MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES,
PETITIONER v. FREEMAN H. RINGER, ET AL.

   No. 82-1772

   In the Supreme Court of the United States

   October Term, 1982

   The Solicitor General, on behalf of the Secretary of Health and
Human Services, petitions for a writ of certiorari to review the
judgment of the United States Court of Appeals for the Ninth Circuit
in this case.

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Ninth Circuit

                       PARTIES TO THE PROCEEDING

   Other parties, in addition to those named in the caption, are
Sanford Holmes, Norman R. Webster-Zieber, Jean Vescio, and Benjamin
Winter, M.D.  Respondents Holmes, Webster-Zieber, and Vescio sought to
represent a class of Medicare beneficiaries who had undergone
bilateral carotid body resection surgery and had claimed reimbursement
prior to the time the suit was filed in district court.  Respondent
Ringer, who had not yet undergone the surgery when the suit was filed,
sought to represent a class of Medicare beneficiaries who had not yet
undergone the surgery and, hence, had not yet claimed reimbursement.
App. B, infra, 11a.

            TABLE OF CONTENTS
   Opinions below
   Jurisdiction
   Statutory provisions involved
   Statement
   Reasons for granting the petition
   Conclusion
   Appendix A
   Appendix B
   Appendix C
   Appendix D
   Appendix E

                            OPINIONS BELOW

   The opinion of the court of appeals (App. A, infra, 1a-10a), as
amended by order dated December 30, 1982, is reported at 684 F.2d 643.
 The opinion as reproduced in App. A, infra, incorporates corrections
made pursuant to order dated February 1, 1983.  The opinion of the
district court (App. B, infra, 11a-17a) is not reported.

                             JURISDICTION

   The judgment of the court of appeals was entered on August 19, 1982
(App. D, infra, 19a), and a petition for rehearing was denied on
December 30, 1982 (App. C, infra, 18a).  By order dated March 22,
1983, Justice Rehnquist extended the time within which to file a
petition for a writ of certiorari to and including April 29, 1983.
The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

                     STATUTORY PROVISIONS INVOLVED

   Relevant provisions of the Social Security Act, Title 28 of the
United States Codes involved in this case are reproduced at App. E,
infra, 20a-22a.

                          QUESTIONS PRESENTED

   1. Whether the district court had jurisdiction under 28 U.S.C. 1331
or 1361 to consider respondents' claims for reimbursement under the
Medicare Program, notwithstanding the preclusion of judicial review
provision in 42 U.S.C. 405(h).

   2. Whether respondents' failure to exhaust their administrative
remedies barred them from seeking review of the denial of their
Medicare reimbursement claims under 42 U.S.C. 405(g).

                               STATEMENT

   This case concerns the jurisdiction of a federal district court to
entertain a challenge to an administrative ruling barring
reimbursement for a particular medical procedure under the Health
Insurance for the Aged Act (42 U.S.C. (& Supp. IV) 1395 et seq.),
commonly known as the Medicare Act.

   1. The Medicare Program is divided into two parts.  Part A of the
Act (42 U.S.C. (& Supp. IV) 1395e to 1395i-2) provides insurance for
hospital and related post-hospital services.  42 U.S.C. (& Supp. IV)
1395c and 1395d.  Part B establishes a voluntary program of
supplementary medical insurance covering, in general, 80% of the
reasonable charges for physicians' services, medical supplies, and
laboratory tests.  42 U.S.C. (& Supp. IV) 1395k, 1396l and 1395x(s).
In addition to other limitations on coverage, the Act provides that no
payment shall be made under Part A or Part B for any expenses incurred
for items or services "which are not reasonable and necessary for the
diagnosis or treatment of illness or injury * * *." 42 U.S.C. (Supp.
IV) 1395y(a)(1).

   The payment of benefits under Part B is administered by private
insurance carriers pursuant to contracts entered into with the
Secretary of Health and Human Services (HHS).  42 U.S.C. (& Supp. IV)
1395u.  The claimant is entitled to an evidentiary hearing conducted
by the carrier if his claim is initially denied by the carrier and the
amount in controversy is $100 or more.  42 U.S.C. (& Supp. IV)
1395u(b)(3)(C);  see Schweiker v. McClure, 456 U.S. 188 (1982).
Congress has foreclosed all judicial review of the carrier's denial of
a claim after a hearing, United States v. Erika, Inc., 456 U.S. 201
(1982), whether the denial is based on the facts of the particular
case or on an administrative instruction of general applicability
issued by the Secretary.  /1/ This case principally concerns the
availability of judicial review of benefit claims under Part A of the
Medicare Program, which was not directly involved in Schweiker v.
McClure or United States v. Erika, Inc.  /2/

   The Medicare Act and implementing regulations establish a detailed
procedure for administrative review of claims for benefits under Part
A.  The Act directs the Secretary to determine the amount of benefits
payable under Part A "in accordance with regulations prescribed by
him" (42 U.S.C. 1395ff(a);  see also 42 U.S.C. (& Supp. IV) 1395f,
1395g and 1395x(v)), but the Secretary is authorized to enter into a
contract with a fiscal intermediary (such as a Blue Cross Association)
under which the intermediary will determine the amount of benefits
payable to the provider of services and make those payments directly
to the provider on behalf of the Secretary.  42 U.S.C. (& Supp. IV)
1395h;  42 C.F.R. 405.702.  If an individual is dissatisfied with the
intermediary's determination, and the amount remaining in controversy
is $100 or more, the individual is entitled to an administrative
hearing by the Secretary as provided in 42 U.S.C. (Supp. IV) 405(b).
See 42 U.S.C. 1395ff(b)(1)(C) and (b)(2);  42 C.F.R. 405.720.  /3/ If
the claim again is denied, he may seek review by the Appeals Council
in HHS.  42 C.F.R. 405.724;  20 C.F.R. 404.967.  The individual then
is entitled to judicial review of "the Secretary's final decision
after such hearing," as provided in 42 U.S.C. (Supp. IV) 405(g), if
the amount remaining in controversy after the Appeals Council review
is $1000 or more.  42 U.S.C. 1395ff(b)(1)(C) and (b)(2);  42 C.F.R.
405.730;  20 C.F.R. 404.981 and 422.210.

   Section 405(g) in turn provides that an individual, "after a final
decision of the Secretary made after a hearing to which he was a
party," may obtain judicial review of that decision.  Finally, Section
205(h) of the Act, as codified at 42 U.S.C. 405(h) and made applicable
to Medicare cases by 42 U.S.C. 1395ii, provides that no findings of
fact or decision of the Secretary may be reviewed by any tribunal
"except as herein provided" -- i.e., except pursuant to 42 U.S.C.
(Supp. IV) 405(g) -- and that no action shall be brought against the
United States or the Secretary under 28 U.S.C. 1331 or 1346 /4/ "to
recover on any claim arising under the (Medicare Act)."

   2. In January 1979, the Health Care Financing Administration (HCFA)
in HHS issued an administrative instruction to Medicare Part A
intermediaries and Part B carriers informing them that no
reimbursement was to be made under the Medicare Program for expenses
incurred in connection with a surgical procedure known as bilateral
carotid body resection (BCBR) if the procedure was performed to
relieve symptoms of pulmonary distress (45 Fed. Reg. 71431-71432
(1980)).  HCFA explained that BCBR had been "shown to lack general
acceptance of the professional medical community" and that "controlled
clinical studies establishing the safety and effectiveness of this
procedure are needed" (id. at 71431).  Accordingly, the instruction
provided that BCBR operations to relieve pulmonary symptoms "must be
considered investigational and cannot be considered reasonable and
necessary within the meaning of (42 U.S.C. (Supp. IV) 1395y(a)(1))"
(45 Fed. Reg. 71431 (1980)).  HCFA did state, however, that although
reimbursement would not be made for the surgery generally, carotid
body resection had been accepted by the medical community as effective
to remove a mass in the carotid body itself, irrespective of symptoms,
and that another specialized procedure in the carotid area also would
be treated as reimbursable (id. at 71431-71432).

   HCFA issued the instruction on the basis of advice from the Public
Health Service and a special BCBR Task Force of the National Heart,
Lung and Blood Institute of the National Institutes of Health (App. A,
infra, 2a;  45 Fed. Reg. 71426 (1980)).  The Public Health Service had
"consistently advised HCFA" that the BCBR procedure, when performed to
relieve the symptoms of pulmonary conditions such as asthma and
emphysema, lacked general acceptance by the professional medical
community "because of questions concerning efficacy and safety" (id.
at 71426).  Similarly, the 12-member Task Force was "unanimous in its
view that before any procedure can be recommended as a therapeutic
measure there should be a clear demonstration of efficacy and
documentation that risk is acceptably small";  in the case of BCBR,
the Task Force concluded, "neither criterion is met" (id. at 71429).
The Task Force further observed that "(e)ven in the hands of
experienced surgeons the procedure has a significant in-hospital
mortality rate, and theoretical considerations suggest that the risk
of hypoventilation may be increased, especially in patients with
chronic obstructive pulmonary disease" (ibid.).

   After the instructions were issued, however, a number of Medicare
beneficiaries nevertheless were able to receive reimbursement under
Part A of the Act for hospital-related expenses associated with BCBR
by obtaining a favorable ruling from an administrative law judge
("ALJ") after an administrative hearing or, in certain cases, from the
Appeals Council (E.R. 57-80), because neither the ALJ nor the Appeals
Council was bound by the intermediary instruction.  /5/ Accordingly,
in October 1980, HCFA issued a formal administrative ruling, binding
upon ALJs and the Appeals Council, that prohibited payments under
Medicare for BCBR performed to relieve symptoms of pulmonary distress.
 45 Fed. Reg. 71426-71427 (1980).  HCFA explained that it interpreted
the statutory prohibition against reimbursement for services that are
not "reasonable and necessary" to "exclude from Medicare coverage
medical and health care services and items that are not demonstrated
to be safe and effective by acceptable clinical evidence" (id. at
71426).  After reviewing the administrative proceedings in which the
Appeals Council had permitted payment and consulting once more with
the Public Health Service, HCFA again was unable to find that BCBR is
safe and effective (id. at 71426, 71427).

   b. In September 1980, respondents commenced this action in the
United States District Court for the Central District of California,
seeking declaratory and injunctive relief to prohibit the Secretary
from refusing to recognize BCBR surgery as a "reasonable and
necessary" treatment for obstructive pulmonary conditions and to
enjoin the Secretary from enforcing the instructions that prevented
claimants from receiving reimbursement from intermediaries or from
obtaining a fair hearing on their claims before an ALJ.  Respondents
consist of Dr. Benjamin Winter -- a physician who developed a surgical
technique for performing BCBR and is a chief proponent of the
procedure (45 Fed. Reg. 71427 (1980)) -- and four Medicare
beneficiaries.  At the time the complaint was filed, three of the four
beneficiary respondents had undergone BCBR surgery and had been denied
reimbursement by fiscal intermediaries, but none had yet had a hearing
before an ALJ.  The fourth beneficiary, respondent Ringer, had not yet
had the surgery.  /6/

   On February 18, 1981, the district court dismissed the complaint
for lack of jurisdiction (App. B, infra, 11a-17a).  The district court
found that "(t)he essence of (respondents') claim * * * is a claim of
entitlement to benefits for the BCBR procedure" and held that such an
action could not be brought under 42 U.S.C. 405(g) until the claimants
had exhausted their administrative remedies (App. B, infra, 13a).  The
court noted that an appearance of futility alone does not render
exhaustion unnecessary and that exhaustion could not be regarded as
futile in this case in any event because, in the administrative
hearings then being sought by respondents, the Secretary's position as
to the reasonableness or efficacy of the procedure might change (id.
at 13a-14a).  /7/

   c. The court of appeals reversed the dismissal of the complaint and
remanded for consideration of respondents' claims on the merits.  The
court of appeals found that a "major thrust" of respondents' complaint
was that the Secretary's instructions, barring reimbursement for the
BCBR procedure on the ground that it had not been shown to be safe and
effective, are an "unlawful interference in the administrative process
for determining benefits" (App. A, infra, 3a).  In the court's view,
this is a "procedural" claim, not a substantive claim for benefits,
and to this extent the instant suit therefore is not an action "to
recover on (a) claim arising under" the Medicare Act for purposes of
the jurisdictional bar in 42 U.S.C. 405(h).  Accordingly, the court
held that this "procedural" claim could be heard in a suit brought
under 28 U.S.C. 1331 or 1361, and did not have to be brought under the
special jurisdictional provision in 42 U.S.C. 405(g) (App. A, infra,
4a-6a).

   The court of appeals recognized that in addition to challenging the
Secretary's "procedures," respondents contended that the Secretary had
"reached an improper substantive result in the process of determining
whether benefits should be awarded" (App. A, infra, 6a).  The court of
appeals acknowledged that this contention did constitute a claim for
benefits that had to be brought under 42 U.S.C. 405(g) and that a
district court has jurisdiction under that Section only after the
claimant has exhausted his administrative remedies.  But the court of
appeals nevertheless concluded that respondents' failure to pursue the
administrative process to completion by obtaining an ALJ hearing and
Appeals Council review before filing this action under 42 U.S.C.
405(g) did not require dismissal.  The court advanced two reasons for
this holding.  First, the court held that the Secretary's issuance of
a ruling requiring ALJS and the Appeals Council to deny claims for
BCBR operations "indicated that (the Secretary) has no interest in
appeals" and that "the Secretary believes appeals are worthless to the
Agency as well as the claimant" (App. A, infra, 8a-9a).  Second, the
court reasoned that respondents' interest in having an initial benefit
determination made "without the prejudice -- and the necessary appeal
-- resulting from the HCFA ruling" barring the payment of claims by
the intermediary or at the administrative level in HHS justified
immediate judicial review (id. at 9a-10a).  /8/

                   REASONS FOR GRANTING THE PETITION

   The decision below cannot be reconciled with this Court's decisions
in Weinberger v. Salfi, 422 U.S. 749 (1975), and Mathews v. Eldridge,
424 U.S. 319 (1976), and it conflicts with decisions of other courts
of appeals.  Respondents' challenge to the Secretary's issuance of a
ruling prohibiting Medicare reimbursement for BCBR operations in
certain contexts plainly is "an action to recover on (a) claim"
arising under the Social Security Act within the meaning of the
jurisdictional bar in 42 U.S.C. 405(h), because respondents seek to
overturn the Secretary's determination that their BCBR operations were
not "reasonable and necessary" medical services for which
reimbursement may be made.  Accordingly, the district court lacked
jurisdiction over the complaint under 28 U.S.C. 1331.  Even if the
court of appeals were correct in characterizing respondents' claim as
"procedural" to the extent that they challenge the Secretary's
authority to determine by rule that a particular service has not been
shown to be safe and effective, this Court's decisions in Mathews v.
Eldridge and Califano v. Yamasaki, 442 U.S. 682 (1979), make clear
that "procedural" challenges also must be brought under 42 U.S.C.
405(g), not 28 U.S.C. 1331.  The exercise of mandamus jurisdiction
under 28 U.S.C. 1361 was precluded in this case as well.

   In addition, respondents' failure to exhaust their administrative
remedies prior to bringing suit clearly foreclosed the district court
from exercising jurisdiction under 42 U.S.C. 405(g).  That Section by
its terms authorizes judicial review only of a "final decision" of the
Secretary rendered "after a hearing." See also 42 U.S.C. 1395ff(b).
The court of appeals' holding that respondents nevertheless may be
excused from obtaining a decision by an ALJ after a hearing and then
seeking review by the Appeals Council is inconsistent with this
Court's decisions in Weinberger v. Salfi and Mathews v. Eldridge and
with decisions of other courts of appeals.

   The court of appeals' ruling in this case encourages circumvention
of the administrative procedures and jurisdictional limitations
carefully crafted by Congress and the Secretary, and thereby poses a
serious threat to the Secretary's ability efficiently to administer
the Medicare Program and other Social Security programs in the manner
Congress intended.  Review by this Court therefore is warranted.

   1.a. The court of appeals' holding that respondents' challenge to
the intermediary and carrier instructions and subsequent formal ruling
that prohibited Medicare reimbursement for BCBR could be brought under
28 U.S.C. 1331 is flatly inconsistent with this Court's decision in
Weinberger v. Salfi, 422 U.S. 749 (1975).  In Salfi, the plaintiffs
brought an action under 28 U.S.C. 1331 challenging provisions
restricting payment of benefits to surviving widows and children under
the Social Security Act, 42 U.S.C. 416(c)(5) and (e)(2), on
constitutional grounds.  The Court concluded that the suit was one
"seek(ing) to recover Social Security benefits" (422 U.S. at 756-757)
and held that jurisdiction under 28 U.S.C. 1331 was barred by the
third sentence of 42 U.S.C. 405(h), which provides that "(n)o action"
shall be brought against the United States or the Secretary under 28
U.S.C. 1331 "to recover on 'any claim arising under (Title II)' of the
Social Security Act." See 422 U.S. at 757-760.  The Court rejected the
contention that the plaintiffs' action was not one to recover on a
claim "arising under" the Social Security Act because it also arose
under the Constitution.  The Court explained that not only were
plaintiffs seeking to recover Social Security benefits, but also it
was the Social Security Act that provided both the standing and the
substantive basis for the presentation of their constitutional
contentions.  Id. at 760-761.  Thus, the Court concluded, the
jurisdictional bar in the third sentence of Section 405(h) "extends to
any 'action' seeking 'to recover on any (Social Security) claim' --
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, quoting 42 U.S.C. 405(h).

   By virtue of 42 U.S.C. 1395ii, Section 405(h) applies to the
Medicare Act "to the same extent" as it applies to Title II of the
Social Security Act, which was involved in Salfi.  The decision in
Salfi therefore controls here.  If Section 405(h) bars jurisdiction
under 28 U.S.C. 1331 even over a suit challenging a statutory
prohibition barring the payment of benefits in a certain category of
cases, as the Court held in Salfi, a fortiori Section 405(h) must bar
federal question jurisdiction over a suit challenging an
administrative ruling issued by the Secretary that also prohibits the
payment of benefits in a certain category of cases.  To paraphrase the
language of Salfi (422 U.S. at 762, quoted at page 11, supra), Section
405(h) bars jurisdiction under 28 U.S.C. 1331 irrespective of whether
resort to judicial processes is necessitated by discretionary
decisions of the Secretary, acting through the ALJs and Appeals
Council, denying benefits in individual cases because he has found on
the particular facts presented at a hearing that the medical procedure
was not reasonable or necessary, or by an ALJ's or the Appeals
Council's nondiscretionary application of an allegedly unlawful ruling
issued by the Secretary that denies payment for this same reason.

   The court of appeals attempted to avoid this result by
characterizing respondents' claim as being in part a "procedural" one:
 a challenge to the Secretary's assertedly "unlawful interference" in
the administrative processing of individual benefit claims (App. A,
infra, 3a) by adopting a "presumptive rule" that the BCBR is not a
reasonable and necessary medical service (id. at 5a).  Even if
respondents' challenge to the Secretary's instructions and ruling were
correctly characterized as "procedural," however, that would not
remove this case from the jurisdictional bar in 42 U.S.C. 405(h).  The
issues involved in Mathews v. Eldridge and Califano v. Yamaski --
whether the claimants were entitled to a hearing prior to the
termination of benefits or commencement of recoupment -- clearly were
"procedural" in nature, and yet jurisdiction in those cases was found
under 42 U.S.C. 405(g), not 28 U.S.C. 1331.  424 U.S. at 327;  442
U.S. at 697-698.  See also Califano v. Sanders, 430 U.S. 99, 109
(1977);  cf. Ellis v. Blum, 643 F.2d 68, 77-78 (2d Cir. 1981).

   In any event, and contrary to the court of appeals'
characterization, respondents' objection is not "procedural" in
nature;  they simply take issue with the Secretary's substantive
determination that BCBR has not been recognized as safe and effective
and thus does not qualify for reimbursement under the Medicare Act.
Indeed, respondents' challenge to the Secretary's "presumptive rule"
is essentially identical for present purposes to the issue involved in
Weinberger v. Salfi.  There, the plaintiffs challenged the
duration-of-relationship prerequisite to the receipt of survivors
benefits on the ground that it created an impermissible irrebuttable
presumption /9/ that a relationship of less than nine months' duration
was a sham;  the plaintiffs there, like respondents here, contended
that claimants should have an opportunity to have the relevant issue
decided on a case-by-case basis in the court of administrative
proceedings.  See 422 U.S. at 753, 767-786, 770-772, 782-785.  The
holding in Weinberger v. Salfi foreclosing jurisdiction under 28
U.S.C. 1331 therefore applies equally here, irrespective of the
"procedural" label respondents and the court of appeals attach to
their claim.

   b. The decision below conflicts with decisions of other courts of
appeals that have recognized that, when a claimant brings an action
seeking increased reimbursement under the Social Security Act by
urging the court to declare invalid a rule or regulation that serves
to limit reimbursement in administrative proceedings, the action falls
within the scope of the jurisdictional bar in 42 U.S.C. 405(h) and
therefore cannot be brought under 28 U.S.C. 1331.  See Hadley Memorial
Hospital, Inc. v. Schweiker, 689 F.2d 905, 908-910 (10th Cir. 1982);
Hopewell Nursing Home, Inc. v. Schweiker, 666 F.2d 34, 39 (4th Cir.
1981);  Humana of South Carolina, Inc. v. Califano, 590 F.2d 1070,
1079 (D.C. Cir. 1978);  Rhode Island Hospital v. Califano, 585 F.2d
1153, 1158 (1st Cir. 1978).  See also National Ass'n of Home Health
Agencies v. Schweiker, 690 F.2d 932, 938 (D.C. Cir. 1982), cert.
denied, No. 82-991 (Feb. 22, 1983);  Association of Am. Medical
Colleges v. Califano, 569 F.2d 101, 106-108 (D.C. Cir. 1977).

   The courts of appeals also are divided on the question whether the
jurisdictional bar in 42 U.S.C. 405(h) is applicable to claims, unlike
that involved here, that accurately may be described as procedural in
nature.  The District of Columbia Circuit has held, for example, that
challenges to the Secretary's failure to follow the notice and comment
procedures of the Administrative Procedure Act /10/ in issuing a rule
under the Social Security Act may be brought under 28 U.S.C. 1331
notwithstanding the jurisdictional bar in 42 U.S.C. 405(h).  See
National Ass'n of Home Health Agencies v. Schweiker, supra, 690 F.2d
at 936-937;  Humana of South Carolina, Inc. v. Califano, supra, 590
F.2d at 1080-1081.  /11/ See also St. Louis University v. Blue Cross
Hospital Service, 537 F.2d 283, 291-292 (8th Cir.), cert. denied, 429
U.S. 977 (1976);  cf. Ellis v. Blum, supra, 643 F.2d at 82.  The Tenth
Circuit recently reached a contrary conclusion, holding that Section
405(h) bars federal question jurisdiction over Administrative
Procedure Act ("APA") and related procedural challenges to the
administration of the Medicare Program.  See Hadley Memorial Hospital,
Inc. v. Schweiker, supra, 689 F.2d at 910-912.  Accord, American Ass'n
of Councils of Medical Staffs v. Califano, 575 F.2d 1367, 1370-1373
(5th Cir. 1978);  Trinity Memorial Hospital of Cudahy, Inc. v.
Associated Hospital Service, Inc., 570 F.2d 660, 667 (7th Cir. 1977).
Review is warranted to resolve these conflicts among the circuits.
/12/

   2. The court of appeals recognized that in addition to presenting
what it found to be a "procedural" claim, respondents' action also
embraces substantive claims for Medicare benefits to the extent that
respondents seek a ruling that their BCBR operations were reasonable
and necessary medical services.  The court acknowledged that 42 U.S.C.
405(g) is the exclusive basis of jurisdiction for judicial review of
respondents' substantive claims, but the court once again seriously
misconstrued the statutory scheme by holding that respondents did not
have to pursue their administrative remedies through the ALJ hearing
stage and subsequent Appeals Council review before bringing suit under
Section 405(g).

   As explained above (see page 4, supra), the special judicial review
section applicable to benefit determinations under Part A of the
Medicare Program, 42 U.S.C. 1395ff(b), provides that the claimant is
entitled to "judicial review of the Secretary's final decision after
(a) hearing as is provided in (42 U.S.C. 405(g))." Section 405(g)
likewise authorizes judicial review only of a "final decision of the
Secretary made after a hearing * * *." In this case, however,
respondents sought judicial review prior to their hearings before an
ALJ and the Appeals Council, at a time when the Secretary had not yet
rendered a "final decision" on their claims.

   This Court has excused claimants from full exhaustion of
administrative remedies under the Social Security Act prior to seeking
judicial review under 42 U.S.C. 405(g) only in two narrowly defined
situations:  first, where the Secretary has concluded that further
administrative proceedings are not necessary (Weinberger v. Salfi,
supra, 422 U.S. at 766-767;  Mathews v. Eldridge, supra, 424 U.S. at
330);  and second, where the claimant's interest in having a prompt
resolution is so great that deference to the Secretary's judgment that
further exhaustion should be required is inappropriate (Mathews v.
Eldridge, supra, 424 U.S. at 330, 332).  It is clear that neither
exception is applicable here.

   a. In Weinberger v. Salfi, the Court stressed that a "final
decision" of the Secretary is a "statutorily specified jurisdictional
prerequisite" and that Section 405(g) therefore is "something more
than simply a codification of the judicially developed doctrine of
exhaustion" (422 U.S. at 766).  The Court held, however, that "the
Secretary may specify such requirements for exhaustion as he deems
serve his own interests in effective and efficient administration" and
that, although "a court may not substitute its conclusion as to
futility for the contrary conclusion of the Secretary," the statutory
scheme does not bar the Secretary from determining in particular cases
that full internal exhaustion is not necessary in order for a decision
to be final for purposes of judicial review.  422 U.S. at 766-767.

   Consistent with this view, the Court held in Salfi that the
Secretary could dispense with the requirement of an ALJ hearing where
he has resolved all issues regarding eligibility for benefits except
one -- the constitutionality of the statutory provision -- in favor of
the claimant and the remaining constitutional issue is beyond his
competence to decide.  422 U.S. at 767.  The Secretary did not
challenge the sufficiency of the allegations of exhaustion in Salfi,
and the Court interpreted this failure as a determination by the
Secretary that the denial of benefits prior to a hearing was "final"
for purposes of the litigation challenging the constitutionality of
the statutory duration-of-relationship requirement.  The Secretary has
now codified the result in Salfi by incorporating in HHS regulations a
formal procedure for dispensing with the need for an ALJ hearing or
Appeals Council review prior to seeking judicial review, if the
claimant and HHS agree that all other eligibility criteria have been
satisfied and the only remaining issue is the constitutionality of a
statutory provision.  42 C.F.R. 405.718(d).

   The instant case is wholly different from Salfi.  Here, the
Secretary moved to dismiss the action under 42 U.S.C. 405(g) on the
ground that respondents had not exhausted their administrative
remedies, thereby refuting any suggestion that he had determined that
the denial of coverage for BCBR prior to an ALJ hearing or Appeals
Council review was a sufficiently "final decision" for purposes of
judicial review.  The court of appeals nevertheless excused exhaustion
of remedies because it believed that the 1980 HCFA ruling, while
"nominally leaving the administrative review process open, * * * not
only makes appeals futile, it also indicates that the Secretary
believes appeals are worthless to the Agency as well as the Claimant"
(App. A, infra, 8a-9a).  This reasoning is seriously flawed.

   The court of appeals pointed to nothing to suggest that the
Secretary, by issuing the ruling, had waived the requirement of full
exhaustion of administrative remedies.  The Secretary's regulations,
for example, contain no provisions comparable to those applicable to
constitutional issues that establish a procedure for the bypassing of
ALJ and Appeals Council review whenever the question of the validity
of a ruling is at issue.  In the absence of such an exception, the
regulations establish that a final decision for purposes of judicial
review results only after Appeals Council review.  See Weinberger v.
Salfi, supra, 422 U.S. at 765;  20 C.F.R. 404.900(a)(5);  42 C.F.R.
Part 405, subpart G app.  /13/ And insofar as the court's conclusion
rested on its own view that further exhaustion would be futile, that
holding is inconsistent with the teaching of the Court's decision in
Weinberger v. Salfi that a court may not substitute its judgment for
that of the Secretary on the question of futility.

   b. The court of appeals' holding with regard to the futility of
exhaustion is truly bizarre in the circumstances of this case, because
respondents in fact obtained meaningful administrative review at an
ALJ hearing while this case was pending before the court of appeals.
This development was called to the court's attention in the
government's petition for rehearing, yet the court did not alter its
holding.

   After this suit was filed, an ALJ in fact held an extensive hearing
on claims filed by 132 claimants who had had BCBR surgery performed by
Dr. Winter and were represented by him in administrative proceedings.
See In the Case of Benjamin Winter, M.D., Representative for 132
Claimants (Feb. 27, 1982), Exh. A. to Appellee's Petition for
Rehearing.  The beneficiaries whose claims were before the ALJ
included the three respondents in this case (Holmes, Webster-Zieber,
and Vescio) who had already had the surgery when this case was filed
(id. at 5, 9).  /14/ These three respondents and 60 other claimants
had the surgery before HCFA issued the ruling in 1980 binding the ALJs
and the Appeals Council (id. at 1).  The ALJ concluded that the 1980
ruling did not govern such pre-1980 ruling claims /15/ and proceeded
to reach the merits of the 63 claims that were properly before him.
After examining the extensive medical testimony and other evidence
(id. at 16-33), the ALJ concluded that BCBR was not a "reasonable and
necessary" medical procedure and, on this basis, denied reimbursement
for some 45 claimants, including respondent Vescio (id. at 8-9,
35-44).  However, the ALJ refused to consider some 36 claims on the
merits, including those of respondents Holmes and Webster-Zieber,
because Dr. Winter, as their representative, had not requested an ALJ
hearing for them within 60 days of the denial of their individual
claims at the reconsideration stage, as required by HHS regulations
(id. at 4-7;  see 42 C.F.R. 405.722).  But for this procedural
default, the claims of these other pre-ruling claimants also would
have been addressed on the merits by the ALJ.  /16/ Accordingly,
although the ALJ ultimately denied recovery, it is manifest from the
ALJ's extensive consideration on the merits of the very type of claims
respondents seek to raise in this action that the pursuit of the
administrative process was not regarded by the Secretary as futile.
/17/ The court of appeals' holding that the district court should have
allowed the case to proceed without further exhaustion of
administrative remedies thus is totally inexplicable.

   The individuals whose claims were denied by the ALJ may seek review
by the Appeals Council.  Given the Appeal Council's prior decision
awarding benefits for the BCBR procedure, there is no reason to
suppose that the Secretary regards such an appeal as futile for the
claimants not covered by the 1980 ruling.  However, after the court of
appeals rendered its decision in this case, counsel for the claimants
in the administrative proceedings requested that the Appeals Council
stay its consideration of the appeals because of the "intervening
event" of the court of appeals' decision.  Counsel stated that the
court of appeals had "remanded the case to the District Court for
trial of many of the legal issues now before the Appeals Council."
Thus, counsel contended, the district court's decision after remand in
the instant case regarding "the validity of HCFA's BCBR policy" "will
also resolve -- or at least offer substantial guidance in resolving --
many of the BCBR cases pending before the Appeals Council." /18/
Respondents thus have stood the doctrine of exhaustion on its head,
urging that the responsible administrative body should stay its hand
pending respondents' exhaustion of judicial remedies.  This blatant
disregard of exhaustion requirements by respondents and the court of
appeals should not go uncorrected.

   c. The court of appeals also believed that the exception to the
exhaustion requirement recognized in Mathews v. Eldridge, was
applicable here (App. A, infra, 9a-10a).  This holding, too, was quite
mistaken.  In Mathews v. Eldridge, the Court stated that even when the
Secretary has determined that a particular decision is not yet final
for purposes of seeking judicial review, "cases may arise where a
claimant's interest in having a particular issue resolved promptly is
so great that deference to the agency's judgment is inappropriate"
(424 U.S. at 330).  The claim of the plaintiff in Mathews v. Eldridge
that he had a constitutional right to a hearing prior to the
termination of his disability benefits was found to be such an issue.
The Court relied on two factors:  first, the constitutional issue was
"entirely collateral to the substantive claim of entitlement";  and
second, the claim of a constitutional right to a predeprivation
hearing rested on the proposition that full relief could not be
obtained following a post deprivation hearing, and in view of his
physical condition and dependency on disability benefits, the
plaintiff had made a "colorable claim" that an erroneous pre-hearing
termination of benefits would injure him in a way that would be
recompensable through retroactive payments if he later were found
eligible after a hearing.

   Neither of the factors supporting the exception in Mathews v.
Eldridge is present here.  Respondents' challenge to the instructions
and subsequent ruling barring reimbursement for BCBR is not at all
"collateral" to their substantive claim of entitlement;  it is
intimately bound up with respondents' substantive contention that the
BCBR surgery is reasonable and necessary within the meaning of the
Medicare Act.  Moreover, respondents have advanced no colorable claim
that an erroneous denial of benefits for the BCBR procedure at an
early stage in the administrative proceedings will injure them in a
way that cannot adequately be remedied if they are subsequently
awarded benefits upon a finding by an ALJ, the Appeals Council, or
even a court on judicial review under 42 U.S.C. 405(g) that BCBR is a
reasonable and necessary procedure.  Respondents are not receiving
benefits that HHS has sought to terminate and on which they might have
become dependent.  They are simply seeking a one-time reimbursement
for a particular medical procedure.

   d. The decision below conflicts with rulings of other courts of
appeals that have adhered to Weinberger v. Salfi and Mathews v.
Eldridge and recognized that administrative procedures must be
exhausted before seeking judicial review, even where it appears that
the particular issue on which judicial review is sought might not be
resolved in the claimant's favor at the administrative level.  See,
e.g., Hopewell Nursing Home, Inc. v. Schweiker, supra, 666 F.2d at 40,
42;  Humana of South Carolina, Inc. v. Califano, supra, 590 f.2d at
1075-1076;  Rhode Island Hospital Ass'n v. Califano, supra, 585 F.2d
at 1159;  cf. Hadley Memorial Hospital, Inc. v. Schweiker, supra, 689
F.2d at 912.  This conflict, too, warrants resolution.

   3. The decision of the court of appeals in this case threatens
substantially to disrupt the orderly and efficient administrative
determination of claims for benefits under the Medicare Program and
the Social Security Act generally.  Adherence to the requirement that
claims be brought under the special administrative and judicial review
provisions of 42 U.S.C. (& Suppp. IV) 1395ff, 405(b) and (g),
notwithstanding the apparent applicability of a regulation precluding
recovery, "assures the Secretary the opportunity prior to (litigation
challenging the validity of the regulations) to ascertain, for
example, that the particular claims involved are neither invalid for
other reasons nor allowable under other provisions" (Weinberger v.
Salfi, supra, 422 U.S. at 762).

   The Secretary might determine, for example, that the claimants were
barred from recovery in any event because of a procedural default,
lack of eligibility, or other reason.  Conversely, he might conclude
in the course of the administrative review process that reimbursement
is appropriate notwithstanding the regulation.  As noted above,
payment is authorized for the BCBR procedure when performed to remove
masses from the carotid bodies, rather than simply to relieve symptoms
of pulmonary disease.  In addition, the ruling or regulation in
question might be found inapplicable to the particular claimant, as
was true with respect to the respondents in the instant case who had
BCBR surgery before the date of the 1980 HCFA ruling that bound ALJs.
And even if the ALJ or Appeals Council ultimately were to deny
payment, the evidentiary record developed in the administrative
proceedings would furnish a basis for the Secretary to reconsider his
prior ruling or for the court, on judicial review under 42 U.S.C.
405(g), to consider fully the merits of the individual's claim for
benefits and the challenge to the Secretary's denial of benefits.

   It is possible that, after the issues relevant to the
appropriateness of a particular rule have been fully ventilated within
HHS, the Secretary would determine that it would not be necessary for
a claimant to have an ALJ hearing and pursue an appeal to the Appeals
Council in order to challenge that rule in court.  At that point, the
Secretary would be free under Weinberger v. Salfi to waive the
requirement of full exhaustion.  But until the Secretary has made that
judgment with respect to the particular claims in issue, the courts
must adhere to the normal requirements of exhaustion.

   Under the reasoning of the court of appeals, however, it would
appear that virtually any beneficiary whose claim for benefits might
be affected or governed by a regulation of general applicability could
ignore the special administrative and judicial review process
established under 42 U.S.C. (Supp. IV) 405(b) and (g) and bring an
independent action under 28 U.S.C. 1331 to challenge the regulation,
on the theory that such a suit wuld be a "procedural" challenge to the
Secretary's "interference" with what, according to the beneficiary,
should be a case-by-case determination of the claim by intermediaries,
HHS employees, ALJs, or the Appeals Council.  Even if the court
perceived that such a claim in fact constituted a substantive claim
for benefits, for which federal question jurisdiction is barred by 42
U.S.C. 405(h), the court could exercise jurisdiction under 42 U.S.C.
405(g):  the court of appeals' holding dispensing with the requirement
of exhaustion of remedies through the ALJ and Appeals Council stages
apparently would apply in any case in which the Secretary had issued a
ruling or regulation purporting to bind the ALJs or the Appeals
Council.  The result would be to subject every ruling and regulation
of general applicability to premature judicial attack, divorced from
the particular factual setting of the individual's claim.

   The question of the scope of 42 U.S.C. 405(g) and (h) with respect
to the preclusion of jurisdiction under 28 U.S.C. 1331 and 1361 and
the requirement of exhaustion of administrative remedies prior to the
bringing of an action under 42 U.S.C. 405(g) thus is one of
substantial importance in the administration of the Medicare Act.  As
we have noted above, these questions already have spawned a number of
conflicting decisions by the courts of appeals.  Moreover, we have
been informed by HHS that there are now pending in the lower courts at
least two dozen additional cases under the Medicare Act alone that
raise similar questions concerning the scope of Section 405(h) and
that in at least ten of these cases the plaintiffs are relying on the
court of appeals' decision in this case in seeking immediate judicial
review.  And the rationale of the decision below, including the
strained construction given the preclusion of review and exhaustion
requirements of 42 U.S.C. 405(g) and (h), cannot be limited to
Medicare cases, but would be equally applicable to the old age,
survivors, and disability insurance program under Titles II and XVI of
the Social Security Act, under which millions of claims are filed and
hundreds of thousands of ALJ hearings are conducted annually.

                              CONCLUSION

   The petition for a writ of certiorari should be granted.

   Respectfully submitted.

   REX E.LEE

      Solicitor General

   J. PAUL MCGRATH

      Assistant Attorney General

   KENNETH S. GELLER

      Deputy Solicitor General

   EDWIN S. KNEEDLER

      Assistant to the Solicitor General

   ANTHONY J. STEINMEYER

   MARGARET E. CLARK

      Attorneys

   APRIL 1983

   /1/ In Erika, the carrier's denial of the full amount of
reimbursement requested by the claimant was based in part on an
administrative instruction issued to the carrier.  See Erika, Inc. v.
United States, 634 F.2d 580, 590-591 (Ct. Cl. 1980).

   /2/ Although respondents initially challenged actions of the
Secretary in administering the Part B Program (E.R. 7, 33), that
aspect of the case was not addressed by the court of appeals.  ("E.R."
refers to the Excerpt of Record filed in the court of appeals.)

   /3/ There is an intervening layer of administrative reconsideration
between the intermediary's initial denial and an administrative law
judge ("ALJ") hearing.  42 C.F.R. 405.710-716.

   /4/ See note 12, infra.

   /5/ The Part B carriers' denials of claims for reimbursement for
physicians and other services could not be appealed administratively
to HHS (see page 3, supra), and the carriers' denials of coverage
pursuant to the instruction therefore were final.

   /6/ Respondents sought to represent a class of beneficiaries
seeking reimbursement for BCBR (E.R. 5-6, 31-32), but the district
court dismissed the suit for lack of jurisdiction before ruling on the
class certification issue (App. B, infra, 11a).

   /7/ The district court also held that respondents' constitutional
argument -- that forcing them to undergo administrative appeals in
order to receive reimbursement violated their due process rights --
was "inextricably intertwined with their challenge (to) the validity
of the determination denying Medicare coverage" and that exhaustion
was required for this claim as well (App. B, infra, 14a).

   /8/ The court of appeals held that participants in the Medicare
Program who had not yet even applied for benefits for BCBR, such as
respondent Ringer, had not sufficiently exhausted their administrative
remedies, but that this would not preclude the district court on
remand from ordering the Secretary to withdraw the BCBR ruling on the
basis of the claims of those who had filed applications (App. A,
infra, 9a n.4).  The court of appeals also indicated that the district
court would be free to award benefits to claimants who had applied for
them if the district court concluded that it was appropriate to do so
(ibid.).

   /9/ See 422 U.S. at 753 and 770-772, citing Cleveland Board of
Education v. LaFleur, 414 U.S. 632 (1974);  Vlandis v. Kline, 412 U.S.
441 (1973);  and Stanley v. Illinois, 405 U.S. 645 (1972).

   /10/ The Secretary has chosen to follow these procedures
notwithstanding the exception from APA notice and comment requirements
for benefits programs.  5 U.S.C. 553(a);  see 36 Fed. Reg. 2532
(1971).

   /11/ Even the District of Columbia Circuit would regard
respondents' challenge to the regulation here to be covered by the
jurisdictional bar in 42 U.S.C. 405(h) because they seek to invalidate
a regulation on the merits and thereby obtain increased reimbursement.
 Humana of South Carolina, Inc. v. Califano, supra, 590 F.2d at 1029.

   /12/ In addition to finding federal question jurisdiction under 28
U.S.C. 1331, the court of appeals held that the district court had
mandamus jurisdiction under 28 U.S.C. 1361 to entertain respondents'
"procedural" claim (App. A, infra, 10a).  This Court previously has
reserved the question whether 42 U.S.C. 405(h) bars mandamus
jurisdiction under 28 U.S.C. 1361 over an action arising under the
Social Security Act.  Califano v. Yamasaki, supra, 442 U.S. at 698;
Norton v. Mathews, 427 U.S. 524, 529-530 (1976);  Mathews v. Eldridge,
supra, 424 U.S. at 332 n.12.

   The third sentence of Section 205(h) of the Social Security Act, as
originally enacted, provided that an action may not be brought under
Section 41 or Title 28 of the United States Code to recover on a claim
arising under Title II of the Social Security Act.  As the Court
explained in Weinberger v. Salfi, supra, 442 U.S. at 756 n.3, when
Section 205(h) was enacted, Section 41 of Title 28 contained all of
that Title's grants of jurisdiction to federal district courts, except
for special purpose jurisdictional statutes of no relevance to Social
Security cases.  The mandamus statute, however, was not then in force
and was not enacted until 1962 (Pub. L. No. 87-748, Section 1(a), 76
Stat. 744).  (The express reference in Section 405(h) to 28 U.S.C.
1331 and 1346 was substituted by the codifiers, see 42 U.S.C. 405
note, 518, whose "choice, 'made * * * without the approval of Congress
. . . should be given no weight.'" North Dakota v. United States, No.
81-773 (Mar. 7, 1983), slip op. 10 n.13, quoting United States v.
Welden, 377 U.S. 95, 99 n.4 (1964).  It nevertheless would be
consistent with the "sweeping" language of the third sentence of
Section 205(h) (see Weinberger v. Salfi, supra, 422 U.S. at 757) to
interpret it as barring jurisdiction under the later-enacted mandamus
statute as well.  And even if the third sentence does not foreclose
mandamus jurisdiction, the second sentence of Section 205(h) -- which
provides 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" -- would bar review under the mandamus
statute of a decision denying benefits.

   Mandamus jurisdiction cannot in any event be permitted to
circumvent the clear congressional purpose expressed in 42 U.S.C.
405(g) and (h) -- to bar judicial review of decisions of the Secretary
in administering the Social Security Act except as provided in that
Act itself, and thereby to channel all judicial review through 42
U.S.C. 405(g) -- at least where, as here, the particular claim
involved in fact may be raised in an action under Section 405(g).
Moreover, the instant case would be an especially inappropriate
occasion for the exercise of mandamus jurisdiction, in view of the
discretionary and judgmental nature of the Secretary's decision to bar
reimbursement for the BCBR procedure, respondents' failure to exhaust
their administrative remedies, and the availability of judicial relief
under 42 U.S.C. 405(g).  See, e.g., Hadley Memorial Hospital, Inc. v.
Schweiker, supra, 689 F.2d at 912;  Herzog v. Secretary of HEW, 686
F.2d 1154, 1161 n.5 (6th Cir. 1982).

   /13/ In 1980, Congress amended 42 U.S.C. (& Supp. V) 1395oo(f),
which provides for judicial review of reimbursement decisions under
Part A by the Provider Reimbursement Review Board (PRRB) in HHS in a
manner similar to that provided for individual claims under 42 U.S.C.
405(g), to authorize immediate judicial review of a question of law or
regulations whenever the PRRB determines that it is without authority
to decide the question.  This indicates that the solution preferred by
Congress when a case presents a legal question that cannot be resolved
at the administrative level likewise is not to permit a court to
excuse exhaustion, as the court of appeals did here, but to provide a
mechanism for the Secretary to expedite that exhaustion.  See National
Ass'n of Home Health Agencies v. Schweiker, supra, 690 F.2d at 939;
H.R. Rep. No. 96-1167, 96th Cong., 2d Sess. 394 (1980).

   /14/ The fourth respondent who is a Medicare beneficiary, Ringer,
had not yet had the BCBR surgery and therefore had not even satisfied
the jurisdictional requirement of having filed an application for
benefits for such surgery.  See Mathews v. Eldridge, supra, 424 U.S.
at 330.

   /15/ The ALJ held that the 1980 ruling was binding with respect to
the claims of beneficiaries who had the BCBR surgery after the ruling
was issued, and he denied payment to 59 claimants who had post-ruling
surgery on that basis alone (In the case of Benjamin Winter, M.D.,
supra, slip op. 1-4, 34-35, 43).

   /16/ Thus, respondents Holmes and Webster-Zieber not only failed to
exhaust their administrative remedies, but committed a procedural
default that foreclosed recovery at the administrative level.
Nevertheless, they apparently contend that they are entitled to relief
in the instant suit.

   /17/ Given the ALJ's holding that the 1980 HCFA ruling did not
apply to the respondents who had had the BCBR procedure, they do not
even have standing in this case to challenge its validity.

   /18/ See Exh. B to Appellee's Petition for Rehearing.  We have been
furnished by HHS with the following information concerning counsel's
request:  The Appeals Council granted counsel's request that the
administrative appeals be held in abeyance, apparently pursuant to a
general policy of the Appeals Council to grant a stay when the
claimant so requests and has given a reasonable basis for doing so.
However, in response to a February 17, 1983 letter from the
Administrator of HCFA requesting that the Appeals Council proceed with
the appeals, the Appeals Council, by letter dated March 25, 1983,
requested counsel to inform it within 20 days of any reasons why it
should not decide the appeals.  By letter dated April 12, 1983,
counsel again requested that the appeals be stayed, citing, inter
alia, a desire to avoid duplicative proceedings before the Appeals
Council and the district court.  As of the date of the filing of this
petition for a writ of certiorari, the Appeals Council had not taken
any further action on the matter of the stay.

   Appendix Omitted