Ambercity Hospice, Inc. v. Xavier Becerra ( 2021 )

NOT FOR PUBLICATION FILED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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