## Facts

- Medicare Part B reimburses covered physician and related services for eligible beneficiaries.
- A private insurer served as the Medicare Part B carrier for Queens, New York under contract with the Secretary of Health and Human Services, processing claims and issuing written “review determination” notices when claims were reduced or denied.
- The case began as a small-claims dispute over an alleged underpayment for cancer treatment and was removed to federal court.
- The district court certified a class of beneficiaries whose disputed Part B claims of $100 or more were serviced by the carrier.
- At a bench trial, beneficiaries showed that the carrier’s standard notices were highly technical, relied on Medicare-specific codes and jargon, and were largely incomprehensible to typical elderly recipients.
- Evidence indicated a persistent risk of erroneous underpayment, compounded by notices that did not explain the actual, claim-specific reasons for reductions and thus impeded effective review.

## Issues

1. Whether Medicare Part B beneficiaries have a constitutionally protected property interest in receiving the reimbursement to which they are legally entitled.
2. Whether the carrier’s standard “review determination” notices for reduced or partially denied claims provided constitutionally adequate notice under the Due Process Clause.

## Decision

- The court held that beneficiaries have a protected property interest in legally owed Medicare Part B reimbursement.
- The court found the carrier’s standard review determination notices constitutionally inadequate because they did not provide understandable, claim-specific explanations for the reduction or denial.
- The court ordered the notices revised to state, in plain language, the specific reasons for the adverse determination and enough information to permit meaningful assessment and pursuit of further review or appeal.

## Legal Principles

- Statutory entitlements to government benefits can constitute property interests protected by due process.
- Due process requires notice reasonably calculated to inform affected persons of the actual reasons for an adverse benefits determination and to permit meaningful review.
- In mass-administered benefits programs, reliance on opaque codes and technical jargon may be unconstitutional when it prevents typical beneficiaries from understanding and contesting denials, especially where the risk of erroneous deprivation is shown.
- Under the Mathews v. Eldridge framework, when clearer explanations would materially reduce error and are administratively feasible, due process requires improved written notice.

## Conclusion

The court required plain-language, reason-specific Medicare Part B denial or reduction notices because beneficiaries have a protected interest in correct reimbursement and the existing form notices created an unjustified risk of erroneous deprivation by preventing meaningful review.


David v. Heckler, 591 F. Supp. 1033 (E.D.N.Y. 1984)