BAYLOR COUNTY HOSPITAL DISTRICT, doing business as Seymour Hospital, Plaintiff-Appellant
THOMAS PRICE, SECRETARY, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant-Appellee
from the United States District Court for the Northern
District of Texas
JONES, BARKSDALE, and COSTA, Circuit Judges.
H. JONES, Circuit Judge.
1997, Congress created a favorable Medicare reimbursement
schedule for rural facilities designated as "critical
access hospitals." 42 U.S.C. §§ 1395i-4,
1395f. A critical access hospital is defined in part by the
type of roads that connect the facility to the next nearest
hospital. Congress used the term "secondary roads"
in the definition, but it neither defined that term nor
contrasted it with "primary roads." To fill that
gap, an agency within the Department of Health and Human
Services (DHHS) issued a manual that defines "primary
roads" as, inter alia, numbered federal
highways and defines "secondary roads" as
non-primary roads. Appellant Baylor County Hospital District
d/b/a Seymour Hospital (Seymour), located in Seymour, Texas,
challenges DHHS's decision, founded on the manual, that
it is not a critical access hospital. The district court, in
a thorough and thoughtful opinion, granted DHHS's motion
for summary judgment. We accord Skidmore deference,
find nothing arbitrary or capricious in the agency's
decisionmaking, and AFFIRM.
years, the Medicare Rural Hospital Flexibility Program has
provided a special reimbursement scheme for certain rural
facilities that serve Medicare beneficiaries. See
generally 42 U.S.C. §§ 1395i-4, 1395f. These
"critical access hospitals, " id. §
1395f(1)(1), must meet several criteria, including
geographical, staffing, and services requirements. See
id. § 1395i-4(c)(2)(B). At issue in this case is
the geographical requirement measured by a facility's
distance from another hospital and the types of roads
available to travel that distance:
A State may designate a facility as a critical access
hospital if the facility . . . is a hospital that . . . is
located more than a 35-mile drive (or . . . in areas with
only secondary roads available, a 15-mile drive) from a
hospital, or another facility described in this subsection[.]
Id. § 1395i-4(c)(2)(B)(i)(I). Within that
criterion, Congress created two standards-a 15-mile standard
if "only secondary roads [are] available" between
facilities, and a 35-mile default standard if roads other
than secondary roads are available. Despite the reference to
"secondary roads, " Congress defined neither that
term nor its comparator, "primary roads." The
implementing regulations are similarly blank. See 42
C.F.R. § 485.610(c).
remedy the lack of formally binding definitions, the Centers
for Medicare and Medicaid Services (CMS), the agency within
DHHS charged with administering Medicare, issued
"guidance" in a State Operations Manual (the
Manual). The Manual explains that a facility falls within the
"secondary roads" provision when "there are
more than 15 miles between the [facility] and any hospital or
other [critical access hospital] where there are no primary
roads." The Manual then articulates three types of
1. A numbered federal highway, including interstates,
intrastates, expressways or any other numbered federal
2. A numbered state highway with 2 or more lanes each way;
3. A road shown on a map prepared in accordance with the U.S.
Geological Survey's Federal Geographic Data Committee
(FGDC) Digital Cartographic Standard for Geologic Map
Symbolization as a "primary highway, divided by median
State Operations Manual, ch. 2, §2256A. The end result
is that to qualify under the "secondary roads"
provision, a facility must be separated from the nearest
hospital by more than 15 miles in which there is no primary
road-a numbered federal highway, a numbered state highway
with two or more lanes each way, or a road shown on a
particular map as a "primary highway, divided by median
2013, Seymour applied to CMS for designation as a critical
access hospital. The nearest hospital is located 31.8 miles
away in Throckmorton, Texas. Approximately 28.4 miles of the
road directly connecting the small towns of Seymour and
Throckmorton are designated as U.S. Highway 183/283,
rendering that 28.4-mile stretch a "primary road"
under the "numbered federal highway" provision in
the Manual. U.S. Highway 183/283 is designated a
"Primary Highway, " "Principal Highway, "
and "Major Road" by official sources such as the
U.S. Geological Survey and the Texas Department of
Transportation. Seymour does not satisfy the alternate
35-mile standard because Seymour lies less than 35 miles away
from Throckmorton. But Seymour also fails to qualify under
the "secondary roads" provision because for only
approximately three miles (31.8 miles minus 28.4 miles) of
the distance between Seymour and the Throckmorton hospital
are "only secondary roads  available"-well short
of the 15-mile "secondary road" threshold. CMS
rejected Seymour's application based on the plain
language of the "guidance."
then requested a hearing from an administrative law judge
(ALJ), "disput[ing] the validity of CMS'
determination and the rationale for it." Seymour
asserted that U.S. Highway 183/283 is a secondary road
because it "is a two lane rural road, " has
"no shoulders, " and its "dimension and
condition" are those "of a poor quality farm
road." Seymour acknowledged that its characterization of
U.S. Highway 183/283 as a secondary road conflicted with the
"numbered federal highway" provision in the Manual,
but Seymour dismissed the Manual as "only guidance,
" "not controlling, " and "not law."
Seymour additionally challenged the "numbered ...