The opinion of the court was delivered by: CHARLES P. SIFTON
Plaintiffs move and defendants cross-move for summary judgment with respect to the constitutionality of New York Public Health Law § 19. For the reasons discussed below, plaintiffs' motion is denied, and defendants' cross-motion is granted.
Plaintiff the New York State Society of Orthopaedic Surgeons, Inc. ("NYSSOS") is a non-profit corporation, pursuing the common interests of its membership. Plaintiff Green is a licensed physician and past president of NYSSOS. Defendants are state officials who have responsibility for enforcing the challenged statute.
Plaintiffs contend that New York Public Health Law § 19 runs afoul of three provisions of the United States Constitution: the due process clause, the supremacy clause, and the equal protection clause. Defendants argue that section 19 is a constitutionally acceptable exercise of the state's police powers. Judge Haight has recently rejected nearly identical due process and supremacy clause challenges to section 19. See Medical Soc. of State of New York v. Cuomo, 777 F. Supp. 1157 (S.D.N.Y. 1991). That case is currently on appeal.
Section 19 limits the amount that licensed physicians can charge patients who benefit from Medicare, 42 U.S.C. §§ 1395 et seq. Specifically, the section limits physicians to 115% of the "reasonable charge" for a procedure as determined by the Secretary of Health and Human Services. Pub. Health Law § 19(1)(a). Beginning in 1993, that amount could fall to 105%. Id. § 19(1)(b).
Background to this controversy includes the Medicare Act (the "Act") itself. The Act provides supplemental medical insurance to the aged and certain disabled individuals. Part B of the Act, 42 U.S.C. §§ 1395j-1395w-4, establishes a "voluntary individual insurance plan"; participants pay premiums that the federal government matches. See Turecamo v. Commissioner of Internal Revenue, 554 F.2d 564, 571-72 (2d Cir. 1977). This case concerns Part B payments under the Medicare statute.
Part B obligates the federal government in most circumstances to pay 80% of a "reasonable charge" for a service. 42 U.S.C. § 1395u(b)(3)(B). The beneficiary owes the remainder.
Public Health Law section 19 essentially attempts to reduce the size of this remainder.
The size of the remainder varies depending on how a physician bills. The Act permits physicians (and others) to bill for their services in one of two ways: accepting "assignment" or on the basis of an "itemized bill" (which in the vernacular is called "balance billing"). 42 U.S.C. § 1395u(b)(3)(B)(i) & (ii). A physician who accepts assignment agrees to consider the reasonable charge full compensation for services provided. 42 U.S.C. § 1395u(b)(3)(B)(ii)(I). In contrast, physicians who balance bill can charge in excess of that amount.
The different methods of billing create different liabilities for the beneficiary. When a physician bills on assignment, she or he submits the bill directly to Medicare (or an insurance carrier operating under contract with Medicare), which pays the doctor directly. When the physician balance bills, however, the Medicare beneficiary is billed; the beneficiary then seeks reimbursement from Medicare. More significantly, as Medicare typically picks up only 80% of the reasonable charge, the beneficiary is ultimately responsible for the rest. While in all instances the beneficiary must pay the additional 20%, where a physician balance bills, the beneficiary must also pay the amount by which the bill exceeds the reasonable charge.
In part to protect Medicare beneficiaries, Congress has, by various methods, attempted to discourage balance billing. One such method, like section 19, limits the size of a balance bill to a certain percentage above a "recognized payment amount," 42 U.S.C. § 1395w-4(g). As of January 1, 1992, the recognized payment amount is determined by the same "fee schedule" used to establish a reasonable charge. 42 U.S.C. § 1395w-4(g)(2)(D). Another method provides certain benefits to physicians who agree each year to take all Medicare cases on assignment, called "participating physicians." 42 U.S.C. § 1395u(h).
Against this statutory background both sides move for summary judgment. Summary judgment must be granted if there is no genuine issue as to any material fact and if the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The showing needed on summary judgment reflects the burden of proof in the underlying action. The court must consider the "the actual quantum and quality of proof" demanded by the underlying cause of action and which party must present such proof, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 91 L. Ed. 2d 202, 106 S. Ct. 2505, (1986), which in this case is the plaintiff. The Court may rely on affidavits made on personal knowledge, which are sufficient to establish the existence of facts attested to if opposing affidavits are not offered. Fed. R. Civ. P. 56(e).
Plaintiffs first contend that section 19 is unconstitutionally vague. In particular, plaintiffs cite Lanzetta v. New Jersey, 306 U.S. 451, 453, 83 L. Ed. 888, 59 S. Ct. 618, (quoting Connally v. General Constr. Co., 269 ...