1 U.S. FDILISETDR IINC TT HCEO URT EASTERN DISTRICT OF WASHINGTON
Feb 23, 2021 2 SEAN F. MCAVOY, CLERK 3 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 4 JEREMY OLSEN, No. 2:20-cv-00374-SMJ 5 Plaintiff, 6 ORDER GRANTING PLAINTIFF’S v. MOTION FOR SUMMARY 7 JUDGMENT AND DENYING NORRIS W. COCHRAN,1 in his DEFENDANT’S CROSS MOTION 8 official capacity as the acting Secretary FOR SUMMARY JUDGMENT of the United States Department of 9 Health and Human Services,
10 Defendant.
12 Before the Court, without oral argument, are Plaintiff’s Motion for Summary 13 Judgment, ECF No. 22, and Defendant’s Cross Motion for Summary Judgment, 14 ECF No. 27. The Court has reviewed the record and pleadings in this matter, is fully 15 informed, and grants summary judgment for Plaintiff. 16 BACKGROUND 17 Plaintiff Jeremy Olsen alleges he is a 41-year-old Type I diabetic who has 18 suffered kidney failure and undergone a kidney transplant due to his condition. ECF 19
20 1 Norris W. Cochran has succeeded Alex M. Azar, II, as acting United States Secretary of Health and Human Services. 1 No. 1 at 10. Plaintiff uses a Medtronic MiniMed Continuous Glucose Monitor 2 (“CGM)”, which he alleges a doctor prescribed to help avoid failure of his
3 transplanted kidney and prevent other complications from his diabetes. Id. at 11. 4 Plaintiff suffers from hypoglycemic unawareness, meaning he cannot tell when his 5 blood sugar is low. See AR 041.
6 After his claim for Medicare coverage of the CGM supplies was initially 7 denied as not “durable medical equipment,” an Administrative Law Judge 8 eventually approved Plaintiff’s claim. Id. at 11–12. But the Medicare Appeals 9 Council/Departmental Review Board (“Appeals Council”) reversed the ALJ,
10 determining that a CGM is not “durable medical equipment” because it is not 11 “primarily and customarily used to serve a medical purpose.” Id. at 12. 12 Plaintiff sought judicial review in the U.S. District Court for the District of
13 Columbia. ECF No. 1. The case was transferred to this Court. ECF No. 14. Plaintiff 14 alleges six causes of action. ECF No. 1. Among other things, he claims the Appeals 15 Council based its decision on CMS-1682-R, a “final opinion and order” regarding 16 CGM coverage, which the Department of Health and Human Services issued
17 without a public notice and comment period. Id. at 8. He also argues substantial 18 evidence did not support the Appeals Council’s decision to deny coverage and its 19 decision was arbitrary and capricious. Id. at 15.
20 // 1 LEGAL STANDARD 2 Courts must “grant summary judgment if the movant shows that there is no
3 genuine dispute as to any material fact and the movant is entitled to judgment as a 4 matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it could affect the suit’s 5 outcome under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
6 248 (1986). An issue is “genuine” if a reasonable jury could find for the nonmoving 7 party based on the undisputed evidence. Id. The moving party bears the “burden of 8 establishing the nonexistence of a ‘genuine issue.’” Celotex Corp. v. Catrett, 477 9 U.S. 317, 330 (1986). “This burden has two distinct components: an initial burden
10 of production, which shifts to the nonmoving party if satisfied by the moving party; 11 and an ultimate burden of persuasion, which always remains on the moving party.” 12 Id. Still, when a case involves reviewing a final agency determination under the
13 APA, courts generally need not perform any fact-finding. Nw. Motorcycle Ass’n v. 14 United States Dep’t of Agric., 18 F.3d 1468, 1471–72 (9th Cir. 1994). As this Court 15 must confine the scope of its review to the administrative record, it finds this case 16 ripe for resolution by summary judgment.
17 This Court reviews the Appeals Council’s decision under the APA. All. for 18 the Wild Rockies v. Bradford, 856 F.3d 1238, 1242 (9th Cir. 2017); see also 5 U.S.C. 19 §§ 701, 704. This Court will set aside a final agency action if it is “arbitrary,
20 capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 1 U.S.C. § 706(2)(A); see also Oregon Nat. Desert Ass’n v. U.S. Forest Serv., 957 2 F.3d 1024, 1032 (9th Cir. 2020).
3 “Review under the arbitrary and capricious standard is narrow, and [the court 4 does] not substitute [its] judgment for that of the agency.” Oregon Nat. Desert, 957 5 F.3d at 1032 (9th Cir. 2020) (alteration added) (citation and quotation marks
6 omitted). Courts will find 7 an agency action as arbitrary and capricious ‘if the agency [1] has relied on factors which Congress has not intended it to consider, [2] entirely 8 failed to consider an important aspect of the problem, [3] offered an explanation for its decision that runs counter to the evidence before the 9 agency, or [4] [if the agency’s decision] is so implausible that it could not be ascribed to a difference in view or the product of agency 10 expertise.
11 Id. at 1033 (numbering added) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. 12 State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). Still, “[a]n agency decision 13 will be upheld as long as there is a rational connection between the facts found and 14 the conclusions made.” Barnes v. U.S. Dep’t of Transp., 655 F.3d 1124, 1132 (9th 15 Cir. 2011). “[A]s a practical matter, the arbitrary and capricious standard 16 incorporates the substantial evidence test.” ASSE Int’l, Inc. v. Kerry, 803 F.3d 1059, 17 1072 (9th Cir. 2015) (internal quotation omitted). “Substantial evidence means such 18 relevant evidence as a reasonable mind might accept as adequate to support a 19 conclusion.” Id. (internal alterations omitted). 20 // 1 DISCUSSION 2 Plaintiff focuses in his motion on his argument that CMS 1682-R improperly
3 issued without proper notice and comment. See ECF No. 22. But he addresses the 4 substantive considerations in his response to Defendant’s motion. See ECF No. 32 5 at 11. Because there are no issues of material fact in this appeal of an agency
6 decision and both parties have had notice and an opportunity to address all issues, 7 the Court may rule for Plaintiff on substantive grounds. See Fed. R. Civ. P. 56(f); 8 see also ECF No. 27. Because the Court determines that the Appeals Council erred 9 in its determination that the CGM does not constitute durable medical equipment,
10 it need not address Plaintiff’s procedural arguments. 11 A. This Court agrees with other district courts which have determined that the CGM constitutes durable medical equipment 12
13 Medicare Part B generally covers, among other things, “medical and other 14 health care services.” 42 U.S.C. § 1395k(a)(2)(B).
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1 U.S. FDILISETDR IINC TT HCEO URT EASTERN DISTRICT OF WASHINGTON
Feb 23, 2021 2 SEAN F. MCAVOY, CLERK 3 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 4 JEREMY OLSEN, No. 2:20-cv-00374-SMJ 5 Plaintiff, 6 ORDER GRANTING PLAINTIFF’S v. MOTION FOR SUMMARY 7 JUDGMENT AND DENYING NORRIS W. COCHRAN,1 in his DEFENDANT’S CROSS MOTION 8 official capacity as the acting Secretary FOR SUMMARY JUDGMENT of the United States Department of 9 Health and Human Services,
10 Defendant.
12 Before the Court, without oral argument, are Plaintiff’s Motion for Summary 13 Judgment, ECF No. 22, and Defendant’s Cross Motion for Summary Judgment, 14 ECF No. 27. The Court has reviewed the record and pleadings in this matter, is fully 15 informed, and grants summary judgment for Plaintiff. 16 BACKGROUND 17 Plaintiff Jeremy Olsen alleges he is a 41-year-old Type I diabetic who has 18 suffered kidney failure and undergone a kidney transplant due to his condition. ECF 19
20 1 Norris W. Cochran has succeeded Alex M. Azar, II, as acting United States Secretary of Health and Human Services. 1 No. 1 at 10. Plaintiff uses a Medtronic MiniMed Continuous Glucose Monitor 2 (“CGM)”, which he alleges a doctor prescribed to help avoid failure of his
3 transplanted kidney and prevent other complications from his diabetes. Id. at 11. 4 Plaintiff suffers from hypoglycemic unawareness, meaning he cannot tell when his 5 blood sugar is low. See AR 041.
6 After his claim for Medicare coverage of the CGM supplies was initially 7 denied as not “durable medical equipment,” an Administrative Law Judge 8 eventually approved Plaintiff’s claim. Id. at 11–12. But the Medicare Appeals 9 Council/Departmental Review Board (“Appeals Council”) reversed the ALJ,
10 determining that a CGM is not “durable medical equipment” because it is not 11 “primarily and customarily used to serve a medical purpose.” Id. at 12. 12 Plaintiff sought judicial review in the U.S. District Court for the District of
13 Columbia. ECF No. 1. The case was transferred to this Court. ECF No. 14. Plaintiff 14 alleges six causes of action. ECF No. 1. Among other things, he claims the Appeals 15 Council based its decision on CMS-1682-R, a “final opinion and order” regarding 16 CGM coverage, which the Department of Health and Human Services issued
17 without a public notice and comment period. Id. at 8. He also argues substantial 18 evidence did not support the Appeals Council’s decision to deny coverage and its 19 decision was arbitrary and capricious. Id. at 15.
20 // 1 LEGAL STANDARD 2 Courts must “grant summary judgment if the movant shows that there is no
3 genuine dispute as to any material fact and the movant is entitled to judgment as a 4 matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it could affect the suit’s 5 outcome under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
6 248 (1986). An issue is “genuine” if a reasonable jury could find for the nonmoving 7 party based on the undisputed evidence. Id. The moving party bears the “burden of 8 establishing the nonexistence of a ‘genuine issue.’” Celotex Corp. v. Catrett, 477 9 U.S. 317, 330 (1986). “This burden has two distinct components: an initial burden
10 of production, which shifts to the nonmoving party if satisfied by the moving party; 11 and an ultimate burden of persuasion, which always remains on the moving party.” 12 Id. Still, when a case involves reviewing a final agency determination under the
13 APA, courts generally need not perform any fact-finding. Nw. Motorcycle Ass’n v. 14 United States Dep’t of Agric., 18 F.3d 1468, 1471–72 (9th Cir. 1994). As this Court 15 must confine the scope of its review to the administrative record, it finds this case 16 ripe for resolution by summary judgment.
17 This Court reviews the Appeals Council’s decision under the APA. All. for 18 the Wild Rockies v. Bradford, 856 F.3d 1238, 1242 (9th Cir. 2017); see also 5 U.S.C. 19 §§ 701, 704. This Court will set aside a final agency action if it is “arbitrary,
20 capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 1 U.S.C. § 706(2)(A); see also Oregon Nat. Desert Ass’n v. U.S. Forest Serv., 957 2 F.3d 1024, 1032 (9th Cir. 2020).
3 “Review under the arbitrary and capricious standard is narrow, and [the court 4 does] not substitute [its] judgment for that of the agency.” Oregon Nat. Desert, 957 5 F.3d at 1032 (9th Cir. 2020) (alteration added) (citation and quotation marks
6 omitted). Courts will find 7 an agency action as arbitrary and capricious ‘if the agency [1] has relied on factors which Congress has not intended it to consider, [2] entirely 8 failed to consider an important aspect of the problem, [3] offered an explanation for its decision that runs counter to the evidence before the 9 agency, or [4] [if the agency’s decision] is so implausible that it could not be ascribed to a difference in view or the product of agency 10 expertise.
11 Id. at 1033 (numbering added) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. 12 State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). Still, “[a]n agency decision 13 will be upheld as long as there is a rational connection between the facts found and 14 the conclusions made.” Barnes v. U.S. Dep’t of Transp., 655 F.3d 1124, 1132 (9th 15 Cir. 2011). “[A]s a practical matter, the arbitrary and capricious standard 16 incorporates the substantial evidence test.” ASSE Int’l, Inc. v. Kerry, 803 F.3d 1059, 17 1072 (9th Cir. 2015) (internal quotation omitted). “Substantial evidence means such 18 relevant evidence as a reasonable mind might accept as adequate to support a 19 conclusion.” Id. (internal alterations omitted). 20 // 1 DISCUSSION 2 Plaintiff focuses in his motion on his argument that CMS 1682-R improperly
3 issued without proper notice and comment. See ECF No. 22. But he addresses the 4 substantive considerations in his response to Defendant’s motion. See ECF No. 32 5 at 11. Because there are no issues of material fact in this appeal of an agency
6 decision and both parties have had notice and an opportunity to address all issues, 7 the Court may rule for Plaintiff on substantive grounds. See Fed. R. Civ. P. 56(f); 8 see also ECF No. 27. Because the Court determines that the Appeals Council erred 9 in its determination that the CGM does not constitute durable medical equipment,
10 it need not address Plaintiff’s procedural arguments. 11 A. This Court agrees with other district courts which have determined that the CGM constitutes durable medical equipment 12
13 Medicare Part B generally covers, among other things, “medical and other 14 health care services.” 42 U.S.C. § 1395k(a)(2)(B). “Medical and other health 15 services” includes “durable medical equipment.” Id. § 1395x(s)(6). The statute 16 defines durable medical equipment by listing certain equipment that qualifies— 17 including “blood-testing strips and blood glucose monitors for individuals with 18 diabetes without regard to whether the individual has Type I or Type II diabetes or 19 to the individual’s use of insulin (as determined under standards established by the
20 Secretary in consultation with the appropriate organizations)”—and certain 1 equipment that does not. Id. § 1395x(n). The Secretary maintains that CGM 2 monitors measure interstitial fluid, rather than blood-glucose levels, and so is not
3 enumerated in the statutory definition of durable medical equipment. See AR 014; 4 see also ECF No. 27 at 6. 5 But the Court need not decide that issue. Section 1395x(n) is not exhaustive.
6 For unenumerated items, the regulations require that “durable medical equipment” 7 meets five requirements: (1) “[c]an withstand repeated use”; (2) “has an expected 8 life of at least 3 years”; (3) “[i]s primarily and customarily used to serve a medical 9 purpose”; (4) “[g]enerally is not useful to an individual in the absence of an illness
10 or injury”; and (5) “[i]s appropriate for use in the home.” 42 C.F.R. § 414.202. 11 Relying on CMS-1682-R, the Appeals Council determined that “CGMs that 12 are approved by the FDA for use as adjunctive devices to complement, not replace,
13 information obtained from blood glucose monitors in making diabetes treatment 14 decisions are referred to as ‘non-therapeutic’ CGMs” and so are not considered 15 durable medical equipment.” AR 013–14 (quoting CMS-1682-R at 7). It then noted 16 that “classifying a device as DME (or not DME) has to do with its primary function
17 in medical treatment, not any individual’s use of the device.” AR 018. 18 The regulation, as noted, defines “durable medical equipment” as equipment 19 that, along with other requirements, is “primarily and customarily used to serve a
20 medical purpose.” See 42 C.F.R. § 414.202. Equipment is not durable medical 1 equipment just because “it may have some remote medically related use.” AR 019 2 (internal quotation omitted). People commonly understand the adjective “medical”
3 to mean relating to the practice of medicine, and “medicine,” in turn, means “the 4 science and art of preventing, curing, and alleviating sickness or affliction.” See 5 Black’s Law Dictionary 1131 (10th ed. 2014); see also Yith v. Nielsen, 881 F.3d
6 1155, 1165 (9th Cir. 2018) (holding, for purposes of statutory interpretation, 7 “[w]hen determining the plain meaning of language, [courts] may consult dictionary 8 definitions”) (internal quotation and citation omitted); Zieroth v. Azar, No. 20-cv- 9 00172-MMC, 2020 WL 5642614, at *6 (N.D. Cal. Sept. 22, 2020). In short, the
10 regulation “is clear on its face.” See Whitcomb v. Hargan, 2:17-CV-00014, 2017 11 U.S. Dist. LEXIS 216571, at *13 (E.D. Wisc. Oct. 26, 2017). 12 When a regulation is ambiguous, the promulgating agency’s interpretation is
13 entitled to deference “unless it is plainly erroneous or inconsistent with the 14 regulation.” See Kisor v. Wilkie, 139 S. Ct. 2400, 2411 (2019) (internal quotation 15 and citation omitted). But a district court need not defer to the agency’s 16 interpretation when, as here, the regulation is not “genuinely ambiguous.” See id. at
17 2415. Even if 42 C.F.R. § 414.202 could be characterized as “genuinely 18 ambiguous,” as set forth below, the interpretation provided in CMS-1682-R is not 19 reasonable. See Zieroth, 2020 WL 5642614, at *3.
20 1 No evidence supports the Appeals Council’s conclusion that a CGM is not 2 “primarily and customarily used to serve a medical purpose.” There is nothing in
3 the phrase “primarily and customarily used to serve a medical purpose,” that 4 requires covered devices to serve a “primary” medical purpose, rather than an 5 “adjunctive” medical purpose.” Cf. AR 013–14 (quoting CMS-1682-R at 7); AR
6 018; see also Zieroth, 2020 WL 5642614, at *4. This interpretation does not render 7 the requirement that a device “generally is not useful to an individual in the absence 8 of an illness or injury” superfluous. Cf. AR 020. True, Plaintiff must still use a blood 9 glucose monitor. See AR 107. Even so, his CGM serves a distinct primary medical
10 purpose, as it “offer[s] him greater glycemic control.” AR 117. His CGM is 11 particularly important because of his kidney transplant and hypoglycemic 12 unawareness. AR 117–18. As the Court understands it, the blood glucose monitor
13 is effective but only provides a reading for a specific moment in time. The CGM, 14 on the other hand, gives more frequent readings but must be occasionally calibrated 15 with the blood glucose monitor. See AR 030; ECF No. 1 at 5. Diabetics like Plaintiff 16 (with hypoglycemic unawareness) may not realize that their blood sugar has
17 dropped to dangerous levels, and the CGM helps prevent adverse health 18 consequences by alerting Plaintiff of such changes. See AR 030; ECF No. 32 at 2. 19 “A technology’s purpose is not altered just because it must be calibrated or
20 confirmed by another technology. The primary and customary purpose of a 1 mechanical clock is to tell time, and that purpose is the same regardless of the fact 2 that the clock might occasionally need to be calibrated with reference to a more
3 accurate clock.” Bloom v. Azar, No. 5:16-cv-121, 2018 WL 583111, at *10 (D. Vt. 4 Jan. 29, 2018), reversed on other grounds by 976 F.3d 157 (2d. Cir. 2020). 5 Thus, the Court joins the district courts who have found that the CGM
6 constitutes durable medical equipment. See Zieroth, 2020 WL 5642614 at *4; 7 Whitcomb, 2017 U.S. Dist. LEXIS 216571 at *15 (noting, if Secretary “did not 8 intend to provide coverage for secondary medical equipment, then the regulatory 9 definition . . . must be revised to reflect that ideal”); Bloom, 2018 WL 583111, at
10 *10 (holding requirement that device be “primarily and customarily used to serve a 11 medical purpose” has “nothing to do with whether the equipment is the ‘primary’ 12 equipment used to serve that purpose”); Lewis v. Azar, 308 F. Supp. 3d 574, 579
13 (D. Mass. 2018) (rejecting Secretary’s argument that “a device loses its medical 14 nature if it is used in conjunction with another medical device”). The Court finds 15 the Secretary’s interpretation of 42 C.F.R. § 414.202, even if such regulation were 16 deemed genuinely ambiguous, is unreasonable and thus not entitled to deference.
17 See Kisor, 139 S. Ct. at 2415-16 (holding, to be entitled to deference, interpretation 18 must be “within the bounds of reasonable interpretation”). The Medtronic MiniMed 19 Continuous Glucose Monitor is “primarily and customarily used to serve a medical
20 purpose,” and there is no apparent dispute that the other four requirements in 42 1 C.F.R. § 414.202 are satisfied. The Appeal’s Council thus erred in denying 2 Plaintiff’s coverage.
3 Accordingly, IT IS HEREBY ORDERED: 4 1. Plaintiff’s Motion for Summary Judgment, ECF No. 22, is 5 GRANTED.
6 2. Defendant’s Cross Motion for Summary Judgment, ECF No. 27, is 7 DENIED. 8 3. This decision of the Appeals Council is REVERSED. This case is 9 REMANDED with instructions to authorize coverage consistent with
10 this Order. 11 4. Norris W. Cochran has succeeded Alex M. Azar, II, as Acting United 12 States Secretary of Health and Human Services. Accordingly, this
13 Court SUBSTITUTES Norris W. Cochran for Alex M. Azar, II, as a 14 Defendant in this matter under Fed. R. Civ. P. 25(d). The Clerk’s 15 Office is directed to AMEND the caption accordingly. 16 //
17 // 18 // 19 //
20 // 1 5. The Clerk’s Office is directed to CLOSE the file. 2 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and 3 || provide copies to all counsel. 4 DATED this 23" day of February 2021.
5 - 6 rates cA, VADOR MENDS2)A, JR. 7 United States District Jucige 8 9 10 11 12 13 14 15 16 17 18 19 20
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S CROSS MOTION FOR SUMMARY