The Ninth Circuit Sends An Important Message Regarding The Notice-And-Comment Process

Author:Mr Nick Westbrook
Profession:Vinson & Elkins L.L.P.

On April 13, 2004, the Ninth Circuit, in United Health Services v. Thompson, rejected an action brought by 79 hospitals and two health care corporations challenging Medicare outlier reimbursement rates. The Medicare statutes require the government to prospectively set outlier thresholds that determine which cases are costly enough to warrant additional reimbursement. While the plaintiffs argued that the government committed four errors of methodology in arriving at these thresholds, they failed to raise their arguments in the annual notice-and-comment rulemakings. As a result of this failure, the Ninth Circuit affirmed the lower court's judgment in favor of the government. According to the court, "a party's failure to make an argument before the administrative agency in comments on a proposed rule bar[s] it from raising that argument on judicial review" and "there are no exceptional circumstances warranting review." This recent decision magnifies the importance and necessity of submitting well-thought-out and supported comments during the rulemaking process.

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