Cal. Clinical Lab. Ass'n v. Sec'y of Health & Human Servs.

• Decision Date: 20 May 2015
• Docket Number: Civil Action No. 14–cv–0673 KBJ
• Citation: 104 F.Supp.3d 66
• Parties: California Clinical Laboratory Association, et al., Plaintiffs, v. Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Columbia

104 F.Supp.3d 66

California Clinical Laboratory Association, et al., Plaintiffs,

v.Secretary of Health and Human Services, Defendant.

Civil Action No. 14–cv–0673 KBJ

United States District Court, District of Columbia.

Signed May 20, 2015

James F. Segroves, Hooper, Lundy & Bookman, P.C., Washington, DC, Patric Hooper, Hooper, Lundy & Bookman, Los Angeles, CA, for Plaintiffs.

Brad P. Rosenberg, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge

Plaintiffs California Clinical Laboratory Association (“CCLA”) and Jane Doe have brought the instant action to challenge certain Medicare coverage determinations that private entities—known as Medicare Administrative Contractors (“MACs”)—make. Congress has expressly authorized Defendant Secretary of the Department of Health and Human Services (the “Secretary”) to use MACs to help administer the Medicare program, and under the existing statutory and regulatory scheme, MACs routinely establish local Medicare coverage practices by issuing statements regarding whether or not, as a general rule, Medicare insurance will be available for particular items or services within a geographic region. These statements are known as “local coverage determinations” or “LCDs,” and Plaintiffs' complaint alleges, inter alia,that MACs are issuing LCDs that amount to blanket and inappropriate denials of Medicare coverage for certain clinical testing services. Plaintiffs also launch several broad attacks against the LCD development process and the resulting coverage (or non-coverage) practices, including the charge that Congress has acted unconstitutionally in delegating to private contractors the authority to issue LCDs.

Before this Court at present is Defendant's motion to dismiss Plaintiffs' complaint. The Secretary argues that Jane Doe lacks constitutional standing to bring the instant claims, and that, in any event, this Court does not have subject matter jurisdiction over Plaintiffs' claims under any of the statutes upon which Plaintiffs rely. (SeeDef.'s Mot. to Dismiss (“Def.'s Mot.”) 1, ECF No. 17; see alsoDef.'s Mem. in Supp. of Def.'s Mot. (“Def.'s Br.”) 15, ECF No. 17–1.)¹For the reasons explained below, this Court concludes that Jane Doe has failed to allege a sufficient injury-in-fact to give rise to Article III standing, and that this Court lacks subject matter jurisdiction over CCLA's remaining claims. Consequently, Defendant's motion to dismiss the complaint will be GRANTED, and Plaintiffs' complaint will be dismissed without prejudice. A separate order consistent with this opinion will follow.

I. BACKGROUND

A. Background Facts

Jane Doe is a retired, 82 year-old registered nurse who lives in Virginia and is a Medicare enrollee. (Compl. ¶ 6, ECF No. 3.)²Plaintiffs allege that Doe has been diagnosed with “several chronic conditions requiring the administration of numerous [prescription] drugs,” and that, unfortunately, some of those drugs have caused her to “suffer[ ] allergic and other very serious adverse reactions[.]” (Id.) Hoping to learn more about Jane Doe's reactions to medication and to customize further treatment, Doe's “physician recently ordered pharmacogenomic testing from a clinical laboratory in Virginia.” (Id.) Pharmacogenomic testing is a type of molecular diagnostic testing that can anticipate a medication or treatment's effect on a patient based on that patient's genetic makeup. (See id.¶¶ 6, 27; see alsoDecl. of Scott W. Blevins (“Blevins Decl.”) ¶ 1, Ex. 1 to Pls.' Opp'n, ECF No. 18–1 (explaining that “genotyping

of drug-metabolizing enzymes and bleeding risk factors ... enables health care practitioners to provide targeted therapy to patients based on patients' individual genetic profiles”).) The parties do not dispute that such testing may allow doctors to determine in advance whether a particular medication or course of treatment will help or harm a patient.

Doctors can order pharmacogenomic and other molecular diagnostic testing from certain clinical laboratories across the United States. The complaint does not specify which Virginia laboratory received the doctor's order for the pharmacogenomic testing of Jane Doe; however, Plaintiffs explain that CCLA's members include laboratories that provide such testing for Medicare enrollees and other individuals. (SeeCompl. ¶ 5; see alsoBlevins Decl. ¶ 3.) Specifically, Plaintiffs state that one of CCLA's member laboratories is GENETWORx, “a clinical laboratory headquartered in Glen Allen, Virginia” (Blevins Decl. ¶ 1), and that GENETWORx “conducts [pharmacogenomic] testing of samples from patients located throughout the United States” (id.¶ 2). When GENETWORx provides services to Medicare Part B enrollees, it must submit claims for reimbursement to Palmetto GBA (“Palmetto”), which is the MAC assigned to cover GENETWORx's region. (SeeBlevins Decl. ¶ 3.) Palmetto has issued a local coverage determination known as “LCD L34499,” which Plaintiffs contend Palmetto relies on to “den[y] Medicare coverage for pharmacogenomic testing regularly performed by GENETWORx” and other laboratories in Palmetto's region. (Id.) Indeed, according to the complaint, “Jane Doe has learned that Medicare will not cover or pay for [her pharmacogenomic] testing” because of LCD L34499. (Compl.¶ 6.)

Plaintiffs maintain that LCD L34499 and other similar LCDs pertaining to clinical testing “jeopardize[ ] [Jane Doe's] and similarly situated Part B enrollees' access to medically necessary laboratory services” (id.), and more broadly, that “[t]he current LCD development process and the resulting LCD policies of the MACs are legally invalid and ultra vires” (id.¶ 2). Thus, Plaintiffs have directly challenged an aspect of the coverage system that the Medicare Act creates; the following brief description of the Medicare system provides the necessary context for understanding Plaintiffs' claims.

B. The Medicare Act

Congress established the Medicare program in 1965 when it passed the Medicare Act (the “Act”), 42 U.S.C. §§ 1395 et seq.,as part of the Social Security Amendments of 1965. SeePub.L. No. 89–97, 79 Stat. 291 (July 30, 1965). The program provides health benefits to all persons age sixty-five and older who are eligible for Social Security benefits or eligible for retirement benefits under the railroad retirement system, see42 U.S.C. § 1395c(1), and is divided into several parts that the Secretary administers through the Centers for Medicare and Medicaid Services (“CMS”), along with the MACs. Medicare Part A, the program's hospital insurance component, covers inpatient care in facilities such as hospitals and skilled nursing facilities, as well as hospice care and some home healthcare. SeeHall v. Sebelius,770 F.Supp.2d 61, 64 (D.D.C.2011)(citing 42 U.S.C. §§ 1395c–1395i–5). Individuals who receive benefits under Medicare Part A are commonly referred to as “Medicare beneficiaries.” The instant case concerns Medicare Part B, which is the supplementary medical insurance program that covers certain physicians' services, outpatient hospital care, and other medical items and services not covered under Part A. See id.(citing 42 U.S.C. §§ 1395j–1395w–5). Individuals must enroll in Medicare Part B to receive coverage, which is why recipients of Part B benefits are sometimes referred to as “Medicare enrollees.”

While Part B is specifically designed to fill coverage gaps in Part A, there are limits to what Part B coverage entails. As relevant here, the Act expressly provides that “no payment may be made ... for any expenses incurred for items or services which ... are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member[.]” 42 U.S.C. § 1395y(a)(1)(A). In other words, Medicare Part B covers only “reasonable and necessary” items and services. Id.

1. MAC Determinations And Provider Reimbursement Under Medicare Part B

In order to obtain payment for items and services provided to Medicare Part B enrollees, healthcare providers generally must submit claims for reimbursement directly to the designated MAC for the provider's region. See id.§§ 1395kk–1(a)(1)–(4) (authorizing the Secretary to contract with MACs to perform certain functions including payment functions). Prior to paying the claim, the MAC must assess whether Part B covers the items or services at issue—i.e.,the MAC must make a determination as to whether the particular items or services are “reasonable and necessary” under the Act and, thus, whether Medicare will cover the costs associated with the particular item or service. See id.§ 1395kk–1(a)(4). Such determinations concerning “whether an individual is entitled to benefits” under the Act are commonly referred to as “initial” coverage determinations.Id.§ 1395ff(a)(1).

The Secretary may dictate the outcome of a MAC's initial coverage determination in one of two ways. First, the Act authorizes her to promulgate regulations regarding covered items or services. See id.§§ 1395hh, 1395ff. Second, she may issue “national coverage determination[s],” known as “NCDs,” which are “determination[s] by the Secretary with respect to whether or not a particular item or service is covered” on a nationwide basis. Id.§ 1395ff(f)(1)(B). The Secretary's Medicare coverage regulations and NCDs are binding on MACs such that if a relevant regulation or NCD exists with respect to a provider's claim, a MAC must apply that regulation or NCD to determine coverage. See42 C.F.R. § 405.1060(a)(4); see also42 U.S.C. § 1395ff(c)(3)(B)(ii)(I). In the absence of such direction from the Secretary, MACs may either make initial coverage determinations on a claim-by-claim basis or, in the interest of efficiency, MACs may develop and adopt local coverage determinations—LCDs—establishing “whether or not a particular item or service is covered” within the geographic region assigned to the particular MAC. 42 U.S.C. § 1395ff(f)(2)(B). LCDs thus...