Abiona v. Thompson

• Decision Date: 04 December 2002
• Docket Number: No. CV00-3994(DRH)(MLO).,CV00-3994(DRH)(MLO).
• Parties: Margaret ABIONA, Jill Altman, Rodolfo T. Domingo, Jeffrey Gropper, Kwang Ho Kim, June Woo Lee, William Mairino, Terence O'Malley, Thomas Tomaselli, V. Venkatachalam, Jay Stein, Lawrence Minowitz, Richard Moore, Richard Peters, John Pilliterri, Individually and on behalf of others similarly situated, Plaintiffs, v. Tommy THOMPSON, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Eastern District of New York

237 F.Supp.2d 258

Margaret ABIONA, Jill Altman, Rodolfo T. Domingo, Jeffrey Gropper, Kwang Ho Kim, June Woo Lee, William Mairino, Terence O'Malley, Thomas Tomaselli, V. Venkatachalam, Jay Stein, Lawrence Minowitz, Richard Moore, Richard Peters, John Pilliterri, Individually and on behalf of others similarly situated, Plaintiffs, v. Tommy THOMPSON, Secretary of Health and Human Services, Defendant.

No. CV00-3994(DRH)(MLO).

United States District Court, E.D. New York.

December 4, 2002.

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Landy & Seymour, New York, NY by Whitney North Seymour, Jr., for Plaintiffs.

United States Attorney's Office, Civil Division, Brooklyn, NY by Kevin P. Mulry, for Defendant.

MEMORANDUM AND ORDER

HURLEY, District Judge.

Plaintiffs, assignees of Medicare claims for reimbursement of certain pain management services provided by anesthesiologists, brought this action challenging the Secretary of Health and Human Services' determination that separate reimbursement was not allowed absent a showing of medical necessity. The action alleges that the Secretary's determination was unsupported by substantial evidence and violative of procedural due process. The parties filed cross-motions for judgment on the pleadings. Plaintiffs also made a motion for certification of the class of assignee anesthesiologists. For the reasons discussed infra, the Court grants Defendant's motion for judgment on the pleadings and denies Plaintiffs' motions.

I. BACKGROUND

A. Procedural Facts.

The named plaintiffs ("Plaintiffs") commenced this action to challenge the Secretary of Health and Human Services' ("Secretary") policies regarding Medicare reimbursement for routine post-operative patient controlled analgesia¹ ("PCA") services administered by anesthesiologists. Plaintiffs are all anesthesiologists, practicing in New York, who individually administered surgeon-directed PCA services to Medicare beneficiaries. The Medicare beneficiaries subsequently assigned their claims for reimbursement to each of the Plaintiffs.

The Plaintiffs' resulting reimbursement claims were each denied by the carrier, Empire Medical Services ("Empire"). The Plaintiffs then requested carrier hearings. In each case, the hearing officer issued a formal decision denying reimbursement. Discrete groups among the Plaintiffs then aggregated their claims (to meet the jurisdictional amount) and requested hearings before an Administrative Law Judge ("ALJ"). See 42 C.F.R. § 405.817(b). In each case, the ALJ reversed the hearing officer and held that Plaintiffs were entitled to separate reimbursement for anesthesia services related to PCA. In each case, the ALJs relied upon testimony and declarations of anesthesiologists and physicians (including the testimony of Plaintiffs) to render decisions in Plaintiffs' favor. Based on this testimony, the ALJ's found that there was no national policy regarding the payment of PCA services provided by anesthesiologists.

The Centers for Medicare and Medicaid Services ("CMMS") sent some of these ALJ decisions (those rendered by Judge Nisnewitz) to the Departmental Appeals Board ("Board") with the recommendation that the Board take own-motion review of those decisions. On April 7, 1999, the Board issued a notice of proposed action and a proposed order of remand. Plaintiffs filed a timely objection to the Board's proposed action, citing other favorable ALJ decisions and requesting oral argument. On June 24, 1999, the Board notified the Plaintiffs that it would accept additional submissions and hear oral argument regarding the existence of a national policy for the payment of PCA services rendered by anesthesiologists. The Board also consolidated all appeals from Plaintiff's ALJ decisions into a single case for review and requested that CMMS submit a position paper addressing the issues presented.

On May 15, 2000, following submission of the CMMS position paper, a brief from Plaintiffs and oral argument via telephone, the Board issued its final decision. The Board reversed the ALJs' decisions and held that, consistent with established CMMS policy, payment for PCA services rendered by anesthesiologists are included in the global surgical fee, not via separate payment to the anesthesiologist. The Board also noted that separate payment could be made where the documented severity of the Medicare beneficiary's condition required consultation with a pain therapist. However, no such documentation was made in the instant case.

On July 11, 2000, Plaintiffs sought timely judicial review of the Board's decision by filing a complaint in this Court. On August 7, 2001, the parties filed cross-motions for judgment on the pleadings and Plaintiffs' motion for class certification. The Court disposes of these pending motions at this time.

B. Medicare Facts.

This action arises under 42 U.S.C. §§ 1395-1395ggg, which establishes the Medicare program. Medicare is a federally funded health care program for the elderly and disabled. Part B of the Medicare program provides supplemental insurance benefits to cover certain diagnostic, outpatient and physician services to Medicare beneficiaries. See Schweiker v. McClure, 456 U.S. 188, 190, 102 S.Ct. 1665, 72 L.Ed.2d 1 (1982).

This portion of Medicare is administered by the Health Care Financing Administration ("HCFA"), a branch of the Department of Health and Human Services ("DHHS"), in conjunction with private "carriers" that have entered into contract with the Secretary. (The carrier in this case is Empire.) The Secretary possesses the authority to decide which items or services are included under Part B. See 42 U.S.C.A. § 1395ff(a). The Secretary utilizes regulations, see 42 C.F.R. § 411, et seq., the Federal Register and manuals to direct carriers as to which circumstances require Medicare reimbursement. Furlong v. Shalala, 238 F.3d 227, 229 (2d Cir.2001). These regulations and the Federal Register are binding upon the carriers. Id.

As amended in the Omnibus Budget Reconciliation Act of 1989, reimbursement is now made in accordance with a "fee schedule" for physicians' services. See 42 U.S.C. § 1395w-4; see also Medical Soc. of State of N.Y. v. Cuomo, 976 F.2d 812, 814-815 (2d Cir.1992). This fee schedule "reflect[s] an objective evaluation of the physician resources required to provide a particular service or the amount that the physician actually charged." Medical Soc., 976 F.2d at 814. The Secretary establishes, through regulation, a fee schedule for all physicians' services before January 1 of each year. 42 U.S.C. § 1395w-4(b)(1). Physician anesthesia services are expressly addressed in these fee schedules.² See 42 U.S.C. § 1395w-4(b)(2)(B).

Rather than allow piecemeal reimbursement for individual procedures performed in connection with surgery, certain physicians' services are collectively embraced by a "global surgical fee." 42 U.S.C. § 1395w-4(c)(1)(A). This fee is meant to embrace the "pre-operative and post-operative physicians' services" connected with surgical procedures. Id. However, Congress delegated to the Secretary the responsibility to define which specific services should be included in the global surgical fee. 42 U.S.C. § 1395w-4(c)(1)(A)(ii).

The preamble of the physician fee schedule rule addressed the reimbursement of acute post-operative pain management services provided by physicians. Responding to "approximately 95,000" public comments, the Secretary stated the following national policy:

Acute post-surgical pain management services are generally furnished by the surgeon. Under the fee schedule, these services by the surgeon are included in the surgeon's global payment and are not separately billed. We recognize, however, that there are certain special situations when a patient's acute postsurgical pain may be so severe as to require consultation or treatment by another specialist such as an anesthesiologist. Our policy for these situations will be to allow separate billing by the pain specialist if the service is documented as being medically necessary. This policy is consistent with our policy for other instances of concurrent care. If, however, we find that referral to a pain specialist becomes routine, we will direct carriers to reduce the global payment for the surgery accordingly.

56 Fed.Reg. 59,561 (November 15, 1991). This policy applies to physician services, such as those at issue in the instant case, provided on or after January 1, 1992. See 56 Fed Reg. 59,502.

On May 29, 1992, the HCFA, the administrator of Part B medicare benefits for the Secretary, issued a Memorandum regarding "Policy Issues Flowing from the Carrier Medical Directors' Meeting." See Bureau of Program Development, HCFA, Medicare & Medicaid Guide, ¶ 40,375 at 31,531. In relevant part, the Memorandum stated:

The Surgeon should manage postoperative pain except under special circumstances. If postpay audits reveal that a surgeon's patients routinely receive pain management from an anesthesiologist, the global fee for the surgeon should be reduced .... Payment for physician services related to patient controlled anesthesia (PCA) is included in the global fee paid to the surgeon.

Id. at 31,568 (emphasis added). This Memorandum was distributed to all regional offices and ultimately to the carriers. Empire, the carrier in this case, issued a memorandum instruction repeating the policy contained in this Memorandum on June 23, 1993.

C. Medicare Claims and Appeals.

A claim for Medicare reimbursement must first be filed in writing with the carrier within a specified period after the services are furnished. 42 U.S.C. § 1395u(b)(3)(B). The carrier determines whether the claimed services have been provided to a Medicare beneficiary and whether those services are covered by Part B. The carrier rejects claims that are not covered and pays the proper amount for the covered services. The determination notice is sent to the beneficiary and any assignee. Reimbursement, when...