Medical Fund-Philadelphia Geriatric Center v. Heckler

• Decision Date: 24 November 1986
• Docket Number: FUND-PHILADELPHIA,No. 86-1024,86-1024
• Citation: 804 F.2d 33
• Court: U.S. Court of Appeals — Third Circuit
• Parties: , Medicare&Medicaid Gu 35,900 MEDICALGERIATRIC CENTER, Appellant, v. HECKLER, Margaret M., Secretary of Health and Human Services.

Page 33

804 F.2d 33

15 Soc.Sec.Rep.Ser. 299, Medicare&Medicaid Gu 35,900

MEDICAL FUND-PHILADELPHIA GERIATRIC CENTER, Appellant, v. HECKLER, Margaret M., Secretary of Health and Human Services.

No. 86-1024.

United States Court of Appeals, Third Circuit.

Argued Aug. 21, 1986.

Decided Oct. 24, 1986.

Rehearing Denied Nov. 24, 1986.

Bayard M. Graf (argued), Kohn, Savett, Marion & Graf, P.C., Philadelphia, Pa., for appellant.

Beverly Dennis, III, Chief Counsel, Region III, James C. Newman, Supervisory Asst., Regional Counsel, James S. Feight, Jr. (argued), Asst. Regional Counsel, Dept. of Health and Human Services, Edward S.G. Dennis, Jr., U.S. Atty., Serena H. Dobson, Asst. U.S. Atty., James G. Sheehan, Chief, Civil Div., Asst. U.S. Atty., E.D.Pa., Philadelphia, Pa., for appellee.

Before BECKER, MANSMANN, Circuit Judges, and TEITELBAUM, District Judge ^*.

OPINION OF THE COURT

MANSMANN, Circuit Judge.

The plaintiff, an association of physicians, seeks judicial review of the decision of the Secretary of Health and Human Services ("HHS") to recoup alleged overpayments for medical services provided to Medicare Part B enrollees by members of the plaintiff association. The Secretary asserts that the services were provided in a non-certified nursing facility and thus should have been classified and reimbursed as nursing home services rather than skilled nursing facility visits. The district court dismissed the action for lack of subject matter jurisdiction.

We agree with the district court that the facts alleged by the plaintiff do not provide jurisdiction under 42 U.S.C. Sec. 1395ff(b)(1)(B) or under 42 U.S.C. Sec. 405(g). However, in light of the recent decision of the Supreme Court in Bowen v. Michigan Academy of Family Physicians, --- U.S. ----, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986), we will reverse the decision and remand to permit the plaintiff to amend its complaint to allege jurisdiction under 28 U.S.C. Sec. 1331.

I.

The Medicare Program, 42 U.S.C. Sec. 1395 et seq. consists of Part A, which provides for hospital insurance, 42 U.S.C. Sec. 1395c-1395i-2, and Part B, which provides coverage for supplemental medical services, 42 U.S.C. Sec. 1395j-w. Part A benefits are funded by a wage tax and are generally available to all persons who are over the age of 64 or are disabled. Participation in Part B is elective, and benefit payments are funded by enrollees' premiums as well as by federal government appropriations. Individuals enrolled under Part B may request direct reimbursement for medical services or may assign the right to reimbursement to the physician.

Part B is administered by private intermediaries called "carriers" who are authorized to set rates, review claims and make payments on behalf of HEW. 42 U.S.C. Sec. 1395u. Medicare Part B patients or their assignees are paid on the basis of the amounts charged, subject to the carrier's responsibility to establish appropriate "reasonable amounts". 42 U.S.C. Sec. 1395x(v); 42 C.F.R. Sec. 403.501 et seq. By accepting assignment a physician agrees to charge a patient no more than the reasonable charge determined by the carrier.

II.

The members of the plaintiff association, physicians on staff at the Philadelphia Geriatric Center, rendered medical services to a number of Medicare Part B beneficiaries who assigned their claims to the plaintiff. During the period from October 1, 1980 to September 30, 1982 the plaintiff submitted to the carrier, Blue Shield of Pennsylvania, the assigned claims of fifteen Part B enrollees. The plaintiff was reimbursed at the rate for services performed in a skilled nursing facility. A later audit by the Health Care Financing Administration ("HCFA") revealed that the Philadelphia Geriatric Center had not been a Medicare-certified skilled nursing facility during the period from October 1, 1980 to September 30, 1982.

On instruction of the HCFA the carrier reopened the plaintiff's claims for the period in question and conducted a post-payment review. The carrier determined that because the physician's services had not been rendered in a Medicare-certified skilled nursing facility, the services should have been reimbursed at the lower rate applicable to services performed in a nursing home. The carrier notified the plaintiff that it had been overpaid in the amount of $86,128 and requested repayment. ¹

When a carrier determines that full reimbursement is not warranted, statute and regulations designate an agency appeal procedure culminating in a "fair hearing" before a hearing officer designated by the carrier. See 42 U.S.C. Sec. 1395u(b)(3)(C); 42 C.F.R. Sec. 405.820 (1980). The plaintiff was given a Medicare fair hearing on April 2, 1985. Relying on an explicit HFCA policy, the hearing officer determined that the medical services provided to the Medicare patients by the members of the plaintiff association had been properly classified by the carrier as nursing home visits. A request for reconsideration was denied.

The plaintiff filed this suit on August 16, 1985 seeking judicial review of the hearing officer's decision. The plaintiff alleges and the defendant admits that the sole basis for the retroactive reduction in the amount of benefits payable to the plaintiff was the determination that the professional services were not rendered in a skilled nursing facility certified by Medicare. Both parties also agree that the services provided by Medical Fund were equivalent to those provided in a skilled nursing facility.

The plaintiff does not assert that the services were rendered in a Medicare-certified facility. It argues instead that the services were rendered in a facility which is certified by Medicaid as a skilled nursing facility and therefore should have been treated as certified for Medicare as well because the statutory requirements are the same. The district court found that it lacked subject matter jurisdiction to consider the issue and dismissed the action.

III.

The dismissal of a complaint for lack of jurisdiction by the district court raises a question of law subject to plenary review. See Universal Minerals, Inc. v. C.A. Hughes and Co., 669 F.2d 98 (3d Cir.1981).

In dismissing the action the district court relied on United States v. Erika, 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982). The Supreme Court noted in Erika that 42 U.S.C. Sec. 1395ff provides jurisdictional grants for judicial review of disputes relating to eligibility to participate in either Part A or Part B, and for judicial review of disputes concerning the amount of benefits to which an individual is entitled under Part A. ² Erika, 456 U.S. at 207, 102 S.Ct. at 1653. The Court held that by omitting a provision for judicial review of determinations of the amount of Part B awards, Congress intentionally foreclosed review of those determinations. Id. at 208, 102 S.Ct. at 1654.

In its motion to dismiss, the defendant asserted that the dispute before the hearing officer concerned only the amount of Part B benefits due the plaintiff under the assignment and that district court review was therefore precluded under Erika. The plaintiff on the other hand attempted to bring the decision within the review provisions of 42 U.S.C. Sec. 1395ff(b)(1)(B) by characterizing the dispute as one regarding entitlement, i.e., the eligibility of the plaintiff's assignors to receive Part B benefits in an amount allowable for services performed in a certified skilled nursing facility.

Section 1395ff as originally enacted allowed judicial review of determinations as to "entitlement" under part A or part B, or as to "amount of benefits under part A." 42 U.S.C. Sec. 1395ff. In order to obviate the problems experienced by courts in distinguishing between questions of "entitlement" and questions of "amount," the statute was amended in October, 1972. See generally Bohlen v. Weinberger, 483 F.2d 918, 921 (3d Cir.1973). Under the current version, relied upon by the plaintiff, the only reviewable questions of entitlement to part B benefits are those involving the Secretary's determination after a hearing as to whether an individual "is eligible to enroll and has enrolled" in the Part B program.

As the district court correctly concluded, this is not the question presented here. No one has disputed that plaintiff's assignors are properly enrolled. The overall question presented is simply which of two amounts is to be deemed reasonable reimbursement for the services performed by the members of the plaintiff Medical Fund. Judicial review is not available under Sec. 1395ff(b)(1)(B). An attempt to recast the question as one of "entitlement" to an amount rather than simply one of reasonableness of an amount will not bring a Part B amount determination within the review provisions of Sec. 1395.

The plaintiffs also alleged jurisdiction under 42 U.S.C. Sec. 405(g). ³ Section 405(g) is the jurisdictional statute for review of the Secretary's decisions under subchapter II of the Social Security Act. While Sec. 1395ii makes certain subsections of Sec. 405 fully applicable to subchapter XVIII, subsection (g) is not among those listed. Therefore it is not an independent source of jurisdiction to review decisions under subchapter XVIII, the Medicare Act, but applies only as incorporated by 1395ff to delineate prerequisites and procedures for judicial review in the specific instances authorized by 1395. See 42 U.S.C. 1395ii. Since 1395 does not provide for jurisdiction here, 405(g) is unavailing as well.

IV.

The plaintiff's complaint also asserts, however, that there is only one set of statutory requirements for certification as a "skilled nursing facility" whether it be for Medicare or for Medicaid purposes. The plaintiff further asserts that "[t]o require the place of service of plaintiff's professional services as a condition of payment, to be performed in a Medicare-certified facility, which, in fact, is already Medicaid-certified, is agency rule making in excess of statutory...