Your feedback ensures we stay focused on the facts that matter to you most—take our survey.
Azar v. Allina Health Services
 | |
| Azar v. Allina Health Services | |
| Term: 2018 | |
| Important Dates | |
| Argument: January 15, 2019 Decided: June 3, 2019 | |
| Outcome | |
| Affirmed | |
| Vote | |
| 7-1 | |
| Majority | |
| Chief Justice John G. Roberts • Clarence Thomas • Ruth Bader Ginsburg • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch | |
| Dissenting | |
| Stephen Breyer | |
Azar v. Allina Health Services was a 2019 United States Supreme Court case about whether the process used by the U.S. Department of Health and Human Services (HHS) to change Medicare reimbursement rates complied with the notice-and-comment procedures of the Medicare Act.[1][2][3] The case involved efforts started under former President Barack Obama to change how much reimbursement money hospitals receive for treating disproportionate numbers of low-income Medicare patients.[3] The court ruled that HHS has to follow notice-and-comment procedures when it makes substantive changes to Medicare policy, which included the reimbursement formula at issue in the case.[3]
Justice Brett Kavanaugh wrote the lower court opinion while serving as a judge on the D.C. Circuit Court and was recused from the case at the U.S. Supreme Court level.[4][1]
Why it matters: The court declined to draw a bright line between substantive and interpretive rules in general, but it did clarify that both substantive and interpretive rules promulgated under the Medicare Act must follow notice-and-comment rulemaking procedures.[4][5]
Background
| Administrative State |
|---|
|
| Five Pillars of the Administrative State |
| • Judicial deference • Nondelegation • Executive control • Procedural rights • Agency dynamics |
| Click here for more coverage of the administrative state on Ballotpedia |
Case background
Several hospitals joined together to object to the way HHS calculated certain Medicare reimbursement adjustments for the 2012 fiscal year. The hospitals argued that the Medicare Act required HHS to provide "the public with notice and opportunity for comment" before changing the formula used to calculate reimbursements.[2]
The District Court sided with HHS and ruled that the agency did not violate the Medicare Act's procedural requirements because the formula change came from an interpretive rule. The court held the Medicare Act incorporated exemptions for interpretive rules from notice-and-comment rulemaking found in the Administrative Procedure Act.[2]
The United States Court of Appeals for the District of Columbia Circuit reversed the judgment of the District Court. Then-judge Brett Kavanaugh wrote:[2]
|
You can review the lower court's opinion here.[2]
Oral argument
Audio
- Audio of oral argument:[8]
Transcript
- Read the oral argument transcript here.
Oral argument analysis
Law professors Abbe R. Gluck and Anne Joseph O'Connell speculated that Justices Sotomayor, Kagan and Gorsuch seemed inclined to rule against the government, in a post at SCOTUSblog reflecting on the oral arguments. Gluck and O'Connell wrote that Justice Breyer and Chief Justice Roberts seemed to lean toward the plaintiffs. They indicated that Justices Alito and Thomas were quiet during oral argument, but that they might side against the government because of what they described as their "preference for textual analysis." Justice Ginsburg was recovering from lung surgery during the argument and Justice Kavanaugh recused himself from the case because he wrote the opinion for the case at the D.C. Circuit.[9]
Outcome
The U.S. Supreme Court affirmed the D.C. Circuit's ruling with a 7-1 vote, Justice Kavanaugh was recused.[1] Justice Neil Gorsuch wrote the majority opinion.[3]
Opinion
Writing for the majority, Justice Gorsuch affirmed the D.C. Circuit ruling that said the government should have followed notice-and-comment procedures before changing the rate (called the Medicare fraction) used to calculate Medicare payments for hospitals serving low-income patients.[3] He argued that the policy could not stand because "affected members of the public received no advance warning and no chance to comment first, and because the government [had] not identified a lawful excuse for neglecting its statutory notice-and-comment obligations."[3]
Gorsuch said that the court took the case to resolve a split among U.S. appeals courts regarding whether notice-and-comment was required to change the Medicare fraction.[3] He argued that Congress passed a law in 1987 requiring agencies administering Medicare to give notice and allow time for the public to comment before changing the standards that govern payment for services.[3] Gorsuch said that his opinion did not answer every question about the Medicare Act, but focused on rejecting the argument that the law contained the same exceptions to notice-and-comment requirements as the Administrative Procedure Act, which covers general federal agency procedures.[3]
Gorsuch said, "[I]f notice and comment really does threaten to 'become a major roadblock to the implementation of' Medicare, the agency can seek relief from Congress, which—unlike the courts—is both qualified and constitutionally entitled to weigh the costs and benefits of different approaches and make the necessary policy judgment."[10][3]
Dissenting opinion
Justice Stephen Breyer wrote a dissenting opinion arguing that the court should send the case back to the court of appeals for it to determine whether the agency decision to change the Medicare fraction was a substantive or interpretive rule.[3] Breyer argued that the HHS decision to change the reimbursement formula was an interpretive rule exempt from the notice-and-comment requirements outlined by the Medicare Act.[3] He concluded his dissent saying, "Given the statute’s context, its language, its history, and related practical consequences, I believe that Congress intended the provision before us to apply to all substantive rules, irrespective of the labels that the agency affixed" and that "Congress did not, however, intend the provision to require notice and comment for interpretive rules that, by definition, lack the force and effect of law."[3]
Breyer also argued that the Azar ruling imagines "that Congress intended to enact what could become a major roadblock to the implementation of the Medicare program" because notice-and-comment procedures can take multiple years.[3] Justice Gorsuch responded in the majority opinion that courts cannot change legal requirements out of concern for policy consequences.[3] Gorsuch added that "the government failed to document any draconian costs associated with notice and comment" and "neglected to acknowledge the potential countervailing benefits" of giving affected people fair warning of coming changes.[3]
Text of the opinion
Read the full opinion here.
Impact
While the decision did not resolve major questions concerning where to draw the line between interpretive rules and substantive rules, which are subject to different requirements under the Administrative Procedure Act (APA)—leaving commentators at SCOTUSblog to conclude that "[a]dministrative law folks looking for drama will be disappointed"—the ruling nonetheless applied the text of the Medicare Act to say that HHS went too far when it tried to apply a changed hospital reimbursement formula without following notice-and-comment procedures.[5][3][5]
In doing so, some commentators observed, the decision implied that the court would give agencies less leeway to make decisions in tension with legal requirements in future cases. Despite the narrow scope of the ruling, Hillsdale College professor Adam Carrington argued that "the court implicitly affirmed essential components to the rule of law: that the law must exist before bureaucrats can demand its obedience; that the law must be made known to citizens before it can be enforced; that the law rules only when it is followed as written, not as bureaucrats would like it to have been; and, finally, that lawmaking must leave some place for consent, some place for Americans to have a say in the laws that govern them."[11]
See also
- Rulemaking
- Informal rulemaking
- Guidance (administrative state)
- Administrative Procedure Act
- Separation of powers
- Supreme Court of the United States
- Ballotpedia's administrative state coverage
External links
- Case resources from SCOTUSblog
- Opinion text from JUSTIA
- Supreme Court of the United States
- Search Google News for this topic
Footnotes
- ↑ 1.0 1.1 1.2 1.3 SCOTUSblog, "Azar v. Allina Health Services", accessed October 9, 2018
- ↑ 2.0 2.1 2.2 2.3 2.4 United States Court of Appeals for the District of Columbia Circuit, Allina Health Services et al. v. Thomas E. Price Opinion July 25, 2017
- ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 JUSTIA, "Azar v. Allina Health Services, 587 U.S. ___ (2019)," accessed June 3, 2019
- ↑ 4.0 4.1 Bloomberg, "Supreme Court to Review Kavanaugh Opinion on Hospital Payments," accessed October 9, 2018
- ↑ 5.0 5.1 5.2 SCOTUSblog, "Opinion analysis: Notice and comment under the Medicare Act, no big moves for the APA," accessed June 4, 2019
- ↑ Internal citations and quotations have been omitted
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Supreme Court of the United States, Azar v. Allina Health Services, argued January 15, 2019
- ↑ SCOTUSblog, "Argument analysis: Justices grapple with notice-and-comment rulemaking for Medicare and beyond," Abbe R. Gluck and Anne Joseph O'Connell, January 16, 2019
- ↑ Internal citations and quotations have been omitted
- ↑ Washington Examiner, "Supreme Court's Azar v. Allina decision is a tiny victory for the rule of law," accessed June 4, 2019
