IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-50398

MAXMED HEALTHCARE, INCORPORATED, 

 Plaintiff - Appellant

v.

THOMAS PRICE, SECRETARY, U.S. DEPARTMENT OF HEALTH AND 

HUMAN SERVICES, 

 Defendant - Appellee

Appeal from the United States District Court

for the Western District of Texas

Before JONES and OWEN, Circuit Judges, and ENGELHARDT, District 

Judge*.

EDITH H. JONES, Circuit Judge:

The Secretary of Health and Human Services determined that the 

Medicare program overpaid plaintiff-appellant Maxmed Healthcare, Inc., by 

almost $800,000 for home health care services rendered to Medicare 

beneficiaries. Maxmed sought judicial review, arguing principally that the 

overpayment calculation was in error to the extent it extrapolated from a group 

of noncompensable services to estimate an overpayment three times larger. 

 

* Chief Judge of the Eastern District of Louisiana sitting by designation.

United States Court of Appeals

Fifth Circuit

FILED

June 22, 2017

Lyle W. Cayce

Clerk

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The district court granted summary judgment to the Secretary and denied 

Maxmed’s motion to amend or alter the judgment. We AFFIRM.

BACKGROUND

The Medicare program reimburses health care providers who render 

services to Medicare beneficiaries. Congress created the Medicare Integrity 

Program through which the Secretary contracts with private entities “for the 

purpose of identifying underpayments and overpayments and recouping 

overpayments[.]” See 42 U.S.C. § 1395ddd(a), (h)(1). 

Extrapolation is one permissible method of calculating overpayments. In 

particular, Congress authorized Medicare contractors to “use extrapolation to 

determine overpayment amounts” if the Secretary determines that “there is a 

sustained or high level of payment error.” Id. § 1395ddd(f)(3)(A). 

The Centers for Medicare and Medicaid Services (CMS), the agency 

responsible for administering Medicare, has issued two key documents that 

govern the use of extrapolation. One document, Ruling 86-1, provides that 

sampling for extrapolation purposes “only creates a presumption of validity as 

to the amount of an overpayment which may be used as the basis for 

recoupment.” Following an overpayment determination based on 

extrapolation, the burden shifts to the Medicare provider, who “could attack 

the statistical validity of the sample, or [] could challenge the correctness of 

the determination in specific cases identified by the sample[.]” The second

document is the Medicare Program Integrity Manual, which sets out “[t]he 

major steps in conducting statistical sampling,” and articulates a number of 

criteria that govern the specifics of each step in the extrapolation process. See 

Medicare Program Integrity Manual (MPIM) § 8.4.1.3; see also id. §§ 8.4.3.1 

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(Period for Review), 8.4.3.2.1 (Composition of the Universe), 8.4.3.2.2 (Sample 

Unit), 8.4.4.3 (Sample Size).1 

Providers who dispute an overpayment determination may challenge it 

in a lengthy appeal process. At the outset, a Medicare Administrative 

Contractor makes an “initial determination” regarding the overpayment 

amount. See 42 C.F.R. § 405.920. A provider who is displeased with the 

Medicare Administrative Contractor’s initial determination may then seek a 

“redetermination”—the first step in a five-step appeal process. Id. §§ 405.940–

.958. The redetermination is conducted by employees of the Medicare 

Administrative Contractor who were not involved in the initial determination. 

Id. § 405.948. Second, if the provider remains dissatisfied, the provider may 

request a “reconsideration.” Id. § 405.960. A Qualified Independent 

Contractor, another private contractor, conducts the “independent” 

reconsideration. Id. § 405.968. Third, if the provider still remains dissatisfied, 

the provider may request a hearing before an administrative law judge (ALJ). 

Id. § 405.1000(a). The ALJ reviews the case de novo. Id. § 405.1000(d). 

Fourth, either the provider or CMS, through its contractors, may request that 

the Medicare Appeals Council (Council) review the ALJ’s decision. Id. 

§ 405.1100(a). The Council, like the ALJ, reviews the case de novo, and its 

decision constitutes the Secretary’s final decision. Id. § 405.1000(c). Fifth, if 

all else fails, the provider is entitled to “judicial review of the Secretary’s final 

decision . . . as is provided in section 405(g) of this title.” 42 U.S.C. 

§ 1395ff(b)(1)(A). 

 

1 A copy of MPIM Chapter 8 may be found at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/pim83c08.pdf (last visited June 20, 2017). At the 

time of the agency proceedings in this case, the relevant MPIM provisions were located in

Chapter 3. Subsequently, the provisions were relocated to Chapter 8, and both parties assure 

us that the provisions are substantively unchanged. 

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Over the past six years, Maxmed navigated the appeal process from start 

to finish. Maxmed is a home health agency that provided home health services 

to Medicare beneficiaries. Maxmed submitted claims for services to its 

Medicare Administrative Contractor, Palmetto GBA, and received payments 

accordingly. In 2011, however, Palmetto GBA informed Maxmed that it 

calculated overpayments between April 2008 and March 2010. Palmetto GBA 

explained that Health Integrity, LLC, a private contractor charged with 

investigating potential overpayments, determined that Maxmed had been 

“overpaid in the amount of $773,967.00.” Health Integrity reviewed a sample 

of 40 claims, submitted on behalf of 22 beneficiaries during that period, and 

determined all but one noncompensable either because the patients were not 

homebound or the services provided were not medically necessary. See 

42 U.S.C. § 1395f(a)(2)(C) (requiring a physician’s certification that “in the 

case of home health services, such services are or were required because the 

individual is or was confined to his home . . . and needs or needed skilled 

nursing care”). This was an “error” rate exceeding 97%. The overpayment 

amount attributable to the disapproved claims was $264,584.51. Health 

Integrity then statistically extrapolated to a universe of 130 claims, which 

yielded a total overpayment amount of $773,967. Palmetto GBA instructed 

Maxmed to repay the larger amount. 

Maxmed invoked the five-step appeal process to challenge the 

overpayment determination. Maxmed challenged both the denial of coverage 

for the claims and the extrapolation to 130 overpayments. Maxmed lost at the 

redetermination and reconsideration levels before prevailing after an ALJ 

hearing. 

In a 106-page ruling, the ALJ thoroughly examined each of the cases of 

the 22 beneficiaries and found nearly all of their claims noncompensable or 

overpaid. She ruled in favor of Maxmed on only one of the individual claims. 

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The ALJ then took up multiple challenges to Health Integrity’s statistical 

sampling methodology and relied heavily on a report by an independent 

statistician, not retained by Maxmed, who disagreed with the overpayment 

calculations. Ultimately, the ALJ found that Health Integrity’s extrapolation 

methodology was fatally flawed in a number of ways, including (1) the failure 

to record the random numbers used in the sample as required by the MPIM;

(2) the failure to properly define sampling units; (3) the failure to demonstrate

the sampling units’ independence; and (4) the failure to demonstrate average 

overpayment was normally distributed. The ALJ invalidated the extrapolation 

methodology and the overpayment amounts based on the methodology. 

CMS referred the ALJ’s decision to the Council, as it is entitled to do, 

seeking “own-motion” review. The Council, ruling de novo, affirmed the ALJ’s 

assessment that the 22 beneficiaries’ individual cases were (with one 

exception) not eligible for Medicare coverage, but reversed the ALJ’s 

determinations about extrapolation and sampling. Like the ALJ, the Council 

noted that an appeal challenging the validity of the sampling methodology 

must be predicated on the actual statistical validity of the sample as drawn 

and conducted. See MPIM § 8.4.1.1. Further, like the ALJ, the Council noted 

Maxmed’s burden was to overcome the presumption of validity of the sampling 

and extrapolation methodology. CMS Ruling 86-1. The Council concluded that 

the ALJ “erred as a matter of law in her application of CMS Ruling 86-1 and 

MPIM guidance and erred as a matter of fact by concluding that the evidence 

of record establishes that the statistical sampling and extrapolation were 

invalid.” The Council addressed numerous generic and specific challenges to 

Health Integrity’s sampling and extrapolation methodology. Pertinent to this 

appeal, the Council held that “the MPIM does not require that the list of 

random numbers be provided,” because the sample selected by Health 

Integrity could be replicated by other means. Further, the Council rejected 

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Maxmed’s contention that the sampling units were not independent because 

(1) the record did not prove this assertion; (2) multiple claims pertaining to 

individual beneficiaries were “independent” because they were generated in 

separate 60-day increments; and (3) the MPIM expressly contemplates the use 

of “claims, individual claims, or clusters of claims (e.g. a beneficiary)” as the 

sampling units. MPIM, ch. 3, §3.10.3.2.2.2 Finally, finding no authority for 

Maxmed’s “sweeping proposition,” the Council summarily rejected Maxmed’s 

“additional” argument that extrapolation violates the agency’s “Rule of 

Thumb,” which, according to Maxmed, requires individualized review of each 

beneficiary’s medical record. 

Maxmed sought judicial review of the Council’s decision. The company 

no longer challenges its liability to repay over $250,000 based on services that 

were found not medically reasonable and necessary, nor does it raise many of 

the technical issues concerning extrapolation that were covered in its briefing 

before the ALJ and the Council. In federal court, Maxmed raised various 

issues challenging the Council’s decision and contended that it was deprived of 

due process because it was denied timely, critical information about the 

extrapolation methodology. The district court granted summary judgment to 

the Secretary. The court affirmed the Council’s resolution of the extrapolation 

issues for essentially the same reasons invoked by the Council. The court

found no due process violation because Maxmed had an “encrypted CD [with] 

an explanation and details of the findings” for the entire duration of the appeal 

process, and Maxmed had all relevant information at least “prior to the hearing 

before the ALJ.” 

 

2 The concept of “independence” is important to a proper extrapolation. As the ALJ 

stated, “[t]he concept of independence means that the (a) probability of denying the payments 

from one sampling unit does not affect (b) the probability of denying the payments to any 

other sampling unit in the frame. This form of independence is completely separate from the 

random selection of sampling units from the frame.”

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Maxmed moved to amend or alter the judgment, attaching four 

complaints in different lawsuits filed by Maxmed’s counsel that were presented 

as “new evidence” demonstrating arbitrary extrapolation. The district court 

denied the motion because “the[] complaints [did] not adequately inform the 

Court as to the parties’ evidence, records, testimony, and statistical sampling, 

and whether they are exactly the same as those at issue in this case.”

Now, six years after the Secretary first demanded repayments, Maxmed 

appeals the district court’s grant of summary judgment and denial of the 

motion to amend or alter the judgment.

STANDARD OF REVIEW

Because Maxmed raises a variety of claims, the standard of review varies 

from claim to claim. First, as to the validity of the overpayment methodology 

on which the district court granted summary judgment, “[t]his court reviews a 

grant of summary judgment de novo, applying the same standard to review the 

agency’s decision that the district court used.” Baylor Cty. Hosp. Dist. v. Price, 

850 F.3d 257, 261 (5th Cir. 2017). The Secretary contends that the appropriate 

standard is confined to 42 U.S.C. §405(g): “(1) whether the [Secretary] applied 

the proper legal standards; and (2) whether the [Secretary’s] decision is 

supported by substantial evidence on the record as a whole.” See Estate of 

Morris v. Shalala, 207 F.3d 744, 745 (5th Cir. 2000). Maxmed argues that this 

court should consider, under the Administrative Procedure Act, whether the 

Secretary’s decision is not founded on substantial evidence or is “arbitrary, 

capricious, an abuse of discretion, or otherwise not in accordance with law.” 

See 5 U.S.C. § 706(2)(A), (E). This court recently addressed the same debate 

between a medical services provider and CMS and “assume[d] only for the sake 

of argument that the APA’s arbitrary and capricious standard applies.” Baylor 

Cty. Hosp. Dist., 850 F.3d at 261. Because the standard of review “probably 

makes no difference,” id., we make the same assumption here, too.

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Second, this court reviews the denial Maxmed’s motion to alter or amend 

the judgment under Fed. R. Civ. P. 59(e) for abuse of discretion. See Rosenblatt 

v. United Way of Greater Hous., 607 F.3d 413, 419 (5th Cir. 2010). “[A] motion 

to alter or amend the judgment under Rule 59(e) ‘must clearly establish either 

a manifest error of law or fact or must present newly discovered evidence’ and 

‘cannot be used to raise arguments which could, and should, have been made 

before the judgment issued.’” Id. (quoting Rosenzweig v. Azurix Corp., 332 F.3d 

854, 864 (5th Cir. 2003) (quoting Simon v. United States, 891 F.2d 1154, 1159 

(5th Cir. 1990))) (alteration in original). 

Finally, this court reviews the grant of summary judgment against 

Maxmed’s due process claim de novo. Summary judgment is proper “if the 

movant shows that there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.” See, e.g., Rogers v. Bromac 

Title Servs., L.L.C., 755 F.3d 347, 350 (5th Cir. 2014) (quoting Fed. R. Civ. 

P. 56(a)).

DISCUSSION

Maxmed argues that substantial evidence does not support the Council’s 

decision to approve the integrity contractors’ sampling and extrapolation 

methodology and the Council’s decision was arbitrary and capricious. To this 

end, the company focuses on the arguments highlighted above—random 

numbers should have been recorded, the sampling units were not independent, 

the Rule of Thumb prohibits extrapolation, and the four lawsuit complaints 

highlighted in its post-judgment motion illustrate arbitrary extrapolation. 

Maxmed also asserts that its due process rights were violated. None of these 

arguments has merit.

I. Random Numbers

Maxmed contends that the extrapolation is invalid because the 

Secretary, acting through its contractors, failed to document the random 

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numbers used in the sample and how they were selected. Maxmed relies on 

MPIM section 8.4.4.4.1, which states that 

[a] record shall be kept of the random numbers actually used in 

the sample and how they were selected. Sufficient documentation 

shall be kept so that the sampling frame can be re-created, should 

the methodology be challenged. 

The Secretary does not dispute that there is no record of the random numbers 

in this case.

But, as the Secretary notes, this fact does not necessarily invalidate the 

extrapolation methodology, at least under the MPIM. Note that the quoted 

section refers also to “sufficient documentation . . . so that the sampling frame 

can be re-created.” Maxmed does not argue that the failure to record the 

random numbers actually rendered the sampling invalid, and it ignores the 

stated goal of maintaining the random numbers. Health Integrity’s chief 

statistician was able to replicate the sample of 40 claims using the information 

available to Maxmed.

 Moreover, MPIM section 8.4.1.1 makes clear that a contractor’s failure 

“to follow one or more of the requirements contained herein does not 

necessarily affect the validity of the statistical sampling that was conducted or 

the projection of the overpayment.” Instead, “[a]n appeal challenging the 

validity of the sampling methodology must be predicated on the actual 

statistical validity of the sample as drawn and conducted.” MPIM § 8.4.1.1. 

Section 8.4.1.1 concludes by reemphasizing that a contractor’s failure to follow 

all MPIM requirements “should not be construed as necessarily affecting the 

validity of the statistical sampling and/or the projection of the overpayment.” 

Maxmed’s argument is inconsistent with the MPIM, and the Secretary did not 

arbitrarily reject this argument.

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II. Sampling Units’ Independence

Maxmed also argues that the MPIM requires the Secretary’s contractors, 

to “obtain a statistically valid random sample of processed Medicare claims 

that are defined correctly and independent.” Maxmed contends that the 

sampling in this case was fatally dependent because the same Medicare 

beneficiary could have multiple claims or claim lines in the sample. The 

independent expert Dr. Haller found, and the ALJ agreed, that using multiple 

claims for one beneficiary in the sample rendered the sampling units not 

independent. MPIM section 8.4.10, entitled “Resources,” lists authoritative 

texts on statistical methods, several of them referenced in Dr. Haller’s opinion, 

which explain the proper concepts used by academics.

As explained by the Council, however, the MPIM does not actually have 

a strict “independence” requirement that conforms to authoritative statistical 

standards and texts. The Council criticized Dr. Haller’s “assertion that 

confidence interval extrapolation requires the sampling units to be wholly 

independent,” and found that it “represents another example of [his] effort to 

incorporate by reference academic standards that are not contemplated in 

CMS guidance or consistent with real-world Medicare practices.” 

Moreover, the MPIM expressly permits a sample to include multiple 

claims or claim lines from the same beneficiary. Section 8.4.3.2.2 provides that 

sampling units “may be an individual line(s) within claims, individual claims, 

or clusters of claims (e.g., a beneficiary).” Not only that, but the Council was 

not persuaded that the sample units were in fact dependent. The Council 

credited Health Integrity’s statistician, who testified that because different 

dates of service are covered by each claim, the fact that a single beneficiary 

was involved did not compel the same medical review result for each claim. 

And although Dr. Haller characterized the sample units as dependent, 

Maxmed’s retained expert said he lacked sufficient information to determine 

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whether the sampling units are dependent or independent. Finally, Maxmed 

bore the burden but did not elect to challenge the compensability of any of the 

claims or claim lines used in the sampling units. 

 The conclusion of the Council’s reasoning in rejecting Maxmed’s 

challenge to the sampling and extrapolation methodology is worth repeating:

Suffice it to say, given MPIM provisions, the fact that [Health 

Integrity] selected a sampling methodology or sample size that 

another statistician may not prefer, or which may not result in the 

most precise point estimate, does not provide a basis for 

invalidating the sampling or the extrapolation as drawn and 

conducted in this case. . . . The Council must give substantial 

deference to CMS guidelines including where, as here, CMS has 

chosen a reasonable, feasible, and well-articulated approach for 

collecting overpayments which, by design, offsets precision in favor 

of lower recovery amounts. To the extent that [Dr. Haller] or other 

statisticians have significant concerns with the parameters of 

CMS’s statistical sampling guidelines, those concerns should be 

raised with CMS, as the Council has no authority to invalidate 

CMS guidelines.

To be sure, Maxmed may have had a viable argument that the only

reasonable interpretation of the statutory term “extrapolation” includes 

“independence” as understood by statisticians who have developed and 

articulated the governing concepts. Such an interpretation could place the 

Secretary’s non-technical interpretation outside the range of permissible 

interpretations under Chevron, U.S.A., Inc. v. Natural Resources Defense 

Council, Inc., 467 U.S. 837 (1984). Maxmed does not make this argument but 

relies instead on the MPIM, and there is no basis for its MPIM argument. The 

Secretary did not act arbitrarily and capriciously in rejecting the challenge to 

the independence of the sampling units.

III. Rule of Thumb

CMS’s Medicare Benefit Policy Manual (MBPM) provides that a 

“determination of whether home health services are reasonable and necessary 

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must be based on an assessment of each beneficiary’s individual care needs.” 

MBPM Chap. 7, § 20.3.3 The parties refer to this provision as a “Rule of 

Thumb.” Maxmed contends that the use of extrapolation violates the Rule of 

Thumb because extrapolation is not based on an assessment of each 

beneficiary’s individual care needs. The upshot of this argument is that any 

overpayment should only be determined after a review of each beneficiary’s 

specific claims, and it is fundamentally at odds with extrapolation concerning 

home health care claims. The Council rejected the argument because Maxmed 

“point[ed] to no authority for such a sweeping proposition.” The district court 

affirmed for the same reason and also because Maxmed did not suggest “any 

alternative means to calculate the overpayment in this case that would not

violate the ‘Rule of Thumb.’”

We agree with the Council and the district court. Maxmed’s contention

contradicts the statutory scheme. The Rule of Thumb makes sense for and 

applies to the prepayment review of individual coverage claims under 

Medicare. The MBPM provides guidance to Medicare contractors providing 

such prepayment review. What is appropriate when services are being 

authorized to Medicare beneficiaries, however, is not the standard for postpayment audits of providers. Congress authorized the Secretary’s contractors 

to use extrapolation where, as in this case, “there is a sustained or high level 

of payment error[.]” 42 U.S.C. § 1395ddd(f)(3)(A). This provision is part of the

overall fiscal integrity program governing “[r]eview of activities of providers of 

services or other individuals or entities furnishing items and services for which 

payment may be made under this subchapter (including skilled nursing 

facilities and home health agencies)[.]” 42 U.S.C. § 1395ddd(b)(1) (emphasis 

 

3 A copy of MBPM Chapter 7 is available at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/bp102c07.pdf (last visited June 20, 2017).

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added). Thus, Congress clearly envisioned extrapolation in overpayment 

determinations involving home health agencies like Maxmed, and the 

Secretary’s reliance on extrapolation as a tool was justified.

IV. Relevance of Similar Cases

Maxmed states that “[d]uring the course of judicial review, Maxmed 

learned of four similar administrative cases” in which the use of the same 

sampling methodology was rejected at the first stage of administrative review. 

Maxmed contends that the difference in results between those cases and the 

instant case shows that extrapolations and sampling are performed in an 

arbitrary, inconsistent manner. Discovery of this “new” evidence led Maxmed 

to ask the district court to amend or alter its decision pursuant to Rule 59(e), 

but the district court denied relief.

The court did not abuse its discretion. As the district court observed, all 

of the unverified complaints were filed by Maxmed’s counsel while the 

summary judgment motion was pending. Yet more than a month after the 

district court rendered its decision, Maxmed asserted to the court that it had 

“newly discovered evidence” that “by due diligence could not have been 

discovered ahead of the decision.” Such assertion is factually inconsistent with 

the filing dates of the four lawsuits. Predicating the denial of Maxmed’s 

motion on that ground alone would not have been an abuse of discretion.

Moreover, Maxmed ignores the district court’s statement that the 

“complaints do not adequately inform the Court as to the parties’ evidence, 

records, testimony, and statistical sampling, and whether they are exactly the 

same as those at issue in this case.” That statement is significant and correct: 

the complaints that Maxmed attached as exhibits to its motion do not contain 

details of the methodologies and other evidence at issue in those cases. For 

this additional reason the district court did not abuse its discretion in denying 

Maxmed’s motion to amend or alter the judgment. 

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V. Due Process

 Maxmed asserts that CMS and its contractors “deprived Maxmed of a 

meaningful opportunity to dispute and contest the overpayment by 

withholding critical evidence such as the statistical sampling and 

extrapolation data and information.” Maxmed concedes that it obtained all of 

this information at least shortly before the ALJ hearing, and the Secretary 

disputes the untimeliness. Moreover, the information was thoroughly tested 

before the ALJ and the Council. The company nevertheless complains that the 

information was “withheld for years and through two appeal stages” 

(presumably referring to the redetermination and reconsideration stages).

 We are unaware of any authority holding that agency processes become 

fundamentally unfair under the circumstances before us, where Maxmed never 

denies having received the information before the ALJ conducted a de novo 

hearing. The only case that Maxmed cites is inapposite. See Chaves Cty. Home 

Health Serv., Inc. v. Sullivan, 931 F.2d 914, 922–23 (D.C. Cir. 1991). No doubt, 

42 U.S.C. § 1395ddd(f)(3) and 42 C.F.R. § 405.371 require the Secretary “to 

disclose information about the review and statistical sampling that was 

followed to calculate an overpayment[.]” It is unclear whether Maxmed 

requested this detailed information earlier in the administrative process, and 

Maxmed alleges in only conclusory terms that it was prejudiced by late 

disclosure. The district court properly rejected this claim.

* * *

We close with a note about how Maxmed’s appeal fits within the larger 

pressing concerns surrounding Medicare appeals. Hundreds of thousands of 

Medicare appeals are backlogged in agency proceedings. After being prompted 

by the D.C. Circuit in American Hospital Association v. Burwell, 812 F.3d 183 

(D.C. Cir. 2016), a district judge issued mandamus relief ordering the 

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Secretary to resolve the backlog by 2020 and adjudicate the appeals within 

statutorily imposed deadlines. See Am. Hosp. Ass’n v. Burwell, No. 14-851, 

2016 WL 7076983 (D.D.C. Dec. 5, 2016) (mem. op.). In March 2017, the 

Secretary filed a status report in that case, indicating that the backlog is 

increasing, not decreasing, and that the Secretary “has no means to, and 

therefore cannot, meet the reduction targets . . . and simultaneously comply 

with the statutory requirements for appropriate payment of claims.” Cochran 

Decl. at 4 (Mar. 6, 2017), ECF No. 55. In a second status report filed in June 

2017, the Secretary reported that there are 607,402 pending appeals, and the 

Secretary projects that, absent legislative and budgetary measures, there will 

be nearly 1 million pending appeals by the end of Fiscal Year 2021. 

Defendant’s Status Report at 2–3 (June 5, 2017), ECF No. 56. It appears that 

the Secretary awaits resources and funding from Congress to remedy the 

problem.

The practical realities are troubling. Providers like Maxmed who can 

afford to challenge overpayment determinations are mired in years of review

(now six years for Maxmed). For many others who lack the necessary will or 

resources, such challenges are undoubtedly cost-prohibitive, and capitulation, 

even for meritorious objections, presents a more attractive option.

The problems don’t end there. Think about the potential problems with 

extrapolation methodologies employed by private contractors who are awarded 

bounties for finding purported overpayments and whose findings are presumed 

valid.4 Consider also the effect of multiple tiers of de novo agency review, 

 

4 See Recovery Auditing in Medicare Fee-For-Service for Fiscal Year 2015, Centers for 

Medicare & Medicaid Services vi, 4 (explaining that Recovery Audit Contractors—who work 

with the Medicare Administrative Contractors, Zone Program Integrity Contractors, and 

Qualified Independent Contractors—“are paid on a contingency fee basis,” and the fees range 

from 9% to 17.5% of the overpayment amount), https://www.cms.gov/Research-StatisticsData-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-

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which render non-Council decisions and proceedings all but useless. Finally, 

if a provider endures until judicial review, the courts’ highly deferential 

standards of review offer the vast majority of providers little hope of success. 

Are these redundant, time-consuming, and costly procedures worthwhile 

for program integrity or providers? One is reminded of Prof. Gilmore’s 

aphorism: “In Hell there will be due process, and it will be meticulously 

observed.” Grant Gilmore, The Ages of American Law 111 (Yale 1977).

* * *

For the foregoing reasons, the district court’s grant of summary 

judgment and denial of the motion to amend or alter the judgment are 

AFFIRMED.

 

Audit-Program/Downloads/FY2015-Medicare-FFS-RAC-Report-to-Congress.pdf (last visited 

June 20, 2017).

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