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No. 98-1109: Shalala v. Illinois Council on Long Term Care Inc. | |||||||||||
No. 98-1109
In the Supreme Court of the United States
DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
BRIEF FOR THE PETITIONERS
HARRIET S. RABB
General Counsel
SHEREE R. KANNER
Associate General
Counsel
JEFFREY GOLLAND
Attorney
Department of Health
and Human Services
Washington, D.C. 20201
SETH P. WAXMAN
Solicitor General
Counsel of Record
DAVID W. OGDEN
Acting Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY A. LAMKEN
Assistant to the Solicitor General
BARBARA C. BIDDLE
JEFFREY CLAIR
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
Whether 42 U.S.C. 405(h), incorporated into the Medicare Act by 42 U.S.C.
1395ii, permits skilled nursing facilities participating in the Medicare
program to bring anticipatory, pre-enforcement lawsuits under 28 U.S.C.
1331 and 1346 (1994 & Supp. III 1997) to challenge the validity of Medicare
program enforcement regulations and guidelines notwithstanding the Medicare
Act's provision of an express, post-enforcement mechanism for administrative
and judicial review.
In the Supreme Court of the United States
No. 98-1109
DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
BRIEF FOR THE PETITIONERS
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-12a) is reported at 143
F.3d 1072. The memorandum and order of the district court (Pet. App. 13a-21a)
is unreported.
The judgment of the court of appeals was entered on May 8, 1998. A petition
for rehearing was denied on August 13, 1998 (Pet. App. 22a-23a). On November
2 and December 4, 1998, Justice Stevens extended the time within which to
file a petition for a writ of certiorari, first to December 12, 1998, and
then to January 10, 1999, a Sunday. The petition was filed on Monday, January
11, 1999, and was granted on April 19, 1999. The jurisdiction of this Court
is invoked under 28 U.S.C. 1254(1).
STATUTORY AND REGULATORY PROVISIONS INVOLVED
Pertinent statutory and regulatory provisions are set forth in the appendix
to this brief.
The Health Insurance for the Aged Act, commonly known as the Medicare Act,
Pub. L. No. 89-97, 79 Stat. 290, codified as amended, 42 U.S.C. 1395 et
seq., provides insurance for covered in-patient hospital and post-hospital
services, 42 U.S.C. 1395x(m), including skilled nursing care. 42 U.S.C.
1395f(b)(1), 1395i-3, 1395x(v)(1)(A).1 To receive payment for services provided
to Medicare beneficiaries, a skilled nursing facility must enter into a
provider agreement with the Secretary of Health and Human Services (HHS),
and meet "requirements of participation" relating to beneficiary
health, safety, and care. See 42 U.S.C. 1395i-3(a) to (d). Respondent, a
trade association that represents nursing facilities participating in the
Medicare program in Illinois, brought this suit to challenge the methods
by which the Secretary assesses compliance with Medicare's health, safety,
and quality-of-care requirements and selects remedies when noncompliance
is detected. The question before the Court is whether a federal district
court may entertain such a pre-enforcement challenge under the general grant
of federal-question jurisdiction contained in 28 U.S.C. 1331, notwithstanding
the Medicare Act's provision of express post-enforcement mechanisms for
judicial review.
1. The Social Security Act was passed in 1935 to provide retirement and
related benefits for the elderly. See ch. 531, 49 Stat. 620. Four years
later, Congress amended the Act by adding express provisions for administrative
and judicial review. See Social Security Act Amendments of 1939, ch. 666,
53 Stat. 1360; see S. Rep. No. 734, 76th Cong., 1st Sess. 51 (1939); H.R.
Rep. No. 728, 76th Cong., 1st Sess. 42 (1939). Those provisions now appear
(as amended) at 42 U.S.C. 405(b), (g) and (h).
Section 405(b) provides that any individual who is dissatisfied with an
agency determination is entitled to "notice and opportunity for a hearing
with respect to" the determination. 42 U.S.C. 405(b). Section 405(g),
in turn, provides that anyone dissatisfied with a "final decision *
* * made after a hearing to which he was a party may * * * obtain a review
of such decision by" filing an action in district court. 42 U.S.C.
405(g). Finally, 42 U.S.C. 405(h) renders the administrative and judicial
review procedures under Section 405(b) and (g) exclusive. It declares:
The findings and decisions of the Commissioner of Social Security after
a hearing shall be binding upon all individuals who were parties to such
hearing. No findings of fact or decision of the Commissioner of Social Security
shall be reviewed by any person, tribunal, or governmental agency except
as herein provided. No action against the United States, the Commissioner
of Social Security, or any officer or employee thereof shall be brought
under sections 1331 or 1346 of title 28 to recover on any claim arising
under this subchapter.
42 U.S.C. 405(h). (Section 1331 of Title 28 accords federal courts general
federal-question jurisdiction, and 28 U.S.C. 1346 provides jurisdiction
over cases in which the United States is a defendant.)
In 1965, Congress amended the Social Security Act by adding Title XVIII-the
Medicare Act-to furnish medical insurance for the elderly and disabled.
Pub. L. No. 89-97, § 102, 79 Stat. 291, codified as amended at 42 U.S.C.
1395 et seq.; see p. 1, supra. Rather than enact separate provisions for
review of Medicare claims, Congress incorporated the hearing and judicial
review mechanisms of 42 U.S.C. 405(b), (g), and (h) into the Medicare program.2
For example, 42 U.S.C. 1395ff(a) and (b) provide that any "individual
dissatisfied with" the determination by the Secretary of Health and
Human Services respecting either his "entitle[ment]" to or the
"amount" of benefits under Medicare is entitled to "a hearing
thereon * * * to the same extent as is provided in Section 405(b) * * *
and to judicial review of the Secretary's final decision after such hearing
as is provided in Section 405(g)." 42 U.S.C. 1395ff(a) and (b).
The Medicare Act makes those same hearing and judicial review provisions
applicable to decisions affecting institutions, such as skilled nursing
facilities, that provide services to Medicare beneficiaries. For example,
nursing facilities may receive reimbursement under Medicare only if they
have a provider agreement with the Secretary and they meet statutory requirements
relating to patient health, safety, and care; they must be certified as
meeting statutory requirements on average once a year. 42 U.S.C. 1395i-3(b)
to (d), 1395cc. If a provider wishes to dispute a determination concerning
compliance or certification-or termination or non-renewal of its provider
agreement-42 U.S.C. 1395cc(h) provides that it may do so through the hearing
and review procedures under 42 U.S.C. 405(b) and (g).3 It thus states:
[A]n institution or agency dissatisfied with a determination by the Secretary
that it is not a provider of services or a determination described in subsection
(b)(2) of this section shall be entitled to a hearing thereon by the Secretary
(after reasonable notice) to the same extent as provided in section 405(b)
[of Title 42], and to judicial review of the Secretary's final decision
after such hearing as is provided in section 405(g) [of Title 42].
42 U.S.C. 1395cc(h). The determinations "described in subsection (b)(2)"
include, among other things, a determination "that the provider fails
to comply substantially with the provisions of [its provider agreement or]
with the provisions of [the Medicare Act] and regulations thereunder."4
Different provisions of the Medicare Act added after 1965 similarly channel
other decisions affecting Medicare providers, including decisions determining
provider reimbursement or imposing civil money penalties for violations,
through specific statutory mechanisms for administrative and judicial review.5
Finally, the Medicare Act makes 42 U.S.C. 405(h)-the provision of Title
II of the Social Security Act that declares the Secretary's decisions to
be binding, prohibits review of any decision except as provided in the Act
itself, and deprives federal courts of jurisdiction under 28 U.S.C. 1331
and 1346-applicable to the Medicare program. Specifically, Section 1395ii
declares that "[t]he provisions of * * * subsections (a), (d), (e),
(h), (i), (j), (k), and (l) of section 405 of this title, shall also apply
with respect to this subchapter to the same extent as they are applicable
with respect to [Title II]."
2. Notwithstanding the Medicare program's health and safety requirements
for provider participation, a 1986 survey by the Institute of Medicine of
the National Academy of Sciences found that, in many "government certified
nursing homes, individuals * * * receive very inadequate -sometimes shockingly
deficient-care that is likely to hasten the deterioration of their physical,
mental, and emotional health." H.R. Rep. No. 391, 100th Cong., 1st
Sess., Pt. 1, at 452 (1987). A Government Accounting Office survey also
reported widespread deficiencies, ibid., and testimony before Congress confirmed
(sometimes in grim detail) extensive problems, such as unsanitary conditions,
pervasive neglect, and instances of serious abuse. See generally 1 Nursing
Home Care-The Unfinished Agenda: Hearing Before the Senate Special Comm.
on Aging, 99th Cong., 2d Sess. (1986) (1986 Hearing).6 As one observer summarized,
Medicare's compliance regime had "failed, * * * somewhat dismally,
to assure a decent level of patient care" to nursing facility residents.
Id. at 2. That failure, Congress concluded, was in part the product of a
system that focused on the facility's theoretical capacity to provide care,
i.e., paper qualifications and physical characteristics, rather than on
the actual care provided to beneficiaries. H.R. Rep. No. 391, supra, Pt.
1, at 466-467. And it resulted in part from the limited effectiveness of
the only enforcement remedy available to the Secretary-termination of the
provider agreement permitting the facility to participate in the Medicare
program. That regime led to a "yo-yo" effect, under which facilities
with serious health, safety, and quality-of-care deficiencies would remedy
them just in time to avoid termination, but fall into noncompliance once
again immediately thereafter. Id. at 471.7
Congress responded in 1987 by comprehensively reforming the requirements
of participation for skilled nursing facilities, altering the manner in
which compliance is enforced, and expanding the range of available remedies.
See Omnibus Budget Reconciliation Act of 1987 (OBRA), Pub. L. No. 100-203,
§§ 4201-4218, 101 Stat. 1330-160 to 1330-221. Among other things,
OBRA requires that skilled nursing facilities be subjected to inspection
without prior notice on average once a year. 42 U.S.C. 1395i-3(g)(2)(A)(i)
and (iii). Although surveys are generally under the control of state agencies,
42 U.S.C. 1395i-3(g)(1)(A),8 federal law governs the qualifications of survey
team members, prescribes survey methods and procedures, and requires the
use of federal forms. 42 U.S.C. 1395i-3(g)(2)(C); see also 42 C.F.R. 488.26(c),
488.314. Survey information must be made available to the public, 42 U.S.C.
1395i-3(g)(5)(A), and information about some types of substandard care must
be provided to certain state officials, licensing boards, and physicians,
42 U.S.C. 1395i-3(g)(5)(B) to (C); see also 42 C.F.R. 488.325. The statute
also directs the Secretary to develop enforcement criteria and to minimize
the time between the detection of deficiencies and the imposition of a remedy.
42 U.S.C. 1395i-3(h)(2)(B).
When a survey agency detects a deficiency, it must recommend a remedy to
the Secretary, who can approve the remedy or select a different one. 42
U.S.C. 1395i-3(h)(1). If the facility substantially complies with health,
safety, and quality of care requirements-that is, if "any identified
deficiencies pose no greater risk to resident health or safety than the
potential for causing minimal harm," 42 C.F.R. 488.301-no remedy is
imposed.9 Where substantial compliance is not found, however, the Secretary
may impose a remedy from an expanded list of options; she may direct the
creation of a plan for correcting violations, impose civil money penalties,
deny further reimbursement for services rendered after the deficiency is
discovered, appoint temporary management, or terminate a facility's right
to participate in Medicare. 42 U.S.C. 1395i-3(h)(2); 42 C.F.R. 488.406.
In general, the remedies selected depend on the seriousness of the violations.
See 42 U.S.C. 1395i-3(h)(2)(B); see also 42 C.F.R. 488.408 (grouping violations
into 3 categories). Thus, the Secretary's regulations require survey agencies
to determine whether the violations have already resulted in actual harm
to residents, the potential for harm the violations pose, the degree of
that potential harm, and whether the violations place residents in "immediate
jeopardy," i.e., whether the violations have "caused, or [are]
likely to cause, serious injury, harm, impairment, or death to a resident."
42 C.F.R. 488.301, 488.404(b)(1). The survey agency also must consider whether
the violations are isolated, form a pattern, or are widespread. 42 C.F.R.
488.404(b)(2). Other factors relevant to remedy selection include the relationship
among deficiencies and the facility's compliance history. 42 C.F.R. 488.404(c).
In general, the Secretary is expected to use available enforcement mechanisms
to "bring substandard facilities into compliance with [federal] quality
of care requirements or to exclude them from the program." H.R. Rep.
No. 391, supra, Pt. 1, at 452.
Where relatively serious violations grouped under the heading "substandard
quality of care" are found,10 the agency must evaluate the facility's
operations in greater depth and identify the policies and procedures that
caused the deficiency. 42 U.S.C. 1395i-3(g)(2)(B). Nursing facilities that
are subjected to such an extended survey because of substandard care lose
their eligibility to conduct a certified nurse-aide training program for
two years, 42 U.S.C. 1395i-3(f)(2)(B)(iii), and three consecutive findings
of substandard quality of care trigger automatic sanctions, such as a denial
of payment for new admissions until the facility achieves, and can demonstrate
that it is able to maintain, substantial compliance, 42 U.S.C. 1395i-3(h)(2)(E);
42 C.F.R. 488.414.
Nursing homes must be afforded written notice of deficiencies noted in any
survey, of the remedy (if any) to be imposed, and of appeal rights. 42 C.F.R.
488.330, 488.402(f). A facility that disagrees with the survey may invoke
an informal dispute-resolution process before the survey agency. That process
must afford the nursing facility a prompt and meaningful opportunity to
refute any findings of deficient care. 42 C.F.R. 488.331.11 Whether or not
the facility invokes the informal dispute resolution process, any facility
subjected to a remedy for noncompliance is entitled to a hearing before
an administrative law judge (ALJ). See 42 U.S.C. 1395cc(h); 42 C.F.R. 498.1(a)-(b),
498.3(a), 498.3(b)(12). At that hearing, the facility may be represented
by counsel, call witnesses, and present evidence. 42 C.F.R. 498.40-498.78.
Any nursing facility dissatisfied with the resulting "decision may
request Departmental Appeals Board review." 42 C.F.R. 498.5(c). Where
civil money penalties are imposed, the decision of the Departmental Appeals
Board is subject to judicial review through a petition to the court of appeals.
42 U.S.C. 1395i-3(h)(2)(B)(ii); 42 U.S.C. 1320a-7a(e); see also 42 U.S.C.
1395cc(h)(2). In all other cases, "judicial review of the Secretary's
final decision" is available in district court as provided in 42 U.S.C.
405(g). 42 U.S.C. 1395cc(h)(1). See generally pp. 4-6 & n.5, supra.
3. Respondent filed this action in the United States District Court for
the Northern District of Illinois in 1996 seeking injunctive and declaratory
relief with respect to the implementing regulations the Secretary issued
in 1995. The complaint does not challenge the Secretary's substantive standards
governing resident health, safety, and care. J.A. 17, 22, 36-37 (¶¶
1, 16, 64). Instead, respondent broadly challenges the procedures and remedies
used in enforcing those standards.
More specifically, respondent alleges that the Secretary's regulations concerning
the characterization of the seriousness of violations are unconstitutionally
vague. J.A. 18, 29-32, 43-45 (¶¶ 3B, 37-50, 84-88). According
to respondent, critical terms such as "minimal harm," "immediate
jeopardy," "pattern," and "widespread," are not
defined with sufficient particularity. See J.A. 30-31 (¶¶ 42-44).
Respondent further claims that, because of that asserted vagueness, remedies
are not imposed in a consistent fashion. J.A. 18, 36-38, 45, 46 (¶¶
3C, 64-68, 89-91, 94).
Respondent also alleges that the Secretary's regulations are inconsistent
with due process because they limit the scope of administrative review.
J.A. 18-19, 32-36, 47-49 (¶¶ 3D-3E, 51-63, 95-101). In particular,
respondent complains that administrative review of survey findings is not
available if no remedy is imposed, J.A. 34-35, 48-49 (¶¶ 59, 99,
101), or as to matters such as the surveyors' characterization of the level
of noncompliance (except where it affects the permissible range of civil
penalties) and the remedy selected, J.A. 34, 48-49 (¶¶ 57-58,
101). See generally 42 C.F.R. 498.3(b)(12) and (13), (d)(10) and (11). Respondent
also protests the absence of a prior hearing before certain remedies, such
as termination of the provider agreement, are imposed. J.A. 18-19 (¶
3D).12 Finally, the complaint alleges that a manual used by state survey
inspectors to review facilities for compliance-the State Operations Manual
or SOM-is a substantive rule that was promulgated outside the notice-and-comment
rulemaking process required by the Administrative Procedure Act (APA), 5
U.S.C. 553. J.A. 18, 26-28, 46 (¶¶ 3A, 30-36, 92-94).
Respondent seeks an order declaring that (1) the Secretary's regulations
are unconstitutionally vague, (2) the State Operations Manual was promulgated
in violation of the APA, and (3) the administrative appeal procedures provided
under the current regulations are inadequate. J.A. 51 (¶¶ A, C,
D). Respondent also seeks an injunction precluding the Secretary from (1)
disclosing survey results where "substandard quality of care"
is found; (2) imposing or collecting civil money penalties; and (3) imposing
"upon [respondent's] Medicare members any ban on payment as a remedy
for any deficiency." J.A. 52 (¶¶ E, F, G). Subject matter
jurisdiction is premised on 28 U.S.C. 1331, 1346, and 2201. J.A. 22 (¶
14); Pet. App. 13a, 15a.
The district court dismissed the complaint for lack of subject matter jurisdiction.
Pet. App. 13a-21a. The court pointed out that, under 42 U.S.C. 405(h), a
federal district court may not assert jurisdiction under 28 U.S.C. 1331
or 1346 with respect to claims arising under the Medicare Act. In this case,
the court reasoned, respondent's claims clearly arise under the Medicare
Act, and it therefore could not assert jurisdiction under 28 U.S.C. 1331
and 1346. Pet. App. 15a-18a.
The district court also rejected respondent's reliance on Bowen v. Michigan
Academy of Family Physicians, 476 U.S. 667 (1986). See Pet. App. 18a-19a.
In Michigan Academy, this Court held that 28 U.S.C. 1331 gave a federal
district court jurisdiction over a facial challenge to the validity of Medicare
regulations governing the methodology for calculating payments under Part
B of the Medicare program. At the time Michigan Academy was decided, the
Medicare Act (through 42 U.S.C. 1395ff (1982)) provided for a hearing and
judicial review, under 42 U.S.C. 405(b) and (g), of decisions regarding
the amount of payment (if any) due for particular services under Part A
of the Medicare program, but not under Part B, see 476 U.S. at 674 n.5,
and the Court had already held in United States v. Erika, Inc., 456 U.S.
201, 207-208 (1982), that Congress thereby had completely foreclosed judicial
review of administrative decisions concerning the amount of benefits payable
under Part B. In Michigan Academy, however, the Court, relying on the "strong
presumption that Congress intends judicial review of administrative action,"
held that the Medicare Act does not preclude "challenges mounted against
the method by which [the] amounts [of Part B benefits] are to be determined
rather than [challenges to] the [amount] determinations themselves."
476 U.S. at 670, 675.
In light of the statutory framework and this Court's analysis, the district
court in this case concluded that Michigan Academy was premised on the fact
that the plaintiffs there had "no other avenue of judicial review"
to challenge the Secretary's regulations. Pet. App. 18a. Here, in contrast,
the Medicare Act itself provides an avenue through which respondent's members
can challenge the relevant enforcement procedures any time they are applied
to the members themselves. Ibid. Moreover, the district court continued,
Congress amended the Medicare Act shortly after the Court's decision in
Michigan Academy, and the amendment now provides administrative and judicial
review under 42 U.S.C. 405(b) and (g) for the sort of Part B methodology
challenges that were at issue in that case. See Omnibus Budget Reconciliation
Act of 1986, Pub. L. No. 99-509, § 9341(a)(1), 100 Stat. 2037 (codified
at 42 U.S.C. 1395ff(1)). Because both Part A and Part B participants "now
have an avenue of judicial review," the district court explained, "the
concern * * * in Michigan Academy"-that agency action would be altogether
immune from judicial review-"no longer exists." Pet. App. 18a.
The district court further found that respondent had not satisfied the prerequisites
for judicial review under 42 U.S.C. 405(g) (as made applicable here by 42
U.S.C. 1395cc(h)(1)), including the non-waivable requirement that all claims
be presented to the Secretary, and the waivable requirement that administrative
remedies be exhausted. Pet. App. 18a-19a. Here, the court observed, respondent
"ha[d] not alleged or shown any attempt at presentment of [its] claims
to the Secretary." Id. at 19a.13
4. The court of appeals vacated and remanded. Pet. App. 1a-12a. It acknowledged
that this Court's decisions in Heckler v. Ringer, 466 U.S. 602 (1984), and
Weinberger v. Salfi, 422 U.S. 749 (1975), "treat th[e] language [of
42 U.S.C. 405(h)] as channeling all claims to benefits through the administrative
forum, no matter what legal theory underlies the claim." Pet. App.
4a. Relying on Michigan Academy, however, the court of appeals concluded
that Section 405(h) addresses only provider claims relating to a "request
for reimbursement," ibid., and does not apply to an "anticipatory
challenge to implementing regulations," id. at 5a.
The court of appeals agreed that "the 1986 amendments [to Part B],"
which now provide an avenue of judicial review of Part B amount determinations
and regulations through Section 405(g), might well "remove the practical
support" for a distinction between "pre-enforcement challenges
to Medicare regulations * * * and requests for reimbursement." Pet.
App. 5a. It also recognized that "Michigan Academy [had] emphasized
* * * the presumption that Congress has allowed some avenue of judicial
review, and the Justices [had] read the statutes then in effect with that
presumption in mind." Ibid. But the court of appeals noted that Congress
had not amended 42 U.S.C. 405(h) or 1395ii. The court therefore considered
itself "obliged to follow" Michigan Academy, which it read as
permitting pre-enforcement review of regulations notwithstanding 42 U.S.C.
405(h), even where (unlike in Michigan Academy) Congress has provided for
judicial review under 42 U.S.C. 405(g). See Pet. App. 6a-7a.14
The Secretary's petition for rehearing with suggestion of rehearing en banc
was denied, although three judges voted to grant rehearing en banc. Pet.
App. 22a-23a & n.2.
A. The Medicare Act establishes detailed mechanisms for obtaining judicial
review of claims that arise under the Act. Of particular significance here,
it provides for judicial review of a regulation after the regulation has
been applied to the party seeking to challenge it, the party has presented
its claim to the Secretary, and the Secretary has issued a final decision.
Where the Act itself provides an express mechanism for obtaining judicial
review, that mechanism is exclusive. That is clear not merely from the reticulated
nature of the Act's review mechanisms, but also from the text of 42 U.S.C.
405(h), which, as incorporated into the Medicare program by 42 U.S.C. 1395ii,
declares that "[n]o findings of fact or decision of the [Secretary]
shall be reviewed by any person, tribunal, or governmental agency except
as * * * provided" in the Medicare Act itself, and that "[n]o
action against the United States, the [Secretary], or any officer or employee
thereof shall be brought under sections 1331 or 1346 of title 28 to recover
on any claim arising under this subchapter." As the Senate Report accompanying
the Medicare Act explained, "[i]t is intended that the remedies provided
by these review procedures shall be exclusive." S. Rep. No. 404, 89th
Cong., 1st Sess., Pt. 1, at 55 (1965).
B. The court of appeals' decision permitting federal-question jurisdiction
over "pre-enforcement" challenges to the validity of Medicare
regulations under 28 U.S.C. 1331, notwithstanding the availability of post-enforcement
review, is at odds with the plain language of Section 405(h) and is inconsistent
with Heckler v. Ringer, 466 U.S. 602 (1984); Weinberger v. Salfi, 422 U.S.
749 (1975), and Mathews v. Eldridge, 424 U.S. 319 (1976). Those precedents
hold that where, as here, the plaintiff's standing and the substantive basis
for the plaintiff's suit are based on the Social Security Act (including
its Medicare title), review is available only as provided by the Act itself.
Nor is the court of appeals' decision supported by Bowen v. Michigan Academy
of Family Physicians, 476 U.S. 667 (1986). Unlike this case, Michigan Academy
involved Medicare claims for which there was no avenue of judicial review
under the Medicare Act. As a result, precluding general federal-question
jurisdiction over those claims would have left the plaintiffs with no means
of securing judicial review of substantial questions concerning the administration
of the Medicare program-a result that the Court found to be inconsistent
with the strong presumption that Congress intends final agency action to
be subject to judicial review. Thus, contrary to the decision below, Michigan
Academy does not authorize federal-question jurisdiction over pre-enforcement
challenges to Medicare regulations where, as here, the Medicare Act itself
affords fully adequate means of judicial review.
C. Although respondent attempts to justify bypass of the Medicare Act's
otherwise exclusive mechanisms by claiming that its statutory and constitutional
claims cannot be raised in administrative proceedings, those claims can
be raised on judicial review of the Secretary's final decision. This Court,
moreover, has repeatedly rejected the suggestion that a party can bypass
the otherwise exclusive mechanisms for review provided by the Social Security
Act simply because it raises constitutional or other issues that would not
ordinarily be addressed in the administrative process. "[T]he plain
words of the third sentence of 405(h) do not preclude constitutional challenges.
They simply require that [the challenges] be brought under jurisdictional
grants contained in the Act, and thus in conformity with the same standards
which are applicable to nonconstitutional claims arising under the Act."
Salfi, 422 U.S. at 762.
RESPONDENT'S PRE-ENFORCEMENT JUDICIAL CHALLENGE TO THE SECRETARY'S ENFORCEMENT
GUIDELINES AND REMEDIES IS BARRED BY THE MEDICARE ACT
By incorporating 42 U.S.C. 405(g) and (h) into the Medicare Act through
42 U.S.C. 1395cc(h) and 1395ii, Congress established a specific and exclusive
mechanism for obtaining judicial review of claims "arising under"
the Medicare Act. Those provisions require a nursing facility or other participant
in the Medicare program to challenge the Secretary's regulations and policies
after they have been applied to that participant, thereby ensuring that
challenges are of manageable proportions and are framed by a concrete, factual
setting. And they route all challenges through the administrative process
as a pre-condition to judicial review, thereby permitting the development
of a factual record, allowing for refinement of legal issues, enabling the
agency to apply its expertise to the specific issues raised, and affording
the Secretary the opportunity to resolve the dispute on other grounds.
In this case, respondent seeks to bypass Medicare's established mechanisms
for obtaining review by bringing an anticipatory challenge under 28 U.S.C.
1331 to the Secretary's regulations in the abstract, without reference to
any specific enforcement action. That effort, however, cannot be reconciled
with the Medicare "statute's language, structure, * * * purpose, [and]
legislative history," especially given that the Act itself provides
an opportunity for "meaningful review." Thunder Basin Coal Co.
v. Reich, 510 U.S. 200, 207 (1994). Indeed, the text of Section 405(h) prohibits
such an effort in unmistakeable terms.
A. WHERE THE MEDICARE ACT PROVIDES A MECHANISM FOR OBTAINING JUDICIAL REVIEW,
THAT MECHANISM IS EXCLUSIVE
1. a. The Medicare Act provides a highly "reticulated statutory scheme,
which carefully details the forum and limits of review" of the Secretary's
determinations. Bowen v. Michigan Academy of Family Physicians, 476 U.S.
667, 675 (1986). With respect to each of a number of categories of claims,
the Act channels the claims through administrative and then judicial review
after the Secretary has taken action (reimbursement, enforcement, etc.)
directed at the person seeking review. Thus, individuals who are dissatisfied
with entitlement and payment determinations, 42 U.S.C. 1395ff(a) and (b),
providers aggrieved by reimbursement decisions, 42 U.S.C. 1395oo(a) and
(f), and entities subjected to civil money penalties, 42 U.S.C. 1320a-7a(c)(2)
and (e), all are afforded the opportunity for a hearing after the Secretary's
initial determination, and for judicial review once the Secretary reaches
a final decision. See also pp. 3-6, supra.
That same general scheme applies to nursing facilities seeking to challenge
the Secretary's guidelines and remedies for enforcing the Medicare program's
requirements for participation. In particular, any nursing facility or other
provider "dissatisfied with a determination by the Secretary that it
is not a provider of services" or a determination that it does not
"substantially comply" with the Secretary's health, safety, and
quality-of-care requirements "is entitled to a hearing thereon by the
Secretary (after reasonable notice) to the same extent as provided in section
405(b) * * * and to judicial review of the Secretary's final decision after
such hearing as is provided in section 405(g) [of Title 42]." 42 U.S.C.
1395cc(h)(1) and (b)(2); see pp. 4-5, supra. Likewise, under 42 U.S.C. 1395i-3(h)(2)(B)(ii),
a facility against which civil penalties have been assessed is entitled
to a hearing, and judicial review in the court of appeals, as provided by
42 U.S.C. 1320a-7a(c)(2) and (e).
The provision of such a "detailed structure" for post-enforcement
administrative and judicial review is, by itself, strong evidence that Congress
intended to make that structure exclusive. See Thunder Basin, 510 U.S. at
207; United States v. Erika, Inc., 456 U.S. 201, 208 (1982) (concluding
that evidence of exclusivity is particularly strong "[i]n the context
of" the Medicare Act's "precisely drawn provisions"). See
also Board of Governors of the Fed. Reserve Sys. v. MCorp Fin., Inc., 502
U.S. 32, 43-44 (1991); United States v. Fausto, 484 U.S. 439, 448-449 (1988);
Whitney Nat'l Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411,
420 (1965). By contrast, when Congress intends to permit pre-enforcement
review notwithstanding specific post-enforcement review mechanisms, it typically
enacts express statutory provisions so providing. See, e.g., Harrison v.
PPG Indus., 446 U.S. 578, 592-593 (1980). It has not done so here.15
b. Congress, in any event, has expressly provided that the post-enforcement
mechanisms for judicial review in the Medicare Act are exclusive. When Congress
provided for judicial review of Social Security decisions by enacting 42
U.S.C. 405(g), it paired that provision with 42 U.S.C. 405(h) to preclude
judicial review by other means. And when Congress made 42 U.S.C. 405(g)
applicable to compliance determinations under the Medicare program in 1965,
it also made Section 405(h) applicable by enacting 42 U.S.C. 1395ii. As
incorporated into the Medicare Act, Section 405(h) provides:
The findings and decisions of the [Secretary] after a hearing shall be binding
on 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 sections 1331 or 1346 of title 28 to recover on any claim
arising under this subchapter.
As this Court has observed, "the first two sentences of § 405(h)
* * * assure that administrative exhaustion will be required," Weinberger
v. Salfi, 422 U.S. 749, 757 (1975), while the third sentence "provides
that § 405(g), to the exclusion of 28 U.S.C. § 1331, is the sole
avenue for judicial review for all 'claim[s] arising under' the Medicare
Act." Heckler v. Ringer, 466 U.S. 602, 614-615 (1984) (emphasis added).
Section 405(h) thus "require[s] the exhaustion of available administrative
procedures, * * * foreclose[s] jurisdiction under the general grant of federal-question
jurisdiction, 28 U.S.C. § 1331, and * * * route[s] review through §
[405(g)]." Califano v. Sanders, 430 U.S. 99, 103 n.3 (1977); see also
id. at 110 (Stewart, J., concurring) ("I can see no reason in this
case why the second sentence of § [405(h)] should not be read to mean
exactly what it says-that the decision before us is reviewable under §
[405(g)] or not at all.").16
c. To the extent the text and structure of the Medicare Act could leave
any doubt, the legislative history erases it. The 1965 Senate Report that
accompanied the Medicare Act, immediately after discussing the various methods
for obtaining administrative and judicial review under the Act, declares:
"It is intended that the remedies provided by these review procedures
shall be exclusive." S. Rep. No. 404, 89th Cong., 1st Sess., Pt. 1,
at 54-55 (1965) (emphasis added). A clearer expression of Congress's intent
is difficult to imagine.
d. Finally, requiring nursing facilities like respondent's members to seek
judicial review under Section 405(g) after first seeking relief in the administrative
process is fair and sensible. It does not deny nursing facilities the opportunity
for judicial review; it merely postpones review until such time as the claim
has arisen in a specific, factual context, the matter has been presented
to the Secretary, and the Secretary has issued a final decision. See Salfi,
422 U.S. at 762. Moreover, channeling Medicare claims through the statutorily-provided
mechanisms for administrative and judicial review serves important policy
goals. First, by requiring that challenges be brought in the context of
a specific enforcement action, the Act ensures that "the scope of the
controversy [will be] reduced to more manageable proportions, and its factual
components fleshed out, by some concrete action applying the regulation
to the claimant's situation in a fashion that harms or threatens to harm
him." Lujan v. National Wildlife Fed'n, 497 U.S. 871, 891 (1990); see
Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 58-59 (1993) (noting, for
similar reasons, that mere passage of a statute and issuance of regulations
do not give a complainant a ripe claim absent agency action "applying
the regulation to him"). Second, the process required by Section 405(g)
and (h) promotes the interest in administrative efficiency by protecting
the agency from the "potential for overly casual * * * judicial intervention
in an administrative process" that is responsible not only for protecting
the health and safety of thousands of Medicare beneficiaries residing in
nursing homes, but also for resolving "millions of claims" a year.
Ringer, 466 U.S. at 627; see also Salfi, 422 U.S. at 765.
Third, channeling claims through the administrative process promotes judicial
economy. It permits the agency "to correct its own errors, to afford
the parties and the courts the benefit of its experience and expertise,
and to compile a record which is adequate for judicial review." Salfi,
422 U.S. at 765; accord Ringer, 466 U.S. at 619 n.12. Further, it may avert
the need for judicial review altogether, as it "assures the Secretary
the opportunity prior to * * * litigation to ascertain, for example, that
the particular claims involved are neither invalid for other reasons nor
allowable under other provisions of the Social Security Act." Salfi,
422 U.S. at 762.
2. Consistent with the text, structure, history, and purposes of the Social
Security Act's review provisions, the Court repeatedly has recognized that,
where those provisions create a mechanism for judicial review, that mechanism
is exclusive. In Salfi, for example, the Court held that a federal district
court lacked jurisdiction under 28 U.S.C. 1331 to hear a constitutional
challenge to a provision of the Social Security Act that rendered the plaintiffs
ineligible for certain benefits. The language of Section 405(h), the Court
held, is "sweeping and direct"; it states "that no action
shall be brought under § 1331" with respect to any claim "arising
under" the Social Security Act. 422 U.S. at 757. The Court in Salfi
also rejected the argument that Section 405(h) does not apply if the suit
can be characterized as "arising under" the Constitution. Where
"the Social Security Act * * * provides both the standing and the substantive
basis for the presentation of their constitutional contentions," the
Court held, the plaintiffs' action is a suit "arising under" the
Act within the meaning of Section 405(h), even if the suit could be said
to arise under the Constitution as well. 422 U.S. at 760-761. Consequently,
where such claims are asserted, Section 405(h) precludes federal courts
from exercising jurisdiction over them pursuant to 28 U.S.C. 1331; instead,
judicial review is available only through the mechanisms provided by the
Social Security Act itself. 422 U.S. at 760-761.
Seven years later, the Court again stressed the exclusivity of the Act's
review mechanisms in United States v. Erika, Inc., 456 U.S. 201 (1982).
There, a company that had provided services to Medicare beneficiaries sought
to challenge the amount of reimbursement it received under Part B of the
Medicare program. At that time, the Act provided for judicial review of
decisions under both Part A and Part B where the "dispute relates to
* * * eligibility to participate," but provided for judicial review
of determinations concerning the "amount" of payment only with
respect to claims under Part A. See 456 U.S. at 207-208. "In the context
of the statute's precisely drawn provisions" and supporting legislative
history, the Court explained, the omission of an express provision for judicial
review of Part B "amount determinations" furnished "persuasive
evidence that Congress deliberately intended to foreclose further review"
of such determinations. Id. at 208. Thus, even though treating the Medicare
program's review provisions as exclusive in Erika rendered the administrative
determination at issue there completely unreviewable, the Court held them
to be exclusive.
More recently, in Heckler v. Ringer, 466 U.S. 602 (1984), this Court once
again concluded that 42 U.S.C. 405(g) provides the exclusive mechanism for
obtaining judicial review of the Secretary's implementation and enforcement
of the Medicare Act. In Ringer, one of the named plaintiffs, Freeman Ringer,
sought to challenge an agency rule that precluded reimbursement for an operation
he wished to undergo. Because Ringer had not undergone that procedure, he
could not file a claim for reimbursement and challenge the Secretary's decision
denying the claim under 42 U.S.C. 405(g). Accordingly, he brought a "pre-enforcement"
action in district court requesting a declaratory judgment that the pertinent
Medicare regulation was invalid. 466 U.S. at 621-623. This Court held that
the Medicare Act itself, in 42 U.S.C. 405(g) (as incorporated by 42 U.S.C.
1395ff(b)), affords the exclusive basis for obtaining jurisdiction over
such a claim, and that federal courts could not exercise jurisdiction under
28 U.S.C. 1331. The Court stated: "The third sentence of 42 U.S.C.
§ 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii,
provides that § 405(g), to the exclusion of 28 U.S.C. § 1331,
is the sole avenue for judicial review for all 'claim[s] arising under'
the Medicare Act." 466 U.S. at 614-615 (emphasis added; footnote omitted).
Finally, just last Term, in Your Home Visiting Nurse Services, Inc. v. Shalala,
119 S. Ct. 930, 935 (1999), this Court reaffirmed its holding in Ringer,
again declining to permit judicial review of claims under the Medicare program
except as provided in the Act itself. There, a provider sought judicial
review of a refusal to reopen its reimbursement claim. "[J]udicial
review under the federal-question statute, 28 U.S.C. § 1331,"
the Court explained, "is precluded by 42 U.S.C. § 405(h), applicable
to the Medicare Act by operation of § 1395ii, which provides that '[n]o
action against . . . the [Secretary] or any officer or employee thereof
shall be brought under section 1331 . . . of title 28 to recover on any
claim arising under this subchapter." 119 S. Ct. at 935. The provider's
claim, the Court further concluded, "'arises under' the Medicare Act
within the meaning of [Section 405(h)] because 'both the standing and the
substantive basis for the presentation' of the claim are the Medicare Act."
Ibid. (quoting Ringer, 466 U.S. at 615 (some internal quotation marks omitted)).
3. The exclusivity of the review procedures established by Section 405(g)
is further reinforced by the Administrative Procedure Act (APA), 5 U.S.C.
702-704. Section 10(b) of the APA states that, where Congress has provided
a "special statutory review proceeding relevant to the subject matter,"
complainants must use that "form of proceeding for judicial review,"
unless it is "inadequa[te]." 5 U.S.C. 703. Moreover, Section 10(c)
of the APA bars resort to its general provisions for judicial review of
agency action unless "there is no other adequate remedy in a court."
5 U.S.C. 704.
As Attorney General Clark explained shortly after the APA's enactment, "[t]he
net effect [of Section 10], clearly intended by the Congress, is to provide
for a dovetailing of the general provisions of the [APA] with the particular
statutory provisions which the Congress has moulded for special situations."
Attorney General's Manual on the Administrative Procedure Act 95 (1947).17
The APA thus "'does not provide additional judicial remedies in situations
where the Congress has provided special and adequate review procedures.'"
Bowen v. Massachusetts, 487 U.S. 879, 903 (1988) (quoting Attorney General's
Manual, supra, at 101).
4. The foregoing principles foreclose respondent's suit here. Respondent
seeks to challenge the Secretary's regulations and guidelines governing
the enforcement of Medicare's health, safety, and quality-of-care requirements
for nursing homes. But respondent does not seek review of a specific, concrete
"determination" or application of those regulations. See J.A.
22 (¶ 16) (Respondent "does not challenge the specific application
of the 1995 Regulations and the SOM to any one facility, but challenges
instead their lawfulness and their use" generally). Nor does respondent
assert that jurisdiction is proper under the mechanisms for judicial review
provided by the Medicare Act itself. To the contrary, respondent omits any
reference to those provisions in its complaint, relying only on the more
general jurisdictional grants contained in 28 U.S.C. 1331 and 1346. J.A.
22 (¶ 14).
Respondent thus is attempting to bypass the express statutory mechanisms
for judicial review provided by the Medicare Act. But such a bypass is precisely
what Section 405(h) prohibits, for it makes Section "405(g) * * * the
sole avenue for judicial review for all 'claim[s] arising under' the Medicare
Act." Ringer, 466 U.S. at 615 (emphasis added). Respondent nowhere
disputes that its claims "arise under" the Act within the meaning
of Section 405(h).18
Permitting respondent to bypass the mechanisms for review provided by the
Medicare Act in this case, moreover, would give rise to the very dangers
that the Medicare Act seeks to avoid. Because respondent seeks to raise
its claims in the abstract rather than in connection with a specific application
of the regulations, "the scope of the controversy" has not been
"reduced to more manageable proportions," Lujan, 497 U.S. at 891;
instead, it remains unwieldy and unmanageable, a broad-ranging attack on
virtually every aspect of the Secretary's compliance regime. The correspondingly
broad relief respondent seeks also creates a serious risk that premature
judicial interference could have devastating consequences for the program.
In essence, respondent asks the district court to invalidate the Secretary's
entire compliance enforcement program, J.A. 51 (¶¶ A-D), and to
bar the Secretary from assessing civil penalties, withholding payments,
or imposing other sanctions, even where blatant and dangerous violations
of the program's health, safety, and quality-of-care criteria are detected,
J.A. 52 (¶¶ F-H). That relief would deprive the Secretary of access
to the very remedies Congress thought necessary when it enacted OBRA to
reform enforcement in 1987, and would bring enforcement to a virtual standstill
in Illinois. See pp. 6-9, supra. Requiring respondent's members to challenge
a discrete instance of enforcement of the regulations under the Medicare
Act's review provisions will dramatically reduce the risk of such a grave
intrusion on a federal program critical to the health of thousands of Medicare
beneficiaries. See Ringer, 466 U.S. at 627 (Medicare Act remedies protect
the agency from the "potential for overly casual * * * judicial intervention
in" important administrative processes); Salfi, 422 U.S. at 765 (review
mechanisms avoid "premature interference with agency processes, so
that the agency may function efficiently").
Likewise, because respondent's challenge is purely anticipatory, it suffers
from the absence of a factual record and concrete context that would make
it fit for judicial review. Indeed, for that reason, the court of appeals
held that respondent's void-for-vagueness claim was not "ripe"
under ordinary APA principles. See Pet. App. 10a-11a. Compare Salfi, 422
U.S. at 765 (administrative process helps create a record and thereby render
the case "fit" for judicial review); Ringer, 466 U.S. at 619 (similar).
A similar absence of requisite facts-such as the nature of the nursing patient
interests at stake in individual cases, e.g., whether there is immediate
jeopardy to their lives requiring prompt action-makes adjudication of respondent's
procedural due process claims cumbersome, if not impossible, as well. J.A.
32-46 (¶¶ 51-63).
Nor can it be claimed that there is a need here for immediate review outside
of ordinary processes. Respondent does not assert that its members are required
by allegedly improper regulations to refrain from engaging in otherwise
lawful conduct. Cf. Lujan, 497 U.S. at 891 (rules requiring the complainant
"to adjust [its] conduct immediately" may be ripe). To the contrary,
respondent disavows any challenge to the substantive health, safety, and
quality-of-care standards that govern its members' day-to-day operations.
Instead, respondent claims that its members cannot tell what sanction, if
any, otherwise clearly proscribed conduct will draw. See pp. 11-12, supra.
Such an argument hardly provides compelling grounds for bypassing the express
post-enforcement review process provided by the Medicare Act. Would-be criminals
normally cannot bring declaratory judgment actions seeking to halt enforcement
of criminal laws simply because they cannot tell in advance what their sentence
will be if they commit a crime; any arbitrariness in sentencing must be
raised through ordinary criminal processes only after an allegedly arbitrary
sentence is imposed. The same should be true of would-be violators of the
(unchallenged) substantive health, safety, and quality-of-care requirements
that protect Medicare beneficiaries from abuse and injury.
B. MICHIGAN ACADEMY DOES NOT PERMIT FEDERAL COURTS TO EXERCISE GENERAL FEDERAL-QUESTION
JURISDICTION OVER RESPONDENT'S SUIT
The court of appeals disputed none of the preceding analysis. Nowhere did
the court dispute that the text, structure, purposes and legislative history
of the Medicare Act all demonstrate that, where the Act provides a mechanism
for obtaining judicial review, that mechanism is exclusive. Nor did the
court of appeals express any doubt that respondent's members would be able
to obtain judicial review of their claims-in a concrete factual setting-through
the procedures provided by the Medicare Act itself. Indeed, the court of
appeals agreed that, in a long line of cases stretching from Salfi to Ringer,
this Court has rejected efforts to bypass the mechanisms for judicial review
provided by the Medicare Act, and has held that 42 U.S.C. 405(h) precludes
federal courts from exercising jurisdiction with respect to such claims
under 28 U.S.C. 1331. See Pet. App. 2a-3a.
1. Nonetheless, the court of appeals concluded that Michigan Academy allowed
the district court to exercise jurisdiction over respondent's pre-enforcement
action. In Michigan Academy, the plaintiffs challenged the validity of reimbursement
regulations under Part B of the Medicare program. At that time, the relevant
provision of the Medicare Act, 42 U.S.C. 1395ff(b)(1) (1982), expressly
provided for judicial review of disputes concerning the "amount"
of reimbursement (if any) payable under Part A, but not under Part B. See
476 U.S. at 674-675. And in Erika, the Court had held that that omission,
together with the relevant legislative history, established that Congress
had intended to preclude judicial review of Part B claims challenging the
amount of reimbursement. See 456 U.S. at 207-208.
In Michigan Academy, the government argued that Congress's failure to include
a provision for judicial review of Part B claims, other than those relating
to basic eligibility under the program, indicated that Congress intended
to preclude judicial review of all issues under Part B except those relating
to eligibility. Relying on the "strong presumption that Congress did
not mean to prohibit all judicial review" of agency decisions, 476
U.S. at 672, the Court rejected that argument. While the Court found evidence
that Congress had deliberately foreclosed any challenge to the amount of
benefits awarded in a particular case, it found no evidence that Congress
intended to preclude more general "challenges mounted against the method
by which [the] amounts [of Part B benefits] are to be determined rather
than [challenges to] the [amount] determinations themselves." Id. at
675. In particular, the legislative history provided "specific evidence
of Congress' intent to foreclose review" with respect to "amount
determinations," i.e., claims concerning the monetary sum of benefits
due, but provided no indication of a similar intent to foreclose judicial
review of more general "methodology" claims, which might involve
"statutory and constitutional challenges to the Secretary's administration
of Part B of the Medicare program." Id. at 680. Because the government
had not produced "clear and convincing evidence" sufficient to
overcome the "strong presumption that Congress did not mean to preclude
judicial review" entirely, id. at 681, the Court held that "methodology"
claims were not precluded even though "amount" claims were.
In this case, the court of appeals read Michigan Academy as broadly "hold[ing]
that [42 U.S.C.] § 1395ii," which incorporates 42 U.S.C. 405(h)
into the Medicare program, "does not foreclose Medicare providers'
anticipatory challenge[s] to implementing regulations" under 28 U.S.C.
1331. Pet. App. 4a, 6a. In particular, the court of appeals interpreted
Michigan Academy as holding that Section 405(h) "addresses only 'amount
determinations' * * * -that is, calculations of reimbursements.'" Pet.
App. 4a; see also id. at 6a. Thus, in the court of appeals' view, pre-enforcement
challenges are permissible under Michigan Academy whether or not such claims
could be adjudicated after a final administrative decision under the mechanisms
for judicial review provided by the Medicare Act itself. That reading of
Michigan Academy is incorrect.
a. Whatever the continuing vitality of Michigan Academy in the particular
context in which it arose, in light of later amendments to the Medicare
Act (see pp. 36-37, infra), that decision has no bearing where, as here,
the question is not whether judicial review will be available, but when
it will be available. See National Kidney Patients Ass'n v. Sullivan, 958
F.2d 1127, 1133 (D.C. Cir. 1992) ("[T]he Court in Michigan Academy
was concerned not with timing, but with reviewability vel non."), cert.
denied, 506 U.S. 1049 (1993). The Court's reasoning in Michigan Academy
literally begins with, 476 U.S. at 670, ends with, id. at 681, and is steeped
throughout with, see id. at 672, the presumption that Congress intends judicial
review to be available. See also id. at 681 n.12 (noting that finding review
to be available "avoids the 'serious constitutional question' that
would arise if [the Court] construed § 1395ii to deny a judicial forum
for constitutional claims arising under Part B"). That presumption,
however, is not "implicate[d]" where, as here, the Medicare Act
itself provides for judicial review of a regulation once it is applied in
a concrete, factual context. See Thunder Basin, 510 U.S. at 207 n.8, 212-214
("Because court of appeals review is available, this case does not
implicate the strong presumption that Congress did not mean to prohibit
all judicial review. Bowen v. Michigan Academy."); MCorp, 502 U.S.
at 44 n.16 (similar analysis). See also McNary v. Haitian Refugee Ctr.,
Inc., 498 U.S. 479, 498 (1991) ("Inherent in our [Michigan Academy]
analysis was the concern that * * * [there] would be 'no review at all of
substantial statutory and constitutional challenges to the Secretary's administration
of Part B of the Medicare program.'") (quoting Michigan Academy, 476
U.S. at 680).
Moreover, Michigan Academy relied heavily on the legislative history of
the relevant statutory provision, which provided "specific evidence"
that Congress intended to foreclose judicial review entirely only with respect
to so-called "amount" determinations under Part B. 476 U.S. at
680. But whether or not Congress intended judicial review to be available
at all for Part B benefit "amount" determinations has no bearing
on the question here, which is merely the timing of judicial review of nursing
home regulations under Part A. The relevant legislative history in this
context, moreover, makes it abundantly clear that, while Congress did not
intend to foreclose judicial review of claims like respondent's entirely,
it did intend that such review would occur exclusively through the post-enforcement
mechanisms provided in the Medicare Act itself. Immediately after describing
the mechanisms for judicial review provided by the Medicare Act, the Senate
Report states: "It is intended that the remedies provided by these
review procedures shall be exclusive." S. Rep. No. 404, supra, Pt.
1, at 55.
Finally, the distinction between post-decision "amount" claims
on the one hand and pre-enforcement actions on the other has no logical
place in the context of enforcement actions under 42 U.S.C. 1395cc(h). The
Court's opinion in Michigan Academy drew that distinction based on the language
of 42 U.S.C. 1395ff (1982), which addressed review of "amount"
claims under Part A, but was (at that time) silent about review of such
claims under Part B. 476 U.S. at 674-675. Here, the relevant provision of
the Medicare Act is not 42 U.S.C. 1395ff, but 42 U.S.C. 1395cc(h), which
incorporates 42 U.S.C. 405(b) and (g). Unlike Section 1395ff, Section 1395cc(h)
does not mention "amount" claims, and in fact it does not deal
with reimbursement requests or such "amount" claims at all. Instead,
it addresses challenges to noncompliance determinations. (Reimbursement
or "amount" claims relating to nursing facilities would arise
instead under 42 U.S.C. 1395oo.) It simply makes no sense to incorporate
an amount/methodology distinction from Michigan Academy into Section 1395cc(h),
which deals with neither reimbursement amounts nor the method by which they
are calculated.
Thus, neither Michigan Academy's reasoning, nor the statutory language and
legislative history it cited, has any bearing on cases like this one, in
which barring review under 28 U.S.C. 1331 would not preclude judicial review
altogether, but rather would channel it through the specific mechanisms
provided by the Medicare Act. It therefore should be unsurprising that every
court of appeals to have considered the matter-with the exception of the
panel decision below-has concluded that Michigan Academy does not permit
pre-enforcement judicial review under 28 U.S.C. 1331 where the Medicare
Act itself provides for post-enforcement review. See, e.g., National Kidney
Patients Ass'n, 958 F.2d at 1133 (because Michigan Academy rested "largely
on the presumption of reviewability," it does not govern where agency
action "will not go unreviewed," but review instead "simply
awaits initial administrative determination in a concrete setting");
St. Francis Med. Ctr. v. Shalala, 32 F.3d 805, 812 (3d Cir. 1994) ("Since
a provider seeking Part A payments has these avenues of review available
under the Medicare Act, the presumption that Congress did not intend to
foreclose judicial review, which was central to the decision in Michigan
Academy, is inapplicable."), cert. denied, 514 U.S. 1016 (1995); Michigan
Ass'n of Homes & Servs. for the Aging, Inc. v. Shalala, 127 F.3d 496,
501 (6th Cir. 1997) (Michigan Academy permits review despite 405(h) "when
there is no other avenue of judicial review.").
b. Reading Michigan Academy as the court of appeals did here-as drawing
a program-wide distinction between pre-enforcement suits challenging regulations
on the one hand, and suits seeking to challenge "amount" determinations
on the other-would also place Michigan Academy in irreconcilable conflict
with the Court's prior decision in Ringer, which held that "§
405(g), to the exclusion of 28 U.S.C. § 1331, is the sole avenue for
judicial review for all 'claim[s] arising under' the Medicare Act."
Ringer, 466 U.S. at 615 (emphasis added). As we have pointed out above (see
pp. 24-25, supra), one of the named plaintiffs in Ringer sought pre-decisional,
declaratory relief with respect to a Medicare rule. Moreover, the plaintiff
in Ringer did not challenge a determination concerning the "amount"
of reimbursement (if any) he was due for a particular claim. Instead, he
sought to challenge a rule that, if he had submitted a claim, might have
required denial of that claim. See 466 U.S. at 613. The Court nevertheless
held that Section 405(h) precluded the exercise of general federal-question
jurisdiction over such a pre-enforcement challenge. The Court reached an
identical result in Salfi. There, the plaintiffs sought injunctive relief
prohibiting the Secretary from relying on allegedly unconstitutional provisions
(App. at 12-13, Weinberger v. Salfi, 422 U.S. 439 (1975) (No. 74-214)).
But the Court held that Section 405(h) precluded federal district courts
from entertaining their challenges under 28 U.S.C. 1331, and required that
they instead file a claim and seek review through the mechanisms provided
by the Social Security Act itself. 422 U.S. at 764.
Consequently, if the court of appeals' construction of Michigan Academy
were correct-that it limits Section 405(h)'s preclusive effect to "amount"
determinations and prevents its application to pre-enforcement regulatory
challenges-then Michigan Academy would have overruled Ringer and Salfi sub
silentio. That reading, we submit, is implausible given the seminal and
far-reaching significance of Salfi and Ringer, as well as the strong presumption,
rooted in considerations of stare decisis, that where this Court intends
to overrule precedents it says so expressly. See Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477, 484 (1989); Agostini v. Felton,
521 U.S. 203, 237 (1997). For the same reason, the courts of appeals have
uniformly refused to conclude that Michigan Academy overruled Ringer and
Salfi. Instead, they have concluded that Michigan Academy controls over
Ringer and Salfi only where-unlike here-the Medicare statute itself provides
no mechanism for judicial review and, as a result, applying 42 U.S.C. 405(h)
to bar suit under 28 U.S.C. 1331 would preclude judicial review altogether.
National Kidney Patients Ass'n, 958 F.2d at 1132; Farkas, 24 F.3d at 860;
American Academy of Dermatology, 118 F.3d at 1500.19
c. For similar reasons, subsequent statutory amendments have eliminated
the basis for continuing application of the result in Michigan Academy even
in the specific context in which it arose: challenges to the methods used
to calculate the amount of reimbursement due on claims under Part B of the
Medicare program. As the district court explained below, Pet. App. 18a,
Congress amended Section 1395ff in 1986 (months after Michigan Academy was
decided) to provide for administrative and judicial review (under 42 U.S.C.
405(b) and (g)) of carrier determinations concerning "amount"
determinations under Part B. Pub. L. No. 99-509, § 9341(a)(1)(B), 100
Stat. 2037. In light of that amendment and its legislative history, the
courts of appeals have uniformly agreed that district courts now lack jurisdiction
under 28 U.S.C. 1331 to review all benefit-related claims arising under
Part B, including the type of "methodology" disputes at issue
in Michigan Academy. Instead, all such claims, like their counterparts under
Part A, must be brought through the review mechanisms provided by the Medicare
Act itself. See National Kidney Patients Ass'n, 958 F.2d at 1132 ("[T]he
special treatment of part B [methodology claims], based on the pre-October
1986 statutory differences, cannot survive the elimination of those differences.");
American Academy of Dermatology, 118 F.3d at 1500 ("[T]he amount/methodology
distinction established in Michigan Academy is no longer viable.");
Martin v. Shalala, 63 F.3d 497, 503 (7th Cir. 1995) ("[T]he Michigan
Academy distinctions drawn between 'amount of payment' and 'validity of
the statute and regulations' challenges are no longer meaningful or necessary.");
Farkas, 24 F.3d at 860 (amount/methodology distinction no longer "good
law"); Abbey v. Sullivan, 978 F.2d 37, 42 (2d Cir. 1992) (Michigan
Academy's distinction "relegat[ed] to irrelevancy").
2. Although conceding the lack of "practical support" for the
result it reached, Pet. App. 5a, the court of appeals nonetheless read Part
III of the Court's opinion in Michigan Academy-the only portion addressed
to 42 U.S.C. 1395ii, which incorporates 42 U.S.C. 405(h) into the Medicare
program-as providing a broadly applicable limit on the preclusive scope
of Section 405(h). In particular, the court of appeals interpreted Part
III as holding that Section 405(h), as incorporated into Medicare, precludes
review of "only 'amount determinations.'" Pet. App. 6a. That reasoning
is flawed from premise to conclusion.
As an initial matter, the construction of Sections 1395ii and 405(h) the
court of appeals purported to draw from Michigan Academy is not supported
by that decision. This Court did not hold that Section 405(h) has no effect
on any claim other than one involving the amount of reimbursement. Rather,
again relying on the presumption that Congress intends agency action to
be reviewable, 476 U.S. at 680, 681, the Court simply rejected the "extreme
position" that Congress, by incorporating 42 U.S.C. 405(h) into the
Medicare Act, "intended no review at all of substantial statutory and
constitutional challenges to the Secretary's administration of Part B of
the Medicare program." 476 U.S. at 680. Nowhere did the Court reject
the distinctly more moderate position that, in those circumstances where
the Medicare Act does provide mechanisms for judicial review, Section 405(h)
channels all challenges to the Secretary's actions through those mechanisms.
In fact, far from offering a broadly applicable construction of Section
405(h), the Court in Michigan Academy expressly declined to "pass on
the meaning of § 405(h) in the abstract," instead choosing to
decide only that Section 405(h) "d[id] not apply" to preclude
review of the particular claims at issue there. And to the extent the Court
did identify generally applicable constructions of Section 405(h), both
of the constructions it identified would bar the pre-enforcement action
respondent seeks to bring here. The broader of the two interpretations (which
represented the government's position in that case) was that Section 405(h)
"by its terms prevents any resort to the grant of general federal-question
jurisdiction contained in 28 U.S.C. 1331." 476 U.S. at 679. That construction
would surely bar respondent's claim, which rests explicitly on 28 U.S.C.
1331. The narrower view identified by the Court was that Congress enacted
Section 405(h) "to make clear that whatever specific procedures it
provided for judicial review of final action by the Secretary were exclusive,
and could not be circumvented by resort to the general jurisdiction of the
federal courts." 476 U.S. at 679. That position too-although previously
rejected by this Court in Salfi as excessively narrow20-would bar respondent's
suit here, since the issues respondent seeks to raise on behalf of its members
all may be raised after enforcement action is taken against a member, under
the "specific procedures * * * for judicial review" provided by
the Medicare Act.
3. Nor does the court of appeals' decision find support in the text of 42
U.S.C. 405(h). The court of appeals found it significant that the third
sentence of 42 U.S.C. 405(h) bars the exercise of general federal-question
jurisdiction over suits "to recover" on a claim arising under
the Medicare Act, apparently reading "to recover" as meaning to
obtain a monetary recovery. See Pet. App. 6a. That reasoning, however, does
not take respondent's suit outside of Section 405(h).
a. To begin with, the court of appeals' reading of the phrase "to recover"
is unnecessarily starchy. "Section 405(h) does not apply on its own
terms" to challenges to the Secretary's enforcement of health, safety
and quality-of-care requirements, "but instead is incorporated mutatis
mutandis"-that is, with necessary changes in details and meaning, Black's
Law Dictionary 1019 (6th ed. 1990)-"by § 1395ii." Michigan
Academy, 476 U.S. at 680. In legal contexts, moreover, the phrase "to
recover" does not refer only to the recovery of a monetary award. Instead,
it means "to prevail" or "to obtain relief." See Black's
Law Dictionary 1275-1276 (6th ed. 1990) ("In a narrower sense, to be
successful in a suit, * * * to have judgment, to obtain a favorable or final
judgment."); Webster's Third New International Dictionary 1898 (1981)
("to gain by legal process; to obtain a final judgment in one's favor:
to succeed in a lawsuit or proceeding"); Random House Dictionary of
the English Language 1613 (2d ed. 1987) ("to obtain by judgment in
a court of law or by legal proceedings").
That Congress used the words "to recover" in that broader sense
in Section 405(h)-and did not by that phrase intend to limit Section 405(h)'s
application to "amount" determinations-is evident from the fact
that Congress incorporated Section 405(h) into numerous parts of the Medicare
program where "amount" determinations, as such, do not arise.
For example, Congress expressly incorporated Section 405(h) into 42 U.S.C.
1320a-7 and 1320c-5, which address the circumstances under which Medicare
providers can or must be excluded from the program. See 42 U.S.C. 1320a-7(f)(3).
Since neither of those provisions deals with "amount" determinations-instead,
like 42 U.S.C. 1395cc(h) here, they deal with eligibility to participate
in Medicare-it would be illogical to construe Section 405(h) as "affect[ing]"
only "amount determinations" of claims for reimbursement. Congress
cannot be presumed to have specifically incorporated Section 405(h) in that
setting with the understanding that so doing would have no effect at all.21
Construing Section 405(h) as "affect[ing] only 'amount determinations,'"
Pet. App. 6a, moreover, would make the second sentence in Section 405(h)
mere surplusage. An amount determination is by its very nature a reimbursement
decision by the Secretary. Judicial review of such amount determinations
through means other than those provided by the Medicare Act itself, however,
is already precluded by the second sentence of Section 405(h), which states
that "[n]o * * * decision of the [Secretary] shall be reviewed by any
person, tribunal, or governmental agency except as herein provided."
The court of appeals' construction thus makes the third sentence of Section
405(h) superfluous in light of the second sentence.
The court of appeals' ruling ignores the text and purpose of the second
sentence of Section 405(h) in another respect as well. Whatever the words
"to recover" might mean in the third sentence of Section 405(h),
those words do not appear in the second sentence, which bars "any person,
tribunal or governmental agency" from reviewing any "decision"
of the Secretary, except as provided in the Medicare Act.22
b. In any event, respondent's suit is a suit "to recover" under
Medicare even if some nexus to monetary recovery were necessary to trigger
Section 405(h). By this suit, respondent seeks to preclude enforcement of
the requirements that govern its members' participation in Medicare, and
thus their eligibility for payment. See 42 U.S.C. 1395i-3(a) to (d); 42
C.F.R. 483.1-483.75; pp. 2, 12, supra. Respondent even prays for an injunction
prohibiting the Secretary from imposing "upon [respondent's] Medicare
members any ban on payment as a remedy for any deficiency." J.A. 52
(¶¶G, H). As the district court aptly observed (Pet. App. 17a):
[A]t the heart of [respondent's] case, is a claim for benefits. This is
evidenced by the relief sought by [respondent]. [Respondent] seeks continuation
of Medicare payments and reimbursement for past due payments incurred by
the patients at the nursing homes. Thus, the issue here is whether or not
the nursing homes are entitled to benefits.
For that reason, respondent's claim is essentially indistinguishable from
the lead plaintiff's claim in Ringer and Salfi. Just as Freeman Ringer sought
to bring a pre-enforcement challenge to the Secretary's rule barring payment
for the treatment he wanted, Ringer, 466 U.S. at 614-615, respondent here
brought a pre-enforcement challenge to regulations that could deny payments
to its members if noncompliance is found. See p. 41, supra. And just as
Salfi sought (as an alternative to monetary relief) a declaratory judgment
that the statutory provisions were unconstitutional and injunctive relief
prohibiting the Secretary from applying those provisions to deny him payment
in administrative proceedings (App. at 12-13, Weinberger v. Salfi, supra),
respondent makes an identical request with respect to the regulations at
issue here. Since Ringer's and Salfi's anticipatory lawsuits challenging
payment-barring statutes and regulations under 28 U.S.C. 1331 were precluded
by Section 405(h) as suits "to recover on a claim arising under"
the Act, respondent's action must be barred by Section 405(h) as well.23
Even as an original matter, moreover, the court of appeals' theory would
place an implausible gloss on the statutory scheme as a whole. It ignores
the fact that Congress deliberately paired Section 405(g) with Section 405(h),
with the obvious purpose of excluding through the latter, at a minimum,
all issues that could be raised under the former. And it turns the normal
priorities for access to judicial review on their head. Under the court
of appeals' approach, the party with the least need for immediate access
to judicial review-the party bringing an abstract, facial challenge to regulations
that may not be applied to it-has immediate access to the courts, while
the party with a greater need, i.e., a party to whom the regulations have
actually been applied and that is facing imminent enforcement proceedings
and remedies, cannot bring suit until it exhausts administrative remedies.
It is singularly unlikely that Congress intended to allocate access to the
courts in that manner.
C. RESPONDENT'S CLAIMS CONCERNING THE ADEQUACY OF THE MEDICARE ACT'S REVIEW
MECHANISMS ARE WITHOUT MERIT
In its brief in opposition, respondent attempted to defend the judgment
of the court of appeals on different grounds. In particular, respondent
argued that the issues it sought to raise in district court do not fall
within Section 405(h)'s preclusive scope because they would not be addressed
in a hearing under 42 U.S.C. 405(b); given that no such hearing is available,
respondent argued, providing judicial review only after exhaustion of administrative
remedies "is the practical equivalent of total denial of judicial review."
See Br. in Opp. 13; see also id. at 9-10. The court of appeals did not address
those arguments, and they are, in any event, without merit.
1. Respondent is, as an initial matter, incorrect in asserting that its
members can obtain no relief at all with respect to any of its claims. For
example, respondent contends that the State Operations Manual, which is
used by survey agencies when reviewing nursing facilities for compliance,
is invalid because it was "promulgated without the required notice
and comment procedures required by the Administrative Procedures Act for
substantive regulations." J.A. 18, 27-28, 46 (¶¶ 3A, 32-36,
94A-94B); see Br. in Opp. 2. Any nursing facility that is subjected to a
remedy for a violation because of the Manual, however, can challenge the
finding of a violation in administrative proceedings. Because ALJs and the
Departmental Appeals Board are not bound by the Manual, see Shalala v. Guernsey
Mem'l Hosp., 514 U.S. 87, 99 (1995),24 such a nursing home could obtain
complete relief. Moreover, a claim of a violation of the APA's notice-and-
comment requirements can in any event be addressed on judicial review, after
exhaustion, under 42 U.S.C. 405(g). See Ringer, 466 U.S. at 614-616 (claim
that regulations and instructions to intermediaries violate APA notice-and-comment
requirements reviewable under Section 405(g) after exhaustion of administrative
remedies).25
To be sure, some of the other issues respondent seeks to raise, such as
its constitutional contentions and its challenges to the Secretary's regulations,
ordinarily would not be the subject of an administrative hearing. Neither
the Departmental Appeals Board nor individual ALJs are free to depart from
statutory and regulatory requirements. But that does not mean that Section
405(h) ceases to apply. To the contrary, Section 405(h) requires all claims
"arising under" the Medicare Act to be brought through the mechanisms
provided by the Medicare Act itself; nowhere does it exclude individual
issues that would not be addressed in the administrative process. That,
in fact, is precisely the holding of Salfi, 422 U.S. at 760-762. There,
the plaintiffs sought to challenge the constitutionality of a provision
of the Social Security Act, a challenge that could not be resolved in the
administrative process. This Court held that the language of Section 405(h),
"which is sweeping and direct," does not limit its preclusive
effect "to decisions of the Secretary on issues of law or fact. Rather,
it extends to any 'action' seeking 'to recover on any * * * claim'-irrespective
of whether resort to judicial processes is necessitated by discretionary
decisions of the Secretary or by * * * nondiscretionary application of allegedly
unconstitutional statutory restrictions." Id. at 757, 762. As the Court
summarized: "[T]he plain words of the third sentence of § 405(h)
do not preclude constitutional challenges. They simply require that [the
challenges] be brought under jurisdictional grants contained in the Act,
and thus in conformity with the same standards which are applicable to nonconstitutional
claims arising under the Act." Id. at 762.
This Court likewise has applied Section 405(h) to preclude federal courts
from exercising federal-question jurisdiction over procedural and due process
claims like respondent's. In Ringer, for example, the Court "disagree[d]
in particular with [the court of appeals'] apparent conclusion that simply
because a claim somehow can be construed as 'procedural,' it is cognizable
in federal district court by way of federal-question jurisdiction."
466 U.S. at 614. Instead, "the inquiry in determining whether §
405(h) bars federal-question jurisdiction must be whether the claim 'arises
under' the Act, not whether it lends itself to a 'substantive' rather than
a 'procedural' label." Id. at 615.
Finally, in Mathews v. Eldridge, 424 U.S. 319 (1976), the plaintiff alleged
that the procedures the Secretary employed under the Act violated procedural
due process. Even though the plaintiff's claims were "collateral"
to the merits-they challenged the process provided, not the substantive
result -and the plaintiff made a colorable claim that the post-deprivation
review provided through administrative remedies would be inadequate, this
Court held that "[t]he only avenue for judicial review" of such
claims "is 42 U.S.C. 405(g)." Id. at 327. Section 405(g), the
Court explained, permits adequate review of even completely collateral claims
so long as the "final decision" requirement is properly applied.26
2. The text and structure of the Medicare Act confirm the correctness of
that result. As the Court recognized in Ringer and Salfi, nothing in Section
405(h) limits its application to issues that might be addressed by an ALJ
in the administrative process; its sweeping language instead extends to
"all 'claim[s] arising under' the Medicare Act." Ringer, 466 U.S.
at 615. Nor can such a limit be inferred from the scope of review provided
by Section 405(g). Whereas the hearing provided by Section 405(b) might
have a limited scope, the review provided by Section 405(g) is not limited
to those issues cognizable before an ALJ. For example, far from restricting
the reviewing court to an examination of whether "the findings * *
* as to any fact" are "supported by substantial evidence,"
42 U.S.C. 405(g), Section 405(g) expressly permits the reviewing court to
address "the validity of [the] regulations" themselves, ibid.-an
issue an ALJ could not address.
Other provisions of the Medicare Act, moreover, confirm that Congress intended
to channel all claims through the administrative process as a prerequisite
to judicial review under Section 405(g) and parallel Medicare provisions,
even where individual legal issues bearing on those claims- including challenges
to the Act or regulations-would not be addressed in the administrative process.
For example, 42 U.S.C. 1395oo(f)(1) permits the Provider Reimbursement Review
Board (PRRB) to facilitate judicial review on an expedited basis by certifying
"that it is without authority to decide" a "question of law
or regulations relevant to the matters in controversy." Once such a
certification is made in a case otherwise properly before the PRRB, 42 U.S.C.
1395oo(a), an action for judicial review on that question may be filed immediately;
it need not await the PRRB's resolution of issues that are within its competence
to decide, as would otherwise be required by Salfi and Ringer. See 42 U.S.C.
1395oo(f)(1); Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399, 406-407 (1988).
If matters outside the PRRB's competence to decide were not required to
be channeled into the special statutory procedure for administrative and
judicial review together with issues that are-and such issues instead could
be presented outside that procedure in district court under 28 U.S.C. 1331-the
expedited review provision in 42 U.SC. 1395oo(f)(1) would be entirely unnecessary.
It is, of course, inappropriate to construe a statute so as to make any
of its provisions superfluous. Moskal v. United States, 498 U.S. 103, 109-110
(1990). Similarly, in the case of individuals who seek administrative and
judicial review of individual benefit claims under 42 U.S.C. 1395ff(b) (which
incorporates 42 U.S.C. 405(g)), the Act specifically contemplates that judicial
review of national coverage determinations of general applicability will
be available under 42 U.S.C. 405(g), even though such determinations cannot
be reviewed by an ALJ. See 42 U.S.C. 1395ff(b)(3).27
3. Because even issues that would not be addressed in a hearing can be reviewed
by a court under 42 U.S.C. 405(g) after exhaustion, respondent's reliance
on Thunder Basin, 510 U.S. at 207, is misplaced. Quoting Thunder Basin,
respondent notes that whether "a statute is intended to preclude initial
judicial review" depends in part on "whether the claims can be
afforded meaningful review" through the mechanisms provided by statute.
Br. in Opp. 13. Respondent then contends that the issues it seeks to raise
"cannot be meaningfully addressed or reviewed in the administrative
process." Br. in Opp. 13. But the question is not whether its contentions
will be "meaningfully addressed * * * in the administrative process."
It is whether they will be meaningfully addressed through the statutory
mechanism for administrative and judicial review as a whole, with an emphasis
on the latter. See 510 U.S. at 212-213 (inquiry particularly important "where
a finding of preclusion could foreclose all meaningful judicial review")
(emphasis added). In fact, in Thunder Basin itself, this Court held that
the statutory review mechanism was meaningful, adequate, and exclusive "[e]ven
if" the administrative agency would not or could not adjudicate the
statutory and constitutional claims at issue there, because those issues
ultimately would "be meaningfully addressed" on judicial review.
Id. at 215. The same is true of the issues respondent seeks to raise here.
4. At bottom, respondent's suit for anticipatory relief is nothing more
than an effort to bypass the reticulated mechanisms for administrative and
judicial review provided by the Medicare Act itself. Seeking to avoid the
necessity of bringing challenges in the context of specific violations,
and attempting to evade the requirements that individual claims be presented
to the Secretary and administrative remedies be exhausted, respondent filed
the current facial challenge to the Secretary's regulations in an effort
to obtain far-reaching and intrusive relief. But it was precisely such circumvention
of the statutory processes (and the resulting potential for unnecessary
and damaging intrusion into the administration of programs affecting millions
of people) that this Court rejected in Salfi, in Mathews, and in Ringer,
and that Sections 405(g) and 405(h) were designed to prevent. Those provisions
simply do not permit a nursing facility to split off one legal issue bearing
on the merits of a challenge to a compliance determination and present that
issue in an independent action for declaratory or injunctive relief under
28 U.S.C. 1331. Of course, "[i]n the best of all worlds, immediate
judicial access * * * might be desirable" for particular challenges
in particular cases. Ringer, 466 U.S. at 627. But this is not such a case
and, even if it were, "Congress, in § 405(g) and § 405(h),
struck a different balance, refusing declaratory relief and requiring that
administrative remedies be exhausted before judicial review of the Secretary's
decisions takes place." Ibid. Because the court of appeals' judgment
fails to respect that statutory balance, it should be reversed.
The judgment of the court of appeals should be reversed.
Respectfully submitted.
HARRIET S. RABB
General Counsel
SHEREE R. KANNER
Associate General
Counsel
JEFFREY GOLLAND
Attorney
Department of Health
and Human Services
SETH P. WAXMAN
Solicitor General
DAVID W. OGDEN
Acting Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY A. LAMKEN
Assistant to the Solicitor General
BARBARA C. BIDDLE
JEFFREY CLAIR
Attorneys
JULY 1999
1 Such coverage is provided through Part A of the program. Part B of Medicare
is a voluntary supplementary insurance program covering physicians' charges
and other medical services. 42 U.S.C. 1395k, 1395l, 1395x(s). The recently
enacted Part C of Medicare authorizes beneficiaries to obtain covered Medicare
services through Health Maintenance Organizations and other "managed
care" arrangements. Balanced Budget Act of 1997, Pub. L. No. 105-33,
Tit. IV, § 4001, 111 Stat. 276-327. Only Part A of the program is at
issue here.
2 Although 42 U.S.C. 405(b), (g), and (h) refer to the "Commissioner
of Social Security," Congress declared that, in applying those provisions
to the Secretary's decisions under Medicare, any reference to the Commissioner
of Social Security shall be construed as a reference to the Secretary. See
42 U.S.C. 1395cc(h), 1395ii. As originally enacted, Section 405(b), (g),
and (h) referred directly to the Secretary, but Congress changed those provisions
so they would refer instead to the Commissioner of Social Security in 1994,
when Congress established the Social Security Administration as a separate
agency and made it responsible for administration of the social security
program. See Social Security Independence and Program Improvements Act of
1994, Pub. L. No. 103-296, § 106(d), 108 Stat. 1476.
3 Originally, 42 U.S.C. 1395cc(h) appeared as subsection (c) of 42 U.S.C.
1395ff. See 42 U.S.C. 1395ff(c) (1976). When the Act was amended in 1987
(see pp. 7-8, infra), the provision was moved to its current location in
42 U.S.C. 1395cc(h).
4 A finding that a facility fails to meet statutory or regulatory standards
for health or safety, and that imposes certain remedies as a result, might
also be considered a determination that the facility "is not a provider
of services." See 42 U.S.C. 1395i-3(a)(3) (defining provider of services
as a facility that meets statutory and regulatory requirements); Michigan
Ass'n of Homes & Servs. for the Aging, Inc. v. Shalala, 127 F.3d 496,
501 & n.3 (6th Cir. 1997).
5 Under Part A, initial reimbursement determinations affecting participating
providers are made by fiscal intermediaries operating under contract with
the Health Care Financing Administration (HCFA). 42 U.S.C. 1395h. Pursuant
to 42 U.S.C. 1395oo(a), which was enacted in 1972, Pub. L. No. 92-603, §
243(a), 86 Stat. 1420, a provider that "is dissatisfied with a final
determination" and timely files objections meeting amount-in-controversy
requirements may obtain a hearing before the Provider Reimbursement Review
Board (PRRB). The decisions of the PRRB are final (although the Secretary
has the right to affirm, reverse, or modify them within 60 days); and, pursuant
to 42 U.S.C. 1395oo(f), judicial review is available in district court.
See Your Home Visiting Nurse Servs., Inc. v. Shalala, 119 S. Ct. 930, 932-933
(1999). Where the Secretary imposes civil money penalties under 42 U.S.C.
1320a-7a, a hearing is available under 42 U.S.C. 1320a-7a(c)(2), and review
in the court of appeals is available under 42 U.S.C. 1320a-7a(e). See Medicare
and Medicaid Amendments of 1981, Pub. L. No. 97-35, Tit. XXI, § 2105,
95 Stat. 789.
6 For example, surveyors and others found nursing home residents lying in
their own feces or urine for extended periods of time, covered with flies
and dried food, and ridden with bedsores, despite complaints from visiting
relatives. 1986 Hearing 8-9, 61, 64, 800. There were reports of patients
dying when facilities failed to pay attention to their medical needs. See,
e.g., id. at 110 (patient died of starvation after facility failed to ensure
feeding tube provided sufficient calories); id. at 73-74 (patient died from
absence of medical attention for severe cramps and vomiting). And there
were disturbingly frequent reports of brain-impaired and comatose patients
being raped and sexually abused. Id. at 105-106.
7 As the House Report explained, nursing homes knew "in advance that
they [would] not be penalized" by termination even "if caught
with serious deficiencies as long as they correct[ed] them sufficiently"
after inspection. As a result, the deterrent value of that remedy was relatively
slight. H.R. Rep. No. 391, supra, Pt. 1, at 471.
8 State agencies conduct the surveys pursuant to contracts with the Secretary,
see 42 U.S.C. 1395i-3(g)(1)(A), 1395aa, but the Secretary may survey public
nursing facilities operated by state or local governments and may survey
any other facility if she has reason to question the facility's compliance
with the statute, 42 U.S.C. 1395i-3(g)(3)(D), or it is necessary to assess
survey agency performance, 42 U.S.C. 1395i-3(g)(3)(A).
9 The regulations governing nursing home surveys and remedies for violations
apply to both the Medicaid program, which is administered jointly by the
States and the Secretary, and the Medicare program, which is administered
by the Secretary (although state agencies conduct Medicare nursing home
surveys for the Secretary under contract). See 42 C.F.R. 488.300, 488.400.
Some of the regulations therefore refer to enforcement actions taken by
the State as well as by HCFA on behalf of the Secretary. See, e.g., 42 C.F.R.
488.402(b).
10 "Substandard quality of care" exists where serious violations
of the statutory requirements most directly related to medical care and
the residents' quality of life either (1) create immediate jeopardy to resident
health and safety, (2) constitute a pattern of or widespread actual harm
that falls short of immediate jeopardy, or (3) pose a widespread potential
for more than minimal harm even if no actual harm has yet occurred. 42 C.F.R.
488.301.
11 Under the prior regulatory scheme, many States had successfully employed
various types of informal appeal procedures to handle compliance disputes.
59 Fed. Reg. 56,116, 56,224 (1994). Because those procedures had proven
effective and efficient, the Secretary directed all States to establish
similar processes. Id. at 56,224-56,225. Although the regulations give the
States discretion concerning the form and content of such procedures, the
process as a whole must afford nursing homes a meaningful opportunity to
refute findings of deficient care. 42 C.F.R. 488.331(a)(1). If the provider
successfully rebuts a survey finding, the State must remove the deficiency
from its findings and rescind any proposed enforcement action based on that
determination. 42 C.F.R. 488.331(c). Similar procedures are also available
with respect to federally-conducted surveys. 42 C.F.R. 488.331(a)(2).
12 Respondent also complains that, under current regulations, no administrative
review is available where a finding of "substandard quality of care"
causes the facility (automatically) to lose approval for its nurse-aide
training program but no other remedy is imposed. J.A. 33 (¶¶ 54-55);
see 42 C.F.R. 498.3(b)(12) and (d)(10)(ii). We have been informed by the
Department of Health and Human Services that it is currently reviewing that
exclusion.
13 The district court also dismissed respondent's claims brought under the
Medicaid program. Pet. App. 19a-20a. The status of those claims is not at
issue here. See note 14, infra.
14 The court of appeals affirmed on ripeness grounds dismissal of respondent's
vagueness challenge to the Secretary's regulations, Pet. App. 10a-11a, and
this Court denied respondent's conditional cross-petition for a writ of
certiorari seeking review of that holding. See 119 S. Ct. 1459 (1999). The
court of appeals also reinstated respondent's claims on behalf of its Medicaid-only
members with respect to the Secretary's Medicaid regulations. Pet. App.
7a-8a. Our certiorari petition did not seek review of that aspect of the
court of appeals' judgment. See Pet. i, 5.
15 Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), is not to the contrary.
There, the Court permitted pre-enforcement review of an agency regulation
absent express statutory authority, but only after determining that a statutory
savings clause and the legislative history reflected Congress's intent to
preserve an established practice of exercising equitable jurisdiction over
pre-enforcement challenges to similar agency actions. Id. at 142-144. See
also Thunder Basin, 510 U.S. at 212.
16 As noted above, where civil money penalties are imposed as a sanction
for noncompliance, a hearing and judicial review are available to the extent
provided for by 42 U.S.C. 1320a-7a. See 42 U.S.C. 1395i-3 (h)(2)(B)(ii).
Where 42 U.S.C. 1320a-7a applies, 42 U.S.C. 405(h) applies too. See 42 U.S.C.
1320a-7(f)(3).
17 The Court has accorded the Attorney General's Manual deference in construing
the APA. See, e.g., Darby v. Cisneros, 509 U.S. 137, 148 n.10 (1993).
18 Indeed, respondent concedes that its "claims on behalf of its Medicare
members arise under * * * the provisions of the Social Security Act pertaining
to Medicare, 42 U.S.C. § 1395 et seq." J.A. 22 (¶ 14). Respondent's
standing, which derives from its members' participation in the Medicare
program, clearly derives from the Act; absent the Act, respondent would
have no complaint and no basis for bringing suit. See Salfi, 422 U.S. at
760-761. Likewise, the "substantive basis for the presentation"
of respondent's claims originates in the Act. Respondent, by this lawsuit,
seeks to bar the Secretary from enforcing regulations alleged to be inconsistent
with the Act, to prevent the Secretary from cutting off reimbursement otherwise
provided by the Act, and to bar the imposition of remedies alleged to be
contrary to the Act. J.A. 51-53 (¶¶ A-H). To suggest that such
an action "does not arise under the Act" is "to ignore both
the language and the substance of the complaint and the judgment" that
respondent seeks. Salfi, 422 U.S. at 761.
19 The court of appeals likewise erred in asserting that McNary v. Haitian
Refugee Center, 498 U.S. 479, 497-498 (1991), "reiterated [the] conclusion
that § 1395ii [which incorporates Section 405(h)] does not affect regulatory
challenges that are detached from any request for reimbursement." Pet.
App. 5a. McNary was not a Medicare case; it concerned whether Congress intended
to foreclose judicial review of certain claims concerning the immigration
status of agricultural workers. In addressing that issue, McNary cited Michigan
Academy for the proposition that statutes barring review of a final administrative
decision are not sufficient to preclude "collateral" challenges
to regulations that would otherwise be unreviewable. Thus, far from supporting
the court of appeals' view that Michigan Academy sanctions immediate review
of pre-enforcement claims without regard to whether review would be available
after exhaustion of administrative remedies, McNary stressed the difference
between postponement of judicial review and foreclosure, and noted that
the distinction is central to Michigan Academy's holding. "Inherent
in our [Michigan Academy] analysis," the McNary Court explained, "was
the concern that absent such a construction of the judicial review provisions
of the Medicare statute, there would be 'no review at all of substantial
statutory and constitutional challenges to the Secretary's administration
of Part B of the Medicare program.'" 498 U.S. at 498 (quoting Michigan
Academy, 476 U.S. at 680).
20 "Nor can it be argued that the third sentence of § 405(h) simply
serves to prevent a bypass of the § 405(g) requirements by filing a
district court complaint alleging entitlement prior to applying for benefits
through administrative channels." Salfi, 422 U.S. at 759 n.6.
21 That Congress specifically meant Section 405(h) to apply to suits, like
respondent's, that seek to avoid sanctions is also made clear by its incorporation
into 42 U.S.C. 1320a-7a and 1320a-8, which authorize the Secretary to impose
civil money penalties and other sanctions for misconduct. See 42 U.S.C.
1320a-7(f)(3) ("The provisions of section 405(h) * * * shall apply
with respect to sections 1320a-7a [and] 1320a-8."). Under the court
of appeals' theory, Section 405(h) in that context would not bar an anticipatory
suit seeking to prevent the Secretary from collecting a civil penalty, since
such a suit would not be an "amount" claim seeking reimbursement
from the Secretary, but rather a pre-enforcement suit.
22 The Secretary's regulations and guidelines are not themselves "decisions"
of the Secretary within the meaning of the second sentence of 42 U.S.C.
405(h). See Michigan Academy, 476 U.S. at 679 n.8. But respondent cannot
avoid the force of Section 405(h)'s second sentence by arguing that it is
not challenging a "decision" of the Secretary here. If that argument
were accepted, any plaintiff could bypass the Medicare Act's exhaustion
requirements at will by filing a declaratory judgment action in federal
court at a time when its claims are least ripe for review-when enforcement
may not even be contemplated and the Secretary therefore has not yet issued
any "decision." For the same reason, this Court rejected that
argument in Ringer, 466 U.S. at 621. There, the lead plaintiff contended
that Section 405(h) did not preclude his lawsuit because his request had
neither "blossomed into a 'claim' cognizable under § 405(g),"
nor resulted in a decision by the Secretary. The Court held that to allow
plaintiffs "to bypass the exhaustion requirements of the Medicare Act
by simply bringing declaratory judgment actions in federal court" in
any instance where the Secretary has not yet issued an individualized decision
would "undercut Congress' carefully crafted scheme for administering
the Medicare Act." See 466 U.S. at 621. Accordingly, it held that Ringer's
claim was barred even though the regulation he sought to challenge had not
yet resulted in a "decision" by the Secretary on a claim for benefits.
23 To the extent there are differences between Ringer and this case, Ringer
provided the more compelling case for bypass of administrative remedies.
The lead plaintiff in Ringer wished to undergo surgery that, under the Secretary's
guidelines, was not covered by Medicare. Because Ringer allegedly could
not afford to pay for the surgery himself and (he contended) no surgeon
would perform the surgery in light of the non-coverage guideline, Ringer
contended that he could not have the surgery, submit a claim, and challenge
the Secretary's resulting decision through the Medicare Act's judicial review
procedures; instead, to have the surgery, he needed an anticipatory ruling.
See 466 U.S. at 629 (Stevens, J., dissenting). Respondent's institutional
members could not make any such assertion of personal hardship.
24 See, e.g., Furlong v. Shalala, 156 F.3d 384, 388-389, 394 (2d Cir. 1998)
(noting that ALJs had, in over 100 cases, declined to apply a particular
manual provision); see also Ringer, 466 U.S. at 607-608 (even though HCFA
had concluded that a particular surgical procedure was not "reasonable
and necessary" within the meaning of the Medicare Act and had issued
instructions to fiscal intermediaries not to approve claims for that procedure,
ALJs "were consistently ruling in favor of individual * * * claimants"
with respect to that procedure; only later did HCFA issue a formal ruling
that bound ALJs).
25 Of course, interpretive rules, general statements of policy, and rules
of agency organization, procedure, or practice in the Manual are exempt
from APA notice-and-comment requirements. 5 U.S.C. 553(b)(A); Guernsey Mem'l
Hosp., 514 U.S. at 99.
26 The Court held that the "final decision" requirement of Section
405(g)-like the "final decision" requirement of 28 U.S.C. 1291-is
sufficiently flexible to permit expedited review of collateral claims in
limited, appropriate circumstances. According to the Court, an otherwise
interim decision by the Secretary may be considered "final" within
the meaning of Section 405(g) and thus immediately reviewable, even where
the plaintiff has not fully pursued all administrative remedies, if: (1)
a claim for benefits has been properly presented to the Secretary, 424 U.S.
at 328-329, (2) the challenge on which review is sought is "entirely
collateral to" the merits of the plaintiff's substantive claim, 424
U.S. at 330, and (3) full relief with respect to that challenge could not
be afforded after exhaustion of administrative remedies. Mathews, 424 U.S.
at 331-332. See also Bowen v. City of New York, 476 U.S. 467, 483-486 (1986)
(excusing failure to exhaust in "unique" circumstances involving
secret agency policy).
In Mathews itself, the Court held that the plaintiff could seek immediate
judicial review under 42 U.S.C. 405(g) to assert a constitutional right
to a pre-deprivation hearing, once he had presented his claim to the Secretary
and the Secretary had made an initial determination to terminate his benefits
without that full hearing, because the plaintiff could not obtain relief
on his claim that he had a right to a pre-deprivation hearing in an action
for judicial review after the deprivation had taken effect. 424 U.S. at
331-333. That holding, however, does not assist respondent. First, respondent
does not assert that jurisdiction is proper under Section 405(g); it relies
on the general federal-question statute, 28 U.S.C. 1331, instead. J.A. 22
(¶ 14); Pet. App. 13a, 15a. Second, the collateral order rule described
in Mathews excuses the plaintiff from fully pursuing available administrative
remedies, but it does not excuse the other jurisdictional prerequisites
for review under Sections 405(g) and 1395cc(h), such as the requirement
that the plaintiff actually present its claim to the Secretary, see Salfi,
422 U.S. at 764; Ringer, 466 U.S. at 617-618; Mathews, 424 U.S. at 328,
and that it be "dissatisfied with a determination" of the Secretary,
42 U.S.C. 405(g), 1395cc(h)(2). Here, the district court expressly found
that respondent "has not alleged or shown any attempt at presentment
of [its] claims to the Secretary," id. at 19a, and respondent has never
challenged that finding. That failure is fatal to jurisdiction under 42
U.S.C. 405(g), since the requirements of presentation and dissatisfaction
with a determination are not waivable. See Ringer, 466 U.S. at 617.
27 See also 42 U.S.C. 1395ff(b)(4) (barring judicial review of a regulation
or instruction relating to a method of determining the amount of payments
under Part B if the regulation or instruction was issued prior to January
1, 1981). Judicial review similarly would be available with respect to the
Secretary's choice of remedies to be imposed on a particular facility, and
the characterization of seriousness of violations to the extent it influenced
the choice of remedies, even though those issues are, by regulation, outside
the scope of ALJ and Departmental Appeals Board review. (The ALJ, of course
is not precluded from addressing whether and how many violations occurred.)
See 42 C.F.R. 498.3(d)(10)-(11) (excluding the choice of remedy and disputes
concerning the agency's characterization of the scope and severity of the
violations from the administrative review process, except where the range
of civil money penalties would be affected). The standard of review applied
to such remedy-related claims, however, is extraordinarily deferential.
See Butz v. Glover Livestock Comm'n Co., 411 U.S. 182, 185-186 (1973) ("[W]here
Congress has entrusted an administrative agency with the responsibility
of selecting the means of achieving the statutory policy 'the relation of
remedy to policy is peculiarly a matter for administrative competence,'"
and the agency's choice of remedies may not be overturned unless "unwarranted
in law or * * * without justification in fact.").
APPENDIX A
2. Section 405(h) of Title 42, United States Code, provides: 3. Section 1320a-7 of Title 42, United States Code, provides in relevant
part: 4. Section 1320a-7a of Title 42, United States Code, provides in relevant
part: 5. Section 1395i-3(h) of Title 42, United States Code, provides:
STATUTORY PROVISIONS
1. Section 405(g) of Title 42, United States Code, provides:
(g) Judicial review
Any individual, after any final decision of the Commissioner of Social Security
made after a hearing to which he was a party, irrespective of the amount
in controversy, may obtain a review of such decision by a civil action commenced
within sixty days after the mailing to him of notice of such decision or
within such further time as the Commissioner of Social Security may allow.
Such action shall be brought in the district court of the United States
for the judicial district in which the plaintiff resides, or has his principal
place of business, or, if he does not reside or have his principal place
of business within any such judicial district, in the United States District
Court for the District of Columbia. As part of the Commissioner's answer
the Commissioner of Social Security shall file a certified copy of the transcript
of the record including the evidence upon which the findings and decision
complained of are based. The court shall have power to enter, upon the pleadings
and transcript of the record, a judgment affirming, modifying, or reversing
the decision of the Commissioner of Social Security, with or without remanding
the cause for a rehearing. The findings of the Commissioner of Social Security
as to any fact, if supported by substantial evidence, shall be conclusive,
and where a claim has been denied by the Commissioner of Social Security
or a decision is rendered under subsection (b) of this section which is
adverse to an individual who was a party to the hearing before the Commissioner
of Social Security, because of failure of the claimant or such individual
to submit proof in conformity with any regulation prescribed under subsection
(a) of this section, the court shall review only the question of conformity
with such regulations and the validity of such regulations. The court may,
on motion of the Commissioner of Social Security made for good cause shown
before the Commissioner files the Commissioner's answer, remand the case
to the Commissioner of Social Security for further action by the Commissioner
of Social Security, and it may at any time order additional evidence to
be taken before the Commissioner of Social Security, but only upon a showing
that there is new evidence which is material and that there is good cause
for the failure to incorporate such evidence into the record in a prior
proceeding; and the Commissioner of Social Security shall, after the case
is remanded, and after hearing such additional evidence if so ordered, modify
or affirm the Commissioner's findings of fact or the Commissioner's decision,
or both, and shall file with the court any such additional and modified
findings of fact and decision, and a transcript of the additional record
and testimony upon which the Commissioner's action in modifying or affirming
was based. Such additional or modified findings of fact and decision shall
be reviewable only to the extent provided for review of the original findings
of fact and decision. The judgment of the court shall be final except that
it shall be subject to review in the same manner as a judgment in other
civil actions. Any action instituted in accordance with this subsection
shall survive notwithstanding any change in the person occupying the office
of Commissioner of Social Security or any vacancy in such office.
(h) Finality of Commissioner's decision
The findings and decision of the Commissioner of Social Security after a
hearing shall be binding upon all individuals who were parties to such hearing.
No findings of fact or decision of the Commissioner of Social Security shall
be reviewed by any person, tribunal, or governmental agency except as herein
provided. No action against the United States, the Commissioner of Social
Security, or any officer or employee thereof shall be brought under section
1331 or 1346 of title 28 to recover on any claim arising under this subchapter.
§ 1320a-7. Exclusion of certain individuals and entities from participation
in Medicare and State health care programs
(a) Mandatory exclusion
The Secretary shall exclude the following individuals and entities from
participation in any program under subchapter XVIII of this chapter and
shall direct that the following individuals and entities be excluded from
participation in any State health care program (as defined in subsection
(h) of this section):
(1) Conviction of program-related crimes
* * * * *
(2) Conviction relating to patient abuse
* * * * *
(b) Permissive exclusion
The Secretary may exclude the following individuals and entities from participation
in any program under subchapter XVIII of this chapter and may direct that
the following individuals and entities be excluded from participation in
any State health care program:
(1) Conviction relating to fraud
* * * * *
(2) Conviction relating to obstruction of an investigation
* * * * *
(3) Conviction relating to controlled substance
* * * * *
(f) Notice, hearing, and judicial review
(1) Subject to paragraph (2), any individual or entity that is excluded
(or directed to be excluded) from participation under this section is entitled
to reasonable notice and opportunity for a hearing thereon by the Secretary
to the same extent as is provided in section 405(b) of this title, and to
judicial review of the Secretary's final decision after such hearing as
is provided in section 405(g) of this title, except that, in so applying
such sections and section 405(l) of this title, any reference therein to
the Commissioner of Social Security or the Social Security Administration
shall be considered a reference to the Secretary or the Department of Health
and Human Services, respectively.
(2) Unless the Secretary determines that the health or safety of individuals
receiving services warrants the exclusion taking effect earlier, any individual
or entity that is the subject of an adverse determination under subsection
(b)(7) of this section shall be entitled to a hearing by an administrative
law judge (as provided under section 405(b) of this title) on the determination
under subsection (b)(7) of this section before any exclusion based upon
the determination takes effect.
(3) The provisions of section 405(h) of this title shall apply with respect
to this section and sections 1320a-7a, 1320a-8, and 1320c-5 of this title
to the same extent as it is applicable with respect to subchapter II of
this chapter, except that, in so applying such section and section 405(l)
of this title, any reference therein to the Commissioner of Social Security
shall be considered a reference to the Secretary.
§ 1320a-7a. Civil monetary penalties
* * * * *
(c) Initiation of proceeding; authorization by Attorney General, notice,
etc., estoppel, failure to comply with order or procedure
* * * * *
(2) The Secretary shall not make a determination adverse to any person under
subsection (a) or (b) of this section until the person has been given written
notice and an opportunity for the determination to be made on the record
after a hearing at which the person is entitled to be represented by counsel,
to present witnesses, and to cross-examine witnesses against the person.
* * * * *
(e) Review by courts of appeals
Any person adversely affected by a determination of the Secretary under
this section may obtain a review of such determination in the United States
Court of Appeals for the circuit in which the person resides, or in which
the claim was presented, by filing in such court (within sixty days following
the date the person is notified of the Secretary's determination) a written
petition requesting that the determination be modified or set aside. A copy
of the petition shall be forthwith transmitted by the clerk of the court
to the Secretary, and thereupon the Secretary shall file in the Court[1]
the record in the proceeding as provided in section 2112 of title 28. Upon
such filing, the court shall have jurisdiction of the proceeding and of
the question determined therein, and shall have the power to make and enter
upon the pleadings, testimony, and proceedings set forth in such record
a decree affirming, modifying, remanding for further consideration, or setting
aside, in whole or in part, the determination of the Secretary and enforcing
the same to the extent that such order is affirmed or modified. No objection
that has not been urged before the Secretary shall be considered by the
court, unless the failure or neglect to urge such objection shall be excused
because of extraordinary circumstances. The findings of the Secretary with
respect to questions of fact, if supported by substantial evidence on the
record considered as a whole, shall be conclusive. If any party shall apply
to the court for leave to adduce additional evidence and shall show to the
satisfaction of the court that such additional evidence is material and
that there were reasonable grounds for the failure to adduce such evidence
in the hearing before the Secretary, the court may order such additional
evidence to be taken before the Secretary and to be made a part of the record.
The Secretary may modify his findings as to the facts, or make new findings,
by reason of additional evidence so taken and filed, and he shall file with
the court such modified or new findings, which findings with respect to
questions of fact, if supported by substantial evidence on the record considered
as a whole, shall be conclusive, and his recommendations, if any, for the
modification or setting aside of his original order. Upon the filing of
the record with it, the jurisdiction of the court shall be exclusive and
its judgment and decree shall be final, except that the same shall be subject
to review by the Supreme Court of the United States, as provided in section
1254 of title 28.
(h) Enforcement process
(1) In general
If a State finds, on the basis of a standard, extended, or partial extended
survey under subsection (g)(2) of this section or otherwise, that a skilled
nursing facility no longer meets a requirement of subsection (b), (c), or
(d) of this section, and further finds that the facility's deficiencies-
(A) immediately jeopardize the health or safety of its residents, the State
shall recommend to the Secretary that the Secretary take such action as
described in paragraph (2)(A)(i); or
(B) do not immediately jeopardize the health or safety of its residents,
the State may recommend to the Secretary that the Secretary take such action
as described in paragraph (2)(A)(ii).
If a State finds that a skilled nursing facility meets the requirements
of subsections (b), (c), and (d) of this section, but, as of a previous
period, did not meet such requirements, the State may recommend a civil
money penalty under paragraph (2)(B)(ii) for the days in which it finds
that the facility was not in compliance with such requirements.
(2) Secretarial authority
(A) In general
With respect to any skilled nursing facility in a State, if the Secretary
finds, or pursuant to a recommendation of the State under paragraph (1)
finds, that a skilled nursing facility no longer meets a requirement of
subsection (b), (c), (d), or (e) of this section, and further finds that
the facility's deficiencies-
(i) immediately jeopardize the health or safety of its residents, the Secretary
shall take immediate action to remove the jeopardy and correct the deficiencies
through the remedy specified in subparagraph (B)(iii), or terminate the
facility's participation under this subchapter and may provide, in addition,
for one or more of the other remedies described in subparagraph (B); or
(ii) do not immediately jeopardize the health or safety of its residents,
the Secretary may impose any of the remedies described in subparagraph (B).
Nothing in this subparagraph shall be construed as restricting the remedies
available to the Secretary to remedy a skilled nursing facility's deficiencies.
If the Secretary finds, or pursuant to the recommendation of the State under
paragraph (1) finds, that a skilled nursing facility meets such requirements
but, as of a previous period, did not meet such requirements, the Secretary
may provide for a civil money penalty under subparagraph (B)(ii) for the
days on which he finds that the facility was not in compliance with such
requirements.
(B) Specified remedies
The Secretary may take the following actions with respect to a finding that
a facility has not met an applicable requirement:
(i) Denial of payment
The Secretary may deny any further payments under this subchapter with respect
to all individuals entitled to benefits under this subchapter in the facility
or with respect to such individuals admitted to the facility after the effective
date of the finding.
(ii) Authority with respect to civil money penalties
The Secretary may impose a civil money penalty in an amount not to exceed
$10,000 for each day of noncompliance. The provisions of section 1320a-7a
of this title (other than subsections (a) and (b)) shall apply to a civil
money penalty under the previous sentence in the same manner as such provisions
apply to a penalty or proceeding under section 1320a-7a(a) of this title.
(iii) Appointment of temporary management
In consultation with the State, the Secretary may appoint temporary management
to oversee the operation of the facility and to assure the health and safety
of the facility's residents, where there is a need for temporary management
while-
(I) there is an orderly closure of the facility, or
(II) improvements are made in order to bring the facility into compliance
with all the requirements of subsections (b), (c), and (d) of this section.
The temporary management under this clause shall not be terminated under
subclause (II) until the Secretary has determined that the facility has
the management capability to ensure continued compliance with all the requirements
of subsections (b), (c), and (d) of this section.
The Secretary shall specify criteria, as to when and how each of such remedies
is to be applied, th