Overlook Nursing Home, Inc. v. United States

• Citation: 556 F.2d 500
• Decision Date: 18 May 1977
• Docket Number: No. 188-72.,188-72.
• Parties: OVERLOOK NURSING HOME, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

556 F.2d 500

OVERLOOK NURSING HOME, INC. v. The UNITED STATES.

No. 188-72.

United States Court of Claims.

May 18, 1977.

Richard H. Gens, Boston, Mass., attorney of record for plaintiff. Leppo & Gens, Boston, Mass., of counsel.

Arlene Fine, Washington, D.C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, New York City, for defendant. Carol Tootle, Atty., Social Security Administration, Dept. of HEW, Baltimore, Md., of counsel.

Before NICHOLS, KUNZIG and BENNETT, Judges.

ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

NICHOLS, Judge.

This case is before us on cross-motions for summary judgment. Plaintiff sues the United States for payment allegedly due under 42 U.S.C. § 1395x(v), for services it rendered pursuant to the Medicare program. Under the program, a hospital or other "provider of medical services," as defined in § 1395x(u), that wishes to treat patients eligible for medical assistance through Medicare may apply with the Secretary of Health, Education and Welfare for recognition as a "provider." Providers agree, once enrolled, to furnish medical care to elderly patients without charge, but to accept as compensation reimbursement for the "reasonable costs" of such services, § 1395f(b). Providers may nominate as "fiscal intermediaries" any qualified public or private agency to determine the amount of reimbursement due them, and to make the payments, § 1395h. Intermediaries' payments to providers are fully funded by advances from the Federal Hospital Insurance Trust Fund, administered by the United States.

Between November 1968 and January 1970, plaintiff was a provider of Medicare services in Boston, Massachusetts, and the Travelers Insurance Company was its fiscal intermediary and, thereby, an agent of the United States, the perennial defendant in our court. For the entire time it participated in the program, plaintiff claimed $1,009,800 in reimbursable costs, of which Travelers paid $636,500. On December 16, 1970, plaintiff's representatives met with Travelers field representative and its auditor to discuss various discrepancies in the accounts. The parties agree that plaintiff then acquiesced in the auditor's disallowances and agreed to accept $125,335 in full payment of their claims. No such payment was ever made, however, because Travelers later disallowed all but some $4,000 of plaintiff's claims during a post-audit review conducted at its home offices. Unable to collect more than this amount, plaintiff timely sued here on the grounds that the agreement of December 16 bound the Government to payment of the sum agreed upon, and that, in any event, Travelers latest reductions contravened the Medicare statute and regulations. The case never reached trial, though, because our trial judge suspended proceedings pending the outcome of an administrative hearing on plaintiff's claims. The court concurred in the suspension, by its order of March 1, 1974, while preserving plaintiff's opportunity to reassert its claim based on an accord and satisfaction.

An administrative board, convened under 20 C.F.R. §§ 405.490-499 (1974), has now heard the dispute and rendered its decision denying plaintiff any further recovery. Now plaintiff returns to this court so we might address the once-deferred issue regarding an agreement to pay a stated sum, and also for our review of the board's several determinations. Additionally, plaintiff now contends that by its composition the hearing board was inherently biased, depriving plaintiff of its right to the due process of law. Defendant, for its part, once again challenges our jurisdiction to hear such a case as this based in the Medicare statute. Before we reach the merits, therefore, we shall first reiterate why we consider ourselves empowered to exercise jurisdiction in this case, and shall elaborate upon the proper scope of review. Then, before reaching the merits, we shall explain why the Medicare appeals boards do not offend the principle of due process.

Defendant reasserts the challenge to our jurisdiction that it earlier advanced in Whitecliff, Inc. v. United States, 536 F.2d 347, 210 Ct.Cl. 53 (1976), cert. denied, ___ U.S. ___, 97 S.Ct. 1652, 52 L.Ed.2d 361 (1977), based on the finality language in § 405(h) of Title 42, and the Supreme Court's recent decision in Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1974). We held in Whitecliff that in the absence of specific statutory procedures for, or limitations upon, judicial review, a court can review provider reimbursement disputes under its generally applicable grant of jurisdiction. In our court, jurisdiction rests upon 28 U.S.C. § 1491 where, as here, plaintiff seeks money from the United States. Defendant has added nothing new to its argument, and we are aware of no reason to retreat from our position. We continue to hold that Congress did not preclude judicial consideration in any court of a provider's reimbursement rights, when it provided against judicial review of a social security beneficiary's claims, except in a single specified channel. We adhere, therefore, to the view we expressed in Whitecliff.

Once we undertake to exercise jurisdiction over such administrative determinations, we should describe what standard of judicial review the statute prescribes. Although we have held that § 405(h) does not entirely preclude judicial review, it does reflect Congress' obvious desire to commit the resolution of factual disputes to the technical expertise collected in an administrative agency. Consistent with such purpose, the court should largely defer to the determinations of the administrative tribunals duly constituted. 4 K. Davis, Administrative Law § 30.09 (1958). We might properly review those findings to be sure that they are not arbitrary or capricious or unsupported by substantial evidence, but beyond that we must recognize that our qualifications are limited and should limit our inquiry. On the other hand, we do stand ready to test each board's holding for compliance with statutory provisions and regulations that have the force and effect of law. Whitecliff, Inc. v. United States, 536 F.2d at 351, 210 Ct.Cl. at 58; Goldstein v. United States, 201 Ct.Cl. 888 (order), cert. denied, 414 U.S. 974, 94 S.Ct. 287, 38 L.Ed.2d 217 (1973). And, of course, our power to review constitutional questions could not be foreclosed without itself raising a serious constitutional problem. Weinberger v. Salfi, 422 U.S. at 762, 95 S.Ct. 2457. But an error of law, unlike a decision over disputed questions of fact, is peculiarly within our province as an appellate court to correct. Other federal courts have arrived at this result via the Administrative Procedures Act, specifically 5 U.S.C. § 706. See, e.g., Aquavella v. Richardson, 437 F.2d 397 (2d Cir. 1971); Temple Univ. v. Associated Hosp. Serv. of Philadelphia, 361 F.Supp. 263, 270 (E.D.Pa.1973). Within our jurisdiction, this scope of review in Medicare disputes resembles our oversight of administrative decisions in Government contract disputes, under Wunderlich Act standards, 41 U.S.C. §§ 321-22. Thus, our review considers all of plaintiff's objections to the hearing panel's results, at least insofar as each alleges defendant's denial of a constitutional guarantee or a violation of applicable law.

Plaintiff complains that the composition of the administrative board was so inherently biased that it deprived plaintiff of an impartial decisionmaker as due process requires. Plaintiff's objection stems from the uncontroverted fact that the majority of the three-member board were Travelers employees. We had a similar contention before us in Whitecliff, where we noted that it raised a substantial question but one that we did not then need to decide, 210 Ct.Cl. at 61, 536 F.2d at 352-53. Now we do.

Plaintiff's theory seems to be that Travelers, although a mere intermediary in Medicare matters, would have an interest in similar issues where it would be itself the health insurer under private, non-governmental plans, and would wish to establish precedents unfavorable to providers. But plaintiff accepted Travelers as an intermediary and evidently desired to benefit from its experience with the problems to be solved, no doubt antedating that of the federal bureaucracy.

Plaintiff's contention rests first upon the Supreme Court's parting comment in Goldberg v. Kelly, 397 U.S. 254, 271, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), that an essential element of due process is a hearing before an impartial decisionmaker. The Court did linger on the point long enough to remark that an official of an interested agency would not necessarily be disqualified as a decisionmaker, however, so long as he had not already participated in making the determinations under review. Id. More recently, though, we learned in Withrow v. Larkin, 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975), that such an official will not be disqualified automatically even if he had earlier investigated the dispute under review. Plaintiff there was a physician who complained of bias in a state medical disciplinary board that would determine whether to suspend his license to practice medicine, because of his having engaged in prohibited conduct, after that same board had already conducted a separate investigatory hearing into the matter. This was not an instance, the Court explained, where "experience teaches that the probability of actual bias * * * is too high to be constitutionally tolerable." Id. at 47, 95 S.Ct. at 1464; but cf., e.g., Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927) (adjudicator had personal pecuniary interest in the outcome); Taylor v. Hayes, 418 U.S. 488, 501-03, 94 S.Ct. 2697, 41 L.Ed.2d 897 (1974) (judge had become target of personal abuse from party before him). In most other circumstances, the court seemed to say, the allegation of an unconstitutional risk of bias bears a more difficult burden, for it must overcome a presumption...