Shalala v. Illinois Council on Long Term Care
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to
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SUPREME COURT OF THE UNITED STATES
No. 98–1109
DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN
SERVICES, et al., PETITIONERS v. ILLINOIS COUNCIL ON LONG
TERM CARE, INC.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
SEVENTH CIRCUIT
[February 29, 2000]
Justice Breyer delivered the opinion of the Court.
The question before us is one of jurisdiction. An association of nursing homes sued, inter alios, the Secretary of Health
and Human Services (HHS) and another federal party (hereinafter Secretary) in Federal District Court claiming that certain
Medicare-related regulations violated various statutes and the Constitution. The association invoked the court’s
federal-question jurisdiction, 28 U.S.C. ? 1331. The District Court dismissed the suit on the ground that it lacked
jurisdiction. It believed that a set of special statutory provisions creates a separate, virtually exclusive, system of
administrative and judicial review for denials of Medicare claims; and it held that one of those provisions explicitly barred
a ?1331 suit. See 42 U.S.C. ? 1395ii (incorporating to the Medicare Act 42 U.S.C. ? 405(h), which provides that “[n]o
action ? to recover on any claim” arising under the Medicare laws shall be “brought under section 1331 ? of title 28”).
The Court of Appeals, however, reversed.
We conclude that the statutory provision at issue,
?405(h), as incorporated by ?1395ii, bars federal-question jurisdiction here. The association or its members must proceed
instead through the special review channel that the Medicare statutes create. See 42 U.S.C. ? 1395cc(h); ?1395cc(b)(2)(A);
?1395ii; ??405(b), (g), (h). I
A
We begin by describing the regulations that the association’s lawsuit attacks. Medicare Act Part A provides payment to
nursing homes which provide care to Medicare beneficiaries after a stay in hospital. To receive payment, a home must enter
into a provider agreement with the Secretary of HHS, and it must comply with numerous statutory and regulatory
requirements. State and federal agencies enforce those requirements through inspections. Inspectors report violations,
called “deficiencies.” And “deficiencies” lead to the imposition of sanctions or “remedies.” See generally ??1395i–3,
1395cc.
The regulations at issue focus on the imposition of sanctions or remedies. They were promulgated in 1994, 59 Fed. Reg.
56116, pursuant to a 1987 law that tightened the substantive standards that Medicare (and Medicaid) imposed upon nursing
homes and that significantly broadened the Secretary’s authority to impose remedies upon violators. Omnibus Budget
Reconciliation Act of 1987, ??4201–4218, 101 Stat. 1330–160 to 1330–221 (codified as amended at 42 U.S.C. ?
1395i–3 (1994 ed. and Supp. III)).
The remedial regulations (and a related manual) in effect tell Medicare-administering agencies how to impose remedies
after inspectors find that a nursing home has violated substantive standards. They divide a nursing home’s deficiencies into
three categories of seriousness depending upon a deficiency’s severity, its prevalence at the home, its relation with other
deficiencies, and the home’s compliance history. Within each category they list a set of remedies that the agency may, or
must, impose. Where, for example, deficiencies “immediately jeopardize the health or safety of ? residents,” the Secretary
must terminate the home’s provider agreement or appoint new, temporary management. Where deficiencies are less
serious, the Secretary may impose lesser remedies, such as civil penalties, transfer of residents, denial of some or all
payment, state monitoring, and the like. Where a nursing home, though deficient in some respects, is in “[s]ubstantial
compliance,” i.e., where its deficiencies do no more than create a “potential for causing minimal harm,” the Secretary will
impose no sanction or remedy at all. See generally 42 U.S.C. ? 1395i–3(h); 42 CFR ? 488.301 (1998); ?488.400 et seq.;
App. 54, 66 (Manual). The statute and regulations also create various review procedures. 42 U.S.C. ? 1395cc(b)(2)(A), (h);
42 CFR ? 431.151 et seq. (1998); ?488.408(g); 42 CFR pt. 498 (1998).
The association’s complaint filed in Federal District Court attacked the regulations as unlawful in four basic ways. In its
view: (1) certain terms, e.g., “substantial compliance” and “minimal harm,” are unconstitutionally vague; (2) the
regulations and manual, particularly as implemented, violate statutory requirements seeking enforcement consistency, 42
U.S.C. ? 1395i–3(g)(2)(D), and exceed the legislative mandate of the Medicare Act; (3) the regulations create
administrative procedures inconsistent with the Federal Constitution’s Due Process Clause; and (4) the manual and other
agency publications create legislative rules that were not promulgated consistent with the Administrative Procedure Act’s
demands for “notice and comment” and a statement of “basis and purpose,” 5 U.S.C. ? 553. See App. 18–19, 27–38,
43–49 (Amended Complaint). B
We next describe the two competing jurisdictional routes through which the association arguably might seek to mount its
legal attack. The route it has followed, federal-question jurisdiction, is set forth in 28 U.S.C. ? 1331 which simply states
that “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the
United States.” The route that it did not follow, the special Medicare review route, is set forth in a complex set of statutory
provisions, which must be read together. See Appendix, infra. The Medicare Act says that a home
“dissatisfied ? with a determination described in subsection (b)(2) ? shall be entitled to a hearing ? to the same extent
as is provided in [the Social Security Act, 42 U.S.C. ?]405(b) ? and to judicial review of the Secretary’s final decision
after such hearing as is provided in section 405(g) ? .” 42 U.S.C. ? 1395cc(h)(1) (emphasis added).
The cross-referenced subsection (b)(2) gives the Secretary power to terminate an agreement where, for example, the
Secretary
“has determined that the provider fails to comply substantially with the provisions [of the Medicare Act] and regulations
thereunder ? .” ?1395cc(b)(2)(A) (emphasis added).
The cross-referenced ?405(b) describes the nature of the administrative hearing to which the Medicare Act entitles a
home that is “dissatisfied” with the Secretary’s “determination.” The cross-referenced ?405(g) provides that a “dissatisfied”
home may obtain judicial review in federal district court of “any final decision of the [Secretary] made after a hearing ? .”
Separate statutes provide for administrative and judicial review of civil monetary penalty assessments.
?1395i–3(h)(2)(B)(ii); ??1320a–7a(c)(2), (e).
A related Social Security Act provision, 42 U.S.C. ? 405(h), channels most, if not all, Medicare claims, through this
special review system. It says:
“(h) Finality of [Secretary’s] decision.
“The findings and decision of the [Secretary] after a hearing shall be binding upon all individuals who were parties to such
hearing. No findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental
agency except as herein provided. No action against the United States, the [Secretary], or any officer or employee thereof
shall be brought under section 1331 or 1346 [federal defendant jurisdiction] of title 28 to recover on any claim arising
under this subchapter.” (Emphasis added.)
Title 42 U.S.C. ? 1395ii makes ?405(h) applicable to the Medicare Act “to the same extent as” it applies to the Social
Security Act. C
The case before us began when the Illinois Council on Long Term Care, Inc. (Council), an association of about 200
Illinois nursing homes participating in the Medicare (or Medicaid) program, filed the complaint we have described, supra,
at 3, in Federal District Court. (Medicaid is not at issue in this Court.) The District Court, as we have said, dismissed the
complaint for lack of federal-question jurisdiction. No. 96 C 2953 (ND Ill., Mar. 31, 1997), App. to Pet. for Cert. 13a, 15a.
In doing so, the court relied upon ?405(h) as interpreted by this Court in Weinberger v. Salfi, 422 U.S. 749 (1975), and
Heckler v. Ringer, 466 U.S. 602 (1984). App to Pet. for Cert. 15a–19a.
The Court of Appeals reversed the dismissal. 143 F.3d 1072 (CA7 1998). In its view, a later case, Bowen v. Michigan
Academy of Family Physicians, 476 U.S. 667 (1986), had significantly modified this Court’s earlier case law. Other
Circuits have understood Michigan Academy differently. See Michigan Assn. of Homes and Servs. for the Aging v. Shalala,
127 F.3d 496, 500–501 (CA6 1997); American Academy of Dermatology v. HHS, 118 F.3d 1495, 1499–1501 (CA11
1997); St. Francis Medical Center v. Shalala, 32 F.3d 805, 812–813 (CA3 1994), cert. denied, 514 U.S. 1016 (1995);
Farkas v. Blue Cross & Blue Shield, 24 F.3d 853, 855–860 (CA6 1994); Abbey v. Sullivan, 978 F.2d 37, 41–44 (CA2
1992); National Kidney Patients Assn. v. Sullivan, 958 F.2d 1127, 1130–1134 (CADC 1992), cert. denied, 506 U.S. 1049
(1993). We granted certiorari to resolve those differences. II
Section 405(h) purports to make exclusive the judicial review method set forth in ?405(g). Its second sentence says that
“[n]o findings of fact or decision of the [Secretary] shall be reviewed by any person, tribunal, or governmental agency
except as herein provided.” ?405(h). Its third sentence, directly at issue here, says that “[n]o action against the United
States, the [Secretary], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover
on any claim arising under this subchapter.” (Emphasis added.)
The scope of the italicized language “to recover on any claim arising under” the Social Security (or, as incorporated
through ?1395ii, the Medicare) Act is, if read alone, uncertain. Those words clearly apply in a typical Social Security or
Medicare benefits case, where an individual seeks a monetary benefit from the agency (say a disability payment, or
payment for some medical procedure), the agency denies the benefit and the individual challenges the lawfulness of that
denial. The statute plainly bars ?1331 review in such a case, irrespective of whether the individual challenges the agency’s
denial on evidentiary, rule-related, statutory, constitutional, or other legal grounds. But does the statute’s bar apply when
one who might later seek money or some other benefit from (or contest the imposition of a penalty by) the agency
challenges in advance (in a ?1331 action) the lawfulness of a policy, regulation, or statute that might later bar recovery of
that benefit (or authorize the imposition of the penalty)? Suppose, as here, a group of such individuals, needing advance
knowledge for planning purposes, together bring a ?1331 action challenging such a rule or regulation on general legal
grounds. Is such an action one “to recover on any claim arising under” the Social Security or Medicare Acts? That, in
effect, is the question before us. III
In answering the question, we temporarily put the case on which the Court of Appeals relied, Michigan Academy, supra,
to the side. Were we not to take account of that case, ?405(h) as interpreted by the Court’s earlier cases of Weinberger v.
Salfi, supra, and Heckler v. Ringer, supra, would clearly bar this ?1331 lawsuit.
In Salfi, a mother and a daughter, filing on behalf of themselves and a class of individuals, brought a ?1331 action
challenging the constitutionality of a statutory provision that, if valid, would deny them Social Security benefits. See 42
U.S.C. ? 416(c)(5), (e)(2) (imposing a duration-of-relationship Social Security eligibility requirement for surviving wives
and stepchildren of deceased wage earners). The mother and daughter had appeared before the agency but had not
completed its processes. The class presumably included some who had, and some who had not, appeared before the agency;
the complaint did not say. This Court held that ?405(h) barred ?1331 jurisdiction for all members of the class because “it is
the Social Security Act which provides both the standing and the substantive basis for the presentation of th[e]
constitutional contentions.” Salfi, supra, at 760–761. The Court added that the bar applies “irrespective of whether resort
to judicial processes is necessitated by discretionary decisions of the Secretary or by his nondiscretionary application of
allegedly unconstitutional statutory restrictions.” 422 U.S., at 762. It also pointed out that the bar did not “preclude
constitutional challenges,” but simply “require[d] that they be brought” under the same “jurisdictional grants” and “in
conformity with the same standards” applicable “to nonconstitutional claims arising under the Act.” Ibid.
We concede that the Court also pointed to certain special features of the case not present here. The plaintiff class had
asked for relief that included a direction to the Secretary to pay Social Security benefits to those entitled to them but for the
challenged provision. See id., at 761. And the Court thought this fact helped make clear that the action arose “under the Act
whose benefits [were] sought.” Ibid. But in a later case, Ringer, the Court reached a similar result despite the absence of
any request for such relief. See 466 U.S., at 616, 623.
In Ringer, four individuals brought a ?1331 action challenging the lawfulness (under statutes and the Constitution) of the
agency’s determination not to provide Medicare Part A reimbursement to those who had undergone a particular medical
operation. The Court held that ?405(h) barred ?1331 jurisdiction over the action, even though the challenge was in part to
the agency’s procedures, the relief requested amounted simply to a declaration of invalidity (not an order requiring
payment), and one plaintiff had as yet no valid claim for reimbursement because he had not even undergone the operation
and would likely never do so unless a court set aside as unlawful the challenged agency “no reimbursement” determination.
See id., at 614–616, 621–623. The Court reiterated that ?405(h) applies where “both the standing and the substantive
basis for the presentation” of a claim is the Medicare Act, id., at 615 (quoting Salfi, 422 U.S., at 760–761) (internal
quotation marks omitted), adding that a “claim for future benefits” is a ?405(h) “claim,” 466 U.S., at 621–622, and that
“all aspects” of any such present or future claim must be “channeled” through the administrative process, id., at 614. See
also Your Home Visiting Nurse Services, Inc. v. Shalala, 525 U.S. 449, 456 (1999); Califano v. Sanders, 430 U.S. 99,
103–104, n. 3 (1977).
As so interpreted, the bar of ?405(h) reaches beyond ordinary administrative law principles of “ripeness” and
“exhaustion of administrative remedies,” see Salfi, supra, at 757-doctrines that in any event normally require channeling a
legal challenge through the agency. See Abbott Laboratories v. Gardner, 387 U.S. 136, 148–149 (1967) (ripeness);
McKart v. United States, 395 U.S. 185, 193–196 (1969) (exhaustion). Indeed, in this very case, the Seventh Circuit held
that several of respondent’s claims were not ripe and remanded for ripeness review of the remainder. 143 F.3d, at
1077–1078. Doctrines of “ripeness” and “exhaustion” contain exceptions, however, which exceptions permit early review
when, for example, the legal question is “fit” for resolution and delay means hardship, see Abbott Laboratories, supra, at
148–149, or when exhaustion would prove “futile,” see McCarthy v. Madigan, 503 U.S. 140, 147–148 (1992); McKart,
supra, at 197–201. (And sometimes Congress expressly authorizes pre-enforcement review, though not here. See, e.g., 15
U.S.C. ? 2618(a)(1)(A) (Toxic Substances Control Act).)
Insofar as ?405(h) prevents application of the “ripeness” and “exhaustion” exceptions, i.e., insofar as it demands the
“channeling” of virtually all legal attacks through the agency, it assures the agency greater opportunity to apply, interpret, or
revise policies, regulations, or statutes without possibly premature interference by different individual courts applying
“ripeness” and “exhaustion” exceptions case by case. But this assurance comes at a price, namely, occasional individual,
delay-related hardship. In the context of a massive, complex health and safety program such as Medicare, embodied in
hundreds of pages of statutes and thousands of pages of often interrelated regulations, any of which may become the subject
of a legal challenge in any of several different courts, paying this price may seem justified. In any event, such was the
judgment of Congress as understood in Salfi and Ringer. See Ringer, 466 U.S., at 627; Salfi, supra, at 762.
Despite the urging of the Council and supporting amici, we cannot distinguish Salfi and Ringer from the case before us.
Those cases themselves foreclose distinctions based upon the “potential future” versus the “actual present” nature of the
claim, the “general legal” versus the “fact-specific” nature of the challenge, the “collateral” versus “non-collateral” nature
of the issues, or the “declaratory” versus “injunctive” nature of the relief sought. Nor can we accept a distinction that limits
the scope of ?405(h) to claims for monetary benefits. Claims for money, claims for other benefits, claims of program
eligibility, and claims that contest a sanction or remedy may all similarly rest upon individual fact-related circumstances,
may all similarly dispute agency policy determinations, or may all similarly involve the application, interpretation, or
constitutionality of interrelated regulations or statutory provisions. There is no reason to distinguish among them in terms
of the language or in terms of the purposes of ?405(h). Section 1395ii’s blanket incorporation of that provision into the
Medicare Act as a whole certainly contains no such distinction. Nor for similar reasons can we here limit those provisions
to claims that involve “amounts.”
The Council cites two other cases in support of its efforts to distinguish Salfi and Ringer: McNary v. Haitian Refugee
Center, Inc., 498 U.S. 479 (1991), and Mathews v. Eldridge, 424 U.S. 319 (1976). In Haitian Refugee Center, the Court
held permissible a ?1331 challenge to “a group of decisions or a practice or procedure employed in making decisions”
despite an immigration statute that barred ?1331 challenges to any Immigration and Naturalization Service ” ‘determination
respecting an application for adjustment of status’ ” under the Special Agricultural Workers’ program. 498 U.S., at
491–498. Haitian Refugee Center‘s outcome, however, turned on the different language of that different statute. Indeed,
the Court suggested that statutory language similar to the language at issue here-any claim “arising under” the Medicare or
Social Security Acts, ?405(h)-would have led it to a different legal conclusion. See id., at 494 (using as an example a
statute precluding review of ” ‘all causes ? arising under any of’ ” the immigration statutes).
In Eldridge, the Court held permissible a District Court lawsuit challenging the constitutionality of agency procedures
authorizing termination of Social Security disability payments without a pretermination hearing. See 424 U.S., at
326–332. Eldridge, however, is a case in which the Court found that the respondent had followed the special review
procedures set forth in ?405(g), thereby complying with, rather than disregarding, the strictures of ?405(h). See id., at
326–327 (holding jurisdiction available only under ?405(g)). The Court characterized the constitutional issue the
respondent raised as “collateral” to his claim for benefits, but it did so as a basis for requiring the agency to excuse, where
the agency would not do so on its own, see Salfi, 422 U.S., at 766–767, some (but not all) of the procedural steps set forth
in ?405(g). 424 U.S., at 329–332 (identifying collateral nature of the claim and irreparable injury as reasons to excuse
?405(g)’s exhaustion requirements); see also Bowen v. City of New York, 476 U.S. 467, 483–485 (1986) (noting that
Eldridge factors are not to be mechanically applied). The Court nonetheless held that ?405(g) contains the nonwaivable and
nonexcusable requirement that an individual present a claim to the agency before raising it in court. See Ringer, supra, at
622; Eldridge, supra, at 329; Salfi, supra, at 763–764. The Council has not done so here, and thus cannot establish
jurisdiction under ?405(g).
The upshot is that without Michigan Academy the Council cannot win. Its precedent-based argument must rest primarily
upon that case. IV
The Court of Appeals held that Michigan Academy modified the Court’s earlier holdings by limiting the scope of “1395ii
and therefore ?405(h)” to “amount determinations.” 143 F.3d, at 1075–1076. But we do not agree. Michigan Academy
involved a ?1331 suit challenging the lawfulness of HHS regulations that governed procedures used to calculate benefits
under Medicare Part B-which Part provides voluntary supplementary medical insurance, e.g., for doctors’ fees. See
Michigan Academy, 476 U.S., at 674–675; United States v. Erika, Inc., 456 U.S. 201, 202–203 (1982). The Medicare
statute, as it then existed, provided for only limited review of Part B decisions. It allowed the equivalent of ?405(g) review
for “eligibility” determinations. See 42 U.S.C. ? 1395ff(b) (1)(B) (1982 ed.). It required private insurance carriers
(administering the Part B program) to provide a “fair hearing” for disputes about Part B “amount determinations.”
?1395u(b)(3)(C). But that was all.
Michigan Academy first discussed the statute’s total silence about review of “challenges mounted against the method by
which . . . amounts are to be determined.” 476 U.S., at 675. It held that this silence meant that, although review was not
available under ?405(g), the silence did not itself foreclose other forms of review, say review in a court action brought
under ?1331. See id., at 674–678. Cf. Erika, supra, at 208 (holding that the Medicare Part B statute’s explicit reference to
carrier hearings for amount disputes does foreclose all further agency or court review of “amount determinations”).
The Court then asked whether ?405(h) barred 28 U.S.C. ? 1331 review of challenges to methodology. Noting the
Secretary’s Salfi/Ringer-based argument that ?405(h) barred ?1331 review of all challenges arising under the Medicare Act
and the respondents’ counter-argument that ?405(h) barred challenges to “methods” only where ?405(g) review was
available, see Michigan Academy, 476 U.S., at 679, the Court wrote:
“Whichever may be the better reading of Salfi and Ringer, we need not pass on the meaning of ?405(h) in the abstract to
resolve this case. Section 405(h) does not apply on its own terms to Part B of the Medicare program, but is instead
incorporated mutatis mutandis by ?1395ii. The legislative history of both the statute establishing the Medicare program and
the 1972 amendments thereto provides specific evidence of Congress’ intent to foreclose review only of ‘amount
determinations’ – i.e., those [matters] ? remitted finally and exclusively to adjudication by private insurance carriers in a
‘fair hearing.’ By the same token, matters which Congress did not delegate to private carriers, such as challenges to the
validity of the Secretary’s instructions and regulations, are cognizable in courts of law.” Id., at 680 (footnote omitted).
The Court’s words do not limit the scope of ?405(h) itself to instances where a plaintiff, invoking ?1331, seeks review of
an “amount determination.” Rather, the Court said that it would “not pass on the meaning of ?405(h) in the abstract.” Ibid.
(emphasis added). Instead it focused upon the Medicare Act’s cross-referencing provision, ?1395ii, which makes ?405(h)
applicable “to the same extent as” it is “applicable” to the Social Security Act. (Emphasis added). It interpreted that phrase
as applying ?405(h) “mutatis mutandis,“ i.e., “[a]ll necessary changes having been made.” Black’s Law Dictionary 1039
(7th ed. 1999). And it applied ?1395ii with one important change of detail-a change produced by not applying ?405(h)
where its application to a particular category of cases, such as Medicare Part B “methodology” challenges, would not lead
to a channeling of review through the agency, but would mean no review at all. The Court added that a ” ‘serious
constitutional question’ ? would arise if we construed ?1395ii to deny a judicial forum for constitutional claims arising
under Part B.” 476 U.S., at 681, n. 12 (quoting Salfi, 422 U.S., at 762 (citing Johnson v. Robison, 415 U.S. 361, 366–367
(1974))).
More than that: Were the Court of Appeals correct in believing that Michigan Academy limited the scope of ?405(h)
itself to “amount determinations,” that case would have significantly affected not only Medicare Part B cases but cases
arising under the Social Security Act and Medicare Part A as well. It accordingly would have overturned or dramatically
limited this Court’s earlier precedents, such as Salfi and Ringer, which involved, respectively, those programs. It would,
moreover, have created a hardly justifiable distinction between “amount determinations” and many other similar HHS
determinations, see supra, at 10. And we do not understand why Congress, as Justice Stevens believes, post, at 1–2
(dissenting opinion), would have wanted to compel Medicare patients, but not Medicare providers, to channel their claims
through the agency. Cf. Brief for Respondent 7–8, 18–21, 30–31 (apparently conceding the point). This Court does not
normally overturn, or so dramatically limit, earlier authority sub silentio. And we agree with those Circuits that have held
the Court did not do so in this instance. See Michigan Assn. of Homes and Servs., 127 F.3d, at 500–501; American
Academy of Dermatology, 118 F.3d, at 1499–1501; St. Francis Medical Center, 32 F.3d, at 812; Farkas, 24 F.3d, at
855–861; Abbey, 978 F.2d, at 41–44; National Kidney Patients Assn., 958 F.2d, at 1130–1134.
Justice Thomas maintains that Michigan Academy “must have established,” by way of a new interpretation of ?1395ii,
the critical distinction between a dispute about an agency determination in a particular case and a more general dispute
about, for example, the agency’s authority to promulgate a set of regulations, i.e, the very distinction that this Court’s
earlier cases deny. Post, at 7 (dissenting opinion). He says that, in this respect we have mistaken Michigan Academy‘s
“reasoning” (the presumption against preclusion of judicial review) for its “holding.” Post, at 8–9. And, he finds the
holding consistent with earlier cases such as Ringer because, he says, in Ringer everyone simply assumed without argument
that ?1395ii’s channeling provision fully incorporated the whole of ?405(h). Post, at 9–10.
For one thing, the language to which Justice Thomas points simply says that “Congres[s] inten[ded] to foreclose review
only of ‘amount determinations’ ” and not “matters which Congress did not delegate to private carriers, such as challenges
to the validity of the Secretary’s instructions and regulations,” Michigan Academy, supra, at 680 (emphasis added). That
language refers to particular features of the Medicare Part B program-“private carriers” and “amount
determinations”-which are not here before us. And its reference to “foreclosure” of review quite obviously cannot be taken
to refer to ?1395ii because, as we have explained, ?1395ii is a channeling requirement, not a foreclosure provision-of
“amount determinations” or anything else. In short, it is difficult to reconcile Justice Thomas’ characterization of Michigan
Academy as a holding that ?1395ii is “trigger[ed]” only by “challenges to ? particular determinations,” post, at 9, with the
Michigan Academy language to which he points.
Regardless, it is more plausible to read Michigan Academy as holding that ?1395ii does not apply ?405(h) where
application of ?405(h) would not simply channel review through the agency, but would mean no review at all. And contrary
to Justice Scalia’s suggestion, post, at 1 (dissenting opinion), that single rule applies to Medicare Part A as much as to
Medicare Part B. This latter holding, as we have said, has the virtues of consistency with Michigan Academy’s actual
language; consistency with the holdings of earlier cases such as Ringer; and consistency with the distinction that this Court
has often drawn between a total preclusion of review and postponement of review. See, e.g., Salfi, supra, at 762
(distinguishing ?405(h)’s channeling requirement from the complete preclusion of judicial review at issue in Robison,
supra, at 373); Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 207, n. 8 (1994) (strong presumption against preclusion of
review is not implicated by provision postponing review); Haitian Refugee Center, 498 U.S., at 496–499 (distinguishing
between Ringer and Michigan Academy and finding the case governed by the latter because the statute precluded all
meaningful judicial review). Justice Thomas refers to an “antichanneling” presumption (a “presumption in favor of
preenforcement review,” post, at 15–16). But any such presumption must be far weaker than a presumption against
preclusion of all review in light of the traditional ripeness doctrine, which often requires initial presentation of a claim to an
agency. As we have said, supra, at 9–10, Congress may well have concluded that a universal obligation to present a legal
claim first to HHS, though postponing review in some cases, would produce speedier, as well as better, review overall. And
this Court crossed the relevant bridge long ago when it held that Congress, in both the Social Security Act and the Medicare
Act, insisted upon an initial presentation of the matter to the agency. Ringer, 466 U.S., at 627; Salfi, supra, at 762.
Michigan Academy does not require that we reconsider that longstanding interpretation. V
The Council argues that in any event it falls within the exception that Michigan Academy creates, for here as there, it can
obtain no review at all unless it can obtain judicial review in a ?1331 action. In other words, the Council contends that
application of ?1395ii’s channeling provision to the portion of the Medicare statute and the Medicare regulations at issue in
this case will amount to the “practical equivalent of a total denial of judicial review.” Haitian Refugee Center, supra, at
497. The Council, however, has not convinced us that is so.
The Council says that the special review channel that the Medicare statutes create applies only where the Secretary
terminates a home’s provider agreement; it is not available in the more usual case involving imposition of a lesser remedy,
say the transfer of patients, the withholding of payments, or the imposition of a civil monetary penalty.
We have set forth the relevant provisions above, supra at 4–5; Appendix, infra. The specific judicial review provision,
?405(g), authorizes judicial review of “any final decision of the [Secretary] made after a [?405(b)] hearing.” A further
relevant provision, ?1395cc(h)(1), authorizes a ?405(b) hearing whenever a home is “dissatisfied ? with a determination
described in subsection (b)(2).” (Emphasis added.) And subsection (b)(2) authorizes the Secretary to terminate an
agreement, whenever she “has determined that the provider fails to comply substantially with” statutes, agreements, or
“regulations.” ?1395cc(b)(2)(A) (emphasis added).
The Secretary states in her brief that the relevant “determination” that entitles a “dissatisfied” home to review is any
determination that a provider has failed to comply substantially with the statute, agreements, or regulations, whether
termination or “some other remedy is imposed.” Reply Brief for Petitioners 14 (emphasis added). The Secretary’s
regulations make clear that she so interprets the statute. See 42 CFR ??498.3(b)(12), 498.1(a)–(b)(1998). The statute’s
language, though not free of ambiguity, bears that interpretation. And we are aware of no convincing countervailing
argument. We conclude that the Secretary’s interpretation is legally permissible. See Chevron U.S. A. Inc. v. Natural
Resources Defense Coun-
cil, Inc., 467 U.S. 837, 843 (1984); Your Home Visiting Nurse Services, 525 U.S., at 453; see also 42 U.S.C. ?
1395i3h(2)(B)(ii) (providing a different channel for administrative and judicial review of decisions imposing civil monetary
penalties.)
The Council next argues that the regulations, as implemented by the enforcement agencies, deny review in practice by
(1) insisting that a nursing home with deficiencies present a corrective plan, (2) imposing no further sanction or remedy if it
does so, but (3) threatening termination if it does not. See 42 CFR ??488.402(d), 488.456(b)(ii) (1998). Because a home
cannot risk termination, the Council adds, it must always submit a plan, thereby avoiding imposition of a remedy, but
simultaneously losing its opportunity to contest the lawfulness of any remedy-related rules or regulations. See
?498.3(b)(12). And, the Council’s amici assert, compliance actually harms the home by subjecting it to increased sanctions
later on by virtue of the unreviewed deficiency findings, and because the agency makes deficiency findings public on the
Internet, ?488.325.
The short, conclusive answer to these contentions is that the Secretary denies any such practice. She states in her brief
that a nursing home with deficiencies can test the lawfulness of her regulations simply by refusing to submit a plan and
incurring a minor penalty. Minor penalties, she says, are the norm, for “terminations from the program are rare and
generally reserved for the most egregious recidivist institutions.” Reply Brief for Petitioners 18; ibid. (HHS reports that
only 25 out of more than 13,000 nursing homes were terminated in 1995–1996). She adds that the “remedy imposed on a
facility that fails to submit a plan of correction or to correct a deficiency-and appeals the deficiency-is no different than the
remedy the Secretary ordinarily would impose in the first instance.” Ibid. Nor do the regulations “cause providers to suffer
more severe penalties in later enforcement actions based on findings that are unreviewable.” Ibid. The Secretary concedes
that a home’s deficiencies are posted on the Internet, but she notes that a home can post a reply. See id., at 20, n. 20.
The Council gives us no convincing reason to doubt the Secretary’s description of the agency’s general practice. We
therefore need not decide whether a general agency practice that forced nursing homes to abandon legitimate challenges to
agency regulations could amount to the “practical equivalent of a total denial of judicial review,” Haitian Refugee Center,
498 U.S., at 497. Contrary to what Justice Thomas says, post, at 11–12, 20–21, we do not hold that an individual party
could circumvent ?1395ii’s channeling requirement simply because that party shows that postponement would mean added
inconvenience or cost in an isolated, particular case. Rather, the question is whether, as applied generally to those covered
by a particular statutory provision, hardship likely found in many cases turns what appears to be simply a channeling
requirement into complete preclusion of judicial review. See Haitian Refugee Center, supra, at 496–497. Of course,
individual hardship may be mitigated in a different way, namely, through excusing a number of the steps in the agency
process, though not the step of presentment of the matter to the agency. See supra, at 11–12; infra, at 20–21. But again,
the Council has not shown anything other than potentially isolated instances of the inconveniences sometimes associated
with the postponement of judicial review.
The Council complains that a host of procedural regulations unlawfully limit the extent to which the agency
itself will provide the administrative review channel leading to judicial review, for example, regulations insulating from
review decisions about a home’s level of noncompliance or a determination to impose one, rather than another, penalty. See
42 CFR ??431.153(b), 488.408(g)(2), 498.3(d)(10)(ii)(1998). The Council’s members remain free, however, after
following the special review route that the statutes prescribe, to contest in court the lawfulness of any regulation or statute
upon which an agency determination depends. The fact that the agency might not provide a hearing for that particular
contention, or may lack the power to provide one, see Sanders, 430 U.S., at 109 (“Constitutional questions obviously are
unsuited to resolution in administrative hearing procedures ?”); Salfi, 422 U.S., at 764; Brief for Petitioners 45, is beside
the point because it is the “action” arising under the Medicare Act that must be channeled through the agency. See Salfi,
supra, at 762. After the action has been so channeled, the court will consider the contention when it later reviews the
action. And a court reviewing an agency determination under ?405(g) has adequate authority to resolve any statutory or
constitutional contention that the agency does not, or cannot, decide, see Thunder Basin Coal, 510 U.S., at 215, and n. 20;
Haitian Refugee Center, supra, at 494; Ringer, 466 U.S., at 617; Salfi, supra, at 762, including, where necessary, the
authority to develop an evidentiary record.
Proceeding through the agency in this way provides the agency the opportunity to reconsider its policies, interpretations,
and regulations in light of those challenges. Nor need it waste time, for the agency can waive many of the procedural steps
set forth in ?405(g), see Salfi, supra, at 767, and a court can deem them waived in certain circumstances, see Eldridge, 424
U.S., at 330–331, even though the agency technically holds no “hearing” on the claim. See Salfi, supra, at 763–767
(holding that Secretary’s decision not to challenge the sufficiency of the appellees’ exhaustion was in effect a determination
that the agency had rendered a “final decision” within the meaning of ?405(g)); Eldridge, supra, at 331–332, and n. 11
(invoking practical conception of finality to conclude that collateral nature of claim and potential irreparable injury from
delayed review satisfy the “final decision” requirement of ?405(g)). At a minimum, however, the matter must be presented
to the agency prior to review in a federal court. This the Council has not done.
Finally, the Council argues that, because it is an association, not an individual, it cannot take advantage of the special
review channel, for the statute authorizes review through that channel only at the request of a “dissatisfied” “institution or
agency.” ?1395cc(h)(1). The Council speaks only on behalf of its member institutions, and thus has standing only because
of the injury those members allegedly suffer. See Arizonans for Official English v. Arizona, 520 U.S. 43, 65–66 (1997);
Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 343 (1977). It is essentially their rights to review that
are at stake. And the statutes that create the special review channel adequately protect those rights. VI
For these reasons, this case cannot fit within Michigan Academy‘s exception. The bar of ?405(h) applies. The judgment
of the Court of Appeals is
Reversed. APPENDIX TO THE OPINION OF THE COURT
42 U.S.C. ? 1395cc(h)(1) provides:
“(h) Dissatisfaction with determination of Secretary; appeal by institutions or agencies; single notice and hearing
“(1) Except as provided in paragraph (2), an institution or agency dissatisfied with a determination by the Secretary that
it is not a provider of services or with a determination described in subsection (b)(2) of this section shall be entitled to a
hearing thereon by the Secretary (after reasonable notice) to the same extent as is provided in section 405(b) of this title,
and to judicial review of the Secretary’s final decision after such hearing as is provided in section 405(g) of this title, except
that, in so applying such sections and in applying section 405(l) of this title thereto, any reference therein to the
Commissioner of Social Security or the Social Security Administration shall be considered a reference to the Secretary or
the Department of Health and Human Services, respectively.”
42 U.S.C. ? 1395cc(b) provides, in relevant part:
“(b) Termination or nonrenewal of agreements . . . . .
“(2) The Secretary may refuse to enter into an agreement under this section or, upon such reasonable notice to the
provider and the public as may be specified in regulations, may refuse to renew or may terminate such an agreement after
the Secretary-
“(A) has determined that the provider fails to comply substantially with the provisions of the agreement, with the
provisions of this subchapter and regulations thereunder, or with a corrective action required under section
1395ww(f)(2)(B) of this title.”
42 U.S.C. ? 405(b) provides, in relevant part
“(b) Administrative determination of entitlement to benefits; findings of fact; hearings; investigations;
evidentiary hearings in reconsiderations of disability benefit terminations; subsequent applications
“(1) The Commissioner of Social Security is directed to make findings of fact, and decisions as to the rights of any
individual applying for a payment under this subchapter. Any such decision by the Commissioner of Social Security which
involves a determination of disability and which is in whole or in part unfavorable to such individual shall contain a
statement of the case, in understandable language, setting forth a discussion of the evidence, and stating the
Commissioner’s determination and the reason or reasons upon which it is based. Upon request by any such individual or
upon request by a wife, divorced wife, widow, surviving divorced wife, surviving divorced mother, surviving divorced
father, husband, divorced husband, widower, surviving divorced husband, child, or parent who makes a showing in writing
that his or her rights may be prejudiced by any decision the Commissioner of Social Security has rendered, the
Commissioner shall give such applicant and such other individual reasonable notice and opportunity for a hearing with
respect to such decision, and, if a hearing is held, shall, on the basis of evidence adduced at the hearing, affirm, modify, or
reverse the Commissioner’s findings of fact and such decision. Any such request with respect to such a decision must be
filed within sixty days after notice of such decision is received by the individual making such request. The Commissioner
of Social Security is further authorized, on the Commissioner’s own motion, to hold such hearings and to conduct such
investigations and other proceedings as the Commissioner may deem necessary or proper for the administration of this
subchapter. In the course of any hearing, investigation, or other proceeding, the Commissioner may administer oaths and
affirmations, examine witnesses, and receive evidence. Evidence may be received at any hearing before the Commissioner
of Social Security even though inadmissible under rules of evidence applicable to court procedure. . . . . .
“(3)(A) A failure to timely request review of an initial adverse determination with respect to an application for any benefit
under this subchapter or an adverse determination on reconsideration of such an initial determination shall not serve as a
basis for denial of a subsequent application for any benefit under this subchapter if the applicant demonstrates that the
applicant, or any other individual referred to in paragraph (1), failed to so request such a review acting in good faith
reliance upon incorrect, incomplete, or misleading information, relating to the consequences of reapplying for benefits in
lieu of seeking review of an adverse determination, provided by any officer or employee of the Social Security
Administration or any State agency acting under section 421 of this title.
“(B) In any notice of an adverse determination with respect to which a review may be requested under paragraph (1), the
Commissioner of Social Security shall describe in clear and specific language the effect on possible entitlement to benefits
under this subchapter of choosing to reapply in lieu of requesting review of the determination.”
42 U.S.C. ? 405(g) provides:
“(g) Judicial review
“Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a
party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within
sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social
Security may allow. Such action shall be brought in the district court of the United States for the judicial district in which
the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business
within any such judicial district, in the United States District Court for the District of Columbia. As part of the
Commissioner’s answer the Commissioner of Social Security shall file a certified copy of the transcript of the record
including the evidence upon which the findings and decision complained of are based. The court shall have power to enter,
upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the
Commissioner of Social Security, with or without remanding the cause for a rehearing. The findings of the Commissioner
of Social Security as to any fact, if supported by substantial evidence, shall be conclusive, and where a claim has been
denied by the Commissioner of Social Security or a decision is rendered under subsection (b) of this section which is
adverse to an individual who was a party to the hearing before the Commissioner of Social Security, because of failure of
the claimant or such individual to submit proof in conformity with any regulation prescribed under subsection (a) of this
section, the court shall review only the question of conformity with such regulations and the validity of such regulations.
The court may, on motion of the Commissioner of Social Security made for good cause shown before the Commissioner
files the Commissioner’s answer, remand the case to the Commissioner of Social Security for further action by the
Commissioner of Social Security, and it may at any time order additional evidence to be taken before the Commissioner of
Social Security, but only upon a showing that there is new evidence which is material and that there is good cause for the
failure to incorporate such evidence into the record in a prior proceeding; and the Commissioner of Social Security shall,
after the case is remanded, and after hearing such additional evidence if so ordered, modify or affirm the Commissioner’s
findings of fact or the Commissioner’s decision, or both, and shall file with the court any such additional and modified
findings of fact and decision, and a transcript of the additional record and testimony upon which the Commissioner’s action
in modifying or affirming was based. Such additional or modified findings of fact and decision shall be reviewable only to
the extent provided for review of the original findings of fact and decision. The judgment of the court shall be final except
that it shall be subject to review in the same manner as a judgment in other civil actions. Any action instituted in
accordance with this subsection shall survive notwithstanding any change in the person occupying the office of
Commissioner of Social Security or any vacancy in such office.”
42 U.S.C. ? 405(h) provides:
“(h) Finality of Commissioner’s decision
“The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals
who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed
by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the
Commissioner of Social Security, or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28
to recover on any claim arising under this subchapter.”
42 U.S.C. ? 1395ii provides:
“The provisions of sections 406 and 416(j) of this title, and of subsections (a), (d), (e), (h), (i), (j), (k), and (l) of section 405
of this title, shall also apply with respect to this subchapter to the same extent as they are applicable with respect to
subchapter II of this chapter, except that, in applying such provisions with respect to this subchapter, any reference therein
to the Commissioner of Social Security or the Social Security Administration shall be considered a reference to the
Secretary or the Department of Health and Human Services, respectively.”
28 U.S.C. ? 1331 provides:
“Federal question. The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws,
or treaties of the United States.”