Agendia Vs Azar; LCDs Ruled Invalid without notice & comment under APA; but Reversed at Appeals Court

Agendia has disputed denials of claims in 2012 and 2013 under an early MOLDX LCD.  They used constitutional arguments against LCDs.   They won at the federal court level in 2019 but the decision in their favor was reversed at the appeals level in July 2021.

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The case was delayed due to ALJ backlog from 2014 to 2018.  An ALJ supported payment in 2018, finding the claims were "reasonable and necessary" despite the position of the MAC and QIC.  

The Department Appeals Council overruled, saying the ALJ had not clearly explained why he was overriding the LCD (although he has the right to do so with justification.)

Agendia appealed to federal district course.  HERE.   Agendia v Azar, 10/29/2019.   Agendia argued that 

1. LCDs are an illegal delegation of responsibility from CMS to a private entity.
2. LCDs violate the Administrative Procedures Act.
3. LCDs were arbitrary and capricious.

The district court ruled:

1. LCDs are not an illegal delegation, as CMS continues to supervise MACs and LCD claim decisions can be overturned (even if "deference" is paid to the LCD) and LCDs can be invalidated under a beneficiary's LCD challenge.
2. LCDs do violate the administrative procedures act.  They set operational CMS policy.  They may set CMS's initial policy.  Regardless of whether LCDs have a public comment period of sorts, there is no statutory basis for this to be different than APA notice and comment rulemaking.  (There IS, however, a separate statutory comment provided for NCDs.)  
3. The judge need not address #3 because he has decided the case on #2.

The judge remanded back to CMS for Department Appeals Board review, but instead, CMS appealed the case in federal appeals court.  A video hearing is online from January 16, 2021.  HERE.   The appeals case was decided on July 16, 2021.   It determined that the federal court decision was incorrect, e.g. LCDs do not violate the APA.   HERE.  The decision was that the LCDs "do not establish or change a substantive legal standard" and therefore did not implicate APA.  One judge dissented.