Petition for Writ of Certiorari — Hillsborough County Hospital Authority v. Shalala
Supreme Court brief1995
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5-98 sul 8 198
5
Supreme Court of the United States
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October Term, 1995
HILLSBOROUGH COUNTY HOSPITAL AUTHORITY, et al.,
Petitioners,
VS.
DONNA E. SHALALA, SECRETARY, DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Respondent.
Petition for a Writ of Certiorari to the United States Court of
Appeals for the Eleventh Circuit
PETITION FOR A WRIT OF CERTIORARI
NANCY A. ROMFH
Counsel of Record
MERSHON, SAWYER, JOHNSTON,
DUNWODY & COLE
Attorneys for Petitioners
Phillips Point - East Tower
777 South Flagler Drive, Suite 900
West Palm Beach, Florida 33401
(407) 659-5990
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QUESTION PRESENTED FOR REVIEW
Whether the "special circumstances" adjustments mandated
under 42 U.S.C. §1395ww(b)(4)(A) are applicable to the
calculation of the hospital-specific portion of a hospital's
Medicare reimbursement under 42 U.S.C. §1395ww(d)
during the four year transition period under Medicare's
prospective payment system.
-ill-
LIST OF ALL PARTIES TO THE PROCEEDINGS '
Adventist Health System/Sun Belt, Inc. d/b/a Florida
Hospital
Parent Company: None
Subsidiaries/Affiliates: East Pasco Medical Center;
Florida Hospital Altamonte; Florida Hospital
Apopka; Florida Hospital East Orlando; Florida
Hospital Kissimmee; Florida Hospital Lake Placid;
Florida Hospital Waterman; Florida Hospital
Wauchula; Volusia Medical Center
Adventist Health System/Sun Belt, Inc. d/b/a Medical Center
Hospital
Parent Company: None
Subsidiaries/Affiliates: East Pasco Medical Center;
Florida Hospital Altamonte; Florida Hospital
Apopka; Florida Hospital East Orlando; Florida
Hospital Kissimmee; Florida Hospital Lake Placid;
Florida Hospital Waterman; Florida Hospital
Wauchula; Volusia Medical Center
| Rule 29.1 Listing: The parent companies and
subsidiaries/affiliates of the 114 Petitioners, to the extent they have been
ascertained, are listed in conjunction with the List of All Parties to the
Proceedings. We are in the process of obtaining the remainder of the
names of parent companies and subsidiaries/affiliates of the 114
Petitioners. Because of the number of Petitioners, and because most, if
not all of the Petitioners have parent companies and/or subsidiaries, we
were unable to complete this formidable task within the time restraints
for filing this Petition. We will file lists with the required information as
soon as it is obtained and compiled.
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Adventist Health System/Sun Belt Inc. d/b/a Walker
Memorial Hospital
Parent Company: None
Subsidiaries/Affiliates: East Pasco Medical Center;
Florida Hospital Altamonte; Florida Hospital!
Apopka; Florida Hospital East Orlando; Florida
Hospital Kissimmee; Florida Hospital Lake Placid;
Florida Hospital Waterman; Florida Hospital
Wauchula; Volusia Medical Center
Baptist Hospital, Inc. d/b/a Baptist Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates (not already listed as Petitioner):
Baptist Hospital of Miami, Inc. d/b/a Baptist Hospital of
Miami
Parent Company: Baptist Health System
Subsidiaries/Affiliates: Mariners Hospital, Tavernier;
SMH Homestead Hospital; South Miami Hospital
Baptist Medical Center d/b/a Baptist Medical Center-
Beaches
Parent Company: Baptist/St. Vincent's Health System
Subsidiaries/Affiliates: Baptist Medical Center
(Jacksonville); Baptist Medical Center-Nassau,
Fernandina Beach; Riverside Hospital (Jacksonville)
(also part of Daughters of Charity); St. Vincent's
Medical Center (Jacksonville) (also part of Daughters
of Charity); Wolfson Children's Hospital
(Jacksonville)
Baptist Regional Health Services, Inc., d/b/a Jay Hospital
Parent Company: Baptist Health Care, Inc.
Subsidiaries/Affiliates: Baptist Hospital (Pensacola);
Gulf Breeze Hospital, Inc.
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Bartow Memorial Hospital, Inc., d/b/a Bartow Memorial
Hospital
Parent Company: Quorum Health Resources
Subsidiaries/Affiliates: Bascom Palmer Eye Institute;
Bert Fish Medical Center; Brooksville Regional
Hospital; DeSoto Memorial Hospital, Inc.; Glades
General Hospital; Hendry General Hospital; Hialeah
Hospital; Jackson Hospital; Jupiter Medical Center;
Leesburg Regional Medical Center; South Lake
Memorial Hospital, Inc.; Spring Hill Regional
Hospital; University of Miami Hospital/Clinic
Bay Hospital, Inc. d/b/a HCA Gulf Coast Comm.
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not availabie)
Bayfront Medical Center, Inc., d/b/a Bayfront Medical
Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Bethesda Memorial Hospital, Inc. d/b/a Bethesda Memorial
Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Big Sun Healthcare Systems, Inc., d/b/a Monroe Regional
Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Board of Commissioners of Halifax Medical Center d/b/a
Halifax Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
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Boca Raton Community Hospital, Inc. d/b/a Boca Raton
Community Hospital
Parent Company: BRCH Corporation
Subsidiaries/A ffiliates: BRCH Foundation, Inc.; BRCH
Home Health Service, Inc.; BRCH Imaging, Inc.;
BRCH Health Plans, Inc.; BRCH Properties, Inc.
Cape Coral Medical Center, Inc. d/b/a Cape Coral Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Cedars Medical Center, Inc., d/b/a Cedars Medical Center
Parent Company: Columbia/HCA South Florida Division
Subsidiaries/Affiliates: Aventura Hospital & Medical
Center; Columbia Hospital (West Palm Beach);
Deering Hospital (Miami); Kendall Regional Medical
Center (Miami); Miami Heart Institute, Inc.;
Northwesi Regional Medical Center (Margate); Palm
Beach Regional Hospital (Lake Worth); Palms West
Hospital (Loxahatchee); Pembroke Pines Hospital;
Plantation General Hospital; Pompano Beach
Medical Center; University Hospital - Tamarac;
University Pavillion Hospital (Tamarac); Victoria
Pavillion (Miami); Westside Regional Medical
Center (Plantation)
Central FL Reg. d/b/a Central FL Reg.
Parent Company: Columbia/HCA Central Florida
Division
Subsidiaries/Affiliates: Columbia Park Medical Center
(Orlando); Daytona Medical Center (Daytona Beach);
Lawnwood Pavilion (Ft. Pierce); Lawnwood
Regional Medical Center (Ft. Pierce); Medical
Center/Port St. Lucie; Osceola Regional Hospital
(Kissimmee); Psychiatric Care Center (Winter Park);
Raulerson Hospital (Okeechobee); South Seminole
= eo ree ll
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Hospital (Longwood); Winter Park Memorial
Hospital
CHS Management Corporation d/b/a University General
Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
CHS Management Corporation d/b/a Women's Medical
Center (Lake Seminole)
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
City of Homestead d/b/a James Archer Smith Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Clearwater Community Hospital Limited Partnership d/b/a
Clearwater Community Hospital
Parent Company: Columbia/HCA Tampa Bay Division
Subsidiaries/Affiliates: Brandon Hospital; Columbia
Hospital of New Port Richey; Columbia Regional
Medical Center at Bayonet Point (Hudson);
Columbia/HCA Oak Hill Community Hospital
(Springhill); Dade City Hospital; Edward White
Hospital (St. Petersburg); L.W. Blake Hospital
(Bradenton); Largo Medical Center; Northside
Hospital (St. Petersburg); South Bay Hospital (Sun
City Center); St. Petersburg General Hospital
Cleveland Clinic Florida Hospital d/b/a North Beach
Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
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Community Hospital of Humana, Inc., d/b/a Humana
Hospital-Cypress
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Community Hospital of the Palm Beaches, Inc. d/b/a
Humana Hospital-Palm Beaches
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
DeSoto Memorial Hospital, Inc. d/b/a DeSoto Memorial
Hospital?
Parent Company: Quorum Health Resources
Subsidiaries/Affiliates: Bartow Memorial Hospita!;
Bascom Palmer Eye Institute; Bert Fish Medical
Center; Brooksville Regional Hospital; Glades
General Hospital; Hendry General Hospital; Hialeah
Hospital; Jackson Hospital; Jupiter Medical Center;
Leesburg Regional Medical Center; South Lake
Memorial Hospital, Inc.; Spring Hill Regional
Hospital; University of Miami Hospital/Clinics
Doctors General Hospital, Ltd., d/b/a Universal Medical
Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Doctors Hospital of Sarasota, Ltd. d/b/a Doctors Hospital of
Sarasota
Parent Company: Columbia/HCA S.W. Florida Division
Subsidiaries/Affiliates: East Point Hospital; Englewood
Community Hospital, Inc.; Fawcett Memorial
. Managed by Quorum Health Resources.
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Hospital; Gulf Coast Hospital; Southwest Florida
Regional Medical Center
Doctors Mercy Hospital, Ltd., d/b/a AMI Medical Center
Orlando (Brookwood Community Hospital)
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Dr. John T. MacDonald Foundation d/b/a Doctor's Hospital
of Coral Gables
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
HCA Health Services of Florida, inc. d/b/a Bayonet Point
Hospital
Parent Company: Columbia/HCA Tampa Bay Division
Subsidiaries/Affiliates: Brandon Hospital; Clearwater
Community Hospital; Columbia Hospital of New
Port Richey; Columbia/HCA Oak Hill Community
Hospital (Springhill); Dade City Hospital; Edward
White Hospital (St. Petersburg); Largo Medical
Center; Northside Hospital (St. Petersburg); South
Bay Hospital (Sun City Center); St. Petersburg
General Hospital
HCA Health Services of Florida, Inc. d/b/a L.W. Blake
Memorial Hospital
Parent Company: Columbia/HCA Tampa Bay Division
Subsidiaries/Affiliates: Brandon Hospital; Clearwater
Community Hospital; Columbia Hospital of New
Port Richey; Columbia Regional Medical Center at
Bayonet Point (Hudson); Columbia/HCA Oak Hill
Community Hospital (Springhill); Dade City
Hospital; Edward White Hospital (St. Petersburg);
Largo Medical Center; Northside Hospital (St.
A lanl An ate OTE an ted i aR at
Petersburg); South Bay Hospital (Sun City Center);
St. Petersburg General Hospital
HCA Health Services of Florida, Inc. d/b/a HCA North
Florida Medical Center
Parent Company: Columbia/HCA North Florida Division
Subsidiaries/Affiliates: Ft. Walton Beach Medical
Center; Gulf Coast Hospital (Panama City); Hamilton
County Memorial Hospital (Jasper); Lake City
Medical Center; Mariane Community Hospital
(Ocala); North Okaloosa Medical Center (Crestview);
Putnam Community Hospital (Palatka); Santa Rosa
Medical Center (Milton); Tallahassee Community
Hospital; Twin Cities Hospital (Niceville); West
Florida Regional Medical Center (Pensacola)
HCA Health Services of Florida, Inc. d/b/a HCA Northwest
Regional Hospital
Parent Company: Columbia/HCA South Florida Division
Subsidiaries/A ffiliates: Aventura Hospital & Medical
Center; Cedars Medical Center; Columbia Hospital
(West Palm Beach); Deering Hospital (Miami);
Kendall Regional Medical Center (Miami); Miami
Heart Institute (Miami Beach); Palm Beach Regional
Hospital (Lake Worth); Palms West Hospital
(Loxahatchee); Pembroke Pines Hospital; Plantation
General Hospital; Pompano Beach Medical Center;
University Hospital - Tamarac; University Pavillion
Hospital (Tamarac); Victoria Pavillion (Miami);
Westside Regional Medical Center (Plantation)
Hillsborough County Hospital Authority d/b/a Tampa
General Hospital
Parent Company: None
Subsidiaries/Affiliates: TGH University Psychiatry
Center; Tampa General Hospital
|
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Holmes Regional Medical Center, Inc. d/b/a Holmes
Regional Medical Center
Parent Company: None
Subsidiaries/A ffiliates: Palm Bay Community Hospital
Holy Cross Hospital, Inc. d/b/a Holy Cross Hospital
Parent Company: Eastern Mercy Health System
Subsidiaries/A ffiliates: None
Hospital, Inc. d/b/a AMI Beach Gardens Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Hospital Board of Directors of Lee County d/b/a/ Lee
Memorial Hospital
Parent Company: None
Subsidiaries/A ffiliates: Lee Memorial/Health Park
Medical Center
Hospital Corp of AME d/b/a HCA Twin Cities Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Humana, Inc. d/b/a Humana Hospital-Sebastian
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Humana, Inc. d/b/a Humana Hospital-South Broward
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Humana, Inc. d/b/a Humana Hospital-Biscayne
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
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Humana of Florida, Inc. d/b/a Humana Hospital-Bennett
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Daytona
Beach
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Ft. Walton
Beach
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Kissimmee
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Lucerne
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Orange Park
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-Pasco
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Humana of Florida, Inc. d/b/a Humana Hospital-St.
Petersburg
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
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Humana of Florida, Inc. d/b/a Humana Women's Hospital-
Tampa
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Humbosco, Inc. d/b/a Humana Hospital-Northside
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Humhosco, Inc. d/b/a Humana Hospital-Brandon
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
JFK Medical Center, Inc. d/b/a JFK Medical Center
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Jupiter Hospital, Inc. d/b/a Jupiter Hospital
Parent Company: Quorum Health Resources
Subsidiaries/A ffiliates: Bartow Memorial Hospital;
Bascom Palmer Eye Institute: Bert Fish Medical
Center; Brooksville Regional Hospital; DeSoto
Memorial Hospital, Inc.: Glades General Hospital:
Hendry General Hospital; Hialeah Hospital; Jackson
Hospital; Leesburg Regional Medical Center: South
Lake Memoria! Hospital, Inc.; Spring Hill Regional
Hospital; University of Miami Hospital/Clinics
Kissimmee Memorial Hospital, Inc., d/b/a Kissimmee
Memorial Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
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Lake Wales Hospital Association, Inc. d/b/a Lake Wales
Hospital Association, Inc.
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Lakeland Regional Medical Center, Inc., d/b/a Lakeland
Regional Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Largo Medical Center Hospital, Inc. d/b/a HCA Marion
Community Hospital
Parent Company: Columbia/HCA Tampa Bay Division
Subsidiaries/Affiliates: Brandon Hospital; Clearwater
Community Hospital; Columbia Hospital of New
Port Richey; Columbia Regional Medical Center at
Bayonet Point (Hudson); Columbia/HCA Oak Hill
Community Hospital (Springhill); Dade City
Hospital; Edward White Hospital (St. Petersburg);
L.W. Blake Hospital (Bradenton); Northside Hospital
(St. Petersburg); South Bay Hospital (Sun City
Center); St. Petersburg General Hospital
Leesburg Regional Medical Center, Inc., d/b/a Leesburg
Regional Medical Center, Inc.
Parent Company: Quorum Health Resources
Subsidiaries/Affiliates: Bartow Memorial Hospital;
Bascom Palmer Eye Institute; Bert Fish Medical
Center; Brooksville Regional Hospital; DeSoto
Memorial Hospital, Inc.; Glades General Hospital;
Hendry General Hospital; Hialeah Hospital; Jackson
Hospital; Jupiter Medical Center; South Lake
Memorial Hospital, Inc.; Spring Hill Regional
Hospital; University of Miami Hospital/Clinics
>
;
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Lifemark Hospitals of Florida, Inc. d/b/a AMI Palmetto
General Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Lower Florida Keys Health System, Inc. d/b/a Depoo
Hospital
Parent Company: None
Subsidiaries/A ffiliates: Health System Florida Keys and
Depoo
Manatee Hospitals & d/b/a Manatee Memorial Hospital
Parent Company: Universal Health Services, Inc.
Subsidiaries/A ffiliates: THC-Hollywood; Transitional
Hospital of Tampa; Universal Medical Center;
Wellington Regional Medical Center
Memorial Hospital of Tampa, Inc. d/b/a Memorial Hospital
of Tampa
Parent Company: Tenet Healthcare Corporation
Subsidiaries/A ffiliates: Delray Community Hospital:
Hollywood Medical Center; North Ridge Medical
Center; Palm Beach Gardens Medical Center:
Palmetto General Hospital; Palms of Pasadena
Hospital; Pinecrest Rehabilitation Hospital at Delray;
Seven Rivers Community Hospital; Town and
Country Hospital; West Boca Medical Center
Memorial Hospital-Flagler, Inc. d/b/a Memorial Hospital
Parent Company: Memorial Health Systems
Subsidiaries/A ffiliates: Memorial Hospital (Ormond
Beach); Memorial Hospital (West Volusia)
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Mercy Hospital, Inc. d/b/a Mercy Hospital
Parent Company: Daughters of Charity
Subsidiaries/Affiliates: Riverside Hospital (Jacksonville);
Sacred Heart Hospital Pensacola; St. Vincent's
Hospital (Jacksonville)
Methodist Hospital, Inc. d/b/a Methodist Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Miami Heart Institute, Inc., d/b/a Miami Heart Institute
Parent Company: Columbia/HCA South Florida Division
Subsidiaries/Affiliates: Aventura Hospital & Medical
Center; Cedars Medical Center; Columbia Hospital
(West Palm Beach); Deering Hospital (Miami);
Kendall Regional Medical Center (Miami);
Northwest Regional Medical Center, (Margate); Palm
Beach Regional Hospital (Lake Worth); Palms West
Hospital (Loxahatchee); Pembroke Pines Hospital;
Plantation General Hospital; Pompano Beach
Medical Center; University Hospital - Tamarac;
University Pavillion Hospital (Tamarac); Victoria
Pavillion (Miami); Westside Regional Medical
Center (Plantation)
Morton F. Plant Hospital Association, Inc. d/b/a Morton F.
Plant Hospital
Parent Company: Morton Plant/Mease Health Care
Subsidiaries/A ffiliates: Mease Hospital (Countryside,
Safety Harbor); Mease Hospital (Dunedin)
3 Riverside Hospital and St. Vincent's Hospital are also part of
Baptist/St. Vincent's Health System.
eS se ee Oe ee ee Pe ee eee ee Se See ee ‘a
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Mount Sinai Hospital of Greater Miami, Inc., d/b/a Mount
Sinai Medical Center
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
National Medical Enterprises d/b/a Delray Community
Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
New Port Richey Hospital, Inc. d/b/a HCA New Port Richey
Hospital (Community Hospital of New Port Richey)
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
NME Hospital, Inc. d/b/a Hollywood Medical Center
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
NME Hospital, Inc. d/b/a Palms of Pasadena Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not availabie)
NME Hospital, Inc. d/b/a Steven Rivers Community
Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
North Brevard County Hospital District d/b/a Jess Parrish
Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
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North Broward Hospital, North Broward Hospital District
d/b/a Broward General Medical Center
Parent Company: None
Subsidiaries/Affiliates: Coral Springs Medical Center;
Imperial Point Medical Center (Ft. Lauderdale)
North Broward Hospital d/b/a Imperial Point Medical Center
Parent Company: North Broward Hospital District
Subsidiaries/Affiliates: Coral Springs Medical Center
North Broward Hospital d/b/a North Broward Medical
Parent Company: North Broward Hospital District
Subsidiaries/Affiliates: Coral Springs Medical Center;
Imperial Point Medical Center (Ft. Lauderdale)
North Miami Medical Center, Ltd., d/b/a ies Regional
Medical Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
North Shore Medical! Center, Inc., d/b/a North Shore Medical
Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Notami Hospitals of Florida, Inc. d/b/a Lake City Medical
Center
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Orlando Regional Medical Center, Inc. d/b/a Orlando
Regional Medical Center
Parent Company: Orlando Regional Healthcare System
Subsidiaries/Affiliates: Arnold Palmer Hospital for
Children & Woman; Sand Lake Hospital; South
Seminole Hospital; St. Cloud Hospital
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Palm Beach Gardens Community Hospital, Inc. d/b/a AMI
Beach Gardens Medical Center
Parent Company: Tenet Healthcare Corporation
Subsidiaries/A ffiliates: Delray Community Hospital:
Hollywood Medical Center; Memorial Hospital of
Tampa; North Ridge Medical Center; Palmetto
General Hospital: Palms of Pasadena Hospital:
Pinecrest Rehabilitation Hospital at Delray; Seven
Rivers Community Hospital; Town & Country
Hospital; West Boca Medical Center
Pan American Hospital d/b/a American Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Public Health Trust of Dade County d/b/a Jackson Memorial
Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Riverside Hospital, Inc., d/b/a Riverside Hospital
Parent Company: Daughters of Charity
Subsidiaries/A ffiliates: Sacred Heart Hospital of
Pensacola; St. Vincent's Hospital; Mercy Hospital
Saint Anthony's Hospital, Inc. and Saint Anthony's Health
Care Center, d/b/a/ Saint Anthony's Hospital
Parent Company: Allegany Health System
Subsidiaries/A ffiliates: St. Joseph's Hospital: St. Joseph's
Women's Hospital: St. Mary's Hospital
Shands Teaching Hospital & Clinics, Inc. d/b/a Shands
Teaching Hospitals and Clinics
Parent Company: ( Information not available)
Subsidiaries/A ffiliates: (Information not available)
-XX-
South Florida Baptist Hospital, Inc. d/b/a South Florida
Baptist Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
South Miami Hospital, Inc., d/b/a South Miami Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Southeast Community Health Services, Inc., d/b/a Doctors’
Memorial Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Southeast Community Health Services, Inc., d/b/a Gadsden
Memorial Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Southeastern Medical Center, Hospital Contractors, Ltd.,
d/b/a AMI Town & Country Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Southwest Florida Regional Medical Center, Inc., d/b/a
Southwest Florida Regional Medical Center (Ft. Myers
Community)
Parent Company: Columbia/HCA S.W. Florida Division
Subsidiaries/Affiliates: Doctors Hospital of Sarasota,
Inc.; East Pointe Hospital; Englewood Community
Hospital; Fawcett Memorial Hospital; Gulf Coast
Hospital;
cee nenreerestaiinieaiiaiaeiaiaeaiieiiiiicmmuaiidiliil
De ee ee he Sy
-XXI-
St. Francis Hospital, Inc., d/b/a St. Francis Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
St. Joseph Hospital of Port Charlotte, F lorida, Inc., d/b/a St.
Joseph Hospital of Port Charlotte
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
St. Luke's Hospital Association d/b/a St. Luke's Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
St. Mary's Hospital, Inc., d/b/a St. Mary's Hospital
Parent Company: Allegany Health System (also part of
Intracoastal Health System)
Subsidiaries/Affiliates: St. Anthony's Hospital, Inc.; St.
Joseph's Hospital, Inc.; St. Joseph's Women's
Hospital; Good Samaritan Medical Center
St. Vincent's Medical Center, Inc., d/b/a St. Vincent's
Medical Center
Parent Company: Daughters of Charity
Subsidiaries/A ffiliates: Mercy Hospital; Riverside
Hospital; Sacred Heart Hospital of Pensacola
Tallahassee Medical Center, Inc. d/b/a Tallahassee
Community Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
Tallahassee Memorial Regional Medical Center, Inc.. d/b/a
Tallahassee Memorial Regional Medical Center
Parent Company: Columbia/HCA North Florida Division
Subsidiaries/Affiliates: Fort Walton Beach Medical
Center; Gulf Coast Hospital; Hamilton County
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Memorial Hospital; Lake City Medical Center;
Marion Community Hospital; North Florida Regional
Hospital; North Okaloosa Medical Center; Putnam
Community Hospital; Santa Rosa Medical Center;
Twin Cities Hospital; West Florida Regional Medical
Center
Trustees of Mease Hospital, Inc. d/b/a Mease Hospital
Dunedin
Parent Company: Morton Plant/Mease Health Care
Subsidiaries/A ffiliates: Mease Hospital/Countryside,
Safety Harbor; Mease Hospital/Dunedin
University Medical Center d/b/a University Medical Center
of Jacksonville
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
University of Miami, Inc. d/b/a Anne Bates Leach Eye
Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Victoria Hospital Partnership d/b/a Victoria Hospital
Parent Company: (Information not available)
Subsidiaries/A:filiates: (Information not available)
Washington County Board of County Commissioners d/b/a
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
Northwest Florida Community Hospital
Parent Company: (Information not available)
Subsidiaries/Affiliates: (Information not available)
-XXIli-
West Orange Memorial Hos
Orange Memorial Hospital
Parent Company: (Information not available)
Subsidiaries/A ffiliates: (Information not available)
pital Tax District d/b/a West
Winter Haven Hospital, Inc., d/b/a Winter Haven Hospital
Parent Company: Mid-F lorida Medical Services
Subsidiaries/A ffiliates: Lake Wales Medical Center. Inc.;
Morrow Memorial Hospital: Regency Medical Center
-XX1V-
TABLE OF CONTENTS
QUESTION PRESENTED FOR REVIEW.............. Sahin il
LIST OF ALL PARTIES TO THE PROCEEDINGS.....111
Fe i i ate ED ccitgninecicetescossneisansinansteosetins deshesaiieiicls ill
Re Oe ee tases dcncocnanndannscvdentvcnngnsiicd XXIV
Tee Or Pee ici visncasee cers cei nacdecdncsaninsacs XXVi
ee a arcs pcce tdiciip since -Stcsdorncaacasiins XXX
Ce I Brereton tien rile inesoncaeisneecndancasnis 2
ST ADs OF FRU SN oscccenccnctcasacsnepsssaanenare 2
STATUTES AND REGULATIONS INVOLVED.......... 3
SFG CE NE Oe Nev iperenyceetincrnapncarsstcncdatncesine 3
Fi. ~ FURIE Ts scsi ccsecv sitive ccsensenesens 3
BD -FEESOGEY CE Ge Bi vv cncnsvscssccccctcscsensencones 4
C. Indigent Health Care Program
PI icsk a ste tctepteesscadineiossaaiieds 7
DD, FPOCTIIS IW onc Siccs peecsctrtncssvisicncs 7
REASONS FOR GRANTING THE WRIT..............000 8
A. To Settle a Controversy Among the
Circuits Over a Significant Legal Issue
of Continuing Importance ..............c: eee
“XXV-
1. Secretary's Interpretation Under the
Chevron AnalySis .0.0.0..c.cccecceeeeee.-....... 10
2. The Error of the Secretary's
Interpretation of Subsection
ia he Ne 10
Pe MD cei hai ei Mao ak 12
4. Sacred Heart and Episcopal................. 13
5. District Court Decisions.................... 14
6. Question of Continuing Importance... 15
B. To Prevent the Propagation of
Mistakes and to Clarify the Appropriate
Standard of Deference to Be Given
Agency Interpretation...........00.0.0.0.......... 16
1. Legislative History «00.00.0000... 17
2. The Secretary's Changing Position...... 18
Se I ton feh ic tatathdaliaeescoraieeside co oe 20
-XXVI-
TABLE OF AUTHORITIES
Page
CASES
Andrus v. Glover Construction Company,
SAG U.S. GOB, GU C1 DODD cnccccnssicsccccntescsnassisonsivn 10
Board of Governors of the Fed. Reserve
Sys. v. Dimension Fin. Corp.,
Sa FOE CEE osiisntiomeininnciamanaa 10
Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc.,
467 U.S. 837 (1984) ...... 10, 12, 13, 14, 15, 16, 19
Community Hosp. of Chandler, Inc. v. Sullivan,
963 F.2d 1206 (9th Cir. 1992) ........... 9, 12, 13. 14
Episcopal Hosp. v. Shalala, 994 F.2d 879
(D.C. Cir. 1993), cert. denied,
No. 93-429, 62 U.S.L.W. 3468
CA. BS, Fre ecco 9, 14, 15, 16, 19
Florida and American Medical Assoc., Inc.
v. Department of Health, Education
and Welfare, 479 F. Supp. 1291
Ce Be ee ices ttaiedoccivaneenieneonatanciaceneametan 1]
General Care Corp. v. Sullivan, No. 92-1326................ 15
Good Samaritan Hosp., et al., v. Shalala,
EES GG BIO CERT OR covdiniecspasten 16, 19
Good Samaritan Hosp. Regional Medicai Center
Siem, PAO. FES Fae eicvccdcccrncersiensccesenaes 16
enema aaa emaamcaeeriemacameaemmmamee aiil
~ pine tS husieeocaiadels
DN a8 dite SEINE tS Fikes cae a tle es
aa
-XXVIli-
Greenville Hosp. Sys. v. Heckler.
642 F. Supp. 15 (D.S.C. 1985).................... 15,19
Hospital Corporation of Tennessee vy.
Sullivan, No. 92-1325 .0.....cccccccsccsccscseescesee- 15
Hillsborough County Hosp. Auth. v. Shalala,
49 F.3d 1516 (11th Cir. 1995)... *.
Hospital Corp. of Tennessee v. Sullivan,
nc cceansns-............ 15
Motor Vehicles Manufacturers Association v.
State Farm Mutual Automobile Insurance
Company, 463 U.S. 29 a 19
Newport Hospital and Clinic, Inc. v. Sullivan,
Medicare and Medicaid Guide (CCH)
938,844 (D.D.C. Sept. 24, a 15
Nyack Hospital v. Sullivan, No. 92-0455... 15
Okeechobee Hospital v. Sullivan, No. 92-1323... 15
Redbud Hospital District v. Heckler. Medicare
and Medicaid Guide (CCH) 934,085
(N.D. Cal. July 30, 1984), vacated on
other grounds, 473 U.S. 1308 a 15,19
Sacred Heart Medical Ctr. v. Sullivan, 958 F.2d
537 (3rd Cir. 1992)........... 9, 12, 13, 14, 15, 16, 19
Sunshine Health Sys., Inc. v. Bowen.
809 F.2d 1390 (9th Cir. 1987) 13
-XXVIil-
The Methodist Hospital v. Sullivan, Medicare
and Medicaid Guide (CCH) 939,627 (D.D.C.
Sept. 20, 1991), reversed, 6 F.3d 829
(D.C. Cir. Sept. 16, 1993), cert. denied,
No. 93-1449, 114 S.Ct. 2162
CE Gy CE iitictenctn ie dtinenicimnance 9, 15
STATUTES
ae Anh A TE vckciolscteinenssencinadl pieskincbdaamoeammnedeoadion 2
Me Sil: DEED acdiipibivacterssensinereuiiaalendnee 2,8
SF Fh Bits UIE Hid saceinsreinsadasdladeviadiglsiadassetcaaies 3
Se TFs ee IE cites eis crs insvccucanrsaaoabidseudearmaseien es 10
42 ULS.C. GU SSSWWOD) nccccessccsssenscosecnceens 4,5, 9, 10,11, 12
asasusuitabes visesebtimatamiaian dagaiats sadaandageeamiaten iia 13, 14, 16, 18, 19
Bz UA, BIR ii iicicaccssisccinsccnateciesianivics 4,6, 11, 13
GE GF rae, SEY cssicisosbscipeciinsceinssetnictssalcramueeidanias 4
Florida Statutes $395.101 (1985) .............cccoccsccsssescsesseseee 7
Florida Statutes §409.2662(1) (1985) oo... ececeeceeeeeee 7
REGULATIONS
ae ae Ps RI sahara cizinicas«santhstanuadsesininsaciessiedaeubidatins 2
G2 658 Bete ce tiercsantccd tds atecreicernis 6
GE CF Fis QB Ge kevstecis sn eiteh tie tsagudhecceeiactiaaaalgaadaadsbatontecaeees 6
GP FOE, FBO sevthincscnstiniarintinianDedetiidaabaih 18
a a emer
oe)
-XX1X-
MISCELLANEOUS
Fed. R. Pe Ei elaine 8 8
PO iin etihatnttdicne uit 8
S. Rep. No. 23, 98th Cong., Ist Sess. 53.
reprinted in 1983 U.S. Code Cong. & Admin.
indice Sica oe en ne 6
H.R. Rep. No. 760, 97th Congress, 2d Sess. 420.......... 18
-XXX-
APPENDICES
Appendix A - Opinion of the United States
Court of Appeals, Eleventh Circuit,
Dated April 19, 1995, 49 F.3d 1516
C1 Coe, Fe iiceeiedinns ea. la
Appendix B - Judgment of the United States
Court of Appeals, Eleventh Circuit,
EURO ATE FHS ee icncenstacicaasenceacitixtivesinsvinsess 5a
\ppendix C - Order of the United States
District Court, Middle District of Florida,
Tampa Division, Dated November 9, 1993........... 7a
Appendix D - Judgment of the United States
District Court, Middle District of Florida,
Tampa Division, Dated November 9, 1993........... 9a
Appendix E - Report and Recommendation of
United States Magistrate Judge Thomas G.
Wilson, United States District Court,
Middle District of Florida, Tampa Division,
Disord Coctetber 15, Fire ceencciisdaettenistassescacssssscns 11a
Appendix F - Order of the Provider Reimbursement
Review Board Dated October 31, 1990................ 18a
Appendix G - Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S.
S57 CT DED oiccccinseccniniecechebsiaasantindadiamaatanetiacadt 1a
Appendix H - Community Hospital of Chandler,
Inc. v. Louis W. Sullivan, M.D., 963 F.2d
PE Ee 60a
BO EL AE, NSTI IED AL SD wR er CM Me Ny i nae ae Aes TT BN a ils
-XXXI-
Appendix I - Episcopal Hospital v. Donna E.
Shalala, 994 F.2d 879 (D.C. Cir. > re 81a
Appendix J - Good Samaritan Hospital, et al., v.
Donna-E. Shalala, Secretary of Health
and Human Services. 113 S.Ct. 2151 (1993)... 94a
Appendix K - Methodist Hospital v. Shalala,
6 F.3d 829 (D.C. Cir. 1993) occ. 125a
Appendix L - Sacred Heart y Sullivan,
958 F.2d 537 (3rd Cir. 1992); 958 F.2d 537
“sircShcpculet ace. | SOO 127a
Appendix M - United States Code. Title 42,
The Public Health and Welfare. §1395ww(a)..... 157a
Appendix N - United States Code. Title 42,
The Public Health and Welfare, §1395ww(b)..... 161a
Appendix O - United States Code. Title 42,
The Public Health and Welfare, §1395ww(d)..... 173a
Appendix P -Code of Federal Regulations,
Title 42, Public Health, tS | ee 176a
Appendix Q - Code of Federal Regulations,
Title 42, Public Health. : 179a
Appendix R - Senate Report No. 23.
98th Congress, Ist Session 1983
IN THE
Supreme Court of the United States
OCTOBER TERM, 1995
HILLSBOROUGH COUNTY HospiTAL AUTHORITY, et al..
Petitioners.
-
DONNA E. SHALALA, SECRETARY,
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Eleventh C ircuit
PETITION FOR A WRIT OF CERTIORARI
NANCY A. ROMFH
Counsel of Record
MERSHON, SAWYER. JOHNSTON,
DUNWODY & COLE
Attorneys for Petitioners
Phillips Point - East Tower
777 South Flagler Drive. Suite 900
West Palm Beach, Florida 3340]
(407) 659-5990
esses
th
OPINIONS BELOW
Hillsborough County Hospital Authority, et al. v.
Donna E. Shalala, 49 F.3d 1516 (11th Cir. 1995), was
entered on April 19, 1995, and is reproduced herein as
Appendix A.'! The opinion and order of the District Court
for the Middle District of Florida in Hillsborough County
Hospital Authority, et al. v. Donna E. Shalala, are unreported
and are reproduced herein as Appendices C and D. The
decision of the Provider Reimbursement Review Board is
unreported and is reproduced herein as Appendix E.
STATEMENT OF JURISDICTION
The opinion of the United States Court of Appeals for
the Eleventh Circuit was entered on April 19, 1995, and is
reproduced herein as Appendix A.”
This Court has jurisdiction to issue the requested writ
of certiorari pursuant to 28 U.S.C. §1254(1). Subject matter
jurisdiction in the District Court was pursuant to 42 U.S.C.
§139500(f). The case began as an appeal before the Provider
Reimbursement Review Board which, on its own motion,
ordered expedited judicial review of the matter pursuant to
42 C.F.R. §405.1842.
The Judgment entered by the Eleventh Circuit Court of Appeals
is reproduced herein as Appendix B.
2 Documents in the Appendix are cited as “App.”
—7x_aaQLa
tors
‘
Ww
'
STATUTES AND REGULATIONS
The following statutes and regulations are set forth in
the Appendix to the Petition:
42 U.S.C. §1395ww(a) - Appendix M
42 U.S.C. §1395ww(b) - Appendix N
42 U.S.C. §1395ww(d) - Appendix O
42 C.F.R. §412.71 - Appendix P
42 C.F.R. §412.72 - Appendix Q
STATEMENT OF THE CASE
A. Factual Background
This is an appeal brought by 114 acute care hospitals
(the "Hospitals") who are Medicare providers, and involves
the interpretation of the statutes and regulations that govern
reimbursement of the Hospitals and other health care
providers under the Medicare Act. Under the Medicare Act,
an eligible Medicare beneficiary is entitled to receive certain
inpatient and outpatient services from the Hospitals and other
healthcare providers which participate in the Medicare
Program. A “participating provider" is paid for services
rendered to a beneficiary by the Medicare Program through
the Secretary of the Department of Health and Human
Services (the "Secretary") who is the federal officer
responsible for the administration of the Medicare Program.
42 U.S.C. §1395(g). Asa practical matter, reimbursement to
a participating provider is made through a fiscal
intermediary, as an agent of the Medicare program, who
audits the provider's cost reports and who follows the
regulations promulgated by the Secretary in determining
what claims are allowable as part of the provider's
reimbursement.
The issue in this case arises from amendments to the
Medicare Act in 1982 and 1983 which resuited in confusion
over what provisions controlled the reimbursement of
Medicare providers during the transition period between the
original system of reimbursement and the new system,
during which period reimbursement was determined using a
blend of the two systems. Specifically, the question before
this Court is whether the adjustments for special, unforeseen
circumstances mandated under 42 U.S.C.
§1395ww(b)(4)(A), which were a part of the original system
of reimbursement, are applicable to the calculation of the
hospital-specific portion of a _ hospital's Medicare
reimbursement under 42 U.S.C. §1395ww(d) during the
four-year transition period under Medicare's prospective
payment system. Three courts of appeal, including the court
below, have resolved the issue with inconsistent results,
using different reasoning and basis. The result is confusion
over the state of the law. Specifically, questions of statutory
construction have arisen as well as problems with granting
judicial deference to agency interpretation which has shifted
for no apparent reason except to deny reimbursement to a
multitude of Medicare providers.
B. History of the Statute
Until 1982, the Hospitals and other health care
providers were reimbursed for the reasonable cost of services
actually and necessarily provided to Medicare beneficiaries.
42 U.S.C. §1395x(v). When the Tax Equity and Fiscal
Responsibility Act of 1982 ("TEFRA") was enacted, the
"reasonable cost" reimbursement scheme was altered with the
imposition of a ceiling on the rate of increase of inpatient
operating expenses recoverable by a hospital under the
Medicare Act. The ceiling was calculated using a provider's
"target amount" which, in turn, was defined as follows:
Ble hg ati
aes
(i)...[t]he allowable Operating costs of
inpatient hospital services... recognized under
this subchapter for such hospital for the
preceding twelve-month cost reporting
period...
42 U.S.C. §1395ww(b)(3)(A)(i).
The base year is the 12-month or longer cost reporting
period ending on or after September 30, 1982 and before
September 30, 1983. Despite the ceiling, TEFRA expressly
included a specific exception which allowed a hospital to
adjust its calculated "target amount" to account for events or
circumstances beyond the hospital's control. In pertinent
part, 42 U.S.C. §1395ww(b)(4)(A) (hereinafter "Subsection
(b)(4)(A)") (App. N) states as follows:
The Secretary shall provide for an
exemption from, or an exception and
adjustment to, the method under this
subsection for determining the amount of
payment to a hospital where events
beyond the hospital's control, or
extraordinary circumstances... Create a
distortion in the increase in costs for a cost
reporting period (including any distortion
in the cost of the base period against which
such increase is measured). [emphasis
added]
In 1983, TEFRA was replaced by the Prospective
Payment System ( "PPS"). PPS radically changed the method
of reimbursement for inpatient costs by requiring that the
Hospitals and other health care providers be compensated on
the basis of Prospectively determined national and regional
rates, regardless of actual operating costs. 42 U.S.C.
§1395ww(d) (App. O). Because of the dramatic change in
the way providers would be reimbursed under PPS, Congress
provided a four-year transition period (the "Transition
Period") during which Medicare reimbursement was based on
a blend of the old and new systems. The express reason for
the phase-in period for PPS was to "minimize disruption that
might otherwise occur: because of sudden changes in
reimbursement levels." S.Rep.No. 23, 98th Cong., Ist Sess.
53, reprinted in 1983 U.S. Code Cong. & Admin. News 143,
193. (App. R). A hospital's reimbursement for the Transition
Period was calculated using a formula combining a hospital-
specific component (based on actual allowable costs) of each
hospital's payment rate with the PPS federally prescribed
reimbursement rate. 42 U.S.C. §139S5Sww(d)(1)(A). See also
42 C.F.R. §412.71 and §412.72 (App. P and App. Q). The
hospital-specific portion ("HSP") of a hospital's rate is
defined under PPS for the Transition Period as follows:
[T]he target percentage... of the hospital's
target amount for the cost reporting period
(as defined in subsection (b)(3)(A) of this
subsection)... |
42 U.S.C. §1395ww(d)(1)(A)(i1)(1).
The percentage of each rate to be used to calculate
reimbursement was statutorily prescribed for each of the four
years of the Transition Period, with a gradual increase of
basis in the prospective rate. Therefore, during the four years
there would be both a TEFRA-based element and a PPS-
based element included in every hospital's reimbursement
rate. By the fiscal year ending October 1, 1987, inclusion of
the actual cost rate in calculating reimbursement would be
phased out completely and only the national standardized rate
would remain. 42 U.S.C. §1395ww(d)(1)(c).
rcs etw SsikedLhs Rahat eed AS
a 2
i Indigent Health Care Program Assessment
In 1984, subsequent to the Hospitals’ base year but
prior to the first year for which payments were made under
PPS, the State of Florida imposed the Indigent Health Care
Program ("IHCP") assessment against all Florida hospitals in
order to help fund health care services to indigent persons.
The assessment is a recurring annual assessment calculated at
One percent (1%) of a hospital's annual net Operating revenue
for the fiscal year ending subsequent to May 18, 1984, and
one and one-half percent (14%) for each fiscal year
thereafter. Fla. Stat. §395.101 (1985); see also Fla. Stat.
§409.2662(1) (1985).
Prior to the IHCP, there was no similar assessment or
obligation imposed on Florida hospitals to fund indigent care,
and these assessments have not been imposed throughout the
United States. The IHCP is unique to Florida hospitals.
Because the IHCP assessment was imposed subsequent to the
Hospitals’ base years, the Hospitals' respective target amounts
used in the interim years were calculated without factoring in
the additional cost of the IHCP assessment. Although the
Intermediary determined that the IHCP assessment is an
allowable cost (which, as a result, would have had an impact
on the Petitioners’ base year if it had been in place in 1982),
the Intermediary failed to adjust the Petitioners’ hospital
specific components of their PPS payments to reflect the
increased costs to the Hospitals resulting from the IHCP
assessment.
D. Proceedings Below
This action began as an appeal to the Provider
Reimbursement Review Board (the "PRRB") by 114 Florida
acute care hospitals Participating in the Medicare Program
for a review of the Medicare Intermediary's determination of
the Hospitals’ reimbursement for the first fiscal year under
PPS. By order dated October 31, 1990, the PRRB, on its
own motion, ruled that it did not have the authority to grant
the retroactive adjustment to the Hospitals’ respective
prospective payment rate in order to expedite a judicial
review and the Hospitals filed an action in the United States
District Court for the Middle District of Florida pursuant to
42 U.S.C. §139500(f). On cross motions for summary
judgment, the Middle District adopted the Report and
Recommendation of United States Magistrate Judge
Thomas G. Wilson and entered a judgment in favor of the
Secretary.
An appeal was taken to the United States Court of
Appeals for the Eleventh Circuit on January 7, 1994,
pursuant to Federal Rule of Appellate Procedure 4(a)(1). On
April 19, 1995, the Eleventh Circuit affirmed the judgment
of the Middle District of Florida by its opinion, which noted
conflicts in a prior Circuit Court ruling. [App. A]. This
Court has jurisdiction of this matter pursuant to Rule 10,
Rules of the Supreme Court of the United States.
REASONS FOR GRANTING THE WRIT
A. To Settle a Controversy Among the Circuits Over
a Significant Legal Issue of Continuing
Importance
The Petitioners respectfully submit that the issuance
of a Writ of Certiorari in this case will allow the Court to
settle a conflict among the Third, Ninth, and District of
Columbia Circuits, and now the Eleventh Circuit, on the
statutory construction of a significant provision of the Social
Security Act. The conflicting opinions of the Circuits are
based on different and inconsistent legal theories and have
ee ee ee
«
created confusion in the law. Even while relying on the
Third Circuit in Sacred Heart Medical Center y. Sullivan,
958 F.2d 537 (3rd Cir. 1992) (App. L) and the D.C. Circuit in
Episcopal Hospital et al. y Shalala, 994 F.2d 879 (D.C. Cir.
1993) (App. I), the Eleventh Circuit in this case recognized
the contrary opinion on the issue espoused by the Ninth
Circuit in Community Hospital of Chandler v. Sullivan, 963
F.2d 1206 (9th Cir. 1992) (App. H). The confusion of the
law, as well as the Ongoing litigation in the circuit courts, the
district courts and before the PRRB, will continue unless this
Court resolves the conflict.
The Petitioners acknowledge that this issue was
presented to this Court in the Petition for Certiorari filed in
Episcopal Hospital et al. y Shalala, 994 F.2d 879 (D.C. Cir.
1993), cert. denied. No. 93-429, 62 U.S.L.W. 3468
(January 18, 1994). However. in that case, the Court of
Appeals had found that the Petitioners had failed to qualify as
a special exception of Subsection (b)(4)(A), so a decision by
this Court that Subsection (b)(4)(A) is applicable under PPS
would not have allowed the Petitioners in that case to prevail
anyway. In the instant case, the IHCP assessment was
determined by the Intermediary to Satisfy the accepted
standards for the Subsection (b)(4)(A) adjustment and was
never contested by the Secretary when the matter was before
the PRRB. The Petitioners further acknowledge that this
issue was presented to the Court in a Petition for Certiorari
filed in The Methodist Hospital v. Donna E. Shalala, 6 F.3d
829 (D.C. Cir. 1993), cert. denied, No. 93-1449, 114 Sct
2162 (June 6. 1994). In that case, the District of Columbia
Circuit overturned the decision of the district court Without
opinion, relying on its decision in Episcopal.
-10-
1. Secretary's Interpretation Under the Chevron
Analysis
Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984) (App. G)
provides a two-step process for the review of a challenge to
agency action, such as the Secretary's interpretation of the
Medicare Act. First, a Court must determine if congressional
intent is clear. If so, the analysis is complete and the
Secretary must follow the plain meaning of the statute. 467
U.S. at 842. If congressional intent is not clear, a Court must
go to the second step and determine if the Secretary's
interpretation of the statute is reasonable. If the
interpretation is determined to be reasonable, deference
should be given to the Secretary. However, as this Court
cautioned in Board of Governors of the Fed. Reserve Sys. v.
Dimension Fin. Corp., 474 U.S. 361, 368 (1986), "[t]he
traditional deference Courts pay to Agency interpretation is
not to be applied to alter the clearly expressed intent of
Congress.”
a [he Error in the Secretary's Interpretation of
Subsection (b)(4)(A).
The position the Secretary has taken in this
and other cases is that the "special circumstances" exception
of Subsection (b)(4)(A) is not applicable to the calculation of
the Hospitals’ HSP during the Transition Period. This
argument is based on the premise that (b)(4)(A) was not
expressly incorporated by the language of (b)(3)(A). The
Secretary's premise ignores the fact that (b)(3)(A) does not
expressly include any subsections, while it does exclude
TEFRA provision 42 U.S.C. §1395ww(a). It does not
exclude (b)(4)(A). The doctrine of "expressio unius est
exclusio alterius" clearly applies in that not being expressly
excluded, (b)(4)(A) is included. See also Andrus v. Glover
ait
€
x
a
1]
3
4
Ta tPA o EO ie AEA Ete i Shek ee
binant naar.
ott.
Construction Company, 446 U.S. 608, 617 (1980) ("[w]here
Congress explicitly enumerates certain exceptions to a
general prohibition, additional exceptions are not to be
implied in the absence of a contrary legislative intent.").
The Secretary has further argued that
Subsection ( b)(4)(A) does not apply under PPS because the
PPS statute contains its own Provision for adjustments and
exceptions in Subsection (d)( 5), and therefore the provisions
in Subsection (b)(4)(A) are at odds with Subsection (d)(5)
because Subsection (d)(S) does not repeat (b)(4)(A)'s
directive to the Secretary to make adjustments to
reimbursement amounts under extraordinary circumstances.
The fact that Subsection (d)(5) does not repeat Subsection
(b)(4)(A) provides evidence of the congressional intent that
Subsection (b)(4)(A) was to be applicable under PPS.
Subsection (d)(5)(I) provides for exceptions to
"payment amounts," whereas Subsection (b)(4)(A) provides
for exceptions to "such method," referring to the method for
determining the HSP of the PPS rate in the first instance.
Congress was no doubt aware that Subsection (b)(4)(A)
adjustments were one method of ultimately affecting how
much a hospital would be paid. It would have been
redundant to repeat this Provision in Subsection (d)(5).
Rather, Congress simply added a number of other exceptions
and adjustments in Subsections (b)( 5)(A)-(I), each of which
covered something other than a cost due to extraordinary
circumstances beyond the hospitals’ control. The additional
exceptions and adjustments in Subsection (d)(5) are a list of
Situations where Congress felt there should be a Change in
payment without modifying the underlying and basic
determination of the methodology to be used as a Starting
point for determining the payment amount for all hospitals.
Therefore, Petitioners submit that Subsections (b)(4)(A) and
(d)(S) should be read in harmony, complementary, giving
effect to each part of the statute in furtherance of a
congressional purpose to provide for exceptions both as to
methodology as well as to more esoteric payment
determinations not predicated on the notion of allowable
costs. See Florida & American Medical Association, Inc. v
Department of Health, Education and Welfare, 479 F. Supp.
1291. ("Courts have a duty to interpret a statute so that all
provisions can be reconciled into a harmonious whole.
without internal conflict or repugnancy if possible.").
VG
“ ,
3. Chandler
In Community Hospital of Chandler v. Sullivan, 963
F.2d 1206 (9th Cir. 1992), the Ninth Circuit addressed the
issue of whether the special exception found in 42 U.S.C.
§1395ww(b)(4)(A) is applicable to PPS during the Transition
Period. The Court in that case concluded that the TEFRA
adjustments under subparagraph (b)(4)(A) are applicable to
PPS, utilizing the first prong of the analysis of Chevron
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984). In its opinion, the Chandler Court
specifically recognized the contrary ruling in Sacred Heart
Med. Ctr. v. Sullivan, 958 F.2d 537 (3rd Cir. 1992), and
expressly rejected the Third Circuit's reasoning in that case.
The Court in Chandler noted that under PPS, the starting
point for all covered hospitals, was the HSP which in turn
required a determination of the hospital's base year costs.
However, Subsection (b)(4)(A) was intended to provide the
mechanism whereby an aberration or distortion in the base
year costs due to extraordinary circumstances would warrant
an adjustment to the target amount. There is no other
mechanism in the statute to accomplish this result. The
Ninth Circuit in Chandler thus concluded that Congress
intended Subsection (b)(4)(A) to be read in conjunction with
Subsection (b)(3)(A) and noted as follows:
a
ck.
[W]e have noted before, "although the
PPS is basically embodied within 42
U.S.C. §1395ww(d)... there is clear
interface between § 1395ww subsections
(b) and (d)." Sunshine Health, 809 F.2d at
1398. In Sunshine Health, we rejected the
Secretary's argument that Congress did not
intend to incorporate § 1395ww(b)(5). Id.
The Secretary has conceded that PPS target
amount calculations were based in part on
§ 1395ww(b)(3)(A). Thus in light of the
fact that § 1395ww(d) "by its own terms
incorporates one of the main concepts of
subsection (b)," we found it illogical to
exclude from PPS other subsections of
§ 1395ww(b). Id. That reasoning applies
with equal force here: It would be equally
illogical to exclude § 1395ww(b)(4).
963 F.2d at 1214, n.4. It is worth noting that the Secretary
did not petition for certiorari from the Ninth Circuit opinion
in Chandler.
4. Sacred Heart and Episcopal
The Third and D.C. Circuits. also relying on
Chevron's ‘first Step analysis, have held that the plain
language of the statute evidences clear congressional intent
that the TEFRA special exception provision is not applicable
to the calculation of the HSP under PPS. The Third Circuit
in Sacred Heart Medical Center v. Sullivan, rejected the
district court's finding that while the TEFRA component was
still a part of computing reimbursement during the transition
period, it was only reasonable that the corresponding
Provision which gave TEFRA flexibility should apply.
Utilizing a first step Chevron analysis, the Third Circuit
Y=
further found that deference should be given to the
Secretary's "reasonable" interpretation of the statute under a
second step analysis of Chevron. 958 F.2d 537, 548 (3rd
Cir. 1992).
In Episcopal Hospitals v. Shalala, the D.C.
Circuit also deferred to the Secretary's interpretation of the
statute, but without defining the Secretary's interpretation.
994 F.2d 879 (D.C. Cir. 1993). Furthermore, the issue in this
case was not an issue in the Episcopal case at the district
court level. In those proceedings, the parties assumed that
the TEFRA adjustments applied in the calculation of the
HSP. The question was one of whether the adjustment
sought was one which fell under the (b)(4)(A) exception.
Not having been an issue at the district court level, a
complete legislative and regulatory record was _ not
established on the issue of whether Subsection (b)(4)(A) was
applicable under PPS during the transition years. It is also
significant to note that the Court in Episcopal does not
acknowledge the existence of the Chandler case nor does it
reference the Sacred Heart case.
Petitioners submit that the Third and D.C.
Circuits erred in ignoring legislative history and
congressional intent, and in allowing the Secretary to depart
from its prior position without a true "reasoned justification."
The deference accorded by the Third Circuit to the
Secretary's interpretation is misplaced and inappropriate
where the interpretation is inconsistent with prior
interpretations and positions taken by the Secretary, and
there is no rational reason for the change.
5. District Court Decisi
Until the instant case, every federal district
court decision involving this issue has held that the
oie;
legislative history of the statute Clearly demonstrates
congressional intent to incorporate the TEFRA special
exception adjustment into PPS during the Transition Period.
All of the courts based their conclusion on the clear language
of the statute (first prong of the Chevron case), obviating the
need to make an inquiry into the reasonableness of the
Secretary's interpretation. The decision by the district court
in this case is forced to depart from the prior decisions
because of the Sacred Heart and Episcopal cases.
6 “Ggeemiaeaiemece
The question presented to the Court in this
Case is one of continuing importance. Not only are 114
hospitals affected by the Court's decision in this case, but
there are five cases involving this issue currently pending
before the United States District Court for the District of
Columbia Circuit. In addition, there are an unknown
number of cases pending before the PRRB 5
3 Redbud Hospital District v. Heckler, Medicare and Medicaid
Guide (CCH) 934,085 (N.D. Cal. July 30, 1984), vacated on other
grounds, 473 U.S. 1308 (1985): Greenville Hospital System v. Heckler,
642 F. Supp. 15 (D.S.C. 1985), after remand. Medicare and Medicaid
Guide (CCH) 935,880 (D.S.C. 1986); Newport Hospital and Clinic, Inc.
v. Sullivan, Medicare and Medicaid Guide (CCH) 938,844 (D.D.C. Sept.
24, 1990), Secretary's appeal voluntarily withdrawn (199| ); The
Methodist Hospital v. Sullivan, Medicare and Medicaid Guide (CCH)
139,627 (D.D.C. September 20, 1991), reversed, 6 F.3d 829 (D.C. Cir.
Sept. 16, 1993) adopting Episcopal, 994 F 2d 879 (D.C. Cir. 1993), cert.
denied, No. 93-1449, 114 S.Ct. 2162 (June 6, 1994): Sacred Heart
Medical Center v. Sullivan. 199} U.S. Dist. Lexis 9535 (E.D.‘ Pa. 1991),
reversed, 958 F.2d 537 (3rd Cir. 1992).
‘ Nyack Hospital v. Sullivan, No. 92-0455; Okeechobee Hospital
v. Sullivan, No. 92-1323; HCA Services of Texas v. Sullivan, No.
92-1324; Hospital Corporation of Tennessee v. Sullivan, No. 92-1325;
and General Care Corp. v. Sullivan, No. 92-1326. In addition, there is
- 16-
B. To Prevent the Propagation of Mistakes and to
Clarify the Appropriate Standard of Deference to
be Given Agency Interpretations
Standards of deference to agency interpretations of
Statutes were established in the Chevron case and in Good
Samaritan Hospital v. Shalala, 113 $.Ct. 2151 (1993).
Petitioners submit that the Third and District of Columbia
Circuits have improperly expanded the standards set forth in
Chevron and Good Samaritan by affording deference to the
Secretary's interpretation of Subsection (b)(4)(A) in the
Sacred Heart and Episcopal cases. The District Court and
the Eleventh Circuit decisions rendered in this case
demonstrate that the errors made by the District of Columbia
Circuit in Episcopal and by the Third Circuit in Sacred Heart
are now being propagated.
As stated above, the Chevron case provides a two-
step analysis for the review of statutory construction. The
first step is a determination of whether the intent of Congress
is clear, in which case the clear language of the statute
should be followed. If congressional intent is not clear,
deference will be given to a reasonable interpretation made
by a government agency. The Good Samaritan case clarified
the two-step process by noting the following:
On the other hand, the consistency of an
agency's position is a factor in assessing
one case pending in the Southern District of New York, Good Samaritan
Hospital Regional Medical Center v. Shalala, No. 92-8726.
5 The PRRB has no mechanism for determining the
number of cases before it involving this issue, although we understand
from counsel involved in cases cited herein, that they represent hospitals
pending PRRB appeals on this issue.
pc tc I a inane
=
Hah Bh NAMEN a IFO RON Ey MRA EH Seba lia Hd Rie
Me see am
~ae.
the weight that position is due. As we
have stated, "[a]n agency interpretation of
a relevant provision which conflicts with
the agency's earlier interpretation is
‘entitled to considerably less deference’
than a consistently held view." .. How
much weight should be given to the
agency's views in such a situation. and in
particular where its shifts might have
resulted from intervening in possibly
erroneous judicial decisions and its current
position from one of our own rulings will
depend on the facts of individual Cases.
The acknowledgment that blind deference to an agency's
interpretation of a statute would be inappropriate is important
in this case where the Secretary has taken a position in
litigation which is contrary to certain official actions taken
with respect to the same TEFRA adjustments.
l. Legislative History.
When TEFRA was enacted, _the
Congressional Conference Committee Report reflected
Congress’ intent to maintain fairness in the administration of
the Medicare Program and stated as follows:
The Secretary of HHS would be required
to provide for appropriate exemptions,
exceptions and adjustments as in the
Senate provision. The Conference notes
that adjustments could have the effect of
either increasing or decreasing the target
amount payment amounts. The principal
intention in authorizing such adjustments
is to take into account factors that would
« 18 -
distort either base period, or operative cost
increase in any of the three years to which
the provisions are applicable. Examples of
such factors include... extraordinary
circumstances beyond the hospital's
control...
H.R. Rep. No. 760, 97th Congress, 2d Sess. 420.
When the Secretary adopted _ regulations
implementing PPS, she acknowledged the congressional
mandate and stated in the preamble to the final PPS
regulations:
We believe that Congress intended to
assure, by giving us broad authority under
the law to provide for exceptions,
exclusions and adjustments, that some
hospitals are not advantaged’ or
disadvantaged by unique circumstances in
their base year that do not reflect their
usual cost of operation per case. This
intent is indicated in §1886(b)(4)(A)
[Subsection (b)(4)(A)] of the Act.
49 Fed. Reg. at 261 (January 3, 1984).
7 The 's Changing Positi
Hundreds of Medicare providers, including
the Petitioners, relied upon the Secretary's assurance that the
TEFRA adjustments would be available to calculate the
HSP.
Subsequent to the Secretary's statement in the
Federal Register, the Secretary granted TEFRA adjustments
a i
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a
4
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ad
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ia i i
«its
under Subsection (b)(4)(A) to certain hospitals for PPS
purposes, one hospital being Greenville Hospital. Greenville
Hospital Systems v. Heckler. 642 F. Supp. 15 (D.S.C. 1985)
(concerning jurisdiction), after remand, Medicare and
Medicaid Guide (CCH) 135,880 (D.S.C. 1986) (granting
retrospective relief for an HSP adjusted by the Secretary
under Subsection (b)(4)(A)). In addition, the Secretary
conceded in another case in California that Subsection
(b)(4)(A) was to be incorporated in determining the target
amount used in calculating PPS rates during the transition
period. Redbud Hospital District vy. Heckler, Medicare &
Medicaid Guide 134,085 (N.D. California 1984).
The Secretary's Position in Sacred Heart and
Episcopal is contrary to its initial "official" position and is a
post hoc rationalization which should be accorded little or no
deference at all. Motor Vehicles Manufacturers Association
v. State Farm Mutual Automobile Insurance Company, 463
U.S. 29 (1983). The Secretary's change in Position does not
mirror the change allowed in Good Samaritan where the
agency was found to have adopted a mistaken interpretation
of a statute because of an erroneous Court decision. The
Secretary has never made that claim with respect to this
issue, and has merely changed her position Claiming that her
prior interpretation was incorrect. Therefore, the deference
afforded to the Secretary in the Episcopal and Sacred Heart
cases was clearly incorrect and inconsistent with the
standards set forth by this Court in the Chevron and Good
Samaritan cases. The District Court in the instant case, and
the Eleventh Circuit's affirmance of that decision, is another
example of the flawed reasoning which is inconsiStent with
the Chevron and Good Samaritan standards, in ignoring the
statement made by the Court in Good Samaritan that a lower
level of deference should be accorded to changing
interpretations.
Petitioners submit that this case would allow this
Court the opportunity to clarify its position with respect to
the proper judicial deference to be accorded to a new position
taken by an agency based on its own conclusion that its
initial interpretation was incorrect.
CONCLUSION
Petitioners respectfully request the Court grant this
Petition and issue a writ of certiorari to the United States
Court of Appeals for the Eleventh Circuit. The granting of
the Petitioners’ request will allow this Court to address the
inconsistency and discrepancy in the law on this critical issue
which affects hundreds of Medicare providers.
Respectfully Submitted,
NANCY A. ROMFH
MERSHON, SAWYER,
JOHNSTON, DUNWODY &
COLE
Attorneys for Petitioners
Phillips Point - East Tower
777 South Flagler Drive, Suite 900
West Palm Beach, Florida 33401
(407) 659-5990
|
|
la
APPENDIX A --- OPINION OF THE UNITED STATES
COURT OF APPEALS, ELEVENTH CIRCUIT,
DATED APRIL 19, 1995
HILLSBOROUGH COUNTY HOSPITAL
AUTHORITY, d/b/a Tampa General Hospital, et al.
Plaintiffs-A ppellants.
v.
DONNA E. SHALALA. Secretary,
United States Department of
Health and Human Services.
Defendant-Appellee.
No. 94-2050
April 19, 1995
cd * *
James M. McCann, Jr. Mershon, Sawyer, Johnston.
Dunwody & Cole, West Palm Beach, FL, for plaintiff.
Lana Smith Sensenig, Department of Health and
Human Services, Atlanta. GA, for defendant.
Acute care hospitals sought judicial review of
determination by Secretary of Health and Human Services
that hospitals were not entitled to adjustment in their
Medicare _ reimbursements based on extraordinary
circumstances. The United States District Court for the
2a
Middle District of Florida, No. 91-12-CIV-T-21(B),
Ralph W. Nimmons, Jr., J., upheld Secretary's determination.
Hospitals appealed. The Court of Appeals held that
Medicare's Prospective Payment System (PPS) for
reimbursement of health care providers does not incorporate
prior provision of the Tax Equity and Fiscal Responsibility
Act (TEFRA) which permitted adjustment of reimbursement
rates for extraordinary circumstances.
Affirmed.
Social Security and Public Welfare - Key No. 241.10
Medicare's Prospective Payment System (PPS) for
reimbursement of health care providers does not incorporate
prior provision of the Tax Equity and Fiscal Responsibility
Act (TEFRA) directing the Secretary of Health and Human
Services to adjust reimbursement amounts’ where
"extraordinary circumstances" create a distortion in the
increase in costs for a cost reporting period; the PPS contains
its own provision endowing Secretary with authority to
create exceptions to amount of reimbursement that would
otherwise be afforded under the PPS. Social Security Act,
§1886(b)(4)(A), (d), as amended, 42 #£4US.C.A.
§1395ww(b)(4)(A), (d).
Appeal from the United States District Court for the
Middle District of Florida.
Before DUBINA, Circuit Judge, RONEY and
ESCHBACH*, Senior Circuit Judges.
Honorable Jesse E. Eschbach, Senior U.S. Circuit Judge for the
Seventh Circuit, sitting by designation.
PER CURIAM:
Plaintiffs, approximately 114 acute care hospitals
("the Hospitals") belonging to the Florida Hospital
Association, appeal the district court's grant of summary
judgment in favor of the Secretary of Health and Human
Services ("the Secretary") denying the Hospitals' claim that
they were entitled to an adjustment in their Medicare
reimbursements based on the "extraordinary circumstances"
exception of 42 U.S.C. §1395ww(b)(4)(A). Specifically, the
district court upheld the Secretary's determination that
§1395ww(b)(4)(A) was not incorporated into 42 U.S.C.
§1395ww(d), Medicare's Prospective Payment System
(PPS). We affirm.
This particular issue of Statutory interpretation has
already been addressed by three of our sister circuits. Both
the D.C. Circuit and the Third Circuit have held that the
Secretary could reasonably conclude that Congress did not
incorporate the “extraordinary circumstances" exception of
§1395ww(b)(4)(A) into the PPS. Episcopal Hospital y.
Shalala, 994 F.2d 879. 884 (D.C. Cir. 1993), cert. denied
US. ___, 114 S.Ct. 876, 127 L.Ed.2d 73 (1994):
Sacred Heart Medical Center y Sullivan, 958 F.2d 537, 550
(3rd Cir. 1992). In examining the plain language of the PPS
Statute, these courts point out that §1395ww(d)(1) makes no
reference to §1395ww(b)(4)(A), even though it expressly
refers to §1395ww(b)(3)(A), and, furthermore, the PPS
contains its own list of exceptions in §139Sww(d)(5),
eliminating any need to incorporate §1395ww(b)(4)(A)'s
exception. See Episcopal, 994 F.2d at 883; Sacred Heart,
958 F.2d at 545. The Sacred Heart court also notes that the
legislative history supports the Secretary's determination that
Congress did not intend to incorporate §1395ww(b)(4)(A)
into the PPS. /d., 958 F.2d at 547. Although the Ninth
4a
Circuit has expressed a contrary view on this issue, see
Community Hospital of Chandler v. Sullivan, 963 F.2d 1206,
1214 n. 4 (9th Cir. 1992), we nonetheless find the reasoning
of the D.C. and Third Circuits persuasive. We therefore
AFFIRM the judgment of the district court.
Sa
APPENDIX B --- JUDGMENT OF THE UNITED
STATES COURT OF APPEALS, ELEVENTH
CIRCUIT, DATED APRIL 19, 1995
HILLSBOROUGH COUNTY HOSPITAL
AUTHORITY, d/b/a Tampa General Hospital, et al.
Plaintiffs-Appellants.
v.
DONNA E. SHALALA,
Defendant-Appellee.
No. 94-2050
D.C. Docket No. 91-12-CIV-T-21(B)
April 19, 1995
* * *
James M. McCann. Jr., Mershon, Sawyer, Johnston.
Dunwody & Cole, West Palm Beach, FL, for plaintiff.
Lana Smith Sensenig, Department of Health and
Human Services, Atlanta, GA, for defendant.
Appeal from the United States District Court -
for the Middle District of F lorida
6a
Before DUBINA, Circuit Judge, RONEY and
ESCHBACH*, Senior Circuit Judges.
JUDGMENT
This cause came to be heard on the transcript of the
record from the United States District Court for the Middle
District of Florida, and was argued by counsel;
UPON CONSIDERATION WHEREOF, it is now
hereby ordered and adjudged by this Court that the judgment
of the said District Court in this cause be and the same is
hereby AFFIRMED:
It is further ordered that plaintiffs-appellants pay
defendant-appellee the costs on appeal to be taxed by the
Clerk of this Court.
Entered: April 19, 1995
For the Court: Miguel J. Cortez, Clerk
By:__/s/ Matt Davidson
Deputy Clerk
ISSUED AS MANDATE: 6/19/95
Honorable Jesse E. Eschbach, Senior U.S. Circuit Judge for the
Seventh Circuit, sitting by designation.
7a
APPENDIX C --- ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE MIDDLE DISTRICT
OF FLORIDA, TAMPA DIVISION, DATED
NOVEMBER 9, 1993.
HILLSBOROUGH COUNTY HOSPITAL
AUTHORITY, d/b/a TAMPA GENERAL
HOSPITAL, et al.,
Plaintiffs,
¥.
DONNA E. SHALALA. Secretary,
Department of Health and Human Services.
Defendant.
Case No. 91-12-Civ-T-21B
United States District Court
Middle District of Florida
Tampa Division
November 9, 1993
*x * *
James M. McCann, Jr., Mershon, Sawyer, Johnston,
Dunwody & Cole, West Palm Beach, FL. for plaintiff.
Lana Smith Sensenig, Department of Health and
Human Services, Atlanta, GA, for defendant.
8a
ORDER
This cause came on for consideration of the parties’
cross-motions for summary judgment (Dkts. 17 and 26).
Pursuant to the Court's Order of referral (Dkt. 35), this matter
was considered by the Magistrate Judge, who has filed his
report recommending that summary judgment be granted to
the defendant.
Upon consideration of the Report and
Recommendation (Dkt. 42) of the Magistrate Judge, no
objection thereto having been filed, and upon the Court's
independent examination of the motions and the file, the
Court finds that the Report and Recommendation should be
and is hereby adopted and confirmed and made a part
hereof. Accordingly, it is
ORDERED AND ADJUDGED that the plaintiffs’
motion for summary judgment (Dkt. 17) is DENIED and the
defendant's motion for summary judgment (Dkt. 26) is
GRANTED. The Clerk is directed to enter judgment on
behalf of the defendant and against the plaintiffs.
DONE AND ORDERED, at Tampa, Florida, this
9th day of November, 1993.
/s/
RALPH W. NIMMONS, JR.
United States District Judge
Copies to: Counsel of record
9a
APPENDIX D --- JUDGMENT OF THE UNITED
STATES DISTRICT COURT FOR THE MIDDLE
DISTRICT OF FLORIDA, DATED
NOVEMBER 9, 1993
HILLSBOROUGH COUNTY HOSPITAL
AUTHORITY, d/b/a TAMPA GENERAL
HOSPITAL, et al.,
V.
DONNA E. SHALALA. Secretary,
Department of Health and Human Services.
Case No. 91-12-Civ-T-21B
United States District Court
Middle District of Florida
November 9, 1993
* * *
James M. McCann, Jr.. Mershon, Sawyer, Johnston.
Dunwody & Cole, West Palm Beach, FL, for plaintiff.
Lana Smith Sensenig, Department of Health and
Human Services, Atlanta, GA, for defendant.
JUDGMENT IN A CIVIL CASE
IT IS ORDERED AND ADJUDGED that plaintiffs’
motion for summary judgment is DENIED and the
defendant's motion for summary judgment is GRANTED
10a
and judgment is entered on behalf of the defendant and
against the plaintiffs.
Nov 9 1993 /s/_ David L. Edwards
Date Clerk
Deputy Clerk
APPENDIX E --- REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
THOMAS G. WILSON, UNITED STATES DISTRICT
COURT, MIDDLE DISTRICT OF FLORIDA, TAMPA
DIVISION, DATED OCTOBER 13, 1993
HILLSBOROUGH COUNTY HOSPITAL
AUTHORITY, ET AL..
Plaintiffs,
v.
DONNA E. SHALALA. Secretary,
United States Department of
Health and Human Services.
Defendant.
CASE No. 91-12-CIV-T-21(B)
October 13, 1993
* ss *
James M. McCann, Jr., Mershon. Sawyer, Johnston,
Dunwody & Cole, West Palm Beach, FL. for plaintiff.
Lana Smith Sensenig, Department of Health and
Human Services, Atlanta, GA, for defendant.
12a
REPORT AND RECOMMENDATION
This cause came on for a report and recommendation
upon the parties’ cross motions for summary judgment
(Docs. 17 and 26).* At the hearing on the motions, both
sides acknowledged that there were no factual disputes that
would preclude entry of summary judgment. For the reasons
stated below, I recommend that summary judgment be
granted in favor of the defendant Secretary of Health and
Human Services.
This matter concerns the interpretation of statutes that
govern reimbursement of hospitals and other health care
providers under the Social Security Act. The Social Security
Act was amended several times during the 1980's with the
result that, in the circumstances presented here, the
relationship between the amendments left the controlling law
unclear. Accordingly, it is appropriate to outline those
various amendments in order to explain the dispute in this
case.
Until 1982, hospitals and other health care providers
were reimbursed for the costs of services actually and
necessarily provided to Medicare beneficiaries under the
Social Security Act. 42 U.S.C. 1395x(v). In 1982, however,
Congress enacted the Tax Equity and Fiscal Responsibility
Act of 1982 ("TEFRA"), which altered the "reasonable cost"
reimbursement scheme by imposing a ceiling on the rate of
increase of inpatient operating expenses recoverable under
This matter was specifically referred to the undersigned by the
Honorable Ralph W. Nimmons, Jr., United States District Judge
(Doc. 35).
ae
13a
the Social Security Act. This rate-of-increase ceiling was
calculated using a hospital's "target amount," a statutorily
defined amount which, in turn, was based on the hospital's
actual operating costs for a particular twelve-month cost
reporting _ period. 42 U.S.C. 1395ww(b)(3)(A).
Significantly, the TEFRA plan included a specific exception
permitting hospitals to adjust their calculated "target
amount" to account for "events beyond the hospital's control
or extraordinary circumstances" which rendered the "base
year" operating-cost estimate inaccurate. 42 U.S.C.
1395ww(b)(4)(A).
In 1983, however, Congress replaced the TEFRA
reimbursement scheme with the Prospective Payment System
("PPS") that is currently in effect today. This reform of the
Medicare Program substantially changed the method of
reimbursement for inpatient costs, since it requires that
hospitals and other health care providers be compensated on
the basis of prospectively determined national and regional
rates, rather than actual operating costs. Because the PPS
represented such a dramatic change in the calculation of
inpatient cost reimbursement, Congress provided a four (4)
year transition period to enable hospitals and other health
care providers to adjust their operating procedures. During
this interim period, Medicare reimbursement for inpatient
hospital services was based upon statutorily prescribed
percentages of both the hospital's actual costs and the PPS's
federally prescribed reimbursement rate. The dispute in this
case involves the method of computation of a hospital's
"target amount" that is used in this interim period. 42 U.S.C.
1395ww(b)(3)(A). :
The plaintiffs, approximately 114 acute care hospitals
in the State of Florida, each seek to amend the imputed
operating costs used in the calculation of their respective
"target amounts" to reflect the increase in Operating costs
l4a
precipitated by the Indigent Health Care Program ("IHCP")
assessment imposed in 1984 by the State of Florida. The
plaintiffs argue that each hospital's "target amount" under 42
U.S.C. 1395ww(b)(3)(A) was calculated without respect to
these IHCP assessments, and that 42 U.S.C.
1395ww(b)(4)(A), which permits an adjustment for
"extraordinary circumstances," entitles them to include the
IHCP assessments into the calculation (Doc. 39). Such an
adjustment would permit the plaintiff hospitals to increase
their §1395ww(b)(3)(A) “target amount," which would in
turn result in a greater recovery during the interim period.
The Secretary, in contrast, contends that §1395ww(b)(4)(A),
which is a remnant from TEFRA, has no application to the
calculation of the "target amount" during the interim period.
II.
The PPS. provisions refer in 42 U.S.C.
1395ww(d)(1)(A) to §1395ww(b)(3)(A) for the definition of
a hospital's "target amount," the amount used in calculating a
hospital's operating costs for a twelve-month cost reporting
period. Because §1395ww(b)(3)(A) was an operative
provision under the prior TEFRA reimbursement scheme, the
plaintiffs argue that the interim scheme also must have
incorporated from TEFRA §1395ww(b)(4)(A), which
authorized adjustments to the "target amount" for
extraordinary circumstances.
The plaintiffs’ argument, however, is not supported
by the language of the PPS provisions. Those provisions,
importantly, make absolutely no_ reference to
§1395ww(b)(4)(A). Moreover, §1395ww(b)(3)(A), which
the PPS expressly incorporates, enumerates only
subparagraphs C, D, and E as exceptions from the (b)(3)(A)
definition of a hospital's "target amount.” In other words,
15a
neither the PPS provisions, nor the statutorily incorporated
definition of "target amount" adopts the §1395ww(b)(4)(A)
“extraordinary circumstances" exception.
Furthermore, the statutory scheme indicates that
Congress did not intend to incorporate §1395ww/(b)(4)(A)
into the PPS. Thus, the adoption of §1395ww(b)(3)(A)'s
definition of "target amount" shows that Congress considered
the incorporation of TEFRA provisions and apparently
elected not to incorporate §1395ww(b)(4)(A). This
conclusion is strengthened by the fact that the PPS itself
contains its own list of exceptions and adjustments. 42
U.S.C. 1395ww(d)(5)(A-I).
For these reasons, the Secretary's position that the
PPS does not include §1395ww(b)(4)(A) is clearly the better
reading of the statutory scheme. The issue, however, is not
whether the Secretary's construction of the statute is the
preferred interpretation, but simply whether it is a reasonable
one. In Good Samaritan Hospital v. Shalala, > Qa
61 U.S.L.W. 4554, 4557 (1993), the Supreme Court recently
reiterated that, in the case of a statutory ambiguity, the courts
will generally defer to a permissible interpretation espoused
by the agency entrusted with the statute's implementation.
The deference afforded the Secretary's interpretation
is not lost because the Secretary previously had a different
view of the relationship between §1395ww(b)(3)(A) and
§1395ww(b)(4)(A). As the Supreme Court observed in
Good Samaritan Hospital, "the Secretary is not estopped
from changing a view she believes to have been grounded
upon a mistaken legal interpretation." Id. at 4558. Here.
counsel for the Secretary noted during the hearing that the
Secretary's initial confusion regarding the interaction
between these two provisions is at least partly attributable to
the difficulties associated with the dramatic change in
l6a
approach in the statutory schemes. It was undoubtedly also
partly attributable to the prolixity and obfuscation for which
Social Security statutes are legendary.
As previously indicated, the Secretary's conclusion
that §1395ww(b)(4)(A) is not a part of the interim
reimbursement scheme is the better interpretation of the
pertinent statutory provisions. In all events, her reading of
those provisions is certainly at least as plausible as the
plaintiffs’ construction. Id. at 4558-4559. Accordingly, her
interpretation should be accepted.
IIT.
Three courts of appeals have recently addressed this
particular issue of statutory construction. The courts of
appeals for both the Third Circuit and the District of
Columbia Circuit have considered whether
§1395ww(b)(4)(A) should be imported into the calculation of
a hospital's "target amount” under §1395ww(b)(3)(A). After
full analysis, each of those Circuits concluded that it should
not. Sacred Heart Medical Center v. Sullivan, 958 F.2d 537
(3d Cir. 1992); Episcopal Hospital v. Shalala, __ F.2d __
[Nos. 92-5033 and 92-5034, D.C. Cir. June 18, 1993]
(Doc. 39, Ex.).
The Ninth Circuit Court of Appeals in Community
Hospital of Chandler v. Sullivan, 963 F.2d 1206 (9th Cir.
1992), indicated a contrary conclusion. That decision,
however, failed to address certain critical points. For
example, the Ninth Circuit failed to explain why the
Secretary's statutory interpretation should not be accorded
deference. In addition, the Court did not consider the impact
of the PPS's own exceptions and adjustments in
§1395ww(d)(5). As a result, the Ninth Circuit's decision is
not sufficiently persuasive to warrant disregarding the well
17a
reasoned opinions of both the Third Circuit and the District
of Columbia Circuit.
IV.
For all of the foregoing reasons, I recommend that
summary judgment be granted in favor of the Secretary.
Respectfully submitted,
/s/
THOMAS G. WILSON
United States Magistrate Judge
NOTICE TO PARTIES
Failure to file written objections to the proposed
findings and recommendations contained in_ this report
within ten days from the date of its service shall bar an
aggrieved party from attacking the factual findings on
appeal. 28 U.S.C. 636(b)(1).
18a
APPENDIX F --- ORDER OF THE PROVIDER
REIMBURSEMENT REVIEW BOARD
DATED OCTOBER 31, 1990
Case No.: TM:86-1539G
90-D61
CERTIFIED MAIL
Joanne Erde, Esq.
Mershon, Sawyer, Johnston, Dunwody & Cole
Southeast Financial Center
200 S. Biscayne Blvd., Suite 4500
Dear Ms. Erde:
RE: Florida Hospital Specific Rate Group Appeal,
Provider Nos. - Various, Case No. 86-1539G,
90-D61, FYE - First PPS year, Board's Own Motion
Determination That It Lacks Authority To Decide
Whether the PPS Hospital Specific Rate (HSR)
Should Be Adjusted to Reflect a Factor for the
Indigent Care Tax Assessment
This is in response to the Provider's request for appeal of the
Indigent Care Tax Assessment issue in the above-captioned
case. Pursuant to 42 CFR 405.1842, the Board, on its Own
Motion, has decided to grant expedited judicial review on the
issue of whether the PPS Hospital Specific Rate (HSR) in the
first PPS year should be adjusted to reflect a factor for the
Indigent Care Tax Assessment, pursuant to 42 CFR 412.70 et
seq. The above-cited regulatory provision permits a
provider, which has requested and is entitled to a hearing
before the Board, under 42 USC 1395o00(a), to bypass the
Board's hearing procedure and obtain judicial review of an
19a
issue involving a question of law or regulation where the
Board determines that it is without authority to decide such
question.
The Board has reviewed the Providers' submissions
pertaining to the requests for hearing. The documentation
shows thai the estimated amount in controversy exceeds
$50,000.
The Board finds:
: That the Board has jurisdiction of the matter
for the subject year and that the Providers are
entitled to a hearing before the Board;
That there are no findings of fact for
resolution before the Board;
That the Board is bound by the applicable
existing Medicare law and regulations (42
CFR 405.1867); and
That the Board is without authority to decide
the legal question of whether the PPS
Hospital Specific Rate in the first PPS year
should be adjusted to reflect a factor for the
Indigent Care Tax Assessment, pursuant to 42
CFR 412.70 et seq.
Accordingly, the Board finds that this case properly falls
within the provisions of 42 USC 1395o00(f)(1) and “hereby
grants expedited judicial review on its Own Motion for the
Hospital Specific Rate issue for the subject year. The
Provider has 60 days from the receipt of this decision to
institute the appropriate action for judicial review.
20a
aan niki
Arthur P. Owens
Keith E. Braganza
Sally A. Kirkpatrick
Joseph F. Sloan
/s/
Joseph F. Sloan
Board Member
Enclosures
Section 1878(f)(1) of the Social Security Act, as amended
ec: Elaine C. Powell, Blue Cross of Florida
Terry Hamaker, Mutual of Omaha
William Braggs, BCBSA
Abin Yeas © Abit ok ert
2la
APPENDIX G
CHEVRON, U.S.A., INC., Petitioner,
V.
NATURAL RESOURCES DEFENSE
COUNCIL, INC.., et al.
AMERICAN IRON AND STEEL INSTITUTE, et al..
Petitioners,
V.
NATURAL RESOURCES DEFENSE
COUNCIL, INC.., et al.
William D. RUCKELSHAUS, Administrator,
Environmental Protection Agency,
Petitioner,
vs
NATURAL RESOURCES DEFENSE
COUNCIL, INC., et al.
Nos. 82-1005, 82-1247 and 82-1591.
Supreme Court of the United States
Argued Feb. 29, 1984.
Decided June 25, 1984.
Rehearing Denied Aug. 16, 1984.
See 468 U.S. 1227, 105 S.Ct. 28, 29.
22a
Petition was filed for review of order of the Environmental
Protection Agency. The Court of Appeals, 685 F.2d 718,
vacated regulations, and certiorari was granted. The Supreme
Court, Justice Stevens, held that Environmental Protection
Agency regulation allowing states to treat all pollution-
emitting devices within same industrial grouping as though
they were encased within single "bubble" was based on
permissible construction of term "stationary source" in Clean
Air Act Amendments.
Reversed.
[1] FEDERAL COURTS k445
170BE +45
Supreme Court reviews judgments, not opinions.
[2] STATUTES k219(2)
361k219(2)
When court reviews agency's construction of statute which it
administers, court is confronted with two questions: whether
Congress has directly spoken on precise question at issue; if
statute is silent or ambiguous with respect to specific issue,
question for court is whether agency's answer is based on
permissible construction of statute.
[2] STATUTES k219(4)
361k219(4)
When court reviews agency's construction of statute which it
administers, court is confronted with two questions: whether
Congress has directly spoken on precise question at issue; if
statute is silent or ambiguous with respect to specific issue,
question for court is whether agency's answer is based on
permissible construction of statute.
23a
[3] STATUTES k219(4)
361k219(4)
Judiciary is final authority on issues of Statutory construction
and must reject administrative constructions which are
contrary to clear congressional intent.
[4] STATUTES k219(1)
361k219(1)
Court need not conclude that agency's construction of statute
which it administered was only one it permissibly could have
adopted to uphold construction, or even reading the court
would have reached if question initially had arisen in judicial
proceeding.
[5] STATUTES k219(1)
361k219(1)
Where legislative delegation to agency on particular question
is implicit rather than explicit, court may not substitute its
own construction of statutory provision for reasonable
interpretation made by administrator of agency.
[6] STATUTES k219(1)
361k219(1)
Considerable weight should be accorded to executive
department's construction of statutory scheme it is entrusted
to administer.
[7] HEALTH AND ENVIRONMENT k25.6(3.1)
199k25.6(3.1)
Formerly 199k25.6(3)
Environmental Protection Agency regulation allowing States
to treat all pollution-emitting devices within same industrial
grouping as though they were encased within single "bubble"
was based on permissible construction of term "stationary
source" in Clean Air Act Amendments. Clean Air Act, ss
24a
111(a)(3), 172(b)(6), 302(j), as amended, 42 U.S.C.A. ss
741 1(a)(3), 7502(b)(6), 7602()).
Syllabus [FNal ]
FNal. The syllabus constitutes no part of the opinion of the
Court but has been prepared by the Reporter of Decisions for
the convenience of the reader. See United States v. Detroit
Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 287, 50 L.Ed.
499.
The Clean Air Act Amendments of 1977 impose certain
requirements on States that have not achieved the national air
quality standards established by the Environmental
Protection Agency (EPA) pursuant to earlier legislation,
including the requirement that such "nonattainment" States
establish a permit program regulating "new or modified
major stationary sources" of air pollution. Generally, a
permit may not be issued for such sources unless stringent
conditions are met. EPA regulations promulgated in 1981 to
implement the permit requirement allow a State to adopt a
plantwide definition of the term "stationary source,” under
which an existing plant that contains several pollution-
emitting devices may install or modify one piece of
equipment without meeting the permit conditions if the
alteration will not increase the total emissions from the plant,
thus allowing a State to treat all of the pollution- emitting
devices within the same industrial grouping as though they
were encased within a single "bubble." Respondents filed a
petition for review in the Court of Appeals, which set aside
the regulations embodying the "bubble concept" as contrary
to law. Although recognizing that the amended Clean Air
Act does not explicitly define what Congress envisioned as a
"stationary source” to which the permit program should
apply, and that the issue was not squarely addressed in the
legislative history, the court concluded that, in view of the
purpose of the nonattainment program to improve rather than
CD ALSINARS PRA a BAER ON
25a
merely maintain air quality, a plantwide definition was
"inappropriate," while stating it was mandatory in programs
designed to maintain existing air quality.
Held: The EPA's plantwide definition is a permissible
construction of the statutory term "stationary source." Pp.
2781-2793.
(a) With regard to judicial review of an agency's
construction of the statute which it administers, if Congress
has not directly spoken to the precise question at issue. the
question for the court is whether the agency's answer is based
on a permissible construction of the statute. Pp. 2781-2783.
(b) Examination of the legislation and _ its history
supports the Court of Appeals’ conclusion that Congress did
not have a specific intention as to the applicability of the
"bubble concept" in these cases. Pp. 2783-2786.
(c) The legislative history of the portion of the 1977
Amendments dealing with nonattainment areas plainly
discloses that in the permit program Congress sought to
accommodate the conflict between the economic interest in
permitting capital improvements to continue andthe
environmental interest in improving air quality. Pp. 2786-
2787.
(d) Prior to the 1977 Amendments, the EPA had used a
plantwide definition of the term "source," but in 1980 the
EPA ultimately adopted a regulation that, in essence, applied
the basic reasoning of the Court of Appeals here, precluding
use of the "bubble concept" in nonattainment States’
programs designed to enhance air quality. However, when a
new administration took office 1981, the EPA, in
promulgating the regulations involved here, reevaluated the
various arguments that had been advanced in connection
26a
with the proper definition of the term "source" and concluded
that the term should be given the plantwide definition in
nonattainment areas. Pp. 2787-2790.
(e) Parsing the general terms in the text of the amended
Clean Air Act-- particularly the provisions of ss 302(j) and
111(a)(3) pertaining to the definition of "source"--does not
reveal any actual intent of Congress as to the issue in these
cases. To the extent any congressional "intent" can be
discerned from the statutory language, it would appear that
the listing of overlapping, illustrative terms was intended to
enlarge, rather than to confine, the scope of the EPA's power
to regulate particular sources in order to effectuate the
policies of the Clean Air Act. Similarly, the legislative
history is consistent with the view that the EPA should have
broad discretion in implementing the policies of the 1977
Amendments. The plantwide definition is fully consistent
with the policy of allowing reasonable economic growth, and
the EPA has advanced a reasonable explanation for its
conclusion that the regulations serve environmental
objectives as well. The fact that the EPA has from time to
time changed its interpretation of the term "source" does not
lead to the conclusion that no deference should be accorded
the EPA's interpretation of the statute. An agency, to engage
in informed rulemaking, must’ consider varying
interpretations and the wisdom of its policy on a continuing
basis. Policy arguments concerning the "bubble concept"
should be addressed to legislators or administrators, not to
judges. The EPA's interpretation of the statute here
represents a reasonable accommodation of manifestly
competing interests and is entitled to deference. Pp. 2790-
2793.
222 U.S.App.D.C. 268, 685 F.2d 718 (1982), reversed.
Paul M. Bator, Cambridge, Mass., for petitioners.
David D. Doniger, Washington, D.C., for respondents.
27a
Justice STEVENS delivered the opinion of the Court.
In the Clean Air Act Amendments of 1977, Pub.L. 95-95, 91
Stat. 685, Congress enacted certain requirements applicable
to States that had not achieved the national air quality
Standards established by the Environmental Protection
Agency (EPA) pursuant to earlier legislation. The amended
Clean Air Act required these “nonattainment" States to
establish a permit program regulating "new or modified
major stationary sources" of air pollution. Generally, a
permit may not be issued for a new or modified major
stationary source unless several stringent conditions are met.
[FN1] The EPA regulation promulgated to implement this
permit requirement allows a State to adopt a plantwide
definition of the term "stationary source." [FN2] Under this
definition, an existing plant that contains several pollution-
emitting devices may install or modify one piece of
equipment without meeting the permit conditions if the
alteration will not increase the total emissions from the plant.
The question presented by these cases is whether EPA's
decision to allow States to treat all of the pollution-emitting
devices within the same industrial grouping as though they
were encased within a single "bubble" is based on a
reasonable construction of the statutory term "stationary
source."
FN1. Section 172(b)(6), 42 U.S.C. §7502(b)(6), provides:
"The plan provisions required by subsection (a) shall-- .....
"(6) require permits for the construction and operation of
new or modified major stationary sources in accordance with
section 173 (relating to permit requirements)." 91 Stat. 747
FN2. "(i) ‘Stationary source’ means any building, structure,
facility, or installation which emits or may emit any air
pollutant subject to regulation under the Act. "(ii) ‘Building,
28a
structure, facility, or installation’ means all of the pollutant-
emitting activities which belong to the same industrial
grouping, are located on one or more contiguous or adjacent
properties, and are under the control of the same person (or
persons under common control) except the activities of any
vessel." 40 C.F.R. ss 51.18(j)(1)(i) and (ii) (1983).
1.
The EPA regulations containing the plantwide definition of
the term stationary source were promulgated on October 14,
1981. 46 Fed.Reg. 50766. Respondents [FN3] filed a
timely petition for review in the United States Court of
Appeals for the District of Columbia Circuit pursuant to 42
U.S.C. §7607(b)(1). [FN4] The Court of Appeals set aside
the regulations. National Resources Defense Council, Inc. v.
Gorsuch, 222 U.S.App.D.C. 268, 685 F.2d 718 (1982).
FN3. National Resources Defense Council, Inc., Citizens
for a Better Environment, Inc., and North Western Ohio
Lung Association, Inc.
FN4. Petitioners, Chevron U.S.A. Inc., American Iron and
Stee! Institute, American Petroleum Institute, Chemical
Manufacturers Association, Inc., General Motors Corp., and
Rubber Manufacturers Association were granted leave to
intervene and argue in support of the regulation.
The court observed that the relevant part of the amended
Clean Air Act "does not explicitly define what Congress
envisioned as a ‘stationary source, to which the permit
program ... should apply," and further stated that the precise
issue was not "squarely addressed in the legislative history."
Id., at 273, 685 F.2d, at 723. In light of its conclusion that the
legislative history bearing on the question was "at best
contradictory," it reasoned that "the purposes of the
29a
nonattainment program should guide our decision here." Id.,
at 276, n. 39, 685 F.2d, at 726, n. 39. [FN5] Based on two
of its precedents concerning the applicability of the bubble
concept to certain Clean Air Act programs, [FN6] the court
stated that the bubble concept was "mandatory" in programs
designed merely to maintain existing air quality, but held that
it was "inappropriate" in programs enacted to improve air
quality. Id., at 276, 685 F.2d, at 726. Since the purpose of
the permit program--its "raison d'etre," in the court's view--
was to improve air quality, the court held that the bubble
concept was inapplicable in these cases under its prior
precedents. Ibid. It therefore set aside the regulations
embodying the bubble v.oncept as contrary to law. We
granted certiorari to review that judgment, 461 U.S. 956, 103
S.Ct. 2427, 77 L.Ed.2d 1314 (1983), and we now reverse.
FNS. The court remarked in this regard: "We regret, of
course, that Congress did not advert specifically to the
bubble concept's application to various Clean Air Act
programs, and note that a further clarifying statutory
directive would facilitate the work of the agency and of the
court in their endeavors to serve the legislators’ will." 222
U.S.App.D.C., at 276, n. 39, 685 F.2d, at 726, n. 39.
FN6. Alabama Power Co. v. Costle, 204 U.S.App.D.C. 51,
636 F.2d 323 (1979); ASARCO Inc. v. EPA, 188
U.S.App.D.C. 77, 578 F.2d 319 (1978).
[1] The basic legal error of the Court of Appeals was to
adopt a static judicial definition of the term "stationary
source" when it had decided that Congress itself had not
commanded that definition. Respondents do not defend the
legal reasoning of the Court of Appeals. [FN7] Nevertheless,
since this Court reviews judgments, not opinions, [FN8] we
must determine whether the Court of Appeals’ legal error
30a
resulted in an erroneous judgment on the validity of the
regulations.
FN7. Respondents argued below that EPA's plantwide
definition of "stationary source" is contrary to the terms,
legislative history, and purposes of the amended Clean Air
Act. The court below rejected respondents’ arguments based
on the language and legislative history of the Act. It did
agree with respondents contention that the regulations were
inconsistent with the purposes of the Act, but did not adopt
the construction of the statute advanced by respondents here.
Respondents rely on the arguments rejected by the Court of
Appeals in support of the judgment, and may rely on any
ground that finds support in the record. See Ryerson v.
United States, 312 U.S. 405, 408, 61 S.Ct. 656, 658, 85
L.Ed. 917 (1941); LeTulle v. Scofield, 308 U.S. 415, 421, 60
S.Ct. 313, 316, 84 L.Ed. 355 (1940); Langnes v. Green, 282
U.S. 531, 533-539, 51 S.Ct. 243, 244-246, 75 L.Ed. 520
(1931).
FN8. e.g., Black v. Cutter Laboratories, 351 U.S. 292, 297,
76 S.Ct. 824, 827, 100 L.Ed. 1188 (1956); JE. Riley
Investment Co. v. Commissioner, 311 U.S. 55, 59, 61 S.Ct.
95, 97, 85 L.Ed. 36 (1940); Williams v. Norris, 12 Wheat.
117, 120, 6 L.Ed. 571 (1827); McClung v. Silliman, 6 Wheat.
598, 603, 5 L.Ed. 340 (1821).
3la
II.
[2}[3}][4] When a court reviews an agency's construction of
the statute which it administers, it is confronted with two
questions. First, always, is the question whether Congress
has directly spoken to the precise question at issue. If the
intent of Congress is clear, that is the end of the matter; for
the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress. [FN9] If,
however, the court determines Congress has not directly
addressed the precise question at issue, the court does not
simply impose its own construction on the statute, [FN10]
as would be necessary in the absence of an administrative
interpretation. Rather, if the statute is silent or ambiguous
with respect to the specific issue, the question for the court is
whether the agency's answer is based on a permissible
construction of the statute. [FN11]
FN9. The judiciary is the final authority on issues of
Statutory construction and must reject administrative
constructions which are contrary to clear congressional
intent. See, e.g., FEC v. Democratic Senatorial Campaign
Committee, 454 U.S. 27, 32, 102 S.Ct. 38, 42, 70 L.Ed.2d 23
(1981); SEC v. Sloan, 436 U.S. 103, 117-118, 98 S.Ct. 1702,
1711-1712, 56 L.Ed.2d 148 (1978); FMC v. Seatrain Lines,
Inc., 411 U.S. 726, 745-746, 93 S.Ct. 1773, 1784-1785, 36
L.Ed.2d 620 (1973); Volkswagenwerk v. FMC, 390 U.S. 261,
272, 88 S.Ct. 929, 935, 19 L.Ed.2d 1090 (1968); NZRB v.
Brown, 380 U.S. 278, 291, 85 S.Ct. 980, 988, 13 L.Ed.2d
839 (1965); FTC v. Colgate-Palmolive Co., 380 U.S, 374,
385, 85 S.Ct. 1035, 1042, 13 L.Ed.2d 904 (1965); Social
Security Board v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637,
643, 90 L.Ed. 718 (1946); Burnet v. Chicago Portrait Co.,
285 U.S. 1, 16, 52 S.Ct. 275, 281, 76 L.Ed. 587 (1932);
Webster v. Luther, 163 U.S. 331, 342, 16 S.Ct. 963, 967, 41
L.Ed. 179 (1896). If a court, employing traditional tools of
32a
Statutory construction, ascertains that Congress had an
intention on the precise question at issue, that intention is the
law and must be given effect.
FN10. See generally, R. Pound, The Spirit of the Common
Law 174-175 (1921).
FN11. The court need not conclude that the agency
construction was the only one it permissibly could have
adopted to uphold the construction, or even the reading the
court would have reached if the question initially had arisen
in a judicial proceeding. FEC v. Democratic Senatorial
Campaign Committee, 454 U.S., at 39, 102 S.Ct., at 46;
Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98
S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978); Train v. Natural
Resources Defense Council, Inc., 421 U.S. 60, 75, 95 S.Ct.
1470, 1479, 43 L.Ed.2d 731 (1975); Udall v. Tallman, 380
U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965);
Unemployment Compensation Comm'n v. Aragon, 329 U.S.
143, 153, 67 S.Ct. 245, 250, 91 L.Ed. 136 (1946); McLaren
v. Fleischer, 256 U.S. 477, 480-481, 41 S.Ct. 577, 577-578,
65 L.Ed. 1052 (1921).
[5] "The power of an administrative agency to administer a
congressionally created ... program necessarily requires the
formulation of policy and the making of rules to fill any gap
left, implicitly or explicitly, by Congress." Morton v. Ruiz,
415 U.S. 199, 231, 94 S.Ct. 1055, 1072, 39 L.Ed.2d 270
(1974). If Congress has explicitly left a gap for the agency to
fill, there is an express delegation of authority to the agency
to elucidate a specific provision of the statute by regulation.
Such legislative regulations are given controlling weight
unless they are arbitrary, capricious, or manifestly contrary
to the statute. [FN12] Sometimes the legislative delegation to
an agency on a particular question is implicit rather than
explicit. In such a case, a court may not substitute its own
33a
construction of a statutory provision for a reasonable
interpretation made by the administrator of an agency.
[FN13]
FN12. See, e.g., United States v. Morton, 467 U.S. 822, 834,
104 S.Ct. 2769, 2776, 81 L.Ed.2d 680 (1984) Schweiker v.
Gray Panthers, 453 U.S. 34, 44, 101 S.Ct. 2633, 2640, 69
L.Ed.2d 460 (1981); Batterton v. Francis, 432 U.S. 416, 424-
426, 97 S.Ct. 2399, 2404-2406, 53 L.Ed.2d 448 (1977);
American Telephone & Telegraph Co. v. United States, 299
U.S. 232, 235- 237, 57 S.Ct. 170, 172-173, 81 L.Ed. 142
(1936).
FN13. e.g., INS v. Jong Ha Wang, 450 U.S. 139, 144, 101
S.Ct. 1027, 1031, 67 L.Ed.2d 123 (1981); Train v. Natural
Resources Defense Council, Inc., 421 U.S., at 87, 95 S.Ct., at
1485.
[6] We have long recognized that considerable weight should
be accorded to an executive department's construction of a
statutory scheme it is entrusted to administer, [FN14] and the
principle of deference to administrative interpretations.
FN14. Aluminum Co. of America v. Central Lincoln
Peoples' Util.. Dist., 467 U.S. 380, 389, 104 S.Ct. 2472,
2479-2480, 81 L.Ed.2d 301 (1984); Blum v. Bacon, 457 U.S.
132, 141, 102 S.Ct. 2355, 2361, 72 L.Ed.2d 728 (1982);
Union Electric Co. v. EPA, 427 U.S. 246, 256, 96 S.Ct.
2518, 2525, 49 L.Ed.2d 474 (1976); Investment Company
Institute v. Camp, 401 U.S. 617, 626-627, 91 S.Ct. 1091,
1097, 28 L.Ed.2d 367 (1971); Unemployment Compensation
Comm'n v. Aragon, 329 U.S., at 153-154, 67 S.Ct., at 250-
251; NLRB v. Hearst Publications, Inc., 322 U.S. 111, 131,
64 S.Ct. 851, 860, 88 L.Ed. 1170 (1944); McLaren v.
Fleischer, 256 U.S., at 480-481, 41 S.Ct. at 577-578;
Webster v. Luther, 163 U.S., at 342, 16 S.Ct., at 967; Brown
i eee
34a
v. United States, 113 U.S. 568, 570-571, 5 S.Ct. 648, 649-
650, 28 L.Ed. 1079 (1885); United States v. Moore, 95 US.
760, 763, 24 L.Ed. 588 (1878); Edwards’ Lessee v. Darby, 12
Wheat. 206, 210, 6 L.Ed. 603 (1827).
"has been consistently followed by this Court whenever
decision as to the meaning or reach of a statute has involved
reconciling conflicting policies, and a full understanding of
the force of the statutory policy in the given situation has
depended upon more than ordinary knowledge respecting the
matters subjected to agency regulations. See, e.g., National
Broadcasting Co. v. United States, 319 U.S. 190 [63 S.Ct.
997, 87 L.Ed. 1344]; Labor Board v. Hearst Publications,
Inc., 322 U.S. 111 [64 S.Ct. 851, 88 L.Ed. 1170]; Republic
Aviation Corp. v. Labor Board, 324 U.S. 793 [65 S.Ct. 982,
89 L.Ed. 1372]; Securities & Exchange Comm'n v. Chenery
Corp., [332] 322 U.S. 194 [67 S.Ct. 1575, 91 L.Ed. 1995];
Labor Board v. Seven-Up Bottling Co., 344 U.S. 344 [73
S.Ct. 287, 97 L.Ed. 377]. "... If this choice represents a
reasonable accommodation of conflicting policies that were
committed to the agency's care by the statute, we should not
disturb it unless it appears from the statute or its legislative
history that the accommodation is not one that Congress
would have sanctioned." United States v. Shimer, 367 U.S.
374, 382, 383, 81 S.Ct. 1554, 1560, 1561, 6 L.Ed.2d 908
(1961). Accord Capital Cities Cable, Inc. v. Crisp, 467 U.S.
691, 699-700, 104 S.Ct. 2694, 2700-2701, 81 L.Ed.2d 580
(1984).
In light of these well-settled principles it is clear that the
Court of Appeals misconceived the nature of its role in
reviewing the regulations at issue. Once it determined, after
its own examination of the legislation, that Congress did not
actually have an intent regarding the applicability of the
bubble concept to the permit program, the question before it
was not whether in its view the concept is "inappropriate" in
35a
the general context of a program designed to improve air
quality, but whether the Administrator's view that it is
appropriate in the context of this particular program is a
reasonable one. Based on the examination of the legislation
and its history which follows, we agree with the Court of
Appeals that Congress did not have a specific intention on
the applicability of the bubble concept in these cases, and
conclude that the EPA's use of that concept here is a
reasonable policy choice for the agency to make.
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II.
In the 1950's and the 1960's Congress enacted a series of
Statutes designed to encourage and to assist the States in
curtailing air pollution. See generally Train v. Natural
Resources Defense Council, Inc., 421 U.S. 60, 63-64, 95
S.Ct. 1470, 1474-1475, 43 L.Ed.2d 731 (1975). The Clean
Air Amendments of 1970, Pub.L. 91-604, 84 Stat. 1676,
"sharply increased federal authority and responsibility in the
continuing effort to combat air pollution," 421 U.S., at 64, 95
S.Ct., at 1474, but continued to assign "primary
responsibility for assuring air quality" to the several States,
84 Stat. 1678. Section 109 of the 1970 Amendments directed
the EPA to promulgate National Ambient Air Quality
Standards (NAAQS's) [FN15] and §110 directed the States to
develop plans (SIP's) to implement the standards within -
specified deadlines. In addition, §111 provided that major
new sources of pollution would be required to conform to
technology-based performance standards; the EPA was
directed to publish a list of categories of sources of pollution
and to establish new source performance standards (NSPS)
for each. Section 111(e) prohibited the operation of any new
source in violation of a performance standard.
FN15. Primary standards were defined as those whose
attainment and maintenance were necessary to protect the
ee a
36a
public health, and secondary standards were intended to
specify a level of air quality that would protect the public
welfare.
Section 1 11(a) defined the terms that are to be used in setting
and enforcing standards of performance for new stationary
sources. It provided: "For purposes of this section: ..... (3)
The term ‘stationary source’ means any building, structure,
facility, or installation which emits or may emit any air
pollutan:.’ 84 Stat. 1683. In the 1970 Amendments that
definition was not only applicable to the NSPS program
required by s 111, but also was made applicable to a
requirement of §110 that each state implementation plan
contain a procedure for reviewing the location of any
proposed new source and preventing its construction if it
would preclude the attainment or maintenance of national air
quality standards. [FN16]
FN16. See §§110(a)(2)(D) and 110(a)(4).
In due course, the EPA promulgated NAAQS's, approved
SIP's, and adopted detailed regulations governing NSPS's for
various categories of equipment. In one of its programs, the
EPA used a plantwide definition of the term "stationary
source." In 1974, it issued NSPS's for the nonferrous
smelting industry that provided that the standards would not
apply to the modification of major smelting units if their
increased emissions were offset by reductions in other
portions of the same plant. [FN17]
FN17. The Court of Appeals ultimately held that this
plantwide approach was prohibited by the 1970 Act, see
ASARCO Inc., 188 U.S.App.D.C., at 83-84, 578 F.2d, at
325-327. This decision was rendered after enactment of the
1977 Amendments, and hence the standard was in effect
when Congress enacted the 1977 Amendments.
PLAS LLANE TN BELLE TIDE TEL AE ec
Ses Sea
— - Po peEtic ew “
LR ORAL ALE AL EMI LDL ID ERO _
37a
Nonattainment
The 1970 legislation provided for the attainment of primary
NAAQS's by 1975. In many areas of the country,
particularly the most industrialized States, the statutory goals
were not attained. [FN18] In 1976, the 94th Congress was
confronted with this fundamental problem, as well as many
others respecting pollution control. As always in this area,
the legislative struggle was basically between interests
seeking strict schemes to reduce pollution rapidly to
eliminate its social costs and interests advancing the
economic concern that strict schemes would retard industrial
development with attendant social costs. The 94th Congress,
confronting these competing interests, was unable to agree
on what response was in the public interest: legislative
proposals to deal with nonattainment failed to command the
necessary consensus. [FN19]
FN18. See Report of the National Commission on Air
Quality, To Breathe Clean Air, 3.3-20 through 3.3-33 (1981).
FN19. Comprehensive bills did pass both Chambers of
Congress; the Conference Report was rejected in the Senate.
122 Cong.Rec. 34375-34403, 34405-34418 (1976).
In light of this situation, the EPA published an Emissions
Offset Interpretative Ruling in December 1976, see 41
Fed.Reg. 55524, to "fill the gap," as respondents put it, until
Congress acted. The Ruling stated that it was intended to
address "the issue of whether and to what extent nafiohal air
quality standards established under the Clean Air Act may
restrict or prohibit growth of major new or expanded
stationary air pollution sources." Id., at 55524-55525. In
general, the Ruling provided that "a major new source may
locate in an area with air quality worse than a national
38a
standard only if stringent conditions can be met." Id., at
55525. The Ruling gave primary emphasis to the rapid
attainment of the statute's environmental goals. [FN20]
Consistent with that emphasis, the construction of every new
source in nonattainment areas had to meet the "lowest
achievable emission rate" under the current state of the art
for that type of facility. See Ibid. The 1976 Ruling did not,
however, explicitly adopt or reject the "bubble concept."
[FN21]
FN20. For example, it stated: "Particularly with regard to the
primary NAAQS's, Congress and the Courts have made clear
that economic considerations must be subordinated to
NAAQS achievement and maintenance. While the ruling
allows for some growth in areas violating a NAAQS if the
net effect is to insure further progress toward NAAQS
achievement, the Act does not allow economic growth to be
accommodated at the expense of the public health." 41
Fed.Reg. 55527 (1976).
FN21. In January 1979, the EPA noted that the 1976 Ruling
was ambiguous concerning this issue: "A number of
commenters indicated the need for a more explicit definition
of 'source.' Some readers found that it was unclear under the
1976 Ruling whether a plant with a number of different
processes and emission points would be considered a single
source. The changes set forth below define a source as ‘any
structure, building, facility, equipment, installation, or
operation (or combination thereof) which is located on one or
more contiguous or adjacent properties and which is owned
or operated by the same person (or by persons under
common control.’ This definition precludes a large plant
from being separated into individual production lines for
purposes of determining applicability of the offset
requirements." 44 Fed.Reg. 3276.
39a
IV.
The Clean Air Act Amendments of 1977 are a lengthy,
detailed, technical, complex, and comprehensive response to
a major social issue. A small portion of the statute -- 91 Stat.
745-751 (Part D of Title I of the amended Act, 42 U.S.C. ss
7501-7508) -- expressly deals with nonattainment areas. The
focal point of this controversy is one phrase in that portion of
the Amendments. [FN22]
FN22. Specifically, the controversy in these cases involves
the meaning of the term "major stationary sources" in
§172(b)(6) of the Act, 42 U.S.C. §7502(b)(6). The meaning
of the term "proposed source" in §173(2) of the Act, 42
U.S.C. §7503(2), is not at issue.
Basically, the statute required each State in a nonattainment
area to prepare and obtain approval of a new SIP by July 1,
1979. In the interim those States were required to comply
with the EPA's interpretative Ruling of December 21, 1976.
91 Stat. 745. The deadline for attainment of the primary
NAAQS's was extended until December 31, 1982, and in
some cases until December 31, 1987, but the SIP'’s were
required to contain a number of provisions designed to
achieve the goals as expeditiously as possible. [FN23]
FN23. Thus, among other requirements, §172(b) provided
that the SIP's shall-- "(3) require, in the interim, reasonable
further progress (as defined in section 171(1)) including such
reduction in emissions from existing sources in the area as
may be obtained through the adoption, at a minimum, of
reasonably available control technology; "(4) include a
comprehensive, accurate, current inventory of actual
emissions from all sources (as provided by rule of the
Administrator) of each such pollutant for each such area
which is revised and resubmitted as frequently as may be
ae
necessary to assure that the requirements of paragraph (3) are
met and to assess the -.ced for additional reductions to assure
attainment of each standard by the date required under
paragraph (1); "(5) expressly identify and quantify the
emissions, if any, of any such pollutant which will be
allowed to result from the construction and operation of
major new or modified stationary sources for each such area;
ak "(8) contain emission limitations, schedules of
compliance and such other measures as may be necessary to
meet the requirements of this section." 91 Stat. 747. Section
171(1) provided: "(1) The term ‘reasonable further progress’
means annual incremental reductions in emissions of the
applicable air pollutant (including substantial reductions in
the early years following approval or promulgation of plan
provisions under this part and section 110(a)(2)(I) and
regular reductions thereafter) which are sufficient in the
judgment of the Administrator, to provide for attainment of
the applicable national ambient air quality standard by the
date required in section 172(a)." Id., at 746.
Most significantly for our purposes, the statute provided that
each plan shall "(6) require permits for the construction and
operation of new or modified major stationary sources in
accordance with section 173...."_ Id., 747. Before issuing a
permit, §173 requires (1) the state agency to determine that
there will be sufficient emissions reductions in the region to
offset the emissions from the new source and also to allow
for reasonable further progress toward attainment, or that the
increased emissions will not exceed an allowance for growth
established pursuant to §172(b)(5); (2) the applicant to
certify that his other sources in the State are in compliance
with the SIP, (3) the agency to determine that the applicable
SIP is otherwise being implemented, and (4) the proposed
source to comply with the lowest achievable emission rate
(LAER). [FN24]
4la
FN24. Section 171(3) provides: "(3) The term ‘lowest
achievable emission rate' means for any source, that rate of
emissions which reflects-- "(A) the most stringent emission
limitation which is contained in the implementation plan of
any State for such class or category of source, unless the
owner or operator of the proposed source demonstrates that
such limitations are not achievable, or "(B) the most
stringent emission limitation which is achieved in practice by
such class or category of source, whichever is more stringent.
"In no event shall the application of this term permit a
proposed new or modified source to emit any pollutant in
excess of the amount allowable under applicable new source
standards of performance." The LAER requirement is
defined in terms that make it even more stringent than the
applicable new source performance standard developed
under s 111 of the Act, as amended by the 1970 statute.
The 1977 Amendments contain no specific reference to the
"pubble concept.” Nor do they contain a specific definition
of the term "stationary source," though they did not disturb
the definition of "stationary. source" contained in §111(a)(3),
applicable by the terms of the Act to the NSPS program.
Section 302(j), however, defines the term "major stationary
source” as follows: "(j) Except as otherwise expressly
provided, the terms ‘major stationary source’ and 'major
emitting facility’ mean any stationary facility or source of air
pollutants which directly emits, or has the potential to emit,
one hundred tons per year or more of any air pollutant
(including any major emitting facility or source of fugitive
emissions of any such pollutant, as determined by rule by the
Administrator)." 91 Stat. 770.
V.
The legislative history of the portion of the 1977
Amendments dealing with nonattainment areas does not
42a
contain any specific comment on the "bubble concept" or the
question whether a plantwide definition of a stationary
source is permissible under the permit program. It does,
however, plainly disclose that in the permit program
Congress sought to accommodate the conflict between the
economic interest in permitting capital improvements to
continue and the environmental interest in improving air
quality. Indeed, the House Committee Report identified the
economic interest as one of the "two main purposes" of this
section of the bill. It stated: "Section 117 of the bill, adopted
during full committee markup establishes a new section 127
of the Clean Air Act. The section has two main purposes: (1)
to allow reasonable economic growth to continue in an area
while making reasonable further progress to assure
attainment of the standards by a fixed date; and (2) to allow
States greater flexibility for the former purpose than EPA's
present interpretative regulations afford. "The new provision
allows States with nonattainment areas to pursue one of two
options. First, the State may proceed under EPA's present
‘tradeoff or 'offset' ruling. The Administrator is authorized,
moreover, to modify or amend that ruling in accordance with
the intent and purposes of this section. "The State's second
option would be to revise its implementation plan in
accordance with this new provision.” H.R.Rep. No. 95-294,
p. 211 (1977), U.S.Code Cong. & Admin.News 1977, pp.
1077, 1290. [FN25]
FN25. During the floor debates Congressman Waxman
remarked that the legislation struck "a proper balance
between environmental controls and economic growth in the
dirty air areas of America.... There is no other single issue
which more clearly poses the conflict between pollution
control and new jobs. We have determined that neither need
be compromised.... "This is a fair and balanced approach,
which will not undermine our economic vitality, or impede
achievement of our ultimate environmental objectives." 123
Cong.Rec. 27076 (1977). The second "main purpose" of the
provision -- allowing the States "greater flexibility" than the
EPA's interpretative Ruling -- as well as the reference to the
EPA's authority to amend its Ruling in accordance with the
intent of the section, is entirely consistent with the view that
Congress did not intend to freeze the definition of "source"
contained in the existing regulation into a rigid statutory
requirement.
The portion of the Senate Committee Report dealing with
nonattainment areas states generally that it was intended to
"supersede the EPA administrative approach," and that
expansion should be permitted if a State could "demonstrate
that these facilities can be accommodated within its overall
plan to provide for attainment of air quality standards."
S.Rep. No. 95-127, p. 55 (1977). The Senate Report notes
the value of "case-by-case review of each new or modified
major source of pollution that seeks to locate in a region
exceeding an ambient standard," explaining that such a
review "requires matching reductions from existing sources
against emissions expected from the new source in order to
assure that introduction of the new source will not prevent
attainment of the applicable standard by the statutory
deadline." Ibid. This description of a case-by-case approach
to plant additions, which emphasizes the net consequences of
the construction or modification of a new source, as well as
its impact on the overall achievement of the national
standards, was not, however, addressed to the precise issue
raised by these cases.
Senator Muskie made the following remarks: "I should note
that the test for determining whether a new or modified
source is subject to the EPA interpretative regulation [the
Offset Ruling] -- and to the permit requirements of the
revised implementation plans under the conference bill -- is
whether the source will emit a pollutant into an area which is
44a
exceeding a national ambient air quality standard for that
pollutant -- or precursor. Thus, a new source is still subject
to such requirements as ‘lowest achievable emission rate’
even if it is constructed as a replacement for an older facility
resulting in a net reduction from previous emission levels.
"A source -- including an existing facility ordered to convert
to coal -- is subject to all the nonattainment requirements as a
modified source if it makes any physical change which
increases the amount of any air pollutant for which the
standards in the area are exceeded." 123 Cong.Rec. 26847
(1977).
VI.
As previously noted, prior to the 1977 Amendments, the
EPA had adhered to a plantwide definition of the term
"source" under a NSPS program. After adoption of the 1977
Amendments, proposals for a plantwide definition were
considered in at least three formal proceedings.
In January 1979, the EPA considered the question whether
the same restriction on new construction in nonattainment
areas that had been included in its December 1976 Ruling
should be required in the revised SIP's that were scheduled to
go into effect in July 1979. After noting that the 1976
Ruling was ambiguous on the question "whether a plant with
a number of different processes and emission points would
be considered a single source," 44 Fed.Reg. 3276 (1979), the
EPA, in effect, provided a bifurcated answer to that question.
In those areas that did not have a revised SIP in effect by
July 1979, the EPA rejected the plantwide definition; on the
other hand, it expressly concluded that the plantwide
approach would be permissible in certain circumstances if
authorized by an approved SIP. It stated: "Where a state
implementation plan is revised and implemented to satisfy
the requirements of Part D, including the reasonable further
3
id
a
a
;
;
progress requirement, the plan requirements for major
modifications may exempt modifications of existing facilities
that are accompanied by intrasource offsets so that there is
no net increase in emissions. The agency endorses such
exemptions, which would provide greater flexibility to
sources to effectively manage their air emissions at least
cost." Ibid. [FN26]
FN26. In the same Ruling, the EPA added: "The above
exemption is permitted under the SIP because, to be
approved under Part D, plan revisions due by January 1979
must contain adopted measures assuring that reasonable
further progress will be made. Furthermore, in most
circumstances, the measures adopted by January 1979 must
be sufficient to actually provide for attainment of the
standards by the dates required under the Act, and in all
circumstances measures adopted by 1982 must provide for
attainment. See Section 172 of the Act and 43 FR 21673-
21677 (May 19, 1978). Also, Congress intended under
Section 173 of the Act that States would have some latitude
to depart from the strict requirements of this Ruling when the
State plan is revised and is being carried out in accordance
with Part D. Under a Part D plan, therefore, there is less need
to subject a modification of an existing facility to LAER and
other stringent requirements if the modification is
accompanied by sufficient intrasource offsets so that there is
no net increase in emissions." 44 Fed.Reg. 3277 (1979).
In April, and again in September 1979, the EPA published
additional comments in which it indicated that revised SIP's
could adopt the plantwide definition of source in
nonattainment areas in certain circumstances. See Id., at
20372, 20379, 51924, 51951, 51958. On the latter occasion,
the EPA made a formal rulemaking proposal that would have
permitted the use of the “bubble concept" for new
installations within a plant as well as for modifications of
46a
existing units. It explained: " 'Bubble' Exemption: The use
of offsets inside the same source is called the 'bubble.’ EPA
proposes use of the definition of ‘source’ (see above) to limit
the use of the bubble under nonattainment requirements in
the following respects: "i. Part D SIPs that include all
requirements needed to assure reasonable further progress
and attainment by the deadline under section 172 and that are
being carried out need not restrict the use of a plantwide
bubble, the same as under the PSD proposal. "ii. Part D SIPs
that do not meet the requirements specified must limit use of
the bubble by including a definition of ‘installation’ as an
identifiable piece of process equipment." [FN27]
FN27. Id., at 51926. Later in that Ruling, the EPA added:
"However, EPA believes that complete Part D SIPs, which
contain adopted and enforceable requirements sufficient to
assure attainment, may apply the approach proposed above
for PSD, with plant-wide review but no review of individual
pieces of equipment. Use of only a plant-wide definition of
source will permit plant-wide offsets for avoiding NSR of
new or modified pieces of equipment. However, this is only
appropriate once a SIP is adopted that will assure the
reductions in existing emissions necessary for attainment.
See 44 FR 3276 col. 3 (January 16, 1979). If the level of
emissions allowed in the SIP is low enough to assure
reasonable further progress and attainment, new construction
or modifications with enough offset credit to prevent an
emission increase should not jeopardize attainment." Id., at
51933.
Significantly, the EPA expressly noted that the word
"source" might be given a plantwide definition for some
purposes and a narrower definition for other purposes. It
wrote: "Source means any building structure, facility, or
installation which emits or may emit any regulated pollutant.
‘Building, structure, facility or installation’ means plant in
47a
PSD areas and in nonattainment areas except where the
growth prohibitions would apply or where no adequate SIP
exists or is being carried out." Id., at 51925. [FN28]
FN28. In its explanation of why the use of the "bubble
concept" was especially appropriate in preventing significant
deterioration (PSD) in clean air areas, the EPA stated: "In
addition, application of the bubble on a plant-wide basis
encourages voluntary upgrading of equipment, and growth in
productive capacity." Id., at 51932.
The EPA's summary of its proposed Ruling discloses a
flexible rather than rigid definition of the term "source" to
implement various policies and programs: "In summary,
EPA is proposing two different ways to define source for
different kinds of NSR programs: "(1) For PSD and complete
Part D SIPs, review would apply only to plants, with an
unrestricted plant-wide bubble. "(2) For the offset ruling,
restrictions on construction, and incomplete Part D SIPs,
review would apply to both plants and individual pieces of
process equipment, causing the plant-wide bubble not to
apply for new and modified major pieces of equipment. "In
addition, for the restrictions on construction, EPA is
proposing to define 'major modification’ so as to prohibit the
bubble entirely. Finally, an alternative discussed but not
favored is to have only pieces of process equipment
reviewed, resulting in no plant-wide bubble and allowing
minor pieces of equipment to escape NSR regardless of
whether they are within a major plant." Id., at 51934.
In August 1980, however, the EPA adopted a regulation that,
in essence, applied the basic reasoning of the Court of
Appeals in these cases. The EPA took particular note of the
two then-recent Court of Appeals decisions, which had
created the bright-line rule that the "bubble concept" should
be employed in a program designed to maintain air quality
LEE eee ee eee
48a
but not in one designed to enhance air quality. Relying
heavily on those cases, [FN29] EPA adopted a dual
definition of "source" for nonattainment areas that required a
permit whenever a change in either the entire plant, or one of
its components, would result in a significant increase in
emissions even if the increase was completely offset by
reductions elsewhere in the plant. The EPA expressed the
opinion that this interpretation was "more consistent with
congressional intent" than the plantwide definition because it
"would bring in more sources or modifications for review,"
45 Fed.Reg. 52697 (1980), but its primary legal analysis was
predicated on the two Court of Appeals decisions.
FN29. "The dual definition also is consistent with Alabama
Power and ASARCO. Alabama Power held that EPA had
broad discretion to define the constituent terms of ‘source’ so
as best to effectuate the purposes of the statute. Different
definitions of ‘source’ can therefore be used for different
sections of the statute.... "Moreover, Alabama Power and
ASARCO taken together suggest that there is a distinction
between Clean Air Act programs designed to enhance air
quality and those designed only to maintain air quality.... .....
"Promulgation of the dual definition follows the mandate of
Alabama Power, which held that, while EPA could not
define 'source' as a combination of sources, EPA had broad
discretion to define ‘building,’ ‘structure,’ ‘facility,' and
‘installation’ so as to best accomplish the purposes of the
Act." 45 Fed.Reg. 52697 (1980).
In 1981 a new administration took office and initiated a
"Government-wide reexamination of regulatory burdens and
complexities." 46 Fed.Reg. 16281. In the context of that
review, the EPA reevaluated the various arguments that had
been advanced in connection with the proper definition of the
term "source" and conclude’ ‘hat the term should be given
the same definition in both nonattainment areas and PSD
areas.
In explaining its conclusion, the EPA first noted that the
definitional issue was not squarely addressed in either the
statute or its legislative history and therefore that the issue
involved an agency "judgment as how to best carry out the
Act." Ibid. It then set forth several reasons for concluding
that the plantwide definition was more appropriate. It
pointed out that the dual definition "can act as a disincentive
to new investment and modernization by discouraging
modifications to existing facilities" and "can actually retard
progress in air pollution control by discouraging replacement
of older, dirtier processes or pieces of equipment with new,
cleaner ones." Ibid. Moreover, the new definition "would
simplify EPA's rules by using the same definition of 'source'
for PSD, nonattainment new source review and the
construction moratorium. This reduces confusion and
inconsistency." Ibid. Finally, the agency explained that
additional requirements that remained in place would
accomplish the fundamental purposes of achieving
attainment with NAAQS's as expeditiously as possible.
[FN30] These conclusions were expressed in a proposed
rulemaking in August 1981 that was formally promulgated in
October. See id., at 50766.
FN30. It stated: "5. States will remain subject to the
requirement that for all nonattainment areas they demonstrate
attainment of NAAQS as expeditiously as practicable and
show reasonable further progress toward such attainment.
Thus, the proposed change in the mandatory scope of
nonattainment new source review should not interfere with
the fundamental purpose of Part D of the Act. "6. New
Source Performance Standards (NSPS) will continue to
apply to many new or modified facilities and will assure use
of the most up-to-date pollution control techniques
50a
regardless of the applicability of nonattainment area new
source review. "7. In order to avoid nonattainment area new
source review, a major plant undergoing modification must
show that it will not experience a significant net increase in
emissions. Where overall emissions increase significantly,
review will continue to be required." 46 Fed.Reg. 16281
(1981).
VIL.
[7] In this Court respondents expressly reject the basic
rationale of the Court of Appeals’ decision. That court
viewed the statutory definition of the term "source" as
sufficiently flexible to cover either a plantwide definition, a
narrower definition covering each unit within a plant, or a
dual definition that could apply to both the entire "bubble"
and its components. It interpreted the policies of the statute,
however, to mandate the plantwide definition in programs
designed to maintain clean air and to forbid it in programs
designed to improve air quality. Respondents place a
fundamentally different construction on the statute. They
contend that the text of the Act requires the EPA to use a
dual definition -- if either a component of a plant, or the plant
as a whole, emits over 100 tons of pollutant, it is a major
stationary source. They thus contend that the EPA rules
adopted in 1980, insofar as they apply to the maintenance of
the quality of clean air, as well as the 1981 rules which apply
to nonattainment areas, violate the statute. [FN31]
FN31. "What EPA may not do, however, is define all four
terms to mean only plants. In the 1980 PSD rules, EPA did
just that. EPA compounded the mistake in the 1981 rules
here under review, in which it abandoned the dual
definition." Brief for Respondents 29, n. 56.
Statutory Language
Sla
The definition of the term "stationary source" in §111(a)(3)
refers to "any building, structure, facility, or installation"
which emits air pollution. See supra, at 2784. This
definition is applicable only to the NSPS program by the
express terms of the statute; the text of the statute does not
make this definition applicable to the permit program.
Petitioners therefore maintain that there is no statutory
language even relevant to ascertaining the meaning of
stationary source in the permit program aside from §302(j),
which defines the term "major stationary source." See supra,
at 2786. We disagree with petitioners on this point.
The definition in §302(j) tells us what the word "major"
means -- a source must emit at least 100 tons of pollution to
qualify -- but it sheds virtually no light on the meaning of the
term "stationary source." It does equate a source with a
facility -- a "major emitting facility" and a "major stationary
source" are synonymous under §302(j). The ordinary
meaning of the term "facility" is some collection of
integrated elements which has been designed and constructed
to achieve some purpose. Moreover, it is certainly no affront
to common English usage to take a reference to a major
facility or a major source to connote an entire plant as
opposed to its constituent parts. Basically, however, the
language of §302(j) simply does not compel any given
interpretation of the term "source."
Respondents recognize that, and hence point to §111(a)(3).
Although the definition in that section is not literally
applicable to the permit program, it sheds as much light on
the meaning of the word "source" as anything in the statute.
[FN32] As respondents point out, use of the words
“building, structure, facility, or installation," as the definition
of source, could be read to impose the permit conditions on
an individual building that is a part of a plant. [FN33] A
52a
“word may have a character of its own not to be submerged
by its association." Russell Motor Car Co. v. United States,
261 U.S. 514, 519, 43 S.Ct. 428, 429, 67 L.Ed. 778 (1923).
On the other hand, the meaning of a word must be
ascertained in the context of achieving particular objectives,
and the words associated with it may indicate that the true
meaning of the series is to convey a common idea. The
language may reasonably be interpreted to impose the
requirement on any discrete, but integrated, operation which
pollutes. This gives meaning to all of the terms -- a single
building, not part of a larger operation, would be covered if it
emits more than 100 tons of pollution, as would any facility,
structure, or installation. Indeed, the language itself implies
a "bubble concept" of sorts: each enumerated item would
seem to be treated as if it were encased in a bubble. While
respondents insist that each of these terms must be given a
discrete meaning, they also argue that §111(a)(3) defines
"source" as that term is used in §302(j). The latter section,
however, equates a source with a facility, whereas the former
defines "source" as a facility, among other items.
FN32. We note that the EPA in fact adopted the language of
that definition in its regulations under the permit program. 40
C.F.R. §§51.18G)(1)(), (11) (1983).
FN33. Since the regulations give the States the option to
define an individual unit as a source, see 40 C.F.R.
§51.18(j)(1) (1983), petitioners do not dispute that the terms
can be read as respondents suggest.
We are not persuaded that parsing of general terms in the text
of the statute will reveal an actual intent of Congress.
[FN34] We know full well that this language is not
dispositive; the terms are overlapping and the language is not
precisely directed to the question of the applicability of a
given term in the context of a larger operation. To the extent
53a
any congressional "intent" can be discerned from this
language, it would appear that the listing of overlapping,
illustrative terms was intended to enlarge, rather than to
confine, the scope of the agency's power to regulate
particular sources in order to effectuate the policies of the
Act.
FN34. The argument based on the text of §173, which
defines the permit requirements for nonattainment areas, is a
classic example of circular reasoning. One of the permit
requirements is that "the proposed source is required to
comply with the lowest achievable emission rate" (LAER).
Although a State may submit a revised SIP that provides for
the waiver of another requirement -- the "offset condition" --
the SIP may not provide for a waiver of the LAER condition
for any proposed source. Respondents argue that the
plantwide definition of the term "source" makes it
unnecessary for newly constructed units within the plant to
satisfy the LAER requirement if their emissions are offset by
the reductions achieved by the retirement of older equipment.
Thus, according to respondents, the plantwide definition
allows what the statute explicitly prohibits -- the waiver of
the LAER requirement for the newly constructed units. But
this argument proves nothing because the statute does not
prohibit the waiver unless the proposed new unit is indeed
subject to the permit program. If it is not, the statute does
not impose the LAER requirement at all and there is no need
to reach any waiver question. In other words, §173 of the
statute merely deals with the consequences of the definition
of the term "source" and does not define the term.
Legislative History
In addition, respondents argue that the legislative history and
policies of the Act foreclose the plantwide definition, and
that the EPA's interpretation is not entitled to deference
54a
because it represents a sharp break with prior interpretations
of the Act.
Based on our examination of the legislative history, we agree
with the Court of Appeals that it is unilluminating. The
general remarks pointed to by respondents "were obviously
not made with this narrow issue in mind and they cannot be
said to demonstrate a Congressional desire....". Jewell Ridge
Coal Corp. v. Mine Workers, 325 U.S. 161, 168-169, 65
S.Ct. 1063, 1067-1068, 89 L.Ed. 1534 (1945). Respondents'
argument based on the legislative history relies heavily on
Senator Muskie's observation that a new source is subject to
the LAER requirement. [FN35] But the full statement is
ambiguous and like the text of §173 itself, this comment
does not tell us what a new source is, much less that it is to
have an inflexible definition. We find that the legislative
history as a whole is silent on the precise issue before us. It
is, however, consistent with the view that the EPA should
have broad discretion in implementing the policies of the
1977 Amendments.
FN35. See supra, at 2787. We note that Senator Muskie was
not critical of the EPA's use of the "bubble concept" in one
NSPS program prior to the 1977 amendments. See Ibid.
More importantly, that history plainly identifies the policy
concerns that motivated the enactment; the plantwide
definition is fully consistent with one of those concerns -- the
allowance of reasonable economic growth -- and, whether or
not we believe it most effectively implements the other, we
must recognize that the EPA has advanced a reasonable
explanation for its conclusion that the regulations serve the
environmental objectives as well. See supra, at 2789-2790,
and n. 29; see also supra, at 2788, n. 27. Indeed, its
reasoning is supported by the public record developed in the
55a
rulemaking process, [FN36] as well as by certain private
studies. [FN37]
FN36. See, for example, the statement of the New York
State Department of Environmental Conservation, pointing
out that denying a source owner flexibility in selecting
options made it "simpler and cheaper to operate old, more
polluting sources than to trade up....". App. 128-129.
FN37. "Economists have proposed that economic incentives
be substituted for the cumbersome administrative-legal
framework. The objective is to make the profit and cost
incentives that work so well in the marketplace work for
pollution control.... [The 'bubble’ or ‘netting’ concept] is a
first attempt in this direction. By giving a plant manager
flexibility to find the places and processes within a plant that
control emissions most cheaply, pollution control can be
achieved more quickly and cheaply." L. Lave & G. Omenn,
Cleaning Air: Reforming the Clean Air Act 28 (1981)
(footnote omitted).
Our review of the EPA's varying interpretations of the word
"source" -- both before and after the 1977 Amendments --
convinces us that the agency primarily responsible for
administering this important legislation has consistently
interpreted it flexibly -- not in a sterile textual vacuum, but in
the context of implementing policy decisions in a technical
and complex arena. The fact that the agency has from time
to time changed its interpretation of the term "source" does
not, as respondents argue, lead us to conclude that no
deference should be accorded the agency's interpretation of
the statute. An initial agency interpretation is not instantly
carved in stone. On the contrary, the agency, to engage in
informed rulemaking, must consider varying interpretations
and the wisdom of its policy on a continuing basis.
Moreover, the fact that the agency has adopted different
56a
definitions in different contexts adds force to the argument
that the definition itself is flexible, particularly since
Congress has never indicated any disapproval of a flexible
reading of the statute.
Significantly, it was not the agency in 1980, but rather the
Court of Appeals that read the statute inflexibly to command
a plantwide definition for programs designed to maintain
clean air and to forbid such a definition for programs
designed to improve air quality. The distinction the court
drew may well be a sensible one, but our labored review of
the problem has surely disclosed that it is not a distinction
that Congress ever articulated itself, or one that the EPA
found in the statute before the courts began to review the
legislative work product. We conclude that it was the Court
of Appeals, rather than Congress or any of the
decisionmakers who are authorized by Congress to
administer this legislation, that was primarily responsible for
the 1980 position taken by the agency.
Policy
The arguments over policy that are advanced in the parties’
briefs create the impression that respondents are now waging
in a judicial forum a specific policy battle which they
ultimately lost in the agency and in the 32 jurisdictions
opting for the "bubble concept," but one which was never
waged in the Congress. Such policy arguments are more
properly addressed to legislators or administrators, not to
judges. [FN38]
FN38. Respondents point out if a brand new factory that will
emit over 100 tons of pollutants is constructed in a
nonattainment area, that plant must obtain a permit pursuant
to §172(b)(6) and in order to do so, it must satisfy the §173
conditions, including the LAER requirement. Respondents
57a
argue if an old plant containing several large emitting units is
to be modernized by the replacement of one or more units
emitting over 100 tons of pollutant with a new unit emitting
less--but still more than 100 tons -- the result should be no
different simply because "it happens to be built not at a new
site, but within a pre-existing plant." Brief for Respondents
4.
In these cases, the Administrator's interpretation represents a
reasonable accommodation of manifestly competing interests
and is entitled to deference: the regulatory scheme is
technical and complex, [FN39] the agency considered the
matter in a detailed and reasoned fashion, [FN40] and the
decision involves reconciling conflicting policies. [FN41]
Congress intended to accommodate both interests, but did
not do so itself on the level of specificity presented by these
cases. Perhaps that body consciously desired the
Administrator to strike the balance at this level, thinking that
those with great expertise and charged with responsibility for
administering the provision would be in a better position to
do so; perhaps it simply did not consider the question at this
level; and perhaps Congress was unable to forge a coalition
on either side of the question, and those on each side decided
to take their chances with the scheme devised by the agency.
For judicial purposes, it matters not which of these things
occurred.
FN39. See e.g., Aluminum Co. of America v. Central
Lincoln Peoples' Util. Dist., 467 U.S., at 390, 104 S.Ct., at
2480 (1984). ?
FN40. See SEC v. Sloan, 436 U.S., at 117, 98 S.Ct., at 1711;
Adamo Wrecking Co. v. United States, 434 U.S. 275, 287, n.
5. 98 S.Ct. 566, 574. n. 5, 54 L.Ed.2d 538 (1978); Skidmore
v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89
L.Ed. 124 (1944).
58a
FN41. See Capital Cities Cable, Inc. v. Crisp, 467 U.S. at
699-700, 104 S.Ct. at 2700-2701; United States v. Shimer,
367 U.S. 374, 382. 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908
(1961).
Judges are not experts in the field, and are not part of either
political branch of the Government. Courts must, in some
cases, reconcile competing political interests, but not on the
basis of the judges’ personal policy preferences. In contrast,
an agency to which Congress has delegated policy-making
responsibilities may, within the limits of that delegation,
properly rely upon the incumbent administration's views of
wise policy to inform its judgments. While agencies are not
directly accountable to the people, the Chief Executive is,
and it is entirely appropriate for this political branch of the
Government to make such policy choices -- resolving the
competing interests which Congress itself either
inadvertently did not resolve, or intentionally left to be
resolved by the agency charged with the administration of
the statute in light of everyday realities.
When a challenge to an agency construction of a statutory
provision, fairly conceptualized, really centers on the
wisdom of the agency's policy, rather than whether it is a
reasonable choice within a gap left open by Congress, the
challenge must fail. In such a case, federal judges -- who
have no constituency -- have a duty to respect legitimate
policy choices made by those who do. The responsibilities
for assessing the wisdom of such policy choices and
resolving the struggle between competing views of the public
interest are not judicial ones: "Our Constitution vests such
responsibilities in the political branches." TVA v. Hill, 437
U.S. 153, 195, 98 S.Ct. 2279, 2302, 57 L.Ed.2d 117 (1978).
59a
We hold that the EPA's definition of the term "source" is a
permissible construction of the statute which seeks to
accommodate progress in reducing air pollution with
economic growth. "The Regulations which _ the
Administrator has adopted provide what the agency could
allowably view as ... [an] effective reconciliation of these
twofold ends...." United States v. Shimer, 367 U.S.. at 383.
81 S.Ct., at 1560.
The judgment of the Court of Appeals is reversed.
It is so ordered.
Justice MARSHALL and Justice REHNQUIST took no part
in the consideration or decision of these cases.
Justice O'CONNOR took no part in the decision of these
cases.
60a
APPENDIX H
COMMUNITY HOSPITAL OF CHANDLER,
INC., an Arizona Corporation,
d/b/a Chandler Regional Hospital,
Plaintiff-Appellant,
V.
Louis W. SULLIVAN, M.D., in his official
capacity as Secretary of the United
States Department of Health and Human Services,
Defendant-Appellee.
No. 90-16331.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted Feb. 11, 1992.
Decided May 4, 1992.
As Amended July 10, 1992.
Hospital sought review of administrative decision by
Health Care Finance Administration determining _ that
hospital was not entitled to Medicare reimbursement
payment under new "federal" rate. The United States District
Court for the District of Arizona, Earl H. Carroll, J., 744
F.Supp. 203, granted motion for summary judgment by
Secretary of Health and Human Services. Hospital appealed.
The Court of Appeals, D.W. Nelson, Circuit Judge, held that:
(1) Department's determination that new state-of-the-art
facility to which hospital's operations had been transferred
was not a "new hospital" within meaning of regulation did
not frustrate congressional intent to ease hospitals’ transition
6la
from cost-based reimbursement to Prospective Payment
System (PPS); (2) Medicare Act definition of "hospital" and
provisions dealing with PPS reimbursement anticipated that
hospital could be "facility" for some purposes and
"institution for others"; and (3) Secretary should have
adjusted hospital's base year costs to take into consideration
the radical shift in its operating costs.
Reversed and remanded.
[1] FEDERAL COURTS k776
170Bk776
District court's grant of summary judgment is reviewed de
novo.
[2] ADMINISTRATIVE LAW AND PROCEDURE k386
1SAk386
Agency's regulations must be consistent with overall intent
behind statute.
[3] SOCIAL SECURITY AND PUBLIC WELFARE
k241.10
356Ak241.10
Determination of Secretary of Health and Human Services,
that new state-of-the- art. facility to which hospital's
operations were transferred was_not a "new hospital" within
meaning of regulation for Medicare reimbursement purposes,
did not frustrate congressional intent to ease hospit
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