Page:Azar v. Allina Health Services, 587 U.S. (2019) (slip opinion).pdf/2

2 court of appeals ultimately sided with the hospitals.

Held: Because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, its policy must be vacated. Pp. 5–17.

(a) This case turns on whether the government’s 2014 announcement established or changed a “substantive legal standard.” The government suggests the statute means to distinguish a substantive from an interpretive legal standard and thus tracks the Administrative Procedure Act (APA), under which “substantive rules” have the “force and effect of law,” while “interpretive rules” merely “advise the public of the agency’s construction of the statutes and rules which it administers,” Perez v. Mortgage Bankers Assn., 575 U. S. 92, ___. Because the policy of counting Part C patients in the Medicare fractions would be treated as interpretive rather than substantive under the APA, the government submits, it had no statutory obligation to provide notice and comment before adopting the policy.

The government’s interpretation is incorrect because the Medicare Act and the APA do not use the word “substantive” in the same way. First, the Medicare Act contemplates that “statements of policy” can establish or change a “substantive legal standard,” §1395hh(a)(2), while APA statements of policy are not substantive by definition but are grouped with and treated as interpretive rules, 5 U. S. C. §553(b)(A). Second, §1395hh(e)(1)—which gives the government limited authority to make retroactive “substantive change[s]” in, among other things, “interpretative rules” and “statements of policy”—would make no sense if the Medicare Act used the term “substantive” as the APA does, because interpretive rules and statements of policy—and any changes to them—are not substantive under the APA by definition. Third, had Congress wanted to follow the APA in the Medicare Act and exempt interpretive rules and policy statements from notice and comment, it could have simply cross-referenced the exemption in §553(b)(A) of the APA. And the fact that Congress did cross-reference the APA’s neighboring good cause exemption found in §553(b)(B), see §1395hh(b)(2)(C), strongly suggests that it “act[ed] intentionally and purposefully in the disparate” decisions, Russello v. United States, 464 U. S. 16, 23. Pp. 5–12.

(b) The Medicare Act’s text and structure foreclose the government’s position in this case, and the legislative history presented by the government is ambiguous at best. The government also advances a policy argument: Requiring notice and comment for Medicare interpretive rules would be excessively burdensome. But courts are not free to rewrite clear statutes under the banner of their own policy concerns, and the government’s argument carries little force even on its own terms. Pp. 13–16.