Document: 526 U.S. 40119 S.Ct. 977143 L.Ed.2d 130 NOTE: This opinion is subject to revision before publication. SUPREME COURT OF THE UNITED STATES 119 977 143 No. 97-2000 AMERICAN MANUFACTURERS MUTUAL INSURANCE COMPANY, et al., PETITIONERS v. DELORES SCOTT SULLIVAN al. ON WRIT CERTIORARI TO APPEALS FOR THIRD CIRCUIT [March 3, 1999] Chief Justice Rehnquist delivered the of Court. 1 Pennsylvania provides in its workers' compensation regime that an employer or insurer may withhold payment for disputed medical treatment pending independent review determine whether reasonable and necessary. We hold insurers are not "state actors" under Fourteenth Amendment, does deprive disabled employees property within meaning Amendment. 2 * Before enactment laws, who suffered a work-related injury occupational disease could recover from their employers only by resort traditional tort remedies available at common law. In early 20th century, States began replace common-law system, which often saddled with difficulty expense establishing negligence proving damages, compulsory insurance system requiring compensate injuries without regard fault. See generally A. Larson & L. Larson, Larson's Workers' Compensation Law 5.20-5.30, pp. 2-15 2-25 (1996). 3 Following this model, Pennsylvania's Act, Pa. Stat. Ann., Tit. 77, seq. (Purdon 1992 Supp. 1998) (Act 77 Ann.), first enacted 1915, creates no-fault liability makes employers' "exclusive . any all other liability." 481. All Act must either (1) obtain private insurer, (2) such through State Insurance Fund (SWIF), (3) seek permission self-insure. 501(a). Once becomes liable employee's injury-because contested no longer issue-the insurer1 pay "reasonable" "necessary" treatment, do so 30 days receiving bill. 531(1)(i), (5). 4 To assure care meets these criteria, attempt control costs, amended 1993. 1993 Laws, 44, p. 190. Most important our purposes, amendments created "utilization review" procedure reasonableness necessity past, ongoing, prospective be reviewed bill paid. Ann. 531(6). 1998).2 Under if "disputes provided," 531(5), it request utilization (within same 30-day period) filing one-page form Bureau Department Labor Industry (Bureau). 531(6)(i); 34 Code 127.404(b), 127.452(a) (1998). The identifies (among things) employee, provider, date injury, reviewed. Ibid.; App. 5. attempt, as Court Appeals stated, "address legitimacy lack thereof request," but merely determines "properly completed-i.e., information required provided." Sullivan Barnett 139 F.3d 158, 163 (CA3 1998); see 127.452(a). Upon proper request, health providers particular services being challenged. 531(5) 208(f). 5 then notifies parties has been requested forwards randomly selected organization" (URO). 127.453. URO's organizations consisting "licensed profession hav[e] similar specialty provider review," 531(6)(i) 127.466. purpose review, sole authority conferred upon URO, "whether necessary condition employee" light "generally accepted protocols." 127.470(a), 127.467. Reviewers examine treating provider's records, 127.459, 127.460, give opportunity discuss 127.469.3 Any doubt given resolved favor employee. 127.471(b). 6 instructed complete render determination completed request. 531(6)(ii) 127.465. If URO finds employee appeal judge de novo need unless overturned judge, later courts. 531(6)(iv) 127.556. immediately, 10 percent annual interest, well cost review.4 127.208(e); 531(6)(iii) 1998). 7 Respondents individual representing received benefits Act.5 They claimed have had withheld pursuant set forth Act. sued Rev. 1979, 42 U.S.C. 1983 acting individually on behalf class similarly situated employees.6 Named defendants were various officials administer director SWIF, School District Philadelphia (which self-insures), number companies provide coverage Pennsylvania. alleged withholding predeprivation notice heard, state defendants, "under color law," deprived them violation due process. Amended Complaint 265-271, 43-44. sought declaratory injunctive relief, damages. 8 dismissed lawsuit ground they actors," Barnett, 913 F. 895, 905 (ED 1996), remained school district, violate process, Pet. Cert. 71a. 9 Third Circuit disagreed both issues. 158 It held insurer's decision suspend Act-what court called "supersedeas"-constitutes action. reasoned: "In creating executing entitlements, [State] complex interwoven regulatory web enlisting Bureau, employers, companies. extensively regulates controls system. Although entities, when act construct providing public honor [s]tate entitlements. effect, become arm State, fulfilling uniquely governmental obligation entirely state-created, self-contained benefit 11 "The right invoke supersedeas, stop payments, power traditionally was hands State. When supersedeas (i.e., suspension) benefits, compromise [s]tate-created terminate participation [State]. More importantly, however, intimately involved constitutionally protected because cannot payments obtaining authorization Bureau. However characterized, deprivation occurs predicated State's involvement." Id., 168. 12 On process issue, did address respondents interest stating "[n]either party disputes" point. 171, n. 23. Thus focusing what "due," bills until submit view writing URO. determined relevant statutory language permitting suspension during severable struck statute. Id. 173-174. 13 granted certiorari, 525 ___ (1998), resolve conflict status laws,7 Appeals' holding prohibits review. II 14 claim relief action brought 1983, establish secured Constitution laws United States, committed Like state-action requirement under-color-of-state-law element excludes reach " 'merely conduct, matter how discriminatory wrongful,' Blum Yaretsky, 457 991, 1002 (1982) (quoting Shelley Kreamer, 334 1, (1948)).8 15 Perhaps hoping avoid application cases, characterize "facial" "direct" challenge procedures contained case, argument goes, we concern ourselves "identity defendant" "act actor entity relying challenged law." Brief 16. argument, ignores repeated insistence requires constitutional "caused exercise some privilege rule conduct imposed person whom responsible," "the charged fairly said actor." Lugar, Edmondson Oil Co., 922, 937 (1982); Flagg Bros., Inc. Brooks, 436 149, 156 (1978). while 'with knowledge to' statute, ibid., thus satisfying requirement, still satisfy second, allegedly unconstitutional attributable State.9 16 Our approach latter question begins identifying specific plaintiff complains." supra, 1004; id., 1003 ("Faithful adherence 'state action' careful attention gravamen plaintiff's complaint"). Here, named self-insured employers. Also Philadelphia, municipal corporation. complaint law prior heard. agree responsible administering SWIF actors. F.3d, 167.10 Thus, issue address, accordance constraints answer "no." 17 cases involving extensive regulation activity, consistently "[t]he mere fact business itself convert into purposes Amendment." Jackson Metropolitan Edison 419 345, 350 (1974); Blum, U.S., 1004. Faithful ensures prerogative regulating remains representative branches, case will standards "there sufficiently close nexus between regulated treated itself." Ibid. Whether "close nexus" exists, state, depends "has exercised coercive provided significant encouragement, overt covert, choice deemed State." supra., 166; Jackson, 357; Moose Lodge 107 Irvis, 407 163, 173 (1972); Adickes S. H. Kress 398 144, 170 (1970). Action taken entities approval acquiescence 1004-1005; 154-165; 357. 18 assert should attributed compels directly decision. Obviously involved. authorizes, require, treatment. payment, like transfer Medicaid patients lower level made concededly parties, "turns judgments parties" "standards established 1008. 19 assert, "authorized" "encouraged" it. Respondents' primary that, amending grant option previously have, purposely reads too much reform, event squared cases. 20 deferring unnecessary unreasonable can sense seen encouraging just that. But, petitioners note, kind subtle encouragement more than inheres creation modification legal remedy. never availability remedy wrongful even use serves interests, significantly encourages activity make Tulsa Professional Collection Services, Pope, 485 478, (1988) ("Private state-sanctioned rise action"); also 485; 165-166. bears repeating finding basis would contrary "essential dichotomy," 349, acts recognized. 21 allow easily inaction, accurately, legislative intervene dispute over 164-165. amendments, restricted ability (after established, course) defer including beyond receipt restored narrow option, historically adoption law, substantiated. most scheme, therefore, whereas prohibited services, so. Such support As before, tolerate imposition Amendment restraints simple device characterizing inaction 'authorization' 'encouragement.' 22 Nor role creating, supervising, setting differ meaningful administration forum resolving disputes. While judicial official, properly considered action, party's resolution machinery, "overt, assistance officials," Tulsa, 486, cannot. 23 course many-faceted remedial shifted one facet favoring employer. sort regularly systems. But change "encourages" "authorizes" actions those terms used jurisprudence. 24 reject notion, relied Appeals, decisions "authorization" "permission" payment. described earlier summary statute regulations, Bureau's limited file "a prescribed Bureau," 127.452, processing technical compliance, forwarding informing requested. rejected notion "by completion form," 1007, additional "paper shuffling" performed here response insurers' alter conclusion. 25 next contend present delegated "powers exclusively reserved 352. Their twofold. Relying West Atkins, 487 (1988), argue state-mandated "public benefits," provision benefits" insurers. exclusive government function determining circumstances injured worker's suspended. apparently agreed points, "providing entitlements obligation," 168, State," ibid. 26 think neither merit. readily distinguishable: there obligated inmates, delegation physician gave 54-56. hand, nothing constitution scheme obligates workers. 1011. Instead, imposes therefore unlike where noted "while furnish service utilities, 352; San Francisco Arts Athletics, Olympic Comm., 483 522, 544 (1987) ("The '[t]hat performs [governmental] ") Rendell-Baker Kohn, 830, 842 (1982)).11 27 merit respondents' deciding Historical practice, characterization. true petition favorable ruling 28 ever adopted contract expenses reason reason, involvement course, might (or workers) refusal breached constituted "bad faith," arise after initiated reduced judgment. That recognized it, now (in respect) constitute function. New York done authorize (and indeed limit)-without official-what [private insurers] tend do, absence authorization," i.e., is, fact, 162, 12. 29 arguments advanced respondents, seems figuratively thrown up fallen back Burton Wilmington Parking Authority, 365 715 (1961). said, "inextricably entangles partnership Commonwealth integral part scheme." 170. Burton, urge us affirm "joint participation" theory dealing action" refined vague test embodied case. particular, "privately owned enterprises necessarily provide, though regulated, fall ambit Burton." 1011; 357-358. least nursing facilities utility Jackson. though, leaves judgment 31 rely Lugar 922 (1982), contains general about clear, torn context out arose: 32 erred 'joint participation' something invoking aid take advantage state-created attachment procedures? Whatever contexts, sufficient whereby attach ex parte dispute. 942. 33 effort seize official. conclude failed essential claim. III 35 Though reverse believe fundamentally misapprehended nature stake ramifications actors, (under Part II) not. left undisturbed, insures (reasonable not) days, able review.12 denied petitions certiorari filed officials, questions presented second therein states: 36 "Whether Due Process Clause necessary." (i). 37 briefed argued, one, squarely proceed 38 inquiry every "property" "liberty." Const., Amdt. ("nor shall life, liberty, property, law"); Mathews Eldridge, 424 319, 332 (1976). Only look comport 332. 39 confers benefits. once employer's certain partial wage replacement, permanent disability, care. 431, 531 follows this, entitlement, affording worker 40 Goldberg Kelly, 397 254 (1970), federal welfare statutorily continued Likewise, Mathews, Social Security disability individual's entitlement hearing terminated. Goldberg, 261-263; 41 different. entitled initial assumes. expressly limits disputes pay-and benefits-arise. 531(1)(i) surgical services" (emphasis added)); ("All thirty (30) records treatment" added)). clear two hurdles: First, he prove parallel beneficiary recipient Mathews. obviously cleared hurdles. eligibility yet good Consequently, interest-under logic own argument-in having paid found refute ask patently unreasonable, unnecessary, fraudulent right, reimbursement providers. Unsurprisingly, require result. 43 Having concluded falters go further.13 Reversed. Notes 44 1. Self-insured face identical obligations refer collectively "insurers" "private insurers." 45 2. procedure, effective means recouping unnecessary. bars seeking excessive providers, Moats Workmen's Appeal Bd. (Emerald Mines Corp.), 588 2d 116, 118 (Pa. Commw. 1991), and, although Supersedeas 127.208((g), fund financed assessments levied themselves. 999(b) 1992). D. Ballantyne, Workers Research Institute, Revisiting 36-37 (1997). 46 3. submit, "reports examinations," 127.461, allowed "written personal statement" regarding "reasonableness and/or necessity" 50. aspect differs place time time, requested, informed suspended permitted materials modified decision, input Petitioners respect procedures. 47 4. appeal, excess Fund. 2, supra. 48 addition employees, Area Project Occupational Safety Health, nonprofit group composed 2,000 unions members, 15, 12, Federation Teachers, labor organization approximately 20,000 16, 49 6. defined include "all persons been, future, [Act], 17, 12-13. 50 7. Cf. Barnes Lehman, 861 F.2d 1383 (CA5 1988). 51 8. Where, here, deprivations rights alleged, requirements converge. 935, (1982). 52 9. reliance 478 position misplaced. Nowhere petitioner's Oklahoma "nonclaim" there. analyzed two-step approach, involvement. 486-487. true, argue, nonclaim "self-executing," relieve requisites suggest otherwise. 53 10. At insurers, refused district's motion dismiss (the district argued contracted responsibilities self-insurer company, actor), leaving unresolved further discovery. 985, 905. Court's obviated decide acted nor question. 167, 54 11. guarantee insolvent, 1053 1992), mean, suggest, self-imposed security receives financial 1055; Ballantyne C. Telles, (1991). 55 Because maintained ruling, likely cause distinct 56 13. claims themselves, finally appropriate procedural protections. Logan Zimmerman Brush 455 422, 430-431 issue. Lyng Payne, 476 926, 942 (1986) (reserving question); Walters National Assn. Radiation Survivors, 473 305, 320, (1985) (same). Ginsburg, J., concurring 57 58 59 60 61 I join understanding rejects specifically, only, demands constant each bill, receipt, ante, 20, doubt, fair adjudication 428-431 (1988); Amicus Curiae 21-22.* 62 disposes instant controversy extended endeavor, II, clean rein precedent. "It fundamental restraint advance them." Three Affiliated Tribes Fort Berthold Reservation Wold Engineering, P. C., 467 138, 157 (1984); Ashwander TVA, 297 288, 347 (1936) (Brandeis, concurring). ordinarily invoked lieu less tall counsel soundly applied situation: presents questions, entire not, case-dispositive suffice. 63 Stevens original deficient, requirement. post, Breyer, 64 65 66 67 Souter joins, 68 Parts insofar facial attack points "do themselves." Ante, add, leads reasonably expect continuation, possess interest. See, e.g., Board Regents Colleges Roth, 408 564, 577 (1972) ("It ancient institution protect people daily lives, arbitrarily undermined"); Perry Sindermann, 593, 601 254, 262, (1970); 69 Opinion Stevens, J. 70 71 72 73 dissenting part. 74 injuries, whatever need. (5) right-whether "claim" "cause action"-is unquestionably species (1988). Disputes treatments decisionmakers actors follow scope claimants' fair. 422 (1982).* asserted against carrier self-insures. equally duty obtains resolved. 75 my raised are: alleging processes commenced, rules ante 4, correctly deficient automatically evidence vested decisional authority. mandated footnote find defect place, reversed extent modifications. unfair, itself, publicly amount. 76 written, reasons. incorrectly assumes company controlling rather disputes, state-appointed implement rights. These suit. Second, fails now. *. notes, [do not] disputes."

Category: 3