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Lazaro v. Azar

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

April 17, 2018

MICHAEL L. LAZARO, Plaintiff,
v.
ALEX M. AZAR[1], in his official capacity as Secretary, United States Department of Health and Human Services, Defendant.

          MEMORANDUM OPINION AND ORDER

          Jorge L. Alonso Judge

         Defendant 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 [8] is granted.

         BACKGROUND

         This is 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.

         Plaintiff 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.

         Plaintiff 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.

         STANDARD

         When 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.

         DISCUSSION

         Subject Matter Jurisdiction

         Defendant 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.

         Amount-in-controversy requirement

          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.

         Under 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. ยง 405.1006. For calendar ...


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