*

This decision was originally issued as an “unpublished decision” filed on June 25, 2004. On September 20, 2004, the court

designated the opinion as one recommended for full-text publication.

**The Honorable S. Arthur Spiegel, Senior United States District Judge for the Southern District of Ohio, sitting by

designation.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 04a0397p.06

UNITED STATES COURTS OF APPEALS

FOR THE SIXTH CIRCUIT _________________

ANTHONY GUZZO,

Plaintiff-Appellant,

v.

THOMAS G. THOMPSON, Secretary of State of the United

States Department of Health and Human Services,

Defendant-Appellee.

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No. 03-1346

Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 02-70711—Patrick J. Duggan, District Judge.

Argued: April 28, 2004

Decided and Filed: June 25, 2004*

Before: COLE and COOK, Circuit Judges; SPIEGEL, Senior District Judge.**

_________________

COUNSEL

ARGUED: Ryan D. Heilman, Joseph K. Grekin, SCHAFER AND WEINER, Bloomfield Hills, Michigan,

for Appellant. Elizabeth Larin, ASSISTANT UNITED STATES ATTORNEY, Detroit, Michigan, for

Appellee. Sally Hart, CENTER FOR MEDICARE ADVOCACY, Tucson, Arizona, for Amici Curiae.

ON BRIEF: Joseph K. Grekin, SCHAFER AND WEINER, Bloomfield Hills, Michigan, for Appellant.

Elizabeth Larin, ASSISTANT UNITED STATES ATTORNEY, Detroit, Michigan, for Appellee. Sally

Hart, CENTER FOR MEDICARE ADVOCACY, Tucson, Arizona, Sarah L. Lock, AMERICAN

ASSOCIATION OF RETIRED PERSONS, Washington, D.C., for Amici Curiae.

SPIEGEL, D. J., delivered the opinion of the court, in which COLE, J., joined. COOK, J. (p. 5),

delivered a separate dissenting opinion.

1
No. 03-1346 Guzzo v. Thompson Page 2

_________________

OPINION _________________

SPIEGEL, Senior District Judge. Plaintiff-Appellant, Anthony Guzzo, appeals from the district

court’s grant of summary judgment in favor of Defendant-Appellee, the Secretary of Health and Human

Services (the “Secretary”), upholding the Secretary’s decision to deny Guzzo Medicare reimbursement for

cryosurgery, a medical treatment he underwent for prostate cancer. For the following reasons, we

REVERSE the judgment of the district court and GRANT summary judgment in favor of Guzzo.

Guzzo is a Medicare beneficiary who was diagnosed with prostate cancer in 1999. His physicians

prescribed cryosurgical ablation (“cryosurgery”), which was performed successfully on March 30, 1999.

The question before us is whether Guzzo was legally entitled to Medicare reimbursement for his

cryosurgery.

The Medicare statute authorizes coverage for numerous medical treatments and health services. See,

e.g., 42 U.S.C. §§ 1395d, 1395k-m. However, an exclusion from coverage is carved out “for items and

services . . . not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve

the functioning of a malformed body member.” 42 U.S.C. § 1395y(a)(1).

In 1997, the Secretary issued National Coverage Decision 35-96 (“NCD”), which prohibited

reimbursement for cryosurgery, stating:

Cryosurgery of the prostate gland . . . destroys prostate tissue by applying extremely cold

temperatures in order to reduce the size of the prostate gland. The evidence is not yet

sufficient to demonstrate the effectiveness of this procedure. Therefore, cryosurgery of the

prostate cannot be considered reasonable and necessary under [the Medicare statute].

In subsequent years, evidence of cryosurgery’s safety and effectiveness accumulated, and the Medicare

administration recognized the error of the 1997 NCD. Accordingly, on February 1, 1999 – approximately

two months before Guzzo underwent his surgery – the Department of Health and Human Services issued

a “Decision Memorandum” approving cryosurgery for clinically localized prostate cancer. The Decision

Memorandum stated that: “Cryosurgery is safe, effective, as well as medically necessary and appropriate

in certain patent populations. . . . It has demonstrated effectiveness through an absolute analysis as well as

through a comparative analysis.” The memorandum makes clear that its purpose is to “[approve coverage

of cryosurgery] as a primary treatment for clinically localized prostate cancer.” The memorandum also

states that NCD 35-96 “will be modified to reflect this change in policy,” meaning that the NCD’s

prohibition of coverage for cryosurgery is lifted by force of the Decision Memorandum, and the NCD itself

would be amended to reflect that.

Guzzo contends that he is entitled to reimbursement for the cryosurgery because the Decision

Memorandum, issued two months before his surgery, deemed the procedure “necessary and appropriate”

for the treatment of prostate cancer. The Secretary counters that the Decisional Memorandum did not make

coverage effective as of February 1, 1999, because the Memorandum stated that various administrative steps

– most of them relating to billing and claims processing – would have to be complete before coverage for

cryosurgery would be effective. (A short time later, the Secretary announced that cryosurgery coverage

would be effective beginning July 1, 1999). As such, the Secretary argues, the 1997 NCD prohibiting

cryosurgery coverage was still in effect at the time of Guzzo’s surgery in March 1999.

In short, Guzzo underwent cryosurgery approximately two months after the Secretary deemed the

procedure “reasonable and necessary” in a Decision Memorandum, but approximately three months before

the date specified by the Secretary when an administrative infrastructure would be ready to issue

reimbursements. 
No. 03-1346 Guzzo v. Thompson Page 3

The statute at issue in this case, 42 U.S.C. § 1395y(a)(1)(A) makes clear that the legal question

before us is one of entitlement, and that entitlement to reimbursement is triggered when the Government

announces that a medical procedure is “reasonable and necessary.” Here, that event occurred on February 1,

1999, when the secretary issued a decisional memorandum deeming cryosurgery “reasonable and necessary”

for the treatment of prostate cancer. The language and very title of the memorandum leave no doubt that

the memorandum itself is the Government’s pronouncement that cryosurgery is “reasonable and necessary.”

Although the memorandum indicates that an administrative infrastructure designed to handle cryosurgery

claims and billing still had to be established, the “reasonable and necessary” determination was effective

as of February 1. Accordingly, we hold that because the Secretary had declared cryosurgery “reasonable

and necessary” for the treatment of prostate cancer two months before Guzzo’s surgery, Guzzo is entitled

to reimbursement. The Secretary might have been entitled to delay reimbursement until the administrative

claims-processing system was in place, but the Secretary’s denial of Guzzo’s claim altogether was contrary

to the Medicare statute.

We are not unmindful of the Department’s interest in ensuring the efficient processing of claims

once a new procedure is approved. But the Department appears to have changed its practices in response

to the instant case. At oral argument, the Government stated that it no longer titles these memoranda

“decisional,” but rather, refers to them as “analytical” documents. Moreover, whereas the February 1

Decisional Memorandum has the language and force of an enacting document, the Department’s new

memoranda make clear that any such pronouncements about changes in the status of a procedure are merely

statements of intent, thereby allowing the Department to choose a date on which a formal pronouncement

is made about the procedure’s reasonableness or necessity, and to synchronize that with the inauguration

of an administrative scheme to process claims that would then flow from the procedure’s new, covered

status.

Mr. Guzzo also requests his attorney’s fees for having to litigate the Secretary’s wrongful refusal

to deny him his reasonable and necessary medical expenses. As the Secretary points out, under 28 U.S.C.

§ 2412(d)(1)(A), Plaintiff is only entitled to fees and costs if the Court would find the government’s position

was not substantially justified. The Secretary’s position is substantially justified if it is “justified to a

degree that could satisfy a reasonable person.” Jankovich v. Bowen, 868 F.2d 867, 869 (6th Cir.

1989)(quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988)). “[A] position can be justified even though

it is not correct. . .it can be substantially (i.e., for the most part) justified if a reasonable person could think

it correct, that is, if it has a reasonable basis in law and fact.” Cummings v. Sullivan, 950 F.2d 492, 497 (7th

Cir. 1991)(quoting Pierce, 487 U.S. at 566 n.2).

The Secretary argues that his position in denying Mr. Guzzo benefits was substantially justified in

his reliance on NCD 35-96, and such decision was affirmed by the district court. The Secretary quotes

Heckler v. Ringer, 466 U.S. 602, 617 (1984), “[t]he Secretary’s decision as to whether a particular medical

service is ‘reasonable and necessary’ and the means by which she implements her decision, whether by

promulgating a generally applicable rule or by allowing individual adjudication, are clearly discretionary

decisions.” In contrast, Plaintiff argues that the Secretary’s position was not substantially justified, as the

Secretary denied payment for coverage which the Secretary himself admits was reasonable and necessary.

Plaintiff argues that the Secretary knows full well that he is not entitled to create his own exceptions to

mandated coverage, based on administrative convenience.

The Court finds in this instance that the Secretary’s position was not substantially justified, and that

Mr. Guzzo is therefore entitled to his attorney’s fees and costs. The Secretary relied on a NCD that he had

already announced was no longer correct. The Secretary’s announcement, that predated Mr. Guzzo’s

surgery, clearly indicates that such surgery was reasonable and necessary. To deny coverage for a service

that is designated reasonable on the basis of an outdated rule is unreasonable. The Secretary’s reliance on

Heckler is misplaced, as in this case the issue is not whether cryosurgery is reasonable and necessary or

whether Plaintiff should not have had the procedure, but rather whether the Secretary can deny a beneficiary
No. 03-1346 Guzzo v. Thompson Page 4

a treatment that has already been determined to be reasonable and necessary. For these reasons, Mr. Guzzo

is awarded his reasonable attorney’s fees and costs.

Having reviewed this matter, the Court FINDS for the Appellant Mr. Guzzo, DETERMINES that

the Secretary’s denial of Mr. Guzzo’s reimbursement for cryosurgery was contrary to Congressional intent

and the Medicare Act, DETERMINES that at the date of Mr. Guzzo’s surgery NCD 35-96 was not

supported by adequate information, VACATES the judgment and opinion of the district court, and

AWARDS Mr. Guzzo attorney’s fees for having to litigate the Secretary’s refusal to reimburse him for his

reasonable and necessary medical expenses. 
No. 03-1346 Guzzo v. Thompson Page 5

______________

DISSENT ______________

COOK, Circuit Judge, dissenting. I would affirm the district court’s grant of summary judgment

in favor of the Secretary for the reasons stated in that court’s opinion. The majority reaches its wellintentioned conclusion in this case without reconciling its departure from the national coverage decision

(NCD) that mandated denial of Guzzo’s claim, with the governing statutory and regulatory framework of

the Medicare Act. The majority’s opinion instead accords force of law to a “Decision Memorandum” that

forecasted a likely change in the controlling NCD, though Guzzo’s ineligibility was fixed by the NCD in

effect at the time of his surgery.