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IN HOME HEALTH CARE, INC. v. BOWEN

July 15, 1986

In Home Health Care, Inc., et al., Plaintiffs,
v.
Otis R. Bowen, et al., Defendants



The opinion of the court was delivered by: SPORKIN

 Plaintiffs, two Medicare beneficiaries and two home health agency providers, challenge the validity of an "interpretative" regulation issued by the Department of Health and Human Services (HHS) without the exercise of the notice and comment procedures of the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq. The challenged rule prohibits home health agency providers from representing Medicare beneficiaries appealing denials of their reimbursement claims. Presently before the Court are cross motions for summary judgment. There being no genuine issue as to any material fact, the Court can proceed to determine whether plaintiffs or defendants are entitled to judgment in their favor as a matter of law.

 I

 The Medicare Act (the "Act"), 42 U.S.C. § 1395 et seq., provides a system of health insurance coverage to the aged and disabled for the cost of certain hospital and home health services. Under the Act, an eligible Medicare beneficiary is entitled to have payment made by the Medicare program on his/her behalf for home health services provided by a home health agency. Home health agencies are specifically included as "providers" under the Act. See 42 U.S.C. § 1395x(u).

 HHS retains fiscal intermediaries who determine whether a particular medical service is covered by the Medicare program and, if so, the amount of the reimbursement expense for that service. 42 U.S.C. § 1395h; 42 C.F.R. § 405.702. If the intermediary decides that a particular service is not covered by Medicare or does not pay the amount to which the beneficiary believes he/she is entitled, the beneficiary can appeal such adverse determinations to three levels of administrative review. 42 C.F.R. §§ 405.710-405.716, 405.701(c), 405.724 (incorporating 20 C.F.R. § 404.967). *fn1"

 HHS, on August 5, 1980, promulgated a regulation prescribing non-attorneys who may represent a Medicare beneficiary in the appeals process. The regulation was promulgated pursuant to the statutory provision authorizing the Secretary to adopt regulations prescribing rules governing the recognition of non-lawyers who may represent Medicare claimants in the administrative appeals process. *fn2" The regulation, which was adopted after HHS gave the public full notice and the right to comment, *fn3" provides that a beneficiary may designate a non-attorney as a representative if the non-attorney:

 
(1) Is generally known to have good character and reputation;
 
(2) Is capable of giving valuable help to you in connection with your claim;
 
(3) Is not disqualified or suspended from acting as a representative . . . and
 
(4) Is not prohibited by any law from acting as a representative.

 20 C.F.R. § 404.1705(b).

 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 ...


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