Court Opinion

ID: 5120174
Source: CourtListenerOpinion
Date Created: 2021-10-21 20:00:59.532922+00
Date Added: 2024-06-11T08:22:16.040392
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       OCT 21 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

AMBERCITY HOSPICE, INC., a California No. 20-56242
corporation,
                                      D.C. No.
             Plaintiff-Appellant,     5:19-cv-00938-CJC-KK

 v.
                                                MEMORANDUM*
XAVIER BECERRA, Secretary of Health
and Human Services,

                Defendant-Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                   Cormac J. Carney, District Judge, Presiding

                           Submitted October 19, 2021**
                              Pasadena, California

Before: CALLAHAN, OWENS, and FORREST, Circuit Judges.

      Ambercity Hospice, Inc. (Ambercity) appeals the district court’s decision

affirming that Health and Human Services’ (HHS) denial of Medicare coverage was

based on the proper legal standard and supported by substantial evidence. It also

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
challenges the district court’s holding that Ambercity was not an innocent provider

under the Medicare Act. Finally, Ambercity argues for the first time on appeal that

HHS violated due process during the administrative appeals process.

      Under the Administrative Procedure Act, agency actions must be upheld

unless they are “arbitrary, capricious, an abuse of discretion, or contrary to law.”

Nat’l Fam. Farm Coal. v. EPA, 966 F.3d 893, 923 (9th Cir. 2020); see 5 U.S.C.

§ 706. Moreover, the Medicare Act provides that “[t]he findings of [HHS] as to any

fact, if supported by substantial evidence, shall be conclusive.” 42 U.S.C. § 405(g)

(made applicable to the Medicare Act by 42 U.S.C. §§ 1395ii, 1395ff(b)(1)(A) and

42 C.F.R. § 405.1136(f)). Substantial evidence is evidence that “a reasonable mind

might accept as adequate to support a conclusion.” Chu v. U.S. Commodity Futures

Trading Comm’n, 823 F.3d 1245, 1250 (9th Cir. 2016) (quoting Gebhart v. SEC,

595 F.3d 1034, 1043 (9th Cir. 2010). We review the district court’s decision de novo.

Fournier v. Sebelius, 718 F.3d 1110, 1117 (9th Cir. 2013). We have jurisdiction

under 42 U.S.C. §§ 405(g), 1395ff(b)(1)(A) and 28 U.S.C. § 1291, and we affirm.

      1.     The district court did not err in holding that HHS’s decision was based

on the correct legal standard and supported by substantial evidence. While a

physician’s certification establishing the patient had a terminal illness is required,

eligibility for Medicare coverage does not rest on clinical judgment alone. See 42

U.S.C. § 1395y(a)(1)(C); 42 C.F.R. §§ 418.200, 424.5(a)(6). The governing

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regulations impose documentation requirements that must be satisfied. 42 C.F.R.

§§ 418.200, 418.22, 418.24, 418.56, 424.5(a)(6). For each claim at issue here, the

record demonstrates that qualified doctors and nurses applied the Local Coverage

Determination (LCD) standards and regulatory requirements and explained why

coverage was not supported by the provided medical documentation. We conclude

that HHS provided evidence that “a reasonable mind might accept as adequate to

support” its coverage decisions. Chu, 823 F.3d at 1250.

      2.     The district court also did not err in holding that Ambercity was not an

innocent provider under the Medicare Act. Providers are deemed to have

constructive knowledge of the coverage requirements contained in the Medicare Act

itself, as well as in its accompanying regulations, manual issuances, bulletins, and

other written guidelines. 42 CFR § 411.406; see Maximum Comfort Inc. v. Sec’y of

Health & Hum. Servs., 512 F.3d 1081, 1088 (9th Cir. 2007). The regulations make

clear that unless providers submit sufficient documentation to demonstrate that their

services are “reasonable and necessary” for hospice care treatment, they will not

receive coverage. 42 C.F.R. §§ 418.200, 424.5(a)(6); see also id. §§ 418.22, 418.24,

418.56. Moreover, the relevant LCDs specifically explain what clinical evidence

must be shown to meet the criteria for terminal illness. See Centers for Medicare and

Medicaid Services, Local Coverage Determination L33393. And finally, 42 U.S.C.

§ 1395ddd provides that initial payments are subject to review and reopening by

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HHS. Therefore, because the statutes and regulations provide constructive notice of

the requirements to receive coverage and the possibility of post-payment audit, the

district court did not err in holding that Ambercity should not be compensated as an

innocent provider.

      3.     Finally, we decline to consider Ambercity’s due process argument

because it was not raised properly for decision in the district court. See Club One

Casino, Inc. v. Bernhardt, 959 F.3d 1142, 1153 (9th Cir. 2020), cert. denied sub

nom. Club One Casino, Inc. v. Haaland, 141 S. Ct. 2792 (2021). Ambercity did not

raise its due process argument to the district court until its reply brief that was

untimely filed, and the district court refused to consider it. The district court has

discretion to ignore issues raised for the first time in reply, cf. El Pollo Loco, Inc. v.

Hashim, 316 F.3d 1032, 1040-41 (9th Cir. 2003), and to ignore untimely filings, see

C.D. Cal. R. 7–12 (“The Court may decline to consider any memorandum or other

document not filed within the deadline set by order or local rule.”). We see no abuse

of discretion by the district court. Moreover, we see no “exceptional circumstances”

justifying Ambercity’s failure to properly present its due process claim that warrant

our considering this issue for the first time on appeal. Club One Casino, Inc., 959

F.3d at 1153 (quoting El Paso City v. Am W. Airlines, Inc. (In re Am. W. Airlines,

Inc.), 217 F.3d 1161, 1165 (9th Cir. 2000)). Indeed, Ambercity does not proffer any

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exceptional circumstances for our consideration or even address the issue of its

waiver.

      AFFIRMED.

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