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By Gill Deford, Margaret Murphy, and Judith Stein

Diagnosed three years earlier with Amyotrophic Lateral Sclerosis (“ALS,” or otherwise known as “Lou Gehrig’s Disease”), 68-year-old Eileen Prendergast was suddenly informed by her home health agency that Medicare would no longer cover the home health care on which she depended.[1] Ms. Prendergast, who needed an electric wheelchair, had recently reached the point where she could not stand on her own and required assistance to get into the wheelchair. During the eight months in which she had been receiving home health care, she had been losing the use of her arms and hands, had been diagnosed with diabetes, and had experienced skin breakdowns due to her immobility that required nursing care. The home health agency provided nursing visits twice a month, physical and occupational therapies, and home health aide services three times per week. Nevertheless, Ms. Prendergast’s Medicare Advantage Plan and home health agency determined that because she was “stable in her disease state” and would not improve, she did not need skilled care, which is a prerequisite to Medicare home health coverage.

Putting aside the dubious determination that a victim of ALS could be in “stable condition,” the agency was following a Medicare tradition that has become virtually an urban myth among the providers and contractors who are largely responsible for making Medicare coverage decisions. The myth is that coverage of skilled care requires a beneficiary to be improving. The myth denies Medicare coverage to a beneficiary who has “plateaued,” is “medically stable,” or needs services for “maintenance only.” All of these shorthand terms essentially impose an improper requirement that results in termination of Medicare coverage for beneficiaries who have chronic conditions and who, sadly, are probably most in need of the care that is being denied them.

Ms. Prendergast’s situation is far from isolated.[2] In various guises and using a potpourri of terminology, agencies and contractors have ingrained in their staffs the belief that the failure to satisfy the “improvement standard” dictates termination of coverage.[3] The impact on beneficiaries with chronic conditions is staggering. As the health of beneficiaries deteriorates, their need for nursing services and physical, occupational, and speech therapies increases. The skilled care denied them under the improvement standard is critical to slow the disease process and to maintain functional ability. Yet these are precisely the people who are most likely to have their coverage terminated.[4]

Neither the Medicare statute nor its implementing regulations mentions or suggests an improvement standard in the context of diagnosis or treatment of illness or injury. The improvement standard, therefore, derives instead from references in some Medicare manual provisions, which have been refined, simplified, and emphasized in contractors’ internal guidelines over time.

The employees who apply this phony coverage standard are simply following the guidelines laid out for them by their employers. Those improper guidelines, rather than federal statutes or regulations, are the basis for the rules that they apply. The improvement standard has become so much a part of Medicare culture that, even when presented with contrary evidence in the form of regulations and manual provisions, employees will simply ignore it and state unequivocally that the improvement standard requires that coverage be terminated. Indeed, many advocates are unaware that the policy has little basis in the law and fail to challenge terminations of Medicare coverage based on it.

Because the improvement standard is not the product of notice-and-comment rulemaking, in theory the policy could be easily corrected. The Centers for Medicare & Medicaid Services (CMS) could simply correct the language of the offending guidelines to reflect the proper legal standard, and then ensure compliance by educating and monitoring the responsible agencies and contractors. If the Centers declined to act on its own, the President could issue an Executive Order directing the Centers to take the appropriate steps to cleanse the manuals and to clarify the policy for those applying it.

Unfortunately, neither of these straightforward approaches has yet occurred. Consequently, at this point, litigation may offer the best route to overcome the recalcitrance that seems to pervade this issue.

This article will attempt to explain the demographic context in which the policy is applied and to describe the statute, regulations, manuals, and guidance that surround the improvement standard, in the hope that advocates will have a clearer understanding of the problem and how it can be challenged. Litigation is often a slow and incremental method for effecting change, but, in this context and at this time, it may be the most appropriate vehicle for correcting this inequity.[5]

I. People with Chronic Conditions Have a Particular Need for Health Care and Therapy.

The population of the United States is aging, and, as a consequence, more people are living longer with chronic conditions. The most recent study indicates that 78 percent of the 41 million Medicare beneficiaries have at least one chronic condition, 63 percent have two or more, and a full 20 percent have at least five chronic conditions.[6] The five most common conditions that afflict these beneficiaries are hypertension, diseases of the heart, diseases of the lipid metabolism, eye disorders, and diabetes.[7] The negative impact caused by the improvement standard is felt most severely by Medicare beneficiaries diagnosed with chronic conditions such as Multiple Sclerosis, ALS, Parkinson’s disease, other neurological diseases, spinal cord injuries including paraplegia and quadriplegia, diabetes, chronic heart failure, dementia and Alzheimer’s disease, and stroke.

Exacerbating the problem is that most Medicare beneficiaries have low incomes. Forty-six percent have incomes that are below 200 percent of the federal poverty level (“FPL”), and 16 percent are below the FPL itself.[8] The incidences of obesity, diabetes, and hypertension are higher among the poor, and those living at or near the poverty level receive fewer health screenings and are less likely to have regular access to a physician.[9] Since more than two-thirds of African-American Medicare beneficiaries have incomes below 200 percent of the FPL, the impact of poverty on health and access to health care falls particularly on minority groups.[10]

These generally impoverished and high-risk beneficiaries with chronic conditions are often in need of nursing, physical, occupational, or speech therapies. Unlike patients with acute conditions for whom health care is intended to heal or to restore functions, individuals with chronic conditions generally rely on health and therapeutic services to slow the deterioration caused by their diseases and to maintain, to the extent possible, their existing functional capabilities. By definition their underlying conditions will not improve, but this care may allow these individuals to live independently, to retain their current health status, or to slow their deterioration—in short, to maintain some quality of life. The improvement standard, however, stands directly in the way of these individuals achieving their modest goals.

II. The Improvement Standard has No Basis in the Statute or Regulations, but Some Manual Provisions Impose that Condition.

Medicare Part A covers nursing and therapy that is received in a hospital or skilled nursing facility (SNF).[11] The home health benefit provides for nursing and therapy services under either Part A or Part B. Therapy services received as an outpatient are covered under Part B.[12] Significantly, a patient can trigger Medicare coverage of either SNF or home health coverage by establishing a need for skilled nursing services or physical, speech, and, in certain cases, occupational therapies.[13] Furthermore, the need for physical or speech therapies or nursing care under the home health benefit may also allow the beneficiary to receive coverage for home health aides and occupational therapy.[14] In short, skilled therapy or nursing services are gateways to broader Medicare coverage. When these skilled services are denied, Medicare beneficiaries stand to lose other medical support services as well as the skilled services.

At this point, it is necessary to state emphatically that the Medicare statute imposes no improvement standard as a prerequisite to Medicare coverage. The general statutory standard for Medicare coverage is one of medical necessity; that is, the standard is whether a given service is “reasonable and necessary.”[15] The same subsection of the law does use the word “improve,” but only in the specific and limited context of authorizing Medicare coverage “to improve the functioning of a malformed body member.”[16] This use of “improve” is the only reference to improvement in the statute. So, it is worth repeating: there is no overarching improvement standard in the Medicare statute. If the skilled services are “reasonable and necessary for the diagnosis or treatment of illness or injury,” they should be covered by Medicare.

The Medicare regulations flesh out the general medical necessity standard. In the SNF context, the regulations make it absolutely clear that improvement cannot be the quid pro quo for coverage:

The restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.[17]

This approach does leave open the possibility that the lack of improvement may be combined with other considerations to reach a determination that a particular individual is not eligible for coverage of skilled services, but it is beyond question that this regulation prohibits requiring improvement potential as a necessary precondition to Medicare coverage.

The home health coverage regulations also define “reasonable and necessary” as specifically requiring an individualized evaluation.[18] With regard to skilled nursing services, the regulations state: “The determination of whether skilled nursing care is reasonable and necessary must be based solely upon the beneficiary’s unique condition and individual needs, without regard to whether the illness or injury is acute, chronic, terminal, or expected to last a long time.”[19]

Although another portion of the home health care regulations related to physical, speech and occupational therapies mentions “improvement,” it does so only in the alternative, thus again prohibiting improvement as a definitive condition of coverage:

There must be an expectation that the beneficiary’s condition will improve materially … based on the physician’s assessment of the beneficiary’s restoration potential and unique medical condition, or the services must be necessary to establish a safe and effective maintenance program required in connection with a specific disease, or the skills of a therapist must be necessary to perform a safe and effective maintenance program.[20]

Thus, not only does the regulation set out alternative bases for coverage, but, even within the context of the improvement prong, the regulation restates the emphasis on the individual’s “unique” situation.

The regulations are silent, however, in the context of therapy for outpatient (Part B) services.[21] There is no reference to improvement, maintenance, or chronic conditions one way or the other. This lack of direction has created a vacuum that has caused many of the problems in this area, for the void has been filled with numerous and sometimes inconsistent manual provisions.

For the most part, the CMS Manual provisions support and reiterate the regulations in their respective areas. The manual provisions make it clear, for example, that the determination of whether a skilled service is reasonable and necessary cannot be based on “rules of thumb” but instead require assessment of the particular individual’s need for care.[22] The Medicare Benefit Policy Manual repeats the regulatory language requiring assessment “of the beneficiary’s unique condition and individual needs” and elaborates on the point: “In addition, skilled care may, depending on the unique condition of the patient, continue to be necessary for patients whose condition is stable.”[23]

Confusion arises, however, when the manual provisions are inconsistent with the regulations. While the home health regulations allow Medicare coverage to establish and provide a maintenance program, the manual provisions limit coverage only for the establishment of the program.[24] Furthermore, the manual provisions appear to set a higher standard for Medicare coverage for home health speech-language pathology services, as it states that Medicare covers those services only if “it is reasonably expected that the services will materially improve the patient’s ability … in a manner that is measurably at a higher level of attainment than that prior to the initiation of the services.”[25] This improvement standard in the manual provisions conflicts with the relevant regulations.[26] The manual requirement results in denying Medicare coverage for, and access to, speech therapy to maintain essential functions like speaking and swallowing.

In short, the manual provisions are all over the lot, with some reinforcing the regulations and some contradicting them. But the situation is made more confusing by the existence of Local Coverage Determinations, which are developed by individual contractors to provide guidance in the jurisdictions in which they operate.[27] Although Local Coverage Determinations are not binding on Administrative Law Judges, contractors’ employees tend to rely on these Determinations to make decisions—even when in conflict with the regulations. Consequently, elimination or correction of inappropriate language in the manual provisions would have only a limited effect unless and until the Local Coverage Determinations are also corrected and the employees are retrained to expunge the concept of an improvement standard.

III. For the Present, Litigation is the Most Effective Vehicle for Correcting Improvement Standard Policies

In a perfect world, the CMS would recognize the error of its ways and unilaterally act to eliminate the improvement standard as a condition of coverage. This change could be accomplished without rulemaking, as the regulations enunciate the correct standard and do not need to be altered. Changes to the inappropriate Manual provisions would be the first step, which should be followed by a review of Local Coverage Determinations to correct those that establish more restrictive coverage conditions than the statute and regulations allow. Even if the Centers would not act on its own, the President could issue an executive order that would require the Centers to take those steps.

For the time being, however, those avenues do not appear to be imminent. Litigation thus may be the more effective tool. Successful lawsuits would not only provide relief to individual plaintiffs and perhaps to classes of beneficiaries, but might also offer sufficient incentive for the Centers to finally correct the problem. A review of the limited and relatively old litigation on this and related issues suggests that the courts have generally been amenable to challenges of this kind. The time has come to bring this issue to court again.

A. Decisions On or Related to the Improvement Standard

The most recent litigation in the area with a substantive (though limited and unpublished) result is the Prendergast case.[28] As noted earlier, Ms. Prendergast was threatened with termination of her home health care on the ground that her ALS had supposedly stabilized. In granting a temporary restraining order, the district judge stated:

Her eligibility is demonstrated both because the Secretary is incorrect to view her condition as stable and because the strict [stability] standard applied by the Secretary is contrary to Medicare policy and, in judging her need for skilled nursing care for her unique situation, it is apparent, as her doctors have shown, that she needs skilled nursing care.[29]

The court thus rejected the improvement standard as establishing a necessary condition of coverage and recognized that the need for skilled care had to be judged on each individual’s situation.[30]

Prendergast was preceded by several decisions that came down 15 to 25 years ago. The most important of these is Fox v. Bowen, which was a Connecticut statewide class action on behalf of Part A beneficiaries in skilled nursing facilities whose coverage of physical therapy was being routinely denied on the ground that the therapy was for maintenance only.[31] The court made the key finding of fact that “the intermediaries often deny coverage without giving adequate consideration to the physical therapy skills required in a particular case.”[32]

In his legal analysis, the district judge reached two main conclusions. First, he held that the regulations “contemplate that each patient will receive an individualized assessment of his need for daily skilled physical therapy based on the facts and circumstances of his particular case.”[33] Second, he concluded:

It is clearly contrary to [the] regulations for an intermediary to deny benefits on the basis of informal presumptions, or “rules of thumb,” that are applied across the board without regard to the medical condition or therapeutic requirements of the individual patient …. [T]he Secretary cannot permit his intermediaries to use blanket rules not supported or authorized by any applicable law or regulations to deny what otherwise might be meritorious claims.[34]

The court then took an unusual tack. Instead of concluding simply that the Secretary had not followed the regulations, he applied the three-factor balancing test of Mathews v. Eldridge to hold that the Secretary’s practices were in violation of the Due Process Clause.[35] For relief, the court enjoined the Secretary from using improper standards to make physical therapy determinations, directed that class members’ claims previously denied should be reconsidered under the proper standard, and established an on-going process to ensure that proper Medicare coverage and therapy continues to be available.[36]

In Smith on Behalf of McDonald v. Shalala, the Secretary had determined that an 82-year-old beneficiary with angina, memory deficits, anemia, and cataracts was no longer entitled to home health care because her condition had stabilized to the point that she no longer needed skilled nursing services.[37] Relying on the regulations and the Home Health Agency Manual, the court rejected the notion that the services were no longer reasonable and necessary. “To hold otherwise would be illogical. The fact that skilled care has stabilized a claimant’s health does not render that level of care unnecessary: an elderly claimant need not risk a deterioration of his fragile health to validate the continuing requirement for skilled care.”[38]

Kuebler v. Secretary of United States Department of Health and Human Services is not technically an improvement case, but the analysis is applicable to this area.[39] The challenge was to the Secretary’s determination that the care at a nursing home was custodial only and therefore not covered by Medicare. Citing several other decisions, the court based its analysis on the view that “the legal standard for determining the need for skilled nursing care is not analysis of services provided but consideration of the patient’s condition as a whole.”[40] Thus, the district judge rejected the Secretary’s technical definition of custodial care: “[T]he courts have consistently interpreted the term in light of the statute’s benevolent congressional purpose using a nontechnical approach, common sense meaning, and consideration of the needs and underlying condition of the claimant insured as a whole.”[41] The court held in favor of the beneficiary because of the Secretary’s dual failure of not using a correct standard in evaluating the need for skilled care and of ignoring the treating physician’s opinion.[42]

B. Potential Problems with Litigation in This Area

Besides the problems inherent in any challenge to the federal government’s policies, cases disputing application of Medicare’s improvement standard face additional hurdles that advocates need to consider in planning litigation.

An early consideration would be whether to bring the case as a class action. While a series of individual cases may ultimately push the CMS to change its policy, successful class actions would be the most effective means to achieve that result. It is certainly possible to allege and have a class certified, as illustrated by the Fox and Hooper cases, but the nature of the challenge poses problems that may discourage a court from certifying a class. For instance, could a class include everyone affected by the improvement standard in a given locale, or would it have to be limited to those denied coverage either because of the application of a particular manual or Local Coverage Determination provision or because they were seeking a particular kind of care? Certainly, the broader the class definition, the louder the government will complain that commonality and typicality are not satisfied.[43]

Furthermore, because Medicare is part of the Social Security Act, litigation in this area has additional potential problems. The first is the jurisdictional requirement that the plaintiff must have “presented” his or her claim in order for the court to have jurisdiction under 42 U.S.C. § 405(g).[44] Since courts have been applying this requirement more strictly of late, at the very least a beneficiary (or an organizational plaintiff) must bring the claim to the attention of the Secretary before filing a lawsuit.[45] Beneficiaries in Parts A and B may only file a claim after the service has been provided.[46] Consequently, if the provider does not believe that the service will be covered, the beneficiary must request that the provider file a claim—a so-called “demand bill”—and the beneficiary will probably have to pay for the service up-front.[47] For beneficiaries of modest means, this requirement may preclude them from obtaining the care and having a claim filed. Nevertheless, regardless of why the claim is not filed, that failure renders a court without jurisdiction to consider the claim.

A related issue is the question of administrative exhaustion. While a court may waive exhaustion, the factors at issue in the waiver analysis often create problems. These factors—whether the claim is collateral to a claim for benefits, whether requiring exhaustion would cause irreparable harm, and whether the purposes of exhaustion would be served (sometimes expressed as whether exhaustion would be futile)—have been discussed and analyzed in depth for over 30 years.[48] Different lower courts have reached different conclusions on crucial points.[49]

This article is not the place for an in-depth analysis of the area, but it must be acknowledged that failure to exhaust is problematical. Of course, for beneficiaries who can proceed through the administrative process while paying for their services, the exhaustion problem does not exist. But, frequently, beneficiaries will not have that luxury, and, having presented their claim, they may need to proceed directly to court.

* * *

The improvement standard, by various names, has been with us for many years, causing probably tens or hundreds of thousands of Medicare beneficiaries to be deprived of coverage for needed care. By now, the standard is so imbedded that many decision-makers do not accept, even when confronted with the evidence, that the Medicare statute does not authorize the standard and the relevant regulations explicitly indicate the opposite. As long as some manual provisions and Local Coverage Determinations suggest that coverage should be terminated when an individual has plateaued or is not improving or is stable, beneficiaries will continue to lose Medicare coverage and access to necessary health care. This result is especially distressing for those with chronic diseases, who are simultaneously the most in need of the care and the most likely to have the improvement standard applied to them to deny coverage.

Litigation has not been common in this area, but, as the size of the Medicare population and the need for skilled care increase, it is imperative that more and stronger efforts be undertaken. Advocates for older people and those with disabilities should recognize the existence of this problem and should give careful consideration to litigating the issue when feasible.

[1]We are grateful to Ms. Prendergast and her family for allowing us to share her story. Unlike most beneficiaries harmed by the termination of home health services in these circumstances, Ms. Prendergast’s home health coverage was reinstated because she obtained a temporary restraining order. See infra at n.2.
Her situation does differ from most other beneficiaries whose coverage has been terminated due to the improvement standard because her home health coverage was reinstated when she obtained a temporary restraining order. Prendergast v. Leavitt, No. 3:08-cv-1148 (D. Conn. Aug. 1, 2008) (temporary restraining order). For more than a year Ms. Prendergast has remained in her home with home health care services as a result of the lawsuit.
For the sake of simplicity, this article will primarily use the term “improvement standard” when referring to the whole range of phrases that the agencies and contractors employ in this context in relation to chronic conditions such as multiple sclerosis, ALS, Parkinson’s disease, diabetes, heart disease, and dementia, among others.
Home health agencies and Part C (Medicare Advantage) plans are especially likely to attempt to terminate beneficiaries with increasingly demanding chronic conditions because of the alleged financial strain placed on the agencies by these so-called “heavy care users.” See, e.g., Healey v. Shalala, 2000 WL 303439, at *2 (D. Conn. Feb. 11, 2000); Winkler v. Interim Services, Inc., 36 F. Supp. 2d 1026, 1027 (M.D. Tenn. 1999).
The Center for Medicare Advocacy, Inc., which employs the authors, has litigated in this area in the past and continues to do so. Advocates are encouraged to contact the authors for assistance on this issue. The Center would consider co-counseling if assistance is needed.
Robert Berenson and Jane Hovarth, Clinical Characteristics of Medicare Beneficiaries and Implications for Reform (2002),
The Henry J. Kaiser Family Foundation, Medicare: A Primer 3 (2009),
AARP, Poverty & Aging in America,
The Henry J. Kaiser Family Foundation, Medicare: A Primer 4 (2009),; see also Tricia Neuman, Juliette Cubanski, and Anthony Damico, Revisiting “Skin in the Game” Among Medicare Beneficiaries: An Updated Analysis of the Increasing Financial Burden of Health Care Spending From 1997 to 2005 (2009),; Juliette Cubanski et. al, Medicare Chart Book (3d ed. 2005),
42 U.S.C. §§ 1395c, 1395d (2005).
Id. §§ 1395x(m), 1395x(p).
Id. § 1395f(a)(2)(C); 42 C.F.R. §§ 409.31, 409.32, 409.42 (2009).
42 C.F.R. § 409.44. Speech therapy or nursing care, in addition to or instead of physical therapy, may also serve as the “skilled” service triggering Medicare coverage for home health care.
The standard is framed in the negative: “[N]o payment may be made … for any expenses incurred for items or services which … are not reasonable and necessary for the diagnosis or treatment of illness or injury ….” 42 U.S.C. § 1395y(a)(1)(A).
42 C.F.R. § 409.32(c). 42 C.F.R. § 409.44(b)(1) of the home health care regulations incorporates by reference the definition of skilled nursing care under 42 C.F.R § 409.32.
Id. § 409.44(a).
Id. § 409.44(b)(3)(iii).
Id. § 409.44(c)(2)(iii) (emphasis added).
Id. §§ 410.60(a), 410.62(a).
Medicare Benefit Policy Manual, ch. 7, §§ 20.3, 40.2,
Id. § 40.1.1.
Id. § 40.2.1.
Id. § 40.2.3.
See 42 C.F.R. § 409.44(c)(2)(iii).
See 42 U.S.C. § 1395ff(f)(2)(B).
Another recently filed case on the issue is Anderson v. Leavitt, No. 1:09-cv-16 (D. Vt. filed Jan. 16, 2009). Since the complaint was filed on January 16, 2009, there have been only procedural rulings.
Prendergast v. Leavitt, No. 08-cv-1148 (D. Conn., Aug. 1, 2008) (temporary restraining order). The district court made a typographical error in using the word “liability” instead of “stability.” In the quoted language above, we have put the correct word in brackets.
Since the issuance of the temporary restraining order, the Medicare Advantage plan has informally agreed to continue to authorize the home health care at issue.
Fox v. Bowen, 656 F. Supp. 1236 (D. Conn. 1987). See also Hooper v. Sullivan, 1989 WL 107497 (D. Conn. July 20, 1989) (a New England-wide class of Medicare beneficiaries; court requires individualized Medicare determinations for inpatient hospital rehabilitation).
Fox, 656 F. Supp. at 1240.
Id. at 1248.
Fox, 656 F. Supp. at 1249–50 (citing Mathews v. Eldridge, 434 U.S. 319, 335 (1976)).
Id. at 1251.
Smith on Behalf of McDonald v. Shalala, 855 F. Supp. 658 (D. Vt. 1994).
Id. at 663 (quotation marks and citation omitted).
Kuebler v. Secretary of United States Department of Health and Human Services, 579 F. Supp. 1436 (E.D. N.Y. 1984).
Id. at 1438 (citations omitted; emphasis in original).
Id. at 1439 (citations omitted).
Id. at 1440. See also Friedman v. Secretary of Department of Health and Human Services, 819 F.2d 42, 45 (2d Cir. 1987) (in a case rejecting coverage for skilled nursing care, the court reiterated that “the decision should be based upon a common sense, non-technical consideration of the patient’s condition as a whole,” adding that “the Social Security Act is to be liberally construed in favor of beneficiaries”); Rizzi v. Shalala, No. 88-cv-360, 1994 WL 686630 (D. Conn. Sept. 29, 1994) (concluding that plaintiffs’ contention that “patients with a ‘chronic’ or ‘stable’ condition are ineligible for home health coverage” is moot because of a change in one of the Secretary’s manuals).
See F. R. Civ. P. 23(a)(2), (3).
42 U.S.C. § 405(g) is incorporated into the Medicare statute, Title XVIII of the Social Security Act, via 42 U.S.C. §§ 1395ff(b)(1)(A) (for Parts A and B claims) and 1395w-22(g)(5) (for Part C claims).
See, e.g., Action Alliance of Senior Citizens v. Leavitt, 483 F.3d 852, 856–58 (D.C. Cir. 2007).
Heckler v. Ringer, 466 U.S. 602, 621–22 (1984).
See, e.g., Connecticut Department of Social Services v. Leavitt, 428 F.3d 138, 149–50 (2d Cir. 2005).
See, e.g., Bowen v. City of New York, 476 U.S. 467, 482–86 (1986); Eldridge, 434 U.S. at 328–32.
Compare, e.g., New York v. Sullivan, 906 F.2d 910, 918 (2d Cir. 1990) (factors are balanced) with Davis v. Astrue, 513 F. Supp. 2d 1137, 1145 (N.D. Cal. 2007) (interpreting circuit law to require that all three factors be met to authorize waiver of exhaustion).

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