Kechijian v. Califano

• Decision Date: 12 March 1980
• Docket Number: No. 79-1041,79-1041
• Parties: Harry M. KECHIJIAN, Plaintiff, Appellant, v. Joseph A. CALIFANO, Jr., etc., et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 1

621 F.2d 1

Harry M. KECHIJIAN, Plaintiff, Appellant, v. Joseph A. CALIFANO, Jr., etc., et al., Defendants, Appellees.

No. 79-1041.

United States Court of Appeals,

First Circuit.

Argued May 8, 1979.

Decided March 12, 1980.

Edward L. Gnys, Jr., Providence, R. I., with whom Robert W. Smith, and Gunning, LaFazia & Gnys, Inc., Providence, R. I., were on brief, and argument that existence for plaintiff, appellant.

Lawrence E. Burstein, Asst. Regional Atty., Dept. of Health, Ed., and Welfare, Boston, Mass., with whom Paul F. Murray, U. S. Atty., and Robert L. Gammell, Asst. U. S. Atty., Providence, R. I., were on brief, for defendants, appellees.

Before COFFIN, Chief Judge, BOWNES, Circuit Judge, and MURRAY, Senior District Judge. ^*

MURRAY, FRANK J., Senior District Judge.

This is an appeal from the district court's denial of subject-matter jurisdiction in an action brought by plaintiff Harry M. Kechijian, a physician furnishing medical services to beneficiaries under Title XVIII ¹ of the Social Security Act, Part B, 42 U.S.C. §§ 1395j-1395w, to recover reimbursements totaling $27,253.80 allegedly due him and unlawfully withheld by defendants. The defendants are the Secretary of Health, Education, and Welfare (Secretary) and Blue Shield of Rhode Island (Blue Shield), the Medicare carrier under section 1395u(f)(1). Defendants admit withholding certain reimbursements as a setoff against overpayments which Blue Shield determined were made to plaintiff for furnishing medical services to beneficiaries under the Act. Defendants assert that the district court lacked subject-matter jurisdiction of the action because plaintiff failed to exhaust administrative remedies available to review the withholding decision. Because we conclude the district court ruled correctly that the presence of subject-matter jurisdiction was lacking, we affirm.

Blue Shield notified plaintiff in writing on April 10, 1972 there would be a temporary delay in processing his pending Medicare claims while they were being assessed for utilization and medical necessity. Blue Shield sought the advisory opinion of the State Peer Review Committee (Committee) of the Rhode Island Medical Society of the medical issues involved in plaintiff's Medicare claims, and referred certain cases to the Committee for its findings and recommendation. On May 25, 1972 plaintiff was requested to attend a meeting of the Committee, and to bring with him medical records of cases referred to the Committee by Blue Shield. Plaintiff appeared with his records at the informal meeting held May 30, 1972, and thereafter on June 8, 1972 he was advised in writing that evidence had been found of overutilization and misutilization by him of certain specified "medications questioned by the Medicare carrier". Plaintiff was notified of his right to appeal the determination, but no appeal was taken. On January 1, 1973 plaintiff decided to withdraw from participation in the Medicare program by declining to accept Medicare assignments from patients, effective March 3, 1973.

On January 8, 1974 plaintiff requested in writing payment of his 1972 reimbursement claims. ² Receipt of the letter was acknowledged, and thereafter Blue Shield notified plaintiff settlement of his claims would be attempted. On April 30, 1974 Blue Shield formally notified plaintiff in writing that it had determined plaintiff was overpaid $26,199.85 by Medicare from January 1970 to December 1972, based on the Committee's findings of plaintiff's "overutilization and misutilization . . . in the frequent use of (certain) medications", and advised plaintiff he had a right to have the determination reviewed within six months. Plaintiff was requested to refund the $26,199.85, and was advised he could refund the amount by check, or could choose to have Blue Shield deduct the amount from the $27,253.80 withheld by Blue Shield, or could pay part by check and the balance by Blue Shield deduction. On June 11, 1974 plaintiff was notified by Blue Shield he could file a request for hearing of the determination that he had been overpaid certain of his Part B Medicare claims.

Without requesting a review or hearing, plaintiff brought this action on August 15, 1974, principally relying on federal question jurisdiction, 28 U.S.C. § 1331. ³ On October 4, 1974, Blue Shield forwarded to plaintiff a check for $1,559.35 which plaintiff did not cash and which represented the balance of his processed claims after deduction of the claimed overpayments of $26,199.85. On October 12, 1978, the district court dismissed the action for want of subject-matter jurisdiction, and the correctness of that ruling constitutes the issue on appeal.

In essence, plaintiff claims entitlement to the reimbursement payments (withheld by defendants) on the basis of accepting assignments from beneficiaries under section 1395u(b)(3)(B)(ii), and that defendants had no authority to withhold the reimbursements without notice, hearing and opportunity to plaintiff to present evidence and cross-examine witnesses. The action was brought to establish his claim to entitlement and the wrongful withholding, and for an order to require defendants to pay over the claims for reimbursements of which he had been deprived, as he alleges, without due process of law.

The Medicare statute is complicated, and provides for judicial review only in limited specific instances. It does not explicitly provide judicial review for determination of reimbursement disputes over a beneficiary's claim, or of a physician's claim as assignee, under Part B. Cervoni v. Secretary of HEW, 581 F.2d 1010, 1015 (1st Cir. 1978); Szekely v. Florida Medical Ass'n, 517 F.2d 345, 348 (5th Cir. 1975), cert. denied, 425 U.S. 960, 96 S.Ct. 1742, 48 L.Ed.2d 205 (1976). Judicial review would involve the courts in the complex and detailed task of "ascertaining the appropriate medical charges for technical services based on facts which vary from community to community. . . . Determining the proper amount of these charges is a matter peculiarly suited to determination by a specialized agency". St. Louis Univ. v. Blue Cross Hosp. Service, 537 F.2d 283, 289 (8th Cir.), cert. denied, 429 U.S. 977, 97 S.Ct. 484, 50 L.Ed.2d 584 (1976). The Act and the regulations which the Secretary is authorized to prescribe provide a particular administrative scheme covering disputes arising from requests for payment of claims assigned to physicians. ⁴ Plaintiff's claim for reimbursements is not explicitly included in judicial review provisions of the Act. To vindicate his claim he has invoked jurisdiction under 28 U.S.C. § 1331. But federal question jurisdiction, 28 U.S.C. § 1331, over substantive Medicare reimbursement disputes is barred by section 205(h) of the Social Security Act, 42 U.S.C. § 405(h), ⁵ made applicable to the Medicare Act by 42 U.S.C. § 1395ii. See Hospital San Jorge, Inc. v. Secretary of HEW, 598 F.2d 684 (1st Cir. 1979); Rhode Island Hospital v. Califano, 585 F.2d 1153 (1st Cir. 1978); Cervoni v. Secretary of HEW, supra.

Plaintiff argues that because his challenge to the defendants' withholding of his claims presented a colorable constitutional due process issue, federal question jurisdiction was not barred by section 405(h) in the district court. In Hospital San Jorge, Inc., supra, we recognized that a "possible exception" to the jurisdictional bar of section 405(h) to federal question jurisdiction "might arise where a . . . reimbursement dispute presented a colorable constitutional claim and the Act provided no available administrative process leading to judicial review". ⁶ Id. at 686. The district court found that plaintiff did not present a colorable constitutional claim. We find plaintiff's contention that his constitutional challenge is to "decisions not of administrative adjudication but of the nature of administrative procedure" adds nothing of substance to the claim alleged in the complaint. The due process claim posed by plaintiff is that an evidentiary administrative hearing, closely approximating a judicial trial, was required before Blue Shield could withhold his payments, and we agree with the district court that plaintiff has shown no colorable basis for such claim.

Although plaintiff did not receive payment of any claim for reimbursement after February 1972, he was made aware on or about April 10, 1972 that payment of his claims might be in dispute, and in June 1972 that payment might well be in jeopardy. We are informed by plaintiff's January 8, 1974 letter that he "accepted the decision" of the State Peer Review Committee, but we are not told of the "workable basis with the Rhode Island Blue Cross (sic)" that he "believe(d) . . . (he) arrived at". When he made request for payment in writing in January 1974, he was notified that Blue Shield determined he had been overpaid by Medicare, for reasons stemming from the 1972 determination of the Committee, and that this determination was subject to administrative review and a hearing, at his request.

Plaintiff argues that the withholding of his claims for reimbursements deprived him of a constitutionally protected property interest without due process of law. His interest in the claims is that of assignee only of the beneficiary's claim under Part B of the Act, and he is not himself a beneficiary. Section 1395j. Even assuming plaintiff has a protected property interest, but cf. Cervoni, supra at 1018, he does not show that the withholding, if erroneous, results in irrevocable harm, or damage that could not be compensated by payment of the claims subsequently. This is not a case where "full relief cannot be obtained at a (post-termination) hearing". Mathews v. Eldridge, 424 U.S. 319, 331, 96 S.Ct. 893, 900, 47 L.Ed.2d 18 (1976). No adequate reasons have been advanced that convince us that in these circumstances the administrative procedures are unfair or unreliable and that additional procedural safeguards are necessary. See Mathews v....