OCTOBER TERM, 1993
Syllabus
THOMAS JEFFERSON UNIVERSITY, DBA THOMAS JEFFERSON UNIVERSITY
HOSPITAL
v. SHALALA, SECRETARY OF HEALTH AND HUMAN
SERVICES
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT
No. 93-120. Argued April 18, 1994-Decided June 24,1994
Medicare reimburses provider hospitals for the costs of certain
educational activities, including the cost of graduate medical
education (GME) services furnished by the hospital or its
affiliated medical school, 42 CFR §§ 413.85, 413.17(a). However,
reimbursement of educational activities is limited by (1) an
"anti-redistribution" principle, providing that the Medicare
program's intent is to support activities that are "customarily or
traditionally carried on by providers in conjunction with their
operations," but that the program should not "participate in
increased costs resulting from
redistribution of
costs from educational institutions ... to patient care
institutions," § 413.85(c) (emphasis added); and (2) a "community
support" principle, providing that Medicare will not assume the
cost for educational activities previously borne by the community,
ibid. Petitioner teaching hospital, a qualified Medicare
provider, sought no reimbursement for its nonsalary-related
(administrative) GME costs before 1984, and those costs were borne
by its affiliated medical college. In fiscal year 1985, the fiscal
intermediary disallowed the hospital's claim for reimbursement for
such costs, but the Provider Reimbursement Review Board reversed in
part, allowing reimbursement. Respondent Secretary reinstated the
fiscal intermediary's ruling, concluding that reimbursement for the
nonsalary GME costs borne in prior years by the medical college
would constitute an impermissible redistribution under § 413.85(c).
As an independent ground, she concluded that the community support
principle also barred reimbursement. The District Court and the
Court of Appeals affirmed.
Held: The Secretary's interpretation of the
anti-redistribution principle is reasonable. Because its
application suffices to deny reimbursement of the disputed costs in
this case, there is no need to decide the validity of the
Secretary's interpretation of the community support language. pp.
512-518.
(a) As petitioner's challenge is to the Secretary's
interpretation of her own regulation, the Secretary's
interpretation must be given controlling effect unless it is
plainly erroneous or inconsistent with the regulation. Broad
deference is all the more warranted here because the
505
regulation concerns a complex and highly technical program in
which the identification and classification of relevant criteria
require significant expertise and entail the exercise of judgment
grounded in policy concerns. Pp. 512-513.
(b) The meaning of § 413.85(c)'s relevant sentence is
straightforward:
Its first clause defines the scope of educational activities for
which reimbursement may be sought, and its second clause provides
that the costs of such activities will not be reimbursed if they
result from a shift of costs from an educational, to a patient
care, facility. The Secretary's interpretation of the
anti-redistribution principle gives full effect to both clauses,
allowing reimbursement for costs of educational programs
traditionally engaged in by a hospital, while denying reimbursement
for costs previously incurred and paid by a medical school. It is
not only a plausible interpretation, but also the most sensible
interpretation the language will bear. The Secretary's reliance on
a hospital's and medical school's own historical cost allocations
is a simple and effective way of determining whether a prohibited
redistribution has occurred. Pp. 513-514.
(c) Petitioner's argument that § 413.85(c) prohibits the
redistribution of activities, not costs, ignores the second clause
of the critical sentence, which refers on its face to the
"redistribution of costs." Moreover, the term "costs" is used
without condition. Even if the Secretary's interpretation were not
far more consistent with the regulation's unqualified language, her
construction is a reasonable one which must be afforded controlling
weight. Petitioner has presented no persuasive evidence to support
its second argument, that the Secretary has been inconsistent in
applying the anti-redistribution principle. Petitioner's argument
that the regulation's language is "precatory" or "aspirational" in
nature, and thus lacking in operative force, is also unpersuasive,
since the antiredistribution clause lays down a bright line for
distinguishing permissible from impermissible reimbursement. Pp.
514-518.
993 F.2d
879, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and BLACKMUN, SCALIA, and SOUTER, JJ., joined.
THOMAS, J., filed a dissenting opinion, in which STEVENS, O'CONNOR,
and GINSBURG, JJ., joined,
post, p. 518.
Ronald N.
Sutter argued the cause for petitioner.
On the briefs were
James M. Gaynor, Jr., and
Amy E.
Hancock.
Amy L. Wax argued the cause for respondent. With her on
the brief were
Solicitor General Days, Assistant
Attorney
506
General Hunger, Deputy Solicitor General Kneedler, Robert v:
Zener, Robert D. Kamenshine, Harriet S. Rabb, Darrel J. Grinstead,
Henry R. Goldberg, and Thomas W Coons.*
JUSTICE KENNEDY delivered the opinion of the Court. Although
Medicare reimburses provider hospitals for the costs of certain
educational activities, the program is forbidden by regulation from
"participat[ing] in
increased costs resulting from
redistribution of costs from educational institutions ... to
patient care institutions." 42 CFR § 413.85(c) (1993) (emphasis
added). In denying reimbursement for the disputed costs in this
case, the Secretary of Health and Human Services interpreted this
provision to bar reimbursement of educational costs that were borne
in prior years not by the requesting hospital, but by the
hospital's affiliated medical school. The dispositive question is
whether the Secretary's interpretation is a reasonable construction
of the regulatory language. We conclude that it is.
I A
Established in 1965 under Title XVIII of the Social Security
Act, 79 Stat. 291, as amended, 42 U. S. C. § 1395
et seq.
(1988 ed. and Supp. IV), Medicare is a federally funded health
insurance program for the elderly and disabled. Subject to a few
exceptions, Congress authorized the Secretary
*Briefs of
amici curiae urging reversal were filed for
the State of Ohio et al. by
Lee Fisher, Attorney General of
Ohio,
Diane M. Signoracci, Catherine M. Ballard, Richard A.
Cordray, and
Simon B. Karas, and by the Attorneys
General for their respective States as follows:
Winston
Bryant of Arkansas,
Charles M. Oberly III of Delaware,
Richard P. Ieyoub of Louisiana,
Hubert H. Humphrey
III of Minnesota,
John P. Arnold of New Hampshire, G.
Oliver Koppell of New York,
Ernest D. Preate, Jr., of
Pennsylvania,
Jan Graham of Utah, and
James S.
Gilmore III of Virginia; and for the American Hospital
Association et al. by
Ronald N Sutter, Mary Susan Philp, and
Joseph A. Keyes, Jr.
507
of Health and Human Services (Secretary) to issue regulations
defining reimbursable costs and otherwise giving content to the
broad outlines of the Medicare statute. § 1395x(v)(1)(A). That
authority encompasses the discretion to determine both the
"reasonable cost" of services and the "items to be included" in the
category of reimbursable services.
Ibid. Acting under the
statute, the Secretary, by regulation, permits reimbursement for
the costs of "approved educational activities" conducted by
hospitals. 42 CFR § 413.85(a)(1) (1993). The regulations define
"approved educational activities" as "formally organized or planned
programs of study usually engaged in by providers in order to
enhance the quality of patient care." § 413.85(b).
Graduate medical education (GME) programs are one category of
approved educational activities. GME programs give interns and
residents clinical training in various medical specialties. Because
participants learn both by treating patients and by observing other
physicians do so, GME programs take place in a patient care unit
(most often in a teaching hospital), rather than in a classroom.
Hospitals are entitled to recover the "net cost" of GME and other
approved educational activities, a figure "determined by deducting,
from a provider's total costs of these activities, revenues it
receives from tuition." § 413.85(g). A hospital may include as a
reimbursable GME cost not only the costs of services it furnishes,
but also the costs of services furnished by the hospital's
affiliated medical school. § 413.17(a).
That brings us to the regulation here in question. Section
413.85(c) sets forth conditions governing the reimbursement of
educational activities.1 In a sentence referred to by the
1 Title 42 CFR § 413.85(c) provides in full:
"Educational Activities. Many providers engage in
educational activities including training programs for nurses,
medical students, interns and residents, and various paramedical
specialties. These programs contribute to the quality of patient
care within an institution and are necessary to meet the
community's needs for medical and paramedical per-
508
parties as the "anti-redistribution" principle, the regulation
provides that "[a]lthough the intent of the [Medicare] program is
to share in the support of educational activities customarily or
traditionally carried on by providers in conjunction with their
operations, it is not intended that this program should participate
in increased costs resulting from redistribution of costs from
educational institutions or units to patient care institutions or
units."
Ibid. In a portion of the regulation known as the
"community support" principle, § 413.85(c) also states that the
costs of educational activities "should be borne by the community,"
but that "[u]ntil communities undertake to bear these costs, the
[Medicare] program will participate appropriately in the support of
these activities."
Ibid.
B
Thomas Jefferson University Hospital (Hospital) is a 700bed
teaching hospital in Philadelphia, Pennsylvania. The Hospital has
been a qualified Medicare provider since the program took effect in
1966. Petitioner Thomas Jefferson University (University) is a
private, not-for-profit educational institution that operates the
Hospital and other entities, including the Jefferson Medical
College (Medical College). As a teaching facility, the Hospital
provides
sonnel. It is recognized that the costs of such educational
activities should be borne by the community. However, many
communities have not assumed responsibility for financing these
programs and it is necessary that support be provided by those
purchasing health care. Until communities undertake to bear these
costs, the [Medicare] program will participate appropriately in the
support of these activities. Although the intent of the program is
to share in the support of educational activities customarily or
traditionally carried on by providers in conjunction with their
operations, it is not intended that this program should participate
in increased costs resulting from redistribution of costs from
educational institutions or units to patient care institutions or
units."
The language in § 413.85(c) has been in effect since the
beginning of the Medicare program, although it was formerly
designated 42 CFR § 405.421 (1977) and 20 CFR § 405.421 (1967).
509
Medicare-approved GME programs for postgraduate interns and
residents in numerous medical specialties. The programs are
conducted at the Hospital by Medical College faculty. Because of
their common ownership by the University, the Hospital and the
Medical College are considered affiliated or "related"
organizations under Medicare regulations. 42 CFR § 413.17(a)
(1993). As a result, the Hospital is entitled to reimbursement for
all eligible patient-care, educational, and administrative costs
carried on the books of the Medical College.
Ibid.
Nevertheless, for reasons not clear from the record, the
Hospital did not seek reimbursement for any GME costs during the
first eight years of the Medicare program's existence. During the
next 10 years, however, from 1974 through 1983, the Hospital sought
and received reimbursement for three categories of salary-related
GME costs: (1) salaries paid by the Hospital to Medical College
faculty for services rendered to the Hospital's Medicare patients;
(2) salaries paid by the Hospital to residents and interns; and (3)
funds transferred internally from the Hospital to the Medical
College as payment for faculty time devoted to the Hospital's GME
program. The Hospital did not seek reimbursement during that period
for its other, non-salary-related GME costs (namely, the costs of
administering the Hospital's GME programs), and those costs were
borne by the Medical College.
In 1983, Congress adopted a more restrictive method of
reimbursing hospitals for inpatient medical services, see 42 U. s.
C. § 1395ww(d) (1988 ed. and Supp. IV), but it retained the more
lenient method of reimbursement for medical education costs. 42 U.
S. C. § 1395ww(a)( 4) (1988 ed., Supp. IV). In 1984, when the new
cost reimbursement regime was implemented, the Hospital reviewed
its claim for costs associated with its GME programs to determine
whether it was identifying all costs eligible for reimbursement.
This review resulted in an increased claim reflecting clerical
costs
510
incurred by the Medical College for activities associated with
its GME programs.2
The following year, in an effort to further refine its cost
allocation techniques, the Hospital retained an accounting firm to
compute the Hospital's total GME costs for fiscal year 1985, the
year here in question. Fiscal year 1985 later became especially
significant because, under a new reimbursement scheme enacted in
1986, it is considered the Hospital's base period, to which all
later claims for GME cost reimbursement will be tied. See 42 U. S.
C. § 1395ww(h). After completing the cost study, the accounting
firm reported that the Hospital had incurred GME program costs
totaling $8.8 million, a figure that included direct and indirect
administrative costs not previously claimed by the Hospital. The
report was submitted to petitioner's assigned fiscal intermediary,
whose function is to review petitioner's annual cost reports and to
calculate the appropriate level of reimbursement under applicable
statutes and regulations. See 42 CFR § 405.1803 (1993). Although
petitioner sought reimbursement for the full $8.8 million, the
fiscal intermediary allowed only those salary-related costs that
had been reimbursed earlier (after adjustment for inflation). The
fiscal intermediary disallowed reimbursement for all
nonsalaryrelated GME costs that the report identified (amounting to
approximately $2.9 million). App. to Pet. for Cert. lOa. Petitioner
then appealed to the Provider Reimbursement Review Board, an
intermediate appellate tribunal within the Department, which
reversed the decision of the fiscal intermediary in part and
allowed reimbursement for all of the GME costs documented in the
cost study.
The Secretary, acting through the Administrator of the Health
Care Financing Administration, modified the Board's decision and
reinstated the fiscal intermediary's ruling. The Secretary
concluded that the anti-redistribution clause of
2 The fiscal intermediary allowed these clerical costs at first,
but later determined that such allowance was in error.
511
§ 413.85(c) prohibits the shift of approved educational costs
from an educational unit to a patient-care unit, even if the
educational activities for which reimbursement is sought are the
kind of activities traditionally engaged in by Medicare providers.
Id., at 35a. Since the nonsalary GME costs here in issue
were borne in prior years by the Medical College, the Secretary
ruled that reimbursement of these costs would constitute an
impermissible "redistribution of costs" under § 413.85(c).
Ibid.
The Secretary also relied on the community support language in §
413.85(c) as an independent ground for denying the requested
reimbursement. According to the Secretary, this language prohibits
Medicare reimbursement for educational activities that "have been
historically borne by the community."
Ibid. That the
Hospital had failed to seek reimbursement for the disputed costs in
previous years was, in the Secretary's view, "evidence of the
communit[y's] support for these activities."
Ibid. "To allow
the community to withdraw that support and pass these costs to the
Medicare program" would violate the community support principle and
would "encourage the community to abdicate its commitment to
education to an insurance program intended to provide care for the
elderly."
Ibid.
Petitioner filed a petition for review in the District Court
seeking reimbursement for the $2,861,247 in GME costs that the
Secretary had disallowed.
Id., at lOa. On crossmotions for
summary judgment, the court ruled in the Secretary's favor,
accepting her interpretation of the anti-redistribution and
community support clauses as a reasonable construction of §
413.85(c).
Thomas Jefferson Univ. v.
Sullivan, CCH
Medicare & Medicaid Guide, 40,294, p. 30,959 (ED Pa. 1992). The
Third Circuit affirmed without opinion, judgment order reported at
993 F.2d
879 (1993), thereby creating a conflict with the decision of
the Sixth Circuit in
Ohio State Univ. v.
Secretary, Dept.
of Health and Human Services, 996 F.2d
122 (1993), cert. pending,
512
No. 93-696, concerning the validity of the Secretary's
interpretation of the anti-redistribution clause. We granted
certiorari, 510 U. S. 1039 (1994), and now affirm.
II
Petitioner challenges the Secretary's construction of §413.85(c)
under the Administrative Procedure Act (APA), 5 U. S. C. §551
et
seq. The APA, which is incorporated by the Social Security Act,
see 42 U. S. C. § 139500(f)(1), commands reviewing courts to "hold
unlawful and set aside" agency action that is "arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance
with law." 5 U. S. C. § 706(2)(A). We must give substantial
deference to an agency's interpretation of its own regulations.
Martin v.
Occupational Safety and Health Review
Comm'n, 499 U. S.
144, 150-151 (1991);
Lyng v.
Payne, 476 U. S. 926, 939
(1986);
Udall v.
Tallman, 380 U. S. 1, 16 (1965). Our
task is not to decide which among several competing interpretations
best serves the regulatory purpose. Rather, the agency's
interpretation must be given "'controlling weight unless it is
plainly erroneous or inconsistent with the regulation.'"
Ibid. (quoting
Bowles v.
Seminole Rock &
Sand Co., 325
U. S. 410,414 (1945)). In other words, we must defer to the
Secretary's interpretation unless an "alternative reading is
compelled by the regulation's plain language or by other
indications of the Secretary's intent at the time of the
regulation's promulgation."
Gardebring v.
Jenkins,
485 U. S. 415,
430 (1988). This broad deference is all the more warranted when, as
here, the regulation concerns "a complex and highly technical
regulatory program," in which the identification and classification
of relevant "criteria necessarily require significant expertise and
entail the exercise of judgment grounded in policy concerns."
Pauley v.
BethEnergy Mines, Inc., 501 U. S. 680, 697
(1991).
Petitioner challenges the Secretary's construction of both the
anti-redistribution language and the community support
513
language of § 413.85(c). Because we conclude that the
Secretary's interpretation of the anti-redistribution clause is
neither "'plainly erroneous [n]or inconsistent with the
regulation,'"
Tallman, supra, at 16-17, and because its
application suffices to deny reimbursement of the disputed costs in
this case, we need not pass upon the Secretary's interpretation of
the community support language.
The anti-redistribution clause is contained in the final
sen-
tence of § 413.85(c), which states:
"Although the intent of the [Medicare] program is to share in
the support of educational activities customarily or traditionally
carried on by providers in conjunction with their operations, it is
not intended that this program should participate in increased
costs resulting from redistribution of costs from
educational institutions or units to patient care institutions or
units." (Emphasis added.)
The meaning of this sentence is straightforward. Its
introductory clause defines the scope of educational activities for
which reimbursement may be sought: To be eligible for
reimbursement, the activity must be one that is "customarily or
traditionally carried on by providers in conjunction with their
operations." It is the language that follows, however, that imposes
the relevant restriction on cost redistribution. The second clause
provides that, notwithstanding the activity for which reimbursement
is sought, the Medicare program will not participate in the
"redistribution of costs from educational institutions or units to
patient care institutions or units."
The Secretary's interpretation gives full effect to both clauses
of the relevant sentence. The Secretary interprets the regulation
to allow reimbursement for costs of educational programs
traditionally engaged in by hospitals, but, at the same time, to
deny reimbursement for "cost[s] previously incurred and paid by a
medical school." Brief for
514
Respondent 26 (emphasis deleted); see also § 413.85(b) (defining
"approved educational activities" that are eligible for
reimbursement as "programs of study usually engaged in by providers
in order to enhance the quality of patient care"). The Secretary's
reading is not only a plausible interpretation of the regulation;
it is the most sensible interpretation the language will bear.
The circumstance addressed by the anti-redistribution clause is
a hospital's submission of "increased costs" arising from approved
educational activities. The regulation provides, in unambiguous
terms, that the "costs" of these educational activities will not be
reimbursed when they are the result of a "redistribution," or
shift, of costs from an "educational" facility to a "patient care"
facility, even if the activities that generated the costs are the
sort "customarily or traditionally carried on by providers in
conjunction with their operations." § 413.85(c). The Secretary's
reliance on a hospital's own historical cost allocations, along
with those of an affiliated medical school, is a simple and
effective way of determining whether a prohibited "redistribution
of costs" has occurred. Indeed, one would be hard pressed to come
up with an alternative method to identify the shifting of costs
from one entity to another.
Petitioner advances three separate arguments for not deferring
to the Secretary's interpretation of the antiredistribution clause.
None is persuasive.
First, petitioner asserts that the "clear meaning" of the
anti-redistribution clause is to allow reimbursement for the costs
of activities traditionally carried on by hospitals (e. g.,
clinical training of residents and interns), but to deny
reimbursement for costs incurred in activities traditionally
carried on by educational institutions (e. g., classroom training).
Pet. for Cert. 14. In other words, according to petitioner, the
redistribution that is prohibited is the redistribution of
activities, not the redistribution of costs. Brief for Petitioner
20.
515
This argument is mistaken, for it ignores the second clause of
the critical sentence, which refers, on its face, to the
"redistribution of costs," not the "redistribution of activities."
The term "costs," moreover, is used without condition. Nothing in
the plain language suggests that the prohibition on "redistribution
of costs" is limited to the costs of certain activities (such as
classroom instruction) carried on by an educational unit. The clear
inference from the language is that the shift of any reimbursable
costs from an "educational institutio[n] or uni[t]" to a "patient
care institutio[n] or uni[t]" is prohibited. The Secretary's
interpretation of the antiredistribution principle is thus far more
consistent with the regulation's unqualified language than the
interpretation advanced by petitioner. But even if this were not
so, the Secretary's construction is, at the very least, a
reasonable one, and we are required to afford it "controlling
weight."
Bowles v.
Seminole Rock &
Sand
Co., 325 U. S., at 414.
Second, petitioner argues that the Secretary has been
inconsistent in her interpretation of the anti-redistribution
provision. While it is true that an agency's interpretation of a
statute or regulation that conflicts with a prior interpretation is
" 'entitled to considerably less deference' than a consistently
held agency view,"
INS v.
Cardoza-Fonseca, 480 U. S.
421, 446, n. 30 (1987) (quoting
Watt v.
Alaska,
451 U. S. 259,
273 (1981)), that maxim does not apply here because petitioner
fails to present persuasive evidence that the Secretary has
interpreted the anti-redistribution provision in an inconsistent
manner.3
In an attempt to find an inconsistency, petitioner points to a
1978 internal operating memorandum issued by the Health Care
Financing Administration (HCFA) that addressed the
3 The dissent seeks to demonstrate that the Secretary has been
inconsistent in her application of the community support principle.
See
post, at 520-522. We see no need to dispute that
proposition; as indicated above, we express no view on the validity
of the Secretary's interpretation of the community support
clause.
516
reimbursement of costs incurred by medical schools affiliated
with providers. Intermediary Letter No. 78-7 (Feb. 1978), App. to
Pet. for Cert. 64a-66a. The intermediary letter detailed various
categories and amounts of educational expenses incurred by
affiliated medical schools that might be allowable to providers,
but did not mention the antiredistribution limitation. Petitioner's
attempt to infer from that silence the existence of a contrary
policy fails because the intermediary letter did not purport to be
a comprehensive review of all conditions that might be placed on
reimbursement of educational costs. By its own terms, the
intermediary letter attempted to review only a "number of
situations" relating to the reimbursement of educational
costs-namely, "situations rais[ing] questions about the
reasonableness of [medical school faculty] costs as allowable
hospital costs and the appropriateness of the bases used in
allocating them to the hospital."
Id., at 64a. It is not
surprising, then, that the letter did not address the
antiredistribution principle, and the mere failure to address it
here hardly establishes an inconsistent policy on the part of the
Secretary.4
4 Petitioner further relies on an exchange of memoranda within
HCFA in 1982 regarding the University of Oregon's health training
programs. App. 22-26. In response to an internal agency memorandum
identifying the antiredistribution clause and requesting additional
clarification on the scope of reimbursable educational activities,
the Director of HCFA's Division of Institutional Services
responded, in part, that "[t]he allocation of costs to a hospital
from a related medical school is governed by Intermediary Letter
78-7," and failed to discuss the redistribution issue.
Id.,
at 25. This omission likewise fails to manifest a contrary policy.
Indeed, a subsequent memorandum issued in 1985 from the Director of
HCFA's Division of Hospital Payment Policy stated that "[t]he fact
that [the redistribution issue] is not mentioned in the subject
memorandum does not change the basic policy as espoused in 42 CFR
[§ 413.85(c),]" which provides "that where costs for items and
services were previously borne by a medical school, their
allocation to a university hospital represents a redistribution of
costs from an educational institution to a patient care
institution."
Id., at 27.
517
Likewise, contrary to the dissent's suggestion,
post, at
520-522, the mere fact that in 1974 a fiscal intermediary may have
allowed reimbursement to petitioner for GME costs that appear to
have violated the anti-redistribution clause does not render the
Secretary's interpretation of that clause invalid. For even if
petitioner could show that such allowance was approved by-or even
brought to the attention ofthe Secretary or her designate at the
time, "[t]he Secretary is not estopped from changing a view she
believes to have been grounded upon a mistaken legal
interpretation."
Good Samaritan Hospital v.
Shalala,
508 U. S. 402,
417 (1993). And under the circumstances of this case, "where the
agency's interpretation of [its regulation] is at least as
plausible as competing ones, there is little, if any, reason not to
defer to its construction."
Id., at 417.
Finally, petitioner contends that we should ignore the
Secretary's interpretation of the anti-redistribution clause
because the language of the regulation is "precatory" and
"aspirational" in nature, and thus lacking in operative force. See
Brief for Petitioner 31-32. We do not lightly assume that a
regulation setting forth specific limitations on the reimbursement
of costs under a federal program is devoid of substantive effect.
That is especially so when, as here, the language in question
speaks not in vague generalities but in precise terms about the
conditions under which reimbursement is, and is not, available.
Whatever vagueness may be found in the community support language
that precedes it, the anti-redistribution clause lays down a bright
line for distinguishing permissible from impermissible
reimbursement: Educational costs will not be reimbursed if they are
the result of a "redistribution of costs from educational
institutions or units to patient care institutions or units." §
413.85(c). The Secretary was well within her discretion to
interpret this language as imposing a substantive limitation on
reimbursement.
518
In sum, the Secretary's construction of the antiredistribution
principle is faithful to the regulation's plain language, and the
application of this language suffices to bar reimbursement of the
costs claimed in this case. For these reasons, we affirm the
judgment of the Court of Appeals.
It is so ordered.
JUSTICE THOMAS, with whom JUSTICE STEVENS, JUSTICE O'CONNOR, and
JUSTICE GINSBURG join, dissenting.
The Court's opinion reads as if this were a case of model agency
action. As the Court views matters, 42 CFR § 413.85(c) (1993) is
"unambiguous,"
ante, at 514, and respondent Secretary of
Health and Human Services (Secretary) has always been "faithful to
the regulation's plain language,"
ante this page. That plain
language, according to the Court, required the Secretary to
disallow the reimbursement petitioner sought. The Court's account
is hardly an accurate portrayal of this case. When the case is
properly viewed, I cannot avoid the conclusion that the Secretary's
construction of § 413.85(c) runs afoul of the plain meaning of the
regulation and therefore is contrary to law, in violation of the
Administrative Procedure Act, 5 U. S. C. § 706(2)(A). I therefore
respectfully dissent.
I
The Court holds that § 413.85(c) has substantive content,
reasoning that "the language in question speaks not in vague
generalities but in precise terms about the conditions under which
reimbursement is, and is not, available."
Ante, at 517. In
my view, however, § 413.85(c) is cast in vague aspirational terms,
and it strains credulity to read the regulation as imposing any
restriction on the reimbursability of the costs of graduate medical
education (GME) or other approved educational expenses. On the
contrary, subsection (c) appears to be nothing more than a
precatory statement of purpose that imposes no substantive
restrictions.
519
Subsection (c), in stark contrast to the remainder of § 413.85,
reads more like a preamble than a law. See
ante, at 507-508,
n. 1 (quoting § 413.85(c)).l In the community support portion of §
413.85(c), the Secretary praises the benefits of approved
educational programs and expresses a belief that communities
"should" pay for such programs. The subsection then announces the
Secretary's intention to support such activities "appropriately,"
limited only by the vague suggestion that at some point in the
future a restructuring of fiscal priorities at the "community"
level may obviate the need for federal support. The
anti-redistribution principle is no less precatory than the
community support principle. It states two "intent[ions]": first,
to pay for the "customar[y] and traditiona[l]" educational
activities of Medicare providers, and, second, to avoid reimbursing
expenses that should be borne by educational institutions
affiliated with teaching hospitals. I would not permit the
Secretary to transform by "interpretation" what self-evidently are
mere generalized expressions of intent into substantive rules of
reimbursability. Cf.
Stinson v.
United States,
508 U. S. 36, 45
(1993) (an agency's interpretation of its own regulation cannot be
sustained if " 'plainly erroneous or inconsistent with the
regulation''') (quoting
Bowles v.
Seminole Rock &
Sand Co., 325 U. S. 410, 414 (1945)). See also
Udall
v.
Tallman, 380
U. S. 1,16-17 (1965).
We rejected a similar attempted transformation of precatory
language in
Pennhurst State School and Hospital v.
Halderman, 451
U. S. 1 (1981). There, we addressed a claim that the "bill of
rights" of the Developmentally Disabled Assistance and Bill of
Rights Act of 1975, 42 U. S. C. § 6010 (1976 ed. and Supp. II!),
created substantive rights in favor of the mentally retarded. The
bill of rights provided, in part, that such persons "have a right
to appropriate treat-
1 Like the Court,
ante, at 507-508, I refer to the last
sentence of 42 CFR § 413.85(c) (1993) as the "anti-redistribution
principle," and to the remainder of the subsection as the
"community support principle."
520
ment, services, and habilitation" and that state governments
"have an obligation to assure that public funds are not provided to
any [noncomplying] institutio[n]." §§ 6010(1), (3). We held that
the bill of rights did not have substantive effect: "§ 6010, when
read in the context of other more specific provisions of the Act,
does no more than express a congressional preference for certain
kinds of treatment. It is simply a general statement of 'findings'
and, as such, is too thin a reed to support the rights and
obligations read into it by the court below." 451 U. S., at 19.
Even though
Pennhurst did not involve an agency regulation,
its textual analysis suggests that it is unreasonable to give
substantive effect to precatory, aspirational language-as would the
Secretary's construction of 42 CFR §413.85(c) (1993). Cf.
EEOC v.
Arabian American Oil Co., 499 U. S. 244, 260 (1991)
(SCALIA, J., concurring in part and concurring in judgment)
(explaining that "deference is not abdication, and it requires us
to accept only those agency interpretations that are reasonable in
light of the principles of construction courts normally
employ").
Interestingly enough, for the first two decades of the Medicare
program's operation, the Secretary's fiscal intermediaries, with
her acquiescence (if not approval), gave § 413.85(c) precisely the
same substantive effect as I would-none. During that entire period,
the Secretary
never invoked the subsection to deny
reimbursement for previously unreimbursed costs, and providers were
actually reimbursed for such costs despite § 413.85(c). Indeed,
contrary to the Court's baffling assertion that "petitioner fails
to present persuasive evidence that the Secretary has interpreted
the antiredistribution provision in an inconsistent manner,"
ante, at 515, one need look no further than petitioner's
brief, see Brief for Petitioner 21-24, to find evidence of such
interpretive inconsistency as to both the anti-redistribution and
community support principles.
Petitioner received no Medicare reimbursement for any GME costs
from 1966 to 1973. Even though the anti-
521
redistribution and community support principles were in effect
for that entire period, see
ante, at 507-508, n. 1,
petitioner was awarded reimbursement
for the first time in
1974, for salary-related GME costs. Because those GME costs were
not paid for by Thomas Jefferson University Hospital (Hospital)
prior to 1974, even the Secretary's opinion below finds, as a
matter of fact, that they were borne, to a large extent, by
Jefferson Medical College (Medical School) during that period. Cf.
App. to Pet. for Cert. 32a (identifying public educational grants
to the Medical School and Medical School tuition as sources for
funding the Hospital's pre-1974 GME activities). Also, the funding
for those costs that came from sources other than the Medical
School (namely, hospital fees from charges to non-Medicare
beneficiaries, see ibid.) did not come from Medicare and therefore
constituted "community support." See App. to Pet. for Cert. 18a
(the Secretary "views community support as any source of funding
other than the Medicare program").
Yet under the Secretary's present interpretation of § 413.85(c),
petitioner should never have received any GME cost reimbursement
because it had not obtained such reimbursement from the beginning
of the Medicare program. To the extent the Hospital's GME costs
were previously borne by the Medical School, providing petitioner
reimbursement for those costs violated the anti-redistribution
principle, as presently construed. See
ante, at 513 ("The
Secretary interprets the regulation ... to deny reimbursement for
'costs previously incurred and paid by a medical school''')
(editorial revisions omitted). Indeed, the Provider Reimbursement
Review Board (PRRB) explicitly recognized this fact, finding that,
on the fiscal intermediary's interpretation of "redistribution"
(adopted by the Secretary below), "[i]n 1974, the [Hospital]
commenced shifting costs ... to the Medicare program" and that
"[a]dditional cost shifting occurred in 1984 when certain clerical
costs of the Medical School were included in the [Hospital's] cost
report." App.
522
to Pet. for Cert. 50a.2 Similarly, reimbursing petitioner for
GME costs violated the community support principle, to the extent
funding for such costs had been available previously from
non-Medicare sources. See
ante, at 511 (where community
support has been received, § 413.85(c) "prohibits Medicare
reimbursement"). Thus, the Court's statement that there is no
"evidence that the Secretary has interpreted the
anti-redistribution provision in an inconsistent manner,"
ante, at 515, appears to be wishful thinking: Petitioner has
been routinely granted reimbursement which it should have been
denied under § 413.85(c), if the Secretary's current interpretation
is correct.
I think it reasonable to conclude that in reimbursing petitioner
since 1974 for GME costs not reimbursed from the inception of the
Medicare program, the Secretary acted on the basis of an
interpretation of § 413.85(c) that attached no significance to a
Medicare provider's failure in prior years to be reimbursed for, or
to carry on its books, eligible educational costs. This conclusion
has significant support in the Secretary's roughly contemporaneous
pronouncements. Cf.
Lyng v.
Payne, 476 U. S. 926, 939
(1986);
M. Kraus &
Bros., Inc. v.
United
States, 327 U. S.
614, 622 (1946) (opinion of Murphy, J.). In 1978, for example,
the Secretary advised fiscal intermediaries that reasonable GME
costs incurred by a related medical school are "allowable hospital
costs," Intermediary Letter No. 78-7 (Feb. 1978), without even
mentioning either the community support or the anti-redistribution
principle as potential limitations on its construction. App. to
Pet. for Cert. 64a. The letter's explicit statement that the
Secretary therein addressed the "appropriateness" of "allocating
[educational costs] to the hospital [in question],"
2 Because the Secretary, through the Health Care Financing
Administration (HCFA), only modified rather than reversed the
PRRB's decision, see App. to Pet. for Cert. 37a, the PRRB's opinion
remains in force to the extent consistent with the opinion of the
HCFA. Cf. 42 U. S. C. § 13950o(f)(1).
523
ibid., demonstrates the inaccuracy of the Court's suggestion
that the letter addressed topics entirely unrelated to the
anti-redistribution principle,
ante, at 515-516; the
"appropriateness" of allocating costs from a medical school to its
affiliated hospital is precisely what the anti-redistribution
principle governs, to the extent it has substantive effect at all.
See 42 CFR § 413.85(c) (1993).
Moreover, in 1982, the Secretary answered a query from a fiscal
intermediary concerning the relationship between the
anti-redistribution principle and Intermediary Letter 78-7 with the
statement that "allocation of costs to a hospital from a related
medical school is governed by Intermediary Letter 78-7." App.25.
The Court makes much of the fact that the 1982 memorandum did not
explicitly mention the anti-redistribution principle.
Ante,
at 516, n. 4. In so doing, however, the Court overlooks the fact
that the fiscal intermediary's inquiry presented the Secretary with
a specific binary choice: Are approved educational activities
previously paid for by an affiliated educational unit either
allowable (i.
e., reimbursable) hospital costs (as
Intermediary Letter No. 78-7 advised) or a prohibited
redistribution of costs under § 413.85(c)? By answering the fiscal
intermediary's pointed query with the statement that Intermediary
Letter No. 78-7 is controlling on the reimbursability of the costs
associated with such activities, see App. 25, the Secretary quite
clearly (albeit implicitly) afforded the antiredistribution
principle no substantive effect whatsoever.
To be sure, in 1985 the Secretary issued a memorandum stating,
without elaboration, that "[t]he fact that [the antiredistribution
principle] is not mentioned in the [1982] memorandum does not
change the basic policy as espoused in [§ 413.85(c)]."
Id.,
at 27. The 1985 memorandum's bare reference to the "policy" of §
413.85(c), however, neither disavowed the Secretary's past
interpretation of the regulation nor set forth any alternative
interpretation. The Court thus considerably overstates matters in
its suggestion that
524
the 1985 memorandum specifically confirmed the continued
vitality of the anti-redistribution principle.
Ante, at 516,
n.4.3
Based on a reading of the undeniably precatory language used in
§ 413.85(c), confirmed by two decades of consistent agency
practice, I would hold that subsection (c) imposes no limit on the
reimbursability of approved educational activities. Cf.
M.
Kraus &
Bros., 327 U. S., at 622 ("Not even the
Administrator's interpretations of his own regulations can ... add
certainty and definiteness to otherwise vague language"). Instead,
the subsection seems intended merely to explain the remainder of
the regulation, which addresses the reimbursability of approved
educational costs in clear,
3 Even less satisfactory is the Secretary's suggestion that her
failure to apply § 413.85(c) in prior fiscal years is of no
relevance. See Brief for Respondent 37. The prior inconsistent
conduct of the agency is quite relevant-not because her
inconsistency "estop[s]" her from changing her view,
ante,
at 517 (internal quotation marks omitted)-but rather because agency
conduct, no less than express statements, can effect a construction
of statutes or regulations. Cf.,
e. g., Motor Vehicle Mfrs.
Assn. of United States, Inc. v.
State Farm Mut. Automobile
Ins. Co., 463 U.
S. 29, 41-42 (1983) (holding that "[a] 'settled course of
behavior embodies the agency's informed judgment that, by pursuing
that course, it will carry out the policies [of applicable statutes
or regulations]''') (quoting
Atchison, T. & S. F.
R.
Co. v.
Wichita Ed. of Trade, 412 U. S. 800, 807-808
(1973)). Two decades of providing reimbursement in contravention of
what is now claimed to be the community support and
anti-redistribution principles certainly constitutes a "settled
course of behavior," and I find it difficult to believe the
Secretary would permit such a persistent-and costlyerror in the
application of her reimbursement rules. Cf. 1991 Medicare
Explained' 706, p. 179 ("When Medicare pays for noncovered services
or it pays too much for covered services, the program will
ordinarily attempt to recover the amount of the overpayment"). A
settled interpretation that persists over time is presumptively to
be preferred, see
Motor Vehicle Mfrs. Assn., 463 U. S., at
41-42, and therefore judges are properly suspect of sharp
departures from past practice that are as unexplained as the
Secretary's in this case.
Id., at 42. See also
Wichita
Ed. of Trade, supra, at 807-808.
525
unmistakably mandatory terms. Cf.
Pennhurst, 451 U. S.,
at 19, n. 14.
By giving substantive effect to such a hopelessly vague
regulation, the Court disserves the very purpose behind the
delegation of lawmaking power to administrative agencies, which is
to "resol[ve] ... ambiguity in a statutory text."
Pauley v.
BethEnergy Mines, Inc., 501 U. S. 680, 696
(1991). See generally
Chevron U. S.
A. Inc. v.
Natural Resources Defense Council, Inc., 467 U. S. 837, 865-866
(1984). Here, far from resolving ambiguity in the Medicare program
statutes, the Secretary has merely replaced statutory ambiguity
with regulatory ambiguity. It is perfectly understandable, of
course, for an agency to issue vague regulations, because to do so
maximizes agency power and allows the agency greater latitude to
make law through adjudication rather than through the more
cumbersome rulemaking process. Nonetheless, agency rules should be
clear and definite so that affected parties will have adequate
notice concerning the agency's understanding of the law. Cf.
FTC v.
Atlantic Richfield Co., 567
F.2d 96, 103 (CADC 1977) (Wilkey, J.). Cf. generally 2 K. Davis
& R. Pierce, Administrative Law § 11.5, p. 204 (3d ed. 1994)
("An agency whose powers are not limited either by meaningful
statutory standards or ... legislative rules poses a serious
potential threat to liberty and to democracy"). The aspirational
terms of § 413.85(c) are woefully inadequate to impart such
notice.4
4 As a result of the Court's ruling today, petitioner and other
Medicare providers who, in the past, received reimbursement for GME
costs in violation of the Secretary's present interpretation of §
413.85(c) are suddenly faced with the possibility of being sued for
recoupment of the millions of dollars of "overpayments" they
received from Medicare. The Social Security Act, we have noted,
"permits ... retroactive action" within three years by the
Secretary to make '''corrective adjustments ... where, for a
provider of services for any fiscal period, the aggregate
reimbursement produced by the methods of determining costs proves
to be ... excessive.'''
Bowen v.
Georgetown Univ.
Hospital, 488 U.
S. 204, 209 (1988) (quoting 42 U. S. C. § 1395x(v)(1)(A)).
Thus, although the Secretary per-
526
II A
In view of its unbelabored conclusion that § 413.85(c) imposes
substantive limits on the reimbursability of approved educational
costs, the Court's discussion focuses primarily on what substantive
import § 413.85(c)'s anti-redistribution principle should be read
to have. The Court finds the antiredistribution principle
"straightforward" in its meaningany costs that, at some previous
point in time, were carried on the books of an affiliated
educational institution cannot subsequently be reimbursed by
Medicare.
Ante, at 513. For the reasons previously
discussed, I would hold that § 413.85(c) cannot reasonably be
construed to impose substantive restrictions on the reimbursability
of approved educational costs. Nevertheless, if I had to give the
principle substantive effect, I could not agree with the Court's
sweeping construction of the principle. In my view, the Court's
reading is premised on a distortion of the text of the regulation
enunciating the anti-redistribution principle, and it is the text,
of course, which must be given controlling effect. See
Bowles, 325 U. S., at 414 (holding that an agency's
interpretation of its own regulation must comport with "the plain
words of the regulation").
Under the relevant portion of § 413.85(c), it is the type of
educational activity engaged in that determines whether or not
reimbursement is proper: "[T]he intent of the [Medicare] program is
to share in the support of educational activities customarily or
traditionally carried on by providers in
mitted petitioner to recover reimbursement for "those medical
education costs which it has traditionally claimed and been allowed
prior to 1984," App. to Pet. for Cert. 37a, that act of
administrative grace appears to be subject to revision at the whim
of the Secretary. Cf.
Heckler v.
Community Health
Services of Crawford Cty., Inc., 467 U. S. 51 (1984)
(Secretary not estopped from recouping overpayment to Medicare
provider whose prior reimbursement claims were made in reliance on
erroneous advice of its designated fiscal intermediary).
527
conjunction with their [patient care] operations." 42 CFR §
413.85(c) (1993). The proper question under the antiredistribution
principle, therefore, is not, as the Secretary puts it, whether "[a
particular provider] has traditionally claimed and been allowed"
reimbursement for a particular category of reimbursable costs. App.
to Pet. for Cert. 37a. Instead, the relevant question is whether
the educational activities for which reimbursement is sought are of
a type "customarily or traditionally" engaged in by providers. If,
in a particular case, that question is answered in the negative,
then it would be a forbidden "redistribution" of costs to award
Medicare reimbursement for the costs associated with the activities
in question. Conversely, if the costs for which a provider seeks
reimbursement result from educational activities that are
traditionally engaged in by Medicare providers, no redistribution
of costs occurs when those costs are reimbursed.
A prohibition against shifting the costs of educational units
(for example, medical or nursing schools) to patient care units was
necessary because of the Medicare program's related-organization
rule, which provides that "costs applicable to services,
facilities, and supplies furnished to the provider by organizations
related to the provider by common ownership or control are
includable in the allowable cost of the provider." 42 CFR §
413.17(a) (1993). In light of the related-organization rule, §
413.85(a)'s recognition of educational costs as reimbursable costs
created the distinct possibility that many, if not most, of the
costs arising from educational unit activities could be shifted to
affiliated Medicare providers (and therefore to the Medicare
program) because, by definition, such units engage in educational
activities. Cf. 57 Fed. Reg. 43659, 43668 (1992) (expressing the
Secretary's concern that "Medicare payment for medical education
costs should not result in a redistribution of costs from the
educational institution to the provider"). Since Medicare is
primarily intended to fund health care for the elderly and
528
disabled, not to subsidize the education of health care
professionals, cf. 42 U. S. C. § 1395c, the Secretary avoided such
an inadvertent "expan[sion] [in] the range of items and services
for which a provider could claim payment" by barring the
redistribution of costs from educational to patient care units. 57
Fed. Reg. 43668 (1992).
The Court therefore errs in reading the term "redistribution"
wholly divorced from the context in which it appears. See
ante, at 513 (suggesting the first clause of the
antiredistribution principle is not even "relevant" to an
understanding of the second phrase). In my view, "redistribution"
can only be properly understood in light of the remainder of the
sentence in which it appears and in light of the
related-organization rule, because interpreting a statute or
regulation "is a holistic endeavor."
United Sav. Assn. of
Tex. v.
Timbers of Inwood Forest Associates, Ltd.,
484 U. S. 365,
371 (1988). Viewed in the proper textual context, § 413.85(c)'s
anti-redistribution principle simultaneously expresses an intent to
fund educational activities customarily conducted by teaching
hospitals and disallows reimbursement for costs incurred by their
affiliated educational units in conducting educational programs not
customarily or traditionally engaged in by such hospitals. The
Secretary's contrary interpretation, in my view, is unworthy of
deference. Cf.,
e. g., Bowles, supra, at 414.
There can be no question that the GME activities for which
petitioner seeks reimbursement are customarily or traditionally
engaged in by teaching hospitals. As the District Court cogently
explained in
Ohio State Univ. v.
Secretary, U. S.
Dept. of Health and Human Services, 777 F. Supp. 582 (SD
Ohio 1991), aff'd,
996 F.2d
122 (CA6 1993), cert. pending, No. 93-696:
"In the case of graduate medical education, it would be
customary and traditional for a teaching hospital to employ
qualified physicians in various medical specialties to select and
supervise the interns and residents
529
enrolled in the educational program. These physicians would need
clerical and administrative staff, office space and supplies to
carry out their function[s]. Their salaries, the salaries of their
clerical and administrative staffs, and the cost of their office
space and supplies would all be part of the cost of the educational
activity which ultimately contributes to the quality of patient
care in the hospital." 777 F. Supp., at 587.
As a result, the anti-redistribution principle provides no basis
for denying petitioner Medicare reimbursement for the full level of
its GME costs, less tuition revenues. See §§ 413.85(a), (g).
I therefore wholeheartedly agree with the PRRB that "[t]he fact
that [the Hospital] did not fully identify all of the costs
associated with its GME programs in prior years does not prohibit
the correction of this [cost accounting] error in the cost
reporting period in contention." App. to Pet. for Cert. 58a-59a. In
ruling to the contrary, the Court arbitrarily subjects similarly
situated Medicare providers, with identical levels of reimbursable
GME costs, to disparate reimbursement, simply because one provider
may have forgone reimbursement to which it was plainly entitled as
a consequence of its cost accounting procedure's failure to
identify all of the provider's reimbursable costs. Although "[m]en
must turn square corners when they deal with the Government,"
Rock Island, A. &
L. R. Co. v.
United
States, 254 U. S.
141, 143 (1920) (Holmes, J.), the manifest injustice of the
Court's result should be apparent.
B
Because, unlike the Court, I do not believe the
antiredistribution principle may reasonably be read to bar
petitioner's claim for reimbursement for non-salary-related GME
costs, I must also address petitioner's challenge to the
Secretary's construction of the community support principle.
Petitioner argues that interpreting the term "community
530
support" to include all non-Medicare sources of funding for GME
costs is inconsistent with the text of § 413.85(c). I agree. Not
only is the community support principle merely an aspirational
statement of policy, see
supra, at 519-523, but, in my view,
the other provisions of 42 CFR § 413.85 (1993) plainly leave no
role for the principle in the cost reimbursement calculus for
approved educational activities.
Section 413.85(a) authorizes a provider to "include its net cost
of approved educational activities" in its allowable Medicare costs
and provides that the "net cost" of such activities is to be
"calculated under paragraph (g) of this section." Section
413.85(g), in turn, defines "[n]et cost of approved educational
activities" as the provider's "total costs of these activities,"
less "revenues it receives from tuition." Section 413.85(g)
therefore clearly establishes the level of reimbursement a provider
may expect for approved educational costs, and the only source of
funding that is to be offset against such costs is tuition
revenues. No other potential sources of funding for GME activities
are included in the offset required by § 413.85(g). Thus, the
Secretary's interpretation of the community support principle as
requiring, in effect, all non-Medicare sources of funding to be
offset against total educational cost is flatly inconsistent with
§§ 413.85(a) and (g).
The plain implication of § 413.85(g) is confirmed by its
regulatory history. Cf. Payne, 476 U. S., at 941. In 1984, the
Secretary amended the subsection's predecessor to eliminate the
requirement that "grants" and "specific donations" be offset
against educational costs actually incurred. See 49 Fed. Reg. 234,
296, 313 (1984) (amending 42 CFR § 405.421(g) (1983)). See also 48
Fed. Reg. 39752, 39797, 39811 (1983) (withdrawing 42 CFR § 405.423
(1982) relating to offsets for certain grants and gifts). The
Secretary's construction of the community support principle
essentially reintroduces grants and specific donations into the
reimbursement calculus. The Secretary has thus rendered the 1984
amend-
531
ment to the regulation entirely superfluous, a disfavored result
that should be avoided where possible. See
Kungys v.
United States, 485 U. S. 759, 778
(1988). Cf. also
Connecticut Nat. Bank v.
Germain,
503 U. S. 249,
253 (1992).
Consequently, the Secretary's construction of the community
support principle to impose a substantive restriction on the
reimbursability of approved educational expenses is inconsistent
with the regulation. As such, the construction is unworthy of
deference. See,
e. g., Stinson, 508 U. S., at 45.
III
For the foregoing reasons, the Secretary acted contrary to law,
within the meaning of 5 U. S. C. § 706(2)(A), in construing 42 CFR
§ 413.85(c) (1993) as denying Medicare providers the right to
receive reimbursement for otherwise eligible educational costs
simply because the costs had not previously been reimbursed by
Medicare. I would therefore reverse the judgment of the Court of
Appeals. I respectfully dissent.
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