Duggan v. Bowen, Civ. A. No. 87-0383.

• Decision Date: 01 August 1988
• Docket Number: Civ. A. No. 87-0383.
• Parties: Katherine DUGGAN, et al., Plaintiffs, v. Otis R. BOWEN, et al., Defendants.
• Court: U.S. District Court — District of Columbia

691 F. Supp. 1487

Katherine DUGGAN, et al., Plaintiffs, v. Otis R. BOWEN, et al., Defendants.

Civ. A. No. 87-0383.

United States District Court, District of Columbia.

August 1, 1988.

Stanley M. Brand, Abbe David Lowell, Sean Connelly, Brand & Lowell, Washington, D.C., William A. Dombi, Center for Health Care Law, National Assn. for Home Care, Washington, D.C., for plaintiffs.

Sheila Lieber, Jason R. Baron, Dept. of Justice, Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

SPORKIN, Judge.

INTRODUCTION

This case involves a challenge to the Department of Health and Human Services' ("HHS") administration of the Medicare home health care program. Plaintiffs take issue with the agency's interpretation and application of the "part-time or intermittent" care provision. I agree with plaintiffs that defendants' policy is contrary to the plain language of the Medicare Act and was promulgated in violation of the procedures required by the Administrative Procedure Act. Appropriate relief requires the certification of a nationwide class, the issuance of a declaratory order and the imposition of an injunction against further implementation of the challenged policy.

The named plaintiffs are seventeen elderly and sick Medicare patients, an association of home health care agencies, National Association for Home Care ("NAHC"), individual home health care agencies, and several members of Congress. They have brought this lawsuit on behalf of a nationwide class of elderly Medicare patients whom they claim are being injured by HHS' unlawful restriction of home health care coverage.

Plaintiffs lodge two separate but related causes of action. First, plaintiffs assert that HHS is using an unlawfully narrow definition of "part-time or intermittent care" — especially at the initial coverage determination stage of the four-step Medicare reimbursement process¹ — to deny home health care benefits to deserving patients. Second, plaintiffs charge that HHS "has abdicated its legal responsibility and thwarted the Medicare statute by delegating primary decisionmaking authority to private fiscal intermediaries without adequate supervision or regulatory mandate." Complaint at 6.

Plaintiffs contend that the upshot of their first cause of action is the unfair denial of benefits to a large class of elderly patients — especially those that lack the financial means, physical and emotional strength and tenacity to pursue an appeal of an initial declination of coverage. They claim that the prime product of HHS' wrongful delegation of authority to private intermediaries is a standardless system of ad hoc decisionmaking which leads to irrational, contradictory and unexplained home health care coverage determinations. Complaint at 6.

For their part, defendants contend that "plaintiffs raise vague, abstract, overbroad, premature and conflicting claims ..." and "fail to present a specific, concrete controversy appropriate for resolution by this Court." Defendants' Motion to Dismiss at 1. Defendants have interposed the usual procedural defenses in order to stop plaintiffs from receiving a hearing on the merits. For instance, defendants maintain that none of the plaintiffs has standing, that plaintiffs' claims are not ripe for adjudication, that this court lacks subject matter jurisdiction to review plaintiffs' claims, and that plaintiffs' claims are moot. Defendants also contest plaintiffs' charges on the merits.

Plaintiffs' causes of action are in very different procedural postures. Plaintiffs' "part-time or intermittent" care claim has been the subject of extensive briefing, a bench trial and several oral arguments. It is ripe for judgment. On the other hand, the broader "wrongful delegation" claim has now been stayed (before the completion of discovery) pursuant to the joint motion of the parties. See Order, May 16, 1988. Hence, this Memorandum Opinion and Order will focus exclusively on plaintiffs' part time or intermittent care claim; it constitutes my Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52(a).

At stake in this case are fundamental issues of judicial review, administrative law, statutory interpretation and most importantly, the access of elderly, sick and needy individuals to much-needed medical care.

OVERVIEW

A. The Medicare Program and the Home Health Benefit

The Medicare program, established by Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., is a system of health insurance for the aged and disabled. See generally Social Security Amendments of 1965, Pub.L. No. 89-97, Title I, 79 Stat. 286 (1965). It is administered by HHS through the Health Care Financing Administration ("HCFA"). The Medicare program consists of two basic parts. Medicare Part A provides coverage for the costs incurred by eligible beneficiaries for hospital care, extended care and home health care. See generally 42 U.S.C. §§ 1395c to 1395i-2. Medicare Part B is a voluntary program in which eligible beneficiaries who pay a monthly premium are entitled to reimbursement for physicians' and other medical services. See generally 42 U.S.C. §§ 1395j-1395w.

This case involves Medicare Part A. Services are provided under Part A by home health agencies ("HHAs") which enter into agreements with the Secretary to provide health care to persons eligible for Medicare. HHAs provide Part A services in patients' homes rather than in an institutional setting for two principal reasons — first, home services are more humane, and secondly, they are more economical. Home health services include: part-time or intermittent nursing care provided by or under the supervision of a registered nurse; physical, occupational or speech therapy; medical social services under the direction of a physician; and part-time or intermittent services of a home health aide. See 42 U.S.C. § 1395x(m).

Under the Medicare Act a beneficiary must meet certain conditions to receive home health care coverage. The patient must need skilled care while "confined to his home." 42 U.S.C. § 1395f(a)(2)(C).² The care must be medically "reasonable and necessary." 42 U.S.C. § 1395y(a)(1)(A). In addition, medicare coverage for home health care is limited to the "part-time or intermittent" care of a nurse and/or a home health aide. 42 U.S. C. § 1395x(m)(1) and (4).³

Plaintiffs and defendants agree that the "part-time or intermittent" care requirement is derived from the statutory definition of "home health services." The legislative history makes it clear that Congress intended the part-time or intermittent requirement to exclude more or less full-time care.⁴ The relevant House and Senate Reports provide an identical description of home health care covered by Medicare:

Covered Service.—The proposed post-hospital home health payment would meet the cost of part-time or intermittent nursing services, physical occupational, and speech therapy, and other related home health services furnished by visiting nurse agencies, hospital based home health programs and similar agencies. More or less full-time nursing care would not be paid for under the home health benefits provision.

See H.R.Rep. No. 213, 89th Cong. 1st Sess. 29 (1965) and S.Rep. No. 404, 89th Cong., 1st Sess. 32 (1965), 1965 U.S.Code Cong. & Admin.News 1943, 1974 (emphasis added).

The rationale for such an exclusion was simple: full time care generally would be provided more humanely and economically in an institutional setting. The dispute between the parties centers on what care is "part-time or intermittent" and hence appropriately rendered in the home, and what care is "full-time" and hence better provided in an institutional setting. Succinctly stated, plaintiffs have a different conception of what care qualifies as "part-time or intermittent" from that of defendants. The answer to this dispute, as discussed below, is found in the legislative history and the plain language and structure of the Medicare Act.

B. The Administrative Process

Pursuant to his responsibility to determine benefits claims under Medicare Part A "in accordance with regulations prescribed by him," 42 U.S.C. § 1395ff(a), the Secretary of HHS has delegated much of the day-to-day administration of the Medicare Part A program to private fiscal intermediaries. The Secretary has also issued regulations which provide that private intermediaries — typically insurance companies—make the initial determination as to whether a particular service is covered by Medicare Part A. The Secretary had contracted with 47 different private intermediaries at the start of 1987, but was ordered by Congress to reduce the number of regional intermediaries to no more than ten by July 1, 1987. See Deficit Reduction Act of 1984, Pub.L. No. 98-369, § 2326(b) (codified at 42 U.S.C. § 1395h(e)(4)).

The beneficiary has the right to appeal the private intermediary's initial coverage determination to the HCFA. The beneficiary has the right to pursue his or her appeal, if refused by the HCFA, before an Administrative Law Judge (ALJ), and ultimately to HHS' highest administrative appeals forum, the Appeals Council. Finally, if the beneficiary's claim exceeds $1,000, he or she has the right to judicial review of the Secretary's final decision in the same manner as is provided in 42 U.S.C. § 405(g) for social security claimants. See 42 U.S.C. § 1395ff(b)(2); 42 C.F.R. § 405.730; 20 C.F.R. §§ 404.981, 422.210.

THE PROCEDURAL HISTORY OF THIS LITIGATION

This lawsuit was filed by plaintiffs on February 17, 1987. They filed a motion for partial summary judgment regarding their claim that defendants' definition of "part time or intermittent care" was erroneous. After the motion was fully briefed, I held a hearing on July 1, 1987.

At that hearing, plaintiffs contended that HHS' "part time or intermittent" care policy is applied substantially more restrictively, in effect requiring a Medicare patient to demonstrate a need for both "part time and intermittent care." By...