New York State Ophthalmological Society v. Otis R. Bowen, Secretary, Health and Human Services

STEPHEN F. WILLIAMS, Circuit Judge,

concurring in part and dissenting in part.

I concur in the court’s affirmance of the district court’s dismissal of the complaint, and in its reliance on the doctrines of exhaustion and ripeness. I write separately to express my view that the two doctrines apply to different aspects of the case’s prematurity, and to present a somewhat different understanding of the plaintiffs’ claim on the merits from that stated by the court.

As the court’s opinion explains, plaintiffs —individual ophthalmologists, their patients, and two ophthalmological professional organizations — sue the Secretary of Health and Human Services in order to challenge the constitutionality of § 9307(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985, Pub.L. 99-272, 100 Stat. 194, codified at 42 U.S.C.A. § 1395u(k) (Supp.1988). While another portion of the Act restricts Medicare funding for an assistant surgeon in a cataract operation to instances where an insurance carrier or peer review organization has approved the use because of “the existence of a complicating medical condition,” 42 U.S. C.A. § 1395y(a)(15) (Supp.1988), the challenged section imposes substantial penalties (fines and ineligibility for Medicare reimbursement) on a doctor who bills a patient for services provided without such approval. It thus restricts the ability of a cataract patient to use her own money to secure such additional protection as an assistant surgeon might provide. Plaintiffs raise no objection to Congress’s decision as to what HHS will reimburse; they attack only the limit on an individual’s ability to enter into private arrangements — free of any expense to the government — to employ extra services that would (arguably) reduce the risks of losing his or her eyesight.

I

Exhaustion and ripeness advance substantially identical interests: (1) judicial economy (the proceedings before the agency may give the plaintiffs victory and thus moot the dispute); (2) agency autonomy (the agency’s proceedings permit it to develop both a factual record and its own understanding and articulation of the issues); and (3) the proper functioning of the judiciary (judicial non-involvement until the conclusion of agency proceedings prevents the courts from becoming entangled in “abstract disagreements over administrative policies” unfit for judicial review). Abbott Laboratories v. Gardner, 387 U.S. 136, 148 , 87 S.Ct. 1507, 1515 , 18 L.Ed.2d 681 (1967). See also McKart v. United States, 395 U.S. 185, 193-94 , 89 S.Ct. 1657, 1663 , 23 L.Ed.2d 194 (1969) (reviewing purposes of exhaustion doctrine); American Trucking Ass’ns v. ICC, 747 F.2d 787, 789-90 (D.C.Cir.1984) (ripeness). The clearest (and perhaps the only) difference between the doctrines is that exhaustion addresses the plaintiffs failure to employ available avenues of administrative relief, while ripeness addresses the status of agency activity, namely, the extent to which it has actually enforced its policies.

The two doctrines in this case apply to different features of prematurity. Exhaustion is relevant to the absence of any evidence in the record that any plaintiff has applied for authorization to use an assistant surgeon and been denied. Ripeness applies to the failure of HHS (so far as appears) to impose § 1395u(k) penalties on *1393 any doctor for billing a patient for the services of an unapproved assistant surgeon.

Exhaustion first. Because the record contains no evidence of a denied application for carrier or PRO approval, we have some uncertainty as to how restrictive the carriers and PROs may be. See Maj.Op. at 1388. A clearer picture of the severity of the challenged statute would aid judicial review: the more stringent the PROs and carriers, the heavier the burden imposed by the statute on the plaintiff patients’ ability to use their own resources to protect their health.

In all candor, however, I think we should acknowledge that the rejection of a few applications will shed only a dim light on the issues here. Standing alone, one denied application would satisfy the exhaustion requirement, but it would mark out merely one point in the border between the accepted and the rejected; it would not define the border. More specifically, 42 U.S.C.A. § 1395y(a)(15) itself makes clear that carriers and PROs are not to authorize a second surgeon in the absence of a “complicating medical condition,” i.e., some special indicator that an assistant surgeon’s help would be useful. Thus complete exhaustion cannot significantly close the gap between the parties; 42 U.S.C.A. § 1395y(a)(15) appears to preclude the defendant from accepting in the slightest degree plaintiffs’ belief that the presence of an assistant surgeon is always a wise precaution, even in the absence of any specific indicators. Accordingly, I believe that the case for requiring exhaustion is marginal.

Ripeness, as I have said, is implicated by HHS’s having so far not enforced 42 U.S.C. A. § 1395u(k) against any doctors. The statute imposes the penalties when a doctor “bills” a Medicare patient for the services of an unapproved assistant surgeon. As the court notes, the stated purpose is -to protect beneficiaries from additional out-of-pocket costs. Maj.Op. at 1382 (citing legislative history). This leaves various possible interpretations, and under Chevron U.S.A. Inc. c. NRDC, 467 U.S. 837 , 104 S.Ct. 2778 , 81 L.Ed.2d 694 (1984), of course, we would owe considerable deference to HHS’s choice. For example, a patient who pays the doctor before the operation, without having ever been “billed,” will necessarily have confronted the choice in a starker, more concrete way than one who responds to billing after the operation. If the pre-paying patient has also been informed that the carrier’s or PRO’S denial of approval manifests his government’s considered judgment that under the circumstances the expense is a waste (either in the sense of not being worth the cost, or perhaps in the stronger sense of not being worth anything), penalties hardly seem necessary to advance consumer-protection interests as they are normally conceived.

The closest HHS has come to passing on this issue takes the form of a statement of Thomas G. Morford, acting director of HHS’s Health Standards and Quality Bureau, and Richard P. Kusserow, inspector general. The statement took the form of a question and answer published in Argus, a newsletter for ophthalmologists, in September 1986:

Will Medicare patients have the freedom of choice to pay for a second surgeon?

As we read the statute, it does not appear to exclude voluntary payment from the scope of the prohibition. Presumably, Congress was aware that patients are not usually in a position to disagree with the advice of their physicians, so that it would be impossible to determine whether a patient’s decision was indeed “voluntary.”

Plaintiffs’ Exhibit 2.

The statement leaves obscure to what extent the authors intend the second sentence to undermine the message of the first. (Nor does the record clearly indicate their authority to speak for HHS.) At least a possible construction would be that the penalties do not apply to a doctor who received payment from a patient (1) who was never billed (thus escaping the literal language of § 1395u(k), (2) who paid in advance, and (3) who received full disclosure of the sort suggested above. So interpreted, the statute would impose a far less *1394 severe burden on plaintiffs’ interests than if it were read as universally banning payments. Accordingly, because there has been neither enforcement nor any other authoritative indication of HHS’s detailed intentions as to the application of § 1395u(k), adjudication now risks precisely the entanglement in indeterminate administrative policy decisions that the ripeness requirement is designed to prevent.

Plaintiffs invoke Doe v. Bolton, 410 U.S. 179, 188 , 93 S.Ct. 739, 745 , 35 L.Ed.2d 201 (1973), in which the Court allowed pre-en-forcement review of Georgia’s anti-abortion statute at the behest of physicians. But there the Court perceived no ambiguity in the statute that had a potential for altering the outcome of the constitutional issue. (I put aside the complications entailed by Doe’s involving enforcement of a state criminal statute.) Here the unsettled issues of statutory interpretation render plaintiffs’ constitutional claim unfit for judicial review.

Even if the issue presented were fit for judicial review, established ripeness law prevents pre-enforcement review unless failure to review would pose a hardship to parties. Abbott Laboratories v. Gardner, 387 U.S. 136, 149 , 87 S.Ct. 1507, 1516 , 18 L.Ed.2d 681 (1967). (For a limited exception, inapplicable here, see Eagle-Picher Industries, Inc. v. EPA, 759 F.2d 905 (D.C.Cir.1985).) Such a hardship could occur if a doctor could obtain no authoritative advance reading from the Department as to its view of the statute’s application to receipt of money under specific circumstances: the doctor would be required either to forego the transaction or to risk the penalties authorized by § 1395u(k). A hardship for plaintiff patients could flow from this dilemma — inability to find a doctor willing to engage a second surgeon.

Thus, while hardship normally derives from parties’ inability to secure a judicial hearing, here its primary source would be inability to obtain authoritative administrative rulings. But plaintiffs do not claim such rulings are unavailable. Cf. National Automatic Laundry and Cleaning Council v. Shultz, 443 F.2d 689 (D.C.Cir.1971) (authoritative, judicially reviewable advice provided in correspondence between trade association and Federal Wage and Hour Administrator). Accordingly, even if the constitutional issue posed were fit for judicial review, plaintiffs’ hardship assertions are weak.

II

The court finds neither exhaustion nor ripeness a bar to adjudication of what it characterizes as plaintiffs’ privacy claim, framed by the court as relating to an “interest in avoiding the approval requirement at its inception, as well as in obtaining the service.” Maj.Op. at 1387. The court differentiates this claim from what it characterizes as plaintiffs’ assertion of a “liberty” interest “in procuring the treatment of choice.” Maj.Op. at 1383 (emphasis in original). The court characterizes the first claim, so articulated, as posing a “facial” challenge to § 1395u(k), a pure legal issue independent of the stringency of PRO or carrier review, Maj.Op. at 1383, and of the facts regarding the utility of the second surgeon. On this basis it finds the exhaustion and ripeness doctrines satisfied with respect to that claim.

My difficulty is that I do not believe plaintiffs have posed any such claim. So far as I can determine, there is a unified claim, which may best be characterized as resting in the plaintiff patients’ interest in autonomy. (Roe v. Wade, 410 U.S. 113 , 93 S.Ct. 705 , 35 L.Ed.2d 147 (1973), and kindred cases employ the term “privacy,” but autonomy seems more apt to describe the individual’s interest in making those decisions which affect only him or her (plus any others participating voluntarily).) So far as I can determine, this claim is not independent of the facts regarding the possible value of the uses of an assistant surgeon in unapproved situations; I do not understand plaintiffs to claim that they would have a constitutional claim if it were stipulated that a second surgeon contributed no increment in safety whatsoever in the unapproved situations. Nor am I able to perceive any claim independent of the extent of the practical burden imposed by *1395 § 1395u(k) (as it may prove to be interpreted by HHS). Accordingly, I cannot join the court in carving out any pure legal issue that surmounts exhaustion and ripeness.

The above deals with the court’s rejection of a claim that I believe plaintiffs never made. No harm done. But the court’s subdivision of plaintiffs’ claim has a troubling side effect. It has led the court into a characterization of the remainder of plaintiffs’ claim — what I regard as their sole claim — that appears to divest it of its autonomy values. Thus, the court analyzes what it sees as the second or “liberty” claim solely by reference to such cases as Rochin v. California, 342 U.S. 165 , 72 S.Ct. 205 , 96 L.Ed. 183 (1952), involving forcible government invasions of the individual’s body, made in the interest of discovering criminal conduct and judged by the Court in terms of whether the government’s act “shocks the conscience,” id. at 172 , 72 S.Ct. at 209 . See Maj.Op. at 1388. This further leads the court to suggest that plaintiffs could prevail on the issue only by proving that the second surgeon’s presence (in unapproved instances) was “indispensable to the preservation of health or represented] a clearly preferable medical alternative,” id. at 1390 (emphasis in original), or that the second surgeon was “a medical necessity,” id. at 1391, or “medically necessary,” id.

As exhaustion and ripeness aim to avoid premature judicial pronouncements, we should not get too far into the unaddressed claim. I will follow the majority only a short way into the thicket. § 1395u(k) restricts individuals’ ability to decide for themselves the sort of medical care they may select in self-financed transactions with physicians. The sole interest asserted in favor of the restriction is the interest in preventing individuals from being harmed by making unwise expenditures of their own money; there is no claim that the presence of a second surgeon ever makes a cataract operation more risky. Thus the state interest is not only paternalistic, but lies solely in protecting pocketbook interests of the supposed patient beneficiaries. 1

Let us consider two possible sets of facts: (1) No reasonable person could conclude that the second surgeon ever (in the unapproved cases) enhanced the patient’s chances of retaining his eyesight. Here, as I’ve suggested, I believe that even plaintiffs would say they had no claim.

(2) In the unapproved cases the average incremental value of the second surgeon is less than its average cost (about $286 according to plaintiffs), but not necessarily much less. This would certainly explain Congress’s unwillingness to provide insurance coverage for such operations. But an individual, fully informed about the costs and potential risk reduction, could reasonably decide to pay the extra amount. Averages, after all, are made up of individual figures, many or most of which deviate from the average. Moreover, the value a person attaches to preservation of eyesight is highly subjective. Suppose her vocation or interests specially depend on sight — an artist (or a lawyer). Or suppose he was very rich, so that the marginal value of the $286 was very slight? Finally, even an individual patient for whom the expected value of the second surgeon (i.e., the value of the benefit under each of the various possible eventualities, weighted for the probability of each eventuality) is less than the cost may be willing to retain a second surgeon; he would do so for the same reason that people buy insurance — to reduce the variability of possible outcomes.

If the average value of the second surgeon is less than the cost, it would be hard to characterize the second surgeon as a “medical necessity,” but it is far from clear to me that the invasion of individual autonomy would be constitutional. Accepting arguendo the majority’s view that the Supreme Court will not place a person’s ability to preserve her eyesight on the same lofty plane as her ability to abort a fetus, see Roe v. Wade, 410 U.S. 113 , 93 S.Ct. 705 , *1396 35 L.Ed.2d 147 (1973), I wonder whether the state may prohibit a person from investing $286 in a health measure merely because its average incremental value is only, say, $280. What if its average incremental value is $50?

Nor am I clear, insofar as facts as to the utility of the second surgeon bear upon the constitutional issue, where the burden of proof lies. Normally of course a statute enjoys a presumption of constitutionality, so that one assailing it must establish such facts as may be necessary to undermine that presumption. But see Doe v. Bolton, 410 U.S. 179, 195 , 93 S.Ct. 739, 749 , 35 L.Ed.2d 201 (1973) (invalidating requirement that abortions be performed in a fully licensed hospital, as state failed to establish that only hospitals satisfied its interest in protecting the patient’s health).

Clearly the facts may vary with infinite gradations. We have no way of knowing what may be proven by the statistical data for which the court rightly calls. Maj.Op. at 1391. As a society we mandate in some situations the expenditures of billions of dollars per life expected to be saved. See, e.g., John A. Morrall III, A Review of the Record, Regulation (Nov/Dec 1986) 25, 30 (citing estimated cost of $72 billion dollars per life saved by proposed formaldehyde regulations). By what criteria could an individual be deemed irrational for wishing to spend $286 to reduce the risk of losing her eyesight by one-in-100,000? by one-in-a-million? If such an expenditure is not irrational, can Congress obstruct it solely on the basis of an asserted interest in consumer protection? Compare Rutherford v. United States, 616 F.2d 455 (10th Cir.1980) (upholding Food and Drug Administration’s denial of approval of laetrile as a permissible “new drug” under 21 U.S.C. § 355 (1982), where FDA found insufficient evidence that it would have “the effect it purports or is represented to have”), with England v. Louisiana State Board of Medical Examiners, 259 F.2d 626, 627 (5th Cir.1958) (while state may outlaw “witch doctors, voodoo queens, bee stingers, and various other cults which no reasonably intelligent man would choose for the treatment of his ills,” chiropractors are entitled to a chance to prove that “a reasonable man might ... intelligently choose a chiropractor”).

To repeat, I do not pass on these issues. By the same token, I most emphatically do not join the court in its suggestions that plaintiffs’ autonomy claim can be validated only if they establish that the presence of the second surgeon in unapproved cases is “necessary.”

. Of course extravagant expenditures on health may in some instances affect health adversely, by foreclosing expenditures on items — higher quality food, shelter, recreation, etc. — that would have contributed more to the individual’s health than the direct expenditure thereon. See generally Aaron Wildavsky, Searching for Safety (1988).