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BookSheter v. Price

United States District Court, N.D. Illinois, Eastern Division

April 20, 2017

THOMAS E. PRICE, M.D., in his official capacity as Secretary, United States Department of Health and Human Services, Defendant.



         This matter is before the court on Defendant Secretary of the Department of Health and Human Services' motion to dismiss. For the reasons stated below, the motion to dismiss is granted.


         Plaintiff Joyce Bookshester (Bookshester) contends that she suffers from diabetes and that Defendant denied her Medicare claim for supplies for her continuous glucose monitor (CGM). Bookshester pursued an administrative appeal and on August 8, 2016, the Medicare Appeals Council denied the appeal. Bookshester filed the instant action, seeking a review of the final decision of Defendant. Bookshester includes in her complaint claims seeking judicial review under the Administrative Procedures Act (APA), 5 U.S.C. § 701 et seq. (Counts I-VI), and a mandamus claim (Count VII). Defendant now moves to dismiss the instant action for lack of jurisdiction, and failure to state a valid claim.


         Federal Rule of Civil Procedure 12(b)(1) (Rule 12(b)(1)) requires a court to dismiss an action when it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1); see also Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995)(stating that when reviewing a motion to dismiss brought under Rule 12(b)(1), the court “must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff”). When subject matter jurisdiction is not apparent on the face of the complaint and is contested, “the district court may properly look beyond the jurisdictional allegations of the complaint . . . to determine whether in fact subject matter jurisdiction exists.” Sapperstein v. Hager, 188 F.3d 852, 855-56 (7th Cir. 1999)(internal quotations omitted)(quoting United Transportation Union v. Gateway Western Railway Co., 78 F.3d 1208, 1210 (7th Cir. 1996)). The burden of proof in regards to a Rule 12(b)(1) motion is on the party asserting that the court has subject matter jurisdiction. Id.

         In ruling on a motion to dismiss brought pursuant Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). A plaintiff is required to include allegations in the complaint that “plausibly suggest that the plaintiff has a right to relief, raising that possibility above a ‘speculative level'” and “if they do not, the plaintiff pleads itself out of court.” E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007)); see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive a motion to dismiss, the complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” and that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations omitted).


         Defendant argues that this court lacks subject matter jurisdiction over the claims in Counts I through VI, and that the remaining mandamus claim is either moot or should be dismissed for failure to state a valid claim.

         I. APA Claims (Counts I-VI)

         Defendant argues that Bookshester failed to exhaust her administrative remedies for most of her APA claims, and that the only claim that she did exhaust does not meet the amount in controversy requirement.

         A. Exhaustion of Administrative Remedies Defendant contends that Bookshester only exhausted her administrative remedies in regard to a claim involving the disposable sensors used with the CGM. A Medicare claimant is required to exhaust her “administrative remedies by obtaining a final decision of the Secretary before they can present a claim for judicial review.” Martin v. Shalala, 63 F.3d 497, 503 (7th Cir. 1995); see also 42 U.S.C. § 405(g); 1395ff(b)(1)(explaining administrative exhaustion); Michael Reese Hosp. & Med. Ctr. v. Thompson, 427 F.3d 436, 440-41 (7th Cir. 2005)(holding that a provision “incorporated into the Medicare Act . . . has been held to preclude federal question jurisdiction unless the Medicare program's administrative review process has been exhausted”). The administrative record confirms that Bookshester pursued administrative remedies only in regard to the disposable sensors and not in regard to the whole CGM system. (AR 3-16, 416-19, 1156-1169, 1377-1383). It was clear from the decision of the administrative law judge (ALJ) that the sole claim being pursued related to the disposable sensors. The ALJ specifically stated that the issue presented concerned “Medicare coverage for the disposable senors for a” CGM system. (AR 1157). The Appeals Council also made clear the limited scope of appeal, stating that the ALJ issued a decision concerning “Medicare coverage of disposable sensors . . . for use with a” CGM system, that the “items at issue [were] 28 units of disposable sensors, ” and that “no other components for the GCM System” were at issue, “except the sensors.” (AR 3, 7). The court notes that Bookshester also pursued administrative remedies relating to an OmniPod Insulin Management System that is not the subject of the complaint in the instant action. (AR 7, 1157). Bookshester argues that the exhaustion requirement should be waived and makes a vague reference to the futility of administrative remedies. (Resp. 10). Bookshester, however, has not shown that such remedies would have been futile or shown that she was prevented from pursuing her administrative remedies for all the APA claims she presented in her complaint. Bookshester has not provided a sufficient justification for her failure to pursue the entire GCM system during the administrative appeal process. The Seventh Circuit has emphasized that “[t]he exhaustion requirement serves an important purpose, preventing the premature interference with agency processes so that the agency can function efficiently and can correct its own errors, as well as affording the parties and the courts the benefit of the agency's experience and expertise and compiling a record which is adequate for judicial review.” Michael Reese Hosp. & Med. Ctr., 427 F.3d at 441; Martin, 63 F.3d at 504 (explaining exhaustion can be waived in certain instances such as when it would be futile, if it was collateral to the benefits claim, and irreparable harm would result). BookShester chose not to pursue administrative remedies concerning the entire GCM system and cannot now circumvent that process by pursuing unexhausted claims before this court. Therefore, Defendant's motion to dismiss all APA claims other than the APA claims relating to the disposable sensors, is granted.

         B. Amount in Controversy

         Defendant argues that the APA claim premised upon the disposable sensors does not meet the amount in controversy requirement. Pursuant to 42 U.S.C. § 1395ff(b)(1)(E), the amount in controversy for judicial review of Medicare claim is $1, 500. Id.; see also 80 Fed. Reg. 57827 (setting $1, 000 threshold for judicial review). In the instant action, Bookshester seeks compensation for the denial of coverage over 28 disposable sensors (Sensors). Defendant contends that the Sensors only cost Bookshester $150. Bookshester contends that Medicare Summary Notice relied upon by Defendant contains hearsay and lacks a foundation. The record shows, however, that Bookshester herself relied upon the Medicare Summary Notice pursuing her claims. (AR 416-19). Bookshester has not pointed to any facts to call into question the validity of the Medical Summary Notice and the court can rely on the document in determining whether the court has jurisdiction to hear her claim. Sapperstein, 188 F.3d at 855-56. Even if this court considers the invoice that Bookshester has submitted with her response dated August 23, 2013, the invoice indicates that such charges only amounted to $499. (DE 19-3: 7). This court therefore lacks jurisdiction over the remaining APA claim and Defendant's motion to dismiss the claim is granted. The court notes that Bookshester ...

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