UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
October 24, 1980
GRAY PANTHERS, ET AL., APPELLANTS
PATRICIA R. HARRIS, SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
Before: WILKEY, WALD and EDWARDS, Circuit Judges
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT 1980.CDC.262
Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 77-0488)
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WALD
Opinion for the Court filed by Circuit Judge WALD
Dissenting opinion filed by Circuit Judge WILKEY
WALD, Circuit Judge: This case is a class action brought by the Gray Panthers *fn1 and three named beneficiaries of the Medicare program challenging the procedures whereby disputes concerning sums under $100 under the program are resolved. We must decide the question of whether the Government may finally deprive an individual of a property interest *fn2 without any opportunity for an oral hearing of any sort. We hold, following an unbroken line of Supreme Court precedent, that it may not. While we need not find the Medicare Act itself unconstitutional, we do hold that the defendant Secretary of Health and Human Services' interpretation of the Act to eliminate all hearing rights *fn3 to Medicare claimants when their dispute with the defendant does not involve more than $100 denies due process to the plaintiffs.
DESCRIPTION OF THE MEDICARE PROGRAM
In 1965, Congress took an important step in assuring adequate health care for the elderly when it passed the Medicare Act, 42 U.S.C. § 1395 et seq. The legislation set up an insurance program to provide reimbursement for the costs of much of the medical care of the aged.Insurance coverage of hospitalization costs, "Part A" of the Act, is funded out of Social Security taxes. "Part B," in contrast, is a voluntary supplemental insurance program intended to cover most other health costs, for which a beneficiary pays a monthly premium. The $100 "amount in controversy" limitation on hearing rights challenged here applies to disputes arising under both parts.
The determination and review procedures for claims arising under the two parts of the Act are similar. Both are administered primarily through non-governmental organizations, usually insurance companies, pursuant to contracts with the Department. *fn4 Claims for payment or reimbursement are submitted to the carrier, which makes an initial determination as to the claim and sends a notice of its action together with any payment to the claimant. If the claimant is dissatisfied, a request for reconsideration may be made, *fn5 and a different employee of the carrier will examine the determination, together with any additional information the claimant may wish to submit, and notify the claimant of the decision on redetermination.
For any claimant whose disagreement with the carrier at this stage does not amount to more than $100, *fn6 that is the end of the process, according to the Secretary's procedures. There is no further review, and there is at no time an opportunity to present one's case personally to the decisionmaker. If the amount in controversy is more than $100, the claimant may request a hearing. *fn7 Finally, judicial review is available for Part A disputes over $1000; no such review is provided for when the claim arises under Part B.8
THE STATUTE AND THE LEGISLATIVE BACKGROUND
This administrative scheme is based upon the Secretary's interpretation of the Medicare Act itself, which provides for use of carriers to handle the bulk of the administration of the program, for the $100 amount in controversy limitation on formal hearings,9 and for the $1000 threshold for judicial review.
As the Medicare bill was first reported out of the House Committee on Ways and Means in 1965, there would have been a $1000 limitation on both formal hearing rights and judicial review, but only as to Part A claims. H.R. REP. NO. 213, 89th Cong., 1st Sess. 47 (1965).10 When the bill reached the Senate, Senator Edward Kennedy proposed that the amount in controversy requirement be reduced to $100. He emphasized the unprecedented nature of the limitation, the significance of the amounts involved to aged individuals attempting to get by on Social Security benefits and savings, and the value of hearings and appeals in attaining accurate and consistent administration of the new program.11 His amendment was adopted by the Senate, and in Conference Committee a compromise was struck, providing for hearings if the amount in controversy was $100 or more, and judicial review for disputes of $1000 or more.
At the time, there were no comparable limitations on Part B claims. So matters stood until 1972, when Congress amended the Act substantially, and in the process extended the limitation on hearings to Part B claims, expressly to eliminate the expense and inconvenience of a formal hearing when the amount in controversy is small.
As explained by the Senate Finance Committee:
Experience under the program indicates that the holding of a full fair hearing is unwarranted in cases where the amount in controversy is relatively small. Carriers have reported cases involving $5 and $10 claims for which the cost of holding a fair hearing has exceeded $100. Approximately 45 percent of the hearings held since the beginning of the program have involved an amount less than $100. Further regulations require carriers to have a reconsideration review of all denied claims. Such review involves different claims personnel than those who acted on the original claim and should be sufficient protection in small claims cases.
S. REP. NO. 1230, 92d Cong., 2d Sess. 213 (1972).12
As it now stands, review of Part A claims is governed by 42 U.S.C. 1395ff(b) which provides:
(1) Any individual dissatisfied with any determination under subsection (a) of this section as to --
the amount of benefits under Part A of this subchapter (including a determination where such amount is determined to be zero)
shall be entitled to a hearing thereon... and to judicial review of the Secretary's final decision after such hearing....
(2) Notwithstanding the provisions of subparagraph ... a hearing shall not be available to an individual by reason of such subparagraph if the amount in controversy is less than $100; nor shall judicial review be available to an individual by reason of such subparagraph if the amount in controversy is less than $1000.
Administration of benefits under Part B is largely entrusted to the carriers. 42 U.S.C. § 1395u(3)(c) provides that the contract between the Secretary and the carrier must require the carrier to:
establish and maintain procedures pursuant to which an individual enrolled under this part will be granted an opportunity for a fair hearing by the carrier, in any case where the amount in controversy is $100 or more... when the amount of such payment is in controversy.
Though not required by statute, the Secretary has provided by regulation that all carriers must provide a review of the initial determination upon request of the dissatisfied claimant. This review does not include any sort of oral hearing, though the claimant may submit written evidence, but is simply a redetermination of the claim by another employee of the carrier.13
THE CASE HISTORIES OF THE NAMED PLAINTIFFS
1. Plaintiff Patino
Wilma Patino suffers from rheumatoid arthritis. In February of 1976, she fell on ice, and had to undergo a four-month series of treatments, 13 in all, for which she was billed $10 per visit. Her first application for Medicare benefits covered eleven of those treatments; her second covered the final two.
A few weeks later she received partial payment on her first application. Nationwide Mutual Insurance Company, the carrier for her region, approved payment in full for the first seven of her treatments, and wholly disallowed payments for the next four, with the noted explanation that "Medicare does not pay for: This many services for your condition." Shortly thereafter, she received her second communication from Nationwide concerning her second application covering her final two treatments. As an example of the type of notice received by Medicare beneficiaries, we set out in the margin the form utilized by Nationwide in explaining its action to Patino.14 On her second submission, Nationwide approved payment for the services rendered, but only in the amount of $8.25 per treatment. She was directed to "Item 5 on back" for an explanation of why she had not received full compensation. According to Item 5, a preprinted paragraph on the back of the form, the carrier had determined either that her doctor did not customarily charge that much, or that the $10 charge was greater than most area physicians would have charged. The form does not specify which was the case here.
Patino sought reconsideration, submitting a letter from her doctor that the number of treatments was not excessive, considering her age and condition, but Nationwide reaffirmed its initial determination. On her request for a hearing, she was notified that since, after subtracting the deductible, the amount in controversy was only $32,15 she had no right to a hearing, and the determination on reconsideration was final.
2. Plaintiff Keiser
In 1976, Louis Keiser underwent surgery, and received a bill from the anesthesiologist for $270. Keiser submitted his claim to his regional carrier, Blue Cross/Blue Shield of New York, which allowed only $170 of his claim. Keiser requested reconsideration and submitted additional documentation from the hospital, but Blue Cross confirmed its earlier reduction of the bill, notifying Keiser that the doctor's "customary fee" was $170. Keiser's subsequent request for a hearing was denied because the amount in controversy, after subtracting the deductible, was $80.
3. Plaintiff Rothfeld
In 1975, Jack Rothfeld, suffering from glaucoma and cataracts, was treated by two physicians at a clinic in Boston. He received two bills, in the amounts of $140 and $150. The services were covered by his Part B supplemental Medicare policy, so he submitted his claim for reimbursement to Blue Shield of Massachusetts, the Medicare carrier for his region.
A few weeks later, Rothfeld received a form, nearly identical to the one received by Patino, entitled "Explanation of Medicare Benefits." Apparently assuming that the treatment had been for only one eye, Blue Shield paid only $140 of his $290 claim. The "explanation" for this determination was limited to the same "Item 5" on the back of the form indicating that the bills submitted by Rothfeld were either higher than his doctor's customary fee, or higher than the fees usually charged in the area for similar services.
Upon Rothfeld's request for reconsideration, in which he pointed out that his treatment covered both eyes, Blue Shield adjusted his claim by $50. He requested a hearing as to whether the denial of the balance of his claim was proper, but since the amount in controversy was not $100, his request was denied.
We are thus presented with a case in which the Government has taken final adjudicatory16 action against the plaintiffs, determining their admitted property rights against them, without at any time in the process providing an opportunity for an oral hearing. The positions of the parties are simply stated. The plaintiff argues that the historical core of due process, notice and the right to a hearing are fundamental procedural rights which cannot be denied, absent emergency, by the Government in any case when a property or liberty interest which is not de minimus is at stake.17 The timing of these rights and additional procedural protections to which an individual might be entitled may vary substantially depending on the stake involved and the Government's interest in efficient, inexpensive administration, but those core procedural rights of notice and an oral hearing, however informally provided, may not be wholly denied.18
The Secretary agrees that due process dictates the procedures it must follow in making its determinations, but argues that when small money claims are at issue, the claimant's affected rights are not large, the cost of oral hearings in comparison to the amount at stake would be unduly burdensome, and the risk of an erroneous determination after the carrier's reconsideration is not great. Therefore, the contends, applying the Mathews v. Eldridge19 "flexible" due process test, in which a balance is struck based on these factors,20 plaintiffs have received all the procedural protection to which they are entitled under the Constitution.
The district court's analysis essentially followed the position taken by the Secretary. First noting that due process is not a fixed technical concept, but is a flexible notion of fair procedure that requires such protections as the particular situation demands, the court went on to conclude that even though the law was clear that "some kind of hearing is required at some time" before a person can be finally deprived of a property interest, that "hearing" need not be an "oral, evidentiary proceeding" but could be simply an opportunity to submit written material. To decide whether this limited "paper hearing" was sufficient in this case, the court applied the Mathews v. Eldridge balancing test.
It concluded first that while there might be "genuine hardship" in some cases, the amounts of money involved are not large and the Medicare program is not based on financial need. Therefore, as a general matter the private interest at stake was not substantial.
As for the "risk of erroneous deprivation" and value of additional procedural safeguards, the second factor in the Mathews v. Eldridge test, the court entered an area of sharp dispute between the parties. The plaintiffs argued that the notice provided was so cryptic and the information it contained so unhelpful that it would be virtually impossible effectively to gather documentary evidence to submit in writing in order to rebut the carrier's initial determination. Furthermore, individuals of advanced age who are confused about their benefits would be unlikely to be able to prepare an effective written submission, though they might be fully capable of explaining their concerns in person, given a chance to talk to the decisionmaker. Finally, the plaintiffs pointed out that approximately 50 percent of the formal hearings that are held on claims over $100 result in adjustments of benefits in the claimant's favor; therefore, they contended, it is clear that a substantial number of errors remain, even after the redetermination procedure, which would be corrected by further hearings.
The confusion that can be engendered by statistics was demonstrated when the Secretary responded that in fact, the "reversal rate" was less than one-tenth of 1 percent.21 This figure was arrived at by comparing the number of reversals to the total number of all denials of benefits, over 15 million in 1976 alone. This, she claimed, showed an impressive record of accuracy and no need for further procedural safeguards. The Secretary also contended that most errors are coding or processing errors, not the sort of factual disputes which a hearing is best suited to correct. Finally, the Secretary disputed the alleged inadequacy of the notice, pointing out that the form includes a telephone number to call if the claimant has a problem or question.
The district judge agreed with the Secretary. He observed that "witness credibility and veracity" are rarely an issue in Medicare proceedings, and concluded that hearings would therefore serve little purpose. He agreed that the Secretary's method of calculating the risk of error more accurately reflected the adequacy of the protection offered by the reconsideration process, and regarded the form of notice as at least clear enough to enable a dissatisfied claimant to pursue the matter further.
The district court finally turned to the governmental interests at stake. The estimates of the cost of the present formal evidentiary hearing provided for over-$100 disputes varied from a low of $196 for a Part B hearing to a high of $405 for a Part A hearing. Furthermore, it was assumed that providing hearings for small claims would nearly double the number of hearings held.22 Although the court did not consider the possibility of oral hearings that do not involve full evidentiary proceedings, or the possibility that better written notice might greatly imporve the efficacy of paper hearings, it nevertheless concluded that "it is clear that the aggregate additional cost in terms of money and administrative burden in implementing hearings for all claims would be substantial."23
In sum, the district court agreed with the Secretary that the "speculative benefit of a right to an oral, evidentiary hearing to persons with Medicare claims of less than $100 is outweighed by the cost to the public of requiring the additional procedural safeguard."
THE LEGAL UNDERPINNINGS
The underlying dispute in this case is over the definition of the phrase "hearing." The Secretary does not dispute, and indeed could not dispute, that the claimants here have the right to "notice and hearing" on their claims, Brief for Appellee at 21; the principle is so ingrained in our notion of due process that it was described most recently by the Supreme Court as a "general due process maxim." O'Bannon v. Town Court Nursing Center, 447 U.S. 773, 100 S. Ct. 2467, 2473; 65 L. Ed. 2d 506 (1980).24 Indeed, the Secretary cites for us the much-quoted language of Wolff v. McDonnell, 418 U.S. 539, 557-58 (1974), pointing out that "some kind of hearing is required at some time before a person is finally deprived of his property interests." The Secretary contends, however, that the Explanation of Medicare Benefits form, together with the opportunity to submit written materials, constitute an adequate "opportunity to be heard."
Part of the problem with this case is thus simply definitional. When the Supreme Court has said, so emphatically and repeatedly, that "some kind of hearing" is required, did it contemplate that anything other than an oral exchange would suffice? We conclude that it did not, and our reasons are grounded in both precedent and policy.
1. The Due Process Precedents
Perhaps the most persuasive evidence of the Supreme Court's intention in its use of the word "hearing" is the fact that when it has found that a "hearing" is necessary because a property or liberty interest is at stake, no decision by that Court has ever approved a procedure as satisfying due process when there was not an opportunity at some point for the individual to appeal personally and orally to a decisionmaker with the power to prevent the loss, remedy it after the fact, or at least recommend that action favorable to the individual be taken.25 Furthermore, several decisions have explicitly rejected the proposition that an opportunity to submit written comments satisfies the due process requirement of a hearing.
Perhaps the clearest statement on the issue is contained in a case involving a challenge to procedures which were strikingly similar to those in issue here. In Londoner v. City of Denver, 210 U.S. 373 (1908), the charter of the City of Denver authorized the city to make local improvements and to assess the cost upon the property benefited. Notice was to be given by publication, and any comments or objections to the individual assessments were to be filed in writing for the consideration of the city council before it approved the ordinance fixing the assessments. There was no opportunity for a personal appearance before the council. Furthermore, there was no opportunity for judicial review, because state law provided that objections to assessments were cognizable only in the council.
On these facts, the Court held that there was a denial of due process by the State. The Court expressly considered the argument that the opportunity to submit written materials could constitute a "hearing":
If it is enough that, under such circumstances, an opportunity is given to submit in writing all objections to and complaints of the tax to the board, then there was a hearing afforded in the case at bar. But we think that something more than that, even in proceedings for taxation, is required by due process of law. Many requirements essential in strictly judicial proceedings may be dispensed with in proceedings of this nature. But even here a hearing, in its very essence, demands that he who is entitled to it shall have the right to support his allegations by argument, however brief; and, if need be, by proof, however informal.
Id . at 386.
By no means has this venerable precedent lost its force. In Goldberg v. Kelly , 397 U.S. 254 (1970), the court again expressly disapproved a "paper review" rather than an oral hearing prior to termination of welfare benefits, in spite of the fact in that case that a full evidentiary hearing and judicial review would be available later. The Court pointed out some of the underlying practical reasons for the requirement of oral process:
Written submissions are an unrealistic option for most recipients, who lack the educational attainment necessary to write effectively and who cannot obtain professional assistance. Moreover, written submissions do not afford the flexibility of oral presentations; they do not permit the recipient to mold his argument to the issues the decision maker appears to regard as important.
Id . at 269.
Moreover, in each of the recent decisions discussing hearing rights in an adjudicatory proceeding, the Supreme Court clearly contemplates some sort of oral process. For example, Memphis Light, Gas & Water Div. v. Croft , 436 U.S. 1 (1978), was a challenge to the utility's procedure for terminating service for non-payment of bills. The Court held that the "hearing" mandated by due process required, at a minimum, an "opportunity for a meeting with a responsible employee empowered to resolve the dispute." Id . at 18. Similarly, in Mathews v. Eldridge , 424 U.S. 319 (1976), while the Court held, after a careful balancing process, that a pre-termination oral hearing was not necessary when Social Security disability payments were at issue, it specifically relied on the fact that the claimant was assured "a right to an evidentiary hearing, as well as to subsequent judicial review, before the denial of his claim becomes final." Id . at 349. Goss v. Lopez , 419 U.S. 565 (1975), required that before suspending a student for alleged misconduct, "the student be given oral or written notice of the charges against him and, if he denies them, an explanation of the evidence the authorities have and an opportunity to present his side of the story." Id . at 581. The fact that the Court had an oral exchange in mind was made clear when it emphasized that no elaborate, formal procedure was required: "In the great majority of cases the disciplinarian may informally discuss the alleged misconduct with the student minutes after it has occurred." Id . at 582.
Very recently, in Parham v. J.R., 442 U.S. 584 (1979), the Court refused to conclude that a formal, adversary hearing was required in order to institutionalize a child for mental health care but nevertheless held that there must be an oral hearing.
"[Some] kind of inquiry should be made by a 'neutral factfinder' to determine whether the statutory requirements for admission are satisfied.That inquiry must carefully probe the child's background using all available sources, including, but not limited to, parents, schools, and other social agencies. Of course, the review must also include an interview with the child . It is necessary that the decisionmaker have the authority to refuse to admit any child who does not satisfy the medical standards for admission."
Id . at 606-608 (citations omitted; emphasis added).
The list could go on; as we pointed out above, we have found no Supreme Court decision holding that anything less than an oral, personal exchange at some point in the process could satisfy a right to a due process hearing.26 Many cases require far more;27 some permit the hearing to be postponed in favor of prompt administrative action;28 but in each case it must be provided at some point.29 We think it beyond dispute that in its requirement of a "hearing," which the defendant concedes applies to this case, the Supreme Court is requiring some oral process, however informal.30
2. The Policy Interests
The minimum due process requirements of notice and a hearing are so firmly ingrained that judicial opinions often devote little discussion to the reasons why our society adheres, in this day of computers and sophisticated print media, to the notion that a right to a personal oral exchange is a critical element of justice. There seem to be at least three societal goals served by a constitutional requirement of "some sort of a hearing"; the desire for accuracy, the need for accountability, and the necessity for a decisionmaking procedure which is perceived as "fair" by the citizens. Most often mentioned by the courts is the notion that an oral hearing provides a way to ensure accuracy when facts are in dispute, especially if credibility is an issue. Mr. Justice Frankfurter believed that "no better instrument has been devised for arriving at truth" than the notice and hearing requirement. Joint Anti-Fascist Refugee Committee v. McGrath , 341 U.S. 123, 171 (1951) (Frankfurter, J., concurring). Even if credibility is not likely to be directly in issue, personal, oral hearings are an effective way to eliminate misunderstandings and focus issues. Ambiguities which are not readily apparent on the face of a document can be disclosed and clarified with a few moments of oral exchange between the individual and the decisionmaker. For example, in Goss v. Lopez , 419 U.S. 565 (1975), one of the plaintiffs had been suspended from school without a hearing after she was arrested at a demonstration. The student conceded that she had been arrested, but testified at trial that she had been swept up in a mass arrest and had engaged in no misconduct.An opportunity to explain personally the apparently damning arrest could well have avoided a decision based on incorrect facts. As the Court pointed out, "[It] would be a strange disciplinary system in an educational institution if no communication was sought by the disciplinarian with the student in an effort to inform him of his dereliction and to let him tell his side of the story in order to make sure that an injustice is not done." Id . at 580.31
The hearing requirement and many of the additional procedural safeguards that due process may require in particular circumstances also serve as an institutional check on arbitrary or impermissible action. Caseworkers, auditors, parole officers and other initial decisionmakers, if required to meet personally with those whose lives they are touching, and justify, however briefly, their decisions to those who are dissatisfied, are faced with a powerful disincentive to arbitrary action:
[The] fair process of decisionmaking that [the requirement of notice and an opportunity to be heard] guarantees works, by itself, to protect against arbitrary deprivation of property. For when a person has an opportunity to speak up in his own defense, and when the State must listen to what he has to say, substantively unfair and simply mistaken deprivations of property interests can be prevented.
Fuentes v. Shevin , 407 U.S. 67, 81 (1972). A hearing requirement serves to ensure that decisionmakers recognize that their decisions affect the lives of human beings, a fact that is often obscured by a jumble of papers and depersonalized identification numbers. We can well believe it is easy for an employee processing an application for a small amount of Medicare benefits to shrug his or her shoulders and conclude that benefits should be denied or reduced, without stopping to gather the information necessary to reach that decision accurately. The situation could well be different if the employee knew that the claimant would have the opportunity personally to challenge that determination and seek an explanation.
We do not believe it unwarranted to recognize that human nature frequently leads to careless and arbitrary action when the decisionmaker can retreat behind a screen of paper and anonymity.32 The principle that those who govern must be accountable to those whose lives they affect informs not only our representative system of government, but on a broader scale, forms the very essence of what we expect from the government in its dealings with us. The due process requirement of a personal, oral hearing is simply one expression of that principle.
A third and perhaps most important reason for a requirement for an oral hearing is that no other procedure so effectively fosters a belief that one has been dealt with fairly, even if there remains a disagreement with the result. Our system of government is founded on respect for, and deference to, the integrity and dignity of the individual.In the government's dealings with individuals some mechanism must exist to ensure that those values are left intact, even when action is finally taken against the person. In a society like ours, which operates on the assumption of and relies for its continued stability on respect for our institutions and voluntary compliance with the dictates of the law, it is crucial that its members perceive that their rights and interests are taken seriously and thoughtfully by the officials who who are deciding their claims.33 During an oral hearing, the "Government" loses its nameless, faceless quality and comes into focus as another human being with whom the citizen can speak, present his or her case, and look to for a responsible decision. To quote Justice Frankfurter again, no better way has "been found for generating the feeling, so important to a popular government, that justice has been done." Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 172 (1951) (concurring).34
THE MATHEWS V. ELDRIDGE BALANCING TEST
The Supreme Court's decision in Mathews v. Eldridge provided the analytical framework for the district court's opinion below; indeed its application of the "balancing test" set out in Mathews v. Eldridge constitutes the bulk of the opinion. Because of the importance of the Mathews v. Eldridge test to the district court's decision here, and because we believe that the court fundamentally misconceived the thrust of the Supreme Court decision, we find it necessary to discuss the case in some detail.
Eldridge was one in a line of "pre-termination" due process cases; it dealt with the question of what procedural protections are required before the Government may act to terminate benefits which are being provided on a regular basis.Before returning to that point, we begin our consideration of the case by comparing the procedures available to Eldridge in his dispute with the Social Security Administration with those available to the plaintiffs here in attempting to resolve their Medicare disputes.
As here, an intermediary made the initial determination that Eldridge was no longer eligible for benefits, though in the case of disability payments, the intermediary is a state agency rather than a private company acting under contract. The agency notified Eldridge of its tentative determination that his benefits should be terminated.The tentative determination included a statement of reasons and a summary of the evidence on which the agency primarily relied. He was entitled to "full access" to the information relied upon, permitted to respond in writing, and permitted to submit additional evidence. The decision to terminate was then reviewed by an examiner in the Social Security Administration, who once again notified Eldridge of the reasons for the decision, and informed him of his right to de novo reconsideration. Again, he had the opportunity to submit additional written material, and receive a decision on reconsideration with specific reasons for the action taken. A full evidentiary hearing was then provided, with judicial review completing the process.
This abundance of procedural protection would have been unchallengeable were it not for the fact that the termination of benefits became effective before the process was complete. However, if it were ultimately determined that the benefits had been wrongfully cut off, he would receive his benefits retroactively and would thus in the long run lose no money at all. The only issue in Eldridge was the timing of his hearing, not whether he was entitled to one at all.
The procedures at issue here provide a striking contrast to the Eldridge situation. After the claimant submits a claim form, notice of the action taken by the intermediary is sent. The information provided by that form is minimal to say the least; perhaps it is adequate for agency recordkeeping, but it provides little useful information to the dissatisfied claimant, and even less guidance to the confused claimant. It is certainly not the "summary of evidence" provided in Eldridge . Next, if the claimant is able to decipher the reason for the adverse action, he or she may submit a request for reconsideration along with any written materials. Another employee reexamines the claim, makes a new determination, and notifies the claimant of the now final action taken. Timing, the entire focus of concern in Eldridge , is not an issue here at all; rather, the question has become whether there is a right to an oral hearing at all.
The procedures available to Eldridge in pursuing a resolution to his dispute with the Government and the frequent reference by the court to the fact that a "full evidentiary hearing" would be available to him within a reasonable time make it clear that the Court is not suggesting that its "balancing test" could be used to eliminate entirely the fundamental due process requirement of an oral hearing. It is only by taking the Court's test wholly out of context that the decision can be read as authority for that proposition. Rather, the Court is balancing the individual interest at stake, the accurancy of the procedure provided and the burden on the Government of providing additional procedural protection to decide whether the formality and timing of the procedure provided is adequate. Thus, due process requires notice and a hearing, but the particular form that process may take is flexible and can be adapted to the particular situation. Depending on the circumstances, adequate due process can vary from a few minutes' conversation between a student and disciplinarian to a requirement of a full judicial trial in a criminal case. In most cases, a hearing is required before the Government takes action against an individual,35 but in some situations it is adequate if it is provided promptly thereafter.36 The question in every case is whether the opportunity to be heard is being provided in a meaningful way and at a meaningful time, in light of the purposes of the due process clause; efficiency and administrative cost are certainly factors to be taken into account, but only in deciding how and when the requirements of due process are to be provided, not whether they are to be provided:
The establishment of prompt efficacious procedures to achieve legitimate state ends is a proper state interest worthy of cognizance in constitutional adjudication. But the Constitution recognizes higher values than speed and efficiency. Indeed, one might fairly say of the Bill of Rights in general, and the Due Process Clause in particular, that they were designed to protect the fragile values of a vulnerable citizenry from the overbearing concern for efficiency and efficacy that may characterize praiseworthy government officials no less, and perhaps more, than mediocre ones.
Stanley v. Illinois , 405 U.S. 645, 656 (1972) (holding that before an illegitimate child can be declared a ward of the State, the father must be permitted a hearing on the issue of custody unburdened by a presumption of unfitness).
THE REQUIREMENTS OF DUE PROCESS IN THIS CASE
As we believe we have made clear, we hold that the "notice and hearing" requirement of the due process clause mandates, at a minimum, that at some point the claimant under the Medicare program be provided an opportunity for a personal, oral interview with an individual empowered to resolve the dispute. The claimant should be informed of or have access to the evidence on which the carrier relied in reaching its initial decision. In the course of the oral hearing, the claimant should have the opportunity to present evidence in support of his or her position. At some point after the hearing, the claimant should receive a meaningful explanation of the reasons for the final action taken on the claim.37
The plaintiffs have presented this case as a frontal attack on the constitutionality of the Medicare Act's statutory hearing procedures. In their complaint, they ask that the defendant be ordered to hold "fair hearings"38 on all disputed claims, and at oral argument, counsel for plaintiffs made it clear that they seek extension of the same procedural rights now afforded to those with disputes involving sums of over $100 to all claimants who desire hearings.39 We find, however, that the plaintiffs go too far, and that it is unnecessary to hold the statute unconstitutional. Of course, due process "is a restraint on the legislative as well as on the executive and judicial powers of the government, and cannot be so construed as to leave Congress free to make any process 'due process of law,' by its mere will." Murray's Lessee v. Hoboken Land & Improvement Co ., 59 U.S. 272, 276 (1856).Nevertheless, respect for the coordinate branches of government requires that we avoid a construction of the statutes passed by Congress which would render them unconstitutional if it is fairly possible. Crowell v. Benson , 285 U.S. 22 (1932). We find that it is possible here.
After a study of the statutes and the agency practice at the time they were passed, we conclude that Congress was acting in the interest of administrative efficiency and economy to cut off the formal hearing rights to which claimants with small monetary disputes would otherwise have been entitled.40 Nothing in the statute restricts the Secretary's power to require procedures, less formal and less expensive, which would accommodate both the requirements of due process and the concerns of Congress for economy.41 Indeed, the Secretary exercised that very power in promulgating regulations requiring reconsideration of a disputed claim, a procedure nowhere required by statute.
We are convinced that simplified, streamlined, informal oral procedures are available which would be responsive to the concerns of Congress yet which would provide the claimant with the critical right to participate in decisions affecting their interests. In order to formulate an order which will meet both the dictates of due process and the concerns of Congress, the court needs the assistance of the Secretary and her Department, as well as the contribution of the plaintiffs.42 Thus we must remand this case for further proceedings. We have indicated above the minimum procedure which, on this record, must be afforded to the plaintiffs; we leave further formulation of the precise contours of the required due process hearing to the district court and the parties.43
The decision of the district court is reversed, and the case is remanded for further proceedings.
WILKEY, Circuit Judge, dissenting: In the Social Security Act as amended in 1972 Congress explicitly prohibited the Government from providing hearings for Medicare recipients in disputes concerning less than $100 in benefits.1 The appellants nonetheless claim a constitutional right to oral hearings in such controversies, even when the cost of an oral hearing exceeds the value of the disputed benefits.2 Thus in this case the demands of individual citizens for further assurances that their government is acting fairly and accurately clash with the authority of Congress to fashion efficient and equitable aid programs which do not squander tax dollars.
The majority resolves this conflict by construing the controlling statutory language, "a hearing shall not be available... if the amount in controversy is less than $100"3 to mean that a hearing shall be provided for disputed amounts less than $100. Such a topsy-turvy construction might be a fitting way to avoid a difficult constitutional question if the history of the statute could be read to permit it, but the history surrounding the passage of the relevant portions of the Social Security Act allows no interpretation other than the plain and obvious one. I therefore cannot agree with the statutory construction adopted by the majority to justify reversal of the district court.
In addition, although the majority formally abstained from reaching the question of the statute's constitutionality,4 it discussed at length5 the constitutionality of the straightforward regulations promulgated under the statute by the Secretary of Health, Education, and Welfare (now Health and Human Services). In the process of finding those regulations unconstitutional, the majority concluded that, absent some emergency, the government may never finally deprive an individual of a property interest without an oral hearing, not only in the circumstances of this case, but under any circumstances.6 These views would impose on Congress an unreasonable and inflexible standard not required by precedent or sound constitutional analysis, hence I must dissent from the majority's treatment of the constitutional issues in this case as well. We turn first to the majority's inexplicable statutory construction, then to its expansive, unprecedented interpretation of required constitutional due process. I. STATUTORY CONSTRUCTION
The statutory language at issue here is located in the Social Security Act, as amended in 1972: "a hearing shall not be available to an individual by reason of such subparagraph [describing a claimant's entitlement to a hearing] if the amount in controversy is less than $100."7
When a statute is challenged on constitutional grounds, courts properly look to see whether the statute can be interpreted in a way which avoids the constitutional issue. In the words of the Supreme Court, a court must "first ascertain whether a construction of the statute is fairly possible by which the question may be avoided." *fn8 For example, in Califano v. Yamasaki, *fn9 a recent procedural due process case, the Supreme Court considered a challenge to a section of the Social Security Act that fails to specify whether an oral hearing is required before the government can recoup benefits improperly granted. In the face of this congressional silence the Court nonetheless found it reasonable to conclude that Congress had intended a hearing because the Court determined that a responsible decisionmaker could not properly implement the standards mandated by Congress without the benefit of a hearing. *fn10
Courts, however, do not have unlimited discretion to construe statutes as they please. The Supreme Court considers a statutory construction only if it is "fairly possible." *fn11 Thus in Yamasaki the Court emphasized its "[willingness] to assume a congressional solicitude for fair procedure, absent explicit statutory language to the contrary ." *fn12 The problem in the present case is that Congress did use explicit language squarely contrary to the construction imposed on it by the majority. By any ordinary usage of language the words "a hearing shall not be available" rule out any oral hearing whatever, no matter how formal or informal. *fn13
Of course, a reading contrary to common understanding might be "fairly possible" *fn14 if the legislative history of the statute disclosed that Congress meant to give the words it used something other than their ordinary meaning. The majority's reading, however, rests not on affirmative evidence in the legislative history that Congress meant to attribute a nonstandard meaning to the language it chose, but on the sheer speculation that Congress did not consider, and thus did not intend to forbid, an oral hearing procedure less formal than those generally employed in 1972. *fn15 Based on this speculation, the majority infers that Congress intended to cut off only formal hearing rights, while preserving rights to "less formal and less expensive" oral hearing procedures. *fn16 In fact, the available evidence of congressional intent proves the contrary: the Senate Report clearly states that the reconsideration procedures used by the carriers -- limited to written submissions, not oral hearings -- "should be sufficient protection in small claims cases." *fn17 There thus can be little doubt Congress intended to limit small claims cases to written submissions alone.
By construing the statute contrary to its plain meaning, ostensibly to save it from unconstitutionality, rather than openly striking it down as unconstitutional, the majority may feel it treads more softly on congressional authority. *fn18 But no matter what technical description the majority gives to its action, the end result is the same: on constitutional grounds the court today imposes a hearing Congress has forbidden. Thus the majority, under the guise of merely striking down a regulation, has de facto struck down as unconstitutional the statutory no-hearing provision of the Social Security Act .
My quarrel with the majority's mischaracterization of its result as an exercise in statutory construction is not just a lawyerly academic quibble. For I believe the majority, by adopting this stance, finesses a central issue in this case: the proper weight to be given a congressional balancing of the costs and benefits of additional procedural protections. By purporting to overturn a regulation reflecting merely the decision of unelected bureaucrats not directly answerable to the people, the majority is able to mask the fact that this court has chosen to substitute for the democratic judgment of Congress its own thinking concerning the proper allocation of limited resources between Medicare payments and the procedures which guarantee them . The question whether the judges of this court or our elected representatives are better suited to make this allocation of scarce resources -- and properly charged to do so under the Constitution -- should be squarely addressed, not avoided under the cover of "statutory construction." II. THE REQUIREMENTS OF DUE PROCESS
In considering the constitutionality of the regulations promulgated under the statute, the majority, rather than limit itself to deciding whether an oral hearing is constitutionally required on the facts of this case, has undertaken to decide whether under any circumstances the government may finally deprive an individual of a property interest without an opportunity for an oral hearing at some point. Finding that it is "beyond dispute" that the answer to this question is that due process means oral process, *fn19 the majority then sets this proposition up as a major premise under which the present case falls neatly as a minor premise, and from which the majority's reversal of the district court follows as the necessary conclusion. By thus determining the outcome of this case at an abstract and general level of due process rhetoric, the majority relieves itself of the burden of closely analyzing the particular circumstances we have before us to see whether an oral hearing requirement really makes any sense on these facts. And, by deciding the case under the banner of a constitutional generality, the majority forecloses discussion of the possibility that to decide responsibly whether or not an oral hearing is required necessitates a detailed balancing of competing interests in the allocation of scarce resources, tasks for which Congress is better suited than this court.
Thus, before we can reach the constitutional issue in the case before us, we must address the majority's bold pronouncement that oral process is an indispensable component of due process regardless of the circumstances in any case.
A. Is Oral Process Always Due ?
The majority claims that the indispensability of oral process is so obvious as to be "beyond dispute." *fn20 If so, leading courts and commentators have embarrassed themselves. Judge Henry Friendly, for example, has written that: "Although the term 'hearing' has an oral connotation, I see no reason why in some circumstances a 'hearing' may not be had on written materials only." *fn21 Professor Davis writes in his well known treatise on administrative law that: "In working out the law of the requirement of opportunity to be heard the courts are not limited to requiring or not requiring a trial, and they are not limited to requiring or not requiring an oral process; they are free to require or not require each of
In support of its proposition the majority asserts that: "no decision by [the Supreme] Court has ever approved a procedure as satisfying due process when there was not an opportunity at some point for the individual to appeal personally and orally to a decisionmaker with the power to prevent the loss, remedy it after the fact, or at least recommend that action favorable to the individual be taken." *fn24
This statement, while seductive, cannot withstand analysis. In fact, the Court has approved procedures whereby an individual has been finally deprived of property protected by the fifth and fourteenth amendments without at any time having been afforded an oral hearing. In particular, the Court has found that while an individual has a protected property interest in the use of money taken or withheld by administrative action pending a subsequent hearing -- what might be called an "interest in interest" -- in appropriate circumstances an individual may be deprived of that interest without an oral hearing.
Justice Harlan made it clear there is a property interest in the use of money distinguishable from the interest in the money itself when he wrote in Sniadach v. Family Finance Corp. that: "[the] 'property' of which petitioner has been deprived is the use of the garnished portion of her wages during the interim period between the garnishment and the culmination of the main suit." *fn25 The Court in Sniadach held that, under the circumstances of that case, due process required that Sniadach be granted an oral hearing before she was finally deprived of her property interest in the time value to her of her wages, *fn26 that is, in the use of her wages pending resolution of the main litigation.
But under different circumstances in Mathews v. Eldridge the Court did permit the final deprivation of such property -- this time the time value to the recipient of disability payments -- without an oral hearing. *fn27 The Court did not reach this conclusion by reversing its earlier finding that there is a protected due process interest in the use of money.Instead it found that the protections short of an oral hearing provided by the government were sufficient to survive scrutiny under the due process clause. Thus, in Eldridge the Court approved procedures short of an oral hearing which finally determined rights to a protected property "interest in interest." The holding in Eldridge thus runs counter to the claim that oral process is always due regardless of the circumstances or the nature of the property protected.
The majority, however, attempts to distinguish Eldridge by pointing out that in that case there was provision in the government's procedures for an oral hearing prior to final deprivation of Eldridge's closely related but distinguishable property interest in what might be termed his "principal," that is, in the disability payments themselves rather than in the value to him of their use during the period prior to the oral hearing. But this later hearing would have concerned only Eldridge's property interest in his principal and would have had nothing whatever to do with his right to the use of the payments during the interim preceding the hearing. *fn28 That separate and analytically distinguishable property right was lost once and for all at the initial paper hearing and could not be recovered later . This is what the controversy in Eldridge was about and one way in which Eldridge was an important decision. Eldridge makes clear -- or should make clear -- that in appropriate circumstances due process does not require an oral hearing prior to a final deprivation of property.
An oral hearing, after all, is only one of many means to the end of attaining procedural justice, not an end in itself. The goals of due process *fn29 -- the minimization of error and the maximization of accuracy, the prevention of decisions based on illicit factors or personal animus, the assurance that all legitimate factors have been considered, the promotion of participation by affected individuals in decisions concerning them -- are sometimes advanced and sometimes hindered by oral hearings. For example, in licensing decisions based on an applicant's ability to demonstrate proficiency an objective examination graded anonymously is often required to assure procedural fairness; an oral hearing would be objectionable *fn30 because it would provide an opportunity for illegitimate factors to enter the decision-making process. And in other circumstances when an oral hearing would promote fairness and accuracy, it has long been recognized that if the delay associated with a hearing procedure is unusually costly an oral hearing should not be provided. *fn31 Thus, because the means for achieving the ends of due process must be adapted to the circumstances, an oral hearing is sometimes desirable and sometimes not. "The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation." *fn32
B. Is Oral Process Required for Small Medicare Claims ?
Because "due process is flexible and calls for such procedural protections as the particular situation demands," *fn33 the proper resolution of a procedural due process case calls for a detailed examination of the "particular situation" at hand. The general program to be followed in a consideration of what process is due a recipient of a social benefit program was enunciated by the Supreme Court in its opinion in Mathews v. Eldridge, *fn34 which directs courts to balance the public and private interests at stake in each case. The factors to be considered are:
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. *fn35
The district court in this case carried out the required detailed examination of the "particular situation." The three factors enumerated in Eldridge were carefully canvassed by Judge Flannery in his opinion. His conclusion was straightforward: "the speculative benefit of a right to an oral, evidentiary hearing to persons with Medicare claims of less than $100 is outweighed by the cost to the public of requiring the additional procedural safeguard." *fn36 In view of the majority's handling of this case, it is worth reiterating why this is so.
Eldridge directs us first to consider how great the hardship occasioned by an erroneous deprivation would really be. The district court found the "potential deprivation in [Eldridge to be] of a much greater magnitude than that involved here." *fn37 Judge Flannery's language is restrained; the distitution facing disabled workers denied a hearing under Eldridge hardly compares with the relatively trivial loss claimed by the appellants. To be eligible for disability benefits a disabled worker has "not only [to be] unable to do his previous work but be [unable], considering his age, education, and work experience, [to] engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work." *fn38 In short, he has to be unfit for any job, anywhere, no matter how humbling in status or low in pay. The plight of a disabled worker wrongfully deprived for more than a year *fn39 of all compensation, forced to deplete whatever private resources he has and then, when those are utterly exhausted, to turn to food stamps and welfare lines, *fn40 is of a different order altogether from that of the disappointed Medicare recipient who complains he has been reimbursed by $100 less than he expected. The Medicare recipient, after all, continues to receive all the other Medicare benefits to which he is entitled apart from the disputed $100, and, if his disputed claims cumulate to more than $100 within a six-month period, he even receives the oral hearing the appellants demand. *fn41 The district court was right to conclude that the private interest at stake in this case is far less weighty than that at stake in Eldridge . *fn42
Eldridge next directs us to consider "the risk of an erroneous deprivation... through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards." *fn43 Two indices of the risk of error have been suggested by the parties here and discussed in Eldridge : the ratio of the number of reversals after an oral hearing by an administrative law judge to the total number of denials of benefits, which might be called the overall reversal rate, and the ratio of the number of reversals after an oral hearing to the number of appeals following the paper hearing reconsideration procedure, which might be called the appeal reversal rate. *fn44 By either measure the risk of error is less here than in Eldridge . In Eldridge the overall reversal rate was 3.3% and the appeal reversal rate was 58.6%.*fn45 Here the overall reversal rate is an almost infinitesimal 0.02% to 0.05%, and the appeal reversal rate is about 50%.*fn46 Both of these figures are smaller than the corresponding figures in Eldridge . The risk of erroneous deprivation thus being less here than in Eldridge, the case for an oral hearing is also weaker here than in Eldridge .
The "probable value, if any,"*fn47 of an oral hearing in reducing this risk is also small, as the Supreme Court concluded in like circumstances in Eldridge . In fact, the situation here is remarkably similar to that in Eldridge . In that case, the disabled worker was required to show "by means of 'medically acceptable clinical and laboratory diagnostic techniques,' that he is unable 'to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment....'"*fn48 Considering the nature of the medical determination to be made, the Court found that "the decision whether to discontinue disability benefits will turn, in most cases, upon 'routine, standard, and unbiased medical reports by physician specialists.'"*fn49 Questions of "credibility and veracity" *fn50 would thus infrequently arise, reducing the potential value of an oral presentation.
The Eldridge Court also noted that the entitlement decision involved not only questions of medical diagnosis but also "whether in light of the particular worker's 'age, education, and work experience' he cannot 'engage in any... substantial gainful work which exists in the national economy....'"*fn51 The Court concluded that: "information concerning each of these worker characteristics is amenable to effective written presentation. The value of... even a limited oral presentation, to an accurate presentation of those factors to the decisionmaker does not appear substantial. Similarly, resolution of the inquiry as to the types of employment opportunities that exist in the national economy for a physically impaired worker with a particular set of skills would not necessarily be advanced by an evidentiary hearing. The statistical information relevant to this judgment is more amenable to written than to oral presentation."*fn52
The determinations to be made in Medicare cases closely parallel the determinations the Court considered in Eldridge . The decisionmaker must determine, for example, whether the level of care a beneficiary is receiving is medically necessary and thus reimbursable under the Act,*fn53 and, if so, whether the charges billed for that care are "reasonable."*fn54 This second inquiry requires an arithmetical calculation following a statutorily prescribed formula which sets an upper limit on charges at the seventy-fifth percentile of prevailing charges, subject to a ceiling on the amount this limit increases each year calculated with reference to an economic index.*fn55 Just as in Eldridge, then, the decisionmaker must consider two types of information: the medical condition of the recipient and statistical economic information. In Eldridge, the Court concluded that neither inquiry could be significantly advanced by "even a limited oral presentation."*fn56 It is difficult to understand how the majority can find otherwise in this case without ignoring Eldridge .
In fact, the majority does ignore Eldridge, treating it as though it had never been decided. In attempting to explain how an oral hearing might be helpful, the majority, without referring to Eldridge, quotes a much earlier case, Goldberg v. Kelley :
Written submissions are an unrealistic option for most recipients, who lack the educational attainment necessary to write effectively, and who cannot obtain professional assistance.... Moreover, written submissions do not afford the flexibility of oral presentations; they do not permit the recipient to mold his argument to the issues the decision-maker appears to regard as important.*fn57
But in Eldridge, decided six years after Goldberg, the Court not only explicitly considered this language, but in doing so went so far as to quote extensively from it in the text of its opinion.*fn58 Addressing this discussion in Goldberg, the Supreme Court found the paper hearing procedures under review in Eldridge "fully [to] answer these objections."*fn59 In distinguishing Goldberg the Court noted that "the information critical to the entitlement decision usually is derived from medical sources, such as the treating physician.Such sources are likely to be able to communicate more effectively through written documents than welfare recipients [the beneficiaries in Goldberg ]." *fn60 In addition, the Court found the paper hearing provided in Eldridge sufficient to "enable the recipient to 'mold' his argument to respond to the precise issues which the decisionmaker regards as crucial."*fn61
By quoting the language of Goldberg without referring to the explanation of that language provided by the Court in Eldridge the majority neglects the later development and refinement of the law on this question . But this court is not free to pick and choose its Supreme Court precedents, and cannot ignore the fact that the Supreme Court has found an oral hearing to be of doubtful value to a decisionmaker faced with the dual tasks of evaluating the medical condition of a claimant and applying statistical economic data to analyze the merit of his claims . Thus, both because an oral hearing is of no greater value here that it was in Eldridge and because there is a lesser risk of an erroneous deprivation in this case, the argument for an oral hearing is weaker here than in Eldridge on the basis of the second Eldridge factor as well.
The third and final factor to be considered in applying the three-factor calculus of Eldridge is the "fiscal and administrative burdens that the additional or substitute procedural requirement would entail."*fn62 The administrative burden imposed by the majority's decision today is far greater than the burden considered by the Court in Eldridge . In that case, it was not disputed that Eldridge was entitled to an oral hearing concerning his right to receive disability payments. The question was whether he was also entitled to an oral hearing concerning his right to the use of those payments during the year or so before a hearing on his right to the payments themselves would normally be held. But since an earlier oral hearing on the question whether he was entitled to the use of the payments could, at little if any additional cost, also resolve the question whether he was entitled to the payments themselves, the sole incremental burden at stake was the cost of holding an oral hearing earlier rather than later. In short, the administrative burden in Eldridge was limited to the time value of the cost of an earlier hearing. By contrast, in the present case the entire cost of a hearing is at stake.
Moreover, the burden forced on the Medicare system by the court's decision today is mind boggling when considered in relation to the total value of the benefits at stake. In an era in which citizens increasingly are complaining that government aid programs fail because the bureaucracy siphons from the intended recipients far too great a share of the funds, this court is imposing, over the clearly expressed mandate of Congress to the contrary, an administrative procedure that actually will cost more than the value of the benefits at stake.*fn63 The majority is forcing Congress to buy oral hearings when Congress wants to buy medical care for the elderly . Judges may prefer hearings, but the aged to not want hearings, they want medical care.
Thus, not only is the private interest at stake in this case far less than that at stake in Eldridge, and not only is the value of an oral hearing no greater and the risk of error less in this case than in Eldridge, but the administrative burden is greater here than in Eldridge as well. The case for an oral hearing here is weaker on all three counts .
Moreover, there is yet another reason why this should have been an easier case than Eldridge . In Eldridge the procedures under review were promulgated by the Secretary of Health, Education, and Welfare,*fn64 and the Court pointed out that "[in] assessing what process is due in this case, substantial weight must be given to the good-faith judgments of the individuals charged by Congress with the administration of social welfare programs that the procedures they have provided assure fair consideration of the entitlement claims of individuals."*fn65 Here, despite the majority's claims to the contrary,*fn66 Congress, not an agency, decreed there would be no hearings in small claims cases. Surely Congress' balancing of the factors in Eldridge should receive more weight than that of an agency . So we should find it easier to uphold the procedures presented by this case than the agency procedures in Eldridge .
While this court cannot abdicate its responsibility to protect individual interests against legislative infringement by permitting Congress to balance away all procedural due process rights in the name of efficiency and economy, absent some special justification for judicial intrusion, this court should be wary of upsetting a reasoned and sensible judgment of Congress that an additional procedural protection is not worth the cost. In this case, not only is the judgment of Congress eminently reasonable, but no special circumstance justifying judicial intervention exists. Anyone with an interest in politics knows the elderly cannot reasonably be described as a "discrete and insular minority"*fn67 deserving of unusual judicial solicitude and protection. Moreover, judicial intervention on behalf of the elderly, however well meaning, is likely to be an exercise in ill-conceived paternalism, foisting costly procedures on those who would prefer that funds earmarked for them be spent on medical care rather than oral hearings. The best way to find out whether the aged really want more process and less medical care for each dollar spent is to let Congress resolve the question. In our tripartite system of government Congress is the branch most responsive to the desires of the people affected by decisions about resource allocation and cost-effectiveness. The proper place for organizations such as the Gray Panthers to bring their grievances is Congress.
In sum, the district court correctly applied Eldridge to this case. There is no reason whatever to reverse the decision of the court below. This case presents an even weaker case for the court-imposed oral hearing requirement than did Eldridge . In fact, while it is at pains briefly to contrast the procedural protections afforded Eldridge with those afforded the appellants in this case,*fn68 even the majority does not quarrel anywhere in its opinion with the manner in which the district court applied the Eldridge test to the facts of this case. Presumably, if the majority had agreed with the district court that the Eldridge standard controls this case the outcome here would have been different.
The majority position is that the Eldridge analysis does not apply to this case because this case concerns the availability, not merely the form or timing, of an oral hearing.*fn69 As I have explained above, the majority has misread Eldridge . At issue in Eldridge was the question whether an oral hearing was necessary before Eldridge could be finally deprived of his protected property interest in the use of disability payments pending a determination of his entitlement of them. *fn70 Similarly, at issue in this case is the question whether an oral hearing was necessary before the appellants could be finally deprived of their protected property interest in the last $100 or less of Medicare payments due them. Nothing in Eldridge suggests both questions are not to be resolved by application of the same mode of analysis.
The majority's attempt to limit the holding in Eldridge may stem from its apparent lack of sympathy with the Court's approach in that case. The Court's analysis in Eldridge is consistent with and appears to implement the longstanding view that the primary purpose of procedural due process is to ensure accuracy in factfinding *fn71 through the use of procedures that minimize error, compel the consideration of all relevant factors, and uncover the influence of illicit factors in decisionmaking. On this view, requiring an additional procedure is much like buying insurance against the risk of governmental error. The three-factor calculus in Eldridge simply guarantees that the cost of the premium to society does not exceed the discounted cost of the risk it protects against.
For the majority, however, the primary purposes of due process are to be found elsewhere. The majority suggests that accurate factfinding is "not as important a reason" for the requirement of an oral hearing "as its prominence would seem to suggest." *fn72 For the majority, "perhaps [the] most important reason for a requirement of an oral hearing is that no other procedure so effectively assures a belief that one has been dealt with fairly, even if there remains a disagreement with the result." *fn73 In fact the majority goes so far as to suggest that "oral hearing procedure is not particularly well suited to accurate factfinding" but "serves an important fact-finding function in our society... because it is perceived by the governed as a fair and acceptable way of finding facts, not because it is substantially more accurate." *fn74
Thus in the view of the majority an oral hearing is a means by which the government, by providing an illusory appearance of additional fairness where there may be little actual contribution to accuracy, may engender complaint acceptance by the governed of governmental decisions . It is thus understandable that the majority would be hostile to the Eldridge balancing test, as applied both to the present case and, one suspects, in Eldridge itself, because the test does not factor in this "function" of the oral hearing, and therefore, in the majority's view, undervalues an oral hearing's worth. *fn75 The Supreme Court, however, has spoken on this question in Eldridge, and this court is bound to follow its conclusion.
Moreover, it is worth asking whether the majority's court-imposed requirement that oral hearings be provided in small claims cases will in fact assist in creating a general belief that the Medicare system is being operated in a fair and equitable manner. In many small claims cases the cost of a hearing will be several times greater than the amount of government benefits due. *fn76 In these cases it will plainly be more economical and rational for the government to acceed to any small claim, however unwarranted. For after a hearing, if it is determined that the claim is valid the government will have expended the sum of the cost of the hearing and the amount of the claim, while, on the other hand, if it is determined that the claim is invalid, the government will still have expended the cost of the hearing. Both of these quantities being greater than the amount of the claim alone, the government would better minimize its expenditures and maximize the public benefit simply by allowing all small claims . And that is exactly what will be done; it is not often that the bureaucracy can save itself trouble, save the taxpayer money, and give away more money all at the same time.
This result is perverse. By requiring an additional hearing in the name of due process, the majority thus decreases rather than increases the accuracy with which Medicare benefits will be disbursed, undercutting the principal purpose of procedural justice. And the results will be unjust; the corrupt will cash in at the expense of honest claimants and their physicians, who to them will look naive for their failure to take advantage of a great giveaway program. Rather than instilling confidence, the imposition of these excess oral hearings will destroy respect for the Medicare system, both in those who exploit it and in the taxpayers who foot the bill. And, as the Court noted in Eldridge: "the cost... may in the end come out of the pockets of the deserving since resources available for any particular program of social welfare are not unlimited." *fn77 Thus, even adopting the mode of analysis the majority wishes to substitute for that the Supreme Court has directed us to follow, the conclusion that an oral hearing is required cannot be justified.
Because I cannot agree that Congress intended or the Constitution requires an oral hearing to be provided in small Medicare-claims cases, I believe we should affirm Congress' decision. *fn78
I therefore respectfully dissent.