Paleski v. State Department of Health Services

• Decision Date: 07 November 2006
• Docket Number: No. B186206.,B186206.
• Citation: 51 Cal.Rptr.3d 28,144 Cal.App.4th 713
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph PALESKI, Plaintiff and Appellant, v. STATE DEPARTMENT OF HEALTH SERVICES et al., Defendants and Respondents.

51 Cal.Rptr.3d 28

144 Cal.App.4th 713

Joseph PALESKI, Plaintiff and Appellant, v. STATE DEPARTMENT OF HEALTH SERVICES et al., Defendants and Respondents.

No. B186206.

Court of Appeal, Second District, Division 1.

November 7, 2006.

Arnold & Porter, Brian K. Condon, Los Angeles; Disability Rights Legal Center

and Shawna L. Parks for Plaintiff and Appellant.

Bill Lockyer, California Attorney General, Thomas R. Yanger, Senior Assistant Attorney General, Julie Weng-Gutierrez, Supervising Deputy Attorney General, and Margarita Altamirano, Deputy Attorney General, for Defendants and Respondents.

MALLANO, Acting P.J.

Plaintiff, a beneficiary of the California Medical Assistance Program (Medi-Cal), has AIDS (acquired immune deficiency syndrome). He depends upon Medi-Cal for prescription drugs. Plaintiffs physician diagnosed him with wasting syndrome, a disorder related to HIV (human immunodeficiency virus) that causes the body to use lean body mass rather than fat as an energy source. Plaintiffs physician prescribed a drug specifically approved for the treatment of HIV-related wasting.

After an initial course of treatment, which proved beneficial, plaintiffs physician concluded plaintiff was still suffering from wasting syndrome and prescribed the drug for an additional period. The state Department of Health Services (Department), which administers Medi-Cal, disagreed with the physician's determination and denied the request based on its published drug criteria. Several weeks later, a second prescription request was submitted to the Department and also denied.

Plaintiff filed a petition for a writ of mandate in the trial court, challenging the Department's published drug criteria on the grounds: (1) they had not been promulgated in accordance with the Administrative Procedure Act (APA) (Gov.Code, § 11340 et seq.) or the Medi-Cal Act (Welf. & Inst.Code, § 14105.395); and (2) they did not accord proper deference to a treating physician's determination of medical necessity, thereby violating state and federal law. The trial court denied the petition.

We conclude that state law exempts the Department's published drug criteria from the APA (see Welf. & Inst.Code, § 14105.395, subds. (a), (c)) but requires compliance with the Medi-Cal Act's notice and comment provisions (id., subds. (b), (c)). Plaintiff has not demonstrated that the Department failed in that respect. Further, neither state nor federal law requires the Department to defer to a treating physician's determination of medical necessity when the Department's published drug criteria dictate a contrary conclusion, but the physician's determination is a factor that must be considered.

I BACKGROUND

Plaintiff has been living with AIDS since 1984. Eventually, his physician diagnosed him with HIV-related wasting, a chronic, progressive syndrome that, if left untreated, may be debilitating and potentially life-threatening, causing muscle weakness and an increase in disease complications. Wasting syndrome typically consists of weight loss throughout the body and a decrease in lean body mass.

A human growth hormone, somatropin, sold under the trade name Serostim, has been approved by the federal Food and Drug Administration (FDA) to treat HIV-related wasting syndrome. Serostim increases lean body mass, body weight, and protein synthesis. FDA approval was based on an analysis of patients' body weight and lean body mass in studies lasting up to 12 weeks. Anabolic steroids, which promote weight gain, have also been used to treat wasting syndrome.

There is no single, optimal treatment for wasting syndrome. Treatment must be individualized. A physician needs to manage a patient's condition on an individual basis. AIDS patients taking antiretroviral drugs may experience changes in body mass and fat distribution that mask wasting syndrome. Similarly, several factors can cause weight loss in patients with HIV, making it necessary to treat those underlying causes before determining whether Serostim is appropriate.

Under the auspices of the federal Medicaid program, Medi-Cal provides low-income individuals with health care benefits that are medically necessary. (See 42 U.S.C. § 1396 et seq.; Welf. & Inst.Code, §§ 14000, 14001.1, 14132, 14133.3; Morris v. Williams (1967) 67 Cal.2d 733, 738-741, 63 Cal.Rptr. 689, 433 P.2d 697.) As permitted by federal law, the Department "may place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures." (42 C.F.R. § 440.230(d) (2005).) In turn, state law authorizes the "[p]urchase of prescribed drugs ... subject to the Medi-Cal List of Contract Drugs and utilization controls." (Welf.Inst.Code, § 14132, subd. (d).)

When Serostim was approved by the FDA in 1996, it was added by operation of law to the Medi-Cal List of Contract Drugs for the treatment of certain AIDS conditions. (Welf.Inst.Code, § 14105.43, subds.(a), (b).) Its use by individual patients—if "used under the conditions specified on the Medi-Cal List of Contract Drugs" (Cal.Code Regs., tit. 22, § 51313.3, subd. (b))—was not subject to "utilization controls," namely, "prior authorization, which is approval by a department consultant, of a specified [drug] in advance of the [use] of that [drug] based upon a determination of medical necessity" (Welf.Inst. Code, § 14133, subd. (a)).

Thus, at first, the Department did not require prior authorization—there were no utilization controls—if Serostim was prescribed for the treatment of AIDS wasting or cachexia associated with AIDS.¹ Then, in 2001, the Department adopted more restrictive utilization controls and started to require prior authorization if a patient sought to take Serostim for more than 12 weeks. This change in utilization controls was announced beforehand in Pharmacy Bulletins 505 and 515, dated February 2001 and July 2001, respectively, and the Department issued updated replacement pages for insertion into pharmacies' provider manuals. The Department also developed prior authorization criteria to implement the change but did not make them available to providers.

Because the provider manuals were used by pharmacies, the change in utilization controls soon became common knowledge. But, lacking the implementing criteria, providers did not know how the Department would determine prior authorization. To obtain prior authorization for a prescription, typically a pharmacy submitted a treatment authorization request (TAR), setting forth various medical information about the patient (See Cal.Code Regs., tit. 22, §§ 51456, 51003; see also Welf. Inst.Code, § 14133.01, eff. Aug. 16, 2004.) The TAR had to show that the use of the prescribed drug was medically necessary. (See Cal.Code Regs., tit. 22, § 51003, subd. (e).)

The Department never published its 2001 prior authorization criteria for Serostim, informing its field staff via e-mail that the "Serostim Prior Authorization Guidelines" were "FOR INTERNAL USE ONLY," were "NOT, repeat NOT a public document," and "may NOT be given to providers, prescribers, etc." The criteria relied on an analysis of changes in (1) body weight, (2) body mass index (BMI), and (3) body cell mass (BCM) to determine whether prior authorization would be granted.² The e-mail acknowledged that 98 percent of the TAR's requesting continuation of Serostim beyond the first 12 weeks would be denied under the unpublished criteria. As it turned out, pharmacies often submitted TAR's with clinical information and laboratory data that the Department deemed insufficient, resulting in processing delays or outright denials.

To improve the TAR process, the Department eventually decided to develop more objective prior authorization criteria for Serostim and to make them public. In 2001-2002, the Department's policy division consulted with Serostim's manufacturer, medical practitioners who specialized in HIV and AIDS treatment, and patient advocates. The policy division attended two meetings with the Department's AIDS Drug Assistance Program advisory committee, which consisted of eight physicians, one psychiatrist, three pharmacists, one county AIDS administrator, one AIDS advocacy organization representative, and three community members affected by HIV or AIDS. The Department also reviewed medical literature and published studies.

In May 2002, the package insert for Serostim stated that (1) studies of up to 12 weeks in duration showed the drug to be effective in treating AIDS-related wasting; (2) "no significant additional efficacy was observed beyond 12 weeks"; and (3) "[t]here are no data available from controlled studies for patients that start, stop, and re-start treatment." A year later, the package insert indicated there were no significant changes when treatment went beyond 12 weeks. The manufacturer did note, however, that patients receiving an additional 12 weeks of therapy were able to maintain their earlier gains of lean body mass and weight.

In drafting the new prior authorization criteria, the Department considered whether to include the following provision: "In cases where the recipient's BMI, BCM, or unintentional weight loss fall outside of the listed parameters, or cannot be assessed, a clinical statement from the treating physician may be used as a basis for Serostim® approval. Such a statement would need to specify exactly why Serostim® is medically necessary and why the normal criteria, used to document AIDS wasting, [are] not applicable for this recipient." As explained by an internal Department e-mail: "Although strictly from a Policy standpoint [the foregoing provision] may not seem necessary, the reality in the field office setting is that such a statement is necessary. There are personality types, currently working in the Pharmacy Units, which see [the prior authorization criteria] as something out of the ordinary and thus will not deviate from anything included, or not included, in the [criteria]. It is the impression of the...