Marietta Mem'l Hosp. Emp. Health Benefit Plan v. DaVita Inc.

• Decision Date: 21 June 2022
• Docket Number: 20-1641
• Citation: 142 S.Ct. 1968,213 L.Ed.2d 376
• Parties: MARIETTA MEMORIAL HOSPITAL EMPLOYEE HEALTH BENEFIT PLAN, et al., Petitioners v. DAVITA INC., et al.
• Court: U.S. Supreme Court

142 S.Ct. 1968

213 L.Ed.2d 376

MARIETTA MEMORIAL HOSPITAL EMPLOYEE HEALTH BENEFIT PLAN, et al., Petitioners

v.DAVITA INC., et al.

No. 20-1641

Supreme Court of the United States.

Argued March 1, 2022

Decided June 21, 2022

John J. Kulewicz, Columbus, OH, for petitioners.

Matthew Guarnieri for United States as amicus curiae, by special leave of the Court, supporting reversal.

Seth P. Waxman, Washington, DC, for respondents.

Rodney A. Holaday, Jolie N. Havens, Daniel E. Shuey, Anthony Spina, Evelyn Lundberg Stratton, Erica M. Rodriguez, Vorys, Sater, Seymour and Pease LLP, Columbus, Ohio, John J. Kulewicz, Counsel of Record, Vorys, Sater, Seymour and Pease LLP, Columbus, Ohio, for petitioners.

Brent D. Craft, Emily E. St. Cyr, Vorys, Sater, Seymour and Pease LLP, Cincinnati, Ohio, for petitioner Medical Benefts Mutual Life Insurance Co.

William H. Prophater, Jr., D. Wesley Newhouse, Newhouse, Prophater, Kolman & Hogan, LLC, Columbus, Ohio, for petitioners Marietta Memorial Hospital Employee Health Beneft Plan and Marietta Memorial Hospital.

Jeffrey S. Bucholtz, Matthew Leland, Marisa C. Maleck, Alexander Kazam, King & Spalding LLP, Washington, DC, Seth P. Waxman, Counsel of Record, David W. Ogden, Kelly P. Dunbar, Ari Holtzblatt, Leon T. Kenworthy, Amy Lishinski, Joseph M. Meyer, Jeremy W. Brinster, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Ethan A. Sachs, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, for respondents.

Justice KAVANAUGH delivered the opinion of the Court.

The question in this case is whether a group health plan that provides limited benefits for outpatient dialysis—but does so uniformly for all plan participants—violates the Medicare Secondary Payer statute. We agree with petitioner Marietta and the United States as amicus curiae that the answer is no. We therefore reverse the judgment of the U. S. Court of Appeals for the Sixth Circuit and remand the case for further proceedings consistent with this opinion.

I

A

Medicare provides health insurance coverage for those who are 65 or over, or are disabled. In 1972, Congress extended Medicare coverage to individuals with end-stage renal disease

, regardless of age or disability. See Social Security Amendments of 1972, § 299I, 86 Stat. 1463; 42 U.S.C. § 426–1. That benefit now covers hundreds of thousands of Americans with end-stage renal disease. In the aggregate, the costs of healthcare for individuals with end-stage renal disease are high, and Medicare spends about $50 billion annually on treatments for those individuals.

During the initial years of the Medicare program after its enactment in 1965, Medicare acted as the first payer for many medical services, regardless of whether a Medicare beneficiary was also covered under another insurance plan, such as an employer-sponsored group health plan. In 1980 and 1981, in part due to rising Medicare costs, Congress enacted and amended the Medicare Secondary Payer statute. That statute as amended makes Medicare a "secondary" payer to an individual's existing insurance plan for certain medical services, including dialysis, when that plan already covers the same services. See Medicare and Medicaid Amendments of 1980, § 953, 94 Stat. 2647; Medicare and Medicaid Amendments of 1981, § 2146, 95 Stat. 800; 42 U.S.C. §§ 1395y(b)(1)(C), (2), (4).

Given the significant costs of healthcare for those with end-stage renal disease

, Congress recognized that a plan might try to circumvent the statute's primary-payer obligation by denying or reducing coverage for an individual who has end-stage renal disease, thereby forcing Medicare to incur more of those costs. To prevent such circumvention, the statute imposed two specific constraints on group health plans. First , a plan "may not differentiate in the benefits it provides between individuals having end stage renal disease and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner." § 1395y(b)(1)(C)(ii). Second , as relevant here, a plan "may not take into account that an individual is entitled to or eligible for" Medicare due to end-stage renal disease. § 1395y(b)(1)(C)(i) ; see § 426-1.

B

DaVita is one of the two major dialysis providers in the United States. DaVita provides dialysis to hundreds of thousands of individuals each year, including individuals insured by their employers’ group health plans.

The Marietta Memorial Hospital Employee Health Benefit Plan is an employer-sponsored group health plan. The Plan offers the same terms of coverage for outpatient dialysis to all of its participants. But under the Plan, outpatient dialysis services are subject to relatively limited reimbursement rates.

In 2018, DaVita sued the Plan, arguing that the Plan's limited coverage for outpatient dialysis both (i) differentiates between individuals with and without end-stage renal disease

and (ii) takes into account the Medicare eligibility of individuals with end-stage renal disease in violation of the Medicare Secondary Payer statute. § 1395y(b)(1)(C).

The District Court dismissed DaVita's claims, concluding that the Plan does not violate the anti-differentiation or take-into-account provisions of the Medicare Secondary Payer statute because the Plan's terms, including its terms for outpatient dialysis treatments, apply uniformly to all Plan participants.

A divided panel of the U. S. Court of Appeals for the Sixth Circuit reversed. See 978 F.3d 326 (2020). Among other things, the Court of Appeals ruled that the statute authorized disparate-impact liability, and the Court concluded that the limited payments for dialysis treatment had a disparate impact on individuals with end-stage renal disease

.

Judge Eric Murphy dissented in relevant part. He reasoned that the Plan's terms do not violate the statute because the Plan "offers the same benefits to all participants." Id ., at 358 (opinion concurring in judgment in part and dissenting in part).

The Sixth Circuit's interpretation of the Medicare Secondary Payer statute departed from the holdings of district courts that had considered the question. See DaVita, Inc. v. Amy's Kitchen, Inc. , 379 F. Supp. 3d 960 (N.D. Cal. 2019) ; Dialysis of Des Moines, LLC v. Smithfield Foods Healthcare Plan , 2019 WL 8892581 (E.D. Va., Aug. 5, 2019) ; National Renal Alliance, LLC v. Blue Cross & Blue Shield of Georgia, Inc. , 598 F. Supp. 2d 1344 (N.D. Ga. 2009). Moreover, several weeks after the Sixth Circuit's decision, the Ninth Circuit agreed with Judge Murphy's dissent and largely rejected the Sixth Circuit's analysis. See DaVita Inc. v. Amy's Kitchen, Inc. , 981 F.3d 664 (2020).

This Court granted certiorari to resolve the disagreement between the Courts of Appeals. 595 U. S. ––––, 142 S.Ct. 457, 211 L.Ed.2d 278 (2021).

II

A

We first consider DaVita's differentiation argument. To reiterate, the relevant statutory provision states: A plan "may not differentiate in the benefits it provides between individuals having end stage renal disease

and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner." 42 U.S.C. § 1395y(b)(1)(C)(ii).

That statutory language prohibits a plan from differentiating in benefits between individuals with and without end-stage renal disease

. For example, a group health plan may not single out plan participants with end-stage renal disease by imposing higher deductibles on them, or by covering fewer services for them. See 42 C.F.R. §§ 411.161(b)(2)(i)–(iv). If a plan does not differentiate in the benefits provided to individuals with and without end-stage renal disease, then a plan has not violated that statutory provision, and the differentiation inquiry ends there.¹

The Marietta Plan provides the same benefits, including the same outpatient dialysis benefits, to individuals with and without end-stage renal disease

. Indeed, DaVita does not dispute that the Plan's terms apply uniformly to all Plan participants. Therefore, the Plan does not "differentiate in the benefits it provides between individuals" with and without end-stage renal disease. 42 U.S.C. § 1395y(b)(1)(C)(ii).

In response, DaVita primarily argues that the statute authorizes liability even when a plan limits benefits in a uniform way if the limitation on benefits has a disparate impact on individuals with end-stage renal disease

.

To begin with, the text of the statute cannot be read to encompass a disparate-impact theory. That text requires inquiry into whether a plan provides different benefits to (i) those with end-stage renal disease

and (ii) those without end-stage renal disease. The text does not ask about "the effects of non-differentiating plan terms that treat all individuals equally." 978 F.3d, at 363 (opinion of Murphy, J.); see also Amy's Kitchen , 981 F.3d, at 674-675. In light of that plain text, it comes as no surprise that the Centers for Medicare and Medicaid Services have never adopted a disparate-impact theory in their longstanding regulations implementing this statute.

The disparate-impact theory not only is atextual but also would be all but impossible to fairly implement. The premise of the disparate-impact theory is that the plan's benefits for outpatient dialysis are inadequate. But what level of benefits would be adequate, and how would courts determine the level of benefits that qualifies as adequate?

Neither the statute nor DaVita offers a basis for determining when coverage for outpatient dialysis could be considered inadequate. And neither the statute nor DaVita supplies an objective benchmark or comparator against which to measure a plan's coverage for outpatient dialysis.

Absent some benchmark or comparator, courts would have great difficulty trying to make an apples-to-apples comparison of a plan's coverage for outpatient dialysis against its coverage for other services. Group health plans cover services for many different health issues at...