United States District Court, District of Columbia
ROSEMARY M. COLLYER United States District Judge
This case involves the proverbial tension between form and function. Helomics Corporation is a health-care company that created a test called ChemoFx to measure the response of cancerous tumors to various chemotherapies. Novitas Solutions, Inc., a Medicare Administrative Contractor in Pennsylvania (where Helomics is located), issued a local coverage determination (LCD) on November 5, 2015 stating that Medicare would no longer cover ChemoFx treatments after December 31, 2015. This non-coverage LCD was issued after an earlier determination to the same effect in 2012 and then retired so that Novitas could consider more data from Helomics. The 2015 LCD followed a 45-day comment period, consideration and response to the comments by Novitas, and a notice period of 45 days before the LCD was to become effective. However, Helomics sued Novitas shortly before the effective date to challenge the LCD and enjoin its implementation. As a courtesy to Helomics and the court, Novitas agreed to place the LCD on hold during the pendency of the litigation and delay its implementation. However, Novitas' database apparently did not contemplate this option; instead, Novitas checked that box that indicated that the LCD was "retired" to prevent it from coming into effect as previously scheduled.
Helomics' complaint challenging the substance of the 2015 LCD, filed in the Western District of Pennsylvania, was dismissed for lack of jurisdiction because the company had not exhausted its administrative remedies. At that point, Novitas re-issued the retired non-coverage LC after a 45-day notice period, to be effective on Monday April 11, 2016. No comment period was provided. Helomics filed suit in the District of Columbia on March 22, 2016, alleging that Novitas violated Medicare regulations when it re-issued the "retired" 2015 LCD without providing a new 45-day comment period. Helomics petitions for a writ of mandamus to order Sylvia Mathews Burwell, in her official capacity as Secretary of the Department of Health and Human Services (HHS), and Novitas to follow applicable Medicare regulations and guidance, which it insists requires a new 45-day comment period. Helomics asks the Court to enjoin implementation of the 2015 LCD before its scheduled effective date of April 11, 2016. See Compl. [Dkt. 1].
Helomics filed a Motion for Summary Judgment or, in the alternative, for a Preliminary Injunction. See Mot. for Summ. J. [Dkt. 4] (MSJ). Defendants opposed Helomics' Motion and filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(1). See Mot. to Dismiss [Dkt. 11] (MTD). Helomics also filed a reply. See Reply [Dkt. 14]. On April 7, 2016, the Court heard oral argument from both parties. For reasons stated on the record, the Court held that it had jurisdiction over Helomics' Complaint, but that Helomics failed to show that it was entitled to mandamus relief. With Helomics' consent, Defendants made an oral cross-motion for summary judgment. Given that time was of the essence due to the LCD's effective date, the Court immediately entered an Order denying Helomics' Motion for Summary Judgment, denying Helomics' Motion for a Preliminary Injunction as moot, denying Defendants' Motion to Dismiss for Lack of Jurisdiction, and granting Defendants' Cross-Motion for Summary Judgment. See Order [Dkt. 15]. Helomics appealed and the D.C. Circuit Court of Appeals has set an abbreviated schedule. This Opinion provides the reasons for the April 7, 2016 Order.
A. The Medicare Statute
The Medicare statute, located in Title XVIII of the Social Security Act, provides health insurance to the elderly and disabled. See 42 U.S.C. § 1395 et seq. The Medicare health insurance program is administered by the Centers for Medicare & Medicaid Services, which in turn operates through private entities known as Medicare Administrative Contractors. See 42 U.S.C. § 1395u(a), 1395kk-l(a)(4). These contractors are in charge of administering the program - most particularly receiving, deciding the merit of, and paying claims for Medicare benefits - in specific regions.
The statute provides that "no payment may be made ... for any expenses incurred for items or services, which ... are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member . . . ." See 42 U.S.C. §§ 1395y(a)(l)(A). Congress tasked HHS with important "discretionary functions, " such as deciding "whether a particular medical service is reasonable and necessary" and implementing said decision through rulemaking or individual adjudication. Heckler v. Ringer, 466 U.S. 602, 617 (1984) (internal quotation marks and citation omitted). The Secretary has a range of options for deciding whether a particular medical service is "reasonable and necessary, " by one of which she has authorized Medicare Administrative Contractors to develop and implement local coverage determinations, which apply only in the area in which the contractor operates. See 42 C.F.R. § 400.202. Instead of reviewing claims individually, LCDs allow contractor staff to identify those items or services that will or will not be covered and under what circumstances, thus allowing them to deny a claim for coverage more readily. See 42 U.S.C. § 1395ff(2)(B).
LCDs must be developed and implemented in accord with detailed regulations and chapter 13 of the Medicare Program Integrity Manual (MPIM). See MPIM, Ch. 13, § 13.1.3. New LCDs require "both a comment period and a notice period .. .." Id. § 13.7.2. Specifically, Medicare Administrative Contractors must provide the public a minimum of 45 days to comment on the proposed LCD. Id. § 13.7.4. The contractor must then consider and respond to the comments, revise the LCD if appropriate, and, if it adopts a final LCD, provide a 45-day notice period before the LCD goes into effect. Id. Federal law and the MPIM provide for specific administrative procedures to challenge LCDs. See, e.g., 42 U.S.C. § 1395ff(f)(5); 42 C.F.R. Part 498, Subparts B through E; MPIM § 13.11.
B. The ChemoFx Saga
Since 2007, Novitas has paid only those claims for ChemoFx that it considered to be adequately supported by peer-reviewed literature. In September 2012, Novitas issued a draft LCD that would have refused coverage for chemoresponse tests, such as ChemoFx. However, the draft LCD did not go into effect because Helomics wanted additional time to submit evidence in support of ChemoFx. The truncated record is unclear as to whether Helomics submitted additional evidence. On May 14, 2015, Novitas issued a new draft LCD, which again would deny coverage for ChemoFx. The 45-day comment period ended on July 9, 2015. During the comment period, Novitas held an open public meeting to receive comments on the 2015 draft LCD. Helomics made an oral presentation and submitted written comments. In accord with the MPIM, Novitas responded to the comments and posted its responses on its website. On November 5, 2015, Novitas issued the non-coverage 2015 LCD with an effective date of December 31, 2015, thereby fulfilling the 45-day notice requirement.
On December 11, 2015, Helomics submitted a request for reconsideration to Novitas, which Novitas denied because "[t]he LCD Reconsideration Process is available only for final LCDs." MPIM § 13.11(B). On December 17, 2015, Helomics sued Novitas in the Western District of Pennsylvania to enjoin the implementation of the 2015 LCD. See Helomics, Inc. v. Novitas, No. 2:15-cv-1667-CB (W.D. Penn. Filed Dec. 17, 2015) (Helomics I) (Bissoon, J.). In that litigation, Novitas "agreed to delay implementation of its non-coverage  LCD until [January 22, 2016], " thereby allowing briefing and a ruling on Helomics' Motion for Preliminary Injunction. Id., Dkt. 11 (December 22, 2015 Minute Order). As a result, Novitas staff had to prevent the LCD from going into effect by an entry in the controlling database. With limited available options to check, Novitas staff checked the box indicating that the 2015 LCD was "retired, " which is a term of art in the regulatory scheme. Because Novitas intended only to delay the implementation of the 2015 LCD until Judge Bissoon could rule, it made several entries in the database and elsewhere to that effect. See MTD, Ex. 8 [Dkt. 10-12] (2015 LCD) ("This LCD has been placed on hold and may be reactivated at a future date."); see also Ex. 14 [Dkt. 10-18] (Bennett Decl.), Ex. C (Medical Policy Update History page), Ex. D (Medicare New and Web Update pages), and Ex. E (E-mail Blast to Users). In essence, since Novitas did not know how to change the effective date of the 2015 LCD in its database, it showed the LCD as retired to prevent it from coming into effect.
Novitas moved to dismiss the Pennsylvania complaint for lack of jurisdiction. Judge Bissoon dismissed Helomics' complaint because the court had no jurisdiction since Helomics had failed to exhaust administrative remedies. See Helomics I, Dkts. 23 (Order) and 24 (Mem. Op.). On February 25, 2016, Novitas issued the retired 2015 LCD under a new number and with a new notice period of 45 days (2016 LCD) so that it is scheduled to become effective on Monday, April 11, 2016. Because Novitas had told the database that the 2015 LCD was "retired, " it needed to issue the identical LCD under a new number. See MPIM § 22.214.171.124; see also Bennett DeBcl. ¶ 11. The 2016 LCD is identical to the 2015 LCD as when it was challenged in Helomics I, with the exception of two new Current Procedural Terminology (CPT) code changes. Thus, the 2016 LCD is the same as the 2015 LCD, of which Helomics had full notice and opportunity to comment.
Helomics filed the instant suit to obtain an order to the Secretary that she adopt both a new 45-day comment period as well as a 45-day notice period for the "retired" but reissued and re-numbered 2016 LCD. Defendants argued that this Court lacks jurisdiction over Helomics' mandamus petition. The Court ruled on the record that it had jurisdiction. After Helomics failed to show its ...