About this Guide
Advocates who work with the Medicaid and Medicare programs must, of course, familiarize themselves with the federal statutes and regulations, as well as any state
statutes and regulations. In addition, written guidance from the Centers for Medicare &Medicaid Services (CMS) that has not been promulgated through formal rulemaking,
referred to in this Guide as ?sub-regulatory guidance? can be helpful when trying to understand the issues. 1 In addition, sub-regulatory guidance may be used in federal and
state courts to support or oppose a client?s argument. On these occasions, the court will need to determine the extent to which it must or whether it should follow the
interpretation set forth in the guidance.
It should be noted that deference has historically been a popular topic with the Supreme Court, so the standards may change over time.2 Moreover, while courts are controlled by Supreme Court precedent, deference standards differ somewhat from circuit to circuit. The purpose of this Guide is to summarize and explain these standards. Part I of this Guide discusses the deference issue with selected case examples. Part II is a chart of cases organized by the type of sub-regulatory guidance at issue in the case and the level of deference given to each. Part III is a circuit-by-circuit docket summaries of Medicaid and Medicare deference cases since 1990. Pre-1990 cases and cases that are not directly on point but may be helpful to advocates are included.
Part I
Deference to Guidance from the Secretary of Health and Human Services: Discussion
Over the years, the Supreme Court has made several attempts to clarify the standards for according deference to federal agency interpretations of federal statutes. The most important case is Chevron U.S.A. v. Natural Resources Defense Council, in which the Court articulated a two-step inquiry for judicial review of administrative interpretations of federal statutes. 3 Under the Chevron analysis, a court must first determine whether Congress has spoken to the specific issue. If so, the congressional statement must prevail over any contrary administrative interpretation. However, if Congress has not spoken to the issue or if its statements are ambiguous, the court must defer to (meaning follow) the administrative interpretation as long as it is ?reasonable.?4 The administrative interpretation therefore has the force of law.
In recent years, the Court has narrowed Chevron?s application. In Christensen v. Harris County,5 the Court refused to apply Chevron to an agency opinion letter, finding that ?[i]nterpretations such as those in opinion letters ? like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the
force of law ? do not warrant Chevron-style deference.?6 Christensen held these types of agency interpretations are ?entitled to respect,? but only to the extent they have the power to persuade.7 This type of deference is sometimes called ?Skidmore deference? based on the 1944 decision in Skidmore v. Swift & Co.,8 which said the weight to be accorded to an administrative interpretation in a particular case ?will depend upon the thoroughness evident in its consideration, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.?9
Most recently, in U.S. v. Mead Corporation, 10 the Court discussed the circumstances for applying Chevron or Skidmore deference. At issue in Mead was a ?tariff ruling letter? authorized by regulation but not subjected to formal rulemaking. Tariff ruling letters also are formally binding only upon the particular entity to whom they are issued. The United States Customs Service argued that the letter at issue was entitled to Chevron deference. Rejecting this position, the eight-member majority attempted to clarify when Chevron deference is appropriate:
We hold that administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency?s power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent.11
In other words, Chevron deference is limited to agency interpretations where ?it appears that Congress delegated authority to the agency to make rules carrying the force of law, and that the agency interpretation was promulgated in the exercise of that authority.?12 Applying this standard, the Court found no evidence of congressional intent for the agency?s tariff ruling letter to carry Chevron?s ?force of law.?13
The Court then looked to see whether the tariff ruling was entitled to ?some deference? under the ?practical criteria? of Skidmore. 14 In so doing, the majority rejected
the position articulated by Justice Scalia in dissent that would have broadened the occasions for Chevron deference while eliminating other lesser forms of deference.15
According to the majority:
Chevron did nothing to eliminate Skidmore?s holding that an agency?s interpretation may merit some deference whatever its form, given the specialized experience and broader investigations and information available to the agency, and given the value of uniformity in its administrative and judicial understandings of what a natural law requires.16
The level of deference that courts apply may, but do not always, differ depending on the form in which the agency statement comes. In addition to issuing regulations,
CMS provides guidance through the State Medicaid Manual, a voluminous statement of Medicaid policy and guidance that is periodically updated by the Agency. In addition,
CMS periodically issues letters to state Medicaid directors (sometimes known as ?Dear State Medicaid Director? letters) or other memoranda or transmittals that contain
statements of policy and interpretation.
States submit Medicaid plans that must be approved by CMS before they can take effect.17 42 U.S.C. § 1396a(a). States can also apply for ?waivers? of certain Medicaid requirements in order to offer home and community based services to people at risk of institutionalization. 42 U.S.C. § 1396n(c). And, states may be given approval to create demonstration or pilot projects to advance the purposes of the Medicaid Act. 42 U.S.C. § 1315. CMS must also approve these waiver applications. Both state plans and waiver applications are pre-printed and many aspects of the programs are designated simply by checking a box. For example, the pre-printed state plan allows states to check boxes indicating which (if any) of Medicaid?s optional categories of services they will choose to cover. The approval process is intended to ensure that the state plans and waiver programs comply with federal law. On occasion, however, advocates and beneficiaries have complained that, despite CMS approval, plans and waiver programs
contain provisions that in fact do violate the federal law. In these circumstances, advocates may argue that courts should not defer to the suggestion implicit in plan approval that CMS has actually determined that the plans or waivers comply with Medicaid law.
Numerous cases, pre-dating Mead, accord deference to the federal Medicaid agency?s sub-regulatory interpretive statements. Because courts have generally not treated Mead as marking a major change in doctrine, these cases are likely to still be considered good law. The level of deference varies from case to case. 18 While some of these cases cite Chevron and Skidmore, others simply describe the level of deference without citation to the Supreme Court. Perhaps not surprisingly, Mead has not imposed
significantly more uniformity in this area. The Supreme Court itself recently cited Mead, but offered little other discussion, to give ?respectful consideration? to consistent agency interpretation contained in a Regional State Medicaid Letter and proposed regulation.19
In most cases, courts have given Chevron deference to Medicaid and Medicare regulations. There are a few exceptions as courts may sometimes determine that a regulatory interpretation exceeds the agency?s authority20 or when a statute is not ambiguous.21 Generally, however, the interpretations found in the various types of subregulatory guidance discussed above receive less deferential treatment. In the case of the State Medicaid Manual, courts have not accorded Chevron deference, but usually give the provisions some weight. For example, in Indiana Family and Social Services Admin. v. Thompson, the Seventh Circuit accorded Skidmore level deference to its provisions.22 Specifically, that court decided that less formal interpretations in agency manuals should receive ?more flexible respect? depending on the agency?s care, consistency, formality, relative expertness and the position?s overall persuasiveness. In Strand v. Rasmussen, the Iowa Supreme Court decided that ?substantial deference? is due to the agency interpretations contained in the State Medicaid Manual. 23 The Ninth and Fifth Circuits have given it ?respectful consideration.?24 In contrast, in Ramey v. Reinertson, the Tenth Circuit stated that the court must give deference to interpretations in the State Medicaid Manual but only to the extent they do not conflict with the purpose of the Medicaid Act.25
The results in cases involving Dear State Medicaid Director letters and other memoranda from CMS have been more mixed. The Third and Eleventh Circuits, in Elizabeth Blackwell Health Ctr v. Knoll and Toal v. Shalala, have given them Chevron deference.26 Others have deferred, but not necessarily cited Chevron or indicated the level of deference given. For example, in Rabin v. Wilson-Coker, the Second Circuit held that Dear State Medicaid Director letters are entitled to ?some significant measure of deference.?27 In Johnson v. Guhl,28 a New Jersey district court held that transmittal
1 CMS is a part of the U.S. Department of Health and Human Services. In 2001, the name of the Health Care Financing Administration (HCFA) was changed to the Centers
for Medicare and Medicaid Services (CMS). Court decisions and guidance that pre-date 2001 refer to the agency as HCFA. For the sake of clarity, this fact sheet refers to the
agency as CMS. 2 NHeLP co-authors an annual summary of significant Supreme Court cases that appears in the Clearinghouse Review at the end of each year. See, e.g., Jane Perkins et al., The Supreme Court?s 2006-2007 Term: The Shift to the Right Takes Shape, 41 J.POV.LAW & POLICY 442 (2007); Gary Smith et al., The 2005-2006 U.S. Supreme Court Decisions on Access to the Federal Courts: The First Term of the John Roberts Era, 40 J.POV.LAW & POLICY 394 (2006); Matthew Diller et al., Win Some, Lose Some: The Rehnquist Court?s Final Chapter on Access to Courts, 30 J.POV.LAW &POLICY 389 (2005); Gill Deford et al., Federal Court Access Issues in the U.S. Supreme Court?s 2003-2004 Term, 38 J.POV. LAW &POLICY 464 (2004); Gary F. Smith et al., Highlights from the U.S. Supreme Court?s 2001-2002 Decisions on Federal Court Access, 36 J.POV.LAW &POLICY 375 (2002); Jane Perkins et al., Beyond Bush v. Gore: Highlights from the Supreme Court?s 2000-2001 Decisions Concerning Access to the Courts, 35 J.POV.LAW &POLICY 373 (2001); Matthew Diller et al., Decisions on Federal Access During the Supreme Court?s 1999-2000 Term: Some Social Security, A Little Federalism, and More of the Usual, 34 J.POV.LAW &POLICY 405 (2000); Gill Deford et al., The Supreme Court?s 1999-1998 Term: Federalism, State Action, and Other Cases Affecting Access to Justice, 33 J.POV. LAW &POLICY 359 (1999).
3 467 U.S. 837 (1984).
4 Id. at 844-45.
5 529 U.S. 576, 587 (2000).
6 Id. at 587.
7 Id. (quoting Skidmore v. Swift, 323 U.S. 134, 140 (1944)).
8 323 U.S. 134 (1944).
9 Id. at 140.
10 533 U.S. 218 (2001).
11 Id. at 226-27.
12 Id.
13 Id. at 231-36.
14 Id. at 235.
15 Id. at 237-39.
16 Id. at 234. For an interesting post-Mead case, see Barnhart v. Walton, 535 U.S. 212 (2002), which accorded Chevron deference to a Social Security regulation promulgated in response to the very case that was before the Court: ?In this case, the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the agency has given the question over a long period of time all indicate that Chevron provides the appropriate legal lens through which to review the legality of the Agency interpretation here at issue.? Id. at 222.
17 For more information on the state plan process, see NHeLP, ?State Medicaid Plans,? April 25, 2006, at www.healthlaw.org.
18 For court of appeals cases, see K&A Radiologic Tech. Servs. Inc. v. Comm?r of the Dep?t of Health of State of New York, 189 F.3d 273, 282-83 (2d Cir. 1999) (State
Medicaid Manual) (not specifying the level of deference but following the agency position); Bray v. Dowling, 25 F.3d 135, 143 (2d Cir. 1994) (agency memorandum) (stating that ?[c]onsistent interpretations by the agencies entrusted with the administration of the Social Security Act are due deferential treatment in the courts.?) (citations omitted); Liegl v. Webb, 802 F.2d 623, 625-26 (2d Cir. 1986) (discussing the Medical Assistance Manual, which pre-dated the State Medicaid Manual); Wisconsin Dep?t of Health and Social Services v. Bowen, 797 F.2d 391, 398 (7th Cir. 1986), cert. dismissed, 485 U.S. 1017 (1988) (Medicaid Action Transmittal) (finding that Secretary?s interpretation is warranted deference if reasonable and permitted by the statute, without citing Chevron or Skidmore); Smith v. Miller, 665 F.2d 172, 179 (7th Cir. 1981) (Medical Assistance Manual) (affording judgment of the agency considerable weight); Philadelphia Welfare Rights Org. v. Shapp, 602 F.2d 1114, 1122 (3d Cir. 1979), cert. denied, 444 U.S. 1026 (1980) (Medical Assistance Manual); Stanton v. Bond, 504 F.2d 1246, 1249 (7th Cir. 1974), cert. denied, 420 U.S. 984 (1975). For district court cases, see Salazar v. District of Columbia, 954 F. Supp. 278, 328-34 (D.D.C. 1996) (State Medicaid Manual) (using the standards established in the Manual without citing Chevron); State of New York Dep?t of Social Servs. v. Sullivan, 811 F. Supp. 964, 975 (S.D.N.Y. 1993) (State Medicaid Manual) (Chevron); Sundberg v. Mansour, 627 F. Supp. 616, 619-20 (W.D. Mich. 1986) (regional office memorandum) (stating that deference is due the Secretary?s interpretation unless plainly erroneous or inconsistent and rejecting the agency interpretation, without citing Chevron or Skidmore); Olson v. Reagen, 631 F. Supp. 154, 157-58 (S.D. Iowa 1986), aff?d in part, rev?d in part sub nom., Olsen v. Norman, 830 F.2d 811 (8th Cir. 1987) (regional office memorandum) (according the same level of deference to informal statements of policy as it does regulations, without citing Chevron); Smith v. Vowell, 379 F. Supp. 139 (W.D. Tex. 1974), aff?d mem., 504 F.2d 759 (5th Cir. 1974) (Medical Assistance Manual) (finding that the administrative requirements expressed in the Manual are to be given full force and effect if consistent with the overriding purpose of the legislation).
19 Blumer v. Wisconsin Dep?t of Health and Social Services, 122 U.S. 962 (2001).
19 Blumer v. Wisconsin Dep?t of Health and Social Services, 122 U.S. 962 (2001).
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