1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 GARY ZIEROTH, as representative of Case No. 20-cv-00172-MMC the estate of SHARON ZIEROTH, 10 Plaintiff, ORDER GRANTING IN PART AND 11 DENYING IN PART PLAINTIFF’S v. MOTION FOR ATTORNEYS’ FEES 12 AND COSTS ALEX AZAR, in his capacity as 13 Secretary of Health and Re: Doc. No. 37 Human Services, 14 Defendant. 15 16 Before the Court is plaintiff Gary Zieroth’s (“Zieroth”) “Motion for Attorneys’ Fees 17 and Costs,” filed October 10, 2020, pursuant to the Equal Access to Justice Act (“EAJA”). 18 Defendant Alex Azar, Secretary of Health and Human Services (“Secretary”), has filed 19 opposition, to which Zieroth has replied. Having read and considered the papers filed in 20 support of and in opposition to the motion, the Court rules as follows.1 21 BACKGROUND 22 Zieroth’s wife, Sharon Zieroth, was a type 1 diabetic with hypoglycemic 23 unawareness. (See Certified Administrative Record (“CAR”) at 8.) To manage her 24 condition, she used a continuous glucose monitor (“CGM”), specifically, a Medtronic 25 MiniMed 530G system (“MiniMed 530G”), which device consists of several components, 26 one of which is a sensor. (See id. at 7-8.) 27 1 Between July 2017 and May 2018, Sharon Zieroth submitted, under Part B of the 2 Medicare program, claims for reimbursement of the costs of three sensors, which claims 3 were denied on the ground that a CGM system of the type exemplified by the MiniMed 4 530G did not, according to the Medicare Appeals Council (“Appeals Council”), constitute 5 “durable medical equipment” as defined in 42 C.F.R. § 414.202, as interpreted by CMS- 6 1682-R, a ruling issued by the Secretary through the Centers for Medicare and Medicaid 7 Services. (See id. at 4, 11-13.) 8 On January 8, 2020, Sharon Zieroth filed the instant action seeking review of the 9 denial of her claims. Subsequently, on February 7, 2020, Sharon Zieroth passed away 10 from complications of diabetes (see Mot. to Substitute, filed Apr. 3, 2020), and Zieroth, as 11 the representative of her estate, continued the instant action on her behalf. In an order 12 filed September 22, 2020, the Court granted Zieroth’s motion for summary judgment, 13 denied the Secretary’s cross-motion for summary judgment, and remanded the action 14 with instructions to authorize coverage for the three sensors at issue. 15 DISCUSSION 16 By the instant motion, Zieroth seeks an award of attorneys’ fees in the amount of 17 $53,835, as well as an award of costs in the amount of $400. 18 A. Entitlement to Award 19 Pursuant to the EAJA, attorneys’ fees and costs shall be awarded to the 20 “prevailing party . . . unless the court finds that the position of the United States was 21 substantially justified or that special circumstances make an award unjust.” See 22 28 U.S.C. § 2412(d)(1)(A).2 Ordinarily, such fees are to be awarded at the statutory rate 23 of “$125 per hour,” adjusted, if appropriate, for “an increase in the cost of living or a 24 special factor.” See id. § 2412(d)(2)(A). Where, however, the government has “acted in 25
26 2 There is no dispute that Zieroth is the prevailing party, nor that the other foundational requirements have been met, specifically, that the instant application was 27 timely filed, see 28 U.S.C. § 2412(d)(1)(B), and that Sharon Zieroth’s net worth did not 1 bad faith,” see Ibrahim v. U.S. Dep't of Homeland Sec., 912 F.3d 1147, 1180 (9th Cir. 2 2019) (internal quotation and citation omitted), such fees shall be awarded “to the same 3 extent that any other party would be liable under the common law,” see id. § 2412(b). 4 Here, Zieroth argues he is entitled to an award of attorneys’ fees because the 5 Secretary’s position was not, Zieroth contends, substantially justified, and, further, that he 6 is entitled to an award at an enhanced rate because, according to Zieroth, the Secretary 7 acted in bad faith. 8 1. Substantial Justification 9 The Secretary argues Zieroth is not entitled to an award of fees because, the 10 Secretary asserts, the Secretary’s position was “substantially justified.” See 28 U.S.C. 11 § 2412(d)(1)(A).3 As set forth below, the Court disagrees. 12 “A substantially justified position must have a reasonable basis in both law and 13 fact,” see United States v. Marolf, 277 F.3d 1156, 1161 (9th Cir. 2002), and fees 14 generally should be awarded “where the government’s underlying action was 15 unreasonable even if the government advanced a reasonable litigation position,” see id. 16 at 1159. 17 Here, the Court, in its order granting Zieroth’s motion for summary judgment and 18 denying the Secretary’s cross-motion for summary judgment, found the Secretary’s 19 position, both as set forth in CMS-1682-R and reiterated in the course of the instant 20 litigation, was not reasonable. (See Order at 7:4-5.) Moreover, to date, three other 21 district courts have rejected the Secretary’s position, see Whitcomb v. Hargan, No. 17- 22 CV-00014-DEJ (E.D. Wis. Oct. 26, 2017); Bloom v. Azar, 2018 WL 583111 (D. Vt. Jan. 23 29, 2018), Lewis v. Azar, 308 F. Supp. 3d 574 (D. Mass. 2018), and, although not 24 determinative, “a string of losses can be indicative” of whether a position was 25 substantially justified, see Pierce v. Underwood, 487 U.S. 552, 569 (1988). 26
27 3 The Secretary does not contend there exist any “special circumstances mak[ing] 1 Accordingly, the Court finds the Secretary’s position was not substantially justified 2 and, consequently, Zieroth is entitled to an award of fees. 3 2. Bad Faith 4 A finding of bad faith is warranted where the government “knowingly or recklessly 5 raises a frivolous argument” in prosecuting or defending against an action. See 6 Rodriguez v. United States, 542 F.3d 704, 709 (9th Cir. 2008) (internal quotation and 7 citation omitted). “A frivolous [defense] is one that is groundless . . . with little prospect of 8 success,” such as one in which “the government’s position was foreclosed by binding 9 precedent or so obviously wrong as to be frivolous.” See id. (ellipsis in original; internal 10 quotation and citation omitted). In determining whether a position is frivolous, a court 11 “must review the totality of the government’s conduct” and “may examine the 12 government’s actions that precipitated the litigation, as well as the litigation itself.” See 13 Ibrahim, 912 F.3d at 1180-81. 14 Here, Zieroth contends that, at the time his wife’s claims were denied, no 15 “competent authority of any kind” supported the Secretary’s position (see Mot. at 8:21), 16 and, further, that in the course of the instant litigation, the Secretary “offered a different 17 rationale” for denial than that cited by the Appeals Council (see id. at 9:17-18), 18 specifically, that the MiniMed 530G was not covered because it assertedly is less 19 accurate than other systems. As set forth below, the Court is not persuaded. 20 First, the Court finds the Secretary’s position was not wholly lacking in support.
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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 GARY ZIEROTH, as representative of Case No. 20-cv-00172-MMC the estate of SHARON ZIEROTH, 10 Plaintiff, ORDER GRANTING IN PART AND 11 DENYING IN PART PLAINTIFF’S v. MOTION FOR ATTORNEYS’ FEES 12 AND COSTS ALEX AZAR, in his capacity as 13 Secretary of Health and Re: Doc. No. 37 Human Services, 14 Defendant. 15 16 Before the Court is plaintiff Gary Zieroth’s (“Zieroth”) “Motion for Attorneys’ Fees 17 and Costs,” filed October 10, 2020, pursuant to the Equal Access to Justice Act (“EAJA”). 18 Defendant Alex Azar, Secretary of Health and Human Services (“Secretary”), has filed 19 opposition, to which Zieroth has replied. Having read and considered the papers filed in 20 support of and in opposition to the motion, the Court rules as follows.1 21 BACKGROUND 22 Zieroth’s wife, Sharon Zieroth, was a type 1 diabetic with hypoglycemic 23 unawareness. (See Certified Administrative Record (“CAR”) at 8.) To manage her 24 condition, she used a continuous glucose monitor (“CGM”), specifically, a Medtronic 25 MiniMed 530G system (“MiniMed 530G”), which device consists of several components, 26 one of which is a sensor. (See id. at 7-8.) 27 1 Between July 2017 and May 2018, Sharon Zieroth submitted, under Part B of the 2 Medicare program, claims for reimbursement of the costs of three sensors, which claims 3 were denied on the ground that a CGM system of the type exemplified by the MiniMed 4 530G did not, according to the Medicare Appeals Council (“Appeals Council”), constitute 5 “durable medical equipment” as defined in 42 C.F.R. § 414.202, as interpreted by CMS- 6 1682-R, a ruling issued by the Secretary through the Centers for Medicare and Medicaid 7 Services. (See id. at 4, 11-13.) 8 On January 8, 2020, Sharon Zieroth filed the instant action seeking review of the 9 denial of her claims. Subsequently, on February 7, 2020, Sharon Zieroth passed away 10 from complications of diabetes (see Mot. to Substitute, filed Apr. 3, 2020), and Zieroth, as 11 the representative of her estate, continued the instant action on her behalf. In an order 12 filed September 22, 2020, the Court granted Zieroth’s motion for summary judgment, 13 denied the Secretary’s cross-motion for summary judgment, and remanded the action 14 with instructions to authorize coverage for the three sensors at issue. 15 DISCUSSION 16 By the instant motion, Zieroth seeks an award of attorneys’ fees in the amount of 17 $53,835, as well as an award of costs in the amount of $400. 18 A. Entitlement to Award 19 Pursuant to the EAJA, attorneys’ fees and costs shall be awarded to the 20 “prevailing party . . . unless the court finds that the position of the United States was 21 substantially justified or that special circumstances make an award unjust.” See 22 28 U.S.C. § 2412(d)(1)(A).2 Ordinarily, such fees are to be awarded at the statutory rate 23 of “$125 per hour,” adjusted, if appropriate, for “an increase in the cost of living or a 24 special factor.” See id. § 2412(d)(2)(A). Where, however, the government has “acted in 25
26 2 There is no dispute that Zieroth is the prevailing party, nor that the other foundational requirements have been met, specifically, that the instant application was 27 timely filed, see 28 U.S.C. § 2412(d)(1)(B), and that Sharon Zieroth’s net worth did not 1 bad faith,” see Ibrahim v. U.S. Dep't of Homeland Sec., 912 F.3d 1147, 1180 (9th Cir. 2 2019) (internal quotation and citation omitted), such fees shall be awarded “to the same 3 extent that any other party would be liable under the common law,” see id. § 2412(b). 4 Here, Zieroth argues he is entitled to an award of attorneys’ fees because the 5 Secretary’s position was not, Zieroth contends, substantially justified, and, further, that he 6 is entitled to an award at an enhanced rate because, according to Zieroth, the Secretary 7 acted in bad faith. 8 1. Substantial Justification 9 The Secretary argues Zieroth is not entitled to an award of fees because, the 10 Secretary asserts, the Secretary’s position was “substantially justified.” See 28 U.S.C. 11 § 2412(d)(1)(A).3 As set forth below, the Court disagrees. 12 “A substantially justified position must have a reasonable basis in both law and 13 fact,” see United States v. Marolf, 277 F.3d 1156, 1161 (9th Cir. 2002), and fees 14 generally should be awarded “where the government’s underlying action was 15 unreasonable even if the government advanced a reasonable litigation position,” see id. 16 at 1159. 17 Here, the Court, in its order granting Zieroth’s motion for summary judgment and 18 denying the Secretary’s cross-motion for summary judgment, found the Secretary’s 19 position, both as set forth in CMS-1682-R and reiterated in the course of the instant 20 litigation, was not reasonable. (See Order at 7:4-5.) Moreover, to date, three other 21 district courts have rejected the Secretary’s position, see Whitcomb v. Hargan, No. 17- 22 CV-00014-DEJ (E.D. Wis. Oct. 26, 2017); Bloom v. Azar, 2018 WL 583111 (D. Vt. Jan. 23 29, 2018), Lewis v. Azar, 308 F. Supp. 3d 574 (D. Mass. 2018), and, although not 24 determinative, “a string of losses can be indicative” of whether a position was 25 substantially justified, see Pierce v. Underwood, 487 U.S. 552, 569 (1988). 26
27 3 The Secretary does not contend there exist any “special circumstances mak[ing] 1 Accordingly, the Court finds the Secretary’s position was not substantially justified 2 and, consequently, Zieroth is entitled to an award of fees. 3 2. Bad Faith 4 A finding of bad faith is warranted where the government “knowingly or recklessly 5 raises a frivolous argument” in prosecuting or defending against an action. See 6 Rodriguez v. United States, 542 F.3d 704, 709 (9th Cir. 2008) (internal quotation and 7 citation omitted). “A frivolous [defense] is one that is groundless . . . with little prospect of 8 success,” such as one in which “the government’s position was foreclosed by binding 9 precedent or so obviously wrong as to be frivolous.” See id. (ellipsis in original; internal 10 quotation and citation omitted). In determining whether a position is frivolous, a court 11 “must review the totality of the government’s conduct” and “may examine the 12 government’s actions that precipitated the litigation, as well as the litigation itself.” See 13 Ibrahim, 912 F.3d at 1180-81. 14 Here, Zieroth contends that, at the time his wife’s claims were denied, no 15 “competent authority of any kind” supported the Secretary’s position (see Mot. at 8:21), 16 and, further, that in the course of the instant litigation, the Secretary “offered a different 17 rationale” for denial than that cited by the Appeals Council (see id. at 9:17-18), 18 specifically, that the MiniMed 530G was not covered because it assertedly is less 19 accurate than other systems. As set forth below, the Court is not persuaded. 20 First, the Court finds the Secretary’s position was not wholly lacking in support. In 21 particular, in finding the MiniMed 530G did not qualify as durable medical equipment, the 22 Secretary relied on the distinction made by the Food and Drug Administration (“FDA”) 23 between two categories of CGM systems, specifically, those approved by the FDA “for 24 use in place of a blood glucose monitor” and those, like the MiniMed 530G, approved “for 25 use as adjunctive devices to complement, not replace, information obtained from blood 26 glucose monitors,”4 which categories the Secretary characterized as, respectively, 27 1 “therapeutic” and “non-therapeutic” systems. See CMS-1682-R at 6-7, 13. 2 Second, the Court finds the Secretary’s position has not changed. In particular, 3 the Court disagrees with Zieroth’s contention that the Secretary, in the course of the 4 instant litigation, asserted, for the first time, that the MiniMed 530G is not as “accurate” as 5 other systems. (See Pl.’s Reply in Support of Mot. for Summ. J. at 10:2.) In support 6 thereof, Zieroth cites to the Secretary’s cross-motion for summary judgment, in which the 7 Secretary states that, “[u]nder the terms of [CMS-1682-R], CGMs are only covered if they 8 are accurate enough to be ‘used for making diabetes treatment decisions, such as 9 changing one’s diet or insulin dosage based solely on the readings of the CGM.’” (See 10 Def.’s Cross-Mot. for Summ. J. at 5:22-6:1 (citing CMS-1682-R at 7).) In making that 11 statement however, the Secretary cites to a specific page of CMS-1682-R, in which the 12 Secretary, in denying coverage for systems such as the MiniMed 530G, compared 13 “therapeutic” and “non-therapeutic” CGM systems and explained that the former is, in 14 essence, more accurate than the latter. (See CMS-1682-R at 7.) 15 In sum, the Court finds the Secretary has not acted in bad faith. 16 B. Amount of Award 17 Where, as here, a party establishes he is entitled to an award of fees, such fees 18 are, as noted, awarded at the statutory rate of “$125 per hour unless the court 19 determines that an increase in the cost of living or a special factor, such as the limited 20 availability of qualified attorneys for the proceedings involved, justifies a higher fee.” See 21 28 U.S.C. § 2412(d)(2)(A).5 There is no disagreement here as to the calculation of the 22 statutory hourly rate. As set forth by the Ninth Circuit, the statutory hourly rates, adjusted 23 for increases in the cost of living, are $205.25 and $206.77 for work performed, 24 respectively, in 2019 and 2020. See Statutory Maximum Rates Under the EAJA, 25 https://www.ca9.uscourts.gov/content/view.php?pk_id=0000000039 (setting forth 26 using fingertip blood samples.” See id. at 6. 27 1 adjusted rates for 2010 through first half of 2020).6 2 Next, with one exception, there is no dispute as to the number of hours claimed, 3 namely, 98.45 hours for work performed by Zieroth’s counsel, the one exception being 4 2.4 hours of work described as “delivering chambers copy of pleadings” (see Reply, Ex. 5 A-1 at 3), which, the Secretary argues, were not reasonably expended. In response, 6 Zieroth contends the challenged expenditure was reasonable because his counsel has 7 “no administrative support in the Bay Area” (see Reply at 6:1), and, consequently, in 8 endeavoring to comply with the Court’s directive to “submit forthwith a chambers copy of 9 [the] Complaint” (see Order, filed Jan. 16, 2020, at 1:14-15), personally “hand-deliver[ed]” 10 the copy to the Clerk of Court (see Reply at 6:4). As the Ninth Circuit has noted, 11 however, “purely clerical or secretarial tasks should not be billed at a paralegal [or 12 lawyer's] rate, regardless of who performs them.” See Davis v. City & Cty. of San 13 Francisco, 976 F.2d 1536, 1543 (9th Cir. 1992) (alteration in original; internal quotation 14 and citation omitted), opinion vacated in part on other grounds, 984 F.2d 345 (9th Cir. 15 1993) (finding time spent by counsel in “serving and filing of papers” should “not have 16 been included in the attorneys’ fee award”). 17 Accordingly, the Court will reduce by 2.4 hours the total hours claimed by Zieroth, 18 resulting in an award of attorneys’ fees in the amount of $19,838.60.7 19 Lastly, as noted, Zieroth seeks costs in the amount of $400, specifically, the filing 20 fee for the instant action. There is no dispute Zieroth is entitled to an award of that 21 amount as a taxable item of cost under 28 U.S.C. § 2412(a)(1). 22 CONCLUSION 23 For the reasons stated above, Zieroth’s Motion for Attorneys’ Fees and Costs is 24
25 6 The hours Zieroth claims for 2020 were expended in both the first half and second half of the year. “If no rate is posted for the period in which [the] work was 26 performed,” the court “use[s] the rate that is posted for the previous period.” See id. 27 7 This sum is calculated as follows: (14.25 hours x hourly rate of $205.25) + 1 hereby GRANTED in part and DENIED in part, and Zieroth is awarded attorneys’ fees in 2 || the amount of $19,838.60, together with costs in the amount of $400. 3 IT IS SO ORDERED. 4 5 || Dated: December 3, 2020 : MAXINE M. CHESNEY 6 United States District Judge 7 8 9 10 11 12
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