Thomas Jefferson University, Dba Thomas Jefferson University Hospital v. Shalala

Summary

The Court, in an opinion by Justice Kennedy, upheld the Secretary’s interpretation of Medicare’s anti-redistribution regulation to prohibit reimbursement of educational costs previously borne by a hospital’s affiliated medical school. The interpretation reasonably reflected the regulation’s language, imposed an operative reimbursement limitation, and was not shown to conflict with a prior agency interpretation. The Court affirmed without deciding the validity of the Secretary’s separate community-support rationale. Justice Thomas dissented, joined by Justices Stevens, O’Connor, and Ginsburg. They considered the regulation merely precatory, found the Secretary’s interpretation inconsistent with prior agency practice, and argued that neither the anti-redistribution provision nor the community-support provision justified denying reimbursement.