Plaintiffs, the Attorney General and Superintendent of Insurance of New York, seek a declaration that a final rule of the United States Department of Health and Human Services, 42 C.F.R. § 405.323 (48 Fed.Reg. 14,810), is unlawful, and an injunction barring its enforcement. They allege that the rule is not authorized by § 953 of the Omnibus Budget Reconciliation Act of 1980, 42 U.S.C. § 1395y(b)(l), the statute pursuant to which the rule was enacted. Defendants have moved to dismiss the complaint on the grounds that plaintiffs lack standing and the Court lacks jurisdiction over the subject matter. Both sides have also moved for summary judgment on the merits. 1
I
New York State’s no-fault automobile insurance law provides that no-fault benefits are to be reduced by any amount recoverable under Medicare. N.Y.Ins.Law § 671(2)(b) 2 (“Medicare-offset law”). All New York no-fault policies must contain a clause excluding coverage for services payable by Medicare. N.Y.Ins.Law § 672(4); *1157 11 NYCRR § 65.12. As a result of this provision making Medicare the primary payor and no-fault insurers only residually liable, no-fault policies sold to Medicare-eligible insureds are 40% less expensive than the policies sold to those ineligible for Medicare. The average savings is $30 per car and in the aggregate, New York’s elderly and disabled auto owners save $18 million annually on car insurance.
Section 953 of the Omnibus Budget Reconciliation Act of 1980 amended the Medicare Act to provide that Medicare payments “may not be made with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made (as determined in accordance with regulations) ... under an automobile or liability insurance policy ... or under no fault insurance.” 42 U.S.C. § 1395y(b)(l). On April 5, 1983, the Secretary of Health and Human Services issued a final rule designed to implement this statute. The rule provides that Medicare payments will no longer be made for services covered by any auto insurance policy (including no-fault), even if the policy itself and/or state law states that benefits under the policy are secondary to Medicare. 42 C.F.R. § 405.323. 3
This regulation, in essence, reverses the order of payment when a Medicare beneficiary covered by a New York no-fault policy requires medical or hospital services as the result of a car accident. Prior to the promulgation of the rule, no insurance benefits would have been paid until all recoverable Medicare benefits were exhausted. The rule, however, prohibits the payment of Medicare benefits prior to the exhaustion of recovery under the insurance policy. Since no-fault insurance can no longer be made secondary to Medicare, 4 the policies sold to Medicare beneficiaries will no longer be at a discount and New York’s elderly and disabled will lose their $18 million annual savings.
It is plaintiffs’ contention that in light of the New York statute expressly prohibiting the payment of no-fault benefits for services covered by Medicare, the payment of no-fault benefits for such services could not “reasonably be expected to be made” within the meaning of § 953. It follows, plaintiffs argue, that the Secretary’s enactment of the rule was in excess of her statutory authority. Defendants counter that the rule is a reasonable exercise of the Secretary’s authority under § 953 to issue regulations for determining when payment can “reasonably be expected to be made.” Underlying this dispute is a disagreement over the Congressional purpose behind § 953. Plaintiffs believe that Congress sought only to prevent individuals from recovering twice for the same loss, once under Medicare and once under an insurance policy. Such duplicative recoveries were already impossible under the New York statute, as all no-fault policies were required to exclude coverage for services covered by Medicare. Defendants maintain that Congress intended not merely to stop double recoveries, but to reduce federal expenditures by guaranteeing that auto insurers would be primarily liable, and Medicare only residually liable for the cost of services covered by automobile insurance.
Before addressing the merits of this controversy, the Court must first determine whether it has jurisdiction over the action and whether plaintiffs have standing to maintain it.
II
Plaintiffs assert that the Court has jurisdiction under the general federal ques *1158 tion and mandamus statutes. 28 U.S.C. §§ 1331 and 1361. In light of the Court’s conclusion that § 1331 does provide jurisdiction over the case, it is unnecessary to consider plaintiffs’ alternative jurisdictional theory.
42 U.S.C. § 405(h), made applicable to the Medicare Act by 42 U.S.C. § 139ii, states in relevant part: “No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this chapter.” This unequivocal language would, at first, seem to eliminate § 1331 as a possible basis of jurisdiction, but an extensive body of case law has interpreted § 405(h) as being less absolute in its jurisdictional prohibition than it would appear.
The cases are not all in accord, but two general principles are well established. First, there can be no doubt that plaintiffs would be unable to bring this suit under § 1331 if the Medicare Act contained a jurisdictional grant of its own which would allow plaintiffs to obtain judicial review of the Secretary’s action.
See Weinberger v. Salfi,
A number of cases have reasoned persuasively that § 405(h) does not bar federal question jurisdiction where, as here, the plaintiff does not seek Medicare benefits or a money judgment based on a claim for reimbursement for services rendered, but rather, review of agency action unrelated to such disputes.
Colonial Penn,
With these considerations in mind, the Court holds that it has subject matter jurisdiction over this action under 28 U.S.C. § 1331. The Court finds additional support for this conclusion in the Third Circuit’s recent ruling that federal question jurisdiction exists over an insurance company’s challenge to the retroactivity of the Health and Human Services regulation at issue here.
Colonial Penn,
Ill
Plaintiffs, as representatives of the State of New York, claim standing to sue in a
parens patriae
capacity on behalf of the citizens of the State. Before assessing the propriety of
parens patriae
standing on the facts of this case, the Court must decide whether it is ever permissible for a state, as
parens patriae,
to sue an agency of the federal government. Relying principally on
Massachusetts v. Mellon,
It cannot be conceded that a state, as parens patriae, may institute judicial proceedings to protect citizens of the United States from the operation of the statutes thereof. While the state, under some circumstances, may sue in that capacity for the protection of its citizens, it is no part of its duty or power to enforce their rights in respect of their relations with the federal government. In that field it is the United States, and not the state, which represents them as parens patriae, when such representation becomes appropriate; and to the former, and not to the latter, they must look for such protective measures as flow from that status.
In
Mellon,
Massachusetts sought to challenge the constitutionality of a federal statute, or, as the Court put it, “to protect the citizens of the United States from the operation of the statutes thereof.”
In
Alabama v. Tennessee Valley Authority,
Mellon
is also distinguishable because New York does not seek, as Massachusetts did, to invoke the Supreme Court’s original jurisdiction. The Court's concern for its own caseload counsels stricter scrutiny of cases invoking original Supreme Court jurisdiction than those brought in the district courts. In
Alfred A. Snapp & Son, Inc. v. Puerto Rico,
For these reasons, the Court finds that
Massachusetts v. Mellon
is not a bar to
parens patriae
standing in this case. Although some cases are to the contrary,
e.g. Pennsylvania v. Kleppe,
In order to maintain a suit in a
parens patriae
capacity, a state must articulate a “quasi-sovereign” interest in the litigation distinct from that of any private party.
Alfred L. Snapp,
Defendants argue that New York can have no “quasi-sovereign” interest in this dispute because an injunction against the enforcement of the Secretary’s regulation may run counter to the interests of some New Yorkers. For example, the reduction in Medicare’s liability to auto accident victims effected by the rule may inure to the benefit of those New York citizens who do not own cars but who do pay federal taxes. However this may be, the mere fact that some of the state’s citizens may oppose the position taken by the state’s officials does not mean that the state lacks a “quasi-sovereign” interest. The Supreme Court has stated that “[o]ne helpful indicia in determining whether an alleged injury to the health and welfare of its citizens suffices to give the state standing to sue as parens
patriae
is whether the injury is one that the state, if it could, would likely attempt to address through its sovereign law
*1161
making powers.”
Alfred L. Snapp,
IV
Plaintiffs also claim that they have standing to sue on their own behalf. To evaluate this claim, the Court must determine whether plaintiffs have “alleged such a personal stake in the outcome of the controversy as to assure the concrete adversariness which sharpens the presentation of the issues upon which the court so largely depends...”
Duke Power Co. v. Carolina Environmental Study Group Inc.,
Plaintiffs allege that they have been injured because the regulation at issue here interferes with their ability to discharge their obligation to protect the interests of New York’s elderly and disabled car owners. Through its Medicare-offset law, New York has expressed its policy of reducing the no-fault premiums of its Medicare-eligible citizens. Plaintiff Abrams, who as Attorney General is responsible for enforcing all state laws, and plaintiff Corcoran, who as Superintendent of Insurance is responsible for enforcing all state laws governing the insurance industry, are the state officials charged with implementing that policy. Since it is undisputed that the Secretary’s regulation will eliminate the $18 million annual savings to New York’s elderly and disabled car owners which it was the central purpose of the Medicare-offset law to create, plaintiffs conclude that the regulation frustrates their efforts to enforce the laws and implement the policies of the State of New York, as they are duty-bound to do. As a result, they allege, they have been injured in their official capacities.
A number of cases support plaintiffs’ contention. In
Washington Utilities & Transportation Commission v. Federal Communications Commission,
Here, as in
Washington Utilities,
the challenged regulation will impede the plaintiffs’ ability to protect the interests of those they are charged by statute with protecting. As in
Florida v. Weinberger,
the Secretary’s rule is directed to an end wholly opposite to that of a state statute which plaintiffs are required to enforce. In the Court’s view, this interference with plaintiffs’ execution of their official tasks subjects plaintiffs to a “distinct and palpable injury.”
Warth v. Seldin,
None of the prudential concerns which the Supreme Court has indicated may deprive a party of standing even if he meets the Article III minima are relevant here. Plaintiffs assert their own rights, not those of third parties, and the injury they suffer is concrete and specific, not merely “a generalized grievance shared by a large number of citizens in a substantially equal measure.”
Duke Power,
The “zone of interests” test is a generous one.
Colonial Penn,
Plaintiffs’ interest in this litigation is in removing an impediment to their effective enforcement of the Medicare-offset provision of New York’s no-fault law. Defendants maintain that this interest is unrelated to the purposes which underlie the Medicare Act. The Act is designed to protect the interests of Medicare beneficiaries and providers of services and only these groups, defendants argue, fall within its “zone of interests”.
See National Union of Hospital and Health Care Employees v. Carey,
V
Having concluded that the Court has subject matter jurisdiction and that plaintiffs have standing to sue, the Court must now determine whether the Secretary’s final rule was authorized by § 953. While there is no question that the courts, and not the administrative agencies, are the final authority in matters of statutory construction,
Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission,
Plaintiffs insist that the Secretary’s determination of when payment “can reasonably be expected to be made” under an insurance policy must be based upon the terms of the policy precisely as written, including any provision of the policy expressly designed to withhold payment in favor of Medicare. All New York no-fault policies, by law, have such a provision. The Secretary maintains that the delegation of authority to promulgate rules for determining when payment can be expected should be interpreted as a more flexible grant of authority to set the substantive standards for assessing the probability of payment which best comport with the Congressional purpose behind § 953.
*1164 Plaintiffs’ assertion to the contrary notwithstanding, the statutory language is not so clear and unambiguous as to be susceptible of no interpretation but their own. It is certainly plausible to read the statute as plaintiffs do, interpreting a “reasonable” expectation of payment as meaning reasonable with respect to the express terms of the policy. But on the other hand, in light of the fact that the statute is concerned with the relationship between Medicare and auto insurance, it is equally plausible to read “reasonable” as meaning reasonable without regard to the insurance policy’s own terms governing its relationship to Medicare.
As noted earlier in this opinion, the parties’ dispute over the statutory language reflects their disagreement over the purpose behind § 953. Plaintiffs argue that Congress sought only to eliminate double recoveries and not to affect the priority of payment as between Medicare and automobile insurance. Defendants maintain that the statute was designed to guarantee that auto insurers would be primarily liable for the services covered by their policies. In the Court’s view, the legislative history substantiates the Secretary’s reading of the statute. The Budget Committee Report that accompanied the House version of the statute stated:
Under Title VIII, medicare will have residual rather than primary liability for the payment of services required by a beneficiary as a result of an injury or illness sustained in an auto accident where payment for the provision of such services can also be made under an automobile insurance policy.
... • Under present law, medicare is the primary payor ... for hospital and medical services received by beneficiaries. This is true even in cases in which a beneficiary’s need for services is related to an injury or illness sustained in an auto accident and the services could have been paid for by a private insurance carrier under the terms of an automobile insurance policy. As a result, medicare has served to relieve private insurers of obligations to pay the costs of medical care in cases where there would otherwise be liability under the private insurance contract.
H.R.Rep. No. 96-1167, 96th Cong., 2d Sess. 389, reprinted in 1980 U.S.Code Cong. & Ad.News 5526, 5752. The report plainly states Congress’s intention that auto insurers be primarily liable for the cost of services covered by their policies. Moreover, it is especially clear that double recovery was not the only, if even the primary, problem Congress sought to correct, as the report objected to Medicare “relievpng] private insurers of obligations to pay,” not to Medicare paying in addition to private insurers.
The Secretary’s regulation, which makes Medicare only residually liable despite any Medicare-offset clause in a private insurance policy or any state law requiring such a clause, is the only rule which can effectively implement Congressional policy. If the Secretary were required to respect such clauses in determining when payment “can reasonably be expected to be made,” Medicare would remain the primary payor for those beneficiaries covered by auto insurance. Although double recoveries would still be prevented even in those states which did not previously prohibit them, the federal government would save little as those who had been double covered would surely drop the privately purchased insurance coverage, not the publicly provided Medicare. Such an election could be made simply by the inclusion of a Medicare-offset clause in any auto insurance contract. The legislative history of the Omnibus Reconciliation Act of 1980, as a whole, demonstrates conclusively that the Act was designed to reduce federal expenditures. Id. at 5527-28. Section 953 would wholly fail of this purpose if plaintiffs’ construction were adopted.
Plaintiffs point out that the House version of § 953 did not cover no-fault. A Senate amendment, accepted in conference, brought no-fault (and liability insurance) within the scope of the statute. Nothing in the House Conference Report, however, indicates that no-fault policies were to be treated differently under § 953 than were other auto or liability policies. House Con *1165 ferenee Rep. No. 96-14, 96th Cong., 2d Sess. 133, reprinted, in 1980 U.S.Code Cong. & Ad.News 5903, 5924. 7 Nothing on the face of the statute or in the legislative history even suggests that Medicare was to be made the residual payor for all persons covered by fault-based policies, but that no-fault insureds were to be allowed to look to Medicare for their primary recovery.
Finally, plaintiffs argue that as matter statutory construction, the Court cannot interpret § 953 as authorizing a regulation that undermines New York’s Medicare-offset statute because there is no clear evidence that Congress intended § 953 to preempt state law. “It will not be presumed that a federal statute was intended to supersede the exercise of the power of the state unless there is a clear manifestation of the intention to do so.”
Schwartz v. Texas,
The Court has no quarrel with this general principle of statutory construction. The simple answer to plaintiffs’ argument, however, is that the legislative history of § 953, as the Court reads it, does contain a clear manifestation of [Congress’s] intention” to make Medicare secondary to auto insurance benefits. Since New York law does precisely the opposite, Congress could only have intended to override the state statute. Although Congress did not, in so many words, declare its awareness that in passing § 953 it would supersede state Medicare-offset laws, the Court must infer that Congress intended to do so when such would plainly be the result of effectuating the statute’s clearly articulated purpose.
VI
As the Court has jurisdiction over this action and the plaintiffs have standing to sue, defendants’ motion to dismiss the complaint under F.R.Civ.P. 12(b)(1) and (6) is denied. However, the Court finds that the Secretary’s final rule was authorized by § 953 of the Omnibus Budget Reconciliation Act of 1980, 42 U.S.C. § 1395y(b)(l), and is consistent with the Congressional purpose behind that statute. The promulgation of the rule was, therefore, neither arbitrary, capricious, nor in excess of statutory authority. Accordingly, defendants’ motion for summary judgment dismissing the complaint under F.R.Civ.P. 56 is granted.
IT IS SO ORDERED.
Notes
. William D. Gunter, the Insurance Commissioner and Treasurer of Florida, has moved for leave to file a brief as amicus curiae. That motion is granted.
. N.Y.Ins.Law § 671(2) states in part:
" ‘First party benefits’ means payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less;
"(b) amounts recovered or recoverable on account of such injury under state or federal laws providing ... medicare benefits (other than lifetime reserve days and provided further that the medicare benefits utilized herein do not result in a reduction of such person’s medicare benefits for a subsequent illness or injury)----”
. 42 C.F.R. § 405.323 (48 Fed.Reg. 14,810) states in part:
"Except as specified in paragraph (c) of this section payment may not be made for services covered under an automobile medical or no-fault insurance policy or plan even though State law or the insurance policy or plan states that its benefits are secondary to Medicare’s or otherwise excludes or limits it payments if the injured party is also entitled to Medicare benefits.”
. It would perhaps be more precise to say not that states or private insurers have lost the authority to make insurance benefits secondary to the exhaustion of recoverable Medicare benefits, but that the rule reduces the amount recoverable prior to the exhaustion of insurance benefits to zero.
. Some courts have refused to take jurisdiction over constitutional claims but with the express understanding that the claims could be heard by the Court of Claims.
E.g., Drennan v. Harris,
. 15 U.S.C. § 1012 states in part:
"(b) No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any state for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance____”
. The Report states:
“With respect to no-fault insurance plans, the provision is applicable only to the policies or plans actually held by the individuals involved and not to any hypothetical policies or plans that an individual at one time could have opted, but did not opt, to enroll in.”
1980 U.S.Code Cong. & Ad.News at 5924. This comment would seem to address a completely unrelated concern, and though plaintiffs apparently suggest that it indicates Congressional deference to state Medicare-offset provisions, they offer no support for that view. Plaintiffs have noted that certain state no-fault schemes allowed consumers to purchase insurance coverage that duplicated Medicare, but they acknowledge that § 953 prohibits this. They have not pointed to any state which allows the no-fault consumer to opt against Medicare-offset, with its substantial savings, when double recovery is prohibited. Nor would such an option be rational. Therefore, the Report's statement that § 953 applies only to the policy actually chosen, and not to one which an individual “could have opted, but did not opt, to enroll in", has no bearing on the Medicare-offset issue.
. See note 6. Plaintiffs do not appear to argue that the Secretary's construction of § 953 is barred by the McCarran-Ferguson Act. Rather, they contend that “the final rule violates the principal [sic] of federalism embodied in the ... Act.” Plaintiffs’ Memorandum of Law p. 50. In any case, § 953 “specifically relates to the business of insurance" within the meaning of the Act. As noted above, § 953 is explicitly addressed to the relationship between Medicare and automobile insurance, including no-fault.