Claims Properly Denied for BIO-1000 Device

(CN) -- Medicare officials properly denied thousands of coverage claims for a $5,000 device that uses electrical impulses to treat osteoarthritis in the knee, the 9th Circuit ruled Monday.

Reversing a lower court, the federal appeals panel in Seattle found that the device had been tested only on animals, in studies sponsored by its manufacturer.

Washington-based RS Medical Inc. has been trying to get Medicare to cover the BIO-1000 device since 2004. The company says that it alleviates pain and even regenerates cartilage by sending electrical impulses to the knee. It costs more than $4,000 for one knee and more than $5,000 for two -- about 80 percent more than similar devices called "transcutaneous electric nerve stimulators," according to the court.

The Medicare Appeals Council denied more than a 1000 claims for coverage in a consolidated appeal, prompting RS Medical's federal lawsuit. Presiding U.S. District Judge Ronald Leighton ruled for the company in the Western District of Washington. He reasoned that, since several administrative law judges had granted Medicare coverage for the Bio-1000 in individual claims, the Medicare Appeals Council's denial was improperly inconsistent. The District Court also found that RS Medical had presented enough evidence to show that the BIO-1000 enjoyed "widespread acceptance" in the medical community.

A three-judge panel of the 9th Circuit unanimously reversed from Seattle.

The lower court had improperly based its ruling on cases that "were at low levels of the agency adjudication process and thus were not binding on the Medicare Appeals Council," the panel found.

The panel also ruled that the company had failed to show acceptable scientific evidence that the BIO-1000 actually does what it claims to do.

"Here, the Medicare Appeals Council explained why it disagreed with the lower agency adjudicatory decisions granting coverage: the studies that those decisions relied on purporting to show the BIO-1000's effectiveness at alleviating pain had been authored or sponsored by the BIO-1000 manufacturer, and the studies purporting to show the BIO-1000's effectiveness at regenerating cartilage had been conducted on animals, not humans," wrote Judge Barry Silverman for the panel.

"Among other flaws, the studies RS Medical submitted allegedly showing the BIO-1000's effectiveness at alleviating pain had been authored or sponsored by the BIO-1000 manufacturer, thus bringing their objectivity into question," he added. "And the studies RS Medical submitted purporting to show the BIO-1000's effectiveness at regenerating cartilage had been conducted on rabbits and cows, not humans, thus lessening their relevance."

A request for comment from RS Medical's attorney, Debra Parrish of Pittsburgh, Pa., was not immediately returned.

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