Almy v. Sebelius

Filing 15

MEMORANDUM OPINION. Signed by Judge Richard D Bennett on 3/7/14. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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MONIQUE D. ALMY, Chapter 7 Trustee
for the Bankruptcy Estate of Bionicare
Medical Technologies, Inc.,

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Plaintiff,
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Civil Action Nos.: RDB-09-0255
RDB-09-2617
RDB-10-0131
RDB-10-2755
RDB-11-0598
RDB-11-3691
RDB-12-0856

v.
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KATHLEEN SEBELIUS, Secretary,
United States Department of Health
and Human Services

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Defendant.
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MEMORANDUM OPINION
The Plaintiff Monique Almy, as Chapter 7 Trustee for the Bankruptcy Estate of
Bionicare Medical Technologies, Inc., filed these seven lawsuits against Kathleen Sebelius, in
her capacity as the Secretary of the United States Department of Health and Human Services
(the “Secretary” or the “Defendant”), appealing the Secretary’s decisions to deny Medicare
coverage for a medical device, pursuant to Title XVIII of the Social Security Act, 42 U.S.C. §
1395, et seq. (the “Medicare Act”), and the Administrative Procedure Act, 5 U.S.C. § 551, et
seq. These filings followed an initial lawsuit in which this Court granted summary judgment
in favor of the Secretary. Almy v. Sebelius, 749 F. Supp. 2d 315 (D. Md. 2010) (“Almy I”).
The parties agreed to a stay in these seven cases pending an appeal to the United States
Court of Appeals for the Fourth Circuit, which affirmed this Court’s opinion. Almy v.
Sebelius, 679 F.3d 297 (4th Cir. 2012). Still pending are the Defendant’s Motions to Dismiss

filed in these seven remaining actions.1 The parties’ submissions have been reviewed and no
hearing is deemed necessary. See Loc. R. 105.6 (D. Md. 2011). For the reasons that follow,
the Defendant’s Motions are GRANTED, and these remaining cases are DISMISSED
WITH PREJUDICE.
BACKGROUND
The Plaintiff Almy is the bankruptcy trustee of Bionicare Medical Technologies, Inc.
(“Bionicare”), a company that sold a medical device, the Bionicare Stimulator System, Model
1000 (the “BIO-1000”), that purportedly treats osteoarthritis of the knee by electrical
stimulation. The BIO-1000 is an item of Durable Medical Equipment as defined in 42
U.S.C. § 1395x(n). It was originally developed by Murray Electronics, which initially sought
approval from the Food and Drug Administration (“FDA”) under the stringent “Pre-Market
Approval” standard, but eventually marketed the BIO-1000 pursuant to the less stringent
“510(k) process.” Under Section 510(k) of the Food, Drug, and Cosmetics Act, a device
may be sold if it is “substantially equivalent to another device” that is already approved and
on the market. 21 U.S.C. § 360c(f)(1)(A)(ii). In 1997, the FDA approved the BIO-1000
pursuant to the 510(k) process, concluding that it was equivalent to the Transcutaneous
Electric Nerve Stimulator already approved for the market.2 In 2003 and 2006, the FDA
reaffirmed clearance of the BIO-1000.

1

The Motions to Dismiss filed in the seven pending cases are as follows: No. RDB-09-0255 (“Almy
II”), ECF No. 13; No. RDB-09-2617 (“Almy III”), ECF No. 10; No. RDB-10-0131 (“Almy IV”),
ECF No. 10; No. RDB-10-2755 (“Almy V”), ECF No. 10; No. RDB-11-0598 (“Almy VI”), ECF
No. 11; No. RDB-11-3691 (“Almy VII”), ECF No. 11; and No. RDB-12-0856 (“Almy VIII”), ECF
No. 8.
2
Because the Transcutaneous Electric Nerve Stimulator was marketed prior to the 1976 Medical
Device Amendments to the Federal Food, Drug, and Cosmetic Act, it did not itself pass Pre-Market
Approval but was “grandfathered in.”

2

Part B of the Medicare Act, 42 U.S.C. §§ 1395k(a), 1395x(s)(6), provides coverage for
certain types of Durable Medical Equipment, but explicitly denies coverage for items that are
“not reasonable and necessary,” 42 U.S.C. § 1395y(a)(1)(A). From 2004 until Bionicare filed
for bankruptcy in 2007, the company was enrolled in Medicare as a supplier of Durable
Medical Equipment. Since the BIO-1000’s approval in 1997, it was distributed to thousands
of patients and Bionicare submitted thousands of claims to Medicare for the device. To
facilitate administration of such claims, the Center for Medicare and Medicaid Services
assigned the BIO-1000 a billing code in the Healthcare Common Procedure Coding System
(“HCPCS”) and created a fee schedule for the device. Some Medicare contractors have
covered the BIO-1000 while others have rejected Bionicare’s claims. Bionicare appealed
many of its claims through the administrative process through adjudication by the Medical
Appeals Council (“MAC”), which rendered a final decision of the Secretary covering, or
rejecting coverage of, the BIO-1000.
The Plaintiff alleges that, with regard to many claims, the Defendant Secretary of
Health and Human Services improperly denied Medicare reimbursement for the BIO-1000.
Almy first sued the Secretary in this Court in case No. RDB-08-1245 (“Almy I”). In Almy I,
the Plaintiff sought judicial review and reversal of eight groups of Medicare Appeals Council
decisions denying coverage. After Almy I was filed, the Plaintiff filed these other actions
against the Secretary as more claims for the BIO-1000 were denied. It was agreed that
because the resolution of Almy I might be dispositive of the issues at bar, these other cases
regarding the denial of Medicare coverage for the BIO-1000 would be stayed. Accordingly,

3

these seven other suits (“Almy II-VIII”), addressing dozens of MAC decisions, were stayed
pending resolution of Almy I.
In Almy I, this Court granted summary judgment for the Defendant and denied the
Plaintiff’s motion for reconsideration. 749 F. Supp. 2d 315 (D. Md. 2010). First, this Court
held that although some claims for the BIO-1000 were paid while others were denied, the
Secretary’s decisions were not inconsistent and were therefore entitled to deference pursuant
to 5 U.S.C. § 706, 42 U.S.C. § 405(g), and Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837, 843-45 (1984) (where a statute is silent or ambiguous as to a specific
question, the administrative agency’s permissible construction of the statute is accorded
deference by the court).3 In particular, this Court noted that a certain amount of variation in
coverage determinations is understandable, and that lower-level decisions by contractors and
Administrative Law Judges (“ALJs”) are non-precedential. Under the deferential standard,
this Court held that the Secretary properly considered the FDA’s clearance of the BIO-1000
under the Section 510(k) process in determining coverage, noting that FDA approval is
necessary, but not sufficient for Medicare coverage. In addition, this Court upheld the
Secretary’s negative determination of the BIO-1000’s medical efficacy and acceptance,
holding that the Secretary properly considered and rejected evidence of peer-reviewed
publications and case studies, statements and letters of medical necessity by physicians and
experts, and the assignment of an HCPCS billing code and fee schedule for the device. The

3

The Plaintiff argued that the Secretary’s decisions are entitled to less deference because they were
not preceded by any statute, regulation, or policy specifically addressing the BIO-1000. This Court
rejected that argument, concluding that the Secretary properly announced the Department’s
interpretation of coverage through individual decisions of the Medical Appeals Council, and was not
required to issue a broad National or Local Coverage Decision.

4

Plaintiff’s argument that the MAC improperly calculated the payment amount for BIO-1000
claims that were covered was also rejected.

Finally, this Court found unpersuasive

Bionicare’s argument that it should not be liable for the non-covered cost of the BIO-1000
because it sent an Advance Beneficiary Notice (“ABN”) pursuant to 42 U.S.C. § 1395pp to
certain beneficiaries explaining that the device may not be covered. Specifically, this Court
found that the ABN was too generic to shift liability to the beneficiary. The Plaintiff
appealed the grant of summary judgment against her.
The United States Court of Appeals for the Fourth Circuit affirmed, and denied
Almy’s motion for rehearing and for rehearing en banc on June 25, 2012. 679 F.3d 297 (4th
Cir. 2012). Almy’s three challenges to this Court’s ruling were rejected. Specifically, the
Fourth Circuit held that the Secretary did not improperly implement policy by assessing
coverage of the BIO-1000 through adjudication of individual claims rather than issuing
broader National or Local Coverage Determinations. The Fourth Circuit noted that no
policy is made by any single adjudication or by “the accretion of individual decisions finding
that the BIO-1000 does not meet the statutory requirements for coverage,” and that the
Plaintiff’s theory would “‘effectively require the Secretary to issue item-specific coverage
rules for each and every item of [Durable Medical Equipment] before issuing case
adjudications.’” Id. at 303-04 (quoting 679 F. Supp. 2d at 324 n.2). Furthermore, the Fourth
Circuit held that Almy had not carried her burden to show coverage through “credible and
credited evidence,” while the Secretary’s determination of coverage was supported by
substantial evidence. The Fourth Circuit also held that the Secretary employed proper
procedures pursuant to 5 U.S.C. § 706(2)(A), and adequately considered FDA Section 510(k)
5

approval,4 the effect of precedent on Medicare Appeals Council decisions, HCPCS fee
schedules, payment determinations, Advance Beneficiary Notices, and peer-reviewed studies
in concluding that the BIO-1000 was not covered.
The Supreme Court of the United States denied Almy’s petition for certiorari on
January 7, 2013. 133 S. Ct. 841 (2013). Upon the denial of certiorari, this Court then
instructed the parties to address, via the pending Motions to Dismiss, whether the Fourth
Circuit’s decision in Almy I is controlling as to Almy II-VIII, compelling dismissal of the
other seven cases. See Letter Order of Mar. 7, 2013, No. 09-0255, ECF No. 12. On April
30, 2013, the Defendant filed an identical Motion to Dismiss in all seven pending cases.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Rule 12(b)(6)
authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be
granted. Fed. R. Civ. P. 12(b)(6). Therefore, “the purpose of Rule 12(b)(6) is to test the
sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a
claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th
Cir. 2006) (internal quotation marks and alterations omitted) (quoting Edwards v. City of
Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999))). When ruling on such a motion, the court must
“accept the well-pled allegations of the complaint as true,” and “construe the facts and
reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v.
United States, 120 F.3d 472, 474 (4th Cir. 1997). However, this Court “need not accept the

4

The Fourth Circuit also declined to decide whether the more stringent Pre-Market Approval would
per se satisfy the “reasonable and necessary” requirements. Almy I, 679 F.3d at 309.

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legal conclusions drawn from the facts, and [this Court] need not accept as true unwarranted
inferences, unreasonable conclusions or arguments.”

Nemet Chevrolet, Ltd. v.

Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009) (internal quotation marks and
citation omitted).
The Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
and Ashcroft v. Iqbal, 556 U.S. 662 (2009), “require that complaints in civil actions be alleged
with greater specificity than previously was required.” Walters v. McMahen, 684 F.3d 435, 439
(4th Cir. 2012) (citation omitted). The Supreme Court’s decision in Twombly articulated
“[t]wo working principles” that courts must employ when ruling on Rule 12(b)(6) motions to
dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual
allegations contained in the complaint, legal conclusions drawn from those facts are not
afforded such deference. Id.; Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (“The
mere recital of elements of a cause of action, supported only by conclusory statements, is not
sufficient to survive a motion made pursuant to Rule 12(b)(6).” (citing Iqbal, 556 U.S. at
678.)).

Second, a complaint must be dismissed if it does not allege “a plausible claim for

relief.” Iqbal, 556 U.S. at 679.
Furthermore, as this Court has previously noted in Almy I, the Medicare Act provides
that “the Secretary’s finding of fact, if supported by substantial evidence, shall be
conclusive.” 749 F. Supp. 2d at 322 (quoting McKenzie Med. Supply, Inc. v. Leavitt, 506 F.3d
341, 346 (4th Cir. 2007) (citing 42 U.S.C. § 1395ff(b)(1)(A) and 42 U.S.C. § 405(g))). In
addition, judicial review of the Secretary’s decision is governed by the Administrative
Procedure Act, “which provides that final agency action shall be upheld absent a finding that
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it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”
749 F. Supp. 2d at 322 (quoting 5 U.S.C. § 706(2)(A)). As noted by the Fourth Circuit in its
affirmance of Almy I, the Secretary’s interptetation of what is “reasonable and necessary”
under the Medicare Act is entitled to judicial deference pursuant to Chevron U.S.A., Inc. v.
Natural Resources Defense Council, 467 U.S. 837, 843-45 (1984). 679 F.3d at 302.
DISCUSSION
The Defendant moves to dismiss Almy II-VIII on the grounds that the actions raise
the same claims that were decided in Almy I and are therefore barred by principles of stare
decisis, res judicata, and collateral estoppel. The Defendant further argues that although
Almy V-VIII contain additional claims based on jurisdictional dismissals at the administrative
level that were not raised in Almy I, this Court has no subject matter jurisdiction to hear such
claims.
A. The Identical Causes of Action in Almy II-VIII Are Precluded by Almy I
In its Motions, the Defendant argues that the principle of stare decisis and the
affirmative defenses of res judicata and collateral estoppel preclude the Plaintiff from
bringing the causes of action asserted in Almy II-VIII. The Defendant bears the burden of
establishing an affirmative defense such as res judicata or collateral estoppel. Theune v. U.S.
Bank, N.A., No. MJG-13-1015, 2013 WL 5934114, at *3 (D. Md. Nov. 1, 2013) (citing
Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007)). As stated by the Fourth Circuit
in Goodman:
It follows therefore, that a motion to dismiss filed under Federal Rule of Civil
Procedure 12(b)(6), which tests the sufficiency of the complaint, generally
cannot reach the merits of an affirmative defense . . . . But in the relatively
rare circumstances where facts sufficient to rule on an affirmative defense are
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alleged in the complaint, the defense may be reached by a motion to dismiss
filed under Rule 12(b)(6). This principle only applies, however, if all facts
necessary to the affirmative defense clearly appear on the face of the complaint.
494 F.3d at 464 (citations and internal quotation marks omitted; emphasis in original).
The seven cases pending here form such a “relatively rare circumstance” where facts
sufficient to rule on affirmative defenses clearly appear on the face of the complaint. In
Almy II-VIII, the Plaintiff alleges in the respective Complaints in those actions that:
i.
ii.
iii.
iv.
v.
vi.

vii.

Marketing clearance by the FDA foreclosed the Secretary’s Medicare coverage
denials for the BIO-1000;
Certain studies established that the BIO-1000 was safe and effective;
Physician prescriptions and payments made by commercial insurers
established that the BIO-1000 was generally accepted in the medical
community as reasonable and necessary;5
The establishment of a Healthcare Common Procedure Coding System
(“HCPCS”) billing code and inclusion of the payment amount in the fee
schedule show that the BIO-1000 is covered;
The Secretary’s final denials of coverage were arbitrary and capricious because
the denials by the Medicare Appeals Council (“MAC”) are inconsistent with
Medicare’s payment of numerous claims for the BIO-1000;
Because Bionicare gave Advance Beneficiary Notices indicating the possibility
of non-coverage, the Secretary unlawfully refused to waive Bionicare’s liability
for denied claims, and should have shifted liability to the Department or to the
beneficiaries;
The Secretary unlawfully determined the payment amount for BIO-1000
claims that were covered.6

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The Plaintiff also argues that the Secretary improperly failed to apply the “treating physician rule.”
The rule, wherein the opinion of a treating physician of a Social Security claimant is given
controlling weight if it is supported by, and not inconsistent with, the medical evidence in the
record, Mastro v. Apfel, 270 F.3d 171, 178 (4th Cir. 2001), applies only to Social Security cases and
not to Medicare cases. Almy I, 749 F. Supp. 2d at 332 n.10.
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Additionally, in Almy IV only, the Plaintiff alleges that it was unlawful for the MAC to review the
issue of coverage where the decision of the Administrative Law Judge (“ALJ”) only addressed the
payment amount. In Almy I, however, the Plaintiff argued the opposite—that the MAC had the
authority to review coverage in cases where the ALJ only addressed payment. In any event, in Almy
I, the Fourth Circuit held that the MAC’s authority to review an ALJ’s decision de novo “is
incompatible with the notion that the MAC is somehow obligated to defer to the outcomes of prior
decisions below.” 679 F.3d at 310. Therefore, the Plaintiff is prohibited by Almy I from relitigating
this issue in Almy IV.

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Because each of these allegations was considered in depth and rejected both by this Court
and by the Fourth Circuit, all of the facts necessary to decide the merits of an affirmative
defense are stated in the Complaints in Almy II-VIII. Therefore, it is proper at this stage to
consider the merits of the affirmative defenses raised by the Defendant, as well as the
overarching principle of stare decisis.
1. Stare Decisis
Stare decisis is the general concept of precedent: “when a point or principle of law
has been once officially decided or settled by the ruling of a competent court in which it is
directly and necessarily involved, it will no longer be considered as open to examination or
to a new ruling by the same tribunal, or by those which are bound to follow its
adjudications.”

Black’s Law Dictionary 1414 (7th ed. 1999).

Accordingly, published

opinions of the United States Court of Appeals for the Fourth Circuit are binding precedent
on this Court. See United States ex rel. Palmieri v. Alpharma, Inc., 928 F. Supp. 2d 840, 857 (D.
Md. 2013) (“In sum, [United States ex rel Nathan v. Takeda Pharms. N. Am., Inc. 707 F.3d 451
(4th Cir. 2013)] is binding circuit precedent that is clearly dispositive of the issue. It dictates
that the Amended Complaint must be dismissed for failure to state a claim upon which relief
can be granted.”).
2. Res Judicata
Res judicata, also known as claim preclusion, “bars a party from relitigating a claim
that was decided or could have been decided in an original suit,” Laurel Sand & Gravel, Inc. v.
Wilson, 519 F.3d 156, 161 (4th Cir. 2008), and “bars a cause of action adjudicated between
the same parties or their privies in a prior case.” Jones v. SEC, 115 F.3d 1173, 1178 (4th Cir.
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1997) (citation omitted). The elements of a res judicata defense are: “(1) a final judgment on
the merits in a prior suit, (2) an identity of the cause of action in both the earlier and later
suit, and (3) an identity of parties or their privies in the two suits.” Id.
3. Collateral Estoppel
Collateral estoppel, a subset of res judicata also known as issue preclusion, “bars the
relitigation of issues that were actually determined in a prior action.” Sartin v. Macik, 535
F.3d 284, 287 (4th Cir. 2008). A collateral estoppel defense is available if: (1) the issue
sought to be precluded is identical to one previously litigated; (2) the issue was actually
determined in the prior proceeding; (3) the determination of the issue was a critical and
necessary part of the decision in the prior proceeding; (4) the prior judgment is final and
valid; and (5) the party against whom estoppel is asserted had a full and fair opportunity to
litigate the issue in the previous forum. Sedlack v. Brawell Servs. Group, Inc., 134 F.3d 219, 224
(4th Cir. 1998).
4. Preclusive Effect of Almy I
These cases involve the same parties, the same subject device, and the same
arguments as to why the Secretary’s denials of coverage in Almy I were contrary to law. The
Fourth Circuit, in a published opinion, has clearly rejected each of the arguments once again
raised in Almy II-VIII. Therefore, stare decisis bars the causes of action asserted in Almy IIVIII that are identical to those in Almy I.7

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The Defendant also argues that Almy II-VIII are barred by a variant of stare decisis known as the
“law of the circuit” doctrine. The law of the circuit doctrine is the statutorily-based rule that a
“decision of a division [of a Circuit Court of Appeals] is the decision of the court,” and that “[o]ne
three-judge panel, therefore, does not have authority to overrule another three-judge panel of the
court.” LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996); United States v. Valencia, 645 F.2d

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As to the affirmative defenses raised by the Defendant, although Almy II-VIII involve
the same parties and subject medical device, separate denials of coverage are different
transactions. See Laurel Sand & Gravel, Inc., 519 F.3d at 162 (res judicata applies to a claim
that “arises out of the same transaction or series of transactions as the claim resolved by the
prior judgment,” or “could have been brought in the earlier action”). To the extent that
Almy now seeks coverage for different beneficiaries at different time periods than those
decided in Almy I, those claims are a different series of transactions. Moreover, because this
Court stayed Almy II-VIII rather than consolidating them with Almy I, the Plaintiff could not
have brought the claims, which accrued at a later time, in the earlier action. Thus, because
Almy II-VIII do not advance the same claims as in Almy I, res judicata does not apply.8
However, while res judicata does not apply, the issue in all the claims is exactly the
same, and therefore collateral estoppel precludes the actions in Almy II-VIII. As noted
above, the issues surrounding the Secretary’s denial of coverage for the BIO-1000 are
identical. The Plaintiff argues unconvincingly that new and material evidence in Almy IIVIII makes those seven cases distinct from Almy I. Specifically, the Plaintiff states that the

1158, 1176 (2d Cir. 1980) (Van Graafeiland, J., dissenting) (the law of the circuit doctrine is “the
commonly accepted doctrine that one Court of Appeals panel cannot overrule the decision of a
prior panel but that such disregard of stare decisis requires action by an en banc court.”). As such,
under the law of the circuit doctrine, “‘the same issue presented in a later case in the same court
should lead to the same result.’” In re Grant, 635 F.3d 1227, 1232 (D.C. Cir. 2011) (citation omitted).
Here, the Plaintiff correctly notes that because she does not ask one panel of Fourth Circuit judges
to overrule a decision of another panel, the law of the circuit doctrine is not implicated at this stage
in Almy II-VIII. Nevertheless, the fact remains that the Fourth Circuit’s decision in Almy I is
binding precedent on this Court. Therefore, general stare decisis principles mandate dismissal.
8
On a related note, it is of no moment that the MAC remanded a separate case involving the BIO1000 to an Administrative Law Judge who dismissed on res judicata grounds without holding a
hearing. See Pl.’s Opp. Ex B, ECF No. 14-1. This Court is in a different position than an ALJ. The
Defendant is arguing that this Court is bound not by the MAC decision, but by the decision of the
Fourth Circuit. While proper deference is owed to the MAC because it states the decision of the
Secretary, this Court is bound by the published opinion of the Fourth Circuit.

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administrative records are “likely” to contain evidence of, among other things, affidavits of
physicians and experts, journal articles and studies, Internet articles, video recordings, and
insurance and treatment guidelines that will establish that the Secretary’s denial of coverage
in those cases was arbitrary and capricious. See Pl.’s Opp. Ex. A, ECF No. 14-1. This
evidence, Almy argues, will show that: Bionicare’s peer-reviewed studies should be given
more weight than case studies; the BIO-1000 is widely accepted in the medical community;
the BIO-1000 is considered part of the standard of care; the device is not experimental or
investigational; and physicians and experts generally support coverage of the device. Thus,
the Plaintiff argues that the claims in Almy II-VIII cannot be ruled upon until the
administrative records purportedly containing this new evidence are filed in this Court.
The Plaintiff’s citation to this “new” evidence carries no weight for a number of
reasons. First, Almy argues only that the administrative records are “likely” to contain this
evidence. Such speculation is unwarranted and insufficient to survive a motion to dismiss.
Furthermore, the evidence is not “new.” Almost all of this evidence was in administrative
record in Almy I, or in the Plaintiff’s possession, or accessible by her, during the pendency of
Almy I. Additionally, all but four of the listed documents were submitted to the court by
Plaintiff’s counsel Debra Parrish in International Rehabilitative Sciences, Inc. v. Sebelius, 737 F.
Supp. 2d 1281 (W.D. Wash. 2010), rev’d, 688 F.3d 994 (9th Cir. 2012), another case where
coverage for the BIO-1000 was ultimately rejected, in which Almy was not a party. Finally,
and most critically, the evidence is not “material.” The Plaintiff fails to articulate how this
additional evidence would affect the outcome of a coverage decision regarding the same
product. Nothing establishes that any of the documents that may be contained in the
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administrative records of Almy II-VIII would have any effect on the previous holdings of
this Court or the Fourth Circuit in Almy I. Indeed, the precise types of evidence cited by
Almy as “new” were already considered and rejected. A few additional form affidavits about
the BIO-1000 will have no bearing on the determination of whether the decisions of the
Secretary were supported by substantial evidence. Likewise, “it is not [the court’s] office to
tender an independent judgment on the value and validity of various [additional] scientific
studies submitted.” Almy I, 679 F.3d at 305. Despite her arguments to the contrary, there is
no new and material evidence that makes Almy’s claims in Almy II-VIII any different than
those finally decided in Almy I.
Thus, the Plaintiff raises the same arguments in support of coverage that were critical
and necessary to the decision in Almy I.9 After a full and fair opportunity to litigate these
identical issues, the Fourth Circuit actually rendered a final judgment on those issues.
Because the same causes of action that are at issue in Almy II-VIII were decided in a final
and valid opinion on the merits in Almy I, the Defendant has established that those claims
are barred by the affirmative defense of collateral estoppel. The causes of action raised in
Almy II-VIII that were already decided in Almy I are precluded based on the principle of
stare decisis and the affirmative defense of collateral estoppel. Therefore, the Plaintiff has

9

The Plaintiff also argues that in a redacted Medical Appeals Council decision attached to the
Plaintiff’s Opposition, dated October 11, 2012 and unrelated in any way to the BIO-1000, the
Secretary changed her position with regard to the medical documentation required at the Qualified
Independent Contractor level, showing that the Secretary is not bound by Almy I. It is irrelevant
whether the Secretary “acted as if Almy I was not binding” because this Court is in fact bound by
that decision with regard to the issues in Almy II-VIII. The unrelated MAC decision is not at issue
here, and this Court expresses no opinion on its validity. To the extent that that single MAC
decision represents a different interpretation of the requirements for medical documentation, this
cannot be considered a general change in the Secretary’s policy. Almy I, 679 F.3d at 303 (“The
Secretary’s own regulations make clear that any policy implications in an adjudication do not have
precedential effect.” (citing 24 C.F.R. § 405.1062)).

14

failed to state a plausible claim for relief. Accordingly, the Defendant’s Motions to Dismiss
are granted.
B. This Court Lacks Subject Matter Jurisdiction Over the Challenges to
Jurisdictional Dismissals in Almy V-VIII
In Almy V-VIII, the Plaintiff asserts one type of claim that was not at issue in Almy I.
Specifically, in Almy V-VIII, the Plaintiff challenges the dismissal of Bionicare’s
administrative appeals that were dismissed for lack of jurisdiction. For example, in Almy VI,
the Plaintiff argues that Bionicare timely filed requests for reconsideration of the ALJ’s
determination, but that the challenges were rejected out of hand at each administrative level
based on untimeliness, without a hearing on the merits. The Plaintiff alleges that the
Durable Medical Equipment Medicare Administrative Contractor acknowledged receipt of
Bionicare’s “letter dated March 7, 2007, requesting a redetermination.” Later, the Qualified
Independent Contractor upheld the dismissal because Bionicare’s request “should have been
received on or before May 28, 2007.” Pl.’s Opp. 21, ECF No. 14. The Medical Appeals
Council, the final administrative level, eventually concluded that there was no subject matter
jurisdiction and the claim was not subject to further review. The Defendant argues that this
Court lacks subject matter jurisdiction over the Plaintiff’s challenges to dismissals based on
jurisdiction.
Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, a claim must be
dismissed when the district court lacks subject matter jurisdiction. The Plaintiff has the
burden to establish the existence of subject matter jurisdiction. Piney Run Pres. Ass’n v. Cnty.
Comm’rs of Carroll Cnty., 523 F.3d 453, 459 (4th Cir. 2008). Even accepting her factual

15

allegations that the reconsideration requests were timely filed, the Plaintiff has failed to carry
her burden to show that subject matter jurisdiction exists.
The Medicare Act limits judicial review to the “final decision of the [Secretary]10
made after a hearing.” 42 U.S.C. § 405(g) (incorporated in the Medicare Act by 42 U.S.C. §
1395ff(b)(1)(A)).

In the Fourth Circuit, the dismissal of an administrative appeal for

untimely filing is not a final decision of the Secretary made after a hearing, and thus such
administrative dismissals are not subject to judicial review under 42 U.S.C. § 405(g). Adams
v. Heckler, 799 F.2d 131, 133 (4th Cir. 1986) (collecting cases and noting that each circuit to
have addressed the issue, except one, has held that administrative dismissals for untimely
filing are not final decisions subject to judicial review under 42 U.S.C. § 405(g)); Brandtner v.
Dep’t of Health & Human Servs., 150 F.3d 1306, 1307 (10th Cir. 1998) (same). In Adams, the
Fourth Circuit agreed with the reasoning of the Eighth Circuit that an administrative
dismissal for untimely filing “does not address the merits of the claim, and thus cannot be
considered appealable . . . . If the claimant may avoid the timely exhaustion of remedies
requirement, any claimant could belatedly appeal his claim at any time and always obtain
district court review of an ALJ’s decision.” 799 F.3d at 133 (quoting Smith v. Heckler, 761
F.2d 516, 518 (8th Cir. 1985)).
In Almy V-VIII, the Plaintiff alleges that certain claims were dismissed for lack of
jurisdiction. Even assuming, as this Court must at this stage, that the Plaintiff’s allegation
that the requests for reconsideration were in fact timely filed, there was no hearing and no

10

Although 42 U.S.C. § 405(g) refers to the Commissioner of Social Security, the Medicare Act
explicitly states that references to the Commissioner in § 405(g) are considered references to the
Secretary of Health and Human Services. 41 U.S.C. § 1395ff(b)(1)(A).

16

decision on the merits. Therefore, there has been no exhaustion of administrative remedies
and no final, appealable decision.11 Accordingly, because there has been no final decision by
the Secretary, the Medicare Act does not confer to this Court subject matter jurisdiction over
claims dismissed for lack of jurisdiction.
The Plaintiff argues in the alternative that this Court has general federal question
jurisdiction pursuant to 28 U.S.C. § 1331. However, the Medicare Act explicitly provides
that no action against the Secretary may be brought under § 1331. 42 U.S.C. §§ 405(h),
1395ii.

The Supreme Court has established that § 405(h)’s bar of federal question

jurisdiction applies if the Medicare Act provides “the standing and the substantive basis” for
a plaintiff’s claims.12 Heckler v. Ringer, 466 U.S. 602, 615 (1984). Because Almy II-VIII are
brought pursuant to the Medicare Act, this Court has no federal question jurisdiction over
her challenges to jurisdictional dismissal.
Finally, the Plaintiff argues that this Court should exercise mandamus jurisdiction
over the jurisdictional dismissal claims in Almy V-VIII. The “remedy of mandamus is a
drastic one, to be invoked only in extraordinary situations.” Kerr v. United States Dist. Court,
426 U.S. 394, 402 (1976). Mandamus relief is an appropriate remedy “only if [a plaintiff] has

11

The Plaintiff cites Auburn Regional Medical Center v. Sebelius, a decision of the District of Columbia
Circuit, for the proposition that jurisdictional dismissal is a final decision that is appealable. 642
F.3d 1145 (D.D.C. 2011). That decision was reversed by the Supreme Court, 133 S. Ct. 817 (2013),
and on remand the D.C. Circuit affirmed the district court’s judgment providing that a jurisdictional
dismissal is not appealable, as well as rejecting jurisdiction on the alternative bases of the federal
question statute and mandamus. 686 F. Supp. 2d 55 (D.D.C. 2010), judgment aff’d, 509 F. App’x 1
(D.C. Cir. 2013).
12
The Plaintiff cites the Supreme Court’s statement that jurisdiction would be available under § 1331
if application of the provisions of the Medicare Act limiting jurisdiction “would mean no review at
all.” Shalala v. Ill. Council of Long Term Care, Inc., 529 U.S. 1, 17 (2000). However, that statement is in
reference to review of constitutional claims, where application of § 405(h) as a bar would potentially
be unconstitutional. No such claims are at issue in Almy V-VIII.

17

exhausted all other avenues of relief and only if the defendant owes him a clear
nondiscretionary duty.” Ringer, 466 U.S. at 616 (citing 28 U.S.C. § 1361). “To establish the
necessary conditions for issuance of a writ of mandamus, the party seeking the writ must
show that (1) he has a clear and indisputable right to the relief sought; (2) the responding
party has a clear duty to do the specific act requested; (3) the act requested is an official act
or duty; (4) there is no other adequate means to attain the relief he desires; and (5) the
issuance of the writ will effect right and justice in the circumstances.” Montgomery Cnty, Md. v.
Leavitt, 445 F. Supp. 2d 505, 514 (D. Md. 2006) (denying petition for mandamus in the
Medicare context) (citations and internal quotation marks omitted). The Fourth Circuit has
not squarely addressed whether 42 U.S.C. § 405(h) categorically bars mandamus jurisdiction.
Even so, the Plaintiff has not shown that this is such an “extraordinary” situation to meet
the high bar to invoke mandamus jurisdiction. The Plaintiff argues that a writ of mandamus
is necessary “to correct Medicare payment determinations that are clearly incorrect.” Pl.’s
Opp. 25, ECF No. 14. The Plaintiff has not shown that she has a clear and indisputable
right to coverage for the BIO-1000. Unlike in the context of a motion to dismiss for failure
to state a claim, for mandamus jurisdiction purposes, Almy’s factual allegations that the
requests for reconsideration were filed on time are insufficient to establish a clear and
indisputable right to a further administrative hearing,13 let alone for the outcome to be in her
favor. To be sure, the Secretary has an official, nondiscretionary duty to hear the merits of

13

This Court notes that the Plaintiff did not provide any supporting evidence for the argument that
the jurisdictionally dismissed claims were timely filed. See Metzgar v. KBR, Inc., ___ F. 3d ___ , No.
13-1430, slip op. at 10 (4th Cir. Mar. 6, 2014). As recently noted by the Fourth Circuit, on a motion
to dismiss under Rule 12(b)(1), the district court may consider evidence beyond the scope of the
pleadings without converting the motion to one for summary judgment. Id. (citing Velasco v. Gov’t of
Indon., 370 F.3d 392, 398 (4th Cir. 2004)).

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timely filed requests for reconsideration. However, the Plaintiff asks this Court for more—
to conclude that the BIO-1000 is covered in those cases. That determination, subject to the
applicable statutes and regulations, is squarely within the province of the Secretary’s
discretion.14 See Montgomery Cnty., Md., 445 F. Supp. 2d at 514 (Secretary had no duty to
certify Canadian prescription drug for importation). For those reasons, the issuance of a
writ of mandamus will not effect right and justice in these cases, and the Plaintiff’s petition is
accordingly denied.15
CONCLUSION
For the reasons stated above, the Defendant’s Motions to Dismiss are GRANTED,
and these remaining seven cases (Almy II-VIII) are DISMISSED WITH PREJUDICE.

Dated: March 7th, 2014

/s/
Richard D. Bennett
United States District Judge

14

Also, as noted above in Part A of this Memorandum Opinion, the Plaintiff has failed to state a
claim upon which relief can be granted with respect to the coverage determination of the BIO-1000
and identifies no facts setting the jurisdictionally dismissed claims apart from those dozens of others
decided on the merits.
15
It is also of note that, although there is no further administrative avenue for the claims that were
jurisdictionally dismissed, the Plaintiff had other means of obtaining relief for the denial of a hearing
as to these specific coverage decisions. See Brandtner v. Dep’t of Health & Human Servs., 150 F.3d 1306,
1307 n.3 (10th Cir. 1998) (noting that denial of hearing on the merits for an untimely request for
review could be considered a final decision of the Secretary for purposes of a constitutional due
process claim).

19