Petition — Unihealth Services Corp. v. Harris

ee

IN THE a

Supreme Court of the United States

OCTOBER TERM, 1979

No.

79-505

UNIHEALTH SERVICES CORPORATION,

Petitioner,

versus

Masts,

JOSEPH-P-CALHANO, SECRETARY OF HEALTH,

EDUCATION AND WELFARE, MELVIN

BLUMENTHAL, MARION J. SEABROOKS,

MIKE HOBAN, JOSEPH BREWSTER,

RAYMOND WOERNER, I. COHEN, BLUE CROSS

ASSOCIATION OF AMERICA, INC. AND JAMES SLEEP,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

DONNA D. FRAICHE

Suite 206

3715 Prytania Street

New Orleans, Louisiana 70115

Telephone: (504) 895-8673

Attorney for Petitioner

SCOFIELDS' QUALITY PRINTERS. P. O. BOX 53096, N. O.. LA. 70153 - 504/822-1611

INDEX

Page

ccc eeceseecas 2

IE 2

ca ceccoceccccocs 2

Constitutional, Statutory and Regulatory

Ne ccc ccapeccsccees 4

ei cc necesecesccesces 7

Jurisdictional Posture of the Case .............4: Q

Jurisdiction of Federal Courts ..............000: 14

Ne. cs tess vesccecces 14

B. Court of Claims Is Not the Answer ....... 16

C. Federal Coercion Cannot Be Shielded

Sess cdecceccces 19

D. Actions Against the Government ......... 20

Jurisdiction Over Constitutional

a 22

Reasons for Granting the Writ ...............06. 24

SIE OT 30

eae cccesccccsccess 31

Appendix A — Order of the United States

Court of Appeals for the Fifth Circuit ........ la

Appendix B — Judgment of the United States

District Court for the Eastern District of

EE 2a

il

INDEX (Continued)

Page

Appendix C — Memorandum and Order of

the United States District Court for the

Eastern Uhlstrict OF LOMISISAS .060 060i ve coves 4a

Appendix D — Memorandum and Order of

the United States District Court for the

Eastern District of Louisiana originally dis-

missing Motion to Dismiss, 448 F.Supp.

EE EE ee, Pere ee ee 22a

Appendix E — Constitutional provisions,

statutes and rules of the court involved ...... 59a

AUTHORITIES

Cases:

American Association of Council of Medical Staffs v.

Califano, 575 F.2d 1367 (5th Cir. 1978) ..... 14,19,

21,22,24,29

Pecnep 0. Sebi, 1614 UB. WO ioc ixcevanadowvesace 18

Bivens v. Six Unknown Named Agents of the FBI, 403

U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 ...15,16

Califano v. Sanders, 403 U.S. 99, 97 S.Ct. 980

PEOTOE - otha kbs leave bewecser tee cuene 11,27

Carey v. Piphus, U.S. ___, 98 S.Ct. 1042,

SS 1. Cae Be CAO 6 vin wha ows bvvskevke cesses 19

Caulfield v. U.S. Department of Agriculture, 293

F.2d 217 (Sth Cir. 1961) (en banc) ........... 23

at te

ill

AUTHORITIES (Continued)

Page

Cervoni v. Secretary of H.E.W., 581 F.2d 1010 (1st

th aha ic's an Sia CNS 6 OKRA a ReiKiens 21,29

Continental Casualty Company v. Department of

Highways of the State of Louisiana, 379 F.2d 673

ES eh, Deas sere PET Ter rye peer rte ee ee 11

Cotovsky-Kaplan Phys. Th. Assoc., Ltd. v. United

States, S07 F.2d 1363 (7th Cir. 1975) ..... 10,11,25

Drummond v. United States, 324 U.S. 316,655S.Ct.

ee og | Be reer 20

Elliot v. Weinberger, 564 F.2d 1219 (9th Cir.

1977), cert. granted, ip io bt.

7S, SB LB ee TOO TIGTE) viv vies dcxdecece 21,24,

25,29

Feres v. U.S., 340 U.S. 139, 71 S.Ct. 153, 95

Re NE ee Oa, ood ed ea ae a oe arah a hina 18

Humana of South Carolina v. Matthews, 419

F.Supp. 253 (D.D.C. 1976) .........000e ee 17,24,

26,29

John T. MacDonald Foundation v. Califano, 571 F.2d

328 (Sth Cir. 1977) (en banc), writ denied,

WOM: dana KN deh k te eras ok ek OO 13,19,

24,28,29

John T. MacDonald Foundation, Inc. v. Mathews, 534

er Oe Ce ED hin i nse Saiy's Sa WAS Oe ss 12

Johnson v. Robison, 415 U.S. 361, 94 S.Ct. 1160,

DO Ee Be ee I Oe adc kn vecctv cans es 22,27,28

iv

AUTHORITIES (Continued)

Page

Kechijian v. Califano, 453 F.Supp. 159 (D.R.I.

BOTS) oo accesacvccestse5eueee eee ee 29

Kiefer and Kiefer v. Reconstruction Finance Corpora-

tien, 306 US. DORs occccicesacs cee 18

land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91

L.Ed. 1209 (2969) ....0sesscsacssuupuemes eos 18,21

Larson v. Domestic and Foreign Corporation, 337 U.S.

CY ee Pr Dr ne 30

Marbury v. Madison, 1 Cranch. 137, 2L.Ed.60 .... 20

Matthews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893,

47 L.Ed.28 216 (2006) .énc5eneewdeee eee 26

Ng Fung Ho v. White, 259 U.S. 276, 41S.Ct. 148,

65 L.Ed. 466 (29828) iccecskccsaueeeee 20

Nixon v. Condon, 286 U.S. 73 (1932) .............. 16

Plekowski v. Ralston-Purina Co., 557 F.2d 1218

(Sth Cir. 1999). ocacis tcc¥ degen eee a ae 24

Pushkin v. Califano, F.2d 6722 (August 8,

1979, Slip Opinion, ef errs 19,20,

21,28,29

Rastetter _v. Weinberger, 379 F.Supp. 170, (D.

Ariz. 1974), aff'd., 419 U.S. 1098, 95 S.Ct.

767, 482 L.Ed.ad 70S (2909) <icasnceueee uae 28

Ryan v. Shea, 525 F.2d 268 (10th Cir. 1975) .... 26,29

Schwatzberg v. Califano, 453 F.Supp. 1042 (S.D.

N.Y. 1976) ..0:000c0c0 uence een eee 29

<—~——€s

Vv

AUTHORITIES (Continued)

Page

Smith v. Bourbon County, 127 U.S. 105 (1888) ...... 21

South Windsor Convalescent Home, Inc. v. Matthew,

Oe FO FiO COE Cie. B97) oo ive ecccce veces 11

"St. Louis University v. Blue Cross Hospital, 537 F.2d

eS | Rae e ne eee 12,24,29

Trinity Memorial Hospital v. Associated Hospital Ser-

vices, 570 F.2d 660 (6th Cir. 1977) ............ 29

Unihealth Services Corporation v. Califano, 448

F.Supp. 1059 (E.D. La. 1978) ........00. ceeee. 9

United States v. Alire, 73 U.S. (6 Wall.) 573, 18

I a ek 18,27

United States v. Candelaria, 271 U.S. 432, 44, 46

pan, ool, 70 L.Ed) 1023 (1926) ... 6.606. cee ee 20

United States v. Jones, 131 U.S. 1, 9 S.Ct. 669, 33

IE co eink nb cx bheeadandecc tas 18,27

United States v. King, 395 U.S. 1, 89 S.Ct. 1501,

a er nn ny a 18-19,27

United States v. Lee, 106 U.S. 196, 1S.Ct. 240, 27

Meee ik ge kwh ig bed ag ae wees 16,18

White v. Matthews, 559 F.2d 852 (2d Cir. 1977),

cert. denied, 435 U.S. 908, 98 S.Ct. 1458, 55

NE OD CUE oo ics ees cde vb cede sess 21

Weinberger v. Salfi, 422 U.S. 762,95 S.Ct. 2454,

BS Ee a} i eh a ee a

13,20,40,27

vi

AUTHORITIES (Continued)

Vii

AUTHORITIES (Continued)

Page

Page

Whitecliffe, Inc. v. United States, 536 F.2d 347, 210 28 U.S.C. §1346(a)(2) ....eccccccceceee 6,16,24

Ct. Cl. 53 (1976), cert. denied, 430 U.S. 969, 97

S.Ct. 1652, 52 L.Ed.2d 361 (1977) .......... 20,24 2B UGA... GUDG) ass cennesceecsesans 3,6,27

Wong Wing v. United States, 163 U.S. 228, 16 BB A5.ee be Swine 8h oc cease Aa 3,6,21,25

Ae OFT ae GEE cine aweic kad bisear wasas 20 PRU DC BOE oo cocks dddkivieneee 6,24

Constitutional Provisions: UGK. GOR oo. pieee et See 3,6,27

United States Constitution: SUSE. GOD ....556.n 3,6,11,13,

Actirie GE Sections 1 ae ac cccuseksiakéian 4 23,25,27,29

pe ER a rae Ce emer e ye 3,4,26,27 Or TR Bo cas ntenenevan 6,12,13,20,25

Sie at eo 0) i a 3,5,16 OP EIR DAO £6 wi vowcandedseaseeuelee 3,6

Amendment V, Section 1 LE PR LGR ay ARO 4 42 3... §1395(ii) SeCC CHSC HESECHOHEHSSC CLEVES 3,6

I ri ie a vere tnen cae 3,5,6 42 U.S. GIZIHAMN) 2.0. ccsrvcsanecevads 6,7

Amendment IX ere el ET es ee ee 3,5 42 U.S.C. §1985 CRCEHOHSD COT SOCE CECE SHO OH ES 3,6

P| ne me amen ett ee eye 3,6 Rules:

PN CE ee he Suet 2 ee eee 3,5 Rule 19(b) of the Supreme Court ............ 2,6

Statutes: Provider Reimbursement Manual, §2133 ..... 6,7

Federal Statutes: Provider Reimbursement Manual HIM 15 ...... 7

eR BOND ooo 5 oo eas ca kena 2,6 Miscellaneous:

A Ue cds es ee a passim Davis, “Mandatory Relief from Ad-

28 USC ministrative Actions in Federal Courts,”

SC. $1332 2. see eeeeeeeeeeeeeens 3,6,14 22 U. Chic. L. Rev. 585 (1955) ........ 0005. 22

ee ae es MR is eho ive oe ee eee ee 3,6

Regi ns

Viil

AUTHORITIES (Continued)

Davis, Administrative Law in the Seventies (1976) ....

“The Dollar Litigation, A Study in

Sovereign Immunity,” 65 Harv. L. Rev.

466 (1952) ..cccccccccvcccerccceceses socee

Hill, “Constitutional Remedies,” 69 Colum.

OP . , eeeeerree er

Jaffe, Judicial Control of Advinistrative Action

(1965) .cccccccccccccccccccccsscsces soeee

Katz, “TheJurispruderce of Remedies,” 117

U. Pa. L. Rev. 1 (1968) ..... eee cece eee eeeee

“Mandatory Injunction as Substitutes for

Writs of Mandamus in the Federal Dis-

trict Courts: A Study in Procedural

Manipulation,” 38 Colum. L. Rev. 903

(1938) ..cccccccccccvccccvccvcnsceces cones

P. Bator, P. Mishkin, D. Shaprio and H.

Wechsler, The Federal Courts and the Federal

System, Note on the Power of Congress to Limit the

Jurisdiction of Federal Courts (2d. ed. 1973)

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1979

No.

UNIHEALTH SERVICES CORPORATION,

Petitioner,

versus

JOSEPH P. CALIFANO, SECRETARY OF HEALTH,

EDUCATION AND WELFARE, MELVIN

BLUMENTHAL, MARION J. SEABROOKS, MIKE

HOBAN, JOSEPH BREWSTER, RAYMOND

WOERNER, I. COHEN, BLUE CROSS ASSOCI-

ATION OF AMERICA, INC. AND JAMES SLEEP,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

The petitioner, UNIHEALTH SERVICES COR-

PORATION, prays that a writ of certiorari issue to

2

review the order of the Court of Appeals for the Fifth

Circuit rendered in these proceedings on June 27, 1979.

OPINIONS BELOW

The Court of Appeals for the Fifth Circuit summar-

ily affirmed the District Court for the Eastern District

of Louisiana on June 27, 1979. The Affirmance is re-

ported at F.2d . The opinion in the form of a

Memorandum and Order of the District Court for the

Eastern District of Louisiana was rendered on

February 12, 1979, with the Judgment rendered on

February 14, 1979, and reported at F.Supp.

This judgment dismissed for lack of jurisdiction.

JURISDICTION

The summary affirmance of the Fifth Circuit Court

of Appeals was entered on June 27, 1979. See Appendix

A, p. la, infra. This petition for certiorari was filed

less than ninety (90) days from the date aforesaid. The

jurisdiction of this Court is invoked under Title 28,

United States Code, Section 1254(1) and Supreme

Court Rule 19(b), in that the Circuits are in conflict

with each other, with this Court and the intent of Con-

gress.

QUESTIONS PRESENTED

Petitioner brought suit under the Constitution of

the United States and Title 28 U.S.C., Sections 1331,

ee a ee

3

1333, 1332, 1346(b), 1361, 2201; Title 42 U.S.C.

§405(g), 1395, et seq, 1395(ii); Title 42 U.S.C. §1985;

The United States Constitution, and the First, Fourth,

Sixth, Ninth, Eleventh, and Fourteenth Amend-

ments; and federal and state common law to challenge

actions of federal officials who caused ruination of peti-

tioner’s private business enterprise as a professional

management company of certified Medicare home

health agency providers. The remedies sought ex-

pressly included injunction, declaratory judgment rel-

ative to the unconstitutionality of the actions and a

monetary award for costs, interest and attorney’s

fee. for the resulting damages to the business. The

remedy impliedly sought was mandamus.

The case being summarily dismissed for lack of sub-

ject matter jurisdiction, the questions presented are as

follows:

1. Whether the conflict in Circuits is sufficient to

justify resolution of the underlying unanswered issue

of whether private citizens can be totally deprived of

access, review or remedy to challenge governmental

harassment.

2. Whether Congress can close the federal courts

entirely to constitutional challenges directed against

federal statutes or actions.

3. Whether a private corporation, diverse in citi-

zenship, can challenge the tortious actions of federal

agency individuals under the Federal Tort Claims Act

and applicable state law.

4

CONSTITUTION, STATUTORY AND

REGULATORY PROVISIONS INVOLVED

1. Constitution of the United States, Article III,

Section 1:

The judicial Power of the United States shall

be vested in one supreme court, and in such in-

ferior Courts as the Congress may from time

to time ordain and establish... .

Section 2:

The judicial power shall extend to all Cases,

in Law and Equity, arising under this Consti-

tution, the Laws of the United States, and

Treaties made, or which shall be made under

their Authority; . . . tocontroversies to which

the United States shall be a Party; . . . between

citizens of different States; . . . (Emphasis add-

ed).

2. Constitution of the United States, Amendment

V, §1:

.. nor be deprived of life, liberty, or prop-

erty, without due process of law....

3. Constitution of the United States, Amendment

1 (1791):

Congress shall make no law . . . abridging

the freedom of speech . . . or the right of the

people. . . to petition the Government for re-

dress of grievances. (Emphasis added).

5

4. Constitution of the United States, Amendment

IX (1791):

The enumeration in the Constitution, of

certain rights, shall not be construed to deny

or disparage others retained by the people.

5. Constitution of the United States, Amendment

XIV (1868):

All persons. . . in the United States are citi-

zens of the United States and the State where-

in they reside . . . nor deny to any person...

the equal protection of the laws.

6. Constitution of the United States, Amendment

IV (1791):

The right of the people to be secure in their

persons, houses, papers, and effects, against

unreasonable searches and seizures, shall not

be violated, and no Warrants shall issue, but

upon probable cause, supported by Oath or af-

firmation, and particularly describing the

place to be searched, and the persons or things

to be seized.

7. Constitution of the United States, Amendment

VI (1791):

In all criminal prosecutions, the accused

shall enjoy the right to a speedy and public

trial, by an impartial jury of the State and dis-

6

trict wherein the crime shall have been com-

mitted, which. district shall have been pre-

viously ascertained by law, and to be inform-

ed of the nature and cause of the accusation; to

be confronted with the witnesses against him;

to have compulsory process for obtaining wit-

nesses in his favor, and to have the Assis-

tance of Counsel for his defence.

8. Constitution of the United States, Amendment

XI (1795):

The Judicial power of the United States shall

not be construed to extend to any suit in law

Or equity, commenced or prosecuted against

one of the United States by Citizens of an-

other State, or by Citizens or Subjects of any

Foreign State.

o 28. Gs... §§1254(1), 1331, 1332, 1333,

1346(a)(2), 1346(b), 1361, 1491 and 2201. (Attached in

Appendix).

10. 42 U.S.C. §§405(g) and (h), 1395, et seq.,

1395(ii), 1395(x)(n) and 1985. (Attached in Appendix).

11. Rule 19(b) of the Supreme Court of the United

States. (Attached in Appendix).

12. Provider Reimbursement Manual, §2133. (At-

tached in Appendix).

DAs seta hte thebeats

7

13. Provider Reimbursement Manual, HIM 15

(Too voluminous to copy).

STATEMENT OF THE FACTS

A private, corporate management company known

as Unihealth Services Corporation began to suffer

governmental harassment in and during the year 1976.

This petitioner had home health agency clients as so de-

fined under the Medicare Act, Title 42 U.S.C. §1395(x)

(n). Unihealth provided pursuant to contractual

arrangements certain professional consultation, orien-

tation programs, data processing services, guidance in

financial matters, assistance in audit procedures con-

ducted by fiscal intermediaries who are agents of the

Department of Health, Education and Welfare, to these

client agencies. (Memorandum and Order, p. 1, United

States District Court, Eastern District of Louisiana,

Civil Action No. 77-3001, February 12, 1979, Appendix

C).

In 1969 through 1976 Medicare officials recognized

the private corporate entity as a “management com-

pany” under policy considerations set out in the Pro-

vider Reimbursement Manual, HIM 15. The respond-

ents communicated adverse reactions to the cost of the

Uninealth charges and the manner in which the same

were charged on a percentage basis. Unihealth was

retroactively deemed a “franchise” and Section 2133 of

the Provider Reimbursement Manual was said to apply

thusly requiring the Unihealth clients to submit more

8

documentation in support of their costs on a break-

down, rather than a percentage-based method. The

negative presumption was created and Unihealth was

provided absolutely no forum to contest the challenge

to its change in status.

In short, the complaint alleged treatment of the

status of Unihealth as unconstitutional. The govern-

ment officials acting under the color of federal law

communicated adverse, unfair and often erroneous in-

formation about Unihealth to its clients, potential

users and its competitors. This was alleged to have con-

stituted a serious invasion of contractual rights and re-

lationships. Unihealth’s right to do business became

thwarted and substantial revenues were lost. Uni-

health sought declaration relative to the overly broad,

inconsistent and at times nonexistent Medicare regu-

lations applicable to management companies in the

Federal District Court.

Because Unihealth is not a provider, there was no

statutory right to the administrative hearing provided

to providers.

Unihealth irreparably lost money and reputation as

clients withheld payments. Unihealth became crippled

and unable to service existing clients who relied on its

management expertise in order to service Medicare

patients. Unihealth lost monies in excess of $10,000.00

and therefore had no access to the Court of Claims for

tortious invasion of contractual rights.

9

The respondents were furthermore challenged for

violating Unihealth’s trade secrets as well as attemp-

ting to conspire to price fix it out of the industry.

Respondents discriminated against Unihealth because

Unihealth established private, not-for-profit, home

health agencies contrary to the style of community or

government type institutions. The respondents felt

that Unihealth should not make a profit. Unihealth

alleged losses in the amount of approximately $1,000,-

000.00 plus incurred expenses, including legal fees,

costs, and the waste of valuable services while it was

forced to constantly attempt to justify its existence ina

setting which provided no forum to redress these

grievances.

JURISDICTIONAL POSTURE OF THE CASE

On October 4, 1977, Unihealth having no other

resort or recourse, filed suit against respondents here-

in requesting immediate injunction, declaratory relief

and money damages. After extensions of time were

granted, the defendant therein filed a motion for dis-

missal for lack of standing and subject matter jurisdic-

tion under the Medicare Act.

On March 21, 1978, the District Court rendered a

decision and order granting jurisdiction and finding

that Unihealth very much had standing to challenge

the actions of the defendants. Unihealth Services Corpora-

tion v. Califano, 448 F.Supp. 1059 (E.D. La. 1978). The

Court concluded the following regarding the relief

sought:

10

* * *

The Court agrees with Unihealth that it has

raised more than a request for a review of its

charges to providers. Just as plaintiff has char-

acterized its claims, Unihealth is demanding

both that it be allowed access to the review

procedures provided by the Medicare Act and

that it be regulated within due process para-

meters since the alleged regulations have pur-

portedly interfered with both contractual and

occupational relationships of plaintiff.

. * *

First, it is evident that the alleged chal-

lenged actions, i.e., no access to adminis-

trative and judicial review under the Medi-

care Act and the constitutionality of the reg-

ulations imposed on plaintiff, have caused the

plaintiff economic harm and otherwise in

affecting its relationships with the providers

such that providers are withholding certain

sums purportedly owed Unihealth.

Second, as stated in Cotovsky, supra, the Court

is toassume that plaintiff arguably falls within

the zone of interest protected by its Fifth

Amendment rights when it challenges

governmental action on Fifth Amendment

grounds.

Whether or not Unihealth arguably falls

within the zone of interest regulated by the

nd P Baa SOR hs Ae

11

Medicare Act turns ona determination of the

nature and extent of alleged regulating activi-

ties. Cotovsky, supra. Since a factual issue re-

mains regarding the nature and extent that

Unihealth has been regulated, the Court must

resolve this issue on the merits before it can

render a decision on standing under the Medi-

care Act. Courts have recognized that they

may postpone a decision on a jurisdictional

issue if that issue is intertwined with a deci-

sion on the merits of the case. Continental Cas-

ualty Company v. Department of Highways, State of

Louisiana, 379 F.2d 673 (Sth Cir. 1967). There-

fore, while the Court has already concluded

that this plaintiff has standing under the Fifth

Amendment to bring the claims, ... .

On the issue of federal question jurisdiction, the

Court distinguished Califano v. Sanders, 403 U.S. 99, 97

S.Ct. 980 (1976), because Sanders did have a forum for

judicial review as provided for under Section 405(g) of

the Social Security Act.

The Court expressed grave concern as to the reper-

cussions if federal courts were entirely closed to con-

stitutional challenges. The District Court quoted from

the post-Salfi decision in South Windsor Convalescent Home,

Inc. v. Matthew, 541 F.2d 910 (2d Cir. (1976):

However, when Salfi’s conclusions apply to a

case where no alternative jurisdictional basis

12

exists, its restrictive interpretation of §1331

might lead to a constitutional question of the

first order, one that has arisen but rarely and

tangentially in our constitutional history, i.e.,

whether the Congress can close the federal

courts entirely to constitutional challenges

directed against federal statutes or actions.

We doubt that the Supreme Court intended

its reading of §405(h) in Salfi to have the effect

of precluding federal jurisdiction over consti-

tutional questions, since the result would be at

odds with the well-established principle that a

court will not construe a statute to restrict

access to judicial review unless Congress

manifests its intent to do so by “clear and con-

vincing evidence.”

The Court also found authority pursuant to St. Louis

University v. Blue Cross Hospital, 537 F.2d 283 (8th Cir.

1976); John T. MacDonald Foundation, Inc. v. Mathews, 534

F.2d 633 (Sth Cir. 1977); and concluded that the

Medicare Act cannot be interpreted as closing these

doors:

Regardless of how each court has applied

§405(h) of the Medicare Act, they have all

emphasized one caveat — the Medicare Act

cannot be interpreted as closing the federal

courts to the presentation of a constitutional

challenge to the Act itself. Additionally, these

courts have agreed that the constitutional

ee en ee

;

;

sar

13

challenge to the Act must be brought under the

Medicare Act before §405(g) and (h) can be

applied to such a claim. Salfi, supra.

* ® *

Accordingly, on the basis of the foregoing

reasons, this Court first concludes that Uni-

health Services Corporation has standing un-

der the Fifth Amendment to the United States

Constitution to assert its constitutional chal-

lenges... . Second, this Court also concludes

that Unihealth has subject-matter jurisdic-

tion pursuant to 28 U.S.C. 1331 to have the

constitutional challenges to the Medicare Act

reviewed by this Court. The motion of the

United States to dismiss the claim brought by

Unihealth Services Corporation is hereby

DENIED. (Emphasis in original).

The trial of the matter was heard on the merits on

June 19, 1978. Just prior to the trial, the Fifth Circuit’s

reversal decision en banc in John T. MacDonald Foundation,

was rendered at 571 F.2d 328 (Sth Cir. 1977), writ

denied, U.S. ___. The District Court took the

matter under submission until rendering its memoran-

dum and order of dismissal on February 12, 1979, and

held on page 5 thereof:

Consideration of the Fifth Circuit en banc

decision in MacDonald Foundation, Inc., supra, and

its more recent decision in The American Asso-

14

ciation of Councils of Medical Staffs of Private Hospi-

tals, Inc. (CMS) v. Califano, 575 F.2d 1367 (Sth

Cir. 1978) leads to the inescapable conclusion

that this Court has no federal question juris-

diction pursuant to 28 U.S.C. 1331 over the

present action.

The Notice of Appeal to the Fifth Circuit was filed on

February 20, 1979. On May 21, 1979, a Motion for an

Injunction Pending Appeal and/or Preferential Hear-

ing pursuant to Rule 8 of the Federal Rules of Appellate

Procedure was filed with supporting affidavits. In

response, appellee filed a Motion for Summary Affirm-

ance in response to appellant’s Motion for Injunction

Pending Appeal and/or Preferential Hearing (June 8,

1979). The Court of Appeals received the appellant's

Opposition to said motion on June 18, 1979, and the

decision of the Court of Appeals granting summary

affirmance and denying the motion for injunction

pending appeal was filed on June 27, 1979. No written

decision accompanied the same.

JURISDICTION OF FEDERAL COURTS

A. 280U.S.C. §1332.

Unlike the authorities used to dismiss the case in the

District Court, jurisdiction was originally invoked on

the basis of diversity of the parties, 28 U.S.C. §1332.

The pendent state tort claims asserted against the in-

dividual defendants impliedly arose under the counts,

facts and allegations complained of including invasion

15

of private contractual rights and conspiracy com-

mitted by agents of the federal government who acted

beyond and outside the scope of their authority under

color of law. These individuals were named as defend-

ants and included Joseph Califano, Melvin Blumen-

thal, Marion J. Seabrooks, Mike Hoban, Joseph Brews-

ter, Raymond Woerner, Irvin Cohen, Blue Cross Asso-

ciation of America, Inc. and James Sleep. None of these

individuals reside in Louisiana or Delaware which is the

State in which Unihealth is a citizen. Pendent state

claims do derive jurisdiction from 28 U.S.C. §1331. See,

Bivens v. Six Unknown Named Agents of the FBI, 403 U.S. 388

(1971).

Unihealth alleged and proved at trial an invasion of

its right to privacy. Under Louisiana state law, La. C.C.

Art. 2315, and Federal common law, Bivens, supra, the

right is recognized and its invasion is actionable. Bivens,

supra, 403 U.S. at 394 (1971). The business in which

Unihealth was engaged is not regulated by the Medi-

care Act because Unihealth is not a provider.

At the trial in the District Court, exhibits were intro-

duced which proved that the Medicare Bureau or Blue

Cross representatives recognized Unihealth’s right to

privacy. Yet, their cautions were blown to the wind as

Unihealth became exposed and exploited without a

hearing relative to the truth of its business. See, Bivens,

supra, 403 U.S. at p. 394-395, quoting United States v. Lee:

... “In such cases there is no safety for the

citizen, except in the protection of the judicial

16

tribunals, for rights which have been invaded

by the officers of the government, professing

to act in its name. There remains to him but

the alternative of resistance, which may

amount to crime.” United States v. Lee, 106 U.S.

196, 219 (1882)....

These intentional, negligent, or conspiratorial actions

on the part of the respondents allegedly violated the

Fourth Amendment. This Court has held in Bivens,

supra, at p. 395:

_.. That damages may be obtained for in-

juries consequent upon a violation of the

Fourth Amendment by federal officials should

hardly seem a surprising proposition. His-

torically, damages have been regarded as the

ordinary remedy for an invasion of person

interests in liberty. See Nixon v. Condon, 286

U.S. 73 (1932)....

B. Court of Claims is not the answer.

The Court of Claims does not have jurisdiction over

the federal tort claims. Federal district courts do have

such jurisdiction as was implied in this case. 28 U.S.C.

§1346 sets out that district courts shall have original

jurisdiction concurrent with the Court of Claims, of es

(2) any other civil action or claim against the United

States not exceeding $10,000 in amount, founded either

upon the Constitution, or any Act of Congress . . . or

for liquidated damages not sounding in tort.” (Emphasis

added).

ho AR eee BE,

ae IN Eo Nach foe. NEI

17

In the case at bar, Unihealth has nocontract with the

federal government. Therefore, Unihealth has no

Court of Claims relief. Furthermore, the claim ex-

ceeds $10,000 and does sound in tort. Unihealth tried

to file this case in tort in the Court of Claims and had

the same kicked back. The tort claims could not be

heard by the Court of Claims. Instead, the tort claims,

particularly as they exceed $10,000, should have been

heard in the district court. This is not a case for reim-

bursement as in the case of Humana of South Carolina v.

Matthews, 419 F.Supp. 253 (D. D.C. 1976).

At the same time, state and common law govern and

constitute as illegal the actions of the individually nam-

ed and diverse defendants. Hereinbelow, as a reason

for granting this writ, it is submitted that the federal

law does govern the scope of authority of the individ-

uals so sued. Furthermore, they should not be given

blanket sovereign immunity by the way of aclosed fed-

eral door to review their actions. The remedy is one of

injunctive relief and/or money damages. See, Hill,

“Constitutional Remedies,” 69 Col. L. Rev. 1109, 1143-

46 (1969); Katz, “The Jurisprudence of Remedies,” 117

U. Pa. L. Rev. 1, 51-58 (1968).

The individuals sued had a major responsibility to

carry out the dictates of the Medicare Act pursuant to

delegations of legislative authority. In exceeding the

scope of authority, they committed actionable and

remedial malpractice of their respective professions.

However, the Court of Claims does not have jurisdic-

ae pee eT Weer

18

tion over malpractice actions, nor can it award costs,

interest or attorney’s fees for the harm that was com-

mitted.

The defendants in question do not deserve the

endowment of governmental immunity. Immunity is

not readily implied. Kiefer and Kiefer v. Reconstruction Finance

Corporation, 306 U.S. 381, 388-89. In short, the Federal

Tort Claims Act should have been applied here or

“should have been construed to fit, so far as would

comport with its words, into the entire statutory

system of remedies against the government to make a

workable, consistent and equitable whole.” feres v. U.S.,

340 U.S. 139, 71 S.Ct. 153, 95 L.Ed. 152.

The respondents exerted and exceeded their govern-

mental authority in such a way and design as to dele-

teriously affect the affairs of the corporate citizen. Toa

business, this kind of damage causes great suffering.

Public officials may become tortfeasors by exceeding

the limits of their authority. Land v. Dollar, 330 U.S. 731,

67 S.Ct. 1009, 91 L.Ed. 1209 (1947); Belknap v. Schild, 161

U.S. 10, 18-20; United States v. Lee, 106 U.S. 196, 1 S.Ct.

240, 27 L.Ed. 171.

The Court of Claims cannot entertain this particu-

lar kind of suit. Its powers do not include providing

remedies under the equitable or declaratory relief

sought. United States v. Alire, 73 U.S. (6 Wall.) 573, 18

L.Ed. 947 (1868); United States v. Jones, 131 U.S. 1,9 S.Ct.

669, 33 L.Ed. 90 (1886); United States v. King, 395 U.S. 1,

ee Sed

19

89 S.Ct. 1501, 23 L.Ed.2d 52 (1969). Nominal damages

such as those recognized in The American Association of

Council of Medical Staffs v. Califano, 575 F.2d 1367 (Sth Cir.

1978) (hereinafter called “CMS”), stated that the

Medicare Act withdraws jurisdiction from district

courts over actions like CMS and Dr. John T. MacDonald

Foundation, Inc. v. Califano, supra. But, nominal damages

for contesting actions pursuant to the Medicare Act are

not enough. Carey v. Piphus, U.S. , 98 S.Ct.

1042, 55 L.Ed.2d 252 (1978), and Pushkin v. Califano,

F.2d 6722 (August 8, 1979, Slip Opinion, No. 77-2401).

The relief sought runs to the very basis of consti-

tutional protections. Jurisdiction is asserted herein in

order to assure constitutional protection, including

whether or not the court itself affords a constitutional

protection in being an available forum with sufficient

remedy. Without the remedy, the right to review is a

farce.

The Fifth Circuit could not decide that Congress

could cut off jurisdiction of these issues while provid-

ing another court. CMS, supra, but this Court can decide

the issue and should decide that Congress cannot cut

off jurisdiction of these issues.

C. Federal Coercion Cannot Be Shielded from At-

tack

Furthermore, Unihealth sought the federal court in

complaining of extrajudicial governmental coercion.

Traditionally, relief can be obtained under general

20

jurisdiction. 28 U.S.C. §1331. Wong Wing v. U.S., 163

U.S. 228, 16 S.Ct. 977, 41 L.Ed. 140 (1896); Ng Fung Hoo.

White, 259 U.S. 276, 41 S.Ct. 148, 65 L.Ed. 446 (1922);

Marbury v. Madison, 1 Cranch. 137, 2 L.Ed. 60.

Can Congress by enactment of the Medicare Act

close the doors of federal courts from injured persons

who have no other voice? The theory of sovereign im-

munity has been reiterated and recreated in the un-

resolved issues stated in Pushkin v. Califano, supra. It is all

because the Court of Claims in Whitecliffe, Inc. v. United

States, 536 F.2d 347, 210Ct. Cl. 53 (1976), cert. denied, 430

U.S. 969, 97 S.Ct. 1652, 52 L.Ed. 2d 361 (1977), con-

flicted with the interpretation of the Social Security

Act, Section 405(h), in affording an available forum for

jurisdictional challenges than the Fifth Circuit. The

conflicts in Circuits and conflict in the Court of Claims

need clarification as will be explained below in the

reasons for granting writ.

D. Actions Against the Government.

The action was clearly not a “Medicare case.” Ob-

viously, the Fifth Circuit treated it as another Pushkin v.

Califano, supra. Instead, the Unihealth case included a per-

sonal action against officers and/or agents of the Unit-

ed States who failed to act properly under color of legal

authority. See, United States v. Candelaria, 271 U.S. 432, 44,

46 S.Ct. 561, 70 L.Ed. 1023 (1926); Drummond v. ULS.,

324 U.S. 316, 318, 65 S.Ct. 659, 89 L.Ed. 969 (1945).

The entire defense of this action was conducted by the

government lawyers; however, courts have still held

UES OTT en TT Ee Se

ae AR ae a

ait? A Mime

21

the jurisdictional doors are open to these kinds of per-

sonal attractions. Land v. Dollar, supra. See note, “The

Dollar Litigation, a Study in Sovereign Immunity.” 65

Harv. L. Rev. 466-478-78 (1952).

One method by which federal courts have recog-

nized the obligation to hear cases of federal injustice

such as this is by means of mandamus and Venue Act.

28 U.S.C. §1361. This was also addressed in the Pushkin

v. Califano, supra, case, wherein the Fifth Circuit recog-

nized more conflicts in circuits relative to the interpre-

tation of mandamus under 28 U.S.C. §1361 for chal-

lenging the legal acts of the Secretary of H.E.W. in

promulgating allegedly invalid regulations. American

Association of Council of Medical Staffs v. Califano, 575 F.2d

1367 (5th Cir. 1978). That case conflicts with Cervoni v.

Secretary of H.E.W., 581 F.2d 1010 (1st Cir. 1978). In

CMS, supra, the Court opined in dicta that mandamus

may be a form of independent jurisdiction. This con-

flicts with Cervoni, supra, as well as Elliot v. Weinberger,

564 F.2d 1219 (9th Cir. 1977), cert. granted, ____ US.

, 99 S.Ct. 75, 58 L.Ed.2d 106 (1978); White v.

Matthews, 559 F.2d 852 (2d Cir. 1977), cert. denied, 435

U.S. 908, 98 S.Ct. 1458, 55 L.Ed.2d 500 (1978).

A mandamus and injunction as sought in the case at

bar can be arguably different. Smith v. Bourbon County,

127 U.S. 105 (1888). The common law writ of man-

damus in a federal jurisdiction could be the equivalent

of a mandatory injunction. The courts and particularly

the Circuits argued to be in conflict herein are unclear.

22

See, note, “Mandatory Injunctions as Substitutes for

Writs of Mandamus in the Federal District Courts: A

Study in Procedure Manipulation,” 38 Colum. L. Rev.

903 (1938); Davis, “Mandatory Relief from Adminis-

trative Actions in Federal Courts,” 22 U. Chic. L. Rev.

585 (1955).

JURISDICTION OVER

CONSTITUTIONAL QUESTIONS

The Supreme Court has recently expressed doubts

about the constitutionality of foreclosing all avenues of

review and remedy of constitutional issues. Johnson v.

Robison, 415 U.S. 361, 94 S.Ct. 1160, 39 L.Ed.2d 389

(1974). As was footnoted in CMS, supra:

4. The Court has recently expressed doubts

about the constitutionality of foreclosing all

review of constitutional issues:

“There is another reason why Johnson v.

Robison is inapposite. It was expressly bas-

ed, at least in part, on the fact that if

§211(a) reached constitutional chal-

lenges tostatutory limitations, then abso-

lutely no judicial consideration of the

issue would be available. Not only would

such a restriction have been extra-

ordinary, such that ‘clear and convincing

evidence would be required before we

would ascribe such intent to Congress,

Mad Gk The Ae pale mT Oo ne

23

[citations omitted] but it would have

raised a serious constitutional question of

the validity of the statute as so con-

strued.”

Weinberger v. Salfi, 422 U.S. at 762, 95 S.Ct. at

2465.

A thorough discussion of this whole area is

found in P. Bator, P. Mishkin, D. Shapiro, and

H. Wechsler, The Federal Courts and the Fed-

eral System, Note on the Power of Congress

to Limit the Jurisdiction of Federal Courts,

313-375 (2d ed 1973). See also Caulfield v. U.S.

Dept. of Agriculture, 5 Cir. 1961, 293 F.2d 217 (en

banc); K. Davis, Administrative Law in the Seven-

ties, §2809 (1976); L. Jaffe, Judicial Control of

Administrative Action, 376-94 (1965).

Happily, the Fifth Circuit has done its best to enun-

ciate that the issues need not be decided. As will be

shown in the reasons for granting the writ herein-

below, the issue does need to be decided since man-

damus is insufficient, Court of Claims jurisdiction is in-

sufficient, and the Circuits are in extreme conflict in

the interpretation of Section 405(g) of the Social

Security Act entirely precluding any review. In its sum-

mary affirmance, the Fifth Circuit did not even give

Unihealth the benefit of this kind of statement.

Perhaps the Fifth Circuit could not have happily done

so: however, the issue is more applicable than ever. See,

Reason No. 1, for granting certiorari, below.

24

REASONS FOR GRANTING THE WRIT,

OR CONSOLIDATING THIS CASE

WITH ELLIOT v. WEINBERGER

564 F.2d 1219 (9th Cir. 1977),

cert. granted, ___ U.S. ___, 99 S.Ct. 76 (1978)

1. The Decision Of The Fifth Circuit

Directly Conflicts With Other Circuit

Decisions, The Decisions Of The United

States Supreme Court And Deprives

Petitioner Herein Of Any Remedy,

Review Or Court.

MacDonald Foundation, supra, (Sth Cir.), directly con-

flicts with St. Louis University, supra, (8th Cir.). The

application of general jurisdiction grants of 28 U.S.C.

§§1331(a) and 1346(a)(2) have been differently ap-

plied. Particularly, certain Circuits have found that the

Court of Claims possesses a greater jurisdictional basis

under 28 U.S.C. §1491 than federal district courts un-

der 28 U.S.C. §1331. District courts have been found to

lack §1331 jurisdiction to review Medicare disputes

while the Court of Claims is allowed to hear the claims.

Humana of South Carolina v. Matthews, supra; Whitecliffe, Inc.

v. U.S., supra, CMS, supra (Sth Cir.).

This court should clarify the matter once and for all.

A regulation itself can be reviewed by the Court of

Claims; however, the actions of the individuals and the

harm that was created thereby is not a matter of re-

view by the Court of Claims. Instead, that would argu-

ably be a matter for resolution by mandamus. Plekowski

v. Ralston-Purina Company, 557 F.2d 1218 (Sth Cir. 1977).

ea A ae le la in wm AER ac arr at ce ee Ee ln Cty canal ell aninn i SaSrabiaihee wat itil Ain. snias dg lem

25

The issue of whether mandamus will lie pursuant to

28 U.S.C. §1361 to grant district courts jurisdiction

over constitutional challenges to the Medicare Act is

presently before this Court. Elliot v. Weinberger, 564 F.2d

1219 (9th Cir. 1977), cert. granted, __. U.S. ___, 99

S.Ct. 76 (1978).

The case is significant because of the due process

challenge to the recoupment procedures. In the case at

bar, the due process challenge is also significant be-

cause there were no hearing proceedings available to

the non-regulated, non-provider Unihealth. There

could be no exhaustion of administrative remedies

where there was never a remedy originally available

despite petitioner’s being well within the zone of inter-

est regulated by the Medicare statute. Cotovsky-Kaplan

Phys. Th. Assoc., Ltd. v. United States, 507 F.2d 1363 (7th

Cir. 1975). Unihealth does not seek reimbursement for

the cost of its services. Unihealth charges for the serv-

ice pursuant to agreements which were challenged by

the Medicare Bureau without a proper hearing. Uni-

health was not evena party tothose hearings. In Elliot v.

Weinberger, supra, at p. 1226, the court considered this

fact significant:

Nor are the present suits precluded by 42

U.S.C. §405(h) which controls judicial actions

to recover benefits. Weinberger v. Salfi, 422 U.S.

749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975)

interprets §405(g). The instant suits are quite

different. They assert aconstitutional right to

26

due process notice and hearing when alleged

overpayments are recouped. They are not claims

for benefits. Nor would granting the relief

sought result in an entitlement to benefits.

The distinction between due process questions divorced

from a claim for benefits and questions related to the

merits of a benefits claim is a significant one, requiring

considerably different treatment by the courts. See El-

dridge, supra, 424 U.S. at 329-332, 96 S.Ct. 893.

(Emphasis added).

Nevertheless, the Circuits are still at odds. See Ryan v.

Shea, 525 F.2d 268, 272 (10th Cir. 1975); Humana of South

Carolina, Inc. v. Matthews, supra.

Furthermore, mandamus cannot be used to enforce

money damages. Therefore, the conflict in circuits en-

courages piecemeal litigation on the issue. For example,

Unihealth would have to begin its case in the Court of

Claims for less than the $10,000 jurisdictional amount

and seek clarification relative to the contested regula-

tion on “reasonable cost” and “franchise” under the

Medicare Act. Unihealth would then have to file a

separate claim asking for a mandamus to enforce the

federal officials acting under color of Medicare law to

stop and desist from committing illegal acts pursuant to

the Medicare Act in federal district court. Thirdly, Uni-

health would have to file a suit in state court asking for

money damages over and above the $10,000 for the il-

legal pendent state claims which include violations of

the competitive rights and first amendment rights,

since the Court of Claims cannot entertain jurisdic-

- aw ntl fet lng NE <item.

Wt PPG oh

fds dD tia) ta tiere wth hts (tie) at Ate dS

27

tion over First Amendment claims. United States v. Alire.

73 U.S. (6 Wall.) 573, 18 L.Ed. 947, United States v. Jones,

supra, United States v. King, supra. The Federal Tort Claims

Act does not provide injunctive nor declaratory relief.

Therefore jurisdiction will not lie under 28 U.S.C.

§1346(b).

Declaratory and injunctive relief is procedurally rec-

ognized in Title 28 U.S.C. §2201. However, it has long

since been decided that district courts do not have an

independent grant of jurisdiction over the declaratory

judgment act, 28 U.S.C. §2201. Weinberger v. Salfi, supra;

Califano v. Sanders, supra.

The reason for granting the writ is simple. This case

has the earmarkings of a major jurisdictional challenge.

There are extreme conflicts in the Circuits and a con-

flict with the United States Supreme Court in Johnson v.

Robison, supra. To deprive this citizen of an adequate

forum to address these same factual claims is itself un-

constitutional.

If this Court denies writ, private enterprise will suf-

fer a death blow. The constitutional challenge to the

Medicare Act presented herein includes whether fed-

eral officials acting under Medicare Act “immunity”

can validly destroy private business. The further con-

stitutional challenge is to the Medicare Act itself, Sec-

tion 405(g). This Act has been interpreted in a conflict-

ing manner and in such a way as to completely pre-

clude review of the illegal and unconstitutional actions

of H.E.W. officials.

28

MacDonald Foundation, supra, does not control this re-

quest, although it was found to be applicable by the dis- .

trict court. The conflicts in Circuits arise out of each

circuit’s looking for some kind of out in order to avoid

this very important issue. This has forced aconflict vis-

a-vis mandamus jurisdiction and opting to the Court of

Claims. The federal questions herein have not hereto-

fore been specifically determined by this Court. The

Circuits only paid lip service to the mandate in Johnson v.

Robison, supra. Just as in Johnson, supra, this is not a case

where certain construction of the Medicare Act is “fair-

ly possible” and as such constitutional doubt may be

avoided. Constitutional rights and doubts may not be

avoided in this situation since Unihealth was never

governed nor regulated by Section 405(h) of the Social

Security Act. Unihealth was singled out for attack for

the very reason that it could not challenge these ac-

tions. (Transcript, Testimony, I. Cohen). No proper

hearing, either by right, equity or statute, was ever

afforded Unihealth.

In Pushkin v. Califano, supra, the issue relative to Equal

Protection was heard by this Court. See, Pushkin, supra,

where it was held that plaintiffs could raise a substan-

tial constitutional claim if they could show that Con-

gress “in distinguishing between the diagnostic serv-

ices provided by optometrists and doctors of medicine,

for purposes of Medicare reimbursement, acted ir-

rationally.” Rastetter v. Weinberger, 379 F.Supp. 170, 173

(D. Ariz. 1974), aff'd., 419 U.S. 1098, 95 S.Ct. 767, 482

L.Ed.2d 795 (1975).

Ente Lond nr ie ee

i Ares ean i ee Pk bie tara Be = SG

Se Net i aS LN

ri AS Salt tin tg OH

29

Unihealth was singled out and the complaint which

addressed the issue of singling out Unihealth, is an Equal

Protection claim which raises a substantial consti-

tutional question not preempted by Section 405(g) of the

Medicare Act. Pushkin, supra. This Court should decide

and resolve the conflicts of whether in the presence of a

substantial constitutional claim, jurisdiction will lie un-

der Section 1331. Cervoni v. Secretary of H.E.W., supra;

Kechijian v. Califano, 453 F.Supp. 159 (D.R.I. 1978). The

Circuits are straining for guidance and continually in

conflict.

The question can no longer be skirted by Circuit

courts. If this Court does not act in aid of its own juris-

dictional powers to protect citizens from the arbitrary,

unfair and illegal practices of the agents of govern-

ment, the very spirit of the federal court system will be

thwarted. This case goes the farthest in describing a

petitioner with absolutely no other forum.

Lastly, this is not a reimbursement case such as Mac-

Donald, supra. This is not a “physician services case” as

CMS, supra. This is a case of unequal classification and

unequal protection. This is a case where the due process

challenge to the procedures employed by the agency

are only collateral to reimbursement disputes. This is

not areimbursement dispute and therefore should not

have been barred from review. Humana, supra; Trinity

Memorial Hospital v. Associated Hospital Services, 570 F.2d

660 (6th Cir. 1977); Elliot v. Weinberger, supra; St. Louis Uni-

versity v. Blue Cross Hospital Service, supra; Ryan v. Shea

supra; Schwatzberg v. Califano, 453 F.Supp. 1042 (S.D.N.Y.

1978). This Court has been finally presented with the

OT eee ee ar ane (pram ma men re

30

precise issue of due process and equal protection under

the Constitution.

Finally, the defendants themselves were sued under

color of their offices, but the Fifth Circuit did not take

heed of the Federal Torts Claim action prompted by the

wrongful, tortious and conspiratorial actions of the

respondents. The last and final reason for granting cer-

tiorari is that these individuals should not be given

further blankets of sovereign immunity. Larson v.

Domestic and Foreign Corporation, 337 U.S. 682 ( ). The

longer federal courts persist in skirting the issue and

finding ways not to challenge these kinds of actions,

the greater the authority Medicare officials will feel

they have to abrogate the constitutional rights of indi-

viduals collaterally acting to it.

CONCLUSION

For the foregcing reasons, this Petition for Writ of

Certiorari should be granted, or in the alternative, join-

ed with the granted writ in Elliot v. Weinberger now

before this Court.

Respectfully submitted,

DONNA D. FRAICHE

Suite 206, 3715 Prytania Street

New Orleans, Louisiana 70115

Telephone: (504) 895-8673

Attorney for Petitioner

31

CERTIFICATE OF SERVICE

I certify that this day of September, 1979 that I

have served three copies of the foregoing Petition fora

Writ of Certiorari to the United States Court of

Appeals for the Fifth Circuit upon Henry R. Goldberg,

Office of the General Counsel, Department of Health,

Education and Welfare, 6201 Security Blvd., Balti-

more, Maryland 21235 and Wade H. McCree, Jr.,

Solicitor General of the United States, Department of

Justice, Washington, D.C. 20530 and one copy upon

John P. Volz, United States Attorney, 500 Camp Street,

New Orleans, Louisiana 70130, Attorneys for

Respondents, by mailing same, postage prepaid,

addressed to their respective offices.

DONNA D. FRAICHE

OC ET

CHE oe rere SOE te aa ee

Redline cx.” ates

Bait O21 tee hp sede

la

APPENDIX “A”

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 79-1558

UNIHEALTH SERVICES CORPORATION,

Plaintiff-Appellant,

versus

JOSEPH P. CALIFANO, Sec. of H.E.W., ET AL..,

Defendants-Appellees.

Appeal from the United States District Court for the

Eastern District of Louisiana

Before AINSWORTH, GODBOLD and VANCE, Cir-

cuit Judges.

BY THE COURT:

IT IS ORDERED that the motion of appellees for

summary affirmance is GRANTED.

IT IS ORDERED that appellant’s motion for injunc-

tion pending appeal is DENIED.

ls} JUDGE ROBERT A.

AINSWORTH, JR.

ls) JUDGE JOHN C. GODBOLD

is) JUDGE ROBERT S. VANCE

2a

APPENDIX “B’

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF LOUISIANA

UNIHEALTH SERVICES CORPORATION,

versus CA No. 77-3001

JOSEPH P. CALIFANO, SECRETARY Of HEALTH,

EDUCATION AND WELFARE, MELVIN

BLUMENTHAL, MARION J. SEABROOKS,

MIKE HOBAN, JOSEPH BREWSTER,

RAYMOND WOERNER, I. COHEN, BLUE CROSS

ASSOCIATION OF AMERICA, INC.

and JAMES SLEEP

Filed: Feb. 14, 1979

JUDGMENT

This matter came on for hearing before the Court on

a previous day.

After hearing the evidence, the Court took the

matter under submission.

NOW, THEREFORE, for the written reasons of the

Court on file herein, and considering the direction of

the Court as to the entry of judgment; accordingly,

tae neat Bein aie Ie vale na jk ae a

ES a ms eR wei ea EEA on aR

hashes

3a

IT IS ORDERED, ADJUDGED AND DECREED

that there be judgment in favor of defendants, Joseph

P. Califano, Secretary of Health, Education and

Welfare, Melvin Blumenthal, Marion J. Seabrooks

Mike Hoban, Joseph Brewster, Raymond Woerner, I.

Cohen, Blue Cross Association of America, Inc., and

James Sleep, and against plaintiff, Unihealth Services

Corporation, dismissing said plaintiff’s suit, with costs.

Dated at New Orleans, Louisiana, this 14th day of

February, 1979.

ls/ NELSON B. JONES

NELSON B. JONES, CLERK

/s} ILLEGIBLE

Deputy Clerk,

United States District Court

Eastern District of Louisiana

New Orleans, La.

APPROVED AS TO FORM:

Is) JACK M. GORDON

UNITED STATES DISTRICT JUDGE

4a

APPENDIX “C”

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF LOUISIANA

UNIHEALTH SERVICES CORPORATION

versus CA No. 77-3001(I)

JOSEPH P. CALIFANO, IN HIS OFFICIAL

CAPACITY AS SECRETARY OF HEALTH,

EDUCATION & WELFARE OF THE

UNITED STATES, ET AL

Filed: Feb. 12, 1979

Mrs. Donna D. Fraiche, Suite 542, First National Bank

of Commerce Building, New Orleans, Louisiana

70112

Mrs. Edith S. Marchall, Department of Health, Educa-

tion & Welfare, General Counsel’s Office, 330 C

Street, S.W., Washington, D.C. 20201

Henry R. Goldberg, Esq., Department of Health,

Education & Welfare, Office of General Counsel,

6201 Security Boulevard, Baltimore, Maryland

21235

GORDON, J.

ite a ea Leb hh tS Ale ADA oe a oe co

5a

MEMORANDUM AND ORDER

Plaintiff, Unihealth Services Corporation, is a

private professional management and consulting firm

specializing in the rendering of service to nonprofit

home health agencies (as providers) as those entitled

are so defined in the Medicare Act. 42 U.S.C. 1395(x)

(m). Unihealth has serviced 25 provider clients pur-

suant to a contract with each individual home health

agency wherein a unified charge is billed for various

services rendered based on the percentage of gross bill-

ings of the respective agencies as set out in the agree-

ment. Among the services provided by Unihealth are

professional consultation and orientation programs,

data processing services, guidance in financial matters,

and assistance in audit procedures conducted by fiscal

intermediaries as agents of the Department of Health,

Education and Welfare. The Department of Health

Education and Welfare has responsibility for adminis-

tering the Medicare program, and in fulfilling those

duties, promulgates regulations and establishes policy

relating to the administration of the Medicare

program. Unihealth is presently attacking certain ad-

ministrative practices and policies of the Department

of Health, Education and Welfare.

From 1969 through 1976 Medicare officials recog-

nized Unihealth as a management company under

policy considerations set out in the Provider Reim-

bursement Manual. Medicare officials, in making their

determination as to the reasonableness of cost regard-

ing Unihealth’s services to the providers scrutinized

6a

those costs under guidelines found appropriate to man-

agement companies. From 1970 until November, 1976,

the fees Unihealth charged its clients were found to be

within the principles of reimbursement and thus allow-

ed.

In 1977, Medicare officials made a policy determina-

tion that Unihealth should be regarded as a franchisor

under the Provider Reimbursement Manual rather

than as a management company. Plaintiff has now at-

tacked on constitutional grounds the legality of such a

policy of determination, of the method of promulgat-

ing that determination, and of the manner in which the

policy decision was applied.

As alleged by plaintiff, in 1968 officials of Medicare

began toreview the status of the plaintiff in an effort to

make a policy determination as to whether Unihealth

should be regarded as a management company or as a

franchisor under the Provider Reimbursement Man-

ual. Plaintiff claims that such a review was made

without the knowledge of its representatives. Pur-

portedly without giving plaintiff legal notice of any

meetings, officials of Medicare met and reached a policy

decision that Unihealth should be treated as a fran-

chisor when Medicare officials make a determination

on reimbursement. Under §2133 of the Provider Re-

imbursement Manual, franchise fees are allowable only

to the extent that they are not out of line with costs of

similar services provided by nonfranchise organiza-

tions. This section requires that providers establish the

en a emir nena entices i lll

ee ee oe ee

ee athe Mee hae es rT

7a

cost of each of the specific services provided by the

franchisor. It requires exclusion of any additional fees

relating to the franchisor’s trademark or reputation

which are purportedly not related to patient care.

As a result of this policy determination recognizing

Unihealth as franchisor, the plaintiff contends that

those standards applicable to franchisor in determin-

ing reasonable costs, were applied retroactively to

those years when plaintiff was operating as a manage-

ment corporation as designated by the Medicare Act

(also referred to as “Act”). Retroactive application of

standards relating to franchisors purportedly altered

the condition under which plaintiff was operating in

the following manner:

(1) That Medicare officials retroactively

conducted a more rigorous scrutiny of

Unihealth’s cost report than was re-

quired when Unihealth was accorded

management status;

(2) That Unihealth was required to provide

itemized cost statements of each indi-

vidual service rendered to a provider

whereas in the past under standards

applicable to management corporations,

it did not have to itemize costs as to indi-

vidual services;

(3) That under the franchisor standards, and

as referred to above, Unihealth was

forced to retroactively utilize more

onerous accounting procedures in set-

8a

ting out the costs of the services

rendered;

(4) That the presumption that all costs and

services stated by a management cor-

poration are reasonable was substituted

for the franchisor presumption that all

costs and services rendered are not

reasonable and must be proven by de-

tailed documentation.

Plaintiff contends that as a result of this rectoactive-

ly applied policy determination recognizing it as a fran-

chisor, Unihealth’s provider clients have withheld

almost all payments outstanding to Unihealth in the

full amount of $800,000.

In summarizing its contentions, Unihealth alleges, in

the main, that the defendant has infringed its due

process rights under the Fifth Amendment of the Unit-

ed States Constitution: (1) by singling out the plaintiff

in an attempt to regulate it under the Medicare Act

without allowing plaintiff any administrative review or

judicial review as provided by the Medicare Act; (2) by

failing to give plaintiff guidelines further defining

“reasonable cost” pursuant to Title 20, Code of Federal

Regulations, §405.501, et seq.; (3) by failing to give the

plaintiff proper or legal notice that its charges for serv-

ices would be disallowed based on retroactively applied

policy decisions affecting cost reports for the years

1976, 1975 and 1974; (4) by retroactively applying the

policies, practices, actions, and determinations of

defendant so as to force plaintiff out of its professional

9a

practice thereby proscribing its ability to engage in its

profession; (5) by denying plaintiff the right to a hear-

ing relative to the issue of its status as a franchisor,

though defendant’s precedential policy determination

had the adverse effect of depriving Unihealth of its pre-

sumption of having submitted reasonable costs on a

unified basis.

On a motion to dismiss brought pursuant to FRCP

12(b)(1), the Department of Health, Education and

Welfare of the United States, sought to dismiss the ac-

tion on grounds that (1) the plaintiff lacks standing in

this action so as tomake it a case or controversy subject

to the federal court’s Article III jurisdiction under the

United States Constitution; and (2) that the Court does

not have subject matter jurisdiction of the case in that

Section 405(h) of the Social Security Act, incorporated

into the Medicare provisions at 42 U.S.C. 1395(ii), pre-

vents this Court from exercising any judicial review

over the particular claims presented by plaintiff. Sec-

tion 405(h) reads as follows:

The findings and decisions of the Secretary

after a hearing shall be binding upon all indi-

viduals who were 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 pro-

vided. No action against the United States, the

Secretary, or any officer or employee thereof

shall be brought under Section 41 of Title 28

to recover on any claim arising under this sub-

chapter.

*

10a

After oral argument on the issues, and post argu-

ment briefing, this Court took the matter under sub-

mission. In a written memorandum the Court denied

the motion to dismiss concluding that plaintiff had

standing and that the Court had federal question juris-

diction to entertain constitutional claims against the

Medicare Act and regulations promulgated pursuant to

the Act relying heavily on the decisions in Dr. John T.

MacDonald Foundation, Inc. v. Mathews, 554 F.2d 714 (Sth

Cir. 1977) and St. Louis University v. Blue Cross Hospital Serv-

ice, 537 F.2d 283 (8th Cir. 1976).

In preparation for trial, the parties formulated a de-

tailed pretrial order. In paragraph 5 of the pretrial

order, defendant stated that it would ask the Court to

reconsider the motion to dismiss.

The trial of this matter commenced on June 19, 1978.

At the completion of the trial, the defendant orally re-

quested that the Court reconsider its earlier ruling on

the motion to dismiss, since the Fifth Circuit in an en

banc decision had reversed its position in Dr. John T.

MacDonald Foundation, Inc. v. Mathews, supra. Dr. John T.

MacDonald Foundation, Inc. v. Califano, 571 F.2d 328 (Sth

Cir. 1978). After allowing additional oral argument on

the motion to reconsider and inviting the parties to file

post-trial memoranda should they desire, this Court

took the motion to reconsider and the issues raised at

trial under submission.

lla

Consideration of the Fifth Circuit en banc decision in

MacDonald Foundation, Inc., supra, and its more recent de-

cision in The American Association of Councils of Medical Staffs

of Private Hospitals, Inc. (CMS) v. Califano, 575 F.2d 1367

(Sth Cir. 1978) leads to the inescapable conclusion that

this Court has no federal question jurisdiction pursu-

ant to 28 U.S.C. 1331 over the present action.

In its original memorandum and order, this Court

found the reasoning in St. Louis University, supra, highly

persuasive, where that Court concluded that the

Medicare Act [§405(h) of the Social Security Act] could

not be read to preclude all judicial review of consti-

tutional claims against the Act. In that case, St. Louis

University as a representative of a provider brought an

action pursuant to 28 U.S.C. 1331 challenging the con-

stitutionality under the due process clause of certain

regulatory procedures used. Allegedly, the Depart-

ment of Health, Education and Welfare utilized a pro-

vider appeals committee with the majority of its

membership composed of officers or employees of the

very agency whose initial decision was being appealed.

Undoubtedly these members had an institutional inter-

est in the outcome.

The Department of Health, Education and Welfare

took the position that judicial review of the due process

claim was barred by §405(h) and administrative review

was precluded by an agreement between Health,

Education and Welfare and Blue Cross which estab-

lished the provider appeals committee. Health, Educa-

12a

tion and Welfare stated that it would not review the

appeal committee’s decision even when a provider

asserted that the committee had blatantly ignored

governing statutes, regulations, and constitutional re-

quirements. The Eighth Circuit agreed with the district

court’s conclusion that St. Louis University could bring

a due process claim challenging certain procedures of

the Medicare Act under federal-question jurisdiction.

In doing so, the Eighth Circuit stated three reasons for

concluding that jurisdiction existed under 28 U.S.C.

1331. First, the Court decided that the due process

claim arose primarily under the Constitution rather

than under the Medicare Act so that the last sentence

in Section 405(h) did not apply to such claims. St. Louis

University was primarily seeking a constitutionally

adequate hearing and not a declaration of entitlement

to reimbursement. Second, the Court recognized that

the Medicare Act failed to provide an adequate alter-

native means of obtaining judicial review of St. Louis

University’s due process claim. The Court found that

this ground alone distinguished the case from

Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457 (1975)

where the Supreme Court held that a federal court had

no federal question jurisdiction over a constitutional

claim attacking a Medicare Act regulation. Third, the

Court merely reasserted the caveat raised by other

courts considering similar issues involving jurisdiction

under Medicare; reading Section 405(h) to wholly pre-

clude the adjudication of a party’s due process claim

would raise serious constitutional problems concern-

ing the Medicare Act.

be iene kn Bien lin Sets 2 ok

13a

It was then clear to this Court that the reasoning of

the Court in St. Louis University, supra, was applicable to

the present matter since Unihealth was primarily seek-

ing to obtain due process rights rather than the right to

reimbursable fees, and was being denied any judicial

review procedure under the Medicare Act. A reading of

Section 405(h) to preclude any judicial review of these

constitutional claims appeared to raise particularly

grave constitutional questions concerning the

Medicare Act since Unihealth had previously been

denied all access to administrative as well as judicial

review under the Act.

The Fifth Circuit in the second panel consideration of

MacDonald Foundation, Inc., 554 F.2d 714 (Sth Cir. 1977)

sought to determine whether any jurisdictional

grounds existed for entertaining a provider’s claim

against Health, Education and Welfare to compel the

Secretary to pay over disallowed reimbursements. The

Supreme Court had previously overturned the first

MacDonald Foundation, Inc. panel decision that jurisdic-

tion existed under the Administrative Procedure Act.

Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980 (1977). In

concluding that Congress did not intend Section 405(h)

to preclude federal-question jurisdiction over such

claims as brought by MacDonald Foundation, Inc., the

Fifth Circuit recognized the propriety of the St. Louis

University Court’s reasoning as it applied to con-

stitutional claims against the Medicare Act of the type

brought by St. Louis University. The Court stated:

l4a

And the Eighth Circuit, in St. Louis University

v. Blue Cross Hospital Service, 537 F.2d 283 (8 Cir.

1976), a post-Salfi Medicare case, refused to

find complete preclusion of federal question

jurisdiction by §405(h), reasoning that con-

stitutional claims must be reviewable despite

§405(h) language to the contrary. With

respect, we think the reasoning of our

Brothers’ careful opinion supports a more ex-

pansive result than they reached: (citing St.

Louis University reasoning verbatim.) (554

F.2d at 717)

In an en banc decision, the Fifth Circuit in MacDonald

Foundation, Inc. v. Joseph A. Califano, 571 F.2d 328 (1978)

reversed the second panel’s decision by concluding that

§405(h) precluded federal-question jurisdiction to

review decisions by the Secretary of Health, Education

and Welfare awarding reimbursement under Medicare.

In arriving at this end, the Court analyzed the pre-

clusion of review issue while recognizing that the

appellant was seeking to bring a constitutional claim as

well as a claim for reimbursement. Though the pro-

vider was alleging a constitutional claim and had no

procedure for judicial review under the Medicare Act,

the Court still reached this conclusion:

Assuming that when Congress incorporates

sections specifically they intend to eschew the

remainder, the conclusion is inescapable that

Sec. 405(h) was intended to preclude all

SS Lane it a nee a SIS PAI BBN

15a

review. We therefore hold that §405(h), in-

corporated into Section 1395 (ii) of the

Medicare Act, precludes all review of the

Secretary’s decisions by federal district courts

brought under Section 1331. (571 F.2d at 331)

Not only did the Fifth Circuit reverse its second panel

decision, but it appears to have rejected the reasoning

in St. Louis University, supra. The Court summarized the

Eighth Circuit’s position as follows:

The Eighth Circuit has held that although

Section 405(h) precludes review of agency

findings of fact and law, Section 405(h) does

not preclude jurisdiction to entertain con-

stitutional claims. St. Louis University v. Blue Cross

Hospital Service, 537 F.2d 283 (8th Cir. 1976),

cert. denied, 429 U.S. 977, 97 S.Ct. 484, 50

L.Ed.2d 584 (1977). (MacDonald Foundation, Inc.

v. Califano, 571 F.2d at 331.)

As reflected in its own decision on the issue, the Fifth

Circuit disagreed with the Eighth Circuit’s position and

presumably that Court’s reasoning. While the Fifth

Circuit's interpretation of Section 405(h) required that

it then address MacDonald Foundation, Inc.’s claim

that Section 405(h) unconstitutionally denies due

process to claimants precluded from seeking review of

constitutional claims, a caveat that the Court in St. Louis

University, supra, had raised, the Court avoided this

showdown by concluding that judicial review was

16a

available elsewhere. The Court found that the Court of

Claims had determined that it has jurisdiction to

review claims arising under the Medicare Act. White

Cliff, Inc. v. United States, 536 F.2d 347 (Ct.Cl. 1976), cert.

denied, 430 U.S. 969, 97 S.Ct. 1652. While apparently

recognizing that such jurisdiction was established on

treacherous grounds, the Fifth Circuit stated that it

was powerless to overturn such a determination by the

Court of Claims. The Court then transferred the case

to the Court of Claims, pursuant to 28 U.S.C. 1406(c).

Certainly, persistent arguments could have been

made in an attempt to distinguish the factual circum-

stances of St. Louis University, supra, and MacDonald

Foundations, Inc., supra, and even stronger arguments

could have been made to distinguish the Unihealth

matter from MacDonald Foundation, Inc., supra. The pro-

vider in St. Louis University, supra, was making aconstitu-

tional claim against the denial of a hearing and not pri-

marily against a decision denying reimbursement.

Since MacDonald Foundation, Inc.’s claim was direct-

ed to the reimbursement decision, that party was notin

a strong position to argue that the claim did not arise

under the Medicare Act.

Unihealth can present several factors arguably dis-

tinguishing its position from that of MacDonald

Foundation, Inc. First, Unihealth is a non-provider and

not a provider under the Medicare Act. Second, Uni-

health has been adversely affected by a Medicare regu-

lation and by other related administrative action

without having access to any administrative remedies,

Aiwa ee wee

A:

17a

including a hearing, under the Medicare Act. Third,

Unihealth has brought a claim primarily attacking the

constitutionality of certain policy decisions, including

the method of promulgation and application of these

decisions. Though ultimate success in this lawsuit

might result in Unihealth obtaining certain reim-

bursement funds withheld from providers serviced by

Unihealth, this is not the primary thrust of plaintiff's

claim.

The relevance of these distinctions is no longer open

to question, however, since the Fifth Circuit has re-

cently held, under factual circumstances similar to Uni-

health, that the en banc decision in MacDonald Founda-

tion, Inc., supra, and the decision in Salfi, supra, are con-

trolling, and that Section 405(h) precludes federal-

question jurisdiction over claims like those of Uni-

health. The American Association of Councils of Medical Staffs

of Private Hospitals, Inc. (CMS), supra.

In CMS, supra, an action was brought by an associa-

tion of medical councils of private hospitals for declar-

atory and injunctive relief on behalf of its physician

members who were challenging the constitutionality

of certain federal regulations promulgated under the

Medicare Act. These regulations required that larger

provider hospitals establish utilization review com-

mittees, comprised of doctors on the staff of the

hospital being reviewed. In the district court, the

Department of Health, Education and Welfare moved

for dismissal on grounds of lack of subject matter juris-

diction, based on the preclusion language of Section

405(h). CMS moved for summary judgment as to the

18a

merits of the case. The trial court agreed with Health,

Education and Welfare that Section 405(h) precluded

federal-question jurisdiction but concluded that juris-

diction existed under the Administrative Procedure

Act. The American Association of Councils of Medical Staffs of

Private Hospitals, Inc. v. Mathews, 421 F.Supp. 848 (E.D. La.

1976). The Court then found in favor of Health, Educa-

tion and Welfare on the merits.

On appeal, the Fifth Circuit first held that no juris-

diction existed under the Administrative Procedure

Act, in the aftermath of Califano v. Sanders, supra. It then

focused on whether federal-question jurisdiction was

precluded by Section 405(h), as held by the district

court.

At the outset, the Court acknowledged that condi-

tions existed in the CMS matter that set it apart fact-

ually from other prior decisions considering Section

405(h) preclusion argument:

The question of review of decisions ap-

parently precluded by Section 1395(ii) [Sec-

tion 405(h)] has been considered by several

courts. The cases, however, have always been

slightly different from this case. They have in-

volved actions by providers complaining of re-

imbursement decisions and procedures. (575

F.2d at 1370)

A OS APTS Sy PLN NES EOS

19a

Had the Court chosen to elaborate further on these dis-

tinctions, it would have acknowledged these particular

differences between CMS, supra, and related juris-

prudence: (1) as a nonprovider, CMS had been affect-

ed by a regulation specifically directed at providers; (2)

CMS had no access to administrative or judicial pro-

cedures under the Medicare Act to challenge the con-

stitutionality of the regulation. The Court found CMS’

constitutional claim against a regulation having no

effect on reimbursement to be the major distinction

between CMS, supra, and MacDonald Foundation, Inc. (en

banc), supra.

In spite of these fact differences, the Court held that

Salfi, supra, and MacDonald Foundation, Inc. (en banc), supra,

were controlling. The Court concluded:

This court has decided that the Medicare Act

withdraws jurisdiction from the district

courts over actions like this one. (575 F.2d at

1372)

The Court saw no significance in the fact that CMS

was a nonprovider, with no access to the adminis-

trative or judicial review procedures provided under

the Medicare Act, who was bringing a constitutional

claim against a Medicare regulation affecting it. Even

after the Court recognized that the only available juris-

diction avenue with the Court of Claims was foreclosed

since that Court cannot provide equitable or

declaratory relief as sought in the suit, it did not alter

its decision, nor did it adequately resolve the looming

20a

constitutional questions directed at the Medicare Act.

The Court did state that Congress has the power to

deny all litigants against the United States any reme-

dies and to restrict parties seeking to litigate certain

constitutional claims to specified courts. After the con-

sideration, the Court left it to the ingenuity of counsel

for CMS either to bring the claims within the jurisdic-

tion of the Court of Claims or to seek the guidance of a

higher court.

This Court sees no means by which Unihealth can

extricate itself from the broad holding in CMS, supra.

The apparent aggregate effect of Salfi, supra; MacDonald

Foundation, Inc. (en banc), supra; and CMS, supra, is total

preclusion of federal-question jurisdiction for statu-

tory and constitutional claims against the Medicare

Act. Since this Court is bound by those decisions, it

must conclude that Section 405(h), incorporated in the

Medicare Act at 42 U.S.C. 1395(ii), prevents this Court

from exercising federal-question jurisdiction over the

claims of Unihealth.

In a final argument, Unihealth contends that juris-

diction is established under 28 U.S.C. 1343, since it has

brought a claim pursuant to 42 U.S.C. 1985(3) urging

that the Department of Health, Education and Welfare

and others have entered a conspiracy to deprive the

plaintiff of the equal protection of the law. This con-

tention is short lived since plaintiff has not alleged and

has failed to prove that there existed any racial or

otherwise class-based discriminatory animus behind

the alleged conspirators’ actions. The Supreme Court

21a

in Griffin v. Breckenridge, 403 U.S. 88, 91 S.Ct. 1799

(1971) has held that no relief can be obtained under 42

U.S.C. 1985(3) unless it is shown that racial or class-

based discriminatory animus was an element of the

conspiracy. Failing to state a viable claim under 42

U.S.C. 1985(3), Unihealth cannot utilize the statute’s

independent jurisdictional force to maintain the law-

suit in this Court.

While the preclusion reasoning in CMS, supra, applies

to Unihealth, the results need not be so harsh as in

CMS, supra. Though plaintiff seeks declaratory and in-

junctive relief in its complaint, it has also stated aclaim

for damages. A claim for damages can be entertained by

the Court of Claims. While the total relief sought can-

not be obtained, Unihealth can litigate its con-

stitutional claims and obtain monetary damages should

it prevail.

Accordingly, this Court reverses its earlier decision

and DISMISSES the complaint of UniHealth Services

Corporation pursuant to Federal Rule of Civil Pro-

cedure 12(b)(1).

New Orleans, Louisiana, this 7th day of February,

1979.

ls) JACK M. GORDON

UNITED STATES DISTRICT

JUDGE

22a

APPENDIX “D”

UNIHEALTH SERVICES CORPORATION

versus CA No. 77-3001

JOSEPH P. CALIFANO, in his official capacity

as Secretary of Health, Education & Welfare

of the United States, et al.

United States District Court

E.D. Louisiana

March 21, 1978

Plaintiff, a private professional management and

consulting firm rendering service to nonprofit home

health agency medicare providers, brought action

against Secretary of Health, Education and Welfare on

claim that standards applicable to franchisors, in deter-

mining reasonable rates, were improperly applied

retroactively, in violation of its due process rights, to

years when plaintiff operated as a management cor-

poration as designated by Medicare. Defendant filed

motion to dismiss. The District Court, Jack M. Gordon,

]., held that: (1) because alleged regulations purport-

edly interfered with both contractual and occupational

relationship of plaintiffs, plaintiff had standing to de-

23a

mand that such regulation be conducted within due

process parameters, and (2) court had federal question

subject-matter jurisdiction over plaintiff's con-

stitutional challenge to Medicare Act.

Motion to dismiss denied.

* * *

Donna D. Fraiche, Baton Rouge, La., for plaintiff.

Suzanne Cochran, Asst. Regional Atty., Dept. of

Health, Education & Welfare, Dallas, Tex., for defend-

ant.

MEMORANDUM AND ORDER

JACK M. GORDON, District Judge.

This matter is before the Court on the motion to dis-

miss of Joseph P. Califano, in his official capacity as Sec-

retary of Health, Education & Welfare of the United

States, et al (referred toas “the United States”) brought

pursuant to Federal Rules of Civil Procedure 12(b)(1) as

a challenge to this Court having jurisdiction over the

claims presented. The defendant's jurisdictional argu-

ment is grounded on two basic contentions:

(1) that the plaintiff lacks standing in this action so

as to make it a case or controversy subject to a federal

court’s Article III jurisdiction under the United States

Constitution; and

24a

(2) that this Court does not have subject matter

jurisdiction of the case in that §205(h) of the Social

Security Act, incorporated into the Medicare pro-

visions of the Act as 42 U.S.C. §1395 et seq., prevents

this Court from exercising any judicial review over the

particular claims presented by the plaintiff.

As best the Court can determine on the basis of the

factual scenario presented in the record, Unihealth and

the United States, through its appropriate agency

which administers the Medicare program, agree onthe

following fact rendition. Plaintiff, Unihealth Services

Corporation, established in 1969, is a private pro-

fessional management and consulting firm specializ-

ing in the rendering of service to nonprofit home

health agencies as those entitled are so defined in 42

U.S.C. §1395x(m). These agency clients are “pro-

viders” under Title 18 of the Medicare Act (referred to

also as “Act”), 42 U.S.C. §1395 et seq. Plaintiff has con-

tracted to provide services to certain providers but is

not a Medicare provider itself.

Unihealth services 25 provider clients in a 17-state

area and the District of Columbia pursuant to a con-

tract with each client agency wherein a unified charge

is billed for the services rendered based on the per-

centage of gross billings of the respective agencies as

set out in the agreement. The cost, although not billed

by means of a breakdown, purportedly included initial

startup fees; professional consultation and orientation

program; continued management services; manuals;

25a

forms; brochures; other teaching tools; as well as guid-

ance and aid in all financial matters; data processing;

billing services and preparation of cost and periodic in-

terim payment reports; and assistance in audit pro-

cedures conducted by fiscal intermediaries. In each con-

tract with a provider, plaintiff has agreed that it will re-

fund to the provider any charges for its services that

are disallowed by Medicare. Plaintiff’s clients receive

monthly payments from Medicare which the client and

the United States estimate will amount to the pro-

vider’s proper reimbursement when costs are audited

at the end of the fiscal year. Such interim payments in-

clude payments for the cost of the types of services pro-

vided by plaintiff.

From 1969 through 1976 Medicare officials recog-

nized Unihealth as a management company under

policy considerations set out under the provider reim-

bursement manual. Medicare in making its determina-

tion as to the reasonableness of cost regarding Uni-

health’s services to the providers scrutinized those

costs under guidelines found appropriate to manage-

ment companies. From 1970 until November, 1976, the

fees Unihealth charged its clients were found to be

within the principles of reimbursement and thus

allowed.

As alleged by plaintiff, in 1968 [sic] officials of Medi-

care began to review the status of the plaintiff in an ef-

fort to make a policy determination as to whether Uni-

health should be regarded as a management company

26a

or as a franchisor under the provider reimbursement

manual. Plaintiff claims that such a review was made

without the knowledge of Unihealth. Purportedly

without receiving legal notice of any meetings, offi-

cials of Medicare met and reached a policy decision that

Unihealth should be treated as a franchisor when

Medicare makes a determination on reimbursement.

Under §2133 of the Provider Reimbursement Manual,

franchise fees are allowable only to the extent that they

are not out of line with costs of similar services pro-

vided by nonfranchise organizations. This section re-

quires that providers establish the cost of each of the

specific services provided by the franchisor. It requires

exclusion of any additional fees relating to the fran-

chisor’s trademark or reputation which are purported-

ly not related to patient care.

As a result of this policy determination recognizing

Unihealth as a franchisor, the plaintiff contends that

those standards applicable to franchisors in determin-

ing reasonable costs, were applied retroactively to

those years when plaintiff was operating as a manage-

ment corporation as designated by Medicare. Retro-

active application of standards relating to franchisors

purportedly altered the condition under which plaintiff

was operating in the following manner:

(1) That Medicare officials retroactively

conducted a more rigorous scrutiny of

Unihealth’s cost report than was re-

quired when Unihealth was accorded

management status;

27a

(2) That Unihealth was required to provide

itemized cost statements of each indi-

vidual service rendered to a provider

whereas in the past under standards

applicable to management corporations,

it did not have to itemize costs as to in-

dividual services;

(3) That under the franchisor standards, and

as referred to above, Unihealth was

forced to retroactively utilize more oner-

ous accounting procedures in setting out

the costs of the services rendered;

(4) That the presumption that all costs and

services stated by a management cor-

poration are reasonable was substituted

for the franchisor presumption that all

costs and services rendered are not

reasonable and must be proven by de-

tailed documentation.

Plaintiff contends that as a result of this retroactive-

ly applied policy determination recognizing it as a fran-

chisor, Unihealth’s provider clients have withheld

almost all payments outstanding to Unihealth in the

full amount of $800,000.

In an effort to challenge the legality of the policy

determination, the method of promulgating that deter-

mination, and the manner in which the policy decision

and its attendant requirements were applied, Uni-

health filed the lawsuit temporarily allotted to Section

“I” after its transfer from Section “C.” The following is

a

a summary of the numerous claims for relief Set out in

plaintiff's complaint.

(1)

That defendant has infringed its due

process rights as set out in the Fifth

Amendment of the United States Con-

stitution: (a) by singling out the plaintiff

in an attempt to regulate it under the

Medicare Act without allowing plaintiff

any administrative review or judicial re-

view as provided by the Medicare Act; (b)

by failing to give plaintiff guidelines

further defining “reasonable cost” pur-

suant to Title 20, Code of Federal Regu-

lations, §405.501, et seq.; (c) by failing to

give the plaintiff proper or legal notice

that its charges for services would be dis-

allowed based on retroactively applied

policy decisions affecting cost reports for

the years 1976, 1975 and 1974; (d) by

retroactively applying the policies, prac-

tices, actions, and determinations of

defendant soas to force plaintiff out of its

professional practice thereby proscrib-

ing its ability to engage in its profession;

(e) by denying plaintiff the right to a

hearing relative to the issue of its status

as a franchisor, though defendant's pre-

cedential policy determination had the

adverse effect of depriving Unihealth of

its presumption of having submitted

reasonable costs on a unified basis;

29a

(2) That defendant has failed to grant equal

protection under the law to plaintiff as

required by the Fifth Amendment of the

United States Constitution when it

singled out plaintiff on the basis of its

unique status in the Medicare field to

demonstrate that disallowances of cer-

tain charges submitted to Medicare could

be made on a retroactive basis.

The parties are in substantial disagreement as to

what is the nature of the relief sought. The United

States suggests that the only relief that plaintiff is truly

seeking is to have judicial review of an administrative

determination under the Medicare Act that the costs of

services charged to providers by Unihealth were un-

reasonable. On the basis of this characterization of the

relief Unihealth allegedly is seeking, the United States

suggests that this Court should adopt the reasoning set

forth in New Jersey Chapter, Incorporated, of the Americar

Physical Therapy Association, Inc. v. The Prudential Life Insur-

ance Company of America, 164 U.S.App.D.C. 40, 502 F.2d

500 (1974), wherein the Court discussed both the

standing and judicial review issues. In that case, the

Association of Physical Therapists as a contractor of

services to providers brought an action against its fiscal

intermediary (private company chosen by United

States to make initial determination of reasonableness

of costs that providers have sustained) under the Med-

icare program challenging guidelines adopted by the

intermediary for reimbursement to providers for cost

of physical therapists’ services. Medicare officials made

30a

a policy determination clarifying what intermediaries

should determine to be reasonable costs for physical

therapy services. In adopting these new policy con-

siderations the officials stated that it would be

necessary that accurate records of the therapists’

activities be maintained and made available to the inter-

mediary. Then, the officials prospectively applied these

new record-keeping requirements to providers in the

program.

In entertaining the nonconstitutional challenge to

the guidelines adopted by the intermediaries, the Court

applied the following analysis to the issues:

On this appeal the government argues (1)

plaintiff’s complaint does not state a meritor-

ious claim for relief; (2) the District Court cor-

rectly held that plaintiff did not have stand-

ing to sue; and (3) determination of the

amounts payable to providers of services is

not subject to judicial review. We turn first to

the government’s second and third argu-

ments.

The government says correctly that the Act

was expressly designed for the protection of

elderly citizens who require medical care, and

those persons of course have standing to vin-

dicate their rights under the Act. Further-

more, since the Act assures a provider of re-

imbursement for the reasonable costs in-

curred by him, a provider would seem to have

an interest within the zone protected by the

3la

statute. Plaintiff's members on the other hand

are not subject to regulation under the Act

and their rights are derived from their con-

tractual arrangements with providers. There

is nothing in the Medicare Act or its legisla-

tive history, says the government, which indi-

cates any concern by Congress to protect the

interests of persons such as _ plaintiff's

members who are only indirectly affected by

the operation of the Medicare program. From

all this the government concludes that the

plaintiff and its members have no standing to

sue.

In support of its argument the plaintiff's

claims are not subject to judicial review the

government directs our attention to the pro-

visions of the Medicare Act, 42 U.S.C.

§1395ff, which provide for judicial review of

(1) a determination of whether an individual is

entitled to benefits, and (2) a determination

that an institution is not a provider of serv-

ices or that its agreement to provide services

should be terminated. The government finds

it significant that no provision is made for

judicial review of the award of compensation

to providers of services; and the government

reasons that since decisions on this matter are

not subject to judicial review it follows a fortiori

that decisions on the amounts due to con-

tractors, who are indirectly affected by the

Medicare program, are also not subject to judi-

cial review.

32a

There is much force in the

government's arguments. As this court

has said however recent decisions of the

Supreme Court “have made the standing

obstacle to judicial review a shadow of its

former self, and have for all practical pur-

poses deprived it of meaningful vitality.”

National Automatic Laundry & Cleaning Coun-

cil v. Shultz, 143 U.S. App. D.C. 274, 278,

443 F.2d 689, 693 (1971). Standing need

not be founded ona rock; a pebble or even

a cobweb may do. Moreover, only ashow-

ing of clear and convincing evidence of

legislative intent will justify a court in

precluding access to judicial review. Abbott

Laboratories v. Gardner, 387 U.S. 136, 87

S.Ct. 1507, 18 L.Ed.2d 681 (1967); Barlow

v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25

L.Ed.2d. 192 (1970). Here, we think plain-

tiff’s standing and the reviewability of

plaintiff's claims at least present close and

difficult questions; but we shall not pause

to wrestle with these problems, since we

conclude that in any event the defend-

ants must prevail on the merits. (164 U.S.

App. D.C. at 44, 502 F.2d at 504).

Unihealth denies that it has brought this actioninan

attempt to obtain judicial review of an administrative

determination that Unihealth’s charges to a provider

were unreasonable. Rather, Unihealth suggests that it

is raising constitutional challenges stemming from the

Government's stringent regulation of the plaintiff's

33a

contractual relationship with the providers. In partic-

ular, Unihealth avers that its due process rights have

been violated in that Medicare officials denied it access

to the administrative and judicial review established in

the Medicare Act while at the same time stringently

regulating the plaintiff through enactment of policy

determinations made pursuant to the Medicare Act. In

a second constitutionally based allegation, Unihealth

contends that its due process rights have been denied in

that the policy determinations effecting strict regula-

tion of the plaintiff are unconstitutional on their face,

in the manner of application, and in their method of

promulgation.

Unihealth urges that it has a right to bring these con-

stitutional challenges stemming from indirect regula-

tion by the Medicare Act, citing Cotovsky-Kaplan Physical

Therapists Association, Ltd. v. United States, 507 F.2d 1363

(7th Cir. 1975). In Cotovsky, supra, the issue before the

Court was whether a supplier of services, whose own

interests were not directly regulated by statute or ad-

ministrative action under the Medicare Act, had stand-

ing to challenge a regulation which required its regu-

lated customers to take their patronage elsewhere. The

regulation in question provided that providers could

contract out the provision of physical therapy services

only to nonprofit therapy agencies and not to pro-

prietary corporations such as the plaintiffs. Plaintiffs

brought suit alleging that such a regulation deprived

them of property without due process of law. The Dis-

trict Court concluded that plaintiffs lacked standing to

challenge the constitutionality of the regulation.

34a

The Appellate Court, in reversing the decision of the

District Court, concluded that the interests sought to

be protected by the physical therapists were arguably

within the zone of interest to be protected or regu-

lated by the Medicare statute or by the constitutional

guarantee of the Fifth Amendment. The Court reason-

ed as follows:

Defendants respond and the district court

concluded, however, that the regulation pur-

ports to regulate only home health agencies

and that it does not regulate plaintiffs or their

contracts. To focus on whether the plaintiffs

are directly regulated themselves is to read the

Data Processing test too narrowly. The test is

not whether these plaintiffs are regulated by

the statute but whether the _ interests

asserted by them arguably fall within the zone

of interests so regulated.

Nearly three decades before its Data

Processing decision, the Supreme Court held

that indirect regulation, like that involved in

this case, was adequate to confer standing to

challenge administrative action. In Columbia

Broadcasting System, Inc. v. United States, 316 U.S.

407, 62 S.Ct. 1194, 86 L.Ed. 1563, the Court

held that CBS had standing to challenge

F.C.C. regulations conditioning the grant of

broadcast licenses to local stations on the

nature of their contracts with radio net-

works. Neither CBS nor its contractual rela-

35a

tionship with any local station was directly

regulated. Nevertheless, in response to a

standing argument similar to that made here,

the Court held:

Appellant’s standing to maintain the

present suit in equity is unaffected by the

fact that the regulations ere not directed

to appellant and do not in terms compel

action by it or impose penalties upon it

because of its action or failure to act. It is

enough that, by setting the controlling

standards for the Commission’s action,

the regulations purport to operate to alter and affect

adversely appellant's contractual rights and busi-

ness relations with station owners whose appli-

cations for licenses the regulations will

cause to be rejected and whose licenses

the regulations may cause to be revoked.

316 U.S. at 422, 62 S.Ct. at 1202-1203

(emphasis added.)

Even more directly in point is the holding in

Air Reduction Co., Inc. v. Hickel, 137 U.S. App.

D.C. 24, 420 F.2d 592 (1969). In that case

private producers and distributors of helium

challenged regulations of the Secretary of the

Interior providing that government contrac-

tors must purchase all of their helium re-

quirements for those contracts from the

government. The regulations, of course, did

not directly regulate the plaintiffs or their

contracts with government contractors.

Nevertheless, the court of appeals held that

they had standing.

36a

We therefore conclude that if, pursuant to

what it perceives to be its statutory author-

ity, a government agency regulates the con-

tractual relationships between a regulated

party and an unregulated party, the latter as

well as the former may have interests that are

arguably within the regulated zone for pur-

poses of testing standing, and for this pur-

pose a total prohibition is a form of regula-

tion.

As the interests of these plaintiffs arguably

fall within the zone regulated by the Medi-

care statutes, we hold that they have stand-

ing to obtain judicial review of 20 C.F.R.

§405.1221(a). (507 F.2d at 1366-1367).

The Court also recognized that it was not necessary

to decide whether plaintiffs had standing on consti-

tutional grounds because their interests arguably fell

within the zone of interest protected by the Fifth

Amendment. The Court so opined:

_.. “when the plaintiff is challenging govern-

mental action on constitutional grounds, he

necessarily is asserting that his interest is pro-

tected by the constitutional guarantee upon

which he is relying.” . . . (507 P.2d at 1368, n.

12)

The Court agrees with Unihealth that it has raised

more than a request for-a review of its charges to pro-

viders. Just as plaintiff has characterized its claims,

Unihealth is demanding both that it be allowed access

to the review procedures provided by the Medicare Act

37a

and that it be regulated within due process parameters

since the alleged regulations have purportedly inter-

fered with both contractual and occupational relation-

ships of plaintiff.

In Association of Data Processing Service Organizations, Inc. v.

Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970)

the Court held that a party possesses standing to seek

nonstatutory judicial review of administrative action if

it “alleges that the challenged action has caused it in-

jury in fact, economic or otherwise,” and if “the inter-

est sought to be protected by the complainant is argu-

ably within the zone of interest to be protected or reg-

ulated by the statute or constitutional guarantee in

question.”

First, it is evident that the alleged challenged actions,

i.e., no access to administrative and judicial review

under the Medicare Act and the unconstitutionality of

the regulations imposed on plaintiff, have caused the

plaintiff economic harm and otherwise in affecting its

relationships with the providers such that providers

are withholding certain sums purportedly owed Uni-

health.

Second, as stated in Cotovsky, supra, the Court is to

assume that plaintiff arguably falls within the zone of

interest protected by its Fifth Amendment rights when

it challenges governmental action on Fifth Amend-

ment grounds.

38a

Whether or not Unihealth arguably falls within the

zone of interest regulated by the Medicare Act turnson

a determination of the nature and extent of alleged reg-

ulating activities. Cotovsky, supra. Since a factual issue re-

mains regarding the nature and extent that Uni-

health has been regulated, the Court must resolve this

issue on the merits before it-can render a decision on

standing under the Medicare Act. Courts have recog-

nized that they may postpone a decision on a jurisdic-

tional issue if that issue is intertwined with a decision

on the merits of the case. Continental Casualty Company v.

Department of Highways, State of Louisiana, 379 F.2d 673 (Sth

Cir. 1967). Therefore, while the Court has already con-

cluded that this plaintiff has standing under the Fifth

Amendment to bring the claims, it will await adecision

on the merits before deciding whether Unihealth also

has standing under the Medicare Act.

Having concluded that standing does exist, at least

under the constitutional grounds for plaintiff to bring

this action, the Court turns its inquiry to the issue of

whether it has subject matter jurisdiction to review

such claims.

Basically, plaintiff is asserting that the Court has fed-

eral question jurisdiction pursuant to 28 U.S.C. §1331.

The defendant’s challenge to this jurisdictional ap-

proach is grounded on statutory language in the

Medicare Act. In 42 U.S.C. §405(g), Congress has set

forth the administrative and judicial review pro-

visions for entertaining official administrative deter-

minations. The statute provides:

39a

(g) Any individual, after any final decision

of the Secretary made after a hearing to which

he was a party, irrespective of the amount in

controversy, may obtain a review of such de-

cision by acivil action commenced within sixty

days after the mailing to him of notice of such

decision or within such further time as the

Secretary may allow. Such action shall be

brought in the district court of the United

States for the judicial district in which the

plaintiff resides or has his principal place of

business, or, if he does not reside or have his

principal place of business within any such

judicial district, in the United States District

Court for the District of Columbia. As part of

his answer the Secretary shall file a certified

copy of the transcript of the record including

the evidence upon which the findings and de-

cision complained of are based. The court shall

have power to enter, upon the pleadings and

transcript of the record, a judgment affirm-

ing, modifying, or reversing the decision of

the Secretary, with or without remanding the

cause for a rehearing. The findings of the Sec-

retary as to any fact, if supported by substan-

tial evidence, shall be conclusive, and where a

claim has been denied by the Secretary or a de-

cision is rendered under subsection (b) of this

section which is adverse to an individual who

was a party to the hearing before the Secre-

tary, because of failure of theclaimant or such

individual to submit proof in conformity with

40a

any regulation prescribed under subsection (a)

of this section, the court shall review only the

question of conformity with such regulations

and the validity of such regulations. The court

shall, on motion of the Secretary made before

he files his answer, remand the case to the

Secretary for further action by the Secretary,

and may, at any time, on good cause shown,

order additional evidence to be taken before

the Secretary, and the Secretary shall, after

the case is remanded, and after hearing such

additional evidence if so ordered, modify or af-

firm his findings of fact or its decision, or both,

and shall file with the court any such addi-

tional and modified findings of fact and de-

cision, and a transcript of the additional rec-

ord and testimony upon which his action in

modifying or affirming was based. Such addi-

tional or modified findings of fact and de-

cision shall be reviewable only to the extent

provided for review of the original findings of

fact and decision. The judgment of the court

shall be final except that it shall be subject to

review in the same manner as a judgment in

other civil actions. Any action instituted in ac-

cordance with this subsection shall survive

notwithstanding any change in the person

occupying the office of Secretary or any

vacancy in such office.

The pertinent section of the Medicare Act pertain-

ing to the restriction of judicial review under federal-

4la

question jurisdiction is found in 42 U.S.C. §405(h)

which provides as follows:

The findings and decisions of the Secretary

after a hearing shall be binding upon all indi-

viduals who were 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 pro-

vided. No action against the United States, the

Secretary, or any officer or employee thereof

shall be brought under §24 of the Judicial

Code of the United States (28 U.S.C. §1331) to

recover on any claim arising under this title.

Until the United States Supreme Court’s decision in

Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45

L.Ed.2d 522 (1975), the lower courts had read §405(h)

as merely codifying the principle of exhaustion of ad-

ministrative remedies. The Supreme Court consider-

ed this reading of the section to be entirely too narrow.

In Salfi, supra, a class action was filed by a widow and a

stepchild seeking social security benefits after the

death of the widow’s wage-earning spouse. The Ad-

ministration denied payment of any benefits on the

basis of a regulation that requires the wife or child to

have had such a relationship with the deceased wage-

earner for at least nine months prior to the wage-earn-

er’s death before benefits can be paid. Without seeking

administrative review of the decision, the wife filed suit

in federal district court attacking the constitutionality

of the above regulation.

42a

The Supreme Court concluded that §405(h) of the

Medicare Act prevented the plaintiff in that case from

seeking judicial review of the administrative determi-

nation pursuant to 28 U.S.C. §1331. The Court con-

cluded that she had an alternate judicial remedy as pro-

vided in §405(g) to appeal the Secretary’s finding to the

federal district court. There were several crucial deter-

minations made by the Court in reaching its decision

that the plaintiff could not pursue her claim under fed-

eral question jurisdiction. First, the Court recognized

that plaintiff as an alleged beneficiary under the Social

Security Act did indeed come within the scope of the

Act. Second, the Court concluded that the plaintiff's

claim for social security benefits, consistent with the

design of §405(h) arose under the Social Security Act.

Though the plaintiff had characterized her claim as a

constitutional attack on a regulation promulgated

under the Act, the Court concluded that she was suing

under the Act since she sought benefits provided by the

Act, had standing under the Act, and a substantive

basis for the presentation of her constitutional claims

arose from the Act. Though the Court foreclosed fed-

eral question jurisdiction as a means of obtaining judi-

cial review of her constitutional challenge, the Court

was mindful of the grave constitutional problems

created when legislation is so interpreted as to totally

preclude judicial consideration of constitutional issues.

The impact of such preclusion was not addressed since

the Court recognized that §405(g) provided an alter-

native for judicial review of constitutional challenges to

regulations promulgated under the Act. The Court so

stated:

43a

The Social Security Act itself provides juris-

diction for constitutional challenges to its pro-

visions. Thus the plain words of the third sen-

tence of §405(h) do not preclude con-

stitutional challenges. They simply require

that they be brought under jurisdictional

grounds contained in the Act, and thus in con-

formity with the same standards which are

applicable to nonconstitutional claims arising

under the Act. The result is not only of un-

questionable constitutionality, but is also

manifestly reasonable, since it assures the

Secretary the opportunity prior to the con-

Stitutional litigation to ascertain, for ex-

ample, that the particular claims involved are

neither invalid for other reasons nor allow-

able under other provisions of the Social

Security Act. (95 S.Ct. at 2465)

In the aftermath of the Salfi decision, while attempt-

ing to apply the preclusion rule of §405(h), the lower

courts have struggled to clarify certain puzzling ques-

tions raised by Salfi, supra. Those frequently asked ques-

tions are: (1) when should a claim be deemed as being

brought pursuant to the Medicare Act; (2) does §405(h)

preclude judicial review under federal question juris-

diction of nonconstitutional claims where no alterna-

tive judicial review is provided by the Medicare Act; and

(3) does §405(h) preclude judicial review of con-

stitutional challenges to the Act where no review pro-

cedure for such challenges is provided in the Act?

44a

In Hazelwood Chronic and Convalescent Hospital, Inc. v.

Weinberger, 543 F.2d 703 (9th Cir. 1976) the Court con-

cluded that the directive in Salfi, supra, prevented resort

to federal-question jurisdiction on a constitutional

challenge to denial of benefits under the Social Security

Act. However, aware that aconstitutional challenge re-

quires a forum where it may be redressed, the Court

held that the Administrative Procedure Act provided

an implicit but independent basis for jurisdiction. 5

U.S.C. §702, et seq.

Shortly after the Hazelwood decision, the Supreme

Court in Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51

L.Ed.2d 192 (1976) concluded that the Administrative

Procedure Act did not afford an independent grant of

such jurisdiction to a party seeking to have judicial re-

view of an administrative decision disallowing social

security claims. The Court did emphasize that the

caveat raised in Salfi, supra, and Mathews v. Eldridge, 424

U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) regarding

the need to provide judicial review for constitutional

challenges was stiil of vital significance. The Court con-

cluded that the respondent Sanders did have a forum

for judicial review as provided under §405(g) of the

Social Security Act.

In South Windsor Convalescent Home, Inc. v. Mathews, 541

F.2d 910 (2d Cir. 1976), the Second Circuit in a post-

Salfi decision concluded that §405(h) prevented the

plaintiff from seeking jurisdictional review under 28

U.S.C. §1331 of his claim that a regulation under

Medicare retroactively disallowed certain payments

45a

owed him as a provider, thereby violating his Fifth

Amendment rights. The Court did find that an alter-

native jurisdictional basis existed under 28 U.S.C.

§1491 when a claim against the United States exceeds

the sum of $10,000. As stated in 28 U.S.C. §1491:

The Court of Claims shall have jurisdiction to

render judgment upon any claim against the

United States founded either upon the Con-

stitution, or any act of Congress, or any regu-

lation of an executive department... .

As done by other courts considering these Medicare

issues, the South Windsor court considered what the

repercussions would be should Congress through its

legislation close the federal courts entirely to con-

stitutional challenges directed against federal statutes

or actions. The Court opined:

However, when Salvi’s conclusion is applly] to

a case where noalternative jurisdictional basis

exists, its restrictive interpretation of §1331

might lead to a constitutional question of the

first order, one that has arisen but rarely and

tangentially in our constitutional history, i.e.,

whether the Congress can close the federal

courts entirely to constitutional challenges

directed against federal statutes or actions.

We doubt that the Supreme Court intended

its reading of §405(is) in Salfi to have the effect

of precluding federal jurisdiction over con-

46a

stitutional questions, since the result would

be at odds with the well-established principle

that a court will not construe a statute to

restrict access to judicial review unless Con-

gress manifests its intent to doso by “clear and

convincing evidence.”

The Fifth Circuit in Dr. John T. MacDonald Foundation,

Inc. v. Mathews, 554 F.2d 714 (Sth Cir. 1977) disagreed

with the Second Circuit’s conclusion that §405(h) did

not preclude jurisdiction under 28 U.S.C. §1491. The

Fifth Circuit stated:

... In South Windsor Convalescent Home, Inc. 0.

Mathews, 541 F.2d 910 (2d Cir. 1976), the Sec-

ond Circuit concluded that Salfi precluded fed-

eral-question jurisdiction in Medicare cases

like this one but found jurisdiction to review

existed in the Court of Claims. This it did on

reasoning that although the last sentence of

§405(h) forbade review under “section 41 of

Title 28,” it did not speak to 28 U.S.C. §1491,

the Court of Claims provision. This analysis

fails, however, to deal with what seems to us

the equally preclusive language of the second

sentence of §405(h): “No findings of fact or

decision of the Secretary shall be reviewed by

any person, tribunal or governmental agency

except as herein provided.” (554 F.2d at 716-

717)

47a

In proscribing the alternate jurisdictional bases to

§405() under 28 U.S.C. §1331, 28 U.S.C. §1491, and 5

U.S.C. §702, the courts have quickly approached that

situation that they found necessary to avoid in their

interpretation of §405(h), that being the conclusion

that Congress by enactment of this section had closed

the federal courts entirely to constitutional challenges

directed against the Medicare Act.

In Gallo v. Mathews, 538 F.2d 1148 (Sth Cir. 1976), the

Fifth Circuit came disturbingly close under the factual

circumstances before it to interpreting §405(h) of the

Medicare Act so as to preclude all judicial review to a

party. At the time of the decision, the Supreme Court

had not yet closed the door on an alternative jurisdic-

tion basis under the Administrative Procedure Act. In

the Gallo matter, Dr. Gallo as a provider was seeking to

have the federal district court compel the Secretary of

Health, Education and Welfare to pay certain reim-

bursements that the Secretary had earlier disallowed.

Gallo was challenging reimbursement decisions made

on services rendered in the years 1966 through 1971.

Prior to 1973, the Medicare Act had not adopted

§405(g) of the Social Security Act, so that the Medicare

Act precluded any judicial review of those reimburse-

ment decisions complained of by plaintiff. After con-

cluding that the Medicare Act afforded plaintiff no

judicial review procedures, the Court also agreed that

the Salfi court had interpreted §405(h) so as to prevent

Gallo from seeking judicial review of the adminis-

trative decisions under 28 U.S.C. §1331. In discussing

48a

why Salfi, supra, was applicable in a situation where the

plaintiff had no forum for review under §405(g), the

Court stated:

The determination in that case (Salfi] did not

rest on the availability of judicial review

through 405(g), but rather was based on the

clear language of 405(h). That same language

applies to the present case, and we find it con-

trolling so as to preclude jurisdiction under

1331. (538 F.2d at 1150)

The Court did not have to consider the caveat raised

in Salfi, supra, concerning preclusion of all constitutional

challenges to statutory limitations though it did

emphasize the gravity of that caveat. The Court stated:

As noted in Salfi, any interpretation of §405(h)

which precludes all constitutional challenges

to statutory limitations would raise a serious

constitutional question of the validity of the

statute as so construed, 422 U.S. at 762, 95

S.Ct. 2457. Gallo points out that this con-

sideration should lead us to the conclusion

that Salfi does not apply. But this is an issue we

need not reach, for we agree with Gallo that

jurisdiction exists under the provisions of the

Administrative Procedure Act. (538 F.2d at

1150)

It is clear that in reaching this decision, the Fifth Cir-

cuit concluded, adhering to Salfi, supra, and Califano,

49a

supra, that plaintiff provider had access to any adminis-

trative remedies available under the Act and that the

provider was bringing his claim under the Act.

The Eighth Circuit in St. Louis Univ. v. Blue Cross Hosp.,

537 F.2d 283 (8th Cir. 1976) has carefully scrutinized

those ambiguous areas left by Salfi, supra. St. Louis Uni-

versity as a representative of a provider brought an ac-

tion pursuant to 28 U.S.C. §1331 challenging the con-

stitutionality under the due process clause of certain

regulatory procedures used. Allegedly, the Secretary of

Health, Education and Welfare used a provider appeals

committee, a majority of the members of which were

officers or employees of the very agency whose initial

decision was being appealed, and who had an institu-

tional interest in the outcome.

Health, Education and Welfare took the position that

judicial review of the due process claim was barred by

§405(h) and administrative review was precluded by an

agreement between Health, Education and Welfare and

Blue Cross which established the provider appeals

committee. Health, Education and Welfare stated that

it would not review the appeal committee's decision

even when a provider asserted that the committee had

blatantly ignored governing statutes, regulations, and

constitutional requirements. The Eighth Circuit

agreed with the district court’s conclusion that St.

Louis University could bring a due process claim chal-

lenging certain procedures of the Medicare Act under

50a

federal-question jurisdiction. In doing so, the Court

provided an in-depth analysis of why the Salfi decision

was not controlling in situations where a party has no

other jurisdictional basis for bringing a due process

claim than under 28 U.S.C. §1331.

The Supreme Court has recognized that

totally precluding judicial consideration of

constitutional issues raises serious con-

stitutional problems. Weinberger v. Salfi, supra,

422 U.S. at 762, 95 S.Ct. at 2465, 45 L.Ed.2d at

537; Johnson v. Robinson, 415 U.S. 361, 366 & n.

8, 94 S.Ct. 1160, 1165, 39 L.Ed.2d 389, 397

(1974). Those constitutional problems are

greatly intensified when an agency purports

to subdelegate its immunity from judicial

review to a nongovernmental entity. It is a

“cardinal principle” that we are to ascertain

whether a construction of the statute in-

volved is “fairly possible” by which such con-

stitutional doubts may be avoided. Johnson v.

Robinson, supra, 415 U.S. at 366-67, 94 S.Ct. at

1165-1166, 39 L.Ed.2d at 397-398. We are to

proceed in what Justice Stewart termed “the

candid service of avoiding a serious con-

stitutional doubt.” United States v. Vuitch, 402

U.S. 62, 97, 91 S.Ct. 1294, 1312, 28 L.Ed.2d

601, 624 (1971) (Stewart, J., dissenting in

part).

Thus, we must now return to §405(h) to

determine if it precludes our jurisdiction to

entertain a due process challenge to the pro-

5la

cedures adopted by the Secretary to deter-

mine Medicare reimbursements. Section

405(h) forbids any action under §1331 “to

recover on any claim arising under this sub-

chapter.” Appellees in Salfi argued that this did

not bar their constitutional claims since they

“arose under” the Constitution and not under

the Social Security Act. The Supreme Court

recognized that this argument had sub-

stance. 422 U.S. at 760, 95 S.Ct. at 2464, 45

L.Ed.2d at 536. However, it rejected the argu-

ment because not only is it Social Security

benefits which appellees seek to recover, but it

is the Social Security Act which provides both

the standing and the substantive basis for the

presentation of their constitutional conten-

tions. [Id. at 760-61, S.Ct. at 2464, 45 L.Ed.2d

at 536.|

The Court also indicated that its decision was

influenced by the availability of fully adequate

judicial review under §405(g). The Court said:

In the present case * * * the Social Securi-

ty Act itself provides jurisdiction for con-

stitutional challenge. to its provisions.

Thus the plain word: of the third sen-

tence of §405(h) do not preclude consti-

tutional challenges. [Id. at 762,95S.Ct. at

2465, 45 L.Ed.2d at 537 (emphasis add-

ed).|

S2a

In the present case, the due process claim

has as its primary goal obtaining a consti-

tutionally adequate hearing. Allowing such a

hearing will not necessarily affect the Uni-

versity’s entitlement to reimbursement or the

amount allowed. Secondly, and more impor-

tantly, the Medicare Act does not provide the

University an adequate alternative means of

obtaining judicial review of its due process

claim.

We believe that on these two grounds alone,

this case is distinguishable from Salfi, and thus

§405(h) does not preclude our jurisdiction of

count II. However, there is a third basis for

distinction. Section 405(h) is incorporated into

the Medicare Act only “as * * * applicable.”

§1395ii. The general rule is that a statute in-

corporated into another “as applicable” will be

read in such a manner as will give form and

effect to the statute into which it is incor-

porated. Penrose v. Whitacre, 62 Nev. 239, 147

P.2d 887, 889 (1944), and authority cited

therein. If §405(h) were read to wholly pre-

clude adjudication of the University’s due

process claim it would raise serious con-

stitutional problems which might impair the

force and effect of the Medicare Act.

Therefore, we find that Congress did not in-

tend for §405(h) to apply to the Medicare Act

in such a manner as to completely bar judicial

consideration of a claim of denial of due

process. (537 F.2d at 291, 292.)

53a

In essence, the Court concluded that the con-

stitutional claim did not arise under the Medicare Act

as required in §405(h) since the claim had as its pri-

mary goal obtaining a constitutionally adequate hear-

ing rather than the determination of an entitlement to

reimbursement. Second, the Court concluded that con-

stitutional challenges against the Medicare Act must be

reviewed in Federal Court pursuant to federal-ques-

tion jurisdiction where the Medicare Act fails to pro-

vide an adequate judicial review remedy.

In Dr. John T. MacDonald Foundation, Inc. v. Mathews, 534

F.2d 633 (Sth Cir. 1977), the Fifth Circuit in a matter

similar factually to the Gallo case, supra, recognized that

§405(h) barred §1331 jurisdiction over a challenge to a

reimbursement decision by the administrative offi-

cials, even though such reimbursement decisions made

prior to 1973 were not judicially reviewable under the

Medicare Act. The Court did conclude, however, that

plaintiff had an alternate jurisdictional avenue for ob-

taining judicial review under the Administrative Pro-

cedure Act.

After the Supreme Court in Califano v. Sanders pre-

cluded the use of the Administrative Procedure Act as

an alternate means of obtaining jurisdiction, the Fifth

Circuit granted a rehearing in MacDonald Foundation, 554

F.2d 714 (Sth Cir. 1977). The Court sought to deter-

mine whether any available jurisdictional grounds

existed through which the plaintiff could bring its claim

to compel the Secretary to pay over disallowed reim-

bursements. As support for its conclusion that Con-

54a

gress did not intend §405(h) to preclude federal-ques-

tion jurisdiction over such claims as brought by plain-

tiff (where no judicial review was provided for in the

Medicare Act), the Court adopted a substantial part of

the reasoning set forth in St. Louis University v. Blue Cross

Hospital Service, supra. Of crucial impact to this Court’s

inquiry was the fact that the Fifth Circuit explicitly

agreed in totowith the St. Louis University court’s reason-

ing as it applied to the type of constitutional claim

brought in the St. Louis University matter. The Court

stated:

And the Eighth Circuit, in St. Louis University

v. Blue Cross Hospital Service, 537 F.2d 283 (8 Cir.

1976), a post-Salfi Medicare case, refused to

find complete preclusion of federal question

jurisdiction by §405(h), reasoning that con-

stitutional claims must be reviewable despite

§405(h) language to the contrary. With

respect, we think the reasoning of our

Brothers’ careful opinion supports a more ex-

pansive result than they reached: [citing St.

Louis University reasoning verbatim.] (554 F.2d

at 717)

The Fifth Circuit, in adopting parts of the reasoning in

the St. Louis University decision held as follows:

We agree that Salfi, a Social Security Act

case, is distinguishable from and does not rule

Medicare appeals. We also agree that §405(h)

incorporated into the Medicare context,

should be there read in such a manner as to

55a

give rational form and effect to the workings

of the Medicare scheme. We therefore hold

that during the period before it provided ade-

quate statutory review within the Medicare

Act, and during that period only, Congress did

not intend §405(h) to preclude federal-ques-

tion jurisdiction over such matters as this.

(554 F.2d at 717-18)

As made clear in the decision, the Fifth Circuit found

that the challenges raised by plaintiff arose under the

Medicare Act. Yet after recognizing that the Medicare

Act provided no procedure for judicial review of chal-

lenges to administrative disallowances of reimburse-

ments, the Court found it necessary to conclude that

federal-question jurisdiction was an acceptable juris-

dictional basis under the circumstances.

Regardless of how each court has applied §405(h) of

the Medicare Act, they have all emphasized one caveat

— the Medicare Act cannot be interpreted as closing

the federal courts to the presentation of a con-

stitutional challenge to the Act itself. Additionally,

these courts have agreed that the constitutional chal-

lenge to the Act must be brought under the Medicare Act

before §405(g) and (h) can be applied to such claim. Salfi,

supra. Where the Court in St. Louis Univ. v. Blue Cross Hosp.

Serv., supra, found (1) that a constitutional challenge

against the Act was not brought under the Act and (2)

that the Act itself did not provide a right for judicial re-

dress of that claim, then even a provider under the Act

56a

would be allowed to pursue a claim under 28 U.S.C.

§1331 jurisdiction in spite of the implications raised in

Salfi, supra.

The Fifth Circuit has recognized the rectitude of the

decision in the St. Louis University case. In its latest de-

cision involving the application of §405(h) of the

Medicare Act, the Fifth Circuit has held that even a

provider under the Act who brings a claim for reim-

bursement under the MedicaraAct can assert jurisdic-

tion under 28 U.S.C. §1331, where the Act fails to pro-

vide a procedure for judicial review.

The plaintiff in the present case is admittedly not

regulated as a provider. The brunt of Unihealth’s claim

is, however, that it is being regulated by the Medicare

Act while at the same time being denied due process

rights regarding the manner in which it is being regu-

lated. Specifically, Unihealth contends that it is being

denied access to the administrative and judicial review

procedures provided in the Act, while being regulated

by a policy determination promulgated without legal

notice and applied retroactively. All of these actions are

purportedly in violation of Unihealth’s due process

rights.

The analysis in St. Louis University v. Blue Cross Services,

supra, where that Court concluded that the Salfi de-

cision did not prevent the provider from asserting 28

U.S.C. §1331 jurisdiction, is directly applicable to Uni-

health in the present matter. In the St. Louis University

57a

decision, the Court held: (1) that the due process chal-

lenge to certain regulations under the Medicare Act

were not made under the Medicare Act; (2) that the

Medicare Act provided for no judicial review of the par-

ty’s claim; and (3) that reading §405(h) to wholly pre-

clude the adjudication of the party’s due process claim

would raise serious constitutional problems concern-

ing the Medicare Act. These three factors are certainly

relevant here. |

Initially, Unihealth has brought aclaim, similar to the

one asserted by St. Louis University, seeking as its pri-

mary objective the redress of its due process rights

rather than the obtainment of funds derived from

Medicare. This fact alone supports the conclusion that

Unihealth’s claims are not brought under the Medicare

Act. St. Louis University, supra. Such a conclusion is rein-

forced when the Court considers that the United States

has made a persistent stand denying this nonprovider

any access to the Medicare Act. The Court cannot

reconcile the inconsistencies in the United States’ posi-

tion where it contends that Unihealth, though unable

to avail itself of any of the administrative and judicial

remedies provided under the Act, is still bringing its

claims under the same Act.

Second, Uniheaith not only has no judicial review

procedure under the Act in which to bring its constitu-

tional claims, but also has been denied any access to

purely administrative remedies under the Act as well.

This Court again fails to see any logic in the United

States’ position denying Unihealth access to any of the

58a

administrative and judicial review procedures under

the Act, while at the same time arguing that one par-

ticular preclusion provision under the Act [§405(h)] is

indeed applicable to Unihealth in barring jurisdiction

under 28 U.S.C. §1331.

Third, those same serious constitutional problems

considered by the Court in the St. Louis University de-

cision loom equally large in this matter should the

Court read §405(h) as to wholly preclude adjudication

of due process claims against the Medicare Act.

Based on reasoning in no way inconsistent with the

Supreme Court’s pronouncements in Salfi, supra, and

Califano, supra, this Court must now conclude that Uni-

health Services Corporation has jurisdiction pursuant

to 28 U.S.C. §1331 to bring its constitutional claims.

Accordingly, on the basis of the foregoing reasons

this Court first concludes that Unihealth Services Cor-

poration has standing under the Fifth Amendment to

the United States Constitution to assert its con-

stitutional challenges. A decision as to whether Uni-

health has standing under the Medicare Act will be

postponed until this Court makes a decision on the

merits regarding the nature and extent that Unihealth

has purportedly been regulated by the Act. Second, this

Court also concludes that Unihealth has subject-

matter jurisdiction pursuant to 28 U.S.C. §1331 to

have the constitutional challenges to the Medicare Act

reviewed by this Court. The motion of the United

59a

States to dismiss the claim brought by Unihealth Serv-

ices Corporation is hereby DENIED.

APPENDIX “E”

§1254. Courts of appeals; certiorari; appeal; certified

questions .

esa

Cases in the courts of appeals may be reviewed by the

Supreme Court by the Following methods:

(1) By writ of certiorari granted upon the petition

of any party to any civil or criminal case, before or after

rendition Of judgment or decree;

* * * *

§1331. Federal question; amount in controversy;

costs

(a) The district courts shall have original jurisdic-

tion of all civil actions wherein the matter in contro-

versy exceeds the sum or value of $10,000, exclusive of

interest and costs, and arises under the Constitution

laws, or treaties of the United States.

(b) Except when express provision therefor is

otherwise made ina statute of the United States, where

the plaintiff is finally adjudged to be entitled to recover

less than the sum or value of $10,000, computed with-

out regard to any setoff or counterclaim to which the

defendant may be adjudged to be entitled, and ex-

60a

clusive of interests and costs, the district court may

deny costs to the plaintiff and, in addition, may impose

costs on the plaintiff. June 25, 1948, c. 646, 62 Stat. 930;

July 25, 1958, Pub.L. 85-554, §1, 72 Stat. 415.

* 7 * *

§1333. Admiralty, maritime and prize cases

The district courts shall have original jurisdiction,

exclusive of the courts of the States, of:

(1) Any civil case of admiralty or maritime jurisdic-

tion, saving to suitors in all cases all other remedies to

which they are otherwise entitled.

(2) Any prize brought into the United States and all

proceedings for the condemnation of property taken as

prize. June 25, 1948, c. 646, 62 Stat. 931; May 24, 1949,

c. 139, §79, 63 Stat. 101.

TITLE 28

JUDICIARY AND JUDICIAL PROCEDURE

PART IV—JURISDICTION AND VENUE—

Continued

CHAPTER 85—DISTRICT COURTS;

JURISDICTION—Continued

§1346. United States as defendant

(a) The district courts shall have original jurisdic-

tion, concurrent with the Court of Claims, of:

* * * *

6la

(2) Any other civil action or claim against the Unit-

ed States, not exceeding $10,000 in amount, founded

either upon the Constitution, or any Act of Congress,

or any regulation of an executive department, or upon

any express or implied contract with the United States,

or for liquidated or unliquidated damages in cases not

sounding in tort, except that the district courts shall

not have jurisdiction of any civil action or claim against

the United States founded upon any express or im-

plied contract with the United States or for liquidated

or unliquidated damages in cases not sounding in tort

which are subject to sections 8(g)(1) and 10(a)(1) of the

Contract Disputes Act of 1978. For the purpose of this

paragraph, an express or implied contract with the

Army and Air Force Exchange Service, Navy Ex-

changes, Marine Corps Exchanges, Coast Guard Ex-

changes, or Exchange Councils of the National Aero-

nautics and Space Administration shall be considered

an express or implied contract with the United States.

[See main volume for text of (b) to (d)]

* * * *

§1346. United States as defendant

* 2 * *

(b) Subject to the provisions of chapter 171 of this

title, the district courts, together with the United

States District Court for the District of the Canal Zone

and the District Court of the Virgin Islands, shall have

exclusive jurisdiction of civil actions on claims against

the United States, for money damages, accruing on and

62a

after January 1, 1945, for injury or loss of property, or

personal injury or death caused by the negligent or

wrongful act or omission of any employee of the

Government while acting within the scope of his office

or employment, under circumstances where the Unit-

ed States, if a private person, would be liable to the

claimant in accordance with the law of the place where

the act or omission occurred.

~

e * ® ®

§1361. Action to compel an officer of the United

States to perform his duty.

The district courts shall have original jurisdiction of

any action in the nature of mandamus to compel an

officer or employee of the United States or any agency

thereof to perform a duty owed to the plaintiff.

* J 2 =

§1491. Claims against United States generally; ac-

tions involving Tennessee Valley Authority

The Court of Claims shall have jurisdiction to ren-

der judgment upon any claim against the United States

founded either upon the Constitution, or any Act of

Congress, or any regulation of an executive depart-

ment, or upon any express or implied contract with the

United States, or for liquidated or unliquidated dam-

ages in cases not sounding in tort. For the purpose of

this paragraph, an express or implied with the Army |

and Air Force Exchange Service, Navy Exchanges,

Marine Corps Exchanges, Coast Guard Exchanges, or

63a

Exchange Councils of the National Aeronautics and

Space Administration shall be considered an express or

implied contract with the United States. To provide an

entire remedy and to complete the relief afforded by

the judgment, the court may, as an incident of and col-

lateral to any such judgment, issue orders directing

restoration to office or position, placement in appro-

priate duty or retirement status, and correction of

applicable records, and such orders may be issued to

any appropriate official of the United States. In any

case within its jurisdiction, the court shall have the

power to remand appropriate matters to any adminis-

trative or executive body or official with such direc-

tion as it may deem proper and just. The Court of

Claims shall have jurisdiction to render judgment upon

any claim by or against, or dispute with, a contractor

arising under the Contract Disputes Act of 1978.

Nothing herein shall be construed to give the Court

of Claims jurisdiction in suits against, or founded on ac-

tions of, the Tennessee Valley Authority, nor to amend

or modify the provisions of the Tennessee Valley

Authority Act of 1933, as amended, with respect to

suits by or against the Authority.

As amended Nov. 1, 1978, Pub.L. 95-563. §14(i), 92

Stat. 2391.

* * * *

§2201. Creation of remedy.

In a case of actual controversy within its jurisdic-

tion, except with respect to Federal taxes, any court of

64a

the United States, upon the filing of an appropriate

pleading, may declare the rights and other legal rela-

tions of any interested party seeking such declaration,

whether or not further relief is or could be sought. Any

such declaration shall have the force and effect of a

final judgment or decree and shall be reviewable as

such. June 25, 1948, c. 646, 62 Stat. 964; May 24, 1949,

c. 139, §111, 63 Stat. 105; Aug. 28, 1954, c. 1033, 68

Stat. 890; July 7, 1958, Pub.L. 85-508, §12(p), 72 Stat.

349.

* * * *

42 §405 PUBLIC HEALTH AND WELFARE

* * * *

Judicial review

(g) Any individual, after any final decision of the

Secretary made after a hearing to which he wasa party,

irrespective of the amount in controversy, may obtain a

review of such decision by a civil action commenced

within sixty days after the mailing to him of notice of

such decision or within such further time as the Secre-

tary may allow. Such action shall be brought in the dis-

trict court of the United States for the judicial district in

which the plaintiff resides or has his principal place of

business, or, if he does not reside or have his principal

place of business within any such judicial district, in the

United States District Court for the District of Colum-

bia. As part of his answer the Secretary shall file a certi-

fied copy of the transcript of the record including the

evidence upon which the findings and decision com-

65a

plained of are based. The court shall have power to

enter, upon the pleadings and transcript of the record, a

judgment affirming, modifying, or reversing the de-

cision of the Secretary, with or without remanding the

cause for a rehearing. The findings of the Secretary as

to any fact, if supported by substantial evidence, shall

be conclusive, and where a claim has been denied by the

Secretary or a decision is rendered under subsection (b)

of this section which is adverse to an individual who

was a party to the hearing before the Secretary, be-

cause of failure of the claimant or such individual to

submit proof in conformity with any regulation pre-

scribed under subsection (a) of this section, the court

shall review only the question of conformity with such

regulations and the validity of such regulations. The

court shall, on motion of the Secretary made before he

files his answer, remand the case to the Secretary for

further action by the Secretary, and may, at any time,

on good cause shown, order additional evidence to be

taken before the Secretary, and the Secretary shall,

after the case is remanded, and after hearing such addi-

tional evidence if so ordered, modify or affirm his find-

ings of fact or its decision, or both, and shall file with

the court any such additional and modified findings of

fact and decision, and a transcript of the additional rec-

ord and testimony upon which his action in modifying

or affirming was based. Such additional or modified

findings of fact and decision shall be reviewable only to

the extent provided for review of the original findings

of fact and decision. The judgment of the court shall be

final except that it shall be subject to review in the same

66a

manner as a judgment in other civil actions. Any action

instituted in accordance with this subsection shall sur-

vive notwithstanding any change in the person occupy-

ing the office of Secretary or any vacancy in such office.

Finality of Secretary’s decision

(h) The findings and decisions of the Secretary

after a hearing shall be binding upon all individuals who

were parties to such hearing. No findings of fact or

decision of the Secretary shall be reviewed by any per-

son, tribunal, or governmental agency except as here-

in provided. No action against the United States, the

Secretary, or any officer or employee thereof shall be

brought under section 41 of Title 28 to recover on any

claim arising under this subchapter.

* * * *

§1395ii. Application of certain provisions of sub-

chapter II.

The provisions of sections 406 and 416(j) of this title,

and of subsections (a), (d), (e), (f), (h), (i), (j), (k), and (I)

of section 405 of this title, shall also apply with respect

to this subchapter to the same extent as they are appli-

cable with respect to subchapter II of this chapter.

Aug. 14, 1935, c. 513, Title XVIII, §1872, as added July

30, 1965, Pub.L. 89-97, Title I, §102(a), 79 Stat. 332,

and amended Oct. 30, 1972, Pub.L. 92-603, Title II,

§242(a), 86 Stat. 1419.

* * * *

67a

Ch. 7 — Health Insurance 42 §1395x

* * * *

Post-hospital home health services

(n) The term “post-hospital home health services”

means home health services furnished an individual

within one year after his most recent discharge from a

hospital of which he was an inpatient for not less than 3

consecutive days or (if later) within one year after his

most recent discharge from a skilled nursing facility of

which he was an inpatient entitled to payment under

part A for post-hospital extended care services, but

only if the plan covering the home health services (as

described in subsection (m) of this section) is estab-

lished within 14 days after his discharge from such

hospital or skilled nursing facility.

* * * *

§1985. Conspiracy to interfere with civil rights—

Preventing officer from performing duties

(1) If two or more persons in any State or Terri-

tory conspire to prevent, by force, intimidation, or

threat, any person from accepting or holding any

office, trust, or place of confidence under the United

States, or from discharging any duties thereof; or to in-

duce by like means any officer of the United States to

leave any State, district, or place, where his duties as an

officer are required to be performed, or to injure him in

his person or property on account of his lawful dis-

charge of the duties of his office, or while engaged in

68a

the lawful discharge thereof, or to injure his property

so as to molest, interrupt, hinder, or impede him in the

discharge of his official duties;

Obstructing justice; intimidating party,

witness, or juror

(2) If two or more persons in any State or Terri-

tory conspire to deter, by force, intimidation, or threat,

any party or witness in any court of the United States

from attending such court, or from testifying to any

matter pending therein, freely, fully, and truthfully, or

to injure such party or witness in his person or prop-

erty on account of his having so attended or testified, or

to influence the verdict, presentment, or indictment of

any grand or petit juror in any such court, or to injure

such juror in his person or property on account of any

verdict, presentment, or indictment lawfully assented

to by him, or of his being or having been such juror; or

if two or more persons conspire for the purpose of im-

peding, hindering, obstructing, or defeating, in any

manner, the due course of justice in any State or Terri-

tory, with intent to deny to any citizen the equal pro-

tection of the laws, or to injure him or his property for

lawfully enforcing, or attempting to enforce, the right

of any person, or class or persons, to the equal protec-

tion of the laws;

Depriving persons of rights or privileges

(3) If two or more persons in any State or Terri-

tory conspire or go in disguise on the highway or on the

69a

premises of another, for the purpose of depriving,

either directly or indirectly, any person or class of per-

sons of the equal protection of the laws, or of equal

privileges and immunities under the laws: or for the

purpose of preventing or hindering the constituted

authorities of any State or Territory from giving or

securing to all persons within such State or Territory

the equal protection of the laws; or if two or more per-

sons conspire to prevent by force, intimidation, or

threat, any citizen who is lawfully entitled to vote,

from giving his support or advocacy in a legal manner,

toward or in favor of the election of any lawfully quali-

fied person as an elector for President or Vice Presi-

dent, «. as a Member of Congress of the United States;

or to injure any citizen in person or property on ac-

count of such support or advocacy; in any case of con-

spiracy set forth in this section, if one or more persons

engaged therein do, or cause to be done, any act in fur-

therance of the object of such conspiracy, whereby an-

other is injured in his person or property, or deprived of

having and exercisir any right or privilege of acitizen

of the United States, the party so injured or deprived

may have an action for the recovery of damages,

occasioned by such injury or deprivation, against any

one or more of the conspirators.

R.S. §1980.

70a

PART V. JURISDICTION ON WRIT

OF CERTIORARI

Rule 19. Considerations governing review on certiorari

1. Areview on writ of certiorari is not a matter of

right, but of sound judicial discretion, and will be grant-

ed only where there are special and important reasons

therefor. The following, while neither controlling nor

fully measuring the court’s discretion, indicate the

character of reasons which will be considered:

~ * *

(b) Where acourt of appeals has rendered a decision

in conflict with the decision of another court of appeals

on the same matter; or has decided an important state

or territorial question in a way in conflict with appli-

cable state or territorial law; or has decided an impor-

tant question of federal law which has not been, but

should be, settled by this court; or has decided a federal

question in a way inconflict with applicable decisions of

this court; or has so far departed from the accepted and

usual course of judicial proceedings, or so far sanction-

ed such a departure by a lower court, as to call for an

exercise of this court’s power of supervision.

* * * *

7la

§1332. Diversity of citizenship; amount in controver-

sy; costs

(a) The district courts shall have original jurisdic-

tion of all civil actions where the matter in controversy

exceeds the sum or value of $10,000, exclusive of in-

terest and costs, and is between—

(1) citizens of different States;

(2) citizens of a State, and foreign states or

citizens or subjects thereof; and

(3) citizens of different States and in which

foreign states or citizens or subjects thereof

are additional parties.

(b) Except when express provision therefor is

otherwise made ina statute of the United States, where

the plaintiff who files the case originally in the Federal

courts is finally adjudged to be entitled to recover less

than the sum or value of $10,000, computed without

regard to any setoff or counterclaim to which the

defendant may be adjudged to be entitled, and ex-

clusive of interest and costs, the district court may deny

costs to the plaintiff and, in addition, may impose costs

on the plaintiff.

(c) For the purposes of this section and section 1441

of this title, a corporation shall be deemed a citizen of

72a

any State by which it has been incorporated and of the

State where it has its principal place of business: — Pro-

vided further, That in any direct action against the in-

surer of a policy or contract of liability insurance,

whether incorporated or unincorporated, to which ac-

tion the insured is not jo:red as a party-defendant, such

insurer shall be deemed a citizen of the State of which

the insured is a citizen, as well as of any State by which

the insurer has been incorporated and of the State

where it has its principal place of business.

(d) The word “States”, as used in this section, in-

cludes the Territories, the District of Columbia, and

the Commonwealth of Puerto Rico, June 25, 1948, c.

646, 62 Stat. 930; July 26, 1956, c. 740, 70 Stat. 658; July

25, 1958, Pub.L. 85-554, §2, 72 Stat. 415; Aug. 14, 1964,

Pub.L. 88-439, §1, 78 Stat. 445.