Herzog v. Secretary of Health, Educ. and Welfare, 80-3647

• Decision Date: 09 July 1982
• Docket Number: No. 80-3647,80-3647
• Citation: 686 F.2d 1154
• Parties: Bertha HERZOG, James Vecchio and Joseph Balombin, on behalf of themselves and as representatives of the Class herein defined, Plaintiffs-Appellants, v. SECRETARY OF HEALTH, EDUCATION AND WELFARE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1154

686 F.2d 1154

Bertha HERZOG, James Vecchio and Joseph Balombin, on behalf of themselves and as representatives of the Class herein defined, Plaintiffs-Appellants, v. SECRETARY OF HEALTH, EDUCATION AND WELFARE, Defendant-Appellee.

No. 80-3647.

United States Court of Appeals Sixth Circuit.

Submitted on Briefs Feb. 5, 1982.

Decided July 9, 1982.

N. D. Rollins, Cleveland, Ohio, for plaintiffs-appellants.

James R. Williams, U. S. Atty., Cleveland, Ohio, Robert C. Cordek, Asst. Regional Atty., Dept. of H. H. S., Chicago, Ill., for defendant-appellee.

Before LIVELY and KEITH, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

KEITH, Circuit Judge.

The United States District Court for the Northern District of Ohio held that it did not have subject matter jurisdiction over claims involving the amount payable under Part B of the Medicare Act. We agree, and affirm the judgment of District Judge Lambros.

I. BACKGROUND OF THE MEDICARE PROGRAM

The Federal Health Insurance for the Aged and Disabled, popularly known as Medicare, 42 U.S.C. §§ 1395 et seq., consists of two parts. Part A of the Medicare Program ("Part A"), which is not in issue in this case, provides insurance for hospital and related post-hospital services. 42 U.S.C. §§ 1395c-1395i-2. Part B of the Medicare Program ("Part B") provides insurance for supplementary medical services, primarily physicians' services. 42 U.S.C. §§ 1395j-1395w. The appeal in this case involves Part B.

Part B is a voluntary health insurance program whose operation is similar to private health insurance programs. Only persons 65 years or older or persons who are disabled may enroll. 42 U.S.C. § 1395o. Eligibility for Part B benefits is not dependent upon financial need. Part B is financed by the Federal Supplementary Medical Insurance Trust Fund. 42 U.S.C. § 1395f. The Trust Fund is funded by appropriations from the Treasury and monthly premiums paid by individuals enrolled in the Part B program. See 42 U.S.C. §§ 1395j, 1395r(b) and (c), 1395t and 1395w.

Individuals enrolled in Part B may pay for a covered service and request reimbursement, 42 U.S.C. § 1395u. Typically, the amount reimbursed is eighty percent of the reasonable charges for the services. 42 U.S.C. § 1395l (a)(1). Alternatively, the beneficiary may assign the right to reimbursement to the provider of the service, who collects as an assignee of the beneficiary. 42 U.S.C. § 1395u(b)(3)(ii).

The Secretary of Health and Human Services ("the Secretary"), the defendant-appellee, administers the Medicare Program. The Secretary is authorized to contract with private insurance carriers to administer the payment of Part B claims on his behalf. The Secretary pays the carriers' costs of claims administration, 42 U.S.C. § 1395u(c), and they act as the Secretary's agents. See 42 C.F.R. § 421.5(b).

When a carrier receives a bill for a particular service, it decides initially whether the claim satisfies the Part B criteria. The claim must arise from a medically necessary service, be reasonable, and otherwise be covered under Part B. See 42 U.S.C. § 1395y(a); 42 C.F.R. § 405.803(b). If the carrier determines that a claim satisfies this criteria, the carrier pays the claim out of federal funds. See 42 U.S.C. §§ 1395u(a)(1), 1395u(b)(3), and 1395u(c).

When a carrier receives a bill for a particular service, it decides initially whether the claim satisfies the Part B criteria. The claim must arise from a medically necessary service, be reasonable, and otherwise be covered under Part B. See 42 U.S.C. § 1395y(a); 42 C.F.R. § 405.803(b). If the carrier determines that a claim satisfies this criteria, the carrier pays the claim out of federal funds. See 42 U.S.C. §§ 1395u(a)(1), 1395u(b)(3), and 1395u(c).

If the carrier refuses to reimburse a portion of a claim, however, the claimant has a right to a limited appeal. First, the claimant has a right to review by a carrier employee other than the initial decisionmaker. See Schweiker v. McClure, --- U.S. ---- at ----, 102 S.Ct. 1665, 1668, 72 L.Ed.2d 1 (1982). Second, if the amount disputed is $100 or more, a claimant has a right to an oral hearing before an officer chosen by the carrier. See 42 U.S.C. § 1395u(b)(3)(C). The hearing officer receives evidence and hears arguments concerning the disputed claim. See Schweiker, 102 S.Ct. at 1668. Thereafter, the hearing officer must render a written decision based on the record. 42 C.F.R. § 405.834 (1980).

II. FACTS

The plaintiffs-appellants are all enrolled in the Medicare program. The plaintiffs in this case all received Chelation Therapy treatments for arteriosclerosis from their personal physicians. In each case, the Chelation Therapy was performed in the doctor's office rather than in a hospital. The plaintiffs sought and were denied reimbursement under Part B of the Medicare Act. Each plaintiff sought administrative review of the original decision. However, reimbursement was again denied on reconsideration. Consequently, each plaintiff requested a hearing by a hearing officer. The hearing officer in each case affirmed the denial of the reimbursement request. The hearing officer's decision represented the final decision of the Secretary.

The plaintiffs, individually and as members of a class, filed a complaint in the United States District Court for the Northern District of Ohio, alleging that the denial of their reimbursement requests violated the Medicare Act. The complaint, however, did not allege any constitutional violations. The complaint alleged that the district court had jurisdiction pursuant to 28 U.S.C. §§ 1331(a), 1361, 2201 and 2202, and 5 U.S.C. §§ 703 and 706. The Secretary filed a motion to dismiss for lack of subject matter jurisdiction.

The district court found that it lacked subject matter jurisdiction, and dismissed the plaintiffs' complaint. The court reasoned 1) that 42 U.S.C. § 1395ff precluded judicial review of the amounts recoverable under Part B of the Medicare Act; 2) that Section 205(h) of the Social Security Act, 42 U.S.C. § 405(h), precluded federal question jurisdiction under 28 U.S.C. § 1331(a); 3) that the Administrative Procedure Act, 5 U.S.C. §§ 703 and 706, was not a basis of jurisdiction; and 4) that neither the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, nor the Mandamus statute, 28 U.S.C. § 1361, create jurisdiction. The plaintiffs perfected this appeal.

On appeal, the plaintiffs argue that the district court erred in dismissing their complaint for lack of subject matter jurisdiction. We disagree.

III. JURISDICTION UNDER THE MEDICARE ACT

The plaintiffs first argue that 42 U.S.C. § 1395ff ¹ provides for judicial review in this case. We disagree. The Supreme Court in United States v. Erika, --- U.S. ----, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982), unanimously held that the language of 42 U.S.C. § 1395ff and the related legislative history indicate that Congress intended to preclude judicial review of the amount of benefits payable under Part B of the Medicare Act.

The Erika court relied principally upon the language of § 1395ff in holding that the Court of Claims did not have subject matter jurisdiction:

Congress ... provided explicitly for review by the Secretary of "determination(s) of whether an individual is entitled to benefits under part A or part B, and (of) the determination of the amount of benefits under part A...." § 1395ff(a) (emphasis added). Individuals dissatisfied with the Secretary's determination on such matters are granted the right to additional administrative review, together with a further option of judicial review, in two instances only: when the dispute relates to their eligibility to participate in either Part A or Part B, and when the dispute concerns the amount of benefits to which they are entitled under Part A. § 1395ff(b).

Section 1395ff thus distinguishes between two types of administrative decisions: eligibility determinations (that decide whether an individual is 65 or over or "disabled" within the meaning of the Medicare program) and amount determinations (that decide the amount of the Medicare payment to be made on a particular claim). Conspicuously, the statute fails to authorize further review for determinations of the amount of Part B awards. In the context of the statute's precisely drawn provisions, this omission provides persuasive evidence that Congress deliberately intended to foreclose further review of such claims. (citations omitted) Erika, 102 S.Ct. at 1653-54. (Emphasis in original)

The Court also found the legislative history of § 1395ff persuasive support for its conclusion that Congress intended to foreclose judicial review of the amount of benefits payable under Part B. The Court relied upon a statement by Senator Bennett, who in 1972 introduced an amendment to 42 U.S.C. § 1395ff(b). ² Senator Bennett stated that the amendment to § 1395ff(b) was intended to clarify "the intent of existing law, which 'greatly restricted' the appealability of Medicare decisions 'in order to avoid overloading the courts with quite minor matters.' " Erika, 102 S.Ct. at 1655, quoting, 118 Cong.Rec. 33992 (1972). The Court also found the following Conference Committee report persuasive evidence of Congressional intent in amending 42 U.S.C. § 1395ff(b):

Amendment No. 561: The Senate amendment added a new section to the House bill which would make clear that there is no authorization for an appeal to the Secretary or for judicial review on matters solely involving amounts of benefits under Part B, and that insofar as Part A amounts are concerned, appeal is authorized only if the amount in controversy is $100 or more and judicial review only if the amount in controversy is $1,000 or more.

The House recedes. H.R.Rep.No.92-1605, 92nd Cong.2d Sess. 61 (1972), U.S.Code Cong. & Admin.News 1972, p. 5370.

The Supreme Court's reasoning in Erika applies with equal force to this case. We conclude that the language of § 1395ff and the accompanying...