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Anderson v. Bowen

decided: July 28, 1989.

VINCENT ANDERSON, IRENE CIRILLO, MICHAEL DE MONTE, ALEXANDER ELLMAN, KENNETH SUNEW AND EDUARD NEGOIANU, PLAINTIFFS-APPELLANTS,
v.
OTIS R. BOWEN, AS SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, WILLIAM TOBY, MORTON BERKOWITZ, MORDECAI A. BERKUN, AND EMPIRE BLUE CROSS BLUE SHIELD, DEFENDANTS



Appeal from a judgment of the United States District Court for the Southern District of New York (Leval, J.), granting defendants' motion for summary judgment pursuant to F.R.Civ.P. 12(b)(1) and 12(b)(6). Appellants claim that the district court erred in dismissing the complaint for lack of subject matter jurisdiction. Affirmed.

Feinberg, Pierce, and John R. Brown*fn* Circuit Judges.

Author: Brown

JOHN R. BROWN, Circuit Judge

Patients enrolled in the voluntary Medicare Part B health insurance program and physician assignees of enrolled patients appeal the district court's F.R.Civ.P. 12(b)(1) dismissal for lack of subject matter jurisdiction. Finding a challenge to the amount of Medicare Part B benefits awarded at the heart of this controversy, we agree with the district court that it has no jurisdiction under 28 U.S.C. § 1331 to review the Part B benefit determination. The patients and physicians also fail to establish jurisdiction by either presenting a substantial constitutional equal protection claim, or showing existence of a clear nondiscretionary duty to support mandamus jurisdiction under 28 U.S.C. § 1361.

Part B Roadmap

Part B of the Medicare Act, 42 U.S.C. §§ 1395j-1395w-3, is a federally subsidized voluntary health insurance program for persons who are aged 65 or older, or are disabled. Part B insures against a portion of some medical expenses, such as various physician services, out-patient physical therapy, x-rays, laboratory testing and similar ancillary medical services. 42 U.S.C. § 1395l; 42 C.F.R. § 405.231. Eligible individuals enroll in the program and pay monthly premiums. See 42 U.S.C. §§ 1395r. The Secretary of Health & Human Services (Secretary) is authorized by Congress to contract with private health insurance carriers to administer the Part B claims process. 42 U.S.C. § 1395u(a). See generally Schweiker v. McClure, 456 U.S. 188, 190-91, 102 S. Ct. 1665, 1667-68, 72 L. Ed. 2d 1, 4-5 (1982).

The Secretary, through the Health Care Financing Administration (HCFA), contracted with Empire Blue Cross and Blue Shield (EBCBS)*fn1 to administer Medicare Part B benefits in many New York counties. In its role as a Part B carrier, EBCBS reviews and pays Part B claims according to procedures established by the Medicare Act. This requires that EBCBS utilize statutory guidelines and regulations to determine whether the charges for services rendered are "reasonable." See 42 U.S.C. § 1395u(b)(3), 42 C.F.R. §§ 405.501 et seq. While the statute and regulations instruct the carrier to take into account certain criteria in ascertaining the reasonableness of a charge for which a claim reimbursement is sought, additional factors found by the carrier to be necessary to judge the inherent reasonableness of a charge may also be considered. 42 C.F.R. § 405.502(a)(7).

Heart of the Matter

The instant case involves a dispute regarding EBCBS reimbursements from July 1982 to July 1986 for Swan-Ganz heart catheterizations. Patients enrolled in the Part B program and assignee physicians (claimants)*fn2 who submitted claims for Swan-Ganz procedures performed during this time period challenge reductions to EBCBS reimbursements. Prior to July 1982, all right heart catheterizations (RHCs), including Swan-Ganz,*fn3 were reimbursed under one RHC code. However, EBCBS established a new code for the Swan-Ganz procedure. On July 29, 1982 EBCBS Director Berkun instructed his staff not to treat the Swan-Ganz procedure as a RHC for purposes of reimbursement. This change resulted in reimbursement for Swan-Ganz procedures at a rate lower than those heart catheterizations reimbursed under the generic RHC code.

The claimants sought and received carrier review of claim determinations by EBCBS involving reimbursement under the new code for the Swan-Ganz procedure.*fn4 Hearing officer (HO) Woodson handled review of these claims and in decisions rendered between July 23 and 25, 1985 upheld the carrier's decision, set forth in the Berkun directive, to apply the new code -- not the RHC code -- and corresponding reimbursement rate for the Swan-Ganz procedures. The claimants, unhappy with Woodson's decision, seek judicial review of these claims. The district court, however, dismissed their complaint for lack of subject matter jurisdiction.

Federal Question Jurisdiction?

The claimants argue that 42 U.S.C. § 1395ff, as in effect at the time of the instant claims,*fn5 does not preclude judicial review of their Part B claims. Section 1395ff states:

(a) Entitlement to and amount of benefits

The determination of whether an individual is entitled to benefits under part A or part B of this subchapter, and the determination of the amount of benefits under part A of this subchapter, shall be made by the ...


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