National Ass'n of Home Health Agencies v. Schweiker
| Decision Date | 10 December 1980 |
| Docket Number | No. 393,No. 404,96,No. 1479,89,No. 96-499,No.1167,No. 82-1293,91,P,No. 213,No. 81-3160,No. 81-03160,No. 1167,No.96-499,No. 95-142,No.95-142,82-1293,81-03160,95-142,1167,96-499,81-3160,404,213,393,1479 |
| Citation | 690 F.2d 932,223 U.S.App.D.C. 209 |
| Parties | NATIONAL ASSOCIATION OF HOME HEALTH AGENCIES, et al., Appellees, v. Richard S. SCHWEIKER, et al., Appellants. . Argued 27 May 1982. Decided 14 Sept. 1982. Appeal from the United States District Court for the District of Columbia (D.C. Civil Action). Margaret E. Clark, Atty., Dept. of Justice, Washington, D. C., with whom Stanley S. Harris, U. S. Atty. and Anthony J. Steinmeyer, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellants. James C. Pyles, Washington, D. C., for appellees. Before WILKEY, Circuit Judge, and ROBB and FAIRCHILD, * Senior Circuit Judges. Opinion for the Court filed by Circuit Judge WILKEY. WILKEY, Circuit Judge: Appellants, the Secretary of Health and Human Services and the Administrator of the Health Care Financing Administration (hereinafter referred to collectively as the Secretary), appeal from a district court decision invalidating a regulation requiring Home Health Agencies to seek Medicare reimbursement determinations and payments from government-designated regional intermediaries. The Secretary maintains that the district court did not have jurisdiction to decide the issues involved. He also challenges the lower court's holdings that the Secretary lacked the statutory authority to promulgate the regulation and that he failed to comply with the notice and comment requirements of the Administrative Procedure Act (APA). 1 We hold that the district court properly exercised its jurisdiction and that it correctly concluded that the Secretary was required to comply with the APA's notice and comment provisions. However, we reverse its holding that the Secretary lacked the authority to promulgate the regulation in question. I. Background A. Statutory Scheme The Medicare Act, 2 enacted in 1965, created two distinct, but interrelated, types of health insurance coverage for the aged and disabled. Part B of the Act covers the cost of physician and non-hospital services. 3 Part A provides coverage for inpatient hospital service |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 81-03160).
Margaret E. Clark, Atty., Dept. of Justice, Washington, D. C., with whom Stanley S. Harris, U. S. Atty. and Anthony J. Steinmeyer, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellants.
Before WILKEY, Circuit Judge, and ROBB and FAIRCHILD, * Senior Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
Appellants, the Secretary of Health and Human Services and the Administrator of the Health Care Financing Administration (hereinafter referred to collectively as the Secretary), appeal from a district court decision invalidating a regulation requiring Home Health Agencies to seek Medicare reimbursement determinations and payments from government-designated regional intermediaries. The Secretary maintains that the district court did not have jurisdiction to decide the issues involved. He also challenges the lower court's holdings that the Secretary lacked the statutory authority to promulgate the regulation and that he failed to comply with the notice and comment requirements of the Administrative Procedure Act (APA). 1
We hold that the district court properly exercised its jurisdiction and that it correctly concluded that the Secretary was required to comply with the APA's notice and comment provisions. However, we reverse its holding that the Secretary lacked the authority to promulgate the regulation in question.
The Medicare Act, 2 enacted in 1965, created two distinct, but interrelated, types of health insurance coverage for the aged and disabled. Part B of the Act covers the cost of physician and non-hospital services. 3 Part A provides coverage for inpatient hospital services, post-hospital extended care services and home health services. 4 Home health agencies (HHAs) provide Part A services to a patient in his home, as a lower cost alternative to institutional care. 5 The present litigation involves the mechanism for making reimbursement determinations and payments to HHAs under Part A of the Act.
Under the Act qualified providers of Part A health services are entitled to be reimbursed for the reasonable cost of providing services to Medicare beneficiaries. 6 At the inception of the Medicare program in 1965, HHAs, like other qualified providers, had the option of nominating an intermediary to determine the proper amount of reimbursement and make those payments. 7 When an HHA chose to use an intermediary, the Secretary would enter into a cost-reimbursement contract with the nominated intermediary. 8 Alternatively, if the HHA chose not to use an intermediary, it submitted its claims directly to the Secretary. 9 Under the Act, the Secretary was empowered to perform any of these functions directly or by contract. 10 Payment of claims submitted directly to the Secretary was made by the Office of Direct Reimbursement (ODR) of the Health Care Financing Administration (HCFA).
In 1977 section 1395h, the provision giving providers the right to nominate intermediaries, was amended by the addition of provisions authorizing the Secretary to assign or reassign providers to certain intermediaries if he determined, after applying specified criteria, that the assignment or reassignment would result in the more effective and efficient administration of the Medicare program. 11 In 1980 Congress, responding to concerns over the "wide variation in administrative and reimbursement practices among intermediaries with respect to home health providers," 12 further amended section 1395h. The 1980 amendment required the Secretary to designate regional intermediaries for freestanding 13 HHAs electing to use an intermediary. 14 Shortly after the 1980 amendment, the Secretary promulgated the regulation that is the cause of the present controversy.
On 8 December 1981 the Secretary, without following the notice and comment requirements of the APA, issued an administrative instruction directing freestanding HHAs to begin using forty-nine government-designated, state-wide intermediaries for all Medicare reimbursement determinations and payments. 15 Under the proposed plan, 864 HHAs were reassigned to new intermediaries. 16 Approximately fifty-four percent of these 864 were providers who had previously been dealing directly with the Secretary. At the time the instruction issued the Secretary planned to phase in the proposed reassignments over a period beginning 1 January 1982 and ending 1 October 1982, with transfers becoming effective at the start of the individual HHA's fiscal year. Subsequently, however, the Secretary accelerated the proposed implementation, by requiring that all transfers be effective by 15 March 1982. Soon after the December 1981 instruction issued, the present litigation ensued.
On 24 December 1981 Appellees, two national associations of HHAs, a corporation which owns and operates forty-eight HHAs, and thirty-seven individual HHAs, filed this action in the district court. Appellees sought to enjoin the Secretary from implementing the reassignment outlined in the December 1981 instruction on the grounds that the instruction violated the Medicare Act, the APA, and the Due Process Clause of the Fifth Amendment. On cross-motions for summary judgment, the district court ruled in Appellees' favor on most of the issues involved.
The court rejected the Secretary's argument that jurisdiction over all but the Appellees' APA claim was precluded by 42 U.S.C. § 405(h), concluding that section 405(h) did not preclude federal question jurisdiction over statutory claims for which no alternative form of judicial review was available.
The court also held in Appellees' favor on the merits, concluding that under the Medicare Act, HHAs which had not previously nominated intermediaries had the right to have Medicare reimbursement determinations and payments made directly by the Secretary. The court further held that the December 1981 instruction did not apply to those HHAs which had elected to deal with an intermediary because it was a rule subject to the notice and comment requirements of the APA, requirements the Secretary failed to follow. Accordingly, the court enjoined the Secretary from requiring freestanding HHAs to deal with regional intermediaries if they had chosen not to, and ordered that any effort to reassign freestanding HHAs that had elected to use intermediaries be preceded by the agency's compliance with the notice and comment provisions of the APA. 17 This appeal followed.
Appellees maintain that the district court had jurisdiction to hear all their claims under 28 U.S.C. § 1331, the general grant of federal question jurisdiction. The Secretary counters by arguing that 42 U.S.C. § 405(h), incorporated by reference into the Medicare Act, 18 precludes the district court from exercising section 1331 jurisdiction. Alternatively, the Secretary for the first time argues that if jurisdiction is not precluded by section 405(h), it has been impliedly precluded by Congress' failure expressly to provide for judicial review of claims like the present ones. Because we agree with the district court's interpretation of section 405(h), we hold that jurisdiction over the present action is not barred by this much-litigated preclusion section. 19 We also hold that Congress did not impliedly preclude jurisdiction over claims like the present ones by failing expressly to provide for their review.
Although the Secretary did not object to the exercise of jurisdiction over Appellees' APA claim at the district court level, he has apparently changed his position on appeal, contending that the district court was mistaken in concluding that it had jurisdiction over "any of (Appellees') claims." 20 However, we can easily dispose of the jurisdictional issue with respect to the APA claim by relying on a prior decision of this court.
Section 405(h) of the Social Security Act provides:
The findings and decisions of the Secretary after a hearing shall be binding upon all individuals who are parties to such hearing. 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 an officer or employee thereof shall be brought under sections 1331 or 1346 of title 28 to recover on any claim arising under this subchapter. 21
This section was incorporated into the Medicare Act "to the same extent as (it is) applicable." 22 The Secretary contends that section 405(h) precludes the district court from exercising jurisdiction over the APA claim raised by Appellees. However, the law in this circuit is to the contrary.
In Humana of South Carolina, Inc. v. Califano, 23 this court held that section 405(h) does not bar a claim brought under the APA. The court noted that "in terms (section 405(h) ) bars only actions brought to 'recover on any claim' arising under the Medicare Act." 24 Thus, the court concluded, when a suit is brought "simply to vindicate an interest in procedural regularity, Section (405(h) ) is not summoned into play." 25 Finding that holding eminently logical, and discovering that at least one other court of appeals has followed it, 26 we see no reason to override it.
The Secretary argues that since Humana was decided, Congress has amended the Medicare Act to require that all challenges to reimbursement regulations, whether substantive or procedural, be brought...
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