43296. Section 1395ww(d)(2)(D) was added by Public Law No.
98-21, on April 20, 1983. Therefore, the only "similar area"
that had been recognized by the Secretary when §
1395ww(d)(2)(D) was enacted was the NECMA.
Even if this Court were to find that the Secretary retained
discretion to make an exception to the use of MSAs under the
"or . . . similar area" language of § 1395ww(d)(2)(D) and §
1395ww(a), that does not mean that the Secretary's adoption of
the MSA-based system, as provided in the statute, or his
failure to make an exception in plaintiff's case, was unlawful.
As stated above, Congress clearly and unequivocally stated that
the urban/rural distinction was to be made with reference to
MSAs. That is what the Secretary has done, and, in this Court's
opinion, that is lawful.
Plaintiff further claims that the Secretary was in effect
required to exercise its discretion under §
1395ww(d)(5)(C)(iii), which states that "[t]he Secretary shall
provide by regulation for such other exceptions and adjustments
to such payment amounts under this subsection as the Secretary
deems appropriate. . . ." (emphasis added). The reviewability
of this discretion under the Administrative Procedure Act, or
APA, must first be addressed.
Defendant contends that the Secretary's decision to provide
for exceptions (or not to so provide) was a decision committed
to agency discretion by law under the APA, thus not reviewable,
under APA § 701(a)(2). Plaintiff argues that, because
reviewability is presumed, and there is here no clear and
convincing evidence that Congress sought to preclude review,
the APA is applicable, and the standard of review is found at
APA § 706(2)(A).
The Second Circuit has clearly stated that statutory language
allowing regulation "as the Secretary believes appropriate"
constitutes clear and convincing evidence of Congressional
intent that the agency action is unreviewable. See New York
Racing Association, Inc. v. NLRB, 708 F.2d 46, 50-51 (2d Cir.
1983), cert. denied, 464 U.S. 914, 104 S.Ct. 276, 78 L.Ed.2d
256 (1983). Absent the inclusion in the statute of parameters
or other standards guiding the exercise of the discretion, the
Court has quite literally been given no indicia by which to
evaluate the exercise, that is, no law to apply.
The statutory language at issue here falls squarely within
the Second Circuit holdings. This Court therefore finds that
the creation of exceptions under § 1395ww(d)(5)(C)(iii) is
committed to agency discretion by law. The Secretary's action
or inaction under this clause is therefore unreviewable.
Even were this Court to find that the Secretary's actions
under this section were reviewable, the Court would find no
abuse of discretion, nor that the failure of the Secretary to
make an exception in the case of the plaintiff was arbitrary or
Given that the language of § 1395ww(d)(5)(C)(iii) evinces
such great discretion in the Secretary with respect to the
creation of exceptions, any decision thereunder by the
Secretary would be a policy choice, not a matter of statutory
interpretation. Such decision is therefore entitled to great
deference and, absent evidence that such decision is
"[in]consistent with the congressional mandate," will be upheld
by this Court.
The rulemaking record reveals that every year since the
institution of PPS the Secretary has thoroughly evaluated the
appropriateness of carving out regulatory exceptions to the
MSA-based system. The Secretary has in fact exercised its
discretion with respect to exceptions. It created an exception
for hospitals located in counties which were reclassified from
urban to rural, but remained surrounded on all sides by urban
counties. It also created an exception for hospitals meeting
specific geographic and commuting criteria.
Clearly, then, the Secretary has rationally considered
potential exceptions, acting within the scope of discretionary
authority granted by statute. As stated by the court in
Medical Center Hospital v. Bowen, No.
86-73-CIV-FTM-13A, 1989 WL 234524 (M.D.Fla. June 13, 1989),
The Secretary recognized the shortcomings of the
MSA/non-MSA classification system, considered the
alternatives, provided some exceptions and
concluded, reasonably, that other exceptions were
not feasible based on the objective data available
at the time. While the plaintiff may be able to
show that a contrary conclusion would have inured
to its benefit, the plaintiff has not been able to
show that the Secretary's decision was otherwise
than in accordance with the law.
Slip opinion at 21, 1989 WL 234524 at *10.
In conclusion, the statute defined the rural/urban
distinction by reference to MSAs. The Secretary adopted
regulations reflecting the statutory definition. The Secretary
has exercised its discretionary power under §
1395ww(d)(5)(C)(iii) to provide for certain exceptions to the
statutory MSA-based system. The Secretary has considered, and
rejected, other non-MSA alternatives. That Congress
subsequently enacted legislation, creating a geographical
review board and providing for the eventual elimination of all
rural/urban distinction with respect to repayment rates, does
not render the Secretary's actions, or his failure to grant
plaintiff an exception, arbitrary, capricious or an abuse of
discretion. Plaintiff's motion for summary judgment is denied,
and defendant's motion for summary judgment is granted.
I believe I have an appropriate order, which will be signed
and in all probability will be filed today.