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Abstract

There is a circuit split over the interpretation of 42 U.S.C. § 405(h), which requires providers to exhaust their remedies with the Department of Health and Human Services (HHS) before proceeding to court. This split originates from a recodification that omitted several jurisdictional grants from § 405(h), leaving courts to decide whether to continue interpreting the statute as Congress intended or begin interpreting the statute’s plain language. Complicating this split, a backlog of claims in HHS’s appeal systems prevents speedy adjudication. This delay leaves providers searching for other adjudicatory options for their Medicare claims, such as bankruptcy courts.

As initially written, the statute intended to bar bankruptcy courts from hearing Medicare claims. After a recodification, Congress omitted several jurisdictional grants from the statute, leaving the plain text to support judicial adjudication of Medicare claims. Nonetheless, the recodification canon of statutory construction allows courts to continue using the pre-amended meaning of § 405(h). Congressional Medicare policy leans towards barring bankruptcy courts and allowing HHS to adjudicate these claims first. This Medicare policy supports a uniform and efficient Medicare law. On the contrary, congressional bankruptcy policy supports the court having jurisdiction over the entire bankruptcy estate, including Medicare claims. Nevertheless, bankruptcy jurisdiction is not expansive enough to cover claims clearly under HHS’s jurisdiction.

Providers claim they need bankruptcy courts as an alternative to agency adjudication because of the backlog in the appeal systems. Subsequently, the agency is proactively speeding up the appeal process. Though providers may try to avoid the appeal system by asserting that their claim does not arise under Medicare law, § 405(h) encompasses the claims that providers are trying to file in bankruptcy court. Consequently, providers should appeal to the agency first.

Therefore, Congress should amend the statute to explicitly bar bankruptcy jurisdiction to reflect the Act’s original intent since this will ensure uniformity and efficiency in Medicare law. Furthermore, barring bankruptcy jurisdiction ensures that the agency responsible for health law questions can fully apply its expertise to these questions by facilitating an effective internal agency appeals process.

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