Opinion ID: 757255
Heading Depth: 3
Heading Rank: 1

Heading: Private Interest at Stake

Text: 33 The district court held that the private interest at stake from an HMO's initial denial of Medicare coverage is the potential that medical care will be precluded altogether. The court held that this interest is a substantial private interest in additional protections such as timely and effective notice of service denials. We agree. 34 In Eldridge, the Court held that the private interest at stake was the individual's interest in uninterrupted receipt of disability benefits. 424 U.S. at 340, 96 S.Ct. 893. The Court held that this interest was not based on financial need (unlike the situation of the welfare recipient in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970)) and does not implicate a high degree of potential deprivation. See id. at 340-41, 96 S.Ct. 893. 35 The district court was correct in holding that Plaintiffs' interest in Medicare benefits is greater than the interest of the plaintiff in Eldridge. As the district court noted, [u]nlike Eldridge, the deprivation suffered from an HMO denial to provide care cannot so easily be remedied by retroactive recoupment of benefits. 946 F.Supp. at 757. An HMO's denial of coverage is an initial refusal to provide any medical services. The mere fact that the enrollee may be able to go elsewhere and pay for the services herself is of little comfort to an elderly, poor patient--particularly one who is ill and whose skilled nursing care has been terminated without a specific reason or description of how to appeal. 36 The Secretary argues that the district court erred by adjudicating a complex procedural scheme as falling short of basic standards of fairness, without conducting the sort of detailed inquiry needed. For example, the Secretary argues, the district court should have distinguished between different types of medical services and their urgency when considering this first Eldridge factor, the magnitude of the private interest at stake. The Secretary also argues that the district court's finding that the interests of Medicare HMO enrollees are especially great because they may not receive immediate medical care is erroneous because some beneficiaries can seek those services elsewhere (and then seek reimbursement from the HMO) or disenroll from the HMO. The Secretary's arguments fail. Although, in some cases, the effect of service denial may be remedied easily after the fact, the potential for irreparable damage is surely great when it comes to denial of medical services (particularly denial without notice of any reason for the denial), unlike the suspension of disability benefits pending review as in Eldridge. In many, if not most, cases, the denial of coverage may result in total failure to receive the services. 37 The Secretary argues that the district court failed to recognize that the Medicare program is not need-based, a fact which the Secretary argues mandates holding against additional procedural protections. The Secretary cites to Eldridge for this proposition. The Court in Eldridge, however, discussed the fact that the disability benefits were not need-based in order to distinguish the case from that in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), where the Court had held that a hearing was necessary prior to the suspension of welfare benefits. The Court did not hold that a program has to be need-based in order for this factor to weigh in favor of additional protections. 38 Other courts have found on similar facts that a significant private interest is at stake that weighs in favor of additional protections. See, e.g., Kraemer v. Heckler, 737 F.2d 214, 222 (2d Cir.1984) (In applying the balancing test, the private interest at stake [in the termination of Medicare coverage] should be weighed more heavily than in Eldridge because of the astronomical nature of medical costs.); Vorster v. Bowen, 709 F.Supp. 934, 946 (C.D.Cal.1989) (The private interest, in this case, is the claimant's need to obtain reimbursement for medical bills that he or she has already paid. That interest is fairly great. Congress enacted the [Medicare] program because of the special coincidence of medical needs and financial problems of the elderly.). The interest of the HMO enrollees in medical services weighs in favor of additional procedural protections beyond that offered by the Secretary's original regulations.