US SUPREME COURT DECISIONS

CASES ADJUDGED

IN THE

SUPREME COURT OF THE UNITED STATES

AT

OCTOBER TERM, 1999

Syllabus

SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL. v. ILLINOIS COUNCIL ON LONG TERM CARE, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

No. 98-1109. Argued November 8, 1999-Decided February 29, 2000

Under the Medicare Act's special review provisions, a nursing home that is "dissatisfied ... with a determination described in subsection (b)(2)" is "entitled to a hearing ... to the same extent as is provided in" the Social Security Act, 42 U. S. C. § 405(b), "and to judicial review of the Secretary's final decision after such hearing as is provided in section 405(g) .... " 42 U. S. C. § 1395cc(h)(1) (emphasis added). The crossreferenced subsection (b)(2) gives petitioner Secretary of Health and Human Services (HHS) power to terminate a provider agreement with a home where, for example, she determines that a home has failed to comply substantially with the statute and the regulations. The crossreferenced § 405(b) describes the administrative hearing to which a "dissatisfied" home is entitled, and the cross-referenced § 405(g) provides that the home may obtain federal district court review of the Secretary's "final decision ... made after a hearing .... " Section 405(h), a provision of the Social Security Act incorporated into the Medicare Act by 42 U. S. C. § 1395ii, provides that "[n]o action ... to recover on any claim arising under" the Medicare laws shall be "brought under [28 U. S. C. § ]1331." It channels most, if not all, Medicare claims through this special review system. Respondent, the Illinois Council on Long Term Care, Inc. (Council), an association of nursing homes,

2

Syllabus

did not rely on these provisions when it filed suit against, inter alios, petitioners (hereinafter Secretary), challenging the validity of Medicare regulations that impose sanctions or remedies on nursing homes that violate certain substantive standards. Rather, it invoked federalquestion jurisdiction, 28 U. S. C. § 1331. In dismissing for lack of jurisdiction, the Federal District Court found that 42 U. S. C. § 405(h), as interpreted in Weinberger v. Salfi, 422 U. S. 749, and Heckler v. Ringer, 466 U. S. 602, barred a § 1331 suit. The Seventh Circuit reversed, holding that Bowen v. Michigan Academy of Family Physicians, 476 U. S. 667, had significantly modified such earlier case law.

Held: Section 405(h), as incorporated by § 1395ii, bars federal-question jurisdiction here. pp. 10-25.

(a) Section 405(h) purports to make exclusive § 405(g)'s judicial review method. While its "to recover on any claim arising under" language plainly bars § 1331 review where an individual challenges on any legal ground the agency's denial of a monetary benefit under the Social Security and Medicare Acts, the question here is whether an anticipatory challenge to the lawfulness of a policy, regulation, or statute that might later bar recovery or authorize imposition of a penalty is also an action "to recover on any claim arising under" those Acts. P.lO.

(b) Were the Court not to take account of Michigan Academy, § 405(h), as interpreted in Salfi and Ringer, would clearly bar this § 1331 lawsuit. The Court found in the latter cases that § 405(h) applies where "both the standing and the substantive basis for the presentation" of a claim is the Social Security Act, Salfi, supra, at 760-761, or the Medicare Act, Ringer, 466 U. S., at 615. All aspects of a present or future benefits claim must be channeled through the administrative process. Id., at 621-622. As so interpreted, §405(h)'s bar reaches beyond ordinary administrative law principles of "ripeness" and "exhaustion of administrative remedies"-doctrines that normally require channeling a legal challenge through the agency-by preventing the application of exceptions to those doctrines. This nearly absolute channeling requirement assures the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by individual courts applying "ripeness" and "exhaustion" exceptions case by case. The assurance comes at the price of occasional individual, delay-related hardship, but paying such a price in the context of a massive, complex health and safety program such as Medicare was justified in the judgment of Congress as understood in Salfi and Ringer. Salfi and Ringer cannot be distinguished from the instant

3
Full Text of Opinion