Court Opinion

ID: 204726
Source: CourtListenerOpinion
Date Created: 2011-02-15 01:03:41+00
Date Added: 2024-06-11T17:27:45.408456
License: Public Domain

FILED
                            NOT FOR PUBLICATION                              FEB 14 2011

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U .S. C O U R T OF APPE ALS

                           FOR THE NINTH CIRCUIT

KGV EASY LEASING CORPORATION,                    No. 10-55323
a corporation,
                                                 D.C. No. 2:08-cv-06281-DSF-RZ
              Plaintiff - Appellant,

  v.                                             MEMORANDUM *

MICHAEL O. LEAVITT, Secretary of the
United States Department of Health and
Human Services (“DHHS”),

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     Dale S. Fischer, District Judge, Presiding

                           Submitted February 7, 2011 **
                              Pasadena, California

Before: PREGERSON, WARDLAW, and BEA, Circuit Judges.

       KGV Easy Leasing Corporation (“KGV”) is a Medicare designated

Independent Diagnostic Testing Facility (“IDTF”), an entity that performs medical

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
diagnostic tests. See 42 C.F.R. § 410.33(d). KGV appeals the district court’s

decision upholding the Secretary of the Department of Health and Human

Services’ (the “Secretary”) determination that KGV’s testing services were not

reimbursable by Medicare because KGV failed to demonstrate that the tests were

medically reasonable and necessary.1 We have jurisdiction under 28 U.S.C. § 1291

and, for the reasons that follow, we affirm.

      We must affirm the findings of the Secretary “if they are supported by

‘substantial evidence’ and if the proper legal standard was applied.” Mayes v.

Massanari, 276 F.3d 453, 458-59 (9th Cir. 2001) (citing Aukland v. Massanari,

257 F.3d 1033,1035 (9th Cir. 2001); see also 42 U.S.C. § 405(g) (incorporated by

reference in 42 U.S.C. § 1395ff(b)(1)(A)).

1. Medical Necessity

      Medicare pays only for medical tests that are reasonable and necessary for

the diagnosis or treatment of a patient. See 42 U.S.C. § 1395y(a)(1)(A). The

Secretary has broad discretion to determine what documentation is required to

establish such medical necessity. See Maximum Comfort, Inc. v. Sec’y of Health

and Human Servs., 512 F.3d 1081, 1086-88 (9th Cir. 2007). The documentation

      1
        Because the parties are familiar with the facts of this case, we repeat them
here only as necessary to explain our decision.

                                          2
requirements for IDTFs, such as KGV, are found at 42 C.F.R. § 410.33.

      KGV’s preprinted physician order forms, submitted in support of its

reimbursement claims, did not conform to the requirements of 42 C.F.R. §

410.33(d), which mandates both that (1) the beneficiary’s treating physician order

the tests; and (2) the results are used “in the management of the beneficiary’s

specific medical problem.” KGV’s order forms merely identified the referring

physician and included check boxes which identified symptoms and possible

diagnoses. KGV provided no evidence that the referring physician was also the

treating physician, or that the test results were later used to help manage the

patient’s medical conditions.

      KGV never presented evidence that supplemented the information contained

on its order forms or otherwise established medical necessity, such as medical

records or signed declarations from the physicians named on the forms. Therefore,

the Secretary properly found that KGV failed to fulfill the IDTF documentation

requirements for Medicare reimbursement.2 See 42 C.F.R. § 410.33.

      KGV’s contention that various federal laws prohibited it from obtaining the

      2
        The Secretary did not err in failing to consider the opinion of medical
expert Dr. Clarke Espy because Dr. Espy’s conclusions were based solely on the
information contained in the order forms. Dr. Espy possessed no other information
regarding the patients’ medical conditions, nor did he receive any information from
any treating physician.

                                           3
patient medical information necessary to substantiate its claims is without merit.

The Privacy Act does not apply because it pertains only to records kept by federal

agencies, see 5 U.S.C. 552a(a)(1), 552(f), and the Health Insurance Portability and

Accountability Act of 1996 provides a means for obtaining patient medical

information when used for “treatment, payment, or health care operations.” 45

C.F.R. §§ 164.502, 164.504, 164.506.

2. Waiver

      Pursuant to the waiver provisions of Section 1879 of the Social Security Act,

even when tests are not deemed medically necessary, Medicare may nevertheless

reimburse if the provider did not know or could not reasonably have been expected

to know that payment for services would be denied. See 42 U.S.C. § 1395pp(a).

As a Medicare supplier, however, KGV was charged with knowledge of the

Medicare regulations and with the understanding that Medicare would not provide

reimbursement for services that are not properly documented. See, e.g., Fed. Crop

Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947) (the publishing of rules and

regulations in the Federal Register gives legal notice of their contents); Maximum

Comfort, 512 F.3d at 1088 (supplier had constructive notice of publications from

the Medicare contractor setting forth documentation requirements). The

documentation requirements which govern KGV are provided in federal

                                          4
regulations that took effect more than seven years before the first claims at issue

were filed. See 62 Fed. Reg. 59048 (October 31, 1997). Thus, the Secretary

properly found that KGV knew or should have known that its claims would be

denied, and, therefore, KGV was not entitled to a waiver under Section 1879.

                                   CONCLUSION

      For the foregoing reasons, the Secretary’s final decision in this matter was

supported by substantial evidence and the proper legal standards were applied.

AFFIRMED.

                                          5