Judge Katsas, who joined the D.C. Circuit in December after being appointed by President Trump, is wasting no time adopting a favorite practice of many judicial conservatives: restricting the scope of regulations that harm business interests.
Katsas published his first opinion Friday (June 29) in a case involving an arcane Medicare regulation, and he sided with hospitals over bureaucrats. He said the Department of Health and Human Services had interpreted its own regulation in a way that contradicted the very text of the regulation. The upshot of his ruling is that hospitals will have more leeway to use administrative appeals to seek more money in Medicare reimbursements.
The case, Saint Francis Medical Center v. Azar, involves a complex formula that the federal government uses to calculate annual Medicare payments to hospitals. Numerous hospitals argued that part of the formula is based on faulty data from the 1980s, causing the hospitals to be underpaid. They sought to challenge the use of the old data through an administrative appeals process.
The Department of Health and Human Services attempted to invoke a 2013 regulation to bar those challenges. The agency argued that the regulation prevented hospitals from disputing factual determination that were made more than three years prior to the challenge. Because the data at issue was collected in the early 1980s, the agency said, the use of that data was not subject to hospital appeals.
Katsas, in an opinion joined by Chief Judge Garland and Judge Kavanaugh, rejected the agency’s interpretation. The court held that the regulation’s three-year limitation applies only to a narrow category of Medicare reimbursement challenges known as “reopenings.” Those challenges are procedurally distinct from the administrative appeals that the hospitals used, and Katsas concluded that the time limitation does not apply to the appeals.
The court should not defer to the agency’s interpretation, Katsas said, because that interpretation “is inconsistent with the text of the reopening regulation, as well as with the separate statutes and regulations governing administrative appeals.”
Kavanaugh wrote a concurrence. He opened with some kudos for his newest colleague and fellow conservative, calling Katsas’s debut an “excellent opinion.” But he said he would go further than Katsas did—he would have struck down the regulation altogether as “arbitrary and capricious.”
