Children's Hospital v. Azar, No. 17-2237 (4th Cir. 2018)Annotate this Case
The Secretary appealed the district court's order enjoining him from enforcing a Medicaid policy set forth in a Frequently Asked Questions document (FAQ 33), which purported to clarify the methodology for calculating the maximum amount of financial assistance available to hospitals, like Children's Hospital, that serve a disproportionate number of low-income or special needs patients (DSHs).
The Fourth Circuit held that the district court correctly determined that the policy set forth in FAQ 33 constituted a "legislative rule" and thus the Administrative Procedure Act mandated that the agency establish the FAQ 33 policy through notice-and-comment rulemaking. Therefore, the court affirmed the district court's judgment enjoining the Secretary from enforcing the policy set forth in FAQ 33 against Children's Hospital. The court declined to reach the substantive challenge and vacated the part of the district court's opinion addressing whether the policy conflicts with the language of 42 U.S.C. 1396r-4(g).