Empire Health Foundation, for Valley Hospital Medical Center v. Xavier Becerra, Secretary of Health and Human Services

The Medicare statute provides that any hospital serving a “significantly disproportionate number of low-income patients” is entitled to additional payments for treating Medicare patients. 42 U.S.C. § 1395ww(d)(5)(F)(i)(I). In a Notice of Proposed Rulemaking for Federal fiscal year (“FFY”) 2004, the Secretary of the U.S. Department of Health & Human Services (“HHS”) addressed the complex equations used to determine which hospitals are entitled to payment and how much they should get. See 68 Fed. Reg. 27,154 (May 19, 2003); 42 U.S.C. § 1395ww(d)(5)(F)(i)(I). This notice had a problem, though. In it, HHS claimed that its current policy was something it was not and proposed to change its policy going forward to what was actually its current policy. Although HHS had been made aware of the error and formally addressed the public on two subsequent occasions regarding its proposal, it did not correct those misstatements. Instead, a few days before the final notice-and-comment period, HHS issued a correction on its website. Despite widespread confusion among commenters and requests for additional time to comment, HHS did not extend the time for comments. Instead, HHS issued a final rule that was radically different from its current policy, the opposite of what it had proposed, and that decreased the amount of DSH payments for most hospitals. The questions presented, therefore, are: 1) Whether agencies must accurately include key facts and data in notices of proposed