Dialysis Patient Citizens v. Azar

CourtDistrict Court, District of Columbia
DecidedJanuary 19, 2021
DocketCivil Action No. 2020-1664
StatusPublished

This text of Dialysis Patient Citizens v. Azar (Dialysis Patient Citizens v. Azar) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Dialysis Patient Citizens v. Azar, (D.D.C. 2021).

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) DIALYSIS PATIENT CITIZENS, et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 20-cv-1664 (TSC) ) ALEX M. AZAR II, Secretary of Health ) and Human Services, et al., ) ) Defendants. ) )

MEMORANDUM OPINION

Plaintiffs Dialysis Patient Citizens (“DPC”), DaVita Inc. (“DaVita”), Fresenius Medical

Care Holdings, Inc. d/b/a Fresenius Medical Care North America, and U.S. Renal Care, Inc. have

sued Alex M. Azar II (Secretary of Health and Human Services), the U.S. Department of Health

and Human Services, the Centers for Medicare and Medicaid Services (“CMS”), and Seema

Verma (CMS Administrator). Plaintiffs’ claims arise out of a Final Rule published on June 2,

2020, codifying network adequacy standards for Medicare Advantage Organizations (“MAOs”).1

The Final Rule removes outpatient dialysis centers from the list of facilities to which quantitative

“time-and-distance” standards apply for purposes of assessing the adequacy of MAO networks.

Plaintiffs claim the Final Rule discriminates in violation of the Social Security Act, 42 U.S.C. §

1395w-22, and Section 1557 of the Patient Protection and Affordable Care Act, 42 U.S.C. §

18116; that the Final Rule violates the Administrative Procedure Act because it is arbitrary and

1 As discussed below, Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to obtain covered healthcare services through “managed care” arrangements offered by approved private health insurers, collectively referred to as MAOs. capricious, and was propagated without adequate notice and comment, also in violation of the

Medicare Act, 42 U.S.C. § 1395hh(b).

Plaintiffs have moved for summary judgment and Defendants have moved to dismiss or,

in the alternative, for summary judgment. Defendants have also filed a Motion to Strike certain

factual allegations set forth by Plaintiffs in their Opposition to Defendants’ motion for summary

judgment, as well as the declarations of Phyllis Lenss, a DPC member, and Zachary Dolzani, a

Senior Director at Davita, which were attached thereto. A Consent Motion for Leave to File

Excess Pages and an Unopposed Motion for Leave to File an Amicus Curiae Brief are also

currently pending. For the reasons set forth below, the court will GRANT Defendants’ Motion

to Dismiss (ECF No. 24) without prejudice and will therefore DENY Plaintiffs’ Motion for

Summary Judgment. (ECF No. 21.) The court will also DENY Defendants’ Motion for

Summary Judgment (ECF No. 24), Defendants’ Motion to Strike (ECF No. 36), Defendants’

Consent Motion for Leave to File Excess Pages (ECF No. 35), Better Medicare Alliance’s

Motion for Leave to File an Amicus Curiae Brief (ECF No. 38), and Plaintiffs’ Unopposed

Motion for Leave to File Response to Brief of Amicus Curiae Better Medicare Alliance (ECF

No. 40) as moot.

I. BACKGROUND

A. Factual Background

Medicare is a federal health insurance program for the elderly and persons with

disabilities and is administered by CMS. See 42 U.S.C. § 1395 et seq. Medicare has four parts:

Part A, hospital insurance; Part B, supplemental medical insurance for outpatient services; Part

C, managed care plans administered by private insurers; and Part D, prescription drug coverage.

2 42 U.S.C. §§ 1395w-101–54. The allegations in this lawsuit relate to the coverage of Medicare

beneficiaries with End Stage Renal Disease (“ESRD”) under Medicare Part C.

1. End Stage Renal Disease

ESRD is the final stage of chronic kidney disease. Patients suffering from ESRD must

receive ongoing kidney dialysis or a kidney transplant to survive. See Admin. R. at 1132, 2121.

Dialysis is the process of artificially cleaning the blood, simulating the function of

working kidneys. CMS, MEDICARE COVERAGE OF KIDNEY DIALYSIS & KIDNEY TRANSPLANT

SERVICES 15 (Dec. 1, 2019), https://www.medicare.gov/Pubs/pdf/10128-Medicare-Coverage-

ESRD.pdf. Each dialysis treatment lasts approximately four hours, and a patient with ESRD

must receive dialysis at least three times per week. Admin. R. at 0416, 0931, 0933.

Approximately 90% of ESRD patients in the United States receive dialysis at an outpatient

clinic. Christopher T. Chan et al., Exploring Barriers and Potential Solutions in Home Dialysis:

An NKF-KDOQI Conference Outcomes Report, 73 Am. J. Kidney Diseases 363, 363 (2019).

Although home dialysis is an option, it is not feasible for patients without caregiver support,

stable housing, a home environment with the capacity to safely store necessary supplies and

equipment, or who have serious comorbidities. Admin. R. at 0408, 1767, 1885, 2953, 3169–70.

Even patients who dialyze at home still need access to outpatient dialysis facilities for training,

regular monthly clinical visits, and for dialysis when a care partner is away. Admin. R. at 0934,

1236–37, 1885, 2953.

2. Medicare Coverage of ESRD Patients

The Medicare statutory and regulatory landscape is complex, and the court will provide

only a relatively brief synopsis. Under Medicare Parts A and B, payment on a fee-for-service

basis is provided for services to qualified individuals. See 42 U.S.C. §§ 1395g, 1395k, 1395l;

3 see also id. § 1395w-21(a)(1)(A). In 1972, Congress expanded Medicare eligibility to include

individuals with ESRD regardless of their age. Social Security Amendments of 1972, Pub. L.

No. 92-603, tit. II, § 299I, 86 Stat. 1463–64 (codified as amended at 42 U.S.C. § 426-1(a)).

The Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4001, 111 Stat. 251, 275–327

(1997), added a new Part C (now known as Medicare Advantage, or MA) to the Medicare

statute. See 42 U.S.C. §§ 1395w-21–28. MA allowed Medicare beneficiaries to obtain covered

Medicare services through “managed care” plans offered by private health insurers and approved

by CMS. See id. § 1395w-21. MA plans must offer coverage at least equivalent to traditional

Medicare, and often provide broader benefits, including dental and vision coverage. Id. §§

1395w-22(a)(1)(A), (a)(3); CMS, UNDERSTANDING MA PLANS 5 (Sept. 2019),

https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf.

Many MA plans also have lower out-of-pocket costs. See UNDERSTANDING MA PLANS at 5.

Before passage of the 21st Century Cures Act (“the Cures Act”), Pub. L. No. 114–255, §

17006, 130 Stat. 1033, 1334–36 (2016), Medicare beneficiaries who were entitled to Medicare

due to their ESRD status were specifically excluded from Part C plans. 42 U.S.C. § 1395w-

21(a)(3)(B) (2015); 42 C.F.R. § 422.50(a)(2) (2019). As a result, most ESRD beneficiaries

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