By David Yucht, J.D.
A prescription leg massager was categorized by CMS as a personal comfort item, as opposed to a medical device, and was therefore ineligible for Medicare coverage.
The U.S. Ninth Circuit Court of Appeals affirmed a lower court ruling dismissing for lack of subject matter jurisdiction a medical device supplier’s suit seeking to have Medicare cover its product. The panel agreed that because the supplier had not exhausted its administrative remedies, the court did not have the authority to adjudicate its claim (Sensory NeuroStimulation, Inc. v. Azar, October 16, 2020, Baylson, M.).
Sensory NeuroStimulation, Inc. sells a prescription leg massager called "Relaxis." It sought a favorable nationwide coverage determination (NCD) by CMS that Medicare would reimburse beneficiaries for the purchase of this device. CMS determined that Medicare could not cover Relaxis because it was a personal comfort item. The determination was not a formal NCD, so it did not bind Medicare Administrative Contractors. A few months later, Sensory met with a Principal Deputy Administrator of CMS to try to persuade him otherwise. CMS took no action for six months, at which point Sensory sued. The lower court granted the government’s motion to dismiss based on its finding that Medicare’s channeling requirement applied and had not been met. Sensory appealed.
Jurisdiction-exhaustion of administrative remedies. The panel affirmed the lower court’s dismissal for lack of jurisdiction. Medical devices classified as "durable medical equipment" may be eligible for Medicare reimbursement. Devices considered "personal comfort items" are categorically not covered. The Medicare statute eliminates federal question jurisdiction over lawsuits brought to "recover on any claim arising under" Medicare (42 U.S.C. § 405(h)). A lawsuit’s "collateral," "general legal," or "potential future" nature, as well as the fact that a plaintiff is not seeking damages, are all immaterial to this "arising under" analysis. This "channeling requirement" forces plaintiffs to exhaust pertinent administrative channels prior to being allowed to initiate suit. The channeling requirement does not apply, however, where its application would mean there could be no review, at all, of the agency determination.
Appellate panel affirmed lower court decision. The appellate court held that this case arose under the Medicare statute and therefore the administrative channeling requirements applied. Sensory was not entitled to a waiver of the statute’s exhaustion requirement and requiring exhaustion did not mean there could be "no review at all" of the CMS determination. Citing an opinion of the U.S. Supreme Court, the Ninth Circuit held that the exception to the exhaustion requirement did not apply here because other medical device suppliers could bring the same claim through the existing administrative channel. Consequently, some review was available. Since the administrative channeling requirement applied, the courts had no subject matter jurisdiction to hear Sensory’s claim. Moreover, Sensory could not proceed as a third party to the relationship between Medicare beneficiaries and the government. Because its lawsuit was collateral to claims for benefits and sought no monetary benefits, it defined Sensory as a medical device supplier and accordingly, not in a third-party relationship between beneficiaries and the government.
The case is No. 19-55036.
Attorneys: Diana Hughes Leiden (Winston & Strawn LLP) for Sensory NeuroStimulation, Inc. Karen Paik, U.S. Department of Justice, for Alex M. Azar II, U.S. Department of Health & Human Services and Centers for Medicare & Medicaid Services.
Companies: Sensory NeuroStimulation, Inc.
MainStory: TopStory CMSNews CoverageNews MDeviceNews
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