Shalala v. Illinois Council on Long Term Care, Inc.

PETITIONER: Shalala
RESPONDENT: Illinois Council on Long Term Care, Inc.
LOCATION: Hawaii Office of Elections

DOCKET NO.: 98-1109
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 529 US 1 (2000)
ARGUED: Nov 08, 1999
DECIDED: Feb 29, 2000

ADVOCATES:
Jeffrey A. Lamken - Department of Justice, argued the cause for the petitioner
Kimball R. Anderson - Argued the cause for the respondent

Facts of the case

The Illinois Council on Long Term Care, Inc. (Council), an association of nursing homes participating in Medicare, sued the Secretary of Health and Human Services, Donna Shalala, challenging the validity of various Medicare regulations establishing sanctions and remedies for nursing homes found guilty of violating minimum health and safety standards. The Council alleged that certain terms in the new regulations were unconstitutionally vague, that the regulations created administrative procedures inconsistent with the U.S. Constitution's Due Process Clause, and that the regulations' legislative rules that were not promulgated consistent with the Administrative Procedure Act. The Council invoked the Federal District Court's federal-question jurisdiction, which states that "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States," to rule on its claims. The District Court dismissed the suit on the ground that it lacked jurisdiction. The court concluded that set of special statutory provisions under the Medicare Act create a separate, virtually exclusive, system of administrative and judicial review for such claims. The Court of Appeals reversed and remanded the case for further proceedings.

Question

Does the Medicare Act bar judicial review, under federal-question jurisdiction, of challenges to the validity of Medicare regulations?

Media for Shalala v. Illinois Council on Long Term Care, Inc.

Audio Transcription for Oral Argument - November 08, 1999 in Shalala v. Illinois Council on Long Term Care, Inc.

Audio Transcription for Opinion Announcement - February 29, 2000 in Shalala v. Illinois Council on Long Term Care, Inc.

William H. Rehnquist:

The opinion of the Court in No. 98-1109 Shalala versus Illinois Council on Long Term Care will be announced by Justice Breyer.

Stephen G. Breyer:

There are special statutory provisions in the law that in effect say that no action to recover on any claim arising under either the Medicare or the Social Security Acts can be brought in a Federal Court, unless the claimant has first presented his claim to the agency.

Now, this Court has previously held that those provisions govern efforts not just to get money, but also an effort legally to attack the validity of an agency rule or regulation in general attack as well as specific claim.

By insisting that all such claims first be presented to the agency, the statutory provisions go beyond the ordinary administrative law principles of rightness or exhaustion of remedies which do require an initial agency presentation often but not always.

But this court’s cases seemed to say that a more absolute rule is needed, because of the special importance of giving agencies that administer such massive and highly complex programs as Medicare or Social Security, an opportunity to consider even the most purely legal challenge to a regulation first, before court becomes involved.

The plaintiff in this case is an association of nursing homes.

It challenged the lawfulness of certain Medicare rules and regulations without first going to the agency.

The District Court dismissed the suit for lack of jurisdiction, but the Court of Appeals for the Seventh Circuit reversed.

The Court of Appeals thought that a more recent Supreme Court case called Bowen versus Michigan Academy of Family Physicians has changed the law, as I just described it, and instead read the relevant statutes as permitting an initial challenge to the lawfulness of a Medicare regulation in Federal Court.

After reviewing the matter this Court by a five to four majority concludes that Michigan Academy did not change preexisting law, where that question is simply want to channeling a case to the agency first rather Michigan Academy applies to permit an initial proceeding in a District Court only where, unlike this case, the alternative would be no review at all.

We explained all this at some detail in our opinion.

Our conclusion is that the nursing home must present its case to the age homes, they have to present their case to the agency first before they can go to court, and we reversed the Seventh Circuit’s determination to the contrary.

Justice Stevens has filed a dissenting opinion; Justice Scalia has filed a dissenting opinion; Justice Thomas has filed a dissenting opinion, in which Justice Stevens, Justice Kennedy join, and Justice Scalia joins in part.