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THE GRAY PANTHERS v. CALIFANO

March 6, 1979

The GRAY PANTHERS et al., Plaintiffs,
v.
Joseph CALIFANO, Jr., Secretary, Department of Health, Education and Welfare, Defendant



The opinion of the court was delivered by: FLANNERY

MEMORANDUM OPINION

This matter comes before the court on cross-motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The plaintiffs present a two-pronged challenge to the constitutionality of Sections 1869(b)(2) and 1842(b)(3)(C) of the Social Security Act, codified at 42 U.S.C. §§ 1395ff(b)(2) and 1395u(b)(3)(C), which limit the right to an oral, evidentiary hearing on appeal under Title XVIII of the Act, 42 U.S.C. § 1395 Et seq., commonly known as the "Medicare" program, to those beneficiaries making claims in which the matter in controversy is $ 100 or more. First, the plaintiffs allege that the amount-in-controversy requirement deprives persons whose disputed claims involve less than $ 100 of their property without due process in violation of the Fifth Amendment. Second, the plaintiffs contend that the $ 100 limitation denies them the equal protection of the laws guaranteed by the Fifth Amendment.

 There are no disputed issues as to any material fact in this action and the court properly may decide this controversy under Rule 56. For the reasons set forth below, the court will deny the plaintiffs' motion for summary judgment and will enter summary judgment for the defendant.

 I.

 The plaintiffs assail the constitutional adequacy of the procedural protections afforded beneficiaries appealing adverse decisions on claims of less than $ 100 under Parts A and B of the Medicare program. Part A covers primarily institutional care, such as hospitalization and nursing home services, while Part B covers supplementary medical benefits, such as doctors' fees and physical therapy. The Medicare program is not a comprehensive health program. The statute specifically excludes certain categories of health services from coverage, See, e.g., 42 U.S.C. § 1395y. In addition, it imposes certain general qualifications upon the services that are covered, See, e.g., 42 U.S.C. §§ 1395y, 1395u(b)(3). Consequently, many claims for reimbursement for medical services provided to beneficiaries either are denied or reduced by the reviewing body.

 Reimbursement to providers for services rendered to beneficiaries is carried out either by the Secretary of Health, Education and Welfare, or, more commonly, by private insurance companies, called intermediaries or carriers, who have contracted with the Department of Health, Education and Welfare pursuant to 42 U.S.C. § 1395h to perform that function under its direction. Beneficiaries who have been denied benefits under either component of the Medicare program are entitled to appeal the adverse decision. 42 C.F.R. § 405.710 Et seq. (Part A); 42 C.F.R. § 405.807 Et seq. (Part B). In their initial stages, the prescribed appeal procedures are substantially the same for the two parts. The carrier provides the claimant with notice of the initial determination, which states the reasons for an adverse decision and informs him of the right to review. The claimant is given the opportunity to submit written evidence and argument and to have the claim reviewed by a different decisionmaker than the one involved in the initial determination. After a reexamination of the claim on "reconsideration" (Part A) or "review" (Part B), a beneficiary who remains dissatisfied with the disposition of his claim may request an oral, evidentiary hearing, *fn1" but only if the amount at issue is $ 100 or more. 42 U.S.C. § 1395ff(b)(2), 42 C.F.R. § 405.720(d) (Part A); 42 U.S.C. § 1395u(b)(3)(C), 42 C.F.R. § 405.820(a) (Part B). Under Part A, the eligible claimant is entitled to a hearing before an administrative law judge, 42 C.F.R. § 405.720 Et seq., and may obtain judicial review of the hearing determination where the amount in controversy is $ 1,000 or more. 42 U.S.C. § 1395ff(b)(2); 42 C.F.R. § 405.730. In a claim arising under Part B, the evidentiary hearing is conducted by the carrier, 42 C.F.R. § 405.820 Et seq., and there is no provision for judicial review.

 The named plaintiffs in this action are the Gray Panthers, an organization that claims to represent the interests of the elderly throughout the United States, and three individuals who are enrolled in Parts A and B of the Medicare program. In addition, the court has certified a class of plaintiffs consisting of all persons who have been denied oral, evidentiary hearings on Medicare claims of less than $ 100 within the year immediately preceding the filing of this lawsuit, or who will be denied such hearings while this suit is pending. There is no dispute as to the events giving rise to this litigation. Each of the individual plaintiffs submitted a claim or claims to his carrier for physician services, which are covered by Part B. The carriers determined that some of the services were unnecessary and that charges for some of the other services were not reasonable, and reduced payments accordingly. Following an initial adverse determination, the plaintiffs submitted their claims for review pursuant to 42 C.F.R. § 405.807 Et seq. Each plaintiff, dissatisfied with a second adverse determination under the review procedure, requested an oral, evidentiary hearing before his carrier. In each case, the carrier refused to grant a hearing, because the amounts in controversy at the time of the requests were less than $ 100 for each plaintiff. The carriers expressly based their refusals upon the statutory preclusion of 42 U.S.C. § 1395u(b)(3)(C). The plaintiffs then brought this suit, asking the court to require the defendant to provide them and each of the class members with oral, evidentiary hearings on their claims, and to order the defendant permanently to desist from applying the amount-in-controversy limitations of the challenged statutory provisions.

 The plaintiffs contend that the due process clause of the Fifth Amendment requires the government to afford Medicare beneficiaries the opportunity for an oral, evidentiary hearing on their claims at some stage irrespective of the amount of Medicare benefits in controversy. The defendant does not contest the plaintiffs' assertion that a beneficiary's property interest in Medicare benefits is entitled to the protections of due process. Rather, the defendant argues that the existing administrative procedures for review of disputed claims of under $ 100, which rely solely upon written submissions, provide all the process that is constitutionally due to beneficiaries under the Medicare program. Upon consideration of the parties' arguments on this question, the court concludes that the amount-in-controversy limitation attacked here satisfies the due process guarantees of the Fifth Amendment.

 The court is guided in its determination by certain fundamental precepts of due process jurisprudence articulated by the United States Supreme Court. Due process " "is not a technical conception with a fixed content unrelated to time, place and circumstances'." Cafeteria & Restaurant Workers Union v. McElroy, 367 U.S. 886, 895, 81 S. Ct. 1743, 1749, 6 L. Ed. 2d 1230 (1961). It is "flexible and calls for such procedural protections as the particular situation demands." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S. Ct. 2593, 2600, 33 L. Ed. 2d 484 (1972). In the area of social benefits programs, courts scrutinizing the government's compliance with due process must balance the public and private interests affected by a given procedural scheme. Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976); Goldberg v. Kelly, 397 U.S. 254, 263-66, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970). Although "some kind of hearing is required at some time before a person is finally deprived of his property interests," Wolff v. McDonnell, 418 U.S. 539, 557-58, 94 S. Ct. 2963, 2975, 41 L. Ed. 2d 935 (1974), an oral, evidentiary hearing is not required in all cases. In a variety of situations where due process requirements are invoked, "something less than an evidentiary hearing" can satisfy the right to be heard. Mathews v. Eldridge, supra, 424 U.S. at 343, 96 S. Ct. at 907.

 Both sides in the present case agree that the Supreme Court's decision in Mathews v. Eldridge, supra, is applicable to determine whether the Medicare review procedures challenged here pass constitutional muster. *fn2" The Court there enumerated three factors that courts engaged in a due process analysis must consider in evaluating the adequacy of a particular procedural scheme:

 
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. (citation omitted)

 424 U.S. at 335, 96 S. Ct. at 903. The United States Court of Appeals for the District of Columbia Circuit has observed that courts are to balance these three factors, rather than treat one or another of the factors alone as dispositive. Basel v. Knebel, 179 U.S.App.D.C. 209, 212, 551 F.2d 395, 398 (1977). Mindful of this admonition, the court will ...


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