McCuin v. Secretary of Health and Human Services, 86-1732

Citation817 F.2d 161
Decision Date14 April 1987
Docket NumberNo. 86-1732,86-1732
Parties, 55 USLW 2607, 7 Fed.R.Serv.3d 436, 17 Soc.Sec.Rep.Ser. 691, Medicare&Medicaid Gu 36,258, Unempl.Ins.Rep. CCH 17,309 Gaynell McCUIN, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

John F. Daly, Dept. of Justice, with whom William Kanter, Dept. of Justice, Richard K. Willard, Asst. Atty. Gen., Washington, D.C., and Richard V. Wiebusch, U.S. Atty., Concord, N.H., were on brief, for defendant, appellant.

John E. Tobin, Jr. with whom Mitchell M. Simon and New Hampshire Legal Assistance, Concord, N.H., were on brief, for plaintiff, appellee.

Before BOWNES, Circuit Judge, ALDRICH, Senior Circuit Judge, and GIGNOUX, * Senior District Judge.

BOWNES, Circuit Judge.

Defendant-appellant Otis R. Bowen, Secretary of Health and Human Services (the Secretary), appeals from summary judgment by the United States District Court for the District of New Hampshire. The district court upheld a claim by plaintiff-appellee Gaynell McCuin that her benefits under Medicare Part A had been taken away by the Appeals Council of the Social Security Administration Office of Hearings and Appeals through an illegal "reopening" procedure. The district court certified the suit as a class action and issued summary judgment for appellee in April, 1986. See McCuin v. Bowen, 634 F.Supp. 431 (D.N.H.1986).

I. SUMMARY OF FACTS
A. The Medicare Appeals Process

Medicare Part A primarily covers institutional care such as hospital and nursing home services. The program is financed by payroll deductions. See 42 U.S.C. Sec. 1395c-i (1982). Medicare Part B covers doctor bills and various other supplementary medical services and is financed through monthly premiums and general revenue funds. See 42 U.S.C. Secs. 1395j-w (1982).

A claimant who is dissatisfied with the initial administrative determination and reconsideration of her claim may request a hearing before an Administrative Law Judge (ALJ). After the ALJ issues a decision, the claim is subject to further review by the Appeals Council. The Appeals Council may, on its own motion, review the decision within sixty days, pursuant to 20 C.F.R. Sec. 404.969 (1986). The claimant may also request review by the Appeals Council, pursuant to 20 C.F.R. Sec. 404.967 (1986). After the sixty-day time limit, the claim is subject to "reopening" by the Appeals Council, pursuant to 20 C.F.R. Secs. 404.987-989 (1986). As we discuss in detail below, McCuin contends that after the sixty-day time limit for "review" has expired, cases may only be "reopened" upon the motion of a claimant; the Secretary argues that the Appeals Council may reopen upon its own initiative. A claim may also be appealed to federal court, depending on the amount of the claim and the nature of the appeal.

B. Proceedings Below

This case arose when McCuin sought Medicare reimbursement for hospital expenses incurred in March, 1981. In May, 1981, an ALJ found that she was ineligible for benefits. She sought review from the Appeals Council. The Council remanded to the ALJ for a new hearing. On July 18, 1983, a second decision was issued, granting coverage for part of McCuin's hospital stay and finding her not liable for the costs of noncovered services. The finding of nonliability was pursuant to the "waiver of liability" provision of 42 U.S.C. Sec. 1395pp (1982).

Eight months later, on March 22, 1984, the Appeals Council informed McCuin that it was reopening her case pursuant to 42 C.F.R. Sec. 405.750(b) and 20 C.F.R. Sec. 404.988. The Appeals Council based its decision to reopen on a provision of 20 C.F.R. Sec. 404.988 which allows reopening for "good cause" within four years of the initial decision. The Council upheld the ALJ's decision finding coverage for part of the hospitalization costs. It rejected, however, the applicability of the "waiver of liability" provision of 42 U.S.C. Sec. 1395pp. The Council held that the ALJ had committed an error of law in granting the waiver of liability for noncovered services. The amount of medical expenses that had been waived by the ALJ was $940.43.

McCuin brought suit in district court in October, 1984. Her suit challenged only the propriety of the reopening of her case on the Appeals Council's own initiative and did not argue the merits of her Medicare claim. McCuin charged that such so-called "own-motion" 1 reopening violated the Secretary's regulations as well as her right to due process of law. McCuin also claimed that the regulations only allow reopening, no matter at whose instigation, on the basis of errors of fact, not of law. The Secretary asserted that the regulations allowed the Appeals Council to reopen cases sua sponte and that such reopening, on errors of fact or law, presented no issues of due process. He also contested the court's jurisdiction over the suit.

II. JURISDICTION

The Secretary claims that the district court had no jurisdiction to hear this case. This argument is based on the wording of the statute authorizing review for Medicare claims, 42 U.S.C. Sec. 1395ff. Subsection (b) states in pertinent part:

(1) Any individual dissatisfied with any determination under subsection (a) of this section as to--

....

(C) the amount of benefits under Part A of this subchapter (including a determination where such amount is determined to be zero)

shall be entitled to a hearing by the Secretary to the same extent as is provided in section 405(b) of this title and to judicial review of the Secretary's final decision after such hearing as is provided in section 405(g) of this title.

(2) Notwithstanding the provisions of subparagraph (C) of paragraph (1) of this subsection, a hearing shall not be available to an individual by reason of such subparagraph (C) if the amount in controversy is less than $100; nor shall judicial review be available to an individual by reason of such subparagraph (C) if the amount in controversy is less than $1,000.

The Secretary argues that subsection (b)(2) shows that Congress intended to bar judicial review for claims under $1,000, regardless of the rubric under which a court seeks to assert jurisdiction.

McCuin contends that she has not challenged the amount of her benefits, which would indeed subject her to the joint provisions of subsections (b)(1)(C) and (b)(2), but the procedure by which claims are reopened. Faced with such a claim, she argues, the district court properly asserted jurisdiction under the mandamus statute, 28 U.S.C. Sec. 1361, and could have asserted jurisdiction under the federal-question statute, 28 U.S.C. Sec. 1331. 2

This jurisdictional dispute is essentially an argument over whether the present case is governed by United States v. Erika, Inc., 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982), or Bowen v. Michigan Academy of Family Physicians, --- U.S. ----, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986). Both of those cases involved Medicare Part B claims. In Erika, the Court ruled on the propriety of judicial review of a hearing officer's determination of the amount of a Medicare Part B claim. The Court based its analysis on the language of 42 U.S.C. Sec. 1395ff. It found that "[i]n the context of the statute's precisely drawn provisions," the conspicuous failure of the statute to authorize any judicial review for Part B amount determinations "provides persuasive evidence that Congress deliberately intended to foreclose further review of such claims." United States v. Erika, Inc., 456 U.S. at 208, 102 S.Ct. at 1654 (cites omitted). The Secretary argues that this logic should apply even more strongly here, since the statute expressly bars judicial review for Part A claims under $1,000.

In Bowen v. Michigan Academy of Family Physicians, --- U.S. ----, 106 S.Ct. 2133, 90 L.Ed.2d 623 the Court amplified its Erika ruling. In Michigan Academy, an association of family physicians and several individual doctors challenged the validity of a regulation issued under Part B. The government contended that federal-question jurisdiction was implicitly barred by the absence of a provision for such review in Sec. 1395; it also argued that review was explicitly barred by 42 U.S.C. Sec. 405(h), a Social Security provision incorporated into the Medicare statute, which bars any review except as authorized by the statute. 3

The Court held that, although Part B amount determinations were precluded from review, "challenges to the validity of the Secretary's instructions and regulations" were not. See Michigan Academy, 106 S.Ct. at 2141. The Court rejected the government's Sec. 405(h) argument, holding that the section must be interpreted in light of the policy and history of the Medicare statute. See id. The Court found that Congress intended to preclude review of Part B amount determinations to avoid burdening the courts with claims for relatively small amounts. See id. at 2139. This congressional intent would be irrelevant to broader challenges to the regulations. See id. at 2141. In reaching its holding, the Court stressed the history and importance of judicial review. It declared that the presumption that Congress intends judicial review of administrative action can only be overcome on the basis of clear and convincing evidence. See id. (citing Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967)). "Indeterminate evidence" of legislative intent does not suffice to overcome this presumption. See id. 106 S.Ct. at 2138 (citing Abbott Laboratories, 387 U.S. at 141, 87 S.Ct. at 1511). McCuin argues that Michigan Academy's analysis of challenges to Part B provisions is applicable to the present challenge to Part A regulations.

While the present case presents some features similar to both Erika and Michigan Academy, we agree with McCuin that the latter case provides the more appropriate analogy. The statute's three-tier system for review...

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