Ambercity Hospice, Inc. v. Xavier Becerra
20-56242
| 9th Cir. | Oct 21, 2021Background
- Ambercity Hospice, Inc. appealed after HHS denied Medicare coverage for certain hospice claims and the district court affirmed that denial.
- HHS reviewers concluded Ambercity’s medical documentation did not satisfy Medicare regulations and the Local Coverage Determination (LCD) criteria for terminal illness and hospice necessity.
- The record shows qualified doctors and nurses applied LCD standards and explained why documentation was insufficient.
- Ambercity argued (1) HHS used an improper legal standard and lacked substantial evidence, (2) it qualified as an "innocent provider," and (3) HHS violated due process during administrative review.
- The district court rejected the coverage and innocent-provider claims on the merits and declined to consider Ambercity’s due process claim because it was raised untimely in a reply brief.
- The Ninth Circuit affirmed: HHS used the correct legal standard and had substantial evidence; Ambercity was not an innocent provider; the due process claim was waived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HHS applied the correct legal standard and whether its denial was supported by substantial evidence | HHS wrongly denied coverage; clinical certifications should control eligibility | HHS applied statutory/regulatory documentation rules and LCD standards; record lacks required documentation | Affirmed: HHS used correct standard and substantial evidence supports denial |
| Whether Ambercity is an "innocent provider" entitled to payment despite documentation defects | Ambercity sought payment as an innocent provider given it provided services in good faith | Medicare statutes, regs, manuals and LCDs give providers constructive notice of documentation and audit risk | Affirmed: Ambercity not an innocent provider; constructive notice bars relief |
| Whether HHS violated Ambercity's due process rights in administrative appeals | Due process was violated during the administrative appeals process (raised on appeal) | Due process claim was not timely presented to the district court and thus waived | Affirmed: claim waived; appellate court declines to consider it |
Key Cases Cited
- Nat'l Fam. Farm Coal. v. EPA, 966 F.3d 893 (9th Cir. 2020) (APA standard for agency action)
- Chu v. U.S. Commodity Futures Trading Comm'n, 823 F.3d 1245 (9th Cir. 2016) (definition of substantial evidence)
- Gebhart v. SEC, 595 F.3d 1034 (9th Cir. 2010) (use of substantial-evidence standard language)
- Fournier v. Sebelius, 718 F.3d 1110 (9th Cir. 2013) (de novo review of district court decision)
- Maximum Comfort Inc. v. Sec'y of Health & Hum. Servs., 512 F.3d 1081 (9th Cir. 2007) (providers have constructive knowledge of Medicare requirements)
- Club One Casino, Inc. v. Bernhardt, 959 F.3d 1142 (9th Cir. 2020) (appellate refusal to consider arguments not raised below)
- El Pollo Loco, Inc. v. Hashim, 316 F.3d 1032 (9th Cir. 2003) (district court discretion to ignore arguments raised for first time in reply)
- In re Am. W. Airlines, Inc., 217 F.3d 1161 (9th Cir. 2000) (standard for finding "exceptional circumstances" to excuse procedural default)