Thomas Jefferson University v. Shalala

PETITIONER: Thomas Jefferson University
RESPONDENT: Shalala
LOCATION: Pomona Police Department

DOCKET NO.: 93-120
DECIDED BY: Rehnquist Court (1993-1994)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 512 US 504 (1994)
ARGUED: Apr 18, 1994
DECIDED: Jun 24, 1994

ADVOCATES:
Amy L. Wax - on behalf of the Respondent
Ronald N. Sutter - on behalf of the Petitioner

Facts of the case

Question

Media for Thomas Jefferson University v. Shalala

Audio Transcription for Oral Argument - April 18, 1994 in Thomas Jefferson University v. Shalala

Audio Transcription for Opinion Announcement - June 24, 1994 in Thomas Jefferson University v. Shalala

William H. Rehnquist:

The opinion of the Court in No. 93-120, Thomas Jefferson University versus Shalala will be announced by Justice Kennedy.

Anthony M. Kennedy:

The petitioner here is Thomas Jefferson University which is located in Philadelphia, Pennsylvania and the dispute is between a teaching hospital that is run by the University and the Secretary of Health and Human Services.

The dispute is over the scope of Medicare reimbursement for costs relating to the hospital's education and training programs for interns and residents.

Although Medicare reimbursed its hospitals for the cost of certain educational activities, Medicare is forbidden by regulation from reimbursing costs that have been redistributed from a medical school to a hospital.

All agreed that the cost here in dispute were born in prior years, not by the hospital but by the hospital's affiliated medical school.

The Secretary determined these costs were not reimbursable because they were the result of an impermissible redistribution under the pertinent regulation.

The District Court and the Court of Appeals for the Third Circuit both affirmed the Secretary's interpretation of its regulation, as do we.

In reviewing an agency's interpretation of its own regulation, we must defer to the Secretary's construction of the language unless it is plainly erroneous or inconsistent with the regulation.

In our view, the Secretary's interpretation is not only a plausible interpretation it is the most sensible interpretation the language will bear.

The pertinent sentence of the regulation provides as follows:

Although we intended the Medicare programers to share in the support of the educational activities customarily or traditionally carried on by providers in conjunction with their operations, it is not intended that this program should participate in increased costs resulting from redistribution of cost from educational institutions or units to patient care institutions or units.

We agree with the Secretary that the meaning of this sentence is straightforward.

Its introductory clause defines the scope of educational activities for which reimbursement maybe sought and its second clause provides that the cost of these activities will not be reimbursed if they result from a shift of cost from an educational to a patient care facility.

Because the disputed cost in this case was shifted from a medical school to the hospital, the Secretary was within her discretion in concluding that reimbursement would constitute an impermissible redistribution under the terms of the regulation.

And finally, because the application of this portion of the regulation suffices to bar reimbursement in the case, we need not address whether there is any other language in the regulation that may provide an independent reason for denial of reimbursement.

The decision of the Third Circuit is affirmed.

Justice Thomas has filed a dissenting opinion in which Justices Stevens, O'Connor, and Ginsburg join.