Opposition Brief — National Kidney Patients Ass'n v. Sullivan

No. 92-569

In the Supreme Court of the United States

OCTOBER TERM, 1992

NATIONAL KIDNEY PATIENTS ASSOCIATION,

ET AL., PETITIONERS

LOUIS W. SULLIVAN. SECRETARY

OF HEALTH AND HUMAN SERVICES. ET Al

11

ON PETITION FOR A WRIT OF CERTIORARI!

TO THE UNITED STATES COURT OF APPEAL:

FOR THE DISTRICT OF COLUMBIA CIRCU!

BRIEF FOR THE RESPONDENTS IN OPPOSITION

No/ c* for (x

STUART M. GERSON

Ass stant Attorne 4 (rene “)

ANTHONY J. STEINMEYER

ROBERT M. LOER

Attorneys

Department of Ji

Was/ naoton, at, POS ij

4)

QUESTION PRESENTED

Whether a Medicare claimant must present a claim for

payment before seeking judicial review of a Medicare pol-

icy or regulation governing the method of determining

the amount or the allowance of Medicare benefits.

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Abbey v. Sullivan, No. 92-6055 (2d Cir. Sept. 28,

ies asiceiakullginnssaiaenbinbbannsasnbiin 11, 12, 13

Bodimetric Health Services, Inc. v. Aetna Life &

Casualty, 903 F.2d 480 (7th Cir.), cert. denied, 111 S.

oi iis cae alegnapheneisnveudinnshacateneestonnesce 14, 15

Bowen v. Michigan Academy of Family Physicians, 476

scans ea ane cee cntuaneninageenencdunntarcesanee 6, 9, 10

Bowen v. Yuckert, 482 U.S. 187 (1987) .................0000 11

Heckler v. Ringer, 466 U.S. 602 (1984) .......... ee 5, 8,9

McCuin v. Secretary of HHS, 817 F.2d iol (ist Cir.

NT Nidedetl hc ichdsscihaniuatiatinsbuslis wsdunnsdeersbeboueseanshsncssesncasecesons 14

McNary v. Haitian Refugee Center, Inc., 111 S. Ct. 888

alla coins ccannindtetensintnsdebun phtnoanvenendheceneensce 10

Mathews v. Eldridge, 424 U.S. 319 (1976) ................. ~

National Kidney Patients Ass’n v. Sullivan, 958 F.2d

I chs sccdsantssdnysahathbbbeviicdensasesstonnenestés 13

Roen v. Sullivan, 764 F. Supp. 555 (D. Minn. 1991) ...... 11, 12

United States v. Erika, Inc., 456 U.S. 201 (1982) ...... 9

Weinberger v. Salfi, 422 U.S. 749 (1975) ................. 8, 11

Westchester Management Corp. v. HHS, 948 F.2d 279

(6th Cir. 1991), cert. denied, 112 S. Ct. 1936 (1992) ....... 11,14

(IIT)

IV

Constitution, statutes-and regulation: Page

U.S. Const.:

Art. I, § 7, Cl. 2 (Pocket Veto Clause) .................ccccsceees 12

Amend. V (Due Process Clause) .................ccccccsssecscscees 9

Administrative Procedure Act:

OS - SNe IE ha alas iain nn aitickstuiinsenannisiasiuhabeliablendinaiiauenivadili 4

Bb. - Sree WI nctcicaeasibiciceneiteiabtnibisaNdueiiaancinekedneainnakuaitors 12

Health Insurance for the Aged Act (Medicare Act), Pub.

Fe Se | we a een pee ee 2

Omnibus Budget Reconciliation Act of 1986, Pub. L. No.

99-509, 100 Stat. 1874:

a ee MN INI wietleiibakiihanecctinsnctiibhiienniitetonanstiies 10

SN, Ee II III sicasscdnsisannstnsendncnnsdadacstesceshonsieeas 13

Omnibus Budget Reconciliation Act of 1989, Pub. L. No.

101-239, § 6203(b)(1), 103 Stat. 2235 0... eeeeteeeeeees 5

Social Security Act:

Tit. II, 42 U.S.C. 301 et seq.:

es OD chi teikaphtacdininncseninmniinucnivonmepninianeds 6, 8

ee I entail dieticaeninendnnsnnunceneiensarsensgnveninnes 6, 8, 9

Tit. XVIII, 42 U.S.C. 1395 et seq.:

Te le Fe I Me ped tnctinncadecsiinncsxceniacinmrstcanicone 2

42 U.S.C. 1395c-1395i-4 (1988 & Supp. IT 1990) ...... 2

42 U.S.C. 1395j-11395w-4 (1988 & Supp. IT 1990) ... 2

SB TAGs. TN citeesecetaesncrtsnndecssctinatsionssssciens 3

GB TEB., TED cicinivevsetesvincencisnenicnnsensisons 3

GS TET, Fe tethhncstaintnnsiaereieditinineiesinsen 6, 9, 14

42 U.S.C. 1395ff(a)-(b) (1982 & Supp. II 1984) ...... 9

GD eae SD sharers tecennennennincccipetansianentonis 7

GE CL AKS.. PTE socertnccnsinssnnnersnrsensnnseennisinvsgas 11

BE Fes RIF hnintiswninsiceticcscandsndacinionivs 9, 10

Se BEA, FD eentietasentnestnsiatginneenienanaianioninn 14

ee EE tical thaisitiahninnacisneccnsateciansuhieniameneion 6, 7

Fe Tie EAA) cnvsennccsecssnssoncsievannasnensanve 2

Se Tia RTE ILOD avisscnrensencurarecsssenessssonniens 2

Be BD Are POE RIUED sucnssccnvcciassesntasznsseectnsnisnnenacs 2

Se Rae es. SUNN ccbd vnnnincnscennnitinanvaonunentinnsinin 2

Be TE eax Ie satiated uae giisiindinetensdeaascuintiosionseniios 6, 8, 10, 12

GE CFs I Sean tickticenininatsentnniiinrntiinsmeen 3, 4

Miscellaneous—Continued: Page

138 Cong. Rec.:

D. HIZSTO (Gatly OG. Oct. 5, TFBE) .....ccccceseecsesscresssccsrsene 12

my, RG Be CTY OG. GOCE. Fe, BOT) ccincncscssccccccsvcnnsscsneses 12

HR. 11, 20Be Comm., Bd Bens. (IGRE) ...ccnsssvccccsssvccscssessseres 12

H.R. Rep. No. 727, 99th Cong., 2d Sess. (1986) ................ 12

28 Weekly Comp. Pres. Doc. No. 45 (1992)

In the Supreme Court of the Giuted States

OCTOBER TERM, 1992

No. 92-569

NATIONAL KIDNEY PATIENTS ASSOCIATION,

ET AL., PETITIONERS

v.

Louis W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1la-22a)

is reported at 958 F.2d 1127. The opinion of the district

court (Pet. App. 28a-35a) is reported at 754 F. Supp. 900.

JURISDICTION

The judgment of the court of appeals was entered on

March 13, 1992. A petition for rehearing was denied on

June 1, 1992. Pet. App. 59a. On July 29, 1992, the Chief

Justice extended the time for filing a petition for a writ

of certiorari to and including September 29, 1992. The

petition was filed on September 29, 1992. The jurisdic-

(1)

2

tion of this Court is invoked pursuant to 28 U.S.C.

1254(1).

STATEMENT

1. Title XVIII of the Social Security Act, as added by

the Health Insurance for the Aged Act, Pub. L. No. 89-97,

§ 102(a), 79 Stat. 291—popularly known as the Medicare

Act—establishes a health insurance program for eligible

aged and disabled persons. 42 U.S.C. 1395 et seq. The

Medicare Program is administered by the Secretary of

Health and Human Services (HHS) through the Health

Care Financing Administration (HCFA). The Act is

divided into two parts. Part A of the Act authorizes

payment for hospital and related post-hospital services.

42 U.S.C. 1395¢ to 1395i-4 (1988 & Supp. II 1990). Part B

of the Act authorizes payment for supplementary

medical services. 42 U.S.C. 1395] to 1395w-4 (1988 &

Supp. If 1990). This case involves reimbursement under

Part B for home kidney dialysis equipment and supplies.

There are two methods of obtaining reimbursement

under Part B for home dialysis equipment and supplies.

Under Method I, certified facilities are reimbursed based

on a formula established by the Secretary. 42 U.S.C.

1395rr(b)(1)(A) and (b)(7). Under Method II, entities that

are not certified facilities are reimbursed on a “reason-

able charge” basis. 42 U.S.C. 1895u(b)(3), 1395rr (b)(1)(B)

and (b)(8). See also Pet. App. 2a-3a. The “reasonable

charge” generally is the lowest of (1) the supplier’s

actual charge, (2) its customary charge, or (3) the

prevailing charge in the area. 42 U.S.C. 1395u(b)(3). In

addition, Congress has directed the Secretary to identify

by regulation instances in which the standard criteria

would lead to a charge that is “grossly excessive” (or

“grossly deficient”), such that the charge is not

3

“inherently reasonable.” 42 U.S.C. 1395u(b)(8)(A). The

Secretary has implemented this provision through a

regulation that authorizes HCFA or the carrier to de-

termine that a charge is inherently unreasonable and to

prescribe a substitute rate. 42 C.F.R. 405.502(g). Method

II affords patients who self-dialyze at home the option of

contracting directly with a supplier of home dialysis

equipment and supplies, instead of receiving home dialy-

sis equipment and supplies from a certified facility.

2. In 1988, petitioner Home Intensive Care, Inc.

(HIC), was the largest supplier of home dialysis equip-

ment under Method II in Florida. HIC supplied dialysis

equipment and supplies to approximately 1,000 patients

at a rate of $3,100 per month. Although Method II pay-

ments cover only dialysis equipment and supplies, HIC

provided its clients with “free” staff assistants to aid the

patients during home hemodialysis sessions. C.A. App.

18, 30-31.

On July 12, 1988, Blue Cross and Blue Shield of Florida

(Blue Cross), the local Medicare Part B carrier, issued a

notice proposing to reduce the maximum monthly al-

lowance under Method II for home dialysis supplies and

equipment from $3,100 to $1,625. Blue Cross solicited

comments on the proposed reduction, surveyed dialysis

facilities, and requested cost information from dialysis

equipment suppliers. Pet. App. 4a; C.A. App. 55-57.

Upon completion of its evaluation of the comments and

cost information, Blue Cross determined that the $3,100

charge was unreasonable and that the new monthly pay-

ment maximum would become effective on January 1,

1989. C.A. App. 55, 63. In its letter to suppliers, Blue

Cross noted that HIC had refused to reveal its

acquisition and operating costs. C.A. App. 57. Based on

the cost information available from other suppliers,

4

however, Blue Cross determined that a charge of $3,100

per patient per month was more than three times the

suppliers’ cost and was “grossly excessive.” C.A. App.

56-57. Blue Cross explained that more than 75% of all

home dialysis equipment and supplies were provided by

Method I providers, and that there was no reason to

believe that Method I providers (who charged only $1,625

per month for such services) had lower costs than

Method II suppliers. C.A. App. 56-59, 61-62. Blue Cross

rejected the argument that the provision of “free”

assistarts justified the higher Method II rate, explaining

that the cost of such assistants is not reimbursable

under the Medicare Act. C.A. App. 61.

5. Petitioners—HIC, a renal dialysis patients’ group,

and ten individual renal dialysis patients who received

dialysis equipment from HIC—failed to present a claim

for payment under the reduced rate. If petitioners had

done so, they could have obtained administrative review

of Blue Cross’s rate reduction and judicial review of the

Secretary’s final determination if their claims for

increased reimbursement were denied. Instead of pre-

senting a claim, petitioners filed an action directly in the

district court seeking to enjoin the rate reduction. Pet.

App. 4a. Petitioners’ complaint alleged (1) that the

general regulation that authorized Blue Cross to find

HIC’s charge “inherently unreasonable” (42 C.F.R.

405.502(g)) was not properly promulgated; (2) that a

transmittal letter issued by the HCFA urging carriers

to examine the reasonableness of Part B dialysis

equipment rates violated the Medicare Act and was a

substantive rule requiring notice-and-comment rulemak-

ing under the Administrative Procedure Act (APA), 5

U.S.C. 553; and (3) that the carrier’s decision to reduce

the rate was “arbitrary and capricious.” Pet. App. 5a.

5

In December 1988, the district court issued a prelimi-

nary injunction, enjoining the Department of Health and

Human Services from reducing the rate paid to HIC.

Pet. App. 5a.

4. The government appealed the district court’s order,

arguing, inter alia, that the district court lacked juris-

diction because petitioners failed to present a claim for

payment covered by the challenged rate reduction and

failed to exhaust their administrative remedies. While

the case was on appeal, “Congress commanded what the

district court had enjoined.” Pet. App. 5a. Section

6203(b)(1) of the Omnibus Budget Reconciliation Act of

1989, Pub. L. No. 101-239, 103 Stat. 2235, amended 42

U.S.C. 1395rr(b)(7) to cap Method II home dialysis pay-

ments at the Method I level. Pet. App. 5a. As a result of

the new legislation, the district court modified its

injunction to allow HHS to reduce future payments to

HIC. bid. Thereafter, the court of appeals dismissed

the government’s appeal from the preliminary injunction

as moot, vacated the district court’s order, and remanded

for consideration of whether the government could

recoup overpayments made pursuant to the injunction.

Pet. App. 36a-42a.

5. On remand, the district court ruled that HHS could

not recover under the injunction bond or recoup any of

the payments made pursuant to the injunction. The

court concluded that its prior ruling was correct in all

respects. The court further held that, even if its prior

ruling was in error, it would be inequitable to require

HIC to repay any of the money paid to it under the pre-

liminary injunction. Pet. App. 5a-6a, 27a-35a.

6. The court of appeals reversed. Pet. App. 6a-22a. It

held that the district court lacked jurisdiction to enter

the injunction. In Heckler v. Ringer, 466 U.S. 602 (1984),

6

this Court construed the judicial review provisions of

the Medicare Act, 42 U.S.C. 1395ff (incorporating 42

U.S.C. 405(g)) and 42 U.S.C. 1395ii (incorporating 42

U.S.C. 405(h)), to require presentment of a claim to the

agency (“an absolute prerequisite”) and exhaustion of

the administrative process (“a prerequisite that may be

excused only under rather limited conditions”) before a

court may assert jurisdiction over claims arising under

Part A of the Medicare Act. Pet. App. 6a-lla. In 1986,

Congress amended those judicial review provisions—

which had applied only to Part A—to include Part B

claims. Pet. App. 8a-9a, 12a. In light of the 1986 amend-

ment, the court of appeals found it “inescapable that the

same rule[s} must [now] govern parts A and B.” Pet.

App. 12a. Accordingly, the court held that a district

court may not assert jurisdiction over Part B claims

where, as here, the claimant has failed to present a claim

to the agency for payment under the policy or regulation

at issue. Pet. App. 10a-13a.

a. The court of appeals distinguished this Court’s de-

cision in Bowen v. Michigan Academy of Family

Physicians, 476 U.S. 667 (1986), which allowed judicial

review of Part B methodology challenges in a suit based

on the general judicial review provisions of the APA and

28 U.S.C. 1331. The court of appeals explained that

Michigan Academy, which was decided before the 1986

amendment to the judicial review provisions, rested on

the presumption that Congress did not intend to preclude

all judicial review of serious statutory and consti-

tutional questions arising under Part B. Pet. App. 1la-

12a. The court of appeals concluded that Michigan

Academy no longer governs Part B claims, because

Congress has now provided a route for judicial review

under 42 U.S.C. 405(g) after presentment and exhaustion

r> —

7

of the administrative process. Pet. App. 12a-13a. Under

the 1986 amendment, “[PJart B claims will not go

unreviewed; review simply awaits initial administrative

determination in a concrete setting.” Pet. App. 18a

b. The court of appeals also held that HHS, as a defen-

dant injured by a wrongfully issued preliminary injunc-

tion, is presumptively entitled to obtain recovery from

the injunction bond. Pet. App. 15a-17a The court found

that none of the equitable arguments raised by petition-

ers were sufficient to overcome that presumption. Pet.

App. at 17a-18a. The court further ruled that HHS has

the right to seek restitution in excess of the amount of

the bond through the usual Medicare procedures for

seeking recoupment of overpayments. I/d. at 20a-22a.

The court added that when HHS recoupment procedures

“have run their full course, HIC may, if not content with

the outcome, seek judicial relief in an appropriate

forum.” Pet. App. at 22a.

ARGUMENT

The decision of the court of appeals is correct and is

consistent with the decisions of this Court and the only

other court of appeals to have decided the issue. Accord-

ingly, further review is not warranted.

1. The court of appeals correctly held that petitioners

were required to present a claim for Medicare benefits to

the Secretary as a prerequisite to seeking judicial re-

view.

a. The Medicare Act’s judicial review provisions, 42

U.S.C. 1395ff(b), 1395ii, incorporate by reference the ju-

dicial review provisions of Title II of the Social Security

! Petitioners do not seek review of these rulings by the court of

appeals regarding HHS’s rights to recovery.

8

Act, 42 U.S.C. 405(g), 405(h). In Heckler v. Ringer, 466

U.S. 602 (1984), the Court held that a claimant asserting

claims arising under Part A of the Medicare Act must

satisfy the same exhaustion requirement applicable un-

der Section 405(g). The Court explained that this ex-

haustion requirement has two components: (1) a

“nonwaivable” requirement that a claim for benefits

must be presented to the Secretary; and (2) a “waivable”

requirement that the claimant must have fully pursued

the administrative review process. 466 U.S. at 617. See

also Mathews v. Eldridge, 424 U.S. 319, 328 (1976); Wein-

berger v. Salfi, 422 U.S. 749, 763-765 (1975).

Mr. Ringer challenged the Secretary’s policy concern-

ing Part A Medicare insurance coverage of a surgical

procedure known as a bilateral carotid body resection

(BCBR). This Court held that because he had not filed a

claim for reimbursement, he was barred from seeking ju-

dicial review under either the Medicare Act or the gen-

eral grant of federal jurisdiction in 28 U.S.C. 1331. 466

U.S. at 621-622. The Court explained that because

“Ringer has not given the Secretary an opportunity to

rule on a concrete claim for reimbursement, he has not

satisfied the nonwaivable exhaustion requirement of

§ 405(g).” Id. at 622.

b. Petitioners incorrectly assert (Pet. 15) that they

need not present a claim for payment to the Secretary

before seeking judicial review because Ringer only dealt

with “amount determinations.” Petitioners contend (Pet.

13-15) that parties challenging the Secretary’s polices or

methodologies may proceed directly to court without

even filing a claim with the Secretary. Petitioners’

contention is inconsistent with Ringer, which involved

“methodology” challenges similar to those at issue in

this case. Mr. Ringer sought to “invalidate the Secre-

9

tary’s rule” regarding coverage of BCBR surgery, con-

tending that the Secretary’s instructions regarding re-

imbursement violated the Due Process Clause, the Ad-

ministrative Procedure Act (APA), and the Medicare

Act. 466 U.S. at 610, 623 n.13. The Court explained that

Ringer was chalienging the policy so that he could estab-

lish the right to payment on a claim at a later date. 466

U.S. at 621-626. This Court concluded that it made no

difference whether the suit raised procedural objections

or substantive challenges to the Secretary’s regulations;

Ringer could not seek judicial review without presenting

a claim for payment. [bid.? .

ec. This case involves claims under Part B of the

Medicare Act. Prior to 1986, the judicial review provi-

sions discussed in Ringer applied to Part A claims, but

not to Part B claims. Indeed, the Medicare Act did not

expressly furnish Part B claimants with any avenue for

seeking judicial review, see 42 U.S.C. 1395ff(a)-(b) (1982

& Supp. II 1984). For that reason, this Court had held in

United States v. Erika, Inc., 456 U.S. 201, 210 (1982), that

in light of the carefully drawn provisions of 42 U.S.C.

1395ff permitting judicial review of benefit amount deter-

minations under Part A but not Part B, review of such

determinations under Part B was implicitly precluded.

Thereafter, in Bowen v. Michigan Academy of Family

Physicians, 476 U.S. 667 (1986), this Court declined to

read the Medicare Act as precluding all judicial review

for Part B claimants. 476 U.S. at 678-681. Accordingly,

2 Petitioners argue (Pet. 14-15) that, because 42 U.S.C.

1395ff(b)(1)(C) applies to benefit “amount” determinations, it is

only judicial review of such determinations that is impliedly

precluded by 42 U.S.C. 1395ff. But petitioners overlook 42 U.S.C.

405(h), which expressly bars this suit, quite apart from any implied

preclusion in 42 U.S.C. 1395ff.

10

the Court held that a party challenging the Secretary’s

methods and procedures relating to Part B claims could

seek judicial review pursuant to the general judicial

review provisions of the APA, with jurisdiction resting

on 28 U.S.C. 1331.

Underpinning the Court’s holding in Michigan

Academy was “the strong presumption that Congress

intends judicial review of administrative action.” 476

U.S. at 670. Absent a clear Congressional statement to

the contrary, the Court refused to read the Act to pre-

clude all judicial review of challenges to directives and

other actions taken by the Secretary, as distinguished

from amount determinations by carriers. Jd. at 680. As

this Court recently explained in McNary v. Haitian

Refugee Center, Inc., 111 8S. Ct. 888 (1991):

Inherent in our analysis [in Michigan Academy] was.

the concern that absent such a construction of the

judicial review provisions of the Medicare statute,

there would be “no [judicial] review at all of substan-

tial statutory and constitutional challenges to the

Secretary’s administration of Part B of the Medicare

program.”

111 S. Ct. at 899 (quoting Michigan Academy, 476 U.S.

at 680).

d. Four months after this Court decided Michigan.

Academy, Congress amended 42 U.S.C. 1395ff(b)(1)(C) to

authorize administrative and judicial review of Part B

claims under the identical statutory scheme applicable

to Part A claims. See Omnibus Budget Reconciliation

Act of 1986, Pub. L. No. 99-509, § 9341, 100 Stat. 2037.

Section 1395ff(b)(1)(C), as amended, now permits a

claimant to obtain review of:

11

the amount of benefits under part A or part B * * *

[in] a hearing * * * by the Secretary * * * and to

judicial review of the Secretary’s final decision af-

ter such hearing as is provided in [42 U.S.C. 405(g)].

42 U.S.C. 1395ff(b)(1) (emphasis added). Thus, Part B

claims are now subject to the same statutory review pro-

visions as Part A claims. See Pet. App. 12a; Abbey v.

Sullivan, No. 92-6055 (2d Cir. Sept. 28, 1992), slip op. 7081

(“Part B claims are now reviewed in the same manner as

Part A claims.”). As shown by this Court’s decisions in

Ringer, supra, Bowen v. Yuckert, 482 U.S. 137 (1987),

and Weinberger v. Salfi, 422 U.S. at 756-767, challenges

to regulations and even to the Act itself may and must be

presented through this special statutory review proce-

dure.

Because the statutory differences between Parts A

and B that gave rise to the Ringer/Michigan Academy

dichotomy have been eliminated, and because the funda-

mental premise of Michigan Academy’s analysis (the

absence of any judicial review of Part B claims) is no

longer applicable, the avenue for judicial review recog-

nized in Michigan Academy is no longer available. See

Pet. App. 12a-13a; Abbey v. Sullivan, slip op. 7080-7081;

Roen v. Sullivan, 764 F. Supp. 555, 561 (D. Minn. 1991);

see also Westchester Management Corp. v. HHS, 948

F.2d 279, 282 (6th Cir. 1991) (“the Michigan Academy

exception applies only when there is no other avenue of

judicial review”), cert. denied, 112 S. Ct. 1936 (1992). As

the court of appeals here explained, under the, 1986

amendment, “part B claims will not go unreviewed;

review simply awaits initial administrative determin-

ation in a concrete setting.” Pet. App. 13a.

e. Given that the same statutory review provisions

now govern claims under Parts A and B, the court of ap-

12

peals correctly reached the “inescapable” conclusion

that the same principles of judicial review “must [now]

govern parts A and B.” Pet. App. 12a. Accordingly, the

court of appeals was plainly correct in holding that by

bringing the Part B claims into the established Part A

review framework, Congress intended to subject Part B

claims to the same rules applicable to Part A claims

under that existing framework. See H.R. Rep. No. 727,

99th Cong., 2d Sess. 95 (1986) (amendments establish “an

appeals procedure under Part B that is modeled after

that available under Part A”). See also Abbey v.

Sullivan, slip op. 7078-7081 (holding that Part B claims

are now governed by Ringer); Roen v. Sullivan, 764 F.

Supp. 555, 561 (D. Minn. 1991) (“Ringer, which concerned

Part A * * *, is now applicable to Part B claims as

well.”). Now, under both Part A and Part B, a party is at

a minimum required to present a claim for benefits

before seeking judicial review. As the APA itself makes

clear, see 5 U.S.C. 703, a party may not circumvent this

special statutory review procedure by resorting to the

general judicial review provisions of the APA and the

general jurisdictional grant in 28 U.S.C. 1331.’

% We note that the jurisdictional issue addressed by the court of

appeals has been the focus of recent legislative action. On October

22, 1992, Congress passed legislation that would have permitted di-

rect judicial review of Part B challenges to regulations or Medi-

care instructions where no material issue of fact is in dispute. See

H.R. 11, 102d Cong, 2d Sess. § 10210 (1992); see also 138 Cong. Rec.

H12,379 (daily ed. Oct. 5, 1992) (setting out § 10210); 138 Cong.

Rec. $18,262 (daily ed. Oct. 22, 1992). On November 5, 1992, that

bill failed to become law under the “Pocket Veto” Clause, U.S.

Const. Art. I, § 7, Cl. 2. 28 Weekly Comp. Pres. Doc. No. 45, at

2283 (1992).

13

2. a. The conflict in the courts of appeals alleged by

petitioners is fictitious. As the court of appeals ex-

plained, this is the first case in which a court of appeals

addressed the effect of the 1986 amendment on judicial

review of Part B “methodology” claims. Pet. App. 15a.

Since the court of appeals issued its decision in this case,

one other court of appeals has addressed that issue. In

Abbey v. Sullivan, supra, the Second Circuit fully

agreed with the result and the reasoning in this case:

[W]e agree with the only other Circuit to address

this issue that “the special treatment of part B, based

on the pre-October 1986 statutory differences, cannot

survive the elimination of those differences.” * * *

Part B claims are now reviewed in the same manner

as Part A claims so that the Social Security Act

provides the exclusive authority for exercising

jurisdiction over Part B disputes. See Ringer, 466

U.S. at 605.

Abbey, slip op. 7081 (quoting National Kidney Patients

Ass’n v. Sullivan, 958 F.2d 1127, 1182 (D.C. Cir. 1992)) .*

b. Petitioners also contend (Pet. 15) that the courts of

appeals are in conflict over whether a Part A claimant

raising a methodology challenge may seek judicial re-

4 Although petitioners contend (Pet. 15) that the decision in this

case conflicts with other courts of appeals’ decisions, none of the

decisions cited by petitioners even discusses the 1986 amendments.

Indeed, the cases cited by petitioners all involved pre-1987

Medicare claims. The 1986 amendment applies only to claims re-

lating to services and items provided on or after January 1, 1987.

See Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99-509,

§ 9341(b), 100 Stat. 2038. Decisions that did not concern (and

therefore did not address) the 1986 amendment cannot establish a

conflict concerning the jurisdictional rules applicable to Part B

claims arising after the 1986 amendment.

~~

14

view without filing a claim. As we explain above (pp. 8-9,

supra), however, that issue was resolved in Ringer,

which required presentment as a prerequisite for seek-

ing judicial review of a methodology challenge. See also

Pet. App. 10a, 12a-18a; Westchester Management Corp.,

948 F.2d at 282. In any event, the two decisions relied

upon by petitioners do not conflict with the decision in

this case.

In McCuin v. Secretary of HHS, 817 F.2d 161 (1st Cir.

1987), the type of claim at issue—a Part A claim involv-

ing less than $1,000—was not subject to any judicial re-

view under 42 U.S.C. 1895ff. Thus McCuin, like Michi-

gan Academy, raised the question whether Congress in-

tended to preclude all judicial review of certain claims.

As the Court held in Michigan Academy, there is a

strong presumption in favor of judicial review of admin-

istrative action. Although we believe, contrary to the

First Circuit in McCuin, that the amount-in-contro-

versy requirement in 42 U.S.C. 1395ff(b)(2) is sufficient

to overcome that presumption for claims involving less

than the required amount, this case does not present

that issue, because the amount-in-controversy require-

ment for invocation of the special statutory review pro-

cedure is met. As a result, in both Ringer and this

case—in contrast to McCuin—there is no question that

the plaintiffs could have sought judicial review under 42

U.S.C. 1395ff after presentment of a claim and exhaus-

tion of the administrative process. See Westchester

Management Corp., 948 F.2d at 281-282 (the Michigan

Academy methodology exception to Ringer “applies only

when there is no other avenue of judicial review”).

In Bodimetric Health Services, Inc. v. Aetna Life &

Casualty, 903 F.2d 480 (7th Cir.), cert. denied, 111 S. Ct.

579 (1990), the court of appeals held that, because the

15

plaintiff could have sought review through the Medicare

Act’s administrative and judicial review process, that

process was the exclusive means of obtaining judicial re-

view. See Bodimetric, 903 F.2d at 486-487. That reason-

ing is entirely consistent with Ringer and the D.C. Cir-

cuit’s decision in the present case.°

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

STUART M. GERSON

Assistant Attorney General

ANTHONY J. STEINMEYER

ROBERT M. LOEB

Attorneys

DECEMBER 1992

® In dicta, the Seventh Circuit appeared to construe Michigan

Academy as extending to any claim that cannot be remedied

through the administrative process. See 903 F.2d at 486-487. It is

far from clear that the Seventh Circuit would adhere to that ap-

proach in a case governed by the 1986 amendment. In any event,

it was entirely possible for petitioners to obtain the result they

sought—reversal of the carrier’s decision to lower the reimburse-

ment rate—through the administrative process. Consequently,

even if the court of appeals had applied the Seventh Circuit’s

dicta, it would have required petitioners to present a claim and

exhaust their administrative remedies.