American Orthotic and Prosthetic Association, Inc. v. Sebelius
62 F. Supp. 3d 114
D.D.C.2014Background
- AOPA (association of prosthetic suppliers) challenged an August 11, 2011 "Dear Physician Letter" issued by DME MACs (contractors for Medicare claims), arguing it changed standards for documenting medical necessity and was issued without required rulemaking.
- The MPIM and LCDs govern Medicare coverage for prostheses and require adequate patient medical records documenting diagnosis, clinical course, prognosis, functional limitations, and other treatments; suppliers bear responsibility to obtain and retain documentation and risk liability if claims lack support.
- An HHS OIG report (Aug. 2011) found significant questionable billing for lower-limb prostheses, prompting DME MACs to increase audits and issue the Dear Physician Letter emphasizing physician records and urging more detailed physician documentation.
- AOPA alleged the Letter caused increased audits and denials (one DME MAC reported an 86% denial rate in Nov. 2011 with most denials for inadequate physician documentation) and sought declaratory, injunctive, and mandamus relief under the Medicare Act, APA, BIPA, and RFA.
- The Secretary moved to dismiss for lack of subject-matter jurisdiction and failure to state a claim; the court granted dismissal on jurisdictional grounds, holding AOPA lacked redressability and failed to meet Medicare Act presentment/exhaustion requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Redressability — can invalidating the Dear Physician Letter remedy AOPA’s alleged injuries? | Letter materially changed standards so invalidation would reduce audits/denials. | Letter merely restated preexisting MPIM/LCD standards; enforcement discretion (increased audits) would continue regardless. | Court: Not redressible; injunctive relief would not alleviate audits/denials; Counts I–IV dismissed. |
| Whether prosthetist records alone were sufficient pre-letter | Prosthetist records previously accepted; letter withdrew that practice. | MPIM/LCDs already required robust physician documentation; supplier records were never interchangeable with physician records. | Court: MPIM/LCDs previously made physician documentation central; supplier records were not sufficient alone. |
| Presentment — did AOPA present a ‘‘claim for benefits’’ to Secretary as required by 42 U.S.C. §405(h)? | AOPA’s generalized complaint letters and association submissions satisfy presentment. | Presentment requires concrete claims for reimbursement; AOPA’s generalized letters did not present discrete claims. | Court: AOPA failed to satisfy presentment; generalized letters insufficient. |
| Exhaustion — must AOPA members exhaust administrative remedies before judicial review? | Exhaustion would be futile; waiving exhaustion is appropriate. | The Medicare Act requires channeling of claims; many AOPA members have won appeals, so futility not shown. | Court: AOPA did not exhaust and failed to show futility; dismissal for lack of jurisdiction. |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts have limited, statutory jurisdiction)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury, causation, redressability)
- Heckler v. Chaney, 470 U.S. 821 (agency enforcement discretion generally not reviewable)
- Heckler v. Ringer, 466 U.S. 602 (Medicare jurisdictional limits apply even when claims plead under other statutes)
- Weinberger v. Salfi, 422 U.S. 749 (claims ‘‘arising under’’ Medicare are governed by the Act’s review scheme)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (§405(h) channels virtually all Medicare-related legal attacks through the agency)