Opposition Brief — Lifestar Ambulance Service, Inc. v. United States

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No. 04-430

Jn the Supreme Court of the Gunited States

LIFESTAR AMBULANCE SERVICE, INC., ET AL..,

PETITIONERS

UNITED STATES OF AMERICA, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

PAUL D. CLEMENT

Acting Solicitor General

Counsel of Record

PETER D. KEISLER

Assistant Attorney General

BARBARA C. BIDDLE

JEFFREY CLAIR

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Whether the district court could properly exercise

mandamus jurisdiction under 28 U.S.C. 1361 over peti-

tioners’ challenge to Medicare regulations governing

the reimbursement of ambulance services.

(I)

TABLE OF CONTENTS

Page

NE TUNIUO sissiinnicintinesiiehintlebeh isaac eadidaicaie 1

Jurisdiction R 1

SIE siiiahieiscsiindcsecichladiatatieniennentndnionisincnen on 1

Argument ...........04 : ‘ 6

TINE eli caiptehieanihienitehchetncaesereninicindanmsatainadienibeinheninitonntaheedion 12

TABLE OF AUTHORITIES

Cases:

Belles v. Schweiker, 720 F.2d 509 (8th Cir. 1983) ............ 9

Burnett v. Bowen, 830 F.2d 731 (7th Cir. 1987) .............. )

Ellis v. Blum, 643 F.2d 68 (2d Cir. 1981) ........ccssessseeeeee 9

Heckler v. Ringer, 466 U.S. 602 (1984) 8, 10, 11

Mallard v. United States Dist. Ct., 490 U.S. 296

(1989) .... 6

Monmouth Med. Ctr. v. Thompson, 257 F.3d 807

(D.C. Cir. 2001) on 9

Roche v. Evaporated Milk Ass’n, 319 US. 21

(1943) 11

Shalala v. Illinois Council on Long Term Care, Inc.,

529 US. 1 (2000) 8,11

Weinberger v. Salfi, 422 U.S. 749 (1975) 8

Your Home Visiting Nurse Servs., Inc. v. Shalala,

525 U.S. 449 (1999) 8, 10

Statutes and regulations:

Consolidated Appropriations Act, 2001, Pub. L. No.

106-554, § 1(a)(6), 114 Stat. 2763 .. - 7

Balanced Budget Act of 1997, Pub. L. No. 105-33,

Subtit. F, 111 Stat. 432:

§ 4531(b), 111 Stat. 451 (42 U.S.C. 1395m(()) ............... 3

§ 4531(b)(3), 111 Stat. 452 (42 U.S.C. 1395m(1)

OI siiccinsnnintiinasicenesinandetahininjeiniinivmbiesnennaiintinmmnnimanneniontan 3

(IIT)

Statutes and regulations—Continued: Page

Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act of 2000,

Pub. L. No. 106-554 (App. F—H.R. 5661), 114 Stat.

2763A-463:

§ 423(b), 114 Stat. 2763A-518

" § 423(b)(2), 114 Stat. 2763A-518 ....... 4

§ 521, 114 Stat. 2763A-534 ...........ccccccscssscsesecereceses

Social Security Act, 42 U.S.C. 301 et segq.:

Tit. II, 42 U.S.C. 401 et seq.

42 U.S.C. 405(b)

42 U.S.C. 405(g)

42 U.S.C. 405(h)

Tit. XVIII, 42 U.S.C. 1395 et seg. (Medicare Act) ...........

42 U.S.C. 1395¢

42 U.S.C. 1395d

42 U.S.C. 1395k

42 U.S.C. 1395/1

42 U.S.C. 1395m(/)

42 U.S.C. 1395m(/)(2)(A)-(D)

42 U.S.C. 1395m(1)(2)(E)

42 U.S.C. 1395m(1)(3)

42 U.S.C. 1395m(/) note

42 U.S.C. 1395x(m)

42 U.S.C. 1395x(s)

42 U.S.C. 1395x(s)(7)

42 U.S.C. 1395ff

42 U.S.C. 1395ff(b)(1)(A)

42 US.C. 1395ii

28 U.S.C. 1331

28 U.S.C. 1361 2,5, 10,1

42 C.F.R. 410.40-410.41

—

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Ne WAIN NANNNNHWWWWWWNW ND WD DY

Miscellaneous:

65 Fed. Reg. (2000):

p. 55,078

p. 55,079

p. 55,085

67 Fed. Reg. (2002):

p. 9100

p. 9102

p. 9104

pp. 9118-9119

Page

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ororn or

Jn the Supreme Court of the Anited States

No. 04-430

LIFESTAR AMBULANCE SERVICE, INC., ET AL.,

PETITIONERS

UNITED STATES OF AMERICA, ETAL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENTS

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-11a)

is reported at 365 F.3d 1293. The opinion of the district

court (Pet. App. 12a-48a) is reported at 211 F.R.D. 688.

JURISDICTION

The judgment of the court of appeals was entered on

April 16, 2004. A petition for rehearing was denied on

June 29, 2004 (Pet. App. 44a-45a). The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

Petitioners challenge regulations implementing a fee

schedule governing the reimbursement of ambulance

(1)

services under Medicare. The court of appeals held that

petitioners must raise their challenge under the specific

review procedures of the Medicare Act, 42 U.S.C. 1395

et seq., and could not circumvent those procedures by

resorting to the general mandamus statute under 28

U.S.C. 1361.

1. The Medicare program, established in 1965 by

Title XVIII of the Social Security Act, 42 U.S.C. 1395 et

seq., is a federally subsidized health insurance program

for the elderly and certain disabled people. 42 U.S.C.

1395c, 1395d. Part A of the program provides insurance

for covered inpatient hospital and related post-hospital

services. 42 U.S.C. 1395x(m). Part B is a voluntary

supplementary insurance program covering physicians’

services and certain other medica! and hea’th services.

42 U.S.C. 1395k, 1395/, 1395x(s).

The Medicare statute provides that ambulance ser-

vices are covered under Part B “where the use of other

methods of transportation is contraindicated by the

individual’s condition, but only to the extent provided in

regulations.” 42 U.S.C. 1395x(s)(7). Medicare accord-

ingly covers ambulance services, in both emergency and

non-emergency situations, if the use of an ambulance is

necessary in light of the beneficiary’s medical condition

at the time of transport, and if the ambulance service

meets certain vehicle and crew requirements. 42

C.F.R. 410.40-410.41.

Medicare previously paid for ambulance services on a

“reasonable cost” basis, if services were furnished by a

hospital-based provider, or a “reasonable charge” basis,

if services were furnished by a free-standing ambulance

service supplier. 67 Fed. Reg. 9102 (2002). Those

retrospective methodologies based payments on the

costs or charges actually incurred. In the Balanced

Budget Act of 1997, Congress directed the Secretary of

Health and Human Services (HHS) to establish a

national fee schedule setting forth pre-determined

amounts that Medicare would pay for ambulance ser-

vices. Pub. L. No. 105-33, § 4531(b), 111 Stat. 451 (42

U.S.C. 1395m(1)).

The Balanced Budget Act of 1997 provides that in

developing a fee schedule, the Secretary shall establish

mechanisms to control increases in expenditures, estab-

lish definitions for ambulance services that link pay-

ments to the type of services furnished, consider ap-

propriate regional and operational differences, and con-

sider adjustments for inflation and other “relevant

factors.” 42 U.S.C. 1395m(/1)(2)(A)-(D). The Act directs

the Secretary to “phase in the application of the

payment rates under the fee schedule in an efficient and

fair manner.” 42 U.S.C. 1395m(/)(2)(E). It mandates

that the fee schedule be “budget neutral” by requiring

that payments under the schedule in the year 2000 not

exceed the inflation-adjusted expenditures that would

have been made under prior law. 42 U.S.C. 1395m(/)(3).

And it provides that “(t]he amendments made by this

subsection shall apply to services furnished on or after

January 1, 2000.” Pub. L. No. 105-33, § 4531(b)(3), 111

Stat. 452 (42 U.S.C. 1395m(/) note).

On September 12, 2000, the Secretary promulgated a

proposed ambulance fee schedule rule that, inter alia,

included payments based on mileage covered by the

ambulance. 65 Fed. Reg. 55,078. The rule proposed

that the schedule take effect on January 1, 2001, and

that the fee schedule be phased in over a four-year

transition period during which some percentage of the

payment would be based on the prior, cost or charge-

based methodology, and an increasing percentage of the

payment would be based on the new fee schedule. Jd.

at 55,085. The Secretary observed that the proposed

effective date for implementing the fee schedule did not

meet the statutory deadline set out in the Balanced

Budget Act of 1997. The Secretary explained, however,

that the development of the fee schedule had been

delayed by the burdens of ensuring that HHS’s massive

computer systems would be “Y2K” compliant and not

disrupted by difficulties in accurately recognizing the

calendar year 2000, and by obligations to implement

other Medicare changes mandated by the Balanced

Budget Act. Jd. at 55,079.

On December 21, 2000, before the proposed rule was

finalized, Congress enacted legislation amending one

component of the proposed fee schedule: the mileage

payment to be made to certain ambulance service sup-

pliers. The statute amended the phase-in provisions of

the existing ambulance fee schedule statute to provide

that the

phase-in shall provide for full payment of any na-

tional mileage rate for ambulance services provided

by suppliers that are paid by carriers in any of the

50 States where payment by a carrier for such

services for all such suppliers in such State did not,

prior to the implementation of the fee schedule,

include a separate amount for all mileage within the

county from which the beneficiary is transported.

Medicare, Medicaid, and SCHIP Benefits Improvement

and Protection Act of 2000, Pub. L. No. 106-554 (App. F

—H.R. 5661), § 423(b), 114 Stat. 2763A-518. Congress

specified that the amendment “shall apply to services

furnished on or after July 1, 2001.” § 423(b)(2), 114 Stat.

2763A-518.

On February 27, 2002, the Secretary promulgated the

final fee schedule rule. 67 Fed. Reg. 9100. The final

rule enlarged the transition period for phasing in the

e sername

new fee schedule to five years to accommodate

ambulance provider requests for a longer adjustment

period. /d. at 9118-9119. In addition, the final rule

postponed the effective date until April 1, 2002. Jd. at

9100. The Secretary explained that

[ijn the September 12, 2000 proposed rule, we in-

dicated our intention to implement the fee schedule

beginning January 1, 2001. However, although the

proposed rule was largely based on an agreement

reached as part of the negotiated rulemaking pro-

cess with representatives of the ambulance industry

and other interests, we received over 340 public

comments. We did not have sufficient time to

carefully consider all comments and publish a final

rule in time to implement the fee schedule by

January 1, 2001.

Id. at 9104.

2. Petitioners are a class of ambulance service

operators. They allege that the aforementioned Acts

require the new fee schedule to be applied to services

provided from January 1, 2000, forward, and that the

Secretary therefore erred in establishing a later effec-

tive date. The district court found that it had man-

damus jurisdiction under 28 U.S.C. 1361 over peti-

tioners’ claims and ordered the Secretary to adopt a fee

schedule applicable to services rendered on or after the

earlier effective dates specified by statute. Pet. App.

32a.

The district court held that the Medicare Act does

not preclude mandamus jurisdiction, and that peti-

tioners satisfied the criteria for invoking mandamus

jurisdiction. Pet. App. 18a-19a, 20a-26a. The court

reasoned that the Secretary had a nondiscretionary

duty to establish the fee schedule and mileage provi-

sions by the statutorily-specified dates. Jd. at 20a-22a.

The court further reasoned that petitioners had no

alternative means of securing review because the

administrative review procedures established by Medi-

eare were futile. Jd. at 23a-26a. On the merits, the

court granted summary judgment for petitioners. Jd. at

20a-30a.

3. The court of appeals reversed, holding that the

district court had erred in exercising subject matter

jurisdiction under the mandamus statute. The court

found it unnecessary to decide whether the Medicare

Act forecloses mandamus jurisdiction, expressly stating

that “[w]e assume, without deciding, that mandamus

jurisdiction is not barred by 42 U.S.C. § 405(h) and,

therefore, is available for a claim arising under the

Medicare statute.” Pet. App. 4a n.3. It held, however,

that, even assuming mandamus jurisdiction is available,

“[pllaintiffs cannot invoke the extraordinary remedy of

mandamus because they have an ‘alternative avenue of

relief’” Jd. at 4a (quoting Mallard v. United States

Dist. Ct., 490 U.S. 296, 309 (1989)). The court explained

that “[t]he Medicare Act establishes a comprehensive

remedial scheme, providing both administrative hear-

ing rights for aggrieved providers, such as [petitioners],

and judicial review of the Secretary’s final decisions.”

Id. at 4a-5a. The court further observed that “(i]t is

undisputed that [petitioners] did not resort to these

administrative remedies.” Jd. at 5a. The court of ap-

peals accordingly vacated the district court’s judgment

and remanded with instructions to dismiss for want of

subject matter jurisdiction. Jd. at 11a.

ARGUMENT

The court of appeals’ decision is correct and con-

sistent with this Court’s precedents holding that man-

damus is an extraordinary remedy that is not available

if the plaintiff has an adequate, alternative means of

judicial review.

1. The Medicare Act generally makes federal juris-

diction over all claims arising under the Medicare Act

contingent on presentment of a claim to the Secretary

and exhaustion of statutori!y-prescribed administrative

remedies. With respect to ambulance services and

other items paid under Part B, the Act, as in effect at

the time the complaint was filed,” and subject to

amount-in-controversy limitations not relevant here,

provides that individuals and health care providers who

are aggrieved by a reimbursement determination have

a right to a hearing on their claim before the Secretary

under 42 U.S.C. 405(b), and to judicial review of the

Secretary’s final decision under 42 U.S.C. 405(g). 42

U.S.C. 1395ff(b)(1)(A).

The Act provides that a party may obtain judicial

review “after any final decision of the [Secretary] made

after a hearing to which [the provider] was a party” by

filing a civil action in district court within 60 days after

notice of the decision. 42 U.S.C. 405(g). Finally, 42

U.S.C. 405(h), which is incorporated by reference into

the Medicare Act, 42 U.S.C. 1395ii, makes the Act the

* Congress amended 42 U.S.C. 1395ff to impose processing

deadlines on certain administrative appeals and to require a claim-

ant to exhaust an additional level of administrative reconsideration

before seeking judicial review. Pub. L. No. 106-554 (App. F— H.R.

5661), § 1(a)(6), 114 Stat. 2763; § 521, 114 Stat. 2763A-534. The

amendments, however, do not apply to initial administrative deter-

minations made before October 1, 2002, and do not otherwise alter

the Act’s requirements that condition judicial review on pre-

sentment of a claim to the Secretary and exhaustion of admini-

strative remedies.

exclusive means of obtaining review of the Secretary’s

final decision. Section 405(h) provides:

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

person, tribunal, or governmental agency except as

herein provided. No action against the United

States, the [Secretary], or any officer or employee

thereof shall be brought under section 1331 or 1346

of title 28, [United States Code], to recover on any

claim arising under this [title].

42 U.S.C. 405(h).

In short, the above provisions condition federal

jurisdiction over Medicare claims on presentment of the

claim to the Secretary and exhaustion of administrative

remedies. They do so by establishing administrative

hearing rights, by providing that final decisions made

after a hearing are judicially reviewable solely under

provisions of the Medicare statute, and by expressly

foreclosing resort to the federal question jurisdiction

provision of 28 U.S.C. 1331. Shalala v. Illinois Council

on Long Term Care, Inc., 529 U.S. 1, 7-14 (2000); Heck-

ler v. Ringer, 466 U.S. 602, 614-619 (1984); Weinberger

v. Salfi, 422 U.S. 749, 760-761 (1975).

This Court has not resolved whether Section 405(h)

bars resort to mandamus jurisdiction pursuant to 28

U.S.C. 1861. Your Home Visiting Nurse Servs., Inc. v.

Shalala, 525 U.S. 449, 457 n.3 (1999) (declining to

address the Secretary’s contention that the second

sentence of Section 405(h) bars mandamus jurisdiction);

Ringer, 466 U.S. at 616. Some courts have concluded,

however, that, with respect to essentially procedural

claims arising under Medicare or other pertinent titles

of the Social Security Act, Section 405(h) does not

foreclose mandamus jurisdiction where the standards

for mandamus relief are otherwise satisfied. See, e.g.,

Ellis v. Blum, 643 F.2d 68, 82 (2d Cir. 1981) (Section

405(h) “does not preclude assertion of § 1361 jurisdic-

tion over claims essentially procedural in nature.”);

Belles v. Schweiker, 720 F.2d 509, 512 (8th Cir. 1983)

(“[I]n cases like the present one, which involve claims

essentially procedural in nature, § 405(h) presents no

obstacle to mandamus jurisdiction.”); Burnett v. Bowen,

830 F.2d 731, 738 (7th Cir. 1987) (“Congress intended to

preserve mandamus jurisdiction for claims that are pro-

cedural in nature.”); Monmouth Med. Ctr. v. Thompson,

257 F.3d 807 (D.C. Cir. 2001) (mandamus jurisdiction

available to compel Secretary to comply with regula-

tions governing reopening of final reimbursement

determination).

Petitioners argue that the court of appeals’ decision,

in denying mandamus relief in this particular case,

conflicts with the above appellate authority. Pet. 14-15.

Petitioners reason that the court of appeals’ decision,

by recognizing the availability of alternative remedies

established by the Medicare Act, effectively renders

mandamus jurisdiction unavailable in all instances. Pet.

22-25. That is not correct. The decision below “as-

sume[d], without deciding, that mandamus jurisdiction

is not barred by 42 U.S.C. § 405(h) and, therefore is

available for a claim arising under the Medicare stat-

ute.” Pet. App. 4a n.3 (emphasis added). The court of

appeals’ decision thus expressly did not decide whether

mandamus jurisdiction is available for claims arising

under Medicare.

_ The court of appeals correctly found such considera-

tion unnecessary because petitioners’ undisputed fail-

ure to follow the administrative and judicial review

procedures specified in the Act, 42 U.S.C. 405(b) and

(g), precluded their ability to meet the traditional

standards for mandamus relief, thereby obviating the

need to address whether mandamus relief might be

appropriate in other circumstances. Pet. App. 4a-5a.

That holding is fully consistent with this Court’s similar

refusal to decide whether mandamus relief would ever

be available for Medicare and Social Security claims

oecause the plaintiff otherwise could not meet the stan-

dards for mandamus relief, 7.e., a clear non-discre-

tionary duty and unavailability of alternative avenues

of relief. Heckler, 466 U.S. at 616 (“We have on

numerous occasions declined to decide whether the

third sentence of § 405(h) bars mandamus jurisdiction

* * * because we have determined that jurisdiction

was otherwise available under § 405(g).”); accord Your

Home Visiting Nurse Servs., 525 U.S. at 457 & n.3

(plaintiff failed to show existence of a clear nondis-

cretionary duty).

Nothing in the court of appeals’ decision suggests or

purports to hold that Medicare’s administrative reme-

dies will be adequate in each and every instance,

without regard to the nature and circumstances of the

claim. It thus does not, as petitioners maintain, fore-

close mandamus jurisdiction in an appropriate case.

For instance, the court of appeals did not confront a cir-

cumstance where the Act itself provides no admini-

strative or judicial review of a final decision of the

Secretary. Cf. Your Home Visiting Nurse Servs., 525

U.S. at 453-454 (holding an intermediary’s refusal to

reopen a reimbursement decision is not subject to

review under the Act).

2. The court of appeals decision is also consistent

with the siandards for mandamus relief set forth in this

Court’s precedents. The mandamus jurisdiction con-

ferred by 28 U.S.C. 1361 “is intended to provide a

remedy for a plaintiff only if he has exhausted all other

avenues of relief and only if the defendant owes him a

clear nondiscretionary duty.” Ringer, 466 U.S. 602, 616

(1984). It is a narrow remedy reserved for extraordi-

nary circumstances and, as such, ordinarily “may not be

resorted to as a mode of review where a statutory

method of appeal has been prescribed.” Roche v.

Evaporated Milk Ass’n, 319 U.S. 21, 27-28 (1948).

The court of appeals correctly applied those stan-

dards in holding that mandamus jurisdiction could not

be asserted over petitioners’ claims. The court noted

that Medicare’s remedial scheme provides for admini-

strative review followed by plenary judicial review of

all claims arising under the Medicare statue, and

concluded that, “[iJn the face of this comprehensive

statutory scheme, it cannot be said that the second

requirement for mandamus review—that there be no

alternative avenues of relief—is met.” Pet. App. 10a.

Petitioners argue that the remedy available under

Medicare’s jurisdictional scheme is not adequate. Peti-

tioners thus assert that because they “can only obtain

the relief they seek through an order directing a federal

official to comply with the law, no ‘other remedy’

besides mandamus can possibly exist.” Pet. 25-26. That

contention lacks merit. Medicare’s judicial review

provisions afford the reviewing court plenary power to

direct a federal official to comply with the law, and the

court is fully empowered to enter any other injunctive

or declaratory relief that the court deems appropriate.

Cf. Illinois Council, 529 U.S. at 23 (“[A] court review-

ing an agency determination under § 405(g) has ade-

quate authority to resolve any statutory or constitu-

tional contention that the agency does not, or cannot,

decide.”). Petitioners thus err in asserting that the

assumption of mandamus jurisdiction pursuant to 28

U.S.C. 1361 affords the only avenue of relief on their

claims. Medicare’s jurisdictional scheme provides a

fully adequate remedy, and the court of appeals there-

fore correctly held that mandamus relief was inappro-

priate in this case.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.