Massachusetts Medical Soc. v. Dukakis

• Citation: 815 F.2d 790
• Decision Date: 30 March 1987
• Docket Number: No. 86-1575,86-1575
• Parties: , 17 Soc.Sec.Rep.Ser. 335, Medicare&Medicaid Gu 36,228 MASSACHUSETTS MEDICAL SOCIETY, et al., Plaintiffs, Appellants, v. Michael S. DUKAKIS, et al., Defendants, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 790

815 F.2d 790

55 USLW 2560, 17 Soc.Sec.Rep.Ser. 335,

Medicare&Medicaid Gu 36,228

MASSACHUSETTS MEDICAL SOCIETY, et al., Plaintiffs, Appellants, v. Michael S. DUKAKIS, et al., Defendants, Appellees.

No. 86-1575.

United States Court of Appeals First Circuit.

Argued Oct. 6, 1986.

Decided March 30, 1987.

Jack R. Bierig, Chicago, Ill., with whom David F. Graham, Chicago, Ill., Carter G. Phillips, Washington, D.C., Sidley & Austin, Chicago, Ill., Thayer Fremont-Smith, Kenneth Laurence, Choate, Hall & Stewart, Boston, Mass., Kathleen R. Curtis, Waltham, Mass., Michael J. Kelly, Kirk B. Johnson and B.J. Anderson, Chicago, Ill., were on brief, for plaintiffs, appellants.

Carl Valvo, Asst. Atty. Gen., with whom Douglas H. Wilkins, Asst. Atty. Gen., and Francis X. Bellotti, Atty. Gen., Boston, Mass., were on brief, for defendants, appellees.

Ellen A. Bruce, with whom Jan Stiefel, Greater Boston Elderly Legal Services, Daniel S. Manning and Greater Boston Legal Services, Boston, Mass., were on brief, for intervenors Massachusetts Sr. Action Council, Inc. and Massachusetts Ass'n of Older Americans, Inc.

Before CAMPBELL, Chief Judge, BROWN, ^* Senior Circuit Judge, and BREYER, Circuit Judge.

BREYER, Circuit Judge.

This case concerns the legal status of "balance billing" within the federal Medicare program. Balance billing is the practice by which a doctor bills a patient for the balance of the doctor's fee over and above the amount that the Medicare program has determined to be a "reasonable charge." Massachusetts has enacted a statute that forbids balance billing. Chapter 475 of the Massachusetts Acts of 1985 directs the Massachusetts Board of Registration in Medicine to require as a condition of granting or renewing a physician's certificate of registration, that the physician, who if he agrees to treat [a Medicare beneficiary], shall also agree not to charge or to collect from such beneficiary any amount in excess of the reasonable charge for that service as determined by the United States Secretary of Health and Human Services.

Mass.Gen.Laws ch. 112, Sec. 2; see also Mass.Regs.Code tit. 243, Sec. 2.07(15) (prohibiting charging to or collecting from Medicare patients any amounts in excess of the reasonable charge). Appellants in this case--the Massachusetts Medical Society, the American Medical Association, and an individual Massachusetts doctor (whom we shall refer to collectively as MMS)--have sued the Governor and other Massachusetts officials seeking a declaration that the statute is unconstitutional. They argue that it conflicts with the federal Medicare Act, which must prevail under the supremacy clause of the United States Constitution, Art. VI, cl. 2. The district court rejected their legal claims. See Massachusetts Medical Society v. Dukakis, 637 F.Supp. 684 (D.Mass.1986). We affirm its decision.

I

The federal Medicare Act preempts the Massachusetts ban on balance billing if and only if Congress intended it to do so. Our "sole task" here is to determine the intent of Congress. California Federal Savings & Loan Association v. Guerra, --- U.S. ----, 107 S.Ct. 683, 689, 93 L.Ed.2d 613 (1987) (reviewing supremacy clause doctrine). Congress might show that it intends to preempt state law by explicitly withdrawing the power of states to regulate within certain fields. See, e.g., Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). Or, Congress might implicitly withdraw the states' power to regulate by creating a regulatory system so pervasive and complex that it leaves "no room" for the states to regulate. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Congress might also enact a law such that "compliance with both federal and state regulations is a physical impossibility," Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963), in which case the state statute must yield. Finally, the Supreme Court has noted that, even in the absence of a direct conflict, a state law violates the supremacy clause when it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941); see, e.g., Michigan Canners & Freezers Association v. Agricultural Marketing and Bargaining Board, 467 U.S. 461, 478, 104 S.Ct. 2518, 2527, 81 L.Ed.2d 399 (1984) (holding that a Michigan statute that requires producers to pay fees to a particular producers' association and to abide by the association's marketing contracts is preempted by a federal statute that forbids coercing producers to join a producers' association); City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 627, 638-39, 93 S.Ct. 1854, 1856, 1862, 36 L.Ed.2d 547 (1973) (holding that a local ordinance barring overnight take-offs and landings is preempted by the Federal Aviation Act, one purpose of which is to ensure the "efficient utilization" of airspace).

This case involves only the final--"state obstacle"--form of supremacy clause challenge. MMS has not argued, nor could it argue, that Congress explicitly preempted state authority in the field of fee regulation of medical services for the elderly. The first section of the Medicare Act explicitly states the contrary intent to minimize federal intrusion in the area. See 42 U.S.C. Sec. 1395. Nor could MMS argue that Congress intended implicitly to withdraw the power of states to regulate medical fees. The field of medical fee regulation seems by tradition to be one of state concern. See Massachusetts Nurses Association v. Dukakis, 726 F.2d 41, 44 (1st Cir.1984) (noting that hospital cost containment is an interest " 'deeply rooted in local feeling and responsibility' " (quoting San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959))); P. Starr, The Social Transformation of American Medicine 62 (1982) (noting that Massachusetts regulated medical fees as early as 1633). And, the Supreme Court has held that when Congress legislates "in a field which the States have traditionally occupied," courts must presume that Congress has not preempted state power to act unless that was Congress's "clear and manifest purpose." See Rice v. Santa Fe Elevator Corp., 331 U.S. at 230, 67 S.Ct. at 1152. Finally, MMS does not claim that the federal Medicare Act and the Massachusetts statute challenged here place doctors under conflicting legal obligations.

MMS can and does argue, however, that the Massachusetts statute "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" in enacting the Medicare statute. Hines v. Davidowitz, 312 U.S. at 67, 61 S.Ct. at 404. MMS says that one purpose or objective of Congress was to create an "option" for doctors to balance bill, and they cite several cases holding that states may not frustrate options created or explicitly guaranteed by Congress. See Lawrence County v. Lead-Deadwood School District, 469 U.S. 256, 105 S.Ct. 695, 83 L.Ed.2d 635 (1985); Michigan Canners & Freezers Association v. Agricultural Marketing & Bargaining Board, 467 U.S. 461, 104 S.Ct. 2518, 81 L.Ed.2d 399 (1984); Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982); Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981); McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981); Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979); Free v. Bland, 369 U.S. 663, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962); Franklin National Bank v. New York, 347 U.S. 373, 74 S.Ct. 550, 98 L.Ed. 767 (1954); Wissner v. Wissner, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424 (1950); Hill v. Florida, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782 (1945); First Federal Savings & Loan Association v. Greenwald, 591 F.2d 417 (1st Cir.1979).

To prevail, MMS must show that Congress intended to create an "option" in the strong sense of that word: that Congress intended to create a legal right to balance bill, a right immune from significant state interference. MMS cannot win by showing only that Congress failed to disturb a preexisting legal status quo that happened to permit doctors to balance bill. We cannot infer from Congress's simple failure to disturb an existing practice that Congress meant to grant that practice the status of a right, immune from state regulation. MMS understands this point and undertakes to prove that Congress intended to create a balance billing "right" by making two general sorts of argument: that the language and history of the Medicare Act express Congress's intent to create a right immune from state interference, and that the basic underlying purpose of the Act implies such an intent.

A

We first consider MMS's arguments that rest on statutory language and history. MMS points to language in the Medicare Act itself that seems to presume the existence of a balance billing option. The Act provides two mechanisms by which the Secretary of Health and Human Services--or to be more accurate, a Medicare insurance carrier--may pay a doctor for treatment of a Medicare beneficiary:

[P]ayment will ... be made [by the carrier]--

(i) on the basis of an itemized bill; or

(ii) on the basis of an assignment under the terms of which ... the reasonable charge is the full charge for the service

....

42 U.S.C. Sec. 1395u(b)(3)(B). Under either payment method, HHS pays 80 percent of the reasonable charge for the doctor's services. See 42 C.F.R. Sec. 405.240(a)(1). If the doctor chooses the second payment method and accepts "assignment" of the patient's right to payment, the Medicare carrier will pay him directly 80 percent of the reasonable charge. In addition, the doctor may bill his patient for the remaining 20 percent of the reasonable charge. But, he may not balance bill--he may not bil...