Johnson's Professional Nursing Home v. Weinberger

490 F.2d 841, 1974 U.S. App. LEXIS 9746
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 11, 1974
DocketNos. 73-1020, 73-1561
StatusPublished
Cited by1 cases

This text of 490 F.2d 841 (Johnson's Professional Nursing Home v. Weinberger) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson's Professional Nursing Home v. Weinberger, 490 F.2d 841, 1974 U.S. App. LEXIS 9746 (5th Cir. 1974).

Opinion

GEE, Circuit Judge:

In this appeal we decide the validity of two regulations promulgated by the Secretary of HEW to govern state Medicaid payments to skilled nursing homes. With 45 C.F.R. § 250.30(b) (3) (ii), the Secretary limited Medicaid payments to skilled nursing homes to “reasonable costs” as defined by the standards for such payments under Medicare. And with 45 C.F.R. § 250.30(a)(6) he sought to gradually eliminate “supplementation” programs which allow payments to nursing homes by a patient’s friends or relatives, who are not legally obligated to contribute to the Medicaid recipients support and from a patient’s otherwise exempt income or resources. The Alabama nursing homes (Opelika) attacked both regulations 1 but the Florida nursing homes (Johnson’s) challenged only the provision eliminating supplementation. The Alabama district court upheld the payment limits regulation as consistent with the statute under which it was promulgated. Both district courts upheld the supplementation regulation as within the Secretary’s authority. We affirm.

Payment Limits

Medicaid is funded by the Secretary of HEW and administered by participating states under Title XIX of the Social Security Act, 42 U.S.C.A. §§ 1396-1396e. The program provides medical assistance for the aged, the blind, the disabled, families with dependent children, and other individuals with insufficient resources to meet the cost of necessary medical care.

HEW provides federal matching funds to finance state plans for medical assistance which conform to federal requirements. The appropriate state agencies, in this case the Alabama Board of Health and the Florida Department of [843]*843Health and Rehabilitation Services, disburse the payments to nursing homes and other providers of medical assistance. The participating nursing homes must agree to accept the payments provided in the state plan. The states establish the amount of the payments subject to the federal statutory limit, which requires the states to:

“[Pjrovide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments (including payments for any drugs provided under the plan) are not in excess of reasonable charges consistent with efficiency, economy, and quality of care." (emphasis added)

42 U.S.C.A. § 1396a(a) (30). In implementing the statute 2 the Secretary promulgated 45 C.F.R. § 250.30(b) (3) (ii) 3 which provides that payments by a state to nursing homes cannot exceed the total of the combined payments by the Secretary and the beneficiary to such facilities for comparable medical services under Medicare.

Medicare is both a federally funded and administered program created by Title XVIII of the Social Security Act, 42 U.S.C.A. § 1395 et seq., furnishing hospital and out patient insurance benefits to the aged. The standard for payment to nursing homes participating in Medicare is the “reasonable cost" of services determined by statutory4 and regulatory5 formula.

Supplementation

Although, under Medicaid, the states bear the cost of medical assistance (with federal funds), the statute allows states to require cost sharing or deductions on the basis of a patient’s income and resources, 42 U.S.C.A. § 1396a(a) (14). Additionally some state programs, including Alabama’s and Florida’s, allowed further supplementation of the amount paid by the state and the patient. The supplementation payments generally come from the patient’s friends or relatives who are not legally obligated to contribute to the Medicaid recipient’s support. In addition the patients otherwise exempt income or resources could be used for supplementation. From 1965 to 1969 the Secretary approved plans which permitted supplementation if the state had existing supplementation arrangements with nursing homes and if the state would be unable otherwise to attract a sufficient number of facilities. In 1969 the Secretary promulgated the regulation requiring those states allowing supplementation to submit a plan gradually eliminating that provision.6

[844]*844 Standards of Review

As stated by the Supreme Court:

The standard to be applied in determining whether the [Secretary] exceeded the authority delegated to [him] ... is well established. . Where the empowering provision of a statute states simply that the agency may “make . . . such rules and regulations as may be necessary to carry out the provisions of this Act,” we have held that the validity of a regulation promulgated thereunder will be sustained so long as it is “reasonably related to the purposes of the enabling legislation.” Thorpe v. Housing Authority of the City of Durham, 393 U.S. 268, 280-281, 89 S. Ct. 518, 525, 21 L.Ed.2d 474 (1968). (footnote omitted)

Mourning v. Family Publications Service, 411 U.S. 356, 369, 93 S.Ct. 1652, 1660, 36 L.Ed.2d 318, 329-330 (1973).

The empowering provision of the Social Security Act, 42 U.S.C.A. § 1302, contains essentially those same terms and to the extent the nursing homes attack the Secretary’s authority to promulgate these regulations we will review them under the “reasonably related” standard.

§ 1302 also requires the rules and regulations to be consistent with the enabling legislation. Determining the regulations consistency with the statute requires examination of the language of each and of the statutory history and congressional purpose.

Given the deference normally accorded an administrator’s interpretation of the statutory scheme he carries out, those who attack that interpretation necessarily shoulder a heavy burden. Arizona Dept. of Public Welfare v. HEW, 449 F. 2d 456 (9th Cir. 1971); Connecticut Dept. of Public Welfare v. HEW, 448 F. 2d 209 (2d Cir. 1971); Review Committee v. Willey, 275 F.2d 264 (8th Cir. 1960).

Reasonable charge v. Reasonable cost

Opelika cannot and does not assert that the establishment of payment limits is outside the Secretary’s authority, rather the nursing homes contend that by limiting the Medicaid nursing home payments to “reasonable costs” (the Medicare standard) when the Medicaid statute limits the payments to “reasonable charges consistent with efficiency, economy, and quality of care” the Secretary acted inconsistently with his statutory command. We recognize, that “reasonable costs” and “reasonable charges” may have distinct and different connotations in common understanding, but the issue here, as recognized by the district court, is whether reasonable costs as defined in the complex formulae of Title XVIII (Medicare) is consistent with the Medicaid statutory requirement of reasonable charges consistent with efficiency, economy, and quality of care.

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490 F.2d 841, 1974 U.S. App. LEXIS 9746, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnsons-professional-nursing-home-v-weinberger-ca5-1974.