United States District Court, N.D. Illinois, Eastern Division
MICHAEL L. LAZARO, Plaintiff,
ALEX M. AZAR, in his official capacity as Secretary, United States Department of Health and Human Services, Defendant.
MEMORANDUM OPINION AND ORDER
L. Alonso Judge
Alex M. Azar, Secretary of the United States Department of
Health and Human Services, has filed a motion to dismiss
plaintiff's complaint pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). For the reasons set forth
below, the motion  is granted.
a Medicare benefits case. Plaintiff has type 1 diabetes, and
his physician prescribed a continuous glucose monitor
(“CGM”) system for him as reasonable and
medically necessary. Plaintiff applied to the Department of
Health and Human Services for Medicare coverage for a
disposable sensor he received on January 8, 2014 for his CGM,
amounting to $946 in denied coverage. Following a hearing, an
administrative law judge (“ALJ”) denied
plaintiff's request after determining that: (1) the
sensors were not medically necessary or reasonable; and (2)
Medicare does not cover the sensors and plaintiff is
financially responsible for them.
filed an administrative appeal, and on February 8, 2017, the
Medicare Appeals Council modified and affirmed the ALJ's
decision. The Medicare Appeals Council clarified that (1)
Medicare does not cover the January 8, 2014 sensors because
the CGM system at issue does not satisfy the definition of
durable medical equipment (“DME”), not because
the sensors were not medically reasonable and necessary; and
(2) plaintiff is financially responsible for the sensors
regardless of whether he knew Medicare would cover them.
seeks judicial review of the Secretary's final
administrative decision, arguing that it was arbitrary,
capricious, contrary to law and not supported by substantial
evidence (Count I), and that the Secretary's actions
constitute a due process violation (Count II). Defendant
moves to dismiss on the basis of lack of subject matter
jurisdiction and failure to state a claim.
considering a Rule 12(b)(1) motion to dismiss for lack of
subject-matter jurisdiction, a district court accepts as true
all well-pleaded factual allegations and draws reasonable
inferences from the allegations in favor of the plaintiff.
Kelley v. Med-1 Sols., LLC, 548 F.3d 600, 604 (7th
Cir. 2008) (citing Capitol Leasing Co. v. FDIC, 999
F.2d 188, 191 (7th Cir. 1993)). The court may also look
beyond the allegations of the complaint and consider
affidavits and other documentary evidence to determine
whether subject-matter jurisdiction exists. Capitol
Leasing, 999 F.2d at 191.
moves to dismiss, arguing that plaintiff cannot satisfy the
jurisdictional requirements because (1) he cannot meet the
amount-in-controversy requirement; (2) he failed to exhaust
his administrative remedies; and (3) there is no independent
basis for federal jurisdiction. Plaintiff responds that his
claim exceeds the amount-in-controversy requirement, he was
not required to exhaust his administrative remedies due to
futility, and defendant is subject to federal jurisdiction.
Plaintiff is challenging the denial of his request for
Medicare coverage for a disposable sensor used for his CGM
system. The sensor has a service date of January 8, 2014 and
amounts to $946 in Medicare benefits. Defendant says that
plaintiff's claim for $946 of Medicare benefits does not
satisfy the amount-in-controversy requirement to obtain
judicial review under the Medicare Act, 42 U.S.C. §
1395ff(b)(1)(E), and that the Court therefore lacks
jurisdiction. The Court agrees.
Section 1395ff(b)(1)(E) of the Act, judicial review of a
Medicare benefits claim is not available if the amount in
controversy is less than $1, 000. 42 U.S.C. §
1395ff(b)(1)(E)(i). This amount is adjusted annually based on
the consumer price index. See 42 U.S.C. §
1395ff(b)(1)(E)(iii). Plaintiff is required to meet the
amount-in-controversy requirement at the time he requests
judicial review. See 42 C.F.R. § 405.1006. For