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Becerra v. Empire Health Found., 142 S. Ct. 2354 (2022) or: How I Learned to Stop Deferring and Forget Chevron

Nathan T. Seltzer | March 28, 2023 | PDF Version (205 KB)

Summary: On June 24, 2022, the Supreme Court decided a relatively obscure case over a Medicare provision.  The case marks another step in the trend of the Supreme Court ignoring Chevron deference. The Supreme Court had granted certiorari to resolve a circuit split in which the Ninth Circuit diverged from other circuits over the application of Chevron deference.  The Ninth Circuit applied Chevron analysis to overrule changes promulgated by the United States Department of Health and Human Services (“HHS”), while the Sixth and D.C. Circuits came to the opposite conclusion. But—in a surprising twist—the Supreme Court issued a decision without so much as a whisper of Chevron deference.  Instead, the Court applied general rules of statutory interpretation.

Preferred Citation: Nathan T. Seltzer, Becerra v. Empire Health Found., 142 S. Ct. 2354 (2022) or: How I Learned to Stop Deferring and Forget Chevron, 62 Washburn L.J. Online 3 (2023),

I. Introduction

Courts have long used Chevron deference to allow agencies to have discretion to interpret ambiguous statutory text while drafting regulations.  So long as the interpretation is permissible, all federal courts must defer to the agency.  In Becerra, the agency was the Department of Health and Human Services (“HHS”) and the issue before the courts was how to calculate the percentage of low-income patients a hospital serves.[1]

The Ninth Circuit created a circuit split by striking down the HHS regulations while the Sixth and D.C. Circuits deferred to HHS.[2]  When the Supreme Court granted certiorari,[3] the stage was set for the greatest Chevron deference Medicare fraction showdown of all time.  The circuit split would be resolved and the Supreme Court would provide much-needed clarity on Chevron.  Or so we thought.

In a strange twist, the Court split 5-4, with the Court’s left and right wings overruling the center.[4]  And, most surprisingly, neither the majority nor the dissent mentioned Chevron.

Section II of this Comment covers the case history, the legal background of the Medicare Disproportionate Share adjustment, and Chevron deference.  Section III centers on Chevron application, or its lack thereof in this case.

II. Background

A. Case Description

While Empire Health v. Becerra deals with a “downright byzantine” regulatory interpretation of an obscure provision of the Medicare statute, the precedential value is in the Court’s application (or lack thereof) of Chevron deference to the issue at hand.[5]  The Ninth Circuit opinion, which gave rise to the Supreme Court case, meticulously followed Chevron deference.[6]  Upon identifying that it had previously held that the Medicare statutory provision underlying the case was unambiguous, it applied National Cable & Telecommunications Association v. Brand X Internet Services at step one.[7]  Because the HHS regulation at issue contravened an unambiguous statute as interpreted by Ninth Circuit precedent, the Court concluded that the regulation was invalid.

In its opinion, the Ninth Circuit recognized that its holding seemed at odds with the D.C. and Sixth Circuits, but argued that this case and holding were distinguishable.[8]  The Ninth Circuit held that its circuit precedent invalidated the HHS interpretation under Chevron step one—the statute was unambiguous.[9]  The other circuits had no precedent holding that the language was unambiguous, and—holding the language to be ambiguous—deferred to the agency interpretation of the same language under Chevron step two.[10]  The HHS petition for certiorari explained this difference and asked the Court to resolve the interpretive dissonance by deferring to its interpretation under Chevron.[11]

B. Medicare “Disproportionate Patient Percentage”

When the government reimburses hospitals for Medicare patients, the reimbursement is “based on the patient’s diagnosis and regardless of the hospital’s actual costs.”[12]  The diagnosis-based payments use an average cost and are adjusted for various factors.  Adjustments include geographic location, rural or urban areas, and—as relevant here—treating an unusually high number of low-income patients.  A hospital qualifying as a disproportionate share hospital (“DSH”) receives higher rates from Medicare because low-income patients are more expensive to treat, on average, than high-income patients.[13]

The higher a DSH’s share of low-income patients, the higher the per-patient rate the hospital receives.  The DSH rate is set by Congress and calculated by hospitals and the HHS.  Writing for the majority in Becerra, Justice Kagan quipped, “[w]ith that under your belt, you might be ready to absorb the relevant statutory language (but don’t bet on it).”[14]

The statutorily proscribed calculation is performed by adding together two fractions: the Medicare fraction[15] and the Medicaid fraction.[16]  The description of these fractions in the Medicare statute is the crux of what makes the interpretation so complicated.[17]  The sum of the Medicare fraction and Medicaid fraction is the disproportionate patient percentage, which determines whether a hospital qualifies as a DSH and what rate adjustment it will receive for its Medicare reimbursements.[18]

The controversy in Becerra concerned the statutory reading of these formulae.  Specifically, is a Medicare-insured patient who is not being paid for by Medicare considered “entitled to benefits under Part A” on any given day?[19]  Hospitals did not want these patients counted because counting them tends to decrease their DSH percentage under the statute.[20]  HHS regulations from 2004 said the patients should be counted.[21]  The HHS interpretation is far easier to comprehend:

The Medicare fraction is computed by dividing the number of patient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the total number of patient days furnished to patients entitled to benefits under Medicare Part A.

The Medicaid fraction is computed by dividing the number of patient days furnished to patients who, for those days, were eligible for Medicaid but were not entitled to benefits under Medicare Part A by the number of total hospital patient days in the same period.[22]

These fractions are intended to act as a proxy to increase reimbursement of hospitals when they serve a higher percentage of low-income patients.  As more of these patients enter the patient pool, the fractions get larger, and the DSH adjustment results in higher compensation.[23]

C. Chevron Deference Concerning the Phrase “Entitled to Benefits”

The Chevron deference doctrine flows from the Supreme Court case, Chevron, U.S.A., Inc. v. NRDC, Inc.[24]  Though repeatedly modified, the holding shaped administrative law and judicial interpretations for the next three decades: if a challenged agency interpretation is based on the agency’s judgment, rather than its mandate, then the challenge fails.[25]  Although once relying on Chevron extensively, the Supreme Court has increasingly refused to apply Chevron deference in favor of routine statutory interpretation and Court-created exceptions.[26]

1. Pre-2004 Appellate Precedent

HHS’s original regulations on this point (which mirrored the regulations at bar in Becerra) were shot down by courts, beginning with Jewish Hospital v. Secretary of Health & Human Services.[27]  In Jewish Hospital, the Sixth Circuit interpreted the DSH Medicaid fraction based on statutory language demonstrating congressional intent.[28]  HHS argued for a DSH calculation where the terms “eligible” and “entitled” had the same meaning for the calculations which would shrink the DSH percentage and reduce payouts to DSH hospitals.[29]  The Court disagreed, saying that this portion of the statute was not ambiguous, and the word “eligible” had a broader meaning than “entitled.”[30]  However, its holding stated that even if the statute was ambiguous, the HHS construction was impermissibly contrary to the statutory language.[31]  Whether the Court’s determination regarding the statute’s unambiguousness was dicta is a matter of some debate.[32]

In Legacy Emanuel Hospital & Health Center v. Shalala, the Ninth Circuit interpreted the same Medicaid fraction and agreed with the Jewish Hospital dicta that the statutory language was unambiguous.[33]  It held, at Chevron step one, that the HHS interpretation was invalid because the word “eligible” had a different, broader meaning than “entitled.”[34]  The Ninth Circuit therefore incorporated the apparent dicta in Jewish Hospital: Congress clearly intended “entitled” to have a narrower meaning than “eligible,” and only included days for which Medicaid was actually paying.[35]

In a per curiam opinion, the Eighth Circuit adopted the Sixth Circuit holding of Jewish Hospital in its entirety.[36]  The Fourth Circuit likewise struck down the HHS interpretation, but, like Jewish Hospital, contended with a formidable dissent.[37]  This settled the pre-2004 regulations with the circuits effectively agreeing that Congress unambiguously intended the words “eligible” and “entitled” to have different meanings (with “eligible” being more broad) and striking down the HHS’s interpretation.

2. 2004 HHS Regulations Lead to Circuit Split

In 2004, HHS promulgated new regulations that, once again, treated the words “eligible” and “entitled” as effectively synonymous for purposes of calculating the Medicare and Medicaid fractions.[38]  The first appellate court to address this regurgitated construction was the D.C. Circuit in Northeast Hospital Corp. v. Sebelius.[39]  Holding that HHS could not retroactively apply its regulations, the court withheld judgment on the statutory provision itself.[40]  Acknowledging the previous kerfuffle over the same provision, it latched onto the dissent’s reasoning in Jewish Hospital and Cabell Huntington Hospital, Inc. v. Shalala,[41] stating—in dicta—that the statutory text was ambiguous, and the HHS interpretation was a permissible construction.[42]  In his concurrence, then-Circuit Judge Brett Kavanaugh foreshadowed his dissent in Becerra, arguing that the HHS interpretation was not entitled to Chevron deference.[43]

The first decision on the merits of the 2004 regulations was—fittingly—in the Sixth Circuit once again.  In Metropolitan Hospital v. United States HHS, a Sixth Circuit panel refused to accept its own reasoning from Jewish Hospital, instead holding that even though it had decided the unambiguous meaning of the words “eligible” and “entitled” in that case, that portion of the analysis was not part of its holding and stare decisis did not apply.[44]

Weeks later, a D.C. Circuit panel issued its own opinion on the HHS construction, relying on its Northeast Hospital decision and on Metropolitan Hospital.[45]  It decided that the phrase “entitled to benefits” was ambiguous.[46]  As a result, the court held that “under [Chevron], we of course defer to the Department’s construction.”[47]  This history provided the framework upon which the Ninth Circuit upheld its decision in Legacy Emanuel, creating the circuit split at bar.[48]

III.  Court’s Decision

In Becerra, the Court held that the HHS regulations are the correct interpretation of the Medicare statute at issue.[49]  Remarkably—despite every previous appellate decision revolving around the application of Chevron—the majority holding contains no mention of Chevron, instead relying on good old-fashioned statutory interpretation.[50]

Justice Kagan, writing for the majority, unsurprisingly prefaced her analysis by framing the issue before the Court as whether to defer to the agency interpretation of the statute.[51]  However, she never addressed that issue.[52]  Instead, Justice Kagan engaged in a detailed and rigorous statutory interpretation, first explaining the statute, and then expounding the arguments of the HHS and Empire.[53]

In the analysis that followed, Justice Kagan engaged only with the interpretive reasoning of the HHS and of Empire,[54] relying solely on principles of statutory interpretation.[55]  And, although many of her cited cases turned on the application of Chevron, the Justice made no mention of Chevron deference in her analysis.[56]  The Court ultimately reached no conclusion on whether the HHS was entitled to deference, only that the HHS had the correct interpretation.[57]  This is especially noteworthy because the Court upheld the statutory reasoning of the Sixth and D.C. Circuits, independent from Chevron—impliedly rejecting the Chevron-based holding of the Ninth Circuit.[58]

The dissent also made no reference to Chevron.[59]  Although Justice Kavanaugh wrote the concurrence in Northeast Hospital (arguing that the HHS construction fails at Chevron step one and two), the Becerra majority did not reference Chevron in its opinion.[60]  This creates a situation in which Chevron is irrelevant to Justice Kavanaugh’s contention that the HHS had an incorrect statutory construction.[61]  Because the majority did not mention Chevron, the dissent relegated it to the “dog’s breakfast” category of arguments by both parties that are not worth considering.[62]

In the dissent, Justice Kavanaugh applied his own statutory interpretation before grappling with the majority opinion.[63]  Interestingly, despite addressing this precise issue as a circuit judge, he claimed that “from the time the statute was enacted in 1986 until 2003, HHS interpreted this statutory provision in the exact same way that I do.”[64]  But, strictly speaking, this is not true.  The agency had originally attempted to promulgate roughly the same regulations at bar in this case—and was blocked by the courts.[65]

IV. Commentary

In summary, five Supreme Court Justices think the agency tasked with enforcement of a statute has correctly interpreted the provision at bar.  Four Justices think it has not.  Neither side voices any suspicion that the text—although “downright byzantine”—might be ambiguous.[66] 

The major question doctrine is nowhere in sight.[67]  If only there were some doctrine, shaped by nearly forty years of jurisprudence, that might be instructive.  Oh well.

This commentary first examines possible explanations for the omission of Chevron in this case, then compares the Court’s decreasing use of Chevron deference to a similar pattern with the Lemon test,[68] before finally speculating on the future of Chevron.

A. Ignoring the Elephant in the Room

It would be fair to take away the idea that the Court’s liberal wing made a pact with the Court’s originalists to agree on a conclusion for this case that did not rely on Chevron, thereby sparing Chevron further scrutiny during the Major Questions Term.[69]  However, there are a couple peculiarities which cut against this view.

First, by not applying Chevron, the Court rejects, sub silentio, Chevron’s utility for resolving statutory ambiguity.  The elephant tapdancing in the corner is the appearance that this case is tailor-made for the application of Chevron.  If—in this case of tortuous statutory text having little import—Chevron is not useful, then where could it ever be useful again?

Second, in the same term, the Court decided American Hospital Association v. Becerra, unanimously holding that HHS had the wrong construction of a different Medicare provision.[70]  This case also revolved around whether the lower courts correctly applied Chevron and, as here, the Supreme Court again disregarded Chevron and did not address whether the statute was ambiguous.[71]  Justice Kavanaugh, writing for a unanimous majority, struck down the HHS interpretation of a different Medicare provision without invoking Chevron.[72]  A mention of Chevron (even in a concurring opinion) might have made Becerra seem less like Chevron’s coffin lid.

B. When the Court Hands You Lemon Analogs

Another Court-created test followed a trajectory similar to Chevron.  In the same term the Court decided the case at bar, it also decided Kennedy v. Bremerton School District, which finally put a formal end to a different decades-old Court doctrine: the Lemon test.[73]  Kennedy made plain that Lemon was no longer valid precedent, but this occurred only after decades of Court attempts to tweak the test, followed by decades of ignoring it.

The entanglement test was first employed in Lemon v. Kurtzman in 1971.[74]  But two years later, the Court referred to it as “no more than helpful signposts.”[75]  In 1984, a concurrence proposed a modified-Lemon endorsement test.[76]  Then, in 1989, the Court invoked both prior tests, while a partial dissent proposed a new coercion test.[77]  By 1992, the Court notably could not be bothered to even apply Lemon at all.[78]  And in Town of Greece,[79] decided in 2014, Lemon was relegated to a single throwaway quote in the dissent.[80]  By 2022, Kennedy merely represented the inevitable dagger.[81]

With the Court invoking exceptions to Chevron in some cases, and ignoring it where the exceptions did not apply, is Chevron on the Lemon path?

Like Lemon, the Chevron test is court-created doctrine, intended to provide an analytical tool for lower courts to decide as the Supreme Court would.[82]  Like the Lemon test, the Chevron doctrine has been repeatedly modified as the Court has attempted to guide appellate decisions.[83]  Like Lemon, Chevron has been criticized by the Court.[84]  And now, like the Lemon test, the Court has declined to apply Chevron even in appropriate cases.[85]  All that is lacking to complete the Lemon incremental cycle of marginalization is a direct overruling of the test by a Court majority.[86]

C. Is Chevron Sunk?

Whether the final dagger falls or the Court breathes new life into Chevron remains to be seen.  But in either case, lower federal courts are taking note of the Court’s decreasing use of Chevron.

While ambiguity is still undesirable for litigants, they will likely benefit from the Court’s decreasing deference to the government.  One way to view this is that the Supreme Court is increasingly less willing to hold that a statute is ambiguous.  Becerra is a signal to lower courts to perform a rigorous statutory analysis, and Justice Kagan leads by example.  Whether the analysis is within the Chevron step one framework, or is Chevron agnostic, courts will likely attempt to make a decision on the merits, rather than use Chevron as an escape hatch.

Federal agencies may still argue that statutory ambiguity should entitle them to deference, but increasingly, they are waiving Chevron.[87]  If this case is any indication, courts will find less ambiguity and more legislative intent in the text of federal statutes.

V. Conclusion

Chevron, its progeny, and its offshoots appear to be out of fashion, if not dead.  Even in a case such as Becerra where Chevron is seemingly most appropriate, the Court plunged headlong into the byzantine text.  Decisions based on traditional statutory interpretation could be all the rage at this year’s gala.  Court watchers can be hopeful that something good may emerge from the hazy penumbra of Chevron precedent: clarity.



          [1].   Becerra v. Empire Health Found., 142 S. Ct. 2354, 2360 (2022). [Return to Text]

          [2].   Becerra, 142 S. Ct. at 2356 (“The Court granted certiorari to resolve a conflict between the Ninth Circuit and two other Circuit Courts, which had approved of HHS’s regulation.”). [Return to Text]

          [3].   Id. [Return to Text]

          [4].   Conservative Justices Thomas and Barrett joined the Court’s liberal Justices Sotomayor and Breyer in signing onto Justice Kagan’s opinion.  Chief Justice Roberts and Justices Gorsuch, Alito, and Kavanaugh dissented. [Return to Text]

          [5].   Becerra, 142 S. Ct. at 2362 (quoting Cath. Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914, 916 (D.C. Cir. 2013) (discussing the same statutory provision)). [Return to Text]

          [6].   See Empire Health Found. v. Azar, 958 F.3d 873, 884 (9th Cir. 2020), reh’g denied en banc Nos. 18-35845, 18-35872, 2020 U.S. App. LEXIS 33108 (9th Cir., Oct. 20, 2020), cert. denied sub nom. Empire Health Found. v. Becerra, 141 S. Ct. 2884 (2021), cert granted sub nom. Becerra v. Empire Health Found., 141 S. Ct. 2883 (2021), rev’d and remanded sub nom. Becerra v. Empire Health Found. 142 S. Ct. 2354 (2022). [Return to Text]

          [7].   Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005); Azar, 958 F.3d at 878 (“Because Legacy Emanuel interpreted the meaning of ‘entitled to [Medicare]’ in 42 U.S.C. § 1395ww(d)(5)(F)(vi) to be unambiguous, the 2005 Rule’s conflicting construction cannot stand.” (brackets in original) (quoting Legacy Emanuel Hosp. & Health Ctr. v. Shalala, 97 F.3d 1261, 1265 (9th Cir. 1996)). [Return to Text]

          [8].   Id. at 885 (“[T]he Sixth and D.C. Circuits have affirmed the 2005 Rule’s interpretation of the phrase ‘entitled to [Medicare]’ in [the DSH fractions] at Chevron step two.”  But “neither court dealt with binding circuit precedent holding that the statutory language was unambiguous, as Legacy Emanuel did.” (quoting Legacy Emanuel, 97 F.3d at 1265)); see also id. at 884 (“The rulemaking procedure at issue here did not involve the unexpected ‘volte-face’ that the D.C. Circuit confronted in Allina.” (quoting Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1109 (2014))). [Return to Text]

          [9].   Id. at 884. [Return to Text]

        [10].   Contra id., with Cath. Health Initiatives, 718 F.3d at 920 (“Therefore, under [Chevron], we of course defer to the Department’s construction.”), and Metro. Hosp. v. U.S. Dep’t of Health & Human Servs., 712 F.3d 248, 270 (6th Cir. 2013) (“[T]he resulting regulation . . . warrants judicial deference under Chevron.”). [Return to Text]

        [11].   Petition for Writ of Certiorari at 27, Becerra v. Empire Health Found., 142 S. Ct. 2354 (No. 20-1312).  (“[T]he Secretary’s interpretation of the Medicare fraction 2004 regulation embodies the best construction of the statutory text in light of its context, structure, history, and purpose.  At a minimum, it represents a reasonable reading that the court of appeals was obligated to uphold.”). [Return to Text]

        [12].   Becerra v. Empire Health Found., 142 S. Ct. 2354, 2359 (2022). [Return to Text]

        [13].   Id. (“The mark-up reflects that low-income individuals are often more expensive to treat than higher income ones, even for the same medical conditions.”). [Return to Text]

        [14].   Id. [Return to Text]

        [15].   42 U.S.C. § 1395ww(d)(5)(F)(vi)(I) (“[T]he fraction (expressed as a percentage), the numerator of which is the number of such hospital’s patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this title [42 U.S.C. §§ 1395c et seq.] and were entitled to supplemental security income benefits (excluding any State supplementation) under title XVI of this chapter [42 USCS §§ 1381 et seq.], and the denominator of which is the number of such hospital’s patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this title [42 USCS §§ 1395c et seq.].”). [Return to Text]

        [16].   42 U.S.C. § 1395ww(d)(5)(F)(vi)(II) (“[T]he fraction (expressed as a percentage), the numerator of which is the number of the hospital’s patient days for such period which consist of patients who (for such days) were eligible for medical assistance under a State plan approved under title XIX [42 USCS §§ 1396 et seq.], but who were not entitled to benefits under part A of this title [42 USCS §§ 1395c et seq.], and the denominator of which is the total number of the hospital’s patient days for such period.”). [Return to Text]

        [17].   Becerra, 142 S. Ct. at 2362 (“The ordinary meaning of the fraction descriptions, as is obvious to any ordinary reader, does not exactly leap off the page.”). [Return to Text]

        [18].   Id. at 2359 (“To calculate a hospital’s DSH adjustment, HHS adds together two statutorily described fractions, usually called the Medicare fraction and the Medicaid fraction.”). [Return to Text]

        [19].   See 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). [Return to Text]

        [20].   Id. at 2360 (“That percentage determines whether a hospital will receive a DSH adjustment, and if so, how large it will be.”). [Return to Text]

        [21].   42 C.F.R. § 412.106(b); see also Becerra, 142 S. Ct. at 2361 (“An HHS regulation, issued in 2004, says those patients remain so entitled.”). [Return to Text]

        [22].   69 Fed. Reg. 48916, 49090–91 (Aug. 11, 2004). [Return to Text]

        [23].   Becerra, 142 S. Ct. at 2360 (“The higher the disproportionate-patient percentage goes, the greater the rate mark-up that the hospital will receive.”). [Return to Text]

        [24].   See Chevron USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). [Return to Text]

        [25].   Id. at 866 (“When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail.  In such a case, federal judges—who have no constituency—have a duty to respect legitimate policy choices made by those who do.”). [Return to Text]

        [26].   See, e.g., West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022) (“Thus, in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there.” (quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014))).  For a chronology of the Court’s recent decisions moving away from Chevron, see Nathan Richardson, Deference is Dead (Long Live Chevron), 73 Rutgers U. L. Rev. 441, 485–493 (2021). [Return to Text]

        [27].   Jewish Hosp. v. Sec’y of Health & Hum. Servs., 19 F.3d 270 (6th Cir. 1994). [Return to Text]

        [28].   Id. at 272. [Return to Text]

        [29].   Id.  “Any day of a Medicaid patient’s hospital stay that is not payable by the Medicaid program will not be counted as a Medicaid patient day since the patient is not considered eligible for Medicaid coverage on those days.”  Id. (quoting Medicare Program, 51 Fed. Reg. 17.777 (1986)). [Return to Text]

        [30].   Id. at 275 (“Adjacent provisions utilizing different terms, however, must connote different meanings.”). [Return to Text]

        [31].   The Sixth Circuit dedicated the bulk of its analysis to its conclusion that the statute was unambiguous.  See id.  It then (apparently) relegated the section to dicta with its alternate holding that ambiguity was irrelevant.  Id. (“We hold that, even if the language of the statute can be deemed silent or ambiguous, the Secretary’s construction of the statute is not permissible.”). [Return to Text]

        [32].   See Metro. Hosp. v. U.S. Dep’t of Health & Hum. Servs., 712 F.3d 248, 273 (6th Cir. 2013) (McKeague, J., dissenting) (“The majority attempts to marginalize Jewish Hospital’s principal rationale by characterizing it as a ‘suggestion,’ because the court did not explicitly formalize its conclusion by so ‘holding.’  The majority proposes that the court’s secondary or alternative rationale is really the decision’s primary holding.”). [Return to Text]

        [33].   Legacy Emanuel Hosp. & Health Ctr. v. Shalala, 97 F.3d 1261, 1266 (9th Cir. 1996) (“Because the language of the statute clearly provides that the Medicaid provision includes all days attributable to Medicaid patients, whether paid or not, there is no need to look further.”). [Return to Text]

        [34].   Id. (“We hold that the statutory language is clear because of Congress’s use of ‘eligible’ rather than ‘entitled,’ and because Congress’s overarching goal was to reimburse hospitals for the added expense of serving low-income patients.”). [Return to Text]

        [35].   Id. at 1265 (“We believe the language of the Medicare reimbursement provision is clear: the Medicaid proxy includes all patient days for which a person was eligible for Medicaid benefits, whether or not Medicaid actually paid for those days of service.”). [Return to Text]

        [36].   Because the content of the Jewish Hospital holding was itself ambiguous, this four-sentence, unsigned opinion provided no clarity.  Deaconess Health Servs. Corp. v. Shalala, 83 F.3d 1041 (8th Cir. 1996). [Return to Text]

        [37].   Compare Jewish Hosp. v. Sec’y of Health & Hum. Servs., 19 F.3d 270, 278 (6th Cir. 1994) (Batchelder, J., dissenting) (“Medicare provisions, for reasons not readily apparent, regularly refer to potential beneficiaries under Medicare as being ‘entitled’ to benefits, while the Medicaid laws consistently refer to potential beneficiaries of that program as being ‘eligible’ for benefits.”), with Cabell Huntington Hosp. v. Shalala, 101 F.3d 984, 992 (4th Cir. 1996) (Luttig, J., dissenting) (“Congress has . . . consistently used the words ‘eligible’ to refer to potential Medicaid beneficiaries and ‘entitled’ to refer to potential Medicare beneficiaries for no reason whatever that anyone . . . has been able to divine.”). [Return to Text]

        [38].   42 C.F.R. § 412.106(b) (2023). [Return to Text]

        [39].   The question of whether the 2004 HHS regulations were valid was not before the Court.  This decision only ruled that the (presumably valid) 2004 HHS regulations could be retroactively applied.  Ne. Hosp. Corp. v. Sebelius, 657 F.3d 1, 18 (D.C. Cir. 2011) (“But we also hold that the Secretary’s present interpretation, even if it would pass Chevron step two (an issue upon which we do not opine), may not be retroactively applied.”). [Return to Text]

        [40].   Id. [Return to Text]

        [41].   Cabell Huntington Hosp., 101 F.3d at 984. [Return to Text]

        [42].   Ne. Hosp., 657 F.3d at 13 (“Congress . . . has left a statutory gap, and it is for the Secretary, not the court, to fill that gap.”). [Return to Text]

        [43].   Id. at 23 n.4 (Kavanaugh, J., concurring) (“From my perspective, HHS’s interpretation violates the statute, whether at Chevron step one or Chevron step two.”). [Return to Text]

        [44].   Metro. Hosp. v. U.S. Dep’t of Health & Hum. Servs., 712 F.3d 248, 256 (6th Cir. 2013) (“Answers to other questions that an opinion might provide, even ones that purport to define the allegedly unambiguous terms of related statutory language, are therefore not part of the Chevron step-one holding and thus do not foreclose future agency interpretations under Brand X’s analysis.”).  The dissent was not buying this reasoning, stating, “We have already wrestled with the very statutory provision at issue and arrived at definitive conclusions as to its meaning.  In my opinion, stare decisis demands greater respect for our ruling in [Jewish Hospital].”  Id. at 270 (McKeague, J., dissenting). [Return to Text]

        [45].   See Cath. Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914, 920 (D.C. Cir. 2013). [Return to Text]

        [46].   Id. (“We conclude that, although the Department’s interpretation is the better one, it is not quite inevitable.  Either interpretation seems permissible, a conclusion that is reinforced by our recent decision in [Northeast Hospital].”). [Return to Text]

        [47].   Id. [Return to Text]

        [48].   See discussion supra Section II.A. [Return to Text]

        [49].   Becerra v. Empire Health Found., 142 S. Ct. 2354, 2368 (2022) (“Text, context, and structure all support calculating the Medicare fraction HHS’s way.”). [Return to Text]

        [50].   Id. [Return to Text]

        [51].   Id. at 2361 (“As the Ninth Circuit recognized, two other Courts of Appeals had deferred to HHS’s contrary view of the statute and upheld the regulation. . . . We granted certiorari to resolve the conflict.”). [Return to Text]

        [52].   See generally id., 142 S. Ct. 2354 (Justice Kagan never discusses agency deference in her holding). [Return to Text]

        [53].   See id. at 2358–61. [Return to Text]

        [54].   See, e.g., id. at 2362 (“HHS’s regulation correctly construes the statutory language at issue.”); id. (“The text and context support the agency’s reading: HHS has interpreted the words in those provisions to mean just what they mean throughout the Medicare statute.”); id. (“Empire primarily contends, echoing the Ninth Circuit, that ‘different words [mean] different things’ when used in a single statute—and so ‘entitled’ means something different from ‘eligible.’”); id. at 2365 (“But we cannot understand Congress to have changed the statute’s consistent meaning of ‘entitled to benefits’ simply by adding ‘(for such days).’”). [Return to Text]

        [55].   See, e.g., id. at 2363 (“Age or disability makes a person ‘entitled’ to Part A benefits without an application or anything more.” (citing Hall v. Sebelius, 667 F. 3d 1293, 1294–1296 (D.C. Cir. 2012))); id. at 2364 (“The Sixth and D.C. Circuits have cataloged several other statutory provisions that Empire’s reading would render unworkable or unthinkable or both.” (citing Metro. Hosp. v. U.S. Dep’t of Health & Hum. Servs., 712 F.3d 248 (6th Cir. 2013); Ne. Hosp. v. Sebelius, 657 F.3d 1, 18 (D.C. Cir. 2011))); id. at 2365 (“If Congress ‘does not alter the fundamental[s]’ of a statutory scheme ‘in vague terms or ancillary provisions,’ then it ordinarily does not do so in parentheticals either.” (citing Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 468 (2001))); id. (“To the contrary, a parenthetical is ‘typically used to convey an aside or afterthought.’” (citing Boechler v. Comm’r, 142 S. Ct. 1493, 1498 (2022))). [Return to Text]

        [56].   See Becerra, 142 S. Ct. at 2364.  A prominent example appears at the end of Justice Kagan’s analysis rejecting Empire’s argument that “entitled” excludes Medicare recipients not being paid for by Medicare Part A.  Id.  Justice Kagan cites Metropolitan Hospital and Northeast Hospital, both of which predicate their holdings on Chevron (see discussion supra Section II.C.2), but utilizes them for the statutory analysis (theoretically conducted at Chevron step one), ignoring the Chevron implications.  Id. [Return to Text]

        [57].   Id. at 2368 (“Text, context, and structure all support calculating the Medicare fraction HHS’s way.”). [Return to Text]

        [58].   See id.  The majority ultimately holds that the HHS construction “best implements the statute’s bifurcated framework by capturing low-income individuals in each of two distinct populations a hospital serves.”  Id. [Return to Text]

        [59].   See id. at 2368–70 (Kavanaugh, J., dissenting). [Return to Text]

        [60].   See supra notes 54–56 and accompanying text. [Return to Text]

        [61].   See Becerra, 142 S. Ct. at 2368 (Kavanaugh, J., dissenting) (“Whatever HHS’s precise motivations for the 2004 change, we now must focus on the statutory text and HHS’s current interpretation of it.”).  Applying Chevron would have aided the majority, but the majority did not mention Chevron.  Therefore, there was no reason for Chevron analysis in the dissent, either.  Id. [Return to Text]

        [62].   Id. (Kavanaugh, J., dissenting) (“[B]oth parties offer a dog’s breakfast of arguments about broad statutory purposes, real-world effects, surplusage, structure, consistent usage, inconsistent usage, agency deference, and the like.” (emphasis added)). [Return to Text]

        [63].   Id. at 2368–69 (Kavanaugh, J., dissenting) (“But this case is resolved by the most fundamental principle of statutory interpretation: Read the statute.”). [Return to Text]

        [64].   Id. at 2368 (Kavanaugh, J., dissenting). [Return to Text]

        [65].   See discussion supra Section II.C.1. [Return to Text]

        [66].   Becerra, 142 S. Ct. at 2362 (“The ‘language is downright byzantine.’” (quoting Cath. Health Initiatives Iowa Corp. v. Sebelius, 718 F.3d 914, 916 (D.C. Cir. 2013))).  In an amusing twist, neither side even uses the word “ambiguous.”  See generally id. at 2354 (no use of the word “ambiguous” in the holding). [Return to Text]

        [67].   The statutory interpretation at bar is about as deep in the weeds as the Supreme Court ever gets.  Id. at 2360 (“This case is about how to count patients who qualify for Medicare Part A—because they are over 65 or disabled—at times when the program is not paying for their hospital treatment.”). [Return to Text]

        [68].   See Lemon v. Kurtzman, 403 U.S. 602, 615 (1971). [Return to Text]

        [69].   See West Virginia v. EPA, 142 S. Ct. 2587, 2595 (2022) (“This is a major questions case.”); Nat’l Fed’n of Indep. Bus. v. DOL, OSHA, 142 S. Ct. 661, 668 (2022) (Gorsuch, J. concurring) (“The Court rightly applies the major questions doctrine . . . .”); Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 141 S. Ct. 2485, 2489 (2021) (“We expect Congress to speak clearly when authorizing an agency to exercise powers of ‘vast “economic and political significance.”‘ (quoting Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014))). [Return to Text]

        [70].   Am. Hosp. Ass’n v. Becerra, 142 S. Ct. 1896, 1899 (2022) (“The question is whether the statute affords HHS discretion to vary the reimbursement rates for that one group of hospitals when, as here, HHS has not conducted the required survey of hospitals’ acquisition costs.  The answer is no.”). [Return to Text]

        [71].   Compare Am. Hosp. Ass’n v. Azar, 967 F.3d 818, 834 (D.C. Cir. 2020), rev’d by Am. Hosp. Ass’n v. Becerra, 142 S. Ct. 1896, 1899 (2022) (“At a minimum, the statute does not clearly preclude [the HHS interpretation]. . . . That is enough to reject the Hospitals’ argument under Chevron.”), with Am. Hosp. Ass’n v. Becerra, 142 S. Ct. at 1906 (“In sum, after employing the traditional tools of statutory interpretation, we do not agree with HHS’s interpretation of the statute.”). [Return to Text]

        [72].   Am. Hosp. Ass’n v. Becerra, 142 S. Ct. at 1906. [Return to Text]

        [73].   Kennedy v. Bremerton Sch. Dist., 142 S. Ct. 2407, 2434 (2022) (Sotomayor, J., dissenting) (“The Court overrules [Lemon] and calls into question decades of subsequent precedents that it deems ‘offshoot[s]’ of that decision.”). [Return to Text]

        [74].   Lemon v. Kurtzman, 403 U.S. 602, 615 (1971) (creating the controversial test: “In order to determine whether the government entanglement with religion is excessive, we must examine the character and purposes of the institutions that are benefited, the nature of the aid that the State provides, and the resulting relationship between the government and the religious authority.”). [Return to Text]

        [75].   Hunt v. McNair, 413 U.S. 734, 741 (1973) (“With full recognition that these are no more than helpful signposts, we consider the present statute and the proposed transaction in terms of the three ‘tests’: purpose, effect, and entanglement.”). [Return to Text]

        [76].   Lynch v. Donnelly, 465 U.S. 668, 689 (1984) (O’Connor, J., concurring) (“Focusing on institutional entanglement and on endorsement or disapproval of religion clarifies the Lemon test as an analytical device.”). [Return to Text]

        [77].   Cnty. of Allegheny v. ACLU, 492 U.S. 573, 659 (1989) (Kennedy, J., concurring in the judgment in part and dissenting in part) (“[G]overnment may not coerce anyone to support or participate in any religion or its exercise.”). [Return to Text]

        [78].   Lee v. Weisman, 505 U.S. 577, 587 (1992) (declining to apply the Lemon test and holding, “Conducting this formal religious observance conflicts with settled rules pertaining to prayer exercises for students, and that suffices to determine the question before us.”). [Return to Text]

        [79].   See Town of Greece v. Galloway, 572 U.S. 565 (2014). [Return to Text]

        [80].   Id. at 615 (Breyer, J., dissenting) (asking if the situation “‘was one of the principal evils against which the First Amendment was intended to protect.’” (quoting v. Kurtzman, 403 U.S. 602, 622 (1971))).  Justice Breyer answered his question by rejecting Lemon: “In seeking an answer to that fact-sensitive question, ‘I see no test-related substitute for the exercise of legal judgment.’” Id. at 615 (quoting Van Orden v. Perry, 545 U.S. 677, 600 (2005)).  The majority does not mention Lemon at all.  See id. at 569–92. [Return to Text]

        [81].   Kennedy v. Bremerton Sch. Dist., 142 S. Ct. 2407, 2427 (2022) (holding, “[T]his Court long ago abandoned Lemon and its endorsement test offshoot.”). [Return to Text]

        [82].   Chevron USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 866 (1984) (“[F]ederal judges—who have no constituency—have a duty to respect legitimate policy choices made by those who do.”); see also discussion supra Section II.C.2. [Return to Text]

        [83].   See, e.g., United States v. Mead Corp., 533 U.S. 218 (2001); Gen. Dynamics Land Sys. v. Cline, 540 U.S. 581 (2004); Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005). [Return to Text]

        [84].   Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001) (“Congress, we have held, does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.”). [Return to Text]

        [85].   See West Virginia v. EPA, 142 S. Ct. 2587 (2022); Becerra v. Empire Health Found., 142 S. Ct. 2354 (2022). [Return to Text]

        [86].   See generally Cass R. Sunstein, One Case at a Time: Judicial Minimalism on the Supreme Court (1999) (discussing judicial minimalism and incrementalism). [Return to Text]

        [87].   See, e.g., Cnty. of Maui v. Haw. Wildlife Fund, 140 S. Ct. 1462, 1474 (2020) (“Neither the Solicitor General nor any party has asked us to give what the Court has referred to as Chevron deference to EPA’s interpretation of the statute.”); Guedes v. BATFE, 920 F.3d 1, 21 (D.C. Cir. 2019) (“In particular, in its briefing before the district court, the government expressly disclaimed any entitlement to Chevron deference.”); Cargill v. Garland, 57 F.4th 447, 465 (5th Cir. 2023) (“First, Chevron does not apply for the simple reason that the Government does not ask us to apply it.  Indeed, the Government affirmatively argued in the district court that Chevron deference is unwarranted.”).  Agencies may attempt to waive Chevron for various reasons, including an attempt to have a Court reverse its own notice-and-comment rulemaking.  See Jeremy D. Rozansky, Comment, Waiving Chevron, 85 U. Chi. L. Rev. 1927, 1946 (2018). [Return to Text]