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February 17, 1983

RICHARD S. SCHWEIKER, et al., Defendants

The opinion of the court was delivered by: OBERDORFER

 The parties have now briefed and argued this so-called retroactivity question.* The point of departure for their arguments and the Court's decision is contained in the amendments to the Medicare Act enacted by Congress in December 1980 ("CORF Amendments") that added comprehensive outpatient rehabilitation facilities (CORFs) to the category of facilities previously entitled to government reimbursement for medical services rendered. Section 933 of the CORF Amendments provided an effective date in these terms:

The amendments made by this section shall become effective with respect to a comprehensive facility's first accounting period which begins on or after July 1, 1981.

 In earlier phases of the litigation the Court recognized the Secretary's prerogative to use the rulemaking process he had chosen to determine in the first instance how to carry out the provisions of the CORF Amendments with respect to the effective date. The final regulations issued on December 15, 1982, and their accompanying discussion evidence the defendants' determination that "the regulations are effective on publication," and not as of July 1, 1981. 47 Fed. Reg. at 56282. According to the discussion, eight persons who commented on the proposed regulations had recommended that the final "regulations be effective on July 1, 1981, the statutory effective date." Id. The defendants' response was that:

. . . facilities cannot be reimbursed for CORF services until they apply for participation, are surveyed and are found to be in compliance with the conditions of participation. It would be impossible for a survey to determine that a facility would have been in compliance on July 1, 1981 with the conditions established by these final regulations.

 Id. (emphasis supplied).

 Other provisions of the final regulations provide, among other things, for on-site inspection of each facility by the defendants' staff as a requisite to certification of each qualifying facility. Only after defendants complete that inspection process does a facility become eligible for CORF payments. Such payments would not begin until after that date, and would not cover services provided prior to that date. There is no provision for interest from the date of certification, or from December 15, 1982, when the regulations were issued, or from July 1, 1981. Thus, the defendants have made the Act effective, in terms of eligibility for payment, on different dates for different facilities, none of which is either December 15, 1982 when the regulations were promulgated, or July 1, 1981, the date which Congress stated in December 1980 would be the effective date.

 Plaintiffs' challenge to defendants' decision on the effective date is based on what plaintiffs claim to be the plain meaning of the December 1980 statute, to the effect that when Congress specified July 1, 1981, as the effective date, it meant that the program of services and benefits added to Medicare by the CORF Amendments should become available in a calendar quarter falling on or about that date and be available uniformly throughout the United States. Cf. United States v. Estate of Donnelly, 397 U.S. 286, 295, 25 L. Ed. 2d 312, 90 S. Ct. 1033 (1970).

 Plaintiffs refer to the pre-existing provisions of the Medicare Act which entitle individual participants to the benefit of payments for enumerated medical services, one of which, as of July 1, 1981, was comprehensive outpatient rehabilitation facility services. 42 U.S.C. § 1395k(a)(2)(E). Plaintiffs argue that no provision of the law relieved defendant from an obligation to make such payments. See 42 U.S.C. § 1395. Plaintiffs request the Court to focus on the provisions of the statute which, they claim, merely authorize the Secretary to "prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this title," to define "other qualified professional personnel" as that term is used in the statute, or to prescribe standards for a utilization plan. According to plaintiffs, none of these statutory provisions for exercise of the defendants' rulemaking power authorized them to defer benefits or to preclude payment or reimbursement for services to which individuals are entitled under the Act. Plaintiffs refer to this Court's observations made in ruling on their preliminary injunction motion that Congress intended the December 1980 Act to become effective on July 1, 1981. NARF, supra, 550 F. Supp. at 365-66, P 7.

 Plaintiffs challenge the assertion in the preamble to defendants' final regulations that it is "impossible" to determine after the fact whether a facility was entitled to payment for services rendered before the facility is certified as in compliance with the December 15, 1982 regulations. 47 Fed. Reg. 56281, 56282. According to plaintiffs, the claim of impossibility "ignores the fact that a primary function of courts, administrators and other adjudicatory bodies is to make findings about what the facts were at points in time in the past." Plaintiffs' Supplemental Memorandum (Dec. 15, 1982), at 1. Plaintiffs point out that the statute itself, which has been available to defendants since December 1980, provides definitions for CORFs, CORF services, and the rate of payment for CORF services. See 42 U.S.C. § 1395x & l (Supp. V 1981).

 Addressing the Court's jurisdiction, plaintiffs contend that the December 1980 Act left no discretion to defendants with respect to when it became effective, so that mandamus under 28 U.S.C. § 1361 is in order, unaffected by limitations imposed on court jurisdiction by 42 U.S.C. § 1395. In this respect, plaintiffs argue that the question in this litigation is not whether defendants owe money, or how much they owe. The question, they argue, is whether defendants violated or failed to perform a statutory duty when they adopted a regulation that precludes payments as of the date Congress selected. Plaintiffs maintain that they do not seek an order that defendants pay any person or entity, but rather an order that defendants put in place under Medicare the "scheme of benefits" mandated by Congress in December 1980 to be effective July 1, 1981.

 In challenging jurisdiction, defendants rely primarily on the provisions of the Medicare Act, as applied in United States v. Erika, 456 U.S. 201, 102 S. Ct. 1650, 72 L. Ed. 2d 12 (1982), that preclude judicial review of Medicare payment and reimbursement decisions made by the Secretary. 42 U.S.C. § 1395f. They contend that Congress limited a facility initially refused reimbursement to a "'fair hearing by the carrier'" with no access to a court for redetermination. 102 S. Ct. at 1653. They equate the plaintiffs' stance here to that of a facility seeking redetermination of a denial of a reimbursement claim. According to defendants "the pivotal fact in Erika, equally present in this case, is that the judicial determination would necessarily cause Part B money -- in whatever amount -- to transfer from the Secretary to the facility." Defendants' Supplemental Memorandum (Oct. 12, 1982), at 4. As a corollary of the argument about jurisdiction, vel non, the defendants claim that even if Erika did not completely foreclose jurisdiction here, exercise of it now is premature because plaintiffs have failed to exhaust the administrative appeals procedure provided for facilities seeking reimbursement.

 Defendants also discuss at some length the provisions of the Administrative Procedure Act that regulations should have prospective effect unless "otherwise provided by the agency for good cause found." 5 U.S.C. § 553(d)(3). According to defendants, regulations are normally prospective, and the only reviewable decision would be one finding good cause to make the regulations retroactive. According to defendants a decision not to make regulations retroactive is not reviewable. In any event, say ...

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