Court to Decide Medical School Reimbursements

The Supreme Court said Monday it would rule on whether teaching hospitals can seek government reimbursement for the multimillion-dollar cost of training young doctors who work with elderly patients.

Under the Medicare program, hospitals are paid for their direct costs of providing interns and residents. But the government has balked at paying the extra training costs normally covered by a university medical school.

The lower courts have split on whether the government’s position is reasonable and the justices announced that they would resolve the question this spring in the case of Thomas Jefferson University vs. Shalala, 93-120.

About $145 million in reimbursements are at stake, Justice Department lawyers told the court.

The justices also said they would resolve an unusual dispute between Congress and the high court involving the time limits for filing a securities fraud case. The case it will consider involves a suit filed by a Newport Beach, Calif., insurance firm.

In 1991, the high court in a 5-4 decision set a new nationwide standard for filing claims of fraud involving stock, bonds or other securities. Adopting the federal rule, the court said that a person who has been defrauded must file a suit within one year of discovering the fraud, or within three years of the fraud itself.

But many states had more lenient laws and hundreds of pending suits were filed after those time limits. If enforced, the high court’s strict time rule threatened to extinguish pending claims against the so-called S&L; kingpins accused of causing the collapse of many thrifts.

In reaction, Congress hurriedly passed a law reinstating those pending suits. But the lower courts have divided on whether to follow the guidance of the high court or Congress.

Now, the justices have agreed to reconsider the issue and rule on whether Congress can supersede a high court ruling and revive an already-dismissed lawsuit.

A ruling in the case (First Republicbank vs. Pacific Mutual, 93-609) will determine whether an estimated 200 lawsuits can go forward. Pacific Mutual, a life insurance company based in Newport Beach, had purchased debt securities issued by a Texas bank that was acquired by First Republicbank of Dallas. Pacific Mutual sued First Republicbank over the effect of the acquisition on debt holders.

In other action, the court:

* Refused to squelch a trial in which California inmates seek to force the state’s prison industry authority to pay them the federal minimum wage. The court, without comment, let stand a federal judge’s ruling that a trial is needed to determine whether the minimum wage applies to work done by California prison inmates. The case is In Re Prison Authority, 93-730.

* Let stand an Ohio law that requires a pregnant teen-ager to notify a parent before getting an abortion or to convince a judge that she is mature enough to make the decision on her own (Cleveland Surgi-Center vs. Jones, 93-787). Several abortion doctors said that the law is being applied too strictly but lower court judges said they did not have the legal right to contest the matter. Recently, the high court has refused to tamper with state laws restricting the abortion rights of minors.

* Rejected a claim by environmentalists who contended that President Clinton needed to undertake an environmental assessment before seeking final approval of the North American Free Trade Agreement (Public Citizen and Sierra Club vs. U.S. Trade Representative, 93-560). An appeals court had ruled that the President has the sole authority to negotiate treaties and without judicial interference.