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 obtain judicial review under 28 U.S.C. 1331 and 1346 (1994 &Supp. II 1996) to challenge the validity of Medicare regulations.

PARTIES TO THE PROCEEDING
Petitioners are Donna E. Shalala, Secretary of the Department of Healthand Human Services and Anthony J. Tirone, Deputy Director of the UnitedStates Office of Survey and Certification, Health Standards and QualityBureau, Health Care Financing Administration. Petitioners were named asdefendants/ appellees in the court of appeals. Both petitioners appear intheir official capacities only. John R. Lumpkin, M.D., Director of the IllinoisDepartment of Public Health, was also a defendant/appellee in the courtof appeals.


In the Supreme Court of the United States

OCTOBER TERM, 1998



No. 98-1109

DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL., PETITIONERS

v.

ILLINOIS COUNCIL ON LONG TERM CARE, INC.



ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT



PETITION FOR A WRIT OF CERTIORARI



The Solicitor General, on behalf of the Secretary of Health and Human Servicesand the other federal party, respectfully petitions for a writ of certiorarito review the judgment of the United States Court of Appeals for the SeventhCircuit in this case.
OPINIONS BELOW

The opinion of the court of appeals (App., infra, 1a-12a) is reported at143 F.3d 1072. The opinion of the district court (App., infra, 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. (App., infra, 22a-23a). OnNovember 2, 1998, Justice Stevens extended the time within which to filea petition for a writ of certiorari to and including December 12, 1998.On December 4, 1998, Justice Stevens further extended the time within whichto file a petition for a writ of certiorari to and including January 10,1999. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATUTORY PROVISIONS INVOLVED
The provisions of 42 U.S.C. 405(g), 405(h), 1395cc(h), and 1395ii are reproducedat App., infra, 24a-27a.

1. In Title XVIII of the Social Security Act, Congress established the federallyfunded Medicare program to provide health insurance to the elderly and disabled.42 U.S.C. 1395 et seq. Part A of the program provides insurance for coveredin-patient hospital and related post-hospital services, including skillednursing care and related services for residents of qualified skilled nursingfacilities. 42 U.S.C. 1395d, 1395i-3, 1395x(j).1 When patient beneficiariesreceive those services, the Secretary reimburses the providers of the servicesunder the Medicare Act and the Secretary's implementing regulations. 42U.S.C. 1395f(b)(1), 1395x(v)(1)(A).
Skilled nursing facilities must comply with statutory standards for health,safety, and quality of care. 42 U.S.C. 1395i-3(a)-(d); 42 C.F.R. 483.1-483.75.2To enforce compliance with those standards, the Act vests the Secretarywith authority to impose a broad range of remedies upon a finding of a violation,including direction of a plan for correcting statutory violations, impositionof civil money penalties, denial of further reimbursement for services renderedafter the deficiency is discovered, appointment of temporary management,and termination of a facility's right to participate in Medicare. 42 U.S.C.1395i-3(h)(2); 42 C.F.R. 488.406.
The Act also sets forth comprehensive procedures for administrative andjudicial review of enforcement measures taken by the Secretary. If a remedyor sanction is imposed, a nursing facility has a right to an evidentiaryhearing before an administrative law judge (ALJ) to contest a finding ofa statutory or regulatory violation. 42 C.F.R. 498.3(b)(12), 498.40-498.78.3The facility may appeal an adverse hearing decision to the DepartmentalAppeals Board, which may modify, affirm, or reverse the ALJ's decision.42 C.F.R. 498.80-498.88. Such a decision is the final decision of the Secretary.42 C.F.R. 498.90(a). A provider may obtain judicial review of the Secretary'sfinal decision after a hearing by filing an action in district court within60 days. 42 U.S.C. 1395cc(h)(1) (incorporating 42 U.S.C. 405(g)).4 Finally,Section 205(h) of Title II of the Social Security Act, 42 U.S.C. 405(h),made applicable to the Medicare Act by 42 U.S.C. 1395ii, makes those proceduresthe exclusive means of obtaining judicial review over final decisions ofthe Secretary:
The findings and decision of the [Secretary] after a hearing shall be bindingupon 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 section 1331 or 1346 of title 28 to recover on any claimarising under this subchapter.
42 U.S.C. 405(h).

2. Respondent is a trade association that represents approximately 200 nursingfacilities that participate in both the Medicare and the Medicaid programs.App., infra, 14a. In May 1996, respondent filed suit in the United StatesDistrict Court for the Northern District of Illinois seeking injunctiveand declaratory relief and invoking the court's jurisdiction under 28 U.S.C.1331, 1346 (1994 & Supp. II 1996), and 2201. The complaint alleges thatthe Secretary's regulations governing the enforcement of health and safetystandards for nursing facilities are unconstitutionally vague, exceed theSecretary's statutory authority, and deprive facilities of their due processrights by limiting a provider's ability to contest an enforcement action.The complaint also alleges that a manual used by inspectors to survey providersis a substantive rule that must comply with the notice-and-comment rulemakingprocedures of the Administrative Procedure Act (APA), 5 U.S.C. 553. SeeApp., infra, 13a, 15a.
The district court dismissed the complaint for lack of subject matter jurisdiction.App., infra, 13a-21a. The court explained that 42 U.S.C. 405(h) foreclosesjurisdiction under 28 U.S.C. 1331 and 1346 (1994 & Supp. II 1996) overthe claims asserted on behalf of respondent's Medicare provider members,because those claims arise under the Medicare Act. App., infra, 15a-18a.The district court rejected respondent's reliance on this Court's decisionin Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986),which held that a federal district court had jurisdiction under Section1331 to review a challenge to the validity of a Medicare regulation governingpayments to physicians under Part B of the Medicare program. At that time,42 U.S.C. 1395ff (1982) provided for a hearing and judicial review of challengesto the amount of payments made under Part A but not under Part B of theMedicare program. See 476 U.S. at 674 n.5 (quoting 42 U.S.C. 1395ff (1982));United States v. Erika, Inc., 456 U.S.201, 207-208 (1982). Relying on the"strong presumption that Congress intends judicial review of administrativeaction," the Court in Michigan Academy concluded that Section 405(h)did not preclude "challenges mounted against the method by which [the]amounts [of Part B benefits] are to be determined rather than [challengesto] the [amount] determinations themselves." 476 U.S. at 670, 675.Given that statutory framework, the district court concluded that the decisionin Michigan Academy is premised on the fact that the plaintiffs in thatcase had "no other avenue of judicial review" to challenge theSecretary's regulations. App., infra, 18a.
The district court pointed out that, after this Court's decision in MichiganAcademy, Congress amended the Medicare Act to provide for administrativeand judicial review of challenges to Part B amount determinations. See Pub.L. No. 99-509, § 9341(a)(1), 100 Stat. 2037 (1986) (codified at 42U.S.C. 1395ff(1)). Thus, because both Part A and Part B participants "nowhave an avenue of judicial review," the district court concluded thatthe concern in Michigan Academy that agency action would be altogether immunefrom review "no longer exists." App., infra, 18a.
The district court further found that it lacked jurisdiction to considerrespondent's claims under 42 U.S.C. 405(g), as incorporated into the MedicareAct for cases such as this by 42 U.S.C. 1395cc(h)(1). The district courtexplained that Section 405(g) imposes two requirements for obtaining judicialreview: a non-waivable requirement of presentment of the claim to the Secretaryand a waivable requirement of exhaustion of administrative remedies. App,infra, 18a-19a. The district court concluded that because respondent "hasnot alleged or shown any attempt at presentment of [its] claims to the Secretary,"the court lacks subject matter jurisdiction over the claims arising underthe Medicare Act. Id. at 19a.5

3. The court of appeals vacated and remanded for further proceedings. App.,infra, 1a-12a. The court of appeals observed that this Court's decisionsin Heckler v. Ringer, 466 U.S. 602 (1984), and Weinberger v. Salfi, 422U.S. 749 (1975), "treat th[e] language [of 42 U.S.C. 405(h)] as channelingall claims to benefits through the administrative forum, no matter whatlegal theory underlies the claim." App., infra, 4a. Relying on MichiganAcademy, however, the court of appeals concluded that Section 405(h) precludesa provider's challenge relating to a "request for reimbursement"but permits an "anticipatory challenge to implementing regulations."Id. at 4a, 5a. The court of appeals reasoned that, even though "[i]tmay well be that the 1986 amendments [to Part B] remove the practical supportfor the distinction drawn by Michigan Academy" between "pre-enforcementchallenges to Medicare regulations * * * and requests for reimbursement,""[u]ntil the Supreme Court tells us that it believes that the 1986amendments require a change of direction * * *, we are obliged to followthe holding of Michigan Academy." Id. at 5a, 7a.6
The Secretary filed a petition for rehearing and suggestion of rehearingen banc. The court of appeals denied the petition, although three judgesvoted to grant rehearing en banc. App., infra, 22a-23a & n.2.

This case presents two questions at issue in Your Home Visiting Nurse Services,Inc. v. Shalala, No. 97-1489 (argued Dec. 2, 1998). Both this case and YourHome concern whether the preclusive language of Section 405(h) bars an actionto review agency action under the Medicare program where subject matterjurisdiction is based on 28 U.S.C. 1331. Both cases also concern whetherthis Court's decision in Bowen v. Michigan Academy of Family Physicians,476 U.S. 667 (1986), has continuing application when the Medicare Act itselfaffords a provider with an opportunity to obtain administrative and judicialreview over agency action. As we note in our merits brief in Your Home,Gov't Br. 40-41 n.18, the court of appeals' decision in this case conflictswith the great weight of appellate authority. Because the Court's resolutionin Your Home may govern the disposition of this case, the petition in thiscase should be held pending the decision in Your Home and then disposedof in light of that decision.7
1. a. The principal question presented in Your Home is whether a fiscalintermediary's refusal to reopen a provider's annual reimbursement determinationis subject to review by the Provider Reimbursement Review Board (PRRB) under42 U.S.C. 1395oo(a), which in turn would result in a right to judicial reviewof the PRRB's final decision under 42 U.S.C. 1395oo(f). If the Court concludesin Your Home that the provider is not entitled to such administrative review,however, the Court will consider the Your Home petitioner's alternativecontention that this Court's decision in Michigan Academy permits a federaldistrict court, exercising jurisdiction under 28 U.S.C. 1331, to review(presumably pursuant to the APA) an intermediary's refusal to reopen a priorreimbursement determination. Pet. Br. 18-23.8 The Secretary has argued inYour Home (Gov't Br. 36-42) that such jurisdiction is specifically precludedby the second and third sentences of Section 405(h), incorporated into theMedicare Act by 42 U.S.C. 1395ii, which provide that:
No findings of fact or decision of the [Secretary] shall be reviewed byany person, tribunal, or governmental agency except as herein provided.No action against the United States, the [Secretary], or any officer oremployee thereof shall be brought under section 1331 * * * of title 28 torecover on any claim arising under this subchapter.
42 U.S.C. 405(h). Section 405(h) equally bars respondent's suit in thiscase.
This Court has made clear that the preclusive language of Section 405(h)is "sweeping and direct and * * * states that no action shall be broughtunder § 1331." Weinberger v. Salfi, 422 U.S. 749, 757 (1975).Similarly, in Heckler v. Ringer, 466 U.S. 602 (1984), the Court held that"[t]he third sentence of 42 U.S.C. § 405(h) * * * provides that[42 U.S.C.] 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." Id. at 614-615 (quoting 42 U.S.C. 405(h)). The Court in Ringerexplained that Section 405(h) "broadly" extends to "any claimsin which 'both the standing and the substantive basis for the presentation'of the claims" is the Medicare Act. 466 U.S. at 615 (quoting Salfi,422 U.S. at 761). The Court therefore concluded that all such claims mustbe brought under Section 405(g) by presenting the claims to the Secretaryand exhausting administrative remedies, absent a waiver by the Secretary.466 U.S. at 617; see also Bowen v. City of New York, 476 U.S. 467, 482-483(1986); Mathews v. Eldridge, 424 U.S. 319, 327-328 (1976); Salfi, 422 U.S.at 763-767.9
Those principles foreclose jurisdiction under 28 U.S.C. 1331 and 1346 (1994& Supp. II 1996) over respondent's claims for declaratory relief.10Respondent seeks review of the validity of the Secretary's regulations thatimplement the statutory health and safety standards for nursing facilitiesparticipating in the Medicare program. The district court correctly concludedthat, because respondent's claims asserted on behalf of Medicare providersarise under the Medicare Act, App., infra, 15a-18a, Section 405(h) barsa district court from exercising jurisdiction under Sections 1331 and 1346to hear those claims.11 Moreover, because respondent neither presented itsclaims to the Secretary nor exhausted its administrative remedies, the districtcourt correctly concluded that it lacked jurisdiction under Section 405(g)to hear such claims.12
In reaching the contrary conclusion, the court of appeals reasoned that"pre-enforcement review of a regulation's validity is not an actionto 'recover on' a claim" within the meaning of Section 405(h). App.,infra, 6a. This Court in Ringer, however, rejected as "superficiallyappealing but ultimately unavailing" the contention that Section 405(h)excepts from its breadth a challenge to a regulation that is divorced froma specific claim for benefits. 466 U.S. at 621. Rather, the Court foundthat federal courts lack jurisdiction under 28 U.S.C. 1331 to award declaratoryand injunctive relief respecting the Secretary's policy not to cover a particularsurgical procedure, even if a claimant has not undergone the surgery andtherefore has no concrete claim for reimbursement on which he could recover.Id. at 621-626; compare id. at 631 n.9 (Stevens, J., concurring in partand dissenting in part) (arguing that such a claimant had "nothingon which he can recover" when he had not yet submitted a reimbursementclaim). In short, the Court concluded that "[i]n the best of all worlds,immediate judicial access * * * might be desirable. But Congress, in §405(g), and § 405(h), struck a different balance, refusing declaratoryrelief and requiring that administrative remedies be exhausted before judicialreview of the Secretary's decisions takes place." Id. at 627. Thus,the court of appeals' decision conflicts with this Court's decision in Ringer,which construed the plain text of Section 405(h) to preclude "all 'claim[s]arising under' the Medicare Act," 466 U.S. at 615 (quoting 42 U.S.C.405(h)).
b. The court of appeals also erred in relying on this Court's decision inMichigan Academy to permit respondent to bypass the Medicare Act's specificadministrative and judicial remedies. In Michigan Academy, the Court permittedplaintiffs to invoke the district court's jurisdiction under Section 1331to challenge the validity of reimbursement regulations under Part B of theMedicare program at a time when 42 U.S.C. 1395ff (1982) provided for a hearingand judicial review of challenges to the amount of payments made under PartA but not Part B of the program. 476 U.S. at 674 n.5 (quoting 42 U.S.C.1395ff (1982)); United States v. Erika, Inc., 456 U.S. 201, 207-208 (1982).Rejecting what it termed the "extreme" position taken by the governmentthat Congress intended Section 405(h) to foreclose "all" judicialreview of facial challenges to the Secretary's regulations, the Court heldthat Section 405(h) did not preclude "challenges mounted against themethod by which [the] amounts [of Part B benefits] are to be determined."476 U.S. at 675, 680.
Michigan Academy does not support jurisdiction over respondent's claimsoutside the specific review provisions of the Medicare Act. Unlike the situationin Michigan Academy, in which jurisdiction under Section 1331 was the solejurisdictional basis for obtaining judicial review of administrative actionunder Part B of the program as it then existed, Section 405(g), as incorporatedinto the Medicare Act by 42 U.S.C. 1395cc(h)(1), explicitly affords respondentan avenue to challenge the Secretary's regulations. Thus, Section 405(g)expressly confirms the district court's power to "review * * * thevalidity of [the Secretary's] regulations" when it reviews the Secretary'sfinal decision. Because judicial review of regulations is available, thepresumption of judicial review underlying the decision in Michigan Academyis not "implicate[d]." Thunder Basin Coal Co. v. Reich, 510 U.S.200, 207 n.8 (1994); see also McNary v. Haitian Refugee Ctr., Inc., 498U.S. 479, 498 (1991) ("Inherent in our analysis [in Michigan Academy]was the concern that absent such a construction of the * * * statute, therewould be 'no review at all of substantial statutory and constitutional challengesto the Secretary's administration of Part B of the Medicare program.'")(quoting Michigan Academy, 476 U.S. at 680). Accordingly, under Section405(h) and this Court's decisions in Ringer and Salfi, the Medicare Actis the sole means of obtaining judicial review over claims arising underthe Act.

2. In holding that Medicare providers may bring a pre-enforcement APA challengeto the Secretary's' regulations by invoking the district court's jurisdictionunder 28 U.S.C. 1331, the court of appeal's decision departs from the greatweight of appellate authority.
In Michigan Ass'n of Homes & Services for the Aging, Inc. v. Shalala,127 F.3d 496 (1997), the Sixth Circuit rejected the attempt by an associationof nursing facilities to invoke a district court's jurisdiction under Section1331 to raise claims that are virtually identical to the those assertedby respondent. Id. at 498-499. The Sixth Circuit held that under the expressterms of Section 405(h), and this Court's decisions in Ringer and Salfi,judicial review under Section 405(g) is the sole means to challenge theSecretary's regulations, and providers therefore may not invoke the jurisdictionof a district court under Section 1331 to circumvent Section 405(g)'s requirementsof presentment to the Secretary and exhaustion of administrative remedies.Id. at 499-501. The Sixth Circuit further held that Michigan Academy didnot support the assertion of federal question jurisdiction. The court reasonedthat "[a]dministrative review-and so long as * * * sections 405(g)and (h) are fulfilled, judicial review-is available any time a sanctionis actually imposed." Id. at 501.
The Sixth Circuit's decision therefore squarely conflicts with the courtof appeals' decision in this case. The court of appeals' decision similarlyis inconsistent with the Third Circuit's decision in St. Francis MedicalCenter v. Shalala, 32 F.3d 805, 812-813 (1994), cert. denied, 514 U.S. 1016(1995), which holds that the administrative and judicial review provisionsof the Medicare Act are the sole means of obtaining review of provider reimbursementclaims arising under Part A of the Medicare program. See also WestchesterManagement Corp. v. HHS, 948 F.2d 279, 282 (6th Cir. 1991) (court lackedjurisdiction under Sections 1331 and 1346 to consider provider's APA, statutory,and constitutional challenge to Medicare regulation), cert. denied, 504U.S. 909 (1992).
Moreover, the court of appeals' decision conflicts with the decisions ofthose courts of appeals that have applied Michigan Academy in light of subsequentlegislative changes to Part B of the Medicare program. As the Seventh Circuitrecognized in this case (App., infra, 4a-6a), Congress amended 42 U.S.C.1395ff in 1986 to provide for administrative and judicial review of challengesto carrier determinations concerning the amount of payments made under PartB of the program. Pub. L. No. 99-509, § 9341(a)(1), 100 Stat. 2037.In light of that amendment, the courts of appeals have held that Part Bclaimants must pursue the specific review procedures under Section 405(g),and that Section 405(h) bars federal courts from exercising jurisdictionunder 28 U.S.C. 1331 to review claims arising under Part B of the Medicareprogram, including the type of facial challenges to regulations at issuein Michigan Academy. See American Academy of Dermatology v. HHS, 118 F.3d1495, 1497-1501 (11th Cir. 1997); Farkas v. Blue Cross & Blue Shield,24 F.3d 853, 855-860 (6th Cir. 1994); Abbey v. Sullivan, 978 F.2d 37, 41-44(2d Cir. 1992); National Kidney Patients Ass'n v. Sullivan, 958 F.2d 1127,1130-1134 (D.C. Cir. 1992), cert. denied, 506 U.S. 1049 (1993).13 Thus,disregarding the express terms of Section 405(h), the court of appeals'decision in this case conflicts with the substantial body of appellate authoritythat has held that Medicare providers may not invoke the jurisdiction ofa federal district court under Section 1331 to circumvent the administrativeand judicial review procedures prescribed by the Medicare Act.

The petition for a writ of certiorari should be held pending the decisionin Your Home Visiting Nurse Services, Inc. v. Shalala, No. 97-1489 (arguedDec. 2, 1998), and then disposed of as appropriate in light of the decisionin that case.
Respectfully submitted.

SETH P. WAXMAN
Solicitor General

JANUARY 1999

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT



No. 97-2315

ILLINOIS COUNCIL ON LONG TERM CARE INC.,
PLAINTIFF-APPELLANT

v.

DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET AL., DEFENDANTS-APPELLEES



[Argued: Dec. 5, 1997
Decided: May 8, 1998]


Before: EASTERBROOK, DIANE P. WOOD, and EVANS, Circuit Judges

EASTERBROOK, Circuit Judge.

Nursing homes that want reimbursement under the Medicare or Medicaid programsmust comply with regulations specifying minimum health and safety standards.Statutory criteria were enacted in 1987, see 42 U.S.C. § 1395i- 3(a)to (d) (Medicare), § 1396r(a) to (d) (Medicaid), but implementing regulationswere not issued until 1994, and did not take effect until July 1, 1995.59 Fed.Reg. 56,116 (1994). An association of nursing homes, the IllinoisCouncil on Long Term Care, tells us that before these new regulations wereadopted about 6% of its members had been directed to change their operationsin order to meet applicable standards, while more recent inspections havefound 70% of nursing homes to be deficient. Regulators attribute this totougher substantive rules that nursing homes have yet to satisfy; the nursinghomes attribute the jump to vague rules that leave too much discretion inthe hands of inspection teams.

The Council filed this suit on behalf of its members and asked the courtto declare that the new regulations violate the due process clause of thefifth amendment because they are too vague and do not provide adequate opportunitiesto be heard before financial penalties take effect. The Council also arguedthat a manual used by inspection teams has the effect of a regulation andtherefore could be adopted only after notice-and-comment rulemaking under§ 3 of the Administrative Procedure Act, 5 U.S.C. § 553. The Secretaryof Health and Human Services, the principal defendant in the case, askedthe district court to distinguish between the Medicare and Medicaid aspectsof the suit. According to the Secretary, objections to implementation ofthe Medicare Act are barred by 42 U.S.C. § 1395ii, incorporating 42U.S.C. § 405(h), which makes an application for benefits (and reviewof the Secretary's final decision), the sole route to judicial review. Noneof the Council's members has obtained a final decision, and § 1395iiforbids jumping the gun on legal issues that will be relevant to the administrativedecision, the Secretary contended. See Heckler v. Ringer, 466 U.S. 602,104 S. Ct. 2013, 80 L.Ed.2d 622 (1984). Although most of the Council's theoriesare based on the Constitution and the APA rather than any incompatibilitybetween the regulations and the Medicare Act, Weinberger v. Salfi, 422 U.S.749, 95 S. Ct. 2457, 45 L.Ed.2d 522 (1975), holds that a claim is subjectto the review-channeling provision in § 405(h) when the end in viewis receipt of federal payments. Claims under the Medicaid Act should behandled otherwise, the Secretary submitted, because that statute does notincorporate § 405(h) and lacks any comparable restriction. A challengeto Medicaid regulations therefore is proper under 28 U.S.C. § 1331and 5 U.S.C. § 702-but, the Secretary added, should be dismissed inlarge measure as unripe. Only the Medicaid providers' APA challenge to thehandbook is mete for decision, the Secretary concluded. The district judgeaccepted the first part of this argument-that § 1395ii postpones reviewof claims by Medicare providers-but extended it to the entire case, stating:"The issues are the same, the only difference being that the firstthree counts arise under the Medicaid Act whereas the latter three ariseunder the Medicare Act. By reaching the merits on the Medicaid claims, thiscourt would effectively resolve the Medicare issues as well. This attemptto back-door the jurisdictional bar of the Medicare Act is impermissible."1997 WL 158347 at *3, 1997 U.S. Dist. Lexis 3982 at *9-10. After the Councilfiled its notice of appeal, the sixth circuit reached the same conclusionin an essentially identical case. Michigan Association of Homes & Servicesfor the Aging, Inc. v. Shalala, 127 F.3d 496 (6th Cir.1997).

Section 1395ii makes § 405(h) applicable to Medicare cases "tothe same extent as" it applies to Social Security disability cases.Section 405(h) provides in part: "No findings of fact or decision ofthe [Secretary] shall be reviewed by any person, tribunal, or governmentalagency except as herein provided. No action against the United States, the[Secretary], or any officer or employee thereof shall be brought under §1331 or 1346 of Title 28 to recover on any claim arising under this subchapter."The word "herein" refers to the rest of § 405, and in particularto § 405(g), which permits judicial review only after a final decisionby the Secretary. Ringer and Salfi treat this language as channeling allclaims to benefits through the administrative forum, no matter what legaltheory underlies the claim. But Bowen v. Michigan Academy of Family Physicians,476 U.S. 667, 678-81, 106 S. Ct. 2133, 2140-41, 90 L.Ed.2d 623 (1986), holdsthat § 1395ii does not foreclose Medicare providers' anticipatory challengeto implementing regulations. Bypassing the question whether § 405(h)would prevent such a challenge to a regulation implementing the Social Securitydisability program, the Court held that § 1395ii addresses only "amountdeterminations" (476 U.S. at 680, 106 S. Ct. at 2141)-that is, calculationsof reimbursements by the fiscal intermediaries that implement the Medicareprogram-and that "matters which Congress did not delegate to privatecarriers, such as challenges to the validity of the Secretary's instructionsand regulations, are cognizable in courts of law." Ibid. (emphasisin original).

According to the Secretary, Michigan Academy ceased to have any precedentialforce a few months after it was issued. The Secretary reads Michigan Academyas creating an exception to § 1395ii for claims that otherwise couldnot reach the courts. Shortly after the Court decided Michigan Academy,Congress amended the Medicare Act to give providers an avenue to judicialreview of amount determinations, 42 U.S.C. § 1395ff(b)(1), thus overturningthe result of United States v. Erika, Inc., 456 U.S. 201, 102 S. Ct. 1650,72 L.Ed.2d 12 (1982). Once that occurred, the argument concludes, the basisof Michigan Academy disappeared, and with it the Court's holding. The districtcourt, and the sixth circuit in Michigan Association, 127 F.3d at 500-01,accepted this line of argument. But if something important happened in 1986,the point has been lost on the Supreme Court, which in 1991 reiterated itsconclusion that § 1395ii does not affect regulatory challenges thatare detached from any request for reimbursement. McNary v. Haitian RefugeeCenter, Inc., 498 U.S. 479, 497-98, 111 S. Ct. 888, 898-99, 112 L.Ed.2d1005 (1991). And it has been lost on us too, for we have since 1986 drawna distinction between pre-enforcement challenges to Medicare regulations(allowed) and requests for reimbursement (postponed until after the Secretaryhas made a final decision). E.g., Martin v. Shalala, 63 F.3d 497, 503-05(7th Cir.1995); Bodimetric Health Services, Inc. v. Aetna Life & Casualty,903 F.2d 480, 483-87 (7th Cir.1990).

It may well be that the 1986 amendments remove the practical support forthe distinction drawn by Michigan Academy. The panel in Martin said as much.63 F.3d at 502-03. Michigan Academy emphasized, 476 U.S. at 670-73, 106S. Ct. at 2135-37, the presumption that Congress has allowed some avenueof judicial review, and the Justices read the statutes then in effect withthat presumption in mind. Now that Congress has authorized review of amountdeterminations through § 1395ff(b)(1), that part of Michigan Academy'srationale is gone-the invalidity of regulations would be a good reason fora reviewing court to upset an amount determination. This led the districtcourt to write that "the Michigan Academy exception does not apply."Both the Secretary and the district court thus treat the Supreme Court'sopinion as an "exception" to a statute-as if the Court claimedthe power to treat statutes no differently from the common law, and to make"exceptions" to Acts of Congress based on judicially created presumptions.Cf. Guido Calabresi, A Common Law for the Age of Statutes (1982). To thecontrary, the Court has disavowed such power. E.g., Bank of Nova Scotiav. United States, 487 U.S. 250, 255, 108 S. Ct. 2369, 2373-74, 101 L.Ed.2d228 (1988). Michigan Academy does not say that a presumption of judicialreview justifies an "exception" to § 1395ii. It says, rather,that § 1395ii, read in light of its 1972 legislative history, affectsonly "amount determinations". 476 U.S. at 678-81, 106 S. Ct. at2140-41. The key language from this perspective is "recover on"in the sentence: "No action against the United States, the [Secretary],or any officer or employee thereof shall be brought under § 1331 or[§] 1346 . . . to recover on any claim arising under this subchapter."As the Court read § 1395ii and therefore § 405(h) in MichiganAcademy, pre-enforcement review of a regulation's validity is not an actionto "recover on" a claim, even when per Salfi a constitutionalobjection to the regulation is a "claim arising under this subchapter."

Neither this critical language from § 405(h) nor the history of §1395ii changed in 1986. Had Congress written a new statute, we would needto decide what the new language means, rather than what Michigan Academysaid some bygone language meant. But when Congress amended § 1395ffit left § 1395ii alone. Section 1395ii was amended in 1994 (see §108(c)(4) of Pub.L. 103-296, 108 Stat. 1485), but that change was designedonly to make it clear that a bureaucratic reorganization (the removal ofthe Commissioner of Social Security from the Department of Health and HumanServices) had no substantive effects. The operative language is the samenow as it was when Michigan Academy came down. The Supreme Court is jealousof its powers and insists that the inferior courts are not authorized todeclare the reasoning of its opinions outdated and their holdings passe.See State Oil Co. v. Khan, -- U.S. --, 118 S. Ct. 275, 284, 139 L.Ed.2d199 (1997); Rodriguez de Quijas v. Shearson/American Express, Inc., 490U.S. 477, 484, 109 S. Ct. 1917, 1921-22, 104 L.Ed.2d 526 (1989); ThurstonMotor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535, 103 S. Ct.1343, 1344, 75 L.Ed.2d 260 (1983). Until the Supreme Court tells us thatit believes that the 1986 amendments require a change of direction withrespect to § 1395ii, we are obliged to follow the holding of MichiganAcademy.

Although this conclusion makes it unnecessary to discuss in detail the distinctionsbetween the Medicare and Medicaid programs, the possibility that this casemay find its way to a higher tribunal leads us to record our disagreementwith the district court's conclusion that challenges to Medicaid regulationsare barred whenever the decision has implications for Medicare regulations.The Medicaid Act contains nothing comparable to § 405(h) or §1395ii. The general federal-question jurisdiction under § 1331 thereforesupplies the avenue of judicial review, and it has been understood for along time that courts are not to invent novel obstacles to the use of thisjurisdiction. See Colorado River Water Conservation District v. United States,424 U.S. 800, 817, 96 S. Ct. 1236, 1246, 47 L.Ed.2d 483 (1976). We haveentertained challenges to Medicaid regulations without hinting that a districtcourt should dismiss the case (effectively abstaining) if a similar problemcould arise under the Medicare Act or its regulations. See Woodstock/KenoshaHealth Center v. Schweiker, 713 F.2d 285, 288-89 (7th Cir.1983); IllinoisDepartment of Public Aid v. Schweiker, 707 F.2d 273 (7th Cir.1983). Thedistrict court did not mention these cases; instead it relied on an earlierdecision, Rhode Island Hospital v. Califano, 585 F.2d 1153, 1162-63 (1stCir.1978), that is incompatible with the law of this circuit. The Medicareand Medicaid programs have many substantive and procedural differences;it is not as if they were twins, so that a court should struggle to avertthe possibility of allowing judicial review at different times or throughdifferent mechanisms. Nursing homes that participate in the Medicaid programare not limited to the Medicare procedures. If some nursing homes may litigateon their own, they may litigate through their trade association; we don'tsee why the fact that other members of the Council have potential Medicareclaims should cut off associational representation and compel independentlitigation.

Thus we disapprove the sixth circuit's decision in Michigan Associationacross the board, for it is inconsistent with Woodstock/Kenosha, and similarcases in this circuit, none of which the sixth circuit cited. Michigan Associationclaimed to follow Health Equity Resources Urbana, Inc. v. Sullivan, 927F.2d 963 (7th Cir.1991), which it read for the proposition that the MedicaidAct's incorporation of 42 U.S.C. § 405(g) via 42 U.S.C. § 1396i(b)(2)is independently sufficient to prevent anticipatory judicial review of regulations.Any interpretative exercise that makes multiple sections of the United StatesCode meaningless-and this one would dispense with at least § 405(h)and § 1395ii-and requires a federal court to renounce its own jurisdictioninto the bargain, is more than a little suspect. It is not at all what ouropinion in Health Equity Resources was about. That Medicaid provider commencedan administrative proceeding under § 405(g) and § 1396i(c)(2)to contest an "amount determination" by a fiscal intermediary.Dissatisfied with how things were going, the provider attempted to initiatea suit before the administrative proceeding was over. Applying standarddoctrines of exhaustion of administrative remedies, Health Equity Resourcesnixed the maneuver. We did not hold then, and decline to hold now, thata Medicaid provider is forbidden to bring a pre-enforcement challenge toa Medicaid regulation under § 1331.

It follows from what we have said so far that the district court shouldhave resolved on the merits the Council's argument that the manual is aregulation for which notice-and-comment rulemaking was essential. For themost part, however, the Council's victory on the jurisdictional issue doesit little good. In order to take advantage of Michigan Academy, the Councilmade its claim entirely abstract. It does not object to any evaluation ofany particular nursing home or contend that a single one of its membershas been ill used. Such arguments would have played into the Secretary'shands by making it easier to contend that this is just a disguised effortto contest "amount determinations" and therefore postponed (by§ 1395ii and Ringer) until after the administrative process has runits course. But by making the claim so abstract, the Council set up theSecretary's contention that the suit is unripe.

One aspect of the Council's attack is assuredly premature. The nursing homescontend that the regulations are void for vagueness. But this is not a firstamendment case. It is about conditions attached to a federal subsidy; noneof any nursing home's substantive constitutional rights is in jeopardy.That makes it impossible to mount a "facial" attack on the rules.If a rule "implicates no constitutionally protected conduct, [the court]should uphold the challenge only if the enactment is impermissibly vaguein all of its applications. A plaintiff who engages in some conduct thatis clearly proscribed cannot complain of the vagueness of the law as appliedto the conduct of others. A court should therefore examine the complainant'sconduct before analyzing other hypothetical applications of the law."Hoffman Estates v. The Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494-95,102 S. Ct. 1186, 1191, 71 L.Ed.2d 362 (1982) (footnote omitted). In otherwords, "vagueness challenges . . . which do not involve First Amendmentfreedoms must be examined in the light of the facts of the case at hand."United States v. Mazurie, 419 U.S. 544, 550, 95 S. Ct. 710, 714, 42 L.Ed.2d706 (1975). Having crafted a litigation strategy to avoid § 405(h)and § 1395ii, the Council finds itself with no "facts of the caseat hand" and therefore without any hope of success on a claim thatthe regulations are unconstitutionally vague. It is indeed hard to see howregulations under a social welfare program could be condemned out of handas Delphian. Agencies may use ambiguous standards that acquire meaning throughthe process of application, just as the common law does. See, e.g., Parkerv. Levy, 417 U.S. 733, 94 S. Ct. 2547, 41 L.Ed.2d 439 (1974); NLRB v. BellAerospace Co., 416 U.S. 267, 294, 94 S. Ct. 1757, 1771-72, 40 L.Ed.2d 134(1974); CSC v. Letter Carriers, 413 U.S. 548, 93 S. Ct. 2880, 37 L.Ed.2d796 (1973). An industry subject to a battery of new regulations cannot askfor an all-at-once review but must wait until the agency has worked throughthe process of adding detail in administrative adjudication. See MachinistsUnion v. NLRB, 133 F.3d 1012, 1015-17 (7th Cir.1998).

To the extent the Council complains that the manual and accompanying surveyforms are unauthorized by the 1987 legislation, these claims may be mootedby a decision on the APA theory. Other aspects of this line of argumentmay be inappropriate for pre-enforcement review given the standards of Babbittv. United Farm Workers, 442 U.S. 289, 298-99, 99 S. Ct. 2301, 2308-09, 60L.Ed.2d 895 (1979); Gardner v. Toilet Goods Association, 387 U.S. 167, 87S. Ct. 1526, 18 L.Ed.2d 704 (1967); and Abbott Laboratories v. Gardner,387 U.S. 136, 87 S. Ct. 1507, 18 L.Ed.2d 681 (1967). For example, the Councilinsists that the regulations and manual will not assure that remedies areconsistently applied to similarly situated nursing homes, which 42 U.S.C.§ 1395i-3(g)(2)(D) requires the Secretary to do. But how could a courtdetermine, without examining how the system works in practice, whether remedieshave been applied consistently? Some other arguments based on the 1987 statutedo not appear to present situations in which lack of pre-enforcement reviewwill put the plaintiffs to costly choices-and if anticipatory review isnot essential to avoid hardship, then courts should defer review, in orderto obtain the benefits of the more focused presentation made possible bya concrete application of the rules. See Texas v. United States, -- U.S.--, 118 S. Ct. 1257, 140 L.Ed.2d 406 (1998).

Finally, to the extent the Council believes that the regulations fail toprovide pre-deprivation hearings at the times (and in the form) the Constitutiondemands, the claim may be ripe for decision. But because the appellate papersleave us unsure just what this claim entails and how it affects any particularnursing home, it is best to leave to the district court the resolution ofthe Secretary's ripeness objection to this aspect of the Council's suit.

In sum: the APA-based objection to adoption of the manual is within thedistrict court's jurisdiction and should be addressed on the merits; thevagueness challenge is not ripe for decision and should be dismissed; thedue process objection to the timing and structure of opportunities to beheard, and the arguments based on the 1987 statute, may or may not be ripefor decision, and the district court should require the parties to fleshout these claims before deciding which, if any, is justiciable. The judgmentis vacated, and the case is remanded for further proceedings consistentwith this opinion.



APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS


No. 96 C 2953

ILLINOIS COUNCIL FOR LONG TERM CARE, INC., PLAINTIFF,

vs.

DONNA E. SHALALA, ET AL., DEFENDANTS


[March 31, 1997]



MEMORANDUM AND ORDER

LINDBERG, District Judge.

Plaintiff, Illinois Council for Long Term Care, has filed a complaint requestinginjunctive and declaratory relief against defendants, Secretary Donna Shalalaof the Department of Health and Human Services; Anthony J. Tirone, in hiscapacity as Deputy Director of the United States Office of Survey and Certification,Health Standards and Quality Bureau, Health Care Financing Administration;and John R. Lumpkin, M.D., as Director of the Illinois Department of PublicHealth (IDPH). Defendants have moved to dismiss all claims pursuant to Fed.R.Civ.P.12(b)(1) and 12(b)(6).

Plaintiff represents approximately two-hundred nursing homes. Approximately75 of these members participate only in Medicare. The remaining membersparticipate in either Medicaid or both Medicare and Medicaid. Plaintiff'scase arises from the following facts.

The Department of Health and Human Services (HHS) has given the Health CareFinancing Administration (HCFA) the responsibility to establish a set ofrequirements of participation. 42 C.F.R. § 483.1(b). A nursing homemust be in compliance with these requirements in order to receive Medicareand Medicaid reimbursements for its patients. In Illinois, the IDPH conductsannual surveys of nursing homes in order to determine whether they are insubstantial compliance.

HCFA has developed regulations and distributed Standard Operating Manualsto state agencies such as the IDPH. The IDPH uses them as a guide for surveysand imposing penalties when a nursing home is found to be in non-compliance.In 1987, the Congress amended the Social Security Act with the Omnibus BudgetReconciliation Act (OBRA) in an attempt to improve upon the health, safety,and rights of participants. The amendments called for stricter guidelinesand more severe penalties. The first set of HCFA's regulations used thepre-1987 OBRA amendments as its enforcement guidelines. Under these regulations,only 6% of nursing homes in Illinois were found to be in non-compliance.In 1995, HCFA's new set of regulations went into effect. These regulationstook into account the 1987 OBRA amendments. Nearly 70% of nursing homesin Illinois were found to be in non-compliance under these new regulations.

Plaintiff claims that this drastic change in the rate of non-complianceis because the new regulations and Standard Operating Manuals are unconstitutionallyvague, that the new regulations and Standard Operating Manuals were enactedin violation of the Administrative Procedure Act, and that the lack of asufficient appeals process is a violation of due process.

Defendants, pursuant to Fed. R. Civ. P. 12(b)(1), move to dismiss for lackof subject matter jurisdiction. "The general rule . . . is that absentclear direction to the contrary by Congress, the federal courts have thepower to award any appropriate relief in a cognizable cause of action broughtpursuant to a federal statute." Franklin v. Guinnett County PublicSchools, 503 U.S. 60, 70-71, 112 S. Ct. 1028, 117 L.Ed.2d 208 (1992). Thisjurisdictional issue must be resolved first.

Plaintiff contends that this court has subject matter jurisdiction under28 U.S.C. §§ 1331, 1346 and 2201. Defendants argue that this courtlacks subject matter jurisdiction under §§ 1331 and 1346. Thisis because plaintiff's claims arise under the Medicare Act. This court hasjurisdiction over a complaint arising under the Medicare Act only afterthe plaintiff has satisfied the requirements of § 405(g) which is incorporatedinto the Medicare Act by 42 U.S.C. §§ 1395cc(h)(1). Defendantscontend that plaintiff has not satisfied the § 405(g) requirements.

Plaintiff contests this court has jurisdiction for four separate reasons.First, the claims do not arise under the Medicare Act. Second, an administrativeappeals tribunal cannot hear constitutional and statutory challenges. Third,there is no other avenue of judicial review for plaintiff's due processclaims and thus the exception noted in Michigan Academy v. Bowen, 476 U.S.667, 106 S. Ct. 2133, 90 L.Ed.2d 623 (1986), applies to them. Fourth, CountsI through III allege claims under the Medicaid Act which unlike the MedicareAct does not incorporate the 42 U.S.C. §§ 405(g) and 405(h) jurisdictionalprovisions of the Social Security Act. Plaintiff is incorrect and the complaintwill be dismissed for lack of subject matter jurisdiction.

Plaintiff first argues that its claims do not arise under the Medicare Actand are thus not barred by the jurisdictional requirements of 42 U.S.C.§§ 405(g) and 405(h).

Under § 405(h)(which is incorporated into the Medicare Act by 42 U.S.C.§ 1395ii), federal courts do not have subject matter jurisdiction under§ 1346 and § 1331 over claims arising under the Medicare Act.Michigan Association v. Donna Shalala, 931 F.Supp. 1339, 1342 (E.D.Mich.1996)(quoting Livingston Care Center, Inc. v. United States, 934 F.2d 719, 721(6th Cir.1991)). Section 405(h)'s "claims arising under" languagehas been defined to "include any claims in which both the standingand the substantive basis for the presentation of the claims is the MedicareAct." Id. (quoting Heckler v. Ringer, 466 U.S. 602, 615, 104 S. Ct.2013, 80 L.Ed.2d 622 (1984)).

Count V of plaintiff's complaint alleges defendants did not satisfy theirduties under a specific Medicare Act provision. 42 U.S.C. § 1395i-3(g)(2)(D).This count is barred by § 405(h) because it is directly based on aMedicare Act provision.

The resolution of the claims alleged in Counts IV, VI, and VII largely dependson an analysis of various Medicare Act provisions. Plus, any resolutionwill have a direct impact on the applicability and enforceability of theMedicare Act. Thus, Counts IV, VI, and VII are also barred by § 405(h)because they are substantively based on the Medicare Act. Id.

Plaintiff next contends that its constitutional and statutory challengescannot be brought before an administrative appeals body. Under 42 C.F.R.§ 488.408, the Secretary of HHS will not hear appeals concerning themanner and method of the surveys and the choice of remedy. However, §405(h) allows for and requires that constitutional and statutory challengessatisfy the jurisdictional requirements of § 405(g) before a complaintcan be brought to court. 42 U.S.C. § 405(h). This gives the Secretaryan opportunity prior to constitutional litigation to determine whether plaintiff'sclaims are either invalid or resolvable under some other provision of theMedicare Act. Weinberger v. Salfi, 422 U.S. 749, 95 S. Ct. 2457, 45 L.Ed.2d522 (1975). Therefore, it is not only constitutional, but reasonable tohave constitutional and statutory challenges go through the jurisdictionalrequirements of the Medicare Act. Id.

Also, at the heart of plaintiff's case, is a claim for benefits. This isevidenced by the relief sought by plaintiff. Plaintiff 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. Plaintiff may not circumventthe Medicare Act by attempting to bring what is essentially a claim forbenefits as a facial constitutional challenge. Id. Heckler, 466 U.S. at616.

Plaintiff next argues that even if the claims arise under the Medicare Actand the Secretary has jurisdiction over the constitutional and statutorychallenges, §§ 405(g) and 405(h) do not apply because of the exceptionnoted in Michigan Academy, 476 U.S. 667, 106 S. Ct. 2133, 90 L.Ed.2d 623(1986).

In Michigan Academy, the Supreme Court was addressing Medicare Part B. Defendantcontended that the Supreme Court's jurisdiction was barred by § 405(h).At the time, HHS did not offer an appeals process for its Part B participants.It was because the plaintiff had "no other avenue of judicial review"that the Court ruled §§ 1331 and 1346 gave federal courts jurisdictionover the Part B claims despite the jurisdictional bars of the Medicare Act.

The Medicare Act has now been amended to provide Part A and Part B participantsthe right to appeal within HHS. 42 U.S.C. § 405(h); 42 C.F.R. §488.408(g). Section 405(h) allows plaintiff to appeal any dispute to theSecretary. Thus, the concern noted in Michigan Academy no longer existsbecause all participants now have an avenue of judicial review within HHS.

Having established that this case falls under the Medicare Act and thatthe Michigan Academy exception does not apply, it is now necessary to lookat the jurisdictional requirements of the Act.

Under § 405(g), a Medicare participant must satisfy two requirementsbefore bringing a case to court. The first is a non-waivable requirementof presentment to the Secretary of HHS. The second is a waivable requirementof exhaustion of remedies. 42 U.S.C. § 405(g); Martin v. Shalala, 63F.3d 497, 503 (7th Cir. 1995).

The first requirement has not been satisfied. Plaintiff has not allegedor shown any attempt at presentment of his claims to the Secretary. Therefore,it is unnecessary to even reach the second requirement.

As stated above, plaintiff's claims arise under the Medicare Act. Therefore,under § 405(h), HHS has jurisdiction over all of plaintiff's claims,including its constitutional and statutory challenges. The exception to§ 405(h) noted in Michigan Academy does not apply since an avenue ofjudicial review exists for plaintiff. Therefore, failure by plaintiff tosatisfy the presentment requirement of § 405(g) means this court lackssubject matter jurisdiction over the claims in plaintiff's complaint.

Plaintiff also represents nursing homes which only receive Medicaid benefits.The Medicaid Act does not contain any jurisdictional restrictions similarto those contained in §§ 405(g) and 405(h). Therefore, plaintiffargues, this Court has jurisdiction over the first three counts of theircomplaint which arise under the Medicaid Act.

This court does not agree. Counts I through III of the Complaint mirrorCounts IV through VI. The issues are the same, the only difference beingthat the first three counts arise under the Medicaid Act whereas the latterthree arise under the Medicare Act. By reaching the merits on the Medicaidclaims, this court would effectively resolve the Medicare issues as well.This attempt to back-door the jurisdictional bar of the Medicare Act isimpermissible. Rhode Island v. Califano, 585 F.2d 1153, 1162-63 (lst Cir.1978).

In Rhode Island v. Califano, the court held that federal courts lacked subjectmatter jurisdiction over Medicaid claims under circumstances similar tothose at bar. In so ruling, the court reasoned that the Medicaid claimswere not sufficiently separate and distinct from the Medicare claims. Anyresolution of the Medicaid issues would unavoidably touch upon substantiveMedicare issues. This, the court ruled, cannot be allowed under § 405(h).

Further, the Medicaid issues will be addressed when the Medicare claimsare appealed to and heard by the Secretary. Rhode Island, 585 F.2d. at 1163.The result of such an appeal will have the same impact on both the Medicareand Medicaid claims because the Secretary's decision is based on regulationswhich provide a single set of requirements that both Medicare and Medicaidparticipants must satisfy. Michigan Association, 931 F.Supp. at 1345, 42C.F.R. § 483. 1(b). Thus, the counts arising under the Medicaid Acthave the same avenue of judicial review within HHS as the counts arisingunder the Medicare Act. As stated above, this appeals process must be completedbefore this court has jurisdiction over the claims plaintiff alleges inits complaint.

For the foregoing reasons, all claims against defendants will be dismissedfor lack of subject matter jurisdiction.

ORDERED: The motion to dismiss of defendants, Donna E. Shalala, AnthonyJ. Tirone, and John R. Lumpkin [13-1] is granted. All counts of the complaintof plaintiff, Illinois Council for Long Term Care, are dismissed. Defendants'alternative motion for summary judgment [13-2] is denied as moot. Plaintiff'smotion for a preliminary injunction [19-1] is denied as moot. The documentbeing recorded in the docket as a motion for summary judgment by AmericanHealth Care Association [27-2] is a mislabeled memorandum and so is administrativelyterminated.
/s/ GEORGE W. LINDBERG
GEORGE W. LINDBERG
District Judge

APPENDIX C

UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
CHICAGO, ILLINOIS 60604


No. 97-2315
No. 96 C 2923

ILLINOIS COUNCIL ON LONG TERM CARE
INC., PLAINTIFF-APPELLANT

v.

DONNA E. SHALALA, SECRETARY OF HEALTH AND
HUMAN SERVICES, ET. AL., DEFENDANTS-APPELLEES


APPEAL FROM THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT
OF ILLINOIS, EASTERN DIVISION


[August 13, 1998]



BEFORE: HON. FRANK H. EASTERBROOK,
Circuit Judge
HON. DIANE P. WOOD, Circuit Judge
HON. TERENCE T. EVANS, Circuit Judge



ORDER
Federal defendants-appellees filed a petition for rehearing and suggestionof rehearing en banc on June 22, 1998. All of the judges on the panel havevoted to deny rehearing. A judge in active service called for a vote onsuggestion of rehearing en banc,* but a majority** of the active judgesvoted to reject the suggestion. The petition for rehearing is thereforedenied, and the suggestion for rehearing en banc is rejected.

APPENDIX D
1. Section 405(g) of Title 42, United States Code, provides:
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.

2. Section 405(h) of Title 42, United States Code, provides:
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.

3. Section 1395cc of Title 42, United States Code, provides in relevantpart:
(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.