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Caring Hearts Personal Home Services, Inc. v. Sebelius

United States District Court, D. Kansas

August 28, 2014

CARING HEARTS PERSONAL HOME SERVICES, INC., Plaintiff,
v.
KATHLEEN SEBELIUS, Secretary of the United States Department of Health and Human Services, Defendant.

MEMORANDUM AND ORDER

CARLOS MURGUIA, District Judge.

Plaintiff filed this action under 42 U.S.C. §§ 405(g) and 1395ff(b)(1) seeking judicial review of the final decision of Kathleen Sebelius, Secretary of the United States Department of Health and Human Services ("Secretary"), which denied Medicare coverage for home health services for twenty-two Medicare beneficiaries under Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., ("Medicare Act").

I. Medicare Overview

"Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq. (2006), establishes the federally funded health insurance program for the aged and disabled, commonly known as Medicare." Via Christi Reg'l Med. Ctr., Inc. v. Leavitt, 509 F.3d 1259, 1261 (10th Cir. 2007). The Secretary utilizes the Centers for Medicare and Medicaid Services ("CMS"), a division of the United States Department of Health and Human Services ("HHS") to administer the program. Under Medicare Part A, payment is made for covered services administered by hospitals and other institutional providers such as home health agencies. 42 U.S.C. §§ 1395c-1385i-5. Medicare Part B pays for covered "medical and other services" and is a voluntary insurance program. 42 U.S.C. §§ 1395j-1395w-5.

For services to be covered, the beneficiary must (1) be homebound and in need or needed skilled nursing care, physical or speech therapy, or in some cases occupational therapy; (2) be receiving services under a plan of care created by a physician who periodically reviews the plan; (3) be under a physician's care; and (4) in cases certified after January 1, 2010, meet face-to-face with the physician or other medical professional prior to certification. Id. §§ 1395f(a)(2)(C), 1395n(a)(2)(A), 1395x(m); 42 C.F.R. §§ 409.42-409.43, 424.22. Additionally, only services that are "reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member" are eligible for coverage. 42 U.S.C. § 1395y(a)(1)(A); 42 C.F.R. § 411.15(k)(1).

A provider may challenge a coverage or reimbursement decision by utilizing the following levels of review:

• The Medicare Administrative Contractor ("MAC") issues an "initial determination" notice informing the provider whether services are covered and, if not, the amount owed. 42 U.S.C. § 1395ff(a)(1); 42 C.F.R. § 405.920.
• The provider may request a "redetermination" from the same MAC. 42 U.S.C. § 1395ff(a)(3); 42 C.F.R. § 405.940.
• The provider may seek "reconsideration" from a Qualified Independent Contractor ("QIC"). 42 U.S.C. § 1395ff(b)(1)(A), (c); 42 C.F.R. § 405.960.
• The next step is to request a hearing before an Administrative Law Judge ("ALJ"). 42 U.S.C. § 13955(b)(1)(A), (E), (d)(1); 42 C.F.R. § 405.1002.
• The Medicare Appeals Council ("Council") reviews ALJ decisions. 42 U.S.C. § 1395ff(d)(2); 42 C.F.R. § 405.1100.
• The provider may then seek judicial review. 42 U.S.C. § 405(g) (incorporated into the Medicare statute by 42 U.S.C. § 1395ff(b)(1)(A)); 42 C.F.R. § 405.1136.

II. Factual and Procedural Background

Plaintiff is a home health services provider. In June 2010, a Medicare Program Safeguard Contractor ("PSC")[1] notified plaintiff of its intent to reopen and review plaintiff's claims for services between January 1, 2008, and January 31, 2009. From a sample of thirty claims, the PSC determined that the services provided in twenty-four claims failed to meet Medicare coverage requirements. The PSC determined that plaintiff had been overpaid $63, 153.39 for the twenty-four claims. An additional overpayment amount of $792, 490.12 was calculated by extrapolation, resulting in a total overpayment amount of $855, 643.51. Plaintiff then requested a redetermination of the twenty-four claims. In its redetermination, the MAC issued a fully favorable decision on one of the claims and issued partially favorable or entirely unfavorable decisions on the other twenty-three claims. The MAC determined a revised overpayment amount of $814, 245.39 based on the redetermination.

Plaintiff then sought reconsideration of the twenty-three denied claims. The QIC affirmed the denials of the twenty-three claims and also affirmed the statistical sampling and extrapolation methodology utilized by the PSC in reviewing the claims. Plaintiff further appealed the decision, requesting an ALJ hearing. The hearing took place on April 21, 2011, before ALJ Wendy A. Weber. In her June 2, 2011 decision, the ALJ held that some of the home health services provided in eight claims should be covered. The ALJ denied coverage for all of the home health services provided in the remaining fifteen claims. The ALJ also affirmed the statistical sampling and extrapolation methodologies. Further, the ALJ denied plaintiff's claim that it was not financially liable for the noncovered services.

At the final level of agency review, plaintiff requested review from the Council. The Council issued a decision on August 29, 2012, finding that all home health services should be covered for one claim, allowing partial coverage for four claims, and denying coverage for the remaining eighteen claims. The Council also affirmed the statistical sampling and extrapolation methodology, as well as the ALJ's rejection of plaintiff's argument that it was not financially liable for noncovered services. As a result, the Council's decision-as well as the portions of the ALJ's decision the Council upheld- represent the final decision of the Secretary.

III. Legal Standard

Under 42 U.S.C. § 405(g) (incorporated into the Medicare statute by 42 U.S.C. § 1395ff(b)(1)(A)), this court applies a two-pronged review to the Secretary's decision. This review determines (1) whether the Secretary's decision is supported by substantial evidence in the record as a whole, and (2) whether the Secretary applied the correct legal standards. Lax v. Astrue, 489 F.3d 1080, 1084 (10th Cir. 2007) (citation omitted). "Substantial evidence is more than a mere scintilla and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Hunter v. Astrue, 321 F.App'x 789, 792 (10th Cir. 2009) (quoting Flaherty v. Astrue, 515 F.3d 1067, 1070 (10th Cir. 2007)). Although the court must give deference to the Secretary's findings of fact, the same is not true for legal findings. Exec. Dir. of Office of Vt. Health Access v. Sebelius, 698 F.Supp.2d 436, 439 (D. Vt. 2010) (citing 42 U.S.C. § 405(g)).

In its analysis, the court may not reweigh the evidence or substitute its judgment for that of the Secretary. See White v. Massanari, 271 F.3d 1256, 1257 (10th Cir. 2001) (citing Casias v. Sec'y of Health & Human Servs., 933 F.2d 799, 800 (10th Cir. 1991)). On the other hand, the court must examine the entire record-including any evidence that may detract from the Secretary's decision. Jaramillo v. Massanari, 21 F.App'x 792, 794 (10th Cir. 2001) (citing Glenn v. Shalala, 21 F.3d 983, 984 (10th Cir. 1994)). Further, the court gives broad deference to the Secretary's interpretation of its own regulations. Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (noting that broad deference is warranted when the regulation covers "a complex and highly technical regulatory program") (quotation omitted).

Review of the Secretary's decision is also governed by the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq. The APA allows a court to set aside an agency decision only if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or "unsupported by substantial evidence in a case... reviewed on the record of an agency hearing provided by statute." 5 U.S.C. § 706(2)(A), (E).

IV. Discussion

Plaintiff argues that the Secretary erred in three different ways: (1) the Secretary failed to apply the statutory requirements in determining whether beneficiaries were homebound; (2) the Secretary failed to apply statutory criteria in determining whether home health services were reasonable and necessary; and (3) the Secretary incorrectly determined that plaintiff is not entitled to payment under the Doctrine of Waiver of Liability and that plaintiff is not a provider without fault. Each of plaintiff's arguments is addressed in turn.[2]

A. The Secretary's Decision Finding that Coverage Was Inappropriate for Nine Beneficiaries Who Were Not Confined to the Home is Supported by Substantial Evidence[3]

One requirement for reimbursement of home health services is that the beneficiary is "confined to his home." 42 U.S.C. § 1395f(a)(1)(C); 42 C.F.R. § 409.42. A beneficiary qualifies as "confined to the home" if he or she:

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) (language following paragraph (8)). In addition, absences that are "infrequent or of relatively short duration, " including attending a religious service, will not prevent a beneficiary from being considered "confined to the home." Id.

In determining whether a beneficiary was homebound, plaintiff argues that the Secretary used a two-part test. First, plaintiff claims that the Secretary determined whether the beneficiary has a condition such that trips outside the home (1) require assistance of another individual or the aid of a supportive device, or (2) are medically contraindicated. Second, upon determining that either one of the first elements is met, plaintiff contends that the Secretary then analyzed whether outings (1) require a considerable and taxing effort, and (2) are infrequent, of a short duration, or are taken to receive medical treatment. If a beneficiary did not meet both elements of the second prong, plaintiff contends that the Secretary then concluded that the beneficiary is not confined to the home.

Plaintiff argues that the Secretary incorrectly applied the test. According to plaintiff, a beneficiary must be considered homebound if one of two criteria is met: (1) he or she has a condition that restricts the ability to leave home without the assistance of another individual or the aid of a supportive device, or (2) he or she has a condition that would make leaving home medically contraindicated. Plaintiff argues that if a beneficiary needs aid from another person or a supportive device to leave the home, then there is a presumption that there is a normal inability to leave the home and that doing so requires a considerable and taxing effort. Further, plaintiff argues that the presumption should apply unless there is some evidence to show that (1) the patient leaves the home frequently, for long durations, or (2) that leaving does not require a considerable and taxing effort. Essentially, plaintiff argues that the first sentence of 42 U.S.C. § 1395f(a) should be read separately from the second sentence. In its initial brief, plaintiff appears to argue that the use of a supportive device alone should qualify one as homebound, whether or not leaving home requires a considerable and taxing effort. In its reply brief, plaintiff changes its argument slightly, arguing that it is not necessarily the "use" of an assistive device, but whether one "needs" an assistive device that is important.

This court disagrees with plaintiff. Faced with the same issue, the district court in Labossiere v. Secretary of ...


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