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March 1, 1973

Elliot L. RICHARDSON, Secretary of Health, Education and Welfare, and Associated Hospital Service of New York (Blue Cross), Defendants

Travia, District Judge.

The opinion of the court was delivered by: TRAVIA


Plaintiff moves this court for an order, pursuant to Rule 56 of the Federal Rules of Civil Procedure, granting it summary judgment on all the claims set forth in the complaint. Defendants respond by cross-moving for an order dismissing the complaint, pursuant to Rule 12(b)(1) and (6), or in the alternative, for an order granting them summary judgment, pursuant to Rule 56.

 Kingsbrook Jewish Medical Center, (hereinafter "Kingsbrook"), has been a participating "provider of services" in the federal program of Health Insurance for the Aged ("Medicare"), Title 42 U.S.C. § 1395 et seq., since the program's inception. Under the provisions of Title 42 U.S.C. § 1395cc, "providers" are required to enter into an agreement with the Secretary of Health, Education and Welfare (hereinafter "Secretary"), not to directly charge Medicare benefit recipients for services rendered. Pursuant to the plan, the Blue Cross Association was nominated to act as fiscal intermediary for the administration of the program. (See Title 42 U.S.C. § 1395h). Blue Cross delegated its duties as fiscal intermediary for Kingsbrook to defendant Associated Hospital Service of New York, and the Department of Health, Education and Welfare made and continues to make Medicare payments to Kingsbrook through Associated Hospital Service.

 Kingsbrook, as a charitable organization and voluntary provider under the Medicare Act, was and is entitled to be paid by the fiscal intermediary, Associated Hospital Service, that sum which represents the "reasonable cost" of those services which it has furnished Medicare beneficiaries. (See Title 42 U.S.C. § 1395f(b)). The "reasonable cost" of such services shall be determined through the means expressed in Title 42 U.S.C. § 1395x(v), subject to the provisions of § 1395e of the same Title.

 Plaintiff alleges that during all the periods in issue, including the period from July 1, 1966, the effective date of the Medicare Act, to December 31, 1967, it was a "multiple facility" institution, providing both an acute division and a chronic division, which divisions constituted separate facilities. Further, plaintiff alleges that treating each facility as a separate cost entity satisfies the provisions of § 1395x(v), which stipulates that the costs with respect to individuals covered by the Medicare Act will not be borne by individuals not covered by the Act. It is alleged that during all the periods in issue, plaintiff has made repeated requests to have its costs computed separately for its separate facilities, and that such requests have been uniformly denied.

 Plaintiff avers that it was advised on January 27, 1972 by the Secretary that, since "during all of the years" in question plaintiff offered "multiple facilities", it would be reimbursed for the reasonable costs incurred based on multiple facility accounting. However, such reimbursement, plaintiff alleges, was granted only for the period beginning January 1, 1968 and was "erroneously, arbitrarily and illegally refused for the period July 1, 1966 through December 31, 1967."

 Offered as proof by the plaintiff that the Secretary has failed to reimburse it for the "reasonable costs" it has expended is Bureau of Health Insurance Intermediary Letter No. 295, dated December 13, 1967, which allegedly verifies that multiple facility accounting must be permitted for reasonable cost reimbursement purposes. Plaintiff insists that Title 42 U.S.C. § 1395x(v)(1)(B) requires the Secretary to adjust any inequities involving the reimbursement of providers, and if necessary to do so by making retroactive corrective adjustments.

 As a result, plaintiff has commenced this suit, and seeks not only monetary damages from the defendants, but also injunctive relief. At this early stage in the proceedings, both plaintiff and defendants have moved for summary judgment, and defendants have additionally moved to dismiss the suit for lack of subject matter jurisdiction.

 Defendants argue that the present action is within the doctrine of "sovereign immunity", and that the suit must fail if the Government has not "consented" to be sued. Further, the Government contends that the doctrine of sovereign immunity cannot be circumvented by naming defendants other than the United States Government in the complaint.

 In the case of Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 687-688, 69 S. Ct. 1457, 1460, 93 L. Ed. 1628 (1949), the Supreme Court said:

"It has long been established that the crucial question is whether the relief sought in a suit nominally addressed to the officer is relief against the sovereign . . . the question is directly posed as to whether, by obtaining relief against the officer, relief will not, in effect, be obtained against the sovereign."

 In the case at bar, any relief granted to plaintiff will be relief against the sovereign, for the Medicare Act makes clear that Associated Hospital Service is only a conduit through which the "reasonable costs" expended by the "provider" may be recovered from the Government. The issue in this case, therefore, is simply whether the Government has consented to be sued, by way of review, in the district court after the Secretary allegedly failed to reimburse Kingsbrook for the "reasonable costs" it has expended in providing services for patients under the Medicare Act.

 The Medicare Act, Title 42 U.S.C. § 1395 et seq., expressly provides for judicial review in only two types of determinations relevant to a provider of services:

 When a determination has been made

 (1) that an institution is not qualified to be a provider of services; and

 when a determination has been made

 (2) that a provider of services agreement should be terminated. See Title 42 U.S.C. § 1395ff, which ...

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