[00:00:00] Speaker 02:
Good morning.

[00:00:03] Speaker 00:
Good morning, your honor.

[00:00:04] Speaker 00:
May it please the court?

[00:00:05] Speaker 00:
Alice Bares on behalf of the three named plaintiffs and a putative class of Medicare beneficiaries.

[00:00:11] Speaker 00:
And I'd like to reserve three minutes for rebuttal time.

[00:00:14] Speaker 02:
Keep your eye on the clock.

[00:00:14] Speaker 02:
We'll try to help you.

[00:00:15] Speaker 00:
Thank you.

[00:00:17] Speaker 00:
Medicare is not supposed to make people think that it will cover health care, that it won't, in fact, cover.

[00:00:23] Speaker 00:
But that's what happened to the plaintiffs.

[00:00:25] Speaker 00:
They had relied for years on Medicare coverage of a physician administered

[00:00:30] Speaker 00:
injectable drug, it had been covered by Medicare Part B, the general outpatient benefit that covers things like visits to a doctor's office.

[00:00:39] Speaker 00:
Medicare changed course.

[00:00:40] Speaker 00:
It determined that the drug was usually self-injected by patients.

[00:00:45] Speaker 00:
Part B coverage was discontinued.

[00:00:48] Speaker 00:
Medicare beneficiaries could look to the Medicare prescription drug benefit, Part D, instead.

[00:00:54] Speaker 00:
The catch was that Medicare did this with no advance notice to beneficiaries.

[00:00:59] Speaker 00:
The plaintiffs kept going to get the drug in outpatient settings.

[00:01:03] Speaker 00:
They racked up enormous liability before they had any idea that there was a coverage issue.

[00:01:09] Speaker 02:
That gets me to my first question.

[00:01:11] Speaker 02:
It seems to me that at bottom, this is really a claim for benefits.

[00:01:18] Speaker 02:
It seems like if you get your request at injunction that the plaintiffs will ultimately receive benefits in the form of a waiver of liability for past doses, which amounts to a lot of money.

[00:01:28] Speaker 02:
Isn't that correct?

[00:01:30] Speaker 00:
Um, so, uh, this gets at the, uh, are you speaking in terms of the collaterality issue, your honor?

[00:01:37] Speaker 02:
The reality is how do we square your profit, irreparable injuries with the possibility that you received back payment?

[00:01:44] Speaker 02:
sufficient to compensate you for the hard effort.

[00:01:48] Speaker 00:
That would be with regard to the two named plaintiffs who haven't exhausted their... Right.

[00:01:54] Speaker 02:
They're placed in the sad category, and I forget what it is, like $55,000 a piece or something like that.

[00:02:01] Speaker 00:
Yes.

[00:02:01] Speaker 02:
Isn't that right?

[00:02:02] Speaker 00:
Yes.

[00:02:02] Speaker 00:
And I would first just point out that there's no dispute that the lead named plaintiff, Mr. Beitzel, that the court has subject matter jurisdiction over his fully exhausted

[00:02:14] Speaker 00:
administrative claim.

[00:02:15] Speaker 00:
We part ways over the scope of the relief he has standing to pursue.

[00:02:20] Speaker 00:
But with regard to your question, Your Honor, the relief requested here would be an injunction prohibiting the Secretary from imposing or assigning liability in this situation.

[00:02:32] Speaker 00:
That is, in a situation where a drug has been or will be added to the self-administered list.

[00:02:38] Speaker 02:
But as a result, would your client not receive, if you will, a waiver of the past liability?

[00:02:44] Speaker 00:
Right, so that would be the result.

[00:02:50] Speaker 00:
And the question there is not a question regarding substantive eligibility for benefits.

[00:02:58] Speaker 00:
If we're talking about the issue in terms of

[00:03:03] Speaker 00:
whether this is a collateral issue with regard to waiver of exhaustion of administrative remedies for the other two named plaintiffs.

[00:03:10] Speaker 02:
And that's really what you're struggling against, right?

[00:03:12] Speaker 02:
Because if you're going to get some money, you have a whole different procedure you have to follow, right?

[00:03:17] Speaker 00:
Well, I would say that this is, with regard to those two plaintiffs, the actual issue is not substantive eligibility for benefits, but what notice is due.

[00:03:30] Speaker 00:
when Medicare discontinues coverage of a drug.

[00:03:33] Speaker 00:
And the Briggs case uses that phrase, substantive eligibility.

[00:03:37] Speaker 00:
We know the answer to the question of substantive eligibility for benefits here.

[00:03:42] Speaker 00:
The answer is no, because Medicare, when Medicare made this determination that the drug is usually self-administered, it excluded coverage from Part B, put it into this excluded coverage category.

[00:03:57] Speaker 00:
Now there's another question, liability and notice.

[00:04:02] Speaker 00:
That is a separate and distinct question.

[00:04:04] Speaker 00:
And I just also wanted to note that money can come or leave essentially beneficiaries' pockets, and the issue can still be considered collateral.

[00:04:15] Speaker 00:
So for example, in the Briggs case that I mentioned, the secretary was enjoined from withholding Social Security from people who were

[00:04:25] Speaker 00:
eligible but did not have a representative payee.

[00:04:29] Speaker 00:
And in the Harrow case, the court stated that was, quote, not a claim for benefits, but the plaintiffs there challenged a policy of demanding upfront reimbursement.

[00:04:41] Speaker 00:
In both cases, the secretary was enjoined

[00:04:45] Speaker 00:
from withholding payment for a reason other than eligibility or coverage.

[00:04:51] Speaker 00:
So those were collateral issues because the secretary was being enjoined from withholding for these other reasons.

[00:05:04] Speaker 00:
It didn't have to do with substantive eligibility, which is the core area of agency knowledge.

[00:05:12] Speaker 00:
an evasion of the administrative review system here on an issue that is core agency purview.

[00:05:20] Speaker 00:
And that's going back to the foundational case of Ringer, where the problem was not the inevitable flow of payment, but an evasion, an attempt to evade the administrative review system where... That gets me to another question.

[00:05:34] Speaker 02:
What's your best argument that the legislative act doctrine doesn't apply here?

[00:05:39] Speaker 00:
Yeah, so this case is controlled by the Green and Joachim cases, which involved a change in benefit eligibility rules, but that would have resulted in an arbitrary loss of benefits unless individuals had a procedure so that they could see if they would qualify under the revised rules.

[00:05:59] Speaker 00:
And I think this situation is particularly similar to the language that was used

[00:06:04] Speaker 00:
in the Joaquin case in the Seventh Circuit, which adopted the reasoning from the Green case.

[00:06:10] Speaker 02:
To apply Green, wouldn't we have to conclude that adding Stella or Stellara, if you say it correctly, to the sad list that the MACs have functionally changed the eligibility requirement for plaintiffs to receive Stadela?

[00:06:24] Speaker 00:
To receive, I'm sorry?

[00:06:25] Speaker 02:
Receive the medication they wanted, Stadela.

[00:06:27] Speaker 02:
I think it's called Zellara, I'm sorry.

[00:06:29] Speaker 00:
Yes, yes.

[00:06:31] Speaker 00:
And that certainly was, from the perspective of the beneficiaries, the eligibility rules had changed.

[00:06:36] Speaker 00:
They could no longer receive coverage of this medication as they had.

[00:06:42] Speaker 00:
And I would like to, if I may, point to the strikingly similar language in the Joaquin case, where the court found that the foster care families in that case, most, if not all, would have qualified

[00:06:56] Speaker 00:
for the benefits in that case under the revised rules, very similar to the language that the agency itself used in the federal register here.

[00:07:06] Speaker 00:
It's included in our addendum at page five, where it said that when a drug is found to be determined to be self-administered, it is no longer excluded from coverage by part B, but almost always will be covered by part D.

[00:07:25] Speaker 00:
very similar situation.

[00:07:28] Speaker 00:
So this is a, you know, not a case, this is a case where the individual loss of benefits, as in Green and Joaquin, does raise due process concerns.

[00:07:44] Speaker 01:
So assuming you get over the collateral issue, we go to number two in the Briggs analysis, which is that there is an irreparable injury that can't be remedied

[00:07:55] Speaker 01:
by retroactive payments.

[00:07:57] Speaker 01:
So here, right now, you have, your clients are out of money, but it could be cured with retroactive payments.

[00:08:07] Speaker 01:
Explain to me why that satisfies the irreparable injury requirement.

[00:08:11] Speaker 00:
Understood, Your Honor.

[00:08:12] Speaker 00:
Again, this is speaking only to the two named plaintiffs who don't have an exhausted claim.

[00:08:20] Speaker 00:
So what we have here is, for example, Ms.

[00:08:23] Speaker 00:
Craig with her ALJ hearing.

[00:08:26] Speaker 00:
The ALJ found that she is experiencing, quote, a difficult financial situation and mental stress.

[00:08:33] Speaker 00:
That's in the record at ER 39.

[00:08:36] Speaker 00:
That's an uncontested finding.

[00:08:38] Speaker 00:
She also paid $5,000 and she's relying on a patient assistance program for the drug that may not continue.

[00:08:47] Speaker 00:
She's alleged her distress and anxiety over this situation that's at ER 39 to 40.

[00:08:53] Speaker 00:
And so this meets the standard for it.

[00:08:56] Speaker 01:
So why can't that be solved with a retroactive payment?

[00:08:58] Speaker 00:
Well, because this, the ongoing distress, anxiety, difficult financial and mental stress,

[00:09:07] Speaker 00:
is one of these types of injuries that can't be erased.

[00:09:12] Speaker 00:
The entire effect and the experience cannot be erased by retroactive payments, or in this case, forgiveness of liability.

[00:09:23] Speaker 00:
Why?

[00:09:23] Speaker 00:
Because the very experience of going through this with facing enormous liability won't be entirely.

[00:09:32] Speaker 02:
With respect, people.

[00:09:34] Speaker 02:
Excuse me, counselor.

[00:09:35] Speaker 02:
With respect.

[00:09:36] Speaker 02:
People all the time are compensated in court for similar kinds of injuries in a monetary way.

[00:09:42] Speaker 02:
So in response to my colleague's question, you seem to be evading the issue.

[00:09:46] Speaker 02:
He's saying, why can't this be taken care of with payments?

[00:09:50] Speaker 02:
And I don't think you're answering his question.

[00:09:52] Speaker 00:
Well, we don't think this is the typical.

[00:09:55] Speaker 02:
It can be typical, but it can be satisfied with a payment of money.

[00:09:58] Speaker 00:
We actually don't think it's a typical case because of the very large amounts, not typical to owe $40,000 for a medication.

[00:10:08] Speaker 00:
The standard here is colorable claim for irreparable harm.

[00:10:11] Speaker 00:
And I would also point the court to the City of New York case from the Supreme Court, which talks about the fact that the very ordeal of having to go through

[00:10:21] Speaker 00:
the administrative process is something that court should be particularly sensitive to when the plaintiffs are requesting a procedure that they should have been afforded in the first place.

[00:10:32] Speaker 00:
And we've also cited the Davis case, district court case in this circuit, for the fact that these sort of psychological injuries that a person may experience cannot necessarily be erased by the eventual award of benefits later on.

[00:10:50] Speaker 00:
or in this case, forgiveness of liability.

[00:10:56] Speaker 00:
I would also state that in regard to this three factor analysis, just to take one step back on that, the case law counsels that the ultimate decision regarding waiver should be guided by the purposes underlying exhaustion and not solely by mechanical application.

[00:11:16] Speaker 00:
of the Eldridge factors, and that also comes from the City of New York case, from the Supreme Court, and the Johnson case in this circuit.

[00:11:24] Speaker 00:
I think that's particularly applicable here, where the problem is stemming from the agency applying its own policy.

[00:11:31] Speaker 00:
It's a policy we've identified in the Medicare Benefit Policy Manual.

[00:11:36] Speaker 00:
It is in our addendum at pages 41 to 42, where it says straight out, an advanced beneficiary notice is not required.

[00:11:46] Speaker 00:
when a denial is based on the self-administered drug exclusion.

[00:11:54] Speaker 00:
And nonetheless, a beneficiary can be charged.

[00:11:59] Speaker 00:
And so this is not a situation where it might make sense for an agency to have a first crack, fix the problem itself, and correct errors through administrative review.

[00:12:09] Speaker 00:
And that, I think, is really the sort of overriding issue here.

[00:12:16] Speaker 00:
is and really gets at the purposes behind exhaustion is this is sort of the quintessential futility situation because we have the problem stemming from the agency applying its own policy.

[00:12:27] Speaker 00:
And I would say it's the opposite of that Kildare situation, the Kildare situation which talked about an assemblage of individual or errors or irregularities.

[00:12:39] Speaker 00:
We have here an announced policy.

[00:12:41] Speaker 00:
The secretary is showing no intention of changing it.

[00:12:45] Speaker 00:
The case law also talks about when the policy being challenged as a directive of the secretary hit himself, we can assume that plaintiffs or claimants won't get favorable decisions in the administrative review system.

[00:13:01] Speaker 03:
Well, let me ask you this, prospectively.

[00:13:04] Speaker 03:
What are the injuries for these plaintiffs?

[00:13:07] Speaker 00:
Prospectively, the injuries?

[00:13:09] Speaker 00:
OK.

[00:13:09] Speaker 00:
So speaking in terms of Article III standing, Your Honor,

[00:13:14] Speaker 00:
Yeah, so the injury here is ongoing.

[00:13:21] Speaker 00:
In terms of Article III standing, there's no dispute that Mr. Beitzel, who has a fully exhausted claim, has an injury that's traceable to the challenge conduct of the secretary, and that's financial liability that he carries to this very day.

[00:13:40] Speaker 00:
And he's asking the court to redress that injury

[00:13:43] Speaker 00:
by prohibiting the secretary from imposing liability in this situation.

[00:13:49] Speaker 00:
So this is not like the Lyons case where the plaintiff needed to demonstrate another similar injury in the future.

[00:13:57] Speaker 00:
Rather, it's like the Harrow case where the injury was ongoing, also financial liability in that case.

[00:14:05] Speaker 00:
And the court specifically stated there that the plaintiff did not need to demonstrate

[00:14:10] Speaker 00:
that she would be injured in the same way in the future.

[00:14:13] Speaker 00:
The court said an injunction prohibiting the secretary from withholding reimbursement payments until after completion of the appeals process would have redressed Harrow's injury.

[00:14:25] Speaker 00:
So we disagree with the position of the district court and I believe of the government that the relief here could only apply, the requested relief here could only apply to drugs

[00:14:38] Speaker 00:
other than Stellara, the drug that the plaintiff was taking, that relief in connection with Stellara is not distinct from relief that would apply to other drugs.

[00:14:51] Speaker 00:
And that's because we have this continuing present adverse effect that will be remedied by an injunction.

[00:15:00] Speaker 00:
And I think the district court didn't regard that possibility of the continuing present

[00:15:07] Speaker 00:
adverse effects and was looking instead solely for a future threatened injury.

[00:15:13] Speaker 03:
Well, the plaintiffs here weren't notified in advance, so they kept incurring these costs.

[00:15:18] Speaker 03:
That's past relief.

[00:15:20] Speaker 03:
I'm trying to understand what's for these plaintiffs, what's the perspective relief?

[00:15:25] Speaker 03:
Wouldn't it be better for somebody who's on some other drugs that could be added to the sad list to be, wouldn't they be better plaintiffs?

[00:15:34] Speaker 00:
I'm not sure that I think, Your Honor, that I'm not sure I quite agree with the idea that what you're referring to as past relief doesn't also capture the harm that would befall to proposed class members.

[00:16:02] Speaker 00:
They have ongoing injuries that stemmed from the lack of notice that would be redressed by prohibiting the secretary from carrying forward with his current policy.

[00:16:20] Speaker 00:
So the injunction would essentially say, your current policy is unlawful.

[00:16:24] Speaker 00:
Here are the remedial consequences.

[00:16:29] Speaker 00:
you have to come up with a new way of dealing with this.

[00:16:33] Speaker 00:
And that would essentially mean that that would remedy the current injury that the plaintiff is currently suffering, experiencing, the financial liability that stemmed from the lack of notice.

[00:16:57] Speaker 00:
And it would also carry forward for proposed class members when new drugs are added to this list.

[00:17:07] Speaker 00:
So I think that that would actually capture both.

[00:17:11] Speaker 02:
You said you wanted to save about three minutes.

[00:17:13] Speaker 02:
You want to save your time?

[00:17:14] Speaker 02:
Yes.

[00:17:14] Speaker 00:
I would like to.

[00:17:15] Speaker 00:
Thank you, Your Honor.

[00:17:15] Speaker 02:
Very well.

[00:17:17] Speaker 02:
All right.

[00:17:18] Speaker 02:
Ms.

[00:17:19] Speaker 02:
Lin for, I'm sorry, wrong case.

[00:17:22] Speaker 02:
Apologize, Ms.

[00:17:24] Speaker 02:
Powell.

[00:17:28] Speaker 04:
Good morning, and may it please the court, Lindsay Powell for the government.

[00:17:32] Speaker 04:
To go back to where the court's questioning started, there are two claims here that are very closely related to each other.

[00:17:38] Speaker 04:
And one of those claims, as the question suggested, is a claim for payment under the Medicare statute.

[00:17:44] Speaker 04:
And so what plaintiffs are seeking under that claim is under 42 US code 1395 PP, which provides the conditions prerequisite to payment for items and services

[00:17:57] Speaker 04:
notwithstanding determination of disallowance.

[00:17:59] Speaker 04:
And so their theory is, even though everyone agrees that there is no entitlement to coverage of these drugs anymore under Part B, that they should still get payment of Medicare benefits because they didn't have the right notice.

[00:18:15] Speaker 04:
That is a claim for benefits.

[00:18:16] Speaker 04:
And their arguments about what processes do, their other claim, is not in any sense collateral to that claim

[00:18:24] Speaker 04:
for payment of benefits.

[00:18:26] Speaker 04:
The two go part and parcel with each other.

[00:18:28] Speaker 04:
Both are fundamentally about whether the plaintiffs had the notice that they say they were entitled to.

[00:18:34] Speaker 04:
And so for that reason, the district court was correct in concluding that the claims that were not exhausted are not eligible for waiver of exhaustion here.

[00:18:44] Speaker 04:
That's enough for the court.

[00:18:47] Speaker 04:
The collaterality question is a sufficient basis for the court

[00:18:51] Speaker 04:
affirm on that ground, but I do want to make one point.

[00:18:53] Speaker 01:
But don't you think the futility exception applies here?

[00:18:58] Speaker 01:
It doesn't seem reasonable to me that the agency is going to change its mind.

[00:19:05] Speaker 01:
Am I wrong on that?

[00:19:06] Speaker 04:
Well, two things, Your Honor.

[00:19:08] Speaker 04:
First, for waiver of exhaustion to apply the... No, I understand the other requirements.

[00:19:12] Speaker 01:
I'm asking about futility.

[00:19:14] Speaker 04:
Yes.

[00:19:14] Speaker 04:
So with respect to futility, what 1395 PP requires, and so again, this is taking plaintiff's argument on its terms.

[00:19:22] Speaker 04:
This is not, we think, sort of categorically that the statute doesn't apply.

[00:19:27] Speaker 04:
But what they are asking the court to find, what they were asking the agency to find is that they are entitled to payment of benefits

[00:19:34] Speaker 04:
because they lack notice.

[00:19:35] Speaker 04:
And another requirement is that the providers lack notice.

[00:19:39] Speaker 04:
And so the terms of the statute is that both such individual and such provider did not know and could not reasonably have been expected to know.

[00:19:46] Speaker 04:
And those knowledge terms, particularly with respect to the provider, those are fact questions that have not been developed.

[00:19:54] Speaker 04:
So we have here, in terms of the notice, a designated website that the MACs put up these designation determinations.

[00:20:03] Speaker 04:
There was a robust comment process here.

[00:20:05] Speaker 04:
We know that lots of people, in fact, did have notice about the plan to designate Stellara as usually self-administered.

[00:20:14] Speaker 04:
A lot of groups weighed in.

[00:20:15] Speaker 04:
There was a fairly long period of time, about a year between when that notice was provided and when the designation took effect.

[00:20:22] Speaker 04:
And so the question whether providers knew or should have known about this designation is absolutely something that the agency

[00:20:29] Speaker 04:
could develop if given the opportunity, and so defeats the futility point.

[00:20:34] Speaker 01:
Listening to your answer, it doesn't seem that the agency believes at all that there was improper notice.

[00:20:39] Speaker 01:
Is that true?

[00:20:40] Speaker 01:
That is true, Your Honor.

[00:20:42] Speaker 01:
So why doesn't futility exception apply to that person?

[00:20:47] Speaker 01:
Well, in order for... I mean, it seems to me that the agency's made up its mind on this question on notice and on entitlement to benefits.

[00:20:55] Speaker 01:
So you're asking us to send it back so that you can say no, basically.

[00:21:01] Speaker 04:
The standard is... The inquiry is not so limited, Your Honor.

[00:21:06] Speaker 04:
So if you look at a case like Kaiser, even where it was clear that the administrative process would not result in the relief that plaintiffs wanted,

[00:21:16] Speaker 04:
it was found that exhaustion would still serve the purpose of that process by allowing the agency to develop the claims and build a record.

[00:21:22] Speaker 04:
And so here, for plaintiffs to prevail, you know, assuming the analysis should look as they say, these facts would need to be developed and a finding would need to be made about both in terms of beneficiaries and providers who had what notice when, because if the providers did know or should have known, it affects who's supposed to pay, whether it's Medicare or whether it's the providers themselves.

[00:21:45] Speaker 04:
Under their theory, these facts matter, the record matters.

[00:21:48] Speaker 04:
And so even if it seems unlikely that the agency would award relief through this process, it's not futile in the sense that exhaustion still serves an important function.

[00:21:58] Speaker 01:
Do you agree that the plaintiffs are entitled to Stellara under Part D?

[00:22:03] Speaker 01:
So I do want to... They basically argued that, do you?

[00:22:08] Speaker 04:
If I may, I want to step back in answering that.

[00:22:11] Speaker 04:
So the Part B and Part D are

[00:22:13] Speaker 04:
are very separate benefits under Medicare.

[00:22:16] Speaker 04:
And nothing about Part D, its coverage of Stellara, has changed in this.

[00:22:20] Speaker 04:
So Part D coverage of Stellara always was or wasn't available under your Part D plan, depending on your Part D plan and what that particular plan provides.

[00:22:30] Speaker 04:
And the terms of coverage, even if it is covered, vary from Part B coverage.

[00:22:34] Speaker 04:
The only thing that has changed here is the Part B coverage.

[00:22:37] Speaker 01:
No, I understand that.

[00:22:38] Speaker 01:
I just said, do you agree they're entitled to Stellara under Part D?

[00:22:42] Speaker 04:
It would depend on the terms of their plan.

[00:22:45] Speaker 04:
And it would be, again, depending on the plan, would have been entitled to still our coverage under Part D.

[00:22:52] Speaker 04:
all along.

[00:22:52] Speaker 04:
That is not a new circumstance.

[00:22:54] Speaker 01:
No, I understand that.

[00:22:55] Speaker 01:
That results.

[00:22:56] Speaker 01:
So if I can distill your answer so I understand it, what you're saying is, if Part B had been in place, they were automatically entitled to STILARA, and if they had eligibility under Part D, you believe there are some eligibility requirements and you don't know whether they meet them or not.

[00:23:16] Speaker 01:
Is that right?

[00:23:18] Speaker 01:
I'm just trying to figure out.

[00:23:20] Speaker 01:
I mean, they've said nobody contests that we're a title that's still under Part D. I'm just trying to find out if you agree with that or not.

[00:23:28] Speaker 04:
So it will depend on the individual beneficiaries' plan and their coverage.

[00:23:35] Speaker 04:
And I'm not aware of the coverage available to each plaintiff.

[00:23:42] Speaker 04:
But I think there is some suggestion in their briefing

[00:23:46] Speaker 04:
the eligibility, the availability of Part D coverage somehow change over the course of these proceedings in a way that's relevant.

[00:23:54] Speaker 04:
And so the stepping back I'd like to do, if I may, is trying to fit this to the due process theory.

[00:24:00] Speaker 04:
So typically, we talk about due process as protecting against the erroneous deprivation of a benefit.

[00:24:07] Speaker 04:
Here, the benefit that changed is

[00:24:10] Speaker 04:
Part B coverage of Stellara, and everyone agrees there is no ongoing entitlement.

[00:24:15] Speaker 04:
No amount of notice process hearing showing would establish that plaintiffs, these plaintiffs or anyone else could obtain Part B coverage of Stellara.

[00:24:26] Speaker 04:
That's just not.

[00:24:28] Speaker 04:
There's no erroneous deprivation, there's no argument.

[00:24:30] Speaker 02:
Perhaps I misunderstood.

[00:24:31] Speaker 02:
I thought that until the change was made to add Stellara to the SAD provision, that it was clear that they were entitled to Stellara under Part B because they had been paid all along.

[00:24:44] Speaker 02:
Isn't that correct?

[00:24:45] Speaker 02:
Yes, that's correct.

[00:24:46] Speaker 02:
So what changed?

[00:24:47] Speaker 02:
The government changed its mind.

[00:24:50] Speaker 02:
Right.

[00:24:50] Speaker 02:
And the question seems to be, was adequate notice given?

[00:24:53] Speaker 02:
Or you're claiming, is any notice required?

[00:24:57] Speaker 04:
Right.

[00:24:57] Speaker 04:
And the answer, what I was trying to describe and distinguish this from sort of the typical due process case.

[00:25:05] Speaker 04:
So normally we talk about when there is a change, and this is plaintiffs rely on Green and Joaquin in principle for this.

[00:25:13] Speaker 04:
And the changes there were to eligibility requirement for a particular benefit that the plaintiffs had been receiving and urged that they were entitled to continue receiving notwithstanding the change.

[00:25:27] Speaker 04:
Here, there is no question that plaintiffs are not entitled to continue receiving Part B coverage, right?

[00:25:33] Speaker 04:
That is the benefit.

[00:25:35] Speaker 04:
There was a changes to that benefit that applies categorically.

[00:25:38] Speaker 04:
It doesn't depend in any way on the particular circumstances of these plaintiffs.

[00:25:42] Speaker 04:
So they don't want a hearing to show their entitlement to Part B coverage.

[00:25:47] Speaker 04:
There's no Part B coverage.

[00:25:49] Speaker 04:
It would have helped us to know about this change so that we could arrange our affairs.

[00:25:53] Speaker 04:
We would have made different choices.

[00:25:54] Speaker 04:
We wouldn't have used Stillara.

[00:25:55] Speaker 01:
Or they would have applied under Part D. The issue here is, and you know you're familiar with medical billing, obviously everybody thought it was going to be covered under Part B because it had before us in this case, so they transmitted the claim under Part B.

[00:26:16] Speaker 01:
You know, that's the argument in this case, is that nobody knew in time to make a change.

[00:26:22] Speaker 01:
And you didn't, as I understand it, you just made the change on a website, you didn't put it in the Federal Register, right?

[00:26:28] Speaker 01:
That's correct, although the... I know it's a prominent website, but that's all you did, right?

[00:26:33] Speaker 04:
Well, in a way that was in fact effective to...

[00:26:37] Speaker 04:
lead to a robust comment process.

[00:26:39] Speaker 04:
This is the website where these sorts of changes are announced.

[00:26:43] Speaker 01:
But the normal claims handling person at a medical clinic is just not going to check the website to see how things change, generally speaking.

[00:26:51] Speaker 01:
Speaking from experience.

[00:26:53] Speaker 04:
I think that's a fact question, but as plaintiffs acknowledge, these are websites that are put up there to inform providers.

[00:26:59] Speaker 04:
And so, one, whether the

[00:27:02] Speaker 04:
whether that notice is adequate, at least as to providers, I think is a very real question.

[00:27:07] Speaker 04:
But I think the federal register point is a great one.

[00:27:09] Speaker 04:
All the time we accept that federal register notice is adequate for changes that broadly affect categories of people.

[00:27:16] Speaker 04:
And it's not as though individuals on the ground are routinely checking the federal register to see how their rights are being affected, but it suffices.

[00:27:25] Speaker 01:
Correct.

[00:27:25] Speaker 01:
Now let me get to my ultimate question on this.

[00:27:29] Speaker 01:
Isn't it the duty of the courts to decide due process and not the agency?

[00:27:37] Speaker 01:
Because your argument is, look, there's a fact issue on notice.

[00:27:41] Speaker 01:
I take that.

[00:27:43] Speaker 01:
But the agency doesn't decide constitutional questions.

[00:27:48] Speaker 01:
Courts do.

[00:27:49] Speaker 01:
So why isn't this a fact question for the court rather than the agency in the exhaustion process?

[00:27:56] Speaker 04:
The way plaintiffs have presented these claims, there is emphatically a claim for benefits.

[00:28:03] Speaker 04:
And the exhaustion inquiry says where there's a claim for benefits,

[00:28:07] Speaker 04:
You just have to go to the agency first.

[00:28:08] Speaker 04:
It then comes to the courts.

[00:28:09] Speaker 04:
Our theory doesn't prevent the courts from ultimately deciding these questions.

[00:28:13] Speaker 01:
The odd thing I find about their complaint, and I'm going to ask about it, I don't see a claim for relief for benefits.

[00:28:20] Speaker 01:
I see a claim for prospective relief.

[00:28:23] Speaker 01:
I mean, I'm looking at their request for relief.

[00:28:26] Speaker 01:
It doesn't include a claim for past benefits.

[00:28:29] Speaker 01:
So where does that leave you?

[00:28:31] Speaker 01:
Well, to the extent... But you're saying they are asking for past benefits.

[00:28:35] Speaker 01:
Their complaint says nothing about it.

[00:28:38] Speaker 04:
And there may be a mismatch.

[00:28:40] Speaker 04:
I was having some trouble tracking the relationship between the prospective relief sought and how it remedies past harm.

[00:28:46] Speaker 04:
It has been and continues to be our position, of course, that the broad prospective relief that seeks to compel notice as to all future designations of drugs that these plaintiffs don't allege that they take or will

[00:29:02] Speaker 04:
affect the harms that they have suffered is not redressable and so not properly before the court.

[00:29:10] Speaker 04:
I do, I worry that I haven't been as clear as I hope to be about the part B, part D difference, but the, it is- I think we understand, but go ahead.

[00:29:19] Speaker 04:
I just wanted to acknowledge it.

[00:29:20] Speaker 04:
It is of course unfortunate the way things played out here.

[00:29:24] Speaker 04:
It would be frustrating to anyone to have been receiving a benefit and

[00:29:28] Speaker 04:
have it covered and then without your realizing to have that coverage not be provided in the same way.

[00:29:33] Speaker 04:
That is not ideal, that doesn't mean it has a constitutional dimension.

[00:29:39] Speaker 04:
And the fact that there are alternatives that might be available to people in this position if they have Part D plans that they could, if they had the Part D plan already, they could submit for that very same

[00:29:53] Speaker 04:
drug could submit it to Part D potentially.

[00:29:56] Speaker 04:
They can certainly switch to it in the future.

[00:29:57] Speaker 04:
There are different options, but none of those fits onto the due process analysis in the way these cases discuss.

[00:30:05] Speaker 02:
You seem to be saying, if I understand you correctly, that there are lots of people in the country who have claims.

[00:30:13] Speaker 02:
And you can't notify everybody.

[00:30:14] Speaker 02:
Putting it on the website is adequate.

[00:30:18] Speaker 02:
That satisfies due process.

[00:30:20] Speaker 02:
Is that your position?

[00:30:21] Speaker 04:
That is certainly our position.

[00:30:22] Speaker 04:
And then I think that my second point is that ultimately the Part D question here is a red herring.

[00:30:29] Speaker 04:
That the question about notice when we're talking about the deprivation of a protected entitlement, the deprivation here was as to Part B coverage.

[00:30:38] Speaker 04:
And so the analysis is as to Part B. Right.

[00:30:40] Speaker 01:
I mean, their argument is that they were denied due process because you didn't give them notice of the changes in Part B.

[00:30:46] Speaker 01:
That's the way I take it.

[00:30:48] Speaker 01:
And that seems to be a constitutional question for the courts, not the agency.

[00:30:53] Speaker 01:
Your reaction is what they're really seeking is a claim for benefits, even though that's not in their complaint.

[00:31:01] Speaker 01:
And so therefore, the agency should have the first crack at it.

[00:31:05] Speaker 01:
Am I summarizing it correctly?

[00:31:06] Speaker 01:
That's correct, Your Honor.

[00:31:07] Speaker 04:
Yes.

[00:31:07] Speaker 04:
And where is here that the two claims overlap in the way they do?

[00:31:12] Speaker 04:
So this is very much unlike Eldridge and unlike Briggs, where

[00:31:16] Speaker 04:
The question about process is not adjacent to the question for substantive relief.

[00:31:22] Speaker 04:
The entire theory that they should get paid is because of notice.

[00:31:26] Speaker 04:
And so the question of notice on the due process side is not collateral in any relevant sense.

[00:31:31] Speaker 04:
These two claims are part and parcel with each other.

[00:31:34] Speaker 04:
And so all that means is that they have to exhaust.

[00:31:36] Speaker 04:
It doesn't mean the court doesn't get to consider it.

[00:31:39] Speaker 04:
But it does mean under the clear precedent of Briggs that you go to the agency first, and there may be these fact questions.

[00:31:46] Speaker 04:
You know, what notice did both beneficiaries and providers have won?

[00:31:49] Speaker 04:
And then it can come to the court after.

[00:31:51] Speaker 04:
So the court absolutely can still decide the constitutional question.

[00:31:54] Speaker 01:
But I think you've already answered this question.

[00:31:59] Speaker 03:
Regardless of what they did with regard to exhausting their administrative remedies, they weren't ever going to win.

[00:32:09] Speaker 04:
The government's position that they are not eligible for the for the payment or for the additional notice But that doesn't as far as futility goes it doesn't mean there's still not a record That would need to be developed to support their theory So it's not just our defense that matters and in figuring out whether exhaustion serves a purpose of exhausted administrative remedies is simply to develop a record of

[00:32:31] Speaker 03:
It's not that they'd ever have a chance of prevailing.

[00:32:33] Speaker 03:
Is that what you're saying?

[00:32:34] Speaker 04:
In this case, that's the main function, and that has been credited in case after case by this court as one of the principle functions that exhaustion is supposed to serve is to allow for that development of a record and consideration by the agency.

[00:32:45] Speaker 03:
Well, what record would they develop?

[00:32:47] Speaker 03:
How is this record going to do?

[00:32:48] Speaker 04:
What is it?

[00:32:49] Speaker 04:
One of the questions that is not answered by the record so far is what notice providers had or should have had.

[00:32:56] Speaker 04:
And under 1395 PP, that is, again, under their theory,

[00:33:01] Speaker 04:
that is a necessary part of determining whether they would be eligible for payment of benefits here.

[00:33:13] Speaker 01:
that they were deprived of the right of constitutional notice and therefore entitled to benefit.

[00:33:21] Speaker 01:
Because the way I see playing out is this.

[00:33:24] Speaker 01:
Please correct me if I'm wrong.

[00:33:25] Speaker 01:
They filed their claim for benefits.

[00:33:27] Speaker 01:
You say no.

[00:33:28] Speaker 01:
They say, we didn't get notice.

[00:33:29] Speaker 01:
You say, that's beyond our jurisdiction because that's a due process argument.

[00:33:33] Speaker 01:
Take it to the court.

[00:33:35] Speaker 01:
But we're going to wait for all the appeals to go through so we can say no, so then you can make the argument to the court.

[00:33:42] Speaker 01:
And I don't mean to be facetious, but isn't that the way this plays out?

[00:33:47] Speaker 01:
Because the agency is not going to make a due process determination.

[00:33:54] Speaker 04:
Again, I think we need to take the claims as they are actually presented by the plaintiffs and what they are arguing.

[00:34:00] Speaker 04:
And under the 1395 PP, that claim itself, the notice question, doesn't necessarily need to have constitutional dimension.

[00:34:08] Speaker 04:
It just happens to overlap with their due process claim, but the statute

[00:34:12] Speaker 04:
itself doesn't ask whether the notice was constitutionally sufficient.

[00:34:16] Speaker 04:
It just says whether both the individual and the provider did not know and could not reasonably have been expected to know.

[00:34:21] Speaker 04:
That's a fact question.

[00:34:22] Speaker 04:
And so that is the type of thing in the ordinary course.

[00:34:25] Speaker 04:
I mean, the agency answers that all the time with other types of waiver of liability questions.

[00:34:30] Speaker 04:
So it's not unusual for that to go through.

[00:34:33] Speaker 04:
And the fact that the claims

[00:34:34] Speaker 04:
are so interlocked here, weighs against a waiver of exhaustion because the due process claim is not collateral.

[00:34:45] Speaker 04:
It's not like in Eldridge where you have a completely separate fact question about entitlement to disability benefits that's going to turn on presentation of medical evidence and those sorts of issues.

[00:34:57] Speaker 04:
That's collateral to how much process was due.

[00:35:01] Speaker 04:
Do you get a pre-deprivation hearing?

[00:35:02] Speaker 04:
Here the question of notice is the very basis on which they seek payment from the agency.

[00:35:07] Speaker 01:
They say, because we didn't know, you should pay for the injections, even though they weren't covered under Part B. So I gather, based on your argument and perception, that the claim, as it were, for past benefits is not one you're capable of settling outside the administrative agency.

[00:35:30] Speaker 04:
As in, like, negotiated settlement between the parties?

[00:35:33] Speaker 04:
That's not something I can speak to here.

[00:35:36] Speaker 02:
Just asking.

[00:35:37] Speaker 02:
Doesn't that get to Judge Thomas's question about futility, though?

[00:35:42] Speaker 02:
If we send this back, they don't get anywhere.

[00:35:47] Speaker 02:
Right?

[00:35:49] Speaker 04:
But, again, with... So, two things.

[00:35:52] Speaker 04:
One, if the government is right about collaterality, as the district court held,

[00:35:58] Speaker 04:
The rest of it doesn't matter, right?

[00:35:59] Speaker 04:
That would be, there's no waiver of exhaustion then.

[00:36:02] Speaker 04:
With respect to, and there were some questions raised earlier about irreparable harm as well, so some doubt as to the second prong.

[00:36:09] Speaker 04:
And then on the third prong, on futility, that it is not the only question as to whether the agency is likely to reverse a policy in the course of that adjudication.

[00:36:20] Speaker 04:
The plaintiffs have presented a theory for payment of benefits that raises fact questions, and those are precisely the types of questions.

[00:36:27] Speaker 04:
that ordinarily and should go to the agency in the first instance.

[00:36:30] Speaker 04:
So if they want payment under 1395 PP, they need to make certain showings and those depend on what, knowing what notice both the beneficiaries and the providers had and all the time those sorts of claims go through.

[00:36:45] Speaker 04:
The fact that they are accompanied by overlapping due process claims here

[00:36:50] Speaker 04:
just underscores the lack of collaterality and doesn't mean that we should skip over that process.

[00:36:54] Speaker 01:
Well, it's a practical matter.

[00:36:55] Speaker 01:
I mean, we do hear a lot of exhaustion arguments from the government.

[00:37:00] Speaker 01:
But what we don't like is to say, OK, go exhaust.

[00:37:05] Speaker 01:
And then we're back here two or three years later hearing the same arguments we're hearing today, although we've made a good presentation they have as well.

[00:37:13] Speaker 01:
But that is not very efficient in terms of judicial economy.

[00:37:19] Speaker 04:
that may call into doubt some of the wisdom of the channeling process and the way the doctrine has evolved.

[00:37:28] Speaker 04:
But in terms of how the doctrine apply here, we certainly stand by our position.

[00:37:32] Speaker 04:
And in terms of these claims, as opposing counsel noted, there is one claim that is fully exhausted and presented for review.

[00:37:40] Speaker 04:
There's still the additional threshold question about the scope of the relief

[00:37:45] Speaker 04:
that Mr. Beitzel has standing to seek.

[00:37:49] Speaker 04:
But he did fully exhaust one claim.

[00:37:51] Speaker 04:
And so those merits questions are presented here.

[00:37:54] Speaker 04:
And these particular claims can be resolved as far as that goes.

[00:37:59] Speaker 02:
Your time is up.

[00:38:00] Speaker 02:
Let me ask my colleague whether or not there's additional questions.

[00:38:02] Speaker 02:
I think not.

[00:38:03] Speaker 02:
Thank you very much.

[00:38:03] Speaker 02:
Thank you.

[00:38:04] Speaker 02:
Ms.

[00:38:04] Speaker 02:
Beers, you have a little bit of time rebuttal.

[00:38:12] Speaker 00:
Thank you, Your Honor.

[00:38:14] Speaker 00:
Yes, I'm glad that the Council for the Secretary brought up the issue of provider knowledge because, in fact, the Secretary's policy has taken that off the table.

[00:38:29] Speaker 00:
And it may just help to quickly explain what normally happens under Medicare's existing system is when a beneficiary goes to a doctor, if the provider expects that Medicare will not cover an item or service,

[00:38:42] Speaker 00:
the patient must receive a written advance beneficiary notice and the patient can then make a decision about whether to assume liability.

[00:38:51] Speaker 00:
What's happened here with the policy that the secretary has crafted here is the secretary has essentially carved out this situation from the normal notice and liability rules.

[00:39:02] Speaker 00:
And it's really particularly unfair because the secretary is treating this situation as if this is a service that Medicare never covers so that the

[00:39:13] Speaker 00:
the protective provisions in the statute are simply aren't triggered.

[00:39:19] Speaker 00:
So like it's something like cosmetic surgery or dental services.

[00:39:23] Speaker 00:
So if you, again, pointing to that, the policy in the addendum pages 41 to 42, provider knowledge doesn't matter.

[00:39:35] Speaker 00:
It says because this, you know, the, if the,

[00:39:42] Speaker 00:
If the drug is excluded under self-administered drug exclusion, an ABN is not required.

[00:39:52] Speaker 00:
That's it.

[00:39:53] Speaker 00:
Provider knowledge doesn't come into the picture.

[00:39:55] Speaker 00:
Provider knowledge is actually taken out of the picture.

[00:39:58] Speaker 00:
Provider may nonetheless charge the beneficiary.

[00:40:01] Speaker 00:
And I think that becomes very clear

[00:40:03] Speaker 00:
If in the First Amendment complaint, you look at what happened with Ms.

[00:40:07] Speaker 00:
Craig in her ALJ hearing, that's at ER 39, I believe, where the ALJ said, I logically assumed that the provider had an obligation here to inform the patient of the non-coverage.

[00:40:23] Speaker 00:
She went back and looked the policy under this policy.

[00:40:27] Speaker 00:
I was constrained, and I had to find the beneficiary liable.

[00:40:31] Speaker 00:
There were no protections.

[00:40:33] Speaker 00:
So this is actually a clean legal issue, and provider knowledge has been taken out of the picture.

[00:40:40] Speaker 00:
And as for the statute, which is in our Addendum 3, where it talks about beneficiary or provider knowledge,

[00:40:52] Speaker 00:
In subsection B, which is at addendum four, it talks about cases where the provider did not know.

[00:41:02] Speaker 00:
So these are not, this is really, under the policy here, that's just off the table.

[00:41:11] Speaker 00:
And there's a clean legal issue and there's no reason to assume that

[00:41:19] Speaker 00:
the secretary would change this, and that really is the root of the problem here, that the fact that the provider doesn't, that even if the provider knew, there's no obligation to tell the patient.

[00:41:33] Speaker 01:
So are you not asking for reimbursement of the past claims?

[00:41:39] Speaker 00:
Not asking for reimbursement?

[00:41:41] Speaker 00:
Right.

[00:41:42] Speaker 00:
The claim is for waiver of

[00:41:46] Speaker 00:
of liability.

[00:41:48] Speaker 01:
It's that this... No, your complaint only speaks of prospective relief.

[00:41:54] Speaker 01:
In answer to, I believe, one of Judge Smith's questions, you said, well, of course they'll get reimbursed.

[00:42:02] Speaker 01:
And their argument is, look, if it's a claim for reimbursement, you've got to exhaust it.

[00:42:06] Speaker 01:
So are you asking for reimbursement or not?

[00:42:10] Speaker 00:
We're asking that liability be waived.

[00:42:14] Speaker 00:
So if I misspoke before, it would be the application, the enjoyment that the court would only be enjoining the secretary from assigning liability, and then that would be applied to the plaintiff.

[00:42:30] Speaker 00:
So their liability would be forgiven.

[00:42:31] Speaker 01:
If you're not asking for reimbursement for past claims, how do you satisfy the irreparable injury portion of this?

[00:42:40] Speaker 01:
Your argument on irreparable injury was it's causing financial harm.

[00:42:45] Speaker 01:
And you're relying on then the denial of the past claims, not prospective.

[00:42:51] Speaker 00:
I would say that our argument on irreparable injury for collaterality is actually

[00:43:00] Speaker 00:
relying on the psychological anxiety and stress that's being caused.

[00:43:06] Speaker 00:
Because they're not getting reimbursed.

[00:43:08] Speaker 00:
Because they're not getting reimbursed.

[00:43:10] Speaker 00:
Partly because they're not getting reimbursed because of the fear of collection efforts that Ms.

[00:43:16] Speaker 00:
Goldstein has alleged and the possibility of not getting the drug again in the future.

[00:43:26] Speaker 00:
For Ms.

[00:43:27] Speaker 00:
Craig, she had terrible symptoms when

[00:43:29] Speaker 00:
she had a gap in coverage before.

[00:43:31] Speaker 00:
And again, also being sensitive to the fact that this is a procedural claim.

[00:43:39] Speaker 00:
So that's for collaterality, different for Article III study.

[00:43:42] Speaker 00:
Time is up.

[00:43:43] Speaker 02:
Any additional questions by my colleagues?

[00:43:44] Speaker 02:
No, no, thank you.

[00:43:44] Speaker 02:
All right, thanks to both counsel for your argument.

[00:43:46] Speaker 02:
We appreciate it.

[00:43:48] Speaker 00:
Thank you, Your Honor.

[00:43:48] Speaker 02:
Case of Beisel versus Becerra is submitted.