The American Association of Councils of Medical Staffs of Private Hospitals (CMS) filed suit on behalf of its physician members challenging certain federal regulations. These regulations, promulgated under the Medicare Act, 42 U.S.C. § 1395 et seq., control the manner in which participating hospitals review their physicians' efforts. The district court held that it had jurisdiction, and found against the plaintiff-appellant on the merits. We find there is no subject matter jurisdiction, and vacate the judgment below without prejudice to CMS to file other appropriate proceedings.

Title XVIII of the Social Security Act establishes the Medicare program. Part A of that program provides hospital insurance for the aged and certain disabled individuals of any age. The government undertakes to reimburse authorized "providers of services" for a covered beneficiary's health costs. These providers include hospitals, skilled nursing facilities, and home health agencies, but not individual physicians. 42 U.S.C. § 1395x(u).

Congress feared that the existence of a federal blank check would lead providers to use their resources inefficiently. To avoid that, the Act requires that each hospital or skilled nursing facility must have in effect a "utilization review plan" to qualify as a provider. 42 U.S.C. § 1395x(e)(6), (j)(8). A "sufficient" plan reviews the admissions to a facility, the duration of stays, and the professional services, including drugs, furnished the patients to determine both the medical necessity for the actions and their effects on the efficiency of the facility. The statute specifies the composition of the reviewing group.

"(k) A utilization review plan . . . shall be considered sufficient . . . if it provides (2) for such review to be made by either (A) a staff committee of the institution composed of two or more physicians, with or without participation of other professional personnel, or (B) a group outside the institution which is similarly composed and (i) which is established by the local medical society and some or all of the hospitals and skilled nursing facilities in the locality, or (ii) if (and for as long as) there has not been such a group which serves such institution, which is established in such other manner as may be approved by the Secretary . . . ."

42 U.S.C. § 1395x(k). If the institution is very small or lacks an organized medical staff, the review must be accomplished by the outside group or other method allowed in subsection (B). 42 U.S.C. § 1395x(k).

The Secretary of Health, Education, and Welfare has the authority to promulgate necessary regulations for the Medicare Act. 42 U.S.C. § 1395hh. The Secretary is given the power to authorize state health agencies to determine whether a facility may participate in Medicare as a provider. 42 U.S.C. § 1395aa(a). Under his general authority to promulgate regulations, the Secretary defined the composition of the review body in the alternative ways used by the statute. 20 C.F.R. § 405.1035(e)(1). In order to guide state agencies in their eligibility determinations, the Department's Bureau of Health Insurance produced the "State Operations Manual", known as HIM-7. Unlike the statute, and unlike the regulation, the section defining utilization review plans in HIM-7 specifies a preferred alternative.

"2510(a) In-House Committees Typically and preferably when a hospital has a sufficiently large staff the utilization review committee is, as in the words of the law, comprised of, 'a staff committee of the institution composed of two or more physicians with or without the participation of other professional personnel'."

HIM-7 acknowledged that the law provides an alternative, but authorizes that alternative only in limited situations.

"The law provides for alternate types of UR committees, where a facility does not have a sufficient number (two or more) of physicians on the house staff to serve on a UR committee."

HIM-7, § 2515(a). Section 2515(b) establishes a preference for smaller facilities to use outside committees sponsored by medical societies, rather than some "other manner as may be approved by the Secretary". Furthermore, that section advises state agencies to inform the facilities that any other plan is acceptable only until one of the preferred methods can be devised.

That mandate of the Secretary sparked this law suit. The composition of the utilization review committee must be approved, or the facility will not be an authorized "provider". Without authorization, the government will not reimburse it for any services provided to patients otherwise eligible for Medicare. Provider status is essential to most American private hospitals. CMS, representing doctors at private institutions, disapproves of the preferred method of review. It believes that in-house review committees waste physician time and lead to conflicts, ethical and personal, within the staff.

On October 1, 1975, CMS filed suit for declaratory and injunctive relief in the Eastern District of New Orleans. CMS pressed three arguments. It urged that the Secretary had no power to establish mandatory preferences among the methods allowed by the statute. It maintained that HIM-7 was promulgated in violation of the rule-making requirements of the Administrative Procedure Act. It argued that the requirement violated the doctors' due process rights, protected by the fifth amendment. The Secretary moved to dismiss; CMS moved for summary judgment. After a hearing on the motions, the district court granted summary judgment for the Secretary in November 1976. The trial court found that it had jurisdiction under § 10 of the Administrative Procedure Act. The court held that the regulation was not inconsistent with the statute; that it was an interpretive rule, outside the restrictions of the A.P.A.; and held that no constitutional violation existed. This appeal followed.

We cannot reach the merits on this appeal: the dispositive question is whether subject matter jurisdiction existed. The district court followed this and some other Courts of Appeals by holding that jurisdiction existed under § 10 of the A.P.A., 5 U.S.C. § 701-06. See Ortego v. Weinberger, 5 Cir. 1975, 516 F.2d 1005; Dr. John T. MacDonald Foundation, Inc. v. Califano, 5 Cir. 1976, 534 F.2d 633, modified on rehearing, 1977, 554 F.2d 714, rev'd en banc, 1978, 571 F.2d 328; Bradley v. Weinberger, 1 Cir. 1973, 483 F.2d 410; Deering Milliken, Inc. v. Johnston, 4 Cir. 1961, 295 F.2d 856; Sanders v. Weinberger, 7 Cir. 1975, 522 F.2d 1167, rev'd sub nom., Califano v. Sanders, 1977, 430 U.S. 99, 97 S. Ct. 980, 51 L. Ed. 2d 192; Brandt v. Hickel, 9 Cir. 1970, 427 F.2d 53; Brennan v. Udall, 10 Cir. 1967, 379 F.2d 803; Pickus v. United States Board of Parole, 1974, 165 U.S.App.D.C. 284, 507 F.2d 1107. The Supreme Court has now spoken to the contrary: "(T)he APA does not afford an implied grant of subject-matter jurisdiction permitting federal judicial review of agency action". Califano v. Sanders, 1977, 430 U.S. 99, 107, 97 S. Ct. 980, 985, 51 L. Ed. 2d 192.

The district court held that general federal question jurisdiction was precluded by 42 U.S.C. § 1395ii. To find jurisdiction, we would have to reverse that holding.

The Medicare Act does not have its own section precluding judicial review. Instead, § 1395ii incorporates 42 U.S.C. § 405(h), which precludes review of decisions under Title II of the Social Security Act. That section reads:

"The findings and decisions 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 41 of Title 28 to recover on any claim arising under this subchapter."

(emphasis added) 42 U.S.C. § 405(h). Title II provides administrative and judicial review of the matters covered by § 405(h) through § 405(g). The Medicare Act incorporated § 405(h), precluding review, totally; it incorporated § 405(g), providing review, only in part.

"Any institution or agency dissatisfied with any determination by the Secretary that it is not a provider of services, or with any determination described in section 1395cc(b)(2) of this title (concerning termination by the Secretary of certain agreements), shall be entitled to a hearing thereon by the Secretary (after reasonable notice and opportunity for hearing) 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."

42 U.S.C. § 1395ff(c). See also 42 U.S.C.A. § 1395oo (f) (West Supp.1977) (added in 1974).

The question of review of decisions apparently precluded by § 1395ii has been considered by several courts. The cases, however, have always been slightly different from this case. They have involved actions by providers complaining of reimbursement decisions and procedures. The Court of Claims ruled that it had jurisdiction as to questions of law and constitutional claims under 28 U.S.C. § 1491. Whitecliff, Inc. v. United States, Ct.Cl.1976, 536 F.2d 347, cert. den. 1977, 430 U.S. 969, 97 S. Ct. 1652, 52 L. Ed. 2d 361. The Court of Appeals for the Eighth Circuit held that it had jurisdiction over constitutional issues only. St. Louis University v. Blue Cross Hospital Service, 8 Cir. 1976, 537 F.2d 283, cert. den. 1977, 429 U.S. 977, 97 S. Ct. 484, 50 L. Ed. 2d 584. In the Second and Seventh Circuits the Courts of Appeals have held that they have no jurisdiction, but that the Court of Claims does. South Windsor Convalescent Home, Inc. v. Mathews, 2 Cir. 1976, 541 F.2d 910; Trinity Memorial Hospital of Cudahy, Inc. v. Associated Hospital Service, Inc., 7 Cir. 1977, 570 F.2d 660.1

This Court had taken an inconsistent position. In Gallo v. Mathews, 5 Cir. 1976, 534 F.2d 1137 (decided before Califano v. Sanders and relied upon by the district court here), the Court held that § 1395ii precluded review, but that § 10 of the A.P.A. provided it. In Dr. John T. MacDonald Foundation, Inc. v. Califano, 5 Cir. 1977, 554 F.2d 714, the panel's second opinion followed Califano v. Sanders and held that no A.P.A. jurisdiction existed. The Court held that § 1395ii was not intended to preclude judicial review of issues, constitutional or statutory, which could be reviewed in no other way.2 We withheld deciding this case to await the result of this Court's reconsideration of MacDonald en banc. That decision, reported at 571 F.2d 328, resolves our major issue.

The Court en banc held that " § 405(h), incorporated into § 1395ii of the Medicare Act, precludes all review of the Secretary's decisions by federal district courts brought under § 1331". 571 F.2d at 331. The Court refused to find a distinction between § 405(h) in the Title II context and § 1395ii in the Medicare context because of the differing availability of review under § 405(g). Instead, it adopted the Supreme Court's position in Weinberger v. Salfi, 1975, 422 U.S. 749, 95 S. Ct. 2457, 45 L. Ed. 2d 522, that neither statutory nor constitutional claims could be reviewed under the Act.

As a matter of statutory construction, the major difference between our case and MacDonald, as resolved by the en banc Court3, is that these plaintiffs complain not of a decision denying reimbursement but of a regulation which does not affect reimbursement. Salfi, relied upon by the Court en banc, shows that distinction to be unimportant. In Salfi widows brought a class action challenging on constitutional grounds the statute's failure to cover certain women. The Court gave a broad reading to the third sentence of § 405(h) and held that it was "more than a codified requirement of administrative exhaustion". 422 U.S. at 757, 95 S.Ct. at 2463. It then distinguished Johnson v. Robison, 1974, 415 U.S. 361, 94 S. Ct. 1160, 39 L. Ed. 2d 389. In that case a challenge was brought to a provision concerning veterans' benefits. The Court held that review of a statutory limitation was not precluded by a section providing that decisions of the Administrator

"on any question or law or fact . . . shall be final and conclusive and no other official or any court of the United States shall have power or jurisdiction to review any such decision . . . ."

38 U.S.C. § 211(a), quoted in Salfi, 422 U.S. at 761, 95 S.Ct. at 2465. The Court had found jurisdiction in Johnson, in spite of this language. The Salfi Court explained that while the Veterans' Administration statute precluded only review of decisions of the Administrator, § 405(h) extended to any action to recover on any claim. Thus, the fact that no administrative hearing or decision was involved in the instant case does not serve as a relevant distinction from MacDonald. This Court has decided that the Medicare Act withdraws jurisdiction from the district courts over actions like this one.

This construction of § 1395ii does not end our inquiry. We must determine whether this construction totally precludes judicial consideration of claims of CMS, statutory and constitutional. If it does, we must consider whether such preclusion itself violates the requirements of due process.

The question of Congressional power over jurisdiction is both ancient and difficult. It involves the most sensitive relationships between coequal branches of the federal government. Courts and commentators have long discussed the issue.4 While many commentators may have decided it, it is fair to say that the Supreme Court has not. Under MacDonald, this Court can only say:

"Happily, we need resolve neither Congress' intent to preclude review of constitutional claims nor the constitutionality of a statute so construed. We would face these issues only if all avenues of review were precluded. In Whitecliff, however, the Court of Claims determined it to have jurisdiction to review claims arising under the Medicare Act."

571 F.2d at 332.

This particular suit cannot be brought in the Court of Claims. Its jurisdiction is founded on 28 U.S.C. § 1491, which was never part of the section 41 of title 28 mentioned in § 405(h). It has jurisdiction over claims against the United States, without limitation as to jurisdictional amount.5 That Court cannot provide the equitable or declaratory relief sought in this suit. United States v. Alire, 1868, 73 U.S. 573, 6 Wall. 573, 18 L. Ed. 947; United States v. Jones, 1886, 131 U.S. 1, 9 S. Ct. 669, 33 L. Ed. 90; United States v. King, 1969, 395 U.S. 1, 89 S. Ct. 1501, 23 L. Ed. 2d 52. Nevertheless, the issue raised by the plaintiff could be heard by that Court if CMS can state a claim for damages or at least for nominal damages.6 Only the relief granted would be different, and Congress has power over the relief granted suitors against the United States and its officers.7

The resolution we have reached is not pleasant. CMS has waited nearly three years for the resolution of its suit. The parties have briefed and argued their cases. When the suit was filed, before Califano v. Sanders and before MacDonald, the action gave no sign of being appropriate for the Court of Claims. Now, we must deny both parties a decision on the merits where at least one argument is substantial. But the alternative is to find that Congress cannot cut off our jurisdiction over these issues while providing another court, the Court of Claims, to hear the issues. That is a decision we cannot make. Moreover, we respect the ingenuity of lawyers. We do not exclude the possibility of plaintiff's counsel casting an action in terms of mandamus that might resolve what is obviously an important issue to the private hospitals in this country.

The decision of the district court is vacated, and this suit is remanded for dismissal without prejudice to the plaintiff to file other appropriate proceedings.

Vacated and remanded.