Respondents Brief — Xavier Becerra, Secretary of Health and Human Services, Petitioner v. Empire Health Foundation, for Valley Hospital Medical Center

NO. 20-1312

In the

Supreme Court of the United States

________________

XAVIER BECERRA,

SECRETARY OF HEALTH AND HUMAN SERVICES,

Petitioner,

v.

EMPIRE HEALTH FOUNDATION, FOR VALLEY

HOSPITAL MEDICAL CENTER,

________________

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

________________

BRIEF IN OPPOSITION

________________

Anne M. Voigts

Matthew V.H. Noller

KING & SPALDING LLP

601 S. California Avenue

Suite 100

Palo Alto, CA 94304

(650) 422-6700

avoigts@kslaw.com

mnoller@kslaw.com

Daniel J. Hettich

Counsel of Record

KING & SPALDING LLP

1700 Pennsylvania Ave. NW

Washington, DC 20006

(202) 626-9128

dhettich@kslaw.com

Counsel for Respondent

May 19, 2021

QUESTION PRESENTED

Congress mandated in the Medicare statute that

any hospital serving a “significantly disproportionate

number of low-income patients” is entitled to

additional payments for treating them. Accordingly,

Congress directed the Secretary of Health and Human

Services to calculate a disproportionate share hospital

adjustment by using two fractions: (1) the percentage

of a hospital’s patient days attributable to individuals

“entitled to benefits under [Medicare] part A” and

“entitled to supplemental-security-income benefits”

(the “Medicare fraction”); and (2) the percentage of a

hospital’s patient days attributable to individuals

“eligible” for Medicaid coverage but not “entitled to

benefits under [Medicare] part A” (the “Medicaid

fraction”). 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I)-(II).

After HHS promulgated a prior rule narrowly

defining who was “eligible for Medicaid” under the

Medicaid fraction, four circuit courts concluded that

rule conflicted with the statute because it improperly

equated being merely “eligible” for benefits with being

“entitled” to them. HHS then promulgated a new rule

addressing the Medicare fraction set forth in the same

statutory provision. That new rule equated “entitled”

with “eligible.”

The question presented is:

Does 42 U.S.C. § 1395ww(d)(5)(F) preclude HHS

from equating being “eligible” for benefits with being

“entitled” to such benefits?

ii

CORPORATE DISCLOSURE STATEMENT

Empire Health Foundation Medical Center is not

a publicly traded company. It has no parent company

and no company owns 10% or more its stock.

iii

TABLE OF CONTENTS

QUESTION PRESENTED .......................................... i

CORPORATE DISCLOSURE STATEMENT ............ ii

TABLE OF AUTHORITIES ...................................... iv

BRIEF IN OPPOSITION ........................................... 1

STATEMENT ............................................................. 5

A. Statutory and Regulatory Background ....... 5

B. The Sixth and D.C. Circuit Decisions ........ 11

C. The Ninth Circuit Decision ........................ 13

REASONS FOR DENYING HHS’S PETITION ...... 14

I.

The Decision Below Is Correct Because HHS’s

Interpretation Conflicts With the Plain

Language of the Statute .................................... 15

II. There Is No Clean Circuit Split on the

Question Presented ........................................... 21

A. HHS’s Position Before This Court Is Not

the One It Advanced Before the Ninth,

D.C., and Sixth Circuits ............................. 22

B. Even if Review Could Be Warranted at

Some Point, It Isn’t Warranted Now ......... 25

III. Additional Reasons Warrant Denial of HHS’s

Petition............................................................... 27

IV. HHS’s Concerns About the Administration of

Medicare Are Unfounded .................................. 29

CONCLUSION ......................................................... 32

iv

TABLE OF AUTHORITIES

Cases

Alhambra Hosp. v. Thompson,

259 F.3d 1071 (9th Cir. 2001)............................ 5, 11

Allina Health Servs. v. Sebelius,

746 F.3d 1102 (D.C. Cir. 2014) .............................. 11

Azar v. Allina Health Servs.,

139 S. Ct. 1804 (2019)...................................... 11, 17

Bartlett Mem’l Med. Ctr., Inc. v. Thompson,

347 F.3d 828 (10th Cir. 2003)................................ 29

Cabell Huntington Hosp., Inc. v. Shalala,

101 F.3d 984 (4th Cir. 1996).................... 7, 8, 17, 27

Catholic Health Initiatives

Iowa Corp. v. Sebelius,

718 F.3d 914 (D.C. Cir. 2013) ........................ passim

Chevron U.S.A. Inc. v. Nat. Res. Def. Council,

467 U.S. 837 (1984)................................ 3, 11, 23, 24

Deaconess Health Servs. Corp. v. Shalala,

83 F.3d 1041 (8th Cir. 1996),

aff’g, 912 F. Supp 438 (E.D. Mo. 1995) ............. 7, 27

Grant Med. Ctr. v. Hargan,

875 F.3d 701 (D.C. Cir. 2017) .......................... 30, 31

In Re Medicare Reimbursement Litig.,

414 F.3d 7 (D.C. Cir. 2005) .................................... 29

Jewish Hosp., Inc. v. HHS,

19 F.3d 270 (6th Cir. 1994)............................ 7, 8, 11

Leavitt v. Baystate Health Systems,

547 U.S. 1054 (2006).............................................. 29

v

Legacy Emanuel Hosp.

& Health Ctr. v. Shalala,

97 F.3d 1261 (9th Cir. 1996).......................... 7, 8, 11

Long Island Care at Home, Ltd. v. Coke,

551 U.S. 158 (2007)................................................ 28

Metro. Hosp. v. HHS,

712 F.3d 248 (6th Cir. 2013)...................... 11, 12, 22

Mohasca Corp. v. Silver,

447 U.S. 807 (1980)................................................ 17

Motor Vehicle Mfrs. Ass’n

v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 52 (1983) ...................................... 12, 25

Ne. Hosp. Corp. v. Sebelius,

657 F.3d 1 (D.C. Cir. 2011) .............................. 17, 26

Portland Adventist Med. Ctr. v. Thompson,

399 F.3d 1091 (9th Cir. 2005)............................ 5, 11

Samaritan Health Ctr. v. Heckler,

636 F. Supp. 503 (D.D.C. 1985) ............................... 6

Sosa v. Alvarez-Machain,

542 U.S. 692 (2004)................................................ 16

Statutes

5 U.S.C. § 553(b) ....................................................... 28

42 U.S.C. § 1395d(a) ................................................. 18

42 U.S.C. § 1395ff(f)(2)(B) ........................................ 31

42 U.S.C. § 1395oo(f)(1) ............................................ 30

42 U.S.C. § 1395ww(d)(5)(C) ...................................... 6

42 U.S.C. § 1395ww(d)(5)(F) ............................ passim

42 U.S.C. § 1396u-2(a)(2)(A)(i) ................................. 18

vi

Deficit Reduction Act of 1984,

Pub. Law No. 98-369, 98 Stat. 494.......................... 6

Cal. Code Regs. tit. 22, § 50179.7(a) ........................ 11

Wash. Admin. Code § 182-510-0001 ........................ 11

Regulations

42 C.F.R. § 412.106(b)(2) (2003)............................... 19

48 Fed. Reg. 234 (Jan. 3, 1984) .................................. 6

68 Fed. Reg. 27,154 (May 19, 2003) ........................... 8

69 Fed. Reg. 48,916 (Aug. 11, 2004)..................... 3, 10

75 Fed. Reg. at 50,042 (Aug. 16, 2010) .................... 20

Other Authorities

2A N. Singer, Statutes and Statutory

Construction (6th rev. ed. 2000)............................ 17

Brief for Appellants Cross-Appellees,

Metro. Hosp. v. HHS,

712 F.3d 248 (6th Cir. 2013)

(Nos. 11-2465, 11-2466), 2012 WL 988895 ..... 12, 23

Final Brief for Appellant Kathleen Sebelius,

Catholic Health Initiatives

Iowa Corp. v. Sebelius,

718 F.3d 914 (D.C. Cir. 2013)

(No. 12-5092), 2012 WL 4849174 .................... 12, 23

Final Reply Brief for Appellant

Kathleen Sebelius, Catholic Health

Initiatives Iowa Corp. v. Sebelius,

718 F.3d 914 (D.C. Cir. 2013)

(No. 12-5092), 2012 WL 4849175 .......................... 27

H.R. Rep. No. 99-241 (1985),

as reprinted in 1986 U.S.C.C.A.N. 579 ................... 6

vii

HHS,

CMS Ruling No. 1498-R2 (Apr. 22, 2015) ............. 31

HHS,

HCFA Ruling No. 97-2 (Feb. 27, 1997) ................... 8

Pet. for Writ of Cert.,

Leavitt v. Baystate Health Sys.,

547 U.S. 1054 (2006) (No. 05-936) ........................ 30

Samaritan Health Ctr. v. Heckler,

No. 85-0464, Medicare and Medicaid Guide

(CCH) ¶ 35,853 (Sept. 26, 1986) .............................. 6

BRIEF IN OPPOSITION

This Court should deny HHS’s petition for

certiorari contesting the Ninth Circuit’s unanimous

decision upholding Respondent Empire Health’s

challenge to the rule governing how HHS does its

annual calculation of the disproportionate share

hospital (“DSH”) adjustment. HHS contends that

review is warranted because the Ninth Circuit’s

decision was incorrect, there is a split between that

Circuit and two others, and allowing the Ninth

Circuit’s decision to stand will create a “balkanized”

approach to DSH calculations. None of those reasons

warrant review here.

First, the Ninth Circuit got it right: because the

statute precludes equating “eligible” with “entitled,” it

also precludes equating “entitled” with “eligible.” The

HHS rule at issue violates that obvious rule of

statutory interpretation.

The DSH adjustment increases a hospital’s

annual Medicare inpatient services reimbursement

based on how many low-income patients the hospital

serves. In determining which hospitals qualified for

this adjustment and how much the adjustment would

be, Congress ordered HHS to calculate: (1) what

proportion of the hospital’s “patients who (for such

days) were entitled to benefits under [Medicare] part

A” were also “entitled” to Supplemental Security

Income (“SSI”) (the Medicare fraction), and (2) what

proportion of the hospital’s non-Medicare patients

were “eligible for [Medicaid]” (the Medicaid fraction).

The purpose of this provision was to ensure that those

hospitals that served a disproportionately large

2

number of indigent patients got a corresponding

increase in reimbursement for doing so.

Congress’s purpose, however, has not been

reflected in HHS’s practices. To the contrary, HHS’s

rules have consistently (and impermissibly) sought to

reduce the payments to which such hospitals are

entitled. First, HHS took on the Medicaid fraction,

contending that only patients with an absolute right

to have their services paid for by Medicare or Medicaid

would be considered “entitled to [Medicare]” or

“eligible for [Medicaid]” respectively. This reduced the

number of patients who would be considered “eligible

for [Medicaid]” and, as a result, reduced the DSH

reimbursement to which hospitals were entitled. But

four circuit courts held that HHS’s position that only

those with a right to Medicaid payment were “eligible

for [Medicaid]” violated the DSH statute because HHS

was assigning the more restrictive meaning of the

word “entitled” to the word “eligible.”

HHS then sought to reach the same result by a

slightly different route. This time, it promulgated a

rule that addressed the Medicare fraction. Again

disregarding Congress’s deliberate choice of two

different words to reflect two different concepts, the

new rule concluded that “entitled” in the phrase

“entitled to benefits under part A” meant the same

thing as “eligible”—thus not requiring a right to

payment. At the same time, HHS continued to

interpret the word “entitled” in the phrase “entitled to

[SSI]” in the same statutory sentence to require actual

receipt of payment. Put differently, after courts ruled

that, under the statute, “eligible” and “entitled” were

not the same for purposes of the Medicaid fraction,

3

HHS promulgated a rule that “entitled” and “eligible”

were the same—but in only one of the two places the

word “entitled” appears in the Medicare fraction. That

makes no sense: if X does not equal Y, Y cannot equal

X.

Faced with that illogic, the Ninth Circuit correctly

vacated a portion of 69 Fed. Reg. 48,916, 49,098-99

(Aug. 11, 2004) (the “2005 Rule”) because it conflicted

with 42 U.S.C. § 1395ww(d)(5)(F)(vi)’s unambiguous

text. That was the right result. To uphold the 2005

Rule would require treating different words in the

same statutory provision as if they are the same—and

the same words as if they are different. Nothing in the

statutory text supports such a result—in fact,

Congress’s deliberate use of different words to mean

different things precludes it.

Second, while both the Ninth Circuit’s opinion

and the decisions on which HHS relies in asserting a

circuit split turned on the application of Chevron

U.S.A. Inc. v. Natural Resources Defense Council, 467

U.S. 837 (1984), HHS doesn’t so much as cite Chevron

in its argument for review here. And while HHS

implicitly frames the Question Presented in terms of

Chevron step two by asking whether it “permissibly”

interpreted the DSH statute, this case never got to

that step. In short, HHS is asking this Court to decide

a Chevron step two question in a case decided at

Chevron step one, all without actually relying on

Chevron. Perhaps HHS is wary of putting the

continuing vitality or contours of Chevron before the

Court. But HHS can hardly expect the Court to grant

certiorari to decide a Chevron step two question

without considering whether Chevron even applies.

4

Certiorari is all the more unwarranted because

the argument HHS presents before this Court—

namely, that it is appropriate to equate “entitled” to

“eligible” because the canon that different words carry

different meanings is just a “rule of thumb” that “has

little weight” here, Pet.30—is the opposite of what it

argued before the Ninth Circuit. See, e.g., USA Resp.Reply Br. at 31 (9th Cir. Dkt. No. 30) (“[t]he Secretary

… does not conflate the terms ‘entitled’ and ‘eligible’ in

the Medicare DSH provision”) (emphasis added).

Indeed, no court has explicitly endorsed HHS’s

current argument that “entitled” means the same

thing as “eligible.”

An additional reason to deny HHS’s petition is

that endorsing HHS’s new and untenable argument

would not even necessarily change the outcome of this

case. As the district court below held, there is an

independent reason to invalidate HHS’s 2005 Rule: it

was adopted through inadequate notice and comment

rulemaking. The Ninth Circuit reversed that holding,

but the procedural invalidity of the rule is bound up

with the question on which HHS seeks certiorari, so

the Court should grant Empire Health’s conditional

cross-petition if it grants HHS’s petition.

Finally, HHS’s petition is conspicuously light on

why this Court’s review is needed: it devotes only a

single page to the supposed consequences of allowing

the Ninth Circuit’s decision to stand. And the primary

concern HHS raises in its brief discussion, namely,

potential “balkaniz[ation]” of how the DSH

adjustment is calculated, rings hollow. Having

different Medicare reimbursement rules apply in

different jurisdictions is hardly unprecedented and,

5

indeed, is the logical outcome of a congressional

scheme that expressly allows hospitals to bring

Medicare reimbursement appeals in different venues.

For all these reasons, the Court should deny the

petition for certiorari.

STATEMENT

A. Statutory and Regulatory Background

Because hospitals that treat a disproportionate

share of indigent patients incur higher costs, 42 U.S.C.

§ 1395ww(d)(5)(F)(vi)(II) requires HHS to provide an

upward adjustment to the routine Medicare payments

made to those hospitals. HHS’s practices have

historically been at odds with that legislative mandate

and purpose.

1. Both courts and Congress have noted HHS’s

“hostility” toward the congressionally mandated DSH

payments, and yet, despite repeated correction by both

Congress and federal courts, that hostility has

continued largely unabated from the enactment of the

DSH adjustment until today. Alhambra Hosp. v.

Thompson, 259 F.3d 1071, 1076 n.4 (9th Cir. 2001);

Portland Adventist Med. Ctr. v. Thompson, 399 F.3d

1091, 1099 (9th Cir. 2005) (“This appears to be the

latest in a series of cases in which the Secretary has

refused to implement the DSH provision in conformity

with the intent behind the statute”).

In 1983, when Congress first implemented the

prospective payment system, it commanded HHS to

include a DSH adjustment but left it to HHS’s

discretion to determine how that adjustment would be

calculated. See former Section 1886(d)(5)(C)(i) of the

Social Security Act, formerly codified at 42 U.S.C.

6

§ 1395ww(d)(5)(C)(1). HHS, however, determined

that “[no] adjustment [was] warranted.” 48 Fed. Reg.

234, 276 (Jan. 3, 1984). In response, Congress

intervened a second time, commanding HHS to

“develop and publish a definition of ‘hospitals that

serve a significantly disproportionate number of

patients who have low income’” by December 31, 1984.

Deficit Reduction Act of 1984, Pub. Law No. 98-369,

§ 2315(h), 98 Stat. 494, 1080. After that deadline

came and went with no action from HHS, a court

ordered the Secretary to comply with the

congressional mandate. Samaritan Health Ctr. v.

Heckler, 636 F. Supp. 503 (D.D.C. 1985).

Adding a court order to the congressional

mandate had little effect. Faced with HHS’s continued

argument that no DSH adjustment was required,

despite the plain language of the statute and its own

order, the Samaritan court found it necessary “to

remind [HHS’s] responsible associates of their

continuing obligation to carry out congressional

mandates and court orders.” Samaritan Health Ctr.

v. Heckler, No. 85-0464, Medicare and Medicaid Guide

(CCH) ¶ 35,853 (Sept. 26, 1986). Meanwhile, the

House Ways and Means Committee issued a report

explaining that HHS’s “total lack of responsiveness” to

“implement a disproportionate share adjustment in

any meaningful way,” “[d]espite several mandates in

the law,” had “forced the Committee to go to the

considerable length of mandating a specific

adjustment to the PPS System to provide additional

payments to disproportionate share hospitals.”

H.R. Rep. No. 99-241, Pt. 1, at 16 (1985), as reprinted

in 1986 U.S.C.C.A.N. 579, 594.

7

2. In direct response to HHS’s refusal to develop

a methodology for calculating DSH adjustments,

Congress enacted Section 1395ww(d)(5)(F)(vi)(II). See

id. That section commands HHS to calculate two

factors to determine which hospitals will receive DSH

adjustments and what those adjustments will be:

(1) what proportion of the hospital’s “patients who (for

such days) were entitled to benefits under [Medicare]

part A” were also “entitled” to SSI (the Medicare

fraction), and (2) what proportion of a hospital’s nonMedicare patients, i.e., patients who are not “entitled

to benefits under [Medicare] part A,” were “eligible for

[Medicaid]” (the Medicaid fraction). Id.

a. HHS’s obstructionism continued unabated.

HHS initially contended that only patients with an

absolute right to have their services paid for by

Medicare or Medicaid would be considered “entitled to

[Medicare]” or “eligible for [Medicaid],” respectively.

This reduced the number of patients who would be

considered “eligible for [Medicaid]” and, as a result,

reduced the DSH reimbursement to which hospitals

were entitled. But four different circuit courts,

including the Ninth Circuit, rejected HHS’s position

that only those with a right to Medicaid payment

during their inpatient stay are “eligible for

[Medicaid],” finding that the statute precluded such a

reading. Legacy Emanuel Hosp. & Health Ctr. v.

Shalala, 97 F.3d 1261, 1266 (9th Cir. 1996); see also

Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d

984, 987-88 (4th Cir. 1996); Deaconess Health Servs.

Corp. v. Shalala, 83 F.3d 1041 (8th Cir. 1996) (per

curiam), aff’g, 912 F. Supp 438, 447 (E.D. Mo. 1995);

Jewish Hosp., Inc. v. HHS, 19 F.3d 270, 275 (6th Cir.

1994).

8

In so doing, all four circuits contrasted Congress’s

use of “entitled” in the Medicare context with “eligible”

in the Medicaid context.

As Legacy Emanuel

explained, “the use of the broader word ‘eligible’

indicates a meaning different from ‘entitlement,’

which means ‘the absolute right to … payment.’” 97

F.3d at 1265 (quoting Jewish Hosp., 19 F.3d at 275);

see also Cabell Huntington, 101 F.3d at 987-88 (“the

Secretary would have us read the word ‘eligible’ in the

Medicaid proxy to mean exactly the same thing as the

word ‘entitled’ .... To do so, we would have to violate

both a clear canon of statutory construction, and the

plain meaning of the two terms.”).

After four losses, HHS capitulated, recognizing,

consistent with the statute, that patients meeting

Medicaid eligibility criteria are “eligible for Medicaid”

whether or not Medicaid actually made payments on

their behalf for their inpatient stay. HHS, HCFA

Ruling No. 97-2, at 3-4 (Feb. 27, 1997).

b. Having been told that the statute precluded

interpreting “eligible” to mean “entitled” in the context

of the Medicaid fraction, HHS then tried to interpret

“entitled” to mean “eligible” in the context of the

Medicare fraction.

In a Notice of Proposed

Rulemaking for Federal Fiscal Year 2004, HHS

addressed the meaning of the statutory phrase

“entitled to benefits under [Medicare] part A.” 68 Fed.

Reg. 27,154, 27,154 (May 19, 2003); 42 U.S.C.

§ 1395ww(d)(5)(F)(i)(I).

As set forth in Empire Health’s conditional crosspetition for certiorari, that notice had a problem.

Cross-Pet.7. It claimed that HHS’s current policy was

to include patients who had exhausted their Medicare

9

Part A benefits in the Medicare fraction, when in fact

its current policy was to exclude such days from the

Medicare fraction. Id. HHS proposed to “begin” to

exclude exhausted benefit days from the Medicare

fraction, but it miscategorized this proposal as a

change in policy when it was actually a continuation

of existing policy. Id.

Although HHS had been informed of its errors

and formally addressed the public on two subsequent

occasions regarding its proposal, it did not correct

those misstatements until a few days before the end of

the second and final notice-and-comment period, when

it issued a correction on its website. Cross-Pet.8-10.

Despite widespread confusion among commenters

(nearly all of whom took HHS’s statement regarding

the status quo at face value in the submission of their

comments) and requests for additional time to

comment, HHS did not extend the time for comments.

Id. at 10. Instead, HHS issued a final rule that was

radically different from its current policy—the

opposite of what it had proposed—and that decreased

the amount of DSH payments for most hospitals. Id.

at 11.

Under this 2005 Rule, 1 HHS deemed patients

“entitled to benefits under [Medicare]” regardless of a

right to Medicare payments on their behalf. In other

words, patients would be considered “entitled to

benefits under part A” even after having exhausted

1 HHS sometimes refers to this as the “2004 regulation,” e.g.,

Pet.9 & n.3, 10, 11, presumably because it was finalized on

August 11, 2004. But because it was effective for federal fiscal

year 2005, Empire Health calls it the “2005 Rule,” as did the

Ninth Circuit below.

10

their part A benefits. 69 Fed. Reg. at 49,098. In

equating “entitled” with “eligible,” HHS once again

sought to treat those two different words as if they

were the same.

The effect of this amended rule, like HHS’s prior

DSH policies that courts and Congress rejected, is to

once again significantly decrease the number of

hospitals receiving DSH payments and the amount of

those payments by undercounting the indigent

patients those hospitals serve. That is because the

Medicaid fraction encompasses only non-Medicare

patients who are eligible for Medicaid. The broader

the pool of those “entitled to [Medicare],” the fewer

those “eligible for [Medicaid].” Meanwhile, HHS

defined those who are considered indigent for

purposes of the Medicare fraction, that is, those who

are “entitled to [SSI] benefits,” extremely narrowly—

encompassing only those who both have an absolute

right to SSI benefits and actually receive those

benefits. For example, HHS’s policy excludes from the

definition of “entitled to [SSI] benefits” patients who

have their SSI benefits applied to offset other debts,

patients whose SSI checks are returned as

undeliverable, and patients who decline direct deposit

of their SSI benefits. Empire Reply Br. at 16 (9th Cir.

Dkt. No. 40)

In short, HHS’s 2005 Rule required all indigent

patients with exhausted Medicare benefits to be

removed from the Medicaid fraction and added only a

small portion of them back to the Medicare fraction. 2

2 There are other reasons, besides HHS’s remarkably narrow

definition of SSI entitlement, that hospitals tend to have many

more patients that are “eligible for Medicaid” than are “entitled

11

That 2005 Rule (and the policy underlying it) are

part and parcel of HHS’s ongoing hostility to the

congressionally-mandated DSH adjustment. See, e.g.,

Jewish Hosp., 19 F.3d at 276 (finding “credible and

compelling” evidence of HHS “hostil[ity] to the concept

of the disproportionate share adjustment”); see also

Alhambra Hosp., 259 F.3d at 1076 n.4 (noting

“Secretarial ‘hostility to [DSH]’”); Portland Adventist

Med. Ctr., 399 F.3d at 1099 ; Legacy Emanuel, 97 F.3d

at 1265-66; Azar v. Allina Health Servs., 139 S. Ct.

1804 (2019); Allina Health Servs. v. Sebelius, 746 F.3d

1102, 1106 (D.C. Cir. 2014).

B. The Sixth and D.C. Circuit Decisions

Before this case, two other circuits rejected

challenges to the 2005 Rule. In those decisions, the

Sixth and D.C. Circuits applied the two-step

framework from Chevron U.S.A. Inc. v. Natural

Resources Defense Council, 467 U.S. 837 (1984), to

hold that the 2005 Rule was a reasonable

interpretation

of

Section 1395ww(d)(5)(F)(vi).

Catholic Health Initiatives Iowa Corp. v. Sebelius, 718

F.3d 914 (D.C. Cir. 2013); Metro. Hosp. v. HHS, 712

F.3d 248 (6th Cir. 2013).

In both cases, HHS defended the 2005 Rule under

Chevron, something it does not do in this petition.

Specifically, HHS argued that the text of

Section 1395ww(d)(5)(F)(vi) either required the 2005

Rule’s interpretation of “entitled to benefits under

to SSI.” For example, the majority of states grant automatic

Medicaid eligibility to patients enrolled for SSI benefits, see, e.g.,

Wash. Admin. Code § 182-510-0001; Cal. Code Regs. tit. 22,

§ 50179.7(a), but there is no automatic SSI entitlement for

Medicaid recipients.

12

Part A” or was, at a minimum, ambiguous. Final Brief

for Appellant Kathleen Sebelius at 20-30, Catholic

Health, 718 F.3d 914 (No. 12-5092), 2012 WL 4849174;

Brief for Appellants Cross-Appellees at 19-24, Metro.

Hosp., 712 F.3d 248 (Nos. 11-2465, 11-2466), 2012 WL

988895.

And, HHS argued, if the statute was

ambiguous, the 2005 Rule’s interpretation was

reasonable. Final Brief for Appellant Kathleen

Sebelius at 20-30, Catholic Health; Brief for

Appellants Cross-Appellees at 23-24, Metro. Hosp.

The Sixth and D.C. Circuits both rejected HHS’s

argument that the DSH statute unambiguously

requires the 2005 Rule, concluding that “entitled to

benefits under part A” is ambiguous. Catholic Health,

718 F.3d at 920; Metro. Hosp., 712 F.3d at 261-62. In

reaching this conclusion, both courts heavily engaged

with their own earlier precedent interpreting the

statute.

Having concluded that the DSH statute was

ambiguous, the Sixth and D.C. Circuits then found

that the 2005 Rule’s interpretation of “entitled to

benefits under part A” was reasonable under Chevron.

Catholic Health, 718 F.3d at 920; Metro. Hosp., 712

F.3d at 265-70. Neither court considered whether the

2005 Rule satisfied notice-and-comment requirements

or whether the irregularities in HHS’s rulemaking

process rendered its interpretation of the DSH statute

unreasonable. See Motor Vehicle Mfrs. Ass’n v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52, 55 (1983)

(holding that an agency policy will be considered

“arbitrary and capricious,” and not “reasonable,” if the

agency

failed

to

engage

in

“reasoned

decisionmaking”).

13

C. The Ninth Circuit Decision

Empire Health brought a procedural and

substantive challenge to the 2005 Rule’s change to the

regulatory definition of the statutory phrase “entitled

to benefits under [Medicare]” from the right to receive

Medicare payment to simply “me[eting] the statutory

criteria to qualify as Medicare beneficiaries regardless

of whether Medicare paid the hospital.” USA Resp.Reply Br. at 8 (9th Cir. Dkt. No. 30). The district court

struck down the rule on procedural grounds, finding

that HHS’s misstatement regarding the status quo

deprived parties of a meaningful opportunity to

comment. See ER 50 (9th Cir. Dkt. No. 16) (explaining

that it was unclear “[w]hich policy [commenters were]

advocating, the policy that the Secretary actually

maintained at the time or the policy that the Secretary

inaccurately stated that it maintained”).

While

acknowledging HHS’s notice and comment process

was “certainly not perfect,” the Ninth Circuit

disagreed with the district court, holding it sufficient

under the Administrative Procedure Act (“APA”).

App.14a.

Because, however, the Ninth Circuit found that

“the 2005 Rule violated the unambiguous text of 42

U.S.C. § 1395ww(d)(5)(F)(vi) and our court’s ruling in

Legacy Emanuel,” it upheld the district court’s vacatur

of the 2005 Rule. App.22a. Since Legacy Emanuel

held that “eligible” cannot mean “entitled,” the panel

held, “entitled” cannot mean “eligible.” App.18a-21a.

The panel’s decision, therefore, stands for the

irrefutable truth that if X does not equal Y, Y cannot

equal X.

14

The Ninth Circuit denied HHS’s petition for

rehearing en banc, with “no judge … request[ing] a

vote on whether to rehear the matter.” App.84a-85a.

REASONS FOR DENYING HHS’S PETITION

HHS contends that this Court should grant

certiorari because the Ninth Circuit’s decision was

wrong, there is a direct conflict with the decisions of

two other courts of appeals, and the decision, if left

unreviewed, could result in balkanization. Not so.

First, the Ninth Circuit got it right. This case

involved the straightforward application of the

principle that the same words in a single statutory

provision mean the same thing—and that different

words mean different things. These principles of

statutory interpretation are well understood, were

correctly applied, and do not need further clarification

from this Court. Indeed, in its briefing before the

Ninth Circuit, HHS explicitly disavowed the

argument it advances here that “entitled” and

“eligible” should be given the same meaning. Compare

Pet.30 with USA Resp.-Reply Br. at 30-31 (9th Cir.

Dkt. No. 30).

Second, the decision below and the two other

decisions HHS relies upon in asserting a circuit split

all turned on the application of Chevron, yet HHS

doesn’t so much as cite Chevron in arguing for review.

Furthermore, HHS asks this court to decide whether

HHS’s interpretation of “entitled” is “permissib[e],” an

implicit Chevron step two question, in a case that

decided the issue at Chevron step one (and, as noted

above, all without explicitly arguing that Chevron

applies).

15

This case (and the underlying split) also don’t

warrant review because the courts all relied heavily

on interpretations of their own prior precedents rather

than performing independent and in-depth statutory

analysis (and none of them were faced with the

argument that HHS now advances before this Court).

Given HHS’s contention that the Ninth Circuit’s

decision is geographically limited, it would therefore

be prudent for the Court to wait for another circuit,

without complicating prior precedent, to provide a

thorough statutory analysis and to address the novel

position HHS now takes before deciding this question

of statutory interpretation.

Third, deciding HHS’s question presented may

have no practical effect because there are alternative

grounds for invalidating HHS’s 2005 Rule. HHS’s

2005 Rule should be invalidated in any event because

it was not promulgated through proper and notice and

comment rulemaking. See Cross-Pet.

For all these reasons, HHS’s petition should be

denied.

I.

The Decision Below Is Correct Because

HHS’s Interpretation Conflicts With the

Plain Language of the Statute

HHS dedicates most of its argument in favor of

granting certiorari to contending that the “decision

below is incorrect.” Pet.18-33. The primary question

at the certiorari stage, however, is not whether the

lower court got it wrong, but whether there is a

compelling need for this Court’s intervention. A brief

in opposition is not, therefore, the place for a full

defense of the merits of the decision below. But even

a distilled version of that merits defense makes it clear

16

that even if error correction could be a sufficient

reason for certiorari in some circumstances, there was

no error here.

1. As a threshold matter, the argument HHS

makes now that “entitled” should be interpreted to

mean “eligible” is not the argument HHS made below.

Indeed, HHS explicitly denied that its position

equated the word “entitled” with the word “eligible.”

See USA Reply Br. at 30-31 (9th Cir. Dkt. No. 30)

(“Contrary to plaintiff’s contention[] …, under the

Secretary’s interpretation, the phrase ‘entitled to

benefits under part A’ in the DSH provision does not

mean the same thing as “eligible for benefits under

part A”); see also id. at 31 (“[t]he Secretary … does not

conflate the terms “entitled” and “eligible” in the

Medicare DSH provision”). Surely before asking this

Court to consider its arguments in favor of equating

“entitled” with “eligible,” HHS should have first

presented that argument to the Ninth Circuit instead

of erroneously arguing that its policy still drew some

distinction between the two terms.

2. Even if this Court overlooks this significant

procedural flaw, HHS’s argument fares no better

when considered on the merits. HHS’s contention that

the Ninth Circuit’s straightforward application of a

basic canon of statutory interpretation—that different

words have different meanings (especially when, as

here, used within the same statutory provision)—

requires this Court’s clarification is implausible on its

face. See Sosa v. Alvarez-Machain, 542 U.S. 692, 711

n.9 (2004) (citing the “rule that ‘when the legislature

uses certain language in one part of the statute and

different language in another, the court assumes

17

different meanings were intended’”) (quoting 2A N.

Singer, Statutes and Statutory Construction § 46:06,

p. 194 (6th rev. ed. 2000)). This Court recently

emphasized the corollary of this canon in considering,

and rejecting, HHS’s attempt to interpret “entitled to

benefits under part A” as encompassing patients who

had enrolled in a Medicare managed care plan under

Medicare Part C without proper notice and comment

rulemaking. Azar v. Allina Health Servs., 139 S. Ct.

1804, 1812 (2019) (“the government fails to offer any

good reason or evidence to unseat our normal

presumption that, when Congress uses a term in

multiple places within a single statute, the term bears

a consistent meaning throughout”); Mohasca Corp. v.

Silver, 447 U.S. 807, 826 (1980) (explaining that

adhering to the canon—that the same words bear the

same meaning—“is the best guarantee of evenhanded

administration of the law”).

HHS tries to get around this by contending that

when Congress used the terms “entitled” and “eligible”

in the DSH provision, it was merely “borrowing these

terms from elsewhere in the statute,” where they are

used differently, and that those different meanings

should be imported into this particular provision.

Pet.30 (quoting Ne. Hosp. Corp. v. Sebelius, 657 F.3d

1, 13 (D.C. Cir. 2011) and citing Cabell Huntington,

101 F.3d at 992 (Luttig, J., dissenting)). But four

different circuit courts rejected similar arguments

that the statute allowed HHS to equate “eligible” and

“entitled,” citing the canon that different words have

different meanings. See, e.g., Cabell Huntington, 101

F.3d 987-88 (refusing to “violate … a clear canon of

statutory construction, and the plain meaning of the

two terms” by equating eligible and entitled).

18

In any event, HHS’s argument that these

purportedly borrowed terms have clear and consistent

meanings throughout the statute as a whole doesn’t

hold up. As an initial matter, HHS cites ambiguous

statutory provisions that aren’t even in the Medicare

statute. 3 Provisions that are in the Medicare statute

don’t support HHS’s argument. For example, HHS

ignores a statutory provision in the Medicare statute

that links “entitlement” to “payment”: “The benefits

provided to an individual ... under [Part A] shall

consist of entitlement to have payment made on his

behalf.” See 42 U.S.C. § 1395d(a) (emphasis added).

And notwithstanding HHS’s claim that Congress

consistently distinguished between eligibility and

entitlement and that this warrants attributing

different meanings to the same words in the same

statutory provision, Congress often refers to SSI

eligibility, e.g., 42 U.S.C. § 1396u-2(a)(2)(A)(i) (a

“[s]tate may not require … the enrollment in a

managed care entity of an individual under 19 years

of age who … is eligible for supplemental security

income”), yet referred to SSI entitlement in the DSH

statute. This indicates that Congress did not merely

“borrow” words from other places in the statute but

consciously chose them.

Finally, none of the statutory or regulatory

provisions HHS cites include the phrase “for such

days” or use the terms “entitled” in contrast to

“eligible,” even though both of those features of the

DSH

statutory

language

are

essential

to

3 Sections 426(a) and (b) (see Pet.21) are contained in Title II,

pertaining to social security disability benefits. The Medicare

statute is found in Title XVIII.

19

understanding what “entitled” means in the DSH

context and differentiate the DSH provision from

others. By using both “entitled” and “eligible” in the

same provision, Congress made it clear that “entitled”

can’t mean merely “eligible.” And by using the phrase

“for such days,” see 42 U.S.C. § 1395ww(d)(5)(F)(vi)

(stating that the Medicare fraction includes “patients

who (for such days) were entitled to benefits under

part A”), Congress also made it clear that

“entitlement” cannot be some unchanging or abstract

characteristic. Cf. SER 6-7 (9th Cir. Dkt. No. 24)

(HHS arguing that “Medicare beneficiaries are always

‘entitled to benefits under [Medicare] part A’”

(emphasis added)).

3. HHS also contends that its current policy

reflects its “longstanding interpretation” of “entitled”

that was simply “codified in the 2004 regulation at

issue here.” Pet.15, 20 (emphasis added). Not so.

That wasn’t HHS’s long-standing policy, and it is

inconsistent with HHS’s interpretation of other parts

of the underlying statutory provision.

a. HHS’s policy clearly wasn’t “long-standing”

because for the decades preceding the 2005 Rule,

HHS’s codified policy explicitly excluded patients who

were not entitled to payment under Part A, such as

those who had exhausted their Medicare Part A

benefits, from the Medicare fraction. Pet.7 (“Prior to

2004 … HHS … included in the Medicare fraction only

‘covered’ Medicare patient days, 42 C.F.R.

§ 412.106(b)(2) (2003)—i.e., days for which payment

from the Medicare program was available to the

hospital”). HHS’s 2005 rule, therefore, was not a

“codification” of longstanding policy, but a 180-degree

20

rejection of it. HHS even relied upon its interpretation

that “entitlement” meant “entitled to payment” in

arguing before multiple circuits that the Medicaid

fraction should also be limited to patients who are

entitled to Medicaid payment. See supra at 7-8.

Finally, HHS maintains to this day a

diametrically opposed interpretation of the same word

“entitled” in the same statutory sentence. That is,

when it comes to determining who is “entitled to [SSI]

benefits,” HHS interprets the word “entitled” as

meaning the absolute right to receive SSI payments.

USA Resp.-Reply Br. at 32 (9th Cir. Dkt. No. 30)

(quoting 75 Fed. Reg. at 50,042, 50,280 (Aug. 16, 2010)

(emphasis added)). (Indeed, HHS takes this a step

further by requiring actual receipt of SSI payments.

See Empire Reply Br. at 16 (9th Cir. Dkt. No. 40)). But

when it comes to determining who is “entitled to

benefits under part A,” HHS holds that whether the

patient is entitled to payment under Part A doesn’t

matter as long as the patient meets the statutory

criteria for Medicare coverage.

Simply put, HHS maintained for decades a policy

that is the opposite of the one it is defending now.

HHS’s current policy that “entitlement” doesn’t

require “entitlement to payment,” is not, therefore,

“longstanding,” and is not even consistent with HHS’s

current interpretation of the word “entitled” in the

phrase “entitled to [SSI] benefits” found in the same

statutory sentence.

b. HHS’s more programmatic concerns also don’t

withstand scrutiny. For example, HHS claims that it

would be “unusual” for “each unit of treatment—each

patient day—to be classified individually and

21

incorporated into one fraction or the other based on

whether it was paid for by Medicare.” Pet.27. But the

statute’s focus on patient days and, in particular, its

use of the phrase “for such days,” specifically requires

a day-by-day analysis, necessarily suggesting that

some days may be included while others are excluded.

Furthermore, even under HHS’s interpretation, some

days of a patient’s stay could be included in the

Medicare fraction while other days would be

excluded—if, for example, the patient turned 65

during the stay.

In any event, the true anomaly is not that lowincome patients may move from the Medicare fraction

to the Medicaid fraction. It’s that under HHS’s policy,

low-income patients who are both eligible for Medicaid

and entitled to SSI—the poorest of the poor—are

entirely excluded from a hospital’s DSH calculation if

those patients did not receive the SSI benefits to which

they were entitled. See supra at 10. That’s not what

Congress intended, and it’s not what the statute’s

plain language permits.

II. There Is No Clean Circuit Split on the

Question Presented

HHS’s petition claims a “direct and acknowledged

conflict” with respect to the question presented. But

the actual question that HHS presents is one the

Ninth Circuit didn’t answer. The three decisions on

which HHS relies—the Ninth Circuit’s decision below,

D.C. Circuit’s decision in Catholic Health, and the

Sixth Circuit’s decision in Metropolitan Hospital—did

not all address the same question, and none addressed

HHS’s arguments here. Moreover, any conflict that

does exist is muddied by the fact that the primary

22

disagreement between these decisions is over how the

Ninth, Sixth, and D.C. Circuits interpreted their own

precedent, not over how best to read the Medicare

statute in the first instance. That complication

renders any circuit split messy and unsuited for

review now. Instead, because HHS contends the

Ninth Circuit’s decision is geographically limited, this

Court can await further development in the lower

courts.

A. HHS’s Position Before This Court Is Not

the One It Advanced Before the Ninth,

D.C., and Sixth Circuits

HHS asks this Court to decide the question

whether it “permissibly” interpreted 42 U.S.C.

§ 1395ww(d)(5)(F)(vi)(I) to “include[] in a hospital’s

Medicare fraction all of the hospital’s patient days of

individuals who satisfy the requirements to be

entitled to Medicare Part A benefits, regardless of

whether Medicare paid the hospital for those

particular days.” Pet.i. But that question, which

implicitly invokes Chevron step 2, isn’t what the Ninth

Circuit, which ruled on Chevron step 1, actually

decided.

1. The Ninth Circuit’s decision below, the D.C.

Circuit’s decision in Catholic Health, and the Sixth

Circuit’s decision in Metropolitan Hospital all

addressed the 2005 Rule’s legality under Chevron’s

two-step framework. See App.17a-19a; Catholic

Health, 718 F.3d at 919-20; Metro. Hosp., 712 F.3d at

265-70. The question answered in those cases,

therefore, was whether the 2005 Rule survived

Chevron review. The Ninth Circuit only reached step

1, while the other circuits reached step 2.

23

HHS’s petition, in contrast, doesn’t argue under

the Chevron framework. The petition never even cites

Chevron in its argument, mentioning the case only in

its description of the decision below. Pet.14. And the

arguments that HHS does advance are different than

the ones it raised below. Accordingly, this petition

doesn’t raise the same issues decided either by the

Ninth Circuit or in Catholic Health or Metropolitan

Hospital.

See, e.g., Brief for Appellants CrossAppellees at 18-35, Metro. Hosp. (HHS defending its

2005 Rule under Chevron); Final Brief for Appellant

Kathleen Sebelius at 18-36, Catholic Health (same).

HHS certainly knows how to present a Chevron

argument when it wants to, but it chose not to in its

petition.

2. Making matters worse, HHS’s petition asks the

Court to decide a Chevron step two question, despite

HHS’s choice not to invoke the Chevron framework in

its argument and the fact that the Ninth Circuit did

not address any step two issue.

HHS’s question presented asks whether its

interpretation of Section 1395ww(d)(5)(F)(vi)(I) is

“permissibl[e]”—inherently a Chevron step two

question. Step one of Chevron’s “two-step framework”

asks “whether Congress ‘has directly spoken to the

precise question at issue’ in the statutory text.”

App.17a (quoting Chevron, 467 U.S. at 842). Only if

the answer to that question is no—only “[i]f the

statute is silent or ambiguous”—does a court “proceed

to Chevron step two.” Id. And it is only at step two

that the court asks whether the agency’s

interpretation of the statute is “permissible.”

Chevron, 467 U.S. at 843. By asking this Court to

24

decide whether its interpretation of the statute is

“permissibl[e],” HHS skips step one—the issue the

Ninth Circuit actually decided—in favor of step two.

This case is a poor vehicle to address that question

because the Ninth Circuit didn’t address it, let alone

decide it. App.18a; see Pet.14 (“the court of appeals ...

resolved the meaning of ‘entitled’ when referring to

Medicare at ‘step one’ of the inquiry under Chevron”).

Moreover, while Catholic Health did address

Chevron step two, its analysis was cursory at best.

The D.C. Circuit simply asserted in one sentence that

because it found the Medicare statute ambiguous, it

“of course defer[s] to the [HHS’s] construction.” 718

F.3d at 920. But an agency’s interpretation of a

statute is not automatically permissible just because

the statute is ambiguous. Chevron, 467 U.S. at 843.

And the D.C. Circuit didn’t provide any rationale for

why HHS’s interpretation was permissible under

Chevron step two.

A shallow 2-1 split scarcely warrants certiorari

where, as to the question presented, one decision

provides no explanation for why it decided the issue

the way it did, and the decision from which certiorari

is sought didn’t decide the issue at all. And granting

certiorari to decide HHS’s step two question would be

all the more inappropriate given HHS’s failure to

make any argument in its petition under the Chevron

framework. Chevron’s continued vitality and proper

contours have generated extensive controversy of late,

so it is no wonder that HHS would rather not have the

Court directly consider those issues.

But it is

incoherent and unfair for HHS to ask the Court to

decide a question that is inherently tied to the

25

Chevron framework while studiously avoiding

invoking that framework. HHS’s effort to have it both

ways is reason enough to deny certiorari.

Furthermore, neither the D.C. Circuit nor the

Sixth Circuit addressed the significant rulemaking

irregularities infecting HHS’s final rule even though

those irregularities are highly relevant in assessing

the reasonableness of HHS’s rule under a Chevron

step two analysis. See Motor Vehicle Mfrs., 463 U.S.

at 52, 55 (1983) (holding that an agency policy will not

be considered “reasonable” if the agency failed to

engage in “reasoned decisionmaking”).

B. Even if Review Could Be Warranted at

Some Point, It Isn’t Warranted Now

For the reasons just given, the conflict between

the decision below and the D.C. and Sixth Circuit’s

decisions is limited to whether the DSH statute is

ambiguous under Chevron step one. But, as explained,

that’s not the question that HHS’s petition presents.

And the conflict is both too messy and too undeveloped

to justify this Court’s review now.

1. The Chevron step one disagreement between

the decision below, Catholic Hospital, and

Metropolitan Hospital doesn’t turn primarily on how

the courts at issue interpret the Medicare statute, but

rather on how those courts should interpret their own

precedent. App.19a-21a (discussing the Sixth and

D.C. Circuit decisions and the role of precedent).

Because all three of the decisions at issue relied

heavily on prior circuit precedent, this case presents a

poor vehicle for deciding this question of statutory

interpretation now. It would be prudent, therefore, for

this Court to wait for a decision that delves into the

26

statutory analysis directly, before deciding this case of

statutory interpretation. 4

Take, for example, the D.C. Circuit’s analysis of

Chevron step one in Catholic Health which relied on

its “recent decision in Northeast Hospital” in finding

the statute ambiguous. Catholic Health, 718 F.3d at

920. That analysis was short-circuited by the court’s

reliance on earlier precedent.

But that earlier

precedent, Northeast Hospital, did not address

whether Section 1395ww(d)(5)(F)(vi)(I) is ambiguous

with respect to dual eligible exhausted coverage

patient days. Instead, it addressed whether patients

enrolled in Medicare Part C could also be “entitled” to

Part A benefits, relying on numerous provisions of the

Medicare statute specific to Part C enrollees.

Ne. Hosp., 657 F.3d at 5-13. 5 HHS even argued in

Catholic Health that “[t]he ambiguity identified by the

Court in Northeast ... simply does not apply to the

patients at issue [in Catholic Health]” because

Northeast Hospital “was limited to the specific

question presented—whether a Medicare Part A

To be sure, HHS’s petition argues that the Ninth Circuit

incorrectly interpreted Legacy Emanuel. Pet.27-28. But not only

is HHS wrong on this point, see App.19a, whether the Ninth

Circuit correctly interpreted its own precedent isn’t a cert-worthy

question. And because HHS opted not to petition for certiorari in

Legacy Emanuel, it is difficult for HHS now to complain about

the Ninth Circuit’s adherence to Legacy Emanuel in the decision

below.

4

5 Now-Justice Kavanaugh disagreed with the court’s reasoning,

concluding that the meaning of “entitled” in the Medicare fraction

is unambiguous and requires “entitlement to have payment

made.” Ne. Hosp., 657 F.3d at 19-21 (Kavanaugh, J., concurring

in the judgment); App.20a n.16.

27

beneficiary who has enrolled ... under Medicare Part

C remains ‘entitled to benefits under part A’ within

the meaning of the DSH provision.” Final Reply Brief

for Appellant Kathleen Sebelius at 5, Catholic Health,

718 F.3d 914 (No. 12-5092), 2012 WL 4849175.

Catholic Health’s uncritical extension of that Chevron

step one analysis to the different context of dual

eligible exhausted coverage patient days does not

present a clean, cert-worthy conflict with the Ninth

Circuit’s reasoned step one analysis in Legacy

Emanuel.

2. The paucity of independent statutory analysis

and complicated, case-specific questions concerning

whether the Ninth, D.C., and Sixth Circuits properly

weighed and interpreted their own precedent render

any conflict between those courts’ Chevron step one

analyses too muddled to support certiorari at this

time.

Instead, this Court should await further

development in the courts of appeals, either from

circuits that can consider it as an issue of first

impression, or from the two other Circuits that share

the Ninth Circuit’s interpretation of “entitled,” but

that have not yet had the chance to decide whether

that interpretation forecloses the 2005 Rule. Cabell

Huntington, 101 F.3d at 988-89; Deaconess Health, 83

F.3d at 1041.

III. Additional Reasons Warrant Denial of HHS’s

Petition

This Court should also deny HHS’s petition

because resolving HHS’s question presented may have

no practical effect on the outcome of this case. As set

forth in Empire Health’s conditional cross-petition for

28

certiorari, the APA requires federal agencies engaged

in rulemaking to comply with notice-and-comment

procedures. See 5 U.S.C. § 553(b). Those procedures

require fair notice and a meaningful opportunity to

comment. Long Island Care at Home, Ltd. v. Coke, 551

U.S. 158, 174 (2007). That fair notice requirement

isn’t satisfied where, as here, an agency misstates key

information, such as the policy upon which current

payments are based and how its proposal would affect

that status quo, and thereby deprives interested

parties of a meaningful opportunity to comment. That

problem was only compounded here by the fact that

the rule ultimately adopted by HHS was the opposite

of what HHS had proposed and therefore not a logical

outgrowth of HHS’s proposal.

Because HHS’s

procedural failings are bound up with the

unreasonableness of the 2005 Rule, the Court should

grant Empire Health’s cross-petition if it grants

HHS’s petition. See Cross-Pet.8.

Furthermore, there is still another reason why

the 2005 Rule is invalid. Even if HHS’s broad

interpretation of the word “entitled” in the phrase

“entitled to benefits under part A” were to be upheld,

its narrow interpretation of the word “entitled” in the

phrase “entitled to [SSI] benefits” would then have to

fall. Empire Reply Br. at 24-26 (9th Cir. Dkt. No. 40).

This alternative argument, which neither the district

court nor the Ninth Circuit considered because they

agreed with Empire Health’s primary argument

regarding “entitled to benefits under part A,” 6 is yet

6 The district court did comment, however, that HHS’s

contradictory definition of “entitled” in the SSI context “d[id] not

appear entirely reasonable.” ER 32 (9th Cir. Dkt. No. 16-1).

29

another reason why this case is not a good candidate

for certiorari.

IV. HHS’s Concerns About the Administration of

Medicare Are Unfounded

Normally, a petition for certiorari focuses on why

there is an urgent need for the Court’s intervention.

HHS’s petition strikingly fails to make any such case.

HHS suggests in less than a page that the decision

below could create a “balkanized” approach to

Medicare reimbursement.

But that concern is

misplaced. This case does not implicate how HHS

administers Medicare; it is only about which hospitals

get reimbursed and how much, and HHS doesn’t even

tell the Court how much is at stake. In short, the sky

is not falling and the Court’s limited resources would

be better devoted to other cases.

A comparison between HHS’s petition here and

one of its prior unsuccessful petitions is telling. In

Leavitt v. Baystate Health Systems, 547 U.S. 1054

(2006) (mem.), HHS also asked this Court to resolve a

circuit split. In that case, the question was whether

HHS’s acquiescence to the four circuit court decisions

discussed above invalidating HHS’s narrow

interpretation of “eligible for Medicaid” required HHS

to reopen settled cost reports to reflect HHS’s updated

policy. The D.C. Circuit held that reopening was

required, In Re Medicare Reimbursement Litig., 414

F.3d 7 (D.C. Cir. 2005), after the Tenth Circuit had

held the opposite, Bartlett Mem’l Med. Ctr., Inc. v.

Thompson, 347 F.3d 828 (10th Cir. 2003).

In sharp contrast to its petition here, HHS

explained in detail “the staggering and immediate

financial and administrative burdens imposed by the

30

decision below.” Pet. for Writ of Cert. at 27, Baystate

Health Sys., 547 U.S. 1054 (No. 05-936). HHS pointed

out, for example, that it would have to “review ... 2,306

cost reports for … 639 hospitals” and—apart from that

enormous administrative burden—that the financial

impact could be “as much as $2.8 billion ... owed to

providers.” Id. Despite these weighty concerns and

high stakes, this Court denied HHS’s petition.

By contrast, here HHS has only pointed to the

potential need to calculate the DSH adjustment one

way for hospitals located within the Ninth Circuit and

another way for other hospitals. It has made no

attempt to suggest that doing so would be

administratively problematic or even to quantify the

financial impact of doing so.

That failure is not surprising. Having different

Medicare reimbursement rules apply in different

jurisdictions is hardly unprecedented. See, e.g., Grant

Med. Ctr. v. Hargan, 875 F.3d 701, 703 (D.C. Cir.

2017) (explaining that after the Sixth Circuit ruled

that HHS’s “method for counting hospital beds

conflicted with the plain language of the applicable

regulation,” HHS “amended the regulation to …

appl[y] the Sixth Circuit’s interpretation to hospitals

located within that circuit”). Indeed, having rules that

may vary between jurisdictions is the natural outcome

of Congress’s decision to allow hospitals to bring their

Medicare reimbursement appeals before either the

district courts where they are located or the D.C.

district court. 42 U.S.C. § 1395oo(f)(1). Moreover,

variations in coverage are routine and specifically

contemplated by HHS’s rules allowing regional

Medicare contractors, in the absence of a national

31

coverage

determination,

to

make

regional

determinations regarding Medicare’s coverage of

certain treatments or devices.

See 42 U.S.C.

§ 1395ff(f)(2)(B)

(“the

term

‘local

coverage

determination’ means a determination by a fiscal

intermediary or a carrier ... respecting whether or not

a particular item or service is covered on an

intermediary- or carrier-wide basis”).

Nevertheless, HHS suggests that the decision

below is “fraught” because Ninth Circuit hospitals

that prefer HHS’s current policy could “seek review in

the D.C. Circuit, which has upheld the agency’s

position.” Pet.18. HHS’s concern is again overstated.

As an initial matter, the D.C. Circuit would likely

apply Ninth Circuit precedent in the circumstances

HHS describes. See Grant Med. Ctr., 875 F.3d at 703,

708 (applying Sixth Circuit precedent regarding the

treatment of “swing beds” to hospitals located in the

Sixth Circuit). Furthermore, HHS has on other

occasions given hospitals a choice of different DSH

calculation methodologies when faced with agency

policy of questionable validity, and it could easily do

the same here. See HHS, CMS Ruling No. 1498-R2, at

8 (Apr. 22, 2015) (“we are allowing providers to elect

whether to receive suitably revised Medicare-SSI

fractions on the basis of ‘covered days’ or ‘total days’

for [FFY] 2004 and earlier”). Finally, because HHS’s

current policy all but guarantees a reduced DSH

payment for hospitals as described above, supra at 10,

there is unlikely to be an influx of hospitals to the D.C.

Circuit seeking application of HHS’s current policy.

32

CONCLUSION

Since the DSH adjustment was enacted, it has

taken repeated intervention by Congress and the

courts to get HHS to simply follow the statute as

written. Accordingly, four different circuit courts

invalidated HHS’s policy of equating “eligible” with

“entitled” because it was inconsistent with that

statute. HHS doesn’t challenge those decisions now.

Instead, it argues for a different result, despite the fact

that it is the same statutory provision at play. That

only compounds the problems with HHS’s

interpretation. The Ninth Circuit here did nothing

different by holding that if under the statute, “eligible”

cannot mean “entitled,” “entitled” cannot mean

“eligible.” This Court should deny the petition for

certiorari.

Respectfully submitted,

Anne M. Voigts

Daniel J. Hettich

Matthew V.H. Noller

Counsel of Record

KING & SPALDING LLP KING & SPALDING LLP

601 S. California Avenue 1700 Pennsylvania Ave. NW

Suite 100

Washington, DC 20006

(202) 626-9128

Palo Alto, CA 94304

(650) 422-6700

dhettich@kslaw.com

Counsel for Respondent

May 19, 2021