Schweiker, Secretary of Health and Human Services v. McClure et al.
456 U.S. 188 (1982)
Rule of Law:
The Due Process Clause of the Fifth Amendment does not require that a hearing on a disputed Medicare Part B claim be conducted by a government administrative law judge; a hearing conducted by a hearing officer appointed by a private insurance carrier is constitutionally permissible, absent a showing of actual bias or a disqualifying conflict of interest.
Facts:
- The Medicare Part B program, administered by the Secretary of Health and Human Services, provides supplementary medical insurance to the aged and disabled.
- The Secretary contracts with private insurance carriers, such as Blue Shield of California, to administer the program and process claims on the government's behalf.
- These private carriers pay approved claims from the Federal Supplementary Medical Insurance Trust Fund, not from their own corporate funds.
- Claimants whose claims are denied by a carrier can request a multi-step review.
- For claims disputes of $100 or more, the final step in the review process is an oral hearing before a hearing officer.
- These hearing officers are appointed, and their services are retained, by the private insurance carriers.
- The decision of the carrier-appointed hearing officer is final and not subject to further administrative or judicial review.
- Claimants William McClure, Charles Shields, and 'Ann Doe' each had their Medicare Part B claims for reimbursement denied following hearings conducted by carrier-appointed hearing officers.
Procedural Posture:
- Three claimants (appellees) sued the Secretary of Health and Human Services (appellant) in the U.S. District Court for the Northern District of California.
- The District Court certified the claimants as representatives of a nationwide class.
- On cross-motions for summary judgment, the District Court granted summary judgment for the claimants.
- The District Court held that the Part B hearing procedures violated the Due Process Clause because the final decision was made by carrier-appointed hearing officers.
- The District Court ordered that claimants were entitled to a de novo hearing of record conducted by a government administrative law judge.
- The Secretary appealed the District Court's judgment directly to the U.S. Supreme Court, which noted probable jurisdiction.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the Due Process Clause of the Fifth Amendment require that a final, unappealable hearing on a disputed Medicare Part B claim be conducted by a government-appointed adjudicator rather than a hearing officer appointed by the private insurance carrier that administers the program for the government?
Opinions:
Majority - Justice Powell
No. The procedure for resolving Medicare Part B claims disputes, which culminates in a hearing before a carrier-appointed hearing officer, does not violate the Due Process Clause. Adjudicators are presumed to be unbiased, and the claimants failed to rebut this presumption by showing a disqualifying interest. The court found no basis to conclude the private carriers were biased, as they pay claims from federal funds and their administrative costs, including the hearing officers' salaries, are reimbursed by the government. Applying the Mathews v. Eldridge test, the court determined that while the private interest in benefits is considerable, the claimants did not demonstrate that the existing procedures create an unacceptable risk of erroneous deprivation or that providing an additional hearing before a government administrative law judge would have significant value in increasing accuracy. The claimants failed to show that the congressionally prescribed procedures are unfair.
Analysis:
This decision reinforces the strong presumption of impartiality afforded to administrative adjudicators, placing a high burden on challengers to prove a disqualifying conflict of interest. By upholding the use of private contractors in an adjudicative role, the Court affirmed Congress's flexibility in designing efficient, large-scale administrative benefit schemes. The ruling clarifies the application of the Mathews v. Eldridge balancing test, demonstrating that due process is a flexible concept that does not invariably require a full, formal hearing before a government employee, especially when no direct financial interest taints the decision-maker. This has significant implications for the privatization of government functions, suggesting such schemes can withstand due process challenges so long as structural safeguards prevent inherent bias.
Gunnerbot
AI-powered case assistant
Loaded: Schweiker, Secretary of Health and Human Services v. McClure et al. (1982)
Try: "What was the holding?" or "Explain the dissent"