Lewis v. Burwell

United States District Court

District of Massachusetts

)

Carol Lewis, )

)

Plaintiff, )

)

v. )

) Civil Action No.

Secretary of Health and Human ) 15-13530-NMG

Services, )

)

Defendant. )

)

MEMORANDUM & ORDER

GORTON, J.

This case arises out of a dispute over attorneys’ fees and

costs incurred pursuant to the Equal Access to Justice Act, 28

U.S.C. § 2412 (“EAJA”) following this Court’s order allowing the

motion for summary judgment of Carol Lewis (“Lewis” or

“plaintiff”).

I. Background

Carol Lewis suffers from Type I diabetes and hypoglycemia

and hyperglycemic unawareness. As a result, her doctor

prescribed a continuous glucose monitor (“CGM”). In March,

2013, Lewis submitted five CGM device claims to the National

Health Insurance Corporation (“the NHIC”) for a total of $2,482.

Those claims were denied and plaintiff appealed to the Medicare

Appeals Council (“MAC”) in March, 2014. The MAC also denied her

claims, finding that because the CGM was “precautionary” and did

not “serve a medical purpose”, it was not covered under the

Durable Medical Equipment (“DME”) Medicare benefit.

After the MAC denial, plaintiff filed parallel appeals

relating to her CGM claim for Medicare coverage. In October,

2015, she brought suit against the Secretary of Health and Human

Services (“the Secretary” or “defendant”) in federal court and

this Court dismissed her claim as moot in August, 2017. Upon

reconsideration, however, this Court allowed plaintiff’s motion

for summary judgment in April, 2018, on the grounds that the

Secretary’s denial of CGM coverage constituted legal error and

was not supported by substantial evidence.

At the same time, plaintiff appealed the MAC decision to

the Departmental Appeals Board, Civil Remedies Division (“CRD”),

in December, 2015. In April, 2016, the CRD reversed the MAC

decision on the grounds that NHIC’s reliance on two informal

determinations, the Local Coverage Determination (“LCD”) and the

Local Coverage Article (“LCA”), was unreasonable (“the LCD

challenge”). That decision was then vacated by the Departmental

Appeals Board, Appellate Division, one year later.

Pending before the Court is plaintiff’s motion for

attorneys’ fees and costs incurred during this litigation.

II. Analysis

Lewis has filed three motions: a motion for costs, a motion

for fees and a motion to strike. The motion to strike relates

to the Secretary’s sur-reply. The Court will address the motion

to strike before moving on to the underlying analysis of the

fees and costs claimed.

A. Plaintiff’s motion to strike defendant’s sur-reply

Plaintiff moves to strike the Secretary’s sur-reply on the

grounds that counsel 1) did not meet and confer in good faith to

the narrow issues in this litigation and 2) failed to identify

new arguments by plaintiff in his sur-reply.1 The Secretary

responds that 1) Local Rule 7.1 does not require a conference

with respect to the substance of every memorandum and 2)

plaintiff has provided no authority for her motion to strike.

The Court agrees with plaintiff that the Secretary had

ample opportunity to contest fees because they were disclosed in

great detail, including the fees related to the LCD challenge.

In fact, it does not appear that any of the Secretary’s sur-

reply responses arises out of “new” information discovered since

plaintiff’s reply. Nevertheless, notwithstanding the tenuous

grounds on which defendant submits her sur-reply, motions to

strike pursuant to Fed. R. Civ. P. 12(f) are limited to

1 Since the filing of this case, Alex Azar has succeeded Sylvia

Burwell as Secretary of Health and Human Services.

pleadings identified in Fed. R. Civ. P. 7(a). Because this sur-

reply does not qualify as a pleading under Rule 12(f),

plaintiff’s motion to strike will be denied and the Court will

consider it with respect to the underlying motion for fees.

Plaintiff will not be entitled to fees relating to the motion to

strike.

B. EAJA Fees

In the United States, each party is generally required to

bear its own attorneys’ fees. Buckhannon Bd. & Care Home, Inc.

v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 602

(2001). The Equal Access to Justice Act (“the EAJA”), 28 U.S.C.

§ 2412, is an exception to that rule in that it provides for

attorneys’ fees and expenses under §§ 2412(b) and (d). In

allowing for the reimbursement of fees, the EAJA serves two

broad functions: 1) to ensure that individuals are not deterred

from challenging unjustified government action and 2) to deter

“unreasonable exercise of Government authority”. Ardestani v.

I.N.S., 502 U.S. 129, 138 (1991).

1. Section 2412(d)

Plaintiff seeks to recover fees and expenses pursuant to

Section 2412(d), which provides that

a court shall award to a prevailing party other than the

United States fees and other expenses, in addition to any

costs awarded pursuant to subsection (a), incurred by that

party in any civil action (other than cases sounding in

tort), including proceedings for judicial review of agency

action, brought by or against the United States in any

court having jurisdiction of that action, unless the court

finds that the position of the United States was

substantially justified or that special circumstances make

an award unjust.

28 U.S.C. § 2412(d)(1)(A).

To seek attorneys’ fees pursuant to 28 U.S.C § 2412(d), the

claimant must establish that 1) she is the prevailing party in

the civil action, 2) the petition was timely filed, 3) the

government’s position was not substantially justified and 4) no

special circumstances make an award against the government

unjust. Castaneda-Castillo v. Holder, 723 F.3d 48, 57 (1st Cir.

2013). Assuming that an award is proper, § 2412(d) caps fees to

$125 per hour but allows for rate enhancements if the court

determines that an increase in the cost of living or a

special factor, such as the limited availability of

qualified attorneys for the proceedings involved, justifies

a higher fee.

28 U.S.C. § 2412(d)(2)(A).

The parties do not dispute that Lewis is the prevailing

party or that the petition for fees was timely filed. The

Secretary does dispute, however, substantial justification, rate

enhancements and reasonableness, all of which the Court now

addresses.

a. Substantially Justified

The Secretary bears the burden of establishing that his

position during the litigation and the agency proceedings was

“substantially justified” by a preponderance of the evidence.

Castaneda-Castillo, 723 F.3d at 73. Substantially justified

means “justified to a degree that could satisfy a reasonable

person”, which is no different than having a “reasonable basis

both in law and fact”. Pierce v. Underwood, 487 U.S. 552, 565

(1988). The term requires more than “merely undeserving of

sanctions for frivolousness”. Id. at 566.

Lewis argues that the Secretary’s position was not

substantially justified because 1) 55 Administrative Law Judges

(“ALJs”) had previously determined that CGM was covered under

DME, 2) the Civil Remedies Division of HHS held that the denial

of CGM coverage failed the reasonableness standard, 3) no

professional in the healthcare industry was of the opinion that

CGM is not “primarily and customarily used for medical purpose”,

4) the Secretary was late in issuing the MAC decision by 460

days, 5) the Secretary moved for improper dismissal under CMS

Ruling 1682R and 6) counsel refused to meet and confer pursuant

to Local Rule 7.1 during this litigation.

The Secretary responds that 1) plaintiff’s CGM did not

primarily or customarily serve the medical purpose of

controlling her disability and 2) decisions by an ALJ are not

precedential and even among such tribunals, coverage for CGMs

remains largely an unsettled issue. He further points to the

administrative record in this case wherein plaintiff’s own

physician noted that she must consult with her traditional

fingerstick testing before adjusting her insulin pump dosage.

Finally, he contends that dismissal for lack of standing was

justified because plaintiff’s complaint sought declaratory

relief and it was not clear that she was seeking payment for

past claims.

To the extent that the Secretary continues to argue that

the fingerstick method precludes a finding that CGMs serve a

medical purpose, the Court reiterates its order at summary

judgment:

The fact that fingersticks may be used to confirm the

results of a CGM does not deprive a CGM of its “primarily

medical” character. First, Medicare frequently covers

confirmatory testing. Second, the FDA recognizes that a

CGM may be a diabetic’s sole means of monitoring glucose

levels. The Secretary’s assertion that a device loses its

medical nature if it is used in conjunction with another

medical device is contrary to law.

The fact that the Secretary was ultimately the losing

party, does not, in itself, warrant the award of fees because it

is possible that the government can “take a position that is

substantially justified, yet lose”. Pierce, 487 U.S. at 569.

Since 2015, however, three district courts and more than 40 ALJs

have disagreed with the Secretary’s position that CGMs do not

qualify as DME. Thus, the Court concludes that the breadth of

decisions contrary to the Secretary’s position demonstrates a

“string of losses” that connotes a lack of substantial

justification. Id.

Moreover, in citing the exceptional ALJ decisions that

support the Secretary’s position, his claim that ALJ decisions

are not precedential is disingenuous. The Court further notes

that the ALJ decisions that have affirmed the Secretary’s

position predate 2015, while more recent decisions have

recognized the trend that CGMs are DME. See Bloom v. Azar, No.

5:16-CV-121, 2018 WL 583111, at *11 (D. Vt. Jan. 29, 2018)

(finding the CGM to be an essential part of the patient’s

diabetes management and thus the MAC erred in denying Medicare

coverage); Whitcomb v. Hargan, 2017 U.S. Dist. LEXIS 216571, at

*17-18 (the decision not to cover CGMs, which arguably do serve

a primary medical purpose, is arbitrary and capricious).

Thus, while the Secretary’s position may have been

substantially justified at the ALJ stage of this litigation,

since then, the Secretary has been put on notice that his

position is tenuous at best. See Whitcomb v. Burwell, 2015 U.S.

Dist. LEXIS 67802 (E.D. Wis. May 26, 2015) (finding that the

denial of CGM coverage was an error of law); Hargan, 2017 U.S.

Dist. LEXIS 216571, at *18 (finding that while an ALJ decision

may not be precedential as to whether a CGM is reasonable to a

particular enrollee, the “threshold question of whether [CGMs]

satisfy the regulatory definition of durable medical equipment

should not vary from enrollee to enrollee”). Thus, plaintiff is

entitled to reimbursement of fees pursuant to § 2412(d).

b. Rate Enhancement

Because the Secretary does not oppose plaintiff’s cost of

living adjustment (“COLA”) request if fees are awarded, the

Court adopts plaintiff’s COLA multiplier of 1.62, which raises

the statutory billing rate to $202.50 per hour. The Court

declines, however, to award an enhancement pursuant to a

“special factor” for the following reasons.

The “special factor” enhancement generally relates to the

limited availability of qualified attorneys for the proceedings

involved. Castaneda-Castillo, 723 F.3d at 74. This requires the

attorney to have some “distinctive knowledge or specialized

skill needful for the litigation in question”. Pierce, 487 U.S.

at 572. This special factor is distinct from the

extraordinary level of the general lawyerly knowledge and

ability useful in all litigation.

Id.

Plaintiff argues that Attorney Parrish (lead counsel)

possesses a technical and scientific background and detailed

knowledge of the Medicare appeals process, both of which were

required to represent Lewis competently. While Attorney

Parrish’s prior experience certainly renders her competent, her

purported expertise was not “essential for competent

representation”. Atl. Fish Spotters Ass’n v. Daley, 205 F.3d

488, 492 (1st Cir. 2000).

Here, the central legal issue revolved around coverage

under the DME Medicare benefit and, while the factors and

procedures surrounding such a claim may be complicated, the

Supreme Court has recognized that a district court cannot rely

on the novelty and difficulty of the issues, the work and

ability of counsel or customary awards in other cases (among

other factors) when determining whether a special factor

enhancement applies. Pierce, 487 U.S. at 573. In fact, the

First Circuit has held that administrative law suits, like this

one, involve

a tangle of discrete regulations, various precedents . . .

[b]ut in most cases an otherwise competent lawyer can . . .

learn enough about the particular controversy to litigate

in the area adequately.

Atl. Fish Spotters Ass’n, 205 F.3d at 492.

Thus, while counsel competently represented her client

throughout this litigation, plaintiff has not demonstrated that

counsel has met her burden for entitlement to a special factor

enhancement.

c. Reasonableness

The Secretary argues that plaintiff’s request for fees is

significantly higher than the fees requested in similar cases

and that she is seeking fees for an unrelated LCD challenge.

Lewis replies that, putting aside the fees incurred in

connection with the motion to alter and the LCD challenge, the

remaining fees are less than those fees requested in similar

cases. Furthermore, while the LCD challenge occurred in an

administrative proceeding not before this Court, plaintiff

argues that the issues of the LCD challenge and the DME

determination are intertwined and had she not been successful in

the administrative proceeding, the LCD challenge would have been

an issue before this Court. The Secretary rejoins that

plaintiff is only entitled to approximately $32,000 in fees

which is a reduction in the award requested because counsel

allegedly overbilled for fees incurred with respect to 1)

unrelated administrative proceedings and 2) filings that were

substantially similar to those made in other cases.

The Court will reduce the § 2421(d) award by $52,245 (258

hours at $202.50 per hour) because, while the Civil Remedies

Division found for plaintiff with respect to her LCD challenge,

that decision was vacated by the appellate court.2 Thus,

plaintiff was not the prevailing party with respect to the LCD

challenge and she did not appeal that decision to this Court.

Had plaintiff appealed the final decision from the agency

proceeding, she may have been entitled to the LCD related fees

if she prevailed. Cf. Castaneda-Castillo, 723 F.3d at 72

2 That award is commensurate with plaintiff’s estimate that

approximately $50,000 was billed for unrelated administrative

proceedings.

(finding that a court must have jurisdiction over the underlying

action to award fees under the EAJA). Finally, the Court will

not credit the Secretary’s challenge for fees allegedly incurred

for substantially similar filings because the Court finds such

time spent (approximately 70 hours) to be reasonable.

Accordingly, plaintiff’s counsel will be awarded $49,477 in

costs and fees pursuant to § 2412(d), based on the COLA award

($101,096) less the reduction calculated by the Court ($52,245)

plus the bill of costs ($626).

C. Section 2412(b)

Lewis also moves for fees pursuant to 28 U.S.C. § 2412(b).

To prevail under that section, she must prove that the losing

party’s claim was 1) meritless and 2) brought for improper

purposes such as harassment or delay. Kerin v. U.S. Postal

Serv., 218 F.3d 185, 190 (2d Cir. 2000) (internal quotations and

citations omitted). The latter inquiry requires a showing that

the losing party acted in “bad faith, vexatiously, wantonly, or

for oppressive reasons”. Id.

Both parties reiterate their arguments on substantial

justification to defend (or attack) the merits of the

Secretary’s position. The Court declines to address whether the

“substantial justification” and “meritless” standards converge

but instead finds that plaintiff has not satisfied the second

inquiry of “improper purposes”.

The Court is disconcerted by 1) allegations that counsel on

behalf of the Secretary refused to meet and confer with

plaintiff’s counsel to narrow issues throughout the litigation

and 2) the inference that the Secretary raised the issue of

mootness (which was later overruled by this Court on a motion to

reconsider) when plaintiff clearly sought reimbursement for

prior denials of coverage. Nevertheless, the standard of bad

faith is a high burden and plaintiff has not demonstrated that

the Secretary’s actions were so exceptional as to warrant an

award of fees under § 2412(b). See Cordeco Dev. Corp. v.

Santiago Vasquez, 539 F.2d 256, 263 (1st Cir. 1976) (finding

that such an award can only occur “in extraordinary

circumstances and for dominating reasons of justice”).

Plaintiff’s contention that the Secretary’s conduct was on

par with the conduct alleged in Gray Panthers Project Fund v.

Thompson, 304 F. Supp. 2d 36 (D.D.C. 2004) is over-wrought. In

that case, the district court found bad faith because, contrary

to a mandatory congressional directive, the Secretary failed to

mail plan information to eligible Medicare beneficiaries. Id. at

40–41. Although the Secretary is required to cover devices that

are “primarily and customarily used for a medical purpose”, that

action requires the Secretary to make a determination as to

coverage eligibility. The decision-making process is one step

removed from the actions in Gray Panthers where there was clear

and convincing evidence that the Secretary violated an

unambiguous congressional mandate by failing to mail out

required information. Id. at 39.

Thus, because plaintiff has failed to demonstrate that the

government acted with “improper purpose”, the Court declines to

award attorneys’ fees pursuant to § 2412(b).

This finding does not absolve counsel of their obstructive

conduct throughout this protracted and unnecessarily expensive

litigation. This suit began as a claim for reimbursement of

$2,800 for a medical device to be used by a diabetes patient and

unconscionably escalated into a claim for over $200,000 in

attorneys’ fees and costs. Had counsel met and conferred early

on in an attempt to narrow the issues, these exorbitant fees and

costs could have been avoided.

ORDER

For the foregoing reasons, plaintiff’s motion for costs

(Docket No. 79) is ALLOWED and counsel is awarded $626.

Plaintiff’s motion for attorneys’ fees (Docket No. 80) is

ALLOWED, in part, and DENIED, in part, and counsel is awarded

$48,851. Her motion to strike (Docket No. 100) is DENIED.

So ordered.

_/s/Nathaniel M. Gorton____

Nathaniel M. Gorton

United States District Judge

Dated March 30, 2019