As promised, here are quick summaries of four adlaw decisions the Court issued in June.

Forrest General Hospital v. Azar, No. 18-60227 (June 10, 2019) (Reavley, Elrod, Willett)

Under the Medicare statute, the government compensates hospitals for inpatient services under a prospective payment system. HHS pays hospitals for particular services at national rates that are subject to various statutory adjustments. This case concerns an upward adjustment to those rates for hospitals that serve a “significantly disproportionate number of low-income patient.” 42 U.S.C. § 1395ww(d)(5)(F)(i)(I).

The formula for determining whether and to what extent a hospital qualifies for this “DSH” adjustment is based primarily on the number of “patient days” that a hospital treated patients who are either (i) Medicaid eligible, or (ii) deemed to be eligible because they receive benefits under a “demonstration project” under § 1115 of the Act. That provision authorizes the Secretary to waive certain Medicaid requirements for “experiments and demonstration projects” deviating from the ordinary Medicare reimbursement rules. See 42 U.S.C. § 1395b-1.

In the wake of Hurricane Katrina, Mississippi proposed, and the Secretary approved, one such demonstration project to provide aid for treating affected populations. As relevant here, the program extended and expedited coverage under Medicaid and the State Children’s Health Insurance Program (SCHIP) and established an uncompensated care pool (the UCCP) to compensate hospitals for costs associated with care for patients not covered by Medicaid or any other insurance.

The dispute arose when HHS refused to compensate two Mississippi hospitals for days they provided services to the UCCP. In very simplified terms (this stuff is complicated), HHS argued that UCCP patients were neither “eligible for medical assistance under a State plan approved under [Medicaid]” nor “regarded as such because they receive benefits under a demonstration project . . . .” 42 U.S.C. § 1395ww(d)(5)(F)(vi)(II). As a result, the Secretary insisted, days when the hospitals treated UCCP patients did not qualify as “patient days” for purposes of calculating the hospitals’ DSH adjustment.

The district court deferred to HHS’s interpretation of the Act and the relevant regulations, but the Fifth Circuit reversed and remanded. In an opinion by Judge Willett, the Court held that the relevant statutory and regulatory language unambiguously foreclosed the Secretary’s interpretation and required HHS to include UCCP days when calculating the hospitals’ DSH compensation.

Other noteworthy features of the opinion, which is a worth reading in full, include the following:

1.       It contains a Lord of the Rings Reference.

2.       It criticizes Auer deference and quips that “Auer’s hours seem numbered,” alluding to the Supreme Court’s reconsideration of the doctrine in Kisor, which was still pending when the case was decided.

3.       It is one of several court of appeals decisions cited in Justice Gorsuch’s Kisor dissent for “question[ing] Auer’s validity and pleading with [the Supreme Court] to reconsider it.”

4.       It relies heavily on the opinion of Judge Ketanji Brown Jackson of the U.S. District Court for the District of Columbia in Health Alliance Inc. v. Azar, 346 F. Supp. 3d 43 (D.D.C. 2018). That decision, which the panel describes as “excellent” and “extremely persuasive,” is currently pending on appeal in the D.C. Circuit.

SEC v. Arcturus Corp., No. 17-10503 (5th Cir. June 27, 2019) (Stewart, Dennis, Willett)

This case concerns an SEC enforcement action against several defendants who sold interests in oil and gas drilling projects to investors but never registered the interests as securities. The SEC alleged that the defendants’ failure to register violated several securities laws and regulations. The district court granted SEC’s motion for summary judgment, holding that oil and gas interests qualify as securities. Concluding that the defendants had raised significant material issues of fact, the Fifth Circuit reverses and remands for trial. For those interested, the opinion includes a thorough discussion of the law governing the question of whether a given investment constitutes a “security.”

Neville v. Lipnic, No. 18-50438 (5th Cir. June 28, 2019) (Clement, Graves, Oldham) (per curiam)

Tina Neville filed a petition for writ of mandamus requesting an order requiring a military agency to comply with EEOC orders finding that the agency had discriminated against her. The district court denied her petition, and the Fifth Circuit affirms.

Neville was a “dual status technician,” meaning she was an employee of the air force and a civilian employee of the United States simultaneously. See 32 U.S.C. § 709(e). In both capacities, Neville’s job was servicing F-16 fighter jets.

After Neville had a hysterectomy, Neville’s boss refused to put her on light duty despite doctor’s orders. The boss’s explanation? “[G]uys don’t have hysterectomies.” So, Neville continued with full duty, and, predictably, was injured as a result. Later, when it came time for her performance appraisals, Neville’s boss downgraded her from outstanding to fully successful, telling her that he wouldn’t give an outstanding rating to someone “he and the guys don’t respect.”

Neville brought an EEOC complaint against the U.S. Air Force, the National Guard Bureau, the Texas Military Department, the EEOC, and others. Although the EEOC found that Neville had in fact been subjected to sex discrimination and ordered the defendants to provide various remedies, the state and federal agencies refused to implement the ruling, claiming the ALJ lacked jurisdiction to issue it.

Both sides appealed the ALJ’s ruling to the EEOC, which affirmed and ordered additional relief. When the various defendants still refused to implement the EEOC’s now-final order, Neville filed a petition for enforcement (PFE) with the EEOC, claiming that several of the defendants had disregarded EEOC’s decision. The EEOC agreed and, once again, ordered the defendants to take remedial actions as ordered.

When the defendants still refused to comply, Neville filed a petition for writ of mandamus in the U.S. District Court for the District of Columbia seeking to compel the EEOC to enforce the final decision on her PFE or to force the defendants to comply with the PFE. The U.S. District Court for the District of Columbia transferred Neville’s petition to the U.S. District Court for the Western District of Texas, which concluded that the EEOC had no nondiscretionary duty to obtain another agency’s compliance with its final order after Neville commenced a civil action in federal court and, on the basis, dismissed Neville’s petition for lack of jurisdiction. As for the rest of the state and federal defendants, the district court concluded that adjudicating Neville’s claims would require the court to review questions of military decision-making barred by the Feres doctrine—a doctrine of intra-military immunity that precludes members of the military from pursuing claims against the military or the United States for injuries that arise out of or in the course of military service.

The Fifth Circuit affirmed. It agreed with the district court that “an employee’s decision to pursue Title VII claims in federal court typically mandates dismissal of the EEOC complaint and precludes the EEOC from entertaining an appeal of that dismissal.” (quoting Walch v. Adjutant Gen.’s Dep’t of Tex., 533 F.3d 289, 304 n.7 (5th Cir. 2008)). And regarding the Feres doctrine, the Fifth Circuit noted that “the events giving rise to Neville’s claims occurred on Lackland Air Force Base”; “Neville performed the same mechanic tasks of servicing F-16 fighter jets in both her civilian and military capacities . . .”; and “Neville’s petition for writ of mandamus sought to compel the defendants to, among other things, revise her performance appraisal, provide personnel training at Lackland, take disciplinary action against military personnel, and restore benefits including in-grade steps and promotions.” In light of those considerations, the panel agreed with the district court that adjudicating Neville’s claims would require the sort of intrusion on military decision-making that the Feres doctrine forbids.

The panel opinion contains an extensive discussion of some of the questions that arise when applying the Feres doctrine in the Title VII context. If that’s your thing, it’s certainly worth a read.

W.M.V.C. v. Barr, No. 17-60753 (5th Cir. June 7, 2019)

Two Honduran immigrants, W.M.V.C. and her daughter A.P.V., appealed the dismissal of their application for asylum and withholding of removal. The Fifth Circuit granted the government’s motion to remand to permit the BIA to consider issues petitioners had raised in their opening brief. Arguing that the remand made them “prevailing parties,” petitioners sought attorney’s fees under the Equal Access to Justice Act. In W.M.V.C. v. Barr, a divided panel of the Fifth Circuit holds that while petitioners were indeed prevailing parties, they are not entitled to attorney’s fees under the EAJA because the government’s position as a whole was “substantially justified.” Accordingly, the Fifth Circuit denies the petition for review. Judge Willett joined Judge Smith’s majority opinion. Judge King dissented.

In the majority’s view, this case required the panel to decide whether the government’s position was substantially justified under the EAJA where the agency had made multiple determinations, some of which were reasonable and some of which were not. That question, the majority notes, “has proved to be an issue of considerable conceptual and practical difficulty.” (quoting Roanoke River Basin Ass’n v. Hudson, 991 F.2d 132, 138 (4th Cir. 1993)). After exploring the debate at some length, the majority announces that it “joins the vast majority of our sister circuits in evaluating the government’s position under the totality of the circumstances.” Under that standard, “[p]rovided the government’s position as a whole was reasonable, a prevailing party may not recover EAJA fees event though some of the government’s actions or arguments were without merit.” The panel acknowledges that the D.C. Circuit has rejected that view.

Applying its preferred “holistic” standard to the case before it, the majority concludes that “[a]ttorney’s fees are unwarranted because the government was the prevailing party on the bulk of petitioners’ claims and was substantially justified in denying CAT protection.” Petitioners had applied for asylum and withholding of removal on eight distinct grounds. And although the government effectively conceded the unreasonableness of its position on one of them and lacked justification for its position on another, the majority holds that “when viewed in the aggregate, the position of the United States was reasonable.”

Judge King’s dissent accuses the majority of “confusing alternative arguments with separable challenges to discrete governmental actions.” Contrary to the majority opinion, Judge King argues that the government did not make “multiple determinations.” If it had, she explains, she “would agree with the majority’s decision to identify the most prominent issues and consider whether the Government’s positions with respect to those issues were substantially justified.” In her view, however, “the Government made only one determination here—that the petitioners must be removed. And when a litigant challenging a single administrative determination does so with alternative arguments, the success on any one of which requires a complete remand to the agency, most courts focus only on the Government’s position with respect to the litigant’s winning arguments.” (citing cases).

Judge King acknowledges that the Seventh Circuit has accepted the majority’s reading of the statute, but she disputes the majority’s view of its opinion “as falling on the heavier-trafficked side of a circuit split.” In her view, many of the cases the majority cites as agreeing with its view of the statute actually “directly contradict the majority’s position” or “do not squarely confront the question currently before us.” As she sees it, “the majority stands alone with the Seventh Circuit,” whereas she “would join the Sixth, Tenth, and D.C. Circuits.”

Judge King’s dissent doesn’t focus on “nose-counting alone,” however. She also insists that the majority’s opinion will have perverse consequences. First, she argues that “[i]n penalizing the petitioners for challenging their deportation, the majority’s approach will discourage future litigants from challenging unreasonable exercises of governmental power because the litigants might get stuck with the cost of doing so if the Government can reasonably oppose a substantial enough alternative argument.” Second, she fears that “the majority’s approach will perversely disincentivize litigants from making alternative arguments.”

I haven’t read the various decisions on either side of the disputed circuit split, so I have no view regarding whether the majority or the dissent has the better view of the state of the law, but the issue is certainly one to keep an eye on.

Fifth Circuit Update No. 4
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