United States v. Erika, Inc.

Background

The dispute involves a major distributor of kidney dialysis supplies that billed Medicare Part B claims assigned to it by beneficiaries. The distributor submitted invoices to Prudential, the private insurance carrier that administers Part B payments in its area. Prudential calculated reasonable charges using the supplier's catalog prices as of July 1 of the prior year, paid 80% of that figure, and refused retrospective adjustments for later price increases. After a carrier hearing officer upheld Prudential's decision, the supplier sued the United States in the Court of Claims seeking payment based on current prices; that court concluded it had jurisdiction and remanded for redetermination.

Reasoning

The Supreme Court's central question was whether the Court of Claims could hear suits challenging a carrier or hearing officer determination of the amount of Part B payments. The Court focused on the Medicare statute's language and legislative history and concluded Congress intended to preclude further judicial review of Part B amount determinations. The statute expressly provides administrative review by carriers and allows judicial review for eligibility and Part A amount disputes, but it omits authorization for judicial review of Part B payment amounts. The Court therefore reversed the Court of Claims for lack of jurisdiction.

Real world impact

As a result, suppliers and beneficiaries generally cannot sue the United States in the Court of Claims to overturn carrier or hearing officer decisions about how much Medicare Part B will pay on a claim. Instead, claimants must use the carrier's internal review process described in the statute and regulations. The opinion emphasized congressional intent to keep routine Part B disputes out of court, noting the program handles a very large volume of claims. The Supreme Court did not reach the supplier's constitutional arguments, which it did not consider here.