United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-3954
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State of North Dakota, ex rel. Carol K. *
Olson, Executive Director, North *
Dakota Department of Human Services, *
*
Appellee, *
*
v. * Appeal from the United States
* District Court for the District
Centers for Medicare and Medicaid * of North Dakota.
Services; Thomas A. Scully, in his *
official capacity as Administrator of *
the Centers for Medicare and Medicaid *
Services; United States Department of *
Health and Human Services; Tommy *
G. Thompson, in his official capacity *
as Secretary of the United States *
Department of Health and Human *
Services, *
*
Appellants. *
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No. 03-4036
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James W. Ellenbecker, Secretary, *
South Dakota Department of Social *
Services; State of South Dakota *
Department of Social Services, *
*
Appellees, *
*
v. * Appeal from the United States
* District Court for the District
Centers for Medicare and Medicaid * of South Dakota.
Services; Thomas A. Scully, in his *
official capacity as Administrator of *
the Centers for Medicare and Medicaid *
Services; United States Department of *
Health and Human Services; Tommy *
G. Thompson, in his official capacity *
as Secretary of the United States *
Department of Health and Human *
Services, *
*
Appellants. *
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Submitted: October 22, 2004
Filed: April 6, 2005
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Before MORRIS SHEPPARD ARNOLD, GIBSON, and SMITH, Circuit Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
The Centers for Medicare and Medicaid Services (CMS), an agency of the
Department of Health and Human Services (HHS) that (along with the states)
administers Medicaid, appeals from summary judgments entered against it in district
courts in North and South Dakota. North and South Dakota had claimed 100 percent
federal reimbursement for some Medicaid services provided to Native Americans by
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non-Indian Health Service facilities. CMS reduced the reimbursement percentage,
disallowing some of the states' claims. The Department of Appeals Board of HHS
(DAB) upheld CMS's decisions, but the district courts reversed. We reverse and
remand to the district courts for entry of judgments upholding the decisions of the
DAB.
I.
Prior to the enactment of the Indian Health Care Improvement Act of 1976
(IHCIA), the Indian Health Service (IHS) was ineligible to receive payments from
Medicaid for Medicaid services provided at IHS facilities. To increase funding for
health-care services and facilities for Native Americans, the IHCIA made IHS eligible
for Medicaid reimbursement. See 42 U.S.C. § 1396j(a). Normally a state pays for
Medicaid services not covered by private insurance, and the federal government
reimburses the state for a percentage of its cost, known as the federal medical
assistance percentage (FMAP). Because IHS facility services were entirely federally
funded before the IHCIA, Congress increased to 100 percent the FMAP applicable
to Medicaid services "received through an Indian Health Service facility." 42 U.S.C.
§ 1396d(b). Thus the IHCIA avoided shifting the federal government's pre-IHCIA
responsibility for Native American health care onto the states.
The scope of the Medicaid services reimbursed at the 100 percent FMAP
depends on the meaning of "received through an Indian Health Service facility."
North and South Dakota argue that the 100 percent FMAP applies to referred services
that constitute IHS facility services, as defined in two Medicaid regulations, and that
are provided by referred service providers with which IHS facilities have service
contracts. In support of their position, the states cite a 1997 CMS memorandum from
the acting director of the Medicaid Bureau. According to the memorandum,
"[r]eferred services, provided through a contractual arrangement, can also be
considered provided 'through an IHS facility' and reimbursed at the 100 percent
FMAP rate as long as these are services that could be provided as a 'facility service,'
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as referenced by [42 C.F.R. §§ 440.10, 440.20]." The DAB, however, interpreted the
CMS memorandum as requiring a contractual relationship in which the non-IHS
provider is an independent contractor, a relationship that a contract of negotiated rates
for referrals fails to create. See 42 U.S.C. § 1395x(w)(1).
II.
In interpreting the scope of the phrase "received through an Indian Health
Service facility," we need not consider the 1997 CMS memorandum or any other
agency pronouncement if the language of the IHCIA or its legislative history
addresses the question. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 843 n.9, 845 (1984); Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d
933, 936 (8th Cir. 2000). Only when statutory language is ambiguous and its
accompanying legislative history unclear do we decide whether to defer to an
agency's policy for implementing a statute's requirements. Chevron, 467 U.S. at 845.
In the case of the IHCIA, the statute suggests that there is no requirement that
services be provided physically within an IHS facility to qualify for the 100 percent
FMAP, but the language does not compel any particular interpretation. In the same
section of the IHCIA in which Congress used the phrase "received through" to
identify the services eligible for 100 percent FMAP, IHCIA § 402(c) (codified at
42 U.S.C. § 1396d(b)), Congress described the IHS services newly eligible to receive
Medicaid funds as "services provided in Indian Health Service facilities," IHCIA
§ 402(b) (codified at 42 U.S.C. § 1396j(c)) (emphasis added). Given the proximity
of the phrase "received through" and the phrase "provided in," they might convey two
different meanings, with the latter phrase being the more limited of the two.
Nevertheless, even if "received through" has a broader connotation than "provided
in," the statute does not specify how far "received through" should extend. Thus the
statutory language is susceptible to multiple interpretations and does little to resolve
the present controversy.
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The legislative history, on the other hand, is clear and consistent when it
discusses the scope of the 100 percent FMAP. Nowhere does it suggest that the
100 percent FMAP applies to services provided outside of IHS facilities, such as the
referrals at issue in this case. Instead, each committee report that discusses the scope
of the 100 percent FMAP, which includes reports from one Senate committee and two
House of Representatives committees, says that the special FMAP applies to services
provided in IHS facilities. H.R. Rep. No. 94-1026, pt. 1, at 108 (1976), reprinted in
1976 U.S.C.C.A.N. 2652, 2746; id., pt. 3, at 7, reprinted in 1976 U.S.C.C.A.N. at
2782; S. Rep. No. 94-133, at 128 (1975). Further, the report from the Interstate and
Foreign Commerce Committee of the House of Representatives explains that the
"Committee approved [the 100 percent FMAP] because ... since the 100 percent
matching is limited to services in IHS facilities, it is clearly being paid for Indians ...
who are already eligible for full Federal funding of their services." H.R. Rep. No. 94-
1026, pt. 3, at 21, reprinted in 1976 U.S.C.C.A.N. at 2796 (emphasis added). Given
the legislative history's unequivocal stance, we conclude that Congress's use of
"received through" rather than "provided in" does not cover referred services such as
those at issue in this appeal.
Because our inquiry stops if the legislative history explains the statutory
language, even when that language would otherwise be ambiguous, cf. Davis v.
United States, 495 U.S. 472, 479-81 (1990), we do not reach the matter of what
deference we might owe to the relevant agencies' interpretation of the statute. Based
on the legislative history alone, we reverse the district courts' judgments.
III.
North and South Dakota argue that, in the event that we reverse the district
courts' interpretation of the IHCIA, we still should not require them to repay the
difference between the 100 percent FMAP and the regular FMAP for referred services
that they billed to CMS prior to the DAB's decisions. The 1997 CMS memorandum,
they contend, authorized a 100 percent FMAP for referred services, and the DAB's
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decisions should not be applied retroactively to defeat North and South Dakota's
reasonable reliance.
Because our construction of the scope of the 100 percent FMAP stems from the
IHCIA's legislative history and not from past agency interpretations, ordering North
and South Dakota to disgorge past overpayments simply implements the IHCIA's
requirements, which are unchanged. If our interpretation of the IHCIA causes a
change in policy toward referred services, that is only because CMS's prior policy
was unauthorized by the IHCIA. Thus what North and South Dakota really ask us to
do is to estop CMS from seeking repayment, since the states allegedly relied to their
detriment on the advice CMS offered in its 1997 memorandum and failed to repudiate
in subsequent audits of North and South Dakota's Medicaid billing practices.
Equitable estoppel is granted against the government only in extraordinary situations,
however. See Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 423 (1990); Conforti
v. United States, 74 F.3d 838, 841 (8th Cir. 1996), cert. denied, 519 U.S. 807 (1996).
Further, when funds that belong to the United States treasury are at stake,
constitutional principles embodied in the separation of powers doctrine and the
appropriations clause of the Constitution, U.S. Const., Art. I, § 9, cl. 7, strongly
militate against estoppel. "If agents of the Executive were able, by their unauthorized
oral or written statements to citizens, to obligate the Treasury for the payment of
funds, the control over public funds that the [Appropriations] Clause reposes in
Congress in effect could be transferred to the Executive." Richmond, 496 U.S. at 428;
see also Microcomputer Tech. Inst. v. Riley, 139 F.3d 1044, 1052 (5th Cir. 1998).
North and South Dakota consequently must return to CMS the amounts that the
agency overpaid them when it reimbursed them at the 100 percent FMAP for referred
services provided by non-IHS facilities.
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IV.
We therefore reverse the district courts' judgments and remand the cases to the
district courts with instructions to enter judgments upholding the decisions of the
DAB.
JOHN R. GIBSON, dissenting.
I respectfully dissent. I would affirm on the basis articulated in the district
court’s order.
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