American Hospital Assn. v. Becerra (20-1114)
argument 20-1114American Hospital Assn. v. Becerra
Supreme Court of the United States
1h 13m
8 speakers
8 chapters
transcribed 8 days ago
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What statutory provision is at the heart of the American Hospital Association v. Becerra case?
We'll hear an argument next in case twenty eleven fourteen, American
Hospital Association versus Becerra. Mr. Virilli. Mr. Chief Justice, and may it please the court. Congress enacted the statute at issue, which I will refer to as paragraph fourteen, to curb the discretion HHS normally enjoys when it sets Medicare rates for outpatient hospital services. For the drugs covered by the statute, paragraph fourteen directs that the agency may set rates based on acquisition cost. and vary rates by hospital groups if it conducts a cost study that meets the requirements of the paragraph. If it does not do a cost study, rates must equal the average price for the drug determined by a cross reference statutory formula calculated and adjusted as necessary for purposes of the paragraph.
Now in the order at issue, HHS set rates for Section three hundred forty B hospitals different from the rates for all other hospitals and purported to base those rates on acquisition costs, but it did not conduct the cost study that the statute requires. Now at the threshold the government asserts that courts cannot review that agency action, but no statutory text precludes review, and it makes sense that Congress would want review because the point of paragraph fourteen was to constrain agency discretion. On the merits, the government asserts that separate cost based rates for three forty B hospitals can be justified as an exercise of the agency's authority to adjust price based rates that the statute requires in the absence of a cost study.
But paragraph fourteen does not authorize HHS to vary price based rates by hospital group and it authorizes varying cost base rates only in the presence of a cost study. And beyond that, HHS didn't base the rates it set for three hundred forty B hospitals on average price at all. Estimated the acquisition cost using a different formula and then swapped that number in for the average price number. That's a substitution. It's not an adjustment. And it can't be justified under Chevron. Congress spoke directly to the question of when rates can be based on acquisition cost and varied by hospital groups, and that's when it conducts a cost study. Congress surely did not delegate to HHS the authority to remove that statutory requirement.
I welcome the Court's questions.
Uh Mr. Varelli, if we don't agree with your last statement, but rather with the um D C circuit uh that you uh uh in its application to Chevron. And that uh we agree that Chevron disposes of this. Uh would you argue or are you arguing that we should uh overrule Chevron to uh get to uh the statutory approach that you are taking?
Well I think, Your Honor, the the way we've approached that question is that We think with respect to The application of Chevron here. We are asking the court to reject the D C circuit's application of Chevron. But there are several steps before getting to that final question that your Honor asked. We do think that what the D C circuit did was essentially go hunting for ambiguity and purport to find it by finding superfluity in one provision, superfluity in another and saying there's no hierarchy in of superfluity throwing up its hands and deferring. We think this is a situation in which the statute is clear, unambiguous at the first stage of Chevron, and therefore one doesn't get to the question of whether Chevron needs to be overruled.
And even if the Court finds some ambiguity in that with respect to the statute, we think this is a case very much like MCI, or very much like the Iowa Utilities Board case, which is cited at page sixteen of the Chamber brief, and what Whatever ambiguity and therefore discretion the agency has, This is so far outside of it because it effectively writes this provision out of the statute entirely and Congress can't possibly have intended to delegate the agency the authority to do that.
Why? I mean i i it's I read look you understand this better than I do. I looked at paragraph fourteen. Okay, we're in this thing that says Roman numeral two. down down here on page forty two A.
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Chapters
8 chapters
1
What statutory provision is at the heart of the American Hospital Association v. Becerra case?
0:00–9:31
2
How does paragraph 14 distinguish between acquisition‑cost rates and price‑based rates?
9:31–17:46
3
Why does the government argue that a cost‑study is required before varying rates for 340B hospitals?
17:46–25:31
4
What is the significance of the “adjusted for purposes of this paragraph” language?
25:31–35:00
5
How do the parties interpret the role of Chevron deference in this dispute?
35:00–44:25
6
What arguments are made about possible over‑payment to 340B hospitals and its impact on Medicare beneficiaries?
44:25–54:12
7
How do the parties address the question of statutory ambiguity and the amount needed for deference?
54:12–1:02:52
8
What conclusions does each side draw about the proper balance between congressional intent and agency discretion?
1:02:52–1:13:07