Bethesda Hospital Assn. v. Bowen

485 U. S. 399

April 4, 1988

Hospitals could get reimbursement for Medicare-related costs by submitting an expense report to a fiscal intermediary. The intermediary would audit this report, and declare the total reimbursement amount the hospital was entitled to. If a hospital was “dissatisfied” with the intermediary’s reimbursement amount, it could appeal to a review board. Some hospitals did not report certain expenses for reimbursement because a regulation disallowed them. Nonetheless, the hospitals wanted to challenge this regulation, and appealed to the review board to do so. The review board claimed that it could only hear an appeal if the desired reimbursement had been asked for in the original report.

Unanimously, the Court ruled that the review board could hear appeals when the desired reimbursement was not included in the original report submitted to the intermediary. Kennedy, writing his first ever opinion, focused on the statute’s literal requirement that the hospital be “dissatisfied” with the intermediary’s award. It’s certainly possible, he argued, to be dissatisfied with the amount you report. Furthermore, reporting the expense to the intermediary would have been a waste of time, since intermediaries had no power to determine that a regulation was invalid. True, the review board also lacked that power, but no judicial review was allowed until a board appeal had taken place.

Kennedy sure has degenerated as a Justice. It’s so frustrating to read his very first opinion, and witness it’s laserlike focus on the plain language of the statutory text. With such a promising start there was nowhere to go but downhill, and downhill he went.

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