Miller v. Heckler

• Decision Date: 05 February 1985
• Docket Number: No. TY-84-453-CA.,TY-84-453-CA.
• Citation: 601 F. Supp. 1471
• Parties: Floye MILLER, et al., v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, et al.
• Court: U.S. District Court — Eastern District of Texas

601 F. Supp. 1471

Floye MILLER, et al., v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, et al.

No. TY-84-453-CA.

United States District Court, E.D. Texas, Tyler Division.

February 5, 1985.

Frank H. Case III, Bruce R. Gilbert, Case & Cohen, Washington, D.C., Michael L. Sampson, Steves & Leonard, Fort Worth, Tex., for plaintiffs.

Robert J. Wortham, U.S. Atty., Ruth Harris, Asst. U.S. Atty., Tyler, Tex., Amy Yourman, Atty., Office of the General Counsel, Dept. of Health and Human Services, Washington, D.C., for defendants.

ORDER OF DISMISSAL FOR LACK OF SUBJECT MATTER JURISDICTION

STEGER, District Judge.

The plaintiffs in this action comprise two separate and distinct groups. The first consists of residents of various Texas nursing homes who have been denied coverage for durable medical equipment under Part B of Title XVIII of the Social Security Act ("Medicare Part B"). The second group includes several durable medical equipment suppliers that provided equipment to those people in the first group. The defendants are Margaret M. Heckler, Secretary of the United States Department of Health and Human Services, and Carolyne K. Davis, Administrator of the Health Care Financing Administration (HCFA) of the Department of Health and Human Services. (The HCFA has been delegated the responsibility of administering the Medicare program.) The plaintiffs seek declaratory, injunctive and mandamus relief to halt the defendants' allegedly unlawful denial of Medicare Part B coverage for the named plaintiffs and others similarly situated. For the reasons delineated below, the Court believes that this action should be dismissed for lack of jurisdiction over the subject matter.

I. BACKGROUND

The Medicare program was enacted in 1965 to furnish federal health insurance to the elderly and disabled. Part A of the Medicare Act, 42 U.S.C.S. §§ 1395c et seq. (Law.Co-op.1973 & Supp.1984), provides insurance for the cost of hospital and related post-hospital services. On the other hand, Part B of the Medicare Act, 42 U.S.C.S. §§ 1395j et seq. (Law.Co-op.1973 & Supp. 1984), establishes a voluntary program of supplemental medical insurance covering expenses not comprehended by the Part A program, including the costs of durable medical equipment.

Part B is funded in part by monthly premiums paid by beneficiaries, with matching federal government contributions making up the remainder of the budget. 42 U.S.C.S. §§ 1395j, 1395r, 1395s (Law.Co-op.1973 & Supp.1984). Part B benefits are paid through private insurance carriers under contract with the Department of Health and Human Services ("HHS"). 42 U.S.C.S. § 1395u (Law.Co-op.1973 & Supp. 1984). Medicare pays 80 per cent of reasonable charges for covered services, while the beneficiary pays the remaining 20 per cent. 42 U.S.C.S. §§ 1395l(a)(1), 1395l (f)(1)-(4) (Law.Co-op.1973 & Supp.1984).

Part B pays for durable medical equipment that is used in a patient's home, including an institution such as a nursing facility that the patient uses as his home. 42 U.S.C.S. § 1395x(n) (Law.Co-op.Supp. 1985).¹ The term "home" is never fully defined.

The issue in this case is not what a home is, however, but what a home is not. Part B will not pay for durable medical equipment if the patient lives in "an institution ... that meets the requirements of subsection (e)(1) or (j)(1) of this section § 1395x ...." 42 U.S.C.S. § 1395x(n). The question in this case is what type of institution meets the requirements of subsection (j)(1).

Section 1395x defines the services and institutions covered by Medicare. Subsection (j)(1) of section 1395x, is the first part of the definition of the term "skilled nursing facility" contained in subsection (j). 42 U.S.C.S. § 1395x(j) (Law.Co-op.1973 & Supp.1984) (hereafter referred to as § 1395x(j).)² (Many HHS documents refer to § 1395x(j) as § 1861(j), using the section number from the Social Security Act.) In short, patients residing in facilities that provide skilled nursing care (§ 1395x(j)(1) facilities) are not entitled to Part B coverage for durable medical equipment.

Therein lies the problem. Plaintiffs in the first group reside in nursing homes formerly classified solely as intermediate care facilities — and therefore entitled to Part B coverage for medical equipment — that were reclassified as skilled nursing facilities for Part B benefit purposes effective September 1, 1984. The reclassification resulted from HCFA's interpretation of the Medicare Act. In order to be certified as a "skilled nursing facility," a nursing home must meet all fifteen requirements of subsection (j). 42 U.S.C.S. 1395x(j)(1)-(15). Patients in homes meeting the fifteen requirements for skilled nursing facilities are eligible for benefits under Part A of the Medicare Act. Residents of all other nursing homes are eligible for Part B coverage for items such as durable medical equipment unless their home provides "skilled nursing care," which is merely the first of the fifteen requirements in subsection (j). 42 U.S.C.S. §§ 1395x(j)(1); 1395x(n). Since section 1395x(n), the section providing coverage for medical equipment, only refers to (j)(1), the first of the fifteen criteria, HHS believes that a nursing home can provide skilled nursing care (as defined in (j)(1)) and still not be a skilled nursing facility (as defined in (j)(1) through (15)). If patients receive skilled nursing care, they are not eligible for Part B coverage for durable medical equipment.

The reclassification of Texas nursing homes that is now under attack allegedly was necessitated by the former lax enforcement in HCFA Region VI of the statutory interpretation outlined above. (HCFA Region VI is responsible for overseeing the Medicare program in Texas as well as Arkansas, Louisiana, New Mexico and Oklahoma.) In an attempt to clarify its interpretation, HCFA had established special criteria for identifying nursing homes that provide skilled nursing care ((j)(1)) but that are not necessarily skilled nursing facilities ((j)(1)-(15)). According to the government, Region VI's failure to properly apply these criteria led to an overabundance of nursing home patients eligible for Part B benefits in Texas.³ The reclassification in Region VI brought it in line with the rest of the country.

The HCFA criteria were not published in the Federal Register until December 3, 1982,⁴ but were apparently printed in section 3412 of the Medicare State Operations Manual long before that date. See generally Kron, et al v. Heckler, Medicare and Medicaid Guide (CCH) ¶ 33,105 at 10,550 (E.D.La. Sept. 12, 1983). The government maintains that the criteria have been in effect since 1966, shortly after the inception of the Medicare program. They were republished, slightly modified, in the Federal Register on March 22, 1984.⁵ The republished criteria only apply to determinations of spells of illness under Part A, however, and do not affect the present case. The criteria now challenged are those published on December 3, 1982. (Hereafter, the December 3, 1982 published criteria will be referred to as the "j(1) regulations.")

The j(1) regulations specify four requirements for determining whether a nursing home provides skilled nursing care. Plaintiffs have focused on the alleged inequities of the third requirement, nurse-bed ratio. By the same token, HCFA contends that it was the relaxed application of this third requirement that initially led Region VI astray. The third element of the j(1) regulations provides that the ratio of nursing personnel to the number of beds in a facility cannot exceed 1 to 15. A note following this provision indicates that in facilities with a low occupancy rate, the number of nursing personnel should be compared to the actual number of residents rather than the amount of beds. This note was apparently ignored in Region VI, with the result that ratios greater than 1 to 15 were found in numerous facilities with lower than average occupancy rates. When the number of nursing personnel was compared to the number of actual residents in those facilities, the resulting ratios were 1 to 15 or lower, thus leading to the reclassification of those homes.

II. PROCEDURAL HISTORY

The reclassification of homes in Region VI became effective on September 1, 1984. On October 5, 1984, Plaintiffs filed their complaint seeking declaratory, injunctive and mandamus relief. After a detailed rendition of the circumstances surrounding this case, the complaint specifies nine requested forms of relief.

First, Plaintiffs request the Court to determine that this suit is maintainable as a class action. Next, Plaintiffs request a declaratory judgment with respect to five matters: (1) That Defendants' promulgation of the j(1) regulations violated the Administrative Procedure Act. (2) That Defendants' denial of Part B benefits violated Plaintiffs' right to due process of law. (3) That Defendants' actions denied Plaintiffs their right to equal protection under the law. (4) That Defendants' reclassification was contrary to the Medicare Act. (5) That the March 22, 1984 version of the j(1) regulations should apply in this case. Plaintiffs next seek preliminary and permanent injunctive relief to prohibit HCFA Region VI from reclassifying nursing homes according to the j(1) regulations and to prohibit correspondence with homes for the same purpose. Finally, Plaintiffs request the Court to issue a writ of mandamus ordering the Defendants to promulgate the March 22, 1984 version of the j(1) regulations as the only interpretation of 42 U.S.C. § 1395x(j)(1).

The matter was set for hearing on November 5, 1984 to consider Plaintiffs' Motion for a Preliminary Injunction. At the start of the proceedings, the Court consolidated the hearing with the trial on the merits pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure. At the conclusion of the trial, the Court ordered the filing of all briefs and the proposed...