Assume that after all the rhetoric and great debates on health care reform that Congress decided the rate regulation that has been used for a century to control the prices and services of common carriers in transportation is an appropriate model. It therefore established the "Health Care Control Commission." Among other things, Section 107 of the statute provides that "the Commission may, after hearing, disapprove any rate, fee, or charge that it finds to be unreasonable and not justified by the costs." It also provides, very near the end, that the Commission is authorized to adopt "all rules that are necessary and proper for the implementation of the statute."
Several months after the Commission began business, the Chairman gave a speech in St. Louis. After he described what the Commission planned to do and reviewed its powers, someone stood up in the audience and complained bitterly about the practices of the emergency room of Metro Hospital. The person explained that her aunt had been turned away because they could not demonstrate that they had insurance or put down a deposit of $500 that would be applied to any treatment that would be provided. The Chairman said he would look into it.
Shortly thereafter, on July 5, 1995, the HC3 published a Notice of Proposed Rulemaking in the Federal Register that would outlaw any health care provider from requiring a deposit before providing treatment. Interestingly, the proposed rule purported to take effect on May 10, 1994, the date Congress enacted the legislation. Finally, the rule required any health care provider to refund any deposit it required after that date. The preamble mentioned Metro Hospital by name several times and described its practices in a way that made it sound as if Metro were unique in imposing deposits. Metro's lawyers filed a petition with HC3, saying that the rulemaking was a sham and that it was, in fact, an adjudication aimed solely at Metro. It therefore demanded a hearing pursuant to Section 107. The Commission responded that its proposal was indeed a rule, but that it would be willing - but not required to provide Metro with a hearing: the Commission set aside one hour during one of its meetings during which Metro could present arguments as to why requiring a deposit should be allowed; it explained that it did not need to present its arguments since they were in the Preamble to the Rule. And, anyhow, this is a pure policy decision that did not need supporting facts. Not surprisingly, given this set of circumstances, HC3 issued the rule anyhow.
So now the questions:
Can the Commission issue the rule, or is this an adjudication?
If it was an adjudication, was the hearing sufficient? If yes, why; if not, how would you fix it to meet the minimal requirement of the Constitution?
If it was a rule, can the Commission require the refund of deposits made before the rule was issued? Before the Notice of Proposed Rulemaking was published?
Assuming, as is very likely, that Metro wants to challenge the decision. Would it make any difference as to the standard of review that will be applied by the court whether it is a rule or an adjudication? Explain.
2 answers