Warder v. Shalala - 149 F.3d 73 (1st Cir. 1998)

Rule:

A rule is exempt from notice and comment as an interpretative rule if it does not effect a substantive change in the regulations.

Facts:

Appellees, Medicare beneficiaries and medical equipment suppliers, challenged a ruling made by appellant health care administration that classified certain medical equipment as durable medical equipment rather than as braces. The former classification limited Medicare reimbursement to devices used at home, precluding reimbursement for such devices when used in certain hospital and institutional settings. Appellees advanced the procedural claim that the ruling was invalid because it was adopted without compliance with the notice-and-comment procedures of the Administrative Procedure Act, 5 U.S.C.S. § 553, and the Medicare statute, 42 U.S.C.S. § 1395hh. The district court held that the ruling was substantive and, therefore, invalid because it was issued without following notice and comment procedures. The court also found that the equipment in dispute was not durable medical equipment and enjoined appellant from treating it as such. Appellant challenged the district court’s judgment.

Issue:

Was the appellant’s rule invalid for being issued without following notice and comment procedures?

Answer:

No.

Conclusion:

The appellate court concluded that appellant's rule was interpretive and not invalidated by the failure to adopt notice and comment procedures. The court noted that appellant’s rule did not effect a substantive change in the regulations, and was thus exempt from notice and comment procedures. Accordingly, the district court's injunction was vacated on the ground that appellant's interpretation was a permissible one.