857 F. Supp. 2d 1
D.D.C.2012Background
- Gentiva provides home health services to Medicare beneficiaries and was reviewed by Cahaba Safeguard Administrators under a contract with HHS in 2007.
- Cahaba sampled 30 claims from Gentiva’s 1,951 total claims and found 26 overstated, yielding an 85.64% error rate.
- Extrapolation from the sample to the universe led to a demand for $4,242,452.10 in overpayments.
- Gentiva appealed through redetermination, reconsideration, ALJ hearings, and MAC review; the MAC held contractors can determine sustained/high-level error.
- The Secretary upheld Cahaba’s extrapolation-based overpayment amount; Gentiva challenged the Secretary’s delegation and the underlying merits, and sued for review and mandamus.
- The court granted summary judgment for the Secretary, finding proper delegation and preclusion of judicial review regarding the extrapolation decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Secretary may delegate the sustained/high-level payment error determination to contractors. | Gentiva argues only the Secretary may make the determination. | Sebelius may subdelegate under 42 U.S.C. §1395kk(a). | Yes; delegation is lawful. |
| Whether the delegation must be effected via notice-and-comment rulemaking. | Rulemaking required under 1395hh(a)(2). | Subdelegation did not alter substantive standards; not required. | Not required; subdelegation permissible as interpretive/procedural rule. |
| Whether the Secretary’s delegation and the contractor’s determination are reviewable judicially. | Preclusion should not apply to the contractor’s determination. | There is no judicial review of the Secretary’s sustained/high-level determination. | Precluded; no judicial review of the contractor’s determination. |
| Whether Gentiva’s merits challenge to the contractor’s finding is subject to review. | The merits show no sustained/high-level error. | Even if merits, precluded by statute from review. | Jurisdiction precluded; merits not reviewable. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (establishes two-step framework for agency deference; step two assesses reasonable construction)
- U.S. Telecom Ass’n v. FCC, 359 F.3d 554 (D.C. Cir. 2004) (subdelegation authority requires affirmative evidence of authority)
- Schweiker v. Schweiker, 690 F.2d 932 (D.C. Cir. 1982) (recognizes Secretary may delegate to contractors under §1395kk(a))
- Cape Cod Hosp. v. Sebelius, 630 F.3d 203 (D.C. Cir. 2011) (affords deference to Secretary’s interpretation in Medicare context)
- Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667 (1986) (presumption of judicial review; precluded where statute so provides)
- John v. Sebelius, No. 09-cv-552, 2010 WL 3951465 (E.D. Ark. 2010) (-) (upheld Secretary’s subdelegation to a contractor (Eastern District of Arkansas))
- Amgen, Inc. v. Sebelius, 357 F.3d 103 (D.C. Cir. 2007) (preclusion/Review- limitations under Medicare statutes)
- Tex. Alliance for Home Care Servs. v. Sebelius, 811 F. Supp. 2d 76 (D.D.C. 2011) (statutory review limitations in Medicare context)