Chillicothe Chiropractic and Wellness Center v. Sibelius

Filing 40

OPINION and ORDER adopting 35 the Report and Recommendation. The Secretary's final decision is hereby AFFIRMED. Signed by Judge Michael H. Watson on 11/24/14. (jk1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Chillicothe Chiropractic
and Wellness Center,
Plaintiff,

v.

Case No. 2:12-cv-330

Kathleen Sibelius,
Secretary, United States
Department of Health and
Human Services

Judge Michael H. Watson
Magistrate Judge Deavers

Defendant.

OPINION AND ORDER
Chillicothe Chiropractic and Wellness Center ("Plaintiff'), a Medicare
provider, seeks review of the decision of the Department of Health and Human
Services (the "Secretary") finding Plaintiff liable for overpayments received from
Medicare. The Magistrate Judge issued a Report and Recommendation ("R&R")
recommending that the Court affirm the Secretary's decision. ECF No. 35. On
May 2, 2014, Plaintiff filed Objections to the R&R. ECF No. 38. For the following
reasons, the Court OVERRULES Plaintiffs Objections and ADOPTS the R&R.

I. BACKGROUND
The complete background of this case is set forth in the R&R, ECF No. 35.
Briefly, on December 9, 2009, the Secretary notified Plaintiff that it had overpaid
Plaintiff for Medicare services in the amount of $90,628. In calculating the

overpayment, the Secretary examined 100 fully or partially paid claims. Upon
review of those claims, it determined that every claim was missing some requisite
documentation. It ultimately denied all 100 claims for various reasons, attributing
to them $2,541.44 in actual overpayment. The Secretary then extrapolated that
amount of overpayment to the entire universe of Plaintiff's claims, resulting in an
estimated overpayment of $90,628.
Plaintiff sought redetermination of the Secretary's finding before the
appropriate entities and eventually before an Administrative Law Judge ( "ALJ").
On September 29, 2011, the ALJ issued a partially favorable decision wherein he
concluded that some of the claims in the sample did in fact satisfy Medicare's
coverage requirements, the statistical sample the Secretary used was invalid,
and the Secretary's sample analysis could not be extrapolated to Plaintiff's larger
population of claims.
On November 25, 2011, the Secretary referred the matter to the Medicare
Appeals Council ("MAC"). The MAC found that the ALJ erred in invalidating the
statistical sample and that Plaintiff did not satisfy its burden to demonstrate the
invalidity of the statistical sampling method. It concluded that the overpayment
should be assessed at the lower limit of a one-sided, 90% confident interval.
Plaintiff appealed the MAC's determination to this Court, arguing that the
MAC exceeded its jurisdictional authority in reviewing the ALJ's decision and that
Plaintiff had carried its burden to demonstrate the invalidity of the Secretary's
sampling method.
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The Magistrate Judge issued an R&R recommending the MAC's
determination be affirmed, finding that the MAC did not exceed its jurisdictional
authority in hearing the appeal and that its decision was supported by substantial
evidence. R&R, ECF No. 35. Plaintiff objects only to the Magistrate Judge's
finding that substantial evidence supports the MAC's decision.

II. STANDARD OF REVIEW
If a party objects within the allotted time to an R&R, the Court "shall make
a de novo determination of those portions of the report or specified proposed
findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1 );

see also Fed R. Civ. P. 72(b). Upon review, the Court "may accept, reject, or
modify, in whole or in part, the findings or recommendations made by the
magistrate judge." 28 U.S.C. § 636(b)(1 ).
Plaintiff's objections address the Magistrate Judge's review of the MAC's
decision. In reviewing a MAC decision, the Court affirms the Commissioner's
decision if it is supported by substantial evidence. R&R 8, ECF No. 35 (citing

Rabbers v. Comm'rof Soc. Sec., 582 F.3d 647, 651 (6th Cir. 2009)).

Ill. ANALYSIS
In seeking reversal of the MAC's decision, Plaintiff argued the decision
was not supported by substantial evidence because: ( 1) the MAC incorrectly
concluded that the ALJ did not include sufficient detail in his analysis of the
Secretary's sampling method, and (2) the MAC incorrectly determined Plaintiff

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failed to satisfy its burden to prove the invalidity of the Secretary's sample
methodology. Brief 4-5, ECF No. 28.
The Magistrate Judge concluded that Plaintiff's first argument was
irrelevant because in determining whether substantial evidence supports the
MAC's decision, the district court does not consider the ALJ's findings:
[l]n ascertaining whether substantial evidence supports the
Secretary's decision, the Court reviews only the MAC's findings. See
John Balko & Assoc., Inc., v. Sec'y of Health & Human Servs., No.
13-1568, --- F. App'x ----, 2014 WL542262, at *5 (3d Cir. Feb. 12,
2014) ("[l]nasmuch as we are concerned on this appeal ... with a
review of MAC's decision, we do not review the ALJ's findings, and
[the plaintiff's] arguments addressing those findings are irrelevant.").
For this reason, Plaintiff's contention that the MAC erroneously
attacked the sufficiency of detail in the ALJ's analysis is not relevant
to this Court's determination of whether substantial evidence
supports the Secretary's decision.
R&R 11-12, ECF No. 35.
Plaintiff objects to this conclusion. Its argument is as follows. In declining
to review the ALJ's findings, the Magistrate Judge relied on Balko's conclusion
that the ALJ's findings are irrelevant. In reaching that conclusion, Balko relied on
International Rehabilitative Sciences Inc. v. Sebelius, 688 F.3d 994, 1001-02

(9th Cir. 201 0). lnt'l Rehab. does not, however, stand for the proposition that the
ALJ decision should be ignored when reviewing the MAC's decision. Balko
therefore incorrectly found the ALJ decision irrelevant, and in relying on Balko, so
too did the Magistrate Judge. Had the Magistrate Judge correctly applied
International Rehab. and considered Plaintiff's argument regarding the MAC's

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treatment of the ALJ's analysis, she would have found that the MAC's decision is
not supported by substantial evidence.
Plaintiff's argument is not well taken. Even assuming lnt'l Rehab. required
the Magistrate Judge to consider the MAC's attack on the sufficiency of the ALJ's
analysis, Plaintiff fails to explain how such consideration would affect the
Magistrate Judge's finding of substantial evidence. Indeed, the Magistrate Judge
found that substantial evidence existed to support the MAC's decision without
considering Plaintiff's challenge to MAC's attack on the sufficiency of the ALJ's
reasoning. As Plaintiff does not challenge the evidence on which the Magistrate
Judge relied in determining that substantial evidence existed, it is unclear how
consideration of Plaintiff's argument would change the Magistrate Judge's
conclusion. 1
In sum, Plaintiff has failed to establish that the Magistrate Judge erred in
finding that the MAC's decision was not supported by substantial evidence.

1

Plaintiff's also takes issue with the fact that the MAC considered the case even though
the Secretary did not participate in the hearing before the ALJ. Again, however, Plaintiff
fails to explain how the Secretary's absence at the hearing demonstrates a lack of
substantial evidence to support the MAC's decision. To the extent Plaintiff meant to
object to the Magistrate Judge's conclusion that the MAC did not lack authority to
consider the case absent the Secretary's participation in the hearing, Plaintiff fails to
present a cogent argument to that effect.
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IV. CONCLUSION
For the foregoing reasons, the Court OVERRULES Plaintiff's Objections,
ECF No. 38, and ADOPTS the R&R, ECF No. 35. The Secretary's final decision
is hereby AFFIRMED.
IT IS SO ORDERED.

MlCHAELH:WATSON, JUDGE
UNITED STATES DISTRICT COURT

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