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No. 98-1109: Shalala v. Illinois Council on Long Term Care Inc. | |||||||||||
No. 98-1109
2. When we filed the petition for certiorari, we suggested (Pet. 8-9, 17)
that it be held pending the Court's decision in Your Home Visiting Nurse
Services, Inc. v. Shalala, No. 97-1489 (Your Home), and then disposed of
as appropriate in light of that decision. The Secretary's petition suggested
that the Court's decision in Your Home might implicate issues concerning
the scope of Section 405(h)'s bar and the effect of the Court's prior decision
in Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986).
Although respondent agrees that this case warrants review, respondent argues
in its response to the petition that the case should not be held pending
decision in Your Home, and that plenary review should be granted. 3. Respondent's defense of the ruling below is incorrect and at odds with
this Court's precedents. See Pet. 13-16.
In the Supreme Court of the United States
OCTOBER TERM, 1998
DONNA E. SHALALA, SECRETARY OF HEALTH
AND HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
REPLY BRIEF FOR THE PETITIONERS
SETH P. WAXMAN
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
In the Supreme Court of the United States
OCTOBER TERM, 1998
No. 98-1109
DONNA E. SHALALA, SECRETARY OF HEALTH
AND HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
REPLY BRIEF FOR THE PETITIONERS
1. Respondent agrees that the Seventh Circuit's decision in this case creates
a conflict in circuit authority that warrants this Court's review. See Br.
in Opp. 5 ("This case * * * presents a clear circuit conflict on a
significant jurisdictional issue."). As respondent explains, "the
Seventh Circuit's decision" regarding the scope of the jurisdictional
bar presented by 42 U.S.C. 405(h), as incorporated in 42 U.S.C. 1395ii,
"squarely conflicts with [the Sixth Circuit's decision in] Michigan
Assn. of Homes & Services for the Aging, Inc. v. Shalala, 127 F.3d 496
[(1997)]," and with the "other court of appeals decisions that
have limited the holding in Bowen v. Michigan Academy of [Family] Physicians,
476 U.S. 667 (1986) * * * in light of subsequent amendments to Part B of
the Medicare program." Br. in Opp. 5; see Pet. 15-16 (citing, inter
alia, St. Francis Medical Center v. Shalala, 32 F.3d 805 (3d Cir. 1994),
cert. denied, 514 U.S. 1016 (1995); Abbey v. Sullivan, 978 F.2d 37 (2d Cir.
1992); National Kidney Patients Ass'n v. Sullivan, 958 F.2d 1127 (D.C. Cir.
1992), cert. denied, 506 U.S. 1049 (1993); and American Academy of Dermatology
v. Department of Health & Human Services, 118 F.3d 1495 (11th Cir. 1997)).1
Respondent, moreover, agrees that the conflict over the scope of Section
405(h)'s jurisdictional bar on pre-enforcement challenges to Medicare regulations
is "of widespread importance for both a federal agency and for providers
nationwide that participate in Medicare." Br. in Opp. 6. The conflict,
it notes, is likely to "spawn confusion in the lower courts,"
"consume an increasing amount of judicial resources," and "encourage
forum shopping by plaintiffs seeking to challenge Medicare regulations."
Id. at 6-7. Respondent therefore joins the Secretary in urging the Court
to grant the petition, and urges that the case be set for plenary review.2
The Court rendered its decision in Your Home on February 23, 1999. We now
agree with respondent that the appropriate disposition of the petition is
to grant plenary review. The Court's decision in Your Home is consistent
with the Secretary's position here: that Section 405(h), as made applicable
to the Medicare Act by 42 U.S.C. 1395ii, channels all claims arising under
the Medicare Program to the avenues of administrative and judicial review
provided by the Medicare Act itself-here, as provided by Section 405(g),
which is made applicable in this case by 42 U.S.C. 1395cc(h)(1). Your Home,
however, does not discuss Michigan Academy. See Pet. 13-14. Nor does it
address the relationship of Michigan Academy to Heckler v. Ringer, 466 U.S.
602 (1984), which rejected the contention that Section 405(h)'s jurisdictional
bar does not extend to challenges that, like respondent's claim here, do
not themselves involve a specific claim for benefits. See Pet. 12. Because
the court of appeals expressed the view that this Court's decision in Michigan
Academy compelled it to reject the Secretary's position in this case despite
the Secretary's reliance on Ringer-and expressly stated that it was "obliged
to follow the holding of Michigan Academy" unless "the Supreme
Court tells [it] that * * * a change of direction" is required, Pet.
App. 7a-we see no reason to remand this case for further consideration in
light of Your Home, which does not discuss Michigan Academy. Accordingly,
we agree with respondent (Br. in Opp. 16) that this case is ready and suitable
for the Court's review, and that a remand in light of Your Home is neither
necessary nor appropriate.
a. Respondent begins by attempting to reconcile the decision below with
this Court's decision in Heckler v. Ringer, 466 U.S. at 614-617. See Br.
in Opp. 9-10. In Ringer, this Court held that, under Section 405(h), as
made applicable to Medicare by 42 U.S.C. 1395ii, federal courts can obtain
jurisdiction over claims "arising under" the Medicare Act only
if the claimant avails himself of the administrative and judicial review
mechanisms established by the Medicare statute itself, i.e., by first presenting
his claim to the Secretary and exhausting administrative remedies and then
filing suit under Section 405(g), which is made applicable to the Medicare
Program by 42 U.S.C. 1395cc(h)(1). According to respondent, the pre-enforcement
action at issue in Ringer, which sought the invalidation of a Medicare rule,
was not "collateral" to a claim for benefits, whereas the claims
in this case are; Section 405(h), respondent appears to argue, bars pre-enforcement
review only of payment-related claims. Br. in Opp. 9.
That contention is inconsistent with Ringer itself, which holds that 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). Besides, respondent's claim
is inextricably entwined with payment under the Medicare Act: Compliance
with the regulations it challenges is a condition of participation in Medicare,
and thus controls its members' eligibility for payment under the program.
See 42 U.S.C. 1395i-3(a) to (d); 42 C.F.R. 483.1-483.75; see also Pet. App.
17a (That respondent's claim is entwined with benefits eligibility is "evidenced
by the relief sought," because respondent "seeks continuation
of Medicare payments and reimbursement for past due payments incurred by
the patients at the nursing homes."). Just as the plaintiff in Ringer
sought to bring a pre-enforcement challenge to the Secretary's rule barring
payment for the treatment he wanted, respondent here seeks to bring a pre-enforcement
challenge to regulations that condition its members' participation in Medicare
(and thus payments under the program) on compliance with certain substantive
and remedial requirements.3
Respondent's construction is also inconsistent with the structure of the
statute and the channeling function that 42 U.S.C. 405(g) and (h) are designed
to serve. Section 405(g), which provides for review only of the "final
decision" of the Secretary, provides jurisdiction over claims like
respondent's after those claims are presented to the Secretary and administrative
remedies are exhausted. Section 405(h), made applicable by 42 U.S.C. 1395ii,
precludes claimants from evading those presentment and exhaustion requirements
by seeking review under 28 U.S.C. 1331. See Ringer, 466 U.S. at 614-615
("42 U.S.C. § 405(h) * * * provides that § 405(g), to the
exclusion of 28 U.S.C. § 1331, is the sole avenue for judicial review")
(footnote omitted). Given the proximity of those provisions and their obviously
related purposes, Section 405(h) should be read (at a minimum) as barring
courts from reviewing under 28 U.S.C. 1331 and 1346 all claims that-like
respondent's -can be reviewed through the mechanism established by Section
405(g); any other construction would permit providers to evade the presentment
and exhaustion requirements for certain claims by seeking immediate review
under 28 U.S.C. 1331 and 1346, rather than using the specific review mechanism
that Congress prescribed.
Section 10(b) of the Administrative Procedure Act (APA), 5 U.S.C. 703, has
a channeling function that reinforces this interpretation of Section 405(g)
and (h). It expressly provides 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. And the APA specifically 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.
Because respondent's members can avail themselves of the fully adequate
mechanism for judicial review under 42 U.S.C. 405(g), the APA both remits
them to that mechanism, and bars them from evading its prerequisites by
seeking immediate review under 28 U.S.C. 1331 and 1346 and the cause of
action codified in the APA.
b. Nor is respondent correct to assert (Br. in Opp. 10-12) that this Court
should follow Michigan Academy rather than Ringer because it is "more
recent," and because portions of it have been followed in other decisions
of this Court. In this Court's most recent decision in the area, Your Home,
the provider made a similar argument, seeking to avoid the jurisdictional
limitations of Section 405(h) and invoking Michigan Academy on the ground
that, absent review through 28 U.S.C. 1331, no judicial review could be
had at all. See Pet. Br. at 19-20, 23, Your Home Visiting Nurse Servs.,
Inc. v. Shalala, No. 97-1489. Citing Ringer, this Court rejected that argument,
holding the provider's claim to be barred by Section 405(h) because the
provider's standing and the substantive basis of its claim were based on
the Medicare Act. Your Home Visiting Nurse Servs., Inc. v. Shalala, No.
97-1489 (Feb. 23, 1999), slip op. 7. The same argument applies here with
greater force, since respondent's members do have an alternative mechanism
for obtaining judicial review of the agency action they seek to challenge.4
c. Finally, respondent errs in asserting that the decision below correctly
applies this Court's decisions in Michigan Academy and McNary v. Haitian
Refugee Center, Inc., 498 U.S. 479 (1991). As explained in our petition
(at 13-14), both Michigan Academy and McNary underscore the point that federal
courts may assert jurisdiction over claims arising under the Medicare Act
under 28 U.S.C. 1331 and 1346 only where (if at all) the statute otherwise
would afford no meaningful avenue of judicial review, as only in that situation
does the presumption against unreviewability come into play. See Michigan
Academy, 476 U.S. at 678-681; McNary, 498 U.S. at 498. Indeed, the Court
reiterated that distinction in Thunder Basin Coal Co. v. Reich, 510 U.S.
200 (1994), upon which respondent relies (Br. in Opp. 12-13, 14). Notwithstanding
Michigan Academy, the Court in Thunder Basin held that the pre-enforcement
challenge there was not subject to judicial review under 28 U.S.C. 1331
because the statutory scheme provided for meaningful judicial review after
a final agency decision and evidenced an intent to allocate initial review
to an administrative tribunal. See 510 U.S. at 207 & n.8, 213-214. The
same is true here.
* * * * *
For the foregoing reasons, and those set forth in the petition, the petition
for a writ of certiorari should be granted.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
MARCH 1999
1 Although acknowledging a circuit conflict and agreeing that the Secretary's
petition should be granted, respondent argues (Br. in Opp. 14-15) that the
decision below is consistent with United States qui tam Body v. Blue Cross
& Blue Shield of Alabama, Inc., 156 F.3d 1098 (11th Cir. 1998). That
case, however, involved a qui tam suit brought under the False Claims Act,
31 U.S.C. 3729, to recover allegedly wrongful payments made to a Medicare
provider. The case did not involve claims against the government and, as
the court of appeals held, the qui tam relator's cause of action and substantive
rights arose under the False Claims Act, not the Medicare statute. 156 F.3d
at 1105. As a result, that decision turns on claims and issues that differ
substantially from those presented in this case.
2 As explained in the petition, the Secretary challenges the judgment of
the court of appeals only insofar as it reinstates respondent's claims with
respect to, and on behalf of, its members that participate in the Medicare
program. See Pet. 7 n.5; see also Pet. i (limiting question presented to
whether facilities participating "in the Medicare program" may
obtain judicial review under 28 U.S.C. 1331 and 1346 "to challenge
the validity of Medicare regulations") (emphasis added). Medicaid (unlike
Medicare) does not incorporate the jurisdictional limitation of Section
405(h); as a result, Section 405(h) does not apply to respondent's claims
arising under, and on behalf of members participating in, the Medicaid program.
Pet. 7 n.5.
3 Even if one were to assume arguendo that respondent's claims were in some
sense "collateral," that would not be sufficient to permit a federal
court to assume subject matter jurisdiction. First, any collaterality exception
could excuse (at most) compliance with waivable requirements of the Medicare
Act's judicial review scheme; it could not permit a litigant to circumvent
the non-waivable requirement that a claim be presented to the Secretary
before judicial review may be had. See Ringer, 466 U.S. at 617-618; Mathews
v. Eldridge, 424 U.S. 319, 328 (1976). In this case, the district court
held that respondent had failed to present its claims to the Secretary,
Pet. App. 19a, and respondent does not contend otherwise. Second, even if
the requirement of presentment could be waived, that waiver would not be
available absent a showing that following the ordinary statutory review
scheme (i.e., presenting claims to the Secretary and exhausting administrative
remedies) would prevent the complainant from obtaining effective relief.
See Ringer, 466 U.S. at 618 (requiring a "colorable showing that [the
plaintiff's] injury could not be remedied * * * after exhaustion of his
administrative remedies"); Bowen v. City of New York, 476 U.S. 467,
483 (1986) (permitting waiver of exhaustion where plaintiff would be "irreparably
injured"). Because respondent's members in fact can obtain review after
presenting their claims to the Secretary, see note 4, infra, respondent
cannot make that showing here. See also Cross-Resp. Br. in Opp. at 11-13,
17-18 & n.10, Illinois Council on Long Term Care, Inc. v. Shalala, No.
98-1307.
4 Respondent attempts to distinguish Your Home by noting that the provider's
claim in that case did not involve a facial challenge to the validity of
a regulation, and by asserting that the Your Home provider could avail itself
of administrative remedies. Br. in Opp. 7-8. Both of those contentions are
without merit. First, Your Home turned on whether standing and the substantive
basis of the claim were founded on the Medicare Act; nothing in the decision
suggests that a different result would obtain where the provider is challenging
the facial validity of a Medicare regulation.
Second, this case cannot be distinguished from Your Home based on supposed
differences in the availability of administrative remedies. Contrary to
respondent's contentions, and as we have shown in the petition (at 3-4),
respondent's nursing home members have substantial rights to administrative
and judicial review of administrative actions taken to enforce federal standards
of care. It is true that the administrative process will not generally address
challenges to the validity of a federal regulation, but judicial review
of such claims is fully available after exhaustion of administrative remedies,
compilation of an administrative record detailing the factual context of
the claim, and issuance of a final agency decision. The Court made that
very point in Weinberger v. Salfi, 422 U.S. 749, 760-762 (1975), where it
held that a challenge to the constitutionality of a provision of the Act-which
likewise could not be resolved in the administrative process-had to be brought
under Section 405(g), rather than through an independent action invoking
district court jurisdiction under 28 U.S.C. 1331. See also Michigan Ass'n
of Homes & Servs. for Aging, Inc. v. Shalala, 127 F.3d 496, 500 (6th
Cir. 1997).