United States Court of Appeals

for the Fifth Circuit

No. 20-10271

Family Rehabilitation, Incorporated, doing business as 

Family Care Texas, doing business as Angels Care Home 

Health, 

Plaintiff—Appellee,

versus

Xavier Becerra, Secretary, U.S. Department of Health 

and Human Services; Seema Verma, Acting 

Administrator for the Centers for Medicare and 

Medicaid Services, 

Defendants—Appellants.

Appeal from the United States District Court 

for the Northern District of Texas 

USDC No. 3:17-CV-454

Before Stewart, Ho, and Engelhardt, Circuit Judges.

Per Curiam:

Under the Medicare program, the Department of Health and Human 

Services (“HHS”) can recoup overpayments made to a health care provider. 

42 U.S.C. § 1395ddd. A provider can challenge an HHS overpayment 

determination by pursuing four steps of administrative review, followed by 

review in federal district court. 42 U.S.C. § 1395ff. The first two steps, 42 

United States Court of Appeals

Fifth Circuit

FILED

November 2, 2021

Lyle W. Cayce

Clerk

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No. 20-10271

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U.S.C. § 1395ff(a)–(c), and the fourth step, 42 C.F.R. § 405.1100 (2017), 

involve paper hearings, while the third step can include an in-person hearing 

with the opportunity to have oral testimony and cross-examination, 42 

C.F.R.§ 405.1036(c)–(d). The Medicare statute allows HHS to recoup 

overpayments after the second step of review, and a provider who is 

successful at a later stage of review can seek repayment at that time. 42 

C.F.R. § 405.379(d)(4)–(5).

Family Rehabilitation (“Family Rehab”) is currently facing an 

impending recoupment after two steps of administrative review. Due to 

significant delays in third step review, Family Rehab brought a procedural 

due process claim, arguing that it is entitled to third step review before 

recoupment, because in-person cross-examination and testimony are critical 

to the resolution of its claim.

The district court granted summary judgment in favor of Family 

Rehab, and entered a permanent injunction barring HHS from recouping the 

disputed funds until the completion of third step review.

In reaching this decision, the district court did not have the benefit of 

this court’s decision in Sahara Health Care Inc. v. Azar, 975 F.3d 523 (5th Cir. 

2020), in which we rejected a similar due process claim under nearly identical 

facts. Id. at 525. We accordingly reverse.

We apply de novo review to a grant of summary judgment, using the 

same standards as the district court. See, e.g., Petro Harvester Operating Co. 

v. Keith, 954 F.3d 686, 691 (5th Cir. 2020). We review permanent injunctions 

for abuse of discretion, but any issue of law underlying that decision is 

reviewed de novo. See, e.g., BNSF Ry. Co. v. Int’l Ass’n of Sheet Metal, Air, 

Rail & Transp. Workers – Transp. Div., 973 F.3d 326, 333–34 (5th Cir. 2020).

In Sahara, this court found it dispositive that the healthcare provider

could not explain why “steps one and two, standing alone, fail to satisfy the 

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constitutional requirement.” 975 F.3d at 531. The benefit of an in-person 

hearing during the third step of review is to allow the decisionmaker to make 

credibility determinations through the consideration of testimony and cross 

examination. But the provider in Sahara conceded that a third step “hearing 

[would] not develop the factual record.” Id. The provider there could “not 

explain how the possibility of cross-examination at the hearing would benefit 

it.” Id. 

So too here. Family Rehab’s claims all involve documentation issues 

that do not require cross-examination and credibility determinations.

During oral argument, counsel for Family Rehab claimed that third 

step review is required because HHS is contesting the medical judgments of 

the doctors. But counsel’s claim is flatly contradicted by the record. Each 

contested overpayment claim in this case involves documentation issues—

such as the failure to certify patients as “homebound,” the lack of 

descriptions of clinical findings, the lack of Start of Care Certifications, and 

the lack of contemporaneous signatures—not objections to the substantive 

medical judgments of doctors. Accordingly, Family Rehab’s claims could 

have been resolved in the first two steps of administrative review by 

producing the relevant documents. Third step review “does not allow a 

provider to supplement the record” beyond the submission of oral testimony 

and the making of credibility determinations—neither of which are necessary 

to resolve documentation issues. Id. at 532. 

As in Sahara, Family Rehab “has already received two meaningful

opportunities to be heard.” Id. at 530. If Family Rehab wishes, it can escalate 

the review process to the fourth step or to a federal district court, instead of 

waiting for third step review. Id. at 531–33.

We reverse.

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