LEE BARROWS, ET AL., individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
SYLVIA MATHEWS BURWELL, Secretary of Health and Human Services, Defendant-Appellee
Argued October 23, 2014
Appeal from the United States District Court for the District of Connecticut. No. 3:11-cv-1703--Michael P. Shea, Judge.
In this putative class action lawsuit, plaintiffs-appellants sue the Secretary of Health and Human Services (" Secretary" ) on behalf of Medicare beneficiaries who were placed into " observation status" by their hospitals rather than being admitted as " inpatients." Because " inpatients" are covered by Medicare Part A, while patients in " observation status" are covered by Medicare Part B, placement into " observation status" allegedly caused these beneficiaries to pay thousands of dollars more for their medical care than they would have had they formally been admitted as " inpatients" to their hospitals.
The United States District Court for the District of Connecticut (Michael P. Shea, Judge) granted the Secretary's motion to dismiss the complaint in its entirety. Plaintiffs now appeal the dismissal of two of their nine claims, which together assert that the Secretary violated the Medicare Act and the federal Due Process Clause by failing to provide expedited notice of the decisions to place them into " observation status," or an expedited opportunity to challenge these decisions.
For the reasons that follow, the District Court's judgment is affirmed in part and vacated in part. Specifically, we affirm the dismissal of plaintiffs' Medicare Act claims for substantially the reasons stated in the District Court's opinion; we vacate, however, the dismissal of plaintiffs' Due Process claims. The District Court erred in concluding that plaintiffs lacked a property interest in being treated as " inpatients," because, in so concluding, the District Court accepted as true the Secretary's assertion that a hospital's decision to formally admit a patient is " a complex medical judgment" left to the doctor's discretion. That conclusion, however, constituted an impermissible finding of fact, which in any event is inconsistent with the complaint's allegations that the decision to admit is, in practice, guided by fixed and objective criteria set forth in " commercial screening guides" issued by the Centers for Medicare & Medicaid Services (" CMS" ). Treating the complaint's allegations as true, as we must at this stage, plaintiffs-appellants have arguably asserted a property interest protected by the federal Due Process Clause.
Accordingly, the District Court's judgment is AFFIRMED in part, insofar as it dismissed plaintiffs' Medicare Act claims, and VACATED in part, insofar as it dismissed plaintiffs' Due Process Clause claims. The cause is REMANDED to the District Court, with instructions to permit a period of limited discovery, focused on whether plaintiffs in fact possessed a property interest in being admitted to their hospitals as " inpatients." In the interest of judicial economy, any future appeals taken from the District Court's decisions shall be referred to this panel.
ALICE BERS (Gill Deford, Center for Medicare Advocacy, Inc., Willimantic, CT; Anna Rich, National Senior Citizens Law Center, Oakland, CA, on the brief), Center for Medicare Advocacy, Inc., Willimantic, CT, for Barrows, et al., Plaintiffs-Appellants.
JEFFREY A. CLAIR (Stuart F. Delery, Assistant Attorney General, Adam C. Jed, Michael S. Raab, United States Department of Justice, Civil Division, Appellate Staff, Washington, DC; Deirdre M. Daly, United States Attorney for the District of Connecticut, on the brief), United States Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Burwell, Defendant-Appellee.
Mark G. Arnold, Husch Blackwell LLP, Clayton, MO, for Amicus Curiae American Health Care Association.
Edith M. Kalls, Whatley Kallas, LLP, New York, NY, for Amici Curiae American Medical Association, et al.
Catherine E. Stetson, Hogan Lovells U.S. LLP, Washington, DC, for Amicus Curiae American Hospital Association.
Before: WINTER, WALKER, and CABRANES, Circuit Judges.
José A. Cabranes, Circuit ...