Brown v. Richardson, Civ. A. No. 72-845.

• Decision Date: 27 May 1975
• Docket Number: Civ. A. No. 72-845.
• Citation: 395 F. Supp. 185
• Parties: Harry V. BROWN, Jr., for Harry V. Brown, Sr., Plaintiff, v. Elliot L. RICHARDSON, Secretary of Health, Education and Welfare, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

395 F. Supp. 185

Harry V. BROWN, Jr., for Harry V. Brown, Sr., Plaintiff, v. Elliot L. RICHARDSON, Secretary of Health, Education and Welfare, Defendant.

Civ. A. No. 72-845.

United States District Court, W. D. Pennsylvania.

May 27, 1975.

Merle H. Hildebrand, New Castle, Pa., for plaintiff.

James A. Villanova, Asst. U.S. Atty., Pittsburgh, Pa., for defendant.

OPINION and ORDER

McCUNE, District Judge.

Defendant's motion for summary judgment requires that we determine whether the Social Security Administration, an administrative agency of the United States Government, can be estopped to deny payment of benefits, when payment would work a result inconsistent with the substantive provisions of the Social Security Act. At issue is the liability of the Administration for the cost of in-patient hospital services furnished to plaintiff's father by the Jameson Memorial Hospital from January 13, 1970, until his death on April 26, 1970.

I Background

Plaintiff, a son of the deceased, initiated this action pursuant to §§ 1869(b) and 205(g) of the Act, 42 U.S.C. §§ 1395ff(b)(1)(C) and 405(g) to seek review of the final decision of the Secretary of Health, Education and Welfare (the Secretary) denying his claim for health insurance benefits under § 1812(a)(1) of the Act's "medicare" provisions, 42 U.S.C. § 1395d(a)(1). As initially presented, plaintiff contended that his father had commenced a new "spell of illness" under § 1861(a)(1) of the Act, 42 U.S.C. § 1395x(a)(1) upon his admission to the hospital on January 13, 1970, and was, therefore, entitled to benefits under the Act.

In our opinion of December 5, 1973, we rejected that argument and held that plaintiff was not entitled to the contested benefits under the substantive provisions of the Act. At that time, however, we denied defendant's motion for summary judgment and remanded the case to the Secretary for consideration of the estoppel question which had been raised at the first argument and which is now before us, plaintiff having appealed from the Secretary's additional findings.¹

Plaintiff contends that under the facts presented here defendant should be estopped to deny payment of the contested benefits. We will summarize the facts upon which plaintiff's claim is based.

From April, 1968, until his death, plaintiff's father was continuously institutionalized in either a nursing home or a hospital. Plaintiff claims that throughout this prolonged period of institutional care, he and members of his family were led to believe that they would be notified of the status of deceased's health insurance benefits by the Administration. This belief was founded upon a statement contained in a pamphlet prepared and distributed by the Commissioner of Social Security entitled "Your Medicare Handbook." On page 7 of that pamphlet it states:

"Hospital Insurance-Part A of Medicare

You Get a Personal Record of Benefits Used.

You don't have to bother about trying to keep track of how many `days' or `visits' you use in each period. The notice you receive from the Social Security Administration after you have used any hospital insurance benefits will tell you how many benefit `days' and `visits' you have left in that benefit period."²

While the deceased had used his hospital benefits on several occasions after April 7, 1968, the Administration did not send any notice to the plaintiff or any member of his family concerning the status of deceased's benefits from April 7, 1968, until March 6, 1970,³ almost two months after deceased was readmitted to the hospital, despite the fact his benefits had been exhausted prior to January 13, 1970. Plaintiff claims that this failure to give the notices as described in the medicare handbook lulled him into a false sense of security. Therefore, plaintiff argues that the Secretary should be estopped to deny payment of the contested benefits.

At a hearing conducted before an Administrative Law Judge, Don Brown, plaintiff's brother testified:

"I absolutely had no knowledge that his benefit period was used up and to the best of my knowledge there was no notification on the part of the Social Security Administration that his benefits had been used to the extent where he had overdrawn⁴ and used his benefits and also to the point where (benefits for) the last stay in the hospital were denied because of the government's contention that he had used up all his benefits periods . . . . I am sure it would have changed things had we been notified that we were incurring a debt of this magnitude through the hospital . . . . I am sure had we known this size of a bill was going to be run up, that we would have examined to see if there was private individuals who had homes that, who would have rendered the kind of service that we had intended him to get at Golden Hill (nursing home) through private sources at a much less sic economical rate and also it would have been in a position to extend his benefit period." Tr. 44-46.

Finding that the Secretary in denying benefits had not considered the estoppel question we remanded the case for factual determinations as to whether the factual prerequisites for an estoppel claim were present without deciding whether, as a matter of law, estoppel could be invoked against the Secretary. Our remand order directed the Secretary to address four questions: (1) whether under the statute and related administrative regulations the Commissioner of Social Security had the authority to make the statement found on page 7 of the pamphlet "Your Medicare Handbook" concerning notice of the number of days remaining in a given benefit period; (2) whether the issuance of such a notice was required or provided for by any Social Security Administration practice, regulation or ruling; (3) whether such a notice was ever given to deceased, his son or any other person; and (4) if such notice was not given, whether plaintiff relied to his detriment on the government's failure to give such notice.

Pursuant to our order, the Secretary, acting through the Appeals Council, answered those questions as follows:

(1) The authority to issue the pamphlet "Your Medicare Handbook" derives from and is implicit in the responsibility for the administration of the Social Security program. The program depends on informed participation by the public. Therefore it is necessary as Congress has repeatedly recognized through budgetary appropriations for the Commissioner to publish informational materials that seek to advise the public in non-technical language of the practice and procedure of the agency and the statutory requirements of the Act;

(2) The pamphlet accurately described the Administration's normal method of operation;

(3) That not less than four notices should have been sent between September, 1968 and January, 1970. The notices were not sent because the notice called for depended upon the act of bill processing which was not done until November 1, 1972. No notice that benefits had been exhausted was received until March 6, 1970.

(4) The Appeals Council does not dispute that plaintiff may have relied on the statement to his detriment. See Tr. 84-88.

On remand, the Appeals Council decided that plaintiff was not entitled to the contested benefits for two reasons. First, the Council held that as a matter of law the Secretary could not be estopped. Furthermore, the Council concluded that as a matter of fact, plaintiff had not displayed reasonable diligence and circumspection in response to the suspicious circumstances created by the complete absence of the promised notices.⁵

Plaintiff has filed exceptions to the additional and modified findings of fact by the Appeals Council which we now address in the context of defendant's motion for summary judgment.

In reviewing an administrative determination, the court is generally limited to consideration of two questions: (1) whether the decision is the product of an error of law and (2) whether it is supported by substantial evidence. The facts are not in dispute. We must address a purely legal issue, i. e., whether estoppel is available against the government and a question of fact, i. e., do the facts presented here show justifiable reliance?

After a thorough review of the administrative record, the briefs of both parties and the points raised at oral argument, we conclude that the Secretary cannot be estopped as a matter of law. We further find that there is substantial evidence to support the decision of the Appeals Council. On the factual issue, therefore, it is proper to grant defendant's motion for summary judgment.

II Estoppel: The Applicable Law

It is sometimes stated as a general rule that "estoppel may not be asserted against an agency of the United States government," see e. g., Spencer v. Railroad Retirement Board, 166 F.2d 342, 343 (3rd Cir. 1948), Cf. Walsonavich v. United States, 335 F.2d 96, 100-101 (3rd Cir. 1964). However, it is clear that this general rule does not apply in all cases. For example, in Ritter v. United States, 28 F.2d 265, 267 (3rd Cir. 1928) the court said:

"The acts or omissions of the officers of the government, if they be authorized to bind the United States in a particular transaction, will work estoppel against the government, if the officers have acted within the scope of their authority."

While in Ritter, the court found that the government was not estopped because a field agent of the Internal Revenue Service acted in an unauthorized manner in telling plaintiff that he need not observe the requirements of a tax refund claim statute, in Walsonavich v. United States, supra, the same court held that the government was estopped from claiming that the statute of limitations applicable to excise taxes preluded a refund claim which was made within the time period specifically agreed to by the Commissioner of Internal Revenue. See also Atlantic Richfield Company v. Hickel, 432 F.2d 587 (10th Cir. 1970) and Smale & Robinson, Inc. v. United States, 123 F.Supp. 457,...