--- title: "Medicare DSH: US District Court in TX Vacates 1115 Waiver \"Exclusion Rule\"" description: Baylor All Saints Medical Center, ET AL. v. Xavier Becerra (“CASE”) was released August 15, 2024 in the United States District Court For the Northern District Of Texas Fort Worth Division. The ruling vacates Code of Federal Register 412.106(b)(4)(iii) known as the “Exclusion Rule” based on the section being unlawful. image: https://public.govdataservices.com/hubfs/Office%20workplace%20with%20laptop%20and%20smart%20phone%20on%20wood%20table%20and%20london%20city%20blurred%20background.jpeg --- [Skip to content](https://public.govdataservices.com/the-scoop/tx-vacates-1115-waiver-exclusion-rule#main-content) Close - [Services](https://public.govdataservices.com/services-page) - [Medicare DSH](https://public.govdataservices.com/medicare-dsh) - [SSI Realignment](https://govdataservices-21378692.hs-sites.com/medicare-dsh#SSI) - [340B MA Underpayments](https://public.govdataservices.com/340b-medicare-advantage-underpayments) - [Medicare Bad Debt](https://public.govdataservices.com/medicare-bad-debt) - [Worksheet S-10 Uncompensated Care](https://public.govdataservices.com/s-10) - [Transfer DRG](https://public.govdataservices.com/transfer-drg) - [Medicare ID & Shadow Billing](https://public.govdataservices.com/medicare-id-shadow-billing) - [MBI ID Finder](https://public.govdataservices.com/mbi-id-finder) - [MIDaS Insurance ID](https://public.govdataservices.com/midas-insurance-id) - [Annual Wellness Visit](https://public.govdataservices.com/annual-wellness-visit) - [Eligibility & Other Services](https://public.govdataservices.com/eligibility-and-other) - [Bundle & Save](https://public.govdataservices.com/bundle-and-save) - [Demo](https://public.govdataservices.com/demo-diagnostics-review) - Resources - [Links](https://public.govdataservices.com/links) - [Blog](https://public.govdataservices.com/the-scoop) - [Contact Us](https://public.govdataservices.com/contact-us) SEARCH [Client Login](https://www.govdataservices.com/gdswebsite/DesktopDefault.aspx) [![GDSlogo\_avenir\_2](https://public.govdataservices.com/hs-fs/hubfs/GDSlogo_avenir_2.png?width=1194&height=340&name=GDSlogo_avenir_2.png)](https://public.govdataservices.com/) - [Services](https://public.govdataservices.com/services-page) - [Medicare DSH](https://public.govdataservices.com/medicare-dsh) - [SSI Realignment](https://govdataservices-21378692.hs-sites.com/medicare-dsh#SSI) - [340B MA Underpayments](https://public.govdataservices.com/340b-medicare-advantage-underpayments) - [Medicare Bad Debt](https://public.govdataservices.com/medicare-bad-debt) - [Worksheet S-10 Uncompensated Care](https://public.govdataservices.com/s-10) - [Transfer DRG](https://public.govdataservices.com/transfer-drg) - [Medicare ID & Shadow Billing](https://public.govdataservices.com/medicare-id-shadow-billing) - [MBI ID Finder](https://public.govdataservices.com/mbi-id-finder) - [MIDaS Insurance ID](https://public.govdataservices.com/midas-insurance-id) - [Annual Wellness Visit](https://public.govdataservices.com/annual-wellness-visit) - [Eligibility & Other Services](https://public.govdataservices.com/eligibility-and-other) - [Bundle & Save](https://public.govdataservices.com/bundle-and-save) - [Demo](https://public.govdataservices.com/demo-diagnostics-review) - Resources - [Links](https://public.govdataservices.com/links) - [Blog](https://public.govdataservices.com/the-scoop) - [Contact Us](https://public.govdataservices.com/contact-us) [Client Login](https://www.govdataservices.com/gdswebsite/DesktopDefault.aspx) [Chris Cusimano](https://public.govdataservices.com/the-scoop/author/chris-cusimano) Sep 3, 2024, 4:00:00 PM 2 min read # Medicare DSH: US District Court in TX Vacates 1115 Waiver "Exclusion Rule" [Previous](https://public.govdataservices.com/the-scoop/change-request-13413-impacts-ssi-realignments) [Next](https://public.govdataservices.com/the-scoop/medicare-dsh-district-of-columbia-case-challenges-retroactive-part-c-days-final-rule) Baylor All Saints Medical Center, ET AL. v. Xavier Becerra (“CASE”) was released August 15, 2024 in the United States District Court For the Northern District Of Texas Fort Worth Division. The ruling vacates Code of Federal Register 412.106(b)(4)(iii) known as the “Exclusion Rule” based on the section being unlawful. This vacatur impacts the potential validity of including, protesting, or appealing 1115 wavier days for Medicare DSH reimbursement. This CASE cites Congressional expansion of the Medicaid fraction in the 2005 Deficit Reduction Act to include patients “..who are regarded as such because they receive benefits under a demonstration project approved under title XI” with further emphasis added by citing the 2019 5th Circuit decision in Forrest Gen. Hosp. v. Azar which notes “the Medicaid fraction’s numerator includes…..days a hospital treated patients who are regarded as Medicaid-eligible because they received demonstration project benefits.” The CASE was brought after implementation of the “Exclusion Rule,” which was an attempt by HHS to overcome the right gained by hospitals to claim 1115 based Medicaid days in the Medicare DSH calculation as a result of the aforementioned Forrest Gen. Hosp. v. Azar ruling. That same right was confirmed in the United States Court of Appeals for the District of Columbia Circuit in Bethesda Health, Inc. v. Azar, 389 F.Supp.3d 32, 43-44 (D.C. 2019), aff'd, 980 F.3d 121 (D.C. Cir. 2020). Rather than petition the Supreme Court to hear the case, HHS promulgated the "Exclusion Rule." While the defense argued that the secretary has discretion on whether to include the days, the judge in this CASE chose not to resurrect 5th Circuit decisions that “\[t\]he Secretary may exercise discretion, and the Secretary did exercise discretion when he authorized the \[state plan\].” and states himself that “Thus, the Secretary exercised his discretion when he approved Texas’s plan.” At the very least hospitals should protest for 1115 waiver-based Medicaid days that are derived from 1115 waiver programs approved by the Secretary. Some hospitals may choose more aggressive strategies including claiming the days based on this CASE. Providers should carefully explore how to preserve their rights. If you have questions regarding Medicare DSH, please contact Adam Blackwell at [adamblackwell@govdataservices.com](mailto:adamblackwell@govdataservices.com) The CASE can be found [here](https://www.documentcloud.org/documents/25050779-texas-dsh-hhs-decision). ![avatar](https://public.govdataservices.com/hs-fs/hubfs/chriscusimano.jpg?width=290&name=chriscusimano.jpg) #### [Chris Cusimano](https://public.govdataservices.com/the-scoop/author/chris-cusimano) ## RELATED ARTICLES ### [Chris Cusimano Dec 15, 2025, 3:29:45 PM 1 min read Circuit Court Overturns District Court's Vacatur of Exclusionary Rule Regarding Certain 1115 Waiver Days On December 9, 2025, the Fifth Circuit (Case 24-10934) overturned the Northern District of Texas decision in Baylor All Saints ... Start Reading](https://public.govdataservices.com/the-scoop/circuit-court-overturns-district-courts-vacatur-of-exclusionary-rule-regarding-certain-1115-waiver-days) ### [Chris Cusimano Oct 2, 2025, 5:48:06 PM 1 min read District Court for District of Columbia Rules Retroactive 2023 Part C Rule is Impermissible Case: Montefiore Medical Center v. Robert F. Kennedy, JR. Court: U.S. District Court for the District of Columbia Decision ... Start Reading](https://public.govdataservices.com/the-scoop/district-court-for-district-of-columbia-rules-retroactive-2023-part-c-rule-is-impermissible) ### [Chris Cusimano Jul 30, 2026, 11:45:14 AM 2 min read Public Record of 340B MA Underpayment Settlements Continues to Grow The public record of Medicare Advantage 340B underpayment settlements continues to grow, with at least three additional cases ... Start Reading](https://public.govdataservices.com/the-scoop/public-record-of-340b-ma-underpayment-settlements-continues-to-grow) [![gds-logo-1](https://public.govdataservices.com/hs-fs/hubfs/gds-logo-1.png?width=500&height=150&name=gds-logo-1.png)](https://public.govdataservices.com/) **Get in Touch** Government Data Services 3200 W. Market St., Ste. 102 Akron, OH 44333-3324 Government Data Services 117 Seaboard Lane, F270 Franklin, TN 37067 Toll Free: (800) 370-7397 Email: [info@govdataservices.com](mailto:info@govdataservices.com) ![soc](https://public.govdataservices.com/hs-fs/hubfs/soc.jpg?width=44&name=soc.jpg)[![digicert](https://public.govdataservices.com/hs-fs/hubfs/digicert.png?width=117&name=digicert.png)](https://seal.digicert.com/seals/popup/?tag=VtfrmabA&url=www.govdataservices.com) © 2026 - Government Data Services LLC. All rights reserved - [Site Use Agreement](https://public.govdataservices.com/terms-of-use) - [Confidentiality and Privacy](https://public.govdataservices.com/privacy) ```json { "@context" : "http://schema.org", "@type" : "Organization", "knowsLanguage" : "en", "name" : "", "url" : "https://public.govdataservices.com/the-scoop/tx-vacates-1115-waiver-exclusion-rule" } ``` ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "abstract" : "Baylor All Saints Medical Center, ET AL. v. Xavier Becerra (“CASE”) was released August 15, 2024 in the United States District Court For the Northern District Of Texas Fort Worth Division. The ruling vacates Code of Federal Register 412.106(b)(4)(iii) known as the “Exclusion Rule” based on the section being unlawful.", "author" : { "@type" : "Person", "name" : "Chris Cusimano" }, "dateModified" : "September 11, 2024 4 PM", "datePublished" : "September 3, 2024 8 PM", "headline" : "Medicare DSH: US District Court in TX Vacates 1115 Waiver \"Exclusion Rule\"", "image" : "https://21378692.fs1.hubspotusercontent-na1.net/hubfs/21378692/Office%20workplace%20with%20laptop%20and%20smart%20phone%20on%20wood%20table%20and%20london%20city%20blurred%20background.jpeg", "inLanguage" : "en", "keywords" : "[Legal News, Disproportionate Share Hospital (DSH), Medicare Cost Report, Inpatient Prospective Payment System]", "mainEntityOfPage" : { "@type" : "WebPage" }, "name" : "Medicare DSH: US District Court in TX Vacates 1115 Waiver \"Exclusion Rule\"", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "" }, "name" : "" }, "text" : "Baylor All Saints Medical Center, ET AL. v. Xavier Becerra (“CASE”) was released August 15, 2024 in the United States District Court For the Northern District Of Texas Fort Worth Division. The ruling vacates Code of Federal Register 412.106(b)(4)(iii) known as the “Exclusion Rule” based on the section being unlawful. This vacatur impacts the potential validity of including, protesting, or appealing 1115 wavier days for Medicare DSH reimbursement. This CASE cites Congressional expansion of the Medicaid fraction in the 2005 Deficit Reduction Act to include patients “..who are regarded as such because they receive benefits under a demonstration project approved under title XI” with further emphasis added by citing the 2019 5th Circuit decision in Forrest Gen. Hosp. v. Azar which notes “the Medicaid fraction’s numerator includes…..days a hospital treated patients who are regarded as Medicaid-eligible because they received demonstration project benefits.” The CASE was brought after implementation of the “Exclusion Rule,” which was an attempt by HHS to overcome the right gained by hospitals to claim 1115 based Medicaid days in the Medicare DSH calculation as a result of the aforementioned Forrest Gen. Hosp. v. Azar ruling. That same right was confirmed in the United States Court of Appeals for the District of Columbia Circuit in Bethesda Health, Inc. v. Azar, 389 F.Supp.3d 32, 43-44 (D.C. 2019), aff'd, 980 F.3d 121 (D.C. Cir. 2020). Rather than petition the Supreme Court to hear the case, HHS promulgated the \"Exclusion Rule.\" While the defense argued that the secretary has discretion on whether to include the days, the judge in this CASE chose not to resurrect 5th Circuit decisions that “[t]he Secretary may exercise discretion, and the Secretary did exercise discretion when he authorized the [state plan].” and states himself that “Thus, the Secretary exercised his discretion when he approved Texas’s plan.” At the very least hospitals should protest for 1115 waiver-based Medicaid days that are derived from 1115 waiver programs approved by the Secretary. Some hospitals may choose more aggressive strategies including claiming the days based on this CASE. Providers should carefully explore how to preserve their rights. If you have questions regarding Medicare DSH, please contact Adam Blackwell at adamblackwell@govdataservices.com The CASE can be found here.", "url" : "https://public.govdataservices.com/the-scoop/tx-vacates-1115-waiver-exclusion-rule", "wordCount" : "492" } ``` ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Chris Cusimano", "url" : "https://public.govdataservices.com/the-scoop/author/chris-cusimano" }, "dateModified" : "2024-09-11T16:21:20.974Z", "datePublished" : "2024-09-03T20:00:00.000Z", "headline" : "Medicare DSH: US District Court in TX Vacates 1115 Waiver \"Exclusion Rule\"", "image" : [ "https://public.govdataservices.com/hubfs/Office%20workplace%20with%20laptop%20and%20smart%20phone%20on%20wood%20table%20and%20london%20city%20blurred%20background.jpeg" ], "mainEntityOfPage" : { "@id" : "https://public.govdataservices.com/the-scoop/tx-vacates-1115-waiver-exclusion-rule", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" } } } ```