Tuesday, November 12, 2013

Bellevue Hospital Center v. Leavitt case brief

Bellevue Hospital Center v. Leavitt case brief summary
443 F.3d 163 (2006)

Appellants, hospitals, sued appellee Secretary of the United States Department of Health and Human Services and challenged the adoption of the new Metropolitan Statistical Areas (MSAs). The United States District Court for the Southern District of New York granted the Department's summary judgment with respect to the MSAs issue, and granted the hospitals summary judgment on the occupational mix adjustment issue. The parties appealed.


The Centers for Medicare and Medicaid Services was the agency within the Department responsible for administering the Medicare program. The hospitals challenged the implementation of a statutory requirement that the agency adjust hospitals' reimbursements for the costs of administering care to Medicare recipients to reflect differences in hospital wage levels across geographic areas.


  • The appellate court held that the term "geographic area" was ambiguous and that the use of MSAs to fill the gap was reasonable since the MSAs, while not designed for 42 U.S.C.S. § 1395ww(d), generally coincided with the statutory purposes and was thus a reasonable proxy for the geographic area that the statute charged the agency with defining. 
  • The agency lacked the statutory authority to apply at only 10 percent effectiveness in its first year a new reimbursement adjustment that controlled for hospitals' decisions to hire more or fewer skilled professionals, on the ground that the data the agency had collected were not of sufficient quality to merit full implementation, and thus acted arbitrarily and capriciously. 
  • Thus, the agency was ordered to apply the adjustment in full by September 30, 2006.

The judgment of the district court with respect to the geographic area issue was affirmed. With respect to the occupational mix adjustment issue, the judgment of the district court was vacated, and the case was remanded to the district court to enter judgment in accordance with the opinion.

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