Beverly Community Hosp. Ass'n v. Belshe

• Citation: 132 F.3d 1259
• Decision Date: 02 December 1997
• Docket Number: 96-56699 and 96-56745,97-55713,96-56249,96-55208,96-56485,96-56648,Nos. 97-55022,s. 97-55022
• Parties: , Medicare & Medicaid Guide P 45,779, 97 Cal. Daily Op. Serv. 9001, 97 Daily Journal D.A.R. 14,555 BEVERLY COMMUNITY HOSPITAL ASSOCIATION, a California non-profit public benefit corporation, d/b/a Beverly Hospital; Bellwood Medical Corporation, d/b/a Bellwood General Hospital; Chico Community Hospital Medical Center, Inc., d/b/a Chico Community Rehabilitation Hospital, d/b/a Chico Community Hospital; Hollywood Community Hospital Medical Center, Inc., d/b/a Hollywood Community Hospital Of Van Nuys, d/b/a Hollywood Community Hospital Of Hollywood; Lancaster Hospital Corporation, d/b/a Lancaster Community Hospital, et al., Plaintiffs-Appellees, v. Kimberly BELSHE, Director of the California Department of Health Services, Defendant-Appellant. CALIFORNIA AMBULANCE ASSOCIATION, Plaintiff-Appellee, v. Donna E. SHALALA, Secretary of the United States Department of Health and Human Services, Defendant, and Kimberly Belshe, Director of the California Department of Health Services, Defendant-Appellant. CALIFORNIA AMBULANCE ASSOCIATION, Plaintiff-Appellee, v. Donna E. SHALALA, Secretary of United States Department of Health and Human Services, Defendant-Appellant. CALIFORNIA MEDICAL ASSOCIATION; California Academy Of Family Physicians; California Society Of Anesthesiologists; California Urological Association; California Chapter Of The American College Of Emergency Physicians; California Chapter Of The American College Of Cardiology; California Society Of Internal Medicine; California Society Of Physical Medicine & Rehabilitation; California Radiology Society, Chapter Of The American College Of Radiology, Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary of United States Department of Health and Human Services; S. Kimberly Belshe, Director of the California Department of Health Services, Defendants-Appellants. Richard GILMORE, M.D.; Saraf Protap, M.D., Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary of the United States Department of Health and Human Resources, Defendan
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1259

132 F.3d 1259

55 Soc.Sec.Rep.Ser. 21, Medicare & Medicaid Guide P

45,779,

97 Cal. Daily Op. Serv. 9001,

97 Daily Journal D.A.R. 14,555

BEVERLY COMMUNITY HOSPITAL ASSOCIATION, a California

non-profit public benefit corporation, d/b/a Beverly

Hospital; Bellwood Medical Corporation, d/b/a Bellwood

General Hospital; Chico Community Hospital Medical Center,

Inc., d/b/a Chico Community Rehabilitation Hospital, d/b/a

Chico Community Hospital; Hollywood Community Hospital

Medical Center, Inc., d/b/a Hollywood Community Hospital Of

Van Nuys, d/b/a Hollywood Community Hospital Of Hollywood;

Lancaster Hospital Corporation, d/b/a Lancaster Community

Hospital, et al., Plaintiffs-Appellees, v. Kimberly BELSHE, Director of the California Department of

Health Services, Defendant-Appellant.

CALIFORNIA AMBULANCE ASSOCIATION, Plaintiff-Appellee, v. Donna E. SHALALA, Secretary of the United States Department

of Health and Human Services, Defendant,

and

Kimberly Belshe, Director of the California Department of

Health Services, Defendant-Appellant.

CALIFORNIA AMBULANCE ASSOCIATION, Plaintiff-Appellee, v. Donna E. SHALALA, Secretary of United States Department of

Health and Human Services, Defendant-Appellant.

CALIFORNIA MEDICAL ASSOCIATION; California Academy Of

Family Physicians; California Society Of Anesthesiologists;

California Urological Association; California Chapter Of

The American College Of Emergency Physicians; California

Chapter Of The American College Of Cardiology; California

Society Of Internal Medicine; California Society Of

Physical Medicine & Rehabilitation; California Radiology

Society, Chapter Of The American College Of Radiology, Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary of United States Department of

Health and Human Services; S. Kimberly Belshe,

Director of the California Department of

Health Services,

Defendants-Appellants.

Richard GILMORE, M.D.; Saraf Protap, M.D., Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary of the United States Department

of Health and Human Resources, Defendant,

S. Kimberly Belshe, Director of Health Services,

Defendant-Appellant.

Richard GILMORE, M.D., individually and on behalf of all

those similarly situated; Pratap Saraf, M.D.,

individually and on behalf of all those

similarly situated, Plaintiffs-Appellees, v. Donna E. SHALALA, Ph.D., Secretary of the United States

Department of Health and Human Services; S.

Kimberly Belshe, Director of the

California Department of

Health Services,

Defendants-

Appellants.

CALIFORNIA MEDICAL ASSOCIATION; California Academy Of

Family Physicians; California Society Of Anesthesiologists;

California Urological Association; California Chapter Of

The American College Of Emergency Physicians; California

Chapter Of The American College Of Cardiology; California

Society Of Internal Medicine; California Society Of

Physical Medicine & Rehabilitation; California Radiology

Society, Chapter Of The American College Of Radiology, Plaintiffs-Appellees, v. Donna E. SHALALA, Secretary of the United States Department

of Health and Human Services, Defendant-Appellant.

Donald R. MacPHERSON, Jr., as Successor in interest to

decedent Christina MacPherson & MacPherson Oil

Company Employee Welfare Benefit Plan, Plaintiff-Appellant, v. EMPLOYERS HEALTH INSURANCE, Defendant-Appellee.

Nos. 97-55022, 96-55208, 97-55713, 96-56249, 96-56485,

96-56648, 96-56699 and 96-56745.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 6, 1997.

Decided Dec. 2, 1997.

Laurie R. Pearlman, California Attorney General, Los Angeles, California, for defendant-appellant Belshe.

John R. Hellow, Byron J. Gross, Michele Melden and Kevin M. Corbett (on brief), Hooper, Lundy & Bookman, Inc., Los Angeles, California, for plaintiffs-appellees Beverly Community Hosp. Ass'n.

Alisa B. Klein, United States Department of Justice, Civil Division, Washington, DC, for the amicus.

Charlton G. Holland III and Ralph Johnson, California Attorneys General, San Francisco, California; Alisa B. Klein, United States Department of Justice, Civil Division, Washington, DC, for defendants-appellants Belshe and Shalala.

William J. Bush, Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP, San Francisco, California, for plaintiffs-appellees California Ambulance Ass'n.

Michael A. Greene, Greenburg, Glusker, Fields, Claman & Machtinger LLP, Los Angeles, California; Bruce S. Sperling, Sperling, Slater & Spitz, P.C., Chicago, Illinois; Harvey J. Barnett, Harvey J. Barnett & Associates, P.C., Chicago, Illinois, for plaintiff-appellee Gilmore..

Appeal from the United States District Court for the Central District of California; J. Spencer Letts, District Judge, Presiding. D.C. Nos. CV-95-04053-JSL, CV-96-02322-JSL, CV-96-2322-JSL, CV-03033-JSL, CV-96-05564-JSL, CV-96-03033-JSL, CV-97-00514-JSL.

Before: REINHARDT and TASHIMA, Circuit Judges, and SHADUR, District Judge. ^*

SHADUR, District Judge:

We address here a question of first impression, not only in this Circuit but (understandably in light of the recency of the legislation involved) in any court: whether a congressional enactment adopted in August 1997, but stating that it is retroactive and applicable to pending cases, calls for approval of the reading that has been given to the pre-enactment version of the same legislation by the Secretary of the United States Department of Health and Human Services ("Secretary"). Because we answer that question in the affirmative, we reverse all three decisions below. ¹

All three of these sets of appeals pose a common problem: whether the State of California may choose to limit certain payments, as required by statute to be made to enroll poor people-qualified Medicare beneficiaries ("QMBs")-in the Medicare insurance program, to the amount by which California's Medicaid rate exceeds what Medicare has paid. Those payments, required from all participating states under the Medicaid Act, extend to deductibles, coinsurance and copayments that the QMBs cannot bear fully and that the State is required to pay on their behalf (whether totally or in part is at stake in these cases).

Title XVIII of the Social Security Act (the "Medicare Act," 42 U.S.C. §§ 1395-1395ccc ²) provides a federal health insurance program for elderly and disabled persons. Medicare Part A covers inpatient hospital services and certain related benefits (Sections 1395c-1395i-4), and it is provided automatically for individuals entitled to Social Security retirement or disability benefits (Section 426). Medicare Part B is a voluntary program under which Medicare-eligible persons can obtain supplemental insurance for various outpatient services from physicians and other providers (Sections 1395j-1395w-4). It is financed by a combination of federal funds and premiums paid by or on behalf of eligible individuals (Sections 1395r, 1395t(g)). Both Medicare Part A and Medicare Part B call for payments by covered individuals that constitute the deductibles, coinsurance and copayments referred to earlier.

Title XIX of the Social Security Act (the "Medicaid Act," Sections 1396-1396v) is a cooperative federal-state program that provides federal matching funds to states that elect to provide medical services to certain needy individuals (see Section 1396; Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980)). Although states are not required to participate in Medicaid, if they elect to do so they must follow federal guidelines (Harris, 448 U.S. at 301, 100 S.Ct. at 2680) and must submit for Secretary's approval their state plans that describe the states' intended means for insuring compliance with those guidelines (Section 1396a(b)).

What is at issue in these three sets of appeals is the area of overlap between the Medicare and Medicaid Acts where coverage for the elderly poor is involved. Those persons are often entitled to participate in such coverage but may not be able to afford to pay the required deductible and coinsurance amounts under Medicare Part A or the premiums and payments needed to enroll in Medicare Part B. At the time that the various lawsuits were filed below, Congress had dealt with individuals who are eligible for both Medicare and Medicaid (see Section 1396d(p)(1)) by stating in Section 1396a(n) of the Medicaid Act what the state plans could set up to cover their obligations on behalf of the QMBs involved.

Three types of plaintiffs (now appellees) are involved in these appeals. Beverly Hospital is a class action on behalf of all California hospitals that provide inpatient hospital services under the Medicare and Medicaid Acts. California Ambulance involves two types of associations, California Ambulance Association and physician associations including California Medical Association, each type of association also representing providers of services under the two statutes. And Gilmore was brought by two doctors who provide outpatient physician services to persons under the two statutes. ³ Thus Beverly Hospital involves Medicare Part A, while California Ambulance and Gilmore implicate Medicare Part B.

Secretary is an appellant in all of the cases except for Beverly Hospital, in which she was given leave to participate as an amicus curiae. Director S. Kimberly Belshe of the California Department of Health Services ("Director") is an appellant in all of the cases. Both appellants subscribe to Secretary's legal position pursuant to which California adopted its Medicaid state plan ("Medi-Cal"), which position asserts that under Section 1396a(n) participating States such as California have the choice to limit their payments as described earlier, so that they need not pay the full cost-sharing amount. In each of the cases before us the District Court rejected that contention, as have all four Courts of Appeals that have addressed the question: Rehabilitation Ass'n of Virginia, Inc. v. Kozlowski, 42 F.3d 1444 (4th Cir.1994)("Kozlowski "); Haynes Ambulance Serv., Inc. v. State of Alabama, 36...