Himmler v. Califano

• Citation: 611 F.2d 137
• Decision Date: 11 December 1979
• Docket Number: No. 77-1083,77-1083
• Parties: Walter HIMMLER, Executor of the Estate of Anna Himmler, Carl Fidorra, individually and on behalf of all other parties similarly situated, Plaintiffs- Appellees, v. Joseph CALIFANO, Secretary of HEW, and Michigan Hospital Service, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 137

611 F.2d 137

Walter HIMMLER, Executor of the Estate of Anna Himmler, Carl Fidorra, individually and on behalf of all other parties similarly situated, Plaintiffs- Appellees, v. Joseph CALIFANO, Secretary of HEW, and Michigan Hospital Service, Defendants-Appellants.

No. 77-1083.

United States Court of Appeals Sixth Circuit.

Argued Feb. 9, 1979.

Decided Dec. 11, 1979.

James K. Robinson, U. S. Atty., Detroit, Mich., William Kanter, John M. Rogers, Alfred Mollin, Attys., Civ. Div., App. Section, Dept. of Justice, Washington, D. C., for defendants-appellants.

Alan W. Houseman, Michigan Legal Services, Inc., Kenneth Lee Lewis, Detroit, Mich., for plaintiffs-appellees.

Before EDWARDS, Chief Judge, and LIVELY and ENGEL, Circuit Judges.

ENGEL, Circuit Judge.

In this appeal we are called upon to decide whether the Social Security Act and the Due Process Clause of the Fifth Amendment require the Secretary of Health, Education and Welfare to provide notice and an opportunity for a hearing before medical expenses already incurred by eligible Medicare recipients can be initially rejected by a fiscal intermediary for Medicare payment as not "medically necessary" when such services were previously certified as necessary by the beneficiary's physician and by a utilization review committee. We hold that the regulatory scheme at issue complies with the Social Security Act and that it does not deprive the plaintiffs of due process. Accordingly, we reverse the district court's judgment, 422 F.Supp. 196, holding to the contrary.

I. THE PARTIES

This suit was originally brought in the district court by and on behalf of two Medicare beneficiaries, Anna Himmler and Carl Fidorra, for payment of health care services rendered to them. Both of these plaintiffs were receiving skilled medical care, certified as medically necessary by their doctors and by a utilization review committee. Anna Himmler was still receiving skilled nursing services when she was first informed by Michigan Blue Cross, the fiscal intermediary, that a period of approximately two months during which she had received nursing home care would not be covered by Medicare. Carl Fidorra received a notice subsequent to his discharge from the hospital that a portion of his hospital care would not be covered by Medicare. Each individual was informed of his or her right to a hearing if requested within six months. No such request was made by either, and instead this action was commenced.

A. Class Action

The district court certified the action as a class action and defined plaintiffs' class as

all persons in Michigan sixty-five years of age or older who are eligible for medicare and having received inpatient hospital care, have been recommended by the attending physician or (Sic: and) the utilization review committee within the hospital for further inpatient care or for transfer to an extended care facility for continued care and treatment, or to a home health care situation, and whose eligibility for such continued services under the medicare program has been, is being, or may be, under 20 C.F.R. 405.702 et. (Sic ) (currently 42 C.F.R.), terminated by Michigan Blue Cross without notice or an opportunity for a prior hearing.

II. THE REGULATORY AND STATUTORY SCHEME

Part A of Title XVIII of the Social Security Act (Medicare), 42 U.S.C. §§ 1395c-1395i-2 (1976) provides insurance for eligible persons to cover the costs of hospital and hospital-related services. Generally, Part A provides for payments from the hospital insurance trust established by the Act for (1) inpatient hospital services for up to 150 days; (2) post-hospital extended care services for up to 100 days; and (3) post-hospital home health benefits for up to 100 visits. 42 U.S.C. § 1395d. Coverage does not extend to post-hospital extended care services where the care is merely custodial rather than skilled. As noted by the district judge:

The type of care needed by a patient, custodial or skilled, is a question of fact to be determined in every case. Under the statute, however, receipt of Medicare benefits for extended care services is conditioned upon certification and periodic recertification by the patient's doctor that skilled care is medically necessary. 42 U.S.C. § 1395f-(a)(2).

The patient's physician is required to certify that the patient is, in fact, ill enough to need the services of a hospital or extended care facility, and that the care needed will be that skilled type of medical care expected to be found in the institution. This determination by the patient's physician must be made at the earliest stage in which the individual patient enters the Medicare process.

Furthermore, the extended care facility providing care to the patient must have a Utilization Review Committee, composed of at least two physicians, which also periodically reviews whether the individual patient continues to need skilled nursing care, 42 U.S.C. § 1395j(8) (Sic: § 1395x(j)(8)), and makes certain that the provider utilizes its facilities correctly. 42 U.S.C. § 1395x(k)(2).

Under the mandate of 42 U.S.C. § 1395x(k), utilization reviews encompass both the practices of the hospital or skilled nursing facility and the need for the particular services being furnished to individuals covered by the Act. Each utilization review plan must provide "for prompt notification to the institution, the individual, and his attending physician of any finding, (made after opportunity for consultation to such attending physician) by the physician members of such committee or group that any further stay in the institution is not medically necessary." 42 U.S.C. § 1395x(k)(4). 42 U.S.C. § 1395f(a) provides that payment may be made to providers of services for the services furnished to an individual only if:

(7) with respect to inpatient hospital services or post-hospital extended care services furnished such individual during a continuous period, a finding has not been made (by the physician members of the committee or group, as described in section 1395x(k)(4) of this title, . . .) pursuant to the system of utilization review that further inpatient hospital services or further post-hospital extended care services, as the case may be, are not medically necessary; except that, if such a finding has been made, payment may be made for such services furnished before the 4th day after the day on which the hospital or skilled nursing facility, as the case may be, received notice of such finding.

Thus, no provider will be eligible to receive Medicare payment for services rendered four days or more after the utilization review committee certifies that further services are not medically necessary.

Under the statutory scheme and the regulations in effect at the time of this litigation, the physician's certification and the decision of the utilization review committee of a given provider Initially determine the patient's right to Medicare coverage for the services provided, but the Final determination of an individual's entitlement to benefits and the amount of any such benefits is entrusted to the Secretary of HEW, in accordance with the regulations which he prescribes. 42 U.S.C. § 1395ff(a). Under the Act, the Secretary's oversight of the administration of the Medicare program is delegated to a "fiscal intermediary." The Secretary has authority to contract with private agencies, such as Michigan Blue Cross, who are thereupon empowered to act on his behalf in performing certain functions. 42 U.S.C. § 1395h(a) provides:

Such agreement may also include provision for the agency or organization to do all or any part of the following: (1) to provide consultative services to institutions or agencies to enable them to establish and maintain fiscal records necessary for purposes of this part and otherwise to qualify as hospitals, extended care facilities, or home health agencies, and (2) with respect to the providers of services which are to receive payments through it (A) to serve as a center for, and communicate to providers, any information or instructions furnished to it by the Secretary, and serve as a channel of communication from providers to the Secretary; (B) to make such audits of the records of providers as may be necessary to insure that proper payments are made under this part; and (C) to perform such other functions as are necessary to carry out this subsection.

This fiscal intermediary is thus the alter-ego of the Secretary for the day-to-day administration of the Medicare program. As explained in Martinez v. Richardson, 472 F.2d 1121, 1123 (10th Cir. 1973): "This intermediary (Blue Cross) determines the amount due to the provider and makes payment accordingly. It thus acts as a field service for the Secretary." While normally such decisions by the fiscal intermediary are final, an individual who is dissatisfied with the determination is entitled (subject to certain dollar limitations) to a hearing under the procedures established by 42 U.S.C. § 405(b), and to a judicial review of the Secretary's final decision as provided by 42 U.S.C. § 405(g). 42 U.S.C. § 1395ff(b).

The parties are agreed that the ultimate determination of entitlement rests with the Secretary under the Act. The parties disagree, however, concerning the significance to be attached to the initial favorable determinations made by the physician and the utilization review committee. ¹ Specifically the parties are at odds over the procedures which the Act and the Fifth Amendment mandate when an initial judgment in favor of coverage is made by the utilization review committee and the claimant's physician and subsequently is overturned by the Secretary through the fiscal intermediary.

III. THE DISTRICT COURT DECISION

We admit to considerable uncertainty concerning the effect and intent of the decision of the district court in this case and, indeed, with the position of the plaintiffs in this appeal.

The operative portion of the summary judgment appears to...