Health Law Daily Medicare reimbursement case remanded for standing determination
Wednesday, July 28, 2021

Medicare reimbursement case remanded for standing determination

By Glenn Borst, J.D.

Because standing was raised for the first time on appeal, the claimant did not have an opportunity to present evidence rebutting HHS’s basis for denial of coverage.

An individual claimant seeking payment by Medicare for his cancer treatment received determinations from two administrative law judges (ALJs), one granting and one denying claims for certain months. He appealed, arguing collateral estoppel by one ALJ’s determination. For the first time on appeal, HHS challenged the claimant’s standing. The case was remanded for further factfinding on the issue of standing (Banks v. HHS, July 26, 2021, Per Curiam).

The claimant suffered a lethal form of brain cancer. He was prescribed Optune, a type of medical device that provides tumor treating field therapy (TTFT) by sending alternating electrical fields into the brain in order to slow or stop cancer growth. One ALJ denied the claims for three months, finding the treatment was not medically reasonable and necessary. Novocure, the supplier of Optune, became liable for the cost of Optune for those three months. A separate ALJ granted claims for another two months, finding the treatment to be a covered Medicare expense. The ALJ determination approving claims became final before the ALJ determination denying claims, so the claimant argued on appeal that the determination finding the treatment to be a covered Medicare expense prevailed due to collateral estoppel. The district court granted summary judgment to HHS, finding collateral estoppel incompatible with the Medicare scheme. The claimant then appealed this determination to the Eleventh Circuit.

On appeal, HHS challenged for the first time the claimant’s standing. To establish standing, a litigant must show that she has (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. HHS argued that the claimant did not suffer injury in fact, since Novocure was liable for the costs, and that there was therefore no injury to be redressed. The claimant argued that the violation of his statutory right to Medicare was sufficient to give standing, and also that HHS would rely on the negative ALJ determination in denying future claims, thus exposing him to a risk of harm.

The claimant’s first argument failed. The Eleventh Circuit has found previously that allegation of a statutory violation alone is insufficient to confer standing. The claimant must show actual injury, or failing that, exposure due to the violation to a "risk of real harm." As to a risk of harm, the claimant argued that HHS would rely on his loss of his appeal from denial of benefits to impute knowledge to him of possible non-coverage, and would deny coverage based on this imputed knowledge by the claimant. Although Novocure was liable for three months, the claimant argued that due to his knowledge of the possibility of non-coverage, he would be financially liable for future payments. This was based on an ALJ holding in another case, in which the ALJ found that because a Medicare recipient was aware that his TTFT was not covered by Medicare based on an earlier claim denial, the recipient was personally liable for the cost of treatment.

HHS argued that the court should follow a Seventh Circuit decision which held that a Medicare recipient seeking reimbursement for TTFT lacked standing (see Lack of standing dooms brain tumor treatment suit, June 28, 2021). In that case, standing was denied after the parties had an opportunity to litigate the issue and establish a record. The appeals court found that the claimant had not shown that various layers of administrative protection for recipients of medical equipment and devices, such as advance notice that a treatment would not be covered and a request for a written agreement from the beneficiary that he or she would be financially liable, would not apply to her case. In the present case, there was no opportunity to establish a record because the issue was raised on appeal for the first time, and the claimant argued that he had no chance to provide evidence rebutting HHS’s assertion. Because standing was not litigated in district court, the case was remanded for further factfinding on that issue.

This is case No. 21-11454.

Attorneys: David Goroff (Foley & Lardner, LLP) for Edwin R. Banks. Elizabeth Holt, U.S. Attorney's Office, for Health and Human Services.

Companies: Health and Human Services

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