Banks v. Sec'y, Dep't of Health & Human Servs.

Decision Date21 June 2022
Docket Number22-10072
Citation38 F.4th 86
Parties Edwin R. BANKS, Plaintiff-Appellant, v. SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

David Goroff, Foley & Lardner, LLP, CHICAGO, IL, James Pistorino, James Pistorino, Menlo Park, CA, Robert R. Baugh, Dentons Sirote, PC, Birmingham, AL, Meghan Salvati Cole, Lightfoot Franklin & White, LLC, Birmingham, AL, Roderic G. Steakley, Dentons Sirote, PC, Huntsville, AL, for Plaintiff - Appellant.

Elizabeth Holt, Michael B. Billingsley, John David Saxon, Jr., Mr., U.S. Attorney's Office, Birmingham, AL, for Defendant - Appellee.

Before Newsom, Marcus, Circuit Judges, and Middlebrooks,* District Judge.

Newsom, Circuit Judge:

In this appeal, we must decide whether Edwin Banks has standing to challenge a denial of Medicare coverage where the costs of his treatment were imposed not on him, but rather on a third-party supplier. The district court determined that Banks hadn't suffered an injury in fact and accordingly dismissed his case for want of jurisdiction. We agree and affirm.

I
A

Banks is a 77-year-old Medicare beneficiary from Madison, Alabama. In 2009, he was diagnosed with glioblastoma multiforme

(GBM), an aggressive form of brain cancer. Without treatment, GBM patients typically don't survive longer than three months. And even with traditional forms of treatment, the five-year survival rate is only 5%.

Banks, however, has defied the odds. Shortly after his diagnosis, he underwent surgery and chemotherapy. That helped for a time, but unfortunately, Banks's cancer

progressed. In 2013, Banks's doctors prescribed him Optune, a groundbreaking medical technology that had recently received FDA approval for treating recurrent GBM. Optune is a portable, wearable device that delivers tumor treating field therapy (TTFT) to inhibit cancer-cell replication. A company called Novocure is the sole supplier of the Optune device, which is rented by patients on a monthly basis.

TTFT seems to have worked wonders for Banks. Despite the grim prospects, his condition stabilized, and he has not experienced a further tumor recurrence

since beginning the treatment. Banks relied on TTFT through 2019, at which point he "elected to take a break" from the therapy because he had developed an allergy to an adhesive gel used to secure the Optune device. He intends to resume TTFT "if his condition changes" in the future—that is, if his tumor progresses. Happily, that hasn't happened in the three years since Banks stopped the treatment.

B

Because Banks is a Medicare Part B beneficiary, he and Novocure asked Medicare to cover his TTFT from January 2018 through January 2019. As we will explain, some of Banks's claims were approved, and others were denied. But importantly, Banks wasn't held liable for any of the claims—Novocure was. Before we get ahead of ourselves, though, some legal background is in order.

Medicare Part B is a supplemental insurance program "for aged and disabled individuals who elect to enroll" in it. 42 U.S.C. § 1395j. The voluntary program is administered by the Secretary of Health and Human Services through the Centers for Medicare and Medicaid Services (CMS). Id. § 1395kk.

Part B enrollees pay monthly premiums in exchange for certain types of healthcare coverage. Id. §§ 1395k(a), 1395q(b)(2), (d). Although Part B typically covers "durable medical equipment" like Optune, see id. §§ 1395k(a)(1), 1395x(n), (s)(6), it excludes coverage for services that "are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member," id. § 1395y(a)(1)(A).

There is no hard-and-fast rule for determining whether a particular medical service is "reasonable and necessary." Congress has instead delegated that decision to the Secretary's discretion. See Heckler v. Ringer , 466 U.S. 602, 617, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984). For his part, the Secretary has defined "reasonable and necessary" to mean (1) "[s]afe and effective," (2) "[n]ot experimental or investigational," and (3) "[a]ppropriate" in light of the prevailing "standards of medical practice" and "the patient's medical needs and condition." Medicare Program Integrity Manual, CMS Pub. 100-08, ch. 13, § 13.5.4. Applying that standard often entails case-by-case adjudication. See Almy v. Sebelius , 679 F.3d 297, 300 (4th Cir. 2012). But the Medicare Act establishes certain ways for the Secretary "to extend coverage determinations to specific courses of treatment." Prosser v. Becerra , 2 F.4th 708, 711 (7th Cir. 2021). "These so-called local coverage determinations (often shorthanded as LCDs) and national coverage determinations guide the individual claims decisions made by CMS." Id. ; see also 42 U.S.C. § 1395ff(f)(1)(2).

Whether or not an LCD is in place, the Medicare claims-review process proceeds in six steps. First , the beneficiary submits his claim to a local contractor for an "initial determination." See 42 U.S.C. § 1395ff(a) ; 42 C.F.R. § 405.920. Second , if the beneficiary is dissatisfied with the initial determination, he may request a "re-determination" by the contractor. See 42 U.S.C. § 1395ff(a)(3) ; 42 C.F.R. § 405.940. Third , the beneficiary can appeal his claim to a "qualified independent contractor" for further review—known as a "reconsideration." See 42 U.S.C. § 1395ff(c) ; 42 C.F.R. § 405.960. From this stage forward, an LCD is no longer binding, even if it remains persuasive. See 42 U.S.C. § 1395ff(c)(3)(B)(ii)(II) ; 42 C.F.R. §§ 405.976(b)(3), 405.1062. In addition, when the propriety of the claim turns on "whether an item or service is reasonable and necessary for the ... treatment of illness," the qualified independent contractor's review "shall include consideration of the facts and circumstances ... by a panel of physicians or other appropriate health care professionals." 42 U.S.C. § 1395ff(c)(3)(B)(i). Fourth , the Medicare beneficiary may request a hearing regarding a denied claim from an administrative law judge (ALJ), who must issue a decision within 90 days. See id. § 1395ff(b)(1)(A), (d)(1) ; 42 C.F.R. § 405.1000(a). Fifth , the beneficiary can appeal an unfavorable ALJ decision to the Medicare Appeals Council (MAC). See 42 U.S.C. § 1395ff(d)(2) ; 42 C.F.R. § 405.1100(a). And sixth , if the beneficiary is still unsatisfied with the result—or if the MAC doesn't act in a timely manner—he can seek judicial review in federal court. See 42 U.S.C. §§ 405(g), 1395ff(b)(1)(A), (d)(3)(B).

Taking stock: A multi-level review process helps to ensure that Medicare beneficiaries receive coverage for medically reasonable and necessary treatment. But "[e]ven when a benefits claim is denied at any level of the appeals process, the beneficiary is not necessarily stuck paying a medical bill." Prosser , 2 F.4th at 711. The Medicare Act contains a handful of measures that serve to protect patients from liability. The most important for our purposes is the one contained in 42 U.S.C. § 1395pp —a provision that the parties have called the "Medicare mulligan."1

Here's how § 1395pp works. Recall that Medicare normally won't pay for "items and services" that "are not reasonable and necessary for the diagnosis or treatment of illness or injury." 42 U.S.C. § 1395y(a)(1)(A). Nevertheless, if "both" the Medicare beneficiary and the supplier "did not know, and could not reasonably have been expected to know, that payment would not be made for such items or services," then Medicare will foot the bill. Id. § 1395pp(a). Alternatively, if the supplier knew that coverage would be denied but the beneficiary didn't, then the Secretary will indemnify the beneficiary and impose the costs on the supplier. Id. § 1395pp(b) ; see also 42 C.F.R. § 411.402. Either way, § 1395pp provides a one-time allowance—a "mulligan" if you will. Following the mulligan, the Secretary "shall notify" the beneficiary explaining why payment or indemnification was made, "and in the case of comparable situations arising thereafter," the beneficiary "shall, by reason of such notice ... be deemed to have knowledge that payment cannot be made for such items or services or reasonably comparable items or services." 42 U.S.C. § 1395pp(a), (b).

C

With the legal landscape in view, we return to Banks's case. As already explained, Banks and Novocure submitted 13 claims to Medicare, corresponding to 13 months of TTFT. In accordance with the LCD then in effect, those claims were denied at the initial stages of review and by a qualified independent contractor as not medically reasonable and necessary. In each case, Novocure—not Banks—was required to bear the costs. This was because Novocure presumably knew that coverage would be denied based on the LCD, but the record didn't show that Banks had received advance notice that Medicare would likely deny payment. Accordingly, he was relieved of any liability for those claims.

Banks further appealed the denials, at which point his claims were, for reasons unexplained, split between two different ALJs. On June 3, 2019, ALJ Bruce Kelton ruled that the TTFT provided in January, March, and April 2018 wasn't medically reasonable and necessary to treat Banks's condition. Even so, Banks didn't have to pay; Novocure was held solely liable for the denied charges. Three days later, Banks and Novocure received a favorable decision from another ALJ, Jeffrey Gulin, for the remaining 10 claims. Unlike ALJ Kelton, ALJ Gulin found that TTFT "was medically reasonable and necessary" for treating Banks's recurrent GBM—at least for the months of service before him. As a result, ALJ Gulin ordered that Medicare pay for the treatment.

Banks and Novocure appealed ALJ Kelton's unfavorable decision to the MAC. And when the MAC didn't issue a decision within 90 days, Banks sought judicial review.

In the district court, Banks argued that ALJ Gulin's decision collaterally estopped the Secretary from denying the claims for TTFT coverage...

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