BOWEN v. MICH. ACADEMY OF FAMILY PHYSICIANS

Transcript: 

ORAL ARGUMENT OF EDWIN S. KNEEDLER, ESQ. ON BEHALF OF THE PETITIONERS

Chief Justice Burger: Mr. Kneedler, I think you may proceed whenever you are ready.

Mr. Kneedler: Thank you, Mr. Chief Justice, and may it please the Court:

The question presented in this case is whether respondents have a right to judicial review of matters concerning the amount of benefits under Part B of the Medicare program.

Part B establishes a voluntary program of supplementary medical insurance that pays in general 80 percent of the reasonable charge of physician services and other services.

Part A of the program, which establishes the basic hospital insurance program, is not directly involved in this case.

The principal relevance of Part A here, however, is that under Part A Congress has expressly provided for judicial review of benefit determinations where the amount in controversy exceeds $1,000, and this demonstrates that where Congress intends to provide for judicial review under the Medicaid program, it expressly does so.

Under Part B, however, Congress has not affirmatively authorized judicial review.

Four terms ago, in United States versus Erika, this Court unanimously held that by this omission Congress had deliberately foreclosed judicial review.

The Court there relied on what Congress perceived to be the relatively insubstantial amount of money involved in the typical Part B claim.

The Court adhered to this view of reviewability under Part B just two terms ago in Heckler versus Ringer.

Although Congress has extensively revised the Part B program in a number of respects since Erika was decided, it has not enacted legislation to overrule that decision.

Bills have been introduced to accomplish that result, however, and as we point out in our reply brief the committee reports on those bills demonstrate Congress's understanding that under existing law judicial review is entirely foreclosed under Part B.

In these circumstances we believe it would be especially prudent for the Court to adhere to its rulings in Erika and Ringer and leave to Congress, which is studying the matter, the question of whether exceptions should be carved out to that preclusion.

Justice O'Connor: Mr. Kneedler, do you think that constitutional challenges to the application of the Secretary's guidelines concerning Part B can be challenged in court?

Mr. Kneedler: Well, as we pointed out in our brief, of course we think that issue is not presented here because the particular--

Justice O'Connor: Well, they've certainly made a constitutional claim.

Mr. Kneedler: --They have made a constitutional claim, but it is our submission, for the reasons we have stated in the brief, that it is so insubstantial as not to vest the Court with subject matter jurisdiction under the rationale that the Court disposed of the constitutional claim in Ringer itself.

We think that's so because the regulation that's being challenged simply authorizes the establishment of separate charge screens, or prevailing charge screens, based on the charging patterns that exist in the community, and where a carrier implements that principle and adopts separate prevailing charge screens that are simply based on the charging patterns in the community, we think that that can in no way be thought to be so utterly lacking in rational justification under Flemming versus Nestor as to--

Justice O'Connor: Well, it did... it did appear to me, anyway, that the plaintiffs below made three different kinds of challenges.

One was to the carrier's utilization and application of the Secretary's rules on Part B, and second was a challenge to the Secretary's regulations themselves, and an allegation that the Secretary's regulations did not meet the statutory requirements that Congress had laid down, and third, a constitutional challenge.

Now, do you think that Erika precludes the constitutional challenge?

I guess you think not, but you think it's insubstantial?

Mr. Kneedler: --Well, yes.

Erika, we think, didn't address it because there was not a constitutional question raised.

Justice O'Connor: What about an allegation, that the regulations of the Secretary simply don't conform to the statute?

Mr. Kneedler: On that question, we think the judicial review is plainly foreclosed.

In Erika... Erika itself involved a challenge to instructions from the Secretary that is, insofar as the carrier is concerned, there is binding regulations, and the Court--

Justice O'Connor: The language in Erika doesn't make too clear that that was intended.

Mr. Kneedler: --But the Court of Claims decision in Erika, however, at pages 590 to 591 of 634 F. 2d do discuss the carrier's challenge to the intermediary letter upon which the carrier relied and also several additional letters implementing that, and the Court of Claims did review the carrier's... the question of the carrier's reliance on those letters and held that they were not a valid basis for the carrier to deny claims.

Justice O'Connor: Well, why would a challenge to the regulation as not meeting the statutory requirement be a burden to the Court such as review of the typical Part B benefit claim?

Mr. Kneedler: Well, the typical Part B benefit claim might well often include a challenge to a regulation or instruction or legal principles upon which the carrier relied, and it would not be difficult for a claimant to allege that.

And I would point but that there are now over 300 million claims a year filed under the Part B program and more than 30 million enrollees, so the potential for bringing these questions into court is rather substantial, in our view.

Also, the premise of Erika that Congress has precluded judicial review of matters concerning the amount of benefits extends not simply to the factual determinations but to the legal ones as well, because a decision on a claim for benefits is really analogous to a court's judgement which includes not simply findings of fact but the application of law to it, and so where Congress has precluded review of a decision concerning the amount of benefits, that necessarily includes the legal rules that the carrier has applied in arriving at that determination.

As we have pointed out in our brief from the beginning, the regulations governing the carrier hearing program have provided that the carrier's decision on a claim for benefits is final and binding and it is not subject to further review, and that the carrier is to adhere to the Secretary's view of the meaning of the statute and regulations.

Putting these together, we think it's quite clear that the preclusion of review of amount of benefits under Part B includes questions of law or regulations.

One other point I'd like to make in this regard is if the Secretary had never issued the regulation involved in this case, and the carrier had simply relied on its own interpretation of the statute, that it's clear that judicial review would be precluded under the rationale of Erika because there in Erika as here, there was a statutory challenge to the prevailing fee limitation that the carrier was using.

In fact, it was a challenge based on the very same sentence of the Act upon which respondents rely in this case.

All that has happened here is that the Secretary has given some interpretive guidance to the carriers explaining what he understands the Act to mean, but the issuance of a regulation should not in our view provide a vehicle for judicial review.

Unidentified Justice: What if the Secretary promulgated a regulation abolishing carrier review entirely?

Would that be reviewable, do you suppose... just said it cost too much money?

Mr. Kneedler: Well, I guess at some point the Secretary's actions would be so far removed from the administration of the program and--

Unidentified Justice: Do you think that would be reviewable?

Mr. Kneedler: --I would hesitate to give definitive answer, but I would think it might well be because for one thing it doesn't really concern the amount of benefits or--

Unidentified Justice: Well, let's say he just abolished carrier reviews for certain kinds of injuries, broken legs or something, no carrier review in certain kinds of injuries.

Would that be reviewable?

Mr. Kneedler: --Well, it may well be, but because the Secretary would not be giving directions on how to adjudicate particular claims--

Unidentified Justice: The argument would be, he's not complying with the statute?

Mr. Kneedler: --No, it would be beyond that.

That would be, among other things, collateral to the substantive determination of the claim and the amount of the claim.

Unidentified Justice: But the particular claimant wouldn't get his broken leg paid for.

I mean, whatever category of review you take out, you know, it would affect some claims.

Mr. Kneedler: It will effect the claim, but what we have here is something that goes directly to the amount of benefits which is at the core of what Congress has precluded.

It's what 1395 FF affirmatively authorizes review of under Part A and hence precludes review of under Part B.

The prevailing fee limitation is an essential element in the calculation of the reasonable charge, and claimant cannot separate out that particular issue, legal issue of the prevailing charge.

Unidentified Justice: In other words, the scope of your position is that whatever is authorized under A is necessarily forbidden under B, but something that's forbidden under both, you could review under B?

Mr. Kneedler: Well, that is essentially our position.

The abolishment of the claims adjudication process is not an issue that arises in the adjudication process itself.

It's wholly external to it.

And once you get out of the claims adjudication process, then the argument for judicial review might be stronger.

But the principle that we're relying on, and it's not just in the Medicare program but it's reflected more broadly in Section 405-H of the Act, is that in the Social Security Act Congress has carefully considered when it wants to have judicial review.

It affirmatively authorizes it typically by incorporating Section 4O5-G, the provision for judicial review in District Court.

Justice O'Connor: Mr. Kneedler, Erika said it didn't rely on 405-H.

Mr. Kneedler: That's correct.

Justice O'Connor: Does that mean it's open to us to hold that 405-H just precludes review of claims for which review is available under 405-G?

Mr. Kneedler: No, I think not.

I think Ringer forecloses that argument.

In Ringer the argument was made that because the one claimant, Ringer, had not submitted a claim for benefits and therefore could not get into the claims adjudication process that culminates in 405-G, that he should have a right of action under the general type of question jurisdiction, 1331, the argument being that 405-H shouldn't preclude review where it's not available under the Act.

And the Court rejected that proposition, saying that the scope of 405-H does not expand or contract depending upon whether review is otherwise available.

In fact, the whole purpose of 405-H is to preclude review except where Congress has provided for judicial review.

This, we have shown in our brief particularly by reference to the legislative history of the enactment of 405-H.

The second sentence of that provision on says that no findings or decisions of the Secretary shall be reviewed by any tribunal except as herein provided, referring to Section 405-G, and under the Part B program the carrier acts as the Secretary's agent and as the Court recognized in Erika, the Secretary is the real party in interest on an issue arising under Part B.

Justice O'Connor: Mr. Kneedler, in Ringer it seemed to me the claimants could obtain judicial review as provided under 405-G, and that just isn't the case here so I suppose we haven't technically answered that.

Mr. Kneedler: Well, the one claimant had not filed a claim and therefore was not within the judicial review... the administrative review process that would culminate in Section 405-G, and he was saying that because 405-G was not available, that federal question jurisdiction should be available.

Unidentified Justice: Well, he hadn't, had the operation, either.

Mr. Kneedler: He hadn't had the operation, but that was simply--

Unidentified Justice: All he had to do was get the operation, file a claim, and he would have review.

He just couldn't afford it, but that's--

Mr. Kneedler: --Well, that's right, but the Court made the point that a court cannot essentially issue a declaratory judgment under the 1331 jurisdiction to expound on a legal issue arising under the Medicare program.

The legal issues have to be taken to court, if at all, under 405-G and that's... the same principle applies here.

Congress has not permitted the courts to grant declaratory judgments or injunctive relief under the general grant of federal question jurisdiction.

It has provided a review mechanism, but unlike, under the Part A program involved in Ringer, Congress has withheld judicial review.

And the third sentence--

Unidentified Justice: --Excuse me.

You say they have provided a review mechanism for the claim, the doctors--

Mr. Kneedler: --Before the carrier.

Unidentified Justice: --But how can these doctors assert that claim?

Mr. Kneedler: A doctor can assert a claim before the carrier if he accepts assignment from the Part B beneficiary, The doctor's rights are then entirely derivative of those of the patient and he can submit a Part B claim to the carrier.

Justice Powell: Mr. Kneedler, will you clarify for me why the difference between Part A and Part B review is so significant?

Part A provides very substantial review.

Mr. Kneedler: It does.

Justice Powell: Judicial review, and my understanding is, Part A provides for reimbursement of hospitals.

Mr. Kneedler: That's correct.

Justice Powell: Why the difference?

Mr. Kneedler: Well, it was Congress's judgment in enacting the Medicare program that Part A was typically going to involve much greater amounts of money in a typical claim.

Justice Powell: Part B would involve greater amounts of money?

Mr. Kneedler: No, Part A.

I'm sorry.

Part B, claim can consist of nothing more than a claim for doctor's visit which can be $10 or $15, and Congress was concerned shout flooding the courts with these relatively insignificant claims, whereas a hospital visit is likely to give rise to a substantial medical bill.

And Congress did provide for judicial review, but significantly it limited it to situations in which there's $1,000 or more in controversy.

In this case, the district court allowed review apparently without regard to any amount of controversy.

Indeed, the one beneficiary who is a plaintiff in this case, the practical difference, the difference in reimbursement levels that's at issue here is about $1.60 an office visit.

It seems to us that this is precisely the sort of minor reimbursement dispute that Congress wanted to keep out of the courts.

As we point out in our brief, also the bills that are pending before Congress now would make the Part B review provisions parallel to those under Part A and allow for judicial review only where there is that $1,000 in controversy.

Justice O'Connor: Do you think it's open for the Secretary to provide by regulation for administrative review of claims like this under Part B?

Mr. Kneedler: It may well be.

There are existing mechanisms for the Secretary to review, not in every case but the Secretary has a quality review mechanism whereby a sample or the carrier's cases are reviewed periodically.

Justice O'Connor: What is the mechanism in place now to review a carrier's development of guidelines or rules to govern how physicians' services are going to be compensated?

Mr. Kneedler: There are several.

There is an annual evaluation of the carrier's performance that is conducted by the... that is conducted by HCFA, the Health Care Financing Administration, which is an assessment of the carrier's overall performance.

This is discussed at some length in our briefs in McClure four terms ago.

One aspect of that, and it's discussed in the testimony in the record in this case, was that there was an evaluation of the prevailing charge levels that the carrier uses, not necessarily poring over the statistical data but just making sure that the carrier is using the right approach in evaluating that question.

The other form of oversight is, as I mentioned, quarterly quality reviews of the carrier's performance by individual hearing officers.

Another mechanism available to a person affected by the Part B program would be to file, and particularly in this case where there's a regulation of the Secretary, would be to file a rule-making petition with the Secretary.

If the respondents in this case believe that in fact the data now supports elimination of any differential in charging patterns based on specialty, that a petition for rulemaking could be submitted to the Secretary along with relevant supporting data.

So, there are mechanisms that can be resorted to, and along these same lines Congress had last year commissioned a study by the Office of Technology Assessment which we also point out in our brief under the Deficit Reduction Act of 1984, to study the differences in charge levels for physicians' services according not only to specialty differences but the locality and the type of service.

So, there's also rather extensive congressional oversight or the way in which the Part B program is administered.

Justice O'Connor: But the question here is so basic.

It's an allegation that the statute says if the services provided by the physicians are identical, that no different level of compensation is permitted, based on specialization, and that's a pretty basic question, isn't it?

Mr. Kneedler: Well, what the statute says is that the reasonable charge cannot exceed 75 percent of the customary charges for similar services.

It certainly seems to us to be a reasonable construction of the phrase,

"similar services, to take into account differences in specialty, and in fact this regulation was promulgated at the very time the Medicare program was being implemented. "

So, we don't have here any aberrational or startling implementation of the Act.

In 45 states the carriers are using this.

I would point out again that in Erika the statutory challenge to the prevailing charge ceiling was under the very same statutory provision.

That sentence requires that the similar charges be accumulated and evaluated as made during the preceding calendar year, and the provider there argued that during the calendar year means over the course of the calendar year.

It doesn't permit the carrier to select just one date in the middle of the year.

And, I submit that that is every bit as, in one sense, basic to the way the program is being administered, but the Court unanimously held that judicial review is foreclosed.

And this is essential in a program of this magnitude with 300 million claims annually, to have the oversight be conducted by an expert agency, by the Secretary, in reviewing the manner in which the carriers perform.

And this is done, as I have said, through the oversight function, and to have judicial review of these matters without regard to the amount in controversy as permitted here would substantially undermine the efficiency of the program.

One other point I wanted to make about reviewing the regulation is that not only did Erika involve instructions analogous to a regulation but so did Ringer itself.

In fact, that was the principal challenge of Ringer, was a contesting of an instruction that prohibited a carrier from paying any amount of benefits for a particular service.

What we have here is not a prohibition of the payment of any amounts, but just concerns the amount of benefits which is something that the carrier is particularly expert in addressing.

Several other ways in which the respondents and the court of appeals have attempted to avoid the force of Erika and Ringer in this case, I think also should be addressed.

One is that the Court of Appeals suggested, is that the preclusion of review under Erika and Ringer doesn't apply to someone other than the claimant for benefits.

The Court of Appeals didn't explain what it meant by that, but it apparently meant positions rather than the Part P beneficiary.

Respondents don't defend that argument here, and I don't see how it could be defended, because in Erika itself it wasn't the beneficiary.

It was the assignee, the provider of the services who brought the action, and judicial review was foreclosed.

By the same token, respondents argue that they aren't really bringing a claim for benefits in the sense that they want monetary relief directly from the court.

They are just challenging the methodology for the calculation of the prevailing charge.

Again, this was exactly what was at issue in Erika.

The Court of Claims, whose judgment was reviewed here, did not get into the question of adjudicating individual claims.

They remanded to the carrier to apply what it viewed as the correct standards, and had the carrier process the claims.

So, again that furnishes no basis for distinguishing Erika or Ringer.

Unidentified Justice: May I just ask, Erika was a suit for monetary judgment though, was it not?

Mr. Kneedler: It was brought in the Court of claims.

Unidentified Justice: Whereas this is a suit for an injunction against enforcement of regulation?

Mr. Kneedler: That's correct, but the--

Unidentified Justice: The Court of Claims could not have granted injunctive relief, could it?

Mr. Kneedler: --It could not have, although in a sense it granted the equivalent by a remand to the carrier.

It didn't award a money judgment.

It remanded the matter to the carrier to compute the benefits under what the Court of Claims viewed as being the proper legal standard, which is exactly what... exactly the relief that the respondents ask for in this case, as to how the prevailing charge screens were formulated.

Unidentified Justice: Well, but they might conceivably be reformulated without their getting any more money.

Couldn't they be uniform at the lower level, for example?

Mr. Kneedler: Well, that would be unlikely to happen because if there appears to be on average... the nonspecialists are reimbursed at a lower level, so if they're put in one screen presumably--

Unidentified Justice: Well, presumably but not necessarily?

Mr. Kneedler: --In individual cases it--

Unidentified Justice: It would be possible, would it not, to grant all the relief that they're entitled to, claiming this uniformity principle, without giving them any money?

Mr. Kneedler: --Well, this lawsuit wouldn't give them money, but the consequence of the judgment would in most cases, particularly--

Unidentified Justice: Not if you reduced to the lowest level, would it?

Mr. Kneedler: --But the Secretary isn't authorized to reduce it to the lowest level.

The calculation has to be based on 75 percent, what would cover 75 percent of charges in the area.

So, if the Secretary says, or if the Court said that you had to combine the lowest prevailing charge level with the highest, bring them together, then the consequence is going to bring up the lowest and bring down the highest.

So, it will have the consequence of raising the amount of benefits payable in most cases to the people treated by family physicians.

There may be some situations, and the record suggests there are a few situations, in which general practitioners or nonspecialists actually receive more, but in the typical case they receive less, or the beneficiary receives less, and so it would nave the effect of raising the benefits.

Of course, in Ringer you had much the same situation.

You had a regulation that absolutely precluded recovery.

The consequence of that, even though not what the Ninth Circuit would have ordered, but the consequence of saying that the Secretary could not rule it out would be to--

Unidentified Justice: Yes, and I of course thought that argument was persuasive there, but the holding of the Court still is, there is another avenue of review.

The thing that's novel about this case, and you correct me if I'm wrong, but is there any other case, any other time the Court has held that any government official can issue a nationwide regulation that is not subject to judicial review of any kind, for failure to comply with the statutory mandate?

I don't think this is ever... it's ever contended disposition before, has it?

Mr. Kneedler: --I'm not aware of the situation but analytically it's no different from precluding judicial review of any administrative action, because in administering a program an executive agency relies on law, statute, and implementing regulations, and if Congress can preclude judicial review even where someone's alleging that there's a statutory violation, as was true in Erika.

Unidentified Justice: Yes, that's true, but in the vast majority of the cases that come up through the Social Security system, and their particular factual controversies, and you've got findings and the formal things that--

Mr. Kneedler: Well, there are quite a few of them that involve... quite a few of the cases that involve challenges to regulations.

Unidentified Justice: --Well, sure, and I think your position would be, then, in Ringer there could have been a challenge to the regulation if you followed the statute?

Mr. Kneedler: That's exactly right.

In fact, as we point out in our brief, Section 405-G contemplates review of regulations as part of review of the final decision.

Unidentified Justice: Right.

Mr. Kneedler: And that seems to us to be clear, that Congress views 405-G as the avenue not only for review of factual issues but review of regulations and the legislative history expressly says that a court can review questions of law on review.

So, when Congress makes 405-G applicable, it is saying, we are authorizing judicial review not only of facts but of regulations and law.

Where Congress has withheld it, it has withheld those same issues from judicial review.

If there are no more questions now, I would like to reserve the balance of my time.

Chief Justice Burger: Mr. Gilchrist.

ORAL ARGUMENT OF ALAN G. GILCHRIST, ESQ. ON BEHALF OF THE RESPONDENTS

Mr. Gilchrist: Thank you, Mr. Chief Justice, and may it please the Court:

There are two basic issues on the merits of this case where petitioners state the respondents have no relief whatsoever.

The first issue pertains to the equal protection claim, and the placement of family physicians, and those patients who choose family physicians, separate from all other physicians and essentially equating the selection of a family physician with that of a chiropractor or a podiatrist.

Now, the government states today that that equal protection count had no merit.

The fact of the matter is, the government filed a motion for summary judgment on that issue.

It was heard.

It was denied.

And the government did not appeal that decision.

It is also a fact that the lower court in this case stated that the government's action utterly lacked merit, utterly lacked reason, rather.

The Sixth Circuit pertained to the government's action as durational.

But perhaps most important, as to the government's position today, as the government conceded at trial it had no rationale for the placement of board eligible family Physicians who all, by definition, have completed residency programs along with chiropractors and podiatrists and sep rate from their peers.

The statutory question is basically the other major issue.

It's important to bear in mind that the Medicare statute repeatedly uses the word "similar services" in determining reasonable charges under Part B of the Medicare program.

The regulation in question doesn't even contain the words "similar services".

Nobody testified at trial in this case that the Secretary attempted to define "similar service", or that the Secretary even considered similarity of service in implementing this regulation.

Basically, it is the respondent's position that a reasonable and consistent interpretation of the Medicare statute is that there is 1331 jurisdiction for both these issues.

We've also addressed the issue of due process and separation of powers, but I think it is essentially not important for purposes of a statutory interpretation because we firmly believe that a consistent reading of the statute supports the respondent's position.

And we have tried to set forth in detail the types of issues for which there is no judicial review and the types of issues for which there is judicial review.

One of the problems I have with the petitioner's position before this Court is, they have never explained in any detail what types of issues there may be judicial review of.

Let me give you an example.

Do the petitioners maintain today that when a lawsuit is filed on the basis of equal protection, and the government concedes no rationale for its actions, that there is no federal court judicial review or no forum anywhere to address the issue?

The government makes that concession, at least to the portion of the claim in this case, and then ignore it, and essentially they refuse to grant any relief voluntarily and they maintain no jurisdiction in the district court, and apparently by making that concession all they want to accomplish is to have the respondents quit talking about it.

To give another example, let's assume that the Secretary, by regulation, decided not to pay family physicians at all, or the patients that choose family physicians, But those services aren't similar to anybody else's services, so they just won't pay them at all.

Is that subject to review anywhere?

Or, the Secretary is satisfied that the office visits performed by family physicians... and incidentally, their paint of $1.50 an office visit, that was one type of office visit.

As a matter of fact, for comprehensive office visits for Carol Diedrich, they cut it in half from $50 to $25.

But if the Secretary is prepared and satisfied that the office visits performed by family physicians are similar to office visits performed by chiropractors, I suppose the Secretary might take one... just one step further and decide that they were only covered for office visits and spinal stipulations on the part of family physicians.

Is that subject to no review?

If the Secretary promulgates the regulation of sickle cell anemia, services will not be paid.

Is that subject to review?

Perhaps that's a suspect clasification, well, let me give another example.

A terminally ill patient, they die too soon.

We won't pay for those services.

Clearly in conflict with the statute, does the government state there is no review for those types of issues?

Now, I've conceded under the Erika case, there is no judicial review of an amount of benefit determination made by a clearing officer after hearing, and that is the issue in the Erika case, not whether there is judicial review of any issue concerning the amount of benefits for which there may be no other determination available.

It says a mouthful, that concession, and the case law tells us the types of issue the carrier routinely conducts hearings on.

In the McClure case, for example, whether a sex change operation is medically necessary, whether an ambulance should have taken a patient to the nearest hospital or to a hospital 30 miles away, whether an appendectomy performed on the same patient on the same day can be billed along with other major abdominal surgery or if it is incidental to and included as part of the bill for the appendectomy, from the Herzog case from the Sixth Circuit, or the Rainer case, whether a medical procedure is a recognized and bona fide medical procedure that the Medicare program should pay.

Unidentified Justice: Are these hypotheticals of yours based on a decision without a hearing of any kind?

Mr. Gilchrist: That's precisely the point, Your Honor, that this issue in this case, several issues of statutory construction, but the reality of this case is, there is no hearing, The carrier has expertise and authority, expertise and experiencer, rather, as well a authority to make the decision on issues such as the issues that I've set forth.

They make those types of determinations every day in their private insurance business, and Congress delegated to a private insurance company under 1395-U the authority to make the same types of determinations and to conduct hearings to make those types of determinations under Part B.

That's in substantial contrast to this case.

this case involves a constitutional claim and a claim that a regulation promulgated by the Secretary violates the Medicare statute.

Certainly the carrier, non-lawyer hearing officer, has no great expertise and experience to address this type of issue, but perhaps more importantly the Secretary recognizes that fact when the Secretary implemented the statute, because the Secretary specifically barred the carrier hearing officer from making any comment on it, never mind making a determination on the legality of a regulation promulgated by the Secretary.

Here we asked for a hearing and the government quite correctly stated we're not entitled to a hearing on these issues, and then they turn around in the same breath state, well, if there's any mechanism at all it's the carrier hearing mechanism.

Congress simply did not intend to delegate those types of issues.

The legislative history makes that clear.

Let me point out just very briefly, on the separation of powers and the due process issue that I've pressed from the briefs... I don't want to get into detail as to Northern Pipeline, the Mathews versus Eldridge, and the McClure case which is a Medicare Part B case, but I concede that there is a great deal of flexibility in the amount of due process that must be afforded in social welfare cases to balance the private interest involved and the risk of erroneous deprivation versus the public interest in avoiding the burden of having to provide additional hearings.

By the way, both the Mathews case and the McClure case were allegations of entitlement to additional hearings.

Here there can be no meaningful hearing at any time on the issues that have been raised, and I think this Court has steadfastly maintained the position, they certainly did in the Mathews versus Eldridge case, that if due process means anything it means a meaningful hearing at a meaningful time.

Here there is no hearing before the carrier.

There is no hearing before a federal agency.

And if you accept the petitioner's position in this case, there's no hearing before any court.

Erika, according to petitioners today, stands for the proposition that there is no judicial review of any issue that may affect the amount of benefits under Part B of the Medicare program, whether there's a determination available anywhere else.

I've gone back and looked at the Erika case.

I've looked at the decision of the carrier in that case.

I've looked at the Court of Appeals decision in that case.

And I simply don't agree that the carrier is bound by any instructions in that case.

The issue was, during the last preceding year, the statutory issue, the regulation used the same words, during the last preceding year.

There was a small issue, basically a side issue concerning retroactive adjustment in that case, that may or may not have involved a carrier following instructions from the Secretary in the form of letters, I guess.

But I couldn't find in the opinion where the carrier stated that they were bound and could not make such determination.

But I think more important than that, if the government wants to take the position that Erika stands for the proposition that there's no hearing on any issue that may involve the amount of benefits, whether another available mechanism is available, even through a carrier hearing, they should have disclosed that to the Court at that time.

I note that Justice Powell's opinion in the Erika case paraphrases in essence what the position of the petitioners was at that time.

There it is stated that the petitioner argues that Congress specifically precluded review in the Court of Claims of adverse hearing officer determinations of the amount of Part B benefit payments.

The position of the respondents today is that a consistent reading of the Medicare statute... and incidentally, the Erika case was based upon not a specific statement from Congress because... from the statute, because 1395 double-F does not explicitly bar judicial review of anything.

Rather, it relied upon the grant of judicial review of determination for the amount of benefits under Part A of the Medicare program and silenced the Part B, coupled with the legislative history to reach the conclusion that there's no review of hearing officer determinations after hearing the amount of benefits under Part B of the program.

But the legislative history, and a logical and a consistent reading of that statute, is that the congressional intent to bar jurisdiction under Part B ties in directly and is related to the issues where Congress gave authority to the carrier to make those types of determinations under 1395-U.

And the issues that Congress intended to bar are those issues such as the types I've already raised where the carrier has expertise and has authority, and the legislative history supports not petitioner's interpretation about that, but rather respondent's.

The Senate committee report which petitioners cite as authority for their position at the inception of the passage of the Medicare statute simply stated that there was a hearing on the amount of benefits under Part B of the Medicare program by the carrier and there is no judicial review of such determinations.

Or when the statute was amended in 1972, again petitioners rely upon this language, the conference committee report also cited in Erika opinion, states there is no authorization for judicial review under Part B for matters involving solely... and that's Congress's word, not mine... the amount of benefits.

It's simply the logic and consistent reading of the statute, taken in proper context, is Congress intended that some issues certainly be conducted through a carrier hearing, and there is no judicial review of that carrier determination.

But there is nothing in the legislative history that Congress intended to preclude any issues under Part B of the Medicare program.

Let me talk about Weiner and Salfi for a moment, as well as 405-A.

Unidentified Justice: Before you do, Mr. Gilchrist, I'm not sure you've completely answered Mr. Kneedler's argument that the doctor, if he takes an assignment of a claim and he doesn't like the two tier or three tiers, whatever it is, is really asking for recovery that relates solely to the amount of benefit that he can get.

Why isn't solely the amount of benefit involved here?

Mr. Gilchrist: First of all, there's a serious question here as to whether this could be an amount of benefit case at all, and let me give you some examples.

The board certified family physicians, respondents in this case, are asking for a reduction in benefits, in essence, if you accept the government's position about equalizing the amount of payments because they are in the specialist screen.

The context of amount of benefits, the language of the legislative history that pertains to determinations on amount of benefits, and even within Part A where they grant judicial review of determinations on amount of benefits, has to be tied in together with the grant of authority to the carrier to make determinations on amount of benefits.

We could dance all day in terms of what those three words mean, amount of benefits.

But the fact of the matter is, when we read the legislative history we know what Congress meant by those words.

It meant those issues for which the carrier has expertise and experience and for which a hearing can be conducted at the carrier level.

Does that help clarify it at all?

Okay, thank you.

As to 405-A in Salfi and Weiner, the interesting part about the petitioner's brief is, they don't cite a single case for the proposition that the last sentence of 405-H which states that there is... no action may be taken under 1331 against the Secretary, U.S. Government officer and employee thereof to recover on any claims.

They don't cite a single case where that last sentence was taken out of context with the balance of 405-H which is clearly precluding 1331 jurisdiction of findings and decisions of the Secretary after a hearing, and precluding judicial review by any tribunal of findings and decisions of the Secretary after a hearing.

I don't want to get into a dispute as to whether or not Ringer had a sufficient reason for attempting to bypass, and that's clearly what that was, a bypass of the review mechanism under Part A.

He attempted to bypass 405-B and 405G.

I think the strongest statement that may be made from the Weiner decision is where Congress has provided for a federal administrative hearing such as they did under 405-B and where Congress has provided for judicial review of that federal administrative hearing such as they did in Weiner under 405-G, that mechanism must be followed and there is no reason that may justify a bypass.

I think that's about as we can go in the Weiner decision, and that states it very strongly.

Justice Rehnquist in that decision stated that the last sentence of 405-H cannot change meaning based upon whether or not a party has followed the mechanism available within 405-G, whether they've satisfied prerequisites, I think were the exact words.

But here that's an absolute, irrelevant issue.

There are no prerequisites under 405-G for the respondents to follow because 405-G simply doesn't apply, and the proper context, the last sentence of 1331, simply states that one may not bring 1331 jurisdiction to review a decision by the Secretary through an administrative hearing process where 405-G provides the judicial review.

That's in essence, also, the finding in the Salfi decision.

As I stumble through the interpretation of the Medicare statute I'm reminded by a statement Justice Powell made in the Gray Panther lawsuit.

He quoted from lower court decision that characterized the Social Security Act a an aggravated assault on the English language, and I certainly agree with that statement.

The fact of the matter is, a single sentence from the statute or even worse, a single sentence from the legislative history can be taken out of context to support virtually any position anybody wants to take, and I think that's in essence what the government has done here.

They've taken the last sentence of 405-H and they've ignored the balance of that section which is clearly in the context of no 1331 jurisdiction, where Congress has provided for a federal administrative hearings for judicial review, and they are attempting to take that sentence outside of that context and say that clearly and convincingly, Congress intended to bar 1331 jurisdiction for any claims under Part B.

Unidentified Justice: Has anyone, authoritatively or otherwise, made any guess or estimate as to how many such claims for judicial review are in the offing?

Mr. Gilchrist: I find that very... I'm glad you asked that question because I meant to talk about the court case.

I handle a great number of Part B cases.

I think I'm familiar with a number of Part B cases for which one goes into federal court in the State of Michigan, at least, and I would wager... I'm not positive... that this Court has been asked to hear more Part B cases involving jurisdiction, and there's been Part B cases filed in the Senate of Michigan, in Federal District Court on the merits, and as a matter of fact Michigan is... Blue Cross Blue Shield of Michigan is the tenth largest carrier in the country.

But what the government does is to keep raising this floodgate issue, but as a matter of fact circuits prior to Erika found jurisdiction even on the types of issues we now concede there's not jurisdiction, and they've never supplied this Court with the data as to the number of cases that have been filed, the number of Federal District Court cases or Court of Claims cases.

And to date they haven't.

I simply don't feel that there ever was a floodgate.

I don't want to rehash the Erika case, but the fact of the matter is today they raise the issue of floodgates but they don't... they don't provide this Court with any data that would indicate that in fact there would be such result.

I think that this is a very unusual case, as a matter of fact, a case that first of all the government sees no rationale in the equal protection issue, and also as Justice O'Connor indicated, it's quite a very basic statutory point, and furthermore--

Unidentified Justice: Do you agree with Mr. Kneedler's statistics of 300 million claims and 30 million are in Part B?

Mr. Gilchrist: --I don't quarrel with that.

Those are claims submitted in Part B of the Medicare program.

The question I'm raising is a number of cases filed in the Federal District Court.

That's the issue of raising the floodgates.

Unidentified Justice: My question is not as to how many have been filed, How many potentially could be filed if you prevail?

Mr. Gilchrist: I'm sorry.

I misunderstood.

On this precise issue, very, very few.

I mean, I suppose even if I don't prevail, the courts are open from nine to five.

Anybody can file a lawsuit.

But on the limited construction that I am stating, where there is judicial review on those issues where, the carrier cannot and has been stripped Of authority to make a determination, I'm not sure if there is another case like this to be honest with you, and there have been other cases filed in federal court.

I'm not sure if there's been a case in the country where the government when finally pushed to the wall stated that they had no rationale whatsoever for its actions in the face of an equal protection attack for example... so I simply don't feel there would be many.

I obviously can't give a precise number, but it certainly would be few.

The lower court stated this issue, and not the trial judge but the judge who heard the motion for summary judgment, better than I can state it.

He stated that he finds it improbable that Congress would delegate to a private insurance company the authority to violate the United States Constitution or the Medicare statute in Congress's name with impunity.

And that's the issue of this case.

I submit that--

Unidentified Justice: When it's put in those terms it's pretty difficult to argue with it.

Mr. Gilchrist: --That's right, but that is those are the terms.

That is the issue in this case.

But what I submit is that if Congress intended this, Congress would have said so.

The section 1395 that the petitioners rely upon on their 405-H argument simply says that 405-H shall apply to Medicare to the extent applicable to Title 2 cases.

Is that a clear statement by Congress that they intended this result?

And the result, I think, should be made even more clear.

What petitioners are alleging today is that Congress, while it's provided a forum for insignificant disputes, albeit without judicial review, performed before the carrier to decide issues such as whether an ambulance should have taken a patient to the nearest hospital or to a hospital 30 miles away, Congress intended no forum and no authority for anybody to address constitutional issues and statutory issues.

Stated another way, the more significant the issue the less likely that Congress afforded any remedy whatsoever or intended to afford any remedy whatsoever for those affected by the violation of the statute or the U.S. Constitution to obtain any relief.

If Congress intended this, somewhere but not within the statute at least within the legislative history, I submit petitioners should find a statement where Congress says this, and they simply haven't.

If there's no questions, I basically have no more to add.

Thank you.

Chief Justice Burger: Do you have anything further, Mr. Kneedler?

Mr. Kneedler: Yes, several points, Mr. Chief Justice.

First, the government did not concede in District Court that the exclusion of board eligible family physicians from the one charge screen was unconstitutional or irrational.

We simply said that by virtue of the changing of the eligibility requirements for family physicians, they should now be included.

So, this is not a case that ever, I would argue, raised a substantial constitutional question.

The other point--

ORAL ARGUMENT OF EDWIN S. KNEEDLER, ESQ. ON BEHALF OF PETITIONERS -- REBUTTAL

Justice Powell: May I ask for clarification, are you simply stating that the equal protection question is not before us at all?

Mr. Kneedler: --Well, there's several points.

Neither court below decided that question.

We also think that in any event, that is so insubstantial on the merits that it does not vest this Court with subject matter jurisdiction the same way that the claim in Ringer itself did not.

Justice Powell: Did the lower court say that the equal protection issue was so insubstantial?

Mr. Kneedler: No, the lower courts did not resolve the equal protection question.

Justice Powell: What is the AG's position?

Mr. Kneedler: Our position is that the equal protection argument is insubstantial, so insubstantial as to not vest the Court with--

Justice Powell: Is it your position that the construction of the statute is not here either?

Mr. Kneedler: --The construction of the statute is not here because we believe Congress has precluded judicial review of the question of the construction of the statute.

The Court of Appeals did address the question of the construction.

Justice Powell: So, you would leave the construction of the statute to somebody engaged by Blue Cross-Blue Shield who may not be a lawyer at all?

Mr. Kneedler: No.

The issue of statutory construction involved here is embodied in the regulation issued by the Secretary, and in fact issued by the Secretary in 1967 when the Medicare program was--

Justice Powell: But you're still going to leave the construction of the regulation to someone... to Blue Cross-Blue Shield to make that decision with no appeal?

Mr. Kneedler: --Well, there's oversight by the Secretary, as I pointed out earlier, annually.

Justice Powell: What sort of oversight?

Mr. Kneedler: There's an annual review of the carrier's performance by the Secretary's agents to make sure that the regulation is being properly implemented.

We would also like to point but that this--

Justice Powell: Has that sort of annual oversight ever been accepted as satisfactory in terms of providing some sort of appropriate administrative or judicial review of a major issue?

Mr. Kneedler: --Well, the Congress has frequently foreclosed judicial review of questions of law.

Last year the Court held that judicial review was foreclosed in the Chaney case.

In Erika, in fact, Congress held that a question relating to what the carrier did was lawful under the statute was foreclosed by Congress.

Justice Powell: Basically, Erika simply involved the question of whether or not individual claimants could argue about the amount of benefits?

Mr. Kneedler: But the basis for their claim was that the approach the carrier took to computing the prevailing charge was inconsistent with the statute, inconsistent with the same sentence of the statute upon which the respondents in this case relied, and similarly in Ringer there was a regulation issued by the Secretary, of nationwide scope, that could not be appealed to the Secretary.

Justice O'Connor: Mr. Kneedler, in the other cases the Court has had, wasn't at least review by the carrier of the issue available?

Mr. Kneedler: Not in Ringer.

Ringer involved Part B as well as Part A, and one of the claims in Ringer was that the Secretary's instructions that barred the carrier from awarding any benefits for the particular service was invalid, and the Court held in footnote 4 of its opinion that judicial review is entirely foreclosed even as to that statutory challenge to the regulations at issue in Ringer.

So, it was not a situation involving another avenue of judicial review.

Thank you.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

We'll hear arguments next.