United States v. Erika, Inc

• Citation: 72 L.Ed.2d 12,456 U.S. 201,102 S.Ct. 1650
• Decision Date: 20 April 1982
• Docket Number: No. 80-1594,80-1594
• Parties: UNITED STATES, Petitioner, v. ERIKA, INC
• Court: United States Supreme Court

456 U.S. 201

102 S.Ct. 1650

72 L.Ed.2d 12

UNITED STATES, Petitioner,

v ERIKA, INC.

No. 80-1594.

Argued March 1, 1982.

Decided April 20, 1982.

Syllabus

Part B of the Medicare program, the federally subsidized, voluntary health insurance system for persons 65 or older or who are disabled, supplements Part A, which covers institutional health costs such as hospital expenses, by insuring against a portion of medical expenses excluded from Part A. Under the statute, private insurance carriers are assigned the task of paying Part B claims. If the carrier determines that a claim meets Part B coverage criteria, the claim is paid out of federal funds. Disputed determinations are subject to review in a hearing by the carrier if the disputed amount is $100 or more. The statute also provides for a review by the Secretary of Health and Human Services of determinations of whether an individual is entitled to benefits under Part A or Part B, and of the determination of the amount of benefits under Part A. Persons dissatisfied with the Secretary's decision are granted the right to additional administrative review, together with the option of judicial review when the dispute relates to their eligibility to participate in either Part A or Part B or concerns the amount of Part A benefits. When respondent distributor of kidney dialysis supplies made sales covered by Part B, the purchasers assigned their Part B claims to respondent. Respondent in turn billed the private insurance carrier, who was required by contract to reimburse 80% of what it determined were "reasonable charges" for the supplies. The carrier interpreted the relevant statute and regulations to define "reasonable charges" to be the catalog price of the supplies as of July 1 of the preceding calendar year. When the carrier refused respondent's request to make adjustments in this method of reimbursement in order to reflect interim price increases, respondent sought review before one of the carrier's hearing officers, who upheld the carrier's decision. Respondent then brought an action against the United States in the Court of Claims, seeking reimbursement on the basis of its current charges. After ruling that the suit was within its jurisdiction under the Tucker Act, the Court of Claims held that the carrier's calculation of respondent's allowable charges erred in several respects, and remanded for redetermination of the charges.

Held : The Court of Claims has no jurisdiction to review determinations by private insurance carriers of the amount of benefits payable under Part B of the Medicare program. Pp. 206-211. (a) In the context of the statute's precisely drawn provisions, the omission to authorize judicial review of determinations of the amount of Part B awards provides persuasive evidence that Congress deliberately intended to foreclose further review of such claims. Pp. 206-208.

(b) The legislative history confirms that Congress intended to limit review of the Part B awards, which are generally smaller than Part A awards. Pp. 208-211

634 F.2d 580, 225 Ct.Cl. 252, and 647 F.2d 129, 225 Ct.Cl. 273, reversed.

Edwin S. Kneedler, Washington, D. C., for petitioner.

Stephen H. Oleskey, Boston, Mass., for respondent.

Justice POWELL delivered the opinion of the Court.

The question is whether the Court of Claims has jurisdiction to review determinations by private insurance carriers of the amount of benefits payable under Part B of the Medicare statute.

I

Part B of the Medicare program, 79 Stat. 301, as amended, 42 U.S.C. § 1395j et seq. (1976 ed. and Supp.IV), is a federally subsidized, voluntary health insurance system for persons who are 65 or older or who are disabled. The companion Part A Medicare program covers institutional health costs such as hospital expenses. Part B supplements Part A's coverage by insuring against a portion of some medical expenses, such as certain physician services and X-rays, that are excluded from the Part A program. Eligible individuals pay monthly premiums if they choose to enroll in Part B. These premiums, together with contributions from the Fed- eral Government, are deposited in the Federal Supplementary Medical Insurance Trust Fund that finances the Part B program. See §§ 1395j, 1395r, 1395s, 1395t, and 1395w (1976 ed. and Supp.IV).

The Secretary of Health and Human Services administers the Medicare program. "In order to provide for the administration of the benefits . . . with maximum efficiency and convenience for individuals entitled to benefits," the Secretary is authorized to assign the task of paying Part B claims from the Trust Fund to private insurance carriers experienced in such matters.¹ § 1395u. See H.R.Rep. No. 213, 89th Cong., 1st Sess., 46 (1965); S.Rep. No. 404, 89th Cong., 1st Sess., 53 (1965), U.S.Code Cong. & Admin.News 1965, p. 1943. After Part B enrollees receive medical care, they (or, after their assignment, their medical providers) bill the private insurance carrier.

If the carrier determines that a claim meets all Part B coverage criteria such as medical necessity and reasonable cost, the carrier pays the claim out of the federal funds. See 42 U.S.C. § 1395u; Schweiker v. McClure, 456 U.S. 188, 102 S.Ct. 1665, 72 L.Ed.2d 1. If the carrier decides that reimbursement in full is not warranted, the statute and the regulations designate an appeal procedure available to dissatisfied claimants. All may request a "review determination," which is a de novo written review hearing before a carrier employee different from the one who initially decided the claim. Claimants who remain dissatisfied and whose appeal involves more than $100 then may petition for an oral hearing before a hearing officer designated by the carrier. See 42 U.S.C. § 1395u(b)(3)(C); 42 CFR § 405.820 (1980). Unless the carrier or the hearing officer decides to reopen the proceeding, the hearing officer's decision is "final and binding upon all parties to the hearing. . . ." § 405.835. Neither the statute nor the Secretary's regulations make further provision for review of hearing officer decisions.

II

Respondent, a major distributor of kidney dialysis supplies, sold its products to institutions and individuals. About half of such sales were covered by the Part B program. Persons purchasing dialysis supplies assigned their Medicare Part B claims to respondent. See 42 U.S.C. § 426(e), § 426-1 (1976 ed., Supp.IV) (establishing Part B coverage for renal disease). Respondent in turn billed the Prudential Insurance Company of America, the private insurance carrier for the New Jersey area in which it is based. According to its contract with the Secretary, Prudential was required to reimburse 80% of what it determined to be a "reasonable charg[e]" for these supplies. See § 1395l (a) (1976 ed., Supp.IV).

Prudential interpreted the relevant statute and regulations to define the "reasonable charges" for respondent's products to be their catalog price as of July 1 of the preceding calendar year.² For example, Prudential reimbursed respondent's Part B invoices from July 1, 1975, to June 30, 1976, on the basis of prices contained in respondent's July 1, 1974, catalog.

Prudential began reimbursing respondent on this basis in 1974. Early in 1976 the respondent learned about the grounds for Prudential's partial reimbursement of its in- voices. At that time it requested Prudential to adjust past and future reimbursements to reflect price increases effective after July 1, 1974. Prudential agreed to adjust prospectively the basis for payment for the drug heparin, the price of which apparently had increased sharply. Cf. U.S. Dept. of HEW, Medicare Part B Carriers Manual § 5010.2 (1980) (permitting adjustments to customary charges in "highly unusual situations where equity clearly indicates that the increases are warranted"). But the carrier refused to make either retroactive adjustments for heparin or any adjustments at all for other products.³

Respondent sought review of this refusal before one of Prudential's hearing officers pursuant to 42 U.S.C. § 1395u(b)(3)(C). The hearing officer affirmed Prudential's decision. Respondent then brought the instant action against the United States in the Court of Claims seeking reimbursement on the basis of its current charges, asserting that Prudential's refusal to set "reasonable charges" on the basis of respondent's interim price increases contravened the Fifth Amendment as well as the Social Security Act and applicable regulations. The Court of Claims ruled that respondent's suit was within the jurisdictional grant of the Tucker Act, 28 U.S.C. § 1491, which permits the Court of Claims to hear "any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department." 634 F.2d 580, 584-588, 225 Ct.Cl. 252, 256-262 (1980) (en banc), opinion clarified, 647 F.2d 129, 225 Ct.Cl. 273 (1981).⁴ On the merits, the court decided that Prudential's calculation of re- spondent's maximum allowable charge erred in several respects. Id., at 588-590, 225 Ct.Cl., at 262-268. The court remanded the case to Prudential for redetermination of these matters.⁵ We granted certiorari to determine whether the Court of Claims has jurisdiction over suits of this kind. 451 U.S. 982, 101 S.Ct. 2312, 68 L.Ed.2d 838 (1981). We now reverse.

III

The United States argues that Congress, by enacting the Medicare statute, 42 U.S.C. § 1395j et seq. (1976 ed. and Supp.IV), specifically precluded review in the Court of Claims of adverse hearing officer determinations of the amount of Part B payments. We agree.⁶

Our lodestar is the language of the statute. Congress has specified in the Medicare statute that disputed carrier Part B determinations are to be subject to review in "a fair hearing by the carrier, in any case where the amount in controversy is $100 or more. . . ." 42 U.S.C. § 1395u(b)(3)(C) (emphasis added).⁷ See Schweiker v. McClure, 456 U.S. 188, 102 S.Ct. 1665, ...