CENTER FOR INNOVATIONS IN EVALUATIVE MEDICINE LLC WARNER ORTHOPEDICS AND WELLNESS v. XAVIER BECERRA SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES (2026)

RULING

Before the Court is Plaintiff Center for Innovations in Evaluative Medicine, LLC d/b/a Warner Orthopedics and Wellness's (“Plaintiff”) request for judicial review pursuant to 42 U.S.C. § 405(g) of the final decision of Defendant Xavier Becerra—as Secretary of the United State Department of Health and Human Services (the “Secretary”)—denying Medicare Part B coverage for orthopedic treatments it administered to numerous patients in 2020 and 2021.¹ The Secretary filed an opposition,² to which the Plaintiff replied.³ The Court has considered the law, arguments, and submissions of the parties and is prepared to rule. For the following reasons, the Court affirms the Secretary's decision.

I. BACKGROUND

Plaintiff is a limited liability company organized and existing under the laws of Delaware, with its principal place of business in Louisiana, that provides specialized orthopedic services to Medicare-qualified patients. Between September 17, 2020, and October 27, 2021, it injected amniotic membrane-derived products—namely, (1) WoundEx Flow, (2) Axolotl Ambient, (3) FlowerAmnioFlo, and (4) Fluid Flow (‘the Products”)—into nineteen (19) Medicare beneficiaries. The stated purpose for administering these treatments was to repair, supplement, and restore the connective tissue of the recipient beneficiaries, for whom more conservative treatment plans had proven unsuccessful.⁴ Plaintiff subsequently submitted claims for Medicare Part B coverage for each injection, citing Health Common Procedure Code System (“HCPCS”) codes Q4162, Q4215, Q4177, and Q4206 for the above-listed Products, respectively.⁵ While the claims were initially paid by Medicare, a post-payment audit conducted by Qlarant, a Unified Program Integrity Contractor (“UPIC”), determined the claims had been paid in error, and the funds were thereafter recouped.⁶ As discussed more thoroughly below, the Secretary—following an administrative appeals process—ultimately denied coverage for almost all the requests,⁷ leading Plaintiff to seek judicial review before this Court.

II. LEGAL STANDARD

Medicare only covers items and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”⁸ The Secretary of Health and Human Services has the authority to decide “whether a particular medical service is ‘reasonable and necessary,’ ” in addition to the authority to decide “the means by which she implements her decision;” typically, this is done “by [either] promulgating a generally applicable rule or by allowing individual adjudication.”⁹ In the latter case, as is relevant here, the determination of whether a service is “reasonable and necessary” is made by adjudicators assessing if the service is (1) safe and effective, (2) not experimental or investigational, and (3) appropriate—factors set out in the Medicare Program Integrity Manual (“MPIM”).¹⁰ It is well-established that, throughout the review process, the claimant “has the burden of proving entitlement to Medicare benefits.”¹¹

III. ADMINISTRATIVE HISTORY

A brief overview of the administrative review process is helpful to understand the nature of Plaintiff's claims. Medicare coverage requests are initially adjudicated by private contractors known as Medicare Administrative Contractors (“MACs”).¹² A claimant who is denied reimbursement may pursue a five-step agency review process. The first step allows the claimant to request a redetermination by the MAC, which is conducted by employees who were not involved in the initial coverage decision.¹³ If the MAC still denies coverage, the claimant may then seek reconsideration from a Qualified Independent Contractor (“QIC”).¹⁴ If the QIC's decision is unfavorable, the claimant may request a hearing before an Administrative Law Judge (“ALJ”).¹⁵ If the ALJ, too, denies coverage, the claimant may appeal to the Medicare Appeals Council (“the Council”),¹⁶ who may also review ALJ decisions on its own motion upon a referral from the Center for Medicare and Medicaid Services (“CMS”).¹⁷ The Council's decision is the agency's final coverage determination.¹⁸ After satisfying all four stages of administrative appeal—i.e., after the Council has rendered a decision—a still dissatisfied claimant may commence a civil action for judicial review in the appropriate federal district court.¹⁹ With this background in mind, the Court will turn to the facts of this case.

As mentioned previously, the MAC in this case, Novitas Solutions, Inc. (“Novitas), initially paid Plaintiff's claims in full. Subsequently, the UPIC Qlarant conducted a post-payment review and determined the funds has been paid erroneously, leading to the issuance of two demand letters for an overpayment amount of $184,395.48.²⁰

Plaintiff subsequently requested a redetermination, which Novitas reviewed and denied on grounds that, pursuant to a July 22, 2020 U.S. Food & Drug Administration (‘FDA”) Consumer Alert, the injected amniotic membrane-derived Products had not been approved for the treatment of any orthopedic condition.²¹ Reconsideration yielded the same result, with a QIC finding the services provided had not been proven safe and effective for treating the beneficiaries' conditions and were, therefore, investigational and/or experimental under the circumstances.²² Plaintiff next sought review by an ALJ who, following two days of hearings, issued a “fully favorable” decision to the Plaintiff.²³ Following a referral by CMS, the Medicare Appeals Council took up review of the ALJ's decision on its own motion.²⁴

On March 8, 2024, the Council reversed the ALJ's decision and issued a final determination denying Part B coverage.²⁵ It determined that the ALJ failed to perform a “proper and complete analysis of the reasonable and necessary standards set forth” in the MPIM and, therefore, erred as a matter of law.²⁶ The Council then conducted an independent review of the record and concluded the provided evidence did not support Medicare coverage for the four Products, as administered to the beneficiaries, and that Plaintiff is financially liable for the overpayment and non-covered costs.²⁷

A. The Medicare Appeals Council Decision

As an initial matter, the Council determined that in the absence of an NCD or LCD, the ALJ “should have afforded ․ substantial deference” to the ‘reasonable and necessary’ factors found in Chapter 3, § 3.6.2.2, of the MPIM (“the MPIM factors”).²⁸ Yet, it found the ALJ had failed to do so in the following ways.

First, the Council determined the ALJ failed to properly evaluate the quality of Plaintiff's submitted medical literature before deciding that “adequate clinical studies and peer-review literature” that supported the Products were “safe and effective” for treating the beneficiaries' conditions.²⁹ In so deciding, the Council explained that “more of an evaluation of the strength of the medical literature than that afforded by the ALJ” was required.³⁰ Upon its own review of the literature, the Council concluded Plaintiff had failed to meet its burden of “showing general acceptance by the medical community that [the Products] are safe and effective treatments for the beneficiaries' conditions.”³¹ The first MPIM factor was therefore unsatisfied.

The Council continued to reject Plaintiff's contention that because the Products “are qualified HCT/Ps under 21 C.F.R. § 1271.10(a), and considered a § 361 product [under the Public Health & Safety Act (“PHS”)], [which] do not require FDA pre-market approval to show that they are safe and effective,” the same outcome is required here.³² The Council explained that, even assuming the Products were properly classified as such, “FDA approval or categorization alone is not determinative of Medicare coverage” and, considering the whole record, “not persuasive here.”³³

Next, the Council found the ALJ had erred by basing its “not experimental or investigation” determination to the Products' purported compliance with 21 C.F.R. § 1271.10(a) and § 361 of the PHS.³⁴ The Council found that the ALJ's analysis for this MPIM factor was “incomplete” and “misplaced.”³⁵ Reiterating that FDA categorization is merely “a factor in making Medicare decisions,” the Council again found its application to the present case unpersuasive.³⁶ Citing its own review of the Plaintiff's provided medical literature, the Council concluded there was insufficient evidence to conclude the Products were not experimental or investigational.

As for the final coverage element, the Council found erroneous the ALJ's determination that the Products were “appropriate” for treating the Medicare beneficiaries' conditions. It explained that the ALJ not only failed to account for the frequency and duration of the administered products but relied primarily on the Plaintiff's offered witness testimony.³⁷ In doing so, the ALJ is said to have overlooked the fact that “no evidence, medical literature or clinical studies were provided that document or recommend” the Products for the treatment purposes presented by the Plaintiff: the repair, supplementing, and restoring of connective tissues.³⁸ As a result, the Council could not conclude—in line with the MPIM guidance for demonstrating ‘appropriateness’—that Plaintiff had shown the treatments (1) were the standard of care for the beneficiaries' conditions, (2) met but did not exceed the beneficiaries' medical need, and (3) were at least as beneficial as existing and available medically appropriate alternatives. Ultimately, the Council determined the record did not support that the Products were “generally accepted by the medical community as ‘appropriate,’ for [the] beneficiaries” at issue.³⁹

Having concluded the Plaintiff failed to show the Products were medically reasonable and necessary, the Council addressed whether Plaintiff was financially liable for the non-covered costs under § 1879 of the Social Security Act (“SSA”) and, if so, if it was entitled to a waiver under § 1870.⁴⁰ Previously, both Novitas and the QIC found the Plaintiff was liable, without waiver, because it knew, or had a responsibility to familiarize itself with, the legal requirements for cost reimbursement such that it should know the services were not reasonable and necessary for purposes of Medicare coverage.⁴¹ Finding the Plaintiff had not contested its financial liability for the overpayments before the ALJ, and did not raise the issue in its exceptions on the same before the Council, the contractors' prior determination was summarily affirmed.⁴²

IV. STANDARD OF REVIEW

Pursuant to 42 U.S.C. § 405(g), a district court's review of a final agency decision is limited to (1) whether the agency applied the proper legal standards, and (2) whether substantial evidence on the record as a whole supports the agency's decision.⁴³ Substantial evidence is “such relevant evidence as a reasonable person would accept as adequate to support a conclusion; it is more than a mere scintilla, but less than a preponderance.”⁴⁴ Thus, even if a reviewing court determines that the evidence preponderates toward a wholly different finding, the Secretary's decision, if supported by substantial evidence, is conclusive.⁴⁵ Importantly, the Court may not reweigh the evidence in the record and cannot substitute its judgment for that of the Secretary's.⁴⁶ It is well-recognized that deference to the Secretary's judgment is especially warranted in the complex and highly technical Medicare context.⁴⁷ The Court reviews the administrative record accordingly.

V. ANALYSIS

Plaintiff's appeal is two-fold. It first challenges the Secretary's decision that Medicare Part B does not cover the Products administered to the recipient beneficiaries. Second, and alternatively, it argues that it is entitled to a limitation of liability under §§ 1870 and 1879 of the SSA.

Plaintiff assigns six points of error to the Council's review of the ALJ's decision and its ultimate determination denying coverage. They are:

1. The Council Decision is unlawful and erroneous, and should be set aside on the grounds that the final agency action is arbitrary, capricious, an abuse of discretion, an improper resolution of a fact issue, or otherwise not in accordance with law, where the ALJ Decisions were supported by substantial evidence in the record to find Medicare coverage for the twenty-two (22) claims at issue.

2. It was legal error for the Council to find the ALJ was required to provide written conclusions and findings on medical literature supporting Medicare coverage because this is not a requirement of the ALJ by applicable any [sic] statute or regulation.

3. The Council exceeded its jurisdiction by exercising its authority to review the ALJ Decisions on its own motion without finding an error of law material to the outcome of the case.

4. The Council exceeded its jurisdiction by conducting its own review of medical literature rather than remanding the issue to the ALJ.

5. The Council exceeded its jurisdiction by “affirming” the MACs decision on Warner Orthopedics' second argument (§ 1870) where the ALJ made no determination on the issue.

6. The Council legally erred by reversing the ALJ Decision without considering Warner Orthopedics' unresolved arguments of their lack of liability for the overpayments.48

The Court notes from the outset that many of Plaintiff's asserted errors concern the propriety of the Council's decision to (1) review the ALJ's findings as a matter of first instance, (2) conduct an independent review of the medical literature, and (3) reverse the ALJ's ultimate coverage determination, which Plaintiff contends was supported by substantial evidence. But, under § 405(g), Court's “may only review the ultimate decision of the Secretary, which is issued only after a case has progressed through all the levels of administrative appeal.”⁴⁹ Even then, judicial review is limited to whether there is substantial evidence to support the findings of the Secretary, and whether the correct legal standards were applied.⁵⁰ Where, as here, an agency has a tiered system of review, “conflicting positions at different levels within [that system]․simply reflect[s] the agency's administrative process at work,”⁵¹ and not every decision during that process constitutes a final determination ripe for judicial review. It follows that because the Council reversed the ALJ's decision on its own motion, this Court's review is thereby limited to whether the Council's coverage determination—as the Secretary's final decision—is supported by substantial evidence.⁵²

But Plaintiff asks for more. By way of Assignment of Error Nos. 2, 3, 4, and 5, Plaintiff requests the Court find that the Council's decisions preceding its final determination were flawed on both jurisdictional and procedural grounds. More specifically, Plaintiff contends that because the ALJ's fully favorable decision was correct, without a material error of law, any subsequent agency action (including the Council's decision to grant review on its own motion and subsequently direct a disposition instead of remand to the ALJ) was an improper exercise of jurisdiction.⁵³ But this Court need not decide whether the Council correctly determined the ALJ's decision contained a material error of law. As described above, the 42 U.S.C. § 405(g) provides no basis to make such a finding.⁵⁴ The limited jurisdiction it confers for judicial review is only applicable to the Secretary's final claim determination under 42 U.S.C. § 1395ff(b)(1)(A); in this case, that is the denial of Medicare coverage.⁵⁵ Accordingly, nonfinal administrative actions, such as the Council's decision to review the ALJ's decision on its own motion, the basis upon which it did so, and its directing a disposition of the Plaintiff's claims instead of remanding them to the ALJ, are not reviewable as the “Secretary's final decision” for which Congress intended to provide judicial review.⁵⁶

Nor does Plaintiff's request for review under § 706(2) of the Administrative Procedure Act (“APA”)—which allows a Court to set aside any agency action that is found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or “without observance of procedure required by law”—provide such a basis.⁵⁷ Indeed, the APA's standard of review does not apply in Medicare appeals pursuant to 42 U.S.C. § 1395ff, and therefore does not apply in this case.⁵⁸ This is made clear under 42 U.S.C. § 405(h), made applicable to Medicare Part B coverage appeals by § 1395ii, which provides: “no action against the United States, the [Secretary], or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter.” Tellingly, Plaintiff's Complaint represents that this Court's jurisdiction over its APA claims is proper pursuant to 28 U.S.C. § 1331. But this is precisely what is precluded by § 405(h), which “definitively” represents Congress' intent to channel all legal challenges arising thereunder through the administrative procedures set forth in § 405(g).⁵⁹ Moreover, it is well settled that the APA itself does not confer subject matter jurisdiction,⁶⁰ nor does it apply in contexts where Congress “has provided an adequate procedure to obtain judicial review[,]” as it has through § 1395ff.⁶¹ Therefore, to the extent Plaintiff's assigned errors—namely Nos. 2, 3, 4, and 5—bring procedural and/or jurisdictional challenges to decisions made during the administrative process, they are not subject to this Court's review.

The Court notes that Plaintiff's Assignment of Error No.1 challenges the Council's decision on grounds that the ALJ's decisions and ultimate grant of Part B coverage were supported by substantial evidence. Accordingly, it allocates most of its briefing to support the ALJ's decision as proper and, in turn, the Council's reversal of it as unwarranted. This misses the mark. After the Medicare Appeals Council issued its coverage determination, its “decision [became] the Secretary's decision and [therefore]․ the final agency decision for purposes of judicial review.”⁶² “In other words, it is the Appeals Council's decision that is on review here; whether substantial evidence supports the ALJ's decision is irrelevant.”⁶³

Yet, because Plaintiff maintains “[t]he Council is not permitted to take its own actions but is [instead] limited to reviewing the finding and decisions of the ALJ,” it dedicates very little in its briefs to challenge the law applied or independent conclusions drawn by the Council in denying Medicare coverage over the Products.⁶⁴ But Plaintiff cites no authority for this mistaken proposition. When reviewing an ALJ's decision, the Council undertakes a de novo review of all the evidence in the record and may modify, affirm, or reverse the ALJ's decision, or remand the case to the ALJ.⁶⁵ The Council is also empowered to make determinations and issue a final decision that is directly attributable to the Secretary and binding on all parties.⁶⁶ Accordingly, “when the [Council] addresses a Medicare case on appeal from an ALJ, it is not bound in any way by the reasoning or conclusions of its subordinate decision-makers.”⁶⁷

The Court therefore turns to the Council's—i.e., the Secretary's—coverage decision and reviews it according to the standard provided in § 405 (g).

A. The Council's applied the correct legal standards in finding that Plaintiff failed to show entitlement to Medicare Part B coverage.

As an initial matter, the parties do not dispute the Council's determination that, absent an applicable NCD or LCD, “adjudicators must make individual reasonable and necessary determinations by assessing whether the service is safe and effective, not experimental or investigational, and appropriate.”⁶⁸ While these factors, which are set out in § 3.6.2.2 of the MPIM, are not binding on the Council, the applicable regulation, 42 C.F.R. § 405.1062(a), requires that they be given “substantial deference.” Thus, the Council applied the proper legal standard in deciding Plaintiff's claims, generally.

Dispute arises, however, over the Council's assertion that “whether an item or service is medically reasonable or necessary․[considers] whether it has general acceptance by the medical community”—which the Council notes is established by “published original research in peer-reviewed medical journals, systematic reviews and meta-analyses evidence-based consensus statements and clinical guidance.”⁶⁹ Plaintiff contends that this standard, which originates from Chapter 13 of the MPIM, does not apply to the present case; rather, it is to be reviewed under Chapter 3 of the Manual.⁷⁰ Notably, Plaintiff raises this point to challenge the Council's determination that “the legal authorities do require more of an evaluation of the strength of the medical literature than that afforded by the ALJ.”⁷¹ But, as previously mentioned, it is the Secretary's final coverage determination that is before the Court, not the Council's assignments of error to the ALJ's decision. Nevertheless, the Court addresses this point to the extent the Council's ultimate safety and effectiveness determination, pursuant to Chapter 3, relied on what it found to be a lack of evidence showing the Products' “general acceptance by the medical community”—a phrase which, as Plaintiff correctly notes, comes from Chapter 13.⁷²

The Court finds no error in the Council reviewing the Products' safety and effectiveness with consideration to its general acceptance by the medical community, a standard which—although not explicitly set out in Chapter 3—has long been recognized as a “basic consideration” in deciding whether Medicare coverage for a particular service is warranted.⁷³ Indeed, “if the service or treatment is not yet generally accepted․then authoritative evidence must be obtained that is safe and effective before [Medicare] may make payment.”⁷⁴ To be sure, the Council acknowledges that its Chapter 13-derived guidance is “explicitly․for contractors assessing medical reasonableness and necessity.”⁷⁵ But it reasons that such guidance must “necessarily apply to adjudicators, including․the Council” who are undertaking the very same inquiry.⁷⁶ The Court agrees as to find otherwise would place form over substance. The fact that the guidance in Chapter 13, § 13.5.3, on its face, applies to contractors conducting a reasonable and necessary analysis for purposes of creating an LCD, does not render that guidance inapplicable to adjudicators (in the later stages of the administrative process) conducting the very same coverage determination, just at a case-specific level. After all, “[t]he linchpin of coverage under Medicare․is whether the service at issue is generally accepted in the medical community as safe and effective.”⁷⁷ The Court therefore finds the referenced guidance in § 13.5.3 “applicable to [this] particular case” and, thus, the Council's reliance thereon appropriate under 42 C.F.R. § 405.1062.

B. Substantial evidence supports the Council's finding that Plaintiff failed to show entitlement to Medicare Part B coverage.

Plaintiff contests the Council's determination that “the provided evidence does not support a finding that WoundEx Flow, FlowerAmnioFlo, Axolotl Ambient, and Fluid Flow were safe and effective treatments to repair, supplement, and restore the beneficiaries connective tissue.”⁷⁸

The Court understands the Plaintiff's first argument to be that, because the Products were “361 HCT/P Products under the FDA's Tissue Rules, and do not require FDA approval,” they are safe and effective for purposes of Medicare coverage.⁷⁹ To be sure, the Council made no findings on whether the Products are, in fact, regulated under § 361. Instead, it reasoned that any such determination—even if favorable to Plaintiff's position—is not persuasive here because FDA categorization “is not determinative of Medicare coverage.”⁸⁰ To the extent Plaintiff contends this was erroneous, the Court disagrees. “An FDA determination regarding the safety and effectiveness of a [product] is not a substitute for CMS review of whether the [product] is eligible for coverage.”⁸¹ The FDA conducts premarket review of products under different statutory standards and, therefore, “a product may be sufficiently ‘safe’ and ‘effective’ to secure FDA approval for a given use․yet its use might nonetheless not be sufficiently ‘reasonable and necessary’ for patient care to warrant Medicare reimbursement.”⁸² Moreover, the Council expressly acknowledged its consideration of a July 20, 2022, FDA Consumer Alert ⁸³ stating that regenerative medicine products—including amniotic fluid—“have [not] been approved for the treatment of any orthopedic condition.”⁸⁴ Accordingly, and after a thorough review of the available record, the Council determined it could not “conclude that the [Products] at issue are safe and effective under Medicare standards.”⁸⁵ The Court therefore finds that the Council's decision was supported by substantial evidence when it decided the Products' potential FDA categorization under § 361 did not automatically entitle them to favorable coverage determinations under the separate reasonable and necessary scheme of Medicare.⁸⁶

Plaintiff's second argument attacks the Council's unfavorable safety and effectiveness finding more directly, contending its stands at odds with many of the articles Plaintiff submitted in support of the opposite conclusion.⁸⁷ To this point, Plaintiff's brief provides two examples: (1) “Application of Amniotic Tissue in Orthopedic Surgery,” which is described as documenting the safe use of “a type of these HCT/P products,” and (2) “A Single Injection of Amniotic Suspension Allograft is Safe and effective for Treatment of Mild to Moderate Hip Osteoarthritis: A Prospective Study.”⁸⁸

The Court notes that “[i]t is not our office to tender an independent judgment on the value and validity of the various scientific studies submitted. We ask only whether the Secretary's assessment was a reasonable one[.]”⁸⁹ So long as substantial evidence supports the Council's decision to discount Plaintiff's provided medical literature, it is not for this Court to reweigh the evidence or substitute its judgment for that of the Secretary.⁹⁰

The Court finds substantial evidence here. Importantly, the Council expressly addressed both articles that Plaintiff includes in its brief. As to the former, the Council determined that while the authors did report “promising results,” they also acknowledged that “more studies are needed to fully understand the therapeutic potential and define the appropriate applications of these tissues.”⁹¹ As to the latter, the Council again considered its reporting of “promising results,” but noted the article's acknowledgment that “the exact mechanism of action remains unknown.”⁹² The Council—highlighting that “none of the medical literature provided by [Plaintiff] involves or mentions” the Products at issue ⁹³ —nevertheless went on to thoroughly review some of the other authorities on which it relied. Of note is the Council's discussion of “Placental Cells and Tissues: The Transformative Rise in Advanced Wound Care.”⁹⁴ More specifically, the Council acknowledged that while the article did find “amniotic membrane has proven to be an effective therapy” for several relevant purposes, the authors expressly recognized that “the number of prospective, randomized controlled clinical trials [ ] on placental tissues are currently limited.”⁹⁵ In line with this, the Council also referenced another one of Plaintiff's provided articles, “Use of Fetal Tissue in Foot and Ankle Surgery,” for its suggestion that “additional focus should be directed to translational research that will safely evaluate the effect of fetal issues [namely, amniotic and placental tissues] in a clinical setting.”⁹⁶

It is from this review and analysis that the Council observed the Plaintiff's “included studies were either short-term and limited in nature, were tested on animals, or reviewed clinical studies of the same nature.”⁹⁷ In another notable instance, the Council pointed to one of Plaintiff's provided case studies which explained that a beneficial use of amniotic stem cell injections for scar remodelling had been shown “for the first time in man.”⁹⁸ On this record, substantial evidence supports the Council's conclusion that Plaintiff failed to show the Products were safe and effective—and, relatedly, had gained general acceptance in the medical community—for treating the beneficiary recipients' conditions.

Plaintiff does not raise an independent argument challenging the Council's determination that it had not shown the Products' use under the circumstances was not experimental or investigational. Any such argument appears to be couched in Plaintiff's general assertion that it has submitted “over 30 peer-reviewed journal articles․that demonstrate that the use of these HCT/Ps was safe and effective and not experimental or investigative.”⁹⁹ Nonetheless, the Council again emphasized that, of all the provided literature discussing clinical trials studying the use of amniotic product injections, none “include any discussion of WoundEx Flow, FlowerAmnioFlo, Axolotl Ambient, [or] Fluid Flow.”¹⁰⁰ And while the Council did note that some of these studies discussed treating relevant ailments (such as knee or hip osteoarthritis, planter fasciitis, or Achilles tendinosis), it drew on excerpts therefrom cautioning that “the use of other orthobiologic treatments [such as the Products] lacks high-quality supportive data on efficacy and safety.”¹⁰¹ To the extent the literature presented conflicts on this point, it is well-settled that “[t]he duty to resolve [it]․rests with the [agency], not with a reviewing court.”¹⁰² To be sure, the ALJ and Council arrived at conflicting determinations based on the medical literature provided. But the ALJ did not explain how the submitted materials rendered the use of the Products reasonable and necessary in this case.¹⁰³ The Council, by contrast, “articulate[d] a satisfactory explanation” after examining the relevant evidence for why the literature in the record was insufficient.¹⁰⁴

The Court is satisfied that none of the evidence highlighted by Plaintiff is so compelling as to overwhelm the evidence relied upon by the Council.¹⁰⁵ The Court therefore finds that substantial evidence supports the Council's determination that it has not been shown here that the Products' use was not experimental or investigational.¹⁰⁶

Finally, the Court considers the Council's determination that “the record does not include evidence to support that [the Products] were ‘appropriate’ for the treatment of the beneficiaries.”¹⁰⁷ The applicable guidance in § 3.6.2.2 of the MPIM provides that appropriateness is determined according to several factors, including, in relevant part, whether the item is: (1) furnished in accordance with accepted standards of medical practice for the treatment of the beneficiary's condition, and (2) ordered and furnished by qualified personnel. The Council reasoned that because no literature had been presented which documented or recommended the Products to repair, supplement, and restore connective tissue, the first prong—asking for conformity with an accepted standard of medical practice—could not be satisfied.¹⁰⁸ The Court finds this determination to be reasonable and supported by substantial evidence, much of which the Court has already discussed in connection with the other two MPIM factors.

Plaintiff's argument before the Council—that deference should be afforded to its qualified personnel whose professional opinion determined the Products to be reasonable and necessary—does not command a different result.¹⁰⁹ “The Medicare statute unambiguously vests final authority in the Secretary, and no one else, to determine whether a service is reasonable and necessary.”¹¹⁰ Indeed, the Council properly noted that “although an item or service may be beneficial or even necessary for the treatment of a Medicare beneficiary, that does not mean that the item is covered by Medicare.”¹¹¹ The Court therefore finds no basis to conclude that the Council's determination regarding the appropriateness of the Products' administration under the circumstances was not supported by substantial evidence.

C. Plaintiff did not preserve the Secretary's decision that Plaintiff is financially liable under § 1879 and not entitled to a waiver under § 1870 for judicial review.

Plaintiff's Assignment of Error Nos. 5 and 6 concern the Council's resolution of Plaintiff's contention in the early stages of its administrative appeal that, even if the Products are not covered by Medicare, they are not liable for any overpaid amount.

Section 1879 of the SSA states that a healthcare provider will be shielded from financial liability for overpayments if the provider did not know, and could not reasonably have been expected to know, that the services administered were not covered by Medicare.¹¹² Similarly, overpayments may not be recovered from a provider under § 1870 of the SSA if the provider is “without fault” in incurring the overpayment.¹¹³ While Plaintiff unsuccessfully sought protection under both these provisions at the lower levels of contractor review, the ALJ's fully favorable determination obviated the need for their further consideration. In fact, Plaintiff did not raise the issue of shielding itself from financial liability under these statutes before the ALJ at all. Accordingly, because Plaintiff did not “previously raise any contentions regarding its financial liability for the non-covered costs or overpayments and [did] not raise the issue in its exceptions on the same to the Council,” the Council “summarily affirm[ed] the previous contractor determinations.”¹¹⁴

Here, Plaintiff does not mount a significant contest to the Council's decision, stating only, and without substantiation, that “Incorrectly, the Council purports to ‘affirm’ Novitas' decision on the issue, rather than remanding the matter for the ALJ's determination.”¹¹⁵ Even so, “[t]he Fifth Circuit has declined to consider issues Plaintiff[s] did not raise before the Council,” especially where “the Council review[s] the ALJ's decision on its own motion.”¹¹⁶ Indeed, Plaintiff had an opportunity to “file exceptions to the [CMS] referral [for Own Motion Council review] by submitting written comments to the Council,” and in doing so, neglected to include any arguments concerning the issue of its financial liability. Yet, Plaintiff now dedicates significant briefing to explain why the above-mentioned statutory protections should apply. Again, this misses the mark—notwithstanding the merits of its arguments, on which the Court does not make a decision, Plaintiff does not explain how the Court may now consider theories it failed to raise before both the ALJ and the Council. Where the Medicare Act is the basis of a claim, “ ‘all aspects’ of any such claims ‘must be channeled through the administrative process.’ ”¹¹⁷ Allowing Plaintiff to litigate an issue on judicial review that it did not raise to the Council “would inappropriately ‘bypass’ the agency's internal requirement.”¹¹⁸ To the extent Plaintiff's arguments concerning financial liability were not—due to its own omissions—exhausted before the Secretary, they cannot now succeed on judicial review.

VI. CONCLUSION

For the foregoing reasons, the Secretary's final decision denying Medicare Part B coverage over the Products at issue is AFFIRMED.

IT IS SO ORDERED.

Signed in Baton Rouge, Louisiana on May 21, 2026.

FOOTNOTES

1.   Rec. Docs. 1 and 28.

2.   Rec. Doc. 33.

3.   Rec. Doc. 34.

4.   Rec. Doc. 28, p. 2.

5.   AR 1A at p.4.

6.   Id at p. 6.

7.   Id at p. 4 n.4.

8.   42 U.S.C. § 1395y(a)(1)(A).

9.   Heckler v. Ringer, 466 U.S. 602, 617 (1984).

10.   CENTERS FOR MEDICARE & MEDICAID SERVICES, Medicare Program Integrity Manual (“MPIM”), Chapter 3, §§ 3.3.3, 3.6.2.1-3.6.2.2. The parties do not dispute that no national coverage determination (“NCD”) from the Secretary or local coverage determination (“LCD”) applies in the present case. Therefore, the Medicare coverage decisions at issue were initially case-specific determinations made by local contractors—designated by the Secretary—applying the standard in § 3.6.2.2. United States ex rel. Omni Healthcare Inc. v. MD Spine Solutions LLC, 160 F.4th 248, 253 (1st Cir. 2025); see Odell v. U.S. Dep't of Health & Hum. Servs., 995 F.3d 718, 720 (9th Cir. 2021) (“Absent a regulation, a national coverage determination, or an LCD, the Medicare contractor proceeds on a case-by-case basis to determine whether a service is reasonable and necessary.”).

11.   Almy v. Sebelius, 679 F.3d 297, 305 (4th Cir. 2012) (quoting Friedman v. Sec'y of Dep't of Health & Hum. Sers., 819 F.2d 42, 45 (2d Cir. 1987)).

12.   See 42 U.S.C. § 1395kk-1(a)(1) & (4)(A); United States ex rel. Hartpence v. Kinetic Concepts, Inc., 44 F.4th 838, 840 (9th Cir. 2022) (noting that CMS accomplishes its Medicare Act directives “by contracting with [MACs to] process․claims on the Government's behalf.”).

13.   See id. § 1395ff(a)(3).

14.   See id. § 1395ff(b)(1), (c).

15.   See id. § 1395ff(d)(1).

16.   See id. § 1395ff(d)(2).

17.   42 C.F.R. § 405.1110(a) & (b).

18.   See id. § 405.1130.

19.   42 U.S.C. § 1395ff(b)(1)(A); 42 U.S.C. § 405(g).

20.   AR 1A at p.6; See Padda v. Becerra, 37 F.4th 1376, 1379 (8th Cir. 2022) (“When Medicare pays providers, it usually does not review the claim. Instead, Medicare generally pays facially valid claims, and conducts post-payment audits to detect overpayments.”) (internal quotations and citations omitted).

21.   AR 18 at 2333-36.

22.   Id at p. 2475, 2479.

23.   Id at p.7.

24.   AR 1A at 2.

25.   Id at pp. 2-22.

26.   Id at p. 9.

27.   Id at pp. 10-16.

28.   Id at p. 10.

29.   Id.

30.   Id at p. 9.

31.   Id at pp. 14-15.

32.   Id at p.12.

33.   Id.

34.   Id at p. 10.

35.   Id.

36.   Id at p. 15.

37.   Id at p. 16.

38.   Id at p. 15.

39.   Id at p. 16.

40.   Id.

41.   AR 18 at p. 2335, 2440.

42.   AR 1A at p. 16.

43.   See Estate of Morris v. Shalala, 207 F.3d 744, 745 (5th Cir. 2000); Encompass Health Rehabilitation Hospital of Texarkana, Inc. v. Becerra, 2024 WL 1505747, at *3 (E.D. Tex. Feb. 28, 2024) (internal citations omitted).

44.   Castelan v. Commissioner of Social Security, 2025 WL 3190671, at *2 (S.D. Tex. Sep. 4, 2025) (citing Oldham v. Schweiker, 660 F.2d 1078, 1083 (5th Cir. 1981) (internal quotations omitted)).

45.   Harrell v. Bowen, 862 F.2d 471, 475 (5th Cir. 1988).

46.   Maxmed Healthcare, Inc. v. Burwell, 152 F. Supp. 3d 619, 625 (W.D. Tex. 2016) (quoting Hollis v. Bowen, 837 F.2d 1378, 1383 (5th Cir. 1988)); Hospital Service Dist. No. 1 of Parish of Lafourche v. Thompson, 343 F. Supp. 2d 518, 525 (E.D. La. 2004) (citing Chaparro v. Bowen, 815 F.2d 1008, 1011 (5th Cir. 1987) (noting it is well-established that “the Secretary, not the judiciary, is responsible for weighing the evidence, resolving material conflicts, and deciding cases”)).

47.   Macomb Foot, Ankle & Wound Care v. Kennedy, 2026 W: 875235, at *4 (D.D.C. Mar. 31, 2026) (“In Medicare cases, the ‘tremendous complexity of the Medicare statute ․ adds to the deference which is due to the Secretary's decision”) (interna citations omitted); United Medical Healthcare, Inc. v. Dep't of Health & Hum. Servs., 889 F. Supp. 2d 832, 844 (E.D. La. 2012) (“The very nature of the Medicare program suggests that the Secretary's determinations are entitled to deference from this Court.”).

48.   Rec. Doc. No. 28, p. 11.

49.   Community Care, LLC v. Leavitt, 537 F.3d 546, 552 (5th Cir. 2008) (citation and internal quotation marks omitted) (emphasis added).

50.   Ripley v. Chater, 67 F.3d 552, 555 (5th Cir. 1995) (citing Greenspan v. Shalala, 38 F.3d 232, 236 (5th Cir. 1994)).

51.   Leavitt, 537 F.3d at 552.

52.   See Family Foot and Leg Center, P.A. v. Kennedy, 2025 WL 2538474, at *3 (M.D. Fla. Sep. 4, 2025) (quoting Parker v. Bowen, 788 F.2d 1512, 1519-20 (11th Cir. 1986) (“in cases where the [Medicare] Appeals Counsil reverses an ALJ's decision on its own motion, judicial review is limited to determining whether the Appeal's Council decision is supported by substantial evidence.”)).

53.   Rec. Doc. 34, p. 7; Rec. Doc. 28, p. 12 (stating that “whether the ALJ Decisions legally erred is a question for this Court to decide, without any weight given to the Council's contrived interpretation.”).

54.   See Bauzo v. Bowen, 803 F.2d 917, 921 (7th Cir. 1986) (rejecting the position that “[i]f the Council failed to properly exercise its authority to review, then the ALJ's decision, not the Appeals Council's, constitutes the Secretary's final decision for purposes of judicial review” under § 405(g).”).

55.   Hospice of East Texas v. Secretary, U.S. Dep't of Health & Hum. Servs., 2025 WL 957519, at *4 (E.D. Tex. Mar. 31, 2025) (noting that 42 U.S.C. § 405(g) “allows for judicial review of a final decision of the Secretary with respect to Medicare benefits”) (internal citations omitted).

56.   See 42 U.S.C. § 1395ff(b)(1)(A).

57.   5 U.S.C. § 706(2) (A) & (D).

58.   Townsend v. Cochran, 528 F. Supp. 3d 208, 215 (S.D.N.Y. 2021) (citing Estate of Morris v. Shalala, 207 F.3d 744, 745 (5th Cir. 2000) (“rejecting plaintiff's argument for application of APA standard in an appeal pursuant to § 1395ff”)).

59.   Giesse v. Secretary of Dep't of Health & Hum. Servs., 522 F.3d 697, 702 (6th Cir. 2008) (quoting Shalala v. Illinois Council on Long Term Care, 529 U.S. 1, 8 (2000) (noting that the language of § 405 “plainly bars § 1331 review in such a case, irrespective of whether the individual challenges the agency's denial on evidentiary, rule-related, statutory, constitutional, or other legal grounds.”)).

60.   Califano v. Sanders, 430 U.S. 99, 107 (1977).

61.   National Ass'n of Waterfront Employers v. Chao, 587 F. Supp. 2d 90, 97 (D.D.C. 2008) (citing 5 U.S.C. § 704) (“The APA only provides review of final agency action when there is no other alternative remedy”); Hinojosa v. Horn, 896 F.3d 305, 310 (5th Cir. 2018) (reiterating same).

62.   Kantor v. Becerra, 2021 WL 1139757, at *1 n.2 (D. Md. Mar. 25, 2021) (citing 42 C.F.R. § 405.1136(d)).

63.   Family Foot and Leg Center, P.A. v. Kennedy, 2025 WL 2538474, at *3 (M.D. Fla. Sep. 4, 2025). To the extent Plaintiff's brief argues that the Council engaged in unauthorized rulemaking by “assert[ing] that an ALJ must detail the medical literature reviewed,” Rec. Doc. 28, p.21, the Court need not decide this issue because it is distinct from the Secretary's final coverage determination (i.e., what is before the Court pursuant to § 405(g)).

64.   Rec. Doc. No. 28, p. 20.

65.   42 C.F.R. § 405.1100(c).

66.   Id, § 405.1130.

67.   Almy v. Sebelius, 749 F. Supp. 2d 315, 326 (D. Md. 2010).

68.   AR 1A at p.8.

69.   Id at p.9.

70.   Rec. Doc. 28, p.19 (“There is no language in Chapter 3 regarding published research or peer-reviewed medical journals, much less its role in claims determinations”).

71.   Id.

72.   Id. at p. 17.

73.   Rush v. Parham, 625 F.2d 1150, 1156 n.11 (5th Cir. 1980) (citations omitted).

74.   Id.

75.   Rec. Doc. 28-1, p. 9.

76.   Id.

77.   Arruejo v. Thompson, 2001 WL 1563699, at *9 (E.D.N.Y. Jul. 3, 2001); Family Foot and Leg Center, P.A. v. Kennedy, 2025 WL 2538474, at *1 (M.D. Fla. Sep. 4, 2025) (citing to Chapter 13 in a case where no LCD applied to support proposition that “adjudicators must assess whether the service is safe and effective, not experimental or investigational, and appropriate based on the strongest evidence possible.”) (internal quotation marks omitted).

78.   Rec. Doc. 28-1, p. 12.

79.   Rec. Doc. 28, p.14. Again, Plaintiff's briefing is presented in such a way that it is primarily concerned with supporting the ALJ's determinations and why reversal was unwarranted. Where possible, and in the interest of providing the thorough review intended under § 405 (g), the Court will interpret Plaintiff's arguments in support of the ALJ's findings as challenges to the Council's subsequent findings, which represent the Secretary's findings in support of his final decision.

80.   AR 1A, p. 12.

81.   United States v. Abbott Labs., 2016 WL 80000, at *3 (N.D. Tex. Jan. 7, 2016) (citing 68 Fed. Reg. 55,634 (Sept. 26, 2003)).

82.   United States ex rel. Nargol v. DePuy Orthopaedics, 865 F.3d 29, 35 (1st Cir. 2017) (internal citations omitted).

83.   AR 1A, p. 12.

84.   Rec. Doc. 33-2.

85.   AR 1A, p. 14.

86.   Emphasis added.

87.   Rec. Doc. 28, p. 15 (stating “the journal articles and medical literature provided by [Plaintiff] support the safety of the products and services in the claims at issue

88.   Id (emphasis added).

89.   Almy v. Sebelius, 679 F.3d 297, 305-06 (4th Cir. 2012).

90.   LivinRite, Inc. v. Azar., 386 F. Supp. 3d 644, 652 (E.D. Va. 2019 (“the district court may not reweigh conflicting evidence, make credibility determinations, or substitute [its] judgment for that of the [Medicare Appeals Council].”

91.   AR 1A, p.13.

92.   Id.

93.   Id.

94.   Id. at 14.

95.   Id.

96.   Id.

97.   Id.

98.   Id.

99.   Rec. Doc. 28, p. 15.

100.   AR 1A at p. 15.

101.   Id. (internal citations omitted).

102.   Smith v. Chater, 99 F.3d 635, 638 (4th Cir. 1996).

103.   See AR 18 at p. 14 (stating “[t]here is adequate clinical studies and peer-review literature supporting the safety and effectiveness of the product at issue for the specific purpose in this appeal.”). The Plaintiff's conclusory assertion that “[t]he ALJ Decisions make clear the ALJ reviewed medical literature” does nothing to counter the reasonableness of the Council's (i.e., the Secretary's) subsequent and final determination on the literature's persuasiveness, or the fact that its ultimate coverage decision was supported by substantial evidence. Rec. Doc. 28, p. 19.

104.   FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009)

105.   See Musgrave v. Sullivan, 966 F.2d 1371, 1374 (10th Cir. 1992) (holding that “[e]vidence is not substantial if it is overwhelmed by other evidence in the record.”).

106.   Plaintiff's argument that “Section 361 Products are specifically allowed to be marketed for general use without the necessity of conducting clinical trial[s]” does not change this outcome. Rec. Doc. 28, p. 18. As explained previously, FDA categorization is but one factor in the Secretary's Medicare coverage calculation, and it certainly does not require that any of the standards for a reasonable and necessary determination be relaxed accordingly. Plaintiff does not cite, nor did the Court locate, any authority that precludes the situation in which a product may be regulated under § 361 but nevertheless experimental or investigational for purposes of Medicare coverage.

107.   AR 1A at p.15.

108.   Id. at 15-16.

109.   Id. at 16.

110.   Bodnar v. Secretary of Health & Hum. Servs., 903 F.2d 122, 125 (2d Cir. 1990).

111.   AR 1A at p. 16.

112.   42 U.S.C. § 1395pp(a).

113.   42 U.S.C. § 1395gg(b)(1).

114.   AR 1A at p.16.

115.   Rec. Doc. 28, p. 22 (emphasis added).

116.   Rapid Med. Transp. Corp. v. Kennedy, 2025 WL 1839449, at *4 (S.D. Tex. May 23, 2025) (citing Palm Valley Health Care, Inc. v. Azar, 947 F.3d 321, 327-28 (5th Cir. 2020) & Rio Home Care, LLC v. Azar, 2019 WL 1411805, at *36 (S.D. Tex. Mar. 11, 2019)).

117.   Rio Home Care, 2019 WL 1411805, at *35 (quoting Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 12 (2000)).

118.   Palm Valley Health Care, 947 F.3d at 327-28 (citing Sims v. Apfel, 530 U.S. 103, 108 (2000).

CHIEF JUDGE SHELLY D. DICK UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA