POLICY - EFFECTIVE DATE: January 18, 1984", added a new section to the Medicare Home Health Agency Manual. The "NEW POLICY" totally prohibits home health providers from representing a beneficiary in appealing claims denied under the Medicare program. The Transmittal expressly states HHS' view that permitting providers to act as the beneficiary's representative is of "dubious value" to the beneficiary because there is a question of potential conflicts of interest between home health agency providers and beneficiaries in the appeals process. HHA Manual § 257A.1.
The two individual plaintiffs have had their administrative appeals dismissed because they respectively designated the two home health agency plaintiffs as their representatives. Plaintiffs allege, inter alia, that the Transmittal constitutes an invalid regulation because it was promulgated without the exercise of the public notice and comment procedures of the Administrative Procedure Act, 5 U.S.C. § 551 et seq. Defendants contend that the Transmittal is within the notice and comment exception applicable to interpretative rules, 5 U.S.C. § 553 (b)(A), because it is merely a clarification of existing statutory directives and regulations governing representation of beneficiaries in administrative appeals.
The "essential purpose [of the APA] notice and comment procedures is to reintroduce public participation and fairness to affected parties after governmental authority has been delegated to unrepresented agencies." Batterton v. Marshall, 208 U.S. App. D.C. 321, 648 F.2d 694, 703 (D.C. Cir. 1980).
This Court has recognized that the notice and comment procedures serve "to curb bureaucratic actions taken without consultation and notice to persons affected." American Academy of Pediatrics v. Heckler, 561 F. Supp. 395, 398 (D.D.C. 1983). Among the limited exceptions to the general notice and comment requirements is the exception for "interpretative rules," 5 U.S.C. § 553(b)(A). "This exemption, like the others, is to be narrowly construed." Credit Union National Ass'n. v. National Credit Union Administration Board, 573 F. Supp. 586, 591 (D.D.C. 1983), citing Humana of South Carolina, Inc. v. Califano, 191 U.S. App. D.C. 368, 590 F.2d 1070, 1082 (D.C. Cir. 1978). See also National Senior Citizens Law Center v. Legal Services Corp., 581 F. Supp. 1362, 1369 n.7 (D.D.C. 1984), aff'd, 243 U.S. App. D.C. 172, 751 F.2d 1391 (D.C. Cir. 1985).
The test to determine whether a rule is interpretative or whether it is substantive and subject to notice and comment procedures is found in Gibson Wine v. Snyder, 90 U.S. App. D.C. 135, 194 F.2d 329, 331 (D.C. Cir. 1952):
It seems to be established that 'regulations,' 'substantive rules' or 'legislative rules' are those which create law, usually implementary to an existing law; whereas interpretative rules are statements as to what the administrative officer thinks the statute or regulation means.