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Forsyth Memorial Hospital, Inc., et al v. Kathleen Sebelius

August 16, 2011

FORSYTH MEMORIAL HOSPITAL, INC., ET AL., APPELLANTS
v.
KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES, APPELLEE



Appeal from the United States District Court for the District of Columbia (No. 1:07-cv-01828)

The opinion of the court was delivered by: Brown, Circuit Judge,

On Petition for Rehearing En Banc

Before: SENTELLE, Chief Judge, and GINSBURG, HENDERSON, ROGERS, TATEL, GARLAND, BROWN*fn1 , GRIFFITH, and KAVANAUGH, Circuit Judges.

ORDER

Appellants' petition for rehearing en banc and the response thereto were circulated to the full court, and a vote was requested. Thereafter, a majority of the judges eligible to participate did not vote in favor of the petition. Upon consideration of the foregoing, it is

ORDERED that the petition be denied.

FOR THE COURT:

Mark J. Langer, Clerk

BY:

/s/ Jennifer M. Clark Deputy Clerk

BROWN, Circuit Judge, dissenting from the denial of rehearing en banc:

"An agency may not promulgate retroactive rules absent express congressional authority." Nat'l Mining Ass'n v. Dep't of Labor, 292 F.3d 849, 859 (D.C. Cir. 2002) (citing Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988)). Though we pay lip service to this principle, it is on the verge of becoming an empty form of words. Petitioners challenge one recent blow to the doctrine: our holding that impermissibly retroactive rules may be rectified by adoption in post hoc agency adjudication. See St. Luke's Hosp. v. Sebelius, 611 F.3d 900, 907 (D.C. Cir. 2010), cited in Forsyth Mem'l Hosp., Inc. v. Sebelius, 639 F.3d 534, 537 (D.C. Cir. 2011). This holding violates the Supreme Court's admonition that "[e]ven where some substantial justification for retroactive rulemaking is presented, courts should be reluctant to find such authority absent an express statutory grant." Georgetown, 488 U.S. at 208-09. Because our new doctrine undermines the presumption against retroactive rulemaking in every administrative agency with an adjudicatory function, I would grant rehearing en banc.

In St. Luke's, we misapplied a different presumption designed for agency adjudication, plain and simple, to a hybrid proceeding in which adjudication served as a Trojan horse for retroactive rules the agency had already promulgated. In contrast to the presumption against retroactive rulemaking, "[w]e start with the presumption of retroactivity for adjudications." Qwest Servs. Corp. v. FCC, 509 F.3d 531, 539 (D.C. Cir. 2007). The origin of these dual presumptions lies in the statutory distinction between rules and orders. See Georgetown, 488 U.S. at 216 (Scalia, J., concurring). Rules are defined by their "future effect," id. (quoting 5 U.S.C. § 551(4)), and orders are defined in contradistinction to rules, id. (citing 5 U.S.C. § 551(6)). Thus, "[a]djudication deals with what the law was; rulemaking deals with what the law will be." Id. at 221.

As long as rules and orders are confined to their proper spheres, the presumption in favor of retroactive adjudication serves a valuable purpose. "Clarifying the law and applying that clarification to past behavior are routine functions of adjudication." Qwest, 509 F.3d at 540. Parties to an adjudication are protected against unanticipated retroactive effects by the procedural guarantees of "notice and an opportunity to offer evidence bearing on the new standard," and by the chance to rebut the presumption of retroactivity by proving they have "detrimentally relied on the established legal regime." Burlington N. & Santa Fe Ry. v. STB, 526 F.3d 770, 784 (D.C. Cir. 2008) (quoting Consol. Edison Co. v. FERC, 315 F.3d 316, 323 (D.C. Cir. ...


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