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Class action v. Secretary of HHS re 'three day rule'.

IN THIS CASE A DISPUTE AROSE OVER HOW TO COUNT TO THREE. The plaintiffs were Medicare beneficiaries. Each of them spent at least three days in the hospital. Each was discharged less than three days after having been formally admitted. Each sought coverage under Part A of the Medicare program for a post-hospitalization nursing home stay.

UNDER MEDICARE PART A, EACH MEDICARE PATIENT WHO HAS BEEN HOSPITALIZED FOR THREE DAYS CONSECUTIVELY IS ENTITLED TO UP TO 100 DAYS OF SKILLED NURSING CARE IN A SKILLED NURSING CARE FACILITY (SNF). The three persons involved were each denied payment of medicare benefits for care in a SNF. The three brought suit in the United States District Court for the District of Connecticut against the Secretary of the Department of Health and Human Services of the United States. They sought class action certification as well as a permanent injunction prohibiting the Secretary of Health and Human Services for excluding time spent in hospitals' emergency rooms from counting toward the three day stays which wouls entitle them to qualify for care in SNF units for up to 100 days paid for by Medicare. The United States District Court for the District of Connecticut granted the petition for class action certification. However, on cross motions for summary judgment, the court ruled in favor of the Secretary. The plaintiffs appealed.

THE UNITED STATES COURT OF APPEALS, SECOND CIRCUIT, AFFIRMED THE JUDGMENT OF THE UNITED STATES DISTRICT COURT. The court rejected the plaintiffs' contention that they were entitled to the benefits sought because they had, in fact, been at the hospital (albeit not admitted as patients), for three days or more. The court made it crystal clear that to qualify for the benefits sought by the plaintiffs they would have to have been admitted as patients and not discharged as patients, for a minimum of three days. This, they had failed to do. Thus, having failed to meet the criteria so clearly articulated in the law, the plaintiffs failed to qualify for the benefits they sought. Accordingly, the court ruled that the District court had not erred when it refused to allow the plaintiffs to propound interrogatories to the Secretary, because they represented post hoc statements from the agency. In the ordinary case, the court upholds or sets aside the agency's action on the grounds that the agency has articulated.

FURTHER, THE COURT FOUND THE DISTRICT COURT ALSO CORRECTLY EXCLUDED THE PLAINTIFFS' DECLARATION AND STATEMENT OF MATERIAL FACTS. The court observed that the facts as set forth in the plaintiffs' submissions were not material to the plaintiffs' eligibility for reimbursement by Medicare because the nature of the medical services rendered to the plaintiffs could not, by themselves, establish the plaintiffs' eligibility for SNF coverage by Medicare. The concept of materiality requires a reasonable possibility that the new evidence would have influenced the Secretary to decide that the plaintiffs' applications differently. The court concluded that the District Court, in refusing to consider these submissions, therefor, acted within its sound discretion.

THE RULE IS NOT IN VIOLATION OF THE CONSTITUTIONAL GUARANTEE OF EQUAL PROTECTION OF LAW. Accordingly, the court noted that Congress intended to create an extended care benefit to serve "as a less expensive alternative to ... the final, convalescent portion of an acute care stay ... at a hospital." Thus, the court observed that a bright line rule measuring inpatient time was rational in separating those who qualify for the benefits sought and those, such as the plaintiffs, who failed to qualify for the benefits in question. Such a bright line rule serves to simplify claims processing and reduces administration costs, while targeting the program to the group Congress intended to benefit. A legitimate interest in administrative efficiency is sufficient to uphold the bright line rule against a rational basis challenge. The court dismissed the plaintiffs' argument that the District Court erred when it refused to consider evidence outside the administrative record. Judicial review of administrative determinations with respect to medicare benefits is governed by specific sections of the United States Code, which incorporates various provisions of the Code. According to the Code, the District Court ordinarily must base its judgment "upon pleadings and transcripts of the record." The court may consider only the pleadings and administrative record, and must accept the Secretary's finding of fact so long as they are supported by substantial evidence. Nevertheless, the District Court has "adequate authority to resolve any statutory or constitutional contention that the agency did not, or cannot decide, "a power that includes, where necessary, the authority to develop an evidentiary record. Landers v. Leavitt, 100108 Fed2 06-4921-cv(10/01/2008) F.3d -CT

A. David Tammelleo JD Editor & Publisher

Meet the Editor & Publisher: A. David Tammelleo, JD, is a nationally recognized authority on health care law. Practicing law for over 40 years. he concentrates in health care law with the Rhode Island firm of A. David Tammelleo & Associates. He has presented seminars on medical, nursing and hospital law throughout the United States. In addition to his writings as Editor of Medical Law's. Nursing Law's & Hospital Lawns Regan Reports, his legal articles have been published in the most prestigious health law journals. A prolific writer, his thousands of articles, as well as his achievements as an attorney and lecturer, have won him recognition in Martindale-Hubbell's Bar Register of Preeminent Lawyers, Marquis Who's Who in American Law, Who's Who in America and Who's Who in the World.
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Author:Tammelleo, A. David
Publication:Hospital Law's Regan Report
Date:Oct 1, 2008
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