MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, ET
AL., PETITIONERS v. MICHIGAN ACADEMY OF FAMILY PHYSICIANS, ET AL.

   No. 85-225

   In the Supreme Court of the United States

   October Term, 1985

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Sixth Circuit

   Reply Brief for the Petitioners

   The court of appeals held in this case that the district court
could entertain respondents' challenge to a regulation that affects
the amount payable on a claim for benefits under the Part B Medicare
Program.  We have demonstrated in the certiorari petition that this
holding is flatly inconsistent with the statutory preclusions of
review applicable to the Part B Medicare Program (42 U.S.C. 1395ff,
405(h)) and with the decisions of this Court in Weinberger v. Salfi,
422 U.S. 749 (1975);  United States v. Erika, Inc., 456 U.S. 201
(1982);  and Heckler v. Ringer, No. 82-1772 (May 14, 1984).  See Pet.
11-20.

   We also have explained that the decision below directly conflicts
with the Fourth Circuit's decision in Starnes v. Schweiker, 748 F.2d
217 (1984), cert. denied, No. 84-1309 (Apr. 15, 1985), concerning the
interpretation of 42 U.S.C. 1395ff (see Pet. 20-21), and with
decisions of other courts of appeals since Ringer that have construed
42 U.S.C. 405(h) to preclude judicial review pursuant to 28 U.S.C.
1331 even of "procedural" challenges arising under the Social Security
Act (see Pet. 21).  /1/ In addition, the Eighth Circuit has recently
held that Section 405(h) bars a district court from entertaining a
procedural challenge arising under the Part B Medicare Program.  See
Hatcher v. Heckler, No. 84-5170 (Sept. 4, 1985).

   Respondents do not dispute that the decision below conflicts with
these decisions of other courts of appeals.  Nor do they explain why
that conflict does not warrant resolution by this Court.  Respondents
instead devote their brief in opposition to a reargument of several
positions that were objected by the Court in Salfi, Erika, and Ringer.
 None of these points has merit.

   1. a. Respondents insist (Br. in Opp. 15-18) that the court of
appeals' decision is not inconsistent with Erika because that case
held only that judicial review of decisions concerning the amount of
benefits under Part B is foreclosed by 42 U.S.C. 1395ff;  in
respondents' view, this case involves a challenge not to the amount of
benefits paid on a Part B claim, but rather to the separate grouping
of certain family physicians and other categories of persons who
furnish Part B services.  This attempt to distinguish Erika is
unavailing.

   As respondents concede (Br. in Opp. 13), Erika concerned a
challenge to the carrier's calculation of the "reasonable charge"
under Part B for particular medical services.  Under 42 U.S.C.
1395u(b)(3), in determining the "reasonable charge" for such services,
the carrier is to take into account both the "customary charge" made
by the physician and the "prevailing charge" in the area.  The
"prevailing charge" is to be calculated at a rate that would cover 75%
of the customary charges made for "similar services" in the locality.
In Erika, the plaintiff challenged the carrier's decision to calculate
the "prevailing charge" on the basis of prices charged in the
preceding calendar year, without taking into account intervening price
increases.  The plaintiff contended that this method of calculating
the prevailing charge, which had the effect of imposing a ceiling on
the amount of benefits paid by the carrier, violated the Social
Security Act and implementing regulations.  See 456 U.S. at 204-205 &
n.2.  This Court, however, unanimously held that judicial review was
precluded.  Id. at 206-211.

   Respondents' challenge is legally indistinguishable from that in
Erika.  Like the plaintiff in Erika, respondents challenge the
carrier's calculation of the prevailing charge.  The only difference
is that respondents take issue with the carrier's identification of
what are "similar services" for purposes of calculating that charge,
while in Erika the challenge was to the year in which the similar
services were rendered.  This difference has no bearing on the
availability of judicial review.  In either case, the challenge is to
the carrier's methodology in calculating the prevailing charge
component of the "reasonable charge" for particular Part B services,
which in turn determines the amount of benefits the carrier will pay
for those services.  Erika therefore squarely controls this case.

   b. Respondents also argue (Br. in Opp. 11, 12, 15, 16, 17) that
neither 42 U.S.C. 1395ff nor 42 U.S.C. 405(h) should be construed to
preclude judicial review of what they term "statutory" issues that may
arise in connection with the carrier's determination and payment of
benefits.  In this case, for example, respondents contend that the
carrier's grouping of services in separate charge screens, depending
on whether they were performed by certain specialists or others, is
inconsistent with the statutory provision in 42 U.S.C. 1395u(b)(3)
that the carrier take into account the prevailing charge for "similar
services." /2/ However respondents' assertion that 42 U.S.C. 1395ff
does not bar such "statutory" challenges is foreclosed by Erika and
Ringer.  As noted above, the plaintiff in Erika contended that the
carrier's formulation of the prevailing charge screen was contrary to
the Social Security Act (456 U.S. at 205), but this Court nevertheless
held that judicial review was foreclosed.  Similarly, the plaintiffs
in Ringer contended that the Secretary's instructions that required
the carriers to refuse to pay any amount of benefits for BCBR surgery
violated the Social Security Act and the Administrative Procedure Act
(see Ringer, slip op. 7 & n.7), but this Court nevertheless held that
judicial review was foreclosed under 42 U.S.C. 1395ff and Erika
insofar as the case concerned the Part B Program (Ringer, slip op. 5
n.4).  /3/

   In any event, even if 42 U.S.C. 1395ff did not foreclose judicial
review of respondents' statutory objections, review nonetheless would
be foreclosed by 42 U.S.C. 405(h).  The third sentence of Section
405(h) provides that "(n)o action against the * * * Secretary * * *
shall be brought under section() 1331 * * * of title 28 to recover on
any claim arising under this subchapter." The Court held in Ringer
that this provision bars a district court from exercising federal
question jurisdiction over a statutory challenge to the "procedures"
utilized by the Secretary for determining the amount of benefits due
under Medicare.  Slip op. 10-13.

   2. Respondents also repeatedly assert (Br. in Opp. 11-19) that this
case presents a question concerning the preclusion of judicial review
of constitutional questions.  Again, respondents are mistaken.  The
district court and court of appeals expressly did not reach the
question whether the differing charge screens formulated by the
carrier under the authority of the Secretary's regulation deprived
family physicians of equal protection and due process.  See Pet. App.
5a, 13a n.5, 27a-28a, 32a.  If this Court reverses the judgment below
finding jurisdiction over respondents' statutory challenge, the Court
could remand to the court of appeals to consider whether the district
court had jurisdiction over respondents' constitutional challenge and
if so, to decide the merits of that question.  However, we do not
believe that it is necessary for the Court to remand for still further
proceedings in this case, which was filed almost nine years ago.

   In Schweiker v. McClure, 456 U.S. 188 (1982), this Court, without
addressing the question of the district court's jurisdiction, reviewed
the merits of a constitutional challenge to certain provisions of the
Medicare title of the Social Security Act.  We may assume for present
purposes that the Court in McClure believed that 42 U.S.C. 1395ff and
405(h) should not be construed to foreclose a judicial challenge to
the constitutionality of provisions of the Social Security Act itself.
 Cf. Hatcher v. Heckler, slip op. 9 n.7.  Compare Salfi, 422 U.S. at
762;  Johnson v. Robison, 415 U.S. 361, 366-367 (1974).  In this case,
however, respondents do not challenge the constitutionality of any
provision of the Social Security Act.  They challenge only the
constitutionality of one carrier's method of calculating the
reasonable charge for particular services, in conformity with a
regulation issued by the Secretary.  McClure, Salfi, and Johnson do
not indicate that it might be unconstitutional for Congress to
foreclose judicial review of constitutional issues that arise in
connection with such administrative determinations made under a
program established by an Act of Congress.

   There is no need to resolve that question in this case, however,
because here, as in Ringer (slip op. 5 n.4), respondents'
constitutional contention is too insubstantial to support subject
matter jurisdiction in any event.  The regulation respondents
challenge simply recognizes the obvious practical reality that "(t)he
range of prevailing charges in a locality may be different for
physicians * * * who engage in a specialty practice or service than
for others," and it accordingly permits a carrier to develop more than
one range of prevailing charges that reflect "(e)xisting differentials
in the level of charges between different kinds of practice or
service" (42 C.F.R. 405.504(b)).  That clearly is not an irrational
approach to determining the amount of payments to be made under the
Medicare Program.  The medical profession itself, through the system
of board certification and in other ways, draws distinctions on the
basis of a physician's specialization.  The Constitution surely does
not prohibit the Secretary from giving effect to those distinctions in
making payments for services rendered by such physicians under this
vast and complex social welfare program.

   For the foregoing reasons and the additional reasons stated in the
petition, it is respectfully submitted that the petition for a writ of
certiorari should be granted, the judgment of the court of appeals
should be summarily reversed, and the case should be remanded with
instructions to dismiss the complaint.

   CHARLES FRIED

      Acting Solicitor General

   SEPTEMBER 1985

   /1/ See American Federation of Home Health Agencies, Inc. v.
Heckler, 754 F.2d 896, 897-898 (11th Cir. 1984);  Ganem v. Heckler,
746 F.2d 844, 848 (D.C. Cir. 1984);  Smith v. North Louisiana Medical
Review Ass'n., 735 F.2d 168, 171-172 (5th Cir. 1984).

   /2/ As we explained in the first certiorari petition in this case
(84-120 Pet. 12 n.5), common sense suggests that there is a difference
in the nature of services depending on whether they are furnished by a
specialist or a generalist, because the former presumably brings
greater expertise or experience to bear.  At the very least that is a
permissible interpretation of the term "similar services" in the Act,
especially in view of the fact that the regulation authorizing the
carrier to develop different charge screens on such a basis was
promulgated in 1967, only one year after the Medicare Program went
into effect.  That contemporaneous and longstanding administrative
interpretation accordingly should be binding on the courts (and
therefore on respondents) even if, contrary to our submission in the
text, judicial review were not entirely foreclosed in this case.
Chevron U.S.A. Inc. v. NRDC, No. 82-1005 (June 25, 1984), slip op. 5.

   /3/ Respondents also contend that the preclusion of review under 42
U.S.C. 1395ff applies only to those issues that can be raised and
decided in an evidentiary hearing before the carrier, such as the
application of the Act, regulations and instructions to a particular
claim and the arithmetic computation of the amount due on that claim.
On this premise, respondents argue that because governing regulations
(42 C.F.R. 405.860) and the Carrier's Manual state that the carrier's
hearing officer is bound by the Act and implementing regulations and
instructions issued by the Secretary, judicial review of such issues
is not foreclosed.  See Br. in Opp. 3-4, 15, 16, 18.  That is
precisely the argument that was made by the American Academy of Family
Physicians in Erika itself (80-1594 Amicus Br. at 11-18, 31), but it
was not accepted by this Court.  Similarly, in Ringer, the
reimbursement claims under Part B were denied by the carrier on the
basis of binding instructions that withdrew from the carrier hearing
officer the question whether BCBR was a reasonable and necessary
procedure covered by Medicare (slip op. 3-4), but the Court held that
judicial review was barred under Erika (Ringer, slip op. 5, n.4).