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TATARANOWICZ v. SULLIVAN

December 21, 1990

MARY TATARANOWICZ, et al., Plaintiffs,
v.
LOUIS W. SULLIVAN, M.D., Secretary, United States Department of Health and Human Services, Defendant


Stanley Sporkin, United States District Judge.


The opinion of the court was delivered by: SPORKIN

STANLEY SPORKIN, UNITED STATES DISTRICT JUDGE

 On April 20, 1990, plaintiffs filed this class action for declaratory and permanent injunctive relief, challenging the Secretary of the United States Department of Health and Human Services' (the "Secretary") construction of the transition provisions of the Medicare Catastrophic Coverage Repeal Act of 1989, Pub. L. No. 101-234, § 101 (b), 103 Stat. 1979 (1989) (the "Repeal Act"). Plaintiffs contend that the Secretary erroneously construed the transition provisions of the Repeal Act so as to unlawfully deny plaintiffs 100 days of Medicare coverage for skilled nursing facility ("SNF") services furnished on and after January 1, 1990. Plaintiffs have moved for class certification on behalf of all others similarly situated. Plaintiffs have also moved for summary judgment.

 Defendant has moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(1) on the ground that the complaint is outside the Court's subject matter jurisdiction because plaintiffs have failed to exhaust their administrative remedies and because plaintiffs lack standing. *fn1" On October 26, 1990, this Court held a hearing on plaintiff's motion for summary judgment and defendant's motion to dismiss.

 Background :

 Title XVIII of the Social Security Act, commonly known as the Medicare Act, 42 U.S.C. §§ 1395 et seq., establishes a federally subsidized health insurance program for the elderly and disabled which is administered by the Secretary. Part A of the Medicare Act, 42 U.S.C. §§ 1395c-1395i-2, provides reimbursements for hospital, post-hospital extended care, and home health care. In 1988, Congress passed the Medicare Catastrophic Coverage Act, Public L. No. 100-360, 102 Stat. 683 (the "Catastrophic Act"). The Catastrophic Act increased Medicare coverage for post-hospital extended care services in a skilled nursing facility ("SNF") from the 100 days allowed previously to 150 days during any calendar year; in addition, the new law eliminated the three-day hospital stay previously required to trigger SNF benefits. The Catastrophic Act, which was to be financed by a special federal surtax on senior citizens, was repealed on December 31, 1989, less than one year after it was instituted.

 The Repeal Act was enacted on December 13, 1989 and was made effective as of midnight on December 31, 1989. The Repeal Act returned to the SNF coverage provisions that were in effect prior to the enactment of the Catastrophic Act. Under the Repeal Act, Medicare benefits for SNF services provided on and after January 1, 1990 are limited to 100 days and are available only where the beneficiary is transferred to an SNF within 30 days after being a patient in a hospital for no less than three consecutive days (the "post-hospital requirement").

 Under the Repeal Act, Congress created certain transition rules to take care of individuals who were relying on benefits they received under the Catastrophic Act for their health care. With regard to extended care services coverage, the transition rule stated:

 
The limitation of coverage of extended care services to post-hospital extended care services shall not apply to an individual receiving such services from a skilled nursing facility during a continuous period beginning before (and including) January 1, 1990, until the end of the period of 30 consecutive days in which the individual is not provided inpatient hospital services or extended care services. . . .

 PUB. L. No. 101-234, § 101(b)(1)(C).

 This case involves the interpretation given to this transition provision by the Secretary of the Department of Health and Human Services (the "Secretary") who, on his own, redefined the provision as follows:

 
A beneficiary whose stay in a SNF . . . continues from 1989 to 1990 is initially exempt from the post-hospital requirement that is reinstated in 1990 . . . . if all other requirements for Medicare payment for extended care services are met for a continuous period that includes at least 12/31/89 and 1/1/90 . . . . If Medicare payment cannot be made for extended care services furnished on both December 31, 1989 and January 1, 1990, this transition exemption does not apply.

 Skilled Nursing Facility Manual (the "SNF Manual"), HCFA-Pub. 12, § IM 501 (Rev. IM-89-2, Jan. 1990) at 6 (emphasis added). See also Medicare Intermediary Manual ("Intermediary Manual"), HCFA-Pub. 13-3, § IM 3623 (Rev. IM-90-1, Feb. 1990); 55 Fed. Reg. 24159, 24160 (June 14, 1990).

 Under the Secretary's construction of the Repeal Act, then, to obtain the additional 100 days of Medicare SNF coverage for services provided on or after January 1, 1990, a beneficiary must not only have received extended care services -- services furnished by an SNF, see 42 U.S.C. § 1395x(h) -- on both December 31, 1989 and January 1, 1990, but the beneficiary must also have received Medicare payment for those services on those days. This means that an SNF resident who, for example, had exhausted his or her 150 days of coverage on December 30, 1989, and therefore was not covered for the services received over the next 2 days, would not qualify under the transition provision for 100 additional days. The only way that this individual could obtain coverage for SNF services in 1990 would be to return to the hospital for a three-day stay and then be readmitted to an SNF. See Intermediary Manual, § IM 3623 (beneficiary who exhausted the SNF benefit period earlier in 1989, "does not qualify for exemption from the post-hospital requirement on January 1, 1990, because Medicare did not pay for December 31.")

 Plaintiffs contest this construction of the transition provision on various substantive and procedural grounds. Primarily, plaintiffs contend that the express and unambiguous language of § 101 (b)(1) provides that SNF residents who received "extended care services" continuously during a period including December 31, 1989 and January 1, 1990, are automatically entitled to a new benefit period of up to 100 days for 1990 without having to satisfy the post-hospital requirement. According to plaintiffs, the Repeal Act does not require that the care which the SNF resident received on December 31 and January 1 had been paid for by the resident's Medicare benefits. They take the position that the statute simply requires that the resident received "such services" in order to qualify for 100 days of additional coverage for those services in 1990.

 Plaintiffs contend that defendant's transitional policy unlawfully denies plaintiffs and others similarly situated SNF Medicare benefits to which they are entitled under the Repeal Act.

 The Repeal Act :

 Congress in § 101 (b)(1) (C) of the Repeal Act extended transition benefits to "an individual receiving such services from a skilled nursing facility during a continuous period beginning before (and including) January 1, 1990." (Emphasis added). The controversy at issue here involves the definition of the term "such services." Plaintiffs contend that the words should be interpreted according to their plain meaning, that is, SNF extended care services, whereas defendant argues that the term covers only those SNF services which were actually covered by Medicare benefits on December 31, 1989, and January 1, 1990.

 This Court holds that defendant's policy of limiting benefits under the Repeal Act only to residents who actually received Medicare payment for services received on December 31, 1989 and January 1, 1990, is at odds with the plain and unambiguous language of the statute and finds no support in its legislative history. The language of § 101 (b)(1)(C) is capable of only one interpretation. The Repeal Act provides that in order to be eligible for 100 days of SNF transition coverage in 1990, an SNF resident must have done nothing more than receive extended care services from an SNF on December 31, 1989 and January 1, 1990. There is no requirement that the SNF services received actually have been paid for by Medicare.

 Congress must be taken to have intended what it plainly expressed. This is a basic principle of statutory construction. The court's role is simply to enforce a statute according to its plain terms. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 109 S. Ct. 1026, 1030, 103 L. Ed. 2d 290 (1989); American Tobacco Co. v. Patterson, 456 U.S. 63, 102 S. Ct. 1534, 1537, 71 L. Ed. 2d 748 (1982). In this case, there is no support for the Secretary's expanded interpretation of the statute. Neither the Joint Explanatory Statement of the Conference Report nor the pre-conference bills contain any language suggesting that Congress desired to limit transition coverage to patients who were actually covered, i.e., actually reimbursed for SNF services, on the days in question.

 In support of its position, defendant cites a number of statements made by individual Congressmen. These provide defendant with little if any comfort. In introducing the first version of his bill, Representative Donnelly stated:

 
the bill repeals all benefits, generally, effective on January 1, 1990. However, to the extent that a beneficiary is receiving benefits under the bill on that date, the beneficiary is generally held harmless. Thus, if a beneficiary was hospitalized in 1989, the days of hospitalization in that year are not treated as a spell of illness. In addition, a beneficiary who is ...

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