StimLabs v. Becerra

• Decision Date: 12 January 2023
• Docket Number: CIVIL 22-cv-01988 (APM)
• Parties: STIMLABS, LLC, et al., Plaintiffs, v. XAVIER BECERRA, et al., Secretary of Health and Human Services, Defendants.
• Court: U.S. District Court — District of Columbia

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STIMLABS, LLC, et al., Plaintiffs, v. XAVIER BECERRA, et al., Secretary of Health and Human Services, Defendants.

CIVIL No. 22-cv-01988 (APM)

United States District Court, District of Columbia

January 12, 2023

MEMORANDUM OPINION AND ORDER

Amit P. Mehta United States District Court Judge

I.

The court previously dismissed this action after determining that it lacked subject matter jurisdiction under three statutes (1) 28 U.S.C. § 1331 (federal question jurisdiction); (2) 42 U.S.C. § 405(g) (the Social Security Act, as incorporated by the Medicare Act, 42 U.S.C. § 1395ii); and (3) 28 U.S.C. § 1361 (Mandamus Act). See StimLabs, LLC v. Becerra, No. 22-cv-01988-APM, 2022 WL 13840218 (D.D.C. Oct. 21, 2022). Plaintiffs now ask the court to reconsider its ruling with respect to 42 U.S.C. § 405(g).

The court makes two corrections to its earlier opinion. First the court now finds that Plaintiff Anesthesia and Pain Consultants (“APC”) has satisfied the presentment requirement. Second, the court applied the incorrect standard for irreparable harm, and improperly focused the irreparable harm analysis on Plaintiff StimLabs, LLC (“StimLabs”) instead of just APC-the only party that has met the presentment requirement. Nevertheless, these corrections do not warrant reconsideration: the court still lacks jurisdiction under § 405(g) because APC has not administratively exhausted its claim and has not shown irreparable harm by enforcement of the exhaustion requirement. For the reasons that follow, Plaintiffs' motion is denied.

II.

StimLabs, APC, and Plaintiff Wound Institute of America (“Wound Institute”) seek amendment pursuant to Federal Rule of Civil Procedure 59(e) or, in the alternative, reconsideration under Rule 60(b)(6). See Pls.' Mot. to Amend the Court's Judg. or, in the Alt., for Recons. of the Court's Order, ECF No. 27 [hereinafter Pls.' Mot.].

Rule 59(e). Altering or amending a judgment under Rule 59(e) “is an extraordinary remedy which should be used sparingly.” Mohammadi v. Islamic Republic of Iran, 782 F.3d 9, 17 (D.C. Cir. 2015). “A district court need not grant a Rule 59(e) motion unless there is an ‘intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.'” Id. (quoting Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403 (D.C. Cir. 2012). “Rule 59(e) permits a court to alter or amend a judgment, but it ‘may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment.'” Exxon Shipping Co. v. Baker, 554 U.S. 471, 486 n.5 (2008) (quoting 11 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2810.1, 127-128 (2d ed.1995).

Plaintiffs do not argue that there was a change in controlling law or that new evidence has become available. They urge the court to reverse course because of “clear error” and to prevent “manifest injustice.” Rule 59(e)'s “clear error” standard is a “very exacting standard.” Bond v. U.S. Dep't of Just., 286 F.R.D. 16, 22 (D.D.C. 2012), aff'd, No. 12-cv-5296, 2013 WL 1187396 (D.C. Cir. Mar. 14, 2013). A court “should have ‘a clear conviction of error' before finding a final judgment was predicated on clear error.” Id. Manifest injustice “must entail at least (1) a clear and certain prejudice to the moving party that (2) is fundamentally unfair in light of governing law.” Mohammadi v. Islamic Republic of Iran, 947 F.Supp.2d 48, 78 (D.D.C. 2013), aff'd, 782 F.3d 9 (D.C. Cir. 2015).

Rule 60(b). In the alternative, based on the same arguments, Plaintiffs seek relief under Rule 60(b), which allows a court to grant a party relief from a final judgment for six enumerated reasons. FED. R. CIV. P. 60(B). PLAINTIFFS SEEK RELIEF UNDER RULE 60(B)(6), A RESIDUAL PROVISION THAT “GRANTS FEDERAL COURTS BROAD AUTHORITY TO RELIEVE A PARTY FROM A FINAL JUDGMENT . . . PROVIDED THAT THE MOTION . . . IS NOT PREMISED ON ONE OF THE GROUNDS FOR RELIEF ENUMERATED IN CLAUSES (B)(1) THROUGH (B)(5).” Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863 (1988). Because the language of Rule 60(b)(6) is “essentially boundless,” Twelve John Does v. D.C., 841 F.2d 1133, 1140 (D.C. Cir. 1988), the Supreme Court has clarified that relief is only appropriate in “extraordinary situations,” Ackermann v. United States, 340 U.S. 193, 202 (1950), and the D.C. Circuit has cautioned that it “should be only sparingly used,” Good Luck Nursing Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980).

III.

Section 405(g) creates two prerequisites for judicial review: (1) “a plaintiff's claim must have been presented to the Secretary,” and (2) “a plaintiff must fully exhaust the administrative remedies prescribed by the Secretary.” RICU LLC v. U.S. Dep't of Health & Hum. Servs., 22 F.4th 1031, 1036 (D.C. Cir. 2022) (quoting Mathews v. Eldridge, 424 U.S. 319, 328 (1976)) (cleaned up). The presentment requirement is a “nonwaivable element” of jurisdiction. Eldridge, 424 U.S. at 328. Exhaustion on the other hand is waivable, and “[w]aiver is warranted if the claim is (1) collateral to a substantive claim of entitlement (collaterality); (2) colorable in its showing that denial of relief will cause irreparable harm (irreparability); and (3) one whose resolution would not serve the purposes of exhaustion (futility).” Sensory Neurostimulation, Inc., v. Azar, 977 F.3d 969, 981 (9th Cir. 2020) (internal quotation marks omitted).

Plaintiffs argue that they have met the jurisdictional requirements of 42 U.S.C. § 405(g). Their motion centers on Count I of their complaint, alleging that CMS has adopted a blanket, unwritten policy to deny coverage to human cell, tissue, and cellular and tissue-based products, or HCT/Ps, which did not proceed by notice and comment in violation of 42 U.S.C. § 1395hh. Compl. for Inj. and Decl. Rel., Mandamus, and Relief Under the All Writs Act, ECF No. 1 [hereinafter Compl.], ¶¶ 70-90. According to Plaintiffs, the court overlooked that claim in its jurisdictional analysis. Pls.' Mot. at 9.^[1] Plaintiffs maintain that APC satisfied the presentment requirement by challenging a contractor's specific adverse reimbursement decision and that their § 1395hh claim qualifies for waiver of the exhaustion requirement because it is “entirely collateral to any claim for Medicare coverage and reimbursement.” Id. at 6 (internal quotation marks omitted).

IV.

The court begins with presentment. The court previously held that Plaintiffs had not met the presentment requirement because they had not shown that APC-the sole plaintiff that presented any claim to CMS-had “challenged CMS's purported unwritten policy on the grounds advanced here ‘in the context of a specific administrative claim for payment.'” StimLabs, 2022 WL 13840218, at *7 (quoting Am. Hosp. Ass'n v. Azar, 895 F.3d 822, 826 (D.C. Cir. 2018)). Plaintiffs now assert that the “presentment requirement does not require that every issue be raised before the agency. Rather it requires that a claim be presented to the agency.” Pls.' Mot. at 13 (emphasis in original). In Plaintiffs' view, the fact that they did not make “the argument relating to rulemaking during the administrative process is not the relevant question” in the presentment inquiry. Id. at 15. The court agrees that it misapplied the presentment requirement.

Presentment requires that the agency have an “opportunity to rule on a concrete claim for reimbursement.” Heckler v. Ringer, 466 U.S. 602, 622 (1984); see RICU, 22 F.4^th at 1036 (“Section[] 405(g) . . . effectively preclude[s] the exercise of district court jurisdiction in the absence of presentment of a concrete dispute, regardless of the nature of the claim at issue.”). That requirement is rooted in the statutory text of § 405(g), which authorizes review of only a “final decision of the Secretary made after a hearing.” Absent presentment of a claim, the Supreme Court has said, “there can be no ‘decision' of any type. And some decision by the Secretary is clearly required by the statute.” Eldridge, 424 U.S. at 328. The Court in Eldridge also, at least, suggested, if not held, that satisfying the presentment requirement does not demand the full airing of all arguments before the agency. See id. at 329 (stating with respect to the presentment requirement, “[t]he fact that [plaintiff] failed to raise with the Secretary his constitutional claim to a pretermination hearing is not controlling”). Whether the plaintiff's failure to assert a particular argument before the agency defeats a court's exercise of jurisdiction would seem to be more appropriately considered under the second, waivable jurisdictional component: exhaustion of administrative remedies. See id. at 330 (stating with respect to the waivable exhaustion element, “[t]he question is whether the denial of [plaintiff's] claim to continued benefits was a sufficiently ‘final' decision with respect to his constitutional claim to satisfy the statutory exhaustion requirement”).

Here, APC has challenged through the Medicare administrative appeals process specific adverse decisions with respect to its use of StimLab's product, Ascent. See StimLabs, 2022 WL 13840128, at *7. This qualifies as “presentment of a concrete dispute,” RICU, 22 F.4th at 1036, allowing the agency the “opportunity to rule on a concrete claim for reimbursement.” Heckler, 466 U.S. at 622. Accordingly, APC has satisfied the presentment requirement. The court's prior finding that Plaintiffs StimLabs and Wound Institute did not satisfy the presentment requirement- which Plaintiffs do not contest-remains unchanged.

V.

The court now turns to § 405(g)'s exhaustion requirement, which can be waived “if the claim is (1) collateral to a substantive...