Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-05022/USCOURTS-cand-4_18-cv-05022-9/pdf.json

Nature of Suit Code: 899
Nature of Suit: Other Statutes - Administrative Procedure Act/Review or Appeal of Agency Decision
Cause of Action: 28:1331 Fed. Question: Review Agency Decision

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

STEVEN BRUCE,

Plaintiff,

v.

ALEX M. AZAR,

Defendant.

Case No. 18-cv-05022-HSG 

ORDER ON CROSS MOTIONS FOR 

SUMMARY JUDGMENT

Re: Dkt. Nos. 90, 94

Pending before the Court are the parties’ cross motions for summary judgment. Dkt. Nos. 

90 (“Pl. Mot”), 94 (“Def. Mot”). The Court held a hearing on the motions on December 5, 2019. 

After carefully considering the papers and the parties’ arguments, the Court DENIES Plaintiff’s 

motion for summary judgment and GRANTS Defendant’s motion for summary judgment. 

I. BACKGROUND

Plaintiff Stephen Bruce filed this action on August 16, 2018, seeking judicial review of the 

final decision by the Medicare Appeals Council (“MAC”) denying Plaintiff coverage for the drug 

Serostim. Dkt. No. 1. The Court provides the relevant statutory framework and facts below. 

A. Part D of the Medicare Act

The Medicare Act, established under Title XVIII of the Social Security Act, 42 U.S.C. 

§ 1395 et seq., provides coverage for certain medical services to eligible aged and disabled 

individuals. Maximum Comfort Inc. v. Sec’y of Health & Human Servs., 512 F.3d 1081, 1083 (9th 

Cir. 2007). At issue here is Part D of the program, which is a voluntary prescription drug benefit 

program established by the Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (“Medicare Modernization Act”). Pub. L. No. 108–173, 117 Stat. 2066 (2012). Part D 

provides coverage for certain types of drugs: (1) prescription drugs; (2) biological products; 

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(3) insulin and insulin supplies used to inject insulin; and (4) vaccines. See 42 U.S.C. § 1395w102(e). 

Under the statute, the term “covered part D drug” includes “any use of a covered part D 

drug for a medically accepted indication.” Id. § 1395w-102(e)(1). The definition of “medically 

accepted indication” depends on whether the medication is used in an “anticancer 

chemotherapeutic regimen.” Id. § 1395w-102(e)(4). If not, as is the case here, “medically 

accepted indication” is defined by cross-reference to 42 U.S.C. § 1396r-8(k)(6), which states:

The term “medically accepted indication” means any use for a 

covered outpatient drug which is approved under the Federal Food, 

Drug, and Cosmetic Act or the use of which is supported by one or 

more citations included or approved for inclusion in any of the 

compendia described in subsection (g)(1)(B)(i).

Id. § 1396r-8(k)(6). The “compendia described in subsection (g)(1)(B)(i)” consist of: (1) the 

American Hospital Formulary Service Drug Information (“AHFS-DI”); (2) United States 

Pharmacopeia-Drug Information (“USPDI”) (or its successor publication); and (3) the DRUGDEX 

Information System. Id. § 1396r-8(g)(1)(B)(i).

B. Plaintiff’s Requests for Coverage of Serostim 

Plaintiff is a Medicare beneficiary enrolled in Part D, administered by Envision in 2016 

and Blue Shield in 2017. AR 49, 720. 1In July 2016, he was diagnosed with lipodystrophy or 

wasting syndrome (used interchangeably in Plaintiff’s case), a rare disorder which causes Plaintiff 

to suffer from severe and progressive weight loss. AR 82. To halt this weight loss, his primary 

physician, Dr. Louis J. Cubba, M.D., prescribed Serostim, which Dr. Cubba said was the only 

medication “that was able to successfully halt his progressive, life threatening, weight loss.” Id. 

Plaintiff submitted a request for coverage of Serostim to his insurers, Envision in 2016 and 

Blue Shield in 2017. See AR 184–85, 192–94, 630–31. Both insurers denied coverage because 

Plaintiff’s use of Serostim for lipodystrophy was not prescribed for a “medically accepted 

indication.” See id. 

 

1 References to AR refer to the certified administrative record filed and attached as exhibits to the 

Declaration of Kimberly A. Robinson. Dkt. Nos. 64-7, 64-8, 64-9, 64-10. 

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i. Plaintiff’s Appeal in 2016 

In September 2016, Plaintiff filed a reconsideration request with the independent review 

entity (“IRE”). AR 1217–18. The physician reviewer found that the “Part D Plan was correct in 

denying the request for Serostim,” because it was prescribed for “off-label (non-FDA) approved 

uses,” and the Medicare-approved compendia “do not contain any citations to support the use of 

this drug for these conditions.” AR 1217. 

Plaintiff requested a hearing before an administrative law judge (“ALJ”). AR 997. ALJ

James Myles held a telephone hearing with Plaintiff on October 21, 2016, and on November 15, 

2016, ALJ Myles issued a decision against Plaintiff. AR 997–1003. ALJ Myles stated that while 

he was “sympathetic to Mr. Bruce’s situation,” he was bound by Medicare Part D coverage 

requirements, which state that the “proposed used of Medication must be supported by approved 

on label use by the FDA or Medicare-recognized compendia.” AR 1002. Based on the record and 

evidence presented, ALJ Myles found that Plaintiff was requesting coverage of Serostim for “offlabel, non-FDA approved uses which are not ‘medically accepted indications’ as defined by 

Medicare law.” AR 1002–03. Therefore, he concluded that Plaintiff’s Plan was not required to 

provide coverage for Serostim. AR 1003. 

Plaintiff appealed ALJ Myles’s decision to the MAC. AR 1031–32. The MAC remanded 

the case back to ALJ Myles, because the claim file did not include a copy of “either the FDA label 

or the Medicare-approved compendia.” AR 1032. The MAC instructed the ALJ to obtain a copy 

of the Plan’s “Evidence of Coverage and formulary for 2016, the FDA label, and the Medicareapproved compendia.” Id.

On remand, ALJ Myles issued another unfavorable decision on March 30, 2018. AR 720–

27. He did not dispute Plaintiff’s credibility, or that Serostim is helpful for Plaintiff to maintain 

his weight. AR 726–27. However, he concluded that “[g]iven the information found on the 

FDA’s label and the Medicare approved compendia, Serostim is not prescribed for a medically 

accepted indication.” AR 727. Plaintiff again appealed the decision. See AR 12. 

ii. Plaintiff’s Appeal in 2017

After Blue Shield denied coverage in 2017, Plaintiff filed a reconsideration request with 

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the IRE. See AR 619. The IRE, after conducting a “new and independent review of the appeal,” 

concluded that Plaintiff’s Part D Plan was not required to cover Serostim. Id. The physician 

reviewer determined that there “are no citations in the Medicare approved compendia that support 

the use of Serostim for the diagnosed condition,” and as a result, “the drug is not being prescribed 

for a medically accepted indication as defined by Medicare law.” AR 620.

Plaintiff then requested an ALJ hearing on May 1, 2017. AR 660. ALJ Jeffrey Gulin 

dismissed the request because he found that ALJ Myles’s decision was based “on the same facts 

and on the same issues” as the appeal before him and thus binding. Id. The MAC remanded the 

case back to ALJ Gulin, because it found that the facts in the decision by ALJ Myles were “not the 

same as the facts at issue here,” given Plaintiff was seeking coverage under two different Medicare 

Part D prescription drug plans (in other words, under Envision in 2016 and Blue Shield in 2017). 

AR 323. After a telephone hearing, ALJ Gulin issued an unfavorable decision on March 15, 2018. 

AR 49–56. Based on the evidence and record presented, he found that Serostim was not being 

used for a medically accepted indication. AR 56. Plaintiff appealed the decision. See AR 12–17. 

iii. MAC Decision

The MAC reviewed and adopted both ALJs’ decisions. Id. In its July 12, 2018 order, the 

MAC acknowledged Plaintiff’s argument “that there is no realistic difference between the Human 

Immunodeficiency Virus and the virus which the appellant asserts has caused the autoimmune 

disease that is the basis for his condition.” AR 16. However, the MAC found that “the similarity 

of a diagnosis to a covered diagnosis is simply not a basis on which we direct Part D coverage.” 

Id. Because the FDA label and Medicare compendia did not list Plaintiff’s prescribed use, the 

MAC concluded that Part D did not cover Serostim in Plaintiff’s case.2 Id. 

C. This Action 

Following the MAC’s decision, Plaintiff filed this civil action challenging the July 2018 

 

2 Plaintiff also sent a letter to the Administrative Appeals Judge, requesting that the MAC “make 

findings on the Section 504 of the Rehabilitation Act of 1973, the due process clause of the Fifth 

Amendment, and offer a reason for why [the MAC] remanded these cases without including the 

above copy of the ‘FDA label or the AHFS-DI’ for Serostim.” AR 8–9. The MAC construed the 

letter as a request to reopen its July 2018 decision and held that Plaintiff did not show good cause 

for reopening. AR 2. 

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MAC decision. Dkt. No. 1. He named Blue Shield, Envision, and Alex M. Azar II, Secretary of 

the United States Department of Health and Human Services (“DHHS”), as Defendants. Id. 

Defendants filed motions to dismiss, which the Court granted on June 18, 2019. Dkt. No. 83. 

Currently, the only remaining Defendant is DHHS, and the only remaining cause of action is 

Plaintiff’s first cause of action, which seeks review of the final decision by the MAC.3 See id. 

II. STANDARD OF REVIEW

A Medicare beneficiary may obtain judicial review of the MAC’s final decision denying 

Part D coverage under 42 U.S.C. § 405(g). See 42 U.S.C. § 1395w-104(h) (incorporating Part C’s 

judicial review provision, § 1395w–22(g), which provides for judicial review under § 405(g)). 

The governing regulations specify that a Part D beneficiary may obtain court review if the amount 

in controversy meets the threshold requirement estimated annually by the Secretary of DHHS. 42 

C.F.R. § 423.2136(a). 

Under the Administrative Procedure Act, the district court may set aside an agency 

decision that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with 

law.” Palomar Med. Ctr. v. Sebelius, 693 F.3d 1151, 1159 (9th Cir. 2012) (citation and quotations 

omitted). A district court may disturb the decision to deny benefits only if the decision is either 

not supported by substantial evidence, or is based on legal error. Burch v. Barnhart, 400 F.3d 676, 

679 (9th Cir. 2005). “Substantial evidence means such relevant evidence as a reasonable mind 

might accept as adequate to support a conclusion. The evidence must be more than a mere 

scintilla, but may be less than a preponderance.” Molina v. Astrue, 674 F.3d 1104, 1110–11 (9th 

Cir. 2012) (quotations and citations omitted). The court must consider the administrative record 

as a whole, weighing both the evidence that supports the decision and the evidence that detracts 

from it. McAllister v. Sullivan, 888 F.2d 599, 602 (9th Cir. 1989). If the evidence can rationally 

 

3 The Court dismissed Plaintiff’s second and third causes of action, which alleged that Defendants 

violated Plaintiff’s due process rights and Section 504 of the Rehabilitation Act of 1973, because 

the Court determined that it did not have subject matter jurisdiction over those two claims under 

Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1 (2000). Dkt. No. 83 at 5–8. Plaintiff 

attempts to relitigate those issues in his motion for summary judgment. Pl. Mot. at 13–15. But the 

Court declines to do so, and will not consider Plaintiff’s arguments as to those two causes of 

action.

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be interpreted in more than one way, the court must uphold the agency’s decision. Mayes v. 

Massanari, 276 F.3d 453, 459 (9th Cir. 2001).

III. DISCUSSION

A. Plaintiff’s Prescription for Serostim Is Not For a “Medically Accepted 

Indication”

As already discussed, Plaintiff’s use of Serostim is covered by Part D only if it is used for a 

“medically accepted indication,” meaning it is prescribed for an FDA-approved use or listed in 

one of the approved compendia. See 42 U.S.C. § 1396r-8(k)(6). Upon review of the record 

presented, the Court finds that Serostim was not used for a medically accepted indication.

The FDA label included in the record states that Serostim is “indicated for the treatment of 

HIV patients with wasting or cachexia to increase lean body weight, and improve physical 

endurance.” AR 317; see also AR 16 (MAC decision citing to the FDA website and finding the 

same). Plaintiff does not dispute this, nor does he dispute that he does not have HIV-related 

wasting syndrome. As to the compendia requirement, the DRUGDEX compendium included in 

the administrative record lists the following uses for Serostim: cachexia associated with AIDs, 

growth hormone deficiency, and short bowel syndrome. AR 787–88. It also lists fat 

maldistribution for HIV infection as a non-FDA (or off-label) use. AR 788. ALJ Gulin noted that 

the AHFS-DI compendium did not identify any uses for Serostim outside the FDA approved 

indications.4 AR 25. Based on the administrative record, there is no suggestion that any of the 

relevant compendia list non-HIV-related lipodystrophy as a use for Serostim. 

Plaintiff argues that the phrase “medically accepted indication” is merely “illustrative, not 

definitional.” Dkt. No. 98 at 5. But as DHHS notes, district courts in this circuit have rejected

 

4 Plaintiff, in his reply brief, again seeks to supplement or complete the administrative record, a 

request the Court previously denied. Dkt. No. 98 at 6. He also filed two administrative motions 

requesting to file extra-record evidence. Dkt. Nos. 100, 102. The Court incorporates its prior 

analysis finding that Plaintiff failed to rebut with clear evidence the presumption that the record is 

complete, or present any evidence that an exception applies to allow the Court to consider extrarecord evidence. See Dkt. No. 83 at 10–11. Accordingly, the Court DENIES Plaintiff’s 

administrative motions to file additional documents. See Dkt. Nos. 100, 102. And even were the 

Court to consider the additional materials Plaintiff seeks to introduce, the Court finds that these 

materials would not change its analysis.

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that very same argument. See, e.g., Nievod v. Sebellius, No. C 11-4134 SBA, 2013 WL 503089, at 

*10 (N.D. Cal. Feb. 8, 2013); United States v. Celgene Corp., 226 F. Supp. 3d 1032, 1047 (C.D. 

Cal. 2016) (“We note, however, that CMS and a clear majority of district courts have read this 

clause to incorporate the medical acceptance limitation, while only one district court has read it 

differently.” (collecting cases)); Broome v. Burwell, No. 6:14-CV-01248-MC, 2015 WL 1526532, 

at *4 (D. Or. Apr. 1, 2015); Rickhoff v. U.S. Sec’y ex rel. Dep't of Health & Human Servs., No. 

CV-11-2189-PHX-DGC, 2012 WL 6177411, at *4 (D. Ariz. Dec. 11, 2012). The Court agrees 

with the reasoning of these decisions, and finds it clear under the plain terms of the statute that a 

covered Part D drug must satisfy the medically accepted indication requirement.

5

According to Plaintiff, providing coverage only to those who have HIV-related 

lipodystrophy, and not to those who have non-HIV-related lipodystrophy, is “unreasonable based 

on the lack of [a] relevant connection.” Pl. Mot. at 12; see also Dkt. No. 98 at 8 (arguing it is 

“irrational and violative of substantive due process” to require Plaintiff to have HIV with 

lipodystrophy to qualify for coverage). Whether Part D should cover Plaintiff’s use of Serostim to 

treat his condition because it has similar symptoms to those of patients with covered conditions is 

a policy matter not within the Court’s competence to decide. The Court echoes the sentiments 

expressed by the MAC and ALJs, and is sympathetic to Plaintiff’s situation. But the only issue 

before the Court is whether the MAC’s decision to deny coverage either was not supported by 

substantial evidence or constituted legal error. Based on the record and for the reasons already 

discussed, the Court finds the MAC’s decision to be supported by substantial evidence and not 

based on legal error. 

B. 42 C.F.R. § 423.578 Exception 

Plaintiff also argues that the MAC failed to apply an exception under 42 C.F.R. 

§ 423.578.

6

 Pl. Mot. at 14. Contrary to Plaintiff’s argument, the MAC did consider this exception 

and held that Plaintiff did not qualify. AR 6. To qualify for a formulary exception under 42 

 

5 The Court finds Plaintiff’s out-of-circuit cases inapposite or not persuasive. See Dkt. No. 98 at 

5, 9 (citing cases). 

6 Plaintiff appears to invoke 42 C.F.R. § 421.2112(a) as another exception, Pl. Mot. at 14, but this 

regulation outlines the requirements for requesting review of an ALJ action.

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C.F.R. § 423.578(b), the drug must be “medically necessary, consistent with the physician’s or

other prescriber’s statement under paragraph (b)(5) of this section, and that the drug would be 

covered but for the fact that it is an off-formulary drug.” 42 C.F.R. § 423.578(b). However, 

“[n]othing in this section may be construed to allow an enrollee to use the exceptions process set 

out in this section to request or be granted coverage for a prescription drug that does not meet the 

definition of a Part D drug.” Id. § 423.578(e).

The MAC found that the “formulary process cannot be used to cover a drug that does not 

meet the definition of a Part D drug.” AR 6. Because Serostim in Plaintiff’s case “does not meet 

the definition of a Part D drug,” the MAC concluded that “there is no basis on which a formulary 

exception for Serostim can be granted.” Id. As already discussed, Plaintiff has not shown that his 

prescribed use of Serostim meets the definition of a Part D drug. Thus, the Court does not find the 

MAC’s determination to be arbitrary, capricious, or not in accordance with the law. 

IV. DISCUSSION

The Court DENIES Plaintiff’s motion for summary judgment, GRANTS Defendant’s

motion for summary judgment, and DENIES Plaintiff’s administrative motions to file additional 

documents. Dkt. Nos. 90, 94, 100, 102. The MAC’s decision is affirmed. The Court directs the 

Clerk to enter judgment in Defendant’s favor and close the case. No further filings will be 

accepted in this closed case.

IT IS SO ORDERED.

Dated: 12/16/2019

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

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