Source: https://casetext.com/case/colonial-penn-ins-co-v-heckler
Timestamp: 2019-05-22 05:05:38
Document Index: 337362533

Matched Legal Cases: ['§ 1395', '§ 953', '§ 1395', '§ 405', '§ 405', '§ 405', '§ 24', '§ 3531', '§ 405', '§ 405', '§ 1395', '§ 405', '§ 405', '§ 1331', '§ 1395', '§ 1361', '§ 1331', '§ 1395', '§ 3532', '§ 405', '§ 405', '§ 1395', 'art, 435', '§ 1011', '§ 1012']

721 F.2d 431 (3d Cir. 1983)
Colonial Penn Ins. Co.v.Heckler
United States Court of Appeals, Third CircuitNov 16, 1983
Decided November 16, 1983. As Amended November 28, 1983. Rehearing Denied December 8, 1983.
Harvey Bartle, III (argued), Jeffrey G. Weil, Sarah Wiggins Mitchell, Dechert Price Rhoads, Philadelphia, Pa., for appellant.
In December 1980, as part of the Omnibus Budget Reconciliation Act of 1980, Congress amended section 1862(b) of the Social Security Act, 42 U.S.C. § 1395y, to realign coverage under the Medicare program. Pub.L. 96-499, § 953, 94 Stat. 2599, 2647 (1980). As modified, the statute states that Medicare payments would not be available "with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made (as determined in accordance with regulations) . . . under an automobile or liability insurance policy . . . or under no fault insurance. Any [Medicare] payment . . . shall be conditioned on reimbursement. . . ." 42 U.S.C. § 1395y(b)(1). The amendment, which became effective on December 5, 1980, was designed to make "medicare payment liability secondary in automobile insurance cases." H.Rep. No. 1167, 96th Cong., 2d Sess. 352 (1980), reprinted in 1980 U.S.Code Cong. Ad.News 5526, 5717.
On May 17, 1982, the Secretary published proposed regulations to carry out the provisions of the amendment, 47 Fed.Reg. 21103 (1982), and issued final regulations on April 5, 1983, 48 Fed.Reg. 14802 (1983). They provided that Medicare payments would not be made for services covered by an automobile insurance policy, even though the policy states that its benefits are secondary to Medicare. 48 Fed.Reg. at 14810 (to be codified at 42 C.F.R. § 405.323(b)). The regulations also authorized the Secretary to sue an insurance carrier for reimbursement if Medicare benefits were made to a person eligible for coverage under an auto insurance policy. Id. (to be codified at 42 C.F.R. § 405.323(c)(3)(iii)). The regulations apply to services required because of accidents occurring after December 5, 1980, id. at 14809 (to be codified at 42 C.F.R. § 405.322(a)), but furnished on or after June 6, 1983, id. at 14810 (to be codified at 42 C.F.R. 405.323(a)). See also 48 Fed.Reg. at 14807.
Having determined that Colonial Penn meets the constitutional requirement of standing, we look to see whether it has met the prudential consideration that the right asserted be within the zone of interests, arguably protected or regulated by the statute. See generally, Kirby v. United States Government, Department of Housing Urban Development, 675 F.2d 60, 64-67 (3d Cir. 1982); Bowman v. Wilson, 672 F.2d 1145, 1150-1153 (3d Cir. 1982). Some doubt has been expressed on the continued vitality of the zone of interest analysis. See 4 K. Davis, ADMINISTRATIVE LAW TREATISE § 24:17 (2d ed. 1983). Nevertheless, the Supreme Court's reaffirmation of the test in Valley Forge Christian College, 454 U.S. at 475, 102 S.Ct. at 760, suggests that reference to this consideration is still required. Kirby, supra.
The test is a generous one. Bank Stationers Association, Inc. v. Board of Governors of Federal Reserve System, 704 F.2d 1233, 1236 (11th Cir. 1983); Tax Analysts and Advocates v. Blumenthal, 566 F.2d 130, 140, 142 (D.C.Cir.), cert. denied, 434 U.S. 1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1977). The rights asserted need only be "arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Association of Data Processing Service Organizations, Inc., 397 U.S. at 153, 90 S.Ct. at 829. Indeed, one commentary has stated that "there is substantial ground to believe that [the test] may be satisfied whenever there is no special reason to deny review." 13 C. Wright, A. Miller E. Cooper, FEDERAL PRACTICE AND PROCEDURE § 3531 at 196 (1975).
As to Colonial Penn's constitutional attack, the property interest alleged is within the zone protected by the fifth amendment, and, as the entity affected, Colonial Penn has standing. See Town Court Nursing Center, Inc. v. Beal, 586 F.2d 266, 275 (3d Cir. 1978). With respect to the statutory challenge, the prudential consideration is somewhat different. In general, the Medicare statutes are plainly applicable to beneficiaries and, in a less direct manner, to providers of services or goods reimbursable under the Act. Colonial Penn, however, is in neither category. Nevertheless, we think the insurer is within the zone of interests of the provision at issue here.
The amendment to section 1395y(b)(1) is primarily a cost reduction measure, see H.Rep. No. 1167, 96th Cong., 2d Sess. 352, 389 (1980), reprinted in 1980 U.S.Code Cong. Ad.News 5526, 5717, 5752, but it affects interests of the insurer by authorizing a type of subrogation to recover the cost of Medicare payments. In accordance with that provision, the regulation provides that if Medicare payments are made to a beneficiary when the insurer provides coverage, the Secretary may bring suit against the company for reimbursement. 48 Fed.Reg. 14810 (1983) (to be codified at 42 C.F.R. § 405.323(c)(3)(iii)). The theory for such a suit is that the insurer is responsible for primary coverage and cannot limit itself to secondary liability because Medicare is available. See 48 Fed.Reg. 14804 (1983); 47 Fed.Reg. 21104 (1982).
Thus we are not presented with merely a housekeeping statute ordering the affairs of the government. See Control Data Corp. v. Baldrige, 655 F.2d 283 (D.C.Cir.), cert. denied, 454 U.S. 881, 102 S.Ct. 363, 70 L.Ed.2d 190 (1981) (suppliers of data processing equipment not within zone of interest of regulation defining procurement specifications for government computer equipment). Colonial Penn is exposed to litigation and affected by the statute at issue. We conclude that the company is "arguably" regulated and that the zone of interest standard has been met as to the statutory claim. See Arnold Tours, Inc. v. Camp, 400 U.S. 45, 91 S.Ct. 158, 27 L.Ed.2d 179 (1970) (per curiam); Columbia Broadcasting System, Inc. v. United States, 316 U.S. 407, 422, 62 S.Ct. 1194, 1202, 86 L.Ed. 1563 (1942) (television network has standing to contest regulations even though it is not directly regulated; "[i]t is enough that . . . the regulations . . . alter and affect adversely appellant's contractual rights"); Cotovsky — Kaplan Physical Therapy Association, Ltd. v. United States, 507 F.2d 1363, 1366 (7th Cir. 1975) (physical therapy organization indirectly regulated by Medicare regulation is within zone of interests); but see National Union of Hospital and Health Care Employees v. Carey, 557 F.2d 278 (2d Cir. 1977).
In Granville House, Inc. v. Department of Health and Human Services, 715 F.2d 1292 (8th Cir. 1983), the court addressed whether a nonprofit corporation that operated residential chemical dependency treatment programs had standing to challenge the Department's interpretation of "institutions for mental disease." The court held that the "nexus between Granville's purpose and the purpose of the Medicaid statute, which is to provide medical assistance to the needy, combined with Granville's economic injury" was sufficient to satisfy the zone of interests test and confer standing. Id. at 1299.
Our review of jurisdictional matters is not complete however. Congress limited access to the courts by incorporating into the Medicare Act the jurisdictional bar of section 205(h) of the Social Security Act, 42 U.S.C. § 405(h) (1976). See 42 U.S.C. § 1395ii (1976) (section 405(h) "shall also apply with respect to this subchapter to the same extent as . . . applicable with respect to subchapter II . . . .").
"Finality of Secretary's decision The findings and decisions of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter."
In Weinberger v. Salfi, 422 U.S. 749, 757, 95 S.Ct. 2457, 2462, 45 L.Ed.2d 522 (1975), the Court held that the third sentence of section 405(h) precluded resort to federal question jurisdiction for adjudicating constitutional challenges as well as claims under the Social Security Act for benefits to survivors of wage earners. In reaching this decision, the court observed that constitutional and other contentions could be presented through the judicial review provision of section 205(g), 42 U.S.C. § 405(g). "Thus the plain words of the third sentence of § 405(h) do not preclude constitutional challenges. They simply require that they be brought under jurisdictional grants contained in the Act, and thus in conformity with the same standards which are applicable to nonconstitutional claims arising under the Act." 422 U.S. at 762, 95 S.Ct. at 2465.
The Salfi Court further observed that had no judicial review of constitutional challenges been available, such a restriction would be "extraordinary" and would raise "a serious constitutional question of the validity of the statute." Id. The Court emphasized this point again in Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977), noting that a decision denying jurisdiction under section 405(g) "would effectively have closed the federal forum to the adjudication of colorable constitutional claims. Thus, [ Salfi] merely adhered to the well-established principle that when constitutional questions are in issue, the availability of judicial review is presumed and we will not read a statutory scheme to take the `extraordinary' step of foreclosing jurisdiction unless Congress' intent to do so is manifested by `"clear and convincing"' evidence." 430 U.S. at 109, 97 S.Ct. at 986.
A critical distinction between Salfi, Sanders, and the case at hand is the absence of a provision in the Medicare law similar to section 405(g) that would allow Colonial Penn to press its claim. Thus, the review route open in other Social Security or Medicare care benefit cases is not available to plaintiff here.
In view of the preclusive language of section 405(h), a number of courts have found that distinction unavailing to justify the exercise of section 1331 jurisdiction over constitutional claims. See e.g., Drennan v. Haris, 606 F.2d 846, 850 (9th Cir. 1979); Dr. John T. MacDonald Foundation, Inc. v. Califano, 571 F.2d 328, 332 (5th Cir.) (en banc), cert. denied, 439 U.S. 893, 99 S.Ct. 250, 58 L.Ed.2d 238 (1978); Trinity Memorial Hospital of Cudahy, Inc. v. Associated Hospital Service, Inc., 570 F.2d 660, 667 (7th Cir. 1977); see also V.N.A. of Greater Tift County, Inc. v. Heckler, 711 F.2d 1020, 1026 (11th Cir. 1983). These cases, however, rely on the Court of Claims' assertions of jurisdiction to review such claims, Whitecliff, Inc. v. United States, 536 F.2d 347, 351, 210 Ct.Cl. 53 (1976), cert. denied, 430 U.S. 969, 97 S.Ct. 1652, 52 L.Ed.2d 561 (1977).
By acquiescing in the Court of Claims exercise of jurisdiction, the decisions by the various courts of appeals avoided the serious constitutional question of whether all judicial review of constitutional claims may be foreclosed. See e.g., V.N.A. of Greater Tift County, Inc., 711 F.2d at 1026 n. 17. See also National Association of Home Health Agencies v. Schweiker, 690 F.2d 932, 939 (D.C.Cir. 1982), cert. denied, ___ U.S. ___, 103 S.Ct. 1193, 75 L.Ed.2d 438 (1983) ("Every court that has considered the issue has agreed that section 405(h) should be read so as to permit some avenue of judicial review for constitutional claims").
A different result was reached by the Court of Appeals for the Sixth Circuit in Chelsea Community Hospital v. Michigan Blue Cross Association, 630 F.2d 1131 (6th Cir. 1980). There the court declined to transfer the case to the Court of Claims, finding the rationale of the above cases neither "attractive" nor "persuasive." Id. at 1135. In holding that there was jurisdiction under section 1331 to adjudicate a constitutional claim arising under the Medicare Act, the Chelsea court found no clear and convincing evidence of intent to preclude review. Salfi was distinguished on the ground that section 405(h) does not have "application . . . where no statutory review mechanism is available." Id.
Similar reasoning was applied by the Court of Appeals for the Eighth Circuit in St. Louis University v. Blue Cross Hospital Service, 537 F.2d 283 (8th Cir.), cert. denied, 429 U.S. 977, 97 S.Ct. 484, 50 L.Ed.2d 584 (1976), and by the Court of Appeals for the District of Columbia in National Association of Home Health Agencies v. Schweiker 690 F.2d 932 (D.C.Cir. 1982), cert. denied, ___ U.S. ___, 103 S.Ct. 1193, 75 L.Ed.2d 438 (1983). See also Starnes v. Schweiker, 715 F.2d 134, 139-141 (4th Cir. 1983); United States v. Aquavella, 615 F.2d 12, 18-21 (2d Cir. 1979); Northeast Emergency Medical Associates v. Califano, 470 F. Supp. 1111, 1119-20 (E.D.Pa. 1979), aff'd mem., 614 F.2d 771 (3d Cir. 1980).
After considering the conclusions reached by the various courts, we hold that, under the facts of this case, there is jurisdiction under 28 U.S.C. § 1331 to review the constitutional challenge brought by Colonial Penn. To hold that courts are precluded from deciding such issues would raise a serious constitutional problem in itself. See Salfi, 422 U.S. at 762, 95 S.Ct. at 2465. The unavailability of administrative remedies here makes it unnecessary for us to determine whether there must be exhaustion before bringing constitutional challenges to court. See 42 U.S.C. § 1395 oo(f)(1) (Supp. V 1981) (Medicare providers may obtain immediate judicial review in instances where the Provider Reimbursement Review Board determined it is without authority to decide question of law).
We have previously exercised mandamus jurisdiction, 28 U.S.C. § 1361, to decide constitutional issues in Social Security disability cases, notwithstanding section 405(h). Mattern v. Weinberger, 519 F.2d 150 (3d Cir. 1975), vacated and remanded sub nom. Mathews v. Mattern, 425 U.S. 987, 96 S.Ct. 2196, 48 L.Ed.2d 812 (1976) (remanded for consideration in light of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18). However, Mattern was decided before Salfi and when we reviewed the case again, after our remand to the district court, we found that jurisdiction existed under section 405(g). Mattern v. Mathews, 582 F.2d 248, 253 (3d Cir. 1978), cert. denied, 443 U.S. 912, 99 S.Ct. 3101, 61 L.Ed.2d 876 (1979). We have since held, in Kuehner v. Schweiker, 717 F.2d 813, 819 (3d Cir. 1983), that mandamus was a proper jurisdictional basis for class action contentions that Social Security Administration procedures in terminating disability payments violated constitutional and statutory provisions. Because we find jurisdiction under the more expansive scope of § 1331, we need not tarry on the mandamus jurisdictional issue here.
Although a substantial number of appellate court decisions find some avenue of relief for constitutional claims, no such consensus exists when the dispute turns on the application or interpretation of a statute or regulation. See V.N.A. of Greater Tift County, 711 F.2d at 1025-26; National Association of Home Health Agencies, 690 F.2d at 939-40. The nature of the matter in controversy assumes significance in influencing the courts' jurisdictional decisions. Thus, where the claim is one for benefits under the Medicare Act, the tendency to apply the ban of section 405(h) is strong. Hopewell Nursing Home, Inc. v. Schweiker, 666 F.2d 34 (4th Cir. 1981); Chelsea Community Hospital v. Michigan Blue Cross Association, 630 F.2d 1131 (6th Cir. 1980) (jurisdiction exists when no administrative remedy provided); Hospital San Jorge, Inc. v. United States Secretary of Health, Education and Welfare, 598 F.2d 684 (1st Cir. 1979). Such suits are viewed as going to the heart of section 405(h) because they envision recovery on a "`claim emanating from' the Medicare Act." V.N.A. of Greater Tift County, 711 F.2d at 1025, quoting Association of American Medical Colleges v. Califano, 569 F.2d 101, 107 (D.C.Cir. 1977). See also National Association of Home Health Agencies, 690 F.2d at 938.
In United States v. Erika, 456 U.S. 201, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982), the Supreme Court concluded that there was no judicial review of a carrier's determination on the amount of an award under part B of the Medicare program. The Court viewed the "precisely drawn provisions" of 42 U.S.C. § 1395ff, which limit judicial scrutiny, as "persuasive evidence that Congress deliberately intended to foreclose further review" of the claim at issue. Id. at 208, 102 S.Ct. at 1654. The court also relied on legislative history stating that the purpose of the statute was to avoid overloading the courts with minor matters. Id. at 208-11, 102 S.Ct. at 1654-55. Finding the language of section 1395ff dispositive, the Court found it unnecessary to reach the bar of section 405(h). Id. at 206 n. 6, 102 S.Ct. at 1653 n. 6.
Some cases, however, have found that section 405(h) does not eliminate section 1331 jurisdiction when the matter is unrelated to reimbursement. In Starnes v. Schweiker, 715 F.2d 134, 139-41, (4th Cir. 1983), the court found that section 405(h) did not bar a suit alleging that certain regulations violated the notice and comment provisions of the Administrative Procedures Act, statutory provisions of the Medicare Act, as well as equal protection and due process rights. The court characterized the plaintiff's suit as one to "enforce lawful conduct on the part of the Secretary," rather than "one to recover benefits." Id. at 141.
The Starnes court relied heavily on the decision in National Association of Home Health Agencies. In that case, the Court of Appeals for the District of Columbia distinguished between suits "directly related to a claim for reimbursement" and those challenging "the mode of reimbursement," and concluded that the latter were not within the ban of section 405(h). 690 F.2d at 938. But see American Association of Councils of Medical Staffs of Private Hospitals, Inc. v. Califano, 575 F.2d 1367, 1372 (5th Cir. 1978), cert. denied, 439 U.S. 1114, 99 S.Ct. 1018, 59 L.Ed.2d 72 (1979).
This excursion through the case law addressing the nuances of section 405(h) points up the difference between the case at hand and those finding that this section precludes the exercise of jurisdiction under section 1331. Here, there is no claim for benefits under Medicare. Moreover, Colonial Penn is not an entity, such as a beneficiary or a provider of services, that is directly addressed by Medicare law. As the Secretary concedes, the administrative procedures set forth in the statute do not allow Colonial Penn to seek administrative review. Further, unlike the situation in Erika, there is no prospect here of a flood of small claims inundating the courts with matters capable of being fairly resolved in administrative proceedings. Therefore, no reason exists to suspect that Congress intended to limit judicial review of the question at issue.
Northeast Emergency Medical Associates v. Califano, 470 F. Supp. 1111 (E.D.Pa. 1979), aff'd mem., 614 F.2d 771 (3d Cir. 1980), presented a statutory challenge by an alleged provider of services and is thus distinguishable from the case at hand.
Although not compelling, it is also significant to note that the first sentence of section 405(h) binds parties to the "findings and decisions of the Secretary [made] after a hearing" and that the second sentence provides that "[n]o findings of fact or decision of the Secretary shall be reviewed . . . except as herein provided." The last sentence of that section prohibits suits against the Secretary to "recover on any claim." Fairly interpreted in context, "decision" means a determination made after reviewing contentions by a claimant and is properly read in conjunction with a provision, such as section 405(g), that contemplates an administrative hearing. As the Supreme Court remarked in Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976), "Absent such a claim [for benefits] there can be no `decision' of any type. And some decision is clearly required by the statute." See United States v. Aquavella, 615 F.2d at 19; cf. Memorial Hospital v. Heckler, 706 F.2d 1130, 1133 (11th Cir. 1983) (issue does not involve finding that no payment may be made but concerns validity of the regulation itself); Trinity Memorial Hospital, 570 F.2d at 667 ("Secretary neither made findings of fact nor rendered a decision upon the constitutional issue").
In the case at hand, there is neither a "finding of fact", nor a "decision," nor a "claim" arising under this title. Thus, by its own terms, section 405(h) does not apply to bar section 1331 jurisdiction in this case. But cf. American Association of Councils of Medical Staffs of Private Hospitals v. Califano, 575 F.2d 1367, 1372 (5th Cir. 1978), cert. denied, 439 U.S. 1114, 99 S.Ct. 1018, 59 L.Ed.2d 72 (1979).
The final factor for preliminary consideration is whether the case is ripe for adjudication. See generally, 13 C. Wright, A. Miller E. Cooper, FEDERAL PRACTICE AND PROCEDURE § 3532 (1975). At the time the suit was filed, Colonial Penn had not yet been required to make any payments as a result of the implementation of the regulations. The district judge's bench opinion suggests that in contesting a specific claim Colonial Penn could assert the contentions it presses here. That would be true if the Secretary filed an action against Colonial Penn; the company would then have the opportunity to raise its objections as a defense to the suit. The practical difficulty is that realistically the Secretary is not likely to file such a suit for some time.
Colonial Penn argues that the regulations are invalid as applied to pre-existing contracts. The company makes two arguments: first, the regulations are retroactive and thus inconsistent with the statute; and second, application of the regulation to pre-existing contracts violates the fifth amendment.
In its complaint, Colonial Penn suggested the regulations were inconsistent with the legislation because Congress sought to eliminate double recoveries rather than eliminate Medicare coverage when insurance coverage was secondary. The company has not pressed this point in its appellate challenge to the statute. In any event, we think Colonial Penn reads the statute too narrowly. The legislative history states that the purpose of the amendment was to make "medicare payment liability secondary" and to prevent Medicare from relieving "insurers of obligations to pay the costs of medical care in cases where there would otherwise be liability under the . . . insurance contract." H.Rep. No. 1167, 96th Cong., 2d Sess. 352, 389 (1980), reprinted in 1980 U.S.Code Cong. Ad.News at 5717, 5752.
The Secretary adopted the route more favorable to insurers and applied the regulations to services required because of accidents that occur after December 5, 1980. 48 Fed.Reg. 14809 (to be codified at 42 C.F.R. § 405.322(a)). Moreover, where payments "can reasonably be expected" to be made by an insurer, the regulations apply to services furnished after June 6, 1983. 48 Fed.Reg. 14810 (to be codified at 42 C.F.R. § 405.323(a)). In our view, the regulations conform to the plain language of the statute. Thus, we reject the contention that they are contrary to the intent of Congress or the language of section 1395y(b)(1). See also Daughters of Miriam Center for the Aged v. Mathews, 590 F.2d 1250, 1256 (3d Cir. 1978) (authorization to apply regulations retroactively may be inferred from 42 U.S.C. § 1395hh).
As support for its position that the regulations should not operate retroactively, Colonial Penn relies primarily on City of Los Angeles Department of Water and Power v. Manhart, 435 U.S. 702, 98 S.Ct. 1370, 55 L.Ed.2d 657 (1978). In that case, the Supreme Court cautioned against retroactive application of legal rules governing pension programs because such plans are based on actuarial premises. The Court noted that requiring refunds to participants in a pension fund as part of a Title VII award would create a major unforeseen contingency that "jeopardizes the insurer's solvency and, ultimately, the insured's benefits." Id. at 721, 98 S.Ct. at 1382. See also Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, ___ U.S. ___, ___, 103 S.Ct. 3492, 3508, 77 L.Ed.2d 1236 (1983) (Powell, J., concurring).
The change in the Medicare payments, vis-a-vis the no-fault and medical payments policies, however, was brought about by the amendments to the statute itself. The insurance company has not demonstrated any basis for challenging Congress's right to change the Medicare Act. Colonial Penn has no vested rights in maintenance of the statutory status quo. See Memorial Hospital v. Heckler, 706 F.2d 1130, 1136-37 (11th Cir. 1983); Cervoni v. Secretary of Health, Education and Welfare, 581 F.2d 1010, 1017-19 (1st Cir. 1978).
Indeed, even direct beneficiaries of the Act could not assert vested property rights as a bar to modification of the statute by Congress. See United States Railroad Retirement Board v. Fritz, 449 U.S. 166, 174, 101 S.Ct. 453, 459, 66 L.Ed.2d 368 (1980) citing Flemming v. Nestor, 363 U.S. 603, 608-611, 80 S.Ct. 1367, 1371-73, 4 L.Ed.2d 1435 (1960); see also Washington v. Secretary of Health and Human Services, 718 F.2d 608, 610 (3d Cir. 1983). Colonial Penn's decision to contract with its policyholders by tying its coverage to the Medicare provisions does not thereby confer power on the insurance company to prevent any change in the statute.
The provision in the statute requiring the Secretary to promulgate regulations gave Colonial Penn some breathing room — here, two and a half years — within which it could take some steps to ease the impact of the statutory change. In view of the interval between enactment of the statute and issuance of the regulations, Colonial Penn cannot contend that the regulations upset any justified expectations. Cf. Cheshire Hospital v. New Hampshire-Vermont Hospitalization Service, Inc., 689 F.2d 1112, 1120, 1122 (1st Cir. 1982). At least that is so in the time periods that were present here.
An additional grace period was explicitly granted by the Secretary. The final regulations were issued on April 5, 1983, but were applicable only as to services furnished on or after June 6, 1983. This sixty-day period allowed Colonial Penn further time to adjust its policies and rate structure.
Colonial Penn argued in the district court that the regulations violate the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-12 (1982). That point was not pressed on appeal, but, in any event, we do not think the contention has merit in these circumstances. If the Medicare amendment is interpreted as regulating insurance, then the statute simply represents permissible congressional pre-emption of state law. There is ample evidence of such an intent in the legislative history. Thus, the requirement of McCarran-Ferguson that the federal law "specifically relate to the business of insurance," 15 U.S.C. § 1012, is satisfied in this instance. If, on the other hand, the amendments do not regulate insurance, but only the priority of Medicare payments, McCarran-Ferguson does not apply. See generally Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, ___ U.S. ___, ___ n. 17, 103 S.Ct. 3492, 3500 n. 17, 77 L.Ed.2d 1236 (Marshall, J. concurring), at ___ n. 6, 103 S.Ct. at 3507 n. 6 (Powell, J. concurring) (1983); Union Labor Life Insurance Co. v. Pireno, 458 U.S. 119, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982).