CARING HEARTS PERSONAL HOME SERVICES, INC., Plaintiff-Appellant, v. Sylvia Mathews BURWELL, Secretary of the United States Department of Health and Human Services, Defendant-Appellee.
No. 14-3243
United States Court of Appeals, Tenth Circuit.
FILED May 31, 2016
824 F.3d 968
GORSUCH, Circuit Judge.
Melissa D. Hart, Special Assistant United States Attorney, United States Department of Health & Human Services, Baltimore, Maryland (Barry R. Grissom, United States Attorney, and Jackie A. Rapstine, Assistant United States Attorney, and William B. Schultz, General Counsel, Janice L. Hoffman, Associate General Counsel, and Susan Maxson Lyons, Deputy Associate General, United States Department of Health and Human Services, Topeka, Kansas, with her on the brief), for Defendant-Appellee.
Before LUCERO, HARTZ, and GORSUCH, Circuit Judges.
GORSUCH, Circuit Judge.
That‘s the problem we confront in this case. And pеrhaps it comes as little surprise that it arises in the Medicare context. Medicare is, to say the least, a complicated program. The Centers for Medicare & Medicaid Services (CMS) estimates that it issues literally thousands of new or revised guidance documents (not pages) every single year, guidance providers must follow exactingly if they wish to provide health care services to the elderly and disabled under Medicare‘s umbrella. Currently, about 37,000 separate guidance documents can be found on CMS‘s website—and even that doesn‘t purport to be a complete inventory. See Jessica Mantel, Procedural Safeguards for Agency Guidance: A Source of Legitimacy for the Administrative State, 61 Admin. L. Rev. 343, 353 (2009).
But how did CMS wind up confused about its own law? It began this way. Caring Hearts provides physical therapy and skilled nursing services to “homebound” Medicare patients.
The trouble is, in reaching its conclusions CMS applied the wrong law. As we‘ll see, the agency didn‘t apply the regulations in force in 2008 when Caring Hearts provided the services in dispute. Instead, it applied considerably more onerous regulations the agency adopted only years later. Regulations that Caring Hearts couldn‘t have known about at the time it provided its services. Regulations that even CMS concedes bore only prospective effect. See
So what to do? Caring Hearts says we can find a way out through
With this we agree. For surely one thing no agency can do is apply the wrong law to citizens who come before it, especially when the right law would appear tо support the citizen and not the agency.
Take first the cases where CMS says Caring Hearts provided care to individuals who weren‘t homebound. Here‘s a typical example, involving a patient known in our record as L.Sm. At the time Caring Hearts provided L.Sm. with home health services he was 85 years old, weighed 352 pounds, and suffered from diabetes, high blood pressure, and a host of other ailments. By all accounts he could not easily walk 20 feet and, while he sometimеs used a walker or cane, he more or less “lived” in a wheelchair. Despite these documented facts, CMS adopted the ALJ‘s judgment that L.Sm. wasn‘t homebound and Caring Hearts could not have reasonably thought otherwise. In support of its conclusion the agency reasoned that “the evidence does not establish ... that leaving his home would require considerable and taxing effort.” ALJ Op. at 46 (App. Vol. 2 at 338). And it‘s surely true that CMS‘s current regulations state that for a patient to qualify as homebound he must “normal[ly]” be unable “to leave home” even with a wheelchair аnd any attempt to leave home must also “require a considerable and taxing effort.” Medicare Benefit Policy Manual (MBPM), Pub. No. 100-02, Ch. 7, § 30.1.1 (Rev. 208, May 11, 2015). For purposes of this appeal, too, we spot CMS the possibility (without in any way deciding) that L.Sm. would fail to qualify as homebound within the meaning of this narrow definition because (again for argument‘s sake only) we accept the possibility that he was often able to leave home in his wheelchair without “considerable and taxing effort.”
The trouble is that CMS‘s current regulations defining who qualifies as homebound look little like the regulаtions in effect when Caring Hearts provided care to L.Sm. in 2008. Back then, CMS‘s regulations indicated that, “[g]enerally speaking, a patient will be considered homebound if they [sic] have a condition due to an illness or injury that restricts their ability to leave the place of residence except with the aid of: supportive devices such as crutches, canes, wheelchairs, and walkers....” MBPM, Ch. 7, § 30.1.1 (Rev. 1, Oct. 1, 2003). So rather than asking whether a patient could leave home with a supportive device, the regulations back then seemed to ask whether a patiеnt
Of course, CMS‘s regulations don‘t exist in a vacuum. There‘s also the statute they purport to interpret. And CMS suggests that, whatever its relevant regulations said at the time, the statute‘s plain terms also and independently alerted Caring Hearts to the impropriety of its care for patients like L.Sm. The relevant statutory language provides that
an individual shall be considered to be “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.
But even looking to this language we don‘t see how CMS could have rationally concluded that Caring Hearts knew or should have known individuals like L.Sm. didn‘t qualify as homebound in 2008. To be sure, CMS points us to the second sentence and argues that, to establish a patient is homebound, a provider must prove both (1) that a patient “normal[ly]” cannot leave home even with a supportive device and (2) that “leaving home requires a considerable and taxing effort.” Just as its current regulations rеquire. The trouble is, without the added gloss of CMS‘s current regulations, this reading of the statute is far from obvious or obviously correct. Indeed, there exists another entirely plausible reading of the statute, one that seems entirely consistent with CMS‘s own earlier regulations on the subject and one that Caring Hearts says (without dispute) it held when those regulations controlled and it issued its services. Under this reading it is the first sentence that does the real work—providing that someone like L.Sm. “shall be considered” homebound because he has a condition that restricts his ability to leave home “except with” (but for) a wheelchair or some other form of assistance. Under this reading, the second sentence adds only hortatory guidance about the sorts of people who will generally qualify as homebound under the first sentence, but it doesn‘t narrow the universe of people encompassed by the first sentence.
More than a few clues seem to support the reasonableness of Caring Hearts‘s reading. Not least of course the fact that CMS itself seemed to take this very view at the time. But even beyond that, there‘s a good dеal of textual evidence in the statute itself. Consider the
The statutory sentences that follow these first two seem to provide yet further support for Caring Hearts‘s (and CMS‘s erstwhile) understanding of the law. They indicate that
[a]ny absence of an individual from the home attributable to the need to receive health care treatment, including regular absences ... shall not disqualify an individual from being considered to be “confined to his home.” Any other absence of an individual from the home shall not so disqualify an individual if the absence is ... of relatively short duration. [And] ... any absence for the purpose of attending a religious service shall be deemed to be an absence of ... short duration.
In saying as much as we do about the statute‘s terms we take care to stress what we haven‘t said. We are not asked to pass upon the question whether the statute unambiguously favors Caring Hearts and in that way forecloses CMS‘s recent regulations in a Chevron step one proceeding. Neither are we asked to decide whether, if statutorily ambiguous, CMS‘s recent regulations would qualify as reasonable interpretations of the statute in a Chevron step two proceeding. It may well be that our reasoning here would be relevant in deciding those questions, but the question we face today is more pedestrian and so is our holding. Here we‘re only asked to pass on CMS‘s conclusion that Caring Hearts knew or reasonably should‘ve known its services were wrongly rendered in light of the statute‘s plain terms. And given the many textual clues supporting Caring
In briefing before us CMS adds at this point one more point. The agency notes that in litigation long ago it advocated an interpretation of the homеbound statute very similar to the one its regulations now adopt. See Labossiere v. Sec‘y of HHS, No. 90-150, 1991 WL 531922, at *4-5 (D. Vt. July 24, 1991). But the CMS‘s order under review didn‘t cite Labossiere or suggest it placed Caring Hearts on notice of the impropriety of its understanding of the statute. And of course in administrative law the post-hoc rationalizations of counsel may not provide grounds for sustaining an agency decision, only those grounds cited in the agency‘s order may. See SEC v. Chenery Corp., 318 U.S. 80, 94-95, 63 S.Ct. 454, 87 L.Ed. 626 (1943). Besides, there may be a good reason why CMS made no mention of the case in its order: under its own regulations its prior litigation positions are generally insufficient to put a provider on notice of what is and isn‘t compensable. See
That still leaves the second group of cases the agency addressed. Here CMS acсepted or assumed that the patients Caring Hearts served were homebound but held that the firm couldn‘t show the physical therapy or skilled nursing services it provided were “reasonable and necessary.” An illustrative patient here might be L.D. She was a 71-year-old woman with diabetes, degenerative joint disease, chronic obstructive pulmonary disease, and uncontrolled pain in her lower back, hips, and right leg. She experienced fatigue and weakness after walking 15 feet. By everyone‘s admission, doctors prescribed physical therapy to increаse her strength and decrease her pain. And the record shows, too, that, thanks to the physical therapy, L.D. increased her ability to walk by 50 percent and experienced a decrease in her reported back pain from a 6 out of 10 to a 3 or 4 out of 10. Even so, CMS held, Caring Hearts couldn‘t show that its physical therapy services were reasonable and necessary because its documentation was insufficient. The company‘s “notes” didn‘t contain details of progress made by L.D. “at each visit” and didn‘t contain enough “quantitative” data. Seе CMS Op. at 26 (App. Vol. 2 at 249).
To support its conclusion that Caring Hearts knew or should‘ve known its documentation was insufficient, CMS doesn‘t cite or rest on the relevant statutory language as it did earlier on the homebound question. And it‘s understandable why. The relevant statute states simply that charges must be “reasonable and necessary,” without offering providers any guidance as to what might and might not qualify, let alone indicating what sort of documentation might be demanded. See
But here again the agency appears unfamiliar with its own regulations. Back in 2008 there wasn‘t any
Now we imagine CMS might reply along these lines. As we‘ve seen, while the agency cites repeatedly to
The same story repeats itself when it comes to the skilled nursing services Caring Hearts supplied. Once more, the agency based its denial of coverage for most patients for want of sufficient documenta
At this point just one last wrinkle remains to unfold. In closing, CMS suggests that
But here too it seems CMS is unfamiliar with its own law. For while
This case has taken us to a strange world where the government itself—the very “expert” agency responsible for promulgating the “law” no less—seems unable to keep pace with its own frenetic rulemaking. A world Madison worried about long ago, a world in which the laws are “so voluminous they cannot be read” and constitutional norms of due process, fair notice, and even the separation of powers seem very much at stake. But whatever