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No. 98-1109: Shalala v. Illinois Council on Long Term Care Inc. | |||||||||||
No. 98-1109
In the Supreme Court of the United States
DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
BRIEF FOR THE PETITIONERS
HARRIET S. RABB
General Counsel
SHEREE R. KANNER
Associate General
Counsel
JEFFREY GOLLAND
Attorney
Department of Health
and Human Services
Washington, D.C. 20201
SETH P. WAXMAN
Solicitor General
Counsel of Record
DAVID W. OGDEN
Acting Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY A. LAMKEN
Assistant to the Solicitor General
BARBARA C. BIDDLE
JEFFREY CLAIR
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
Whether 42 U.S.C. 405(h), incorporated into the Medicare Act by 42 U.S.C.1395ii, permits skilled nursing facilities participating in the Medicareprogram to bring anticipatory, pre-enforcement lawsuits under 28 U.S.C.1331 and 1346 (1994 & Supp. III 1997) to challenge the validity of Medicareprogram enforcement regulations and guidelines notwithstanding the MedicareAct's provision of an express, post-enforcement mechanism for administrativeand judicial review.
In the Supreme Court of the United States
No. 98-1109
DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., PETITIONERS
v.
ILLINOIS COUNCIL ON LONG TERM CARE, INC.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
BRIEF FOR THE PETITIONERS
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-12a) is reported at 143F.3d 1072. The memorandum and order of the district court (Pet. App. 13a-21a)is unreported.
The judgment of the court of appeals was entered on May 8, 1998. A petitionfor rehearing was denied on August 13, 1998 (Pet. App. 22a-23a). On November2 and December 4, 1998, Justice Stevens extended the time within which tofile a petition for a writ of certiorari, first to December 12, 1998, andthen to January 10, 1999, a Sunday. The petition was filed on Monday, January11, 1999, and was granted on April 19, 1999. The jurisdiction of this Courtis invoked under 28 U.S.C. 1254(1).
STATUTORY AND REGULATORY PROVISIONS INVOLVED
Pertinent statutory and regulatory provisions are set forth in the appendixto this brief.
The Health Insurance for the Aged Act, commonly known as the Medicare Act,Pub. L. No. 89-97, 79 Stat. 290, codified as amended, 42 U.S.C. 1395 etseq., provides insurance for covered in-patient hospital and post-hospitalservices, 42 U.S.C. 1395x(m), including skilled nursing care. 42 U.S.C.1395f(b)(1), 1395i-3, 1395x(v)(1)(A).1 To receive payment for services providedto Medicare beneficiaries, a skilled nursing facility must enter into aprovider agreement with the Secretary of Health and Human Services (HHS),and meet "requirements of participation" relating to beneficiaryhealth, safety, and care. See 42 U.S.C. 1395i-3(a) to (d). Respondent, atrade association that represents nursing facilities participating in theMedicare program in Illinois, brought this suit to challenge the methodsby which the Secretary assesses compliance with Medicare's health, safety,and quality-of-care requirements and selects remedies when noncomplianceis detected. The question before the Court is whether a federal districtcourt may entertain such a pre-enforcement challenge under the general grantof federal-question jurisdiction contained in 28 U.S.C. 1331, notwithstandingthe Medicare Act's provision of express post-enforcement mechanisms forjudicial review.
1. The Social Security Act was passed in 1935 to provide retirement andrelated benefits for the elderly. See ch. 531, 49 Stat. 620. Four yearslater, Congress amended the Act by adding express provisions for administrativeand judicial review. See Social Security Act Amendments of 1939, ch. 666,53 Stat. 1360; see S. Rep. No. 734, 76th Cong., 1st Sess. 51 (1939); H.R.Rep. No. 728, 76th Cong., 1st Sess. 42 (1939). Those provisions now appear(as amended) at 42 U.S.C. 405(b), (g) and (h).
Section 405(b) provides that any individual who is dissatisfied with anagency determination is entitled to "notice and opportunity for a hearingwith respect to" the determination. 42 U.S.C. 405(b). Section 405(g),in turn, provides that anyone dissatisfied with a "final decision ** * made after a hearing to which he was a party may * * * obtain a reviewof such decision by" filing an action in district court. 42 U.S.C.405(g). Finally, 42 U.S.C. 405(h) renders the administrative and judicialreview procedures under Section 405(b) and (g) exclusive. It declares:
The findings and decisions of the Commissioner of Social Security aftera hearing shall be binding upon all individuals who were parties to suchhearing. No findings of fact or decision of the Commissioner of Social Securityshall be reviewed by any person, tribunal, or governmental agency exceptas herein provided. No action against the United States, the Commissionerof Social Security, or any officer or employee thereof shall be broughtunder sections 1331 or 1346 of title 28 to recover on any claim arisingunder this subchapter.
42 U.S.C. 405(h). (Section 1331 of Title 28 accords federal courts generalfederal-question jurisdiction, and 28 U.S.C. 1346 provides jurisdictionover cases in which the United States is a defendant.)
In 1965, Congress amended the Social Security Act by adding Title XVIII-theMedicare Act-to furnish medical insurance for the elderly and disabled.Pub. L. No. 89-97, § 102, 79 Stat. 291, codified as amended at 42 U.S.C.1395 et seq.; see p. 1, supra. Rather than enact separate provisions forreview of Medicare claims, Congress incorporated the hearing and judicialreview mechanisms of 42 U.S.C. 405(b), (g), and (h) into the Medicare program.2For example, 42 U.S.C. 1395ff(a) and (b) provide that any "individualdissatisfied with" the determination by the Secretary of Health andHuman Services respecting either his "entitle[ment]" to or the"amount" of benefits under Medicare is entitled to "a hearingthereon * * * to the same extent as is provided in Section 405(b) * * *and to judicial review of the Secretary's final decision after such hearingas is provided in Section 405(g)." 42 U.S.C. 1395ff(a) and (b).
The Medicare Act makes those same hearing and judicial review provisionsapplicable to decisions affecting institutions, such as skilled nursingfacilities, that provide services to Medicare beneficiaries. For example,nursing facilities may receive reimbursement under Medicare only if theyhave a provider agreement with the Secretary and they meet statutory requirementsrelating to patient health, safety, and care; they must be certified asmeeting statutory requirements on average once a year. 42 U.S.C. 1395i-3(b)to (d), 1395cc. If a provider wishes to dispute a determination concerningcompliance or certification-or termination or non-renewal of its provideragreement-42 U.S.C. 1395cc(h) provides that it may do so through the hearingand review procedures under 42 U.S.C. 405(b) and (g).3 It thus states:
[A]n institution or agency dissatisfied with a determination by the Secretarythat it is not a provider of services or a determination described in subsection(b)(2) of this section shall be entitled to a hearing thereon by the Secretary(after reasonable notice) to the same extent as provided in section 405(b)[of Title 42], and to judicial review of the Secretary's final decisionafter such hearing as is provided in section 405(g) [of Title 42].
42 U.S.C. 1395cc(h). The determinations "described in subsection (b)(2)"include, among other things, a determination "that the provider failsto comply substantially with the provisions of [its provider agreement or]with the provisions of [the Medicare Act] and regulations thereunder."4Different provisions of the Medicare Act added after 1965 similarly channelother decisions affecting Medicare providers, including decisions determiningprovider reimbursement or imposing civil money penalties for violations,through specific statutory mechanisms for administrative and judicial review.5
Finally, the Medicare Act makes 42 U.S.C. 405(h)-the provision of TitleII of the Social Security Act that declares the Secretary's decisions tobe binding, prohibits review of any decision except as provided in the Actitself, and deprives federal courts of jurisdiction under 28 U.S.C. 1331and 1346-applicable to the Medicare program. Specifically, Section 1395iideclares that "[t]he provisions of * * * subsections (a), (d), (e),(h), (i), (j), (k), and (l) of section 405 of this title, shall also applywith respect to this subchapter to the same extent as they are applicablewith respect to [Title II]."
2. Notwithstanding the Medicare program's health and safety requirementsfor provider participation, a 1986 survey by the Institute of Medicine ofthe National Academy of Sciences found that, in many "government certifiednursing homes, individuals * * * receive very inadequate -sometimes shockinglydeficient-care that is likely to hasten the deterioration of their physical,mental, and emotional health." H.R. Rep. No. 391, 100th Cong., 1stSess., Pt. 1, at 452 (1987). A Government Accounting Office survey alsoreported widespread deficiencies, ibid., and testimony before Congress confirmed(sometimes in grim detail) extensive problems, such as unsanitary conditions,pervasive neglect, and instances of serious abuse. See generally 1 NursingHome Care-The Unfinished Agenda: Hearing Before the Senate Special Comm.on Aging, 99th Cong., 2d Sess. (1986) (1986 Hearing).6 As one observer summarized,Medicare's compliance regime had "failed, * * * somewhat dismally,to assure a decent level of patient care" to nursing facility residents.Id. at 2. That failure, Congress concluded, was in part the product of asystem that focused on the facility's theoretical capacity to provide care,i.e., paper qualifications and physical characteristics, rather than onthe actual care provided to beneficiaries. H.R. Rep. No. 391, supra, Pt.1, at 466-467. And it resulted in part from the limited effectiveness ofthe only enforcement remedy available to the Secretary-termination of theprovider agreement permitting the facility to participate in the Medicareprogram. That regime led to a "yo-yo" effect, under which facilitieswith serious health, safety, and quality-of-care deficiencies would remedythem just in time to avoid termination, but fall into noncompliance onceagain immediately thereafter. Id. at 471.7
Congress responded in 1987 by comprehensively reforming the requirementsof participation for skilled nursing facilities, altering the manner inwhich compliance is enforced, and expanding the range of available remedies.See Omnibus Budget Reconciliation Act of 1987 (OBRA), Pub. L. No. 100-203,§§ 4201-4218, 101 Stat. 1330-160 to 1330-221. Among other things,OBRA requires that skilled nursing facilities be subjected to inspectionwithout prior notice on average once a year. 42 U.S.C. 1395i-3(g)(2)(A)(i)and (iii). Although surveys are generally under the control of state agencies,42 U.S.C. 1395i-3(g)(1)(A),8 federal law governs the qualifications of surveyteam members, prescribes survey methods and procedures, and requires theuse of federal forms. 42 U.S.C. 1395i-3(g)(2)(C); see also 42 C.F.R. 488.26(c),488.314. Survey information must be made available to the public, 42 U.S.C.1395i-3(g)(5)(A), and information about some types of substandard care mustbe provided to certain state officials, licensing boards, and physicians,42 U.S.C. 1395i-3(g)(5)(B) to (C); see also 42 C.F.R. 488.325. The statutealso directs the Secretary to develop enforcement criteria and to minimizethe time between the detection of deficiencies and the imposition of a remedy.42 U.S.C. 1395i-3(h)(2)(B).
When a survey agency detects a deficiency, it must recommend a remedy tothe Secretary, who can approve the remedy or select a different one. 42U.S.C. 1395i-3(h)(1). If the facility substantially complies with health,safety, and quality of care requirements-that is, if "any identifieddeficiencies pose no greater risk to resident health or safety than thepotential for causing minimal harm," 42 C.F.R. 488.301-no remedy isimposed.9 Where substantial compliance is not found, however, the Secretarymay impose a remedy from an expanded list of options; she may direct thecreation of a plan for correcting violations, impose civil money penalties,deny further reimbursement for services rendered after the deficiency isdiscovered, appoint temporary management, or terminate a facility's rightto participate in Medicare. 42 U.S.C. 1395i-3(h)(2); 42 C.F.R. 488.406.In general, the remedies selected depend on the seriousness of the violations.See 42 U.S.C. 1395i-3(h)(2)(B); see also 42 C.F.R. 488.408 (grouping violationsinto 3 categories). Thus, the Secretary's regulations require survey agenciesto determine whether the violations have already resulted in actual harmto residents, the potential for harm the violations pose, the degree ofthat potential harm, and whether the violations place residents in "immediatejeopardy," i.e., whether the violations have "caused, or [are]likely to cause, serious injury, harm, impairment, or death to a resident."42 C.F.R. 488.301, 488.404(b)(1). The survey agency also must consider whetherthe violations are isolated, form a pattern, or are widespread. 42 C.F.R.488.404(b)(2). Other factors relevant to remedy selection include the relationshipamong deficiencies and the facility's compliance history. 42 C.F.R. 488.404(c).In general, the Secretary is expected to use available enforcement mechanismsto "bring substandard facilities into compliance with [federal] qualityof care requirements or to exclude them from the program." H.R. Rep.No. 391, supra, Pt. 1, at 452.
Where relatively serious violations grouped under the heading "substandardquality of care" are found,10 the agency must evaluate the facility'soperations in greater depth and identify the policies and procedures thatcaused the deficiency. 42 U.S.C. 1395i-3(g)(2)(B). Nursing facilities thatare subjected to such an extended survey because of substandard care losetheir eligibility to conduct a certified nurse-aide training program fortwo years, 42 U.S.C. 1395i-3(f)(2)(B)(iii), and three consecutive findingsof substandard quality of care trigger automatic sanctions, such as a denialof payment for new admissions until the facility achieves, and can demonstratethat it is able to maintain, substantial compliance, 42 U.S.C. 1395i-3(h)(2)(E);42 C.F.R. 488.414.
Nursing homes must be afforded written notice of deficiencies noted in anysurvey, of the remedy (if any) to be imposed, and of appeal rights. 42 C.F.R.488.330, 488.402(f). A facility that disagrees with the survey may invokean informal dispute-resolution process before the survey agency. That processmust afford the nursing facility a prompt and meaningful opportunity torefute any findings of deficient care. 42 C.F.R. 488.331.11 Whether or notthe facility invokes the informal dispute resolution process, any facilitysubjected to a remedy for noncompliance is entitled to a hearing beforean administrative law judge (ALJ). See 42 U.S.C. 1395cc(h); 42 C.F.R. 498.1(a)-(b),498.3(a), 498.3(b)(12). At that hearing, the facility may be representedby counsel, call witnesses, and present evidence. 42 C.F.R. 498.40-498.78.Any nursing facility dissatisfied with the resulting "decision mayrequest Departmental Appeals Board review." 42 C.F.R. 498.5(c). Wherecivil money penalties are imposed, the decision of the Departmental AppealsBoard is subject to judicial review through a petition to the court of appeals.42 U.S.C. 1395i-3(h)(2)(B)(ii); 42 U.S.C. 1320a-7a(e); see also 42 U.S.C.1395cc(h)(2). In all other cases, "judicial review of the Secretary'sfinal decision" is available in district court as provided in 42 U.S.C.405(g). 42 U.S.C. 1395cc(h)(1). See generally pp. 4-6 & n.5, supra.
3. Respondent filed this action in the United States District Court forthe Northern District of Illinois in 1996 seeking injunctive and declaratoryrelief with respect to the implementing regulations the Secretary issuedin 1995. The complaint does not challenge the Secretary's substantive standardsgoverning resident health, safety, and care. J.A. 17, 22, 36-37 (¶¶1, 16, 64). Instead, respondent broadly challenges the procedures and remediesused in enforcing those standards.
More specifically, respondent alleges that the Secretary's regulations concerningthe characterization of the seriousness of violations are unconstitutionallyvague. J.A. 18, 29-32, 43-45 (¶¶ 3B, 37-50, 84-88). Accordingto respondent, critical terms such as "minimal harm," "immediatejeopardy," "pattern," and "widespread," are notdefined with sufficient particularity. See J.A. 30-31 (¶¶ 42-44).Respondent further claims that, because of that asserted vagueness, remediesare not imposed in a consistent fashion. J.A. 18, 36-38, 45, 46 (¶¶3C, 64-68, 89-91, 94).
Respondent also alleges that the Secretary's regulations are inconsistentwith due process because they limit the scope of administrative review.J.A. 18-19, 32-36, 47-49 (¶¶ 3D-3E, 51-63, 95-101). In particular,respondent complains that administrative review of survey findings is notavailable if no remedy is imposed, J.A. 34-35, 48-49 (¶¶ 59, 99,101), or as to matters such as the surveyors' characterization of the levelof noncompliance (except where it affects the permissible range of civilpenalties) and the remedy selected, J.A. 34, 48-49 (¶¶ 57-58,101). See generally 42 C.F.R. 498.3(b)(12) and (13), (d)(10) and (11). Respondentalso protests the absence of a prior hearing before certain remedies, suchas termination of the provider agreement, are imposed. J.A. 18-19 (¶3D).12 Finally, the complaint alleges that a manual used by state surveyinspectors to review facilities for compliance-the State Operations Manualor SOM-is a substantive rule that was promulgated outside the notice-and-commentrulemaking process required by the Administrative Procedure Act (APA), 5U.S.C. 553. J.A. 18, 26-28, 46 (¶¶ 3A, 30-36, 92-94).
Respondent seeks an order declaring that (1) the Secretary's regulationsare unconstitutionally vague, (2) the State Operations Manual was promulgatedin violation of the APA, and (3) the administrative appeal procedures providedunder the current regulations are inadequate. J.A. 51 (¶¶ A, C,D). Respondent also seeks an injunction precluding the Secretary from (1)disclosing survey results where "substandard quality of care"is found; (2) imposing or collecting civil money penalties; and (3) imposing"upon [respondent's] Medicare members any ban on payment as a remedyfor any deficiency." J.A. 52 (¶¶ E, F, G). Subject matterjurisdiction is premised on 28 U.S.C. 1331, 1346, and 2201. J.A. 22 (¶14); Pet. App. 13a, 15a.
The district court dismissed the complaint for lack of subject matter jurisdiction.Pet. App. 13a-21a. The court pointed out that, under 42 U.S.C. 405(h), afederal district court may not assert jurisdiction under 28 U.S.C. 1331or 1346 with respect to claims arising under the Medicare Act. In this case,the court reasoned, respondent's claims clearly arise under the MedicareAct, and it therefore could not assert jurisdiction under 28 U.S.C. 1331and 1346. Pet. App. 15a-18a.
The district court also rejected respondent's reliance on Bowen v. MichiganAcademy of Family Physicians, 476 U.S. 667 (1986). See Pet. App. 18a-19a.In Michigan Academy, this Court held that 28 U.S.C. 1331 gave a federaldistrict court jurisdiction over a facial challenge to the validity of Medicareregulations governing the methodology for calculating payments under PartB of the Medicare program. At the time Michigan Academy was decided, theMedicare Act (through 42 U.S.C. 1395ff (1982)) provided for a hearing andjudicial review, under 42 U.S.C. 405(b) and (g), of decisions regardingthe amount of payment (if any) due for particular services under Part Aof the Medicare program, but not under Part B, see 476 U.S. at 674 n.5,and the Court had already held in United States v. Erika, Inc., 456 U.S.201, 207-208 (1982), that Congress thereby had completely foreclosed judicialreview of administrative decisions concerning the amount of benefits payableunder Part B. In Michigan Academy, however, the Court, relying on the "strongpresumption that Congress intends judicial review of administrative action,"held that the Medicare Act does not preclude "challenges mounted againstthe method by which [the] amounts [of Part B benefits] are to be determinedrather than [challenges to] the [amount] determinations themselves."476 U.S. at 670, 675.
In light of the statutory framework and this Court's analysis, the districtcourt in this case concluded that Michigan Academy was premised on the factthat the plaintiffs there had "no other avenue of judicial review"to challenge the Secretary's regulations. Pet. App. 18a. Here, in contrast,the Medicare Act itself provides an avenue through which respondent's memberscan challenge the relevant enforcement procedures any time they are appliedto the members themselves. Ibid. Moreover, the district court continued,Congress amended the Medicare Act shortly after the Court's decision inMichigan Academy, and the amendment now provides administrative and judicialreview under 42 U.S.C. 405(b) and (g) for the sort of Part B methodologychallenges that were at issue in that case. See Omnibus Budget ReconciliationAct of 1986, Pub. L. No. 99-509, § 9341(a)(1), 100 Stat. 2037 (codifiedat 42 U.S.C. 1395ff(1)). Because both Part A and Part B participants "nowhave an avenue of judicial review," the district court explained, "theconcern * * * in Michigan Academy"-that agency action would be altogetherimmune from judicial review-"no longer exists." Pet. App. 18a.
The district court further found that respondent had not satisfied the prerequisitesfor judicial review under 42 U.S.C. 405(g) (as made applicable here by 42U.S.C. 1395cc(h)(1)), including the non-waivable requirement that all claimsbe presented to the Secretary, and the waivable requirement that administrativeremedies be exhausted. Pet. App. 18a-19a. Here, the court observed, respondent"ha[d] not alleged or shown any attempt at presentment of [its] claimsto the Secretary." Id. at 19a.13
4. The court of appeals vacated and remanded. Pet. App. 1a-12a. It acknowledgedthat this Court's decisions in Heckler v. Ringer, 466 U.S. 602 (1984), andWeinberger v. Salfi, 422 U.S. 749 (1975), "treat th[e] language [of42 U.S.C. 405(h)] as channeling all claims to benefits through the administrativeforum, no matter what legal theory underlies the claim." Pet. App.4a. Relying on Michigan Academy, however, the court of appeals concludedthat Section 405(h) addresses only provider claims relating to a "requestfor reimbursement," ibid., and does not apply to an "anticipatorychallenge to implementing regulations," id. at 5a.
The court of appeals agreed that "the 1986 amendments [to Part B],"which now provide an avenue of judicial review of Part B amount determinationsand regulations through Section 405(g), might well "remove the practicalsupport" for a distinction between "pre-enforcement challengesto Medicare regulations * * * and requests for reimbursement." Pet.App. 5a. It also recognized that "Michigan Academy [had] emphasized* * * the presumption that Congress has allowed some avenue of judicialreview, and the Justices [had] read the statutes then in effect with thatpresumption in mind." Ibid. But the court of appeals noted that Congresshad not amended 42 U.S.C. 405(h) or 1395ii. The court therefore considereditself "obliged to follow" Michigan Academy, which it read aspermitting pre-enforcement review of regulations notwithstanding 42 U.S.C.405(h), even where (unlike in Michigan Academy) Congress has provided forjudicial review under 42 U.S.C. 405(g). See Pet. App. 6a-7a.14
The Secretary's petition for rehearing with suggestion of rehearing en bancwas denied, although three judges voted to grant rehearing en banc. Pet.App. 22a-23a & n.2.
A. The Medicare Act establishes detailed mechanisms for obtaining judicialreview of claims that arise under the Act. Of particular significance here,it provides for judicial review of a regulation after the regulation hasbeen applied to the party seeking to challenge it, the party has presentedits claim to the Secretary, and the Secretary has issued a final decision.Where the Act itself provides an express mechanism for obtaining judicialreview, that mechanism is exclusive. That is clear not merely from the reticulatednature of the Act's review mechanisms, but also from the text of 42 U.S.C.405(h), which, as incorporated into the Medicare program by 42 U.S.C. 1395ii,declares that "[n]o findings of fact or decision of the [Secretary]shall be reviewed by any person, tribunal, or governmental agency exceptas * * * provided" in the Medicare Act itself, and that "[n]oaction against the United States, the [Secretary], or any officer or employeethereof shall be brought under sections 1331 or 1346 of title 28 to recoveron any claim arising under this subchapter." As the Senate Report accompanyingthe Medicare Act explained, "[i]t is intended that the remedies providedby these review procedures shall be exclusive." S. Rep. No. 404, 89thCong., 1st Sess., Pt. 1, at 55 (1965).
B. The court of appeals' decision permitting federal-question jurisdictionover "pre-enforcement" challenges to the validity of Medicareregulations under 28 U.S.C. 1331, notwithstanding the availability of post-enforcementreview, is at odds with the plain language of Section 405(h) and is inconsistentwith Heckler v. Ringer, 466 U.S. 602 (1984); Weinberger v. Salfi, 422 U.S.749 (1975), and Mathews v. Eldridge, 424 U.S. 319 (1976). Those precedentshold that where, as here, the plaintiff's standing and the substantive basisfor the plaintiff's suit are based on the Social Security Act (includingits Medicare title), review is available only as provided by the Act itself.
Nor is the court of appeals' decision supported by Bowen v. Michigan Academyof Family Physicians, 476 U.S. 667 (1986). Unlike this case, Michigan Academyinvolved Medicare claims for which there was no avenue of judicial reviewunder the Medicare Act. As a result, precluding general federal-questionjurisdiction over those claims would have left the plaintiffs with no meansof securing judicial review of substantial questions concerning the administrationof the Medicare program-a result that the Court found to be inconsistentwith the strong presumption that Congress intends final agency action tobe subject to judicial review. Thus, contrary to the decision below, MichiganAcademy does not authorize federal-question jurisdiction over pre-enforcementchallenges to Medicare regulations where, as here, the Medicare Act itselfaffords fully adequate means of judicial review.
C. Although respondent attempts to justify bypass of the Medicare Act'sotherwise exclusive mechanisms by claiming that its statutory and constitutionalclaims cannot be raised in administrative proceedings, those claims canbe raised on judicial review of the Secretary's final decision. This Court,moreover, has repeatedly rejected the suggestion that a party can bypassthe otherwise exclusive mechanisms for review provided by the Social SecurityAct simply because it raises constitutional or other issues that would notordinarily be addressed in the administrative process. "[T]he plainwords of the third sentence of 405(h) do not preclude constitutional challenges.They simply require that [the challenges] be brought under jurisdictionalgrants contained in the Act, and thus in conformity with the same standardswhich are applicable to nonconstitutional claims arising under the Act."Salfi, 422 U.S. at 762.
RESPONDENT'S PRE-ENFORCEMENT JUDICIAL CHALLENGE TO THE SECRETARY'S ENFORCEMENTGUIDELINES AND REMEDIES IS BARRED BY THE MEDICARE ACT
By incorporating 42 U.S.C. 405(g) and (h) into the Medicare Act through42 U.S.C. 1395cc(h) and 1395ii, Congress established a specific and exclusivemechanism for obtaining judicial review of claims "arising under"the Medicare Act. Those provisions require a nursing facility or other participantin the Medicare program to challenge the Secretary's regulations and policiesafter they have been applied to that participant, thereby ensuring thatchallenges are of manageable proportions and are framed by a concrete, factualsetting. And they route all challenges through the administrative processas a pre-condition to judicial review, thereby permitting the developmentof a factual record, allowing for refinement of legal issues, enabling theagency to apply its expertise to the specific issues raised, and affordingthe Secretary the opportunity to resolve the dispute on other grounds.
In this case, respondent seeks to bypass Medicare's established mechanismsfor obtaining review by bringing an anticipatory challenge under 28 U.S.C.1331 to the Secretary's regulations in the abstract, without reference toany specific enforcement action. That effort, however, cannot be reconciledwith the Medicare "statute's language, structure, * * * purpose, [and]legislative history," especially given that the Act itself providesan opportunity for "meaningful review." Thunder Basin Coal Co.v. Reich, 510 U.S. 200, 207 (1994). Indeed, the text of Section 405(h) prohibitssuch an effort in unmistakeable terms.
A. WHERE THE MEDICARE ACT PROVIDES A MECHANISM FOR OBTAINING JUDICIAL REVIEW,THAT MECHANISM IS EXCLUSIVE
1. a. The Medicare Act provides a highly "reticulated statutory scheme,which carefully details the forum and limits of review" of the Secretary'sdeterminations. Bowen v. Michigan Academy of Family Physicians, 476 U.S.667, 675 (1986). With respect to each of a number of categories of claims,the Act channels the claims through administrative and then judicial reviewafter the Secretary has taken action (reimbursement, enforcement, etc.)directed at the person seeking review. Thus, individuals who are dissatisfiedwith entitlement and payment determinations, 42 U.S.C. 1395ff(a) and (b),providers aggrieved by reimbursement decisions, 42 U.S.C. 1395oo(a) and(f), and entities subjected to civil money penalties, 42 U.S.C. 1320a-7a(c)(2)and (e), all are afforded the opportunity for a hearing after the Secretary'sinitial determination, and for judicial review once the Secretary reachesa final decision. See also pp. 3-6, supra.
That same general scheme applies to nursing facilities seeking to challengethe Secretary's guidelines and remedies for enforcing the Medicare program'srequirements for participation. In particular, any nursing facility or otherprovider "dissatisfied with a determination by the Secretary that itis not a provider of services" or a determination that it does not"substantially comply" with the Secretary's health, safety, andquality-of-care requirements "is entitled to a hearing thereon by theSecretary (after reasonable notice) to the same extent as provided in section405(b) * * * and to judicial review of the Secretary's final decision aftersuch hearing as is provided in section 405(g) [of Title 42]." 42 U.S.C.1395cc(h)(1) and (b)(2); see pp. 4-5, supra. Likewise, under 42 U.S.C. 1395i-3(h)(2)(B)(ii),a facility against which civil penalties have been assessed is entitledto a hearing, and judicial review in the court of appeals, as provided by42 U.S.C. 1320a-7a(c)(2) and (e).
The provision of such a "detailed structure" for post-enforcementadministrative and judicial review is, by itself, strong evidence that Congressintended to make that structure exclusive. See Thunder Basin, 510 U.S. at207; United States v. Erika, Inc., 456 U.S. 201, 208 (1982) (concludingthat evidence of exclusivity is particularly strong "[i]n the contextof" the Medicare Act's "precisely drawn provisions"). Seealso Board of Governors of the Fed. Reserve Sys. v. MCorp Fin., Inc., 502U.S. 32, 43-44 (1991); United States v. Fausto, 484 U.S. 439, 448-449 (1988);Whitney Nat'l Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411,420 (1965). By contrast, when Congress intends to permit pre-enforcementreview notwithstanding specific post-enforcement review mechanisms, it typicallyenacts express statutory provisions so providing. See, e.g., Harrison v.PPG Indus., 446 U.S. 578, 592-593 (1980). It has not done so here.15
b. Congress, in any event, has expressly provided that the post-enforcementmechanisms for judicial review in the Medicare Act are exclusive. When Congressprovided for judicial review of Social Security decisions by enacting 42U.S.C. 405(g), it paired that provision with 42 U.S.C. 405(h) to precludejudicial review by other means. And when Congress made 42 U.S.C. 405(g)applicable to compliance determinations under the Medicare program in 1965,it also made Section 405(h) applicable by enacting 42 U.S.C. 1395ii. Asincorporated into the Medicare Act, Section 405(h) provides:
The findings and decisions of the [Secretary] after a hearing shall be bindingon all individuals who were parties to such hearing. No findings of factor decision of the [Secretary] shall be reviewed by any person, tribunal,or governmental agency except as herein provided. No action against theUnited States, the [Secretary], or any officer or employee thereof shallbe brought under sections 1331 or 1346 of title 28 to recover on any claimarising under this subchapter.
As this Court has observed, "the first two sentences of § 405(h)* * * assure that administrative exhaustion will be required," Weinbergerv. Salfi, 422 U.S. 749, 757 (1975), while the third sentence "providesthat § 405(g), to the exclusion of 28 U.S.C. § 1331, is the soleavenue for judicial review for all 'claim[s] arising under' the MedicareAct." Heckler v. Ringer, 466 U.S. 602, 614-615 (1984) (emphasis added).Section 405(h) thus "require[s] the exhaustion of available administrativeprocedures, * * * foreclose[s] jurisdiction under the general grant of federal-questionjurisdiction, 28 U.S.C. § 1331, and * * * route[s] review through §[405(g)]." Califano v. Sanders, 430 U.S. 99, 103 n.3 (1977); see alsoid. at 110 (Stewart, J., concurring) ("I can see no reason in thiscase why the second sentence of § [405(h)] should not be read to meanexactly what it says-that the decision before us is reviewable under §[405(g)] or not at all.").16
c. To the extent the text and structure of the Medicare Act could leaveany doubt, the legislative history erases it. The 1965 Senate Report thataccompanied the Medicare Act, immediately after discussing the various methodsfor obtaining administrative and judicial review under the Act, declares:"It is intended that the remedies provided by these review proceduresshall be exclusive." S. Rep. No. 404, 89th Cong., 1st Sess., Pt. 1,at 54-55 (1965) (emphasis added). A clearer expression of Congress's intentis difficult to imagine.
d. Finally, requiring nursing facilities like respondent's members to seekjudicial review under Section 405(g) after first seeking relief in the administrativeprocess is fair and sensible. It does not deny nursing facilities the opportunityfor judicial review; it merely postpones review until such time as the claimhas arisen in a specific, factual context, the matter has been presentedto the Secretary, and the Secretary has issued a final decision. See Salfi,422 U.S. at 762. Moreover, channeling Medicare claims through the statutorily-providedmechanisms for administrative and judicial review serves important policygoals. First, by requiring that challenges be brought in the context ofa specific enforcement action, the Act ensures that "the scope of thecontroversy [will be] reduced to more manageable proportions, and its factualcomponents fleshed out, by some concrete action applying the regulationto the claimant's situation in a fashion that harms or threatens to harmhim." Lujan v. National Wildlife Fed'n, 497 U.S. 871, 891 (1990); seeReno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 58-59 (1993) (noting, forsimilar reasons, that mere passage of a statute and issuance of regulationsdo not give a complainant a ripe claim absent agency action "applyingthe regulation to him"). Second, the process required by Section 405(g)and (h) promotes the interest in administrative efficiency by protectingthe agency from the "potential for overly casual * * * judicial interventionin an administrative process" that is responsible not only for protectingthe health and safety of thousands of Medicare beneficiaries residing innursing homes, but also for resolving "millions of claims" a year.Ringer, 466 U.S. at 627; see also Salfi, 422 U.S. at 765.
Third, channeling claims through the administrative process promotes judicialeconomy. It permits the agency "to correct its own errors, to affordthe parties and the courts the benefit of its experience and expertise,and to compile a record which is adequate for judicial review." Salfi,422 U.S. at 765; accord Ringer, 466 U.S. at 619 n.12. Further, it may avertthe need for judicial review altogether, as it "assures the Secretarythe opportunity prior to * * * litigation to ascertain, for example, thatthe particular claims involved are neither invalid for other reasons norallowable under other provisions of the Social Security Act." Salfi,422 U.S. at 762.
2. Consistent with the text, structure, history, and purposes of the SocialSecurity Act's review provisions, the Court repeatedly has recognized that,where those provisions create a mechanism for judicial review, that mechanismis exclusive. In Salfi, for example, the Court held that a federal districtcourt lacked jurisdiction under 28 U.S.C. 1331 to hear a constitutionalchallenge to a provision of the Social Security Act that rendered the plaintiffsineligible for certain benefits. The language of Section 405(h), the Courtheld, is "sweeping and direct"; it states "that no actionshall be brought under § 1331" with respect to any claim "arisingunder" the Social Security Act. 422 U.S. at 757. The Court in Salfialso rejected the argument that Section 405(h) does not apply if the suitcan be characterized as "arising under" the Constitution. Where"the Social Security Act * * * provides both the standing and the substantivebasis for the presentation of their constitutional contentions," theCourt held, the plaintiffs' action is a suit "arising under" theAct within the meaning of Section 405(h), even if the suit could be saidto arise under the Constitution as well. 422 U.S. at 760-761. Consequently,where such claims are asserted, Section 405(h) precludes federal courtsfrom exercising jurisdiction over them pursuant to 28 U.S.C. 1331; instead,judicial review is available only through the mechanisms provided by theSocial Security Act itself. 422 U.S. at 760-761.
Seven years later, the Court again stressed the exclusivity of the Act'sreview mechanisms in United States v. Erika, Inc., 456 U.S. 201 (1982).There, a company that had provided services to Medicare beneficiaries soughtto challenge the amount of reimbursement it received under Part B of theMedicare program. At that time, the Act provided for judicial review ofdecisions under both Part A and Part B where the "dispute relates to* * * eligibility to participate," but provided for judicial reviewof determinations concerning the "amount" of payment only withrespect to claims under Part A. See 456 U.S. at 207-208. "In the contextof the statute's precisely drawn provisions" and supporting legislativehistory, the Court explained, the omission of an express provision for judicialreview of Part B "amount determinations" furnished "persuasiveevidence that Congress deliberately intended to foreclose further review"of such determinations. Id. at 208. Thus, even though treating the Medicareprogram's review provisions as exclusive in Erika rendered the administrativedetermination at issue there completely unreviewable, the Court held themto be exclusive.
More recently, in Heckler v. Ringer, 466 U.S. 602 (1984), this Court onceagain concluded that 42 U.S.C. 405(g) provides the exclusive mechanism forobtaining judicial review of the Secretary's implementation and enforcementof the Medicare Act. In Ringer, one of the named plaintiffs, Freeman Ringer,sought to challenge an agency rule that precluded reimbursement for an operationhe wished to undergo. Because Ringer had not undergone that procedure, hecould not file a claim for reimbursement and challenge the Secretary's decisiondenying the claim under 42 U.S.C. 405(g). Accordingly, he brought a "pre-enforcement"action in district court requesting a declaratory judgment that the pertinentMedicare regulation was invalid. 466 U.S. at 621-623. This Court held thatthe Medicare Act itself, in 42 U.S.C. 405(g) (as incorporated by 42 U.S.C.1395ff(b)), affords the exclusive basis for obtaining jurisdiction oversuch a claim, and that federal courts could not exercise jurisdiction under28 U.S.C. 1331. The Court stated: "The third sentence of 42 U.S.C.§ 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii,provides that § 405(g), to the exclusion of 28 U.S.C. § 1331,is the sole avenue for judicial review for all 'claim[s] arising under'the Medicare Act." 466 U.S. at 614-615 (emphasis added; footnote omitted).
Finally, just last Term, in Your Home Visiting Nurse Services, Inc. v. Shalala,119 S. Ct. 930, 935 (1999), this Court reaffirmed its holding in Ringer,again declining to permit judicial review of claims under the Medicare programexcept as provided in the Act itself. There, a provider sought judicialreview of a refusal to reopen its reimbursement claim. "[J]udicialreview under the federal-question statute, 28 U.S.C. § 1331,"the Court explained, "is precluded by 42 U.S.C. § 405(h), applicableto the Medicare Act by operation of § 1395ii, which provides that '[n]oaction against . . . the [Secretary] or any officer or employee thereofshall be brought under section 1331 . . . of title 28 to recover on anyclaim arising under this subchapter." 119 S. Ct. at 935. The provider'sclaim, the Court further concluded, "'arises under' the Medicare Actwithin the meaning of [Section 405(h)] because 'both the standing and thesubstantive basis for the presentation' of the claim are the Medicare Act."Ibid. (quoting Ringer, 466 U.S. at 615 (some internal quotation marks omitted)).
3. The exclusivity of the review procedures established by Section 405(g)is further reinforced by the Administrative Procedure Act (APA), 5 U.S.C.702-704. Section 10(b) of the APA states that, where Congress has provideda "special statutory review proceeding relevant to the subject matter,"complainants must use that "form of proceeding for judicial review,"unless it is "inadequa[te]." 5 U.S.C. 703. Moreover, Section 10(c)of the APA bars resort to its general provisions for judicial review ofagency action unless "there is no other adequate remedy in a court."5 U.S.C. 704.
As Attorney General Clark explained shortly after the APA's enactment, "[t]henet effect [of Section 10], clearly intended by the Congress, is to providefor a dovetailing of the general provisions of the [APA] with the particularstatutory provisions which the Congress has moulded for special situations."Attorney General's Manual on the Administrative Procedure Act 95 (1947).17The APA thus "'does not provide additional judicial remedies in situationswhere the Congress has provided special and adequate review procedures.'"Bowen v. Massachusetts, 487 U.S. 879, 903 (1988) (quoting Attorney General'sManual, supra, at 101).
4. The foregoing principles foreclose respondent's suit here. Respondentseeks to challenge the Secretary's regulations and guidelines governingthe enforcement of Medicare's health, safety, and quality-of-care requirementsfor nursing homes. But respondent does not seek review of a specific, concrete"determination" or application of those regulations. See J.A.22 (¶ 16) (Respondent "does not challenge the specific applicationof the 1995 Regulations and the SOM to any one facility, but challengesinstead their lawfulness and their use" generally). Nor does respondentassert that jurisdiction is proper under the mechanisms for judicial reviewprovided by the Medicare Act itself. To the contrary, respondent omits anyreference to those provisions in its complaint, relying only on the moregeneral jurisdictional grants contained in 28 U.S.C. 1331 and 1346. J.A.22 (¶ 14).
Respondent thus is attempting to bypass the express statutory mechanismsfor judicial review provided by the Medicare Act. But such a bypass is preciselywhat Section 405(h) prohibits, for it makes Section "405(g) * * * thesole avenue for judicial review for all 'claim[s] arising under' the MedicareAct." Ringer, 466 U.S. at 615 (emphasis added). Respondent nowheredisputes that its claims "arise under" the Act within the meaningof Section 405(h).18
Permitting respondent to bypass the mechanisms for review provided by theMedicare Act in this case, moreover, would give rise to the very dangersthat the Medicare Act seeks to avoid. Because respondent seeks to raiseits claims in the abstract rather than in connection with a specific applicationof the regulations, "the scope of the controversy" has not been"reduced to more manageable proportions," Lujan, 497 U.S. at 891;instead, it remains unwieldy and unmanageable, a broad-ranging attack onvirtually every aspect of the Secretary's compliance regime. The correspondinglybroad relief respondent seeks also creates a serious risk that prematurejudicial interference could have devastating consequences for the program.In essence, respondent asks the district court to invalidate the Secretary'sentire compliance enforcement program, J.A. 51 (¶¶ A-D), and tobar the Secretary from assessing civil penalties, withholding payments,or imposing other sanctions, even where blatant and dangerous violationsof the program's health, safety, and quality-of-care criteria are detected,J.A. 52 (¶¶ F-H). That relief would deprive the Secretary of accessto the very remedies Congress thought necessary when it enacted OBRA toreform enforcement in 1987, and would bring enforcement to a virtual standstillin Illinois. See pp. 6-9, supra. Requiring respondent's members to challengea discrete instance of enforcement of the regulations under the MedicareAct's review provisions will dramatically reduce the risk of such a graveintrusion on a federal program critical to the health of thousands of Medicarebeneficiaries. See Ringer, 466 U.S. at 627 (Medicare Act remedies protectthe agency from the "potential for overly casual * * * judicial interventionin" important administrative processes); Salfi, 422 U.S. at 765 (reviewmechanisms avoid "premature interference with agency processes, sothat the agency may function efficiently").
Likewise, because respondent's challenge is purely anticipatory, it suffersfrom the absence of a factual record and concrete context that would makeit fit for judicial review. Indeed, for that reason, the court of appealsheld that respondent's void-for-vagueness claim was not "ripe"under ordinary APA principles. See Pet. App. 10a-11a. Compare Salfi, 422U.S. at 765 (administrative process helps create a record and thereby renderthe case "fit" for judicial review); Ringer, 466 U.S. at 619 (similar).A similar absence of requisite facts-such as the nature of the nursing patientinterests at stake in individual cases, e.g., whether there is immediatejeopardy to their lives requiring prompt action-makes adjudication of respondent'sprocedural due process claims cumbersome, if not impossible, as well. J.A.32-46 (¶¶ 51-63).
Nor can it be claimed that there is a need here for immediate review outsideof ordinary processes. Respondent does not assert that its members are requiredby allegedly improper regulations to refrain from engaging in otherwiselawful conduct. Cf. Lujan, 497 U.S. at 891 (rules requiring the complainant"to adjust [its] conduct immediately" may be ripe). To the contrary,respondent disavows any challenge to the substantive health, safety, andquality-of-care standards that govern its members' day-to-day operations.Instead, respondent claims that its members cannot tell what sanction, ifany, otherwise clearly proscribed conduct will draw. See pp. 11-12, supra.Such an argument hardly provides compelling grounds for bypassing the expresspost-enforcement review process provided by the Medicare Act. Would-be criminalsnormally cannot bring declaratory judgment actions seeking to halt enforcementof criminal laws simply because they cannot tell in advance what their sentencewill be if they commit a crime; any arbitrariness in sentencing must beraised through ordinary criminal processes only after an allegedly arbitrarysentence is imposed. The same should be true of would-be violators of the(unchallenged) substantive health, safety, and quality-of-care requirementsthat protect Medicare beneficiaries from abuse and injury.
B. MICHIGAN ACADEMY DOES NOT PERMIT FEDERAL COURTS TO EXERCISE GENERAL FEDERAL-QUESTIONJURISDICTION OVER RESPONDENT'S SUIT
The court of appeals disputed none of the preceding analysis. Nowhere didthe court dispute that the text, structure, purposes and legislative historyof the Medicare Act all demonstrate that, where the Act provides a mechanismfor obtaining judicial review, that mechanism is exclusive. Nor did thecourt of appeals express any doubt that respondent's members would be ableto obtain judicial review of their claims-in a concrete factual setting-throughthe procedures provided by the Medicare Act itself. Indeed, the court ofappeals agreed that, in a long line of cases stretching from Salfi to Ringer,this Court has rejected efforts to bypass the mechanisms for judicial reviewprovided by the Medicare Act, and has held that 42 U.S.C. 405(h) precludesfederal courts from exercising jurisdiction with respect to such claimsunder 28 U.S.C. 1331. See Pet. App. 2a-3a.
1. Nonetheless, the court of appeals concluded that Michigan Academy allowedthe district court to exercise jurisdiction over respondent's pre-enforcementaction. In Michigan Academy, the plaintiffs challenged the validity of reimbursementregulations under Part B of the Medicare program. At that time, the relevantprovision of the Medicare Act, 42 U.S.C. 1395ff(b)(1) (1982), expresslyprovided for judicial review of disputes concerning the "amount"of reimbursement (if any) payable under Part A, but not under Part B. See476 U.S. at 674-675. And in Erika, the Court had held that that omission,together with the relevant legislative history, established that Congresshad intended to preclude judicial review of Part B claims challenging theamount of reimbursement. See 456 U.S. at 207-208.
In Michigan Academy, the government argued that Congress's failure to includea provision for judicial review of Part B claims, other than those relatingto basic eligibility under the program, indicated that Congress intendedto preclude judicial review of all issues under Part B except those relatingto eligibility. Relying on the "strong presumption that Congress didnot mean to prohibit all judicial review" of agency decisions, 476U.S. at 672, the Court rejected that argument. While the Court found evidencethat Congress had deliberately foreclosed any challenge to the amount ofbenefits awarded in a particular case, it found no evidence that Congressintended to preclude more general "challenges mounted against the methodby which [the] amounts [of Part B benefits] are to be determined ratherthan [challenges to] the [amount] determinations themselves." Id. at675. In particular, the legislative history provided "specific evidenceof Congress' intent to foreclose review" with respect to "amountdeterminations," i.e., claims concerning the monetary sum of benefitsdue, but provided no indication of a similar intent to foreclose judicialreview of more general "methodology" claims, which might involve"statutory and constitutional challenges to the Secretary's administrationof Part B of the Medicare program." Id. at 680. Because the governmenthad not produced "clear and convincing evidence" sufficient toovercome the "strong presumption that Congress did not mean to precludejudicial review" entirely, id. at 681, the Court held that "methodology"claims were not precluded even though "amount" claims were.
In this case, the court of appeals read Michigan Academy as broadly "hold[ing]that [42 U.S.C.] § 1395ii," which incorporates 42 U.S.C. 405(h)into the Medicare program, "does not foreclose Medicare providers'anticipatory challenge[s] to implementing regulations" under 28 U.S.C.1331. Pet. App. 4a, 6a. In particular, the court of appeals interpretedMichigan Academy as holding that Section 405(h) "addresses only 'amountdeterminations' * * * -that is, calculations of reimbursements.'" Pet.App. 4a; see also id. at 6a. Thus, in the court of appeals' view, pre-enforcementchallenges are permissible under Michigan Academy whether or not such claimscould be adjudicated after a final administrative decision under the mechanismsfor judicial review provided by the Medicare Act itself. That reading ofMichigan Academy is incorrect.
a. Whatever the continuing vitality of Michigan Academy in the particularcontext in which it arose, in light of later amendments to the MedicareAct (see pp. 36-37, infra), that decision has no bearing where, as here,the question is not whether judicial review will be available, but whenit will be available. See National Kidney Patients Ass'n v. Sullivan, 958F.2d 1127, 1133 (D.C. Cir. 1992) ("[T]he Court in Michigan Academywas concerned not with timing, but with reviewability vel non."), cert.denied, 506 U.S. 1049 (1993). The Court's reasoning in Michigan Academyliterally begins with, 476 U.S. at 670, ends with, id. at 681, and is steepedthroughout with, see id. at 672, the presumption that Congress intends judicialreview to be available. See also id. at 681 n.12 (noting that finding reviewto be available "avoids the 'serious constitutional question' thatwould arise if [the Court] construed § 1395ii to deny a judicial forumfor constitutional claims arising under Part B"). That presumption,however, is not "implicate[d]" where, as here, the Medicare Actitself provides for judicial review of a regulation once it is applied ina concrete, factual context. See Thunder Basin, 510 U.S. at 207 n.8, 212-214("Because court of appeals review is available, this case does notimplicate the strong presumption that Congress did not mean to prohibitall judicial review. Bowen v. Michigan Academy."); MCorp, 502 U.S.at 44 n.16 (similar analysis). See also McNary v. Haitian Refugee Ctr.,Inc., 498 U.S. 479, 498 (1991) ("Inherent in our [Michigan Academy]analysis was the concern that * * * [there] would be 'no review at all ofsubstantial statutory and constitutional challenges to the Secretary's administrationof Part B of the Medicare program.'") (quoting Michigan Academy, 476U.S. at 680).
Moreover, Michigan Academy relied heavily on the legislative history ofthe relevant statutory provision, which provided "specific evidence"that Congress intended to foreclose judicial review entirely only with respectto so-called "amount" determinations under Part B. 476 U.S. at680. But whether or not Congress intended judicial review to be availableat all for Part B benefit "amount" determinations has no bearingon the question here, which is merely the timing of judicial review of nursinghome regulations under Part A. The relevant legislative history in thiscontext, moreover, makes it abundantly clear that, while Congress did notintend to foreclose judicial review of claims like respondent's entirely,it did intend that such review would occur exclusively through the post-enforcementmechanisms provided in the Medicare Act itself. Immediately after describingthe mechanisms for judicial review provided by the Medicare Act, the SenateReport states: "It is intended that the remedies provided by thesereview procedures shall be exclusive." S. Rep. No. 404, supra, Pt.1, at 55.
Finally, the distinction between post-decision "amount" claimson the one hand and pre-enforcement actions on the other has no logicalplace in the context of enforcement actions under 42 U.S.C. 1395cc(h). TheCourt's opinion in Michigan Academy drew that distinction based on the languageof 42 U.S.C. 1395ff (1982), which addressed review of "amount"claims under Part A, but was (at that time) silent about review of suchclaims under Part B. 476 U.S. at 674-675. Here, the relevant provision ofthe Medicare Act is not 42 U.S.C. 1395ff, but 42 U.S.C. 1395cc(h), whichincorporates 42 U.S.C. 405(b) and (g). Unlike Section 1395ff, Section 1395cc(h)does not mention "amount" claims, and in fact it does not dealwith reimbursement requests or such "amount" claims at all. Instead,it addresses challenges to noncompliance determinations. (Reimbursementor "amount" claims relating to nursing facilities would ariseinstead under 42 U.S.C. 1395oo.) It simply makes no sense to incorporatean amount/methodology distinction from Michigan Academy into Section 1395cc(h),which deals with neither reimbursement amounts nor the method by which theyare calculated.
Thus, neither Michigan Academy's reasoning, nor the statutory language andlegislative history it cited, has any bearing on cases like this one, inwhich barring review under 28 U.S.C. 1331 would not preclude judicial reviewaltogether, but rather would channel it through the specific mechanismsprovided by the Medicare Act. It therefore should be unsurprising that everycourt of appeals to have considered the matter-with the exception of thepanel decision below-has concluded that Michigan Academy does not permitpre-enforcement judicial review under 28 U.S.C. 1331 where the MedicareAct itself provides for post-enforcement review. See, e.g., National KidneyPatients Ass'n, 958 F.2d at 1133 (because Michigan Academy rested "largelyon the presumption of reviewability," it does not govern where agencyaction "will not go unreviewed," but review instead "simplyawaits initial administrative determination in a concrete setting");St. Francis Med. Ctr. v. Shalala, 32 F.3d 805, 812 (3d Cir. 1994) ("Sincea provider seeking Part A payments has these avenues of review availableunder the Medicare Act, the presumption that Congress did not intend toforeclose judicial review, which was central to the decision in MichiganAcademy, is inapplicable."), cert. denied, 514 U.S. 1016 (1995); MichiganAss'n of Homes & Servs. for the Aging, Inc. v. Shalala, 127 F.3d 496,501 (6th Cir. 1997) (Michigan Academy permits review despite 405(h) "whenthere is no other avenue of judicial review.").
b. Reading Michigan Academy as the court of appeals did here-as drawinga program-wide distinction between pre-enforcement suits challenging regulationson the one hand, and suits seeking to challenge "amount" determinationson the other-would also place Michigan Academy in irreconcilable conflictwith the Court's prior decision in Ringer, which held that "§405(g), to the exclusion of 28 U.S.C. § 1331, is the sole avenue forjudicial review for all 'claim[s] arising under' the Medicare Act."Ringer, 466 U.S. at 615 (emphasis added). As we have pointed out above (seepp. 24-25, supra), one of the named plaintiffs in Ringer sought pre-decisional,declaratory relief with respect to a Medicare rule. Moreover, the plaintiffin Ringer did not challenge a determination concerning the "amount"of reimbursement (if any) he was due for a particular claim. Instead, hesought to challenge a rule that, if he had submitted a claim, might haverequired denial of that claim. See 466 U.S. at 613. The Court neverthelessheld that Section 405(h) precluded the exercise of general federal-questionjurisdiction over such a pre-enforcement challenge. The Court reached anidentical result in Salfi. There, the plaintiffs sought injunctive reliefprohibiting the Secretary from relying on allegedly unconstitutional provisions(App. at 12-13, Weinberger v. Salfi, 422 U.S. 439 (1975) (No. 74-214)).But the Court held that Section 405(h) precluded federal district courtsfrom entertaining their challenges under 28 U.S.C. 1331, and required thatthey instead file a claim and seek review through the mechanisms providedby the Social Security Act itself. 422 U.S. at 764.
Consequently, if the court of appeals' construction of Michigan Academywere correct-that it limits Section 405(h)'s preclusive effect to "amount"determinations and prevents its application to pre-enforcement regulatorychallenges-then Michigan Academy would have overruled Ringer and Salfi subsilentio. That reading, we submit, is implausible given the seminal andfar-reaching significance of Salfi and Ringer, as well as the strong presumption,rooted in considerations of stare decisis, that where this Court intendsto overrule precedents it says so expressly. See Rodriguez de Quijas v.Shearson/American Express, Inc., 490 U.S. 477, 484 (1989); Agostini v. Felton,521 U.S. 203, 237 (1997). For the same reason, the courts of appeals haveuniformly refused to conclude that Michigan Academy overruled Ringer andSalfi. Instead, they have concluded that Michigan Academy controls overRinger and Salfi only where-unlike here-the Medicare statute itself providesno mechanism for judicial review and, as a result, applying 42 U.S.C. 405(h)to bar suit under 28 U.S.C. 1331 would preclude judicial review altogether.National Kidney Patients Ass'n, 958 F.2d at 1132; Farkas, 24 F.3d at 860;American Academy of Dermatology, 118 F.3d at 1500.19
c. For similar reasons, subsequent statutory amendments have eliminatedthe basis for continuing application of the result in Michigan Academy evenin the specific context in which it arose: challenges to the methods usedto calculate the amount of reimbursement due on claims under Part B of theMedicare program. As the district court explained below, Pet. App. 18a,Congress amended Section 1395ff in 1986 (months after Michigan Academy wasdecided) to provide for administrative and judicial review (under 42 U.S.C.405(b) and (g)) of carrier determinations concerning "amount"determinations under Part B. Pub. L. No. 99-509, § 9341(a)(1)(B), 100Stat. 2037. In light of that amendment and its legislative history, thecourts of appeals have uniformly agreed that district courts now lack jurisdictionunder 28 U.S.C. 1331 to review all benefit-related claims arising underPart B, including the type of "methodology" disputes at issuein Michigan Academy. Instead, all such claims, like their counterparts underPart A, must be brought through the review mechanisms provided by the MedicareAct itself. See National Kidney Patients Ass'n, 958 F.2d at 1132 ("[T]hespecial treatment of part B [methodology claims], based on the pre-October1986 statutory differences, cannot survive the elimination of those differences.");American Academy of Dermatology, 118 F.3d at 1500 ("[T]he amount/methodologydistinction established in Michigan Academy is no longer viable.");Martin v. Shalala, 63 F.3d 497, 503 (7th Cir. 1995) ("[T]he MichiganAcademy distinctions drawn between 'amount of payment' and 'validity ofthe statute and regulations' challenges are no longer meaningful or necessary.");Farkas, 24 F.3d at 860 (amount/methodology distinction no longer "goodlaw"); Abbey v. Sullivan, 978 F.2d 37, 42 (2d Cir. 1992) (MichiganAcademy's distinction "relegat[ed] to irrelevancy").
2. Although conceding the lack of "practical support" for theresult it reached, Pet. App. 5a, the court of appeals nonetheless read PartIII of the Court's opinion in Michigan Academy-the only portion addressedto 42 U.S.C. 1395ii, which incorporates 42 U.S.C. 405(h) into the Medicareprogram-as providing a broadly applicable limit on the preclusive scopeof Section 405(h). In particular, the court of appeals interpreted PartIII as holding that Section 405(h), as incorporated into Medicare, precludesreview of "only 'amount determinations.'" Pet. App. 6a. That reasoningis flawed from premise to conclusion.
As an initial matter, the construction of Sections 1395ii and 405(h) thecourt of appeals purported to draw from Michigan Academy is not supportedby that decision. This Court did not hold that Section 405(h) has no effecton any claim other than one involving the amount of reimbursement. Rather,again relying on the presumption that Congress intends agency action tobe reviewable, 476 U.S. at 680, 681, the Court simply rejected the "extremeposition" that Congress, by incorporating 42 U.S.C. 405(h) into theMedicare Act, "intended no review at all of substantial statutory andconstitutional challenges to the Secretary's administration of Part B ofthe Medicare program." 476 U.S. at 680. Nowhere did the Court rejectthe distinctly more moderate position that, in those circumstances wherethe Medicare Act does provide mechanisms for judicial review, Section 405(h)channels all challenges to the Secretary's actions through those mechanisms.
In fact, far from offering a broadly applicable construction of Section405(h), the Court in Michigan Academy expressly declined to "pass onthe meaning of § 405(h) in the abstract," instead choosing todecide only that Section 405(h) "d[id] not apply" to precludereview of the particular claims at issue there. And to the extent the Courtdid identify generally applicable constructions of Section 405(h), bothof the constructions it identified would bar the pre-enforcement actionrespondent seeks to bring here. The broader of the two interpretations (whichrepresented the government's position in that case) was that Section 405(h)"by its terms prevents any resort to the grant of general federal-questionjurisdiction contained in 28 U.S.C. 1331." 476 U.S. at 679. That constructionwould surely bar respondent's claim, which rests explicitly on 28 U.S.C.1331. The narrower view identified by the Court was that Congress enactedSection 405(h) "to make clear that whatever specific procedures itprovided for judicial review of final action by the Secretary were exclusive,and could not be circumvented by resort to the general jurisdiction of thefederal courts." 476 U.S. at 679. That position too-although previouslyrejected by this Court in Salfi as excessively narrow20-would bar respondent'ssuit here, since the issues respondent seeks to raise on behalf of its membersall may be raised after enforcement action is taken against a member, underthe "specific procedures * * * for judicial review" provided bythe Medicare Act.
3. Nor does the court of appeals' decision find support in the text of 42U.S.C. 405(h). The court of appeals found it significant that the thirdsentence of 42 U.S.C. 405(h) bars the exercise of general federal-questionjurisdiction over suits "to recover" on a claim arising underthe Medicare Act, apparently reading "to recover" as meaning toobtain a monetary recovery. See Pet. App. 6a. That reasoning, however, doesnot take respondent's suit outside of Section 405(h).
a. To begin with, the court of appeals' reading of the phrase "to recover"is unnecessarily starchy. "Section 405(h) does not apply on its ownterms" to challenges to the Secretary's enforcement of health, safetyand quality-of-care requirements, "but instead is incorporated mutatismutandis"-that is, with necessary changes in details and meaning, Black'sLaw Dictionary 1019 (6th ed. 1990)-"by § 1395ii." MichiganAcademy, 476 U.S. at 680. In legal contexts, moreover, the phrase "torecover" does not refer only to the recovery of a monetary award. Instead,it means "to prevail" or "to obtain relief." See Black'sLaw Dictionary 1275-1276 (6th ed. 1990) ("In a narrower sense, to besuccessful in a suit, * * * to have judgment, to obtain a favorable or finaljudgment."); Webster's Third New International Dictionary 1898 (1981)("to gain by legal process; to obtain a final judgment in one's favor:to succeed in a lawsuit or proceeding"); Random House Dictionary ofthe English Language 1613 (2d ed. 1987) ("to obtain by judgment ina court of law or by legal proceedings").
That Congress used the words "to recover" in that broader sensein Section 405(h)-and did not by that phrase intend to limit Section 405(h)'sapplication to "amount" determinations-is evident from the factthat Congress incorporated Section 405(h) into numerous parts of the Medicareprogram where "amount" determinations, as such, do not arise.For example, Congress expressly incorporated Section 405(h) into 42 U.S.C.1320a-7 and 1320c-5, which address the circumstances under which Medicareproviders can or must be excluded from the program. See 42 U.S.C. 1320a-7(f)(3).Since neither of those provisions deals with "amount" determinations-instead,like 42 U.S.C. 1395cc(h) here, they deal with eligibility to participatein Medicare-it would be illogical to construe Section 405(h) as "affect[ing]"only "amount determinations" of claims for reimbursement. Congresscannot be presumed to have specifically incorporated Section 405(h) in thatsetting with the understanding that so doing would have no effect at all.21
Construing Section 405(h) as "affect[ing] only 'amount determinations,'"Pet. App. 6a, moreover, would make the second sentence in Section 405(h)mere surplusage. An amount determination is by its very nature a reimbursementdecision by the Secretary. Judicial review of such amount determinationsthrough means other than those provided by the Medicare Act itself, however,is already precluded by the second sentence of Section 405(h), which statesthat "[n]o * * * decision of the [Secretary] shall be reviewed by anyperson, tribunal, or governmental agency except as herein provided."The court of appeals' construction thus makes the third sentence of Section405(h) superfluous in light of the second sentence.
The court of appeals' ruling ignores the text and purpose of the secondsentence of Section 405(h) in another respect as well. Whatever the words"to recover" might mean in the third sentence of Section 405(h),those words do not appear in the second sentence, which bars "any person,tribunal or governmental agency" from reviewing any "decision"of the Secretary, except as provided in the Medicare Act.22
b. In any event, respondent's suit is a suit "to recover" underMedicare even if some nexus to monetary recovery were necessary to triggerSection 405(h). By this suit, respondent seeks to preclude enforcement ofthe requirements that govern its members' participation in Medicare, andthus their eligibility for payment. See 42 U.S.C. 1395i-3(a) to (d); 42C.F.R. 483.1-483.75; pp. 2, 12, supra. Respondent even prays for an injunctionprohibiting the Secretary from imposing "upon [respondent's] Medicaremembers any ban on payment as a remedy for any deficiency." J.A. 52(¶¶G, H). As the district court aptly observed (Pet. App. 17a):
[A]t the heart of [respondent's] case, is a claim for benefits. This isevidenced by the relief sought by [respondent]. [Respondent] seeks continuationof Medicare payments and reimbursement for past due payments incurred bythe patients at the nursing homes. Thus, the issue here is whether or notthe nursing homes are entitled to benefits.
For that reason, respondent's claim is essentially indistinguishable fromthe lead plaintiff's claim in Ringer and Salfi. Just as Freeman Ringer soughtto bring a pre-enforcement challenge to the Secretary's rule barring paymentfor the treatment he wanted, Ringer, 466 U.S. at 614-615, respondent herebrought a pre-enforcement challenge to regulations that could deny paymentsto its members if noncompliance is found. See p. 41, supra. And just asSalfi sought (as an alternative to monetary relief) a declaratory judgmentthat the statutory provisions were unconstitutional and injunctive reliefprohibiting the Secretary from applying those provisions to deny him paymentin administrative proceedings (App. at 12-13, Weinberger v. Salfi, supra),respondent makes an identical request with respect to the regulations atissue here. Since Ringer's and Salfi's anticipatory lawsuits challengingpayment-barring statutes and regulations under 28 U.S.C. 1331 were precludedby Section 405(h) as suits "to recover on a claim arising under"the Act, respondent's action must be barred by Section 405(h) as well.23
Even as an original matter, moreover, the court of appeals' theory wouldplace an implausible gloss on the statutory scheme as a whole. It ignoresthe fact that Congress deliberately paired Section 405(g) with Section 405(h),with the obvious purpose of excluding through the latter, at a minimum,all issues that could be raised under the former. And it turns the normalpriorities for access to judicial review on their head. Under the courtof appeals' approach, the party with the least need for immediate accessto judicial review-the party bringing an abstract, facial challenge to regulationsthat may not be applied to it-has immediate access to the courts, whilethe party with a greater need, i.e., a party to whom the regulations haveactually been applied and that is facing imminent enforcement proceedingsand remedies, cannot bring suit until it exhausts administrative remedies.It is singularly unlikely that Congress intended to allocate access to thecourts in that manner.
C. RESPONDENT'S CLAIMS CONCERNING THE ADEQUACY OF THE MEDICARE ACT'S REVIEWMECHANISMS ARE WITHOUT MERIT
In its brief in opposition, respondent attempted to defend the judgmentof the court of appeals on different grounds. In particular, respondentargued that the issues it sought to raise in district court do not fallwithin Section 405(h)'s preclusive scope because they would not be addressedin a hearing under 42 U.S.C. 405(b); given that no such hearing is available,respondent argued, providing judicial review only after exhaustion of administrativeremedies "is the practical equivalent of total denial of judicial review."See Br. in Opp. 13; see also id. at 9-10. The court of appeals did not addressthose arguments, and they are, in any event, without merit.
1. Respondent is, as an initial matter, incorrect in asserting that itsmembers can obtain no relief at all with respect to any of its claims. Forexample, respondent contends that the State Operations Manual, which isused by survey agencies when reviewing nursing facilities for compliance,is invalid because it was "promulgated without the required noticeand comment procedures required by the Administrative Procedures Act forsubstantive regulations." J.A. 18, 27-28, 46 (¶¶ 3A, 32-36,94A-94B); see Br. in Opp. 2. Any nursing facility that is subjected to aremedy for a violation because of the Manual, however, can challenge thefinding of a violation in administrative proceedings. Because ALJs and theDepartmental Appeals Board are not bound by the Manual, see Shalala v. GuernseyMem'l Hosp., 514 U.S. 87, 99 (1995),24 such a nursing home could obtaincomplete relief. Moreover, a claim of a violation of the APA's notice-and-comment requirements can in any event be addressed on judicial review, afterexhaustion, under 42 U.S.C. 405(g). See Ringer, 466 U.S. at 614-616 (claimthat regulations and instructions to intermediaries violate APA notice-and-commentrequirements reviewable under Section 405(g) after exhaustion of administrativeremedies).25
To be sure, some of the other issues respondent seeks to raise, such asits constitutional contentions and its challenges to the Secretary's regulations,ordinarily would not be the subject of an administrative hearing. Neitherthe Departmental Appeals Board nor individual ALJs are free to depart fromstatutory and regulatory requirements. But that does not mean that Section405(h) ceases to apply. To the contrary, Section 405(h) requires all claims"arising under" the Medicare Act to be brought through the mechanismsprovided by the Medicare Act itself; nowhere does it exclude individualissues that would not be addressed in the administrative process. That,in fact, is precisely the holding of Salfi, 422 U.S. at 760-762. There,the plaintiffs sought to challenge the constitutionality of a provisionof the Social Security Act, a challenge that could not be resolved in theadministrative process. This Court held that the language of Section 405(h),"which is sweeping and direct," does not limit its preclusiveeffect "to decisions of the Secretary on issues of law or fact. Rather,it extends to any 'action' seeking 'to recover on any * * * claim'-irrespectiveof whether resort to judicial processes is necessitated by discretionarydecisions of the Secretary or by * * * nondiscretionary application of allegedlyunconstitutional statutory restrictions." Id. at 757, 762. As the Courtsummarized: "[T]he plain words of the third sentence of § 405(h)do not preclude constitutional challenges. They simply require that [thechallenges] be brought under jurisdictional grants contained in the Act,and thus in conformity with the same standards which are applicable to nonconstitutionalclaims arising under the Act." Id. at 762.
This Court likewise has applied Section 405(h) to preclude federal courtsfrom exercising federal-question jurisdiction over procedural and due processclaims like respondent's. In Ringer, for example, the Court "disagree[d]in particular with [the court of appeals'] apparent conclusion that simplybecause a claim somehow can be construed as 'procedural,' it is cognizablein federal district court by way of federal-question jurisdiction."466 U.S. at 614. Instead, "the inquiry in determining whether §405(h) bars federal-question jurisdiction must be whether the claim 'arisesunder' the Act, not whether it lends itself to a 'substantive' rather thana 'procedural' label." Id. at 615.
Finally, in Mathews v. Eldridge, 424 U.S. 319 (1976), the plaintiff allegedthat the procedures the Secretary employed under the Act violated proceduraldue process. Even though the plaintiff's claims were "collateral"to the merits-they challenged the process provided, not the substantiveresult -and the plaintiff made a colorable claim that the post-deprivationreview provided through administrative remedies would be inadequate, thisCourt held that "[t]he only avenue for judicial review" of suchclaims "is 42 U.S.C. 405(g)." Id. at 327. Section 405(g), theCourt explained, permits adequate review of even completely collateral claimsso long as the "final decision" requirement is properly applied.26
2. The text and structure of the Medicare Act confirm the correctness ofthat result. As the Court recognized in Ringer and Salfi, nothing in Section405(h) limits its application to issues that might be addressed by an ALJin the administrative process; its sweeping language instead extends to"all 'claim[s] arising under' the Medicare Act." Ringer, 466 U.S.at 615. Nor can such a limit be inferred from the scope of review providedby Section 405(g). Whereas the hearing provided by Section 405(b) mighthave a limited scope, the review provided by Section 405(g) is not limitedto those issues cognizable before an ALJ. For example, far from restrictingthe reviewing court to an examination of whether "the findings * ** as to any fact" are "supported by substantial evidence,"42 U.S.C. 405(g), Section 405(g) expressly permits the reviewing court toaddress "the validity of [the] regulations" themselves, ibid.-anissue an ALJ could not address.
Other provisions of the Medicare Act, moreover, confirm that Congress intendedto channel all claims through the administrative process as a prerequisiteto judicial review under Section 405(g) and parallel Medicare provisions,even where individual legal issues bearing on those claims- including challengesto the Act or regulations-would not be addressed in the administrative process.For example, 42 U.S.C. 1395oo(f)(1) permits the Provider Reimbursement ReviewBoard (PRRB) to facilitate judicial review on an expedited basis by certifying"that it is without authority to decide" a "question of lawor regulations relevant to the matters in controversy." Once such acertification is made in a case otherwise properly before the PRRB, 42 U.S.C.1395oo(a), an action for judicial review on that question may be filed immediately;it need not await the PRRB's resolution of issues that are within its competenceto decide, as would otherwise be required by Salfi and Ringer. See 42 U.S.C.1395oo(f)(1); Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399, 406-407 (1988).If matters outside the PRRB's competence to decide were not required tobe channeled into the special statutory procedure for administrative andjudicial review together with issues that are-and such issues instead couldbe presented outside that procedure in district court under 28 U.S.C. 1331-theexpedited review provision in 42 U.SC. 1395oo(f)(1) would be entirely unnecessary.It is, of course, inappropriate to construe a statute so as to make anyof its provisions superfluous. Moskal v. United States, 498 U.S. 103, 109-110(1990). Similarly, in the case of individuals who seek administrative andjudicial review of individual benefit claims under 42 U.S.C. 1395ff(b) (whichincorporates 42 U.S.C. 405(g)), the Act specifically contemplates that judicialreview of national coverage determinations of general applicability willbe available under 42 U.S.C. 405(g), even though such determinations cannotbe reviewed by an ALJ. See 42 U.S.C. 1395ff(b)(3).27
3. Because even issues that would not be addressed in a hearing can be reviewedby a court under 42 U.S.C. 405(g) after exhaustion, respondent's relianceon Thunder Basin, 510 U.S. at 207, is misplaced. Quoting Thunder Basin,respondent notes that whether "a statute is intended to preclude initialjudicial review" depends in part on "whether the claims can beafforded meaningful review" through the mechanisms provided by statute.Br. in Opp. 13. Respondent then contends that the issues it seeks to raise"cannot be meaningfully addressed or reviewed in the administrativeprocess." Br. in Opp. 13. But the question is not whether its contentionswill be "meaningfully addressed * * * in the administrative process."It is whether they will be meaningfully addressed through the statutorymechanism for administrative and judicial review as a whole, with an emphasison the latter. See 510 U.S. at 212-213 (inquiry particularly important "wherea finding of preclusion could foreclose all meaningful judicial review")(emphasis added). In fact, in Thunder Basin itself, this Court held thatthe statutory review mechanism was meaningful, adequate, and exclusive "[e]venif" the administrative agency would not or could not adjudicate thestatutory and constitutional claims at issue there, because those issuesultimately would "be meaningfully addressed" on judicial review.Id. at 215. The same is true of the issues respondent seeks to raise here.
4. At bottom, respondent's suit for anticipatory relief is nothing morethan an effort to bypass the reticulated mechanisms for administrative andjudicial review provided by the Medicare Act itself. Seeking to avoid thenecessity of bringing challenges in the context of specific violations,and attempting to evade the requirements that individual claims be presentedto the Secretary and administrative remedies be exhausted, respondent filedthe current facial challenge to the Secretary's regulations in an effortto obtain far-reaching and intrusive relief. But it was precisely such circumventionof the statutory processes (and the resulting potential for unnecessaryand damaging intrusion into the administration of programs affecting millionsof people) that this Court rejected in Salfi, in Mathews, and in Ringer,and that Sections 405(g) and 405(h) were designed to prevent. Those provisionssimply do not permit a nursing facility to split off one legal issue bearingon the merits of a challenge to a compliance determination and present thatissue in an independent action for declaratory or injunctive relief under28 U.S.C. 1331. Of course, "[i]n the best of all worlds, immediatejudicial access * * * might be desirable" for particular challengesin particular cases. Ringer, 466 U.S. at 627. But this is not such a caseand, even if it were, "Congress, in § 405(g) and § 405(h),struck a different balance, refusing declaratory relief and requiring thatadministrative remedies be exhausted before judicial review of the Secretary'sdecisions takes place." Ibid. Because the court of appeals' judgmentfails to respect that statutory balance, it should be reversed.
The judgment of the court of appeals should be reversed.
Respectfully submitted.
HARRIET S. RABB
General Counsel
SHEREE R. KANNER
Associate General
Counsel
JEFFREY GOLLAND
Attorney
Department of Health
and Human Services
SETH P. WAXMAN
Solicitor General
DAVID W. OGDEN
Acting Assistant Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
JEFFREY A. LAMKEN
Assistant to the Solicitor General
BARBARA C. BIDDLE
JEFFREY CLAIR
Attorneys
JULY 1999
1 Such coverage is provided through Part A of the program. Part B of Medicareis a voluntary supplementary insurance program covering physicians' chargesand other medical services. 42 U.S.C. 1395k, 1395l, 1395x(s). The recentlyenacted Part C of Medicare authorizes beneficiaries to obtain covered Medicareservices through Health Maintenance Organizations and other "managedcare" arrangements. Balanced Budget Act of 1997, Pub. L. No. 105-33,Tit. IV, § 4001, 111 Stat. 276-327. Only Part A of the program is atissue here.
2 Although 42 U.S.C. 405(b), (g), and (h) refer to the "Commissionerof Social Security," Congress declared that, in applying those provisionsto the Secretary's decisions under Medicare, any reference to the Commissionerof Social Security shall be construed as a reference to the Secretary. See42 U.S.C. 1395cc(h), 1395ii. As originally enacted, Section 405(b), (g),and (h) referred directly to the Secretary, but Congress changed those provisionsso they would refer instead to the Commissioner of Social Security in 1994,when Congress established the Social Security Administration as a separateagency and made it responsible for administration of the social securityprogram. See Social Security Independence and Program Improvements Act of1994, Pub. L. No. 103-296, § 106(d), 108 Stat. 1476.
3 Originally, 42 U.S.C. 1395cc(h) appeared as subsection (c) of 42 U.S.C.1395ff. See 42 U.S.C. 1395ff(c) (1976). When the Act was amended in 1987(see pp. 7-8, infra), the provision was moved to its current location in42 U.S.C. 1395cc(h).
4 A finding that a facility fails to meet statutory or regulatory standardsfor health or safety, and that imposes certain remedies as a result, mightalso be considered a determination that the facility "is not a providerof services." See 42 U.S.C. 1395i-3(a)(3) (defining provider of servicesas a facility that meets statutory and regulatory requirements); MichiganAss'n of Homes & Servs. for the Aging, Inc. v. Shalala, 127 F.3d 496,501 & n.3 (6th Cir. 1997).
5 Under Part A, initial reimbursement determinations affecting participatingproviders are made by fiscal intermediaries operating under contract withthe Health Care Financing Administration (HCFA). 42 U.S.C. 1395h. Pursuantto 42 U.S.C. 1395oo(a), which was enacted in 1972, Pub. L. No. 92-603, §243(a), 86 Stat. 1420, a provider that "is dissatisfied with a finaldetermination" and timely files objections meeting amount-in-controversyrequirements may obtain a hearing before the Provider Reimbursement ReviewBoard (PRRB). The decisions of the PRRB are final (although the Secretaryhas the right to affirm, reverse, or modify them within 60 days); and, pursuantto 42 U.S.C. 1395oo(f), judicial review is available in district court.See Your Home Visiting Nurse Servs., Inc. v. Shalala, 119 S. Ct. 930, 932-933(1999). Where the Secretary imposes civil money penalties under 42 U.S.C.1320a-7a, a hearing is available under 42 U.S.C. 1320a-7a(c)(2), and reviewin the court of appeals is available under 42 U.S.C. 1320a-7a(e). See Medicareand Medicaid Amendments of 1981, Pub. L. No. 97-35, Tit. XXI, § 2105,95 Stat. 789.
6 For example, surveyors and others found nursing home residents lying intheir own feces or urine for extended periods of time, covered with fliesand dried food, and ridden with bedsores, despite complaints from visitingrelatives. 1986 Hearing 8-9, 61, 64, 800. There were reports of patientsdying when facilities failed to pay attention to their medical needs. See,e.g., id. at 110 (patient died of starvation after facility failed to ensurefeeding tube provided sufficient calories); id. at 73-74 (patient died fromabsence of medical attention for severe cramps and vomiting). And therewere disturbingly frequent reports of brain-impaired and comatose patientsbeing raped and sexually abused. Id. at 105-106.
7 As the House Report explained, nursing homes knew "in advance thatthey [would] not be penalized" by termination even "if caughtwith serious deficiencies as long as they correct[ed] them sufficiently"after inspection. As a result, the deterrent value of that remedy was relativelyslight. H.R. Rep. No. 391, supra, Pt. 1, at 471.
8 State agencies conduct the surveys pursuant to contracts with the Secretary,see 42 U.S.C. 1395i-3(g)(1)(A), 1395aa, but the Secretary may survey publicnursing facilities operated by state or local governments and may surveyany other facility if she has reason to question the facility's compliancewith the statute, 42 U.S.C. 1395i-3(g)(3)(D), or it is necessary to assesssurvey agency performance, 42 U.S.C. 1395i-3(g)(3)(A).
9 The regulations governing nursing home surveys and remedies for violationsapply to both the Medicaid program, which is administered jointly by theStates and the Secretary, and the Medicare program, which is administeredby the Secretary (although state agencies conduct Medicare nursing homesurveys for the Secretary under contract). See 42 C.F.R. 488.300, 488.400.Some of the regulations therefore refer to enforcement actions taken bythe State as well as by HCFA on behalf of the Secretary. See, e.g., 42 C.F.R.488.402(b).
10 "Substandard quality of care" exists where serious violationsof the statutory requirements most directly related to medical care andthe residents' quality of life either (1) create immediate jeopardy to residenthealth and safety, (2) constitute a pattern of or widespread actual harmthat falls short of immediate jeopardy, or (3) pose a widespread potentialfor more than minimal harm even if no actual harm has yet occurred. 42 C.F.R.488.301.
11 Under the prior regulatory scheme, many States had successfully employedvarious types of informal appeal procedures to handle compliance disputes.59 Fed. Reg. 56,116, 56,224 (1994). Because those procedures had proveneffective and efficient, the Secretary directed all States to establishsimilar processes. Id. at 56,224-56,225. Although the regulations give theStates discretion concerning the form and content of such procedures, theprocess as a whole must afford nursing homes a meaningful opportunity torefute findings of deficient care. 42 C.F.R. 488.331(a)(1). If the providersuccessfully rebuts a survey finding, the State must remove the deficiencyfrom its findings and rescind any proposed enforcement action based on thatdetermination. 42 C.F.R. 488.331(c). Similar procedures are also availablewith respect to federally-conducted surveys. 42 C.F.R. 488.331(a)(2).
12 Respondent also complains that, under current regulations, no administrativereview is available where a finding of "substandard quality of care"causes the facility (automatically) to lose approval for its nurse-aidetraining program but no other remedy is imposed. J.A. 33 (¶¶ 54-55);see 42 C.F.R. 498.3(b)(12) and (d)(10)(ii). We have been informed by theDepartment of Health and Human Services that it is currently reviewing thatexclusion.
13 The district court also dismissed respondent's claims brought under theMedicaid program. Pet. App. 19a-20a. The status of those claims is not atissue here. See note 14, infra.
14 The court of appeals affirmed on ripeness grounds dismissal of respondent'svagueness challenge to the Secretary's regulations, Pet. App. 10a-11a, andthis Court denied respondent's conditional cross-petition for a writ ofcertiorari seeking review of that holding. See 119 S. Ct. 1459 (1999). Thecourt of appeals also reinstated respondent's claims on behalf of its Medicaid-onlymembers with respect to the Secretary's Medicaid regulations. Pet. App.7a-8a. Our certiorari petition did not seek review of that aspect of thecourt of appeals' judgment. See Pet. i, 5.
15 Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), is not to the contrary.There, the Court permitted pre-enforcement review of an agency regulationabsent express statutory authority, but only after determining that a statutorysavings clause and the legislative history reflected Congress's intent topreserve an established practice of exercising equitable jurisdiction overpre-enforcement challenges to similar agency actions. Id. at 142-144. Seealso Thunder Basin, 510 U.S. at 212.
16 As noted above, where civil money penalties are imposed as a sanctionfor noncompliance, a hearing and judicial review are available to the extentprovided for by 42 U.S.C. 1320a-7a. See 42 U.S.C. 1395i-3 (h)(2)(B)(ii).Where 42 U.S.C. 1320a-7a applies, 42 U.S.C. 405(h) applies too. See 42 U.S.C.1320a-7(f)(3).
17 The Court has accorded the Attorney General's Manual deference in construingthe APA. See, e.g., Darby v. Cisneros, 509 U.S. 137, 148 n.10 (1993).
18 Indeed, respondent concedes that its "claims on behalf of its Medicaremembers arise under * * * the provisions of the Social Security Act pertainingto Medicare, 42 U.S.C. § 1395 et seq." J.A. 22 (¶ 14). Respondent'sstanding, which derives from its members' participation in the Medicareprogram, clearly derives from the Act; absent the Act, respondent wouldhave no complaint and no basis for bringing suit. See Salfi, 422 U.S. at760-761. Likewise, the "substantive basis for the presentation"of respondent's claims originates in the Act. Respondent, by this lawsuit,seeks to bar the Secretary from enforcing regulations alleged to be inconsistentwith the Act, to prevent the Secretary from cutting off reimbursement otherwiseprovided by the Act, and to bar the imposition of remedies alleged to becontrary to the Act. J.A. 51-53 (¶¶ A-H). To suggest that suchan action "does not arise under the Act" is "to ignore boththe language and the substance of the complaint and the judgment" thatrespondent seeks. Salfi, 422 U.S. at 761.
19 The court of appeals likewise erred in asserting that McNary v. HaitianRefugee Center, 498 U.S. 479, 497-498 (1991), "reiterated [the] conclusionthat § 1395ii [which incorporates Section 405(h)] does not affect regulatorychallenges that are detached from any request for reimbursement." Pet.App. 5a. McNary was not a Medicare case; it concerned whether Congress intendedto foreclose judicial review of certain claims concerning the immigrationstatus of agricultural workers. In addressing that issue, McNary cited MichiganAcademy for the proposition that statutes barring review of a final administrativedecision are not sufficient to preclude "collateral" challengesto regulations that would otherwise be unreviewable. Thus, far from supportingthe court of appeals' view that Michigan Academy sanctions immediate reviewof pre-enforcement claims without regard to whether review would be availableafter exhaustion of administrative remedies, McNary stressed the differencebetween postponement of judicial review and foreclosure, and noted thatthe distinction is central to Michigan Academy's holding. "Inherentin our [Michigan Academy] analysis," the McNary Court explained, "wasthe concern that absent such a construction of the judicial review provisionsof the Medicare statute, there would be 'no review at all of substantialstatutory and constitutional challenges to the Secretary's administrationof Part B of the Medicare program.'" 498 U.S. at 498 (quoting MichiganAcademy, 476 U.S. at 680).
20 "Nor can it be argued that the third sentence of § 405(h) simplyserves to prevent a bypass of the § 405(g) requirements by filing adistrict court complaint alleging entitlement prior to applying for benefitsthrough administrative channels." Salfi, 422 U.S. at 759 n.6.
21 That Congress specifically meant Section 405(h) to apply to suits, likerespondent's, that seek to avoid sanctions is also made clear by its incorporationinto 42 U.S.C. 1320a-7a and 1320a-8, which authorize the Secretary to imposecivil money penalties and other sanctions for misconduct. See 42 U.S.C.1320a-7(f)(3) ("The provisions of section 405(h) * * * shall applywith respect to sections 1320a-7a [and] 1320a-8."). Under the courtof appeals' theory, Section 405(h) in that context would not bar an anticipatorysuit seeking to prevent the Secretary from collecting a civil penalty, sincesuch a suit would not be an "amount" claim seeking reimbursementfrom the Secretary, but rather a pre-enforcement suit.
22 The Secretary's regulations and guidelines are not themselves "decisions"of the Secretary within the meaning of the second sentence of 42 U.S.C.405(h). See Michigan Academy, 476 U.S. at 679 n.8. But respondent cannotavoid the force of Section 405(h)'s second sentence by arguing that it isnot challenging a "decision" of the Secretary here. If that argumentwere accepted, any plaintiff could bypass the Medicare Act's exhaustionrequirements at will by filing a declaratory judgment action in federalcourt at a time when its claims are least ripe for review-when enforcementmay not even be contemplated and the Secretary therefore has not yet issuedany "decision." For the same reason, this Court rejected thatargument in Ringer, 466 U.S. at 621. There, the lead plaintiff contendedthat Section 405(h) did not preclude his lawsuit because his request hadneither "blossomed into a 'claim' cognizable under § 405(g),"nor resulted in a decision by the Secretary. The Court held that to allowplaintiffs "to bypass the exhaustion requirements of the Medicare Actby simply bringing declaratory judgment actions in federal court" inany instance where the Secretary has not yet issued an individualized decisionwould "undercut Congress' carefully crafted scheme for administeringthe Medicare Act." See 466 U.S. at 621. Accordingly, it held that Ringer'sclaim was barred even though the regulation he sought to challenge had notyet resulted in a "decision" by the Secretary on a claim for benefits.
23 To the extent there are differences between Ringer and this case, Ringerprovided the more compelling case for bypass of administrative remedies.The lead plaintiff in Ringer wished to undergo surgery that, under the Secretary'sguidelines, was not covered by Medicare. Because Ringer allegedly couldnot afford to pay for the surgery himself and (he contended) no surgeonwould perform the surgery in light of the non-coverage guideline, Ringercontended that he could not have the surgery, submit a claim, and challengethe Secretary's resulting decision through the Medicare Act's judicial reviewprocedures; instead, to have the surgery, he needed an anticipatory ruling.See 466 U.S. at 629 (Stevens, J., dissenting). Respondent's institutionalmembers could not make any such assertion of personal hardship.
24 See, e.g., Furlong v. Shalala, 156 F.3d 384, 388-389, 394 (2d Cir. 1998)(noting that ALJs had, in over 100 cases, declined to apply a particularmanual provision); see also Ringer, 466 U.S. at 607-608 (even though HCFAhad concluded that a particular surgical procedure was not "reasonableand necessary" within the meaning of the Medicare Act and had issuedinstructions to fiscal intermediaries not to approve claims for that procedure,ALJs "were consistently ruling in favor of individual * * * claimants"with respect to that procedure; only later did HCFA issue a formal rulingthat bound ALJs).
25 Of course, interpretive rules, general statements of policy, and rulesof agency organization, procedure, or practice in the Manual are exemptfrom APA notice-and-comment requirements. 5 U.S.C. 553(b)(A); Guernsey Mem'lHosp., 514 U.S. at 99.
26 The Court held that the "final decision" requirement of Section405(g)-like the "final decision" requirement of 28 U.S.C. 1291-issufficiently flexible to permit expedited review of collateral claims inlimited, appropriate circumstances. According to the Court, an otherwiseinterim decision by the Secretary may be considered "final" withinthe meaning of Section 405(g) and thus immediately reviewable, even wherethe plaintiff has not fully pursued all administrative remedies, if: (1)a claim for benefits has been properly presented to the Secretary, 424 U.S.at 328-329, (2) the challenge on which review is sought is "entirelycollateral to" the merits of the plaintiff's substantive claim, 424U.S. at 330, and (3) full relief with respect to that challenge could notbe afforded after exhaustion of administrative remedies. Mathews, 424 U.S.at 331-332. See also Bowen v. City of New York, 476 U.S. 467, 483-486 (1986)(excusing failure to exhaust in "unique" circumstances involvingsecret agency policy).
In Mathews itself, the Court held that the plaintiff could seek immediatejudicial review under 42 U.S.C. 405(g) to assert a constitutional rightto a pre-deprivation hearing, once he had presented his claim to the Secretaryand the Secretary had made an initial determination to terminate his benefitswithout that full hearing, because the plaintiff could not obtain reliefon his claim that he had a right to a pre-deprivation hearing in an actionfor judicial review after the deprivation had taken effect. 424 U.S. at331-333. That holding, however, does not assist respondent. First, respondentdoes not assert that jurisdiction is proper under Section 405(g); it relieson the general federal-question statute, 28 U.S.C. 1331, instead. J.A. 22(¶ 14); Pet. App. 13a, 15a. Second, the collateral order rule describedin Mathews excuses the plaintiff from fully pursuing available administrativeremedies, but it does not excuse the other jurisdictional prerequisitesfor review under Sections 405(g) and 1395cc(h), such as the requirementthat the plaintiff actually present its claim to the Secretary, see Salfi,422 U.S. at 764; Ringer, 466 U.S. at 617-618; Mathews, 424 U.S. at 328,and that it be "dissatisfied with a determination" of the Secretary,42 U.S.C. 405(g), 1395cc(h)(2). Here, the district court expressly foundthat respondent "has not alleged or shown any attempt at presentmentof [its] claims to the Secretary," id. at 19a, and respondent has neverchallenged that finding. That failure is fatal to jurisdiction under 42U.S.C. 405(g), since the requirements of presentation and dissatisfactionwith a determination are not waivable. See Ringer, 466 U.S. at 617.
27 See also 42 U.S.C. 1395ff(b)(4) (barring judicial review of a regulationor instruction relating to a method of determining the amount of paymentsunder Part B if the regulation or instruction was issued prior to January1, 1981). Judicial review similarly would be available with respect to theSecretary's choice of remedies to be imposed on a particular facility, andthe characterization of seriousness of violations to the extent it influencedthe choice of remedies, even though those issues are, by regulation, outsidethe scope of ALJ and Departmental Appeals Board review. (The ALJ, of courseis not precluded from addressing whether and how many violations occurred.)See 42 C.F.R. 498.3(d)(10)-(11) (excluding the choice of remedy and disputesconcerning the agency's characterization of the scope and severity of theviolations from the administrative review process, except where the rangeof civil money penalties would be affected). The standard of review appliedto such remedy-related claims, however, is extraordinarily deferential.See Butz v. Glover Livestock Comm'n Co., 411 U.S. 182, 185-186 (1973) ("[W]hereCongress has entrusted an administrative agency with the responsibilityof selecting the means of achieving the statutory policy 'the relation ofremedy to policy is peculiarly a matter for administrative competence,'"and the agency's choice of remedies may not be overturned unless "unwarrantedin law or * * * without justification in fact.").
APPENDIX A
2. Section 405(h) of Title 42, United States Code, provides: 3. Section 1320a-7 of Title 42, United States Code, provides in relevantpart: 4. Section 1320a-7a of Title 42, United States Code, provides in relevantpart: 5. Section 1395i-3(h) of Title 42, United States Code, provides: 6. Section 1395cc of Title 42, United States Code, provides in relevantpart: 2. Section 488.330 of Title 42, Code of Federal Regulations, provides: 3. Section 488.331 of Title 42, Code of Federal Regulations, provides: 4. Subpart F (Sections 488.400-488.456) of Title 42, Code of Federal Regulations,provides: 5. Section 498 of Title 42, Code of Federal Regulations, provides in relevantpart:
STATUTORY PROVISIONS
1. Section 405(g) of Title 42, United States Code, provides:
(g) Judicial review
Any individual, after any final decision of the Commissioner of Social Securitymade after a hearing to which he was a party, irrespective of the amountin controversy, may obtain a review of such decision by a civil action commencedwithin sixty days after the mailing to him of notice of such decision orwithin such further time as the Commissioner of Social Security may allow.Such action shall be brought in the district court of the United Statesfor the judicial district in which the plaintiff resides, or has his principalplace of business, or, if he does not reside or have his principal placeof business within any such judicial district, in the United States DistrictCourt for the District of Columbia. As part of the Commissioner's answerthe Commissioner of Social Security shall file a certified copy of the transcriptof the record including the evidence upon which the findings and decisioncomplained of are based. The court shall have power to enter, upon the pleadingsand transcript of the record, a judgment affirming, modifying, or reversingthe decision of the Commissioner of Social Security, with or without remandingthe cause for a rehearing. The findings of the Commissioner of Social Securityas to any fact, if supported by substantial evidence, shall be conclusive,and where a claim has been denied by the Commissioner of Social Securityor a decision is rendered under subsection (b) of this section which isadverse to an individual who was a party to the hearing before the Commissionerof Social Security, because of failure of the claimant or such individualto submit proof in conformity with any regulation prescribed under subsection(a) of this section, the court shall review only the question of conformitywith such regulations and the validity of such regulations. The court may,on motion of the Commissioner of Social Security made for good cause shownbefore the Commissioner files the Commissioner's answer, remand the caseto the Commissioner of Social Security for further action by the Commissionerof Social Security, and it may at any time order additional evidence tobe taken before the Commissioner of Social Security, but only upon a showingthat there is new evidence which is material and that there is good causefor the failure to incorporate such evidence into the record in a priorproceeding; and the Commissioner of Social Security shall, after the caseis remanded, and after hearing such additional evidence if so ordered, modifyor affirm the Commissioner's findings of fact or the Commissioner's decision,or both, and shall file with the court any such additional and modifiedfindings of fact and decision, and a transcript of the additional recordand testimony upon which the Commissioner's action in modifying or affirmingwas based. Such additional or modified findings of fact and decision shallbe reviewable only to the extent provided for review of the original findingsof fact and decision. The judgment of the court shall be final except thatit shall be subject to review in the same manner as a judgment in othercivil actions. Any action instituted in accordance with this subsectionshall survive notwithstanding any change in the person occupying the officeof Commissioner of Social Security or any vacancy in such office.
(h) Finality of Commissioner's decision
The findings and decision of the Commissioner of Social Security after ahearing shall be binding upon all individuals who were parties to such hearing.No findings of fact or decision of the Commissioner of Social Security shallbe reviewed by any person, tribunal, or governmental agency except as hereinprovided. No action against the United States, the Commissioner of SocialSecurity, or any officer or employee thereof shall be brought under section1331 or 1346 of title 28 to recover on any claim arising under this subchapter.
§ 1320a-7. Exclusion of certain individuals and entities from participationin Medicare and State health care programs
(a) Mandatory exclusion
The Secretary shall exclude the following individuals and entities fromparticipation in any program under subchapter XVIII of this chapter andshall direct that the following individuals and entities be excluded fromparticipation in any State health care program (as defined in subsection(h) of this section):
(1) Conviction of program-related crimes
* * * * *
(2) Conviction relating to patient abuse
* * * * *
(b) Permissive exclusion
The Secretary may exclude the following individuals and entities from participationin any program under subchapter XVIII of this chapter and may direct thatthe following individuals and entities be excluded from participation inany State health care program:
(1) Conviction relating to fraud
* * * * *
(2) Conviction relating to obstruction of an investigation
* * * * *
(3) Conviction relating to controlled substance
* * * * *
(f) Notice, hearing, and judicial review
(1) Subject to paragraph (2), any individual or entity that is excluded(or directed to be excluded) from participation under this section is entitledto reasonable notice and opportunity for a hearing thereon by the Secretaryto the same extent as is provided in section 405(b) of this title, and tojudicial review of the Secretary's final decision after such hearing asis provided in section 405(g) of this title, except that, in so applyingsuch sections and section 405(l) of this title, any reference therein tothe Commissioner of Social Security or the Social Security Administrationshall be considered a reference to the Secretary or the Department of Healthand Human Services, respectively.
(2) Unless the Secretary determines that the health or safety of individualsreceiving services warrants the exclusion taking effect earlier, any individualor entity that is the subject of an adverse determination under subsection(b)(7) of this section shall be entitled to a hearing by an administrativelaw judge (as provided under section 405(b) of this title) on the determinationunder subsection (b)(7) of this section before any exclusion based uponthe determination takes effect.
(3) The provisions of section 405(h) of this title shall apply with respectto this section and sections 1320a-7a, 1320a-8, and 1320c-5 of this titleto the same extent as it is applicable with respect to subchapter II ofthis chapter, except that, in so applying such section and section 405(l)of this title, any reference therein to the Commissioner of Social Securityshall be considered a reference to the Secretary.
§ 1320a-7a. Civil monetary penalties
* * * * *
(c) Initiation of proceeding; authorization by Attorney General, notice,etc., estoppel, failure to comply with order or procedure
* * * * *
(2) The Secretary shall not make a determination adverse to any person undersubsection (a) or (b) of this section until the person has been given writtennotice and an opportunity for the determination to be made on the recordafter a hearing at which the person is entitled to be represented by counsel,to present witnesses, and to cross-examine witnesses against the person.
* * * * *
(e) Review by courts of appeals
Any person adversely affected by a determination of the Secretary underthis section may obtain a review of such determination in the United StatesCourt of Appeals for the circuit in which the person resides, or in whichthe claim was presented, by filing in such court (within sixty days followingthe date the person is notified of the Secretary's determination) a writtenpetition requesting that the determination be modified or set aside. A copyof the petition shall be forthwith transmitted by the clerk of the courtto the Secretary, and thereupon the Secretary shall file in the Court[1]the record in the proceeding as provided in section 2112 of title 28. Uponsuch filing, the court shall have jurisdiction of the proceeding and ofthe question determined therein, and shall have the power to make and enterupon the pleadings, testimony, and proceedings set forth in such recorda decree affirming, modifying, remanding for further consideration, or settingaside, in whole or in part, the determination of the Secretary and enforcingthe same to the extent that such order is affirmed or modified. No objectionthat has not been urged before the Secretary shall be considered by thecourt, unless the failure or neglect to urge such objection shall be excusedbecause of extraordinary circumstances. The findings of the Secretary withrespect to questions of fact, if supported by substantial evidence on therecord considered as a whole, shall be conclusive. If any party shall applyto the court for leave to adduce additional evidence and shall show to thesatisfaction of the court that such additional evidence is material andthat there were reasonable grounds for the failure to adduce such evidencein the hearing before the Secretary, the court may order such additionalevidence to be taken before the Secretary and to be made a part of the record.The Secretary may modify his findings as to the facts, or make new findings,by reason of additional evidence so taken and filed, and he shall file withthe court such modified or new findings, which findings with respect toquestions of fact, if supported by substantial evidence on the record consideredas a whole, shall be conclusive, and his recommendations, if any, for themodification or setting aside of his original order. Upon the filing ofthe record with it, the jurisdiction of the court shall be exclusive andits judgment and decree shall be final, except that the same shall be subjectto review by the Supreme Court of the United States, as provided in section1254 of title 28.
(h) Enforcement process
(1) In general
If a State finds, on the basis of a standard, extended, or partial extendedsurvey under subsection (g)(2) of this section or otherwise, that a skillednursing facility no longer meets a requirement of subsection (b), (c), or(d) of this section, and further finds that the facility's deficiencies-
(A) immediately jeopardize the health or safety of its residents, the Stateshall recommend to the Secretary that the Secretary take such action asdescribed in paragraph (2)(A)(i); or
(B) do not immediately jeopardize the health or safety of its residents,the State may recommend to the Secretary that the Secretary take such actionas described in paragraph (2)(A)(ii).
If a State finds that a skilled nursing facility meets the requirementsof subsections (b), (c), and (d) of this section, but, as of a previousperiod, did not meet such requirements, the State may recommend a civilmoney penalty under paragraph (2)(B)(ii) for the days in which it findsthat the facility was not in compliance with such requirements.
(2) Secretarial authority
(A) In general
With respect to any skilled nursing facility in a State, if the Secretaryfinds, or pursuant to a recommendation of the State under paragraph (1)finds, that a skilled nursing facility no longer meets a requirement ofsubsection (b), (c), (d), or (e) of this section, and further finds thatthe facility's deficiencies-
(i) immediately jeopardize the health or safety of its residents, the Secretaryshall take immediate action to remove the jeopardy and correct the deficienciesthrough the remedy specified in subparagraph (B)(iii), or terminate thefacility's participation under this subchapter and may provide, in addition,for one or more of the other remedies described in subparagraph (B); or
(ii) do not immediately jeopardize the health or safety of its residents,the Secretary may impose any of the remedies described in subparagraph (B).
Nothing in this subparagraph shall be construed as restricting the remediesavailable to the Secretary to remedy a skilled nursing facility's deficiencies.If the Secretary finds, or pursuant to the recommendation of the State underparagraph (1) finds, that a skilled nursing facility meets such requirementsbut, as of a previous period, did not meet such requirements, the Secretarymay provide for a civil money penalty under subparagraph (B)(ii) for thedays on which he finds that the facility was not in compliance with suchrequirements.
(B) Specified remedies
The Secretary may take the following actions with respect to a finding thata facility has not met an applicable requirement:
(i) Denial of payment
The Secretary may deny any further payments under this subchapter with respectto all individuals entitled to benefits under this subchapter in the facilityor with respect to such individuals admitted to the facility after the effectivedate of the finding.
(ii) Authority with respect to civil money penalties
The Secretary may impose a civil money penalty in an amount not to exceed$10,000 for each day of noncompliance. The provisions of section 1320a-7aof this title (other than subsections (a) and (b)) shall apply to a civilmoney penalty under the previous sentence in the same manner as such provisionsapply to a penalty or proceeding under section 1320a-7a(a) of this title.
(iii) Appointment of temporary management
In consultation with the State, the Secretary may appoint temporary managementto oversee the operation of the facility and to assure the health and safetyof the facility's residents, where there is a need for temporary managementwhile-
(I) there is an orderly closure of the facility, or
(II) improvements are made in order to bring the facility into compliancewith all the requirements of subsections (b), (c), and (d) of this section.
The temporary management under this clause shall not be terminated undersubclause (II) until the Secretary has determined that the facility hasthe management capability to ensure continued compliance with all the requirementsof subsections (b), (c), and (d) of this section.
The Secretary shall specify criteria, as to when and how each of such remediesis to be applied, the amounts of any fines, and the severity of each ofthese remedies, to be used in the imposition of such remedies. Such criteriashall be designed so as to minimize the time between the identificationof violations and final imposition of the remedies and shall provide forthe imposition of incrementally more severe fines for repeated or uncorrecteddeficiencies. In addition, the Secretary may provide for other specifiedremedies, such as directed plans of correction.
(C) Continuation of payments pending remediation
The Secretary may continue payments, over a period of not longer than 6months after the effective date of the findings, under this subchapter withrespect to a skilled nursing facility not in compliance with a requirementof subsection (b), (c), or (d) of this section, if-
(i) the State survey agency finds that it is more appropriate to take alternativeaction to assure compliance of the facility with the requirements than toterminate the certification of the facility,
(ii) the State has submitted a plan and timetable for corrective actionto the Secretary for approval and the Secretary approves the plan of correctiveaction, and
(iii) the facility agrees to repay to the Federal Government payments receivedunder this subparagraph if the corrective action is not taken in accordancewith the approved plan and timetable.
The Secretary shall establish guidelines for approval of corrective actionsrequested by States under this subparagraph.
(D) Assuring prompt compliance
If a skilled nursing facility has not complied with any of the requirementsof subsections (b), (c), and (d) of this section, within 3 months afterthe date the facility is found to be out of compliance with such requirements,the Secretary shall impose the remedy described in subparagraph (B)(i) forall individuals who are admitted to the facility after such date.
(E) Repeated noncompliance
In the case of a skilled nursing facility which, on 3 consecutive standardsurveys conducted under subsection (g)(2) of this section, has been foundto have provided substandard quality of care, the Secretary shall (regardlessof what other remedies are provided)-
(i) impose the remedy described in subparagraph (B)(i), and
(ii) monitor the facility under subsection (g)(4)(B) of this section,
until the facility has demonstrated, to the satisfaction of the Secretary,that it is in compliance with the requirements of subsections (b), (c),and (d) of this section, and that it will remain in compliance with suchrequirements.
(3) Effective period of denial of payment
A finding to deny payment under this subsection shall terminate when theSecretary finds that the facility is in substantial compliance with allthe requirements of subsections (b), (c), and (d) of this section.
(4) Immediate termination of participation for facility where Secretaryfinds noncompliance and immediate jeopardy
If the Secretary finds that a skilled nursing facility has not met a requirementof subsection (b), (c), or (d) of this section, and finds that the failureimmediately jeopardizes the health or safety of its residents, the Secretaryshall take immediate action to remove the jeopardy and correct the deficienciesthrough the remedy specified in paragraph (2)(B)(iii), or the Secretaryshall terminate the facility's participation under this subchapter. If thefacility's participation under this subchapter is terminated, the Stateshall provide for the safe and orderly transfer of the residents eligibleunder this subchapter consistent with the requirements of subsection (c)(2)of this section.
(5) Construction
The remedies provided under this subsection are in addition to those otherwiseavailable under State or Federal law and shall not be construed as limitingsuch other remedies, including any remedy available to an individual atcommon law. The remedies described in clauses (i),[2] and (iii) of paragraph(2)(B) may be imposed during the pendency of any hearing.
(6) Sharing of information
Notwithstanding any other provision of law, all information concerning skillednursing facilities required by this section to be filed with the Secretaryor a State agency shall be made available by such facilities to Federalor State employees for purposes consistent with the effective administrationof programs established under this subchapter and subchapter XIX of thischapter, including investigations by State medicaid fraud control units.
§ 1395cc. Agreements with providers of services
* * * * *
(b) Termination or nonrenewal of agreements
(1) A provider of services may terminate an agreement with the Secretaryunder this section at such time and upon such notice to the Secretary andthe public as may be provided in regulations, except that notice of morethan six months shall not be required.
(2) The Secretary may refuse to enter into an agreement under this sectionor, upon such reasonable notice to the provider and the public as may bespecified in regulations, may refuse to renew or may terminate such an agreementafter the Secretary-
(A) has determined that the provider fails to comply substantially withthe provisions of the agreement, with the provisions of this subchapterand regulations thereunder, or with a corrective action required under section1395ww(f)(2)(B) of this title,
(B) has determined that the provider fails substantially to meet the theapplicable provisions of section 1395x of this title, or
(C) has excluded the provider from participation in a program under thissubchapter pursuant to section 1320a-7 of this title or section 1320a-7aof this title.
(3) A termination of an agreement or a refusal to renew an agreement underthis subsection shall become effective on the same date and in the samemanner as an exclusion from participation under the program under this subchapterbecomse effective under section 1320a-7(c) of this title.
* * * * *
(h) Dissatisfaction with determination of Secretary; appeal by institutionsor agencies; single notice and hearing
(1) Except as provided in paragraph (2), an institution or agency dissatisfiedwith a determination by the Secretary that it is not a provider of servicesor with a determination described in subsection (b)(2) of this section shallbe entitled to a hearing thereon by the Secretary (after reasonable notice)to the same extent as is provided in section 405(b) of this title, and tojudicial review of the Secretary's final decision after such hearing asis provided in section 405(g) of this title, except that, in so applyingsuch sections and in applying section 405(l) of this title thereto, anyreference therein to the Commissioner of Social Security or the Social SecurityAdministration shall be considered a reference to the Secretary or the Departmentof Health and Human Services, respectively.
(2) An institution or agency is not entitled to separate notice and opportunityfor a hearing under both section 1320a-7 of this title and this sectionwith respect to a determination or determinations based on the same underlyingfacts and issues.
7. Section 1395ii of Title 42, United States Code, provides:
§ 1395ii. Application of certain provisions of subchapter II
The provisions of sections 406 and 416(j) of this title, and of subsections(a), (d), (e), (h), (i), (j), (k), and (l) of section 405 of this title,shall also apply with respect to this subchapter to the same extent as theyare applicable with respect to subchapter II of this chapter, except that,in applying such provisions with respect to this subchapter, any referencetherein to the Commissioner of Social Security or the Social Security Administrationshall be considered a reference to the Secretary or the Department of Healthand Human Services, respectively.
[1] So in original. Probably should not be capitalized.
[2] So in original. The comma probably should not appear.
APPENDIX B
REGULATORY PROVISIONS
1. Section 488.301 of Title 42, Code of Federal Regulations, provides:
§ 488.301 Definitions.
As used in this subpart-
Abbreviated standard survey means a survey other than a standard surveythat gathers information primarily through resident-centered techniqueson facility compliance with the requirements for participation. An abbreviatedstandard survey may be premised on complaints received; a change of ownership,management, or director of nursing; or other indicators of specific concern.
Abuse means the willful infliction of injury, unreasonable confinement,intimidation, or punishment with resulting physical harm, pain or mentalanguish.
Deficiency means a SNF's or NF's failure to meet a participation requirementspecified in the Act or in part 483, subpart B of this chapter.
Dually participating facility means a facility that has a provider agreementin both the Medicare and Medicaid programs.
Extended survey means a survey that evaluates additional participation requirementssubsequent to finding substandard quality of care during a standard survey.
Facility means a SNF or NF, or a distinct part SNF or NF, in accordancewith § 483.5 of this chapter.
Immediate family means husband or wife; natural or adoptive parent, childor sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law,mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law;grandparent or grandchild.
Immediate jeopardy means a situation in which the provider's noncompliancewith one or more requirements of participation has caused, or is likelyto cause, serious injury, harm, impairment, or death to a resident.
Misappropriation of resident property means the deliberate misplacement,exploitation, or wrongful, temporary or permanent use of a resident's belongingsor money without the resident's consent.
Neglect means failure to provide goods and services necessary to avoid physicalharm, mental anguish, or mental illness.
Noncompliance means any deficiency that causes a facility to not be in substantialcompliance.
Nurse aide means an individual, as defined in § 483.75(e)(1) of thischapter.
Nursing facility (NF) means a Medicaid nursing facility.
Partial extended survey means a survey that evaluates additional participationrequirements subsequent to finding substandard quality of care during anabbreviated standard survey.
Skilled nursing facility (SNF) means a Medicare nursing facility.
Standard survey means a periodic, resident-centered inspection which gathersinformation about the quality of service furnished in a facility to determinecompliance with the requirements for participation.
Substandard quality of care means one or more deficiencies related to participationrequirements under § 483.13, Resident behavior and facility practices,§ 483.15, Quality of life, or § 483.25, Quality of care of thischapter, which constitute either immediate jeopardy to resident health orsafety; a pattern of or widespread actual harm that is not immediate jeopardy;or a widespread potential for more than minimal harm, but less than immediatejeopardy, with no actual harm.
Substantial compliance means a level of compliance with the requirementsof participation such that any identified deficiencies pose no greater riskto resident health or safety than the potential for causing minimal harm.
Validation survey means a survey conducted by the Secretary within 2 monthsfollowing a standard survey, abbreviated standard survey, partial extendedsurvey, or extended survey for the purpose of monitoring State survey agencyperformance.
§ 488.330 Certification of compliance or noncompliance.
(a) General rules-(1) Responsibility for certification. (i) The State surveyagency surveys all facilities for compliance or noncompliance with requirementsfor long term care facilities. The survey by the State survey agency maybe followed by a Federal validation survey.
(A) The State certifies the compliance or noncompliance of non-State operatedNFs. Regardless of the State entity doing the certification, it is final,except in the case of a complaint or validation survey conducted by HCFA,or HCFA review of the State's findings.
(B) HCFA certifies the compliance or noncompliance of all State-operatedfacilities.
(C) The State survey agency certifies the compliance or noncompliance ofa non-State operated SNF, subject to the approval of HCFA.
(D) The State survey agency certifies compliance or noncompliance for adually participating SNF/NF. In the case of a disagreement between HCFAand the State survey agency, a finding of noncompliance takes precedenceover that of compliance.
(ii) In the case of a validation survey, the Secretary's determination asto the facility's noncompliance is binding, and takes precedence over acertification of compliance resulting from the State survey.
(2) Basis for certification. (i) Certification by the State is based onthe survey agency findings.
(ii) Certification by HCFA is based on either the survey agency findings(in the case of State-operated facilities), or, in the case of a validationsurvey, on HCFA's own survey findings.
(b) Effect of certification-(1) Certification of compliance. A certificationof compliance constitutes a determination that the facility is in substantialcompliance and is eligible to participate in Medicaid as a NF, or in Medicareas a SNF, or in Medicare and Medicaid as a dually participating facility.
(2) Certification of noncompliance. A certification of noncompliance requiresdenial of participation for prospective providers and enforcement actionfor current providers in accordance with subpart F of this part. Enforcementaction must include one of the following:
(i) Termination of any Medicare or Medicaid provider agreements that arein effect.
(ii) Application of alternative remedies instead of, or in addition to,termination procedures.
(c) Notice of certification of noncompliance and resulting action. The noticeof certification of noncompliance is sent in accordance with the timeframesspecified in § 488.402(f), and resulting action is issued by HCFA,except when the State is taking the action for a non-State operated NF.
(d) Content of notice of certification of noncompliance. The notice of certificationof noncompliance is sent in accordance with the timeframes specified in§ 488.402(f) and includes information on all of the following:
(1) Nature of noncompliance.
(2) Any alternative remedies to be imposed under subpart F of this part.
(3) Any termination or denial of participation action to be taken underthis part.
(4) The appeal rights available to the facility under this part.
(5) Timeframes to be met by the provider and certifying agency with regardto each of the enforcement actions or appeal procedures addressed in thenotice.
(e) Appeals. (1) Notwithstanding any provision of State law, the State mustimpose remedies promptly on any provider of services participating in theMedicaid program-
(i) After promptly notifying the facility of the deficiencies and impendingremedy or remedies; and
(ii) Except for civil money penalties, during any pending hearing that maybe requested by the provider of services.
(2) HCFA imposes remedies promptly on any provider of services participatingin the Medicare or Medicaid program or any provider of services participatingin both the Medicare and Medicaid programs-
(i) After promptly notifying the facility of the deficiencies and impendingremedy or remedies; and
(ii) Except for civil money penalties, during any pending hearing that maybe requested by the provider of services.
(3) The provisions of part 498 of this chapter apply when the followingproviders request a hearing on a denial of participation, or certificationof noncompliance leading to an enforcement remedy (including terminationof the provider agreement), except State monitoring:
(i) All State-operated facilities;
(ii) SNFs and dually participating SNF/NFs; and
(iii) Any other facilities subject to a HCFA validation survey or HCFA reviewof the State's findings.
(4) The provisions of part 431 of this chapter apply when a non-State operatedMedicaid NF, which has not received a HCFA validation survey or HCFA reviewof the State's findings, requests a hearing on the State's denial of participation,termination of provider agreement, or certification of noncompliance leadingto an alternative remedy, except State monitoring.
(f) Provider agreements. HCFA or the Medicaid agency may execute a provideragreement when a prospective provider is in substantial compliance withall the requirements for participation for a SNF or NF, respectively.
(g) Special rules for Federal validation surveys. (1) HCFA may make independentcertifications of a NF's, SNF's, or dually participating facility's noncompliancebased on a HCFA validation survey.
(2) HCFA issues the notice of actions affecting facilities for which HCFAdid validation surveys.
(3) For non-State-operated NFs and non-State-operated dually participatingfacilities, any disagreement between HCFA and the State regarding the timingand choice of remedies is resolved in accordance with § 488.452.
(4) Either HCFA or the survey agency, at HCFA's option, may revisit thefacility to ensure that corrections are made.
§ 488.331 Informal dispute resolution.
(a) Opportunity to refute survey findings. (1) For non- Federal surveys,the State must offer a facility an informal opportunity, at the facility'srequest, to dispute survey findings upon the facility's receipt of the officialstatement of deficiencies.
(2) For Federal surveys, HCFA offers a facility an informal opportunity,at the facility's request, to dispute survey findings upon the facility'sreceipt of the official statement of deficiencies.
(b)(1) Failure of the State or HCFA, as appropriate, to complete informaldispute resolution timely cannot delay the effective date of any enforcementaction against the facility.
(2) A facility may not seek a delay of any enforcement action against iton the grounds that informal dispute resolution has not been completed beforethe effective date of the enforcement action.
(c) If a provider is subsequently successful, during the informal disputeresolution process, at demonstrating that deficiencies should not have beencited, the deficiencies are removed from the statement of deficiencies andany enforcement actions imposed solely as a result of those cited deficienciesare rescinded.
(d) Notification. Upon request, HCFA does and the State must provide thefacility with written notification of the informal dispute resolution process.
Subpart F-Enforcement of Compliance for Long-Term Care Facilities with Deficiencies
SOURCE: 59 FR 56243, Nov. 10, 1994, unless otherwise noted.
§ 488.400 Statutory basis.
Sections 1819(h) and 1919(h) of the Act specify remedies that may be usedby the Secretary or the State respectively when a SNF or a NF is not insubstantial compliance with the requirements for participation in the Medicareand Medicaid programs. These sections also provide for ensuring prompt complianceand specify that these remedies are in addition to any others availableunder State or Federal law, and, except for civil money penalties, are imposedprior to the conduct of a hearing.
§ 488.401 Definitions.
As used in this subpart-
New admission means a resident who is admitted to the facility on or afterthe effective date of a denial of payment remedy and, if previously admitted,has been discharged before that effective date. Residents admitted beforethe effective date of the denial of payment, and taking temporary leave,are not considered new admissions, nor subject to the denial of payment.
Plan of correction means a plan developed by the facility and approved byHCFA or the survey agency that describes the actions the facility will taketo correct deficiencies and specifies the date by which those deficiencieswill be corrected.
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.402 General provisions.
(a) Purpose of remedies. The purpose of remedies is to ensure prompt compliancewith program requirements.
(b) Basis for imposition and duration of remedies. When HCFA or the Statechooses to apply one or more remedies specified in § 488.406, the remediesare applied on the basis of noncompliance found during surveys conductedby HCFA or by the survey agency.
(c) Number of remedies. HCFA or the State may apply one or more remediesfor each deficiency constituting noncompliance or for all deficiencies constitutingnoncompliance.
(d) Plan of correction requirement. (1) Except as specified in paragraph(d)(2) of this section, regardless of which remedy is applied, each facilitythat has deficiencies with respect to program requirements must submit aplan of correction for approval by HCFA or the survey agency.
(2) Isolated deficiencies. A facility is not required to submit a plan ofcorrection when it has deficiencies that are isolated and have a potentialfor minimal harm, but no actual harm has occurred.
(e) Disagreement regarding remedies. If the State and HCFA disagree on thedecision to impose a remedy, the disagreement is resolved in accordancewith § 488.452.
(f) Notification requirements-(1) Except when the State is taking actionagainst a non-State operated NF, HCFA or the State (as authorized by HCFA)gives the provider notice of the remedy, including the-
(i) Nature of the noncompliance;
(ii) Which remedy is imposed;
(iii) Effective date of the remedy; and
(iv) Right to appeal the determination leading to the remedy.
(2) When a State is taking action against a non-State operated NF, the State'snotice must include the same information required by HCFA in paragraph (f)(1)of this section.
(3) Immediate jeopardy-2 day notice. Except for civil money penalties andState monitoring imposed when there is immediate jeopardy, for all remediesspecified in § 488.406 imposed when there is immediate jeopardy, thenotice must be given at least 2 calendar days before the effective dateof the enforcement action.
(4) No immediate jeopardy-15 day notice. Except for civil money penaltiesand State monitoring, notice must be given at least 15 calendar days beforethe effective date of the enforcement action in situations in which thereis no immediate jeopardy.
(5) Latest date of enforcement action. The 2 and 15-day notice periods beginwhen the facility receives the notice, but, in no event will the effectivedate of the enforcement action be later than 20 calendar days after thenotice is sent.
(6) Civil money penalties. For civil money penalties, the notices must begiven in accordance with the provisions of §§ 488.434 and 488.440.
(7) State monitoring. For State monitoring, no prior notice is required.
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.404 Factors to be considered in selecting remedies.
(a) Initial assessment. In order to select the appropriate remedy, if any,to apply to a facility with deficiencies, HCFA and the State determine theseriousness of the deficiencies.
(b) Determining seriousness of deficiencies. To determine the seriousnessof the deficiency, HCFA considers and the State must consider at least thefollowing factors:
(1) Whether a facility's deficiencies constitute-
(i) No actual harm with a potential for minimal harm;
(ii) No actual harm with a potential for more than minimal harm, but notimmediate jeopardy;
(iii) Actual harm that is not immediate jeopardy; or
(iv) Immediate jeopardy to resident health or safety.
(2) Whether the deficiencies-
(i) Are isolated;
(ii) Constitute a pattern; or
(iii) Are widespread.
(c) Other factors which may be considered in choosing a remedy within aremedy category. Following the initial assessment, HCFA and the State mayconsider other factors, which may include, but are not limited to the following:
(1) The relationship of the one deficiency to other deficiencies resultingin noncompliance.
(2) The facility's prior history of noncompliance in general and specificallywith reference to the cited deficiencies.
§ 488.406 Available remedies.
(a) General. In addition to the remedy of termination of the provider agreement,the following remedies are available:
(1) Temporary management.
(2) Denial of payment including-
(i) Denial of payment for all individuals, imposed by HCFA, to a-
(A) Skilled nursing facility, for Medicare;
(B) State, for Medicaid; or
(ii) Denial of payment for all new admissions.
(3) Civil money penalties.
(4) State monitoring.
(5) Transfer of residents.
(6) Closure of the facility and transfer of residents.
(7) Directed plan of correction.
(8) Directed in-service training.
(9) Alternative or additional State remedies approved by HCFA.
(b) Remedies that must be established. At a minimum, and in addition totermination of the provider agreement, the State must establish the followingremedies or approved alternatives to the following remedies:
(1) Temporary management.
(2) Denial of payment for new admissions.
(3) Civil money penalties.
(4) Transfer of residents.
(5) Closure of the facility and transfer of residents.
(6) State monitoring.
(c) State plan requirement. If a State wishes to use remedies for noncompliancethat are either additional or alternative to those specified in paragraphs(a) or (b) of this section, it must-
(1) Specify those remedies in the State plan; and
(2) Demonstrate to HCFA's satisfaction that those remedies are as effectiveas the remedies listed in paragraph (a) of this section, for deterring noncomplianceand correcting deficiencies.
(d) State remedies in dually participating facilities. If the State's remedyis unique to the State plan and has been approved by HCFA, then that remedy,as imposed by the State under its Medicaid authority, may be imposed byHCFA against the Medicare provider agreement of a dually participating facility.
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.408 Selection of remedies.
(a) Categories of remedies. In this section, the remedies specified in §488.406(a) are grouped into categories and applied to deficiencies accordingto how serious the noncompliance is.
(b) Application of remedies. After considering the factors specified in§ 488.404, as applicable, if HCFA and the State choose to impose remedies,as provided in paragraphs (c)(1), (d)(1) and (e)(1) of this section, forfacility noncompliance, instead of, or in addition to, termination of theprovider agreement, HCFA does and the State must follow the criteria setforth in paragraphs (c)(2), (d)(2), and (e)(2) of this section, as applicable.
(c) Category 1. (1) Category 1 remedies include the following:
(i) Directed plan of correction.
(ii) State monitoring.
(iii) Directed in-service training.
(2) HCFA does or the State must apply one or more of the remedies in Category1 when there-
(i) Are isolated deficiencies that constitute no actual harm with a potentialfor more than minimal harm but not immediate jeopardy; or
(ii) Is a pattern of deficiencies that constitutes no actual harm with apotential for more than minimal harm but not immediate jeopardy.
(3) Except when the facility is in substantial compliance, HCFA or the Statemay apply one or more of the remedies in Category 1 to any deficiency.
(d) Category 2. (1) Category 2 remedies include the following:
(i) Denial of payment for new admissions.
(ii) Denial of payment for all individuals imposed only by HCFA.
(iii) Civil money penalties of $50-3,000 per day.
(2) HCFA applies one or more of the remedies in Category 2, or, except fordenial of payment for all individuals, the State must apply one or moreof the remedies in Category 2 when there are-
(i) Widespread deficiencies that constitute no actual harm with a potentialfor more than minimal harm but not immediate jeopardy; or
(ii) One or more deficiencies that constitute actual harm that is not immediatejeopardy.
(3) HCFA or the State may apply one or more of the remedies in Category2 to any deficiency except when-
(i) The facility is in substantial compliance; or
(ii) HCFA or the State imposes a civil money penalty for a deficiency thatconstitutes immediate jeopardy, the penalty must be in the upper range ofpenalty amounts, as specified in § 488.438(a).
(e) Category 3. (1) Category 3 remedies include the following:
(i) Temporary management.
(ii) Immediate termination.
(iii) Civil money penalties of $3,050-$10,000 per day.
(2) When there are one or more deficiencies that constitute immediate jeopardyto resident health or safety-
(i) HCFA does and the State must do one or both of the following:
(A) Impose temporary management; or
(B) Terminate the provider agreement;
(ii) HCFA and the State may impose a civil money penalty of $3,050-$10,000per day, in addition to imposing the remedies specified in paragraph (e)(2)(i)of this section.
(3) When there are widespread deficiencies that constitute actual harm thatis not immediate jeopardy, HCFA and the State may impose temporary management,in addition to Category 2 remedies.
(f) Plan of correction. (1) Except as specified in paragraph (f)(2) of thissection, each facility that has a deficiency with regard to a requirementfor long term care facilities must submit a plan of correction for approvalby HCFA or the State, regardless of-
(i) Which remedies are imposed; or
(ii) The seriousness of the deficiencies.
(2) When there are only isolated deficiencies that HCFA or the State determinesconstitute no actual harm with a potential for minimal harm, the facilityneed not submit a plan of correction.
(g) Appeal of a certification of noncompliance. (1) A facility may appeala certification of noncompliance leading to an enforcement remedy.
(2) A facility may not appeal the choice of remedy, including the factorsconsidered by HCFA or the State in selecting the remedy, specified in §488.404.
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.410 Action when there is immediate jeopardy.
(a) If there is immediate jeopardy to resident health or safety, the Statemust (and HCFA does) either terminate the provider agreement within 23 calendardays of the last date of the survey or appoint a temporary manager to removethe immediate jeopardy. The rules for appointment of a temporary managerin an immediate jeopardy situation are as follows:
(1) HCFA does and the State must notify the facility that a temporary manageris being appointed.
(2) If the facility fails to relinquish control to the temporary manager,HCFA does and the State must terminate the provider agreement within 23calendar days of the last day of the survey, if the immediate jeopardy isnot removed. In these cases, State monitoring may be imposed pending termination.
(3) If the facility relinquishes control to the temporary manager, the Statemust (and HCFA does) notify the facility that, unless it removes the immediatejeopardy, its provider agreement will be terminated within 23 calendar daysof the last day of the survey.
(4) HCFA does and the State must terminate the provider agreement within23 calendar days of the last day of survey if the immediate jeopardy hasnot been removed.
(b) HCFA or the State may also impose other remedies, as appropriate.
(c)(1) In a NF or dually participating facility, if either HCFA or the Statefinds that a facility's noncompliance poses immediate jeopardy to residenthealth or safety, HCFA or the State must notify the other of such a finding.
(2) HCFA will or the State must do one or both of the following:
(i) Take immediate action to remove the jeopardy and correct the noncompliancethrough temporary management.
(ii) Terminate the facility's participation under the State plan. If thisis done, HCFA will also terminate the facility's participation in Medicareif it is a dually participating facility.
(d) The State must provide for the safe and orderly transfer of residentswhen the facility is terminated.
(e) If the immediate jeopardy is also substandard quality of care, the Statesurvey agency must notify attending physicians and the State board responsiblefor licensing the facility administrator of the finding of substandard qualityof care, as specified in § 488.325(h).
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.412 Action when there is no immediate jeopardy.
(a) If a facility's deficiencies do not pose immediate jeopardy to residents'health or safety, and the facility is not in substantial compliance, HCFAor the State may terminate the facility's provider agreement or may allowthe facility to continue to participate for no longer than 6 months fromthe last day of the survey if-
(1) The State survey agency finds that it is more appropriate to imposealternative remedies than to terminate the facility's provider agreement;
(2) The State has submitted a plan and timetable for corrective action approvedby HCFA; and
(3) The facility in the case of a Medicare SNF or the State in the caseof a Medicaid NF agrees to repay to the Federal government payments receivedafter the last day of the survey that first identified the deficienciesif corrective action is not taken in accordance with the approved plan ofcorrection.
(b) If a facility does not meet the criteria for continuation of paymentunder paragraph (a) of this section, HCFA will and the State must terminatethe facility's provider agreement.
(c) HCFA does and the State must deny payment for new admissions when afacility is not in substantial compliance 3 months after the last day ofthe survey.
(d) HCFA terminates the provider agreement for SNFs and NFs, and stops FFPto a State for a NF for which participation was continued under paragraph(a) of this section, if the facility is not in substantial compliance within6 months of the last day of the survey.
[59 FR 56243, Nov. 10, 1994; 60 FR 50118, Sept. 28, 1995]
§ 488.414 Action when there is repeated substandard quality of care.
(a) General. If a facility has been found to have provided substandard qualityof care on the last three consecutive standard surveys, as defined in §488.305, regardless of other remedies provided-
(1) HCFA imposes denial of payment for all new admissions, as specifiedin § 488.417, or denial of all payments, as specified in § 488.418;
(2) The State must impose denial of payment for all new admissions, as specifiedin § 488.417; and
(3) HCFA does and the State survey agency must impose State monitoring,as specified in § 488.422, until the facility has demonstrated to thesatisfaction of HCFA or the State, that it is in substantial compliancewith all requirements and will remain in substantial compliance with allrequirements.
(b) Repeated noncompliance. For purposes of this section, repeated noncomplianceis based on the repeated finding of substandard quality of care and noton the basis that the substance of the deficiency or the exact tag numberfor the deficiency was repeated.
(c) Standard surveys to which this provision applies. Standard surveys completedby the State survey agency on or after October 1, 1990, are used to determinewhether the threshold of three consecutive standard surveys is met.
(d) Program participation. (1) The determination that a certified facilityhas repeated instances of substandard quality of care is made without regardto any variances in the facility's program participation (that is, any standardsurvey completed for Medicare, Medicaid or both programs will be considered).
(2) Termination would allow the count of repeated substandard quality ofcare surveys to start over.
(3) Change of ownership. (i) A facility may not avoid a remedy on the basisthat it underwent a change of ownership.
(ii) In a facility that has undergone a change of ownership, HCFA does notand the State may not restart the count of repeated substandard qualityof care surveys unless the new owner can demonstrate to the satisfactionof HCFA or the State that the poor past performance no longer is a factordue to the change in ownership.
(e) Facility alleges corrections or achieves compliance after repeated substandardquality of care is identified. (1) If a penalty is imposed for repeatedsubstandard quality of care, it will continue until the facility has demonstratedto the satisfaction of HCFA or the State that it is in substantial compliancewith the requirements and that it will remain in substantial compliancewith the requirements for a period of time specified by HCFA or the State.
(2) A facility will not avoid the imposition of remedies or the obligationto demonstrate that it will remain in compliance when it-
(i) Alleges correction of the deficiencies cited in the most recent standardsurvey; or
(ii) Achieves compliance before the effective date of the remedies.
§ 488.415 Temporary management.
(a) Definition. Temporary management means the temporary appointment byHCFA or the State of a substitute facility manager or administrator withauthority to hire, terminate or reassign staff, obligate facility funds,alter facility procedures, and manage the facility to correct deficienciesidentified in the facility's operation.
(b) Qualifications. The temporary manager must-
(1) Be qualified to oversee correction of deficiencies on the basis of experienceand education, as determined by the State;
(2) Not have been found guilty of misconduct by any licensing board or professionalsociety in any State;
(3) Have, or a member of his or her immediate family have, no financialownership interest in the facility; and
(4) Not currently serve or, within the past 2 years, have served as a memberof the staff of the facility.
(c) Payment of salary. The temporary manager's salary-
(1) Is paid directly by the facility while the temporary manager is assignedto that facility; and
(2) Must be at least equivalent to the sum of the following-
(i) The prevailing salary paid by providers for positions of this type inwhat the State considers to be the facility's geographic area;
(ii) Additional costs that would have reasonably been incurred by the providerif such person had been in an employment relationship; and
(iii) Any other costs incurred by such a person in furnishing services undersuch an arrangement or as otherwise set by the State.
(3) May exceed the amount specified in paragraph (c)(2) of this sectionif the State is otherwise unable to attract a qualified temporary manager.
(d) Failure to relinquish authority to temporary management-(1) Terminationof provider agreement. If a facility fails to relinquish authority to thetemporary manager as described in this section, HCFA will or the State mustterminate the provider agreement in accordance with § 488.456.
(2) Failure to pay salary of temporary manager. A facility's failure topay the salary of the temporary manager is considered a failure to relinquishauthority to temporary management.
(e) Duration of temporary management. Temporary management ends when thefacility meets any of the conditions specified in § 488.454(c).
§ 488.417 Denial of payment for all new admissions.
(a) Optional denial of payment. Except as specified in paragraph (b) ofthis section, HCFA or the State may deny payment for all new admissionswhen a facility is not in substantial compliance with the requirements,as defined in § 488.401, as follows:
(1) Medicare facilities. In the case of Medicare facilities, HCFA may denypayment to the facility.
(2) Medicaid facilities. In the case of Medicaid facilities-
(i) The State may deny payment to the facility; and
(ii) HCFA may deny payment to the State for all new Medicaid admissionsto the facility.
(b) Required denial of payment. HCFA does or the State must deny paymentfor all new admissions when-
(1) The facility is not in substantial compliance, as defined in §488.401, 3 months after the last day of the survey identifying the noncompliance;or
(2) The State survey agency has cited a facility with substandard qualityof care on the last three consecutive standard surveys.
(c) Resumption of payments: Repeated instances of substandard quality ofcare. When a facility has repeated instances of substandard quality of care,payments to the facility or, under Medicaid, HCFA payments to the Stateon behalf of the facility, resume on the date that-
(1) The facility achieves substantial compliance as indicated by a revisitor written credible evidence acceptable to HCFA (for all facilities exceptnon-State operated NFs against which HCFA is imposing no remedies) or theState (for non-State operated NFs against which HCFA is imposing no remedies);and
(2) HCFA (for all facilities except non-State operated NFs against whichHCFA is imposing no remedies) or the State (for non-State operated NFs againstwhich HCFA is imposing no remedies) believes that the facility is capableof remaining in substantial compliance.
(d) Resumption of payments: No repeated instances of substandard qualityof care. When a facility does not have repeated instances of substandardquality of care, payments to the facility or, under Medicaid, HCFA paymentsto the State on behalf of the facility, resume prospectively on the datethat the facility achieves substantial compliance, as indicated by a revisitor written credible evidence acceptable to HCFA (under Medicare) or theState (under Medicaid).
(e) Restriction. No payments to a facility or, under Medicaid, HCFA paymentsto the State on behalf of the facility, are made for the period betweenthe date that the-
(1) Denial of payment remedy is imposed; and
(2) Facility achieves substantial compliance, as determined by HCFA or theState.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.418 Secretarial authority to deny all payments.
(a) HCFA option to deny all payment. If a facility has not met a requirement,in addition to the authority to deny payment for all new admissions as specifiedin § 488.417, HCFA may deny any further payment for all Medicare residentsin the facility and to the State for all Medicaid residents in the facility.
(b) Prospective resumption of payment. Except as provided in paragraphs(d) and (e) of this section, if the facility achieves substantial compliance,HCFA resumes payment prospectively from the date that it verifies as thedate that the facility achieved substantial compliance.
(c) Restriction on payment after denial of payment is imposed. If paymentto the facility or to the State resumes after denial of payment for allresidents, no payment is made for the period between the date that-
(1) Denial of payment was imposed; and
(2) HCFA verifies as the date that the facility achieved substantial compliance.
(d) Retroactive resumption of payment. Except when a facility has repeatedinstances of substandard quality of care, as specified in paragraph (e)of this section, when HCFA or the State finds that the facility was in substantialcompliance before the date of the revisit, or before HCFA or the surveyagency received credible evidence of such compliance, payment is resumedon the date that substantial compliance was achieved, as determined by HCFA.
(e) Resumption of payment-repeated instances of substandard care. When HCFAdenies payment for all Medicare residents for repeated instances of substandardquality of care, payment is resumed when-
(1) The facility achieved substantial compliance, as indicated by a revisitor written credible evidence acceptable to HCFA; and
(2) HCFA believes that the facility will remain in substantial compliance.
§ 488.422 State monitoring.
(a) A State monitor-
(1) Oversees the correction of deficiencies specified by HCFA or the Statesurvey agency at the facility site and protects the facility's residentsfrom harm;
(2) Is an employee or a contractor of the survey agency;
(3) Is identified by the State as an appropriate professional to monitorcited deficiencies;
(4) Is not an employee of the facility;
(5) Does not function as a consultant to the facility; and
(6) Does not have an immediate family member who is a resident of the facilityto be monitored.
(b) A State monitor must be used when a survey agency has cited a facilitywith substandard quality of care deficiencies on the last 3 consecutivestandard surveys.
(c) State monitoring is discontinued when-
(1) The facility has demonstrated that it is in substantial compliance withthe requirements, and, if imposed for repeated instances of substandardquality of care, will remain in compliance for a period of time specifiedby HCFA or the State; or
(2) Termination procedures are completed.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.424 Directed plan of correction.
HCFA, the State survey agency, or the temporary manager (with HCFA or Stateapproval) may develop a plan of correction and HCFA, the State, or the temporarymanager require a facility to take action within specified time-frames.
§ 488.425 Directed inservice training.
(a) Required training. HCFA or the State agency may require the staff ofa facility to attend an inservice training program if-
(1) The facility has a pattern of deficiencies that indicate noncompliance;and
(2) Education is likely to correct the deficiencies.
(b) Action following training. After the staff has received inservice training,if the facility has not achieved substantial compliance, HCFA or the Statemay impose one or more other remedies specified in § 488.406.
(c) Payment. The facility pays for directed inservice training.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.426 Transfer of residents, or closure of the facility and transferof residents.
(a) Transfer of residents, or closure of the facility and transfer of residentsin an emergency. In an emergency, the State has the authority to-
(1) Transfer Medicaid and Medicare residents to another facility; or
(2) Close the facility and transfer the Medicaid and Medicare residentsto another facility.
(b) Required transfer when a facility's provider agreement is terminated.When the State or HCFA terminates a facility's provider agreement, the Statearranges for the safe and orderly transfer of all Medicare and Medicaidresidents to another facility.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.430 Civil money penalties: Basis for imposing penalty.
(a) HCFA or the State may impose a civil money penalty for the number ofdays a facility is not in substantial compliance with one or more participationrequirements, regardless of whether or not the deficiencies constitute immediatejeopardy.
(b) HCFA or the State may impose a civil money penalty for the number ofdays of past noncompliance since the last standard survey, including thenumber of days of immediate jeopardy.
§ 488.432 Civil money penalties: When penalty is collected.
(a) When facility requests a hearing. (1) A facility must request a hearingon the determination of the noncompliance that is the basis for impositionof the civil money penalty within the time specified in one of the followingsections:
(i) Section 498.40 of this chapter for a
(A) SNF;
(B) Dually participating facility;
(C) State-operated NF; or
(D) Non-State operated NF against which HCFA is imposing remedies.
(ii) Section 431.153 of this chapter for a non-State operated NF that isnot subject to imposition of remedies by HCFA.
(2) If a facility requests a hearing within the time specified in paragraph(a)(1) of this section, HCFA or the State initiates collection of the penaltywhen there is a final administrative decision that upholds HCFA's or theState's determination of noncompliance after the facility achieves substantialcompliance or is terminated.
(b) When facility does not request a hearing. If a facility does not requesta hearing, in accordance with paragraph (a) of this section, HCFA or theState initiates collection of the penalty when the facility-
(1) Achieves substantial compliance; or
(2) Is terminated.
(c) When facility waives a hearing. If a facility waives its right to ahearing in writing, as specified in § 488.436, HCFA or the State initiatescollection of the penalty when the facility-
(1) Achieves substantial compliance; or
(2) Is terminated.
(d) Accrual and computation of penalties for a facility that-
(1) Requests a hearing or does not request a hearing are specified in §488.440;
(2) Waives its right to a hearing in writing, are specified in §§488.436(b) and 488.440.
(e) The collection of civil money penalties is made as provided in §488.442.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.434 Civil money penalties: Notice of penalty.
(a) HCFA notice of penalty. (1) HCFA sends a written notice of the penaltyto the facility for all facilities except non-State operated NFs when theState is imposing the penalty.
(2) Content of notice. The notice that HCFA sends includes-
(i) The nature of the noncompliance;
(ii) The statutory basis for the penalty;
(iii) The amount of penalty per day of noncompliance;
(iv) Any factors specified in § 488.438(f) that were considered whendetermining the amount of the penalty;
(v) The date on which the penalty begins to accrue;
(vi) When the penalty stops accruing;
(vii) When the penalty is collected; and
(viii) Instructions for responding to the notice, including a statementof the facility's right to a hearing, and the implication of waiving a hearing,as provided in § 488.436.
(b) State notice of penalty. (1) The State must notify the facility in accordancewith State procedures for all non-State operated NFs when the State takesthe action.
(2) The State's notice must-
(i) Be in writing; and
(ii) Include, at a minimum, the information specified in paragraph (a)(2)of this section.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.436 Civil money penalties: Waiver of hearing, reduction of penaltyamount.
(a) Waiver of a hearing. The facility may waive the right to a hearing,in writing, within 60 days from the date of the notice imposing the civilmoney penalty.
(b) Reduction of penalty amount. (1) If the facility waives its right toa hearing in accordance with the proedures specified in paragraph (a) ofthis section, HCFA or the State reduces the civil money penalty amount by35 percent.
(2) If the facility does not waive its right to a hearing in accordancewith the procedures specified in paragraph (a) of this section, the civilmoney penalty is not reduced by 35 percent.
[59 FR 56243, Nov. 10, 1994; 62 FR 44221, Aug. 20, 1997]
§ 488.438 Civil money penalties: Amount of penalty.
(a) Amount of penalty. The penalties are within the following ranges, setat $50 increments:
(1) Upper range-$3,050-$10,000. Penalties in the range of $3,050-$10,000per day are imposed for deficiencies constituting immediate jeopardy, andas specified in paragraph (d)(2) of this section.
(2) Lower range-$50-$3,000. Penalties in the range of $50-$3,000 per dayare imposed for deficiencies that do not constitute immediate jeopardy,but either caused actual harm, or caused no actual harm, but have the potentialfor more than minimal harm.
(b) Basis for penalty amount. The amount of penalty is based on HCFA's orthe State's assessment of factors listed in paragraph (f) of this section.
(c) Decreased penalty amounts. Except as specified in paragraph (d)(2) ofthis section, if immediate jeopardy is removed, but the noncompliance continues,HCFA or the State will shift the penalty amount to the lower range.
(d) Increased penalty amounts. (1) Before the hearing, HCFA or the Statemay propose to increase the penalty amount for facility noncompliance which,after imposition of a lower level penalty amount, becomes sufficiently seriousto pose immediate jeopardy.
(2) HCFA does and the State must increase the penalty amount for any repeateddeficiencies for which a lower level penalty amount was previously imposed,regardless of whether the increased penalty amount would exceed the rangeotherwise reserved for non-immediate jeopardy deficiencies.
(3) Repeated deficiencies are deficiencies in the same regulatory groupingof requirements found at the last survey, subsequently corrected, and foundagain at the next survey.
(e) Review of the penalty. When an administrative law judge or State hearingofficer (or higher administrative review authority) finds that the basisfor imposing a civil money penalty exists, as specified in § 488.430,the administrative law judge or State hearing officer (or higher administrativereview authority) may not-
(1) Set a penalty of zero or reduce a penalty to zero;
(2) Review the exercise of discretion by HCFA or the State to impose a civilmoney penalty; and
(3) Consider any factors in reviewing the amount of the penalty other thanthose specified in paragraph (f) of this section.
(f) Factors affecting the amount of penalty. In determining the amount ofpenalty, HCFA does or the State must take into account the following factors:
(1) The facility's history of noncompliance, including repeated deficiencies.
(2) The facility's financial condition.
(3) The factors specified in § 488.404.
(4) The facility's degree of culpability. Culpability for purposes of thisparagraph includes, but is not limited to, neglect, indifference, or disregardfor resident care, comfort or safety. The absence of culpability is nota mitigating circumstance in reducing the amount of the penalty.
§ 488.440 Civil money penalties: Effective date and duration of penalty.
(a) When penalty begins to accrue. The civil money penalty may start accruingas early as the date that the facility was first out of compliance, as determinedby HCFA or the State.
(b) Duration of penalty. The civil money penalty is computed and collectible,as specified in §§ 488.432 and 488.442, for the number of daysof noncompliance until the date the facility achieves substantial compliance,or, if applicable, the date of termination when-
(1) HCFA's or the State's decision of noncompliance is upheld after a finaladministrative decision;
(2) The facility waives its right to a hearing in accordance with §488.436; or
(3) The time for requesting a hearing has expired and HCFA or the Statehas not received a hearing request from the facility.
(c) The entire accrued penalty is due and collectible, as specified in thenotice sent to the provider under paragraphs (d) and (e) of this section.
(d) When a facility achieves substantial compliance, HCFA does or the Statemust send a separate notice to the facility containing-
(1) The amount of penalty per day;
(2) The number of days involved;
(3) The total amount due;
(4) The due date of the penalty; and
(5) The rate of interest assessed on the unpaid balance beginning on thedue date, as provided in § 488.442.
(e) In the case of a terminated facility, HCFA does or the State must sendthis penalty information after the-
(1) Final administrative decision is made;
(2) Facility has waived its right to a hearing in accordance with §488.436; or
(3) Time for requesting a hearing has expired and HCFA or the state hasnot received a hearing request from the facility.
(f) Accrual of penalties when there is no immediate jeopardy. (1) In thecase of noncompliance that does not pose immediate jeopardy, the daily accrualof civil money penalties is imposed for the days of noncompliance priorto the notice specified in § 488.434 and an additional period of nolonger than 6 months following the last day of the survey.
(2) After the period specified in paragraph (f)(1) of this section, if thefacility has not achieved substantial compliance, HCFA terminates the provideragreement and the State may terminate the provider agreement.
(g) Accrual of penalties when there is immediate jeopardy. (1) When a facilityhas deficiencies that pose immediate jeopardy, HCFA does or the State mustterminate the provider agreement within 23 calendar days after the lastday of the survey if the immediate jeopardy remains.
(2) The accrual of the civil money penalty stops on the day the provideragreement is terminated.
(h) Documenting substantial compliance. (1) If an on-site revisit is necessaryto confirm substantial compliance and the provider can supply documentationacceptable to HCFA or the State agency that substantial compliance was achievedon a date preceding the revisit, penalties only accrue until that date ofcorrection for which there is written credible evidence.
(2) If an on-site revisit is not necessary to confirm substantial compliance,penalties only accrue until the date of correction for which HCFA or theState receives and accepts written credible evidence.
§ 488.442 Civil money penalties: Due date for payment of penalty.
(a) When payments are due-(1) After a final administrative decision. A civilmoney penalty payment is due 15 days after a final administrative decisionis made when-
(i) The facility achieves substantial compliance before the final administrativedecision; or
(ii) The effective date of termination occurs before the final administrativedecision.
(2) When no hearing was requested. A civil money penalty payment is due15 days after the time period for requesting a hearing has expired and ahearing request was not received when-
(i) The facility achieved substantial compliance before the hearing requestwas due; or
(ii) The effective date of termination occurs before the hearing requestwas due.
(3) After a request to waive a hearing. A civil money penalty payment isdue 15 days after receipt of the written request to waive a hearing when-
(i) The facility achieved substantial compliance before HCFA or the Statereceived the written waiver of hearing; or
(ii) The effective date of termination occurs before HCFA or the State receivedthe written waiver of hearing.
(4) After substantial compliance is achieved. A civil money penalty paymentis due 15 days after substantial compliance is achieved when-
(i) The final administrative decision is made before the facility came intosubstantial compliance;
(ii) The facility did not file a timely hearing request before it came intosubstantial compliance; or
(iii) The facility waived its right to a hearing before it came into substantialcompliance;
(5) After the effective date of termination. A civil money penalty paymentis due 15 days after the effective date of termination, if before the effectivedate of termination-
(i) The final administrative decision was made;
(ii) The time for requesting a hearing has expired and the facility didnot request a hearing; or
(iii) The facility waived its right to a hearing.
(6) In the cases specified in paragraph (a)(4) of this section, the periodof noncompliance may not extend beyond 6 months from the last day of thesurvey.
(b) Deduction of penalty from amount owed. The amount of the penalty, whendetermined, may be deducted from any sum then or later owing by HCFA orthe State to the facility.
(c) Interest-(1) Assessment. Interest is assessed on the unpaid balanceof the penalty, beginning on the due date.
(2) Medicare interest. Medicare rate of interest is the higher of-
(i) The rate fixed by the Secretary of the Treasury after taking into considerationprivate consumer rates of interest prevailing on the date of the noticeof the penalty amount due (published quarterly in the Federal Register byHHS under 45 CFR 30.13(a)); or
(ii) The current value of funds (published annually in the Federal Registerby the Secretary of the Treasury, subject to quarterly revisions).
(3) Medicaid interest. The interest rate for Medicaid is determined by theState.
(d) Penalties collected by HCFA. Civil money penalties and correspondinginterest collected by HCFA from-
(1) Medicare-participating facilities are deposited as miscellaneous receiptsof the United States Treasury; and
(2) Medicaid-participating facilities are returned to the State.
(e) Collection from dually participating facilities. Civil money penaltiescollected from dually participating facilities are deposited as miscellaneousreceipts of the United States Treasury and returned to the State in proportioncommensurate with the relative proportions of Medicare and Medicaid bedsat the facility actually in use by residents covered by the respective programson the date the civil money penalty begins to accrue.
(f) Penalties collected by the State. Civil money penalties collected bythe State must be applied to the protection of the health or property ofresidents of facilities that the State or HCFA finds noncompliant, suchas-
(1) Payment for the cost of relocating residents to other facilities;
(2) State costs related to the operation of a facility pending correctionof deficiencies or closure; and
(3) Reimbursement of residents for personal funds or property lost at afacility as a result of actions by the facility or by individuals used bythe facility to provide services to residents.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.444 Civil money penalties: Settlement of penalties.
(a) HCFA has authority to settle cases at any time prior to a final administrativedecision for Medicare-only SNFs, State-operated facilities, or other facilitiesfor which HCFA's enforcement action prevails, in accordance with §488.330.
(b) The State has the authority to settle cases at any time prior to theevidentiary hearing decision for all cases in which the State's enforcementaction prevails.
§ 488.450 Continuation of payments to a facility with deficiencies.
(a) Criteria. (1) HCFA may continue payments to a facility not in substantialcompliance for the periods specified in paragraph (c) of this section ifthe following criteria are met:
(i) The State survey agency finds that it is more appropriate to imposealternative remedies than to terminate the facility;
(ii) The State has submitted a plan and timetable for corrective actionapproved by HCFA; and
(iii) The facility, in the case of a Medicare SNF, or the State, in thecase of a Medicaid NF, agrees to repay the Federal government payments receivedunder this provision if corrective action is not taken in accordance withthe approved plan and timetable for corrective action.
(2) HCFA or the State may terminate the SNF or NF agreement before the endof the correction period if the criteria in paragraph (a)(1) of this sectionare not met.
(b) Cessation of payments. If termination is not sought, either by itselfor along with another remedy or remedies, or any of the criteria set forthin paragraph (a)(1) of this section are not met or agreed to by either thefacility or the State, the facility or State will receive no Medicare orFederal Medicaid payments, as applicable, from the last day of the survey.
(c) Period of continued payments. If the conditions in paragraph (a)(1)of this section are met, HCFA may continue payments to a Medicare facilityor to the State for a Medicaid facility with noncompliance that does notconstitute immediate jeopardy for up to 6 months from the last day of thesurvey.
(d) Failure to achieve substantial compliance. If the facility does notachieve substantial compliance by the end of the period specified in paragraph(c) of this section,
(1) HCFA will-
(i) Terminate the provider agreement of the Medicare SNF in accordance with§ 488.456; or
(ii) Discontinue Federal funding to the SNF for Medicare; and
(iii) Discontinue FFP to the State for the Medicaid NF.
(2) The State may terminate the provider agreement for the NF.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.452 State and Federal disagreements involving findings not inagreement in non-State operated NFs and dually participating facilitieswhen there is no immediate jeopardy.
The following rules apply when HCFA and the State disagree over findingsof noncompliance or application of remedies in a non-State operated NF ordually participating facility:
(a) Disagreement over whether facility has met requirements. (1) The State'sfinding of noncompliance takes precedence when-
(i) HCFA finds that a NF or a dually participating facility is in substantialcompliance with the participation requirements; and
(ii) The State finds that a NF or dually participating facility has notachieved substantial compliance.
(2) HCFA's findings of noncompliance take precedence when-
(i) HCFA finds that a NF or a dually participating facility has not achievedsubstantial compliance; and
(ii) The State finds that a NF or a dually participating facility is insubstantial compliance with the participation requirements.
(3) When HCFA's survey findings take precedence, HCFA may-
(i) Impose any of the alternative remedies specified in § 488.406;
(ii) Terminate the provider agreement subject to the applicable conditionsof § 488.450; and
(iii) Stop FFP to the State for a NF.
(b) Disagreement over decision to terminate. (1) HCFA's decision to terminatethe participation of a facility takes precedence when-
(i) Both HCFA and the State find that the facility has not achieved substantialcompliance; and
(ii) HCFA, but not the State, finds that the facility's participation shouldbe terminated. HCFA will permit continuation of payment during the periodprior to the effective date of termination not to exceed 6 months, if theapplicable conditions of § 488.450 are met.
(2) The State's decision to terminate a facility's participation and theprocedures for appealing such termination, as specified in § 431.153(c)of this chapter, takes precedence when-
(i) The State, but not HCFA, finds that a NF's participation should be terminated;and
(ii) The State's effective date for the termination of the NF's provideragreement is no later than 6 months after the last day of survey.
(c) Disagreement over timing of termination of facility. The State's timingof termination takes precedence if it does not occur later than 6 monthsafter the last day of the survey when both HCFA and the State find that-
(1) A facility is not in substantial compliance; and
(2) The facility's participation should be terminated.
(d) Disagreement over remedies. (1) When HCFA or the State, but not both,establishes one or more remedies, in addition to or as an alternative totermination, the additional or alternative remedies will also apply when-
(i) Both HCFA and the State find that a facility has not achieved substantialcompliance; and
(ii) Both HCFA and the State find that no immediate jeopardy exists.
(2) Overlap of remedies. When HCFA and the State establish one or more remedies,in addition to or as an alternative to termination, only the HCFA remediesapply when both HCFA and the State find that a facility has not achievedsubstantial compliance.
(e) Regardless of whether HCFA's or the State's decision controls, onlyone noncompliance and enforcement decision is applied to the Medicaid agreement,and for a dually participating facility, that same decision will apply tothe Medicare agreement.
§ 488.454 Duration of remedies.
(a) Except as specified in paragraph (b) of this section, alternative remediescontinue until-
(1) The facility has achieved substantial compliance, as determined by HCFAor the State based upon a revisit or after an examination of credible writtenevidence that it can verify without an on-site visit; or
(2) HCFA or the State terminates the provider agreement.
(b) In the cases of State monitoring and denial of payment imposed for repeatedsubstandard quality of care, remedies continue until-
(1) HCFA or the State determines that the facility has achieved substantialcompliance and is capable of remaining in substantial compliance; or
(2) HCFA or the State terminates the provider agreement.
(c) In the case of temporary management, the remedy continues until-
(1) HCFA or the State determines that the facility has achieved substantialcompliance and is capable of remaining in substantial compliance;
(2) HCFA or the State terminates the provider agreement; or
(3) The facility which has not achieved substantial compliance reassumesmanagement control. In this case, HCFA or the State initiates terminationof the provider agreement and may impose additional remedies.
(d) If the facility can supply documentation acceptable to HCFA or the Statesurvey agency that it was in substantial compliance, and was capable ofremaining in substantial compliance, if necessary, on a date preceding thatof the revisit, the remedies terminate on the date that HCFA or the Statecan verify as the date that substantial compliance was achieved and thefacility demonstrated that it could maintain substantial compliance, ifnecessary.
[59 FR 56243, Nov. 10, 1994; 60 FR 50119, Sept. 28, 1995]
§ 488.456 Termination of provider agreement.
(a) Effect of termination. Termination of the provider agreement ends-
(1) Payment to the facility; and
(2) Any alternative remedy.
(b) Basis for termination. (1) HCFA and the State may terminate a facility'sprovider agreement if a facility-
(i) Is not in substantial compliance with the requirements of participation,regardless of whether or not immediate jeopardy is present; or
(ii) Fails to submit an acceptable plan of correction within the time-framespecified by HCFA or the State.
(2) HCFA and the State terminate a facility's provider agreement if a facility-
(i) Fails to relinquish control to the temporary manager, if that remedyis imposed by HCFA or the State; or
(ii) Does not meet the eligibility criteria for continuation of paymentas set forth in § 488.412(a)(1).
(c) Notice of termination. Before terminating a provider agreement, HCFAdoes and the State must notify the facility and the public-
(1) At least 2 calendar days before the effective date of termination fora facility with immediate jeopardy deficiencies; and
(2) At least 15 calendar days before the effective date of termination fora facility with non-immediate jeopardy deficiencies that constitute noncompliance.
(d) Procedures for termination. (1) HCFA terminates the provider agreementin accordance with procedures set forth in § 489.53 of this chapter;and
(2) The State must terminate the provider agreement of a NF in accordancewith procedures specified in parts 431 and 442 of this chapter.
§ 498.1 Statutory basis.
(a) Section 1866(h) of the Act provides for a hearing and for judicial reviewof the hearing for any institution or agency dissatisfied with a determinationthat it is not a provider, or with any determination described in section1866(b)(2) of the Act.
(b) Section 1866(b)(2) of the Act lists determinations that serve as a basisfor termination of a provider agreement.
(c) Sections 1128(a) and (b) of the Act provide for exclusion of certainindividuals or entities because of conviction of crimes related to theirparticipation in Medicare and section 1128(f) provides for hearing and judicialreview for exclusions.
(d) Section 1156 of the Act establishes certain obligations for practitionersand providers of health care services, and provides sanctions and penaltiesfor those that fail to meet those obligations.
* * * * *
(i) Section 1819(h) of the Act-
(1) Provides that, for SNFs found to be out of compliance with the requrementsfor participation, specified remedies may be imposed instead of, or in additionto, termination of the facilitity's Medicare provider agreement; and
(2) Makes certain provisions of section 1128A of the Act applicable to civilmoney penalties imposed on SNFs.
* * * * *
§ 498.3 Scope and applicability.
(a) Scope. This part sets forth procedures for reviewing initial determinationsthat HCFA makes with respect to the matters specified in paragraph (b) ofthis section, and that the OIG makes with respect to the matters specifiedin paragraph (c) of this section. It also specifies, in paragraph (d) ofthis section, administrative actions that are not subject to appeal underthis part.
(b) Initial determinations by HCFA. HCFA makes initial determinations withrespect to the following matters:
(1) Whether a prospective provider qualifies as a provider.
(2) Whether an institution is a hospital qualified to elect to claim paymentfor all emergency hospital services furnished in a calendar year.
(3) Whether an institution continues to remain in compliance with the qualificationsfor claiming reimbursement for all emergency services furnished in a calendaryear.
(4) Whether a prospective supplier meets the conditions for coverage ofits services as those conditions are set forth elsewhere in this chapter.
(5) Whether the services of a supplier continue to meet the conditions forcoverage.
(6) Whether a physical therapist in independent practice or a chiropractormeets the requirements for coverage of his or her services as set forthin subpart D of part 486 of this chapter and § 410.22 of this chapter,respectively.
(7) The termination of a provider agreement in accordance with § 489.53of this chapter, or the termination of a rural health clinic agreement inaccordance with § 405.2404 of this chapter, or the termination of aFederally qualified health center agreement in accordance with § 405.2436of this chapter.
(8) HCFA's cancellation, under section 1910(b) of the Act, of an ICF/MR'sapproval to participate in Medicaid.
(9) Whether, for purposes of rate setting and reimbursement, an ESRD treatmentfacility is considered to be hospital-based or independent.
(10) Whether to deny payment under § 409.19 or § 409.64 of thischapter, pertaining to cardiac pacemakers and the pacemaker registry.
(11) Whether a hospital, skilled nursing facility, home health agency, orhospice program meets or continues to meet the advance directives requirementsspecified in subpart I of part 489 of this chapter.
(12) With respect to an SNF or NF, a finding of noncompliance that resultsin the imposition of a remedy specified in § 488.406 of this chapter,except the State monitoring remedy, and the loss of the approval for a nurse-aidetraining program.
(13) The level of noncompliance found by HCFA in an SNF or NF but only ifa successful challenge on this issue would affect the range of civil moneypenalty amounts that HCFA could collect. (The scope of review during a hearingon imposition of a civil money penalty is set forth in § 488.438(e)of this chapter.)
(14) The effective date of a Medicare provider agreement or supplier approval.
(c) Initial determinations by the OIG. The OIG makes initial determinationswith respect to the following matters:
(1) The termination of a provider agreement in accordance with Part 1001,Subpart C of this title.
(2) The suspension, or exclusion from coverage and the denial of reimbursementfor services furnished by a provider, practitioner, or supplier, becauseof fraud or abuse, or conviction of crimes related to participation in theprogram, in accordance with Part 1001, Subpart B of this title.
(3) The imposition of sanctions in accordance with Part 1004 of this title.
(d) Administrative actions that are not initial determinations. Administrativeactions that are not initial determination (and therefore not subject toappeal under this part) include but are not limited to the following:
(1) The finding that a provider or supplier determined to be in compliancewith the conditions or requirements for participation or for coverage hasdeficiencies.
(2) The finding that a prospective provider does not meet the conditionsof participation set forth elsewhere in this chapter, if the prospectiveprovider is, nevertheless, approved for participation in Medicare on thebasis of special access certification, as provided in subpart B of part488 of this chapter.
(3) The refusal to enter into a provider agreement because the prospectiveprovider is unable to give satisfactory assurance of compliance with therequirements of title XVIII of the Act.
(4) The finding that an entity that had its provider agreement terminatedmay not file another agreement because the reasons for terminating the previousagreement have not been removed or there is insufficient assurance thatthe reasons for the exclusion will not recur.
(5) The determination not to reinstate a suspended or excluded practitioner,provider, or supplier because the reason for the suspension or exclusionhas not been removed, or there is insufficient assurance that the reasonwill not recur.
(6) The finding that the services of a laboratory are covered as hospitalservices or as physician's services, rather than as services of an independentlaboratory, because the laboratory is not independent of the hospital orof the physician's office.
(7) The refusal to accept for filing an election to claim payment for allemergency hospital services furnished in a calendar year because the institution-
(i) Had previously charged an individual or other person for services furnishedduring that calendar year;
(ii) Submitted the election after the close of that calendar year; or
(iii) Had previously been notified of its failure to continue to comply.
(8) The finding that the reason for the revocation of a supplier's rightto accept assignment has not been removed or there is insufficient assurancethat the reason will not recur.
(9) The finding that a hospital accredited by the Joint Commission on Accreditationof Hospitals or the American Osteopathic Association is not in compliancewith a condition of participation, and a finding that that hospital is nolonger deemed to meet the conditions of participation.
(10) With respect to an SNF or NF-
(i) The finding that the SNF's or NF's deficiencies pose immediate jeopardyto the health or safety of its residents;
(ii) Except as provided in paragraph (b)(13) of this section, a determinationby HCFA as to the facility's level of noncompliance; and
(iii) The imposition of State monitoring or the loss of the approval fora nurse-aide training program.
(11) The choice of alternative sanction or remedy to be imposed on a provideror supplier.
(12) The determination that the accreditation requirements of a nationalaccreditation organization do not provide (or do not continue to provide)reasonable assurance that the entities accredited by the accreditation organizationmeet the applicable long-term care requirements, conditions for coverage,conditions of certification, conditions of participation, or CLIA conditionlevel requirements.
(13) The determination that requirements imposed on a State's laboratoriesunder the laws of that State do not provide (or do not continue to provide)reasonable assurance that laboratories licensed or approved by the Statemeet applicable CLIA requirements.
(14) The choice of alternative sanction or remedy to be imposed on a provideror supplier.
(15) A decision by the State survey agency as to when to conduct an initialsurvey of a prospective provider or supplier.
(e) Exclusion of civil rights issues. The procedures in this subpart donot apply to the adjudication of issues relating to a provider's compliancewith civil rights requirements that are set forth in Part 489 of this chapter.Those issues are handled through the Department's Office of Civil Rights.
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