calculation and, because the defendants tried to make this
new interpretation through FAQs and not through the rule-making process, they acted in excess of
their statutory jurisdiction and authority or short of statutory right, in violation of the APA. Id. at
Finding that the response to FAQ 33 made a substantive change to the formula for
calculating the hospital-specific limit in a manner not provided for by any prior rule or statutory
source, the Texas Children=s Hospital court held that it could have been promulgated only in
accordance with the notice-and-comment provisions of the APA. Texas Children=s Hospital, 76
F.Supp.3d at 241. Because the response to FAQ 33 was not subject to any notice-and-comment
procedures, the court found that the plaintiffs were likely to succeed in arguing that FAQ 33 should
be set aside as unlawful. Id. Similarly, the court in New Hampshire Hospital held that because
Defendants substantially altered existing rules, the policies expressed in the FAQs responses had
to be promulgated using notice-and-comment rule-making under the APA, and they were not. New
Hampshire Hospital at * 13.
The Court agrees with the courts in Texas Children=s Hospital and New Hampshire
Hospital. 42 U.S.C. ' 1396r-4(g)(1)(A) clearly and unambiguously sets the DSH limit as costs
incurred, net of payments under the Medicaid Act. See New Hampshire at * 2. The section does
not say net of payments from private insurance and Medicare. It specifically states Anet of
payments under this subchapter, other than under this section, and by uninsured patients.@ 42
U.S.C. ' 1396r-4(g)(1)(A).
In addition, the Court finds that the regulation clearly and unambiguously defines Atotal
annual uncompensated care costs@ as an enumerated set of costs minus an enumerated set of
payments. See Texas Children=s Hospital, 76 F.Supp.3d at 230.Those payments do not include
the payments of private insurance or Medicare. Rather, the regulation specifically lists Aregular
supplemental/enhanced Medicaid payments, uninsured revenues, and Section 1101 payments for
inpatient and outpatient services.@ 42 C.F.R. ' 447.299(c)(16).
The responses to FAQs 33 and 34, on the other hand, provide that in calculating the
hospital-specific DSH limit, a state must subtract payments received from both private health
insurance and Medicare. These responses make a substantive change to existing law, not simply a
clarification. These responses modify the formula for calculating the DSH limit in a manner not
provided by any prior rule or statutory source. Texas Children=s Hospital, 76 F.Supp.3d at 240.
The Court finds the clear language of the statute and regulation to be unambiguous, and the
language of the FAQ responses to be substantially different.
Defendants argue that the words Auncompensated costs@ in 42 U.S.C. ' 1396r-4(j)(2)(C)
should be interpreted to account for all revenue received from private payers on behalf of
Medicaid-eligible patients because such revenue makes those costs compensated, not
uncompensated. But Congress and the legally-promulgated regulation did not leave the word
Auncompensated@ unexplained or undefined. The statute and regulation are not silent about this
issue; they include specific definitions of the calculation and Aall relevant inputs,@ including total
annual uncompensated care costs. Texas Children=s Hospital, 76 F.Supp.3d at 236. In other words,
there is no Agap@ for the Secretary to fill with regard to this calculation. The statute specifies which
payments to subtract, and the regulation specifically defines total uncompensated care costs.
Defendants also argue that the FAQ responses are merely a reasonable interpretation of the
statute, entitled to deference under Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837 (1984). In Chevron, the Court held that if a statute is clear in its meaning, courts must
give effect to the unambiguously expressed intent of Congress. Chevron, 467 U.S. at 842-43. If
Congress= intent is unclear, then the court’s inquiry focuses on whether the agency=s answer is
based on a permissible construction of the statute. Id. at 843.14 Even if the FAQs were considered
regulations, which they are not, Chevron deference is not warranted where a regulation is
Recent cases from the Supreme Court have limited the applicability of Chevron to
those cases in which Congress delegated authority to the agency generally to make rules carrying
the force of law and the agency interpretation claiming deference was promulgated in the exercise
of that authority. New Hampshire Hospital at * 9 (citing United States v. Mead Corp., 533 U.S.
218, 226-27 (2001)).
procedurally defective -- where, as here, the agency erred by failing to follow the correct
procedures in issuing the regulation. Encinco Motorcars, LLC v. Navarro, 136 S.Ct. 2117, 2125
Defendants maintain that Congress has directly spoken on the precise question at issue here
through the language of the statute, Section 1396r-4(g)(1)(A), and that language is entitled to
deference. The Court does not disagree. The language of the statute does not include private
insurance payments or Medicaid payments.15 If Defendants wanted to add those payments to the
statutory calculation, Congress would have to amend the statute through the proper processes.16
Posting responses to FAQs on Defendants= website is not legally sufficient, even if a handy device
for the Defendants. As found in New Hampshire Hospital, the evidence shows the authority for
the policies at issue here is the responses to the FAQs. Responses to FAQs do not carry the force
of law and do not qualify for Chevron deference.
Even if Congress, through words like Aas determined by the Secretary,@ provided an express
delegation of authority to Defendants to elucidate this specific provision of the statute through
regulation,17 the FAQ responses were not promulgated in the exercise of that authority because
they are not regulations. New Hampshire Hospital at * 9, 12. And even if the FAQ responses
It states Anet of payments under this subchapter, other than under this section, and
by uninsured patients.@ 42 U.S.C. ' 1396r-4(g)(1)(A).
It is not the office of this Court to determine what the statute should say but what it
An agency=s interpretation of its own regulations is entitled to deference under Auer
v. Robbins, 519 U.S. 452, 461 (1997), unless it is plainly erroneous or inconsistent with the
regulation. As explained herein, Defendants= interpretation of its 2008 regulation (42 C.F.R.
' 447.299) in this case is both.
were interpreted as regulations, which they are not, they would still be unlawful because they were
not promulgated through the required notice-and-comment process.18
Thus, the Court finds that Defendants= policies set forth in the responses to FAQs 33 and
34 violate the APA because they conflict with the unambiguous language of the Medicaid Act and
the regulation quoted above.19 In addition, the FAQ policies represent agency action that is
arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, and without
observance of procedure required by law because they were not promulgated pursuant to the
required notice-and-comment rule-making procedures. 5 U.S.C. '' 553 and 706. Accordingly,
Plaintiffs= motion as to Counts I and II of the Amended Complaint will be granted.
In Count III, Plaintiffs ask the Court to declare that the proposed 2016 rule also violates
the APA and is unlawful. The Court finds that Plaintiffs= claims with regard to the proposed 2016
rule are moot because that proposed rule has now become a final rule (the A2017 Rule@). 42 C.F.R.
' 447.299(c)(10). A proposed rule is not a final agency action subject to judicial review. In re
Murray Energy Corp., 788 F.3d 330, 334 (D.C. Cir. 2015); Nucor Steel-Ark. v. United States
Environmental Protection Agency, 2016 WL 4055695 at * 2 (E.D. Ark. Apr. 13, 2016).
The APA requires that in promulgating regulations, general notice of proposed
rulemaking shall be published in the Federal Register and interested persons must be given an
opportunity to participate in the rule making through submission of written data, views or
arguments with or without opportunity for oral presentation. 5 U.S.C. ' 553.
Because the plain language of the statute itself supports the Court’s ruling, the
legislative history, the preamble to the regulation, and other extraneous documents discussed by
the parties (which actually include language favoring both sides of this argument) do not change
the ruling herein.
Plaintiffs argue that the Court should invalidate the 2017 Rule and enjoin it retroactively,
but the 2017 Rule is not before the Court. It is not included in the Amended Complaint because it
was not a final rule at the time of the Amended Complaint. Furthermore, the FAQ responses at
issue here are not the same as the 2017 Rule promulgated through proper notice-and-comment
procedures, and the audits at issue here predate 2017. Defendants have represented that the 2017
rule will have no retroactive effect. (Doc. No. 76 at 7.) Therefore, Plaintiffs= request for declaratory
judgment (Count III) will be denied.
For the reasons expressed herein, Plaintiffs= Motion for Summary Judgment (Doc. No. 62)
will be GRANTED as to Counts I and II and DENIED as to Count III. Defendants= Motion for
Summary Judgment (Doc. No. 67) will be DENIED as to Counts I and II and GRANTED as to
An appropriate Order will be entered.
WAVERLY D. CRENSHAW, JR.
CHIEF UNITED STATES DISTRICT JUDGE
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