Tataranowicz v. Sullivan, 91-5052

• Decision Date: 01 June 1992
• Docket Number: No. 91-5052,91-5052
• Citation: 959 F.2d 268
• Parties: , 60 USLW 2619, 36 Soc.Sec.Rep.Ser. 704, Medicare & Medicaid Guide P 40,052 Mary TATARANOWICZ, et al., Appellees, v. Louis W. SULLIVAN, M.D., in his Official Capacity as Secretary, Department of Health and Human Services, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 268

959 F.2d 268

294 U.S.App.D.C. 322, 60 USLW 2619,

36 Soc.Sec.Rep.Ser. 704,

Medicare & Medicaid Guide P 40,052

Mary TATARANOWICZ, et al., Appellees, v. Louis W. SULLIVAN, M.D., in his Official Capacity as

Secretary, Department of Health and Human

Services, Appellant.

No. 91-5052.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 13, 1991.

Decided March 13, 1992.

Rehearing and Rehearing En Banc

Denied June 1, 1992.

Appeal from the United States District Court for the District of Columbia (Civil Action Number 90-00935).

Howard S. Scher, Atty., Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Barbara Biddle, Atty., Dept. of Justice, Washington, D.C., were on brief, for appellant.

Thomas C. Fox, Washington, D.C., for appellees.

Before: BUCKLEY and WILLIAMS, Circuit Judges, and ALAN D. LOURIE, ^* Circuit Judge, U.S. Court of Appeals for the Federal Circuit.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

Dissenting opinion filed by Circuit Judge BUCKLEY.

STEPHEN F. WILLIAMS, Circuit Judge:

In the Medicare Catastrophic Coverage Act of 1988 ("Catastrophic Coverage Act"), Pub.L. No. 100-360, 102 Stat. 683 (1988), Congress expanded Medicare coverage for services in qualified skilled nursing facilities ("SNFs"). The next year, reacting to protest by those on whom it had laid the expense, Congress reversed itself, enacting the Medicare Catastrophic Coverage Repeal Act of 1989 (the "Repeal Act" or "Act"), Pub.L. No. 101-234. The Repeal Act took effect December 31, 1989, largely restoring the status quo ante, but including a "transition provision" affording some continued protection to beneficiaries of the Catastrophic Coverage Act. See id. at 101(b)(1), 42 U.S.C.A. § 1395e note (West Supp.1991). At issue here is how much. We find the transition provision ambiguous and the Secretary's construction of it reasonable. Accordingly, we reverse the district court's decision rejecting the Secretary's interpretation.

I.

Before the Catastrophic Coverage Act, eligible Medicare recipients were entitled to coverage of the costs of SNF services, subject to two restrictions. First, the coverage extended for only 100 days per "spell of illness" ¹; second, the SNF services were covered only if they followed a hospital stay of at least three days. (Congress appears to have provided assistance for SNF costs on the theory that doing so would keep overall costs down by inducing patients to transfer from hospitals to less costly SNFs; it imposed the post-hospital stay requirement to limit the assistance to transfer cases. See S.Rep. No. 404, 89th Cong., 1st Sess., reprinted in 1965 U.S.C.C.A.N. 1943, 1971, 1987.) The Catastrophic Coverage Act removed the spell of illness limitation, substituting a simple limit of 150 days of SNF coverage per calendar year; ² it completely deleted the post-hospital stay requirement. 42 U.S.C. § 1395d (1988). The Repeal Act returned to the prior regime by reinstating both limitations. 42 U.S.C.A. § 1395d(a) (West 1983 & 1991 Supp.).

To soften the blow, Congress included the following transition provision:

(b) Transition provisions for Medicare beneficiaries.

--(1) Inpatient hospital services and post-hospital extended care services.--In applying [42 U.S.C. §§ 1395d and 1395e], as restored by subsection (a)(1) [of the Repeal Act], with respect to inpatient hospital services and extended care services provided on or after January 1, 1990--

(A) no day before January 1, 1990, shall be counted in determining the beginning (or period) of a spell of illness;

. . . . .

(C) the limitation of coverage of extended care services to post-hospital extended care services shall not apply to an individual receiving such services from a skilled nursing facility during a continuous period beginning before (and including) January 1, 1990, until the end of the period of 30 consecutive days in which the individual is not provided inpatient hospital services or extended care services....

Pub.L. No. 101-234, § 101(b)(1), 42 U.S.C. § 1395e note.

All hands appear to agree on how this affects the reinstituted spell-of-illness requirement. Everyone gets a fresh start in 1990, with 1989 bygones treated as completely bygone. Thus, a patient who was in a SNF at the end of 1989 and who satisfied the post-hospital stay requirement would start a spell of illness on January 1, 1990. This would be true regardless of whether the patient had exhausted the Catastrophic Coverage Act's 150-day allowable. Presumably the logic of this is that patients would have rested any decisions on the use of SNF services on the Catastrophic Coverage Act's 150-day rule being the sole limit and so should not be penalized in the next year for their use of that allowance. ³ Nor would it have made sense to require that the patient have been in a SNF on December 31, 1989; the purpose of subsection (A) is not to continue some kind of coverage but to relieve patients from adverse effects that events under the 1989 regime might otherwise have had on their allowables under the Repeal Act.

The parties diverge as to the post-hospital stay requirement. Plaintiffs, who have been or will be denied benefits under the Secretary's interpretation of § 101(b)(1)(C), read it as exempting all individuals who received SNF services on December 31, 1989 and January 1, 1990, regardless of whether the services on December 31, 1989 were covered by Medicare. The Secretary reads it as exempting from the post-hospital stay requirement only those patients whose stay on December 31 was covered by Medicare.

These positions are most meaningful if we look at some specific examples:

(A) A patient is in a SNF on December 31, 1989 and January 1, 1990, having exhausted only 120 days of those allowable under the Catastrophic Coverage Act and having never had a hospital stay. The patient was eligible for coverage on December 31. Under the Secretary's view, the patient needs exemption from the post-hospital requirement and receives it because of his covered SNF stay on December 31. See Medicare Intermediary Claims Manual, Part 3--Claims Process, Transmittal IM-90-1 ("Claims Manual"), Joint Appendix ("J.A.") 90, 94 (Example 1). Plaintiffs of course agree that this patient can start a covered spell of illness; he needs the exemption from the post-hospital requirement and receives it because of his presence in a SNF on December 31.

(B) A patient is in a SNF on December 31, 1989. He has previously exhausted the 150 days allowable in 1989 under the Catastrophic Coverage Act. He has, however, satisfied the post-hospital stay requirement. On both parties' views he will be covered (indeed, starts a spell of illness) on January 1, 1990. Under the Secretary's view, the key is that he has satisfied the post-hospital requirement. See Claims Manual, J.A. at 95 (Example 4). Under the plaintiffs', his presence in the SNF on December 31 assured coverage under the transition provision, regardless of his having also satisfied the post-hospital requirement.

(C) A patient has exhausted the Catastrophic Coverage Act's 150 days well before December 31, 1989 but remains in a SNF till the year's end and into 1990. He has never satisfied the post-hospital requirement. On plaintiffs' view, he is eligible to start coverage under a new spell of illness. As he was in the SNF on December 31, 1989 and continued there, he is exempt from the post-hospital requirement. On the Secretary's view, he is ineligible for coverage starting January 1, 1990. He has not satisfied the post-hospital requirement; since his stay on December 31, 1989 was not covered, he is not entitled to the exemption. See Claims Manual, J.A. at 94-95 (Example 2).

Mary Tataranowicz and thirteen other named plaintiffs brought a class action on behalf of themselves and all others who had been or would be denied benefits due to the Secretary's interpretation of the SNF transition provisions. The district court certified a class so defined and then held that the grandfather clause clearly and unambiguously exempted from the post-hospital requirement all who were SNF patients on December 31, 1989 and who continued in the SNF. Thus it found the Secretary's construction entitled to no deference. Accordingly, the court ordered the Secretary to exempt otherwise eligible SNF patients from the reinstated post-hospital requirement whether or not they had exhausted their 150 days of Medicare coverage for 1989.

The Secretary brings two challenges on appeal. First, he argues that no members of the certified class have satisfied the essential procedural prerequisites to suit--"presentment" and exhaustion. Second, he argues that the transition provision was ambiguous and his own construction reasonable. We find that some though not all of the plaintiff class have satisfied or been excused the requirements of presentment and exhaustion, but reverse on the merits.

II.

First we reject the Secretary's suggestion that we may leap over the jurisdictional or quasi-jurisdictional issues on the grounds that it is proper to do so when those issues are difficult, and the party raising them wins easily on the merits. See Norton v. Mathews, 427 U.S. 524, 96 S.Ct. 2771, 49 L.Ed.2d 672 (1976); Cross-Sound Ferry Services, Inc. v. Interstate Commerce Commission, 934 F.2d 327, 332-34 (D.C.Cir.1991). We need not consider whether the jurisdictional issues here are difficult enough, and the merits issues easy enough, to qualify under that doctrine. The Secretary calls our attention to no case in which the doctrine was invoked to excuse the court's identifying the parties to the suit. But compare Mathews v. Diaz, 426 U.S. 67, 71-72 n. 3, 96 S.Ct. 1883, 1887-1888 n. 3, 48 L.Ed.2d 478 (1976) (in making final decision against constitutional attack on statute, the Supreme Court, whose decision will control all others, finds it unnecessary to find exact class boundaries). Here...