United States Court of Appeals,
Eleventh Circuit.
No. 95-6781.
NATIONAL COAL ASSOCIATION, Alabama Land and Mineral Corporation,
Allied Signal, Inc., Berwind Corporation, Bethlehem Steel
Corporation, Costain Coal, Inc., LTV Steel Company, Mountain Laurel
Resources Company, The Pittston Company, Plaintiffs-Appellees,
v.
Shirley S. CHATER, Commissioner of Social Security, Defendant-
Appellant.
April 26, 1996.
Appeal from the United States District Court for the Northern
District of Alabama. (No. CV 94-H-0780-S), James Hughes Hancock,
Judge.
Before TJOFLAT, Chief Judge, COX, Circuit Judge, and CLARK, Senior
Circuit Judge.
PER CURIAM:
The Commissioner of Social Security appeals from a grant of
summary judgment for the plaintiffs, requiring her to recompute
premiums paid by coal operators under a federal statute that
creates a benefits plan for mine workers. The sole issue in this
appeal is the meaning of the word "reimbursements" as used in the
statutory formula for calculating health benefit premiums. We
affirm the district court.
I. Background
The financial instability of health and retirement benefit
plans for mine workers and retirees historically has been a
significant factor precipitating disputes between mine workers and
coal operators. From 1946 to 1992, health benefits for miners were
provided through a series of multiemployer plans created under
agreements between the United Mineworkers of America (UMWA) and the
National Bituminous Coal Operators' Association. By 1989, the two
multiemployer plans that provided health benefits to retirees, the
1950 UMWA Benefit Plan and Trust, and the 1974 UMWA Benefit Plan
and Trust, were operating at a deficit. The financial instability
of the plans led to a breakdown in labor relations: the Pittston
Company ceased making contributions to the plans in 1990, and an
eleven-month strike ensued. In re Chateaugay Corp., 53 F.3d 478,
484 (2d Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 298, 133
L.Ed.2d 204 (1995).
Congress recognized the potential for continued disruption in
the coal industry without an adequately funded source for the
continued provision of benefits. With the aid of a study on the
issue by a Department of Labor commission,1 Congress passed the
Coal Industry Retiree Health Benefit Act ("the Act"), Pub.L. No.
102-46, 106 Stat. 3036 (1992), codified at 26 U.S.C. §§ 9701-9722
(1994). The purpose of the Act was to remedy the problems in
funding health care benefits for the beneficiaries of the former
UMWA plans while retaining a benefits program that was privately
financed. § 19142, 106 Stat. at 3037.
To accomplish this purpose, the Act basically consolidated the
1950 and 1974 UMWA Benefit Plans into one plan for the provision of
health and retirement benefits called the UMWA Combined Benefit
Fund ("Combined Fund"). 26 U.S.C. § 9702(a)(2). The Act directed
1
The Secretary of Labor's Advisory Commission on United Mine
Workers of America Retiree Health Benefits, A Report to the
Secretary of Labor and the American People (Nov. 1990), reprinted
in Coal Commission Report on Health Benefits of Retired Coal
Miners: Hearing Before the Subcomm. on Medicare and Long-Term
Care of the Senate Finance Comm., 102d Cong., 1st Sess. 142, 167-
81 (1991).
the Secretary of Health and Human Services ("Secretary of HHS") to
assign eligible beneficiaries of the Combined Fund to coal
operators according to certain criteria; a 1994 amendment to the
Act replaced the Secretary with the Commissioner of Social Security
("Commissioner"). 26 U.S.C. § 9706; Social Security Independence
and Program Improvements Act, Pub.L. No. 103-296, § 108(h)(9)(A),
108 Stat. 1464, 1487. Assigned coal operators finance the Combined
Fund by paying annual per-beneficiary premiums as directed by the
Act. 26 U.S.C. § 9704(a). The portion of the annual premium for
health benefits is calculated by the Commissioner using a formula
in § 9704(b)(2), which reads in part:
The Commissioner ... shall calculate a per beneficiary
premium for each plan year beginning on or after February 1,
1993, which is equal to the sum of—
(A) the amount determined by dividing—
(i) the aggregate amount of payments from the 1950 UMWA
Benefit Plan and the 1974 UMWA Benefit Plan for health
benefits (less reimbursements but including administrative
costs) for the plan year beginning July 1, 1991, for all
individuals covered under such plans for such plan year, by
(ii) the number of such individuals ...2
26 U.S.C. § 9704(b)(2) (emphasis added). The meaning of the word
"reimbursement" in this section is the sole issue disputed by the
parties to this appeal.
In order to understand the controversy in this case, it is
important to understand how the 1950 and 1974 UMWA Benefit Plans
acted in combination with government benefits programs, like
2
The amount calculated under § 9704(b)(2)(A) is adjusted
according to any increase in the medical component of the
Consumer Price Index during the plan year. 26 U.S.C. §
9704(b)(2)(B).
Medicare, to provide health care services for beneficiaries.
Health care coverage under the former UMWA plans was limited to
services that were not covered by Medicare or other government
benefit programs. But to promote efficiency for the payors and
convenience for the beneficiaries, the UMWA plans entered into a
series of agreements with the Health Care Financing Administration
("HCFA"), the governmental agency that administers Medicare, under
which the UMWA plans would pay providers all the covered costs of
the beneficiaries' health care. Medicare would then reimburse the
UMWA plans for services covered by Medicare Part B 3 and related
administrative costs.
Prior to June of 1990, the payments made by HCFA pursuant to
its agreement with the UMWA plans were calculated on a traditional
cost basis. The UMWA plans submitted reports of Medicare services
actually received by their beneficiaries, and HCFA used Medicare
cost principles to calculate the appropriate payment to the benefit
plans. The process of calculating cost-based reimbursement for
benefit plans of this size was complicated, and disputes frequently
arose over the amount that HCFA would pay the UMWA plans.
In 1990, the UMWA plans and HCFA signed a new contract that
employed a risk-capitation method for calculating the payments from
HCFA to the benefit plans. (R. 2-28 Defs.' Ex. 5.) Under the new
method, HCFA paid a predetermined amount per plan member per month,
without regard to the amount of money that the UMWA plans actually
3
The Medicare program is divided into two parts. Part A
covers services by institutional providers, like hospitals, and
Part B covers services by non-institutional providers, like
physicians. Only Part B is involved in this case.
spent on Medicare-covered services. The risk-capitation method was
considered desirable by both parties. The UMWA plans hoped that
using this method would prevent the protracted disputes that had
occurred over the amount of the HCFA payments. HCFA favored the
risk-capitation method because it gave the UMWA plans the incentive
to provide Medicare-covered services more efficiently, and because
the amount of its payment to the plans would be more certain.
The contract between HCFA and the UMWA plans using the
risk-capitation method has been renewed every year since its
inception; the Combined Fund has been substituted for the UMWA
plans. The 1990 contract, as well as each of the renewal contracts
in the record, characterize the payment made by HCFA to the UMWA
plans under the contract alternatively as a "payment" or
"capitation payment", and as "reimbursement." (R. 2-28 Defs.' Exs.
5, 6, 7.)4
4
The contract that was in effect from July 1, 1990, to June
30, 1993, reads in part:
I. Reimbursement
Pursuant to waivers ... [T]he [UMWA plan(s) ] will be
reimbursed on a risk-based capitated payment basis for
a period of 3 years, beginning July 1, 1990 and ending
June 30, 1993. The [UMWA plan(s) ] will furnish
medical and other health services to its enrollees who
are entitled to benefits under Part B of the Medicare
program.
The capitation payment for the period beginning July 1,
1990 and ending June 30, 1991, will be $141.87 per
member per month....
No reimbursement will be made to the [Combined Fund]
for covered Part A and Part B services furnished by a
provider of services....
(R. 2-28 Defs.' Ex. 5.)
The Act requires the trustees of the Combined Fund to submit
to the Commissioner "information as to the benefits and covered
beneficiaries under the fund, and such other information as the
[Commissioner] may require to compute any premium under this
section." 26 U.S.C. § 9704(h). In September of 1993, the trustees
submitted a financial report for the 1992 plan year ("base year")
to the Secretary of HHS, the Commissioner's predecessor under the
Act. The report showed that in the base year, the UMWA plans spent
$156.8 million on Medicare Part B services and related
administrative expenses. The report also showed that, pursuant to
their contract with HCFA, the plans received $182.3 million in
risk-capitation payments for Medicare Part B services and related
administrative costs, an amount that exceeded actual costs by about
$25.5 million.
Under the formula in 26 U.S.C. § 9704 for the calculation of
the per beneficiary health benefit premiums, one factor is the
amount of "reimbursements" received by the plans during the base
year. 26 U.S.C. § 9704(b)(2). In calculating this premium, the
Secretary used the amount actually paid by the UMWA plans during
the base year for Medicare Part B and related administrative costs,
or $156.8 million, as "reimbursements" to arrive at an annual per
beneficiary premium of $2,245.33 for assigned coal operators. If
the Secretary had used the amount received by the UMWA plans from
HCFA under the risk-capitation contract, or $182.3 million, as
"reimbursements," the per beneficiary premium would have been about
$2,013.83.
II. Proceedings Below
In April of 1994, the National Coal Association ("NCA") and
eight companies who are assigned premium payment obligations under
the Act filed suit in federal district court, 5 alleging that the
Secretary violated the Act by miscalculating the health benefit
premium. Finding that there were no disputed issues of fact
between the parties, the district court addressed the contentions
of the parties on cross motions for summary judgment. The court
held that the word "reimbursements" in the Act clearly and
unambiguously referred to the entire amount of payments made by
HCFA to the UMWA plans pursuant to the contract. Because the court
held that Congress had precisely addressed the issue before it, the
court rejected the Secretary's argument that her interpretation of
"reimbursement" was entitled to deference under Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104
S.Ct. 2778, 81 L.Ed.2d 694 (1984). The court granted the
plaintiffs' motion, and ordered the Commissioner to recalculate the
health benefit premium using the amount of the risk-capitation
payments as "reimbursements." The Commissioner appeals.
III. Issue on Appeal and Standard of Review
The parties to this appeal do not disagree on any issue of
fact. The sole issue in this appeal is the meaning of the word
"reimbursement" in 26 U.S.C. § 9704(b)(2). This question is one of
statutory interpretation, which we review de novo. United States
v. Hansley, 54 F.3d 709, 717 (11th Cir.), cert. denied, --- U.S. --
--, 116 S.Ct. 540, 133 L.Ed.2d 444 (1995).
5
Many member companies of the plaintiff National Coal
Association are assigned premium payment obligations under the
Act. We will refer to the plaintiffs collectively as NCA.
IV. Discussion
The Commissioner contends that her reading of § 9704(b)(2) is
compelled by the Act's plain meaning, legislative history, and
purpose. According to the Commissioner, the plain meaning of
"reimburse" is to indemnify, or pay back, only the amount that will
make a party whole. In other words, she argues that reimbursements
are necessarily cost-based, and that risk-based capitation payments
are only reimbursement to the extent that they do not exceed actual
costs. The legislative history supports her reading, she argues,
because one of the sponsors of the Act stated that the health
benefit premium would be based on "the aggregate amount of payments
made and to be made from the 1950 UMWA Benefit Plan and the 1974
UMWA benefit plan for health benefits-less payments by the plans
for Federal program benefits but including administrative costs—for
the [base year]." 138 Cong.Rec. S17634 (daily ed. Oct. 8, 1992)
(statement of Sen. Rockefeller) (emphasis added). The Commissioner
argues that her reading is more consistent with the Act's purpose
of creating a privately financed plan, because it does not allow
surplus payments by HCFA to subsidize the operators' contribution
to the Combined Fund. Finally, the Commissioner contends that the
above arguments demonstrate that hers is a reasonable reading of
the statute that is entitled to deference under Chevron.
NCA argues that the district court did not err in holding that
the plain meaning of "reimbursement" refers to the entire amount of
the capitation payments made by HCFA to the UMWA plans during the
base year. NCA contends that the Commissioner's reading of the
word "reimburse," which excludes an arrangement where a party is
repaid on a capitated basis, is impermissibly restrictive. NCA
argues that the agency reading of the statute is not entitled to
deference because Congress has spoken to the precise issue in the
plain language of the Act.
Any exercise of statutory interpretation begins first with
the language of the act. Bailey v. United States, --- U.S. ----,
----, 116 S.Ct. 501, 506, 133 L.Ed.2d 472 (1995); Chevron, 467
U.S. at 842, 104 S.Ct. at 2781. Where the intent of Congress is
expressed in the text of a statute in reasonably plain terms, we
must give effect to that intent. Griffin v. Oceanic Contractors,
Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973
(1982). Terms that are not defined in the statute, like the word
"reimbursement" in this Act, are given their ordinary or natural
meaning. Federal Deposit Ins. Corp. v. Meyer, --- U.S. ----, ----,
114 S.Ct. 996, 1001, 127 L.Ed.2d 308 (1994).
We hold that the plain meaning of "reimbursement" in §
9704(b)(2) refers to the entire amount of the capitation payments
that were made to the UMWA plans as reasonable compensation for
Medicare-related expenditures during the base year. "Reimburse" is
defined as "to pay back (an equivalent for something taken, lost,
or expended) to someone: repay." Webster's Third New
International Dictionary 1914 (1986). The ordinary meaning of the
term "reimbursement" is not restricted by any requirement that such
payments be dollar-for-dollar what the reimbursed party paid out.
The district court was correct in reasoning that the
legislative history and general purpose of the Act do not overcome
its plain statutory language. Although we consider the legislative
history of a statute relevant in the process of interpretation, "we
do not resort to legislative history to cloud a statutory text that
is clear." Ratzlaf v. United States, --- U.S. ----, ----, 114
S.Ct. 655, 662, 126 L.Ed.2d 615 (1994). Nor can a general appeal
to statutory purpose overcome the specific language of the Act,
because the text of a statute is the most persuasive evidence of
Congress's intent. Griffin, 458 U.S. at 571, 102 S.Ct. at 3250.
Because the statutory text is clear, there is no need to address
whether the Commissioner's reading of the statute is entitled to
deference under Chevron. 467 U.S. at 842-43, 104 S.Ct. at 2781.
The district court correctly held that the Secretary should
have included the entire $182.3 million paid to the UMWA plans as
"reimbursements."
AFFIRMED.
CLARK, Senior Circuit Judge, Concurring Dubitante:
While I disagree with the holding of the majority, I
nevertheless join for reasons which I shall explain. In a
nutshell, it would be a disservice in 1996 to reverse a financial
arrangement between the parties that has existed since 1993 and the
parties have acted thereon. No one gets hurt in the short run if
the Combined Fund for which the plaintiffs are partially
responsible becomes overpaid.
The majority is correct in adopting from Webster the
definition of "reimbursement" to mean "pay back" or "repay," but in
my view the opinion tends to err in saying: "The ordinary meaning
of the term "reimbursement" is not restricted by any requirement
that such payments be dollar-for-dollar what the reimbursed party
paid out." While I would agree such would be the case if the
excess reimbursement were penny ante, here we are talking about a
reimbursement that exceeds twenty-five million dollars.
A report prepared by the majority staff of the House Committee
on Ways and Means during the 1994 Term of Congress1 convinces me
that it would be an injustice to go back and try to recalculate the
payments from 1993 to present. Although the report shows during
the first six months of fiscal year 1995 the Combined Fund operated
with a deficit of ten million dollars, the Fund had a surplus of
ninety-six million dollars at the end of fiscal year 1994.
Further, the report has this statement: "The existence of a
surplus in the Combined Benefit Fund of over $100 million has
generated considerable interest among the parties responsible for
financing the retired miners' health benefits."2
From my view, this is a legislative problem, not a judicial
one. I have confidence, pursuant to the legislation on the books,
that the health benefits of the coal miners are protected. I have
just as much confidence that the plaintiff coal mine operators will
continue to be treated justly. I hope the taxpayers are equally
protected.
This is a case in which to let sleeping dogs lie, and
therefore I concur.
1
Staff of House Comm. on Ways and Means, 104th Cong.Sess.,
Development and Implementation of the Coal Industry Retiree
Health Benefit Act of 1992. (Comm. Print 1992).
2
Id. at 21-22.