Opinion ID: 435835
Heading Depth: 1
Heading Rank: 2

Heading: Humana's Dilemma

Text: 5 On September 30, 1981, Humana filed an application with the designated planning agency named in Indiana's 1122 agreement with HHS, the Indiana State Board of Health (Board), proposing to construct a 150-bed hospital in Indianapolis. The Board asked twice for additional information, which Humana provided, and deemed Humana's application complete for its review on December 23, 1981. Dr. Blankenbaker, Board commissioner, notified Humana on February 21, 1982, that the Board would recommend against inclusion of Humana's proposed capital expenses in the reimbursed rates. Humana sought a fair hearing to appeal the Board's action. The hearing officer affirmed the recommendation of the Board, notifying Humana of its decision on April 9, 1983. 6 Humana filed this lawsuit in the Southern District of Indiana two days later, charging Dr. Blankenbaker and the Board with violations of section 1122, the regulations promulgated thereunder, federal and Indiana administrative law, and due process, for alleged procedural and substantive failures by the Board and in the fair hearing. 3 Humana sought declaratory and injunctive relief to prevent the Board from forwarding its negative recommendation to the Secretary of HHS. When considering Humana's request for a preliminary injunction, Judge Dillin advanced to the merits and held that he lacked jurisdiction to review the state agency actions due to Humana's failure to exhaust its administrative remedies before the Secretary of HHS. Humana Hospital Corp. v. Blankenbaker, 83 C 516 (S.D.Ind. April 28, 1983). Humana herein appeals Judge Dillin's decision. 7 Although the statute contemplates four possible stages of agency action (the DPA recommendation, the hearing officer's action, the Secretary's initial determination, and the Secretary's final determination after reconsideration), section 1122 speaks only to judicial review of the Secretary's determination. A determination by the Secretary under this section shall not be subject to administrative or judicial review. 42 U.S.C. Sec. 1320a-1(f). The regulations, while following the statutory language expressly proscribing judicial review of the Secretary's determination, 42 C.F.R. Sec. 100.108(e), suggest that courts may review the decisions of hearing officers. [W]here judicial review of such decision[s] is obtained, the final decision of the reviewing court, to the extent that it modifies the findings and recommendations of the designated planning agency, shall to such extent supersede the findings and recommendations of the designated planning agency. Id. at .106(c)(4). Further, the regulations provide that reconsideration by the Secretary will be based upon the record of the proceedings, which includes the record of any judicial proceedings. Id. at .108(d)(2). 8 The Board and Dr. Blankenbaker argue that a court may not review administrative action at any stage of the 1122 process short of the Secretary's final determination, because administrative remedies remain available and because the court's decision would be subject to review by a federal agency, an unconstitutional result. Yet, as Humana aptly points out, denial of judicial review prior to the Secretary's final determination could leave the courthouse doors forever closed to Humana, due to the clear statutory prohibition against judicial review of the Secretary's determination.