Appeal from the United States District Court for the Central District of Illinois, Peoria Division. No. 87 C 1157--Michael M. Mihm, Judge.
Cudahy and Flaum, Circuit Judges, and Grant, Senior District Judge.*fn**
The plaintiff in this case, Harry Wilkins,*fn1 appeals the denial of his claim for Medicare benefits to pay the costs of a hospital stay during which he underwent bilateral carotid body resection ("BCBR") surgery. The Secretary of Health and Human Services ("HHS") issued a final decision denying Wilkins's claim, and the district court upheld the Secretary's decision. Wilkins now challenges this determination, maintaining that the Secretary improperly relied upon Health Care Financing Administration ("HCFA") Ruling 80-2 to deny Medicare benefits.
Congress established the Medicare program by enacting Title XVIII of the Social Security Act, 79 Stat. 291, as amended, 42 U.S.C. § 1395 et seq. (1982), which provides federally funded health insurance for the aged and disabled. Congress broadly defined the benefits authorized by Medicare, but then restricted the scope of the program by precluding reimbursement for any "items or services . . . [which] are not reasonable and necessary for the diagnosis or treatment of illness or injury. . . ." 42 U.S.C.A. § 1395y(a) (West Supp. 1989). The Act does not precisely define which items or services are "reasonable and necessary" but instead vests the Secretary with authority to determine whether individual claimants are entitled to benefits "in accordance with regulations prescribed by him." 42 U.S.C.A. § 1395ff(a).
Pursuant to these statutes, the Secretary (through the HCFA) began promulgating regulations that govern Medicare payments for BCBR surgery.*fn2 First, after receiving numerous claims for reimbursement for BCBR surgery, HCFA asked the Public Health Service (the "PHS") to review the surgical procedure. PHS advised HCFA that BCBR "lacks general acceptance by the medical community because of questions concerning efficacy and safety." HCFA Ruling 80-2, 45 Fed.Reg. 71426, 71426 (1980). Next, the National Heart, Lung and Blood Institute of the National Institutes of Health (the "NIH") convened a panel of specialists to conduct a thorough examination of the BCBR procedure. This panel considered the pertinent literature, interviewed surgeons familiar with the procedure and concluded in its report that "there was not sufficient evidence to establish the safety and efficacy of the bilateral carotid body resection procedure for relief of pulmonary distress. . . . The panel [also] noted that 'theoretical considerations suggest that the risk of hypoventilation*fn3 may be increased [by BCBR], especially in patients with chronic obstructive pulmonary disease.'" Id. (footnote supplied). Faced with this conclusion, HCFA issued an instruction in January 1979 to fiscal intermediaries in the Medicare system that Medicare would not provide reimbursement for the BCBR procedure.
Some claimants, having been denied reimbursement from Medicare intermediaries because of the instruction, pursued their cases before administrative law judges ("ALJs"),*fn4 who were not bound by the instruction. Indeed, because most ALJs continued to award compensation to Medicare claimants for the BCBR procedure, HCFA again consulted with PHS, and then reaffirmed its original policy by issuing HCFA Ruling 80-2 on October 28, 1980. The ruling explicitly excludes BCBR surgery from Medicare coverage; unlike the earlier instruction, however, HCFA made Ruling 80-2 binding upon all ALJs and the Appeals Council. 20 C.F.R. § 422.408 (1988). In plain language, this ruling states:
Bilateral carotid body resection performed to relieve and treat pulmonary symptoms and diseases is not established as safe and effective and, therefore, is excluded from Medicare coverage under the authority of section 1862(a)(1) of the Act [42 U.S.C.A. § 1395y(a)].
HCFA Ruling 80-2, 45 Fed.Reg. at 71427. The validity and effect of this ruling are the central issues in this case.
Wilkins, who suffered from chronic obstructive pulmonary disease, learned of BCBR surgery in the winter of 1984-1985 and underwent the procedure in May 1985. He submitted a claim for Medicare reimbursement to a fiscal intermediary, who denied coverage, and then requested a hearing before an ALJ, who relied upon Ruling 80-2 to affirm the decision of the fiscal intermediary. Once the ALJ denied his claim, Wilkins sought review in the Appeals Council, 42 C.F.R. §§ 405.701(c), 405.724 (1988) (incorporating 20 C.F.R. § 404.967 (1988)), which refused to review the ALJ's decision. Pursuant to 42 U.S.C.A. sections 1395ff(b)(1)(C) and (b)(2), Wilkins filed his claim in federal district court, challenging the Secretary's final decision. Like all the adjudicative bodies before it, the federal district court denied Wilkins's claim, concluding that the Secretary's issuance of and reliance upon Ruling 80-2 to deny a BCBR claim was within the scope of his administrative authority. Wilkins v. Secretary of Health and Human Servs., No. 87-1157, slip op. at 12 (C.D.Ill. Jan. 30, 1989). Wilkins now appeals the district court's decision, challenging HCFA Ruling 80-2 and its application to his Medicare claim.
Before addressing the merits of this case, we must determine whether we have jurisdiction over Wilkins's claim. Wilkins relies upon 28 U.S.C. section 1361, 28 U.S.C. section 1331 and 42 U.S.C.A. section 1395ff to vest the district court with jurisdiction to review the denial of Medicare benefits. However, 42 U.S.C. section 405(h) (as applied to Medicare by 42 U.S.C.A. section 1395ii) provides that any "claim arising under" the Medicare program must be brought exclusively under section 405(g). See Heckler v. Ringer, 466 U.S. 602, 614-15, 80 L. Ed. 2d 622, 104 S. Ct. 2013 (1984); Weinberger v. Salfi, 422 U.S. 749, 760-61, 45 L. Ed. 2d 522, 95 S. Ct. 2457 (1975). Such a claim was considered by the Supreme Court in Heckler v. Ringer ; there, the Court heard a challenge to the Secretary's authority to promulgate Ruling 80-2 made by plaintiffs who underwent or desired to undergo BCBR surgery. Although the Ringer plaintiffs mounted a facial challenge to the ruling, the Court concluded that the challenge was, "at bottom, a claim that they should be paid for their BCBR surgery." 466 U.S. at 614. Since those plaintiffs had not exhausted their administrative remedies, they could not seek to overturn the Secretary's decision in federal court. Id. at 614-16.
Unlike the plaintiffs in Heckler v. Ringer, Wilkins has exhausted his administrative remedies and therefore may challenge the Secretary's final order in federal district court. See 42 U.S.C.A. § 1395ff. Of course, we have jurisdiction to hear an appeal from a final ...