Nievod v. Sebellius

• Decision Date: 07 February 2013
• Docket Number: Case No: C 11-4134 SBA
• Parties: ABRAHAM NIEVOD, Plaintiff, v. KATHELEEN SEBELLIUS, in her official capacity as SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES and DOES 1-10, Defendants.
• Court: U.S. District Court — Northern District of California

ABRAHAM NIEVOD, Plaintiff,

v. KATHELEEN SEBELLIUS, in her official capacity as SECRETARY OF THEUNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES and DOES 1-10, Defendants.

Case No: C 11-4134 SBA

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION

Dated: February 7, 2013

ORDER ON CROSS-MOTIONS

FOR SUMMARY JUDGMENT

Docket 20, 21

Plaintiff Abraham Nievod filed the instant action against Defendant Katheleen Sebellius ("Secretary") in her capacity as Secretary of the United States Department of Health and Human Services ("DHHS"), seeking judicial review of an adverse decision by the Medicare Appeals Council ("MAC"). Plaintiff seeks to overturn the MAC's decision that Medicare Part D does not cover his off-label use of the prescription medication known as CellCept (Mycophenolate Mofetil).

The parties are presently before the Court on cross-motions for summary judgment, pursuant to Federal Rule of Civil Procedure 56. Dkt. 20, 21. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS the Secretary's motion and DENIES Plaintiff's motion, and thus AFFIRMS the decision of the MAC. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

I. BACKGROUND

The instant action arises from a dispute between Plaintiff and the Secretary over whether Medicare should cover Plaintiff for the cost of CellCept, which he uses to treat his autoimmune conditions. To resolve this dispute, it is helpful to first review Medicare's statutory and regulatory framework for subsidizing the cost of certain prescription drugs under its Part D Prescription Drug Benefit Program.

A. MEDICARE PART D

Medicare is a federally funded health insurance program for the elderly and disabled which was established pursuant to Title XVIII of the Social Security Act ("SSA"), 79 Stat. 291, as amended 42 U.S.C. § 1395, et seq. Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 506 (1994). Congress has delegated general rulemaking authority with respect to Medicare to the Secretary. 42 U.S.C. § 1395hh(a)(1) ("The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this subchapter."). The Secretary administers the Medicare program through the Centers for Medicare and Medicaid Services ("CMS"). Palomar Medical Center v. Sebelius, 693 F.3d 1151, 1154-55 (9th Cir. 2012).

1. Coverage Under Part D

Benefits under Medicare are divided into four parts: Parts A, B, C and D. 42 U.S.C. §§ 1395 to 1395kkk-1. At issue here is Part D, a voluntary prescription drug benefit program that became effective on January 1, 2006, pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("Medicare Modernization Act"), Pub. L. No. 108-173, 117 Stat. 2066. Part D drug benefits are provided, inter alia, by private entities (typically insurance providers) which contract with the CMS to offer approved prescription drug plans ("PDP") to qualified Medicare enrollees. See 42 C.F.R. §§ 423.4, 423.30.

The SSA, as amended by the Medicare Modernization Act, expressly defines the types of drugs covered by Part D as: (1) a prescription drug; (2) a biological product;(3) insulin and supplies used to inject insulin; and (4) certain vaccines. See 42 U.S.C. § 1395w-102(e). The statute states, in relevant part, as follows:

(e) Covered part D drug defined

(1) In general

Except as provided in this subsection, for purposes of this part, the term "covered part D drug" means—

(A) a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A) (ii), or (A)(iii) of section 1396r-8(k)(2) of this title; or

(B) a biological product described in clauses (i) through (iii) of subparagraph (B) of such section or insulin described in subparagraph (C) of such section and medical supplies associated with the injection of insulin (as defined in regulations of the Secretary),¹

and such term includes a vaccine licensed under section 262 of this title (and, for vaccines administered on or after January 1, 2008, its administration) and any use of a covered part D drug for a medically accepted indication (as defined in paragraph (4)).

. . . .

(2) Exclusions

. . . .

(3) Application of general exclusion provisions

. . . .

(4) Medically accepted indication defined

(A) In general

For purposes of paragraph (1), the term "medically accepted indication" has the meaning given that term—

(i) in the case of a covered part D drug used in an anticancer chemotherapeutic regimen, in section 1395x(t)(2)(B) of this title, except that in applying such section—(I) "prescription drug plan or MA-PD plan" shall be substituted for "carrier" each place it appears; and

(II) subject to subparagraph (B), the compendia described in section 1396r-8(g)(1)(B)(i)(III) of this title shall be included in the list of compendia described in clause (ii)(I) section 1395x(t)(2)(B) of this title; and

(ii) in the case of any other covered part D drug, in section 1396r-8(k)(6) of this title.

(B) Conflict of interest.

On and after January 1, 2010, subparagraph (A)(i)(II) shall not apply unless the compendia described in section 1927(g)(1)(B)(i)(III) meets the requirement in the third sentence of section 1861(t)(2)(B).

(C) Update

For purposes of applying subparagraph (A)(ii), the Secretary shall revise the list of compendia described in section 1927(g)(1)(B)(i) as is appropriate for identifying medically accepted indications for drugs. Any such revision shall be done in a manner consistent with the process for revising compendia under section 1861(t)(2)(B).

42 U.S.C. § 1395w-102(e) (emphasis added).

The above definition of "medically accepted indication" in subparagraph (4) varies depending on the purpose for which the medication is used. For drugs used as part of an anticancer chemotherapeutic regimen, the term medically accepted indication is defined by cross-reference to the definition of that term for purposes of Medicare Part B. Id. § 1395w-102(e)(4)(i) (cross-referencing 42 U.S.C. § 1395x(t)(2)(B)). For all other drugs, such as CellCept, however, the meaning of medically accepted indication is defined by cross-reference to 42 U.S.C. § 1396r-8(k)(6), which states:

(6) Medically accepted indication.

The term "medically accepted indication" means any use for a covered outpatient drug which is approved under the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 301 et seq.] or the use of which is supported by one or more citations included or approved for inclusion in any of thecompendia described in subsection (g)(1)(B)(i) of this section.

42 U.S.C. § 1396r-8(k)(6) (emphasis added). The "compendia" referenced above consists of: (1) the American Hospital Formulary Service Drug Information; (2) United States Pharmacopeia-Drug Information (or its successor publications); and (3) the DRUGDEX Information System. Id. § 1396r-8(g)(1)(b)(i).

Regulations promulgated by the Secretary further clarify the scope of what is considered a Part D drug. Title 42, Code of Federal Regulations, section 423.100, states, in relevant part:

Part D drug means—

(1) Unless excluded under paragraph (2) of this definition, any of the following if used for a medically accepted indication (as defined in section 1860D-2(e)(4) of the Act)—

(i) A drug that may be dispensed only upon a prescription and that is described in sections 1927(k)(2)(A)(i) through (iii) of the Act.

(ii) A biological product described in sections 1927(k)(2)(B)(i) through (iii) of the Act.

(iii) Insulin described in section 1927(k)(2)(C) of the Act.

(iv) Medical supplies associated with the injection of insulin, including syringes, needles, alcohol swabs, and gauze.

(v) A vaccine licensed under section 351 of the Public Health Service Act and for vaccine administration on or after January 1, 2008, its administration.

(vi) Supplies that are directly associated with delivering insulin into the body, such as an inhalation chamber used to deliver the insulin through inhalation.

42 C.F.R. § 423.100 (emphasis added).

2. Administrative Review

The Secretary's decisions regarding Part D coverage are subject to an administrative review process. 42 U.S.C. § 1395w-104(g), (h). A coverage determination includes a decision not to provide or pay for a Part D drug, the failure to provide a timely coverage determination when delay would adversely affect the enrollee's health, or a decision concerning an exceptions request. 42 C.F.R. § 423.566(b). An enrollee dissatisfied with aPlan D sponsor's coverage determination may request a redetermination of the decision. Id., §§ 423.580, 423.582. If the Plan D sponsor upholds its original decision, the enrollee may request reconsideration by an independent review entity ("IRE") that contracts with the CMS. Id., § 423.600.

If the IRE upholds the Part D plan sponsor's adverse decision and the amount in controversy equals the threshold amount established annually by the Secretary, the enrollee can request a hearing before an administrative law judge ("ALJ"). Id., §§ 423.610(a), 423.612. If the enrollee is dissatisfied with the ALJ's decision, the enrollee may request additional review by the MAC. Id., § 423.620. If the CMS or its contractor is dissatisfied with the ALJ's decision, it may petition the MAC to accept the case for review. Id., § 405.1110.

The MAC may review a case on its own motion if the MAC finds: (1) an error of law material to the outcome of the case; (2) an abuse of discretion by the ALJ; (3) that the decision is inconsistent with the preponderance of evidence of record; or (4) that there is a broad policy or procedural issue that may affect the general public interest. Id. If the amount in controversy meets the threshold amounts established annually by the Secretary, the enrollee may request judicial review of the MAC's decision, or if the MAC declines review of the ALJ decision, the...