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Case number 21-5117, St.

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Helena Clear Lake Hospital, doing business as Adventist Health Clear Lake at Ballant, versus Xavier Becerra, Secretary, U.S.

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Department of Health and Human Services.

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Ms.

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Carroll for the Ballant, Ms.

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Edwards for the Epoley.

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Good morning.

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This is Judge Wilkins.

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Ms.

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Carroll, you may proceed.

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Good morning, Your Honors.

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May it please the court.

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Kelly Carroll on behalf of Appellant St.

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Helena Clear Lake Hospital.

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I would like to reserve two minutes for rebuttal.

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The question presented is whether the Secretary lawfully disallowed Medicare payment for the on-call costs that the hospital incurred to assure that specialist physicians are available to treat the hospital's Medicare inpatients.

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The answer is no for two basic reasons.

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First, the secretary based the disallowance on a regulation that did not apply while the secretary ignored the regulation that does apply.

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Second, the applicable regulation requires the secretary to pay the hospitals necessary and proper costs.

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And the undisputed factual record shows that the only way the hospital can have the specialty physicians necessary to serve its inpatients

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is by paying doctors for being on-call during set hours.

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This is because of the lack of available specialists in the rural and mountainous area where the hospital is located.

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Thus, we ask this court to set aside the decision of the PRB, find that these inpatient on-call costs must be reimbursed, and remand to the secretary for calculation of the Medicare payments that are due.

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I welcome your questions, Your Honors,

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or I would be happy to provide additional detail on our arguments.

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Can you just start out by explaining if we disagree with you on the issue of whether either the California statute of regulation or the federal EMLAT, or I probably got the acronym wrong,

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that neither of those required the on-call physicians, we would sustain the secretary's decision and wouldn't need to reach anything else, correct?

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Your Honor, in this case, the secretary is required to conduct an analysis of whether the costs are necessary and proper.

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And the PRB, standing in the shoes of the secretary here, did not so conduct that analysis.

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So to answer your question more directly, even if you were to find that those specific laws did not so require, the secretary would still need to conduct an analysis of whether these on-call costs were necessary and proper.

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But here, of course, those laws do require that the hospital incur these costs to serve its inpatients.

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I'm a little confused.

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Did you abandon?

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the notion that the California law requires the payment for on-call positions in your opening statement?

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No, Your Honor.

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We absolutely did not, and forgive me if I implied that, we did not abandon that the California state law so requires.

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In fact, California- Can you show us where you found the requirement?

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Yes, Your Honor.

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So it is the unique purview of states

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to license facilities and to license the practitioners and set forth standards of care for those practitioners in hospital facilities.

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And the controlling Medicare regulations, as I noted, require critical access hospitals and their staff to be in compliance with federal, state, and local laws and regulations.

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Those are the Medicare conditions of participation.

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Perhaps you'd point to the state statute, which you say

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requires on-call physicians for inpatient?

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Your Honor, for example, in California, licensing laws require hospitals to provide 24-hour inpatient care, including surgical and other physician-provided services.

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There's Section 7 California Code of Regulations, Title 22, Section 7-0005.

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What language are you referring to?

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if I may get my binder.

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70011 states that essential services required by law for licensure as a hospital must include surgical services.

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7-0005-A require... 7-0011 does say services, surgical services, but that doesn't require on-call surgeons.

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That is correct, Your Honor, but the issue... And elsewhere, it indicates that emergency room doctors with surgical training are perfectly adequate, right?

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Well, Your Honor, emergency room physicians, there's nothing in the record to state that emergency room physicians would be available to move over to the inpatient area of the hospital to service inpatients with surgical service needs.

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There's nothing in the record to suggest that.

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And in fact, the undisputed record.

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Wasn't it your burden to show that there were none available?

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You only have a stipulation, but the secretary is not bound by the stipulation.

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But your honor, the secretary's own agent agreed to the stipulation.

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And that's all that is in the record here.

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It's a contractor and a contractor is not doesn't with previous cases have indicated the sector is not bound by the contractor stipulation.

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So it's your burden to show that there were no doctors available.

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I mean, excuse me, that emergency room doctors wouldn't be trained.

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You know, unfortunately for you, I've actually been in one of these hospitals and had

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emergency room doctors do surgical work.

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I understand, Your Honor.

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But in this case, the hospital is entitled to, once the hospital holds itself out in the state of California as offering, for example, a basic service such as surgery or a supplemental service as such as pediatrics, perinatal care, or cardiology,

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the state, which happened here, the hospital must maintain continuous compliance with the supplemental service requirements.

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We do concede that the word on-call is not in this regulation, but what we've shown here is that the only possible way for the hospital to adequately meet the requirements of state law, which is continuous compliance, is by having the services of contracted on-call specialty physicians.

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Well, not true.

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The emergency room doctors are trained generally on providing a little bit of service for everything.

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Your honor, each of those services requires that in that department, the hospital is obligated to have a physician responsible for the particular service.

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So your view is

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California requires on-call physicians in every one of these specialties?

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Your honor, in this case, what we're saying is that California law requires these specialty physicians to be available.

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And as the undisputed record in this case shows, the only possible- That's not true.

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Or anybody trained in services.

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You don't have to be an obstetrician

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to be trained in certain emergency situations?

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Even in the perinatal example that the hospital must have somebody trained in that specialty overseeing someone who may just have some training in that specialty.

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Where do you see that?

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So in 70549 is the regulation governing perinatal unit staff.

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And it says a physician shall have overall responsibility of the unit.

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So that unit is not the emergency outpatient emergency department, which is a completely separate area of the hospital paid under a different cost center.

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The physician shall be certified or eligible for certification by the American Board of Obstetrics or Gynecologists.

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or the American Board of Pediatrics.

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It does say- If such a pediatrician is not available, a physician with training and experience in pediatrics may administer this service.

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Yes, but a physician with the above qualifications, meaning the qualifications of the American Board of Obstetrics and Gynecologists or the American Board of Pediatrics shall provide consultation at a frequency which will assure high quality service.

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And that individual

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shall be responsible for providing continuous obstetric pediatric anesthesia laboratory and radiologic coverage.

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So the emergency room doctors have to be periodically trained.

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Your honor, the emergency room doctors would not be available to have overall responsibility for a unit of the inpatient side of the hospital.

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They have to be available 24 seven to service the emergency room physicians.

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But your honor, the issue here is that- Let me ask another question.

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Yes, your honor.

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What about the government's position that even if you were right on the second question, which I doubt, but even if you were right, the government has the ability to determine whether it's necessary and proper before you ever get to that issue.

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And that's, don't we have to defer to the secretary on this?

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Yes, Your Honor, we agree that the Secretary is charged under the regulation with determining whether the costs were necessary and proper.

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Our argument here, the central focus of our argument here, is that the decision of the PRRB did not opine on whether the costs at issue were necessary and proper under the correct and applicable regulation at 413.9.

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Instead, the sole reason the Board gave

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was that as a matter of law, 42 CFR 413.70B4, a regulation found only under the outpatient setting, a regulation that explicitly provides for Medicare reimbursement for critical access hospitals for on-call costs in the outpatient emergency room setting only, the board said that would clearly exclude the on-call services performed in the inpatient areas of the hospital.

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and the board said in conclusion, yes, your honor.

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You're asking just for a remand for the board to make that determination or are you more aggressively also asking that we reverse outright on that point, on the necessary and proper point?

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Your honor, we believe that the factual, the record here that it's been stipulated to by the parties

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demonstrates that these costs were necessary and proper.

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So we are asking the court here to remand and order that these inpatient costs must be reimbursed, but remand to the secretary for the calculation of those Medicare payments that are due.

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Can I ask you maybe a really basic question, but does an emergency room physician

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asked to be a surgeon?

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No, Your Honor.

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I anticipate, Your Honor, that like most medical students, and my apologies, this is not in the record, but my understanding is that medical students do rotations and surgery.

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No, but emergency room doctors have surgical training.

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I've been treated by an emergency room doctor with surgical

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in a surgical situation.

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Yes, Your Honor.

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I'm concurring with your statement.

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They do receive surgical training, Your Honor.

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Well, isn't that all that's necessary?

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No, Your Honor, because under California law and under federal law, which requires following state laws on things like licensure, including facility licensure and physician licensure,

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the inpatient departments, including surgery, which is a basic service in California for general acute care hospitals like this hospital, that department must have coverage by a surgeon.

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There is nothing in the record to show that an emergency room physician could be moved over to the inpatient side to care for patients and then abdicate their duties on the ER, sorry, yes, Your Honor.

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Coverage by a surgeon?

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Or coverage by the very counterintuitive concept to me, but a doctor who is not a surgeon, but close enough in order to do some surgeries.

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Your honor, I'll I want to speak very precisely to this.

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Okay.

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I believe it's in the addendum on 44.

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I mean, I find your position as to surgery pretty appealing except if there is some norm that untrained surgeons in some circumstances can do surgery and that is in fact what happens in the ER

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then does seem like one possibility would be you have those docs do the double duty and they do the surgeries in the ER and they do the surgeries, the inpatient surgeries.

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Your honor, I want to return first to your question about what's in the state law.

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So for the surgical service staff, this is at Addendum 46.

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Section 70225, a physician shall have overall responsibility for the surgical service.

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This physician shall be certified or eligible for certification in surgery by the American Board of Surgery.

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It does say if such a surgeon is not available, a physician with additional training and expert experience in surgery shall be responsible for the service.

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But one or more surgical teams, this is at BEAC, of consisting of physicians,

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registered nurses and other personnel shall be available at all times.

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It just strains practicality and it strains the sort of very nature of a hospital where, as you may well be familiar of the two Midnights case, the Shands case, you know, we've spent, this court has experienced years of litigation on what it means to be admitted as an inpatient.

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It is

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You know, unique in the statutory language.

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It's unique in the regulatory language at issue here.

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It's paid under a separate payment program with a separate calendar of federal regulate yearly calendar federal federal regulations here.

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So I can't stress enough how different the outpatient side, which includes the emergency department is from the inpatient side in the Medicare program.

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And here it's saying under California law that a surgical team.

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that includes a physician shall be available at all times for the surgical service, which is on the inpatient side.

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Or someone trained.

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Yes, Your Honor.

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Where do you mean?

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Where do you find the requirement in California law that a surgeon be available on the inpatient side?

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Tell me where you find that.

[00:17:41] Speaker 01:
Well, in this section here.

[00:17:43] Speaker 03:
Well, show me where, just read the line.

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Oh, sorry.

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In A or B?

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So A is discussing the physician's qualifications for overall responsibility, but B is explaining.

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So let's just start with A and then go to B. And hopefully, because you might have two different theories here, which I'm trying to unpack.

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A says,

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Gold standard is the board certified surgeon.

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And if you can't get that, you can be in compliance with the rule by having the next best thing, which is a physician with additional training and experience in surgery.

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I read that as meaning you have to have a surgeon.

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He might be just out of medical school and not yet ready for board surgery,

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is still a surgeon.

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Am I over reading that?

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I don't believe you are, Your Honor.

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And the other thing I would stress is that I think that this provision is also saying that it shall have overall responsibility and be responsible for this service.

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So this is surgical service staff.

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That's what this section is pertaining to.

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So the language I just read to you

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might or might not support you for the reasons we've been discussing.

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But then I thought you were quoting us a different provision, maybe in B about a surgeon or surgeon-like doctor with the supervisory responsibility.

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So walk me through that.

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Well, I had previously was discussing the perinatal unit staff where... Let's talk about surgery.

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Okay, yes.

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So on surgery,

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What I was discussing is that the provision at B explains that that surgical team, which also does include nurses and other medical personnel, must be available at all times.

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Surgery in the state of California is a basic service.

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When the hospital, the hospital's been around for 70 years.

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It's had its critical access hospital.

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Yep.

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Who has to be on that team besides at a minimum

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the physician with additional training and experience in surgery.

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Your Honor, the regulation here states that it must consist of physicians, registered nurses, and other personnel shall be available at all times.

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That doesn't really push the ball any further than the debate we've been having about A. No, Your Honor, but what it does in terms of

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The physician qualifications, I agree that it does not speak more specifically about the physician qualifications, but what it does say is that the physician must be available at all times for the surgical service.

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And that is the surgical service on the inpatient side of the hospital.

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So it is impossible to have continuous inpatient surgical coverage and then say that those

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physicians could be.

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Where does it say inpatient in 70225?

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Your honor, you're correct that I don't see the word inpatient, but this is a separate section of the regulations that it's separate from emergency department coverage.

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And it also is a separate, when a hospital is licensed, it's licensed for things like surgery, which are in a separate piece of being licensed for having an emergency department.

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And this hospital, as a general acute care hospital in California, which it had that license well before it became a critical access hospital in 2005, one of the basic services is surgery.

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Why would it not work for

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the ER docs to be available for the inpatient.

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I mean, the, yes, let's assume we agree with you that the inpatient surgical department is an administratively and legally separate part of the hospital from the outpatient or non-inpatient ER, but

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and they're still on the same campus.

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The physician who is physically present at one of those will be within whatever, a five minute walk of the other.

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So why isn't that a plausible option for the hospital to satisfy state law?

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And yeah, it may be that if the physician is doing an operation

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in the ER is unavailable to do an operation in the inpatient section of the building, but that's no different from the doctor is doing a surgery on one emergency and for that time unavailable for the next person who walks into the ER.

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It's not part of the record, the issue of whether there were ER physicians available to service inpatients, but the undisputed issue in this record is that in order to service inpatients, which is necessary under both federal and state law, the undisputed record said that the only way this hospital could practically service the needs of its inpatients was to have on-call physicians.

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I understand.

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The problem is only to stabilize under the federal law, right?

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To stabilize patients who come in through the emergency room, make sure they're stabilized.

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Because this hospital is not supposed to keep people more than 96 hours on the average.

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And so if there's serious surgical complications, they would have to be transferred to a bigger hospital.

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So all the

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and emergency room doctors are trained in stabilization.

[00:24:27] Speaker 01:
Your honor, so to your point, I think you're discussing here the emergency, EMTALA, the Emergency Medical Treatment and Labor Act.

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And the issue there is that the state, the hospital must either, it does not require, first of all, the EMTALA does not require hospitals to transfer a patient

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once the patient is stabilized.

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It's not required.

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It could be anticipated.

[00:25:01] Speaker 01:
It could be anticipated, Your Honor.

[00:25:02] Speaker 01:
Absolutely.

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EMTALA does anticipate that if the hospital is unable to stabilize a patient, that it could transfer a patient.

[00:25:10] Speaker 01:
But here, Your Honor, there are a couple things in the record that speak to the fact that this hospital should be servicing inpatients.

[00:25:17] Speaker 01:
One is that the secretary's own regulations

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state that the critical access hospital program was established to improve access for rural residents to essential health care services and particularly hospital services.

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Hospital and services include acute care inpatient services and when critical access hospitals do not provide them, this is the language of the secretary, the individuals residing in that rural community may be at risk.

[00:25:42] Speaker 01:
We believe it is not in the best interest of a critical access hospital's beneficiaries to be routinely transferred to a more distant hospital if instead their care could be provided locally without compromising quality.

[00:25:55] Speaker 01:
And here I might add that the closest tertiary hospital, meaning a hospital with more advanced care, is over an hour away.

[00:26:04] Speaker 01:
And this is over mountainous terrain, two-lane roads that sometimes get closed down by mudslides.

[00:26:09] Speaker 03:
And are helicopters available in emergency situations?

[00:26:12] Speaker 01:
Well, my client has said to me, I understand, Your Honor, but they have explained to me that a helicopter is not always available.

[00:26:20] Speaker 01:
So, Your Honor, I don't think it is fair for a hospital that is required to furnish inpatients under the Medicare conditions of participation to then say, we are trying to prevent you from servicing those inpatients.

[00:26:38] Speaker 01:
The secretary stipulated the PRB adopted the stipulations that stated the only practical way that this hospital could service its inpatients was to have a contract.

[00:26:49] Speaker 03:
What about your contract?

[00:26:52] Speaker 03:
Don't you have a contract for more services than you're claiming you're required to provide?

[00:26:59] Speaker 03:
What is your contract?

[00:27:02] Speaker 01:
I'm sorry, your honor.

[00:27:03] Speaker 03:
Do you mean the contract have a contract with

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a medical organization to provide doctors.

[00:27:11] Speaker 01:
Your honor, the hospital has contracted with various on-call physicians, yes.

[00:27:17] Speaker 03:
No, no, no.

[00:27:17] Speaker 03:
You have a contract to provide doctors in emergency room, don't you?

[00:27:24] Speaker 01:
The hospital also has contracts to provide emergency room physicians.

[00:27:28] Speaker 01:
That's not part of the joint appendix here, but those are separate contracts to provide emergency room physicians.

[00:27:36] Speaker 03:
Well, and they're pretty extensive.

[00:27:39] Speaker 03:
It seems to me I saw that in the briefs.

[00:27:44] Speaker 03:
Isn't that correct?

[00:27:49] Speaker 03:
You have contracted with an organization to provide doctors, right?

[00:27:57] Speaker 01:
We have contracted with an organization, my understanding is to provide emergency room physicians, but that's not

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the costs that are issue here, we have contracted also and provided an example contract of one of these on-call specialty physicians.

[00:28:14] Speaker 01:
We've contracted directly with physicians to provide specialty on-call services.

[00:28:20] Speaker 03:
Yeah, and you have to actually have them on staff, don't you?

[00:28:25] Speaker 01:
Yes, Your Honor.

[00:28:26] Speaker 03:
So why do you need on-call if you have still on staff?

[00:28:30] Speaker 01:
Oh, I think we're using different terminology.

[00:28:34] Speaker 01:
What I'm saying is that the hospital could not staff it.

[00:28:39] Speaker 01:
So, Your Honor, physicians are only paid, and this is not an issue in this case.

[00:28:45] Speaker 01:
I want to be very clear.

[00:28:46] Speaker 01:
The costs that the hospital has requested and sought reimbursement for here are not for the professional services rendered by these on-call physicians.

[00:28:58] Speaker 01:
That is paid under a different payment regime, and the physicians would independently

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bill for any services that they provide.

[00:29:05] Speaker 01:
What these costs are for is to have a physician who's not working elsewhere at the time that they are on call be on call and called in and be able to arrive at the hospital in a certain amount of time to service inpatients as needed if the need arises.

[00:29:24] Speaker 03:
How many doctors do you have on staff?

[00:29:27] Speaker 01:
Your honor, I do not know the answer to that question.

[00:29:29] Speaker 03:
How can you not know the answer if you're arguing the case?

[00:29:32] Speaker 03:
I don't understand that.

[00:29:35] Speaker 01:
Well, your honor, it's not part of the record of this case.

[00:29:39] Speaker 03:
I could certainly follow up with a supplemental letter, but the- Well, who has the burden to show the circumstances?

[00:29:51] Speaker 01:
Your honor, we believe that the record has shown here and certainly

[00:29:56] Speaker 01:
The secretary has the burden to analyze whether the costs are necessary and proper.

[00:30:01] Speaker 01:
We have provided documentation.

[00:30:03] Speaker 01:
Medi-Cal has also analyzed these costs and determined them to be necessary and proper.

[00:30:10] Speaker 01:
And the reason that is meaningful is because the Medi-Cal program, the Medicaid agency in California is both familiar with state law and in this case applies federal regulatory provisions.

[00:30:23] Speaker 01:
It applied for 13.9.

[00:30:26] Speaker 01:
analyzed the costs here and found that these costs were necessary and proper for this hospital to incur.

[00:30:33] Speaker 03:
But isn't the question whether they're necessary and proper a question for the secretary in the first instance?

[00:30:40] Speaker 01:
Yes, it's the secretary's burden to analyze.

[00:30:44] Speaker 03:
If the secretary concludes they aren't necessary and proper, then we don't even have to get into whether California requires it, right?

[00:30:54] Speaker 01:
Yes, your honor, if the secretary were to analyze that's all we're asking for here is that the secretary should have analyzed whether these costs were necessary and proper we've offered arguments as to why they are including that they're that the secretary that the hospitals required to incur these costs under state laws in order to service its inpatients.

[00:31:16] Speaker 01:
There are Medicare conditions of participation that also require furnishing services to end patients in a critical access hospital.

[00:31:23] Speaker 03:
No, but the government is arguing you don't even get into the question of whether California requires, which they don't think California does require.

[00:31:30] Speaker 03:
But we don't even get into that question if the secretary concludes it's not necessary and proper.

[00:31:37] Speaker 01:
Your Honor, all we have asked for here is that the secretary do the analysis of whether the costs were necessary and proper.

[00:31:45] Speaker 01:
The factual record below in the PRB shows that the PRB did not analyze whether these costs were necessary and proper.

[00:31:52] Speaker 01:
And in fact, the PRB decision below had two issues in it.

[00:31:58] Speaker 01:
One was this issue of on-call costs.

[00:32:00] Speaker 01:
Another was whether outpatient meals to patients were payable.

[00:32:05] Speaker 01:
In the section on on-call costs, the board never referred to or discussed section 413.9

[00:32:14] Speaker 01:
whether the costs were reasonable, necessary and proper, it did not discuss any of that.

[00:32:18] Speaker 01:
The PRB's analysis relied solely on the inapplicable, facially inapplicable regulation at 413.70B4 and the PRRB found these costs unallowable under that regulation by negative implication.

[00:32:33] Speaker 01:
The same, the PRB decision in the same decision on the next page, the PRRB's analysis discusses

[00:32:43] Speaker 01:
and rest its analysis entirely under 413.9.

[00:32:47] Speaker 01:
So the PRB was well aware of 413.9, used it to decide whether the outpatient meals were allowable.

[00:32:55] Speaker 01:
They found actually that those meals were allowable, reversing the Medicare contractor.

[00:33:00] Speaker 01:
And it was, and they quoted the language of 413.9.

[00:33:05] Speaker 01:
So we think it is undisputed that the board applied the wrong regulation in this case.

[00:33:11] Speaker 01:
So there's nothing,

[00:33:12] Speaker 01:
the adjudication was on the wrong grounds.

[00:33:16] Speaker 01:
And that's what we're saying here.

[00:33:17] Speaker 01:
So yes, your honor, I agree with you that it is the secretary's burden to analyze whether these costs are necessary and proper under 413.9.

[00:33:24] Speaker 03:
I didn't say it was secretary's burden.

[00:33:27] Speaker 01:
Oh, excuse me, your honor, that the secretary should analyze these costs as to whether they are necessary and proper.

[00:33:33] Speaker 04:
Didn't the secretary

[00:33:41] Speaker 04:
For the PR or B, A, it doesn't matter whether California law requires, effectively requires on-call coverage.

[00:33:59] Speaker 01:
Yes.

[00:34:00] Speaker 01:
The secretary, excuse me, the board said that even if the board could confirm state licensing and certification rules requiring these specialty physicians,

[00:34:10] Speaker 01:
state laws that quote conflict with clear federal Medicare payment regulations would not change the outcome of this appeal.

[00:34:18] Speaker 04:
Okay, so then there's, so then there's really nothing for us to remand.

[00:34:25] Speaker 04:
They've already said that they don't think payment is necessary and proper, even if there's a state law obligation to

[00:34:39] Speaker 04:
have on-call services and we review that and we either uphold it or we reverse it.

[00:34:49] Speaker 01:
Respectfully, Your Honor, in that section, the clear federal regulation that the Board is referring to is 413.70B4.

[00:35:05] Speaker 01:
which is found only in the outpatient section of the critical access hospital payment regulations.

[00:35:11] Speaker 01:
It's also found only in the outpatient statute pertaining.

[00:35:15] Speaker 03:
You're arguing against the negative implication, aren't you?

[00:35:19] Speaker 01:
Yes.

[00:35:19] Speaker 01:
Yes, your honor.

[00:35:20] Speaker 01:
We are arguing against the negative implication here because there is an explicitly applicable regulation on point, which the secretary did not apply in this adjudication.

[00:35:33] Speaker 01:
In addition,

[00:35:35] Speaker 01:
The negative implication here was not promulgated through notice and comment rulemaking.

[00:35:43] Speaker 03:
Oh, wait a minute.

[00:35:45] Speaker 03:
Wasn't in the preamble?

[00:35:46] Speaker 03:
Why is that not promulgated?

[00:35:49] Speaker 01:
Your Honor, that statement in the preamble of, I think you're referring to the 1998 final rule that established when critical access hospitals were established,

[00:36:02] Speaker 01:
It was in the context of discussing outpatient costs and emergency department, specifically emergency department costs.

[00:36:11] Speaker 01:
It was not promulgated in a proposed rule, so there was no notice.

[00:36:15] Speaker 01:
And then there was a comment from a commenter about the use of locum tenons, which are substitute emergency department physicians.

[00:36:24] Speaker 01:
And CMS stated,

[00:36:27] Speaker 01:
the standby costs of emergency room physicians who are present at the emergency room are allowable costs and be taken into account in computing Medicare payment.

[00:36:37] Speaker 01:
However, Medicare does not recognize costs of on-call physicians as allowable costs of operating a critical access hospital.

[00:36:44] Speaker 01:
However, that single sentence was in relation to the comment on the use of locum tenants physicians in emergency departments.

[00:36:53] Speaker 01:
Moreover, in the later regulation,

[00:36:58] Speaker 01:
federal fiscal year 2002 final rule in 2001 after Congress in 2000, presumably having read this and also understanding that the emergency department regulations and statutes pertaining to critical access hospitals are very specific and particularly onerous for hospitals.

[00:37:18] Speaker 01:
It's 24 hour a day coverage in the emergency department.

[00:37:22] Speaker 01:
And so when pressed and also following this statement in the

[00:37:27] Speaker 01:
this preamble statement, Congress came back and revised the outpatient, again, only the outpatient side of the critical access hospital statute and said, we will, actually they said that the secretary shall reimburse the costs of on-call emergency department physicians.

[00:37:51] Speaker 01:
But that's because they were looking at a specific issue pertaining to emergency department physicians.

[00:37:57] Speaker 01:
And even there, the secretary summed up by saying that in that rule that the permit the reasonable costs of critical access hospital outpatient services to include the reasonable compensation related to emergency room on call physicians.

[00:38:13] Speaker 01:
There's no notice there that it had anything to do with reimbursement for inpatient physicians.

[00:38:27] Speaker 05:
I see your honor is that, um, I, um, one more for the questions.

[00:38:33] Speaker 04:
Oh, just quickly, just quickly one more, if we're done with the surgery point, um, for the other services at issue, where do you, where do you get the proposition that state law requires you to have, um, whatever an OBGYN or, or cardiology unit inpatient unit?

[00:38:59] Speaker 01:
Yes, your honor.

[00:39:00] Speaker 01:
So for perinatal, pediatric, and cardiovascular services, once a hospital is approved by the state to provide that supplemental service, which is what happened here, the hospital under, this is under section 70307, must, quote, maintain continuous compliance with the supplemental service requirements.

[00:39:21] Speaker 01:
Those supplemental service requirements obligate a physician, a hospital to have a physician responsible for the particular service.

[00:39:29] Speaker 01:
I understand, Your Honors, as we talked with about in the perinatal section already, as an example, that there are some provisions in there.

[00:39:36] Speaker 01:
The language says that it may permit physicians with different kinds of training, but the main condition is that there must be a physician overseeing it.

[00:39:47] Speaker 01:
And especially with respect for perinatal, it must be a physician with that additional training and certification must oversee.

[00:39:56] Speaker 04:
I understand that.

[00:39:58] Speaker 04:
getting at a slightly different point, which is that the regulations, they seem a little bit different in so far as they affirmatively require rural hospitals like your client to have an inpatient surgery department.

[00:40:16] Speaker 04:
They do not affirmatively require these other inpatient departments, which would seem to make the on costs much less

[00:40:28] Speaker 04:
necessary.

[00:40:29] Speaker 01:
But your honor, once a hospital holds itself out, and again, this hospital has been there for 70 years, and it's had an obstetrics department for that time.

[00:40:38] Speaker 01:
And on its license, its hospital license, it's licensed to have these perinatal OB beds.

[00:40:45] Speaker 01:
And so once it has held itself out to the community, again, a community that doesn't have a hospital, you know, nearby two lane roads, mountainous terrain, then it must continuously provide that service.

[00:40:57] Speaker 01:
So our argument is that once, yes, your honor.

[00:41:01] Speaker 03:
You know, I still don't understand why you keep saying the surgeon is required to be on call.

[00:41:07] Speaker 03:
It says, if such a surgeon is not available, a physician with additional training and experience in surgery shall be responsible for the service.

[00:41:16] Speaker 03:
Now, why can't a emergency room doctor, and I cannot imagine anything that an emergency room doctor would know more than surgery,

[00:41:25] Speaker 03:
Why isn't it sufficient if he or she has training?

[00:41:31] Speaker 01:
Your honor, the issue is that the emergency room physician cannot go leave the duties that it is required to cover in the emergency room.

[00:41:44] Speaker 03:
Every hospital I've seen with such a situation is seamless between the emergency room and the inpatient services.

[00:41:55] Speaker 03:
Surgery, emergency room doctors will move right with a patient into the inpatient section.

[00:42:04] Speaker 03:
I don't understand why you are dividing it as if it was all divided in two parts.

[00:42:10] Speaker 01:
Your honor, there's nothing in the record to suggest that an emergency room physician would be available to service the inpatient areas of the hospital.

[00:42:19] Speaker 03:
No, patients from

[00:42:21] Speaker 03:
to stabilize sufficient, that's all that's necessary to stabilize them.

[00:42:26] Speaker 01:
That's what's necessary under EMTALA, but it's required that a critical access hospital under federal law, under the conditions of participation for a critical access hospital must furnish inpatient services.

[00:42:39] Speaker 01:
And what we're saying is in order to meet that federal law and state laws for these specific services,

[00:42:48] Speaker 01:
This hospital, based upon its location, the lack of available physicians needs to do so through on-call coverage arrangements.

[00:42:55] Speaker 01:
That's the only practical way it can meet its legal obligations to provide these services.

[00:43:10] Speaker 05:
I have no further questions.

[00:43:12] Speaker 05:
How do you respond to the waiver argument on page 27 of the

[00:43:18] Speaker 05:
of the secretary's brief on this point.

[00:43:41] Speaker 01:
Your honor, the issue of whether we waived our right to argue

[00:43:49] Speaker 01:
payment for the on-call specialty services relating to perinatal cardiology and pediatrics?

[00:43:58] Speaker 05:
Yes.

[00:43:59] Speaker 01:
Your Honor, I disagree that we waived that argument.

[00:44:03] Speaker 01:
We discussed all of the services but focused on surgery because of the language of it being a basic service and of course we also provided the contract of a surgeon.

[00:44:15] Speaker 01:
So we focused on that as an example, but as we explained also in our reply brief, the supplemental services, we provided additional background on the supplemental services in our reply brief.

[00:44:29] Speaker 01:
And those supplemental services, once a hospital has elected or needs to, to service the community it serves, offers those services.

[00:44:39] Speaker 01:
And again, as I said, it's on the hospital's license that it offers these services.

[00:44:44] Speaker 01:
then it needs to provide continuous coverage for those services.

[00:44:50] Speaker 01:
So no, Your Honor, we do not concede that we've waived argument with respect to those specialty services.

[00:44:56] Speaker 05:
All right.

[00:44:57] Speaker 05:
Thank you.

[00:44:57] Speaker 05:
Any other questions?

[00:44:58] Speaker 05:
Judge Katz, Judge Silverman?

[00:45:01] Speaker 03:
One question.

[00:45:03] Speaker 03:
How many doctors do you have on staff?

[00:45:08] Speaker 01:
Your honor, I'm sorry, I do not know the answer to that question, but I will certainly speak with the client and can send a letter to the court on that question.

[00:45:18] Speaker 01:
And just to clarify, are you saying doctors that are not servicing the hospital through on-call arrangements, but are servicing the hospital through different means?

[00:45:27] Speaker 01:
Is that what you're asking?

[00:45:28] Speaker 01:
On staff.

[00:45:31] Speaker 01:
Okay, these physicians are on staff.

[00:45:33] Speaker 03:
It's just that they're- Oh, no, no, I'm talking about those who are permanently connected.

[00:45:39] Speaker 01:
Well, I think the issue is that this hospital has difficulty providing these specialty services.

[00:45:45] Speaker 01:
Again, the way critical access hospitals are, as you pointed out, your honor.

[00:45:49] Speaker 03:
All I'm asking is how many doctors are on staff?

[00:45:53] Speaker 01:
Your honor, I do not know the answer to that question, but I'd be happy to find out for you, your honor.

[00:45:59] Speaker 05:
All right, thank you, counsel.

[00:46:01] Speaker 05:
We'll give you some time on rebuttal.

[00:46:04] Speaker 05:
Let's hear from counsel for the secretary.

[00:46:09] Speaker 05:
Kyle Edwards.

[00:46:12] Speaker 02:
Thank you, Your Honor, and may it please the court, Kyle Edwards on behalf of HHS.

[00:46:17] Speaker 02:
Given that much of the discussion has focused on the surgical services requirement under California law, I think it'd be useful to start there.

[00:46:26] Speaker 02:
First, I want to point out, if you're looking at the surgical services staff language at 70225, section 70225,

[00:46:36] Speaker 02:
What it's talking about here is a physician who shall have overall responsibility for the surgical services.

[00:46:42] Speaker 02:
This is the person who is in charge of the surgical services in the hospital.

[00:46:46] Speaker 02:
It's not referring to the doctor that's providing care directly to a patient.

[00:46:53] Speaker 02:
So that's one problem, I think, with the argument that there needs to be on-call physicians under this particular section.

[00:47:01] Speaker 02:
The second is, as the board pointed out,

[00:47:04] Speaker 02:
This provision specifically allows for a doctor that does not have these special credentials but just has additional training in surgery to to fill the role of that.

[00:47:18] Speaker 02:
that physician who provides overall responsibility for the surgical services.

[00:47:22] Speaker 02:
So again, this is the person who's providing, who's sort of running the surgical unit, not the doctor that's providing sort of hands-on care necessarily at every given point.

[00:47:33] Speaker 02:
Another problem with the surgical services argument that- Sorry, why did we move on?

[00:47:39] Speaker 04:
Why does that matter?

[00:47:42] Speaker 02:
Because the argument here is that there needs to be an on-call doctor who's able to come in based off of this California regulation.

[00:47:49] Speaker 02:
And what this regulation is actually referring to is the doctor, you know, the head of the surgical wing, for instance.

[00:47:59] Speaker 02:
This is not sort of about, this is not talking about the doctor that has to be providing care at any given time.

[00:48:08] Speaker 02:
So that's the overall responsibility for the surgical services language.

[00:48:13] Speaker 04:
guess I'm not sure why that matters.

[00:48:16] Speaker 04:
I mean, we're struggling or I'm struggling because you have a state law requirement that they have to have an inpatient surgery department.

[00:48:31] Speaker 04:
And you have stipulations that the only way they can staff up what they have to staff up is through on call arrangements.

[00:48:42] Speaker 04:
And

[00:48:44] Speaker 04:
Where does that leave them?

[00:48:45] Speaker 04:
I mean, it seems to me, whether you're talking about the supervisor or the doctor who does the surgery, you put those two points together and seems like on-call costs at least for surgery are pretty necessary with this possible exception of maybe the ER doc

[00:49:10] Speaker 04:
does double duty and I just I have no idea how to assess that because it's just the record is not developed on that point one way or the other.

[00:49:19] Speaker 02:
So I think one thing that might address this concern entirely is that the California Health and Safety Code actually says, as we say in our brief, that a rural general acute care hospital does not need to provide surgical services.

[00:49:32] Speaker 02:
So in addition to this particular provision 70225 not requiring on-call surgical services, there's actually provision in California law that

[00:49:43] Speaker 02:
says that rural general acute care hospitals do not need to provide surgical services.

[00:49:48] Speaker 02:
And in response, in their reply brief, St.

[00:49:51] Speaker 02:
Helena doesn't take issue with that.

[00:49:53] Speaker 04:
That's 1250A?

[00:49:56] Speaker 02:
Yes, that's correct, Your Honor.

[00:49:59] Speaker 04:
I mean, that wasn't the ground of decision below either by the board or Judge Nichols, right?

[00:50:09] Speaker 02:
It's correct that they did not cite that particular provision.

[00:50:11] Speaker 02:
The board said generally that the provisions that the provider cited to didn't require an on-call.

[00:50:20] Speaker 04:
The rationale below is that even assuming there's a state law requirement, it's not reimbursable under Medicare because of the negative implications.

[00:50:34] Speaker 03:
And the necessary and proper.

[00:50:36] Speaker 02:
There are, yes, there are alternative grounds.

[00:50:40] Speaker 02:
So backing up, you know, even if, again, I don't think it's inappropriate for the court to consider that the California law actually doesn't require these hospitals to provide surgical services, given that that's the primary argument they're making here.

[00:50:52] Speaker 02:
And given that they don't rebut that in their reply brief, they just say, well, we do decide to provide surgical services.

[00:50:58] Speaker 02:
And so California law licensing law just simply doesn't require them to provide surgical services.

[00:51:05] Speaker 02:
It doesn't require them to provide these supplemental services, which is, I think, why they focused in their opening brief on the surgical services.

[00:51:13] Speaker 04:
Now, I'm with you on the supplemental.

[00:51:15] Speaker 04:
I'm just I'm worried about the surgery.

[00:51:18] Speaker 04:
Well, I think because of the seeming requirement in.

[00:51:24] Speaker 04:
What is it?

[00:51:25] Speaker 04:
I guess seven oh five and seven oh one one.

[00:51:30] Speaker 02:
So if you ignore 1250A in the health and safety code, and you're just looking at 70225, as the board explained, this just talks about sort of the ideal qualifications.

[00:51:44] Speaker 02:
It says that someone with additional training in surgery can fulfill that role.

[00:51:51] Speaker 02:
And as was discussed earlier during the argument, the record does reveal that St.

[00:51:58] Speaker 02:
Helena has

[00:52:00] Speaker 02:
emergency room physicians available 24-7.

[00:52:03] Speaker 02:
And the board found that if an inpatient had an emergency that required them to be stabilized, that those emergency room physicians would be able to handle that issue.

[00:52:15] Speaker 02:
And the contracts, if you look to the contracts with Janssen and Janssen, they actually say that those physicians need to be able to handle unexpected emergencies, any unexpected emergencies.

[00:52:28] Speaker 02:
So those contracts, as we've learned,

[00:52:31] Speaker 04:
So to rule for you on this point, do we have to effectively include that the stipulation is wrong, at least as applied to this question of surgical services?

[00:52:50] Speaker 02:
There are multiple bases.

[00:52:51] Speaker 02:
So, you know, I think the board also said that even if this was required by by California law, for instance, that would necessarily mean that

[00:53:00] Speaker 02:
Medicare would be paying for it.

[00:53:01] Speaker 02:
You know, there are all sorts of things a hospital might be required to do by state or federal law.

[00:53:07] Speaker 02:
And that doesn't mean Medicare is going to pay for every single one of those things.

[00:53:11] Speaker 02:
In terms of the stipulation, that stipulation does not bind the secretary who is not a party before the board.

[00:53:18] Speaker 02:
There's a stipulation between the hospital.

[00:53:21] Speaker 04:
Okay, fair enough.

[00:53:25] Speaker 04:
But what's

[00:53:26] Speaker 04:
What's Saint Helena supposed to do?

[00:53:29] Speaker 04:
They have a burden of proof.

[00:53:31] Speaker 04:
They have to show for necessary.

[00:53:35] Speaker 04:
At a minimum, they have to show there's no other way.

[00:53:37] Speaker 04:
Let's assume they have to show there's no other way they can staff up the hospital.

[00:53:45] Speaker 04:
And they get a stipulation that seems to cover that point.

[00:53:51] Speaker 04:
I mean, what more could they have done?

[00:53:53] Speaker 04:
Do they have to?

[00:53:56] Speaker 04:
ignore an offer of stipulation and and litigate out something that the person on the other side of the V is willing to concede at that point?

[00:54:08] Speaker 02:
So, you know, at the very least, they need to be able to point to something in the record that would support that stipulation.

[00:54:14] Speaker 02:
And they haven't done that.

[00:54:15] Speaker 02:
They've never pointed in their briefs to anything.

[00:54:17] Speaker 05:
That's the point of the stipulation.

[00:54:21] Speaker 05:
Yeah, anything in the support of because the other side agrees to it.

[00:54:26] Speaker 02:
Well, the stipulation arose later.

[00:54:29] Speaker 02:
So there's hundreds of pages in the record, obviously.

[00:54:32] Speaker 02:
The stipulation arose just before the board.

[00:54:35] Speaker 02:
And so there was plenty of opportunity.

[00:54:36] Speaker 02:
And indeed, the position papers below include, I think, exhibits one through 50 from the provider, the sort of initial position papers.

[00:54:46] Speaker 02:
So there was opportunity to introduce this.

[00:54:48] Speaker 02:
And it's not a, you know, it's not.

[00:54:50] Speaker 03:
Let's assume council, the stipulation remains.

[00:54:56] Speaker 03:
What is your position then?

[00:54:58] Speaker 03:
Well, they are attempting to rely on the stipulation as if... Let's assume we accept the stipulation.

[00:55:05] Speaker 03:
Then what's your position?

[00:55:07] Speaker 02:
The position is that

[00:55:10] Speaker 02:
Medicare is not required to cover everything that a hospital might decide it wants to provide.

[00:55:18] Speaker 02:
Medicare is responsible for covering the provision of services to Medicare beneficiaries and it's interested in the efficient delivery of needed health care services.

[00:55:27] Speaker 02:
So I think taking a step back and considering the nature of the critical access hospital is really important.

[00:55:33] Speaker 02:
So if you look to

[00:55:34] Speaker 02:
the designation requirements for a critical access hospital, and you look to what Congress was intending in creating this, it was trying to prevent the closure of these rural hospitals to enable there to be 24-hour, 24-7 emergency services.

[00:55:48] Speaker 03:
So I'm just asking for your legal position if the stipulation were to be accepted.

[00:55:54] Speaker 02:
If the stipulation were to be accepted, it wouldn't change anything.

[00:55:57] Speaker 02:
Again, the board said... Why?

[00:55:59] Speaker 02:
The board said that

[00:56:02] Speaker 02:
you know, even if, for instance, California law required them to do this and they needed to, they thought they needed to have these physicians to staff their units, requirements of California law would not determine what Medicare- The stipulation doesn't, the stipulation, if I understand our argument, doesn't go to California law so much as the practicality of whether it's necessary and proper.

[00:56:28] Speaker 02:
I mean, the stipulation says, because of the rural nature of the service, the provider must pay doctors for being on call during set hours, which is the only practical way the provider can adequately staff its hospital with the doctors necessary to serve patients.

[00:56:40] Speaker 02:
Again, that's not really a factual stipulation.

[00:56:42] Speaker 02:
That is a legal conclusion that these costs are necessary and proper.

[00:56:45] Speaker 02:
And our position is that they were not necessary and proper.

[00:56:48] Speaker 02:
The board found that based on the conclusions that it drew with respect to California licensing law and Antala.

[00:56:57] Speaker 03:
If the stipulation is true, that it's the only way they can provide surgical services, what is then the government's position?

[00:57:11] Speaker 02:
That they are not required to provide surgical services by federal law and they are not required to provide surgical services by state law.

[00:57:18] Speaker 02:
And that the purpose of these critical access hospitals is to provide 24 seven emergency care services and they do require inpatient and they do.

[00:57:29] Speaker 02:
They are required to offer inpatient services, but that can be provided by a nurse.

[00:57:32] Speaker 02:
So there doesn't even need to be a physician available at all times at these hospitals.

[00:57:36] Speaker 02:
They're very limited service, 25 acute care beds or less, 96 hours per patient.

[00:57:44] Speaker 02:
inpatient on average.

[00:57:48] Speaker 02:
It is simply not consonant with the nature of these critical access hospitals that they would need to have on-call surgeons in addition to the other on-call doctors.

[00:57:59] Speaker 02:
I'll also note just as a practical matter, they're trying to get on-call coverage costs for perinatal and pediatric services

[00:58:09] Speaker 02:
it's a little unclear how that relates to Medicare, which covers persons that are 60, for the most part, covers persons that are 65 and older.

[00:58:18] Speaker 02:
There are some exceptions to that for younger people with disabilities.

[00:58:21] Speaker 02:
But I think that what that gets to is that the hospital here is really trying to get Medicare to pay for services that are just not what are necessary and proper under in view of the nature of a critical access hospital.

[00:58:35] Speaker 04:
So suppose

[00:58:38] Speaker 04:
Suppose we think the following, and I know you reject these premises.

[00:58:43] Speaker 04:
I'm just trying to think through the decision tree here.

[00:58:48] Speaker 04:
Okay, point one, California law does require this hospital to have an inpatient surgery department.

[00:58:58] Speaker 04:
Point two, we accept the stipulation and read it to say that the only way this hospital

[00:59:07] Speaker 04:
can staff up the emergent inpatient surgical services that they're required to provide, just to have on-call arrangements.

[00:59:21] Speaker 04:
If you get to that point, and then you have the overarching federal requirement is that the services be necessary and proper, you're right that not

[00:59:38] Speaker 04:
every legally required service under state law might be compensable.

[00:59:43] Speaker 04:
But if you have the general obligation to, or the general rule is reimbursed if necessary and proper, and you can't point to any specific exclusion under federal law, why might we then still think, oh, but this might not be necessary and proper?

[01:00:06] Speaker 02:
So I think you know the board again, I just want to note that we disagree with those premises but taking them as as.

[01:00:13] Speaker 02:
True.

[01:00:13] Speaker 02:
The board did say that, you know, even if California licensing law required this result, so accepting the, I think, both of those premises, it still would not mean that Medicare would be required to cover those costs.

[01:00:28] Speaker 02:
There's still an independent determination of whether the costs are necessary and proper, and the board made that determination in addition to rejecting sort of the California

[01:00:37] Speaker 02:
law argument it rejected the and tall argument it said that you know if you're if you're thinking just about the practical situation of this hospital i'm not afraid about him i'm not afraid about him tall i'm i'm just positing a state law obligation to have a surgery surgery department i think that's their best

[01:00:58] Speaker 02:
I see.

[01:00:58] Speaker 02:
I mean, the provider is not pointed to and they repeatedly point to the rule that, you know, the general requirement that a hospital has to comply with state and federal law.

[01:01:10] Speaker 02:
They haven't pointed to anything saying that that requirement means that Medicare is going to provide payment for complying with the requirement.

[01:01:20] Speaker 02:
So I think that they haven't sort of totally closed the circle on that argument with what they've given so far.

[01:01:28] Speaker 06:
Okay.

[01:01:32] Speaker 06:
I understand the position.

[01:01:33] Speaker 06:
Thanks.

[01:01:39] Speaker 06:
I am happy to answer any remaining questions that the panel has.

[01:01:45] Speaker 06:
Judge Katz, Judge Silverman.

[01:01:49] Speaker 03:
I'm all set.

[01:01:50] Speaker 03:
No more.

[01:01:50] Speaker 03:
No more.

[01:01:51] Speaker 03:
This council.

[01:01:52] Speaker 05:
All right.

[01:01:52] Speaker 05:
Thank you.

[01:01:54] Speaker 05:
Council.

[01:01:56] Speaker 05:
We will give Council for the appellant will give you two minutes in remote.

[01:02:04] Speaker 03:
Thank you.

[01:02:04] Speaker 03:
Question right at the outset.

[01:02:07] Speaker 03:
How do you respond to count your your opposing council's comment that the stipulation is not really a stipulation of fact.

[01:02:16] Speaker 03:
but it's really a question of mixed fact and law.

[01:02:21] Speaker 01:
Your honor.

[01:02:22] Speaker 03:
Or even law.

[01:02:25] Speaker 01:
Your honor, the stipulations here are our stipulations of fact.

[01:02:28] Speaker 01:
So it does not say necessary and proper.

[01:02:31] Speaker 03:
It does not say that is the only way we can do this.

[01:02:36] Speaker 03:
But that is a that is not really a classic factual determination, is it?

[01:02:42] Speaker 03:
That goes into all kinds of legal questions.

[01:02:45] Speaker 01:
Well, Your Honor, I think here it is a factual determination because the hospital is not able, it would be extremely expensive to have physician- Aha, aha.

[01:02:57] Speaker 03:
So it'd be expensive, more expensive.

[01:03:00] Speaker 03:
That means it's not- And they aren't available.

[01:03:02] Speaker 03:
That's not impossible then.

[01:03:03] Speaker 01:
No, no, I'm sorry, Your Honor.

[01:03:06] Speaker 01:
What I'm trying to speak to is that this is an efficient way to deliver services here.

[01:03:10] Speaker 01:
As counsel across the aisle pointed out,

[01:03:14] Speaker 01:
The inpatient area of a critical access hospital has a fluctuating census of patients.

[01:03:21] Speaker 01:
So it makes sense.

[01:03:22] Speaker 01:
This is precisely the kind of hospital that is best serviced by on-call specialist physicians.

[01:03:29] Speaker 01:
When there's inpatient surgery that's scheduled, then those surgeons can be brought in from the on-call coverage.

[01:03:39] Speaker 01:
That's precisely what type of hospital

[01:03:44] Speaker 01:
needs a rural hospital like this needs on call coverage, but I want to return to the and but to your honor's point, these stipulations here are factual.

[01:03:56] Speaker 01:
It says the provider must incur the cost at issue to compensate area physicians for being on call rather than physically present in the hospital.

[01:04:06] Speaker 01:
It needs to meet the needs of hospital patients who are admitted into the inpatient area of the hospital.

[01:04:12] Speaker 01:
And

[01:04:14] Speaker 01:
And by the conditions of participation as, well, excuse me, the physicians must be present to service inpatients in the inpatient areas of the hospital.

[01:04:25] Speaker 01:
But I wanna return to the point about whether the board here analyzed whether these costs were necessary and proper.

[01:04:34] Speaker 01:
The board did not do so.

[01:04:36] Speaker 01:
It did not analyze as Congress intended and Congress requires to be done

[01:04:42] Speaker 01:
whether these costs are necessary and proper under the relevant statute and the relevant regulation, which is 413.9.

[01:04:49] Speaker 01:
Instead, the board applied a facially inapplicable regulation.

[01:04:53] Speaker 01:
The district court affirmed the PRB's decision on this point that 413.70B4, which applies only to on-call costs and emergency department applied by negative implication and thus,

[01:05:10] Speaker 01:
The board here, when it says that even regardless of what state law says, it would fail, it would fail because of what it's saying is 413.70B4, which is incorrect as we have explained in our papers.

[01:05:28] Speaker 03:
Suppose the regulation had been explicit rather than the government's argument, a negative implication, a race

[01:05:37] Speaker 03:
the Latin phrase.

[01:05:41] Speaker 03:
I was going to say reciprocal locator, it's the wrong Latin phrase.

[01:05:47] Speaker 03:
Suppose the regulation had been explicit that on call for inpatient, is this allowed?

[01:05:57] Speaker 03:
What would your view be?

[01:05:59] Speaker 01:
Your honor, if that had been done through notice and comment rulemaking as is required under the statute, the Medicare Act of 1395 HHA2,

[01:06:07] Speaker 01:
then we might have to concede that these costs are not allowable, but that was not done so here.

[01:06:14] Speaker 01:
This was not issued by notice and comment rulemaking.

[01:06:17] Speaker 03:
This regulation does not speak to whether- Well, the regulation was issued by notice and comment, wasn't it?

[01:06:23] Speaker 01:
It has nothing to do with inpatient costs, Your Honor.

[01:06:27] Speaker 03:
That's your argument.

[01:06:28] Speaker 03:
That's your argument.

[01:06:29] Speaker 03:
But you concede that if it had been explicit, you'd be out of court.

[01:06:36] Speaker 01:
that if a regulation explicitly prohibited the costs of inpatient on-call costs, would we be precluded from making this argument?

[01:06:47] Speaker 01:
Is that your question?

[01:06:49] Speaker 01:
You already answered.

[01:06:50] Speaker 01:
Procluded from being paid?

[01:06:51] Speaker 03:
Yes.

[01:06:52] Speaker 03:
Thank you.

[01:06:52] Speaker 01:
Yes, Your Honor, if done through notice and comment rulemaking.

[01:06:58] Speaker 05:
All right, Council, thank you, Council, for your arguments in this case.

[01:07:05] Speaker 05:
Take the matter under submission.