United States Court of Appeals
For the First Circuit
No. 04-2721
VISITING NURSE ASSOCIATION GREGORIA AUFFANT, INC.,
Plaintiff, Appellant,
v.
TOMMY G. THOMPSON, in his capacity as Secretary of the United
States Department of Health and Human Services; RUBEN J. KING-
SHAW, JR., as the Deputy Administrator and Chief Operating
Officer of the Centers for Medicare and Medicaid Services;
UNITED GOVERNMENT SERVICES,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges
and Gibson,* Senior Circuit Judge
Héctor J. Pérez Rivera and Carlos R. Pastrana-Torres, with
whom Goldman, Antonetti & Córdova, P.S.C., were on brief, for
appellants.
Maryalice Kozak, Assistant United States Attorney, with whom
José M. Pizzaro-Zayas, Assistant United States Attorney, and H.S.
García, United States Attorney, were on brief, for appellees.
May 8, 2006
*
Of the Eighth Circuit, sitting by designation.
LIPEZ, Circuit Judge. Medicare, a health insurance
program, is administered by the Secretary of Health and Human
Services through the Centers for Medicare and Medicaid Services.
The Secretary is entrusted by the Medicare Act with the authority
to issue regulations that are necessary for the administration of
the health insurance program. Under the Act, providers are
reimbursed the lesser of their charges or their reasonable costs
incurred in providing covered services to Medicare beneficiaries.
42 U.S.C. § 1395f(b). The Act requires the Secretary to promulgate
regulations to interpret "reasonable costs".
This case involves a challenge to the applicability of
interpretive regulations adopted by the Secretary that provide for
the reimbursement of "necessary and proper" costs related to
patient care under the Medicare program. The case also raises a
related issue involving the timing of the Secretary's decision
denying reimbursement of the costs at issue in this case. We
affirm the district court's ruling affirming the decision of the
Secretary.
I.
A. Factual and Procedural Background
Plaintiff-Appellant Visiting Nurse Association Gregoria
Auffant, Inc. ("Plaintiff" or "VNA") is a non-profit corporation
organized and existing under the laws of the Commonwealth of Puerto
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Rico.1 For the time period at issue here, VNA was a Home Care
Medicare provider within the meaning of the Medicare Act, 42 U.S.C.
§ 1395, et seq. Plaintiff owns three subsidiary providers in the
Medicare program: VNA Hato Rey, VNA Bayamón, and VNA Carolina.
Defendant-Appellee Tommy G. Thompson was the Secretary of the
Department of Health and Human Services.2 Defendant-Appellee Ruben
J. King-Shaw, Jr. is the Deputy Administrator and Chief Operating
Officer of the Centers for Medicare and Medicaid Services ("CMS").
King-Shaw (the "Administrator") signed the CMS decision at issue
here. Defendant-Appellee United Government Services ("UGS"), the
intermediary between Medicare and Plaintiff, conducted the initial
review of Plaintiff's cost reports discussed below.
In July 1994, VNA instituted a Deferred Compensation Plan
("Plan" or "DCP") for its employees pursuant to which VNA paid a
deferred "salary differential" for each employee participating in
the Plan. Plaintiff claimed these contributions to the Plan as
costs on its Medicare cost reports for fiscal years 1994-1997. UGS
reviewed Plaintiff's cost reports for those fiscal years,
determined that the Plan did not comply with Medicare rules and
1
This area of law is rife with the use of acronyms. To help
the reader understand them, we attach an appendix containing a
glossary of the less common acronyms used in this opinion.
2
Tommy G. Thompson is no longer the Secretary of Health and
Human Services. Pursuant to Fed. R. Civ. P. Rule 25(d), Michael O.
Leavitt is automatically substituted in his place.
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regulations, and disallowed reimbursement of costs in the amount of
$353,521.3
Plaintiff appealed UGS's decision to the Provider
Reimbursement Review Board ("PRRB" or the "Board"), which held a
hearing on November 19, 2001. On August 9, 2002, the Board
reversed UGS's decision. The Board concluded that VNA was entitled
to reimbursement for its contributions to the Plan, finding that:
(1) UGS never informed VNA that the Plan was invalid; (2) VNA used
outside advisors and consultants to establish the Plan; (3) the
Plan's terms were contained in the personnel by-laws; and (4) VNA
created the Plan intending it to be a permanent arrangement. In
summary, the Board reversed UGS's decision on the grounds that the
Plan was in "substantial compliance" with the provisions of the
Medicare Provider Reimbursement Manual ("PRM" or the "Manual"); and
any non-compliance of the Plan from the requirements set forth in
the Manual was de minimus.
On August 16, 2002, pursuant to 42 C.F.R. § 405.1875,
which provides specifically for appeals from decisions of the
Board, UGS requested a review of the Board's decision, alleging
that the decision was contrary to the rules and standards contained
in the Manual. On August 26, 2002, the Administrator notified the
3
UGS initially reviewed VNA's cost reports for fiscal years
1996 and 1997 only. After finding non-compliance in these reports,
UGS reopened the cost reports for 1994 and 1995, adjusting those
costs related to the Plan.
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parties of its intention to review the Board's decision. VNA was
also notified that the Administrator would issue his decision,
which constitutes the Secretary's final decision, within sixty (60)
days of VNA's receipt of the Board's decision.
On October 8, 2002, the Administrator reversed the
decision of the Board, finding that the Plan did not qualify as a
formal DCP. Specifically, the Administrator found that VNA had not
deposited its contributions with an appropriate funding agent; the
Plan was contingent rather than permanent in nature; and the Plan
did not meet the requirements for Medicare reimbursement as a
formal DCP for the 1994-97 period. On October 10, 2002, the
Administrator's decision was sent to VNA by certified mail.
On December 3, 2002, VNA requested review of the
Administrator's decision in federal district court pursuant to the
Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701-06. VNA
eventually moved for summary judgment; Defendants opposed the
motion and submitted a cross-motion for summary judgment. On
September 30, 2004, the district court issued an order denying
VNA's summary judgment motion and granting Defendants' motion,
affirming the decision of the Secretary. This appeal followed.
B. Standard of Review
We review a district court's grant of summary judgment de
novo. Dominguez-Cruz v. Suttle Caribe, Inc., 202 F.3d 424, 428
(1st Cir. 2000). However, "this rubric has a special twist in the
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administrative law context." Associated Fisheries of Maine, Inc.
v. Daley, 127 F.3d 104, 109 (1st Cir. 1997). "Because the APA
standard affords great deference to agency decisionmaking and
because the Secretary's action is presumed valid, judicial review,
even at the summary judgment stage, is narrow." Id. Pursuant to
42 U.S.C. § 1395oo(f)(1), judicial review of the reimbursement
decision is governed by the standards detailed in the APA. Thus,
we may only set aside agency actions, findings, and conclusions if
they are "arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law" or "unsupported by
substantial evidence". 5 U.S.C. § 706(2). Substantial evidence
means "more than a mere scintilla. It means such relevant evidence
as a reasonable mind might accept as adequate to support a
conclusion." Richardson v. Perales, 402 U.S. 389, 401 (1971).
Additionally, in the situation here, the district court acts as an
intermediate appellate court. Therefore, "when reviewing agency
action, we apply the same legal standards that pertain in the
district court and afford no special deference to that court's
decision." Associated Fisheries, 127 F.3d at 109.
Furthermore, "[w]here Congress has entrusted rulemaking
and administrative authority to an agency, courts normally accord
the agency particular deference in respect to the interpretation of
regulations promulgated under that authority." South Shore Hosp.,
Inc. v. Thompson, 308 F.3d 91, 97 (1st Cir. 2002); see also Bowles
-6-
v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945). "Courts
withhold such deference only when the agency's interpretation of
its regulation is plainly erroneous or inconsistent with its
language." South Shore Hosp., 308 F.3d at 97 (internal citations
and quotation marks omitted). "In situations in which the meaning
of regulatory language is not free from doubt, the reviewing court
should give effect to the agency's interpretation so long as it is
reasonable, that is, so long as the interpretation sensibly
conforms to the purpose and wording of the regulations." Martin v.
Occupational Safety & Health Review Comm'n, 499 U.S. 144, 150-51
(1991)(internal citations and quotation marks omitted).
However, pronouncements in manuals like the PRM, which do
not have the force of law, are entitled to less deference than an
interpretation arrived at after a formal adjudication or notice-
and-comment rulemaking. See Christensen v. Harris County, 529 U.S.
576, 587 (2000) (explaining that administrative interpretations
receive Skidmore deference rather than Chevron deference). We
proceed with these standards in mind.
II.
A. Timing of the Decision of the Administrator for the Centers for
Medicare and Medicaid Services
42 U.S.C. § 1395oo(f)(1) states in relevant part that
"[a] decision of the [PRRB] shall be final unless the Secretary, on
his own motion, and within 60 days after the provider of services
-7-
is notified of the Board's decision, reverses, affirms, or modifies
the [PRRB]'s decision." In turn, 42 C.F.R. § 405.1875(g) states in
relevant part:
(1) If the Administrator has notified the parties and CMS
that he or she has decided to review a [PRRB] decision,
the Administrator will affirm, reverse, modify or remand
the case.
(2) The Administrator will make this decision within 60
days after the provider received notification of the
[PRRB] decision and will promptly mail a copy of the
decision to each party and to CMS.
Both the statute and the regulations implementing the statute
require the Administrator -- who acts with the authority of the
Secretary -- to conduct and conclude his review of a Board decision
within a 60-day period. VNA asserts that the Administrator failed
to make his decision within that 60-day period. As a result, VNA
argues that the Board decision is final, and the Administrator's
silence constitutes approval of the Board's decision.
There is no factual dispute that: (1) the Board issued
its decision on August 9, 2002; (2) the Administrator signed and
dated his decision on October 8, 2002; and (3) the Administrator's
decision was mailed to VNA on October 10, 2002. Plaintiff contends
that 42 C.F.R. § 405.1875(g)(2) requires the Administrator to make
his decision and mail that decision within the 60-day window. The
relevant dates for this proposition would be August 9, 2002, and
October 10, 2002; sixty-one (61) days would have elapsed using this
scenario. With the Secretary not having complied with the
applicable time requirements, the Board's decision would be final.
-8-
However, Plaintiff's argument is predicated on an
unnatural reading of the regulatory language. 42 C.F.R. §
405.1875(g)(2) reads that "the Administrator will make this
decision within 60 days . . . and will promptly mail a copy." If
the regulation required the Administrator to make his decision and
mail it within 60 days, the regulation would have placed "within 60
days" at the end of the regulation. Then the 60-day period would
apply to both the making of the decision and its mailing. However,
the plain language of the regulation states that the Administrator
need only make his decision within the 60-day period. He must then
mail his decision promptly thereafter, which is what the
Administrator did. The date the Administrator signed his decision
is the appropriate date to use in calculating whether the
Administrator complied with the 60-day period. Using that day,
October 8, 2002, the Administrator made his decision in fifty-nine
(59) days, within the 60-day period detailed in both the statute
and the regulations. As a result, the CMS Administrator's decision
was properly before the district court.4
4
Defendants also argue, in the alternative, that the day the
60-day window began should be August 13, 2002, not August 9, 2002,
asserting that the 60 days begins to run when a plaintiff receives
actual notice of the Board's decision. Defendants based this
argument on our decision in Hospital San Jorge v. Secretary of
Health, Education, and Welfare, 616 F.2d 580 (1st Cir. 1980).
There, we held that the 60-day time period under 42 U.S.C. §
1395oo(f)(1) commences the date the party receives notice of the
decision through the mail. Id. at 585 n.6. In that case, we
assumed that a mailing took four days. Id. In light of Hospital
San Jorge, the district court found Defendants' alternative timing
-9-
B. The Applicability of the Provider Reimbursement Manual
Plaintiff makes two attempts to avoid the applicability
of the Manual to the Plan. VNA first argues that the Manual is
just a "codified interpretation" of the Employee Retirement Income
Security Act ("ERISA"). Since the Plan complied with ERISA,
according to Plaintiff, it was entitled to Medicare reimbursement.
This argument is unsupported by any authority.
The Manual anticipates different types of retirement
plans that a Medicare provider may offer to its employees. In §§
2140.1-2140.6, the Manual sets forth the rules governing the broad
category of retirement plan involved in this case -- the deferred
compensation plan. In subsequent sections, specifically §§ 2141.1-
2141.7 and §§ 2142.1-2142.7, the Manual sets forth the rules
governing two subcategories of a DCP, the "defined contribution
deferred compensation plan" and the "pension plan", respectively.
In support of its position that the PRM "codifies" ERISA,
Plaintiff asserts that "[n]owhere in the PRM is a conceptual link
between said Manual and ERISA more clearly suggested and easily
apparent, than in Section 2141.1 of the PRM." In § 2141.1, the
Manual states in relevant part that: "Defined contribution deferred
compensation plans include profit sharing, stock bonus, and other
such defined contribution deferred compensation plans that meet
argument also valid. We agree with the district court that this
decision supports equally well the conclusion that the
Administrator's decision was issued within the 60-day period.
-10-
Internal Revenue Service ("IRS") or [ERISA] requirements as
qualified plans and have been so approved by the IRS."
First, § 2141.1 defines the DCP subcategory of "defined
contribution deferred compensation plans" only; the Plan at issue
here does not fall into that category. As noted, the Plan at issue
here falls into the general category of a deferred compensation
plan, which is governed by §§ 2140.1-2140.6. Those sections do not
refer to ERISA. Second, and more importantly, the reference to
ERISA in § 2141.1 is only used to distinguish a deferred
compensation plan that qualifies as a "defined contribution
deferred compensation plan" from one that does not. Even for the
defined contribution deferred compensation plan, there is no
suggestion that the PRM is simply a codified interpretation of
ERISA. Indeed, whether for a "regular" deferred compensation plan
or for a defined contribution deferred compensation plan, the
question of Medicare reimbursement would be determined by the
Medicare Act and its related regulations, not ERISA. ERISA is
irrelevant to the issue of Medicare reimbursement for contributions
to a DCP.
In a second attempt to avoid the applicability of the
Manual to the Plan, Plaintiff argues that the Manual was preempted
by ERISA. ERISA states in relevant part that "[n]othing in this
subchapter shall be construed to alter, amend, modify, invalidate,
impair, or supersede any law of the United States . . . or any rule
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or regulation issued under any such law." 29 U.S.C. § 1144(d).
The plain language of the statute exempts from preemption any
federal law, and any rule or regulation issued under federal law.
VNA asserts that the Manual, as a whole or in part, is not a valid
rule or regulation issued under federal law, and hence it is not
protected from ERISA preemption.5
VNA's reliance on ERISA is again misguided. If the
provisions of the Manual at issue are invalid on the basis of
familiar administrative law principles (which Plaintiff contends),
they would not apply to the Plan on that basis alone, irrespective
of ERISA. If the provisions are valid, they are protected from
ERISA preemption.6 Thus, the critical question in this appeal is
whether the particular sections of the PRM relied on by the
Administrator are valid rules of the Secretary.
5
In its appellate brief, VNA seems to challenge the Manual,
which is comprised of many provisions, as a single rule. The
relevant cases that we have found involve challenges to a
particular section or provision of the Manual. See, e.g., Shalala
v. Guernsey Mem'l Hosp., 514 U.S. 87 (1995). Given the focus of
Plaintiff on the sections of the Manual that the Administrator
applied -- PRM §§ 2140.1-2140.3, the sections regulating
reimbursement of DCPs -- we interpret VNA's position as a challenge
to the validity of the specific provisions of the Manual at issue.
6
Although Plaintiff argues that the provisions of the PRM are
not interpretive rules, the clearly are, as the ensuing discussion
demonstrates. See Shalala v. Guernsey Mem'l Hosp., 514 U.S. 87, 99
(1995).
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In Shalala v. Guernsey Memorial Hospital, 514 U.S. 87
(1995), the Supreme Court found that § 233 of the Manual7 "is a
prototypical example of an interpretive rule issued by an agency to
advise the public of the agency's construction of the statutes and
rules which it administers." Id. at 99. The Court continued:
"[i]nterpretive rules do not require notice and comment . . . they
also do not have the force and effect of law and are not accorded
that weight in the adjudicatory process."8 Id. Finally, the Court
held that if § 233 had "adopted a new position inconsistent with
any of the Secretary's existing regulations," the APA's notice-and-
comment rulemaking process would be required. Id. at 100. So long
as an interpretive rule does not "effec[t] a substantive change in
the regulations," notice-and-comment is not required and the
interpretive rule is valid. Id.; see also Levesque v. Block, 723
F.2d 175, 182 (1st. Cir. 1983) (citing Skidmore v. Swift & Co., 323
U.S. 134, 139-40 (1944)).
In Christensen, the Supreme Court "confront[ed] an
interpretation contained in an opinion letter, not one arrived at
7
Section 233 of the PRM describes the way in which a cost
associated with capital indebtedness should be recognized, "whether
the loss should be recognized at once or spread over a period of
years." Guernsey, 514 U.S. at 97. Section 233 requires that
"defeasance losses should be amortized." Id.
8
There is no dispute that the provisions of the Manual were
not subject to the notice-and-comment rulemaking procedures of the
APA.
-13-
after, for example, a formal adjudication or notice-and-comment
rulemaking." 529 U.S. at 587. The Court concluded that:
[I]nterpretations contained in policy statements, agency
manuals, and enforcement guidelines, all of which lack
the force of law -- do not warrant Chevron-style
deference. Instead, interpretations contained in formats
such as opinion letters are "entitled to respect" under
our decision in Skidmore v. Swift & Co., but only to the
extent that those interpretations have the "power to
persuade."
Id. (internal citations and quotation marks omitted). While it is
true that rules found in manuals such as the PRM are entitled to
less deference than interpretations arrived at after a formal
adjudication or notice-and-comment rulemaking, this does not mean
that the rules in the Manual are not entitled to any deference at
all. If an interpretive rule is neither inconsistent with
promulgated regulations, nor outside of the coverage of the Act, it
is valid. Furthermore, as the Supreme Court stated in Thomas
Jefferson University v. Shalala, 512 U.S. 504 (1994), "broad
deference [to the administrative agency] is all the more warranted
when, as here, the regulation concerns a complex and highly
technical regulatory program." Id. at 512 (internal citations and
quotation marks omitted); see also Auer v. Robbins, 519 U.S. 452
(1997) (holding that an agency's interpretation of its own
ambiguous regulation is entitled to deference); Bowles v. Seminole
Rock & Sand Co., 325 U.S. 410 (1945). Medicare certainly qualifies
as such a "technical regulatory program".
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Plaintiff challenges the contention that §§ 2140.1-2140.3
of the PRM are valid interpretive rules whose requirements
determine whether contributions to a DCP were necessary, proper,
and reasonable -- and therefore reimbursable -- under the Medicare
Act and its implementing regulations. Section 2140.2 of the PRM
states:
Provider contributions for the benefit of employees under
a deferred compensation plan are reimbursable when, and
to the extent that, such costs are actually incurred by
the provider. Such costs are found to have been incurred
only if the requirements of sections 2140ff[]9 are met .
. . . Provider payments under unfunded deferred
compensation plans are considered an allowable cost only
when actually paid to the particular employee and only to
the extent considered reasonable.
(Footnote added.) Under PRM § 2140.3, a provider must also:
[a]dequately communicate the proposed plan to all
eligible employees, enabling them to make an informed
decision on whether to participate in the plan. A formal
plan is one that is provided for in a written agreement
executed between the provider and the participating
employees.
Additionally, the plan must be a "permanent" one that: (1) details
the method for calculating all contributions to the fund
established under the plan; (2) is funded according to the
requirements of section 2140.3B;10 (3) designates how the plan's
9
"[S]ections 2140ff" refers to Section 2140 in its entirety,
from §§ 2140.1-2140.6. Section 2140 is the entire portion of the
PRM dealing with deferred compensation.
10
Section 2140.3B, entitled "Funding of Deferred Compensation
Plans", describes in detail the recognized ways of funding a DCP,
including commercial insurance, trust funds, and custodial bank
accounts.
-15-
assets are to be protected; (4) provides the requirements for
benefits to vest; (5) gives the basis for the compensation of the
amount of the benefits to be paid; and (6) will continue regardless
of normal fluctuations in the provider's economic experience. PRM
§ 2140.3.
Insofar as these sections effect neither a substantive
change in the regulations nor the Medicare Act, they constitute
valid interpretive rules. While neither the Medicare Act nor the
subsequent regulations specify the requirements for DCPs, this
omission does not mean that there can be no such requirements. In
Guernsey, the Court stated that "[w]e also believe it was proper
for the Secretary to issue a guideline or interpretive rule" in the
form of a section of the PRM. 514 U.S. at 97.
The Medicare Act states that "[t]he reasonable cost of
any services shall be the cost actually incurred, excluding
therefrom any part of incurred cost found to be unnecessary in the
efficient delivery of needed health services." 42 U.S.C. §
1395x(v)(1)(A). The Act grants the Secretary broad discretion in
determining what is a "reasonable cost" under the Act, 42 U.S.C. §
1395x(v)(1)(A) ("In prescribing the regulations referred to in the
preceding sentence, the Secretary shall consider . . . ."), and in
determining what information is required from providers as a
-16-
condition of payment, 42 U.S.C. § 1395g(a).11 The statute provides
a broad definition of "reasonable cost":
The reasonable cost of any services shall be the cost
actually incurred, excluding therefrom any part of
incurred cost found to be unnecessary in the efficient
delivery of needed health services, and shall be
determined in accordance with regulations establishing
the method or methods to be used, and the items to be
included, in determining such costs for various types or
classes of institutions, agencies, and services. . . .
42 U.S.C. § 1395x(v)(1)(A).
Regulations promulgated by the Secretary to implement the
Act state that reimbursement of these costs is "subject to
principles relating to specific items of revenue and cost." 42
C.F.R. § 413.9(a). The burden of proof is on the provider seeking
reimbursement to demonstrate whether a cost is eligible for
reimbursement. 42 C.F.R. §§ 413.20, 413.24. Payments to providers
"must be based on the reasonable cost of services covered under
Medicare and related to the care of beneficiaries." 42 C.F.R. §
413.9(a). Additionally, providers must maintain sufficient
financial records and statistical data for the accurate
determination of reimbursable costs for services to beneficiaries
11
42 U.S.C. § 1395g(a) states in relevant part:
The Secretary shall periodically determine the amount
which should be paid under this part to each provider of
services with respect to the services furnished by it .
. . . [N]o such payments shall be made to any provider
unless it has furnished such information as the Secretary
may request in order to determine the amounts due such
provider under this part for the period with respect to
which the amounts are being paid or any prior period.
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using "[s]tandardized definitions, accounting, statistics, and
reporting practices that are widely accepted in the hospital and
related fields." 42 C.F.R. § 413.20(a).
Given the enormous variety of payments to providers that
the Secretary considers in making reimbursement decisions, the
regulations that the Secretary has issued to explain "reasonable
cost" use general language by necessity. For example, 42 C.F.R. §
413.9 defines "necessary and proper costs", the type of costs at
issue here, as: "costs that are appropriate and helpful in
developing and maintaining the operation of patient care facilities
and activities. They are usually costs that are common and
accepted occurrences in the field of the provider's activity." To
give content to the concept of reasonable cost, the Manual details
the specifics of reimbursement.
The deferred plan specifications found in the Manual,
specifically §§ 2140.1-2140.3, do not contradict or conflict with
the requirements articulated in the Medicare Act and its
regulations. They detail the requirements for determining and
confirming reasonable costs under a DCP, pursuant to the
requirements of the regulations. These interpretive rules are not
beyond the pale of what other courts have found acceptable. See,
e.g., Cmty Hosp. of Monterey Peninsula v. Thompson, 323 F.3d 782,
790-93 (9th Cir. 2003) (holding that the PRM's allowable debt
reimbursements were neither arbitrary nor capricious); Mt. Sinai
-18-
Hosp. Med. Ctr. v. Shalala, 196 F.3d 703, 709 (7th Cir. 1999)
(concluding that PRM requirements that mandate providers collect
Medicare and non-Medicare debts with the same methods were
reasonable and not violative of the APA); see also Creighton Omaha
Reg'l. Health Care Corp. v. Bowen, 822 F.2d 785 (8th Cir. 1987);
St. Mary's Hosp. of Troy v. Blue Cross and Blue Shield Assoc., 788
F.2d 888 (2d Cir. 1986). These courts accorded deference to the
Secretary's interpretive provisions contained in the Manual, and
upheld disallowances of Medicare costs based on those provisions,
despite the fact that those provisions were not expressly stated in
the regulations.
We conclude that §§ 2140.1-2140.3 are valid interpretive
rules. As a result, the Plan must satisfy the specific
requirements found in these provisions in order to qualify for
reimbursement.
C. The Administrator's decision
Finally, using the reasoning of the Board, Plaintiff
contests the district court's decision to affirm the
Administrator's decision. The Board reversed UGS's adjustments to
VNA's reimbursement, reasoning that the Plan "substantially
complied" with the Manual's requirements and any non-compliance of
the Plan to the requirements set forth in the Manual was
de minimus.
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Plaintiff asserts that the strict application of the
Manual is inequitable, and that the Board's more relaxed
"substantial compliance" approach is proper. Here, we have found
the applicable sections of the Manual to be valid interpretive
rules implementing the Medicare Act and the Secretary's
regulations. The Secretary is charged with administering "a
complex and highly technical regulatory program in which the
identification and classification of relevant criteria necessarily
require significant expertise and the exercise of judgement
grounded in policy concerns." Thomas Jefferson Univ., 512 U.S. at
513 (internal citations and quotation marks omitted). Because the
manner in which the Manual is implemented is so integral to its
operation, it would be odd not to defer to the Secretary's method
of applying those rules, as well as those rules themselves. We,
therefore, find Plaintiff's objection to the Administrator's
"strict application" approach unpersuasive. The district court's
ruling affirming the Administrator's decision was correct.
Affirmed.
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Appendix: Glossary
Name of Entity or Acronym Description
Document
Visiting Nurse VNA Plaintiff-Appellant
Association in this case
Centers for Medicare CMS Section of HHS that
and Medicaid administers
Medicare, and a
Defendant-Appellee
United Government UGS The intermediary
Services that performed the
initial audit of
VNA's deferred
compensation plan
Provider PRRB Entity that decides
Reimbursement Review appeals of initial
Board reimbursement
decisions
Deferred DCP The type of employee
Compensation Plan benefit plan at
issue in this case,
an arrangement in
which a portion of
an employee's income
is paid out at a
date after which
that income is
actually earned
Provider PRM Document at issue in
Reimbursement Manual this case,
containing the
Secretary's
guidelines for
implementing the
Medicare Act and
regulations,
including the
requirements a DCP
must meet in order
to be eligible for
reimbursement
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