Earl Warren: Number 480, Robert Morales et al., Appellant, versus City of Galveston et al. Mr. Shirley.
Preston Shirley: Mr. Chief Justice, and may it please the Court. This will be a divided argument. I represent the City of Galveston, take a short time and then the remainder of the time will be so taken by --
Earl Warren: Yes.
Preston Shirley: -- Cardigan Shipping Company. If the Court please, this started as a suit in admiralty, a vessel longshoreman in which the original allegations for against the City of Galveston for negligence in fumigating certain grain and went aboard a vessel. There is a subsidiary allegation that the City had failed to inspect or test the grain. The case against the City of Galveston was strictly consoled on the allegations of negligence, nothing else. As against the respondent, Cardigan Shipping Company, the case was presented there against that company for negligence in hand to inspect the test and on an allegation of unseaworthiness by way of a brief description of the operation to the elevator, this primary at an export house to Water Sack. The grain, when it comes in mostly by railcars, is tested and sampled for the Galveston Exchange Board of Trade Inspectors and Supervisor of the Department of Agriculture. That inspection was made while the car is still in the yard, five samples were taken. If there's anything shows up bad then, it will be noted. Then the car is taken to the elevator; unload it, again by opening the doors and by a person near the elevator. It then goes in by gravity down into a container, has taken by elevating legs about 1000 buckets running this way sir, up to the escape holes, where it's weighed then it goes by shoot, down to its conveyor belts and goes by conveyor belts to the various -- one of the 400 semi bins in the elevator. While in the elevator, stays generally speaking in the same vent. After that, and when it's desired to export, the owner will order so many bushels over a certain grade of grain. It is a mixed house in the sense that there's no one's grain owned by -- it can be identified as such. You can identify by grade owners. After the order is placed, a lineup was made out of which the grain will be taken, that is to particular bins and then there's not just at the bottom of each bin, you take the conveyor belt that open up it so many notches, having to use the various grades to get the desired grade to go into the ship and then runs on this conveyor belt to an elevating leg again and goes back up to the scales, again on the -- and then again on the conveyer belt and to a shipping bin roughly housed to the ship. Stevedore or the chief stevedore, well then order the grain to be released by telephone and the City employees do it. The City has no relation to, no control over or no connection with the ship. Therefore, there's no relation to, no control over or any connection with any question of unseaworthiness.
Earl Warren: Mr. Shirley, where is the -- where is the first inspection made for -- knock this gases odorous?
Preston Shirley: Mr. Chief Justice, it's made while they're in the eleva -- while in the railroad cars adjoining the elevator.
Earl Warren: They -- they made it --
Preston Shirley: Yes sir.
Earl Warren: -- for that purpose right?
Preston Shirley: Yes sir. Now, I might say this Your Honor, the inspection is a double barrel knot. It's primarily for grade --
Earl Warren: Primarily for what?
Preston Shirley: For grade.
Earl Warren: Grade.
Preston Shirley: Hardly, whether wheat number one, number two and so on.
Earl Warren: Yes.
Preston Shirley: They take five samples. They take it all to laboratory. If there's any obnoxious odors noted or if the inspectors find any, they will note it on what is known as pan ticket which is a record of the car that goes through the elevator under permanent record.
Earl Warren: I see.
Preston Shirley: That's the first inspection sir.
Earl Warren: Yes.
Preston Shirley: Now, that is not a chemical test Your Honor, but it is an older test by moving in the car, smelling it and then taking the samples over to the laboratory to grade it.
William J. Brennan, Jr.: Mr. Shirley
Preston Shirley: Yes, sir.
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: Mr. Justice, in certain cases if the grain is found to be weevily.
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: Yes sir. Has -- if it has weeviled, there will be fumigant put in while it's in the railroad car by the name of --
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: High Life sir. And --
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: No sir, they open the car, pour it on top, spray it over the top of it.
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: Yes sir. And High Life is non-damage into humans, maximum of 72 hours, actually at the 20 --
William J. Brennan, Jr.: (Inaudible)
Preston Shirley: It is for about 24 hours sir, then from 24 or 48, not considered. And certainly after 72, there's no question but it's not harmful at all then.
William J. Brennan, Jr.: (Inaudible) kept in the car for that period time.
Preston Shirley: Yes sir it's kept in the car for that period of time and then the Board of Trade goes back, reinspects it and clears it for unloading. There's always a second inspection, if High Life is put on the -- if the fumigant in the car. Now, in further carrying out Your Honor's question on the -- on the occasion, into the elevator if it gets weevily, a fumigant by the name of “Weevil-Cide” would be put on it. But again, you have the 24 and 48 to 72 hour proposition.
William J. Brennan, Jr.: Well, that was (Inaudible)
Preston Shirley: Well, sir there has never been an incident like this before. There had been three incidents, the Lipscomb Lykes in 1949 where Judge Kennedy, the Southern District found that at the elevator had actually fumigated the grain and then shut it on in without a necessary time elapsing. And in Panamolga case which was -- to which the City was not a part, it was again found that the City fumigated the grain while it was in the elevator. And in the Zosianne it was alleged, and that's in '53 the last incident, that the City had fumigated the grain.
William J. Brennan, Jr.: It's been accurate (Inaudible)
Preston Shirley: Yes sir.
Earl Warren: May I ask you Mr. Shirley, what -- what happens besides putting it on the record, if anything, when they find not just odors on this first inspection while it's on the car.
Preston Shirley: It is held out until they're removed sir and that the Board of Trade passes the car for unloading.
Earl Warren: Yes, I see.
Preston Shirley: Now, if the Court please then, coming down to what the trial court found, it was a seventh or eighth-day trial. Numerous witnesses were introduced; all the records were introduced. The court found as a fact that the City did not fumigate the grain either in railroad cars or while in the elevator. And Mr. Justice Brennan and I say that there's -- there's no comfortable incident in the sense that the others were allegations or findings that the City hate and in this and it's an absolute finding of the trial court which by the way is not attacked here to the effect that we did not fumigate the grain. The court also found that there was improper fumigation had an inland point that is before we put it on the railcars for transportation to Galveston and that the fumigant there was chloropicrin. That finding is not attacked. The court further found that the City did not know and the exercise a reasonable care should not have known of any improper inland fumigation. The court also found that the City had never received any knowledge of any prior instance of this kind. All those findings if the Court please, are not attacked. They're accepted. There's no attack laid on here.
Earl Warren: I understood Mr. Mandell to say yesterday that -- that the City did have knowledge of these three that you have mentioned.
Preston Shirley: Yes sir. Mr. Chief Justice, the City had knowledge of those three were the allegations and findings where that the City had fumigated.
Earl Warren: Yes.
Preston Shirley: The trial for here found we did not fumigate it.
Earl Warren: Yes.
Preston Shirley: Now, and that there was an inland fumigation, an improper inland fumigation that caused trouble.
Earl Warren: Yes.
Preston Shirley: The trial court found we had the -- had no notice or knowledge of any prior instance of improper inland fumigation. However, it's put on --
Earl Warren: In this case, in this case.
Preston Shirley: Yes sir or any other case actually. It never happened before.
Earl Warren: Well what I -- what I -- I'm not quite clear. I was trying to -- to connect up these other three accidents that you mentioned just a moment. Did the Court find that they did have knowledge of those or did not have knowledge?
Preston Shirley: Oh the court found we had knowledge of those, sir.
Earl Warren: You have knowledge?
Preston Shirley: There were suits against the City. There's no que --
Earl Warren: Yes, yes.
Preston Shirley: As a matter of fact sir, the suits were brought for -- an allegation to fumigation by the City and that about the third as the record shows, the management was changed and an entirely system of control to put into be sure it didn't happen again. So -- is that --
Earl Warren: Yes, that's answered my questions.
William O. Douglas: Well, Mr. Shirley.
Preston Shirley: Yes sir.
William O. Douglas: Did the city know that the grain was frequently fumigated at in -- at in -- at in an inland point?
Preston Shirley: Yes sir.
William O. Douglas: You didn't know that it was improperly fumigated?
Preston Shirley: No sir and the record is undisputed that throughout the industry over the many, many years. This is a first case of inland fumigation, the chloropicrin or any other substance to cause many trouble.
William O. Douglas: But you did know that those were fumigated at inland point?
Preston Shirley: Yes sir, we did.
William O. Douglas: And in the previous incidents in which the City had fumigated and it caused some trouble, was the cure for the trouble of system of inspections?
Preston Shirley: Yes, sir and the tie to control the records, so we knew exactly where everything was. As a matter of fact sir on this one, the 72 hours was the maximum then, it only limited here. The last fumigation for the City was February, I believe, the 27th on a March 14th incident.
William J. Brennan, Jr.: Well Mr. Shirley, was there any finding of any deficiency on the part of the City in its inspections which might perhaps have -- have discovered whatever may had been the condition resulting from the inland --
Preston Shirley: No sir. The court found sir, as in fact that we were not negligent in failing to learn or to know the presence of the inland fumigation. The court found we were not negligent in failing to make additional inspections. The court found that we made careful and plain taking inspections and examinations and that they failed to detect anything and the court found in addition that there's no reason to believe that additional inspections would have been more successful.
William O. Douglas: Or was it the grain come from so far away that a normal fumigation would automatically have eliminated any danger with the (Voice Overlap) --
Preston Shirley: Yes, sir.
William O. Douglas: -- kind of grain arrived --
Preston Shirley: Yes, sir.
William O. Douglas: -- at the city?
Preston Shirley: Yes. sir. Mr.Jusitice --
William O. Douglas: None of it came -- and none of it came from such a short distance that -- that the 72 hours would not have come.
Preston Shirley: No sir.
Earl Warren: Where did it come from Mr. (Voice Overlap) --
Preston Shirley: Sir, we have no idea because it's a commingled house and it can come anywhere from Nebraska West to any gulf port. Mr. Chief Justice, I cannot an -- there's no way to answer that question sir. Now, continuing just a minute on it, the -- let's say we have trial court's findings completely to the effects we were not negligent in every respect. It went to the Court of Appeals and that Court held that there's no basis whatever for attack on the trial court's finding, that's the fact. It also held that the trial court's findings were well-supported and wholly reasonable. It didn't came to this Court on the argument about unseaworthiness between petitioners and co-respondent, Cardigan Shipping Company, this Court sent it back to the Court of Appeals for consideration; lie to Mitchell versus Trawler Racer. We did not participate in the argument -- second argument of the Court of Civil Appeals and had nothing to do with it because there was no attack made upon us one way or another. And as a matter of fact, as I understand counsel's argument pretty much yesterday, he says that the crux of this case was unseaworthiness and if that's true, if the Court please, I may -- my fact findings may get out. Thank you very much.
Earl Warren: Mr. Watson.
Edward W. Watson: Mr. Chief Justice and may it please the Court. Although, I believe the run of my argument will have to be with the question of unseaworthiness, I'd like briefly to take up where Mr. Shirley left off with the question of negligence to advert to the characteristics of chloropicrin, the particular fumigant that was found by the trial court to have been involved in this case. Actually, this was one of these extremely coincidental matters that the fumigant ever got to this particular balance. Chloropicrin is applied as a watery liquid. I mean it's supposed to be sprinkled over the grain in the inland granary or in the railroad cars or cars being loaded. An expert testified at the trial that the only possible way that this chloropicrin got through to this bin on the Grelmarion was that somebody carelessly dumped a lot of this watery liquid on to a particular portion of the grain. There was really a sudden mass of grain at being a watery type of liquid unlike the more gaseous types. This wet grain was able to survive the journey in the railcars, the elevation and through the Galveston Wharves elevator, the weighing, the shifting into bins, the measuring out, the mixing, the putting in the loading bin and the travel down to shoot from the elevator into the vessel.
William J. Brennan, Jr.: Is that to say Mr. Watson that the actual finding of -- whatever you call that chemical.
Edward W. Watson: Chloropicrin sir.
William J. Brennan, Jr.: Had been introduced at some inland point and not either at Galveston or --
Edward W. Watson: The chloropicrin was never used at -- at seaports.
William J. Brennan, Jr.: So the -- so the finding is that had to be -- had been introduced.
Edward W. Watson: The medical testimony and also some late testimony as well as the expert's, indicating that the characteristics of the fumigant experienced by the libelants was such -- it was a pretty sure thing, it was chloropicrin. It affects the eyes, I mean there was one bit of evidence that to me was very conclusive and that these men were taken for first aid to a doctor's office and the nurse in that office, the day following, noticed that there was some kind of a watery substance that gotten on her clothing that made here eyes smart. It might also be said and because this is somewhat relevant to the issue of damages which is raised by the petitioner here, the chlo -- the another characteristic of chloropicrin unlike some of the other fumigants used which are chlorinated hydrocarbons, the chloropicrin can be highly annoying but if it's sufficiently concentrated, it kills you. If it's not that well concentrated, you get over it rather quickly, it has immediate effects but they're passing. There's no permanent damage to deliver such as with result from Weevil-Cide which is a chlorinated hydrocarbon or the High Life which is never used on ships, incidentally because it's too volatile and too explosive. It all -- might also be said while we are talking about what was the chemical involved here that the libelants made in the trial court and have since raised in their petition for certiorari and in their brief the question of an absence of -- of test as called for by government literature? Actually, the court disregarded all of that evidence and I think it should be disregarded here because the literature referred to test of grain for the purpose of human consumption. And actually, there was an exception in this -- in these manuals and said it did not apply to the application of these kind of fumigants that we were discussing here to grains, but they were talking about some other grains. This is at page 714 of the record. That the ethylene dibromide and methobromide or the kind of things that could penetrate a grain and make it unfit for human consumption and these were the things that Miller, under the Food and Drug actually test for. But these were not the kind of chemicals that were ever used in fumigating grains in elevators or in railcars or on ships to get rid of weevils. But I -- I would call the Court's attention to this matter of the chloropicrin because I wanted to illustrate the extreme coincidence that ever brought it in to this area where it caused the affliction to these libelants, I mean it took an extreme chain of circumstances, just-right atmospheric conditions to keep it from dissipating. And apparently, the heat generated by the last trip down the spout, from the elevator into the bin of the ship was just right with other conditions to make this watery substance turn into gassy substance and as it came out of the spout and into the bin on the ship, the men there immediately felt the effects coming off the grain. Now, this is, to me, the second factual point that is of high importance in this case. The evidence -- all of the longshoreman, I believe, testified and their evidence as well as the evidence of other men who were in the bin but are not parties to this case, was all to the effect that they immediately felt something smarting their eyes and making them tear as the grain was still coming out of the spout and before them into this closed-in bin where they will work. In other words, they received whatever toxic effects they received directly off the grain. There's a mark difference in that connection between -- and I think the Circuit Court so noticed as Mr. Mandell referred to it yesterday. Between that case and the case where maybe the grain had been piled up so high that the men exhausted the oxygen in the air that they were working, and for lack of a fresh supply of oxygen, they were asphyxiated. The medical testimony in this case was not of asphyxiation or a lack of oxygen at all. The medical testimony in this case was of an acute intoxication which meant that a gas of toxic effect was inhaled directly and suddenly, I mean it wasn't chronic or accumulated.
Earl Warren: Well, was -- was it closed? Was the opening closed on these men?
Edward W. Watson: Actually Mr. Chief Justice, the -- as the grain has run up in the opening, these bins are about 10-feet high and they're about 15 feet by 20. I forgot the exact dimensions.
Earl Warren: Yes.
Edward W. Watson: This bin was already three fourths full of grain. This was practically the last shot of grain to be put aboard the ship in this bin, so the working space had become very small. But as the trial court heard and the trial court found, it was entirely normal that as this bin is -- this grain has run out of this elevator shoot, they temporarily cover the opening to the bin and the men start pulling that grain away with their woods, scoops or shovels.
Earl Warren: But the answer is yes to my question.
Edward W. Watson: That the -- the outlet to the air is -- is closed.
Earl Warren: Now, --
Edward W. Watson: But --
Earl Warren: -- the reason I asked that question, I want to follow that up with the -- well another and I was going to ask you if it might not be that -- that the closing of this airspace would cause the toxic effect to be greater than just what -- what you said, that it was at as it was passing down the shoot.
Edward W. Watson: Mr. Chief Justice, I believe on the record in this case, that would not be true. I think the evidence is so strongly that the effects were felt directly off the grain. I don't know -- incidentally, it might also be said that the hysteria that developed was due to an initial suspicion that this may have been a fumigant such as involved in those three prior incidents that happened more than four years -- the last, more than the four years previously where the fumigant used was a chlorinated hydrocarbon. And I'm sure all of us that had the careless experience of one time or another whiffing an open bottle of carbon tetrachloride which is chlorinated hydrocarbon. And even though we are in this room with all the oxygen and everything that's around us, that -- that gas as we whiff it is very penetrating. It immediately serves the insides of our -- the linings of our nose. Incidentally, it's also a very bad gas too within that way. And I -- I believe the physical description of what happened to these men in their own word, not in somebody else's words but in their own words, makes it rather apparent that they were not in anyway suffering from a lack of oxygen but they were suffering because they all admitted -- this is being down there with all the air shut off as a normal experience, so the causative factor in this was not the lack of the oxygen but the presence of this alien substance. Now, I may have aviated your question Mr. Chief Justice in that respect but --
Earl Warren: Well, does this argument go to negligence or unseaworthiness?
Edward W. Watson: These facts in my opinion go to both. I mean I think they go to the -- first, to the negligence question that there's nothing the ship could have done and the trial court so found to have avoided this incident. The bin on the ship was a normal beyond, the standard instruction. The men were working in a normal way. Absent, the chloropicrin gas, nothing would've ever happened. We would never have heard of this case. The fact of the chloropicrin gas coming off the grain caused the incident which is the entire basis for this lawsuit. I believe this brings us to the -- what Mr. Mandell has called, "The crux of the case," because in his treatment of it hand and our own, the -- the question is really whether the vessel, unable to control this situation, unable to avoid it in any possible way, is liable for an unseaworthiness which arises from the breach of a duty.
William O. Douglas: Mr. Watson.
Edward W. Watson: Excuse me sir.
William O. Douglas: Before you leave this other point, previous incidents had indicated that there was a possibility that even if the grain is fumigated at the -- in the elevator by the City that the fumigant may linger and you could have some trouble in the hold of the ship. And I gather that some inspection routine and other controls were instituted to control this matter. And in any event, the inspection routine was setup for the purpose of detecting whether or not there was any excessive residue of fumigant.
Edward W. Watson: Mr. Justice White that would not be the case. Actually, I thought Mr. Shirley looked at this point. He didn't possibly make it entirely clear. There was no inspection being conducted to determine direct, the presence of fumigant residuals in this grain. Frankly, I think the trial court found it would have been impossible to examine the grain that closely. This particular chloropicrin may have come off of 40 or 50 bushels of grain at the most. The ship was loading 300 or 400,000 bushels of grain at a very fast rate from the elevators' grain spouts leading in to about four holes. The -- the stevedore in charge of the loading had the opportunity, as the record shows, of cutting off this flow of grain if at anytime the government inspectors stationed at the end of either any spout, notice the grain was off-grade in any way. Now, one of the things that would put a grain off-grade would not only be the mixture but if it comes out with an objectionable odor. In other words, if the men themselves had noticed this chloropicrin, they would have the stopped the run of grain at the deck before allowing the ship to complete. Actually, the -- the manner in which this grain is handled though would mean that even if he called up to the elevator and said, "Stop spout number 3," it takes probably 30 minutes -- 30 seconds to a minute before they can cut the flow of grain off at the elevator house. And meanwhile, whatever effect was going to happen to the men on this bin would have already happened. So you have a situation of something happening -- happening very suddenly and even frankly, if they had known it was going to happen, they couldn't have stopped it in time. But the -- going back to what Mr. Mandell calls the "crux of the question here" and I believe it is just that. It is the question whether the shipowners warranty extends to the condition of the cargo because from the view point of approximate cause, it was a condition of the cargo which caused the injury in this case. And I think counsel really conceives that in his opening argument to the Court yesterday though other elements of the case are injected. We always come back to this single question, does the ship besides warranting that the ship itself is seaworthy -- besides warranting that its appurtenances are seaworthy, besides warranting that its personnel are fit for their calling? Does the ship also warrant that the cargo which is being taken aboard is free from the conditions which might cause harm? And as stated in our brief, we find no case which says so. And if it is so held in this case, I believe it would be an extension of the doctrine of unseaworthiness as stated up to now. There are some cases involving cashew oil liquids. There are some cases involving the use of carbon tetrachloride or the carriage of carbon tetrachloride on vessels. I believe an examination of those cases insofar as they would be pertinent here, shows that -- where liability was found, it was rested on really negligent handling of a known dangerous commodity. Here, we had a commodity that had no know -- known dangerous characteristics and for that reason, required no special handling but again, we're getting back to negligence.
Earl Warren: May I ask what the -- what the known dangerous element of cashew oil is, --
Edward W. Watson: It's a highly corrosive --
Earl Warren: I don't know.
Edward W. Watson: It's a highly corrosive liquid Mr. Chief Justice.
Earl Warren: Corrosive.
Edward W. Watson: Corrosive. And as a matter of fact, in handling the importation of it, the -- the longshoreman customarily wear -- wear gloves, I mean that are impenetrable to a corrosive or acid. And they use a (Inaudible) to causes a dermatitis and apparently no matter how it's packaged. If you handle it, your skin is going to be affected.
Earl Warren: I see.
Edward W. Watson: And I believe there are two of the cashew oil cases and both of them if I am not mistaken, one was a New York State case, one in federal court, both of them rested upon the question of failure to warn the workmen of the fact that they were handling something that would cause dermatitis unless they took a proper precautions. They -- if the warranty of a vessel as to unseaworthiness is to be so extended, as counsel would contend in this case. It suggests itself to the respondent that we are opening a door, a "Pandora's box" literally, of all kinds of -- of complications. To begin with, it's easy to see where the ship's warranty is confined to its gear, to appurtenances, its personnel but this is going to be confined in area aboard the ship. But if the ship is responsible for any element within its cargo that might cause injury, I was thinking yesterday when hearing the argument on the "twilight zone" cases, where does this responsibility of a ship before its cargo stop? Are we going to hold them responsible for all things that might come out of that cargo, all conditions even after the cargo has been landed and put ashore in a warehouse and the ship is going about its way? Or does the responsibility of the ship for the conditions of that cargo start when the ware -- when the longshoreman are still palletizing the cargo in the warehouse and before they'd even come near the -- the ship's tackle, if it is under the ship's warranty of course that thing, the thing that we would properly dispute.
Earl Warren: May I ask, who, if anyone would be responsible for this condition, for this accident?
Edward W. Watson: This accident Mr. Chief Justice was under the findings of the trial court which are, I believe well-supported in the evidence, due to the carelessness of a party unknown at some inland elevator. The ability to trace back to that party being wiped out in the way the grain in bulk is handled and then received in the elevator in its identity lost. This does not mean, however, that the injured workman have or -- or without a remedy because obviously, the -- the longshoreman and Harbor Worker's Compensation Act was designed to cover some responsibility to give them some protection in some area. They have new opportunities for recovery in many areas. But here, in our position, is an area where they have the benefit of the compensation law in a proper field, the kind of thing that the compensation law was designed for where you cannot put the finger on a fault or even a breach of a warranty because we say the warranty was not there. So here, it's clearly a proper place for the compensation law is such to operate. But it would also occur to us that if the warranty of the -- of seaworthiness or reasonable fitness is to be extend to a condition of a cargo, that immediately you have start making new categories. You might have a cargo that was inherently dangerous and the injury consequent on a condition of that inherently dangerous characteristic. Now, that might be your cashew oil liquid cases. Or you might have a cargo not inherently dangerous but the injury from a normal condition of that cargo and that, I would suggest might be comparable in a way to the Mitchell case. Then you'd have another category of a cargo not inherently dangerous and the injury resulting from an abnormal condition. That I think is the case we had here. In other words, grain, wheat is a staple, it meets certain standards, it's trade. I believe the figures show that this particular export elevator handled 300 -- I mean, 30 million bushels a year of these commodities of this type. It's in world trade. It's standardized by various governmental agencies. It's not regarded as being a dangerous commodity. It's the source of bread. Certainly, the condition of this particular grain which produced the injuries complained here was a very abnormal condition, not to be expected despite these three prior incidents of some years previously because it really wasn't in the final analysis in the same category of those incidents.
Earl Warren: Did I understand you to say, if this had been the other kind of chloride that it probably would have killed them?
Edward W. Watson: You mean that chlorinated hydrocarbon?
Earl Warren: Yes sir.
Edward W. Watson: That has a toxic effect on the liver, if inhaled in sufficient quantities. If the -- the greatest damage seems to be done in the -- in the chronic cases where you inhale chlorinated hydrocarbon consistently over a period of time rather than in -- in the -- in acute cases where you have a very strong inhalation but only a single inhalation.
Earl Warren: And that was -- that is used on occasions?
Edward W. Watson: The chlorinated hydrocarbon is the base of the weevil side which is used in the grain elevator but which -- or at least four years prior to this incident had been used under a very tight control. Now on the ships sometimes, they fumigate aboard the ships. And when they fumigate aboard the ships themselves, this did not happen here, but then again they -- they used a cyanide gas type of fumigant. And the Court may recall in the petitions for certiorari, both of them in this case, some pictures were attached to floors that were being used on a ship. These were being used to clear this kind of a gas out of the ship. Obviously, I mean when cyanide has been used, you can't work for its bin until the whole atmosphere has been well-purified and oxygen restored. We submit that those pictures in the evidence relating to the use of blowers to get cyanide gas out of a ship has no relation to this case because blowers of that kind are never used to air a grain in the first instance and the ship here was not fumigated at any stage of the proceeding in the second, so were not concerned with that aspect.
Earl Warren: Was there any inspection made by the City or the ship or anybody else to see whether that kind of a chemical was used in this -- in this situation?
Edward W. Watson: Mr. Chief Justice, you mean a chlorinated hydrocarbon?
Earl Warren: Yes sir.
Edward W. Watson: I believe this information would have come to the various grain inspectors and there's several -- there's a federal inspector and is a Local Board of Trade inspector. Only incidentally to their examination of the grain for all kinds of purposes to determine whether weevils were in it, to determine whether there's any foreign matter, to grade it, to determine how many kernels of this kind, how many kernels of that kind or to determine whether it had any commercially objectionable foreign odors. But it's pointed out by Mr. Shirley --
Earl Warren: Are there any test that could be made to -- reasonably be made to determine that?
Edward W. Watson: Mr. Chief Justice, I'm no chemist. I only remember what these men said. I believe of course that it would be practical to test for almost anything. But to test in such a way as to avoid this kind of incident would have required almost a bushel-by-bushel inspection of the grain and when you're handling 400,000 bushels of grain, loading that much aboard a ship in a day and a half and trimming it out, I question as the court -- trial court questioned whether there's any practical means of -- of finding this out. Actually, I think the opinion of the trial court was -- was unnecessary to find this out. This is a kind of thing you take precautions for and actually, the precautions against the presence of chlorinated hydrocarbons were -- were worked in this case. There's no evidence to show that there was any chlorinated hydrocarbons in the grian.
Earl Warren: Well, it's true but the -- but the ship wasn't custom to -- to taking on -- taking on grain and filling in this manner, sometimes closing the -- the air shaft and one would think that perhaps there ought to be some test that men were going supposed to be going into that bin, there might be some test that would be given to determine whether it was safe for them to do it. That was the reason of my question here.
Edward W. Watson: Mr. Chief Justice I would say and this is, I believe not in the record and I hate to depart from the record. But I -- I mean I have known in these other instances where a grain that had been fumigated was found aboard a vessel and the workmen were pulled off the job. I think the Zosianne case was an example of that type. But before the workman ever go back to the job, the chemist go in and they not only test the atmosphere above the grain but they make probes into the grain to make sure there's not a -- a latent gas there that maybe released as the grain is stirred up for the trimming process. But that is the only instance I believe that I can recall. I'm sure other counsel can recall where this kind of work is done.
William O. Douglas: But would it make any difference if -- if in this case, the fumigation had been done by the City, would you still make the same argument?
Edward W. Watson: I think that would completely change the complexion of this case Mr. Justice White. I mean if the City had fumigated the grain without putting the ship on notice that it had fumigated the grain, I think Mr. Shirley and I would be adversaries here as well as sitting on the same side of the table.
William O. Douglas: Yes, but how about -- how about your argument of unseaworthiness?
Edward W. Watson: It would have been -- well, somebody would have been responsible in negligence if the City had fumigated the grain and knew that fumigated grain was being loaded aboard this vessel and either did not issue the proper warnings and make proper tests themselves or else did not advise the ship so the ship could have issued the warnings and made them --
William O. Douglas: But would that change your argument on unseaworthiness?
Edward W. Watson: I believe not Mr. Justice because I think -- I think the liability there would be rested on -- on principles of notice or constructive notice which of course would take the case back into the area of negligence.
William J. Brennan, Jr.: But on -- in this if I understand you correctly, you're relying particularly on the finding of this condition, the happen stands of a combination of factors, is that it, that there was nothing anyone could do when the heat as it came in from the bin and suddenly combined with the conditions within the bin to make gaseous but there before, had just been a sub-mass, isn't that it? On the seaworthiness argument?
Edward W. Watson: Mr. Justice Brennan, I think that's exactly it really. I think that's what happened, I mean and I think there's nothing that could've been done to avoid that in the manner in which the ships are handled, the manner in which these men have to work.
William J. Brennan, Jr.: Well, is this the way you distinguished Trawler Racer?
Edward W. Watson: Sir?
William J. Brennan, Jr.: Is this how you distinguished Trawler Racer?
Edward W. Watson: This case in -- in my opinion sir would be like Trawler Racer. If you change the facts of Mitchell, the Racer case, and had the seaman there, we'll say perhaps as they are hauling this catch of fish in over the side of the vessel out of sea at an earlier stage of the voyage, if he had encountered a ship -- an unusual species of fish where a spine that was poisonous to him and had it gotten an infected hand as a consequence. I mean this to me would make -- if that was the Mitchell case then that would be our case or another -- another analogy might be that one of the fish that they brought aboard the Racer while still out at sea, had -- had a previous encounter with some other fisherman and came away with a big hook still in the fish and perhaps while he's gutting the fish and creating this gurry and slime for the rail, he -- that's happened to me or at all fishermen, he encountered this alien hook, they would have no reason to suspect it was present in this fish. That kind of a situation, if that had been the situation in Mitchell, would I think make it like this case.
Potter Stewart: But it's an unseaworthy fish rather unseaworthy ship.
Edward W. Watson: An unseaworthy fish Your Honor, yes sir. The -- but to me, there's -- it also as to be noticed in -- in the Mitchell case that while this Court has said that this was a transitory thing that notice was not necessary, yet the owner of the Trawler Racer did not have to have notice, I mean because the condition that was encountered by Mitchell was a normal byproduct of the way the ship was being used. Now, the condition that was encountered by Morales and the others was not a normal byproduct of the way the ship was being used. And there had been a number of cases since the Mitchell case was decided here and the cases prior to Mitchell, where juries have been instructed in the terms of the Mitchell case, and they have not always found unseaworthiness merely because a condition was transitory or they have not always found unseaworthiness merely because an accident happened. There is still this question of reasonable fitness for unintended use.
Potter Stewart: The Mitchell case itself wasn't the -- wasn't the action of this Court to remand it to the District Court?
Edward W. Watson: It was Mr. Justice Stewart and I've always been interested in what happened then but I don't know.
Potter Stewart: In any event, this Court didn't hold (Voice Overlap) --
Edward W. Watson: No, it was a question of instruction, an erroneous instruction having been given the jury and I believe that is similar to the situation found on the other cases cited by the petitioners here. Of course, that is the end of my argument sir.
Earl Warren: Mr. Mandell.
Arthur J. Mandell: Mr. Chief Justice may it please the Court. I am not going to present the -- for this Court any unseaworthy fish or any unseaworthy condition that does not relate exactly to the ship in question. As I understand the argument presented by my colleagues, (a) they state because the Court found that the noxious fumes and insecticide has been placed at a inland place somewhere that -- that absolves them of all responsibility. And I submit to this Court that that simply cannot be solved under our system of jurisprudence. They conceded as they had to that it was known to the industry, it was known to the Galveston Wharves, it was known to the -- the agent of the Steamship Company that such practice is engaged in by the industry. Now, what steps had they taken to prevent an occurrence such as this, especially in view of the past history in that very port? Now, they state that inspections have been made by, at the time the railroad cars came in, and when it goes into the bin. But I submit to this Court that that is simply not so and the record said it.
William J. Brennan, Jr.: Was there a finding about inspections Mr. Mandell.
Arthur J. Mandell: Yes sir, there was a finding that the -- it could not have been discovered. And of course, I am stuck with this finding and I'm not asking this Court to set aside any such finding except to say that the finding of negligence itself of no negligence rather itself is erroneous conclusion of law under the very record in the case. If you will permit me --
William J. Brennan, Jr.: (Voice Overlap) on the record, you mean on the findings, it's erroneous?
Arthur J. Mandell: It's erroneous on the record. I say there is no evidence at all to support no negligence and I may submit this to the Court as follows. The -- a Mr. Carroll who was the Superintendent of the Galveston Wharves was called as a witness. And on page 26 of my brief, this witness testified in rather detail how the -- the grain comes into various bins and that certain bins are fumigated and others are not, that they keep a record of the bins that are fumigated. But it further testified that from time-to-time, the grain is shifted from one bin to another and there is no record of the -- of the grain that has been shifted. There only is a record of a bin and the Court -- when the Court realized that, it's stopped them and the Court asked him this question. The point I'm making is, if you don't know a body's possible transfers from bin one to bin two, how can you tell me conclusively that a grain from bin two that went in to the vessel had not been switched around and hence perhaps hadn't been fumigated, do you follow me? In other words based -- the evidence was that they loaded that bin from so many number bins, but also -- the evidence was also undisputed that there was no record kept if grain in bin five that was fumigated, was transferred to bin two. In other words, they kept the record of the bins that were fumigated but not of the grain and the grain was constantly shifted from one bin to another. And the court says -- the court asked him, "Do you follow me?" The witness says, "I follow you." “There is a slight possibility that a small amount of that could have happened?” “Yes sir.” The court, “And your records would not show the contrary?” The witness, "No, sir." The court, “Wouldn't show either way?” "No, sir." Actually, there was n record that the bins of -- of the grain that was actually fumigated but only on the bins and there record is undisputed that a grain would be shifted from one bin to another. There is more than that Your Honor. The record is undisputed that a tests that were made as Mr. Watson stated, was for the quality of the grain and not for the purpose of determining whether it has been fumigated or not. And how did they go about it? They go to a car -- the railroad car that comes alongside. If it comes in by 12, there is no -- apparently, no method of inspecting it. But go to a car and they pick up a sample of the car. They take that bin away, some distance away. And sometime later in some laboratory, somebody makes a test to their grain for the quality or whether that has weevils in it or not. Now, they say incidentally, if there is some unusual odor we noted, but there is no evidence at all in this record that any inspection was ever made. Now, this is fortified by further testimony and the court was interested in it and a witness by the name of Goss, he was the sampler who stayed on the ship and as the grain came out from the spot, took some samples. And he -- this man was present when these men were buried in their bin and when they were pulled out, he asked them, "Did you yourself see the mill?" "Yes sir, I saw the mill." "Well, did it seem to you that our air from fumigant.” “It seemed to me that way.” "Did you then take your sample to test, to see what was the matter with that grain?" He said, "No, sir." "Well didn't it seem to you that that was the time to do it?" He said, "No, sir because I do not test it for that purpose." But the evidence goes further than that. Immediately above the vessel or before the last bin -- the grain in the last bin has poured into the spout, no tests were made. At the crucial point, now this was a shot of 500 bushels of grain that obviously was contaminated. Now, what did the ship do about it? With the knowledge that they had of the previous condition, nothing but absolutely nothing, they just assumed that everything would be alright. Now then, an answer to Mr. Justice Harlan's question yesterday, "What could they have done?" This is one of the things that they could have done. But frankly under the doctrine established by this Court and what I thought firmly established by this Court, knowledge is not prerequisite and it has been found in this -- in this cashew oil grounds. Some seamen while loading some cashew nut -- cashew nut oil, drums of cashew nut oil and some of them got into their hands because it was a leaky drum. It was just gotten in onboard ship. The vessel had no knowledge of the situation, couldn't have had a knowledge. There was no question in the District Judge's mind that that was an unseaworthy condition. There're many other cases, in the Boudoin case decided by this Court. (Inaudible) know of the vicious disposition in propensities of the seaman until the assault, he was a calm gentleman. Until under certain conditions, he became vicious. This Court held that seaman to render the vessel unseaworthy. In the Johnson Line versus Maloney, there was presence of wheat dust and wheat kernels on the deck. A situation that to me it would seem comparable to the -- to the sample that Mr. Watson gave and so the rest of the trade because you cannot load grain, I don't think, without getting some kernels on the deck or some wheat dust, but the Court held that to be an unseaworthy condition. This is not a case where you -- when you're a fisherman and when you're a fishermen, has certain no risks, that I take coming here to speak before this Court, this is a great Court. I don't care how many times anybody comes before you, I assure you that a steep channel and somebody may have a weak heart and rock. That's a risk of my trade. I can't help it. But that's not a situation as it happened here in the Grillea case. In the Grillea case somebody just -- longshoreman picked up a -- a hatch cover and improperly placed it. The ship-owner didn't really think about it, the Master was probably sure buying his wife's clothes and the loading made probably done in the galley drinking coffee. He didn't know anything about it but this, the Court imposed liability on this thing and put in Investors v. United States. An apple peel, somebody slipped on an apple peel, I mean --
John M. Harlan II: You go -- you go so far as to suggest that any accident that happens on a ship to a seaman or one who is properly on the ship or to do duties, is -- renders the owner libel because of unseaworthiness?
Arthur J. Mandell: No sir.
John M. Harlan II: Where do you draw the line?
Arthur J. Mandell: I draw the line in the situations for instance, I've gone aboard the vessel, I'm a longshoreman and I carry my -- my hook and I swing my hook because I feel good this morning, and I swing it right into my hand. Certainly, that didn't render anything unseaworthy or another longshoreman trips me, not meaning to. That didn't render the vessel unseaworthy or I trip over my own feet. That didn't render unseaworthy, numerous cases where I can illustrate. But here, there was an absolute failure to supply a safe place to which that there's then no question about that, that a vessel was rendered unsafe for the purpose for which these men went down there to work. The Court so finds and relies only on the transitory doctrine because it happened just like this. This argument that a ship couldn't have done anything about it, it has been made many times before. And as I stated yesterday, the finest example is the -- the Petterson versus Alaska Steamship Company when they had a -- hook that look just tripping and it had a latent defect. This Court had no hesitation to affirm the case. And now, the Crumady case decided by this Court, you remember in that case, there was a good (Inaudible) but it was improperly used, made defective. It was not inherently defective but made defective by the longshoreman working with it. This Court had no hesitation to impose liability in this (Inaudible) case. I submit that this case is a classic example of a place where the longshoremen were working in an area that was not reasonably safe to do their work, expected and intended of them. The shipowner should've known about it, had knowledge of similar instances. There is both negligence and unseaworthiness of this case. I say just -- this is not an inherent dangerous thing to do, longshoremen do it with safety all the time. It is only under the circumstances in which the commodity is -- becomes dangerous by reason of somebody's act, renders the area not reasonably safe to do the work. I believe that the Mesle, a 260 F.2nd 747, sets out that -- that the standard, I think, correctly what constitutes and what does not constitute to unseaworthiness. In this instance, the shipowner had actual or constructive notice that grain is being fumigated. It has happened in that port before. The shipowner didn't lift a finger that discharge his duty. Under such circumstances, we submit the liability is imposed under the law as we know it. Thank you very much.


William H. Rehnquist: We'll hear argument next in Number 97-1489, Your Home Visiting Nurse Services v. Donna E. Shalala. We'll wait just a minute. Ms. Gustin.
Diana L. Gustin: Mr. Chief Justice, and may it please the Court: Petitioner is here today to complain about an insurance company. In this case the insurance company is a fiscal intermediary serving as the agent for the Government, reviewing medicare cost reports, making determinations about allowable cost, and also making decisions about whether or not the cost report may be reopened. In this case, the petitioner, a home health agency, discovered new and material evidence after the initial period for requesting appeal, and therefore made a request for a reopening of the cost report. The intermediary, the insurance company, denied the request to reopen, considered this a final determination, and then we filed an appeal for review of that final agency action at the Provider Reimbursement Review Board. The review board declined to accept the case, stating it did not have jurisdiction to review the refusal to reopen. The district court upheld the jurisdictional decision of the board and the Sixth Circuit also upheld the district court, which brings us here today. We would like to begin with the statement that there is a presumption that there will be judicial review of final agency action, and this presumption is noted in the Court's decision of Bowen v. Michigan Academy of Family Physicians, where the Court's opinion started with saying, we begin with a strong presumption that Congress intends judicial review of administrative action.
William H. Rehnquist: Well, but you had one round of judicial... of administrative review here, didn't you, with the right to appeal to the district court?
Diana L. Gustin: We had an opportunity, a chance to make a request for an appeal, but based upon the information that we had at that time, an appeal was not sought, but when we discovered new and material evidence which we believe shows that the intermediary violated its own regulations, upon discovery of the new and material evidence, we believe that gives us the right to request the reopening, and if that reopening is unlawfully withheld, we sought review, and so it's the review of the refusal, which is final agency action, which we are seeking.
Antonin Scalia: Ms. Gustin, you know, there has to be an end to litigation at some point, and I thought the normal rule is, when there's a final judgment, you can come back and say, you know, there are new circumstances, but whether to open for that reason is discretionary. The Administrative Procedure Act has an exception for judicial review for matters committed to agency discretion by law, and I have always thought that it's committed to agency discretion whether to reopen a closed case. They always can, but I don't think anybody has a right to it.
Diana L. Gustin: Well--
Antonin Scalia: And if they decide not to, that's the end of the matter.
Diana L. Gustin: --Your Honor, in this Court's decision in ICC v. Brotherhood of Locomotive Engineers, which was decided in 1977, this Court held that a refusal to reopen which was based upon new and material evidence should have some sort of review, because otherwise--
Ruth Bader Ginsburg: Ms. Gustin, the statute in that case provided for removal. I mean, for reopening.
Diana L. Gustin: --That is--
Ruth Bader Ginsburg: Here, as I understand it, the statute says nothing. The statute says, get your act together in 180 days. The Secretary then said, yeah, I'll provide for reopening, but it's going to be just this one shot, no review.
Diana L. Gustin: --Well--
Ruth Bader Ginsburg: So how can you compare a case where Congress said, you have a right to reopen, to a case where Congress made no such provision.
Diana L. Gustin: --Well, first of all, I think that there is a statutory provision within the medicare statute which requires reopening.
Ruth Bader Ginsburg: And which one is that?
Diana L. Gustin: And that would be section 1395x(v)(1)(A), clause (ii).
Antonin Scalia: But that refers to reopening when the year's books have finally been closed so that you could tell what the actual charges were, and the Secretary gave you that opportunity, didn't she?
Diana L. Gustin: Well, whether or not that refers to just a year-end book-balancing I think has not been decided by this Court, but in fact the Secretary uses that reopening process for more than simply a year-end book-balancing to compare estimated cost with actual cost, and so we would say first of all to Justice Ginsburg's question, there is statutory authority for a reopening within that. Secondly--
Ruth Bader Ginsburg: But if we read the statute to say what it does, it provides for the year-end adjustment, and that's all it provides for, then you don't have any such argument.
Diana L. Gustin: --If you read the statute that way, but I would impress upon the Court that in this case in particular the Secretary used the reopening process beyond that year-end book-balancing period, and the Secretary routinely uses the reopening process beyond that simple year-end--
Antonin Scalia: The reopening process. What Justice Ginsburg's suggesting is that there are two reopening processes. One is the statutory requirement for reopening, and the other is the normal discretion that any agency has, but a nonreviewable discretion, to reopen a closed matter if it thinks it to be a good idea.
Diana L. Gustin: --Well, I don't think that there... that it's clearly stated that Congress wanted a... an unreviewable, completely insulated final agency action, and I think that the decision in Michigan Academy talks at great length about the fact that the presumption to judicial review is so important that we cannot just think that Congress meant something not to be reopened that it requires--
Antonin Scalia: But you can come back 10 years later, even after you've gotten this review. Let's assume we find for you here. Then you find something else, 10 years later, and you come back again and you ask the Secretary to reopen. She says, get out of here, it's 10 years later. You have judicial review of that again, right?
Diana L. Gustin: --I believe that is correct, Your Honor.
Antonin Scalia: Well--
Diana L. Gustin: As the Ninth Circuit held--
Speaker: --Life is too short for this kind of thing.
Diana L. Gustin: --First of all, in regard to the 10-year time frame that you put on that, I think that that would only apply in cases where there was fraud or abuse alleged, because there's normally a 3-year time period to request a reopening, and the Secretary--
Speaker: Suppose the Secretary said, I'm going to withdraw that regulation. Forget it. I'll stick with what Congress wrote, there is no right to reopen, period. You do it within 80 days, and if you don't have your act together by then, it's tough luck.
Diana L. Gustin: --Well, I think that having your act together is really the problem here, because it wasn't a matter of whether or not we had our act together. It was a matter of information that the intermediary had or had access to that we did not have access to, and this--
Speaker: So perhaps Congress was mistaken in making the period 180 days. But that was Congress' period.
Diana L. Gustin: --I think Congress was not mistaken, but I think that Congress had the section that I referenced earlier, 1395x(v)(1)(A), clause (ii), which allows for corrective retroactive adjustments when a provider is either underpaid or overpaid, and that's been a part of the act from the beginning, but I think that the--
Speaker: Yes, but we already understand that if that is... has the narrow meaning that seems to have been given to it by this Court it isn't across-the-board reopening.
Diana L. Gustin: --Well, in the Court's decision that discussed that provision of the statute, whether or not the book-balancing occurred at... within the 180 days, which would be the narrow meaning, was not really discussed in terms of the time period for the retroactive corrective adjustments, and to the contrary--
Speaker: No, I'm focusing on what can be covered, not the time, what can be covered by that explicit statutory provision, and I thought that provision was confined to the annual overlook of the month-by-month.
Diana L. Gustin: --Well, I don't believe that that provision should be confined to that and, indeed, it's not in practicality. As I stated in this case, beyond that 180-day time period, this cost report was reopened, because we had discovered that a nurse did not have an appropriate license, so we reported that to the intermediary, and then the costs for the visits had to be reduced, and so the narrow view of the year-end book-balancing happening only to do that balancing between interim payments and final payments--
Speaker: Who reopened in that case?
Diana L. Gustin: --The intermediary reopened.
Speaker: Yes, and I gather that's essentially what your position is. The intermediary can reopen.
Diana L. Gustin: Yes.
Speaker: The Secretary can reopen.
Diana L. Gustin: Yes.
Speaker: It's only fair that you should be allowed to.
Diana L. Gustin: Yes, because if we discover wrongful acts that unfairly deprived us of reimbursement to which we were entitled under the act, then we should also be allowed to claim the recovery.
Speaker: That's an argument in fairness and in equity, but you have a statute to deal with.
Diana L. Gustin: Yes.
Speaker: And regulations to deal with, and--
Diana L. Gustin: And we believe that the statute itself at 1395oo clearly states that Congress intended that we have an appeal process after a final determination, and that that language is clear, a final determination, and it is only through the Secretary's interpretation of that phrase to mean one, and only one kind of a final determination, that she prohibits or restricts our ability to obtain review. And so we believe under the Chevron test the plain meaning of the statute must govern first of all. A final determination is what Congress said, and we have a final determination, and indeed it makes sense that final determinations of this nature should proceed--
Speaker: --My notion of a final determination is a final decision on the merits of the claim. A final decision was entered. It doesn't become unfinal because you've moved to reopen it. You know, after a certain amount of time a judgment becomes a final judgment. Thinking of civil litigation, you can move, say under 60(b), but you still have a final judgment.
Diana L. Gustin: --That's correct, Your Honor, but under 60(b) courts have held in the Sixth Circuit that a refusal to grant the relief sought under 60(b) when there is no new and material evidence can be reviewed, but only as to whether or not there was an abuse of discretion, because otherwise--
Speaker: Yeah, and it could be reviewed here, too, if Congress... Congress had provided for reopening and said, and it's reviewable.
Diana L. Gustin: --Well, I believe that Congress provided for review by stating that a final determination as to total program reimbursement can be reviewed if you take the appropriate steps, and the refusal to reopen is a final determination as to program reimbursement, so I believe that we meet the definition under the statute itself, and I believe that that's also where the presumption to judicial review comes back, because the statutory language I believe is clear. But if you believe you must interpret the language in the statute, then the burden is upon the Secretary by clear and convincing proof to show that Congress did not want judicial review, and there is no language in the congressional history which states that they considered whether or not there would be a reopening process and that that should be totally and completely up to the discretion of the insurance company employee. We don't even have a governmental entity reviewing the request to reopen. We have private insurance companies that contract with the Government, and we don't know anything about the individuals who are making these decisions, so we would be leaving within the discretion of one person decisions that could be worth millions of dollars to hospitals. I don't think there's anything in the Congressional Record to indicate that they wanted that to be the case, and--
Speaker: But you have the right to review these decisions before it becomes final, do you not?
Diana L. Gustin: --You... based upon what you know at that time, and I think it's important to understand that my client and other providers should surely have the right to rely upon the intermediary to act lawfully and to give us the information that they are making the decision upon, but when they don't give us the information, or give us the wrong information, whether it is intentional or by mistake, and we discover it later, that we should have a right to request a reopening.
Speaker: But think... you know, this is a tremendously complicated and extensive system, and these matters have to come to an end sooner or later.
Diana L. Gustin: Exactly, and I think the 3-year period within which you can request a reopening is an appropriate time period to expect the provider to act, unless, for example, there is fraud or intentional wrongdoing, which I mentioned, and there's no time period under the regulation for requesting reopening in that case.
Speaker: What if somebody else thinks 3 years is not enough, and petitions the Secretary to make it a 6-year reopening period, and the Secretary says no?
Diana L. Gustin: Well--
Speaker: I assume that would be appealable on your theory of the world. The Secretary has made a final determination that she will not extend the 3-year period to 6 years.
Diana L. Gustin: --I think the Secretary has the right to make rules that are considered reasonable, and whether or not someone could make the argument that a 6-year period was not a reasonable--
Speaker: That's the argument.
Diana L. Gustin: --interpretation of the statute.
Speaker: This person is in good faith and really thinks 3 years is unreasonable, wants 6 years, so that person should have a right to appeal the Secretary's--
Diana L. Gustin: That would be--
Speaker: --final determination--
Diana L. Gustin: --I think that would be--
Speaker: --not to make it 6 years.
Diana L. Gustin: --a different question than what we're dealing with here--
Speaker: I know it's a different question, but--
Diana L. Gustin: --and I think different points of law apply to that, and that would be whether or not the 6-year period was a reasonable interpretation of the statute, as well--
Speaker: --No, that's not the point of law. The point of law is whether it's a final determination. That's the point of law at issue here. That's a final determination just as this is.
Diana L. Gustin: --But a final determination--
Speaker: I will not extend it to 6 years.
Diana L. Gustin: --But the final determination we're referring to here is the one that's laid out in the statute, which is as to the amount of total program reimbursement covered by the cost report.
Speaker: No, it isn't. No.
Diana L. Gustin: The 6-year--
Speaker: The final determination at issue here is whether she will reopen the determination she's already made. That's the final determination. She says no.
Diana L. Gustin: --The final--
Speaker: She says no, I will not reopen.
Diana L. Gustin: --Yes, and we say that the final determination when she says she will not reopen is one which goes to the total amount of program reimbursement, which is what the statute defines--
Speaker: No more so than in my hypothetical. This person who wants 6 years has found something else beyond the 3-year period which will affect the total amount of reimbursement to which he was entitled.
Diana L. Gustin: --Well, that case is not before the Court, Your Honor-- [Laughter] --and I really don't know how to answer that in terms of how it applies to this argument.
Speaker: Of course you know how to answer it. You have to answer it that yes, it's reviewable because it's a final determination.
Diana L. Gustin: Well then it's reviewable because it's a final determination as to the total amount of program reimbursement, but we have a regulation here. This regulation concerning the 3-year time period was before this Court most recently with regard to the graduate medical education reaudit regulation, and there the Secretary argued successfully and very strongly that the 3-year period was what was important, but with regard--
Speaker: But then that again, I mean, that was a case where the Secretary came back within 3 years.
Diana L. Gustin: --Yes.
Speaker: And I... as far as I can see, you are basically complaining about an asymmetrical statute where the Secretary can reopen in 3 years and you can't, and--
Diana L. Gustin: Well, we're complaining--
Speaker: --I can understand that you think that that's not fair. What I have a hard time seeing is how you make... turn everything into a final determination, never mind that we have had a final, the equivalent of a final adjudication on the merits of the claim.
Diana L. Gustin: --I think it's important, Your Honor, to focus upon the abuse of discretion that is possible in deciding whether or not a final determination can be more than simply the first notice of program reimbursement letter that you receive.
Speaker: Maybe it could be, but the Secretary says it isn't, right?
Diana L. Gustin: The Secretary--
Speaker: All right. So that's the... if it's not a final determination within the meaning of 1395oo--
Diana L. Gustin: --Yes.
Speaker: --you're out of luck.
Diana L. Gustin: If the Secretary--
Speaker: Unless you're going to go under mandamus. Is that basically--
Diana L. Gustin: --Well, Federal question jurisdiction.
Speaker: --Federal question jurisdiction, you have a statute that specifically says, no action shall fall under Federal question jurisdiction unless you go through 1395oo.
Diana L. Gustin: I believe that--
Speaker: Doesn't it say that specifically?
Diana L. Gustin: --It says that specifically, Your Honor, but--
Speaker: All right. So if we follow that, you're out of luck, unless it's 1395oo, and you're not in 1395oo unless it's a final determination. Am I right?
Diana L. Gustin: --Well, there are alternative arguments, which were presented, and I think that under Federal question jurisdiction as an alternative, if you're not allowed to use the 1395oo administrative procedure--
Speaker: Right.
Diana L. Gustin: --in the normal route, and if you have raised a claim that is collateral to the underlying amounts of the benefit claim, then Federal question jurisdiction is appropriate, as it was in Bowen v. Michigan Academy.
Speaker: But what do we do about the statement, no action against the United States Commissioner of Social Security or any officer or employee shall be brought under section 1331?
Diana L. Gustin: On any claim.
Speaker: To cover on any claim arising under this title. Do you have a claim arising under this title?
Diana L. Gustin: Well, we believe that on any claim is like a term of art, and that means a claim of benefits, but if we claim that there is an abuse of discretion, if we claim that the intermediary acted unlawfully, violated its own regulations, that that is a collateral issue, just like in Bowen v. Michigan Academy. The statute or the regulation, I mean, which--
Speaker: I have to decide, do you have a claim, or are you trying to bring a claim under the title? If I answer that question, I think you are, suppose hypothetically... yeah, you are. You're trying to bring a claim. You're trying to get some money from them. That's what it means. If I believe that--
Diana L. Gustin: --Uh-huh.
Speaker: --Then are you out of luck?
Diana L. Gustin: No.
Speaker: Unless you have a final determination, and they say you don't, but you say you do.
Diana L. Gustin: Yes.
Speaker: And so for you to win on that, you have to show not only are they wrong, they're just really unreasonable. Is that right?
Diana L. Gustin: I... that they're wrong, they're unreasonable, and they're violating their own... their own regulations, and--
Speaker: Alright. Now... now, to focus on that, what is unreasonable about saying, these things have to come to an end?
Diana L. Gustin: --Well, there are two collateral claims that were raised. One was the collateral claim that their refusal to reopen and no judicial review is unreasonable, all right. Then the second collateral issue that was raised was the fact that the owner's compensation is required to be in accordance with comparable institutions, and that they had, or had access to a salary survey which had a salary range which was much higher than what they were applying to the petitioner, and therefore they were not applying owner's compensation in accordance with their own regulation, and so that was a violation of that regulation. A collateral claim, too, asking for additional owner's compensation, a claim that they didn't do it right, and if they violated that regulation or other regulations, or a regulation is found invalid, then we believe that's a collateral claim, not about the--
Speaker: I have trouble with your description of that as a collateral claim. Your claim... you have one claim. That is, you're entitled to more reimbursement. You have a number of reasons why the procedure should allow you to do this.
Diana L. Gustin: --Uh-huh.
Speaker: But to slice up pieces of your argument in support of your claim for reimbursement and call each one of those a separate claim doesn't make a whole lot of sense.
Diana L. Gustin: Well, there are arguments in the alternative, Your Honor, because first and foremost we believe that the statute itself allows us judicial review, or some type of review process for abuse of discretion, and we only turn to section 1331 for Federal question jurisdiction and then posit the claim itself as collateral to that normal appeals process as an alternative view, an alternative way of looking at this, because we believe there must be some kind of review, because Congress did not prohibit review of this final agency action and, indeed, when--
Speaker: I think... I think that's what perhaps bothers some of us, is that in your view any time you come in, whether it's, you know, 6 months after the final order or 2 years after the final order, and say I want a reopening, that becomes a new final order, and I really don't think the presumption of review that you're talking about extends that far.
Diana L. Gustin: --I don't think that the broader reading of any time you come in is applicable here, and I don't think it's necessary to view this case in those terms. I think it's appropriate to have a reasonable time period to limit the reopening, just like it's appropriate for Congress to say, the dollar amount in controversy for your claim must be 10,000.
Speaker: Yes, but there--
Diana L. Gustin: I think there's a procedural--
Speaker: --There Congress has said, you have to have 10,000 or whatever it is, but Congress has not provided any period for reopening.
Diana L. Gustin: --No, but I think the Secretary has filled that gap with her regulation, and I think that's an appropriate time period, and the Secretary uses that time period and has relied upon it and convinced this Court that millions of dollars can be recovered from hospitals within that 3-year time period under the graduate medical education regulation in Regions Hospital. And I think that Congress wanted the providers to stand on an even footing with the Secretary in regard to these corrective retroactive adjustments, and that's why the language in the statue says that providers or the Secretary may have corrective retroactive adjustments when the provider's payments have been excessive or when they have been underpaid. Congress gave us either situation, but the Secretary's reading turns that system upside down and makes it so that the Secretary only has that right, because we have no right to correct the Secretary's action if we cannot have review of a refusal, and therefore the most abusive situations may go uncorrected if the Secretary's system is allowed to stand. Intermediary insurance company employees could intentionally decide not to reopen because they don't like the particular provider. They could have a system of covering up information, and as long as they kept that information hidden for 180 days, we'd have no recourse. We talk about final--
Speaker: What was the nature of the reimbursement that you say you were entitled to and didn't get? It was a little fuzzy to me.
Diana L. Gustin: --The nature of the reimbursement was owner's compensation. The owners who operate the home health agency are entitled to compensation, and the regulation says that the compensation should be in accordance with comparable institutions.
Speaker: And you made that claim initially and were turned down.
Diana L. Gustin: I beg your pardon?
Speaker: You made a claim for the owner's compensation originally.
Diana L. Gustin: It was on the cost report. It was claimed on the cost report.
Speaker: Yes, and it was denied, and you didn't appeal it.
Diana L. Gustin: And an adjustment was made, and no appeal was taken.
Speaker: It was not... it wasn't denied in full, denied in part. They gave you lower compensation.
Diana L. Gustin: Lower compensation.
Speaker: You just claimed that the rate should have been higher.
Diana L. Gustin: Yes, because it should have been based upon the salary survey for chain operations, because this was a chain operation. The salary survey that they used was for one individual agency, and that range was, like, 28 xx 58--
Speaker: Well, you had... you knew that there were chain operations--
Diana L. Gustin: --Yes.
Speaker: --and individual operations. Why, when you were reduced in the amount you claim, didn't you make that argument, we're like the chains?
Diana L. Gustin: Well, we had reported as a chain. We did not know that the intermediary had the salary survey for chain operations which established a salary range between 71,000 and 98,000 dollars. That salary range was not applied to these petitioners. Instead, a much lower salary range for an individual agency was applied. This information about the salary survey was within the intermediary's knowledge. It was not within our knowledge. They did not tell us that they had this other salary survey and that it was being used against us, and we believe that they should have, and that that was a violation of the law because they should have told us everything that they were basing their adjustment on, and we have a right to rely upon the intermediary doing the right thing, doing the--
Speaker: Maybe you have a cause of action against the intermediary.
Diana L. Gustin: --Well, we don't have a--
Speaker: That's the agency here.
Diana L. Gustin: --I don't think we have a cause of action against the intermediary because they're the agent for the Government, and the cause of action is supposed to be brought against the principal, because they're responsible for what their agent does and, indeed, it's the Government and their position that they don't have to allow any type of review of the intermediary's action, which keeps us from getting the appropriate amount of compensation, and if we could prove this unlawful action, then failing to reopen would be an abuse of discretion, and then we would have the--
Speaker: How did you find this out later rather than earlier? Why couldn't you have found it out sooner?
Diana L. Gustin: --Well, the discovery process that would be available would only happen if you filed a normal appeal process and started down the normal route with Provider Reimbursement Review Board, and then, even if we had done that and asked the question, there's no guarantee that they would have then told the truth, and--
Speaker: But you didn't do it. You didn't do it, so--
Diana L. Gustin: --No, we didn't do it.
Speaker: --You're saying, we could have done it, but we didn't do it, and now, later on, we want to do it.
Diana L. Gustin: No--
Speaker: That's essentially--
Diana L. Gustin: --We're saying, based upon the information that we had, we--
Speaker: --But you could have gotten... if you appealed to the PRR, whatever--
Diana L. Gustin: --PRRB.
Speaker: --You could have then had discovery, and so--
Diana L. Gustin: And we may or may not have found out the information then, because they may have said, no, we don't have the survey--
Speaker: --But you said we're not going to bother using the remedy that Congress did provide. That is, in 180 days you can pursue this. You didn't... because you said, well, maybe you would have failed. I don't--
Diana L. Gustin: --I think that your concern actually shifts the whole question of finality into the other realm in which all providers who were denied reimbursement for any reason would have to file an appeal within 180 days, or know that even if they discovered wrongful action on the part of intermediary there's no recourse. Even if the law was changed and if regulations were determined invalid after the 180 days, there would have been no recourse.
Speaker: --But you haven't given a reason why you didn't have a perfectly adequate remedy for your case within the 180 days. You said, well, before you got to the board you would not have had discovery, but then you would have had discovery.
Diana L. Gustin: We would have had discovery, but--
Speaker: In other words, she's saying, that is not this case, the hypothetical that you--
Diana L. Gustin: --Oh. But this case--
Speaker: --I'm turning the tables for once, you know. [Laughter]
Diana L. Gustin: --Yes. That is not this case, but this case stands for more than just this case, because every provider will be bound by the ruling that comes out of this Court, and so I think it's important to understand the ramifications of the decision that you make, and the situation might not be like this case, and it might be that the intermediary has intentionally covered up evidence, and then on the 181st day comes out and announces we hid this from you.
Speaker: You have to consider perhaps we should have not take your case and waited for such a case.
Diana L. Gustin: Well, I believe that the facts in our case are sufficient for this Court to decide, because I think it is wrong for the intermediary to have a salary survey that they know about that we do not know about and not use it when they're required to do so under law. I think that's certainly a strong enough case for this Court, and the only way that we discovered this is when we hired a CPA who had represented other clients and had seen the salary survey used for those other clients, so by independent means we discovered this. The intermediary may never have told us. We may never have been able to find out that they were doing this, and I think that's the problem with the situation here. The intermediary and its employees can do anything, and as long as we don't know about it for 180 days, they can violate any law, and if they refuse to reopen, there is no recourse for the--
Speaker: It's not a perfect world.
Diana L. Gustin: --It's not a perfect world.
Speaker: There has to be an end of litigation. You could say in any case that new evidence comes up later and we can start relitigating all over again.
Diana L. Gustin: But we're... we're satisfied to do this within the confines of the Secretary's regulation on reopening, the 3-year period.
Speaker: Thank you, Ms. Gustin.
Diana L. Gustin: Thank you.
Speaker: Ms. Blatt, we'll hear from you.
Lisa Schiavo Blatt: Mr. Chief Justice, and may it please the Court: The Secretary has reasonably construed the Medicare Act not to require administrative review of an intermediary's decision refusing to reopen under the Secretary's regulations. The text of section 1395oo(a) gives providers a right to an evidentiary hearing before the board if they are dissatisfied with the final determination as to the amount of their total program reimbursement. That language refers to the intermediary's annual substantive reimbursement determination--
Speaker: So this perhaps presumably happens about once a year?
Lisa Schiavo Blatt: --Yes. For each cost period there is an NP... a notice of amount of program reimbursement, which is referred to as the NPR, and it's clear that the language... both sides concede this, petitioner concedes this, that that is a final determination as to the amount of--
Speaker: Now, the statutes don't refer to any reopening right.
Lisa Schiavo Blatt: --That's correct.
Speaker: But the Secretary has nonetheless promulgated a regulation allowing an application for reopening.
Lisa Schiavo Blatt: That's correct.
Speaker: Within 3 years.
Lisa Schiavo Blatt: That's correct.
Speaker: And what provision of the statute does the Secretary look to for authority to even have such a regulation?
Lisa Schiavo Blatt: The Secretary has relied on her general rule-making authority to promulgate that, which is in section 1302 and 1395hh, and at least the D.C. Circuit and the Ninth Circuit have held that the Secretary's general rule-making authority is the statutory basis for the reopening regulation.
Speaker: --reopening were granted within the discretion referred to by the Secretary, would there be an appeal right from that--
Lisa Schiavo Blatt: If there's a--
Speaker: --decision? If it's reopened and a decision is made, then that would trigger some new appeal right?
Lisa Schiavo Blatt: --Yes, with respect to the matters revised, so if there's a correction--
Speaker: Uh-huh.
Lisa Schiavo Blatt: --and obviously if the... what happened in the Regions case, if there was a request for recoupment, then there's 180 days to challenge the actual change.
Speaker: What if there's no correction? What if, in one of those rare cases where the Secretary reopens in order not to... not for her benefit, but for the benefit of a claimant, she finds nonetheless against the claimant, then would that determination be appealable?
Lisa Schiavo Blatt: The Secretary's position, as reflected in the manual, and as in the regulation, is that there has to be an actual correction or an adjustment to the cost report. It's rare, but it does happen, where there'll be a notice of reopening issued, a reconsideration, and yet no change. It's been the Secretary's--
Speaker: Sort of a one-way appeal, where she loses... well, let's see. Where there's an adjustment... where there is an adjustment... if there's an adjustment upward, no one would have an interest in appealing, right? If there's an adjustment downward, the claimant can appeal.
Lisa Schiavo Blatt: --That's correct, although if there's just a partial adjustment upward, the Secretary has construed or has permitted an appeal in that situation.
Speaker: A partial, I suppose.
Lisa Schiavo Blatt: A partial adjustment.
Speaker: That way the claimant doesn't get everything that he or she wants. Would that be a final order?
Lisa Schiavo Blatt: The regulations give the providers a right to challenge that as a new substantive reimbursement determination, and it's actually a revised NPR that's issued, and they can challenge the matters that got revised, or that were revised.
Speaker: I know you say they can challenge it, but is it in your view a final order?
Lisa Schiavo Blatt: It's consistent with the language of a final determination as to the amount of total program reimbursement.
Speaker: It's under oo? You think it comes under--
Lisa Schiavo Blatt: Yes. It's under oo(a)(1)(A)(i).
Speaker: --So that if there is a reopening, a discretionary reopening, and there's an adjustment, the order providing for the adjustment is a final determination, but if there's no adjustment, it's not a final determination.
Lisa Schiavo Blatt: That's correct. There's... the Secretary has rationally distinguished and said, if there's just a mere refusal to alter or reconsider a prior determination there's no right to an evidentiary hearing before the board.
Speaker: No, but we're assuming... I'm assuming there has been a 3-week evidentiary hearing, a lot of findings of fact, and everything else, but the net result is, no adjustment.
Lisa Schiavo Blatt: Right. It's--
Speaker: That's not a final determination.
Lisa Schiavo Blatt: --It wouldn't be an evidentiary hearing. It's just before the intermediary. The intermediary would review it, and then not make--
Speaker: Right. Okay. Yes.
Lisa Schiavo Blatt: --That has been the Secretary's position thus far. I mean, that's not what happened in this case. There's no--
Speaker: Of course, that is not this case, you would-- --No. --have to say, right. [Laughter]
Lisa Schiavo Blatt: --There's no question that there is not a... that there was no reopening here.
Speaker: Do you think the Secretary could issue a regulation authorizing review in that situation?
Lisa Schiavo Blatt: In this case, or--
Speaker: Well, either the no-adjustment case or this case, either one.
Lisa Schiavo Blatt: --I think it's possible. I don't think the most--
Speaker: Would it be consistent with the statute?
Lisa Schiavo Blatt: --Yes. I think it's not the most natural reading, to read a mere refusal to reconsider a prior determination a new final determination as to the total amount, but I think the statute's ambiguous, and the Secretary could articulate a reasonable rationale to justify that result. The question here, of course, is whether the Secretary reasonably construed the statute not to require a full-blown evidentiary hearing, and we think that language supports that for two... basically two reasons, and that is because it is the Secretary's regulations, not the Medicare Act itself, that provides the opportunity to seek reopening, and we think it does further the interest of administrative finality. And this Court reached a quite similar conclusion in the Califano v. Sanders case, when the Court held that there was no judicial review for refusals to reopen social security benefit determinations, and the Court said that for two reasons. One was the opportunity to reopen was afforded solely by the Secretary's regulations and not the Social Security Act, and a contrary reading would frustrate Congress' intent to impose a specific time limit on the review of the initial decision. And this complaint about an anomaly with reopening under the Medicare Act is no different under the Social Security Act. The claimants are permitted the opportunity to seek reopening, and it may or may not get granted but there's no right of review and, of course, the Commissioner of Social Security can institute reopening, and if there's a change in the benefits, then only the claimant will get review.
Speaker: Ms. Blatt, what would happen under the current regulations if the Secretary reopens and says, we reimbursed them too much and we want to recoup part of it, and then the provider says, well, you also underpaid us, so we want to offset the underpayment against the excess payment. Did the Secretary allow that kind of a defensive set-off if the Secretary initiates the reopening?
Lisa Schiavo Blatt: Reopening is what's known in the... it's issue-specific, and so if it's on that issue, I imagine... I'm not positive of this... that there is that kind of give-and-take.
Speaker: But if it's on a discrete issue--
Lisa Schiavo Blatt: If it's not on the same issue, then they need to formally request a reopening on that issue, and then the intermediary would consider it based on the criteria.
Speaker: --And if it says no--
Lisa Schiavo Blatt: If it says no, it's not reviewable, no, and the review process would be issue-specific, and only if there was an adjustment would that be subject to--
Speaker: --How do you respond to the essential fairness argument that's made that the Secretary has given herself 3 years to reopen and if she loses she can get review, but the providers get this nonreviewable order that they're stuck with.
Lisa Schiavo Blatt: --Right. In addition to this being no different than the Social Security Act, which, by the way, I think is quite significant and governs all medicare beneficiaries on whose behalf these hospitals are providing the services as well as physicians who provide services, they're governed by the same regime--
Speaker: They reopen only the issue there and not the whole determination? I mean, I... it's bad enough as Justice Ginsburg describes it, but it really gets unfair when you say the Secretary does reopen, but only reopens for this one issue, and even though you may have things on the other side, you can't bring them in. That is really unfair.
Lisa Schiavo Blatt: --They can bring them in, and they can request reopening--
Speaker: Yes, but she--
Lisa Schiavo Blatt: --as 3 years--
Speaker: --But she can say no, and there's no review for it.
Lisa Schiavo Blatt: --That's right, and I don't think there would be any difference under the Social Security Act.
Speaker: That's also an issue-by-issue thing.
Lisa Schiavo Blatt: Yes. It's... the way the... the way the process works, you're only entitled to an administrative hearing before an ALJ if there's an actual change in the benefits, and there's no review if there's simply a denial. The other reason why, that there's not an irrational balance is that this is a 120 billion dollar program, and there are, as we said in our acquiescence to the petition in this case, a backlog of 10,000 cases before the board, and it takes over 3 years just to get a hearing on initial challenges to... on challenges to the initial NPR's, and it's just... it would be an enormous administrative as well as financial burden on the system to open this up to any refusal to reconsider a prior determination. Presumably the petitioner's argument would extend to refusals to reconsider, refusals to reopen, and so forth and so on. You'd have 3 years after any kind of decision, and that would be a new final determination under that reading, and the Secretary has rationally cut it off.
Speaker: And as I recall you also make the fairness argument that the Secretary gives herself 3 years, but the Secretary needs 3 years-- [Laughter] --more than an individual applicant does because she has a few more things to do.
Lisa Schiavo Blatt: The simple truth of the matter is, the Secretary administers this program... there are 38 intermediaries... and has no access to the hospital's records. The hospital, on the other hand, are by and large very sophisticated entities, and they're actually very good about appealing within the 180 days. They have 6 months to appeal. This case is particularly instructive, because here the petitioner protested the 50,000 dollars that's at issue here on the cost report. This was a red flag that the provider was going to appeal, and as far as we could tell, there is no reason why the provider did not appeal. As far as the way the petitioner's brief was structured is, the petitioner did appeal cost years prior to 1989--
Speaker: You're talking about the brief before the board, or the brief here.
Lisa Schiavo Blatt: --I think it's the brief... the blue brief on the merits in this Court--
Speaker: In this Court.
Lisa Schiavo Blatt: --says the petitioner discovered the salary survey in the course of appealing prior years, and in all events the petitioner appealed in 1987, it appealed 4 or 5 years after 1989, and could have sought discovery. There's no reason to presume bad faith on the intermediary with respect to production. And again, like I said, there's just no reason that the provider didn't appeal in this case. If I could also turn to clause (ii), if I could refer to it that way, and that's 1395x(v)(1)(A)(ii), which this Court referred to as clause (ii) in the Good Samaritan case, we think that that... that this decision squarely forecloses any argument that clause (ii) is the basis for reopening and requires a reopening procedure. What the Court held in Good Samaritan was that clause (ii) is ambiguous, and it upheld the Secretary's narrow reading as a year-end, and the Court several times referred to it as a year-end book-balancing accounting reconciliation, and that's... that would reconcile the amounts paid to the provider during the year that were simply estimates, pre-audit, periodic payments with the amount that the NPR determined to be allowable. And that's... actually, if you look at the NPR in this case, it shows that reconciliation, and I think it's on page... I think it's... it's page 36 of the joint appendix, so this is how the Secretary administers the program. This is how the regulations work. A reopening procedure is something entirely distinct from that. It's a substantive redetermination, or at least a request to redetermine what had been reimbursable. If I could also address the issue that these are private insurance companies, these are intermediaries making the decision, these are the Secretary's agents and they do act under her close oversight and supervision, and we think it's also significant that intermediaries are nominated by the providers themselves, and if there's some suspicion that the intermediary is biased or unfair the provider is always free to request a change in the intermediary, or not nominate the intermediary. There's simply no allegation in this case that intermediaries act distinctively with bad faith with respect to reopening as opposed to any other initial decision and, of course, the provider and all hospitals have the opportunity to challenge the initial underlying determination within the 6-month time period. Then if I could also address the question of Section 1331 jurisdiction, in addition to the plain language of section 405(h), the third sentence, which forecloses any action arising under the Medicare Act, this Court in Heckler v. Ringer and again in Weinberger v. Salfi made clear that the Court was not going to look at procedural labels or substantive labels, but would look at whether the standing and substantive basis for the claim arises under the Medicare Act. And so I'm not sure the provider... the provider in this case talks about a collateral challenge. That's not from any decision... that doesn't come from any decision of this Court. The only exception, of course, is the Michigan Academy decision and that was dealing... a far cry from this situation. There was no review whatsoever of the Secretary's regulations under part B, and part A, which involves this case as well, now, as part B, providers are free to raise any kind of challenge before the board and under the part A and part B beneficiary side, the administrative law judge, and in the courts. They can bring both amount challenges to their benefits, as well as any kind of facial challenge to a regulation, and so we just don't think the Michigan Academy exception or distinction has any relevance to this case, when there was a full right of review. And again, I would also remind the Court about the Sanders decision where, under the Social Security Act, there is no right of review, and the Court made clear in that case that 1331 was... excuse me, that section 405(h) barred jurisdiction, Federal question jurisdiction under section 1331. Then if I could just finally address mandamus, the mandamus aspect of this, which the petitioner also relies on, we think mandamus is barred by the second sentence of section 405(h), but in all events there is no basis for seeking mandamus relief in this case. The two challenges are, of course, the refusal to reopen, and then the underlying complaint about the owner's compensation. Both of those require discretion on the part of the intermediary. The regulations are in the manual. It's plain on its face that the decision whether to reopen is discretionary, and certainly the question about whether costs are reasonable and allowable under the statute also requires the exercise of discretion. And as to the underlying claim about entitlement to reimbursement, certainly there's no question that the petitioner failed to exhaust its administrative remedies by not appealing within the time frame. If there are no further questions, that completes my argument.
William H. Rehnquist: Thank you, Ms. Blatt. The case is submitted.
Speaker: The honorable court is now adjourned until Monday next at ten o'clock.