Inogen, Inc. v. Becerra
| Decision Date | 17 June 2021 |
| Docket Number | Civil Action No. 1:20-cv-02675 (CJN) |
| Parties | INOGEN, INC., Plaintiff, v. XAVIER BECERRA, Secretary of Health and Human Services, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Inogen, Inc., challenges the Department of Health and Human Services's decision to retract a billing code for its medical device. See generally Compl., ECF No. 8. Pending before the Court are Inogen's Motion for a Preliminary Injunction, ECF No. 20, and Defendants' Motion to Dismiss, ECF No. 29. Because the Medicare Act forecloses judicial review of Inogen's claims at this time, the Court must dismiss this action.
Inogen manufactures durable medical equipment for long-term, at-home patient use. Compl. ¶¶ 9-10. One of its products is the Sidekick Tidal Assist Ventilator ("Sidekick"), a device that helps deliver oxygen to patients needing respiratory assistance. Id. ¶ 11. Inogen's claims relate to the Healthcare Common Procedure Coding System ("HCPCS") code assigned to the Sidekick. Id. ¶¶ 15, 29-30.
Medicare Part B beneficiaries may purchase or rent durable medical equipment using their Part B benefits. Pl.'s Mem. Supp. Appl. for Prelim. Inj. at 8 ( ), ECF No. 21 (citing 42 U.S.C. § 1395m et seq.). The HCPCS coding system categories medical items, including durable medical equipment, for billing purposes. Id. at 1. A product's HCPCS code largely determines whether (and to what extent) private and public insurers will reimburse a supplier of such equipment. Compl. ¶¶ 17, 26.
The Centers for Medicare & Medicaid Services ("CMS") is the HHS component responsible for administering the Medicare program and oversees the HCPCS coding system. Suppliers of durable medical equipment may seek an HCPCS code assignment for their products in two ways: they may file applications to assign, modify, add, or delete HCPCS codes with an entity called the CMS Workgroup, which conducts a HCPCS coding review on a biannual cycle, Defs.' Mem. Supp. Mot. to Dismiss and Opp'n to Pl.'s Mot. for Prelim. Inj. at 2 ( ), ECF No. 31-1; or they may request that a Pricing, Data Analysis, and Coding ("PDAC") contractor assign an already-existing code to their product, Pl.'s Prelim. Inj. at 8; Defs.' Mot. at 3. If a supplier is dissatisfied with the PDAC contractor's determination, it may file a reconsideration request with the PDAC contractor or a request for evaluation during the CMS Workgroup's biannual coding review. Defs.' Mot. at 3.
In August 2019, Inogen submitted a Code Verification Request to confirm that it could bill the Sidekick as a noninvasive ventilator (code E0466). Compl. ¶ 36. Palmetto—the PDAC contractor involved in this case—initially verified the Sidekick for that code. Id. ¶ 36. But Palmetto retracted that determination two weeks later because, in its view, the Sidekick "does not have the full range of controls and gas delivery that would allow it to be accurately classified as a ventilator." Compl. Ex. E at 3, ECF No. 8-5. Palmetto determined that the Sidekick should instead be classified as an oxygen accessory (code E1352) and oxygen concentrator (code E1390). Id. at 2. Inogen submitted a reconsideration request on October 18, which Palmetto denied on January16, 2020. Pl.'s Opp'n to Defs.' Mot. and Reply to Defs.' Opp'n to Pl.'s Mot. for Prelim. Inj. at 4 ("Pl.'s Reply"), ECF No. 32; Compl. ¶ 43. Palmetto's denial stated:
Upon discussion with [CMS], it was concluded that the decision made by CMS stands and that your product would stay as E1352 and E1390. We do not have the authority to change this decision. To change your coding assignment you would need to submit to the CMS [HCPCS] Workgroup and request a change with relevant rationale. As you sent a request to us end-dating your product. No updates will be made to our Product Classification List (PCL).
Compl. Ex. F, ECF No. 8-6.
Inogen also employed other strategies in an attempt to persuade CMS to change the Sidekick's HCPCS code. On September 20, 2019—one week after Palmetto's retraction but before the reconsideration denial—Inogen sent a letter to the CMS Administrator. Pl.'s Reply at 4. Inogen also met with an HHS/CMS attorney and had its congressional representative send a letter to the Administrator. Id. at 5. None of these communications resulted in a coding reassignment. Id. at 9-10. Inogen never applied to the HCPCS Workgroup for a new code or code modification. Id.
Inogen filed this suit on September 21, 2020, see generally Compl., asserting violations of the Administrative Procedure Act, 5 U.S.C. § 706(2), the Medicare Act, 42 U.S.C. § 1395hh(a)(2), and its due process rights, and seeking an order of mandamus establishing procedural requirements for HCPCS code verification and review. Compl. ¶¶ 53-95. Shortly thereafter, it moved for a preliminary injunction, seeking to enjoin Defendants from retracting the E0466 code. Pl.'s Prelim. Inj. at 1. Defendants opposed and moved to dismiss for lack of subject matter jurisdiction. See generally Defs.' Mot.
"Because Article III courts are courts of limited jurisdiction, we must examine our authority to hear a case before we can determine the merits." Khadr v. United States, 529 F.3d1112, 1115 (D.C. Cir. 2008) (quoting United States v. British Am. Tobacco Austl. Servs., 437 F.3d 1235, 1239 (D.C. Cir. 2006)). When contemplating a motion to dismiss pursuant to Rule 12(b)(1), the Court may consider materials outside the pleadings "to assure itself of its own subject matter jurisdiction," Settles v. U.S. Parole Comm'n, 429 F.3d 1098, 1107 (D.C. Cir. 2005) (quoting Haase v. Sessions, 835 F.2d 902, 908 (D.C. Cir. 1987)), and must construe the complaint liberally to afford all possible inferences favorable to the pleader on allegations of fact, id. at 1106. But the Court need not "assume the truth of legal conclusions" nor "accept inferences that are unsupported by the facts set out in the complaint." Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905, 913 (D.C. Cir. 2015) (quoting Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015)). In all events, the plaintiff bears the burden of establishing that the court has subject matter jurisdiction by a preponderance of the evidence. Freedom Watch, Inc. v. McAleenan, 442 F. Supp. 3d 180, 185 (D.D.C. 2020) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).
Three statutes govern the scheme for obtaining judicial review of Medicare claims. 42 U.S.C. § 405(h) bars federal question jurisdiction over "any claim arising under" Title II of the Social Security Act and prohibits judicial review of any "decision of the Commissioner of Social Security . . . except as herein provided." Am. Hosp. Ass'n v. Azar, 895 F.3d 822, 825 (D.C. Cir. 2018). 42 U.S.C. § 405(g), in turn, permits judicial review of Social Security Act claims following "any final decision of the Commissioner of Social Security made after a hearing to which he was a party." Id. And 42 U.S.C. § 1395ii provides that certain provisions in Section 405 "shall also apply with respect to [the Medicare Act] to the same extent as they are applicable with respect to" Title II, with any reference to the "Commissioner of Social Security" considered as a reference to the Secretary of HHS. See Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 7-9 (2000);Heckler v. Ringer, 466 U.S. 602, 614-15 (1984); Nat'l Kidney Patients Ass'n v. Sullivan, 958 F.2d 1127, 1130-31 (D.C. Cir. 1992).1 The Supreme Court has interpreted these provisions to impose two prerequisites for judicial review of a claim "arising under" the Medicare Act. First, "a claim for benefits shall have been presented to the Secretary." Mathews v. Eldridge, 424 U.S. 319, 328 (1976). Second, "the plaintiff must fully exhaust all available administrative remedies, though this more demanding requirement is waivable." Am. Hosp. Ass'n, 895 F.3d at 826 (citing Mathews, 424 U.S. at 328).
As a result, the Medicare Act "demands the channeling of virtually all legal attacks through the agency." Shalala, 529 U.S. at 13 (quotation marks omitted). Channeling extends "beyond ordinary administrative law principles of ripeness and exhaustion of administrative remedies" in order to "assure[] the agency greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts." Id. at 12-13 (quotation marks omitted).
There is one exception: judicial review is available "where application of § 405(h) would not simply channel review through the agency, but would mean no review at all." Shalala, 529 U.S. at 19; see also Am. Hosp. Ass'n, 895 F.3d at 825 (). This exception "applies not only when administrative regulations foreclose judicial review, but also when roadblocks practically cut off any avenue to federal court." Am. Chiropractic Ass'n v. Leavitt, 431 F.3d 812, 816 (D.C. Cir. 2005). But the "difficulties must be severe enough to render judicial review unavailable as a practical matter," id.; it is not enough to show "merely that postponementof judicial review would mean added inconvenience or cost in an isolated, particular case," Council for Urological Interests v. Sebelius, 668 F.3d 704, 708 (D.C. Cir. 2011) (quotation marks, brackets, and citation omitted).
Defendants argue that Inogen's claims "arise under" the Medicare Act and that Inogen is required (but has failed) to present its claims through the agency. Defs.' Mot. at 10-24.
The Court must first determine whether Inogen's claims "arise under" the Medicare Act, a question that turns on whether the Act provides both the standing and the substantive basis for Inogen's claims. Your Home Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449, 456 (1999). Inogen does not dispute that its claims arise under the ...
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