LAYZER v. Leavitt
770 F. Supp. 2d 579, 2011 WL 813822, 2011 U.S. Dist. LEXIS 22479 (2011)
Rule of Law:
The definition of 'covered Part D drug' under the Medicare Act includes all FDA-approved drugs and does not authorize the Secretary to limit reimbursement solely to uses listed in specific drug compendia, as the statutory term 'includes' is illustrative rather than exclusionary.
Facts:
- Plaintiff Layzer was diagnosed with a rare form of ovarian cancer.
- Layzer's oncologist prescribed Cetrotide, determining it was essential to retard tumor growth and prevent hemorrhaging, a conclusion supported by peer-reviewed literature.
- Layzer's plan sponsor denied coverage for Cetrotide because it was classified as a fertility agent and its use for cancer was not listed in the statutory compendia.
- Plaintiff Fischer was diagnosed with a rare, degenerative form of muscular dystrophy (DM2).
- Fischer was prescribed Increlex, which significantly improved his muscle strength and independence.
- Fischer's plan sponsor denied coverage for Increlex because it was not FDA-approved for his specific diagnosis.
- Both drugs were FDA-approved for other uses, but the specific uses for these rare diseases were not listed in the standard drug compendia.
Procedural Posture:
- Plaintiffs submitted claims for drug coverage to their respective plan sponsors.
- The plan sponsors denied the claims.
- Plaintiffs appealed to a Medicare Part D Independent Review Entity.
- The Independent Review Entity affirmed the denials.
- Plaintiffs appealed to Administrative Law Judges.
- The Administrative Law Judges affirmed the denials, stating they were bound by the regulation (42 C.F.R. § 423.100).
- Plaintiffs appealed to the Medicare Appeals Council.
- The Medicare Appeals Council affirmed the denials.
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Issue:
Does the statutory definition of a 'covered Part D drug' authorize the Secretary to impose a regulation requiring that a drug's prescribed use be listed in specific medical compendia to qualify for Medicare Part D reimbursement?
Opinions:
Majority - Judge Harold Baer, Jr.
No, the Secretary is not authorized to impose a 'Compendia Requirement' that excludes coverage for drugs merely because the specific use is not listed in standard reference books. The court reasoned that under Chevron Step One, Congress had clearly spoken through the text of the Medicare Act. The statute defines a covered drug as one approved by the FDA, and adds that 'such term includes' uses for medically accepted indications. The court determined that the word 'includes' is expansive and illustrative, not restrictive, citing the Social Security Act's own definition that 'includes' shall not be deemed to exclude other things. Furthermore, the court applied the canon of expressio unius est exclusio alterius, noting that because the statute contained a specific 'Exclusions' section, the Secretary could not implicitly add new exclusions via the definition section. Finally, the court noted that the Secretary's interpretation would lead to unreasonable results, particularly for rare diseases where clinical trials and compendia listings are difficult to obtain.
Analysis:
This decision is significant in administrative law and healthcare regulation as it limits the deference courts give to agency interpretations of the Medicare Act under Chevron. By strictly applying statutory canons of construction—specifically the meaning of 'includes' and expressio unius—the court invalidated a regulation (42 C.F.R. § 423.100) that restricted patient access to off-label drug treatments. The ruling acknowledges the practical reality that effective treatments for rare diseases often lag behind official compendia listings. This case establishes that while agencies have rule-making power, they cannot promulgate regulations that effectively rewrite broad statutory definitions to create exclusions Congress did not authorize.
