Doyle v. Secretary of Health and Human Services

• Decision Date: 03 February 1988
• Docket Number: 87-1768,Nos. 87-1741,s. 87-1741
• Citation: 848 F.2d 296
• Parties: , Medicare&Medicaid Gu 37,121 Robert DOYLE, M.D., Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant. Robert DOYLE, M.D., Plaintiff, Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee. Robert DOYLE, M.D., Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, et al., Defendants, Appellees. Health Care Review, Inc., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 296

848 F.2d 296

22 Soc.Sec.Rep.Ser. 85, Medicare&Medicaid Gu 37,121

Robert DOYLE, M.D., Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant.

Robert DOYLE, M.D., Plaintiff, Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee.

Robert DOYLE, M.D., Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, et al., Defendants,

Appellees.

Health Care Review, Inc., Defendant, Appellant.

Nos. 87-1741, 87-1768.

United States Court of Appeals First Circuit.

Heard Feb. 3, 1988.

Decided June 3, 1988.

Michael E. Robinson, Appellate Staff, Civil Div., Dept. of Justice, with whom John F. Cordes, Richard K. Willard, Asst. Atty. Gen., Washington, D.C., and Richard S. Cohen, U.S. Atty., Portland, Me., were on brief, for Secretary of Health and Human Services and Health Care Review, Inc.

Julian L. Sweet with whom Thomas J. Valvano and Berman, Simmons & Goldberg, P.A., Lewiston, Me., were on brief, for Robert Doyle, M.D.

Before BREYER, Circuit Judge, ALDRICH, Senior Circuit Judge, and PETTINE, ^* Senior District Judge.

BREYER, Circuit Judge.

On December 31, 1986, the Inspector General of the Department of Health and Human Services ("HHS") entered an order forbidding Dr. Robert Doyle, the plaintiff in this case, from receiving reimbursement for treatment of Medicare patients for at least five years. In doing so, the Inspector General accepted a recommendation of a Maine peer review organization ("PRO") that he impose this serious sanction because Dr. Doyle "grossly and flagrantly violated" his obligation to provide medical care "of a quality which meets professionally recognized standards of health care," 42 U.S.C. Secs. 1320c-5(b)(1)(B); 1320c-5(a)(2) (1982), in particular by improperly treating three patients. Dr. Doyle immediately asked a federal district court in Maine to enjoin HHS from carrying out its order.

The district court rejected Dr. Doyle's constitutionally based legal attacks on HHS's statute and procedures, but it agreed with Dr. Doyle that the Maine PRO had failed to follow an HHS regulation governing its choice of recommended sanction. The court issued the injunction, 660 F.Supp. 1484. The Secretary of HHS now appeals. We agree with the Secretary that the district court cannot lawfully issue an injunction at this stage of the agency's proceedings. We therefore vacate the court order.

I Background

A

The statutory and regulatory scheme within which this case arises works as follows:

1. A statute, the Peer Review Improvement Act, 42 U.S.C. Secs. 1320c-1 through 13 (1982 & Supp. IV 1986), requires those who provide Medicare-reimbursed services to perform work "of a quality which meets professionally recognized standards of health care." HHS may impose sanctions upon doctors (or other health care providers) who "fail[ ] in a substantial number of cases substantially to comply with," or who "grossly and flagrantly violate[ ]," this obligation. The statute requires the Secretary to monitor doctors through peer review organizations (typically private companies), which themselves use doctors (and nurses) to review doctors' conduct.

2. HHS has enacted regulations specifying procedures that PRO's must follow when they review the quality of Medicare doctors' services. See 42 U.S.C. 1320c-3(a)(8) (1982). (These regulations, somewhat amended, are now codified at 42 C.F.R. Secs. 1004.1-130 (1987)). If a PRO "identifies" a "substantial violation" of professional health care standards in "a substantial number" of a doctor's "cases," or a "violation" that is "gross and flagrant," it is to notify the doctor in writing. The doctor must have a chance to submit information to the PRO or to meet with it to review its initial finding, or both. If the PRO still believes the doctor has violated Medicare standards, it will submit a report and a sanction recommendation to HHS's Inspector General. The PRO must send a copy of the report and recommendation to the doctor. The doctor may submit additional material to the Inspector General. The Inspector General will then decide whether to apply a sanction. He must notify the doctor of the sanction decision. If he imposes a sanction, it will take effect two weeks after notification. At that time, the Inspector General must also notify members of the medical community (hospitals, medical societies, etc.) and publish notice in the newspaper.

3. The statutes and the regulations provide further administrative remedies for a doctor whom the Inspector General sanctions. The doctor is entitled to a hearing before an Administrative Law Judge (ALJ). The doctor may appeal an adverse ALJ decision to the Secretary's Appeals Council. (At the time of Dr. Doyle's alleged violation, appeals to the ALJ and the Appeals Council were alternative remedies.) And, he can obtain judicial review of the final decision of the Secretary. See generally 42 U.S.C. Secs. 1320c-1 through 13; 42 C.F.R. Secs. 1004.30-130.

B

The relevant facts here are as follows:

1. A private company called Health Care Review, Inc., ("HCRI") is under contract with HHS to run the peer review system in Maine. It employs nurses who examine medical charts of 25 percent to 30 percent of Maine's Medicare patients. If he or she finds a possible problem, the reviewing nurse alerts a doctor, who may refer the matter to a Quality Review Committee (four doctors), which may refer the matter to the Maine Advisory Committee (six doctors), which may make recommendations to the Inspector General.

2. HCRI followed this process in respect to Dr. Doyle. The Quality Review Committee found seven instances in which Dr. Doyle may have committed a sanctionable offense. The Maine Advisory Committee, after hearing from Dr. Doyle, unanimously found there was a "gross and flagrant" violation in three instances, and recommended a five-year exclusion from the Medicare program. After reviewing Dr. Doyle's further submissions, the Inspector General adopted that recommendation.

3. At this point, during the two weeks before the sanction would take effect, Dr. Doyle brought his suit in district court. See 42 U.S.C. Sec. 1320c-5(b)(4). After hearing evidence about how the Maine Advisory Committee had conducted its deliberations, the court concluded that the committee had not properly applied the factors listed in a particular HHS regulation. That regulation says:

The PRO's specific recommendation must be based on a consideration of:

(a) The type of the offense involved;

(b) The severity of the offense;

(c) The deterrent value;

(d) The practitioner's or other person's previous sanction record;

(e) The availability of alternative sources of services in the community; and

(f) Any other factors that the PRO considers relevant (for example, the duration of the problem).

42 C.F.R. Sec. 1004.80 (1987). (At the time of Dr. Doyle's sanction, the fifth factor, availability of alternative sources of services in the community, was not part of the list. 42 C.F.R. Sec. 474.6 (1985), amended 1986.) For this reason, the court enjoined "enforcement and publication" of plaintiff's five-year exclusion. The court ordered a new meeting of the Maine Advisory Committee to reconsider its sanction recommendation, this time on the basis of the factors in Sec. 1004.80.

II The Secretary's Appeal

The Secretary argues that the district court could not legally issue an injunction because Dr. Doyle came to court before exhausting his administrative remedies. We believe the Secretary is right. See, e.g., Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638 (1938). In the Medicare area, Congress has elevated the ordinary administrative "common law" principle of exhaustion into a statutory requirement. The Medicare statute allows judicial review only after a "final decision by the Secretary." 42 U.S.C. Sec. 405(g); see also 42 U.S.C. Sec. 1320c-5(b)(4). And, the Supreme Court has elaborated upon the meaning of this statutory language. The "finality" requirement

consists of two elements, ... one of which [the requirement that the claim be presented to the Secretary,] is purely "jurisdictional" in the sense that it cannot be waived by the Secretary in a particular case. The [other,] waivable element is the requirement that the administrative remedies prescribed by the Secretary be exhausted.

Bowen v. City of New York, 476 U.S. 467, 483, 106 S.Ct. 2022, 3031, 90 L.Ed.2d 462 (1986) (quoting Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976)).

In this instance, Dr. Doyle's claim has "been presented" to the Secretary; indeed one of the Secretary's administrators, the Inspector General, has imposed the very sanction about which Dr. Doyle complains. Dr. Doyle, however, has not "exhausted" the Department's administrative appeals; and, there is no "final" decision of the Secretary because the Secretary has not "waived" exhaustion.

Dr. Doyle argues that his claim fits within a narrow exception to the exhaustion rule, an exception where courts have found the agency must waive exhaustion. That exception applies to an "entirely collateral" matter where the agency has deprived an individual of something important and "full relief cannot be obtained" later from the agency. City of New York, id., (quoting Mathews, 424 U.S. at 331, 96 S.Ct. at 900). In our view, however, Dr. Doyle's case does not fall within this exception.

To understand why, one must first understand the policy basis of an exhaustion rule:

[Exhaustion] allows the agency to develop a factual record, to apply its expertise to a problem, to exercise its discretion, and to correct its own mistakes, all before a court will intervene. Insofar as specialized administrative understanding is important, the doctrine thereby promotes accurate results, not only at the agency level, but also by allowing more informed judicial review. By limiting judicial interruption of agency proceedings, the doctrine can encourage expeditious...