Zieroth v. Azar, No. 3:2020cv00172 - Document 34 (N.D. Cal. 2020)
Court Description: ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; DENYING DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT. Plaintiff's motion for summary judgment is granted, defendant's cross-motion for summary judgment is denied, and the action is remanded, under sentence four of 42 U.S.C. § 405(g), with instructions to authorize coverage. Signed by Judge Maxine M. Chesney on September 22, 2020. (mmcalc, COURT STAFF) (Filed on 9/22/2020)
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Zieroth v. Azar Doc. 34 Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 1 of 7 1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 8 GARY ZIEROTH, as representative of the estate of SHARON ZIEROTH, Plaintiff, 9 v. 10 United States District Court Northern District of California 11 12 ALEX AZAR, in his capacity as Secretary of Health and Human Services, Case No. 20-cv-00172-MMC ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; DENYING DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT Re: Doc. Nos. 23, 30 Defendant. 13 14 Before the Court are the following two motions: (1) the Motion for Summary 15 Judgment, filed May 22, 2020, by plaintiff Gary Zieroth (“Zieroth”), and (2) the Cross- 16 Motion for Summary Judgment, filed August 3, 2020, by defendant Alex Azar, Secretary 17 of Health and Human Services (“Secretary”). Pursuant to Civil Local Rule 16-5, the 18 motions have been submitted on the papers without oral argument. Having read and 19 considered the parties’ respective written submissions, the Court rules as follows. 20 21 BACKGROUND Zieroth’s wife, Sharon Zieroth, was a type 1 diabetic1 with hypoglycemic 22 unawareness2. (See Certified Administrative Record (“CAR”) at 8.) To manage her 23 condition, she used a continuous glucose monitor (“CGM”), specifically, a Medtronic 24 25 26 27 28 1 Type 1 diabetes is a disease in which the pancreas produces limited insulin, a hormone required “to allow sugar (glucose) to enter cells to produce energy.” See https://www.mayoclinic.org/diseases-conditions/type-1-diabetes. 2 Hypoglycemic unawareness occurs when a diabetic does not have, or is unable to recognize, early symptoms of hypoglycemia, i.e., low blood sugar. See https://www.mayoclinic.org/diseases-conditions/diabetic-hypoglycemia. Dockets.Justia.com Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 2 of 7 1 MiniMed 530G system (“MiniMed 530G”), which device consists of several components, 2 one of which is a sensor. (See id. at 7-8.) 3 4 and is administered by the Secretary through the Centers for Medicare and Medicaid 5 Services (“CMS”). Between July 2017 and May 2018, Sharon Zieroth submitted claims, 6 under Part B of the Medicare program, for reimbursement of the costs of three sensors. 7 United States District Court Northern District of California Medicare is a federal health insurance program for elderly and disabled individuals Thereafter, at the fourth level of administrative review, the Medicare Appeals 8 Council (“Appeals Council”) denied all three claims, on the ground that a CGM system of 9 the type exemplified by the MiniMed 530G does not qualify as durable medical equipment 10 as defined in the applicable regulation, namely, 42 C.F.R. § 414.202, as interpreted by 11 CMS-1682-R, a ruling issued by CMS. (See id. at 4, 11-13.) 12 On January 8, 2020, Sharon Zieroth filed the instant action seeking, pursuant to 13 42 U.S.C. §§ 405(g) and 1395ff, review of the denial of her claims by the Appeals 14 Council. Subsequently, on February 7, 2020, Sharon Zieroth passed away from 15 complications of diabetes. (See Mot. to Substitute, filed April 3, 2020.) Zieroth, as the 16 representative of her estate, now brings the instant action on her behalf. DISCUSSION 17 18 A district court’s review of a final decision of the Secretary is governed by the 19 Administrative Procedure Act, under which “[t]he reviewing court shall . . . hold unlawful 20 and set aside agency action, findings, and conclusions found to be . . . arbitrary, 21 capricious, an abuse of discretion, or otherwise not in accordance with law.” See 22 5 U.S.C. § 706.3 “Generally, judicial review of agency action is limited to review of the 23 record on which the administrative decision was based.” See Thompson v. U.S. Dep't of 24 Labor, 885 F.2d 551, 555 (9th Cir. 1989). A reviewing court can, however, “go outside 25 the administrative record . . . for the limited purpose of background information.” See id. 26 27 28 3 A decision by the Appeals Council constitutes the final decision of the Secretary. See 42 C.F.R. § 405.1130. 2 Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 3 of 7 1 2 comment in violation of 42 U.S.C. § 1395hh and, consequently, that the Appeals 3 Council’s denial, which, as noted, was based on CMS-1682-R, was unlawful. The 4 Secretary contends such procedural argument was waived as it was not raised before the 5 Appeals Council.4 6 United States District Court Northern District of California Here, at the outset, Zieroth asserts CMS-1682-R was issued without notice and In Avol v. Sec'y of Health & Human Servs., 883 F.2d 659 (9th Cir. 1989), the Ninth 7 Circuit held that, where an “issue [is] not raised before the . . . Appeals Council,” the 8 reviewing court “need not . . . address [such] issue.” See id. at 661 (declining to address 9 issue not raised before Appeals Council). Zieroth, while not disagreeing with such 10 authority, contends compliance therewith was not required in this instance. In particular, 11 Zieroth, noting CMS-1682-R was “binding” on the Appeals Council, see 42 C.F.R. 12 § 401.108(c), asserts it would have been futile to raise his procedural challenge at that 13 earlier stage of the proceedings. The cases on which Zieroth relies for such proposition 14 are, however, distinguishable, as, in contrast to the instant case, none concerns the 15 question of the preservation of an issue for appeal.5 16 With regard to that question, in “any adjudicative system, whether judicial or 17 18 19 20 21 22 23 24 25 26 27 28 The Court finds unpersuasive Zieroth’s argument that the Secretary, by failing to assert waiver as an affirmative defense in his Answer, waived any such defense. Although, as Zieroth points out, Rule 8 of the Federal Rules of Civil Procedure requires a party, when “responding to a pleading,” to “affirmatively state any . . . affirmative defense,” including “waiver,” see Fed. R. Civ. P. 8(c)(1), an affirmative defense may be pleaded for the first time in a motion for summary judgment “absent prejudice to the plaintiff,” see Ledo Fin. Corp. v. Summers, 122 F.3d 825, 827 (9th Cir. 1997). Here, Zieroth has identified “no tangible way in which [he] was prejudiced by the delay.” See id. (holding passage of time without more not sufficient to demonstrate prejudice). 4 5 See In re Two Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 994 F.2d 956, 961 (1st Cir. 1993) (finding no waiver where party failed to file bill of costs after court ordered each party to bear own costs); N. Heel Corp. v. Compo Indus., Inc., 851 F.2d 456, 461 (1st Cir. 1988) (finding, where plaintiff brought claim for breach of contract, conditions precedent excused where defendant “deprived [plaintiff] of the opportunity to demonstrate the fulfillment of [those] conditions”); Kinslow v. Am. Postal Workers Union, Chicago Local, 222 F.3d 269, 276 (7th Cir. 2000) (finding plaintiff Union member not obliged to provide “notice of reasons” in support of request for Union records where Union “would still have refused to produce the documents”); Miller v. Drexel Burnham Lambert, Inc., 791 F.2d 850, 854 (11th Cir. 1986) (finding no waiver of right to arbitrate where claims were, by law, not arbitrable). 3 United States District Court Northern District of California Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 4 of 7 1 administrative,” the doctrines of waiver and forfeiture, as the Ninth Circuit has observed, 2 serve to “preserve the integrity of the appellate structure.” See Honcharov v. Barr, 924 3 F.3d 1293, 1295-96 (9th Cir. 2019) (internal quotation and citation omitted) 4 (characterizing waiver and forfeiture as “important tools” for “allowing appellate courts to 5 act as courts of review, not first view”; upholding Board of Immigration Appeals’ 6 application of procedural default rule to argument raised for first time on appeal). 7 Moreover, Zieroth has made no showing that the Appeals Council, even if bound by a 8 finding made in CMS-1682-R, was precluded from considering whether such ruling was 9 issued improperly, and, in any event, a requirement that an issue be raised at such stage 10 of the proceedings allows for development of the record and discourages parties from 11 “withholding secondary, back-up theories.” See id. at 1296 (internal quotation and 12 citation omitted). 13 Accordingly, the Court finds the procedural challenge asserted by Zieroth was 14 waived. The Court next turns to the content of CMS-1682-R, in particular, the conclusion 15 by CMS therein that a CGM like the MiniMed 530G does not qualify as durable medical 16 equipment. 17 In 42 C.F.R. § 414.202, the Secretary has defined “durable medical equipment” as 18 equipment that meets the following requirements: (1) “[c]an withstand repeated use”; (2) 19 “has an expected life of at least 3 years”; (3) “[i]s primarily and customarily used to serve 20 a medical purpose”; (4) “[g]enerally is not useful to an individual in the absence of an 21 illness or injury”; and (5) “[i]s appropriate for use in the home.” See id. The ruling here at 22 issue, CMS-1682-R, was issued by the Secretary for the purpose of “articulat[ing] CMS 23 policy concerning the classification of [CGM] systems as durable medical equipment” 24 under the above-referenced regulation. See CMS-1682-R at 1. 25 Where a regulation is ambiguous, the promulgating agency’s interpretation thereof 26 is entitled to deference “unless it is plainly erroneous or inconsistent with the regulation.” 27 See Kisor v. Wilkie, 139 S. Ct. 2400, 2411 (2019) (internal quotation and citation 28 omitted). As the Supreme Court has cautioned, however, such deference should not be 4 Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 5 of 7 1 afforded unless the regulation is “genuinely ambiguous.” See id. at 2415. Here, Zieroth first contends CMS-1682-R is not ambiguous and, consequently, is 2 3 not entitled to deference. The Court agrees. In particular, the regulation, as noted, defines “durable medical equipment” as United States District Court Northern District of California 4 5 equipment that, in addition to other requirements, is “primarily and customarily used to 6 serve a medical purpose.” See 42 C.F.R. § 414.202. The adjective “medical” is 7 commonly understood to mean relating to the practice of medicine, and “medicine,” in 8 turn, means “the science and art of preventing, curing, and alleviating sickness or 9 affliction.” See Black's Law Dictionary 1131 (10th ed. 2014); see also Yith v. Nielsen, 10 881 F.3d 1155, 1165 (9th Cir. 2018) (holding, for purposes of statutory interpretation, 11 courts, “[w]hen determining the plain meaning of language, . . . may consult dictionary 12 definitions”) (internal quotation and citation omitted). In short, the regulation “is clear on 13 its face.” See Whitcomb v. Hargan, No. 17-CV-00014-DEJ, at 11 (E.D. Wis. Oct. 26, 14 2017). 15 As to the MiniMed 530G, the CGM here at issue, such device is, as noted, used by 16 individuals with type 1 diabetes, a disease in which the pancreas produces limited insulin, 17 a hormone required “to allow sugar (glucose) to enter cells to produce energy.” See 18 https://www.mayoclinic.org/diseases-conditions/type-1-diabetes. CGM systems estimate 19 a diabetic’s glucose level on a continuous basis; additionally, the MiniMed 530G can 20 automatically suspend delivery of insulin when the sensor glucose value falls below a 21 predefined threshold value and the user does not respond to an alarm, a function of 22 particular importance when a patient, like Sharon Zieroth, suffers from hypoglycemic 23 unawareness. (See CAR at 7-8.) The Court thus finds the MiniMed 530G is “primarily 24 and customarily used to serve a medical purpose,” see 42 C.F.R. § 414.202, and, as the 25 record before the Appeals Council makes clear, Sharon Zieroth used the MiniMed 530G 26 for such purpose (see CAR at 50-51). 27 28 Moreover, as Zieroth next argues, even if 42 C.F.R. § 414.202 could be characterized as “genuinely ambiguous,” the Secretary’s interpretation thereof, as 5 Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 6 of 7 1 United States District Court Northern District of California 2 provided in CMS-1682-R, is not, as set forth below, reasonable. In finding the MiniMed 530G does not qualify as durable medical equipment, the 3 Appeals Council relied on CMS’s distinction between CGM systems that are approved by 4 the Food and Drug Administration (“FDA”) “for use in place of a blood glucose monitor” 5 and CGM systems that, like the MiniMed 530G, are approved by the FDA “for use as 6 adjunctive devices to complement, not replace, information obtained from blood glucose 7 monitors.” See CMS-1682-R at 6-7, 13. According to CMS, as set forth in CMS-1682-R, 8 the latter do not qualify as durable medical equipment because they do not “serve the 9 medical purpose of making diabetes treatment decisions,” see id. at 7, in that, once 10 hypoglycemia has been detected by such device and the patient alerted thereby, the 11 patient “may be required to confirm those levels with a fingerstick before taking 12 appropriate action” (see CAR at 8). In other words, according to CMS, systems used as 13 “adjunctive devices to complement, not replace, information obtained from blood glucose 14 monitors” are not covered under Part B of the Medicare program. 15 There is nothing in the phrase “primarily and customarily used to serve a medical 16 purpose,” see 42 C.F.R. § 414.202, however, that requires covered devices to serve a 17 “primary medical purpose,” as opposed to an “adjunctive medical purpose.” Consistent 18 with this finding, at least three other district courts have found the MiniMed 530G 19 constitutes durable medical equipment. See Whitcomb at 12 (noting, if Secretary “did not 20 intend to provide coverage for secondary medical equipment, then the regulatory 21 definition . . . must be revised to reflect that ideal”); Bloom v. Azar, 2018 WL 583111, at 22 *10 (D. Vt. Jan. 29, 2018) (holding requirement that device be “primarily and customarily 23 used to serve a medical purpose” has “nothing to do with whether the equipment is the 24 ‘primary’ equipment used to serve that purpose”); Lewis v. Azar, 308 F. Supp. 3d 574, 25 579 (D. Mass. 2018) (rejecting Secretary’s argument that “a device loses its medical 26 nature if it is used in conjunction with another medical device”). Indeed, the medical 27 purpose for which the MiniMed 530G is used is clearly, and rather dramatically, 28 evidenced in the instant case. (See CAR at 50-51 (noting Sharon Zieroth, prior to using 6 Case 3:20-cv-00172-MMC Document 34 Filed 09/22/20 Page 7 of 7 1 the MiniMed 530G, experienced “frequent and severe episodes of hypoglycemia, which 2 . . . resulted in multiple presentations to the emergency room (ER)”; further noting “she 3 has had no ER visits since starting its use”).) 4 5 even if such regulation were deemed genuinely ambiguous, is not reasonable and thus 6 not entitled to deference. See Kisor, 139 S. Ct. at 2415-16 (holding, to be entitled to 7 deference, interpretation must be “within the bounds of reasonable interpretation”). 8 United States District Court Northern District of California Accordingly, the Court finds the Secretary’s interpretation of 42 C.F.R. § 414.202, Lastly, as the Court has found the MiniMed 530G is “primarily and customarily 9 used to serve a medical purpose,” and there is no apparent dispute that the other four 10 requirements in 42 C.F.R. § 414.202 are satisfied, the Court finds the MiniMed 530G 11 constitutes durable medical equipment as defined in 42 C.F.R. § 414.202, and, as a 12 district court may enter a judgment “reversing the decision of the [Secretary], with or 13 without remanding the case for a rehearing,” see 42 U.S.C. § 405(g), further finds Zieroth 14 is entitled, under Part B of the Medicare program, to reimbursement for the costs of the 15 three MiniMed 530G sensors. CONCLUSION 16 17 For the reasons stated above, Zieroth’s Motion for Summary Judgment is hereby 18 GRANTED, the Secretary’s Cross-Motion for Summary Judgment is hereby DENIED, 19 and the action is hereby REMANDED, under sentence four of 42 U.S.C. § 405(g), with 20 instructions to authorize coverage for the three MiniMed 530G sensors at issue. 21 IT IS SO ORDERED. 22 23 Dated: September 22, 2020 MAXINE M. CHESNEY United States District Judge 24 25 26 27 28 7
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