Opinion ID: 391781
Heading Depth: 2
Heading Rank: 3

Heading: Plaintiff Rothfeld

Text: 22 In 1975, Jack Rothfeld, suffering from glaucoma and cataracts, was treated by two physicians at a clinic in Boston. He received two bills, in the amounts of $140 and $150. The services were covered by his Part B supplemental Medicare policy, so he submitted his claim for reimbursement to Blue Shield of Massachusetts, the Medicare carrier for his region. 23 A few weeks later, Rothfeld received a form, nearly identical to the one received by Patino, entitled Explanation of Medicare Benefits. Apparently assuming that the treatment had been for only one eye, Blue Shield paid only $140 of his $290 claim. The explanation for this determination was limited to the same Item 5 on the back of the form indicating that the bills submitted by Rothfeld were either higher than his doctor's customary fee, or higher than the fees usually charged in the area for similar services. 24 Upon Rothfeld's request for review, in which he pointed out that his treatment covered both eyes, Blue Shield adjusted his claim by $50. It sent him a second Explanation of Medicare Benefits form indicating the upward adjustment in benefits made; the form did not indicate in any way the reason for the denial of the balance of Rothfeld's claim. He requested a hearing as to whether the denial of the balance of his claim was proper but, since the amount in controversy was not $100, Blue Shield sent him a letter denying his request. 25 POSITIONS OF THE PARTIES AND THE OPINION OF THE DISTRICT COURT 26 We are thus presented with a case in which the Government has taken final adjudicatory 18 action against the plaintiffs, determining admitted property rights against them, without at any time in the process providing them more than the sketchiest of notice and a paper hearing conducted by carrier employees. In the cases presented, none of the plaintiffs received any precise indication as to why his or her claim was being denied prior to the final decision on review. The positions of the parties are simply stated. The plaintiffs argue that the historical core of due process, adequate notice and the right to a hearing, are fundamental procedural rights which cannot be denied, absent emergency, by the Government in any case when a property or liberty interest which is not de minimis is at stake. 19 The timing of these rights and additional procedural protections to which an individual might be entitled may vary substantially depending on the stake involved and the Government's interest in efficient, inexpensive administration, but those core procedural rights of notice and an oral hearing, however informally provided, may not be wholly denied. 20 27 In addition the plaintiffs argue that the notice provided to individual claimants is so cryptic, and the information it contains so unhelpful, that it is virtually impossible effectively to gather documentary evidence to submit in writing in order to rebut the carrier's initial determination. Furthermore, individuals of advanced age who are confused about their benefits are unlikely to be able to prepare an effective written submission though they might be fully capable of explaining their concerns in person, given a chance to talk to the decisionmaker. Finally, the plaintiffs point out that approximately 50 percent of the formal hearings that are held on claims over $100 result in adjustments of benefits in the claimant's favor; therefore, they contend, it is clear that a substantial number of errors remain, even after the redetermination procedure, which would be corrected by further oral hearings. 28 The Secretary agrees that due process dictates the procedures he must follow in making his determinations, but argues that the right to any particular procedural safeguard is determined by the flexible due process test enunciated by the Supreme Court in Mathews v. Eldridge. 21 This test calls for a weighing and balancing of three factors: 29 First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. 30 424 U.S. at 335, 96 S.Ct. at 903. When judged by this test, the Secretary contends, the value of oral hearings in this situation is outweighed by their costs. 31 The Secretary disputes the alleged inadequacy of the notice, pointing out that the form includes a telephone number to call if the claimant has a problem or question. The Secretary does not argue, however, that the claimant is given any right to speak directly with a decisionmaker about his claim; indeed, the record belies any such contention. 22 32 The confusion that can be engendered by statistics 23 was demonstrated when the Secretary responded to plaintiff's statistical argument with the fact that the reversal rate is less than one-tenth of 1 percent. This figure was arrived at by comparing the number of reversals to the total number of all denials of benefits, over 15 million in 1976 alone. This, he claims, shows an impressive record of accuracy and no need for further procedural safeguards. The Secretary also contends that most errors are coding or processing errors, not the sort of factual disputes which a hearing is best suited to correct. 33 The district court's analysis essentially followed the position taken by the Secretary. First noting that due process is not a fixed technical concept, but is a flexible notion of fair procedure that requires such protections as the particular situation demands, the court went on to conclude that even though the law was clear that some kind of hearing is required at some time before a person can be finally deprived of a property interest, that hearing need not be an oral, evidentiary proceeding but could be simply an opportunity to submit written material. To decide whether this limited paper hearing was sufficient in this case, the court applied the Eldridge balancing test. 34 It concluded first that while there might be genuine hardship in some cases, the amounts of money involved are not large and the Medicare program is not based on financial need. Therefore, as a general matter the private interest at stake is not substantial. 35 As for the risk of erroneous deprivation and value of additional procedural safeguards, the second factor in the Eldridge test, the district judge agreed with the positions advanced by the Secretary. He observed that witness credibility and veracity are rarely in issue in Medicare proceedings, and concluded that hearings would therefore serve little purpose. He agreed that the Secretary's method of calculating the risk of error more accurately reflected the adequacy of the protection offered by the reconsideration process, and regarded the form of notice as at least clear enough to enable a dissatisfied claimant to pursue the matter further. 36 The district court finally turned to the governmental interests at stake. The estimates of the cost of the present formal evidentiary hearing provided for over-$100 disputes varied from a low of $196 for a Part B hearing to a high of $405 for a Part A hearing. Furthermore, it was assumed that providing full evidentiary hearings for small claims would nearly double the number of hearings held. 24 Although the court did not consider the possibility of oral hearings that do not involve full evidentiary proceedings, or the possibility that better written notice might greatly improve the efficacy of paper hearings, it nevertheless concluded that it is clear that the aggregate additional cost in terms of money and administrative burden in implementing hearings for all claims would be substantial. 25 37 In sum, the district court agreed with the Secretary that the speculative benefit of a right to an oral, evidentiary hearing to persons with Medicare claims of less than $100 is outweighed by the cost to the public of requiring the additional procedural safeguard. Mem.Op. at 17; J.A. 216. THE LEGAL UNDERPINNINGS 38 The underlying dispute in this case is over the definition of the phrase notice and hearing. The Secretary does not dispute, and indeed could not dispute, that the claimants here have the right to notice and hearing on their claims, Brief for Appellee at 21; the principle is so ingrained in our notion of due process that it was described most recently by the Supreme Court as a general due process maxim. O'Bannon v. Town Court Nursing Center, 447 U.S. 773, 780, 100 S.Ct. 2467, 2473, 65 L.Ed.2d 506 (1980). 26 Indeed, the Secretary cites for us the much-quoted language of Wolff v. McDonnell, 418 U.S. 539, 557-58, 94 S.Ct. 2963, 2975-2976, 41 L.Ed.2d 935 (1974), pointing out that some kind of hearing is required at some time before a person is finally deprived of his property interests. The Secretary contends, however, that the Explanation of Medicare Benefits (EOMB) form, together with the opportunity to submit written materials, constitute an adequate opportunity to be heard. The problem is thus definitional. When the Supreme Court has said, so emphatically and repeatedly, that some kind of hearing is required before a person may be finally deprived of a property interest, did it contemplate that this sort of abbreviated notice and hearing would suffice in these circumstances? We conclude that it did not. While we do not believe the plaintiffs are entitled to the same full fair hearing provided for those with disputes of over $100, we find that due process requires a procedure that provides more of an opportunity to be heard than the present notice and paper hearing procedures allow. For this reason, we disagree with the balance reached by the district court under the Eldridge test, and are accordingly compelled to reverse its decision.A. The Value of Oral Hearings 39 The appellants' major criticism of the Secretary's current procedures is their failure to include any opportunity for an oral hearing. While we do not rule that the Secretary must always provide an oral hearing in under-$100 cases in order to meet due process requirements, we do find that the district court, and the agency, failed properly to weigh the interests to be balanced or properly to acknowledge the full extent of the precedential and policy reasons for providing better notice and/or some form of oral hearing in Medicare disputes, including situations like those involving some of the named plaintiffs here. They also failed to recognize the benefits and the minimal costs of informal oral hearings and they seriously underestimated the inadequacy of the notice here to inform a claimant why benefits were being denied. These failings taken together necessarily undercut the correctness of the court's overall balance and require its reexamination of what procedures are necessary to assure adequate notice and a genuine opportunity to be heard.
40 To date, the Supreme Court has never expressly approved as meeting due process hearing requirements a procedure in which a claimant has been finally deprived of the right to government benefits without affording that individual an opportunity to appeal personally and orally to the decisionmaker. On the other hand, it must be recognized that claimants have been denied through suspensions the value of the use of such benefits for varying periods of time pending a final decision without opportunity for oral exchange. In this way the Court has in effect permitted a decision to be made without an oral hearing as to which party should pay the costs of delay inherent in the decision-making process. 41 In Londoner v. City of Denver, 210 U.S. 373, 28 S.Ct. 708, 52 L.Ed. 1103 (1908), for example, the Court explicitly rejected the proposition that an opportunity to submit written comments satisfied the due process requirement of a hearing before tax assessments were finalized as to individual property owners. More recently in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), 27 the Court disapproved as inadequate due process a paper review prior to suspension of welfare benefits pending a full evidentiary hearing on the merits of their permanent termination. The Court pointed out some of the underlying practical reasons for insisting on oral process: 42 Written submissions are an unrealistic option for most recipients, who lack the educational attainment necessary to write effectively and who cannot obtain professional assistance. Moreover, written submissions do not afford the flexibility of oral presentations; they do not permit the recipient to mold his argument to the issues the decision maker appears to regard as important. 43 Id. at 269, 90 S.Ct. at 1021. 44 Nonetheless, the Eldridge Court in ruling out the necessity for an oral hearing prior to suspension of disability benefits acknowledged that at least in some situations, written hearing procedures can be structured to overcome the problems set out in Goldberg. See 424 U.S. at 345-46, 96 S.Ct. at 907-908. At the same time, the Eldridge Court did not exclude the possibility that in some situations, or without the presence of compensating safeguards, an oral hearing might be a due process requirement. 45 Moreover, in several recent decisions discussing hearing rights in an adjudicatory proceeding, the Court found that circumstances warranted some type of oral hearing. For example, Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978), involved a challenge to a municipal utility's procedure for terminating service for non-payment of bills. The Court held that the hearing mandated by due process required, at a minimum, an opportunity for a meeting with a responsible employee empowered to resolve the dispute. Id. at 18, 98 S.Ct. at 1565. Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1976), required that before suspending a student for alleged misconduct, the student be given oral or written notice of the charges against him and, if he denies them, an explanation of the evidence the authorities have and an opportunity to present his side of the story. Id. at 581, 95 S.Ct. at 740. The Court emphasized that no elaborate, formal procedure was required: In the great majority of cases the disciplinarian may informally discuss the alleged misconduct with the student minutes after it has occurred. Id. at 582, 95 S.Ct. at 740. 46 Very recently, in Parham v. J. R., 442 U.S. 584, 99 S.Ct. 2493, 61 L.Ed.2d 101 (1979), the Court refused to conclude that a formal, adversary hearing was required in order to institutionalize a child for mental health care but nevertheless held that there must be a personal interview with the child. 47 (S)ome kind of inquiry should be made by a neutral factfinder to determine whether the statutory requirements for admission are satisfied. That inquiry must carefully probe the child's background using all available sources, including, but not limited to, parents, schools, and other social agencies. Of course, the review must also include an interview with the child. It is necessary that the decisionmaker have the authority to refuse to admit any child who does not satisfy the medical standards for admission. 48 Id. at 606-08, 99 S.Ct. at 2506 (citations omitted; emphasis supplied). 49 Parham was followed by Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979), in which Social Security recipients challenged the Secretary's reliance upon non-oral hearing procedures prior to undertaking recoupment measures (consisting of reductions in future benefits) for past overpayments of Social Security and disability benefits. Full evidentiary hearings were available only after the recoupment measures were instituted. The relevant statute, § 204(b) of the Social Security Act, commanded that: 50 there shall be no adjustment of payments to, or recovery by the United States from, any person who is without fault if such adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience. 51 The Secretary provided written review procedures both for initial adverse overpayment and recoupment decisions. Though the Court upheld the paper review of the overpayment decisions, describing them as relatively straightforward matters of computation ... based on earnings reports (the claimants) themselves submitted, 442 U.S. at 696, 99 S.Ct. at 2555, the Court pointed out that written review hardly seems sufficient to discharge the Secretary's statutory duty to make an accurate determination of waiver under § 204(b) ... (because it) '... is inherently subject to factual determination and adversarial input.'  Id. at 696, 99 S.Ct. at 2555 (citation omitted). 52 The list could go on; as we pointed out above, the Supreme Court has thus far not expressly upheld 28 any process finally disposing of a liberty or property claim 29 that provided no opportunity for an oral personal exchange at any point in the process. Many cases require far more, 30 some permit the hearing to be postponed in favor of prompt administrative action, 31 but in each case it was provided at some point.
53 The tendency to require oral hearings has become so automatic that judicial opinions often devote little discussion to the reasons why our society adheres, in this day of computers and sophisticated print media, to the notion that a right to a personal oral exchange can be a critical element of justice. There seem to be at least three societal goals served by an oral kind of hearing, Wolff v. McDonnell, supra, 418 U.S. at 557, 94 S.Ct. at 2975, the desire for accuracy, the need for accountability, and the necessity for a decisionmaking procedure which is perceived as fair by the citizens. Most often mentioned by the courts is the notion that an oral hearing provides a way to ensure accuracy when facts are in dispute, especially if credibility is an issue. Justice Frankfurter believed that no better instrument has been devised for arriving at truth than the notice and hearing requirement. Joint Anti-Fascist Refugee Comm. v. McGrath, 341 U.S. 123, 171, 71 S.Ct. 624, 649, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). Even if credibility is not likely to be directly in issue, personal, oral hearings are an effective way to eliminate misunderstandings and focus issues. Ambiguities which are not readily apparent on the face of a document can be disclosed and clarified with a few moments of oral exchange between the individual and the decisionmaker. For example, in Goss v. Lopez, supra, one of the plaintiffs had been suspended from school without a hearing after she was arrested at a demonstration. The student conceded that she had been arrested, but testified at trial that she had been swept up in a mass arrest and had engaged in no misconduct. A prior opportunity to explain personally the apparently damning arrest could well have avoided a decision based on incomplete or incorrect facts. 32 54 The hearing requirement and many of the additional procedural safeguards that due process may require in particular circumstances also serve as an institutional check on arbitrary or impermissible action. Caseworkers, auditors, parole officers and other initial decisionmakers, if required to meet personally with those whose lives they are touching, and justify, however briefly, their decisions to those who are dissatisfied, are faced with a powerful disincentive to arbitrary action. 55 (T)he fair process of decisionmaking that (the requirement of notice and an opportunity to be heard) guarantees works, by itself, to protect against arbitrary deprivation of property. For when a person has an opportunity to speak up in his own defense, and when the State must listen to what he has to say, substantively unfair and simply mistaken deprivations of property interests can be prevented. 56 Fuentes v. Shevin, 407 U.S. 67, 81, 92 S.Ct. 1983, 1994, 32 L.Ed.2d 556 (1972). An oral hearing requirement thus serves to ensure that decisionmakers recognize that their decisions affect the lives of human beings, a fact that is often obscured by a jumble of papers and depersonalized identification numbers. We can well believe it is easy for an employee processing an application for a small amount of Medicare benefits to shrug his or her shoulders and conclude that benefits should be denied or reduced, without stopping to gather the information necessary to reach that decision accurately. The situation could well be different if the employee knew that the claimant would have the opportunity personally to challenge that determination and seek an explanation. An employee is particularly vulnerable to the temptation if there are strong external pressures to reduce costs, as a district court has recently found exist in the carrier-administered Medicare program, see note 8 supra ; small claims which the employee knows cannot be subjected to the scrutiny of a later hearing would be the most likely to suffer. 57 We do not believe it unwarranted to recognize that human nature frequently leads to careless and arbitrary action when the decisionmaker can retreat behind a screen of paper and anonymity. The principle that those who govern must be accountable to those whose lives they affect in forms not only our representative system of government, but on a broader scale, forms the very essence of what we expect from the Government in its dealings with us. Providing a personal, oral hearing can be one expression of that principle. 58 A third and perhaps most important reason for generally insisting upon an oral hearing is that no other procedure so effectively fosters a belief that one has been dealt with fairly, even if there remains a disagreement with the result. Our system of government is founded on respect for, and deference to, the integrity and dignity of the individual. In the Government's dealings with individuals especially with respect to those individuals' property rights some mechanism must exist to ensure that those values are left intact, even when action is finally taken against the person. In a society like ours, which operates on the assumption of and relies for its continued stability on respect for our institutions and voluntary compliance with the dictates of the law, it is crucial that its members perceive that their rights and interests are taken seriously and thoughtfully by the officials who are deciding their claims. 33 During an oral hearing, the Government loses its nameless, faceless quality and comes into focus as another human being with whom the citizen can speak, present his or her case, and look to for a responsible decision. To quote Justice Frankfurter again, no better way has been found for generating the feeling, so important to a popular government, that justice has been done. Joint Anti-Fascist Refugee Comm. v. McGrath, 341 U.S. 123, 172, 71 S.Ct. 624, 649, 95 L.Ed. 817 (1951) (concurring). B. The Mathews v. Eldridge Balancing Test 59 Despite the impressive number of cases requiring oral hearings as part of due process and the policy reasons supporting such a right, it must be acknowledged that some federal courts 34 and learned commentators 35 maintain that there are situations involving final adjudications of rights that do not require oral process. It is suggested that under the Court's more recent enunciation in Eldridge, an oral hearing is simply one of an arsenal of procedural safeguards whose worth in any overall process must be determined by the formula, laid down in Eldridge, of whether its probable value is outweighed by its fiscal and administrative burdens. 424 U.S. at 335, 96 S.Ct. at 903. 60 Eldridge dealt with the question of what procedural protections are required before the Government may stop paying disability benefits which had been provided on a regular basis. As here, an intermediary made an initial determination that Eldridge was no longer eligible for benefits, though in the case of disability payments, the intermediary is a state agency rather than a private company acting under contract. The agency notified Eldridge of its tentative determination that his benefits should be terminated. The tentative determination included a statement of reasons and a summary of the evidence on which the agency primarily relied. He was entitled to full access to the information relied upon, permitted to respond both initially in writing, and subsequently to submit additional evidence. The decision to terminate was then reviewed by an examiner in the Social Security Administration who once again notified Eldridge of the reasons for his decision, and informed him of his right to de novo reconsideration. Again, he had the opportunity to submit additional written material, and receive a decision on reconsideration with specific reasons for the action taken. At that point, his benefits would be terminated. After termination, he was entitled to demand both a full evidentiary hearing and judicial review; if successful at either level he would receive retroactive benefits. However, he would be without remedy for the loss of interest, or interim use of the benefits withheld. The question for decision in that case, then, was whether the denial of a right to a pretermination full evidentiary hearing denied Eldridge his right to a meaningful opportunity to present his case at a meaningful time. 61 The Court considered the four factors, discussed above, to determine the identification of the specific dictates of due process: the private interest affected, the risk of an erroneous deprivation of such interest, the probable value of additional or substitute procedural safeguards, and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. 424 U.S. at 334-35, 96 S.Ct. at 902-903. It concluded that, considering the interests at stake, the not insubstantial costs of conducting pretermination hearings outweighed their likely benefits in light of the other procedural protections already afforded the claimant. Id. at 347-48, 96 S.Ct. at 908-909. 62 This balancing test has been used subsequently by other courts to determine the necessity for a variety of procedural protections normally associated with an adversary hearing 36 even if it is the only hearing the claimant will ever receive. They have justified this expansive use of the test by citation to the Court's comment at the end of Eldridge that (t)he judicial model of an evidentiary hearing is neither a required, nor even the most effective, method of decisionmaking in all circumstances, 424 U.S. at 348, 96 S.Ct. at 909, as well as by cases such as Goss v. Lopez, supra, in which the Court, though holding some kind of (notice and) hearing was necessary, recognized that very informal and summary dispute resolution procedures would satisfy due process norms even when liberty or property interests are at stake. Professor Kenneth Davis has concluded in the most recent edition of his Administrative Law Treatise that Goss and Eldridge together may stand for the proposition that (w)hen a trial is not feasible on an issue of adjudicative fact, a person may have a due process right (only) to a summary of the adverse evidence and a chance to respond informally, with the feasibility of additional procedures, including an oral hearing, to be determined by the Eldridge balancing test. 37 63 Thus courts applying the Eldridge balancing test have, on occasion, held paper hearing procedures to be adequate where in the total context of the process, they are deemed to ensure adequate notice and a genuine opportunity to explain one's case. For example, in Basciano v. Herkimer, 605 F.2d 605 (2d Cir. 1978), cert. denied, 442 U.S. 929, 99 S.Ct. 2858, 61 L.Ed.2d 296 (1979), the Second Circuit upheld New York City's procedures for determining a claimant's eligibility for disability benefits despite the fact that the City did not provide for oral hearings. Instead, the claimant was examined by two different panels of Board doctors, each of which recommended a decision, and he had the opportunity to submit his medical records as well as any other written statements. It bears noting both that the court carefully limited its holding to the case at hand, 38 and that the claimant was not totally denied the opportunity for an oral hearing inasmuch as he had the opportunity to converse with those individuals responsible for recommending the decision the agency's doctors. 39 64 Goss and Eldridge, then, provide in the opinion of some a valid basis for justifying the elimination of traditionally accepted forms of dispensing due process such as oral hearings when the costs of those forms outweigh their benefits. But no case or commentator suggests that traditional trial-type procedural safeguards may be eliminated at the expense of the core requirements of due process adequate notice of why the benefit is being denied and a genuine opportunity to explain why it should not be. In deciding if the totality of a procedure meets these core requirements of due process, no component of a procedure can be analyzed independently of the others. As Judge Friendly wrote, if an agency chooses to go further than is constitutionally demanded with respect to one item, this may afford good reason for diminishing or even eliminating another. Friendly, supra note 35, at 1279. In particular, he felt that the better the agency's notice procedures, the more forthcoming the agency has been in disclosing its grounds (for decision), the stronger ... its position in asking curtailment of other procedures. Id. at 1281. 65 Given, then, the fluid and probably still evolving state of the law as to the necessity of oral hearings prior to final determinations of property interests such as these, we do not fault the district court's use of the Eldridge balancing test to determine what, if any, additional procedural safeguards are necessary here. We do disagree, however, with its conclusion that the Secretary's present procedures provide adequate safeguards to protect that due process core, as well as with the manner in which it balanced the benefits and costs of the additional safeguards of more adequate notice and/or an informal opportunity to talk to the decisionmaker at some point in the process. 66 C. The Requirements of Due Process in This Case 67 Whether a procedure such as the paper hearing employed here contains the essence of due process ... (by providing) 'a person in jeopardy of serious loss ... notice of the case against him and opportunity to meet it,'  Mathews v. Eldridge, 424 U.S. at 348, 96 S.Ct. at 909 (citing Joint Anti-Fascist Comm. v. McGrath, 341 U.S. at 171-72, 71 S.Ct. at 648-649), must be decided in the context of the entire dispute resolution process, as well as with reference to the characteristics of the group who have to use it. See id. 424 U.S. at 349, 96 S.Ct. at 909. We find serious procedural deficiencies in the current process which could be alleviated in great part by the provision of an opportunity for informal oral consultations, although possibly by other alternate procedures such as better notice as well. Without some additional improvements, however, we are unable to hold that the current procedures meet the due process minimum, and we must order the court to reengage in the Mathews v. Eldridge balancing test to ascertain what additional safeguards are feasible and necessary. In doing so, however, it is only fair that we indicate wherein we find its prior balancing at fault. 1. The Private Interest at Stake 68 Though the district court recognized that the denial of Medicare benefits undoubtedly does inflict genuine hardship upon some claimants, Mem.Op. at 7; J.A. 206, it minimized the private interest at stake by drawing upon the Court's distinction in Eldridge, supra : (e)ligibility for Medicare benefits, unlike eligibility for public assistance benefits, is not based upon financial need. Mem.Op. at 7; J.A. 206. We are not so sanguine, however, that the mere difference in eligibility criteria between the two programs is sufficient to support an inference that Medicare recipients do not have a substantial enough stake in being compensated for necessary medical expenses to warrant a more expansive notice and hearing procedure than that afforded here. The relatively small amounts involved (less than $100) in disputed claims may be misleading. A chronic patient could be denied up to $600 per year under Part A and $200 per year under Part B without qualifying for additional protection, 40 amounts greater than the cut-off point which Congress felt deserving of a full evidentiary hearing, and close to that it found deserving of judicial review. 69 Nor can we ignore in any evaluation of the interest at stake the significant percentage of Medicare claimants disadvantaged by disability, illness and poverty, a substantially higher figure than is true of the population at large. Indeed it was because of the special coincidence of medical needs and financial problems among elderly people that the Medicare program was established in the first place. See S.Rep.No. 1230, 92d Cong., 2d Sess. 37 (1972) (group characteristics of low incomes and high medical expenses ... led Congress to provide health insurance for older people). That unfortunate coincidence is borne out by current statistics which indicate that the elderly still have lower incomes and higher medical expenses than other segments of the population. 41 Thus, though need is not an eligibility criteria for participation in Medicare, a disproportionately large percentage of elderly recipients hover near the poverty level. Nonreimbursed medical bills of up to $100 represent a substantial loss to them. Although aware that despite evidence submitted to the Eldridge Court that disabled workers' families also tended to be on the low end of the income scale, it reached a conclusion that the potential deprivation (in disability cases) is generally likely to be less than in Goldberg, 424 U.S. at 341, 96 S.Ct. at 906, we still feel that the trial court here must give some explicit consideration to the unique disability problems and low economic status of large numbers of aged persons when evaluating their need for protections against unjustified denials of modest medical claims. 70 Finally, we emphasize that in Eldridge the interest at stake was defined by the court as sole(ly) (an) interest ... in the uninterrupted receipt of this source of income pending final administrative decision on his claim, 424 U.S. at 340, 96 S.Ct. at 905 (emphasis supplied), whereas here the interest at stake is a permanent loss of benefits. The trial judge found that critical difference between a temporary and permanent loss to be irrelevant. Mem.Op. at 8-9; J.A. 207-08. We believe that the permanency of the loss of benefits sets this case apart from Eldridge and enhances the relatively low status of the interest at stake accorded by the district court. We feel the court must weigh the very real differences involved in depriving the claimant in a case like Eldridge of the temporary use of benefit monies pending a final decision as to his right thereto against the permanent loss of the reimbursement for medical expenses involved in this case, as well as any temporary loss of the use of that money pending a final determination on review. This situation, unlike Eldridge, does not involve only the allocation of the costs of delay in the decisionmaking process, but the permanent loss of the benefits themselves. 71 2. The Risk of Erroneous Deprivation and the Benefit of Additional Safeguards 72 The accuracy of the Secretary's current dispute procedures for claims under $100 was a major source of dispute in this litigation. Each side relied on different statistical measures to measure the reversal rate. All of them are undermined to some degree by what even the agency admits is a deceptively low appeals rate; 42 for a variety of reasons acknowledged by the agency and the district court, including ignorance, confusion and disability, few people challenge adverse claims decisions. At any rate, like the Supreme Court in Eldridge, 424 U.S. at 346 n.29, 96 S.Ct. at 908 n.29, we would not feel comfortable in relying too heavily on the elusive statistics proffered by either side to measure the magnitude of the risk of error inherent in the present procedures. 73 We must therefore rely on our own judgment, bolstered by evidence from Congressional hearings and client surveys, that the notice accorded to the plaintiffs here by the EOMB form, unsupplemented by any opportunity to communicate personally with the carrier employee responsible for the initial denial, does not give constitutionally adequate notice of why benefits are being denied. We agree with the plaintiffs that the reasons for claims denials given in the initial notice (can be) ... so unclear that it is virtually impossible for the average beneficiary to present a well-reasoned argument to the insurance company. J.A. 94 (Plaintiffs' Memorandum in Support of Motion for Summary Judgment). 74 Under the Medicare law benefits may be denied either because treatments are deemed unnecessary or because the charges are deemed unreasonable. 42 U.S.C. § 1395x(v). The agency-approved notices 43 received by two of the named plaintiffs here failed to specify prior to the final agency review which of these two basically different causes for denial applied; the claimants were referred only to Item 5 on the back of the form. This item in turn states that either the provider has not charged the customary charge or that his charges are not prevailing, that is, not in the 75th percentile of his provider peers. It says nothing about whether or why the treatment may be deemed inappropriate, although in plaintiffs Patino's and Rothfeld's cases, the nature of the treatment was apparently the underlying reason for denial, not the charge, despite the notation on the EOMB form. Thus plaintiffs Patino and Rothfeld were not adequately informed by the notices whether their doctors were allegedly more expensive than others in the locality, or were charging them more than other patients, or whether or why the treatments were deemed unnecessary. 44 Plaintiff Patino's confusion was accentuated by the fact that she was given two differing and conflicting reasons for the denial of benefits for identical treatments at different times. 45 Their experiences cannot be dismissed as isolated ones. Congressional witnesses recently testified in a hearing on Medicare that their elderly constituents on a widespread scale experienced similar confusion as to why expected benefits were being denied; 46 a survey cited to the trial judge by the plaintiffs also showed that the average Medicare recipient did not understand from the notice why his claim was denied or what to do about it. 47 Unlike the trial judge, we cannot agree that other factors such as age or disability which impede elderly claimants' efforts to seek reconsideration or review in any way detract from their need for informative notice; 48 in our opinion these other factors only accentuate the need for adequate notice as to the specific basis for denial. 75 It is universally agreed that adequate notice lies at the heart of due process. 49 Unless a person is adequately informed of the reasons for denial of a legal interest, a hearing serves no purpose and resembles more a scene from Kafka than a constitutional process. Without notice of the specific reasons for denial, a claimant is reduced to guessing what evidence can or should be submitted in response and driven to responding to every possible argument against denial at the risk of missing the critical one altogether. 76 It may be that in some circumstances a lack of precise initial notice of the grounds for denial may be compensated for by ready access to the adverse evidence or a summary thereof. For instance, in Eldridge, the claimant had such ready access to the decisionmaker's entire file on his case. Moreover, he had the opportunity to talk to the examining doctors. Therefore, he had the opportunity to flesh out the notice of denial and determine from the file and conversations with doctors what factual matters, if any, were in dispute even before the pretermination denial. In this case, however, the cryptic notice on the EOMB form is the sum total of the communication from decisionmaker to claimant before a final denial 50 and it comes only after an initial denial has already been made. The claimant has no opportunity to flesh out the notice at any stage by access to the files or informal consultation with either the initial or reviewing decisionmaker before a final and irrevocable denial of benefits is made. Because the reconsideration is a paper one only, he can only write a letter or get his doctor to write a letter that he hopes will address the issue. The lack of adequate notice is in no way offset by a compensating procedure elsewhere in the process. Cf. Memphis Light, Gas & Water Div. v. Craft, supra. We find the risk of erroneous deprivation encountered in such a process to be substantial enough to require a careful assessment of additional protections. 77 Again we refer to the unique characteristics of the group involved here in order to appraise the accentuated effects of these notice defects. Congress, in enacting and amending Medicare, has repeatedly recognized that the elderly, as a group, are less able than the general populace to deal effectively with legal notices and written registration requirements Congress itself amended the Medicare Act to automatically include Part A eligibles into Part B because elderly eligibles were failing to enroll due to inattention or inability to manage their affairs. S.Rep.No. 1230, 92d Cong., 2d Sess. 38 (1972). 51 To countenance granting them less than adequate notice of the reasons for denial of medical benefits would be inconsistent with that Congressional intent, to say the least. 78 Opportunity for an oral interview or consultation could alleviate some of the problems caused by the inadequate notice, although a conscientious definition of due process would include both specific notice of the factual grounds for denial plus a subsequent opportunity to address these grounds in a way that is accessible to the users of the process. But the chance to talk to someone in charge would at least offer the claimant the opportunity to discover the basis of his dispute with the agency, and, if he has a defense, either answer on the spot or prepare rebuttal material for later submission. 79 In addition, an oral hearing has an independent value in many reviews of this kind which was not taken into account by the trial judge. Oral hearings are peculiarly suitable to advance factfinding on issues which depend on the credibility and veracity of the claimant. See Califano v. Yamasaki, 442 U.S. 682, 696, 99 S.Ct. 2545, 2555, 61 L.Ed.2d 176 (1979). In Medicare review, despite the Secretary's and the trial judge's emphasis on the routine or computational aspects of most denials, issues involving credibility often do arise. For example, the statute and the regulations provide for a waiver of the reasonable and necessary test for the payment of assigned claims in certain cases. Specifically, a beneficiary may be reimbursed for any payments made to a provider for treatments deemed not reasonable or necessary if the beneficiary acted under a good faith belief that the expenses were reimbursable. The agency may then recoup these indemnified funds from the provider, but only if the provider did not in good faith believe that the treatments were necessary or appropriate. 42 U.S.C. § 1395pp. 52 As the Medicare Carriers Manual itself recognizes, the interests of patient and provider in such a situation may be adverse and issues of credibility and veracity are involved. Medicare Carriers Manual, Part 3, Claims Process P 7300.4. The Supreme Court has already held in Yamasaki that a determination of a claimant's good faith or fault requires personal contact between claimant and decisionmaker. 80 (A) written review hardly seems sufficient to discharge the Secretary's statutory duty to make an accurate determination of waiver under § 204(b). Under that subsection, the Secretary must assess the absence of fault and determine whether or not recoupment would be against equity and good conscience. ... The Court previously has noted that a broad 'fault' standard is inherently subject to factual determination and adversarial input. Mitchell v. W. T. Grant Co., 416 U.S. 600, 617 (94 S.Ct. 1895, 1905, 40 L.Ed.2d 406) (1974). As the Secretary's regulations make clear, fault depends on an evaluation of all pertinent circumstances including the recipient's intelligence ... and physical and mental condition as well as his good faith. 20 CFR § 404.507 (1978). We do not see how these can be evaluated absent personal contact between the recipient and the person who decides his case. Evaluating fault, like judging detrimental reliance, usually requires an assessment of the recipient's credibility, and written submissions are a particularly inappropriate way to distinguish a genuine hard luck story from a fabricated tall tale. See Goldberg v. Kelly, 397 U.S. at 269 (90 S.Ct., at 1021). 81 442 U.S. at 676-77, 99 S.Ct. at 2555. 82 Thus, the overriding benefits of an oral hearing where the claimant's good faith belief in the coverage of the services is at issue have already been asserted by the Supreme Court. 53 We cannot, therefore, agree with the trial judge's conclusion here that the nature of (the reviewer's) inquiry is particularly suited to procedures that afford claimants the opportunity to make written submissions. Mem.Op. at 15; J.A. 214. While the largest numbers of denials ... (may be) 'reasonable charge reductions' which typically turn upon mathematical calculations, we do not see on what basis he could conclude that most other decisions are  'sharply focused and easily documented'  by  'routine, standard, and unbiased medical reports by physician specialists.'  Mem.Op. at 14-15; J.A. 213-14. We can foresee different scenarios in which both the claimants' and the providers' credibility may be at issue and their interests at stake not necessarily congruent. 83 As a final fillip here, we note that the decisionmaker on review is himself an employee of the very private insurance carrier which previously denied the claim. Moreover, this carrier has a financial interest in the outcome of the proceedings. The possibility of bias inherent in utilizing the employees of an interested private party as administrative decisionmakers has led one court to hold the full fair hearings provided claimants of over $100 under Part B violative of due process. The failure to provide an impartial tribunal, the court concluded, rendered the hearing fatally defective. The district court in McClure v. Harris, supra note 8, reasoned: 84 If hearing officers are potentially biased in favor of the carriers whose determinations they review, then the availability of an independent, administrative appeal beyond the hearing officer level might well mitigate the harmful effects of such bias. On the other hand, if no independent tribunal is ever to review a hearing officer's decision, the impartiality must be fully ensured at the hearing officer's level. 85 503 F.Supp. at 414. Without passing on the correctness of the McClure court's ruling, we do find its balancing equation instructive. In weighing the calculus of whatever process is due Part B claimants who are not entitled to a full fair hearing because their claims are under $100, the court should consider both that (1) the decisionmaker has a financial incentive to keep payments low because the Secretary periodically reviews the Department's contracts with private carriers, 54 (2) the decisionmaker on review is an employee of the same carrier as the person who originally denied the claim, and could only rule in the beneficiaries' favor by directly overturning the carriers' decision, id., and (3) there is not only no appeal from the carrier employees' decisions but also no opportunity for direct contact between the claimant and these decisionmakers at any stage of the proceeding. 86 In sum, we believe the current procedures allotted to the elderly Medicare claimant, probably disadvantaged by disability and poverty, resemble playing against a stacked deck notice that does not adequately inform him of the basis of the denial, no access to files or a summary of the evidence, no opportunity for any direct oral communication with the decisionmaker, a provider and a decisionmaker with possible bias, no appeal of any sort. This combination results in a significant possibility of deprivation. Our concern is that this combination be altered by the addition of some other protections in a way that will assure a claimant minimal due process, i. e., adequate notice and a genuine opportunity to present his case.
87 Our final problem with the trial court's balancing under Eldridge is that in weighing the feasibility or costs of additional procedures, it considered only the estimated costs of providing the same full fair hearings for under-$100 claims as are currently provided for over-$100 claims. Since we are interested only in ensuring that a claimant receives adequate notice and a genuine opportunity to answer the factual case against him, whether achieved by means of better notice, opportunity to talk to the decisionmaker and/or see his file, or a combination of both, the cost of these additional procedures, not of full fair hearings, is what is at stake. On remand the court should weigh the much less expensive costs of such informal procedures against their expected benefits.