Court Opinion

ID: 8994015
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:24:43.172779+00
Date Added: 2024-06-11T17:10:59.294286
License: Public Domain

SLOVITER, Chief Judge,
dissenting.
The difficulty facing the court in this case is the all too familiar one in which a court, seeking to discern congressional intent from ambiguous statutory language, divides as to that intent because Congress has left us with contradictory signals. Had Congress expressly included a provision, one way or another, as to the states’ ability to regulate balance billing notwithstanding the detailed provisions on that subject in its most recent amendments to the Medicare Act, this issue would never have arisen. Congress’s failure to so provide leaves us *858searching for clues. They lead me to a different result than that which the majority reaches.
As an initial matter, I believe that the majority errs in holding that the district court properly applied a presumption of validity to the Pennsylvania Health Care Practitioners Medicare Fee Control Act (Act). I do not dispute that a presumption of validity generally applies to state laws concerning matters of traditional state concern, see California v. Arc America Corp., 490 U.S. 93, 101, 109 S.Ct. 1661, 1665, 104 L.Ed.2d 86 (1989) (“When Congress legislates in a field traditionally occupied by the States, we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.”); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947), or that the regulation of the public health is such a matter. See Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 719, 105 S.Ct. 2371, 2378, 85 L.Ed.2d 714 (1985) (regulation of health and safety matters is primarily and historically matter of local concern); Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366, 371, 96 S.Ct. 923, 928, 47 L.Ed.2d 55 (1976) (states retain broad power under constitutional scheme to legislate protection for their citizens in matters of local concern such as public health).
These principles are inapplicable here. I think it is taking too great a leap to conclude that a state statute that regulates doctors’ fees, and in particular only certain doctors’ fees charged to certain patients, is a matter of traditional state concern.
In Hillsborough, the regulations deemed within the state’s traditional police power were designed to prevent the transmission of hepatitis by blood donors. In contrast, Pennsylvania’s Medicare Fee Control Act is not directed to the broad issue of the public health. Nothing in Pennsylvania’s Act speaks to the substantive practice of medicine, such as who can be licensed, or the manner in which medical services are provided.1
Assuming that control of fees for medical services would be a permissible regulation of public health under some circumstances, it does not follow that this economic regulation should be viewed as within the state’s traditional power inasmuch as there has been no showing of a history of state oversight over medical fees. Although the Act’s preamble refers to “the continuing escalation of costs for health care services,” the Act is not designed to redress the problem of high medical fees to the indigent; its application is limited to patients on Medicare, some of whom are not indigent, and it does not address the fees doctors can charge to non-elderly indigents. Because its application is limited to doctors who treat patients on Medicare, and there has been no showing of a particular problem warranting the exercise of state police power to redress that problem, I would not treat this Act as entitled to a presumption of validity.
Indeed, not only do I believe that price control over physicians’ fees is not an area of traditional state regulation, but I believe that any presumption of validity is countered by the fact that the state Act targets only those doctors (and patients) participating in a federal program. The state’s connection with the federal Medicare Act is nonexistent. The federal Medicare Act creates an exclusively federal program which provides for its administration by local insurance carriers under the direction of the Department of Health and Human Servic*859es. 42 U.S.C. § 1395u (1988). The Medicare program is funded solely with federal dollars. Unlike the Medicaid program in which the states contribute both funding and administrative oversight, the Medicare program has no state involvement at all.
Under these circumstances, rather than being viewed as presumptively valid, the Pennsylvania Act should be viewed as suspect, which is the general approach taken in preemption cases when the state has enacted a law that targets a federal program. See Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988) (Georgia garnishment law singling out ERISA benefit plans for different treatment than non-ERISA benefit plans preempted, but generally applicable Georgia garnishment law not preempted by ERISA); Raskin v. Moran, 684 F.2d 472 (7th Cir.1982) (striking down state law that decreased salaries of state’s reserve judges by exact amount of federal Social Security benefits they received); cf. Felder v. Casey, 487 U.S. 131, 144, 108 S.Ct. 2302, 2309-10, 101 L.Ed.2d 123 (1988) (state notice-of-claim statute preempted in § 1983 suits in part because rather than being a neutral, uniformly applicable procedural rule, statute extends protections only to governmental defendants, thereby conditioning the right to bring suit against the very persons and entities Congress intended to subject to liability).
These courts have implicitly recognized that it is anomalous to presume that a state may enact non-neutral laws directed at and affecting exclusively federal programs. As the Supreme Court held in Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 308-09, 108 S.Ct. 1145, 1155, 99 L.Ed.2d 316 (1988), a state law whose central purpose is to regulate matters that Congress intended a federal agency to regulate is preempted. By applying a presumption of validity before determining the congressional intent to occupy the field, the majority tilts the analysis. Even if we would not hold that a state statute targeting participants in a federal program for state regulation is presumptively invalid, it certainly should not be presumed to be valid.
Turning then to the issue of implicit preemption, I note that the majority reaches its conclusion that Congress intended that states be permitted to ban balance billing based on a statement of legislative history, the awareness by Congress of several state laws precluding balance billing, a 1986 First Circuit case, and “the very complexity of the Medicare legislation.” See Majority Op. at 851. I will consider each in turn.
The majority cites to one sentence of the House Ways and Means Committee Report that accompanied the House version of OBRA ’89 that expressly acknowledges that states may require assignment. Were this a report of a Conference Committee which had reconciled two conflicting bills into a final version, it would be a clear statement of intent entitled to some weight in light of the ambiguity in the statute. However, that Report merely accompanied an earlier version of the bill ultimately passed. The district court discounted the statement because there is no way to ascertain whether this statement was approved by the committee. More significant for me are the facts that the bill underwent extensive revisions before it was finally enacted as OBRA ’89, and that the final bill was accompanied by a Conference Report that contains no language whatsoever concerning state mandatory assignment laws. Thus, this single sentence taken from thousands of pages of legislative history provides little support for the majority’s conclusion.
The majority places great significance on the fact that although Congress was aware of four states’ restrictions on balance billing and the similar efforts by numerous other states, it nonetheless failed to incorporate a preemption statement into the Medicare Act. The majority states, “[sjurely if Congress intended to occupy the field it would have expelled the state intruders.” Majority Op. at 851.
With respect to this argument, I agree with the district court that “congressional silence is a notoriously bad barometer of *860congressional purpose.” 755 F.Supp. at 1309; Op. at 845; see also Schneidewind, 485 U.S. at 306, 108 S.Ct. at 1154 (Court generally reluctant to draw inferences from Congress’s failure to act). If silence alone were enough to defeat preemption, there would be no doctrine of implicit preemption which is predicated on the absence of any explicit statutory provision regarding preemption.
Next, the majority relies on Massachusetts Medical Soc’y v. Dukakis, 815 F.2d 790 (1st Cir.), cert. denied, 484 U.S. 896, 108 S.Ct. 229, 98 L.Ed.2d 188 (1987), which also involved a Supremacy Clause challenge to a state law banning balance billing. The majority concludes that Massachusetts Medical provides strong support for the defendants in this case because the medical societies here rely on “virtually the same evidence” that the plaintiffs unsuccessfully proffered in Massachusetts Medical to show a Congressional intent to preempt the state law. Majority Op. at 855. The plaintiffs in that case relied on statutory language that provided for balance billing; remarks by Representative Mills, a principal architect of the Medicare Act, to the effect that Medicare was not intended to prevent doctors from charging more than the allowable charge as defined in the Medicare Act; and Congress’s specific rejection of a proposal to eliminate balance billing. 815 F.2d at 792-93. The Massachusetts Medical court stated that this evidence supported a conclusion that Congress simply intended to leave existing fee-setting practices undisturbed and the states free to regulate balance billing individually, and that therefore the plaintiffs failed to show an unmistakable congressional intent to create a right to balance bill.
Massachusetts Medical, however, reached its conclusion on the basis of a presumption of validity to the state law, which, as noted above, I believe is inapplicable in this situation. In any event, I agree with the district court that Massachusetts Medical is largely inapposite to the present case because the regulatory landscape has changed considerably since that opinion was rendered. Even if the provisions of OBRA ’86 regarding balance billing were not enough to occupy the field, the far more extensive provisions set forth in OBRA ’89 present this issue in a far different light.
It is anomalous that the majority uses the very complexity of the Medicare program as support for its conclusion of no preemption. I believe just the contrary. I view the federal statutory scheme in OBRA ’89 regulating assignment and balance billing in intricate detail as indicating that Congress has made a deliberate policy balance and left little room for state supplementation.
To briefly recapitulate the Medicare scheme with respect to medical fees, the Act sets forth specific procedures for setting the reasonable charges applicable to all medical services rendered. 42 U.S.C. § 1395x(v). After Congress received the 1988 report of the Physician Payment Review Commission (PPRC) recommending retention of balance billing but recommending new caps on balance billing and a total prohibition on balance billing for the elderly poor, Congress enacted OBRA ’89 which established a limiting charge in balance billing of no more than twenty-five percent over the recognized payment amount for 1991, no more than twenty percent in 1992, and no more than fifteen percent in 1993 and thereafter. 42 U.S.C.A. § 1395w-4(g)(2) (West Supp.1991). In OBRA ’89 Congress also prohibited balance billing altogether for the elderly poor who are eligible for both Medicare and Medicaid assistance. Furthermore, Congress reduced the Medicare allowed charges and imposed caps on balance billing for specific medical services deemed to be overvalued in comparison to other services. Indeed, the majority concedes that “Congress has dealt in intimate fashion with balance billing.” Majority Op. at 849.
It is hard to imagine a legislative program that more completely occupies the field of balance billing by physicians than one that expressly states which Medicare patients may not be subject to balance billing, imposes a limit on the amount of bal-*861anee billing for the remainder of Medicare patients, and deals specifically and.separately with certain defined services.
Nor do I agree with the majority’s conclusion that a state act banning balance billing will not present an obstacle to the accomplishment of Congress’s objective in enacting the federal legislation. It is significant that the PPRC, an advisory body formed to report to Congress about the Medicare program, specifically recommended that it not ban balance billing. The PPRC stated that although the elimination of balance billing might mean that Medicare patients could receive needed services at more affordable rates, “[t]he balance billing allowed under current Medicare policy serves as something of a safety valve against the deterioration of quality and access that could result if Medicare sets its fees too low and forbids balance billing.” Physician Payment Review Commission, 1988 Annual Report to Congress 173 (March 31, 1988) (hereinafter PPRC 1988 Annual Report).
The majority rejects as “sheer speculation” the possibility that eliminating balance billing will result in a reduction of access to physicians’ services. Majority Op. at 853. What is significant is not this court’s view of the likelihood of a reduced access to services, but Congress’s apparent decision, upon the recommendation of its own agency which studied the question, that the danger of reduced services was real enough to retain the balance billing safety valve.
The PPRC also articulated a concern about the effect of a balance billing ban on the federal budget. See PPRC 1988 Report at 173 (“Given pressures on the federal budget and the high charge reduction rates in Medicare in recent years, such a safety valve might prove important.”). More specifically, it opined that reimbursement costs to the federal government of-the Medicare program will increase if recipients’ lower medical bills result in their increased utilization of physician services. See id. at 169 (“With lower out-of-pocket costs [from reduced balance billing], beneficiaries would probably use more services, thereby increasing Medicare Part B spending. Some of the increased care would be appropriate, but some would not.”) (footnote omitted); Holahan & Zuckerman, Medicare Mandatory Assignment: An Unnecessary Risk, Health Affairs 66, 75 (Spring 1989) (“the potential exists for increased demand by beneficiaries due to the elimination of balance billing^; d]emand would increase because patients would only face deductible and coinsurance obligations causing the net price of care to fall”). Unlike the majority, I assume that the view of an agency established by Congress for this very purpose played a role in the delicate balance Congress struck in retaining balance billing. In fact, were Congress not concerned about the effect of billing limitations on the availability of medical services, it is unlikely it would have increased the cap on fees charged for “evaluative and management services” from 25% to 40% in OBRA ’90. See 42 U.S.C.A. § 1395w-4(g)(2)(A) (West Supp.1991).
I find it difficult to envision how state action on this subject could not present a conflict with the congressional scheme. The majority must concede that were a state to enact a law permitting balance billing up to 50% over the allowable charge in 1991, 40% over in 1992, and 25% over in 1993 and thereafter, it would conflict with the congressional mandate of 25%, 20%, and 15% respectively for those years. Similarly, it seems to me that a state statute tinkering with the same limits and imposing the more limited caps of 15%, 10% and 5% for those years would also be invalid. I see no reason why a state statute eliminating all the caps Congress imposed should not also be deemed preempted. See International Paper Co. v. Ouellette, 479 U.S. 481, 494, 107 S.Ct. 805, 813, 93 L.Ed.2d 883 (1987) (“A state law also is pre-empted if it interferes with the methods by which the federal statute was designed to reach [the ultimate goal of both federal and state laws of eliminating water pollution.]”).
The issue before us is not whether balance billing of Medicare patients is good or bad, reasonable or unreasonable, social or antisocial. It is simply whether beneficiaries and participants in a carefully titrat*862ed federal program which has, since its inception, sought to accommodate the views and needs of patients and providers alike, should be compelled to rely for their protection from what may be deemed to be excess charges on the statute and administrative scheme Congress enacted and supervises or whether the various states may superimpose their own, and potentially different, schemes. I respectfully dissent, and would have reversed the judgment of the district court.

. The majority cites 42 U.S.C. § 1395 (1988), one of the provisions of the federal Medicare Act, in support of its proposition that Pennsylvania’s Medicare Fee Control Act regulates an area traditionally occupied by the states. Majority Op. at 846 n. 4. However, the subjects left to state supervision and control in section 1395 are (1) the practice of medicine; (2) the manner in which medical services are provided; and (3) the selection, tenure and compensation of health care providers. I do not understand the majority to argue that the Pennsylvania Act deals with the substantive practice of medicine within (1) and (2) above. Subsection (3) is not directed to doctors' billing issues, but to “the personnel policies of providers of health care." See S.Rep. No. 404, 89th Cong., 1st Sess., reprinted in 1965 U.S.Code Cong. & Admin.News, 1943, 2098. Thus, the reference to section 1395 is irrelevant.