Superior Home Health Services, LLC v. Burwell et al
Filing
41
MEMORANDUM OPINION AND ORDER, that the Court AFFIRMS the Secretary's finaladministrative decision; (2) DENIES the Plaintiffis Amended Motion for Summary Judgment [ECF No. 31]; and (3) GRANTS the Defendant's Cross-Motion for Summary Judgment {ECF No.35}. Signed by Judge Royce C. Lamberth. (wg)
FILED
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CLERK, U.S.
)
SUPERIOR HOME HEALTH
SERVICES, L.L.C.,
AUG03
IS
2018
CT CLERK
WESTERcOFS
)
)
DEPUTY
)
Plaintiff,
)
)
v.
)
)
ALEX M. AZAR II, SECRETARY,
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Case No: 5:15-cv-00636-RCL
)
)
)
)
Defendant.
)
_____________)
MEMORANDUM OPINION
Before the Court is the Plaintiff's Amended Motion for Summary Judgment {ECF No. 31]
by the plaintiff Superior Home Health Services, L.L.C., and the Defendant's Cross-Motion for
Summary Judgment and Response to Plaintiff's Motion for Summary Judgment [ECF No. 35] by
the defendant Alex M. Azar II, Secretary of the United States Department of Health and Human
Services, and all responses and replies thereto. For the reasons stated below, the Court: (1)
AFFIRMS the Secretary's fmal administrative decision; (2) DENIES the plaintiff's Amended
Motion for Summary Judgment [ECF No. 31]; and (3) GRANTS the defendant's Cross-Motion
for Summary Judgment [ECF No. 35].
I.
BACKGROUND
This case comes before the Court as an appeal from the final agency decision of the
Departmental Appeals Board Medicare Appeals Council ("Council"), which determined that the
'Alex M. Azar LI is the current Secretary of the U.S. Department of Health and Human Services. The caption has
been updated accordingly.
1
plaintiff, Superior Home Health Services, L.L.C. ("Superior"), was overpaid by the Medicare
program for home health services. ECF No.
1
at 3, ¶4.
Superior is a state-licensed, Medicare-certified home health care provider. Id. at 3-4, ¶5.
On January 22,2010, Superior was given the preliminary results of an audit conducted on its claims
for coverage of home health services provided to beneficiaries between June 21, 2007, and April
10, 2009.2 ECF No. 1-1 at 2 (the Council's final agency decision). Health Integrity, the Zone
Program Integrity Contractor ("ZPIC") that conducted the initial audit, reviewed a 49-claim
sample. Id. Twenty-six beneficiaries from this sample were determined to be ineligible for home
health services pursuant to Medicare coverage criteria. Id. at 2-2.
The overpayment received by Superior was determined to be $70,825.17. ECF No.
I
at 8,
¶17. Health integrity then extrapolated the results of the sample to the universe of claims' and
determined the total overpayment to be $2,941,437.00. ECF No. 1-1 at 5. On March 30, 2010, the
Medicare Administrative Contractor, Palmetto GBA, LLC ("Palmetto"), formally notified
Superior of this overpayment. Id. Superior alleges that this formal notification did not include "any
of the statistical data used to extrapolate the overpayment." ECF No. 1 at 8, ¶18.
Pursuant to the statutory appeal process,3 Supericr sought a redetermination by Palmetto.
Palmetto reviewed each claim individually and ultimately upheld the overpayment determination,
denying all claim appeals. ECF No. 1-1 at 5. On reconsideration, a Qualified Independent
It is not clear what the exact period of review was, as the various submissions to this Court by both parties contain
differing dates (in some instances, the alleged date range differs within the same submitted document). Because the
exact period of review does not matter for the purpose of this opinion, the Court will assume the relevant period
stated in the Council's decision (ECF No. 1-1 at 2) is correct.
Following an initial determination by a ZPJC that a claim does not meet the requirements for Medicare coverage, a
beneficiary or provider may appeal the decision through a 5-step process: (1) redetermination by the Medicare
administrative contractor (42 C.F.R. § 405.940 et seq.); (2) reconsideration by a qualified independent contractor
("QIC") (42 C.F.R. § 405.960 etseq.); (3) a hearing before an administrative law judge ("AU") (42 C.F.R. §
405.1002(a), 405.1006(b)); (4) review by the Medicare Appeals Council ("Council") (42 C.F.R. § 405.1100 etseq.);
and (5) judicial review by a U.S. district court (42 U.S.C. § 1395ff(b)(1)(E); 42 C.F.R. § 405.1136; 42 C.F.R. §
405.1130).
2
2
Contractor ("QIC") upheld the overpayment as well, finding "the sampling methodology valid"
and denying "the individual claims for coverage based on the appellant's failure to demonstrate
the medical necessity of the varioUs services." Id.
Superior contested the determination at an AU hearing on June 29-30, 2011. Id. During
the hearing, Superior called expert witnesses challenging the ZPIC's sampling methodology, and
presented testimony from a compliance expert and its former director of nursing addressing the
coverage of the Medicare claims. Id. The AU determined that the sampling methodology was
valid under applicable law, and that Superior was liable for the overpayment. Id. at 4. However,
the Amended Decision issued by the AU on August 3, 2011, was partially favorable to Superior,
finding that seven of the twenty-six claims in dispute had in fact satisfied Medicare coverage
criferia, and that only nineteen of the forty-nine claims were deficient. ECF No. 35 at 7. These
nineteen claims covered eighteen beneficiaries, as the sample included two separate claims for a
single beneficiary. ECF No. 1-1 at 6 n.3.
At the final stage of administrative appeal prior to judicial review, Superior appealed the
AU's findings to the Medicare Appeals Council. ECF No.
1-I at 4. Superior asserted that the AU
had made several errors of law regarding the sampling methodology, namely that the ZPIC had:
(1) improperly reopened the claims; (2) proposed illegal recoupment of the alleged overpayment;
and (3) violated the Medicare Benefit Policy Manual's "No Rule of Thumb" in its denial of
coverage. Id. Superior asserted that the AU simply "lifted" the "same boilerplate language used
by [the QIC]." Id. Lastly, Superior alleged errors of fact in (1) the
the remaining eighteen beneficiaries, and (2) the
AU's denial of coverage for
AU's statistical analysis. Id.
The Council issued the Centers for Medicare & Medicaid Services ("CMS") final agency
decision on June 3, 2015. Id. at 67. While partially reversing the AU in declaring the claims of
3
three of the remaining eighteen beneficiaries to be valid, the Council upheld the sampling
methodology used to generate the extrapolated overpayment value. Id. It also affirmed Superior's
liability for the remaining non-covered claims, and determined that Superior was ineligible for
waiver of recoupment. Id. Finally, the Council ordered the extrapolated overpayment recalculated
to reflect updated claim determinations. Id.
After exhausting all administrative remedies, Superior appeals the Council's decision to
this Court for judicial review pursuant to 42 U.S.C.
II.
§
1395ff(b)(1)(A).
LEGAL STANDARD
A.
Summary Judgment
Under Rule 56, summary judgment is appropriate "if the movant shows that there is no
genuine dipute as to any material fact and the movant is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(a); see Andersonv. Liberty Lobby, Inc., 477 U.S.
242, 247
(1986). The moving
party bears the burden of establishing the lack of a genuine issue of material fact. Id. If the movant
does not bear the burden of proof at trial, he is entitled to summary judgment if he can point to an
absence of evidence to support an essential element of the nonmoving party's case. See Celotex
Corp. v. Catrett, 477
U.S. 317, 323
(1986). Similarly, a movant without the burden of proof at trial
may be entitled to summary judgment if sufficient evidence "negates" an essential element. Id.
The lack of proof as to an essential element renders all other facts immaterial. Id.
A fact is material if it could affect the outcome of the case. Liberty Lobby, 477 U.S. at 247.
A dispute is genuine
if the evidence is such that "a reasonable jury could return a verdict for the
nonmoving party." Id. To survive summary judgment, a nonmoving party must present specific
facts or evidence that would allow a reasonable factfinder to find in his favor on a material issue.
Id. However, merely asserting a factual dispute or conclusory denials of the allegations raised by
4
the moving party is insufficient; the nonmoving party must come forward with competent
evidence. Id, at 249-250. The nonmoving party may set forth specific facts by submitting affidavits
or other evidence that demonstrates the existence of a genuine issue. Id.; see also Fed. R. Civ. P.
56(c). All inferences drawn from the facts must be viewed in the light most favorable to the non-
moving party. See Adickes v. S.H Kress & Co., 398 U.S. 144 (1970). To prevail on a summary
judgment motion there must be enough evidence on which a jury could reasonably find for the
moving party. Liberly Lobby, 477 U.S. at 252.
Judicial Review
B.
The parties argue for two different standards of judicial review. Compare ECF No. 31 at
6-7 with ECF No. 35 at 9-10. The Secretary contends that judicial review of the Council's final
decision is governed by 42 U.S.C.
§
405(g), whiàh states in relevant part that a District Court of
the United States:
shall have power to enter, upon the pleadings and transcript of the record, a judgment
affirming, modifying, or reversing the decision of the [Secretary], with or without
remanding the case for a rehearing. The findings of the [Secretary] as to any fact, if
supported by substantial evidence, shall be conclusive.
42 U.S.C.
§
405(g). The Secretary further cites to Fifth Circuit precedent holding that where
§
405(g) governs the standard of review, "appellate review is limited to two issues: (1) whether the
Commissioner applied the proper legal standards; and (2) whether the Commissioner's decision is
supported by substantial evidence on the record as a whole." Estate ofMorris v. Shalala, 207 F.3d
744, 745 (5th Cir. 2000). Because "Congress charged the Secretary with the primary responsibility
for interpreting the cost reimbursement provisions of the Medicare Act," this Court is required to
"accord particular deference to [the Secretary's] interpretation of Medicare legislation." Girling
Health Care, Inc.
v.
Shalala, 85 F.3d 211, 215 (5th Cir. 1996). Substantial evidence is defined as
5
"more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion." Id. (quoting Richardson v. Perales, 402 U.S. 389, 401 (1971)).
Superior argues that the standard of review is governed by the Administrative Procedure
Act ("APA"), which "permits the setting aside of agency actions, findings, and conclusions that
are 'arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with the law' or
'unsupported by substantial evidence." Cedar Lake Nursing Home
Human Servs., 619 F.3d 453, 456 (5th Cir. 2010) (quoting
5
v.
U.S.C.
US. Dep 't of Health &
706(2)(A)-(E)). This
§
standard is also generally deferential to administrative proceedings. Id.
In
a
similar dispute, also between a medical services provider and the CMS over alleged
Medicare claim overpayments, the Fifth Circuit assumed "only for the sake of argument" that the
arbitrary and capricious standard of the APA applied. Max,nedHealthcare, Inc.
v.
Price, 860 F.3d
335, 340 (5th Cir. 2017). "Because the standard of review 'probably makes no difference,' we
make the same assumption here, too." Id. (quoting Baylor Cly. Hosp. Dist.
V.
Price, 850 F.3d 257,
261(5th Cir. 2017)) (internal citations omitted). Also for the sake of argument, this Court will
make the same assumption and apply the APA's arbitrary and capricious standard, as we agree
that it "probably makes no difference."
III.
DISCUSSION
A.
The "Rule-of-Thumb"
Superior first argues that the sampling and extrapolation methodology used by the ZPIC
violates what it calls the Medicare "Rule-of-Thumb." ECF No. 31 at 8. This "rule-of-thumb" is
derived from language in the Medicare Benefit Policy Manual ("MBPM") which states that
"[M]edicare recognizes that determinations of whether home health services are reasonable and
necessary must be based on an assessment of each beneficiary's individual care needs." MBPM,
Chap. 7,
§
20.3. Because of this requirement that the claim of each beneficiary be individually
evaluated on its own merits, Superior argues, "a 'rule-of-thumb' cannot be utilized to determine
whether services are covered or not for hundreds or thousands of beneficiaries." ECF No. 31 at 8.
Given this interpretation, Superior argues that the ZPIC's use of extrapolation to determine the
total overpayment was error.
The Fifth Circuit has already rejected this exact argument, put forth by Superior's same
attorney, in a prior case. Marmed Healthcare, 860 F.3d at 343. Finding that the "rule-of-thumb"
argument contradicts the CMS statutory scheme, the Fifth Circuit held, in relevant part:
The Rule of Thumb makes sense for and applies to the prepaymeni review of individual
coverage claims under Medicare. The MBPM provides guidance to Medicare contractors
providing such prepayment review. What is appropriate when services are being authorized
to Medicare beneficiaries, however, is not the standard for post-payment audits of
providers. Congress authorized the Secretary's contractors to use extrapolation where, as
in this case, "there is a sustained or high level of payment error." 42 U.S.C. §
1 395ddd(f)(3)(A). This provision is part of the overall fiscal integrity program governing
"[r]eview of activities of providers of services or other individuals or entities furnishing
items and services for which payment may be made under this subchapter (including skilled
nursing facilities and home health agencies)[.J" 42 U.S.C. § 1395ddd(b)(l) (emphasis
added). Thus, Congress clearly envisioned extrapolation in overpayment determinations
involving home health agencies....
860 F.3d at 343. Given that this is settled law in the Fifth Circuit, the Secretary's use of
extrapolation to determine the total value of the overpayment is justified, and is neither arbitrary
nor capricious, nor unsupported by substantial evidence.
B.
The Sampling and Extrapolation Methodologies
In its challenge to the Council's review ofthe AU's findings, Superior raises several points
of error regarding the sampling and extrapolation methodologies employed by the ZPIC: (1) the
Council exceeded its authority in "redrafling" the
AU's findings [ECF No.
31 at 9]; (2) the
Council failed to address Superior's challenge to the reliability of the sample {Id. at 101; (3) the
Council erred in concluding as a matter of law that substantial evidence in the record supported
7
the statistical sampling and extrapolation methodologies [Id. at 11]; and (4) the final agency
decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law
and regulation. [Id. at 12]. The Secretary, in his cross-motion for summary judgment, refutes each
of these alleged errors, calling for summary judgment in his favor. ECF No. 35 at 10-18.
The Council's review
1.
of the AU's findings
Superior asserts that the Council exceeded its authority by merely redrafting the findings
of the
AU and failing to address or even consider the testimony given by Superior's expert
statisticians. ECF No. 31 at 9. Specifically, Superior points to testimony from "Dr. Cobb" at the
AU hearing, who testified that "Health Integrity had failed to disclose all pertinent calculation
documentation, that the claim lines were inconsistent, that undesirable claims were excluded from
the universe which created substantial bias, and that the sample was not representative of the
universe." Id. at 9-10. The Council, Superior argues, "cursorily declared" that the ZPIC's
methodology met Medicare requirements, "affirming the validity of the calculations but
supplanting the AU's findings with its own and the added benefit of a hind-sight review." Id. at
10. Superior asserts
that the Council was "charged with determining whether the AU's decision
was supported by substantial evidence in the record and premised upon correct legal principles."
Id. at 9.
As the Secretary correctly points out in his cross-motion, the Council is in fact charged
with reviewing the case de novonot merely for substantial evidence and correct legal principles,
as Superior asserts. See 42 U.S.C. §1395ff(d)(2)(B); MaxmedHealthcare, 860 F.3d at 338. Aside
from vague, unsupported statements, Superior provides no basis for its claim that the Council
merely redrafted the
AU's findings instead of arriving at
its own conclusions after properly
considering the testimony and evidence before it. Moreover, Superior actually contradicts this very
8
assertion when it argues that the Council supplanted the
AU's findings with its own with the
"added benefit" of hindsight. See ECF No. 31 at 9-10. Surely the mere fact that the Council agreed
with the AU's determination of validity regarding the sampling and extrapolation methodology
does not demonstrate that it failed to do its own investigation into the facts of the case.
To the contrary, the Council thoroughly addressed the sampling guidelines set forth in the
Medicare Program Integrity Manual ("MPIM") and the ZPIC's compliance with those guidelines
in this case. ECF No. 1-1 at 8-21. Consequently, this Court finds that the Council's decision to
uphold the AU's determinations regarding the validity of the sampling methodology was neither
arbitrary nor capricious, nor unsupported by substantial evidence.
2.
The Council's determination of sample reliability
Superior next argues that the sample selected by the ZPIC failed to comport with MPIM
selection guidelines. ECF No. 31 at 10. The sampling universe defined by the ZPIC, Superior
argues, was biased as a result of its exclusion of zero-payment claims and underpayments, the
latter of which the MPIM states must be recorded as negative overpayments and included in the
total overpayment value calculation. Id.; see also CMS Pub. 100-08 ("MPIM")
§
8.4.5.2. Given
this bias, Superior asserts that "the sample was not representative of the universe of claims" and
that the projected extrapolation was therefore inaccurate. Id. at 11. Superior claims that its expert
testified to this extent, stating that the sample was not representative of the universe by a factor of
5,010% and advocating for a different methodology that would have yielded a more accurate
sample. Id.
The sampling universe selected by the ZPIC was "all claims from beneficiaries with
5
or
more continuous full home care episodes and claims with payments greater than $1,000." ECF No.
1-1
at 17 (internal quotations omitted). Out of the 8,555 possible claims,4 this filter narrowed the
sampling universe down to 2,528 claims for which Superior was paid a total of $8,015,218.01 by
the CMS. Id. Superior claims that this subset of claims was chosen in order to "deliberately
exclude" zero payment claims and underpayments (what it refers to as "undesirable claims") in
order to "cherry-pick[] the data for extrapolation." ECF No. 31 at 10-11. Superior supports this
argument with language taken from the MPIM: "Sampling units that are found to be
underpayments, in whole or in part, are recorded as negative overpayments and shall also be used
in calculating the estimated overpayment." MPIM § 8.4.5.2 (emphasis added).
As the Secretary points out and the Council's decision explains, there was in fact nothing
arbitrary about the ZPIC's narrowing of the universe of claims. The ZPIC selected Superior for
post-payment revieW because Superior was "the top provider in the State of Texas in terms of
payment made for five or more continuous 60-day home health episodes (over $22 million) and
43% of its beneficiaries received five or more 60-day episodes." ECF 1-1 at 16. Moreover, the
passage Superior quotes requiring that sampling units determined to be underpayments be included
in overpayment calculations has nothing to do with defining the sampling universe. The language
from section 8.4.5.2 merely states that sampling units (in this case, individual beneficiary claims)
selected as part of the sample and later determined to be underpayments must be included as
negative values in the calculation of the total overpayment. ECF No. 35 at 14; MPIM
§
8.4.5.2.
Here, none of the claims randomly selected for review were underpayments, and the passage is
completely irrelevant to this case. ECF No. 1-1 at 18.
'
Superior claims in its motion that the spreadsheet used by the ZPIC (titled "Sample HICNs Part B Claims) lists
8,555 total claims, out of which "381 were for amounts below $1.00, 1,355 were for amounts below $500, and
almost 50% were for amounts below $20.00." ECF No. 31 at 10 n.3.
10
Superior cites to no additional authority beyond the testimony of its own expert witnesses
that demonstrates the ZPIC erred as a matter of law by limiting the sampling universe as it did. To
the contrary, the MPIM is clear that a ZPIC like Health Integrity has flexibility in choosing a
sampling frame (i.e. "the 'listing' of all possible sampling units from which the sample is
selected."). MPIM
§
8.4.3.2.3. The sampling frame "may be, for example, a list of all beneficiaries
receiving items from a selected supplier, [or] a list of all claims for which fully or partially
favorable determinations have been issued." Id.
Superior's reading of section 8.4.5.2 of the MPIM is unconvincing. Given the large number
of claims submitted by Superior for five or more continuous home health episodes, a trend that
Superior does not dispute, it is unsurprising that the ZPIC sought to review a sample with the
specifications it chose. Consequently, this Court does not find the Secretary's determination
regarding the reliability of the sample to be arbitrary, capricious, or unsupported by substantial
evidence.
3.
The Council '.s determination
that the sampling and extrapolation
methodologies were valid
Superior attacks the general sampling and extrapolation methodologies used by the ZPIC
to calculate the overpayment, arguing (1) that substantial evidence in the record does not support
the method used, and (2) that the Council's decision that the methodologies were valid was
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law and
regulation. ECF No. 31 at 11-12. It argues that the sample design was not "properly executed" as
defined in section 8.4.2 of the MPIM, which states in relevant part:
If a particular probability sample design is properly executed, i.e., defining the universe,
the frame, the sampling units, using proper randomization, accurately measuring the
variables of interest, and using the correct formulas for estimation, then assertions that the
sample and its resulting estimates are "not statistically valid" cannot legitimately be made.
11
MPIM
8.4.2. "Based on expert testimony," Superior generally asserts that the ZPIC failed to
§
follow MPIM procedures in its calculations, and therefore the presumption of validity afforded to
its findings by the Council was unwarranted. ECF' No. 31 at 12. Before addressing the merits of
this argument, it is first necessary to briefly describe the guidelines for conducting statistical
sampling and extrapolation, and where this presumption of validity comes from.
The Social Security Act states that extrapolation may not be used by a Medicare contractor
to determine overpayment amounts unless the Secretary finds that (1) "there is a sustained or high
level of payment error," or (2) "documented educational intervention has failed to correct the
payment error." 42 US.C.
§
1395ddd(f)(3).
The MPIM lays out the steps a contractor must follow when conducting statistical
sampling:
(1) Selecting the provider or supplier; (2) Selecting the,period to be reviewed; (3) Defining
the universe, the sampling unit, and the sampling frame; (4) Designing the sampling plan
and selecting the sample; (5) Reviewing each of the sampling units and determining if there
was an overpayment or an underpayment; and, as applicable, (6) Estimating the
overpayment.
MPIM
§
8.4.1.3. When calculating the estimated overpayment, "the lower limit of a one-sided 90
percent confidence interval shall be used as the amount of overpayment to be demanded for
recovery from the provider or supplier." Id. at
§
8.4.5,1. As the Council explained in its decision,
this effectively means that "there is a ninety percent chance that the actual overpayment is higher
than the overpayment which is being assessed." ECF No. 1-1 at 10. Assessing the estimated value
at this lower limit "incorporates the uncertainty inherent in the sample design" and "works to the
financial advantage of the provider or supplier." MPIM
12
§
8.4.5.1.
In order to ensure the validity of a sample, a Medicare contractor must use a methodology
that results in a "probability sample." Id. at
§
8.4,2. The MPIM defines a probability sample by
two required features:
It must be possible, in principle, to enumerate a set of distinct samples that the
procedure is capable of selecting if applied to the target universe. Although only
one sample will be selected, each distinct sample of the set has a known probability
of selection. It is not necessary to actually carry out the enumeration or calculate
the probabilities, especially if the number of possible distinct samples is large
possibly billions. It is merely meant that one could, in theory, write down the
samples, the sampling units contained therein, and the probabilities if one had
unlimited time; and
Each sampling unit in each distinct possible sample must have a knownprobability
of selection. For statistical sampling for overpayment estimation, one of the
possible samples is selected by a random process according to which each sampling
unit in the target population receives its appropriate chance of selection. The
selection probabilities do not have to be equal but they should all be greater than
zero. In fact, some designs bring gains in efficiency by not assigning equal
probabilities to all of the distinct sampling units.
Id. If a sample is "properly executed" such that a probability sample results, the extrapolated
overpayment amount is entitled to a presumption of validity on review. Id.
The Council determined that the ZPIC followed all six required steps laid out in section
8.4.1.3 of the MPIM:
1.
As discussed in the preceding subsection of this opinion, Superior was selected due to
its status as "the top provider in the State of Texas in terms of payment made for five
or more continuous 60-day home health episodes of care." ECF No.
1-1 at 16.
2. The period reviewed was June 21, 2007, to April 10, 2009. ECF No. 1-1 at 2.
3. "The sampling universe was 'all claims from beneficiaries with 5 or more continuous
full home care episodes and claims with payments greater than $1,000.. . There were
2,528 claims for which Superior.. . was paid a total of $8,015,218.01." Id. at 15. Each
claim constituted a sampling unit, and the sample size was 49 claims. Id.
13
4. As to designing the sampling plan and selecting the sample, RAT-STATS software5
was used to calculate the overpayment. "The sample-claims were randomly selected
from the 2,528-claim universe, using a known seed number." Id.
5. The ZPIC reviewed the sample claims and determined that "26 out
of 49 services were
improperly reimbursed." Id. This constituted a 53% service error rate and an actual
overpayment of $70,825.17. Id.
6. Using an 80% two-sided confidence interval, the ZPIC extrapolated a total
overpayment of $2,941,337 with a 19.5% sample precision. Id. As the Council noted,
and Superior has not disputed, "the lower bound of an 80% two-sided confidence level
is equivalent to a one-sided 90% confidence level discuased in the MPIM." Id.
In its motion, Superior vaguely disputes that the sampling and extrapolation procedures
actually resulted in a probability sample because the sample was not "properly executed." See ECF
No. 31 at 12. It justifies this conclusion by pointing to expert testimony "outlined in section 2"
of
its motion, wherein it disputed the reliability of the sample due to the alleged bias resulting from
the apparent exclusion of underpayments and zero-payment claims. Id. This argument, which is
based entirely on an inaccurate reading of section 8.4.5.2 of the MPIM, has already been deemed
meritless in the preceding subsection. It need not be addressed again here.
Superior lastly points to four cases filed by its same attorney in the U.S. District Court for
the Southern District of Texas seeking judicial review of Medicare Appeals Council
determinations regarding overpayments to medical care providers. ECF No. 31 at 13. It claims that
in all four cases, the Medicare administrative contractor "rejected Health Integrity's statistical
sampling and extrapolation." Id. Superior alleges that the contractor in each case used the "same
The Secretary alleges, and Superior does not dispute, that "RAT-STATS is a widely used and accepted package of
statistics software developed by the HHS Office of Inspector General."
14
methodology" employed by the ZPIC in this case, and that "a determination of whether or not the
ZPIC's methodology is valid ought to be the same in every instance." Id. In Maxmed Healthcare,
Superior's same attorney attempted to make the identical argument, alleging that "four recent cases
filed in federal court in the Southern District of Texas demonstrate that Health Integrity's
methodology was an arbitrary and capricious use and application of statistical sampling and
extrapolation." Maxmed Healthcare, Inc.
7486369,
Burwell, No. SA:14-CV-988-DAE, 2016
v.
WL
at *3 (W.D. Tex. Apr. 1, 2016). The Court held that "these complaints do not adequately
inform the Court as to the parties' evidence, records, testimony, and statistical sampling, and
whether they are exactly the same as those at issue in this case." Id.
Here, Superior cursorily cites to four cases that were voluntarily dismissed by the
respective plaintiffs shoitly after the complaints were filed. It provides no specific basis for this
Court to conclude that the exact same methodology was in fact used in each case aside from
conclusory assurances that this Court obviously cannot simply accept at face value. It cites no final
agency decisions that may have been issued, nor any specific reasons why the sampling or
extrapolation methodologies were rejected. The Court declines Superior's invitation to do its job
for it by piecing together an argument out of separate, uncited administrative determinations
regarding unique circumstances and evidence. This Court is tasked with reviewing the Secretary's
final decision based on the record of this case alone, and Superior's attempt to incorporate mere
allegations made in separate cases is unavailing.
Four reviewing entities have determined that the sampling and extrapolation
methodologies employed by the ZPIC in this case resulted in a probability sample, and that the
sample was therefore entitled to a presumption of validity. The Secretary has demonstrated with
substantial evidence that the procedure used to extrapolate the overpayment value is compliant
15
with Medicare standards as set forth in 42 U.S.C.
§
1395ddd and the MPIM. Superior has made
clear in its submissions to this Court that its expert witnesses would have employed a different
methodology, perhaps even one that would have yielded a significantly more accurate resultbut
it is not the function of this Court on judicial review to dictate which sampling and extrapolation
methodologies must be used in administrative proceedings. What matters for the purpose of this
appeal is the substantial evidence in the record supporting the Secretary's finding that the
methodologies used by the ZPIC satisfied all relevant legal and administrative requirements. His
decision pursuant to those findings was neither arbitrary nor capricious.
C.
Medicare Coverage Determinations
Superior next argues that the Council erred by failing to consider substantial evidence in
its favor as to Medicare coverage of each individual claith for home health services. ECF No. 31
at 15. It claims, specifically: (1) the Council rested its decision on the ZPIC' s interviews "as
opposed to the substantive evidence in favor of homebound status;" (2) the Council improperly
applied "homebound" status rules; and (3) the Council improperly applied "medical necessity"
rules. Id. at 15-19.
In order to qualify for home health services, a beneficiary must be: (a) confined to the
home; (b) under the care of a physician who establishes a plan of care; (c) in need of skilled
services; (d) under a qualifying plan of care that meets the requirements set forth in 42 C.F.R.
409.43; and (e) receiving services from a participating home health agency. 42 C.F.R.
1.
§
§
409.42.
Interviews
Superior disputes the reliability of interviews taken by the ZPIC to determine homebound
status at the time the home health services were rendered. Id. at 15. It asserts that the interviews
were biased given that they were conducted between one and three years after services were
16
rendered, and because the interviewees were "persons with memory problems, dementia, and
comorbidities ofthe ageing process." Id. Instead, it contends, "[c]ontemporaneous medical records
prepared by registered nurses and home health professionals would logically stand as stronger,
more reliable evidence, and should have been accepted not only by the AU but the Council." Id.
Superior points to no authority at all discounting the value of interviews in audit
investigations of Medicare claims. Moreover, contrary to Superior's assertion that the AU and the
Council "rested their decision" on the interviews, the Council's decision specifically states that it
"employs a cautious approach when reviewing an audit agency's subsequent home health
interview" due to "the itherent passage of time between an audit-based interview and service
episode." ECF No. 1-1 at 39. This cautious approach was duly demonstrated when the Council
found the interviews of four of the seven beneficiaries whose homebound statuses were in dispute
to be unpersuasive or unreliable.
See
id.
at 33 (finding interview record of Beneficiary M.C.
unpersuasive to determine homebound status), 40 (finding interview record of Beneficiary I.G.
insufficient to determine homebound status), 44 (finding interview record does not support the
AU's finding that Beneficiary M.M. was not homebound),
46 (finding interview record of
Beneficiary J.R. to be incomplete and insufficient to determine homebound status). The record
contains substantial evidence that the Council did in fact assign the proper probative value to the
interviews conducted by the ZPIC, and the Council's decision based on that information was
neither arbitrary nor capricious.
2.
Homebound Status
Superior moves for summary judgment on its assertion that the Council improperly denied
homebound status to two beneficiaries (C.E. and M.M.(l)) by failing to apply relevant Medicare
'law. ECF No.
31 at 16. The statute reads in relevant part:
17
an individual shall be considered "confined to his home" if the individual has a condition,
due to an illness or injury, that restricts the ability of the individual to leave his or her home
except with the assistance of another individual or the aid of a supportive device (such as
crutches, a cane, a wheelchair, or a walker), or if the individual has a condition such that
leaving his or her home is medically contraindicated. While an individual does not have to
be bedridden to be considered "confined to his home," the condition of the individual
should be such that there exists a normal inability to leave home and that leaving home
requires a considerable and taxing effort by the individual.
42 U.S.C.
§
1395f(a). Furthermore, any "absence of an individual from the home shall not so
disqualify an individual from being considered to be 'confined to his home." Id. Superior argues
that in the case of each of the two disputed claims, the Council determined that neither beneficiary
was homebound "because there was some evidence of their leaving the home during the 2-month
period in question." ECF No. 31 at 16. In the case of Beneficiary M.M.(l), Superior asserts that
the Council made this determination "because there were
three
noted absences from the home."
Id. This determination was error, Superior argues, because certain infrequent activities that involve
leaving the home are expressly allowed under the relevant statutes and the MBPM without
disqualifying an individual from homebound status, including "tak[ing] walks around the block,
go[ing] for drives," and going to church. Id. at 17. Indeed, the statute states that "any absence for
the purpose of attending a religious service shall be deemed to be an absence of infrequent or short
duration."
§
1395f(a).
The record shows no indication that the Council was incapable of properly determining the
homebound status of any beneficiary it considered. As the Secretary points out in his motion, the
Council actually reversed the AU's determination that Beneficiary E.C.(1) was not homebound,
finding his 5-day-per-week attendance at adult daycare, which was providing medical services,
insufficient to destroy the beneficiary's homebound status. This determination was consistent with
42 U.S.C.
§
1395f(a), which states that "[amy absence of an individual from the home attributable
to the need to receive health care treatment, including regular absences for the purpose of
18
participating in therapeutic, psychosocial, or medical treatment in an adult day-care program...
shall not disqualify an individual from being considered to be 'confined to his home."
Instead, the Council upheld the AU's decision that Beneficiary C.E. was not homebound
due to: (1) the fact that the beneficiary was found to use a walker "at times," but was generally
able to move about the home without the device; and (2) that the beneficiary recalled leaving the
house every day to go shopping, out to eat, and to the grocery store, requiring assistance only in
the form of a driver. ECF No. 1-1 at 3 8-39. Similarly, the Council cited the ZPIC's investigative
findings that Beneficiary M.M.(l) was also determined able to leave the house frequently to go to
"church, the grocery store, out to eat and medical care." Id. at 42. Like eneficiary C.E., M.M.( 1)
only required the assistance of a driver. Id.
Superior's assertions that the Council failed to properly comport with Medicare
requirements concerning the homebound statuses of the sampled beneficiaries are baseless. It is
amply clear to this Court that the Council's findings were based on substantial evidence, and its
determination based on that evidence was neither arbitrary nor capricious.
3.
Medical Necessity ofSkilled Services
Superior's final argument concerning the Council's allegedly improper determinations
regarding Medicare coverage criteria asserts that the Council erred by finding a lack of medical
necessity for skilled services in the cases of beneficiaries I.G., M.M.(3), J.R., J.A., E.C.(2),
T.D.L.C., P.F., E.G., R.G., A.L., P.M., M.M.(2), and F.R. ECF No. 31 at 18. The Council denied
these claims, Superior argues, "because the beneficiary was being instructed on 'mere' skills such
as proper body mechanics/alignment, safe in-home mobility, and on the safe dosing and
administration of insulin." Id. It alleges that the Council's decision was a function of its finding
19
that the "nursing visit notes were 'unremarkable' revealing no complaints or changes in condition."
Id.
This, it contends, was an improper application of the law, as "Medicare statutes and
regulations do not require significant changes in condition, medication, or treatment plan, or a
decline in functional mobility for skilled nursing services to be considered reasonable and
medically necessary." Id. at 18-19. Superior argues that its records demonstrated that the
beneficiaries "were unable or unwilling to self-administer and/or could not be taught to selfadminister insulin, even with the help of an auto-fill insulin pen." Id. at 19. It cites the MBPM,
arguing that "where the patient is either physically or mentally unable to self-inject and there is
no other person who is able and willing to inject the patient, the injections woUld be considered a
reasonable and necessary skilled nursing service." Id. at 19 (quoting MBPM, Ch. 7,
42 C.F.R.
§
§
40.1.2.4).
409.32 defines "skilled services" for the purpose of determining Medicare
coverage, as well as the requirements to receive Medicare-covered skilled services. A skilled
service is an activity "so inherently complex that it can be safely or effectively performed only by,
or under the supervision of, professional or technical personnel." 42 C.F.R.
§
409.32(a). In cases
where a beneficiary has special medical complications, "a service that is usually nonskilled
.
may be considered skilled because it must be performed or supervised by skilled nursing or
rehabilitation personnel." Id. at
42 C.F.R.
§
§
409.3 2(b).
409.33 lists services that could qualify as skilled nursing services, including
(1) overall management and evaluation of care plans, (2) observation and assessment of the
patient's changing condition, and (3) education services to teach the patient self-maintenance. See
§
409.33(a). Overall patient management qualifies "when, because of the patient's physical or
mental condition, those activities require the involvement of technical or professional personnel in
20
order to meet the patient's needs, promote recovery, and ensure medical safety."
§
409.33(a)(l)(i).
Additionally, patient observation and assessment may qualify "when the skills of a technical or
professional person are required to identify and evaluate the patient's need for modification of
treatment or for additional medical procedures until his or her condition is stabilized."
§
409.33(a)(2)(i). Patient education services are necessary in the skilled nursing context "if the use
of technical or professional personnel is necessary to teach a patient self-maintenance."
§
409.33(a)(3)(i).
However, "[i]f the nature of a service is such that it can safely and effectively be performed
by the average nonmedical person without direct supervision of a licensed nurse, the service cannot
be regarded as a skilled nursing service."
§
409.44(b)(l)(ii). Services may be considered
reasonable and necessary when they are "consistent with the nature and severity of the
beneficiary's illness or injury, his or her particular medical needs, and accepted standards of
medical and nursing practice." § 409.44(b)(3)(i).
Superior cites no specific errors in the Council's determinations of medical necessity of
skilled services as to any individual beneficiary, instead generally, asserting that "[t]he Council
failed to apply the clear and proper Medicare 'medical necessity' standards for payment." ECF
No. 31 at 19. The Court will briefly address the Council's determinations as to each beneficiary
whose status is herein disputed:
i.
Beneficiary LG.
Based on the skilled nursing notes, the Council found that the services provided to
Beneficiary 1.0. were largely limited to: (1) lifestyle instruction; (2) safe in-home mobility; and
(3) treatment of diabetes. ECF No. I -1 at 40. Visit reports were "unremarkable revealing no
significant complaints or changes in the beneficiary's condition," with "no likelihood of change in
21
the beneficiary's condition which required skilled nursing personnel to identif' and evaluate the
beneficiary's need for modification of treatment." Id. at 41. None of the activities performed were
deemed so inherently complex that a medical professional was required. Id.
ii.
Beneficiary MM (3)
The Council found that skilled nursing services provided to M.M.(3) consisted primarily
of: (1) assessment and observation of the patient; and (2) instruction on disease treatment. Id. at
43. The instruction provided concerned teaching the patient and her caregivers about "diabetes,
hypertension and pain management," as well as "diet, safety, fall prevention and medication
management." Id. at 44. The Council found that: (1) none of these services were sufficiently
complex that a medical professional was required to administer them; (2) the record demonstrated
no likelihood of change in condition requiring skilled services to modify treatment; and (3) the
teaching was unskilled and repetitive. Id. at 45.
iii.
Beneficiaryf.R.
The Council found that services provided were largely limited to: (1) patient observation
and assessment of various disease elements; and (2) glucometer testing when the patient and/or
caregiver were unable to do so themselves. Id. After reviewing the relevant documentation, the
Council found that "[t]he beneficiary was largely independent in terms of blood glucose testing
and insulin administration," and that patient's medical history during the relevant period was
"otherwise stable and unremarkable." Id. at 47. The Council determined that: (1) the record
demonstrated no likelihood of change in condition requiring skilled nursing services; (2) the
services rendered were not sufficiently complex; and (3) the instruction provided was unskilled
and repetitive. Id.
iv.
Beneficiary J.A.
22
After identifying that the AU's findings included an incorrect factual account, the Council
determined, based on the relevant evidence, that the skilled nursing services provided to
Beneficiary LA. were largely limited to: (1) performing assessments of all body systems; (2)
providing disease-related care instruction related to diabetes and pain management; and (3)
conducting glucometer testing. Id. at 48. The beneficiary's condition was "largely unremarkable"
during the period of service, with blood glucose levels remaining within parameters in the plan of
care. Id. "Identified medication 'instruction' was limited to general admonitions to take prescribed,
unexpired, medications only and as only directed." Id. at 48-49. Consequently, the Council
determined that: (1) the record indicated no likelihood of a Change in condition requiring skilled
nursing personnel to identify and oversee treatment modification; (2) the instruction was unskilled
and 'repetitive; and (3) the services provided were not 'sufficiently complex to require a medical
professional. Id. at 49.
v.
Beneficiary E.G. (2)
Based on witness testimony and the relevant medical record, the Council found that
services provided to Beneficiary E.C.(2) were largely limited to: (1) observation and assessment
of body systems; (2) monitoring of vital signs; and (3) instruction on "elements of safe mobility
within the home and the manner in which to take medication, predominantly Coumadin." Id. at
49-50. As the MBPM specifies, "[t]he administration of oral medications by a nurse is not
reasonable and necessary skilled nursing care except in the specific situation in which the
complexity of the patient's condition, the nature of the drugs prescribed, and the number of drugs
prescribed require the skills of a licensed nurse to detect and evaluate side effects or reactions."
Id. at 50 (quoting MBPM, Ch. 7,
"little more.
. .
§
40.1.2.4). The Council determined that: (1) the instruction was
involvement than to relay instruction to the beneficiary;" (2) the record indicated
23
that the treatment was not sufficiently complex to require medical professionals; and (3) instruction
was unskilled and repetitive. Id.
vi.
Beneficiary T.D.L.C.
Based on witness testimony and the relevant medical record, the Council determined that
the services provided to Beneficiary T.D.L.C. were limited to: (1) assessment and observation of
all body systems; (2) monitoring vital signs; (3) monitoring glucose levels; and (4) instruction on
"pain, diet, urinary incontinence energy conservations and the processes of various medical
conditions." Id. at 51. The Council noted that "[t]he evidence reveals that the skilled nurse's
predominant rolewas monitoring the beneficiary's medical conditionand providing instruction on
various areas of self-care, diet and medication management." Id. at 52. The Council found that:
(1) the services provided were insufficiently complex to qualify' as skilled services; (2) the record
indicated no likelihood of changes in condition requiring skilled nursing services; and (3) the
instruction was unskilled and repetitive. Id.
vii.
Beneficiary P.F.
Based on witness testimony and the relevant medical record, the Council determined that
the services provided to Beneficiary P.F. were largely limited to: (1) assessment and observation
of all body systems; (2) monitoring vital signs; and (3) providing instruction on disease processes.
Id. at 53. It found that education services "consisted of instruction relative to aspects of disease
progress and management, diet, general safety concerns and relaxation techniques." Id. The
Council determined that: (1) the services provided were insufficiently complex to qualify as skilled
services; and (2) the record indicated no likelihood of changes in condition requiring skilled
nursing services.
viii.
Beneficiary E.G.
24
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary E.G. were largely limited to: (1) assessment of the beneficiary's
body systems; and (2) instruction regarding elements of self-care and medication management
(including wound care). Id. at 55. "New medications identified in the plan of care consisted of an
oral medication for cramps and a hand cream." Id. The Council determined that: (1) the services
provided were insufficiently complex to qualify as skilled services; (2) the record indicated no
likelihood of changes in condition requiring skilled nursing services; and (3) the instruction was
unskilled and repetitive. Id.
ix.
Beneficiary R. G.
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary R.G. were largel,r limited to: (1) assessmeht and observation of
all body systems; (2) monitoring of vital signs; and (3) instruction on glucose monitoring. Id. at
56. It found that "the skilled nurses' predominant role were [sic] to monitor the beneficiary's
medical condition, assess vital signs, provide instruction in areas of self-care, diet, medication
management [sic] as well as to ensure that the beneficiary, recently widowed, was aware of the
community's various social, emotional, financial and psychological resources available to assist
with that personal transition and make appropriate referrals." Id. The Council determined that: (I)
the services provided were insufficiently complex to qualify as skilled services; (2) the record
indicated no likelihood of changes in condition requiring skilled nursing services; and (3) the
instruction on glucose monitoring was unskilled and repetitive. Id. at 57.
x.
BeneficiaryA.L.
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary A.L. were largely limited to: (I) observation and assessment of
25
all body systems; (2) preparation and administration of insulin; and (3) instruction on diabetes
management, the administration of new medications, hypertension, and pain management. Id. at
59. It found that "[t]he evidence indicates that the skilled nurse expended significant time in what
was essentially routine monitoring and repetitive instruction." Id. at 60. The Council determined
that: (1) the services provided were insufficiently complex to qualify as skilled services; (2) the
record indicated no likelihood of changes in condition requiring skilled nursing services; and (3)
Superior "did not identify the newly introduced 'medication' prescribed just prior to this period of
service or otherwise indicate that skilled nursing services were required for its administration." Id.
xi.
Beneficiary P.M
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary P.M. were largely limited to: (1) assessment and Observation of
all body systems; (2) blood glucose testing; and (3) instruction on diabetes, congestive heart
failure, hypertension and benign prostatic hypertrophy. Id. at 61. It found that the beneficiary "was
capable of self-monitoring blood glucose and his residence was free of safety concerns," and that
the nurse predominantly "provided general instruction on disease management." Id The Council
consequently determined that: (1) the services provided were insufficiently complex to qualify as
skilled services; and (2) the record indicated no likelihood of changes in condition requiring skilled
nursing services. Id. at 61-62.
xii.
Beneficiary MM (2)
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary M.M.(2) were largely limited to: (1) assessment and observation
of all body systems; (2) monitoring of vital signs; (3) blood glucose testing; and (4) instruction on
atrial fibrillation, diabetes and hypertension management. Id. at 62. It found that "the beneficiary's
A1
medical history was largely stable" during the period of service, and that "the nursing services
included clearing pathways for mobility, providing instruction on various aspects of disease and
diet management, as well as physical energy saving techniques." Id. at 63. The Council detennined
that: (1) the services provided were insufficiently complex to qualify as skilled services; (2) the
record indicated no likelihood of changes in condition requiring skilled nursing services; and (3)
the instruction was unskilled and repetitive. Id.
xiii.
Beneficiary F. R.
Based on witness testimony and the relevant medical record, the Council found that the
services provided to Beneficiary F.R. were largely limited to: (1) assessment and observation of
all body systems, (2) morntonng of vital signs, and (3) instruction on hypertension and arthropathy
Id. at 64. It found that "the reports associated with the skilled nursing visits in issue are largely
unremarkable revealing no significant complaints or changes in the beneficiary's condition." Id.
Consequently, the Council determined that: (1) the services provided were insufficiently complex
to qualify as skilled services; (2) the record indicated no likelihood of changes in condition
requiring skilled nursing services; and (3) the instruction was unskilled and repetitive. Id.
4.
Conclusion: Medical Necessity
Based on the above summarizations of the Council's findings and determinations as to each
individual beneficiary whose claims are currently in dispute, the Court finds that the Secretary has
supported his findings with substantial evidence. While Superior identifies the "exact medical
bases for each beneficiary that justified home health nursing services" in its reply brief, it fails to
carry its burden of showing that the Secretary's determinations were arbitrary or capricious in any
way. See ECF No. 37 at 6-8.
D.
Alleged Due Process Violations
27
Superior moves for summary judgment on the basis that the Secretary violated its due
process rights on two grounds: (1) by withholding critical evidence from December 9,2010, when
Superior requested the AU hearing, until the day of the AU hearing; and (2) by failing to comply
with statutory deadlines for adjudicating appeals, resulting in an egregious delay. ECF,No. 31 at
19, 21. After an action arising under the Medicare Act has been "channeled" through all levels
of
the administrative process, a district court on judicial review has authority to resolve "any statutory
or constitutional contention that the agency does not, or cannot, decide." Shalala v. ill. Council on
Long Term Care, Inc., 529 U.S. 1, 23 (2000). The instant action has been channeled through all
four levels of administrative appeal, and this Court has authority to decide Superior's due process
claim. See Maxmed Healthcare, 152 F. Supp. 3d at 640.
1.
Withholding of Evidence
Superior contends that Health Integrity "only disclosed evidence on the sampling and
extrapolation methodology to Superior after the reconsideration decision was issued, and disclosed
more upon instruction from the AU prior at the hearing in 2014." Id. at 19-20. The Council found
that no such due process violations had occurred, as the evidence was in fact provided prior to the
AU hearing. Id at 20. Superior contends that the Council erred in this determination, as it "should
have received an opportunity to challenge the overpayment at redetermination and reconsideration,
before
the AU hearing took place." Id. It claims it was entitled to review of the extrapolation
methodology used by the ZPIC at each of the first two stages of appeal. Id. Because "Medicare
guidelines require CMS contractors to disclose information about the review and statistical
sampling that was followed to calculate an overpayment," it argues, its due process rights were
violated when such information was not disclosed prior to the first stage of appeal. Id. (citing 405
C.F.R.
§
405.371; 42 U.S.C.
§
1395ddd(f)(3)). The "absence from the administrative record" of
28
this information "is grounds for invalidating an extrapolation." Id. at 21 (citing Chaves County
Home Health Svcs., Inc.
v.
Sullivan, 931 F.2d 914 (D.C. Cir. 1991)).
Just as the Fifth Circuit stated in response to a similar due process claim in Maxmed
Healthcare, "[w]e are unaware of any authority holding that agency processes become
fundamentally unfair under the circumstances before us." 860 F.3d at 344. Superior never contends
in any submission to this Court that it ever even requested the information on the sampling and
extrapolation methodologies from the ZPIC, and it cites no relevant authority mandating that such
information be disclosed prior to either the redetermination or reconsideration stages in a Medicare
administrative appeal. See ECF No. 31 at 19-21; ECF No. 37 at 10-11'. It is undisputed that the
information on sampling and extrapolation methodologies was in fact provided to Superior prior
to the AU hearing, and the information was therefore not absent from the administrative record.
Compare ECF No. 31 at 20 with ECF No. 35 at 31. Superior has consequently "failed to produce
,sufficient evidence to survive summary judgment that it was deprived of 'notice and opportunity
for hearing appropriate to the nature of the case,' which is the hallmark of a due process claim."
MaxmedHealthcare, 152 F. Supp. 3d at 640 (quoting Mullane
v.
Cent. Hanover Bank & Tr., 339
U.S. 306, 313 (1950)). The first ground of Superior's due process claim is therefore rejected.
2.
Failure to Comply with Statutory Deadlines
Superior's second ground for its due process claim states that the Secretary's failure to
comply with the statutory deadlines for adjudicating its Medicare appeals constituted such an
egregious delay as to deny Superior its constitutional right of due process. ECF No. 31 at 21. As
set forth in the Medicare Act, an AU is required to conduct and conclude a hearing and render a
decision within 90 days of a Medicare provider's request following reconsideration by a QIC. 42
U.S.C.
§
1395ff(d)(1)(A). Likewise, the Medicare Appeals Council is required to conduct and
conclude a review of the
AU's decision and either make its own decision or remand the case to
the AU within 90 days of the provider's request for review.
§
1
395(d)(2)(A). That the Secretary
failed to filly comply with the statutory deadlines in Superior's administrative appeal is undisputed
in this case. See ECF No. 31 at 21-22; ECF No. 38 at 9.
The Court sympathizes with Superior's frustration in the significant delays now essentially
guaranteed by the decision to appeal an initial Medicare claim overpayment determination.
Crippling backlog in the administrative process is a recognized issue throughout the country, as
demonstrated by the continuing litigation pursued by the American Hospital Association. See Am.
Hosp. Ass 'n
v.
Price, 867 F3d 160, 162-165 (D.C. Cir. 2017). Unfortunately for Superior and the
many other affected providers nationwide, Congress has explicitly provided a remedy for failure
to meet each of the deadlines in question. If an AU fails to render a decisibn by the end of the 90day statutory period, the appellant may bypass the AU stage of appeal and request a review by the
Council. 42 U.S.C.
§
1395ff(d)(3)(A). If the Council fails to meet its 90-day deadline after a
request for review of an AU
decision is filed, an appellant "may seek judicial review,
notwithstanding any requirements for a hearing for purposes of the party's right to such judicial
review."
§ 13 95ff(d)(3)(B).
That these remedies have been explicitly spelled out in the Medicare Act indicates that
Congress anticipated delays yet declined to set for further remedy than that provided in the statute.
See Cumberland Cnly Hosp. Sys., Inc.
v.
Burwell, 816 F.3d 48, 55 (4th Cir. 2016) ("In giving the
healthcare provider these options, Congress anticipated that the 90day deadline might not be met
and provided its chosen remedy."). Further remedies beyond the statutory text must come from
Congress. The second ground of Superior's due process claim must therefore be rejected as well.
E.
Limitation on Liability
30
Finally, Superior argues, in the event the Council's overpayment determinations are
upheld, it should be relieved of liability pursuant to 42 U.S.C.
§
1395pp. It asserts that its liability
should be waived given that it "did not know, and could not reasonably have been expected to
know, that payment would not be made" for its home health services, as allowed by the statute in
such circumstances. 42 U.S.C.
§
1395pp(a)(2).
A provider like Superior may be held liable for the cost of denied services deemed not to
be "reasonable and necessary" as defined under 42 C.F.R.
§
411.15(k). Constructive notice of
noncoverage may be imposed on a provider based on:
(1) Its receipt of CMS notices, including manual issuànces, bulletins, or other written
guides or directives.
(2) Federal Register publications containing notice of national coverage decisions or of
other specifications regarding noncoverage of an item or service.
(3) Its knowledge of what are considered acceptable standards of practice by the local
medical community.
42 C.F.R. 4 11.406(e). The Council found that the beneficiaries were not liable for the non-covered
claims, as "{t]here is no evidence that the beneficiaries knew, or could have reasonably been
expected to know, that their home health services would not be covered." ECF No. 1-1 at 65.
However, it found that Superior, as a provider of Medicare-covered services, "knew or should have
known that Medicare would not cover these charges based on knowledge of Medicare coverage
criteria." Id.
42 U.S.C. § 1395 allows for a waiver of liability to be issued if the provider was "without
fault with respect to the payment of such excess over the correct amount."
is "without fault"
§
1
395(b)( 1). A provider
if it "exercised reasonable care in billing for, and accepting, the payment."
Medicare Financial Management Manual (MFMM), CMS Pub. 100-06, Ch. 3,
§ 90.
Conversely,
the provider is not without fault if it should have known that the services provided were not covered
31
by Medicare. Id. at 90.1 .H. The Council determined that Superior, as a provider with both actual
and constructive knowledge of Medicare coverage regulations, was not without fault in the
overpayments.
As discussed already, judicial review of a final administrative decision is generally.
deferential to the agency's findings. The Court concludes that substantial evidence, including
Superior's status as a Medicare-certified provider, supports the Council's determination that
Superior should have known that the services it provided would not be covered by Medicare, and
that the Secretary's decision to impose liability for the overpayments on Superior was neither
arbitrary nor capricious.
IV.
CONCLUSION
For all the reasons stated above, the Court: (1) AFFIRMS the Secretary's final
administrative decision; (2) DENIES the Plaintiffis Amended Motion for Summary Judgment
[ECF No. 31]; and (3) GRANTS the Defendant's Cross-Motion for Summary Judgment [ECF No.
351.
A separate order shall issue this date.
Date: August 3, 2018
Roy e C. Lamberth
United States Distnct Judge
32
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