Mayburg v. Heckler

• Decision Date: 09 November 1983
• Docket Number: Civ. A. No. 82-2982-K.
• Citation: 574 F. Supp. 922
• Court: U.S. District Court — District of Massachusetts
• Parties: Rose E. MAYBURG, Plaintiff, v. Margaret M. HECKLER, Secretary of Health & Human Services, Defendant.

574 F. Supp. 922

Rose E. MAYBURG, Plaintiff, v. Margaret M. HECKLER, Secretary of Health & Human Services, Defendant.

Civ. A. No. 82-2982-K.

United States District Court, D. Massachusetts.

November 9, 1983.

COPYRIGHT MATERIAL OMITTED

Mark S. Coven, Greater Boston Legal Services, Boston, Mass., Sally Hart Wilson, Los Angeles, Cal., Eileen P. Sweeney, Washington, D.C., for plaintiff.

Joan I. Milstein, Asst. U.S. Atty., Boston, Mass., for defendant.

OPINION

KEETON, District Judge.

This action is before the court on plaintiff's motion for class certification, Docket No. 16, and cross motions by the parties for partial summary judgment, Docket Nos. 18 and 20.

This case arose from defendant's denial of Medicare benefits to plaintiff. At issue was the interpretation of "spell of illness" in the Medicare Act (Title XVIII of the Social Security Act). In short, the Medicare Part A program provides for payment on the beneficiary's behalf for up to 90 days of inpatient hospital services provided during a single spell of illness. If a new spell of illness occurs, the 90-day coverage period begins anew. According to defendant, a single spell of illness continues as long as the Medicare beneficiary resides in a skilled nursing facility ("SNF"). Plaintiff contends that the type of care received, rather than the type of facility in which she resides, determines whether a single spell of illness persists.

Plaintiff stated six causes of action in her complaint. In its order of July 14, 1983, this court severed for expedited consideration plaintiff's claim that defendant's interpretation of "spell of illness" conflicts with the Medicare Act. Docket No. 13. As the facts are undisputed, both parties have moved for summary judgment on this statutory claim.

I. Facts

Plaintiff is an 88-year-old woman who is eligible to receive Part A hospital insurance benefits under the Medicare Act. Since September 11, 1976, plaintiff has been a privately-paying resident of a nursing home where she has received only custodial, rather than skilled nursing, care. Plaintiff was hospitalized for the periods of April 16-April 25, 1977, June 18-August 10, 1979, January 4-January 29, 1980, and March 2-March 18, 1980. The Administrative Law Judge ("ALJ") held that since plaintiff received only custodial care at the nursing home, new spells of illness commenced upon her hospitalizations in April, 1977, June, 1979, and January, 1980. Therefore, the ALJ ruled that hospital services rendered plaintiff in March of 1980 were payable under the Medicare Act. Docket No. 6 at 16-21. The Appeals Council, on its own motion, reviewed and reversed the ALJ's decision. Id. at 5-9.

II. Class Certification

Plaintiff seeks to maintain this suit as a class action under Fed.R.Civ.P. 23(b)(2). She asks to represent a class of all persons residing in Region I of the Department of Health and Human Services who, having presented claims for Medicare Part A benefits, have been or will be denied such benefits based on a determination that they have had a single "spell of illness" which continued while they resided in an SNF, even though they were receiving custodial, rather than skilled nursing, care. Defendant does not challenge class certification per se, but seeks to limit the class to individuals who meet the jurisdictional requirements set forth in 42 U.S.C. § 405(g), and who reside in Massachusetts.

A. Jurisdiction under the Medicare Act

Under 42 U.S.C. § 405(g), incorporated into the Medicare Act by 42 U.S.C. § 1395ff(b)(1), a claimant may obtain judicial review of a "final decision" of the Secretary. Judicial review is unavailable where the amount in controversy is less than $1000. 42 U.S.C. § 1395ff(b)(2).

The "finality" requirement consists of two parts: a nonwaivable requirement that a claim for benefits shall have been presented to the Secretary, and a waivable requirement that the administrative remedies prescribed by the Secretary be exhausted. Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976). Here, all of the current members of the proposed class have filed an application for benefits with the Secretary. Cf. Weinberger v. Salfi, 422 U.S. 749, 764, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975). The nonwaivable jurisdictional requirement has been met.

Defendant argues that the class should not include claimants who have not exhausted the administrative remedies prescribed by the Secretary. Defendant contends that the Secretary has not waived the exhaustion of remedies requirement, and that this court should not do so. I conclude that this court has jurisdiction over proposed class members who have not exhausted their administrative remedies, under either 42 U.S.C. § 405(g) or the mandamus statute, discussed infra.

Under § 405(g), the power to waive the exhaustion of remedies requirement ordinarily rests with the Secretary. Salfi, supra. However, in some cases "a claimant's interest in having a particular issue resolved promptly is so great that deference to the agency's judgment on the need for exhaustion is inappropriate." Eldridge, supra 424 U.S. at 330, 96 S.Ct. at 900, quoted in Caswell v. Califano, 583 F.2d 9, 14 (1st Cir.1978). I conclude that this is such a case.

Although Eldridge concerned a constitutional issue which the agency had no power to decide, it did not restrict judicial waiver of the exhaustion requirement to constitutional challenges. "Where the legal issue is statutory, however, the agency does have authority to decide it, subject of course to judicial review. The test for exhaustion of a statutory issue in an individual case, we believe, should be whether the Secretary has taken a final position on that issue." Liberty Alliance of the Blind v. Califano, 568 F.2d 333, 346 (3d Cir.1977).¹

I conclude that the Secretary has taken a final position on the interpretation of "spell of illness," and so judicial waiver of the exhaustion requirement will not cause "premature interference with agency processes." Salfi, supra 422 U.S. at 765, 95 S.Ct. at 2467. Defendant states that the Department has consistently interpreted "spell of illness" the same way since 1966. Docket No. 21 at 9. Moreover, exhaustion of administrative remedies by the named plaintiff is evidence of the fact that the Secretary has taken a final position on the legal issue. Kuehner v. Schweiker, 717 F.2d 813 (3d Cir.1983); see also Wilson v. Secretary of HHS, 671 F.2d 673, 678-79 (1st Cir.1982).

Defendant argues that judicial waiver is appropriate only where the unexhausted claim is collateral to the substantive claim of entitlement. Eldridge, supra 424 U.S. at 330, 96 S.Ct. at 900, Caswell, supra at 14. Some courts have held that unexhausted claims need not be collateral, e.g., Kuehner, supra, but I need not decide that issue here. Although plaintiff's claim does not raise a procedural issue I conclude that it is substantially collateral to the individual claims for benefits. Cf. Caswell, supra. A decision on plaintiff's statutory claim would not circumvent the exhaustion requirement on the issue of the merits of individual class members' claims. See Caswell, supra at 14. This court will not be ruling on the merits of the underlying claims for benefits but only on the standards that defendant must apply in ultimately making these determinations.

Defendant argues that judicial waiver is limited to cases where substantial hardship or irreparable harm would result from requiring exhaustion of administrative remedies. Kechijian v. Califano, 621 F.2d 1, 5 (1st Cir.1980). She contends that since Medicare eligibility is unrelated to financial need, requiring claimants to exhaust their remedies does not impose hardship. Docket No. 22 at 4.

Pursuing a claim through administrative channels takes a great deal of time, which is an especially precious commodity for the elderly. For example, the named plaintiff here was denied Medicare benefits on April 11, 1980. The Appeals Council issued its final decision on August 16, 1982. Moreover, although Medicare eligibility is not based on financial need, "it was because of the especial coincidence of medical and financial problems among elderly people that the Medicare program was established in the first place." Gray Panthers v. Schweiker, 652 F.2d 146, 166 (D.C.Cir. 1980). In light of this, I conclude that substantial hardship and irreparable harm would result from requiring potential class members to exhaust their administrative remedies.

B. Jurisdiction under the Mandamus Act

Defendant argues that the proposed plaintiff class be limited to beneficiaries whose disputed claims involve at least $1000. The Medicare Act, at 42 U.S.C. § 1395ff(b)(2), forecloses judicial review of the Secretary's final decision if the amount in controversy is under $1000. Similarly, defendant argues that claimants who received a final administrative decision on their claims more than 60 days before the filing of this complaint be excluded from the class. Section 405(g), incorporated into the Medicare Act by 42 U.S.C. § 1395ff(b)(1), provides that a claimant seeking judicial review of a benefit determination must file an action in federal district court within 60 days after notice of the Secretary's final decision on the claim. I conclude that this court has mandamus jurisdiction under 28 U.S.C. § 1361 over the claims of proposed class members who fail to satisfy the jurisdictional requirements set forth in the Medicare Act. McMahon v. Califano, 476 F.Supp. 978 (D.Mass.1979).

42 U.S.C. § 405(h), incorporated into the Medicare Act by 42 U.S.C. § 1395ii, states in relevant part:

No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under this subchapter.

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