The Dist. of Columbia Hosp Assoc. v. Herbert Weldon, 99-7239

• Citation: 224 F.3d 776
• Decision Date: 21 July 2000
• Docket Number: No. 99-7239,99-7239
• Parties: (D.C. Cir. 2000) The District of Columbia Hospital Association, et al.,Appellees v. District of Columbia and Herbert Weldon, Deputy Director for Health Care Finance of Medical Assistance Administration, Appellants
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 776

224 F.3d 776 (D.C. Cir. 2000)

The District of Columbia Hospital Association, et al.,Appellees v. District of Columbia and Herbert Weldon, Deputy Director for Health Care Finance of Medical Assistance Administration, Appellants

No. 99-7239

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 4, 2000

Decided July 21, 2000

Appeal from the United States District Court for the District of Columbia(No. 98cv02575)

Donna M. Murasky, Senior Assistant Corporation Counsel, with whom Robert R. Rigsby, Corporation Counsel, and Charles L. Reischel, Deputy Corporation Counsel, were on the briefs, argued the cause for appellants.

Christopher L. Keough, with whom Ronald N. Sutter and Kimberly N. Brown were on the brief, argued the cause for appellees.

Before Silberman and Sentelle, Circuit Judges, and Buckley, Senior Circuit Judge.

Opinion for the court filed by Senior Judge Buckley.

Buckley, Senior Judge:

The District of Columbia appeals the district court's ruling that its method of computing certain payments to hospitals violated the federal Medicaid statute. Because we agree that the District of Columbia's interpretation of the law is contrary to its plain meaning, we affirm the district court's grant of summary judgment to the District of Columbia Hospital Association.

I. Background

A. Regulatory Framework

The Medicaid statute, Subchapter XIX of the Social Security Act, establishes a cooperative plan between the federal government and the States to provide medical services to low income individuals. 42 U.S.C. §§ 1396-1396v (1994 & Supp. III 1997). The program is jointly funded by the Federal and State governments and is administered by the States pursuant to federal guidelines. See generally id. §§ 1396a, 1396b;42 C.F.R. § 430.0-.25 (1999). The statute treats the District of Columbia ("District") as a State. 42 U.S.C. § 1396d(b) (Supp. III 1997). To qualify for federal funding, a State must have its own Medicaid plan approved by the Health Care Financing Administration ("HCFA") of the United States Department of Health and Human Services. Id. § 1396; 42 C.F.R. § 430.10.

All State plans are required to provide Medicaid beneficiaries with inpatient hospital services. 42 U.S.C. §§ 1396a(a)(10)(A), 1396d(a)(1). Because of the greater costs it found to be associated with the treatment of indigent patients, Congress has directed that hospitals providing inpatient care must be compensated under the Medicaid program at rates that "take into account ... the situation of hospitals which serve a disproportionate number of low-income patients with special needs." Id. § 1396a(a)(13)(A)(iv); see also H.R. Rep. No. 100-391(1), at 524, reprinted in 1987 U.S.C.C.A.N. 2313-1, 2313-344 (discussing adjustments in payments to "disproportionate share hospitals" ("DSH")). The adjustments mandated by Congress ("DSH adjustments" or "DSH payments") are achieved through increases in the "rate or amount of payment for such services." 42 U.S.C. § 1396r-4(a)(1)(B).

States may select one of three complex formulae for calculating the DSH payments. Id. § 1396r-4(c)(1), (2), (3). Under the formula selected by the District ("(c)(1) formula"), see D.C. Mun. Regs. tit. 29, § 908.4(b) (1999), the DSH adjustment must equal "at least the product of [ ] the amount paid under the State plan to the hospital for operating costs for inpatient hospital services" ("base amount"), multiplied by the hospital's "disproportionate share adjustment percentage."42 U.S.C. § 1396r-4(c)(1). Because this case hinges on the calculation of the base amount, we will spare the reader the labyrinthine process by which the disproportionate share adjustment percentage is derived. We simply observe that it alone would justify the Supreme Court's description of the Medicaid statute as "an aggravated assault on the English language, resistant to attempts to understand it." Schweiker v. Gray Panthers, 453 U.S. 34, 43 n.14 (1981) (quoting Friedman v. Berger, 409 F. Supp. 1225, 1226 (S.D.N.Y. 1976)).

B. The District of Columbia's Plan

The District's Medicaid plan is administered by an agency within the Department of Human Services that was called the Commission on Health Care Finance ("CHCF") at the time this controversy originated. Although it has since been renamed the Medical Assistance Administration, the parties have continued to refer to the agency as the CHCF, as will we.

District of Columbia residents who qualify for Medicaid on the basis of their eligibility for assistance under the Temporary Assistance for Needy Families program (formerly Aid to Families with Dependent Children) are required by the District's Medicaid Managed Care Amendment Act of 1992 to enroll in managed care plans. D.C. Code Ann. S 1-359(d)(2) (1999 Repl. & Supp. 2000). Other Medicaid beneficiaries continue to receive services on a fee-for-service basis. The District pays the managed care organizations ("MCOs") that administer the managed care plans a fixed pre-paid amount per Medicaid enrollee. The MCOs, in turn, are responsible for providing these enrollees with all the health care services to which they are entitled under the statute, including inpatient hospital services provided under contract between the MCOs and participating hospitals. Id. S 1-359(d)(2), (3).

C. The Litigation

Without delving too deeply into the tortuous history of this litigation, it suffices to say that the District and the District of Columbia Hospital Association ("Association") have been engaged for the better part of the past decade in an argument over the District's calculation of DSH payments. In 1994, the Association filed a suit in which it claimed, among other things, that the District's method of computing DSH adjustments violated the Medicaid statute by failing to take into account the services provided managed care patients through the MCOs. While the suit was pending, a newly appointed Commissioner of the CHCF agreed to revise the District's methodology. Because the parties believed this would resolve their dispute, the district court dismissed the suit as moot. Subsequent to the dismissal of the case, it became apparent that the parties were not in fact in accord as to how DSH adjustments should be computed. The bone remaining in contention was the District's failure to include, in the (c)(1) formula's base amount, the operating costs incurred by hospitals in providing inpatient services to Medicaid managed care patients.

In 1998, the Association initiated the present action seeking a declaratory judgment that the District's exclusion of Medicaid managed care patients from the base amount violated the Medicaid statute. The Association subsequently filed a motion requesting the district court to compel the District to comply with representations the Association claims the District made in settling the earlier litigation. The court granted the Association's motion for summary judgment based on its holding that the District's method of calculating DSH payments was contrary to law, and it granted the Association's motion to compel compliance with its version of the earlier understanding. District of Columbia Hosp. Ass'n v. District of Columbia, 73 F. Supp. 2d 8 (D.D.C. 1999). The District filed a timely appeal, and we have jurisdiction to review the district court's final order pursuant to 28 U.S.C. § 1291.

II. Analysis

We review a grant of summary judgment de novo, applying the same standard as the district court. See, e.g., Everett v. United States, 158 F.3d 1364, 1367 (D.C. Cir. 1998), cert. denied, 526 U.S. 1132 (1999). Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

The dispositive question in this case is one of statutory interpretation. Specifically, we are concerned here with the proper application of the formula selected by the District for the computation of the DSH adjustment. That formula provides that the adjustment must

be in an amount equal to at least the product of (A) the amount paid under the State plan to the hospital for operating costs for inpatient hospital services (of the kind described in section 1395ww(a)(4) of this title), and (B)the hospital's disproportionate share adjustment percent-age (established under section 1395ww(d)(5)(F)(iv) of this title)[.]

42 U.S.C. § 1396r-4(c)(1) (emphasis added).

The controversy in this case centers on the meaning to be given the word "under" in the quoted text. The District contends that it is not required to include the cost of providing inpatient services to Medicaid managed care patients in the base amount because the hospitals receive payments for those services from MCOs rather than from the District. Because the payments are not made directly by the District, it reasons that they are not made "under the State plan."

It is axiomatic that "[t]he starting point in statutory interpretation is the language of the statute itself." Ardestani v. INS, 502 U.S. 129, 135 (1991) (internal quotation marks and brackets omitted). The Supreme Court has observed that "[t]he word 'under' has many dictionary definitions and must draw its meaning from its context." Id. We see nothing in the context of the Medicaid statute, however, that would require us to give the word other than its ordinary meaning."Under" is defined as "required by[,] in accordance with[, or] bound by." Webster's Third New International Dictionary 2487 (1981); see also Ardestani, 502 U.S. at 135 (finding "the most natural reading" of "under" in context of Equal Access to Justice Act to mean " 'subject [or pursuant] to' or 'by reason of the authority of' ") (quoting St. Louis Fuel and Supply Co. v. FERC, 890 F.2d 446, 450 (D.C. Cir. 1989)).

Although payments from MCOs to hospitals for the care of Medicaid patients are not made directly by the District, they are clearly made pursuant to, and under the authority of,...