PHILIP A. BRIMMER, District Judge.
This matter is before the Court on plaintiff Janice Cihak's complaint [Docket No. 1], filed on August 19, 2013. Plaintiff seeks review of the final decision of defendant Sylvia Burwell,
The Medicare statute, enacted in 1965, is a federal health insurance program primarily benefitting those 65 years of age or older. See Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286 (codified as amended at 42 U.S.C. §§ 1395 to 1395kkk-1). To be eligible, an individual must be (1) 65 years of age or older; (2) disabled and entitled to social security disability benefits; or (3) medically determined to have end stage renal (kidney) disease. 42 U.S.C. § 1395c. The Centers for Medicare and Medicaid Services ("CMS") is the agency within the Department of Health and Human Services charged with the administration of Medicare. See Sw. Pharm. Solutions, Inc. v. Ctrs. for Medicare and Medicaid Servs., 718 F.3d 436, 439 (5th Cir. 2013). The Medicare program is divided into four major components — Parts A, B, C, and D. Part A of the program provides for hospital insurance services, including inpatient hospital services, post-hospital extended care services, home health services, and hospice care. 42 U.S.C. § 1395d(a). Part B is a voluntary program that provides supplemental benefits to Medicare participants to cover the costs of, among other things, home health services, physician services, and outpatient physical therapy services. 42 U.S.C. § 1395k. Part C, the "Medicare + Choice" (M+C) program, allows eligible participants to opt out of the traditional Part A fee-for-service system and instead obtain various benefits through Medical Advantage Organizations, which receive a fixed payment from the United States for each enrollee. 42 U.S.C. § 1395w-21. Part D of the program subsidizes the cost of prescription drugs and prescription drug insurance premiums for Medicare beneficiaries. 42 U.S.C. §§ 1395w-101 et seq.
This appeal concerns the "Coverage Gap Discount Program" (the "discount program"), which was added to Medicare Part D by the Patient Protection and Affordable Care Act. 111 Pub. L. No. 148, 124 Stat. 119, 461 (2010). The discount program was enacted to reduce the expense for prescription medications for Medicare enrollees who fall into Medicare's coverage gap.
The discount program includes an exception (the "exception") that leaves open the possibility of Part D coverage for drugs whose manufacturer has not agreed to participate in the discount program where "the Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under [Part D.]" 42 U.S.C. § 1395w-153(c)(1).
Plaintiff was born on April 9, 1945, and is 69 years old. R. at 147. Plaintiff suffers from severe arterial thrombosis,
Plaintiff's treaters have experimented with a series of anticoagulant medications, including aspirin, Lovenox, Coumadin, unfractionated heparin, and Arixtra (generic name fondaparinux), but those medications were either ineffective at managing plaintiff's condition or produced severe side effects. Id. at 125, 362-63. In particular, plaintiff expressed that she would rather die than experience the adverse effects of Arixtra. Id. at 363. For a time, plaintiff was taking the anticoagulant Refludan (generic name lepirudin), which she was tolerating well, but Refludan is no longer being manufactured. Id. at 125, 363. The remaining medication options have either been tried without success or are chemically similar to drugs that have been tried without success. Id. at 364-66.
On January 11, 2013, plaintiff requested that her prescription drug plan, SilverScript, grant an exception to cover Iprivask, which was not on SilverScript's list of covered drugs. R. at 325-29. In support of plaintiff's request, her physician, Dr. Kathryn Hassell, wrote a letter to SilverScript describing the severity of plaintiff's condition and her need for consistent anticoagulation treatment in order to "avoid significant complications including organ damage, amputation, prolonged hospitalization and death." Id. at 329. SilverScript denied plaintiff's request on January 12, 2013, writing that it was unable to cover Iprivask because the drug's manufacturer had not agreed to participate in the discount program. Id. at 331. On January 16, 2013, Dr. Hassell requested that SilverScript reconsider its denial. Id. at 311-12, 318. SilverScript reaffirmed its denial of coverage on January 18, 2013, stating that it was unable to cover Iprivask. Id. at 320. On January 26, 2013, Maximus Federal Services ("Maximus"), an independent review entity, upheld SilverScript's denial of coverage on the grounds that plaintiff's plan with SilverScript does not cover drugs that do not qualify for Medicare Part D coverage. R. at 295-96. In response to Maximus' denial, Dr. Hassell, acting on plaintiff's behalf, requested an expedited hearing before an Administrative Law Judge ("ALJ"). R. at 293.
Following a hearing, the ALJ issued an order on February 8, 2013. R. at 124-134. The ALJ found that, if a Medicare Part D drug manufacturer does not sign an agreement to participate in the discount program, the drugs that it manufactures are not considered "Part D" drugs. R. at 132. Iprivask's manufacturer, Canyon Pharmaceuticals, did not sign such an agreement. Id. Therefore, Iprivask was not a Part D drug and not eligible to be used as an exception to SilverScript's formulary. Id. The ALJ held, however, that since the Secretary delegated her authority to ALJs to administer the nationwide hearing and appeals system for Medicare, id. at 133 (citing 70 Fed. Reg. 36386, 36387 (June 23, 2005)), the ALJ had the authority to decide whether a drug qualifies for the exception of § 1860D-43(c). Id. The ALJ further held that Iprivask qualified under the exception to the discount program in 42 C.F.R. § 423.578
The Medicare Appeals Council (the "Council"), on its own motion, reviewed and reversed the ALJ's holding. R. at 4-5. The Council held that the Secretary delegated the authority to invoke the exception in § 1860D-43(c) to the CMS, not the ALJ. R. at 9-11 (citing 42 C.F.R. § 423.2310(b)). Pursuant to 42 C.F.R. § 423.2130, the Council's decision is the final decision of the Secretary.
Plaintiff appealed the Council's decision. The issue presented on appeal is whether the ALJ had the authority to invoke the exception in § 1860D-43(c) to find that a drug can be covered by Medicare Part D even where the manufacturer did not sign an agreement to participate in the discount program. Docket No. 23 at 12.
Once the Secretary has rendered a final decision on a Medicare claim, judicial review of that decision is available in the same manner as provided in 42 U.S.C. § 405(g) for old age and disability claims arising under Title II of the Social Security Act. Heckler v. Ringer, 466 U.S. 602, 605 (1984); 42 U.S.C. § 1395ff(b)(1)(A) (stating that "any individual dissatisfied with any initial determination under subsection (a)(1) of this section" is entitled to reconsideration, a hearing by the Secretary, and "to judicial review of the Secretary's final decision after such hearing as is provided in section 405(g)").
Under § 405(g), review of the Secretary's finding that a claimant is not entitled to Medicare benefits is limited to whether the Secretary's finding is supported by substantial evidence and not contrary to law. Chipman v. Shalala, 90 F.3d 421, 422 (10th Cir. 1996). The district court may not reverse the Secretary simply because the court may have reached a different result based on the record; the question instead is whether there is substantial evidence showing that the Secretary was justified in her decision. See Andrade v. Sec'y of Health & Human Servs., 985 F.2d 1045, 1047 (10th Cir. 1993). Substantial evidence is more than a mere scintilla and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Via Christi Reg'l Med. Center, Inc. v. Leavitt, 509 F.3d 1259, 1271 (10th Cir. 2007).
As noted above, the issue before the Court is whether the ALJ had the authority to find that Iprivask qualifies for the exception in § 1860D-43(a) even though Canyon Pharmaceuticals did not sign an agreement to participate in the discount program. The Court finds that the Secretary delegated the authority to determine whether a prescription drug qualifies for the exception to CMS.
The Council first noted that § 1860D-43(c)(1) refers to the Secretary making an exception based on the "health of beneficiaries," not "beneficiary." R. at 10 (citing 42 U.S.C. § 1395w-153(c)(1)). Because a determination based upon a group of "beneficiaries" is more appropriately determined by the CMS through its data collection capability as opposed to an ALJ reviewing a single beneficiary's claim, the Council believed that any delegation of such authority would more appropriately be made to the CMS rather than to an ALJ. However, this observation, by itself, does not answer the question as to whether the Secretary delegated such authority to the ALJ.
Second, the Council found that the regulation that the Secretary promulgated to implement the exception expressly delegated the exception-granting authority to CMS. Id. (citing 42 C.F.R. § 423.2310(b)).
The Court agrees with the Council that the Secretary delegated the authority to determine exceptions to CMS. The implementing regulation provides:
42 C.F.R. § 423.2310 (emphasis added). By its plain terms, § 423.2310(b) conditions exceptions to the requirements of § 423.2310(a) on a determination made by CMS. Plaintiff offers no contrary interpretation of § 423.2310, see Docket No. 23, and offers no other regulations that discusses exceptions to § 423.2310(a).
The ALJ based his authority to determine exceptions under § 1860D-43(c) on regulations by which the Secretary delegated her authority to administer the nationwide hearings and appeals system for the Medicare program to the Office of Medicare Hearings and Appeals. R. at 133 (citing 70 Fed. Reg. 36386, 36387 (June 23, 2005)). This regulation, however, applies only to the administration of an adjudicative system. See 70 Fed. Reg. at 36387. The ALJ cites no support for the Secretary's delegation of her authority under § 1860D-43(c) to make exceptions, which is not an adjudicative function. Neither the ALJ nor plaintiff has identified a source of delegation to the ALJ here to have created an exception for Iprivask under § 1860D-43(c).
Finally, plaintiff argues that, because CMS declined to promulgate regulations that establish an administrative scheme by which enrollees could petition for coverage under the exception, "the reasonable conclusion is that [plaintiff's] avenue of redress was through the administrative hearing process." Docket No. 23 at 16. The Court disagrees. During the rulemaking process, CMS noted that it found it "highly unlikely that [CMS] will need to exercise" the authority to carve out exceptions, "given the strong participation by manufacturers in the Discount Program since 2011 and the likely availability of therapeutic alternatives for any Part D drugs." 77 Fed. Reg. 22072, 22083 (April 12, 2012). CMS's failure to use its authority either to carve out exceptions or to create an administrative scheme for enrollees to petition for exceptions does not, as plaintiff suggests, compel the conclusion that CMS intended to delegate its authority to ALJs to make exceptions on a case-by-case basis.
Because the ALJ did not have the authority to determine whether a prescription drug qualifies for the exception in § 1860D-43(c), the ALJ did not have the authority to order SilverScript to cover Iprivask.
For the foregoing reasons, it is
