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, 1983

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

   Brief for the Petitioner

                       PARTIES TO THE PROCEEDING

   The petitioner is the Secretary of Health and Human Services.  The
respondents are four individual Medicare beneficiaries -- Freeman H.
Ringer, Sanford Holmes, Norman R. Webster-Zieber, and Jean Vescio --
and a physician, Benjamin Winter, who performs the medical procedure
for which respondents contend the Secretary has erroneously denied
coverage under the Medicare Program.  The respondents sought to
represent a class of Medicare beneficiaries who had undergone or
desired to undergo the medical procedure, but the district court
dismissed the suit for lack of jurisdiction before ruling on the class
action issue.  Pet. App. 11a.

            TABLE OF CONTENTS
   Opinions below
   Jurisdiction
   Statutory provisions involved
   Statement
      A.  The statutory and administrative scheme
          1.  The Part B Program
          2.  The Part A Program
      B.  The background and proceedings in this case
          1.  Background
          2.  The proceedings in this case
   Introduction and summary of argument
   Argument:
   The court of appeals erred in concluding that the
   district court had jurisdiction to consider respondents'
   claims under the Medicare program
      A.  District court jurisdiction over this suit
      under 28 U.S.C. 1331 and 1361 is barred by the
      jurisdictional preclusion in 42 U.S.C. 405(h)
      B.  The district court did not have jurisdiction
      over this case under 42 U.S.C. 405(g) because
      respondents did not exhaust their administrative
      remedies and obtain a "final decision" by the
      Secretary on their benefit claims
   Conclusion
   Appendix

                            OPINIONS BELOW

   The opinion of the court of appeals, as amended by orders dated
December 30, 1982 and February 1, 1983 (Pet. App. 1a-10a), is reported
at 697 F.2d 1291.  A prior version of the opinion not incorporating
the February 1, 1983 amendments is reported at 684 F.2d 643.  The
opinion of the district court (Pet. App. 11a-17a) is not reported.

                             JURISDICTION

   The judgment of the court of appeals was entered on August 19, 1982
(Pet. App. 19a), and a petition for rehearing was denied on December
30, 1982 (Pet. App. 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 petition was filed
on that date and was granted on June 27, 1983 (J.A. 34).  The
jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

                     STATUTORY PROVISIONS INVOLVED

   The following statutory provisions are reproduced in an Appendix to
this Brief (App., infra, 1a-4a):  28 U.S.C. (Supp. V) 1331;  28 U.S.C.
1361;  and Sections 205(g) and (h) and 1869(a) and (b) of the Social
Security Act, 42 U.S.C. (& Supp. V) 405(g) and (h) and 1395ff(a) and
(b).

                          QUESTIONS PRESENTED

   1.  Whether the district court had jurisdiction under 28 U.S.C.
1331 or 1361 to consider respondents' challenge to the Secretary's
denial of payment for particular services under the Medicare Program,
notwithstanding the jurisdictional bar in 42 U.S.C. 405(h).

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

                               STATEMENT

   This case concerns the limitations on the jurisdiction of a federal
district court over a suit challenging a decision by the Secretary of
Health and Human Services (HHS) denying payment for a particular
medical procedure under the Health Insurance for the Aged Act (42
U.S.C. (& Supp. V) 1395 et seq.), commonly known as the Medicare Act.

              A.  The Statutory And Administrative Scheme

   The Medicare Program is divided into two parts.  Part A of the Act
(42 U.S.C. (& Supp. V) 1395c et seq.) provides insurance for the
reasonable cost of hospital and related post-hospital services.  42
U.S.C. (& Supp. V) 1395c and 1395d.  Part B of the Act (42 U.S.C. (&
Supp. V) 1395j et seq.) 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. V) 1395k, 1395l and 1395x(s).

                        1.  The Part B Program

   This Court recently considered the claims adjudication process and
the availability of judicial review under the Part B Medicare program
in Schweiker v. McClure, 456 U.S. 188 (1982), and United States v.
Erika, Inc., 456 U.S. 201 (1982).  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.  42
U.S.C. (& Supp. V) 1395u.  The carrier makes payments on a claim
either directly to the beneficiary or to the physician or other
supplier of services to whom the beneficiary has assigned his claim.
42 U.S.C. 1395u(b)(3)(B).  The carrier must determine whether the
services are covered by Part B and, if so, the reimbursable reasonable
charge for the services.  If the carrier finds that the services are
not covered by Part B or determines that the payment due is less than
the amount claimed, the beneficiary or his assignee is entitled to
have the claim reconsidered by the carrier.  42 C.F.R.
405.807-405.812.  If the claim again is denied and the amount
remaining in controversy is $100 or more, the claimant is entitled to
an oral hearing conducted by the carrier.  42 U.S.C. (& Supp. V)
1935u(b)(3)(C);  see Schweiker v. McClure, supra, 456 U.S. at 191.

   There is no provision for review by the Secretary of the carrier's
final decision on a claim after the hearing.  And in view of the
relatively small amount of money involved in the typical Part B claim,
Congress likewise foreclosed all judicial review of the carrier's
determination.  United States v. Erika, Inc., supra, 456 U.S. at
208-211.  Because this Court thus has made clear since this suit was
filed that all judicial review of Part B claims is barred, the
jurisdictional issues in this case now principally relate to the Part
A program.

                        2.  The Part A Program

   The process for determining claims for hospital benefits under Part
A of the Medicare Program is in many respects parallel to that under
Part B.  The Medicare Act directs the Secretary to determine benefit
claims under Part A "in accordance with regulations prescribed by
(her)" (42 U.S.C. 1395ff(a);  see also 42 U.S.C. (& Supp. V) 1395f,
1395g and 1395x(v)), although she is authorized to enter into
contracts with fiscal intermediaries under which the intermediaries
determine whether particular services are covered by Part A and, if
so, the amount of benefits that are payable.  42 U.S.C. (& Supp. V)
1395h;  42 C.F.R. 405.702.  In view of the greater amount of money at
stake in the typical Part A claim, however, Congress has provided for
review by the Secretary of the denial of a claim by an intermediary
and a limited opportunity for judicial review of the Secretary's
"final decision" denying such a claim.  And unlike in the Part B
program, Congress has provided for a bifurcated system of review of
issues arising under Part A.

   a.  If the intermediary determines that particular services
furnished by a hospital or other provider of services are not covered
by Part A, the beneficiary is entitled to have that decision
reconsidered by the Health Care Financing Administration (HCFA) in
HHS.  42 C.F.R. 405.710-405.716.  If HCFA determines that the services
are not covered and the amount in controversy is $100 or more, the
individual must be afforded an opportunity for an evidentiary hearing
by the Secretary in the same manner as is provided in 42 U.S.C. 405(b)
for old age, survivors, and disability claimants under Title II of the
Act.  See 42 U.S.C. 1395ff(b)(1)(C) and (2);  42 C.F.R. 405.720.  The
administrative law judge (ALJ) who conducts these hearings on behalf
of the Secretary may decide a case on the written record if the
individual waives his right to an oral hearing.  42 C.F.R. 405.701(c),
incorporating 20 C.F.R. 404.948(b).

   If the claim is denied by the ALJ, the beneficiary may seek review
by the Appeals Council in HHS.  42 C.F.R. 405.701(c) and 405.724,
incorporating 20 C.F.R. 404.967.  If the Appeals Council also denies
relief, the individual is entitled by 42 U.S.C. 1395ff(b)(1)(C) to
judicial review of "the Secretary's final decision after such hearing"
in the same manner as is provided in 42 U.S.C. 405(g) for claims
arising under Title II of the Act.  However, unlike under Title II,
judicial review is available on a Part A Medicare claim only if the
amount in controversy is $1000 or more.  42 U.S.C. 1395ff(b)(2);  42
C.F.R. 405.730;  20 C.F.R. 404.981 and 422.210.

   Pursuant to her rulemaking authority in 42 U.S.C. 405(a) /1/ and
1395hh, the Secretary has provided that a "final decision" subject to
judicial review under 42 U.S.C. 405(g) is deemed to have been rendered
only after the individual has "completed the steps of the
administrative review process" described above -- i.e., an initial
determination, reconsideration, an ALJ hearing, and Appeals Council
review.  See 42 C.F.R. 405.701(c), incorporating 20 C.F.R.
404.900(a)(5).  The Secretary has fashioned only one narrow exception
to this requirement, applicable to cases in which the facts and the
Secretary's interpretation of the law are not in dispute and the only
factor precluding an award is a statutory provision that the claimant
alleges is unconstitutional.  Compare Weinberger v. Salfi, 422 U.S.
749, 766-767 (1975).  In such a case, the claimant and the Secretary
may enter into a formal agreement that renders it unnecessary for the
claimant to pursue administrative remedies beyond the reconsideration
stage in order to obtain the requisite "final decision" for purposes
of judicial review.  See 42 C.F.R. 405.718-405.718e;  20 C.F.R.
404.923-404.928.  But the Secretary has not authorized avoidance of
the exhaustion requirement in any other situations, including cases
such as that involved here, in which the claimant challenges the
validity of an administrative instruction issued by the Secretary.

   b.  Different procedures have been established for administrative
and judicial review of an intermediary's determination of the
reasonable cost of services that it finds are covered by Part A of the
Medicare Program.  Payment for Part A services must be made directly
to the hospital or other provider of the services, not to the
beneficiary personally or his assignee, as under Part B.  42 U.S.C. (&
Supp. V) 1395g.  Nor is the provider reimbursed for Part A services on
a claim-by-claim basis, as under Part B. Instead, funds are advanced
to the provider at least monthly to cover the estimated cost of all
services furnished by the provider to Medicare beneficiaries during
the relevant period.  A final settlement of the actual amount due for
all such services then is made at the end of the accounting period,
after the provider's total costs are allocated between its Medicare
and non-Medicare patients in accordance with regulations promulgated
by the Secretary.  42 U.S.C. 1395g(a);  42 C.F.R. 405.404, 405.405,
405.415 et seq.  If the provider is dissatisfied with the
intermediary's "final determination" of the total amount of payments
due for the accounting period and the amount in controversy is $10,000
or more, the provider is entitled to an evidentiary hearing before the
Provider Reimbursement Review Board (PRRB) appointed by the Secretary
in HHS.  42 U.S.C. 1395oo(a).  A provider that is dissatisfied with
the "final decision" of the PRRB may obtain judicial review of that
decision by filing a civil action in federal district court within 60
days.  42 U.S.C. (Supp. V) 1395oo(f)(1).

            B.  The Background And Proceedings In This Case

                            1.  Background

   Under 42 U.S.C. (Supp. V) 1395y(a)(1), payment may not be made
under the Medicare Program for services that are "not reasonable and
necessary for the diagnosis or treatment of illness or injury." The
Secretary consistently has construed this provision to prohibit
payment for services that are not recognized as an effective and
proven treatment for a given medical condition;  services that are
experimental or investigational in nature are excluded from coverage.
In applying this limitation, HCFA has instructed intermediaries and
carriers that payment may be made if the particular service has come
to be generally accepted by the professional medical community as an
effective and proven treatment for the condition for which it is used.
 If the service is not generally accepted, however, authoritative
evidence must be presented to establish it as safe and effective.  See
Part A Intermediary Letter, No. 77-4 and Enclosure 2, (1976 Transfer
Binder) Medicare & Medicaid Guide (CCH) Paragraph 28,152 (Jan. 1977);
/2/ Rush v. Parham, 625 F.2d 1150, 1156 & n.11 (5th Cir. 1980).

   Consistent with this policy, HCFA issued administrative
instructions to Medicare Part A intermediaries and Part B carriers in
January 1979 informing them that no payment was to be made for a
surgical procedure known as bilateral carotid body resection (BCBR)
when performed to relieve symptoms of pulmonary distress.  See 45 Fed.
Reg. 71431-71432 (1980) (reproducing the 1979 instructions).  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 instructions stated 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. V) 1395y(a)(1))" (45 Fed. Reg.
71431).  /3/

   HCFA issued the instructions in 1979 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 (Pet. App. 2a;  45 Fed. Reg. 71426).  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" (ibid.).  Similarly, the twelve-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.).

   Because HCFA instructions to Medicare Part A intermediaries are not
binding on ALJs who preside at hearings on Part A claims, a number of
Medicare beneficiaries were able to receive payment under Part A for
the hospital-related expenses of BCBR notwithstanding the 1979 HCFA
instructions by obtaining a favorable ruling on the coverage issue
from an ALJ.  The Appeals Council, which likewise is not bound by
HCFA's intermediary instructions, also allowed payment in a
consolidated decision involving a number of BCBR claimants.  See In re
Ferguson, No. 126-12-3830 (HEW App. Coun. Oct. 18, 1979).  /4/ The
Appeals Council stressed, however, that its decision applied only to
the particular claimants before it;  that it did "not intend that this
conclusion be regarded as definitive as to the issues raised";  and
that its decision was "not to be cited as precedent" in other cases
(slip op. 23).  The Appeals Council expressed its findings about BCBR
in this tentative manner because it regarded the evidence concerning
the efficacy of the procedure and the risk involved as "equivocal" and
"inconclusive" (slip op. 18, 19).  The Appeals Council also noted the
absence of any extensive studies of the procedure and the "lack of any
pertinent regulations," and it urged HCFA to take action with respect
to "clarifying regulations" (slip op. 18).

   In response to these developments, on October 28, 1980, HCFA issued
a formal administrative ruling -- binding upon ALJs and the Appeals
Council -- that prohibited payments under Medicare for BCBR performed
after that date.  45 Fed. Reg. 71426-71427 (1980);  see 20 C.F.R.
422.408.  HCFA explained that it has construed the statute to bar
payment for services "that are not demonstrated to be safe and
effective by acceptable clinical evidence" (45 Fed. Reg. 71426) and
that, after reviewing the proceedings in In re Ferguson and consulting
once more with the Public Health Service, it again was unable to find
that BCBR is safe and effective (45 Fed. Reg. 71426-91427).

                   2.  The Proceedings In This Case

   a.  This suit was filed in the United States District Court for the
Central District of California on September 18, 1980, challenging the
Secretary's policy with respect to payment for BCBR (E.R. 1-26).  /5/
An amended complaint was filed on November 7, 1980 (J.A. 9-28).  The
five plaintiffs named in the amended complaint -- the respondents
before this Court -- are four individual Medicare beneficiaries and
Dr. Benjamin Winter, a physician who developed what respondents termed
the "Winter technique" of BCBR and performed the operation
approximately 1,000 times (J.A. 11), and who is a principal proponent
of BCBR surgery (see 45 Fed. Reg. 71427).

   None of the four plaintiffs who are Medicare beneficiaries had
received an Appeals Council decision on a claim for payment for BCBR
at the time the amended complaint was filed.  In fact, only three of
the four Medicare beneficiaries -- respondents Holmes, Webster-Zieber,
and Vescio -- had undergone BCBR surgery at that time.  Respondents
Holmes and Webster-Zieber had sought payment for their hospital and
physicians' expenses in connection with their surgery under both Part
A and Part B of the Medicare Program.  Their Part A claims had been
denied by the intermediary and by HCFA on reconsideration, but an ALJ
had not yet held a hearing on the claims (J.A. 11;  In re Benjamin
Winter, M.D., Representative for 132 Claimants (SSA Off. Hear. App.
Feb. 27, 1982), slip op. 5)).  The Part B claims of these two
respondents also had been denied by the responsible carrier (J.A. 11).
 Respondent Vescio had filed reimbursement claims for her BCBR surgery
under Part A and Part B, but those claims had not been acted upon by
the intermediary and carrier (J.A. 11;  In re Winter, supra, slip op.
9).  Respondent Ringer had not undergone the BCBR surgery when this
suit was filed, and we have been informed by HHS that a search of its
computer records does not disclose that he has ever filed a claim
seeking payment for BCBR.  These four respondents and Dr. Winter also
sought to represent a class of Medicare beneficiaries who underwent or
desire to undergo BCBR surgery for relief of chronic obstructive lung
disease (J.A. 12), but the district court dismissed the suit for lack
of jurisdiction before ruling on the question of class certification
(Pet. App. 11a).

   Respondents sought on a variety of grounds to prevent the Secretary
from enforcing the 1979 instructions and the October 28, 1980 HCFA
ruling barring payment for BCBR and to have the court declare that
BCBR is a reasonable and necessary medical procedure (J.A. 25-27).
They contended, inter alia, that the policy barring reimbursement for
BCBR violated the requirement in 42 U.S.C. (Supp. V) 1395y(a)(1) that
payment be made for "reasonable and necessary" services and was
arbitrary and capricious under the Administrative Procedure Act (APA)
(5 U.S.C. 706(2)), under the provision in 42 U.S.C. 405(a) for the
Secretary to issue "reasonable" rules, and under the Due Process
Clause of the Fifth Amendment (J.A. 16-18, 19, 23-24).  Respondents
also asserted that requiring claimants to pursue administrative
appeals to the ALJ stage under Part A when intermediaries were obliged
to deny coverage on the basis of the 1979 instructions violated their
right to prompt administrative action under 5 U.S.C. 555(b) and
706(2)(a) (J.A. 18-19).  Finally, respondents contended that the
Secretary violated the rulemaking provisions of the APA (5 U.S.C. 553)
when the 1979 instructions and 1980 ruling were issued (J.A. 20-22).
/6/

   On February 18, 1981, the district court dismissed the complaint
for lack of jurisdiction (Pet. App. 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 it held that such
an action could not be brought under 42 U.S.C. 405(g) until the
claimants had exhausted their administrative remedies (Pet. App. 14a).
 The district court explained that the exhaustion requirement is not
discretionary with the court;  that an appearance of futility does not
render exhaustion unnecessary;  and that exhaustion could not be
regarded as futile in this case in any event because the Secretary's
position concerning the reasonableness or efficacy of the BCBR
procedure might change in the administrative hearings then being
sought by respondents (id. at 14a-15a).  The district court also held
that exhaustion of administrative remedies could not be excused on the
basis of respondents' argument that the Secretary should be
collaterally estopped from "relitigating" the question of the coverage
of BCBR under Medicare.  The court explained that the Secretary had
not yet ruled on the collateral estoppel argument in the pending
administrative proceedings and that the application of collateral
estoppel appeared doubtful because the Appeals Council had stated in
In re Ferguson that its ruling allowing payment for BCBR on behalf of
the claimants in that case was not to have precedential effect (Pet.
App. 14a-16a).

   b.  The court of appeals reversed the dismissal of the complaint
and remanded for consideration of respondents' claims on the merits.
The court of appeals recognized that under 42 U.S.C. 405(h) an action
"to recover on a claim under the (Medicare) Act" can only be brought
under 42 U.S.C. 405(g) and cannot be brought under 28 U.S.C. 1331 or
1361 (Pet. App. 3a-4a).  But the court nevertheless held that the
district court had jurisdiction under 28 U.S.C. 1331 and 1361 in this
case.  It found that a "major thrust" of respondents' complaint was
that the Secretary's 1979 instructions and 1980 ruling barring
reimbursement for BCBR constituted an "unlawful interference in the
administrative process for determining benefits" (Pet. App. 5a, 3a).
In the court's view, this is a "procedural" claim, not a substantive
claim for benefits, and it concluded that to this extent the instant
suit 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) (Pet. App. 4a-6a).

   The court of appeals acknowledged that respondents also contended
that the Secretary had "reached an improper substantive result in the
process of determining whether benefits should be awarded" (Pet. App.
6a) and that this contention did constitute a claim for benefits that
had to be brought under 42 U.S.C. 405(g).  It acknowledged as well
that a district court has jurisdiction under 42 U.S.C. 405(g) only
after the claimant has exhausted his administrative remedies (Pet.
App. 6a).  But the court of appeals found those requirements
inapplicable in this case.  It reasoned that the Secretary's issuance
of the 1980 ruling requiring ALJs and the Appeals Council to deny
claims for BCBR operations "indicated that (the Secretary) has no
interest in appeals" (id. at 8a-9a) and that respondents' interest in
having an initial benefit determination made "without the prejudice --
and the necessary appeal -- resulting from the HCFA ruling" justified
immediate judicial review (id. at 9a-10a).  The court did hold,
however, that the district court was without jurisdiction over the
claims of individuals, such as respondent Ringer, who had not yet even
applied for Medicare benefits for BCBR (id. at 9a n.4).

   c.  Although the court of appeals did not mention the point, the
three respondents who had had BCBR surgery before the amended
complaint was filed in this case -- respondents Holmes,
Webster-Zieber, and Vescio -- in fact received a decision by an ALJ on
their claims well before the court of appeals issued its opinion.  See
In re Winter, supra.  The ALJ dismissed the claims of respondents
Holmes and Webster-Zieber and 34 other beneficiaries without reaching
the merits because Dr. Winter, as their representative, had not
requested an ALJ hearing within 60 days of the decision on HCFA's
reconsideration of their claims, as required by HHS regulations (slip
op. 4-7;  see 42 C.F.R 405.722).  The ALJ did reach the merits of the
claims of respondent Vescio and 44 other beneficiaries who had had
BCBR surgery before the October 28, 1980 effective date of the formal
HCFA ruling.  /7/ However, after reviewing the extensive medical
testimony and other evidence in the record (slip op. 16-33), the ALJ
concluded that BCBR was not a "reasonable and necessary" procedure for
those 45 claimants (slip op. 8-9, 35-44).  The ALJ also rejected the
claimants' argument that the Secretary was precluded by the doctrine
of collateral estoppel from relitigating the BCBR coverage question by
virtue of the Appeals Council's decision in In re Ferguson.  The ALJ
explained that the doctrine of preclusion was inapplicable because the
Appeals Council had explicitly stated in In re Ferguson that its
decision was not to be regarded as definitive on the issues raised and
was not to be cited as precedent (In re Winter, supra, slip op. 15).

   These and other BCBR cases have now been taken to the Appeals
Council, but the Appeals Council has not yet rendered a decision on
them.  /8/

                 INTRODUCTION AND SUMMARY OF ARGUMENT

   The decision of the court of appeals is flatly inconsistent with
this Court's decision in Weinberger v. Salfi, 422 U.S. 749 (1975),
which clearly delineates the statutorily prescribed limitations on the
jurisdiction of federal district courts over claims arising under the
Social Security Act.  Salfi and its progeny require the courts to
respect the terms of the special administrative and judicial review
procedures carefully structured by Congress and the Secretary to
assure fair, thorough, and efficient consideration of the millions of
claims filed each year under the various titles of the Act.  /9/

   A.  Under Salfi, by virtue of the preclusion of review in 42 U.S.C.
405(h), judicial actions seeking to establish an entitlement to
payments under the Social Security Act or to remove a legal barrier to
the recovery of such payments in subsequent administrative proceedings
cannot be brought under 28 U.S.C. 1331.  They may be brought only
pursuant to whatever statutory review provisions Congress has made
applicable in the Social Security Act itself, such as 42 U.S.C.
1395ff(b) and 405(g) in the case of individual Medicare Part A
beneficiaries and 42 U.S.C. (& Supp. V) 1395oo in the case of Medicare
providers.  See 422 U.S. at 756-764.  The effect of this statutory
scheme is simply to channel all issues bearing on a particular
claimant's entitlement to benefits -- whether those issues are
constitutional, statutory, regulatory, procedural, or evidentiary in
nature -- through the special administrative and judicial review
procedures established under the Social Security Act.  See also
Mathews v. Eldridge, 424 U.S. 319, 327 (1976).  The court of appeals'
holding that the district court had jurisdiction under 28 U.S.C. 1331
over respondents' challenge to the denial of payment for BCBR ignores
these limitations.

   Although the court of appeals attempted to avoid the force of Salfi
by characterizing respondents' claim as a "procedural" challenge to
the "presumption" against payment for BCBR created by the 1979
instructions and 1980 ruling, this claim is essentially identical to
that held in Salfi itself to be subject to the jurisdictional bar in
Section 405(h).  Nor can Salfi be distinguished on the ground that
respondents seek only declaratory and injunctive relief, not an award
of benefits.  The plaintiffs in Salfi sought similar relief, but the
Court held that jurisdiction under 28 U.S.C. 1331 was barred.

   The enactment of the Administrative Procedure Act reinforces this
construction of Section 405(h).  Under 5 U.S.C. 703, the appropriate
proceeding in which to obtain judicial review of agency action,
including the issuance of a rule, is the special statutory review
procedure relevant to the subject matter.  In this case, the
applicable statutory review procedure is contained in 42 U.S.C.
1395ff(b) and 405(g).  The exemption in 5 U.S.C. 553(b) from APA
rulemaking requirements for matters pertaining to "benefits" -- by
virtue of which Social Security beneficiaries do not even have a right
to present their legal and factual objections to a rule to the
Secretary outside of the context of an individual claim for benefits
-- also demonstrates that Congress did not intend to permit
beneficiaries to raise such objections to a rule in a separate
proceeding under 28 U.S.C. 1331 notwithstanding the explicit
jurisdictional bar in 42 U.S.C. 405(h).

   Nor can the congressional intent to channel all issues bearing on a
Social Security claim through 42 U.S.C. 405(g) be evaded by bringing
an action under the mandamus statute, 28 U.S.C. 1361.  Mandamus relief
would be inappropriate in this case in any event because respondents
can obtain judicial review of their claims under the special statutory
review provisions in the Social Security Act and because the Secretary
manifestly does not owe a clear duty to respondents to make payments
under Medicare for BCBR surgery or to rescind the BCBR instructions
and ruling.

   B.  Even within the special framework of the Social Security Act,
whenever Congress has authorized judicial review of a claim for
benefits, it has done so only where the Secretary has rendered a
"final decision" on the claim "after a hearing." 42 U.S.C. 405(g).
See also 42 U.S.C. (& Supp. V) 1395ff(b) and 1395oo(f)(1).  This
assures that a court will become involved in considering benefit
disputes only after they first have been reviewed administratively to
the extent the Secretary deems necessary to assure a thorough and
accurate assessment.

   The Court stressed in Salfi that the "final decision" requirement
in 42 U.S.C. 405(g) is a "statutorily specified jurisdictional
prerequisite," not "simply a codification of the judicially developed
doctrine of exhaustion" (422 U.S. at 766).  Accordingly, that
requirement may not be dispensed with by a court on the basis of its
own conclusion that further exhaustion of administrative remedies
would be futile.  Ibid.  Indeed, the determination of when a decision
is "final" for purposes of judicial review is "left to the Secretary
to flesh out by regulation" (ibid.; emphasis added).  Thus, not only
is the Secretary authorized by 42 U.S.C. 405(a) and related provisions
to adopt procedures for the administrative adjudication of Social
Security claims;  she is authorized by the same statutory provisions
to specify such requirements for exhaustion of her administrative
procedures "as (she) deems serve (her) own interests in effective and
efficient administration." 422 U.S. at 766.  See also Mathews v.
Eldridge, supra, 424 U.S. at 328-330.

   The Secretary has exercised this authority by specifying in
governing regulations that, with one narrow exception applicable in
the case of constitutional challenges to the Act that are beyond the
competence of the Secretary to decide, an administrative denial of a
claim is deemed "final" for purposes of judicial review only after the
claimant has pursued all steps in the administrative process.  42
C.F.R. 405.701(c), incorporating 20 C.F.R. 404.900(a)(5).  These
regulations, adopted pursuant to authority expressly delegated by
Congress, must be sustained unless they exceed the Secretary's
statutory authority or are arbitrary and capricious.  Heckler v.
Campbell, No. 81-1983 (May 16, 1983), slip op. 8.  The regulations
clearly are not invalid on either ground, yet the court of appeals in
this case chose not to enforce the exhaustion requirement they embody.
 This the court had no authority to do.

   In view of the vast number of claims presented annually under the
Social Security Act, the Secretary necessarily must fashion
administrative procedures and corresponding exhaustion requirements
with the generality of cases in mind.  Just as the rules of civil and
appellate procedure and statutory finality requirements governing
judicial proceedings in federal courts must be respected in all cases
to which they apply, so too the procedural rules and finality
requirements designed to govern the administrative review of a broad
range of Social Security claims must be uniformly enforced in
individual cases, whether or not the beneficiary or the court believes
them to be sound as applied in the circumstances of a particular case.
 Any other result would sacrifice the certainty and ease of
application of governing principles that are critical to the efficient
administration of the Social Security programs and would overburden
the federal courts with extensive and protracted litigation on
threshold questions of jurisdiction and exhaustion of administrative
remedies in Social Security cases.

   To be sure, the Court in Mathews v. Eldridge fashioned a limited
exception to the requirement of full exhaustion in the case of an
asserted constitutional right to a pretermination hearing.  But the
issue there was entirely collateral to the merits of the disability
claim, and the alleged injury could not have been remedied by a
retroactive award of benefits if its consideration by a court were
postponed until after full exhaustion of administrative remedies.  424
U.S. at 330-332.  Neither of these factors is present here.
Respondents simply challenge on the merits the denial of payment for
particular services under the Medicare Program.  This is a routine
reimbursement issue that presents no basis whatever for excusing
respondents from complying with the applicable exhaustion regulations.

   C.  It is clear that the jurisdictional and exhaustion holdings of
Weinberger v. Salfi and its progeny are fully applicable to
respondents' Part A Medicare claims, because the preclusion of review
provision in 42 U.S.C. 405(h) applies to Medicare cases "to the same
extent" as it applies to Title II cases (see 42 U.S.C. 1395ii) and the
judicial review provisions in 42 U.S.C. (& Supp. V) 1395ff(b) and
1395oo likewise require a "final decision" as a jurisdictional
prerequisite.  And as to respondents' Part B claims, this Court held
in United States v. Erika, Inc., supra, 456 U.S. 201, that Congress
has foreclosed all judicial review under Part B of the Medicare
Program, whether the carrier's denial of a claim is based on the facts
of a particular case or on an administrative instruction of general
applicability issued by the Secretary.  /10/

   As it turns out, moreover, this case vividly illustrates why the
court of appeals should have enforced the established jurisdictional
and exhaustion requirements.  While this case was under submission to
the court of appeals, an ALJ in HHS ruled on the claims of the only
three respondents who had received BCBR surgery, and it did so without
regard to the instructions and HCFA ruling that respondents attack in
this suit.  The ALJ also considered the merits of the same collateral
estoppel argument that respondents contend they should be permitted to
present to a court without first pursuing their administrative
remedies.  It was precisely because of the possibility of such
developments in administrative proceedings that the Court in Salfi
foreclosed judicial review prior to a final decision by the Secretary.

   The court of appeals' countenancing of a circumvention of the
administrative process in these circumstances poses a serious threat
to the Secretary's ability to administer the Medicare and other Social
Security programs in the efficient manner Congress intended.  If
affirmed by this Court, it inevitably would accelerate the recent
proliferation of litigation in the lower courts on questions of
jurisdiction and exhaustion under the Social Security Act that
impelled us to request the Court to revisit these issues despite the
seemingly clear holdings of its prior cases.  These are very real
concerns, because we have been informed by HHS that there are now
pending at least 25 Medicare cases and more than 55 other Social
Security cases involving related jurisdictional issues, several of
which are class actions that include thousands of claimants who have
not exhausted their administrative remedies.  /11/ We therefore urge
the Court to arrest the erosion of the principles established in
Weinberger v. Salfi by reaffirming that the lower courts must strictly
adhere to the preclusion of review and exhaustion provisions in 42
U.S.C. 405(g) and (h).

                               ARGUMENT

 THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE DISTRICT COURT HAD
JURISDICTION TO CONSIDER RESPONDENTS' CLAIMS UNDER THE MEDICARE
PROGRAM

        A.  District Court Jurisdiction Over This Suit Under 28

               U.S.C. 1331 And 1361 Is Barred By The Jurisdictional

               Preclusion In 42 U.S.C. 405(h)

   1.  The court of appeals' holding that respondents could bring an
action under 28 U.S.C. 1331 to challenge the validity of the 1979
instructions and 1980 HCFA ruling barring payment for BCBR is flatly
inconsistent with this Court's decision in Weinberger v. Salfi.  The
named plaintiffs in Salfi filed applications for benefits under Title
II of the Social Security Act as the surviving wife and stepchild of a
deceased wage earner.  Their applications were denied at the initial
determination and reconsideration levels on the ground that they did
not have the requisite relationship with the deceased wage earner for
nine months prior to his death, as required by the Act.  See 422 U.S.
at 753-754, 764-765.  The plaintiffs then brought an action in federal
district court under 28 U.S.C. 1331 contending that the statutory
duration-of-relationship requirement was unconstitutional.  422 U.S.
at 752-753.  As relief, the plaintiffs sought a declaratory judgment
that the relevant statutory provisions were unconstitutional,
injunctive relief prohibiting the Secretary from denying benefits on
the basis of those provisions, and the payment of benefits.  The
district court found jurisdiction under 28 U.S.C. 1331, held the
statute unconstitutional, and granted the requested relief.  422 U.S.
at 755-756.  This Court held that jurisdiction over the suit under 28
U.S.C. 1331 was barred by the third sentence of 42 U.S.C. 405(h),
which provides:  "'No action against the United States, the Secretary,
or any officer or employee thereof shall be brought under (Section
1331 et seq.) of Title 28 to recover on any claim arising under (Title
II of the Social Security Act).'" 422 U.S. at 756, quoting 42 U.S.C.
(1970 ed.) 405(h) (brackets in the Court's opinion).  /12/

   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 reasoned 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.  422 U.S. 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 by the Secretary
or by his nondiscretionary application of allegedly unconstitutional
statutory restrictions." 422 U.S. at 762, quoting 42 U.S.C. 405(h)
(brackets in the Court's opinion).  The Court explained that the
effect of 42 U.S.C. 405(h) in Salfi was simply to require that the
plaintiffs' constitutional challenge be brought under the special
jurisdictional grant in the Social Security Act, "and thus in
conformity with the same standards which are applicable to
nonconstitutional claims arising under the Act.  The result is not
only of unquestionable constitutionality, but it also is manifestly
reasonable, since it assures the Secretary the opportunity prior to
constitutional litigation to ascertain, for example, that the
particular claims involved are neither invalid for other reasons nor
allowable under other provisions of the Social Security Act." 422 U.S.
at 762.

   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.  The decision in Salfi therefore controls here.
If Section 405(h) precludes 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 the validity of an administrative ruling issued by
the Secretary pursuant to the statute that also prohibits the payment
of benefits in a certain category of cases.  /13/ A challenge to such
a ruling on the ground that it was issued in violation of the Social
Security Act is indisputably a claim "arising under" that Act within
the meaning of Section 405(h).  To paraphrase the language of Salfi
(422 U.S. at 762, quoted at page 22, supra), Section 405(h) bars
jurisdiction under 28 U.S.C. 1331 irrespective of whether resort to
judicial processes is necessitated by the discretionary decision of an
intermediary, an ALJ, or the Appeals Council denying benefits because
the medical procedure was found not to be reasonable and necessary on
the basis of evidence received in the particular case, or by their
nondiscretionary application of an allegedly unlawful ruling of
general applicability issued by the Secretary barring payment on the
same grounds.  See Association of American Medical Colleges v.
Califano, 569 F.2d 101, 107 (D.C. Cir. 1977).

   2.  The court of appeals attempted to avoid the preclusive effect
of 42 U.S.C. 405(h) by characterizing respondents' claim as
"procedural" in nature rather than a substantive claim for benefits --
i.e., as a challenge to the Secretary's assertedly "unlawful
interference" in the administrative adjudication of individual cases
(Pet. App. 3a) by adopting a "presumptive rule" that BCBR is not a
reasonable and necessary service covered by Medicare (id. at 5a).  The
court reasoned that Section 405(h) is to be given a "relatively narrow
scope" (Pet. App. 4a) and should not be read to bar jurisdiction under
28 U.S.C. 1331 to entertain such "procedural" claims (Pet. App.
4a-6a).  This reasoning, too, flies in the face of Salfi.

   The Court observed in Salfi that the third sentence of Section
405(h) is "sweeping and direct" and stressed that it is not to be
construed narrowly.  422 U.S. at 757.  See Attorney Registration and
Disciplinary Comm'n v. Schweiker, No. 83-1132 (7th Cir. Aug. 11,
1983), slip op. 5;  Association of American Medical Colleges v.
Califano, supra, 569 F.2d at 106.  Moreover, what the court of appeals
in this case characterized as a "procedural" claim outside the scope
of the jurisdictional bar in Section 405(h) is essentially identical
for present purposes to the claim found in Salfi itself to fall
squarely within the scope of that bar.  The plaintiffs in Salfi
challenged the duration-of-relationship prerequisite to the receipt of
survivors benefits on the similar ground that it created an
impermissible "irrebuttable presumption" /14/ that a relationship of
less than nine months' duration was a sham;  the plaintiffs there,
like respondents here, contended that they instead should be given an
opportunity to have the relevant issue decided on a case-by-case basis
in the course of administrative proceedings on their individual
claims.  See 422 U.S. at 753, 767-768, 770-772, 782-785.  The holding
in 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 the issue.

   Although it is not directly relevant to the jurisdictional issues
involved in this case, we also note that the Court's recent decision
in Heckler v. Campbell sustaining the Secretary's disability grid
regulations demonstrates that the Secretary does not impermissibly
interfere with the adjudication of individual cases by adopting rules
of general applicability to resolve "certain classes of issues" (slip
op. 9).  The Secretary's promulgation of rules and instructions for
this purpose under the Medicare Program is authorized not only by 42
U.S.C. 405(a), relied upon by the Court in Heckler v. Campbell, supra,
slip op. 7-8, but also by 42 U.S.C. 1395ff(a), which expressly
provides for the Secretary to determine Part A Medicare claims "in
accordance with regulations prescribed by (her)." Such rules must be
sustained unless shown to be arbitrary and capricious.  Heckler v.
Campbell, supra, slip op. 7-8.  The Secretary's determinations with
respect to BCBR -- based on relevant data and other available
scientific material, the expert advice of special advisory groups, and
the fact that the procedure is not generally accepted by the medical
profession as safe and effective -- clearly are not invalid under this
standard.  They also are well suited to resolution in the context of a
rule of general applicability rather than case-by-case adjudication.
Compare Heckler v. Campbell, supra, slip op. 9-10.

   The merits of the Secretary's BCBR ruling to one side, however,
even if respondents' challenge were correctly characterized as
"procedural," there is another reason why this characterization would
not remove it from the bar in Section 405(h) to federal question
jurisdiction.  The issue involved in Mathews v. Eldridge -- whether
the plaintiffs were entitled to a hearing prior to the termination of
their disability benefits -- manifestly was "procedural" in nature,
and yet the Court made clear that an action presenting that issue
under 28 U.S.C. 1331 would be barred by Section 405(h) and instead had
to be brought pursuant to 42 U.S.C. 405(g).  424 U.S. at 327.  See
Califano v. Sanders, 430 U.S. 99, 109 (1977);  cf. Ellis v. Blum, 643
F.2d 68, 77-78 (2d Cir. 1981).  See also Califano v. Yamasaki, 442
U.S. 682, 697-698 (1979).

   3.  Respondents also seek to distinguish Salfi by asserting (Br. in
Opp. 19-21) that the plaintiffs there sought an award of benefits,
while in this case respondents seek only a declaratory judgment and
injunction preventing the Secretary from enforcing the BCBR rulings,
leaving the actual award of benefits to further administrative
proceedings.  Contrary to respondents' contention, however, the
"sweeping and direct" bar in Section 405(h) to jurisdiction under 28
U.S.C. 1331 cannot be so transparently evaded.  Salfi itself
establishes as much.  In addition to seeking an award of benefits, the
plaintiffs in Salfi sought a declaratory judgment that the statutory
provisions were unconstitutional and injunctive relief prohibiting the
Secretary from relying on those provisions to deny benefits in
administrative proceedings (App. at 12-13, Weinberger v. Salfi, supra
(No. 74-214, 1974 Term));  but the Court did not find jurisdiction
under 28 U.S.C. 1331 for those aspects of the plaintiffs' suit either.
 /15/

   It necessarily follows from Salfi that respondents in this case
cannot split off one of the legal arguments in support of their claims
for benefits (i.e., that HCFA's intermediary instructions and BCBR
ruling are invalid) and present that argument in a separate action
under 28 U.S.C. 1331, with the intent of subsequently pursuing their
administrative remedies armed with a judicial holding on the validity
of the BCBR rulings.  /16/ The "final decision" after completion of
administrative proceedings, if adverse to the claimant, would be
subject to judicial review under 42 U.S.C. 405(g), thereby initiating
a second round of proceedings in court on the same benefits claim.
And under respondents' view, this course would be available in any
case in which a regulation or instruction issued by HHS may have some
bearing on a benefit claim.  /17/ To permit claimants to pursue such a
course would substantially disrupt the efficient administration of the
various titles of the Social Security Act and would result in the
waste and duplication of scarce administrative and judicial resources.

   For the foregoing reasons, all issues bearing on a claimant's
entitlement to payments under the Social Security Act must be
channeled through whatever special review procedures Congress and the
Secretary have established under that Act.  Other courts of appeals
have adhered to this view.  They have recognized that when a claimant
brings an action seeking to clear the way to receipt of benefits under
the Social Security Act in the future by urging the court to
invalidate an administrative regulation or interpretation of the Act
that serves to limit or bar an award 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 V.N.A. of Greater Tift County, Inc. v. Heckler, 711 F.2d 1020,
1024-1027 (11th Cir. 1983);  Attorney Registration and Disciplinary
Comm'n v. Schweiker, supra, slip op. 5-6;  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, 39-40 (4th Cir. 1981);
/18/ Humana of South Carolina, Inc. v. Califano, 590 F.2d 1070, 1079
(D.C. Cir. 1978);  /19/ Rhode Island Hospital v. Califano, 585 F.2d
1153, 1158 (1st Cir. 1978);  Dr. John T. MacDonald Foundation, Inc. v.
Califano, 571 F.2d 328, 331-332 (5th Cir.) (en banc), cert. denied,
439 U.S. 893 (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 American Medical Colleges v.
Califano, supra, 569 F.2d at 106-108.

   4.a.  There is an additional reason why the statutory scheme cannot
be read to embody a congressional intent to permit judicial challenges
to regulations and instructions issued by the Secretary to be brought
in a separate action under 28 U.S.C. 1331, notwithstanding the
explicit jurisdictional bar in 42 U.S.C. 405(h).  Not long after
Section 405(h) was passed in 1939, Congress enacted the Administrative
Procedure Act in 1946 to provide, inter alia, for participation by
members of the public in the development of rules by federal agencies.
 Act of June 11, 1946, ch. 324, 60 Stat. 237 et seq. Section 4 of that
Act (60 Stat. 238), the substance of which is now codified at 5 U.S.C.
553, requires agencies to provide notice of proposed rulemaking and to
give interested persons "an opportunity to participate in the rule
making through submission of written data, views, or arguments." These
requirements ensure the public the right to bring their factual and
legal objections to a rule to the attention of the agency in an effort
to have the proposal modified or set aside administratively.

   Significantly, however, Congress expressly exempted from the
notice-and-comment requirements of the APA "any matter relating to * *
* benefits" (60 Stat. 238;  5 U.S.C. 553(a)(2)) -- a provision that
clearly was understood to apply to Social Security programs.  See
Attorney General's Manual on the Administrative Procedure Act 27
(1947);  Humana of South Carolina, Inc. v. Califano, supra, 590 F.2d
at 1082-1084.  This exemption was included because Congress believed
that "the principal considerations in most such cases relate to
mechanics and interpretations of policy, and it is deemed wise to
encourage and facilitate the issuance of rules by dispensing with all
mandatory procedural requirements." S. Rep. No. 752, 79th Cong., 1st
Sess. 13 (1945);  see also H.R. Rep. No. 1980, 79th Cong., 2d Sess. 23
(1946).

   It is inconceivable that, although Congress did not even confer on
Social Security beneficiaries a right to present the Secretary with
their factual and legal objections to a rule, it nevertheless
implicitly furnished those beneficiaries with a right to invoke the
judicial process in a separate action under 28 U.S.C. 1331 to raise
those objections, notwithstanding the explicit jurisdictional bar in
42 U.S.C. 405(h).  The enactment of the APA therefore strongly
reinforces the conclusion that challenges to the validity of rulings
and instructions issued under the Social Security Act must first be
presented in administrative proceedings in connection with the
individual's claim for benefits and may be raised on judicial review
only under 42 U.S.C. 405(g) in the event that the Secretary ultimately
denies a claim for benefits on the basis of the rulings and
instructions.  As in Salfi, the result is simply to channel all
objections to the denial of benefits through the special statutory
review procedure Congress has established.  The APA reinforces this
conclusion in another respect as well, for it provides that the form
of proceeding for judicial review of agency action, which includes the
issuance of rules, is the special statutory review proceeding relevant
to the subject matter (5 U.S.C. 703) -- in this case, 42 U.S.C. 405(g)
and 1395ff(b), which permit a claimant to challenge a rule in
connection with his claim for benefits.

   b.  In view of the express statutory exemption from APA rulemaking
procedures for matters relating to "benefits," it would seem to be
especially clear that 42 U.S.C. 405(h) bars jurisdiction under 28
U.S.C. 1331 over a challenge to the Secretary's failure to follow
notice and comment procedures when issuing rules and instructions
under the Social Security Act.  Yet respondents raised such a claim in
district court (J.A. 20-22), and, quite surprisingly, a number of
courts actually have held that jurisdiction over such an "APA"
rulemaking claim does lie under 28 U.S.C. 1331.  /20/ We submit,
however, that it is perverse for these courts to conclude that a
challenge to a Social Security regulation on the ground that it
violates the Social Security Act or even the Constitution (which
clearly do impose limits on the Secretary's authority) nevertheless
must be channeled through 42 U.S.C. 405(g), but that a challenge to a
regulation on the ground that it was not issued in conformity with the
rulemaking provisions of the APA (which do not apply to Social
Security benefit programs) may be brought wholly outside this special
statutory scheme.  See, e.g., Humana of South Carolina, Inc. v.
Califano, supra, 590 F.2d at 1082-1084.  Other courts have properly
rejected this position.  /21/

   In 1970, the Secretary did issue a memorandum to all components of
the Department directing them, as a matter of policy, to follow
notice-and-comment procedures when issuing rules in areas that fall
within the APA exemption for matters relating to benefits.  This
memorandum subsequently was published in the Federal Register.  36
Fed. Reg. 2532 (1971).  See also 47 Fed. Reg. 26860 (1982).  The
courts seem to have assumed that simply by virtue of publication, this
memorandum attained the force of law and created rights enforceable by
private parties in court.  /22/ But in fact it does not appear that
the memorandum and accompanying announcement ever were intended to be
more than their terms suggest:  a statement of internal policy.  See
Independent Meat Packers Ass'n v. Butz, 526 F.2d 228, 235-236 (8th
Cir. 1975).  Cf. United States v. Caceres, 440 U.S. 741, 754 n.18
(1979).  /23/

   However that may be, the publication of the policy statement in
1971 clearly did not make the rulemaking provisions of the APA
applicable in their own right to Social Security programs.  The
statutory exemption Congress enacted remains in effect, and as a
result, the APA rulemaking provisions do not furnish an independent
basis for a court to invalidate the instructions and HCFA ruling
respondents challenge.  Compare United States v. Caceres, supra, 440
U.S. at 753-754.  The Secretary's authority to direct that
notice-and-comment rulemaking be followed in Social Security benefit
programs instead derives from her authority under 42 U.S.C. 405(a) and
related provisions to promulgate rules and regulations for the
administration of the Social Security Act.  Any rights conferred on
respondents by the 1971 publication of the policy statement regarding
notice-and-comment procedures therefore are ones "arising under" the
Social Security Act itself, in the same manner as their substantive
claims for benefits.  It necessarily follows that because of the
jurisdictional bar in 42 U.S.C. 405(h), respondents cannot bring an
action under 28 U.S.C. 1331 to raise the notice-and-comment issue.
They may raise that claim only on judicial review of a denial of
benefits under 42 U.S.C. 405(g).  This conclusion is eminently
reasonable, for it gives the Secretary the opportunity in
administrative proceedings to determine the effect of a failure to
follow her own policy directive, just as she may interpret and apply
substantive regulations in administrative proceedings on a claim for
benefits.

   5.  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 (Pet. App. 10a).  In Califano v. Yamasaki and
Mathews v. Eldridge, this Court found it unnecessary to determine
whether 42 U.S.C. 405(h) entirely bars mandamus jurisdiction under 28
U.S.C. 1361 over any action arising under the Social Security Act,
because jurisdiction over the prerecoupment and pretermination hearing
issues in those cases was found under 42 U.S.C. 405(g).  See 442 U.S.
at 698;  424 U.S. at 332 n.12.  See also Norton v. Mathews, 427 U.S.
524, 529-530 (1976).  In our view, however, the exercise of mandamus
jurisdiction in this case was clearly barred by 42 U.S.C. 405(h).
Indeed, in Salfi itself, the plaintiffs asserted in district court
that jurisdiction over the essentially identical "procedural"
objection to an irrebuttable presumption against eligibility rested on
28 U.S.C. 1361 as well as 28 U.S.C. 1331 (App. at 7, Weinberger v.
Salfi, supra (No. 74-214, 1974 Term)), and yet the Court held that the
action had to be brought under 42 U.S.C. 405(g) because it was one
seeking to recover on a claim arising under the Social Security Act.

   The third sentence of Section 205(h) of the Social Security Act (42
U.S.C. 405(h)), as originally enacted, provided that an action may not
be brought under Section 41 of Title 28 of the United States Code to
recover on a claim arising under Title II of the Act.  See note 12,
supra.  As the Court explained in Weinberger v. Salfi (422 U.S. at 756
n.3), at that time 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 was not then in force and was
not enacted until 1962.  Pub. L. No. 87-748, Section 1(a), 76 Stat.
744.  /24/ It nevertheless would be consistent with the "sweeping"
language of the third sentence of Section 405(h) (see Weinberger v.
Salfi, supra, 422 U.S. at 757) to interpret it as barring jurisdiction
under the mandamus statute whenever jurisdiction over the particular
suit under 28 U.S.C. 1331 also would be barred.  A contrary holding
would permit circumvention of 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).

   In addition, even if the third sentence of Section 405(h) does not
foreclose mandamus jurisdiction in all Social Security cases, the
exercise of that jurisdiction would in any event be barred in this
case by the second sentence of Section 405(h).  The second sentence
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." Respondents challenge on the merits the
non-final decisions of the Secretary denying their claims for payment
for BCBR surgery.  Under the second sentence of Section 405(h), it is
clear that the Secretary's decision on the merits of a claim for
benefits cannot be reviewed by any "tribunal" (including a district
court) except as "herein provided" -- i.e., pursuant to 42 U.S.C.
1395ff(b) and 405(g), after full exhaustion of administrative
remedies.  This principle is fully applicable where, as here, the
Secretary's decision denying coverage is based on a regulation barring
payment.  Even the Second Circuit, which has held that mandamus
jurisdiction is not entirely foreclosed by Section 405(h), has stated
that such jurisdiction is available only to consider "otherwise
unreviewable procedural issues not related to merits of a claim for
benefits." Dietsch v. Schweiker, 700 F.2d 865, 868 (2d Cir. 1983).
See also Ellis v. Blum, 643 F.2d 68, 82 (2d Cir. 1981);  White v.
Mathews, 559 F.2d 852, 856 (2d Cir. 1977), cert. denied, 435 U.S. 908
(1978).  In this case, not only are the procedural issues respondents
seek to raise directly related to the merits of their claims for
benefits;  they also are reviewable in an action under 42 U.S.C.
405(g).

   In any event, well established limitations on the exercise of
mandamus jurisdiction make clear that such relief is not available
here.  Mandamus would lie only if there were no other adequate remedy
available and the Secretary owed the plaintiffs a clear duty.  United
States ex rel. Girard Trust Co. v. Helvering, 301 U.S. 540, 543-544
(1937).  See Leschniok v. Heckler, No. 82-5676 (9th Cir. Aug. 18,
1983), slip op. 4;  /25/ Hadley Memorial Hospital, Inc. v. Schweiker,
supra, 689 F.2d at 912;  American Healthcare Corp. v. Schweiker, 688
F.2d 1072, 1084 (7th Cir. 1982);  Herzog v. Secretary of HEW, 686 F.2d
1154, 1161 n.5 (6th Cir. 1982);  Cervoni v. Secretary of HEW, 581 F.2d
1010, 1020 (1st Cir. 1978);  Association of American Medical Colleges
v. Califano, supra, 569 F.2d at 110 n.80.  See generally 1 J. Moore,
Moore's Federal Practice Paragraph 0.62(17) (2d ed. 1982).  Neither
requirement is satisfied in this case.

   As we have explained, respondents have a fully adequate remedy
under 42 U.S.C. 1395ff(b) and 405(g) to challenge the Secretary's
decision denying payment for BCBR, including any objections to the
1979 intermediary instructions and 1980 ruling if either should
ultimately play a role in the Secretary's final decision.  Claimants
under the Social Security Act cannot avoid the requirement of
exhaustion of remedies under these sections simply by bringing a
challenge to a regulation under the mandamus statute.  Moreover, the
determination whether BCBR is a reasonable and necessary medical
service involves questions of judgment and discretion and the weighing
of available data and other evidence.  In these circumstances, it
scarcely can be said that the Secretary has a clear duty to make
payment for BCBR or to rescind the ruling or instructions through
which the Secretary has expressed her findings on the question of
coverage.  Indeed, the Second Circuit recently has expressed the view
that mandamus will never lie to challenge the propriety of a
regulation, as distinguished from the Secretary's conduct under it.
Smith v. Schweiker, 709 F.2d 777, 779 (1983).  These factors strongly
reinforce the conclusion that a claimant cannot be permitted to
circumvent the congressional policies embodied in 42 U.S.C. 405(g) and
(h) and confirmed by this Court in Salfi by invoking the mandamus
statute.

      B.  The District Court Did Not Have Jurisdiction Over This

               Case Under 42 U.S.C. 405(g) Because Respondents Did Not

               Exhaust Their Administrative Remedies And Obtain A

               "Final Decision" By The Secretary On Their Individual

               Benefit Claims

   Despite the "procedural" label the court of appeals attached to
their claim, it is clear that respondents simply have a substantive
disagreement with the denial by the Secretary of claims for payments
under Part A of the Medicare Program.  Thus, at bottom, this case
involves nothing more than a routine Medicare reimbursement dispute.
Even the court of appeals acknowledged (Pet. App. 6a-7a) that judicial
review of a decision by the Secretary (or by an intermediary acting on
her behalf) denying a claim for benefits may be obtained only pursuant
to 42 U.S.C. 405(g) after exhaustion of administrative remedies.  Yet
the court of appeals held that the district court had jurisdiction
over respondents' claims under 42 U.S.C. 405(g) even though they had
not exhausted their administrative remedies (Pet. App. 6a-10a).  This
holding, like the court's finding of jurisdiction under 28 U.S.C. 1331
notwithstanding the explicit jurisdictional bar in 42 U.S.C. 405(h),
is directly contrary to the statutory text and this Court's decisions.

   1.  The exhaustion requirement derives from the language in 42
U.S.C. 405(g) providing that judicial review is available under that
Section only where there has been a "final decision" by the Secretary
"after a hearing" on the claim for benefits.  This explicit
requirement is reiterated in the judicial review section of the
Medicare Act, 42 U.S.C. 1395ff(b)(1)(C).  See also 42 U.S.C. (Supp. V)
1395oo(f)(1).

   Only three of the five respondents in this case -- Holmes,
Webster-Zieber and Vescio -- ever even filed a claim for benefits
under Medicare for BCBR surgery.  This Court repeatedly has made clear
that the filing of an application for benefits is an absolute
jurisdictional prerequisite to bringing an action under 42 U.S.C.
405(g), because without such an application, there can be no
"decision" whatever by the Secretary on the claim.  See Weinberger v.
Salfi, supra, 422 U.S. at 764;  Mathews v. Eldridge, supra, 424 U.S.
at 328-329;  Mathews v. Diaz, 426 U.S. 67, 75 (1976);  Califano v.
Yamasaki, supra, 442 U.S. at 704;  Heckler v. Lopez, No. A-145 (Sept.
9, 1983), slip op. 7 (Rehnquist, Circuit Justice);  cf. Schweiker v.
Hansen, 450 U.S. 785, 790 (1981).  For this reason, as the court of
appeals held (Pet. App. 9a n.4), the district court clearly had no
jurisdiction under 42 U.S.C. 405(g) with respect to any matters
pressed on behalf of respondent Ringer or other individuals who had
not filed such an application.  /26/ Nor does respondent Winter, the
physician who performs the BCBR surgery, have any standing in his own
right to bring an action under 42 U.S.C. 405(g) on the question of
Medicare coverage for BCBR.  See Attorney Registration and
Disciplinary Comm'n v. Schweiker, supra, slip op. 7.

   Although respondents Holmes, Webster-Zieber, and Vescio did submit
applications for benefits under Part A before the amended complaint in
this case was filed, none had pursued his administrative remedies
beyond the reconsideration stage.  A decision on reconsideration is
not the Secretary's "final decision" for purposes of judicial review.
As we have explained above, the question of what constitutes the
requisite "final decision" for purposes of judicial review is "left to
the Secretary to flesh out by regulation" (Weinberger v. Salfi, supra,
422 U.S. at 766), and the governing regulations explicitly provide
that such a decision will have been rendered only after the claimant
has completed all four steps of the administrative process, including
ALJ and Appeals Council review.  42 C.F.R. 405.701(c), incorporating
20 C.F.R. 404.900(a)(5).  Because respondents Holmes, Webster-Zieber,
and Vescio had not completed the last two steps of the process when
the amended complaint was filed (and even now have not received an
Appeals Council decision), they failed to satisfy the "statutorily
specified jurisdictional prerequisite" to bringing an action under 42
U.S.C. 405(g).  Weinberger v. Salfi, supra, 422 U.S. at 766.

   2.  The court of appeals excused respondents from satisfying the
exhaustion requirement because it believed that "(b)y issuing a ruling
that purports to bind ALJs and the Appeals Council to the denial of
benefits for BCBR operations, the Secretary has indicated that (she)
has no interest in appeals at or beyond the ALJ level" (Pet. App. 8a).
 The court of appeals was simply wrong.  It confused a substantive
rule pertaining to the merits of a claim with a procedural rule
governing the manner in which a claim must be presented to the
Secretary for decision.  The 1980 HCFA ruling was the former, and had
no bearing on the exhaustion issue.  Cf. Heckler v. Lopez, supra, slip
op. 8 (Rehnquist, Circuit Justice) ("there is no decision of this
Court that has interpreted the Secretary's announcement of her
interpretation of a Social Security statute as a waiver of the
exhaustion requirement").  When the Secretary has intended to permit a
claimant to bypass the administrative process, she has explicitly so
provided in her procedural rules.  But she has not done so for
respondents' claims.

   The Court stressed in Salfi that "the Secretary may specify such
requirements for exhaustion as (she) deems serve (her) own interests
in effective and efficient administration" and that the statutory
scheme therefore does not bar the Secretary from determining in
certain circumstances that full internal exhaustion is not necessary
in order for her to deem a decision denying benefits to be
administratively "final" for purposes of judicial review.  422 U.S. at
766-767.  In Salfi itself, the plaintiffs represented that the
Secretary had correctly found the relevant facts regarding the
duration of their relationship to the decreased wage earner;  that
they did not dispute his interpretation or application of the relevant
statutory provisions to deny their claims;  and that the only issue
remaining was the constitutionality of those statutory provisions, a
matter that was beyond the competence of the Secretary to decide.  422
U.S. at 765;  App. at 11, Weinberger v. Salfi, supra (No. 74-214, 1974
Term).  The Court held that the Secretary properly could determine in
these circumstances that it was unnecessary to require the plaintiffs
fully to exhaust their administrative remedies through the Appeals
Council stage, because he had "determin(ed) in favor of the applicant,
without a hearing, all issues with regard to eligibility save for one
(the constitutional issue) as to which he considers a hearing to be
useless." 422 U.S. at 767.

   Following the decision in Salfi, the Secretary promulgated
regulations establishing a procedure for expediting the right to
judicial review in the circumstances identified in Salfi.  This
expedited procedure is available if the individual's claim has been
denied at the reconsideration level, if he does not dispute the
Secretary's findings of fact or interpretation or application of
controlling law, and if the claimant alleges (and the Secretary
agrees) that the only factor precluding a favorable determination is a
statutory provision that the claimant contends is unconstitutional.
In such a situation, the claimant and a representative of the
Secretary may enter into a formal agreement stipulating to the
existence of these conditions and deeming the decision on
reconsideration "final" for purposes of judicial review without
requiring the claimant to request an ALJ hearing or Appeals Council
review.  42 C.F.R. 405.718-405.718c.  /27/ The individual then has 60
days within which to seek judicial review.  42 C.F.R. 405.718d.

   In promulgating these regulations, the Secretary explained that
where the specified conditions have been satisfied, he could be
confident that the claim had been presented at a sufficiently high
level to afford an opportunity to correct errors;  to have a complete
record with respect to the facts, law, and possible alternative bases
of entitlement;  and to insure national uniformity.  40 Fed. Reg.
53385 (1975).  In these circumstances, the Secretary determined,
further pursuit of administrative proceedings would be "clearly
futile." Ibid.  However, in accordance with the Court's admonition in
Salfi that "a court may not substitute its conclusion as to futility
for the contrary conclusion of the Secretary" (422 U.S. at 767), the
Secretary explained that the denial of a claimant's request to pursue
the expedited procedure /28/ "will not be subject to the right to
administrative or judicial review." 40 Fed. Reg. 53385.

   The procedures adopted by the Secretary in cases raising
constitutional issues assure that the question of exhaustion of
administrative remedies itself will be presented to and be expressly
ruled upon by the Secretary in each case and that judicial review will
be accelerated only on the basis of a specific finding by the
Secretary that the particular claim in issue need not be reviewed
further administratively.  Moreover, as the government explained to
this Court in its Supplemental Brief in Mathews v. Diaz, when the
regulations implementing Salfi were being considered for promulgation
in September 1975 (Supp. Br. for Appellant at 5 n.2, Mathews v. Diaz,
supra (No. 73-1046, 1975 Term)), the regulations assure consistent
treatment of a broad range of cases that claimants may assert are ripe
for immediate judicial review.  The formal procedure for dispensing
with the exhaustion requirement also guarantees that the claimant and
the Secretary have formally stipulated to the fact and further
exhaustion may be dispensed with in the particular case, thereby
making it unnecessary for the parties to engage in extensive
litigation on this question in subsequent judicial proceedings and
unnecessary for the court in those proceedings to infer from what
otherwise might be ambiguous circumstances whether the Secretary had
actually concluded that further administrative proceedings are not
required.

   In contrast to the special category of cases raising constitutional
issues, the Secretary has not authorized avoidance of full exhaustion
of administrative remedies in any other circumstances -- including
those, as here, in which the claimant challenges a ruling or
instruction issued by the Secretary.  Her express provision for such a
procedure in the one limited category but not in others establishes
that the Secretary deliberately foreclosed any such bypass in other
cases.  Lehman v. Nakshian, 453 U.S. 156, 162-163 (1981).  The court
of appeals failed to respect this judgment.

   Indeed, given the detailed restrictions in the special regulations
relating to constitutional questions, it is untenable to suppose that
the Secretary would dispense with exhaustion of administrative
remedies in the wholesale and cavalier manner the court of appeals has
permitted in this case.  The court of appeals' opinion does not
require that the issue of exhaustion itself be presented to the
Secretary for decision in each individual claimant's case, as is
required by the regulations permitting accelerated judicial review of
claims raising a constitutional attack on the Social Security Act.
The court of appeals instead has allowed an abrogation of exhaustion
principles for any claimant allegedly affected by a regulation.
Moreover, respondents clearly do challenge the Secretary's
interpretation and application of the statutory provision barring
payment for services that are not reasonable and necessary, and there
has been no stipulation by respondents and the Secretary that they are
in agreement on the proper resolution of any factual issues involved.
Either of these factors alone would disqualify respondents from resort
to the special expediting procedure the Secretary has established in
the case of constitutional issues.  Finally, unlike the constitutional
issue presented in Salfi, the question respondents seek to raise --
the coverage of BCBR under Medicare -- not only is within the
competence of the Secretary, but is one that Congress has expressly
directed her to decide.  42 U.S.C. 1395ff(a).  Thus, none of the
factors supporting the exception to the exhaustion requirement
recognized in the Secretary's regulations implementing Salfi supports
the court of appeals' circumvention of the regulations requiring ALJ
and Appeals Council review before an action may be brought under 42
U.S.C. 405(g).  /29/ But even if the court of appeals believed
otherwise, the court was not authorized to excuse respondents from
satisfying the requirement of ALJ and Appeals Council review.  That is
a matter for the Secretary to decide.  /30/

   3.  Although a claimant who does not qualify under the regulations
applicable to cases raising only constitutional issues cannot wholly
bypass the ALJ and Appeals Council stages, as respondents attempted to
do in this case, applicable regulations do provide a separate
mechanism by which that process may be expedited.  If the claimant
believes that an oral hearing is unnecessary in his case, he may
request that the ALJ decide it on the written record without an oral
hearing.  42 C.F.R. 405.701(c), incorporating 20 C.F.R. 404.948(b).
The Secretary's operating instructions provide that such cases are to
be given "immediate attention" by the ALJ.  If the ALJ agrees with the
claimant, after a review of the claims file, that an oral hearing is
not necessary, the ALJ is expected to issue his decision within 30
days of his receipt of the claims file.  Social Security
Administration, U.S. Dep't of Health and Human Services, Office of
Hearings and Appeals Handbook, Pt. 1, Section 1-313(4) (Apr. 1982);
see also id. at Pt. 2, Section 2-1331.  Under these provisions, if a
claimant believes that the relevant facts are not in dispute and that
his case will be governed at the ALJ stage by a regulatory provision
that binds the ALJ, the case would appear to be suitable for
disposition under this expedited procedure.  /31/ Similarly, if the
Appeals Council is satisfied on a request for review that no other
matters are in issue and the claim is controlled by a formal ruling or
regulation that binds the Appeals Council, it ordinarily could be
expected to deny the request for review promptly and thereby clear the
way for judicial review.

   Against this background, there is no reason to believe that the
requirement of exhaustion of administrative remedies through the
Appeals Council stage will cause substantial hardship or delay for
those claimants whose cases actually are governed by a regulation that
bars recovery at the administrative level and who genuinely desire to
expedite the administrative process.  Respondents, however, made no
such effort.  /32/

   On the other hand, the requirement that claimants exhaust their
administrative remedies before presenting their claims to a court,
despite a rule that appears to bar an award in administrative
proceedings, does further important governmental interests under the
Social Security Act.  It furnishes the ALJ and the Appeals Council
with an opportunity to screen pending cases to determine whether the
rule in fact applies to particular cases and whether the claims should
be granted or denied for reasons unrelated to the rule.  If it appears
to the ALJ on closer examination that the rule does not apply, he then
may receive and review any necessary evidence in order to dispose of
the case expeditiously in light of the changed circumstances.  That is
precisely what happened here.  The 1980 HCFA ruling respondents attack
was not applied to them because they had BCBR surgery before its
effective date, and the ALJ received extensive evidence relating to
the coverage of such pre-1980 surgery.  Even in the case of post-1980
BCBR surgery, the ALJ might conclude that payment may be made under
Medicare because the case falls within one of the exceptions in the
1980 ruling, such as that for situations in which there is a mass in
the carotid body (see note 5, supra).

   The requirement of exhaustion also enables the ALJ to determine
whether a particular claim is "invalid for other reasons" (Weinberger
v. Salfi, supra, 422 U.S. at 762), quite aside from a challenged rule.
 The ALJ might conclude, for example, that the individual was not
covered by Medicare or that the particular procedure was not
"reasonable and necessary" for other reasons.  Thus, in the case of
BCBR, an ALJ might determine that a particular claimant in fact did
not suffer from symptoms that would warrant BCBR surgery even in the
circumstances respondent urge.  In the instant case, the ALJ found
respondents Holmes and Webster-Zieber ineligible for still other
reasons:  they had failed to request review in the time allowed.  See
page 13, supra.

   Similarly, review by the Appeals Council, which has nationwide
jurisdiction, serves important purposes that are not significantly
addressed at other stages in the administrative process.  Appeals
Council review helps to ensure that the complex statutory and
regulatory provisions governing Social Security claims are uniformaly
applied by the more than 800 ALJs and thereby to furnish an
opportunity to correct erroneous interpretations by individual ALJs.
Appeals Council review also may serve to focus attention on particular
issues affecting a number of claimants and provide a catalyst to
reassess Departmental policies, as occurred after the decision in In
re Ferguson regarding BCBR.  See pages 8-9, supra.

   In sum, as the Court observed in Salfi, exhaustion prevents
"premature interference with agency processes, so that the agency may
function efficiently and so that it may have an opportunity to correct
its own errors, to afford the parties and the courts the benefits of
its experience and expertise, and to compile a record which is
adequate for judicial review." 422 U.S. at 765.  Only then is judicial
review available under 42 U.S.C. 405(g).  The court of appeals failed
to respect these considerations.

   4.  The court of appeals also held that this Court's decision in
Mathews v. Eldridge warranted dispensing with the exhaustion
requirement here (Pet. App. 9a-10a).  This holding, too, was quite
mistaken.  In Mathews v. Eldridge, the Court stated that even when the
Secretary has determined that the decision on a given claim 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 contention 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." 424
U.S. at 330.  Second, the very nature of the plaintiff's asserted
constitutional right to a predeprivation hearing rested on the
proposition that full relief could not be obtained following a
postdeprivation hearing;  in view of the plaintiff's physical
condition and dependency on disability benefits, the Court concluded
that he had made a "colorable claim" that an erroneous prehearing
termination of benefits would injure him in a way that would not be
recompensable through retroactive payments if he were found eligible
after a hearing.  Id. at 331.  Thus, the Court reasoned, unlike in
Salfi, the plaintiffs' constitutional challenge would not be answered
if his substantive claim were denied "for other reasons" or upheld
"under other provisions" in the course of administrative exhaustion.
424 U.S. at 331-333, quoting Weinberger v. Salfi, supra, 422 U.S. at
762.

   The factors supporting the exception to the exhaustion requirement
recognized in Mathews v. Eldridge are wholly absent here.
Respondents' challenge to the instructions and HCFA 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.  Furthermore, in
Mathews v. Eldridge, the court permitted a limited detour from the
administrative process only to permit judicial resolution of the
collateral issue regarding a predetermination hearing, not the claim
to disability benefits on the merits.  Here, in contrast, respondents
seek to avoid the administrative process entirely by having the court
resolve their claims on the merits.

   Respondents also 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 a court that BCBR is a
reasonable and necessary procedure.  Unlike the plaintiff in Mathews
v. Eldridge, respondents are not receiving benefits that HHS has
sought to terminate and on which they might have become dependent.
/33/ They are simply seeking a one-time reimbursement for a particular
medical procedure that has already occurred.  And as in Salfi, but
unlike in Mathews v. Eldridge, respondents' asserted claim to payment
for BCBR will be sufficiently answered if they are awarded benefits
notwithstanding the rulings they challenge in this suit or if their
benefits are denied for other reasons.

   5.  Respondents also contend (Br. in Opp. 2, 12, 13-14 n.8, 18-19,
20 (23) that exhaustion of administrative remedies should be excused
because they should not be required to "relitigate" in administrative
proceedings the question of the coverage of BCBR under Medicare.
Respondents argue that the coverage question was decided in favor of
the claimants in the Appeals Council's decision in In re Ferguson and
that, as a result, HCFA was collaterally estopped from issuing the
1980 ruling barring payment for BCBR.  This contention is frivolous.
To begin with, because the 1980 ruling did not apply to the only three
respondents who filed an application for payment for BCBR, they have
no standing to challenge it.  See page 13, supra.

   Moreover, the Appeals Council explicitly stated in In re Ferguson
that its decision was not to be regarded as definitive on the BCBR
issue and was not to be cited as precedent in future cases (slip op.
23).  The Secretary plainly would not be required to give collateral
estoppel to such a decision.  But even if the Appeals Council had been
more definitive in its prior decision, this could not forever bar the
Secretary from taking a different view of the matter.  One of the
reasons for relying upon rulings of general applicability in
administering the Social Security Act is to correct perceived errors
and inconsistencies in prior decisions.  Heckler v. Campbell, supra.
In the case of BCBR, for example, the separate decisions in In re
Ferguson and In re Winter reached opposite conclusions on whether BCBR
is a reasonable and necessary procedure.

   For these reasons, the weight that should be given in
administrative proceedings to a prior administrative ruling in a
similar case is itself a question of the procedure to be followed in
determining individual claims that Congress has authorized the
Secretary to resolve.  See 42 U.S.C. 405(a) and 1395ff(a).  Cf. W.R.
Grace & Co. v. Local 759, Int'l Union of Rubber Workers, No. 81-1314
(May 31, 1983), slip op. 7-8.  And she has done so.  Applicable
regulations provide that if an issue in an ALJ hearing was decided in
a prior case "involving the same parties," the resolution of that
issue will not be considered again "unless there are reasons to
believe it was wrong." 42 C.F.R. 405.701(c), incorporating 20 C.F.R.
404.950(f).  That regulation clearly does not require the application
of collateral estoppel in respondents' cases on the basis of decisions
involving other parties, especially where both the ALJ in In re Winter
and HCFA in issuing the 1980 ruling found reason to believe that the
conclusion reached in the prior decision in In re Ferguson, upon which
respondents rely, was wrong.

   In any event, there is no reason why respondents should not be
required to present their collateral estoppel argument in the course
of administrative proceedings before presenting it to the courts, just
as they must do with respect to other arguments in support of their
benefit claims.  See Continental Can Co. v. Marshall, 603 F.2d 590
(7th Cir. 1979).  This would permit the ALJ and Appeals Council to
conduct an inquiry into the precedential nature of the prior
administrative decisions that respondents contend should be given
preclusive effect.  As we have explained above, the ALJ in In re
Winter -- respondents' case -- did exactly that:  the ALJ considered
the preclusion argument and rejected it, because of the
non-precedential nature of the decision in In re Ferguson.  Moreover,
an ALJ or the Appeals Council might conclude that prior decisions
should be followed as a matter of administrative stare decisis,
thereby obviating any need to resolve the collateral estoppel issue.
And exhaustion of administrative remedies on the collateral estoppel
issue at least would assure that the court, on judicial review under
42 U.S.C. 405(g), would have the benefit of the Secretary's
interpretation of the Social Security Act and implementing regulations
with regard to the application of collateral estoppel in the
particular administrative proceeding.  Cf. W.R. Grace & Co. v. Local
759, Int'l Union of Rubber Workers, supra, slip op. 7-8.

   6.  Because respondents can point to no substantial need for
immediate judicial review, their argument against exhaustion of
administrative remedies reduces to nothing more than a desire to avoid
the administrative process for its own sake.  This Court has made
clear, however, that the mere fact that a party must assume whatever
burden might be entailed in participation in administrative
proceedings does not constitute irreparable injury warranting the
bypassing of those proceedings in favor of immediate judicial review.
See, e.g., FTC v. Standard Oil of California, 449 U.S. 232, 244
(1980).  Nor, contrary to respondents' suggestion (Br. in Opp. 21),
does the fact that respondents might actually prevail in
administrative proceedings and thereby moot the issues on which they
now seek judicial review warrant avoiding the administrative
proceedings.  To the contrary, one of the principal reasons to await a
final agency decision is that the agency's consideration of the matter
might obviate all occasion for judicial review.  449 U.S. at 244 n.11.

                              CONCLUSION

   The judgment of the court of appeals should be reversed.

   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

   September 1983

   /1/ As made applicable to the Medicare Program by 42

   U.S.C. 1395ii.

   /2/ HHS stressed in Intermediary Letter No. 77-4 that a
determination that a particular procedure is excluded from coverage on
this ground does not constitute a determination that the physician has
provided "improper treatment." HHS explained that the doctor is free
to determine the treatment to be given, but that the Medicare Program
"is not free to pay automatically for whatever items and services are
involved in every course of treatment." Id. Paragraph 28,152, at
10600.

   /3/ HCFA explained, however, that 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 could be regarded as
reasonable and necessary in appropriate circumstances (45 Fed. Reg.
71431-71432).

   /4/ The carriers' denials of claims for reimbursement under Part B
of the Medicare Program for physicians' and other services in
connection with BCBR surgery could not be appealed administratively to
HHS (see page 3, supra), and the carriers' denials of coverage
pursuant to the 1979 HCFA instructions therefore were final and
binding on the claimants.

   /5/ "E.R." refers to the Excerpts of Record filed in the court of
appeals.

   /6/ Respondents also objected to the fact that Part A BCBR claims
would be heard in the future by an ALJ other than the one who
previously had considered the claims of Dr. Winter's patients (J.A.
22-23) and argued that the policy barring payment for BCBR constituted
secretarial control over the practice of medicine in violation of 42
U.S.C. 1395 and unconstitutionally interfered with Dr. Winter's
practice of medicine and his relationship with his patients (J.A.
19-20).

   /7/ The ALJ held that payment was barred under the 1980 HCFA ruling
for BCBR surgery performed after October 28, 1980 (In re Winter,
supra, slip op. 1-4, 34-35, 43).

   /8/ After the court of appeals rendered its decision in this case,
counsel for the claimants in the administrative proceedings (who is
also counsel for respondents herein) requested the Appeals Council to
stay its consideration of the administrative appeals from the ALJ's
decision pending a decision by the district court on remand.  The
Appeals Council initially granted that request.  Pet. 22 n.18.
However, in response to a February 17, 1983 letter from the
Administrator of HCFA (and despite a renewed request for a stay by
respondents' counsel in a letter dated April 12, 1983), the Appeals
Council has informed counsel by letter dated July 22, 1983 that it now
intends to proceed with its consideration of the appeals.

   /9/ This Court has had occasion to note the enormous caseload under
various Social Security programs, observing that there were 158
million claims for benefits filed under Part B of the Medicare Program
in 1980 (Schweiker v. McClure, supra, 456 U.S. at 190) and 2.3 million
claims for disability benefits filed under Titles II and XVI of the
Act in 1981 (Heckler v. Campbell, No. 81-1983 (May 16, 1983), slip op.
3 n.2).  More recently, in 1982, there were 48 million claims filed
under Part A of the Medicare Program (Bureau of Program Operations,
Health Care Financing Administration, U.S. Dep't of Health and Human
Services, B.P.O. Part A, Intermediary Workload Report (May 1983)) and
3.2 million claims filed under the old age and survivors insurance
program established by Title II of the Act (Social Security
Administration, U.S. Dep't of Health and Human Services, 1983 Annual
Report To Congress 43).

   /10/ In Erika itself, the carrier's denial of payments under
Medicare was based in part on an instruction issued by the Secretary
to Part B carriers.  See Erika, Inc. v. United States, 634 F.2d 580,
590-591 (Ct. Cl. 1980);  U.S. Br. at 14, United States v. Erika, Inc.,
supra (No. 80-1594, 1980 Term).  See also Starnes v. Schweiker, No.
82-1543 (4th Cir. Aug. 16, 1983), slip op. 10-11, discussed in note
18, infra.

   /11/ See, e.g., Lopez v. Heckler, Civ. No. 83-0697-WPE(T) (C.D.
Cal. June 16, 1983), appeal pending, No. 83-6126 (9th Cir. filed Aug.
3, 1983), stay granted, No. A-145 (Sept. 9, 1983) (Rehnquist, Circuit
Justice);  Morrison v. Heckler, No. C82-888V (W.D. Wash. May 27,
1983);  Mental Health Ass'n of Minnesota v. Schweiker, 554 F. Supp.
157 (D. Minn. 1982), appeal pending, No. 83-1263-MN (8th Cir. argued
June 14, 1983).  See also Smith v. Schweiker, 709 F.2d 777 (2d Cir.
1983).

   /12/ As it appeared in the 1970 and previous editions of the United
States Code, 42 U.S.C. 405(h) provided:

         The findings and decisions of the Secretary after a hearing
      shall be binding upon all individuals who were parties to such
      hearing.  No findings of fact or decision of the Secretary shall
      be reviewed by any person, tribunal, or governmental agency
      except as herein provided.  No action against the United States,
      the Secretary, or any officer or employee thereof shall be
      brought under section 41 of Title 28 to recover on any claim
      arising under this subchapter.

In the 1976 edition of Title 42, which has not been enacted into
positive law, the phrase "sections 1331 or 1346 of title 28" was
substituted for the reference in the third sentence to "section 41 of
Title 28." See page 33, infra.

   /13/ It is instructive in this regard that even the dissenting
opinion in Salfi repeatedly stressed that a suit that does not
challenge the constitutionality of the Social Security Act itself but
simply asserts that the individual has certain rights under the Act,
as respondents contend here, must be brought pursuant to 42 U.S.C.
405(g), after exhaustion of administrative remedies.  422 U.S. at
789-790, 791-793 & nn.6 & 8, 795, 797 (Brennan, J., dissenting).  The
dissenting opinion disagreed with the majority's holding that the
third sentence of Section 405(h) also bars constitutional attacks on
the statute itself under 28 U.S.C. 1331.  422 U.S. at 789-797.

   /14/ 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).

   /15/ The dissenting opinion in Salfi in fact argued that even if an
award of benefits in a suit under 28 U.S.C. 1331 is barred by Section
405(h), a suit under 28 U.S.C. 1331 should not be barred if it sought
only declaratory and injunctive relief requiring the Secretary to
ignore the statutory duration-of-relationship requirement in
subsequent administrative proceedings on individual benefit claims.
But the dissent nevertheless understood the majority to have held
otherwise.  See 422 U.S. at 788-789, 797-799 & n.13 (Brennan, J.,
dissenting).

   /16/ As noted above (see note 8, supra), counsel for respondents
requested the Appeals Council to stay administrative proceedings
pending a decision by the district court on that issue.

   /17/ Under respondents' view, for example, the challenge to the
grid regulations involved in Heckler v. Campbell also could have been
brought under 28 U.S.C. 1331 -- rather than pursuant to 42 U.S.C.
405(g) after full exhaustion of administrative remedies, as actually
occurred (slip op. 4-5) -- if the plaintiff did not seek an actual
award of benefits and purported only to challenge the "procedure" by
which the Secretary decided an issue in a disability case by reference
to general regulations.  Such an approach would have forced the Court
to review the grid regulations in the abstract, without a full
appreciation of the manner in which they would be applied in a
particular case.

   /18/ Although the Fourth Circuit adhered to this view in Hopewell
Nursing Home, cited in the text, its recent decision in Starnes v.
Schweiker, No. 82-1543 (Aug. 16, 1983), takes a conflicting position.
The latter case was brought by Medicare Part B beneficiaries and
physicians who furnished services challenging instructions issued to
Part B carriers that limited the amount of reimbursement for a
particular service.  They contended, inter alia, that the instructions
were not consistent with the statute and were not promulgated in
accordance with the rulemaking provisions of the APA.  The court of
appeals held that, under this Court's decision in Erika, the district
court did not have jurisdiction over the case insofar as the
plaintiffs sought review of decisions by Part B carriers on past
claims.  Starnes, supra, slip op. 10-11.  However, the court held that
neither Erika nor 42 U.S.C. 405(h) bars a suit brought under 28 U.S.C.
1331 to prevent carriers and the Secretary from applying the
instructions in the future.  Slip op. 11-17.

   This decision is clearly wrong, for two separate reasons.  First,
it permits Part B beneficiaries to avoid the holding in Erika simply
by filing a suit in federal district court prior to receiving a final
decision on a reimbursement claim from the carrier, thereby
substantially undermining the congressional intent to keep Part B
disputes out of the courts.  Second, and more generally, it permits a
claimant to avoid the explicit jurisdictional bar in 42 U.S.C. 405(h)
simply by omitting a request for monetary relief, despite the Fourth
Circuit's acknowledgment (Starnes, supra, slip op. 17) that the
plaintiffs there sought judicial invalidation of the instruction in
order to pave the way to greater reimbursement in administrative
proceedings.

   The Fourth Circuit appears to have been influenced in part by the
fact that carrier decisions on individual claims are not subject to
judicial review under Part B, thereby foreclosing all review of the
Secretary's instructions unless the court was able to find
jurisdiction under some other provision, such as 28 U.S.C. 1331.  See
Starnes, supra, slip op. 14, 16-17.  To the extent this was the
court's rationale, it has no application here, because the Medicare
beneficiary respondents in this case have a right of judicial review
under 42 U.S.C. 405(g) if the Secretary ultimately denies their Part A
claims.  In any event, and contrary to the Fourth Circuit's view,
preclusion of judicial supervision of the Secretary's administration
of the Part B Medicare Program -- involving more than 150 million
claims annually -- is precisely what Congress intended (except,
perhaps, in the case of certain constitutional issues, cf. Schweiker
v. McClure, 456 U.S. 188 (1982)).  The Fourth Circuit, understandably,
was not confident about the result it reached, for it stated that it
regarded the question as a "close" one and that a "higher reviewing
court" might be of the opinion that it had misconstrued Section 405(h)
and the decision in Erika (Starnes, supra, slip op. 18).

   /19/ In Humana, the D.C. Circuit did hold that an objection to the
Secretary's failure to follow the notice and comment procedures of the
Administrative Procedure Act before promulgating a rule could be
brought under 28 U.S.C. 1331, even though a substantive challenge to
the validity of the rule could not.  590 F.2d at 1079-1082.  This
distinction between substantive and procedural challenges to the
validity of a single regulation that may have a bearing on a
reimbursement issue finds no support in the Act or common sense.  As
we explain below (see pages 30-32, infra), federal question
jurisdiction over procedural APA claims also is barred by Section
405(h).

   /20/ See, e.g., Starnes v. Schweiker, supra, slip op. 15-17;
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;  Daniel Freeman Memorial Hospital v. Schweiker, 656
F.2d 473, 476 (9th Cir. 1981).

   /21/ Hadley Memorial Hospital, Inc. v. Schweiker, supra, 689 F.2d
at 910-912;  American Ass'n of Councils of Medical Staffs v. Califano,
575 F.2d 1367, 1370-1373 (5th Cir. 1978).

   /22/ Humana of South Carolina, Inc. v. Califano, supra, 590 F.2d at
1084 & n.102.  See Rodway v. Department of Agriculture, 514 F.2d 809,
814 (D.C. Cir. 1975).

   /23/ In May 1982, the Secretary proposed a regulation to clarify
that the Department's policy of following notice-and-comment
procedures is internal only and not judicially enforceable.  47 Fed.
Reg. 26860-26861.

   /24/ The express reference in the 1976 edition of 42 U.S.C. 405(h)
to 28 U.S.C. 1331 and 1346 was substituted for the reference to
Section 41 of Title 28 by the codifiers (see 42 U.S.C. 405 note, at
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).

   /25/ The court in Leschniok appeared to hold, however, that
mandamus jurisdiction would be available, without regard to the usual
exhaustion requirements, in any case raising a constitutional issue
that does not directly seek the payment of benefits;  and the court
then held that an allegation that the Secretary failed to follow the
statute amounts to an allegation of a constitutional violation,
because such conduct contravenes the President's duty to take care
"that the Laws be faithfully executed" (U.S. Court. Art. II, Section
3).  Slip op. 9.  The effect of this decision converting statutory
issues into constitutional ones, if followed, would be to make
mandamus jurisdiction immediately available in any case in which the
claimant alleges that the Secretary misapplied the statute.  We must
assume that the Ninth Circuit did not intend to fashion such a massive
loophole in the Social Security jurisdictional scheme.

   /26/ As typically is the case in insurance programs generally, a
claim may be filed under Medicare (thereby invoking the administrative
process that must precede the right to judicial review under 42 U.S.C.
405(g)) only after the individual has been furnished the services for
which payment is sought.  See 42 U.S.C. (& Supp. V) 1395c, 1395d(a),
1395f(a), 1395ff(b) and 405(b);  42 C.F.R. 405.1662-405.1667.
Congress obviously appreciated that the task of administering the
Medicare Program would be burdensome enough with the processing of
concrete claims for services already rendered, without also providing
for a scheme by which an individual could obtain a declaratory ruling
on whether certain services would be covered should the individual
elect to obtain them in the future.

   /27/ If the individual already has requested an ALJ hearing or
Appeals Council review, the agreement to invoke the expedited judicial
review procedure must be approved by the chief ALJ or the Appeals
Council, respectively.  42 C.F.R. 405.718c(a)(2).

   /28/ See 42 C.F.R. 405.718e (request will be denied when the
Secretary concludes that not all conditions have been satisfied).

   /29/ Respondents rely (Br. in Opp. 8, 10, 12, 16) on Mathews v.
Diaz to excuse exhaustion here.  But in Diaz, as in Salfi, there was
agreement between the parties that no facts were in dispute in the
individual case and that the only issue to be resolved was the
constitutionality of a statutory provision that was beyond the
Secretary's competence to decide.  426 U.S. at 76-77 n.11.  Moreover,
the proceedings in district court in Mathews v. Diaz occurred before
the Secretary adopted regulations to bring order to the determination
of when a "final decision" has been rendered.

   /30/ Other courts of appeals have recognized that administrative
remedies must be exhausted before seeking judicial review even where
the court believes that the particular issue on which judicial review
is sought is unlikely to 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 v.
Califano, supra, 585 F.2d at 1159;  cf. Hadley Memorial Hospital, Inc.
v. Schweiker, supra, 689 F.2d at 912.

   This is Congress' understanding of the statutory scheme as well.
In 1980, Congress amended 42 U.S.C. 1395oo(f), which provides for
judicial review of reimbursement decisions under Part A by the
Provider Reimbursement Review Board 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 Board 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 F2d at 939.
Moreover, the legislative history shows that Congress recognized that
"(u)nder present law," judicial review is not available on an isolated
legal issue until the Board has rendered a final decision on the
entire case.  H.R. Rep. No. 96-1167, 96th Cong., 2d Sess. 394 (1980).

   /31/ We note in this regard that, according to data compiled by the
Appeals Council in its July 22, 1983 letter to counsel for respondents
(see note 8, supra), some 16 BCBR cases pending before the Appeals
Council on requests for review were decided by ALJs without an oral
hearing because it was thought that such hearings were unnecessary in
view of the HCFA ruling that bound the ALJ.  In In re Winter, the
consolidated ALJ decision involving 132 BCBR claimants, the ALJ
likewise disposed of 59 cases on the basis of the HCFA ruling (slip
op. 1-4, 34-35).

   /32/ To the contrary, respondents Holmes and Webster-Zieber waited
so long to request an ALJ hearing that their request was untimely.  We
also have been informed by HHS that neither they nor respondent Vescio
sought to waive their right to an oral hearing, and they actually
requested the Appeals Council to stay its consideration of their cases
(see note 8, supra).

   /33/ The Court in Mathews v. Eldridge found even these
considerations in a disability case insufficient to require a hearing
before benefits are terminated.  424 U.S. at 335-349.

   Appendix Omitted