1 

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

 

 ) 

UNITEDHEALTHCARE INSURANCE ) 

COMPANY, et al., ) 

 ) 

 Plaintiffs, ) 

 ) 

 v. ) Civil Case No. 16-157 (RMC) 

 ) 

ALEX M. AZAR II, in his official ) 

capacity as Secretary of the ) 

Department of Health and Human ) 

Services, et al., ) 

 ) 

 Defendants. ) 

 ) 

MEMORANDUM OPINION ON MOTION TO SUPPLEMENT THE 

ADMINISTRATIVE RECORD 

The UnitedHealthCare Insurance Company challenges a formal rule issued by the 

Centers for Medicare and Medicaid Services (CMS). When CMS filed the administrative record, 

Plaintiffs protested the absence of two documents which had been released by CMS under the 

Freedom of Information Act in another matter. CMS contends that the two documents are not 

properly part of the administrative record for this rulemaking and that they are privileged by the 

deliberative process privilege. The Court concludes that the documents, as redacted upon 

release, are no longer privileged and should be made part of the record here. 

I. BACKGROUND 

Plaintiffs in this case are Medicare Advantage organizations in the UnitedHealth 

Group family of companies, the nation’s leading provider of Medicare Advantage health benefits 

plans (United). Under the Medicare Advantage program (MA), also known as Medicare Part C, 

private insurance companies provide Medicare insurance coverage to eligible individuals and are 
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reimbursed by CMS on a pre-set, per-member-per-month basis, pegged to a dollar value for 

health care attributed to each diagnostic code submitted by medical providers, and adjusted based 

on demographic data. CMS undertakes various efforts to review and audit these reimbursements 

to ensure their accuracy. 

By law, CMS is to pay MA insurers at rates that ensure “actuarial equivalence” 

with what Medicare pays directly for similar health care to participants in traditional Medicare, 

also called “fee-for-service” or FFS Medicare, or Medicare Part A and Part B. 42 U.S.C. 

§ 1395w-23(a)(1)(C)(i). Codes covering all manner of diagnoses are used by Medicare and MA 

to identify the illnesses or conditions affecting the covered populations. Given the millions of 

participants in Medicare, it is only to be expected that some diagnostic codes will be reported in 

error for a patient who does not have that illness or condition; in addition, Medicare suffers from 

some rate of fraud whereby health care providers intentionally report erroneous diagnoses to 

increase their repayments. As a result of these two factors, it is inevitable that Medicare 

experiences an error rate—that is, a proportion of diagnosis codes that are unsupported in 

underlying medical charts—that can be actuarially calculated and/or predicted. 

CMS sets the rates to be paid to MA insurers according to the amounts Medicare 

itself pays directly to providers for the same diagnoses, without regard to the Medicare error rate 

for unsupported diagnoses. In January 2014, CMS published a notice of proposed rulemaking to 

affect MA insurers. See 79 Fed. Reg. 1918-01 (Jan. 10, 2014). “The proposed rule also 

include[d] several provisions designed to improve payment accuracy.” Id. at 1918. After 

receiving comments, CMS published a Final Rule concerning MA overpayments. 79 Fed. Reg. 

29844 (May 23, 2014) (2014 Overpayment Rule). The 2014 Overpayment Rule, challenged 

here, requires MA insurers to return to CMS payments that were based on incorrect diagnostic 
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codes once the insurer discovers, or through reasonable diligence should have discovered, the 

error in any individual patient’s chart. See id. at 29923-24. Failure to do so exposes an insurer 

to a charge of having violated the False Claims Act, 31 U.S.C.A. § 3729, which can lead to treble 

damages, civil penalties, and debarment from federal contracts. Since a similar no-error standard 

is not applied by CMS in paying traditional Medicare providers, United alleges that MA insurers 

are not being reimbursed on an actuarially equivalent rate and that the 2014 Overpayment Rule 

must, perforce, be vacated. 

CMS studied just such an issue in a separate 2012 rulemaking, which concerned 

an audit program to determine the diagnostic accuracy of medical charts for MA beneficiaries. 

In these “risk adjustment data validation,” or RADV, audits, CMS reviews the medical records 

of a small sample of the patients covered by an MA insurance contract and then extrapolates the 

error rate of the sample to the entire population covered by that contract to determine whether the 

insurer had received an aggregate overpayment. As explained by CMS, “RADV audits 

determine whether the diagnosis codes submitted by MA organizations can be validated by 

supporting medical record documentation. . . . Diagnoses that cannot be validated contribute to a 

payment error rate.” Notice of Final Payment Error Calculation Methodology for Part C 

Medicare Advantage Risk Adjustment Data Validation Contract-Level Audits (Feb. 24, 2012) 

(Notice of Final Methodology), AR 005311. On December 20, 2010, CMS posted on its website 

a request for comments titled “Medicare Advantage Risk Adjustment Data Validation (RADV) 

Notice of Payment Error Calculation Methodology for Part C Organizations Selected for 

Contract-Level RADV Audits: Request for Comment.” AR 005020. After receiving more than 

500 comments, CMS determined that it needed to include a “Fee-for-Service Adjuster” (FFS 

Adjuster) in the RADV audit process: when an RADV audit results in a determination that an 
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MA insurer was paid based on unsupported diagnosis codes, the repayment the MA insurer owes 

to the government is adjusted downwards based on an estimated traditional Medicare payment 

error rate.1 CMS explained the rationale for including an FFS Adjuster in auditing payments to 

MA insurers: 

The FFS adjuster accounts for the fact that the documentation 

standard used in RADV audits to determine a contract’s payment 

error (medical records) is different from the documentation standard 

used to develop the Part C risk-adjustment model (FFS claims). The 

actual amount of the adjuster will be calculated by CMS based on a 

RADV-like review of records submitted to support FFS claims data. 

 

Notice of Final Methodology, AR 005314-15. This explanation reflected that an RADV audit 

determines a payment error rate based on actual medical records while the risk-adjustment model 

on which per-diagnosis rates are developed and paid is based on unaudited FFS claims. In 2012, 

CMS apparently intended to develop RADV-like audits of its own FFS claims data. As far as the 

record shows, that has not happened yet. 

The fact that CMS considered and adopted the FFS Adjuster in the context of 

RADV audits forms the basis for the motion to augment the administrative record for the 2014 

Overpayment Rule. United obtained two documents originally disclosed to a third party through 

a request under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, seeking records 

comprised of meeting materials in the files of certain named individuals, all but one of whom 

served as senior decisionmakers at CMS between the years 2011 and 2014 when the RADV 

audit methodology was under consideration. See Declaration of Daniel Meron (Meron Decl.) 

[Dkt. 44-1] ¶¶ 9-13; see also Joint Status Report ¶ 5(b), Schulte v. HHS, No. 14-cv-887 (D.D.C. 

 

1 See 42 U.S.C. § 1320a-7m(i)(5) (“The term ‘Medicare fee-for-service program’ means the 

original medicare [sic] fee-for-service program under Parts A and B of title XVIII of the Social 

Security Act (42 U.S.C. § 1395(c) et seq.).”). In traditional Medicare, CMS directly pays health 

care providers for services to Medicare beneficiaries. 
 5 

Jan 15, 2016), ECF No. 30 (noting that the request included “meeting materials dated after 

January 1, 2012” of these decisionmakers).2 The two FFS Adjuster Documents, a slideshow and 

a bullet-point-style briefing memorandum, describe the reasoning behind the FFS Adjuster for 

RADV audits. Neither document is included in the Administrative Record submitted by CMS 

for the 2014 Overpayment Rule. 

United moves to add both documents to the administrative record. Mot. for Leave 

to File Suppl. to the Admin. Record (Mot.) [Dkt. 44]. Defendants opposed that motion, Mem. in 

Opp’n to Mot. for Leave to File a Suppl. to the Admin. Record (Opp’n) [Dkt. 45], to which 

Plaintiffs replied. Reply to Opp’n to Mot. for Leave to File Suppl. to the Admin. Record (Reply) 

[Dkt. 48]. Defendants also moved to file a surreply in opposition. Defs.’ Mot. for Leave to File 

a Surreply in Opp’n to Pls.’ Mot. to Suppl. the Admin. Record (Surreply Mot.) [Dkt. 54]; 

Proposed Surreply [Dkt. 54-1]. 

II. LEGAL STANDARD 

The Administrative Procedure Act (APA) requires reviewing courts to “set aside 

agency action, findings, and conclusions found to be . . . arbitrary, capricious, abuse of 

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706 (2012). When reviewing 

an agency action under the APA, a court must “review the whole record or those parts of it cited 

by a party.” Id. Review “is to be based on the full administrative record that was before the 

[agency] at the time [it] made [its] decision.” Citizens to Preserve Overton Park, Inc. v. Volpe, 

401 U.S. 402, 420 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 

 

2

 An investigative journalist, unaffiliated with this matter, submitted the original FOIA request in 

response to which the two documents at issue were released by CMS. A separate third party 

submitted a follow-on request for the same records, which were then circulated to, inter alia, 

United. See Meron Decl. ¶¶ 4-6. 
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(1977). The full administrative record “include[s] all documents and materials that the agency 

directly or indirectly considered,” Animal Legal Def. Fund v. Vilsak, 110 F. Supp. 3d 157, 159 

(D.D.C. 2014), and a court “should have before it neither more nor less information than did the 

agency when it made its decision.” Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788, 

792 (D.C. Cir. 1984). 

Because an agency is in the best position to know on what bases it made its 

decision, “[t]he record that an agency produces ‘is entitled to a strong presumption of 

regularity.’” Univ. of Colo. Mem’l Hosp. v. Burwell, 151 F. Supp. 3d 1, 12 (D.D.C. 2015) 

(quoting Marcum v. Salazar, 751 F. Supp. 2d 74, 78 (D.D.C. 2010)). However, supplementation 

of the record is appropriate where certain “unusual circumstances” exist. Lee Mem’l Hosp. v. 

Burwell, 109 F. Supp. 3d 40, 47 (D.D.C. 2015). The United States Court of Appeals for the 

District of Columbia Circuit has found “at least three” circumstances in which such “unusual 

circumstances” might exist: “(1) the agency deliberately or negligently excluded documents that 

may have been adverse to its decision; (2) the district court needed to supplement the record with 

background information in order to determine whether the agency considered all of the relevant 

factors; or (3) the agency failed to explain administrative action so as to frustrate judicial 

review.” Dist. Hosp. Partners, L.P. v. Burwell, 786 F.3d 46, 55 (D.C. Cir. 2015) (quoting 

American Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C. Cir. 2008)); see also City of 

Dania Beach v. FAA, 628 F.3d 581, 590 (D.C. Cir. 2010). 

“[A movant] must do more than simply assert ‘that materials were relevant or 

before an agency when it made its decision.’” Univ. of Colo. Mem’l Hosp., 151 F. Supp. 3d at 13 

(quoting Marcum, 751 F. Supp. 2d at 78). Instead, the party “must identify reasonable, nonspeculative grounds for its belief that the documents were considered by the agency and not 
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included in the record.” Marcum, 751 F. Supp. 2d at 78 (emphasis omitted) (quoting Pac. 

Shores Subdivision Cal. Water Dist. v. U.S. Army Corps of Eng’rs, 448 F. Supp. 2d 1, 6 (D.D.C. 

2006)). The party “must identify the materials allegedly omitted with sufficient specificity, as 

opposed to merely proffering broad categories of documents and data that are ‘likely’ to exist.” 

Lee Mem’l Hosp., 109 F. Supp. 3d at 47. It must “introduce concrete evidence to prove that the 

specific documents allegedly missing from the record were before the actual decisionmaker 

involved in the challenged agency action.” Id. 

“[A]n agency may exclude arguably relevant information that is not contained in 

the agency’s files but that may be available from third parties” and “generally may exclude 

material that reflects internal deliberations.” Fund for Animals v. Williams, 391 F. Supp. 2d 191, 

197 (D.D.C. 2005); see also Oceana, Inc. v. Ross, 290 F. Supp. 3d 73, 82-83 (D.D.C. 2018) 

(“[M]aterials that fall within the scope of the deliberative process privilege are not part of the 

administrative record.”).

III. ANALYSIS 

United asserts that the FFS Adjuster Documents meet the criteria for 

supplementation. It argues that these two documents, known to senior CMS decisionmakers, 

must have been considered at least indirectly by them in the course of developing the 2014 

Overpayment Rule. Notably, the administrative record for the 2014 Overpayment Rule includes 

a plethora of material relating to the FFS Adjuster, including, inter alia, CMS’s December 2010 

request for comments on its proposed payment-error calculation methodology for RADV audits; 

nearly 300 pages of comments it received on that proposal; and its February 2012 announcement 

of the final payment-error calculation methodology, in which it included the FFS Adjuster. 

United contends that “[i]t is simply not credible to suppose that in 2014 CMS reviewed the 
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public comments concerning the FFS Adjuster but not its own senior staff analysis of those 

comments. . . .” Mot. at 11. 

CMS denies that the FFS Adjuster Documents were considered by any of its 

decisionmakers when promulgating the 2014 Overpayment Rule, and states further that, even if 

the documents had been considered, they are the product of internal deliberations and subject to 

the deliberative process privilege. See Lee Mem’l Hosp., 109 F. Supp. 3d at 49 (noting that 

“materials reflecting an agency’s internal deliberations should not be part of an administrative 

record” because it could “discourage candid discussion within the agency”). 

A party moving to include additional documents in the administrative record 

“must identify reasonable, non-speculative grounds for its belief that the documents were 

considered by the agency,” Marcum, 751 F. Supp. 2d at 78 (emphasis omitted) (quoting Pac. 

Shores, 448 F. Supp. 2d at 6; and “must identify the materials allegedly omitted with sufficient 

specificity, as opposed to merely proffering broad categories of documents and data that are 

‘likely’ to exist.” Lee Mem’l Hosp., 109 F. Supp. 3d at 47. Here, by limiting its request to two 

documents, obtained through a FOIA request targeted towards senior decisionmakers in the 

relevant CMS office, United has met the “specificity” requirements to support its request. The 

questions are whether CMS decisionmakers could be said to have considered the documents, 

directly or indirectly, and whether, nonetheless, they are privileged and properly excluded from 

the administrative record. 

CMS does not dispute that the Administrative Record for the 2014 Overpayment 

Rule includes the CMS original proposed RADV methodology, the public comments it received 

on that proposal, and its final decision that included an FFS Adjuster in RADV audits. The FFS 

Adjuster Documents at issue address important considerations involved in that final decision. 
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Nonetheless, CMS insists that these FFS Adjuster Documents were not considered, even 

indirectly, during promulgation of the 2014 Overpayment Rule, and argues that “[i]f the agency 

wanted the views of its senior staff as to issues involved in the earlier proceeding and their 

bearing on the later proceeding, it could have just asked them.” Opp’n at 10-11. 

One assumes, of course, that senior staff of CMS were consulted before the 2014 

Overpayment Rule was promulgated, at least in some fashion. See id. at 10 (acknowledging that 

“many of the same CMS staff members were involved in the creation of the RADV sampling 

methodology and the Overpayment Rule”). These staff members’ knowledge of the FFS 

Adjuster concept inevitably would have been informed by the recent work presenting the FFS 

Adjuster Documents to explain the identical issues to executive management, with which the 

2014 Overpayment Rule arguably conflicts. There is no real dispute about the provenance of the 

FFS Adjuster Documents or that CMS chose to include in the Administrative Record the public 

comments that appear to have led to the agency’s analysis reflected in the FFS Adjuster 

Documents. These facts strongly suggest that CMS at least considered the FFS Adjuster 

Documents indirectly when promulgating the 2014 Overpayment Rule. See Lee Mem’l Hosp., 

109 F. Supp. 3d at 46 (noting an administrative record appropriately includes “all documents and 

materials directly or indirectly considered”).

In addition, a district court may need “to supplement the record with background 

information in order to determine whether the agency considered all of the relevant factors . . . .” 

Dist. Hosp. Partners, 786 F.3d at 55. The Court finds that this is the case here: either CMS 

naturally considered its recent analysis of the FFS Adjuster and omitted the documents in error 

or because they are adverse to its current position, or it failed to consider all of the relevant 
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factors in adopting the 2014 Overpayment Rule. In either event, the FFS Adjuster Documents 

properly supplement the Administrative Record of the 2014 Overpayment Rule. 

CMS further protests that the FFS Adjuster Documents are internal deliberative, 

or “pre-decisional” documents, and are thus privileged and exempt from inclusion in the 

Administrative Record. Oceana, Inc. v. Ross, 290 F. Supp. 3d at 83. “Pre-decisional documents 

are those prepared in order to assist an agency decisionmaker in arriving at his decision rather 

than to support a decision already made. . . . Deliberative materials are those that reflect[ ] the 

give-and-take of the consultative process.” Oceana, Inc. v. Pritzker, 217 F. Supp. 3d 310, 317 

(D.D.C. 2016) (quoting Nat’l Ass’n of Home Builders v. Norton, 309 F.3d 26, 39 (D.C. Cir. 

2002)) (quotation marks omitted). Deliberative documents are usually excluded from an 

administrative record because they may “inaccurately reflect . . . the views of the agency, 

suggesting as an agency position that which is . . . only a personal position.” Coastal States Gas 

Corp. v. U.S. Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). 

The deliberative process privilege “allows the government to withhold documents 

and other materials that would reveal ‘advisory opinions, recommendations and deliberations 

comprising part of a process by which governmental decisions and policies are formulated.’” In 

re Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997) (quoting Carl Zeiss Stiftung v. V.E.B. Carl 

Zeiss, Jena, 40 F.R.D. 318, 324 (D.D.C. 1966), aff’d, 384 F.2d 979 (D.C. Cir. 1967)). The D.C. 

Circuit has elaborated on the deliberative process privilege: 

The deliberative process privilege is a qualified privilege and can be 

overcome by a sufficient showing of need. This need determination 

is to be made flexibly on a case-by-case, ad hoc basis . . . . taking 

into account factors such as “the relevance of the evidence,” “the 

availability of other evidence,” “the seriousness of the litigation,” 

“the role of the government,” and the “possibility of future timidity 

by government employees.” 
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Id. at 737-38 (quoting In re Subpoena Served Upon the Comptroller of the Currency, 967 F.2d 

630, 632 (D.C. Cir. 1992) (internal citation omitted)). 

United argues that any “deliberative” nature of the FFS Adjuster Documents is 

now irrelevant for two reasons: (1) while the Documents may have been deliberative in the 2012 

decision process that preceded adoption of the FFS Adjuster for RADV audits, they are not so 

related to the 2014 Overpayment Rule, as to which they were not deliberative; and (2) the release 

of the FFS Adjuster Documents by CMS in response to a press FOIA request, with some 

redactions for truly “deliberative” materials, indicates that the FFS Adjuster Documents are no 

longer shielded by any privilege. 

As to the first argument, the fact that the deliberations in question related to a 

previous rulemaking does not preclude application of the privilege for deliberative materials. 

The deliberative process exemption protects documents that are “recommendatory in nature,” or 

“draft[s] of what will become a final document.” Coastal States Gas Corp., 617 F.2d at 866. 

Moreover, the purpose of the deliberative process privilege—to “preserve the ‘open and frank 

discussion’ necessary for effective agency decisionmaking,” Abtew v. U.S. Dep’t of Homeland 

Sec., 808 F.3d 895, 898 (D.C. Cir. 2015) (quoting Dep’t of Interior v. Klamath Water Users 

Protective Ass’n, 532 U.S. 1, 9 (2001))—could apply long after the deliberations in question. 

United protests that “even if the document is predecisional at the time it is 

prepared, it can lose that status if it is adopted, formally or informally, as the agency position on 

an issue . . . .” Coastal States Gas Corp., 617 F.2d at 866. United emphasizes that CMS, in fact, 

adopted the FFS Adjuster for RADV audits. CMS disagrees and contends that “[t]he only 

relevant principles that CMS actually adopted were set out in its announcement of the RADV 

sampling methodology.” Opp’n at 10 (emphasis added). Nonetheless, the Secretary agrees that 
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CMS “stud[ied] this problem” of dueling statistics between medical records and FFS claims and 

did adopt an FFS Adjuster. Opp’n at 5. CMS distinguishes its FFS Adjuster from an “agency 

position” because the “Secretary said nothing at all about what he expected the value of this FFS 

Adjuster to be” when it was announced. Id. To the contrary, CMS explained that “if the 

payment error rate calculated by the RADV audits was smaller than the adjustment factor that 

resulted from his study [i.e., the FFS Adjuster], then nothing would be recouped on the audited 

contract.” Id. Wordsmithing aside, this sounds very much like an “agency position” to agree to 

use the FFS Adjuster in RADV audits. 

This debate need not be resolved, however, because the Court finds that the 

deliberative process privilege no longer applies to the FFS Adjuster Documents (except as 

redacted upon release by CMS). The deliberative process is not absolute; it can be waived. See 

In re Sealed Case, 121 F.3d at 740 (“[I]f we find that waiver has occurred, we need not proceed 

further.”). Such waiver is limited to “the document or information specifically released, and not 

[ ] related materials.” Id. at 741. In In re Sealed Case, the D.C. Circuit held that the White 

House had “waived its claims of [deliberative process and executive] privilege in regard to the 

specific documents that it voluntarily revealed to third parties outside the White House.” Id. at 

741-42. 

The agency contends, with good reason, that the mere fact that a document has 

been released under FOIA does not require its inclusion in an administrative record. The Court 

agrees that the questions at issue and the deliberations that give rise to the privilege in question 

may be completely separate from a FOIA analysis. See, e.g., State of Del. Dept. of Nat. 

Resources & Env’l Control v. U.S. Army Corps of Eng’rs, 722 F. Supp. 2d 535, 544 (D. Del. 

2010) (“A FOIA production request is an entirely discrete legal concept that bears no relation to 
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the administrative record compiled for a court’s review under the APA.”). The same analysis 

would apply to a document obtained outside the FOIA process: the mere fact that a plaintiff 

possesses such a document does not render it part of an administrative record. 

The D.C. Circuit has already decided that public disclosure of deliberative 

materials does not necessarily mandate inclusion in the administrative record. See Kansas State 

Network, Inc. v. FCC, 720 F.2d 185, 191-92 (D.C. Cir. 1983) (in action seeking review of FCC’s 

denial of application for tax certificate, refusing to consider a transcript of public deliberations 

regarding the application); Deukmejian v. Nuclear Regulatory Comm’n, 751 F.2d 1287, 1323-29 

(D.C. Cir. 1984) (denying motion to supplement administrative record and the record on appeal 

with transcripts of Commission’s deliberations and finding it unnecessary to reach the question 

as to whether public disclosure of those transcripts was required under the Sunshine Act, 5 

U.S.C. § 552b), vacated in part on other grounds, San Luis Obispo Mothers for Peace v. U.S. 

Nuclear Regulatory Comm’n, 760 F.2d 1320 (D.C. Cir. 1985). This conclusion is not surprising 

because only materials considered directly or indirectly in rulemaking should be part of the 

record on review. 

On the other hand, a document that was privileged as part of the deliberative 

process can lose its privilege when revealed outside the agency. In re Sealed Case, 121 F.3d at 

741-42 (holding that the White House “waived its claims of privilege in regard to the specific 

documents that it voluntarily revealed to third parties outside the White House”). That is what 

happened here. CMS waived any deliberative process privilege in the FFS Adjuster Documents 

to the extent that information was not redacted when it released them to the public. Thus, the 

privilege does not prevent the FFS Adjuster Documents from being made part of the 

administrative record. 
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IV. CONCLUSION 

The Court will grant the motion to supplement the administrative record, Dkt. 44. 

Because the Court need not reach the arguments raised by United to which the Secretary has 

filed a proposed surreply, the agency’s motion for leave to file a surreply, Dkt. 54, will be denied 

as moot. A memorializing order accompanies this opinion. 

 

Date: August 1, 2018 /s/ 

 ROSEMARY M. COLLYER 

 United States District Judge