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Azar v. Allina Health Servs.

Supreme Court of the United States

January 15, 2019, Argued; June 3, 2019, Decided

No. 17-1484.

Opinion

Justice Gorsuch delivered the opinion of the Court.

One way or another, Medicare touches the lives of nearly all Americans. Recognizing this reality, Congress has told the government that, when it wishes to establish or change a “substantive legal standard” affecting Medicare benefits, it must first afford the public notice and a chance to comment. 42 U. S. C. §1395hh(a)(2). In 2014, the government revealed a new policy on its website that dramatically—and retroactively—reduced payments to hospitals serving low-income patients. Because affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, we agree with the court of appeals that the [***6]  new policy cannot stand.

Today, Medicare stands as the largest federal program after Social Security. It spends about $700 billion annually to provide health insurance for nearly 60 million aged or disabled Americans, nearly one-fifth of the Nation’s population. Needless to say, even seemingly modest modifications to the program can affect the lives of millions.

As Medicare has grown, so has Congress’s interest in ensuring that the public has a chance to be heard before changes are made to its administration. As originally enacted in 1965, the Medicare Act didn’t address the possibility of public input. Nor did the notice-and-comment procedures of the Administrative Procedure Act apply. While the APA requires many other agencies to offer public notice and a comment period before adopting new regulations, it does not apply to public benefit programs like Medicare. 5 U. S. C. §553(a)(2). Soon enough, though, the government [*1809]  volunteered to follow the informal notice-and-comment rulemaking procedures found in the APA when proceeding under the Medicare Act. See Clarian Health West, LLC v. Hargan, 878 F. 3d 346, 356-357 (CADC 2017).

 [**145]  This solution came under stress in the 1980s. By then, Medicare had grown exponentially and the burdens and benefits of public comment had come under [***7]  new scrutiny. The government now took the view that following the APA’s procedures had become too troublesome and proposed to relax its commitment to them. See 47 Fed. Reg. 26860-26861 (1982). But Congress formed a different judgment. It decided that, with the growing scope of Medicare, notice and comment should become a matter not merely of administrative grace, but of statutory duty. See §9321(e)(1), 100 Stat. 2017; §4035(b), 101 Stat. 1330-78.

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139 S. Ct. 1804 *; 204 L. Ed. 2d 139 **; 2019 U.S. LEXIS 3888 ***; 27 Fla. L. Weekly Fed. S 870

ALEX M. AZAR, II, SECRETARY OF HEALTH AND HUMAN SERVICES, Petitioner v. ALLINA HEALTH SERVICES, et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Allina Health Servs. v. Price, 863 F.3d 937, 430 U.S. App. D.C. 367, 2017 U.S. App. LEXIS 13347 (D.C. Cir., July 25, 2017)

Disposition: Affirmed.

CORE TERMS

notice-and-comment, regulations, notice, substantive rule, interpretive rule, Manual, legal standard, benefits, Medicare Act, provisions, patients, courts, changes, rulemaking, exemption, fraction, words, requirement of notice, Reimbursement, cross-reference, eligibility, obligations, refers, legislative history, instructions, Provider, agency's action, interpretive-rule, promulgated, suggests

Administrative Law, Agency Rulemaking, Notice & Comment Requirements, Public Health & Welfare Law, Social Security, Medicare, Coverage, Medicare, Governments, Legislation, Interpretation, Medicare Act Interpretation, Civil Procedure, Appeals, Reviewability of Lower Court Decisions, Preservation for Review