Baylor County Hospital District v. Burwell
Filing
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Opinion and Order: Based on the foregoing, Defendant's Motion for Summary Judgment (ECF No. 19) is GRANTED. Plaintiff's Cross-Motion for Summary Judgment (ECF No. 21) is DENIED. A Final Judgment will issue separately. (Ordered by Judge Reed C O'Connor on 2/19/2016) (trt)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
WICHITA FALLS DIVISION
BAYLOR COUNTY HOSPITAL
DISTRICT d/b/a SEYMOUR
HOSPITAL,
Plaintiff,
v.
SYLVIA MATHEWS BURWELL IN
HER CAPACITY AS SECRETARY
OF THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Defendant.
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Civil Action No. 7:15-cv-00053-O
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant’s Motion for Summary Judgment and Brief in Support (ECF
Nos. 19–20), filed October 15, 2015; Plaintiff’s Consolidated Motion for Summary Judgment and
Response to Defendant’s Motion for Summary Judgment (“Cross-Motion & Resp.”) and Brief in
Support (ECF Nos. 21–22), filed November 16, 2015; Defendant’s Consolidated Response to
Plaintiff’s Cross-Motion for Summary Judgment and Reply in Support of Her Motion for Summary
Judgment (“Resp. & Reply”) (ECF No. 26), filed December 7, 2015; and Plaintiff’s Reply Brief in
Support of its Cross Motion for Summary Judgment (“Reply”) (ECF No. 27), filed December 22,
2015. Having considered the Motions, related briefing, and applicable law, the Court finds that
Defendant’s Motion for Summary Judgment should be GRANTED, and Plaintiff’s Cross-Motion
for Summary Judgment should be DENIED.
I.
BACKGROUND
The following facts are primarily taken from Plaintiff’s First Amended Complaint for
Judicial Review of Final Adverse Agency Decision on Critical Access Hospital Status. Am. Compl.,
ECF No. 25. Title XVIII of the Social Security Act establishes the Medicare Program (“Medicare”),
which provides federal health insurance benefits to most persons over age 65 and to younger persons
with certain disabilities. Id. ¶ 7. The Centers for Medicare and Medicaid Services (“CMS”) is the
federal agency responsible for administering Medicare. Id. Plaintiff Baylor County Hospital District
(“Baylor”) is a Medicare-certified provider of services within the meaning of 42 U.S.C. § 1395x(u)
and operates Seymour Hospital, located in the rural area of Seymour, Texas. Id. ¶ 2.
The Medicare Rural Hospital Flexibility Program provides for the designation of certain
health care facilities as Critical Access Hospitals (“CAHs”). Id. ¶ 8 (citing Balanced Budget Act of
1997, Pub. L. 105-33 § 4201, codified at 42 U.S.C. § 1395i-4(c)(2)(B)(i)(I) (hereinafter “§ 1395i4”)). The CAH designation was created to ensure that Medicare beneficiaries are able to access
hospital services in rural areas by providing for greater Medicare payments to CAH-designated
hospitals. Am. Compl. ¶ 8, ECF No. 25. To qualify for CAH status, § 1395i-4 requires that a
hospital be “located more than a 35-mile drive (or in the case of mountainous terrain or in areas with
only secondary roads available, a 15-mile drive) from a hospital . . . .” Id. ¶ 9, ECF No. 25 (quoting
§ 1395i-4.) Neither § 1395i-4 nor the accompanying administrative regulations, codified at 42
C.F.R. § 485.610(c), define “primary” or “secondary” roads. Id. ¶ 10. In 2007, CMS published its
State Operations Manual (“SOM”), which interpreted “primary road” to be: “(1) a numbered federal
highway; (2) a numbered state highway with two or more lanes in each direction; or (3) a road that
is shown as a primary highway divided by a median strip on a map prepared in accord with the U.S.
Geological Survey standards.” Id. (citing SOM, Pub. No. 199-07, Chapter 2, § 2256A). The SOM
2
does not include a definition for “secondary” road. Id. Roads that do not qualify as “primary” roads
are treated as “secondary” roads. Id.
Seymour Hospital is located 31.8 miles from a hospital in Throckmorton, Texas, and thus
fails to meet the 35-mile distance requirement. Id. ¶ 14, ECF No. 25. Only one road connects the
two hospitals. Id. ¶ 15. The road has only “one lane in each direction and no median strip, no
passing lanes and no paved shoulders.” Id. However, approximately 28.4 miles of the road is
designated as U.S. Highway 183/283. Id. ¶ 16. CMS therefore designated the road as “primary”
because it carries a federal, not state, highway designation, and does not meet the lesser 15-mile
requirement when only secondary roads are available. Id.
Baylor contends that “[i]f the road had a state rather than a federal highway designation, it
would be considered a ‘secondary’ road and the 15 mile distance test would be satisfied” because
for “a state highway to be considered a ‘primary’ road under CMS’s policy interpretation, it would
have to have two or more lanes in each direction or have a median strip,” which U.S. Highway
183/283 lacks. Id. ¶ 16 (emphasis added). Baylor argues that the Secretary wrongly denied Seymour
Hospital CAH status, relying on an arbitrary rule that ignores the weight that § 1395i-4 and the
accompanying regulation afford to qualitative differences between primary and secondary roads. See
id. ¶¶ 11, 22.
CMS denied Baylor’s original application for CAH status in 2013, and again upon
reconsideration two months later. See Def.’s Br. Supp. Mot. 7, ECF No. 20 (citing CMS Letter to
Seymour Hospital (“CMS Letter”) App. 17, ECF No. 18). Baylor appealed CMS’s decision to the
Departmental Appeals Board Civil Remedies Division ALJ (“the ALJ”), asserting that CMS’s policy
interpretation conflicts with the language and intent of § 1395i-4. Am. Compl. ¶ 17, ECF No. 25.
3
The ALJ granted summary judgment in favor of CMS, ruling that the Secretary’s policy
determination was reasonable. Id. ¶ 19. Plaintiff appealed the ALJ’s decision to the Department
Appeals Board Appellate Division (“the DAB”), which has final review authority over the
reconsideration and appeal process for the Secretary’s determinations.1 Id. ¶ 20; see also Def.’s
Resp. Pl.’s Mot. & Reply Mot. 8, ECF No. 26. The DAB affirmed the ALJ decision on January 21,
2015, ruling that CMS could “reasonably require that state highways and undesignated roads be
treated as equivalent to federal highways only when they demonstrated specific characteristics typical
of most federal highways.” Am. Compl. ¶ 20, ECF No. 25. Baylor has exhausted its administrative
remedies and now brings the above-styled action pursuant to 42 U.S.C. § 1395cc(h), 42 U.S.C. §
405(g), and 5 U.S.C. § 701–06, asserting that the Secretary’s final decision affirming CMS’s
interpretation was in error. Id. ¶¶ 21–22.
II.
LEGAL STANDARD
A.
Motion for Summary Judgment
Summary judgment is proper when the pleadings and evidence on file show “that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). “[T]he substantive law will identify which facts are material.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine dispute as to any material fact exists “if
the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The
movant makes a showing that there is no genuine dispute as to any material fact by informing the
1
The parties do not dispute that the DAB represents the Secretary’s final decision, leaving no further
steps for administrative review. See, e.g., Am. Compl. ¶¶ 20–21, ECF No. 25; Def.’s Br. Supp. Mot. 18,
ECF No. 20 (“The Secretary’s formal adjudication process allows program participants to challenge CMS’s
interpretations and receive a final decision of the Secretary from the DAB.”) (emphasis added).
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court of the basis of its motion and by identifying the portions of the record which reveal there are
no genuine material fact issues. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Fed. R. Civ.
P. 56(c).
When reviewing the evidence on a motion for summary judgment, the court must decide all
reasonable doubts and inferences in the light most favorable to the non-movant. See Walker v. Sears,
Roebuck & Co., 853 F.2d 355, 358 (5th Cir. 1988). The court cannot make a credibility
determination in light of conflicting evidence or competing inferences. Anderson, 477 U.S. at 255.
As long as there appears to be some support for the disputed allegations such that “reasonable minds
could differ as to the import of the evidence,” the motion for summary judgment must be denied.
Id. at 250. On cross-motions for summary judgment, the court “review[s] each party’s motion
independently, viewing the evidence and inferences in the light most favorable to the nonmoving
party.” Target Constr., Inc. v. Baker Pile Driving & Site Work, LLC, No. 12-01820, 2013 WL
4731369, at *2 (E.D. La. Sept. 3, 2013) (citing Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d
493, 498 (5th Cir. 2001)).
B.
Judicial Review of the Secretary’s Final Decision
Pursuant to 42 U.S.C. § 405(g), “[t]he Court shall have power to enter, upon the pleadings
and transcript of the record, a judgment affirming, modifying, or reversing the decision of the
[Secretary], with or without remanding the cause for a rehearing.” In addition, “[t]he findings of the
[Secretary] as to any fact, if supported by substantial evidence, shall be conclusive . . . .” Id. Thus,
the “Court’s function is limited to determining whether the record, considered as a whole, contains
substantial evidence that supports the final decision of the Secretary, as the trier of fact.” Roland v.
Sebelius, No. 3:08-cv-2084-K, 2010 WL 70855, at *2 (N.D. Tex. Jan. 6, 2010) (Kinkeade, J.) (citing
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Estate of Morris v. Shalala, 207 F.3d 744, 745 (5th Cir. 2000)). Courts “may not reweigh the
evidence or try the issues de novo or substitute its judgment for that of the Secretary,” but will “set
aside fact findings which are not supported by substantial evidence and will correct errors of law.”
Roland, 2010 WL 70855, at *2 (citing Leggett v. Chater, 67 F.3d 558, 564 (5th Cir. 1995); Dellolio
v. Heckler, 705 F.2d 123, 125 (5th Cir. 1983)).
III.
ANALYSIS
Defendant moves for summary judgment as to Plaintiff’s claim that the Secretary’s final
decision should be reversed. Def.’s Mot. 1, ECF No. 19. Plaintiff moves for summary judgment in
favor of its claim, urging that the Court either (1) reverse and/or vacate the Secretary’s action and
remand this case to the Secretary with an order compelling a determination that Seymour Hospital
is eligible for conversion to CAH status; or (2) render final judgment in favor of Baylor, ordering
the Secretary to grant CAH status to Seymour Hospital. Pl.’s Br. Supp. Cross-Mot. & Resp. Def.’s
Mot. 17, ECF No. 22. The Court will first determine the appropriate deferential standard to apply
in reviewing whether the Secretary’s final decision was reasonable.
A.
The Secretary’s Decision Affirming CMS’s Definition of “Primary Road” Is Not
Entitled to Chevron Deference.
The Secretary argues that “[t]he Secretary’s interpretation of the statute should be reviewed
in accordance with Chevron.” Def.’s Resp. Pl.’s Cross-Mot. & Def.’s Reply Mot. 3, ECF No. 26
(citing Chevron, U.S.A, Inc. v. Nat. Res. Defense Council, Inc., 467 U.S. 837 (1984) (internal
citations omitted)). The Secretary argues that “the Supreme Court has clarified that[] ‘the fact that
[an] Agency . . . [reaches] its interpretation through means less formal than notice and comment
rulemaking . . . does not automatically deprive that interpretation of the judicial deference otherwise
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its [sic] due.’” Id. at 4 (quoting Barnhart v. Walton, 535 U.S. 212, 221 (2002) (internal citations
omitted)). The Secretary urges this Court to adopt the Supreme Court’s reasoning in Barnhart, a
case holding that the Social Security Administration Commissioner’s interpretation of the Social
Security Act was entitled to Chevron deference. See, e.g., Br. Supp. Def.’s Mot. Summ. J. 14, ECF
No. 20 (citing Barnhart, 535 U.S. at 215). There, the Supreme Court reasoned that “the interstitial
nature of the legal question, the related expertise of the Agency, the importance of the question to
administration of the statute, the complexity of that administration, and the careful consideration the
Agency has given the question over a long period of time all indicate that Chevron provides the
appropriate legal lens through which to view the legality of the Agency interpretation here at issue.”
Barnhart, 535 U.S. at 222.
Baylor asserts that the Secretary’s final decision concerning the SOM is not entitled to
Chevron deference, as “[t]he Supreme Court has held that interpretations contained in agency
manuals, policy statements and enforcement guidelines lack the force of law, and do not warrant
Chevron deference.” Pl.’s Br. Supp. Cross-Mot. & Resp. Def.’s Mot. 10, ECF No. 22. Baylor
further argues that the Secretary’s reliance on Barnhart is misguided, as that case involved a federal
agency promulgating formal regulations with notice and comment. Id. at 11 (citing Barnhart, 535
U.S. at 217). Baylor argues that here, unlike in Barnhart, “CMS’s interpretation purports to define
a statutory term that is not defined in the regulations.” Id.
An “administrative implementation of a . . . statutory provision [only] qualifies for Chevron
deference when it appears that Congress delegated authority to the agency generally to make rules
carrying the force of law, and that the agency interpretation claiming deference was promulgated in
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the exercise of that authority.”2 United States v. Mead Corp., 533 U.S. 218, 226–27 (2001)
(emphasis added). Here, “[t]he first half of this test is clearly satisfied: Congress has delegated
general rulemaking authority with respect to Medicare to the Secretary of HHS, who in turn has
delegated that authority to CMS.” Estate of Landers v. Leavitt, 545 F.3d 98, 105 (2d Cir. 2008); 42
U.S.C. § 1395hh(a)(1) (“The Secretary shall prescribe such regulations as may be necessary to carry
out the administration of the insurance programs under this subchapter.”); see also Shalala v.
Guernsey Mem’l Hosp., 514 U.S. 87, 96 (1995) (recognizing “the Medicare statute’s broad
delegation of authority”).
The Court then “consider[s] whether CMS has promulgated its interpretation in the exercise
of its authority.” Landers, 545 F.3d at 105–06; Mead, 533 U.S. at 226. “The overwhelming number
of . . . cases applying Chevron deference have reviewed the fruits of notice-and-comment rulemaking
or formal adjudication.” Mead, 533 U.S. at 230. Here, the SOM “is not the product of notice-andcomment rulemaking or formal adjudication.” Landers, 545 F.3d at 106. However, “less formal,
nonlegislative interpretations are not for that reason alone disqualified from receiving Chevron
deference.” Id. (collecting cases). Nevertheless, the Court is “aware of few, if any, instances in
which an agency manual, in particular, has been accorded Chevron deference.” Id.; see also
Freeman v. Quicken Loans, 626 F.3d 799, 805 (5th Cir. 2010) (“[T]here is no indication that the
[published policy statement] carries the force of law.”). “For example, the Fifth Circuit has denied
Chevron deference to IRS revenue rulings, the CMS Medicaid Manual, FTC interpretive rules, and
2
The parties do not dispute that the SOM interprets the language set forth in the guiding statute,
rather than the administrative regulation which contains language identical to § 1395i-4. See, e.g., Def.’s
Br. Supp. Mot. Summ. J. 13, ECF No. 20 (“[T]he Secretary’s interpretation of the statute should be reviewed
. . . .”) (emphasis added); Am. Compl. ¶ 13, ECF No. 25 (“[T]he interpretation contained in the SOM should
not be followed because it is unreasonable and in conflict with the language and intent of the statute.”).
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litigation briefs” as not carrying the robust force of law characterizing notice-and-comment
rulemaking and formal adjudication. Id. at 805–06. Here, this Court similarly declines to accord
Chevron deference to the CMS interpretation of the term “primary road” within the SOM, holding
that the SOM does not carry the force of law.
In declining to accord Chevron deference, the Court necessarily disagrees with the
Secretary’s argument that Barnhart’s reasoning applies to this case. In Barnhart, the statute defined
the term at issue, which the relevant agency interpreted through promulgating formal regulations.
See Barnhart, 535 U.S. at 217. In reaching its holding, the Supreme Court reasoned that “[c]ourts
grant an agency’s interpretation of its own regulations considerable legal leeway.” Id. (citing Auer,
519 U.S. at 461; Udall v. Tallman, 380 U.S. 1, 16–17 (1965)). Here, however, CMS did not
promulgate any formal regulations defining “primary roads” or “secondary roads,” but instead
defined “primary roads” for the first time in the SOM, a publication arising from “less formal,
nonlegislative interpretation[].” See, e.g., Landers, 545 F.3d at 106. Thus, the Court finds that
Barnhart is inapplicable to the facts of this case. Based on the foregoing, the Court declines to
accord Chevron deference to the Secretary’s final decision.
B.
Under Skidmore Deference, the Secretary’s Decision Affirming CMS’s
Interpretation of “Primary Road” Is Reasonable and Should Be Upheld.
To hold that the SOM “do[es] not fall within Chevron is not, however, to place [it] outside
the pale of any deference whatever.” Mead, 533 U.S. at 234. “Chevron did nothing to eliminate
Skidmore’s holding that an agency’s interpretation may merit some deference whatever its form,
given the ‘specialized experience and broader investigations and information’ available to the
agency, and given the value of uniformity in its administrative and judicial understandings of what
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a national law requires.” Id. (internal citations omitted) (emphasis added). “[R]elatively informal
CMS interpretations . . . are entitled to respectful consideration in light of the agency’s significant
expertise, the technical complexity of the Medicaid program, and the exceptionally broad authority
conferred upon the Secretary.” S.D. ex rel. Dickson v. Hood, 391 F.3d 581, 590 n.6 (5th Cir. 2004)
(collecting cases); see also Cmty. Care, L.L.C. v. Leavitt, 477 F. Supp. 2d 751, 757 (5th Cir. 2007)
(citing Reliable Home Health Care, Inc. v. Union Cent. Ins., 295 F.3d 505, 512 (5th Cir. 2002) (“The
Fifth Circuit has held that the [Medicare Provider Reimbursement Manual] is ‘an interpretive
guideline’ to which Chevron . . . deference is not owed, and that the manual should merely be
considered by courts as ‘persuasive at best.’”)).
Indeed, the parties agree that if Chevron deference is not applied, that CMS’s interpretation
is entitled to Skidmore deference. See, e.g., Pl.’s Reply Cross-Mot. Summ. J. 2, ECF No. 27
(“CMS’s interpretation of the term ‘secondary road’ in its agency manual is entitled to Skidmore
deference.”); Def.’s Resp. Pl.’s Cross-Mot. & Reply Mot. 14, ECF No. 26 (“Even if the Court agrees
with [Baylor] that CMS’s interpretation is only ‘entitled to respect’ under Skidmore . . . the Court
should accord deference to the Secretary’s interpretation.”).
Under Skidmore, an agency
interpretation is entitled to “respect according to its persuasiveness.” Mead, 533 U.S. at 221 (citing
Skidmore, 323 U.S. at 140). The Supreme Court has held that “the rulings, interpretations, and
opinions” of an agency charged with enforcing a statute, “while not controlling upon the courts by
reasons of their authority, do constitute a body of experience and informed judgment to which courts
and litigants may properly resort for guidance.” Skidmore, 323 U.S. at 140. Under Skidmore, the
weight afforded to agency rulings, interpretations, and opinions depends on “the thoroughness
evident in its consideration, the validity of its reasoning, its consistency with earlier and later
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pronouncements, and all those factors which give it power to persuade.” Small Bus. Loan Source,
Inc. v. F/V St. Mary II, 361 F. Supp. 2d 570, 574–75 (E.D. La. 2005) (emphasis added); see also
Mead, 533 U.S. at 235 (noting that applying Skidmore deference may consider “thoroughness, logic,
and expertness, its fit with prior interpretations, and any other sources of weight” in determining its
overall power to persuade) (emphasis added). The Court will begin its analysis of Skidmore factors
by considering the validity of the Secretary’s reasoning: the “most salient of the factors that inform
an assessment of persuasiveness.” Doe v. Leavitt, 552 F.3d 75, 82 (1st Cir. 2009).
1.
Validity of Reasoning
“The ‘validity’ element of Skidmore analysis draws [] attention to whether an agency
pronouncement is well-reasoned, substantiated, and logical.” De La Mota v. U.S. Dep’t. of Educ.,
412 F.3d 71, 80 (2d Cir. 2005). This inquiry focuses on “whether the agency has consulted
appropriate sources, employed sensible heuristic tools, and adequately substantiated its ultimate
conclusion.” Doe, 552 F.3d at 82 (citing De La Mota, 412 F.3d at 80).
Baylor argues that the Secretary did not consult appropriate sources, as disregarding the
“qualitative factors that affect travel time to and accessibility of rural hospitals, does not reflect
thorough analysis or valid reasoning.” Pl.’s Cross-Mot. Summ. J. & Resp. Def.’s Mot. 13, ECF No.
22. Baylor argues that “[u]nder CMS’s interpretation, a road with [a] U.S. highway designation
could never be a secondary road, regardless of its characteristics or condition.” Id.
The Secretary asserts that the plain meaning of “secondary roads” in § 1395i-4 supports
CMS’s interpretation. Indeed, “[t]he plain meaning of words in the text of a statute constitutes the
proper starting point for interpreting that statute.” Doe, 552 F.3d at 83 (citing Hughes Aircraft Co.
v. Jacobson, 525 U.S. 432, 438 (1999)). As the Secretary points out, the Merriam-Webster
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dictionary defines a “secondary road” as “a road not of primary importance,” or “a feeder road.” See
Def.’s Resp. Pl.’s Cross-Mot. & Reply Mot. 9–10, ECF No. 26 (citing “Secondary Road,” MerriamWebster.com, Merriam-Webster, n.d. Web. (retrieved Dec. 3, 2015); “Secondary-road,”
Dictionary.com Unabridged, Random House, Inc. (retrieved Oct. 13, 2015)). Thus, the Secretary
argues that “Interstate Highways and U.S. Highways form many important interregional and regional
connections” and thus “it was not unreasonable for CMS . . . to conclude that federally numbered
highways are likely to be bigger, better-maintained, and more well-traveled than state highways.”
Def.’s Br. Supp. Mot. 16, ECF No. 20.
Baylor contends that “the dictionary focus on the relative importance of the road may provide
a meaningful distinction in other contexts, such as maps, [but] it does not do so in the context of the
statutory scheme for determining reasonable hospital access in rural areas.” Pl.’s Reply Cross-Mot.
1–2, ECF No. 27. Baylor avers that “[i]f the dictionary definition applied, it would be unlikely that
there would be an area with only secondary roads. When using a comparative standard, at least one
of the roads would be a primary road.” Id.
The Court affirms that the Secretary’s factual finding that the plain meaning of the term
“secondary road” focusing on the “importance” of the road was reasonable. See Def.’s Resp. Pl.’s
Cross-Mot. Reply 10, ECF No. 26 (emphasis added). Baylor’s argument that the dictionary
definition is invalid necessarily assumes that the “comparative standard” distinguishing between
roads is determined in an area between any two hospitals, rather than on any larger geographic scale,
whether county, state, or national. The commonplace definition of “secondary road” does not require
that a primary road be of primary importance to a particular area between any two hospitals. Thus,
because the commonplace definition does not make the inference that Baylor suggests, the Court
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finds that the plain language of § 1395i-4 supports the Secretary’s final decision as reasonable.
The congressional purpose animating § 1395i-4 also supports the Secretary’s final decision.
See Doe, 552 F.3d at 83 (considering congressional purpose within Skidmore “validity” analysis).
The DAB recognized that the congressional intent of creating the CAH designation is to “provide[]
for higher Medicare payments in an effort to maintain the availability of hospital services in rural
communities.” Final Decision on Review of Administrative Law Judge Decision (“DAB Final
Decision”) 1,3 ECF No. 18 (citing 72 Fed. Reg. 42,628, 42,806 (2007) (stating that the “intent of the
CAH program is to maintain hospital-level services in rural communities while ensuring access to
care”)).
The Secretary argues that “the imposition of the mileage requirements itself illustrates that
this purpose was not intended to benefit every hospital located in a predominantly rural environment.
Instead, funding was to be narrowly targeted to a subset of rural hospitals that were less accessible
and more isolated from other sources of hospital care than other such hospitals.” Def.’s Br. Supp.
Mot. 9, ECF No. 20 (quoting DAB Final Decision 5, ECF No. 18). The Act limits this extra funding
to hospitals meeting certain criterion, depending on how the road is classified, and the Secretary
asserts that “[a]dministrative efficiency justifie[s] developing a bright-line rule that would balance
the goals without individual inquiry into each case.” Def.’s Br. Supp. Mot. 9, ECF No. 20. The
Court finds this to be a reasonable conclusion in light of the CAH designation’s larger purpose of
maintaining hospital-level services in rural communities while ensuring access to care.
The Secretary further supports the imposition of this bright-line requirement through
3
The page numbers of the DAB Final Decision cited in this Order refer to the page numbers of the
DAB Final Decision only, not to the larger filing within which the DAB Final Decision is included.
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providing relevant legislative history.4 See Doe, 552 F.3d at 83 (considering legislative history
within Skidmore “validity” analysis). Before January 1, 2006, states could apply for a waiver of the
minimum distance eligibility requirement by certifying that a prospective CAH was a “necessary
provider” in an area otherwise failing to meet the bright-line distance requirements, much like the
ultimate relief Baylor ultimately seeks. See, e.g., DAB Final Decision 6, ECF No. 18. Pl.’s Br. Supp.
Cross-Mot. & Resp. Def.’s Mot. 4, ECF No. 22. However, as of January 1, 2006, Congress
grandfathered in “necessary providers” that were already certified via waiver, but eliminated this
option for future applicants. Id. (citing Medicare, Prescription Drug, Improvement, & Modernization
Act of 2003, Pub. L. No. 108-173, 117 Stat. 2269, § 405(h); 72 Fed. Reg. at 42, 806 (discussing
statutory change)); see also § 1395i-4 (“A State may designate a critical access hospital if the facility
. . . [i]s certified before January 1, 2006, by the State as being a necessary provider of health care
services to residents in the area.”).
The Court finds that SOM’s definition of primary road “advances the goal of uniformity by
providing a consistent and principled method for calculating” access between hospitals when
considering CAH applicants. Small Bus. Loan Source, 361 F. Supp. 2d at 570. “To decline to
follow the guideline would, as this case aptly demonstrates, frustrate uniformity” by permitting
hospitals an exception to their primary road access by using a qualitative analysis to determine the
roads leading to and from the hospital. Id. Therefore, in considering the plain meaning of
“secondary roads” in § 1395i-4, the congressional purpose of providing uniformity to further the
4
The parties do not dispute that while § 1395i-4 does not specifically mention “primary
roads,” the language prescribing lesser distance requirements for “secondary roads” presupposes the
existence of “primary roads.” See, e.g., Am. Compl. ¶ 10, ECF No. 25; Def.’s Br. Supp. Mot. 4–5,
ECF No. 20.
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broad goal of CAH designation, and the legislative act of closing the “necessary provider” waiver,
the Court finds that the Secretary’s final decision to impose the distance requirement was reasonable.
The Court next addresses how primary roads were deemed as such within that reasonable
bright-line requirement. The parties do not dispute that CMS lacks specific agency expertise when
it comes to evaluating road conditions. See Def.’s Br. Supp. Mot. 18, ECF No. 20; Pl.’s Cross-Mot.
& Resp. Def.’s Mot. 11, ECF No. 22. The Secretary argues that while Defendants “do[] not have
the resources to conduct case-by-case analysis of road conditions for all CAH applications,” their
secondary road determinations “rely heavily on maps produced by state and federal transportation
authorities,” a reasonable source to bolster its goal of “establish[ing] eligibility criteria for CAHs”
to be consistently applied. Def.’s Resp. Pl.’s Cross-Mot. 13, ECF No. 26; see also DAB Final
Decision 4, ECF No. 18 (“CMS lack[s] the resources and capacity for making case-by-case
judgments about the driving characteristics of every stretch of highway in the United States” but
bases its judgments on “objective criteria”) (internal citations omitted). The Court, while not able
to engage in fact-finding or reweighing of the evidence in evaluating this judgment, finds that the
Secretary’s decision is supported by substantial evidence. See Roland, 2010 WL 70855, at *2
(holding that a court “may not reweigh the evidence or try the issues de novo or substitute its
judgment for that of the Secretary”). Combined with the congressional goal of promoting
uniformity, the Secretary reasonably utilized U.S. Geological Survey standards in order to enforce
its bright-line distance requirements.
Furthermore, the Court is unaware of similar challenges to the definition of “secondary road”
in federal court, and only one similar case facing agency review, which cited the Secretary’s final
reasoning in this case. See, e.g., Sai Kwan Wong v. Doar, 571 F.3d 247, 262 (2d Cir. 2009)
15
(“Finally, we note that [the SOM] has never faced a serious challenge in either federal or state court
. . . . That this aspect of [the SOM] has been challenged so infrequently is further evidence that the
rule is well-settled.”). Thus, while certainly not dispositive, the lack of similarly situated challenges
lends further support to the strength of the Secretary’s reasonableness.
The Court is sympathetic to Baylor’s position, as the Court is not presuming at this time that
another reasonable interpretation of § 1395i-4 exists that would allow Baylor to obtain CAH status.
However, reviewing the factual findings de novo is not within the purview of this Court. See
Roland, 2010 WL 70855, at *2. Here, the Secretary adopted “a different reasonable interpretation,
which should be given deference.” Cmty. Care, 537 F.3d at 551 n. 11; see also DAB Final Decision
at 5, ECF No. 18 (“The fact that CMS could have constructed other bright-line rules, using different
approaches, does not mean that the rule it chose to adopt is unreasonable.”). “[G]iven that the
Secretary’s interpretation is reasonable and consistent with statutory and regulatory requirements,
and given that we are dealing with a ‘complex and highly technical regulatory program,’” this Court
finds that the validity of CMS’s interpretation weighs in favor of granting deference to the
Secretary’s final decision. Id.
2.
Thoroughness and Consistency With Earlier and Later Pronouncements
The Secretary argued that CMS’s “July 2015 updates to the SOM[] demonstrate both
consistency and a thorough the [sic] analysis of the CAH distance provisions.” Def.’s Resp. Pl.’s
Cross-Mot. & Reply Mot. 14, ECF No. 26. The Court is not persuaded by this argument, as this case
was already pending when this guidance was published, and the guidance was published several
months after the Secretary’s final decision currently under review. See Original Compl., ECF No.
1 (filed March 13, 2015); see also Luminant Generation Co. v. U.S. E.P.A., 675 F.3d 917, 928 (5th
16
Cir. 2012) (quoting Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) (“Deference to
what appears to be nothing more than an agency’s convenient litigating position would be entirely
inappropriate.”)).
However, the Secretary cites additional evidence which supports granting the Secretary’s
final decision deference as to this point. First, the Court has already determined that CMS’s
imposition of a bright-line rule as to the definition of “primary road” was reasonable. See supra Part
III.B.1. Here, “[t]here is no evidence that the Secretary has ever interpreted the word[s] “[primary
roads or secondary roads],” as used in the [SOM], in a manner inconsistent with the interpretation
that [s]he advances here.” Doe, 552 F.3d at 82. Rather, as the Secretary notes, the SOM is published
on Defendants’ website and frequent amendments are announced in the Federal Register. Def.’s
Resp. Pl.’s Cross-Mot. & Reply Mot. 13, ECF No. 26. Furthermore, the SOM definition of “primary
roads” is applicable to all applicants. Id.
“Normally, greater deference is due to an interpretation that is not merely ad hoc . . . but is
applicable to all cases.” Doe, 552 F.3d at 81 (internal citations omitted); see also Landers, 545 F.3d
at 110. The consistent and several-year imposition of the SOM definition supports granting
deference to the Secretary’s final decision. See Doe, 552 F.3d at 82 (collecting cases).
3.
Expertise
This Court is “mindful of the Supreme Court’s repeated suggestion that HHS interpretations,
in particular, should receive more respect than the mine-run of agency interpretations.” Landers, 545
F.3d at 107 (citing Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)); Schweiker v. Gray
Panthers, 453 U.S. 34, 43 (1981)). In fact, “in cases such as those involving Medicare or Medicaid,
in which CMS, ‘a highly expert agency[,] administers a large complex regulatory scheme in
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cooperation with many other institutional actors, the various possible standards for
deference’—namely, Chevron and Skidmore—‘begin to converge.’” Landers, 545 F.3d at 107
(quoting Cmty. Health Ctr. v. Wilson-Coker, 311 F.3d 132, 138 (2d Cir. 2002) (recognizing the
“considerable deference” afforded to regulations concerning Medicare)). The Court additionally
notes that particularly in light of the enforcement of Medicare, “[e]xpertise . . . counsel[s] in favor
of honoring the Secretary’s interpretation.” Doe, 552 F.3d at 82; see also Landers, 545 F.3d at 107
(noting the high degree of expert knowledge required to run programs such as Medicare and
Medicaid). “Indeed, the Secretary is charged with determining whether and when” a given hospital
meets CAH qualifications. Doe, 552 F.3d at 82; § 1395i-4.
The Court has already determined that CMS employed reasonable resources to aid in its
determination of what constitutes a primary or secondary road, which aids in its broader goal of
promoting effect rural health care through determining which hospitals meet CAH standards. See
supra Part III.B.1. “Thus, the area in which the disputed interpretation operates is within the
heartland of the Secretary’s expertise” in furthering its purpose,” and the Court finds that this factor
weighs in favor of granting deference to the Secretary’s final decision. Doe, 552 F.3d at 82.
For all of the aforementioned reasons, the Court finds that the Skidmore factors counsel the
Court to grant deference to the Secretary’s final decision, as it is supported by substantial evidence
and lacks any clear error of law. The Court therefore concludes that no genuine dispute as to any
material fact exists, and that judgment as a matter of law is appropriate in favor of Defendants.
Accordingly, Defendants’ Motion for Summary Judgment is GRANTED, and Plaintiff’s CrossMotion for Summary Judgment is DENIED.
IV.
CONCLUSION
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Based on the foregoing, Defendant’s Motion for Summary Judgment (ECF No. 19) is
GRANTED. Plaintiff’s Cross-Motion for Summary Judgment (ECF No. 21) is DENIED. A
Final Judgment will issue separately.
SO ORDERED on this 19th day of February, 2016.
_____________________________________
Reed O’Connor
UNITED STATES DISTRICT JUDGE
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