Monday, July 14, 2014

Government Responds to CCLA Lawsuit about LCDs; CCLA Responds to Gov't; Govt files its reply

[Updated for all three July, 2014 documents]
[Updated 8/27/2014:  Judges schedule oral argument for December.]
[Updated 2/3/2015:  Orals arguments were heard in DC on February 2.]

Last spring, the California Clinical Laboratory Association filed a court case against the federal Department of Health and Human Services asserting that Local Coverage Determinations were unconstitutional.   This was announced with a public press release, covered in the trade press, and I provided a short blog and a link to the original CCLA filing here [April 18, 2014].

In early July, the government responded with a 32-page motion to dismiss on several grounds.   This is typically the first move when you sue the government – I worked as a Medicare medical director in the previous decade (the 00’s) and lawsuits against us were quickly transformed into motion-to-dismiss cases.  In mid July, the CCLA, through its attorneys, responded to the motion to dismiss  and finally, at the end of July, the government responded to that CCLA filing as well. Finally, in late August, judges scheduled oral arguments in the case for December, 2014.


I am not an attorney and can only provide a simple plain English summary of what seem to be major points.  The full Department of Justice filing, on behalf of HHS, dated July 2, is found HERE.

The original case is supported by the California Clinical Laboratory Association on behalf of Jane Doe, a Medicare patient whose management would benefit from a pharmacogenetics test.   The government argues that the patient lacks standing, because one principle of filing the case validly is demonstrated harm.   The government argues that the LCD in question was not even finalized at the time the case was filed (although it may be finalized now, which could be pointed out in an amended compliant).

The government points out there is no copay for laboratory tests, so the patient would not be harmed by a copay and would not pay anything unless the lab had an ABN (advance billing notice) for her.    In any case, the government points out that there are multiple appeal processes besides federal court.  It’s more clear after reading the original filing and the government’s response that while the main argument of the CCLA is constitutional – that the government cannot constitutionally delegate coverage decisions to federal contractors by extrapolation from a recent Amtrak/Department of Transportation case – there would be no standing to lodge the argument and argue it unless one had suffered substantial.   Hence, the arguments about unconstitutionality follow the CCLA's lengthy arguments about LCDs being badly done and causing harm.  While a nice LCD may be equally unconstitutional, it is helpful if the LCDs are argued to be abusive or wrong, because it creates the harm that creates the standing to argue the constitutional complaint.

Another problem raised by the government is that the case in the name of the CCLA should nominate a specific harmed member of the CCLA in order for the CCLA as a whole to have standing.   This seems like the easiest problem to resolve in an amended filing by the CCLA.   However, the government's case further maintains that the CCLA as a whole or its member laboratory would still have various other routes of resolution to the “harm” besides, and prior to, a federal court case.  

The government response does not discuss the core constitutional argument (LCDs are an unconstitutional delegation of power legitimately granted to HHS per se) – the issues relate to standing to be a plaintiff.


The CCLA responded in kind, on July 17, to the government's motion to dismiss - HERE.   Again, readers should see the full document.  The CCLA response is forceful.  It points out errors of fact or omission in the government's motion to dismiss, and opens with the tone that the government ALWAYS plays its first card through motions to dismiss for lack of standing (something that I, as a medical director, had noticed when I got sued as an officeholder for Medicare.)   The CCLA sites numerous examples in which associations have had standing to sue the government, and there can be no serious question here that the CCLA and its members are mere distant bystanders without standing - obviously, lab LCDs affect labs.  The CCLA also sites numerous examples where a "Jane Doe" patient (as in this case) has successfully been granted legal standing to sue; and that such cases are almost always supported by additional larger groups, noting that an elderly beneficiary would rarely have hundreds of thousands of dollars to invest over a year or more in pursuing an erroneous $200 claim.   The response also cites CMS passivity in implementing federal statutes regarding national harmonization of LCDs and regarding establishing mediation processes between stakeholders and local CMS medical directors.


Finally, on July 28, the government responds with its closing argument for the judge - HERE - after which the I believe the judge goes into closed quarters and issues an opinion in a couple months.

The response is understood in context of the argument in play - the motion to dismiss for lack of standing.  The government reiterates that (A) the patient in question has suffered no harm - she got her test, will never need this germline CYP test again, and thereby, has no standing to file a federal complaint.   It requires significant and demonstrated harm to file a federal complaint - otherwise, a hyperactive nutcase could file a dozen suits against the government every day, complaining about one law or another.  

The government then tries to (B) undercut the CCLA's standing.  The LCD in question was not final when the case was filed, and even if it was, the CCLA has various administrative responses to its perceived harm.  For example, suppose they filed an LCD Reconsideration and the MAC immediately accepted it?   The government notes that yes, the CCLA files a constitutional case - that LCDs are an unconstitutional delegation of federal authority to a private contractor.  But the government states that there must be high barriers to tying up the court with a constitutional argument - otherwise, you could complain that any X, Y, or Z issue raises (in the mind of the plaintiff) a putative constitutional argument and it would tie up the federal courts unless earlier and simpler means of restitution were used to the full.  


In late August 2014, the CCLA announced that the judges have scheduled oral arguments for December 2014.  This is relatively unusual, since most attempts to litigate CMS are settled based on written motions (most typically as successful motions to dismiss by the government, and sometimes as findings favorable to the government - meaning it's possible - but tough - to actually win against CMS.)  Scheduling oral arguments means the judges are taking arguments on both sides seriously.

Oral arguments were presented on February 2, 2015; someone who was there said the judge was highly engaged and "peppered" both sides with difficult questions.  A written ruling could take 60-90 days (e.g. April or May).