Gray Panthers v. Schweiker

• Citation: 716 F.2d 23
• Decision Date: 19 August 1983
• Docket Number: 82-2098,Nos. 82-1856,s. 82-1856
• Parties: , 2 Soc.Sec.Rep.Ser. 517 The GRAY PANTHERS, et al. v. Richard S. SCHWEIKER, Secretary, Department of Health, Education and Welfare, Appellant. The GRAY PANTHERS, et al. v. Richard S. SCHWEIKER, Secretary, Department of Health, Education and Welfare, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 23

716 F.2d 23

230 U.S.App.D.C. 219, 2 Soc.Sec.Rep.Ser. 517

The GRAY PANTHERS, et al. v. Richard S. SCHWEIKER, Secretary, Department of Health, Education and Welfare, Appellant.

The GRAY PANTHERS, et al. v. Richard S. SCHWEIKER, Secretary, Department of Health, Education and Welfare, Appellant.

Nos. 82-1856, 82-2098.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 11, 1983.

Decided Aug. 19, 1983.

Appeals from the United States District Court for the District of Columbia (D.C. Civil Action No. 77-00488).

Mark H. Gallant, Atty., Dept. of Justice, Washington, D.C., with whom Stanley S. Harris, U.S. Atty., William Kanter, Atty., Dept. of Justice, Juan A. del Real, Gen. Counsel, Lynne K. Zusman, Deputy Gen. Counsel, Henry Goldberg and Henry Eigles, Dept. of Health and Human Services, Washington, D.C., were on brief, for appellant.

Sally Hart Wilson, Los Angeles, Cal., of the Bar of the Supreme Court of the State of Cal., pro hac vice, by special leave of the Court, with whom Bruce M. Fried and Daniel R. Ohlbaum, Washington, D.C., were on brief, for appellees. Burton D. Fretz, Washington, D.C., and Gill W. DeFord, Los Angeles, Cal., also entered appearances for appellees.

Before MIKVA and GINSBURG, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge MIKVA.

Special concurring opinion filed by Senior Circuit Judge MacKINNON.

MIKVA, Circuit Judge:

This class action, originally filed by the Gray Panthers and various named beneficiaries of the Medicare program in 1977, is before this court for the second time. In our first decision, we concluded that procedures adopted by the Department of Health and Human Services (HHS or Department) to resolve disputes involving Medicare program benefits of less than $100 did not comport with due process requirements. See Gray Panthers v. Schweiker (Gray Panthers I), 652 F.2d 146 (D.C.Cir.1981) (as amended on rehearing). Specifically, we held that the written form initially used to notify beneficiaries that their claims are being denied and the paper hearing provided to those beneficiaries who seek review of this initial decision were inadequate procedural safeguards given the elderly and infirm population that seeks Medicare reimbursement for medical expenses. The court left the precise contours of the notice and hearing required by due process for further formulation, however, remanding the case to the district court and directing that both parties cooperate in efforts to devise an appropriate answer to the query "what process is due."

On remand, the district court made a faithful attempt to adhere to this court's mandate. First, it considered but rejected most of the revised procedures that were proposed by HHS. Second, it concluded that a written notice proposed by the Gray Panthers, as well as the availability of an informal, yet face-to-face, hearing between each beneficiary and the decisionmaker for his or her claims, was required in every case. Finally, the court ordered that these oral hearings be provided retroactively to any member of the class, dating back to March 1976, who requested such relief in response to a nationwide mailing that would inform class members of their newly-vindicated procedural rights.

Subsequent to the district court's decision, but prior to oral argument before this court, HHS approved a revised notice form that may well satisfy many of the demands of due process. Thus, notwithstanding the confusion generated by the timing of the Department's actions, and our hesitation in prolonging this litigation, we find it necessary to remand this new written form to the district court for initial consideration. Moreover, because the district court misinterpreted our earlier decision when considering the extent of oral hearings that may be required, we also must remand that issue for redetermination. Finally, the appropriate scope of retroactive class relief that might be warranted, itself dependent on the district court's conclusions on the notice and hearing issues, also must be remanded for disposition consistent with this opinion.

I. BACKGROUND

A. Factual and Statutory Setting

The factual and statutory issues underlying this ongoing dispute are explained adequately in this court's previous opinion, see Gray Panthers I, 652 F.2d at 149-55, and therefore will be summarized only briefly at this time. The Gray Panthers is a national organization which represents elderly citizens, many of whom are enrolled in the Medicare program. The three named plaintiffs who remain in this class action also are enrolled in the Medicare program; more important, they each have been refused a requested oral hearing after being denied reimbursement on Medicare claims for under $100.

The Medicare program, 42 U.S.C. Secs. 1395-1395vv (1976 & Supp. V 1981), is administered by the Secretary of Health and Human Services (Secretary) and consists of two parts. Part A provides insurance coverage for the cost of institutional health services; Part B consists of a voluntary supplemental insurance program that covers a percentage of the costs associated with most other medical procedures. Because many more claims for under $100 are found in the Part B program, and because the dimensions of Part B--encompassing some 30 million participants and federal outlays of over $12.3 billion in the last fiscal year--are so large, the parties have focused their arguments on the notice and hearing procedures used under that aspect of Medicare. It should be noted, however, that the determination and review procedures being challenged are substantially similar for Parts A and B.

In fact, both parts are administered by private insurance companies, referred to as "intermediaries" under Part A and "carriers" under Part B, which have signed contracts with the Secretary. Claims for payment or reimbursement are submitted to the intermediary or carrier for an initial decision that is communicated to the Medicare beneficiary through a written notice. If the claim is denied in whole or in part, and the beneficiary is dissatisfied with this initial determination, a request for reconsideration or review can be made. Thereafter, the beneficiary may submit additional written information, and either the Health Care Financing Administration under Part A or a different employee of the carrier under Part B will make another decision based on this paper hearing. For any losing individual whose remaining claims against the Medicare program amount to less than $100, this second decision grounded solely on their initial claim and later paper submissions is final and nonreviewable. See 42 C.F.R. Secs. 405.701-.750 (1982) (reconsideration and appeals procedures under Part A); id. Secs. 405.801-.872 (review and hearing procedures under Part B; see also id. Secs. 405.740, .820(b) (defining computation of $100 amount in controversy under Parts A and B, respectively). See generally United States v. Erika, Inc., 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982) (upholding as consistent with the statute the preclusion of judicial review after a determination of benefits payable under Part B); Schweiker v. McClure, 456 U.S. 188, 102 S.Ct. 1665, 72 L.Ed.2d 1 (1982) (upholding as consistent with due process the use of employees of the private insurance carriers as decisionmakers Thus, regulations adopted by the Secretary do not provide for any type of oral hearing when the amount in controversy is less than $100. Indeed, until this court's decision in Gray Panthers I, it was thought that the 1972 enactment of 42 U.S.C. Sec. 1395ff(b)(2) (1976) and 42 U.S.C. Sec. 1395u(b)(3)(C) (1976) actually dictated that only written review procedures could be included in the regulations. The plain language of those subsections, in fact, eliminates the availability of "hearing[s]" to claimants seeking less than $100 under Part A and Part B, respectively. But as this court held during the first phase of this litigation, see 652 F.2d at 150-52 & n. 15, these statutory provisions were intended by Congress only to eliminate the expense and inconvenience of "formal hearings" or "full fair hearings" when such small amounts are in controversy. Rather than preempting any rights to an oral hearing completely, "the statute reduces the process due to the minimum constitutional requirements," id. at 152; cf. Califano v. Yamasaki, 442 U.S. 682, 693, 99 S.Ct. 2545, 2553, 61 L.Ed.2d 176 (1979) (courts should be "willing to assume a congressional solicitude for fair procedure, absent explicit statutory language to the contrary"). Therefore, these statutes do not foreclose the use of oral hearings and the Secretary's implementing regulations will not meet the directives of Congress unless and until they satisfy the demands of due process.

in Part B hearings for claims over $100).

B. Prior Judicial Proceedings

The complaint initiating this litigation was originally filed in March 1977, prior to this court's interpretation of the underlying statutes. It thus was premised on a constitutional challenge to the statutory provisions themselves. Specifically, the complaint requested, inter alia, a declaratory judgment that the denial of an oral hearing to all Medicare beneficiaries claiming less than $100 in reimbursement was unconstitutional and an injunction ordering HHS to provide a "fair hearing" for any plaintiff requesting one. After some preliminary discovery between the parties, the individually named plaintiffs moved to certify a class action under Rule 23(b)(2) of the Federal Rules of Civil Procedure. That motion--seeking a class consisting of all Medicare recipients who, within the year immediately preceding the filing of the lawsuit (i.e., since March 21, 1976) or at any time after its filing, had been denied oral hearings concerning Medicare claims of less than $100--was granted by the district court on November 21, 1977. See Order Certifying Class Action,...