Edgar A. Gamboa, M.D., Medical Corp. v. Becerra, No. 5:2022cv02865 - Document 29 (N.D. Cal. 2023)

Court Description: ORDER Granting in Part and Denying in Part 22 Plaintiff's Motion for Summary Judgment, 25 Defendant's Cross Motion for Summary Judgment, and Remanding for Further Administrative Proceedings. Signed by Judge Edward J. Davila on 9/29/2023. (ejdlc2, COURT STAFF) (Filed on 9/29/2023)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 EDGAR A. GAMBOA, M.D., MEDICAL CORP., 8 9 Plaintiff, 10 ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT v. Re: ECF Nos. 22, 25 11 United States District Court Northern District of California Case No. 5:22-cv-02865-EJD XAVIER BECERRA, 12 Defendant. 13 Plaintiff Dr. Edgar Gamboa seeks judicial review of the Medicare Appeals Council 14 15 (“Council”) decision finding that he had improperly billed ClariVein procedures and that he was 16 not “without fault” for the overpayments. Defendant Health and Human Services Secretary 17 Xavier Becerra has filed excerpts of the administrative record. ECF No. 18 (“A.R.”). Both parties 18 have moved for summary judgment in their favor. ECF Nos. 22 (“Pl. MSJ”), 25 (“Opp.”). 19 Based on the following, the Court GRANTS IN PART and DENIES IN PART the parties’ 20 cross motions. The Council’s decision is AFFIRMED IN PART, VACATED IN PART, and shall 21 be REMANDED for further administrative proceedings. 22 I. BACKGROUND 23 A. 24 Medicare is a federal health insurance program that covers aged and disabled individuals. Medicare and Health Care Providers 25 See 42 U.S.C. § 1395, et seq. The Centers for Medicare and Medicaid Services (“CMS”) is the 26 federal agency that administers the program on behalf of the Defendant Secretary of Health and 27 Human Services. 42 U.S.C. § 1395hh(a)(1). This case involves Part B of the Medicare program, 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 1 1 which authorizes payments to health care providers for outpatient care, services, and durable 2 medical equipment. Id. §§ 1395j, 1395k. 3 4 services they provided, and Medicare Administrative Contractors (“MACs”) make initial 5 determinations as to the claims’ coverage and amounts. Id. § 1395ff(a); 42 C.F.R. § 405.920. 6 MACs generally will reimburse claims immediately unless they contain glaring irregularities, and 7 a Zone Program Integrity Contractor (“ZPIC”) may subsequently audit the payments to determine 8 overpayment or underpayment. 42 U.S.C. § 1395ddd(h). If there is an overpayment, the MAC 9 can make an adjustment and seek reimbursement from the health care provider. Id. § 1395gg. 10 United States District Court Northern District of California Medicare service providers like Dr. Gamboa submit claims for reimbursement of covered When health care providers submit claims for reimbursement, they must provide a numeric 11 code for the service or procedure as listed in the Current Procedural Terminology (“CPT”), a 12 coding system maintained by the American Medical Association to identify and describe medical 13 services and procedures. Based on the code provided, CMS will then pay for the covered services 14 pursuant to the Medicare Physician Fee Schedule, which is updated annually based on the relative 15 value units of that service or procedure. Pl. MSJ 6 n.2; Opp. 3–4. “To promote consistency in 16 initial determinations,” MACs can issue a local coverage determination (“LCD”), which “specifies 17 whether or under what conditions that contractor will approve reimbursement for some set of 18 items or services.” Agendia, Inc. v. Becerra, 4 F.4th 896, 897 (9th Cir. 2021), cert. denied, 211 L. 19 Ed. 2d 605 (Jan. 24, 2022); see also 42 U.S.C. § 1395kk01(a)(1). MACs can also issue local 20 coverage articles (“LCAs”) that address specific coverage and billing issues. Opp. 6. ClariVein and Noridian’s Local Coverage Publications 21 B. 22 ClariVein is a relatively new device and procedure for treating varicose veins. Compl. 23 ¶ 23. The procedure involves a physician inserting a catheter into the affected vein that both 24 abrades the vein’s interior lining and delivers a medical solution to coat the inside of the vein. Id. 25 ¶ 21. ClariVein is purportedly cheaper, faster, and safer than the traditional treatment for varicose 26 veins, which involves vein stripping and ligation under anesthesia in a hospital. Id. ¶ 22. 27 28 Although there was not a specific CPT code for ClariVein during the relevant time period, Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 2 1 the most relevant existing CPT codes at the time were: (1) 36299 for “unlisted procedure, vascular 2 injection”; (2) 37241 for “vascular embolization or occlusion,” A.R. 11; and (3) 37799 for 3 “unlisted procedure, vascular surgery,” A.R. 3649. During the relevant time period, the MAC in this case—Noridian Healthcare Solutions, 4 5 LLC (“Noridian”)—had not issued any LCD that directly addressed which CPT code physicians 6 should use for the ClariVein procedure. Pl.’ Separate Statement and Responsive Separate 7 Statement Supp. Reply (“Separate Statement”), Fact 17 (undisputed), ECF No. 26-1, at 9. 8 However, Noridian had issued some LCAs that did specifically reference ClariVein, as well as an 9 LCD that provided general guidance on treating varicose veins, as follows: • United States District Court Northern District of California 10 LCD L33497, “Treatment of Varicose Veins of the Lower Extremities,” provided a list 11 of codes “typically used to report” treatment of varicose veins. A.R. 3648–49. This 12 list included CPT code 37799 for “vascular surgery” but did not include either 36299 13 or 37241. This LCD was effective from Sept. 16, 2013 through Sept. 30, 2015, before 14 being replaced by L34209. A.R. 3682–83, 3731. • 15 LCA A53145,1 “Sclerosing of Varicose Veins,” provided that “CPT 37241 must not be 16 used to bill for the treatment of varicose veins with [ClariVein]” and “[w]hen using the 17 ClariVein device in the treatment of varicose veins[,] Noridian recommends billing 18 with CPT code 36299.” See Opp. 6 n.7 (emphasis added) (citing Medicare Coverage 19 Database Archive, A53145, available at 20 https://localcoverage.cms.gov/mcd_archive/view/article.aspx?articleInfo=53145:4&ke 21 yword=A53145). This LCA was revised on April 11, 2014, specifically to “include 22 billing instructions for the use of ClariVein.” Id. 23 24 25 26 27 28 Although Dr. Gamboa objects that “[n]o copy of LCA A53145 exists in the record” and claims that there is no way to verify the language on any particular date (Separate Statement, Facts 39, 40), the Court takes judicial notice of the past versions of LCA A53145 available at the Medicare Coverage Database Archive, maintained by CMS. See United States v. Kindred Healthcare, Inc., 469 F. Supp. 3d 431, 439 (E.D. Pa. 2020) (“Judicial notice of these documents is proper as the Court may take judicial notice of public records such as those issued by CMS.”); U.S. ex rel. Modglin v. DJO Glob. Inc., 48 F. Supp. 3d 1362, 1382 (C.D. Cal. 2014) (taking “judicial notice of the documents relators proffer from the websites of the . . . CMS.”). Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 3 1 1 LCA A53084, “Sclerosing of Varicose Veins,” provided substantively identical 2 guidance as contained in LCA A53145. See A.R. 3748 (emphasis added). This LCA 3 was effective from Oct. 1, 2015 through most of the relevant time period. 4 United States District Court Northern District of California • • LCD L34209, “Treatment of Varicose Veins of the Lower Extremities,” provided that 5 code “36299 is used for sclerotherapy with mechanical agitation (e.g. Clarivein device) 6 prior to January 1, 2017.” A.R. 3734 (emphasis added). This revision was first 7 effective for services performed after Jan. 1, 2017. A.R. 3731. 8 C. 9 Plaintiff Dr. Edgar Gamboa was practicing as a general surgeon in the greater Watsonville Dr. Gamboa and ClariVein 10 area from May 2011 until he ceased operations in 2018. Compl. ¶¶ 17, 64. From 2013 through 11 2018, he was the only general surgeon servicing the region. Id. ¶ 17. The majority of Dr. 12 Gamboa’s patients were referred to him from county and federal clinics, 80% of whom were 13 insured by either Medi-Cal or Medicare. Id. ¶ 18. 14 In early 2014, Dr. Gamboa began treating patients with varicose veins using a new device 15 and procedure called ClariVein. Id. ¶ 23. Between 2014 to November 2016, Dr. Gamboa 16 performed over 90 ClariVein procedures. Id. ¶¶ 28, 33. Dr. Gamboa alleges that each ClariVein 17 device cost approximately $890, and each procedure required the assistance of a certified vascular 18 ultrasound technician ranging from $150–$250 per procedure. Decl. Edgar A. Gamboa Supp. 19 Request Reconsideration (“Gamboa Decl.”) ¶ 24, ECF No. 18-16. 20 At first, Dr. Gamboa billed his ClariVein services using the CPT code 37241 for “vascular 21 embolization or occlusion,” based on guidance from a ClariVein representative and the AMA’s 22 CPT Assistant tool. Separate Statement, Fact 36 (undisputed); see also Gamboa Decl. ¶¶ 21, 23; 23 Decision 7, ECF No. 1-1. These claims were submitted to Noridian, the MAC in this case. 24 Compl. ¶ 26. Dr. Gamboa was reimbursed approximately $4,000 per procedure under CPT code 25 37241. Gamboa Decl. ¶ 24. 26 In June 2016, Dr. Gamboa was informed by a ClariVein representative that Noridian did 27 not want ClariVein procedures to be billed with code 37241 and that they should be billed using 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 4 1 code 36299 instead for “unlisted procedure, vascular injection.” Compl. ¶ 29; Separate Statement, 2 Fact 18 (undisputed). Because code 36299 was an unlisted code, the reimbursement rate is not set 3 but rather would be separately calculated by Noridian using a variety of factors. Separate 4 Statement, Fact 18. From June to September 2016, Dr. Gamboa billed eight ClariVein procedures 5 using CPT code 36299 and was reimbursed at an equivalent rate to code 37241. Id., Fact 3; 6 Gamboa Decl. ¶ 25. United States District Court Northern District of California 7 In November 2016, a Zone Program Integrity Contractor notified Dr. Gamboa that he had 8 incorrectly billed ClariVein procedures using CPT Code 37241, because the procedures “do not 9 reflect vascular embolization or occlusion as defined and valued by” the AMA. Opp. 7. The 10 ZPIC’s adjusted CPT Code 36471 for “injection of sclerosing solution; multiple veins, same leg,” 11 would reimburse Dr. Gamboa at about $140 instead of $4,000 per procedure. See Gamboa MSJ 7. 12 Consequently, between December 2016 and January 2017, Noridian adjusted Dr. Gamboa’s 13 previously billed ClariVein procedures and concluded that he had been overpaid by approximately 14 $376,000. Compl. ¶ 36. 15 D. 16 After Noridian’s adjustments, Dr. Gamboa proceeded through the four stages of the 17 Administrative and Procedural History Medicare administrative appeals process. 18 First, he requested a redetermination from Noridian, which was largely unfavorable. See 19 Edgar A. Gamboa, M.D., Medicare Appeals Council (“Decision”), Dkt. No. M-22-825 (Mar. 11, 20 2022), ECF No. 1-1, at 7. On the second level of appeal, a Qualified Independent Contractor 21 (“QIC”) issued a decision that was partially favorable to Dr. Gamboa, finding that Noridian’s 22 “downcoding” was improper and recoding the ClariVein procedures to CPT code 37799 for 23 unlisted vascular surgeries. Decision 3. At the third level, an administrative law judge (“ALJ”) 24 held a hearing and issued a favorable decision to Dr. Gamboa. Specifically, the ALJ found that 25 Dr. Gamboa had correctly billed the ClariVein procedures under CPT code 37241 because the 26 published LCAs and LCDs during the relevant period were inconsistent amongst themselves. Id. 27 Furthermore, the ALJ found that Dr. Gamboa was indeed “without fault.” Id. at 4. 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 5 At the fourth and final level of administrative appeal, on March 11, 2022, the Medicare United States District Court Northern District of California 1 2 Appeals Council issued a decision that was widely unfavorable to Dr. Gamboa. Specifically, the 3 Council reversed the ALJ’s decision and found that the preponderance of the evidence supported a 4 finding that ClariVein services should have been reported as CPT code 36299, not 37241 as Dr. 5 Gamboa had reported. Decision 10. The Council further found that Dr. Gamboa “did not have a 6 reasonable basis for assuming that the initial payments from [Noridian] were correct and was thus 7 not without fault in causing any overpayments,” concluding that Dr. Gamboa remained financially 8 responsible for “non-covered costs.” Id. at 9–11. 9 On May 13, 2022, Dr. Gamboa filed the instant Complaint for Judicial Review of 10 Administrative Agency Action. ECF No. 1. On October 12, 2022, Defendant Secretary Becerra 11 filed the administrative record in nine volumes. ECF No. 18. Dr. Gamboa moved for summary 12 judgment on December 19, 2022 (ECF No. 22, “Pl. MSJ”), and Secretary Becerra filed a cross 13 motion for summary judgment and opposition to Dr. Gamboa’s motion on February 2, 2023 (ECF 14 No. 25, “Opp.”). 15 II. 16 LEGAL STANDARD The scope of judicial review over Medicare disputes is determined by two statutes: the 17 Administrative Procedure Act (“APA”) and the Social Security Act. See Int’l Rehab. Scis. Inc. v. 18 Sebelius, 688 F.3d 994, 1000 (9th Cir. 2012) (citing 5 U.S.C. § 706); Odell v. U.S. Dep’t of Health 19 & Hum. Servs., 995 F.3d 718, 722 (9th Cir. 2021) (“The judicial-review provision in the Medicare 20 statute incorporates that of the Social Security Act.”). 21 Under the APA, the Court must uphold a final agency determination unless it is “arbitrary, 22 capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706; see 23 also Int’l Rehab., 688 F.3d at 1000. 24 Under the Social Security Act, the Court must affirm the “findings of the Secretary if they 25 are supported by ‘substantial evidence’ and if the proper legal standard was applied.” KGV Easy 26 Leasing Corp. v. Leavitt, 413 F. App’x 966, 967 (9th Cir. 2011) (quoting Mayes v. Massanari, 276 27 F.3d 453, 458–59 (9th Cir. 2001). “The Secretary’s factual findings are conclusive if they are 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 6 1 supported by ‘substantial evidence.’” Int’l Rehab., 688 F.3d at 1000; 42 U.S.C. § 405(g). 2 “‘Substantial evidence’ means ‘more than a mere scintilla but less than a preponderance; it is such 3 relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’” Int’l 4 Rehab., 688 F.3d at 1000 (quoting Sandgathe v. Chater, 108 F.3d 978, 980 (9th Cir. 1997)). 5 III. United States District Court Northern District of California 6 DISCUSSION Dr. Gamboa seeks reversal of the Medicare Appeals Council Decision and a judgment 7 consistent with the ALJ’s determination in his favor. Compl. at 23; Pl. MSJ 25. In doing so, Dr. 8 Gamboa challenges five aspects of the Decision: (1) the finding that he was overpaid; (2) the 9 finding that he was not “without fault”; (3) the denial of his request to submit further briefing on 10 reconsideration; (4) the Decision’s failure to “functionally resolve[]” the dispute; and (5) the 11 violation of his Fifth Amendment procedural and substantive due process rights. Because the 12 Court will remand this matter for further administrative proceedings regarding Dr. Gamboa’s fault 13 for overpayment, the Court will not address the third, fourth, and fifth arguments asserted. Council’s Finding of Improper Coding 14 A. 15 Dr. Gamboa first challenges the Council’s determination that “the preponderance of the 16 evidence supports a finding that CPT code 37241 was not the correct code for reporting ClariVein 17 services; the correct code for reporting ClariVein services was CPT code 36299.” Decision 8. 18 Specifically, Dr. Gamboa contends that (1) the Decision failed to ascertain the correct amount 19 before finding that he had been overpaid; and (2) he could not have been overpaid because he was 20 paid approximately the same amount under both CPT codes 37241 and 36299. Pl. MSJ 17–18. 21 The Court does not find Dr. Gamboa’s arguments to be relevant to the issues on review. 22 The point Dr. Gamboa attempts to argue (i.e., whether he was overpaid) is distinct and wholly 23 separate from the limited question before the Council (i.e., whether Dr. Gamboa had incorrectly 24 billed his ClariVein services). Dr. Gamboa attempts to bridge this gap by citing a 1947 Supreme 25 Court case for the definition of “overpayment,” Pl. MSJ 17; however, neither this authority nor 26 any other he cites suggest that the quantum of overpayment is relevant to determining whether a 27 provider had billed under an erroneous CPT code. Moreover, Dr. Gamboa had already attempted 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 7 1 once before the Council to reframe the issues from one of erroneous billing to overpayment, which 2 the Council expressly rejected. Decision 5, 8 (“We reiterate that the issue is whether CPT code 3 37241 was the correct code to use when billing ClariVein procedures.”). The Court agrees with 4 the Council’s finding on this point and finds it to be supported by substantial evidence, namely the 5 ALJ’s express remark in its decision that “[a]t issue is whether procedure code 37241 is an 6 acceptable CPT code for payment of these claims.” A.R. 142. In sum, Dr. Gamboa’s asserted 7 arguments do not impact the Decision’s findings and conclusions regarding the correct CPT code 8 to bill for ClariVein procedures. United States District Court Northern District of California 9 Notwithstanding Dr. Gamboa’s arguments, the Court finds that the Council’s factual 10 findings on this issue are supported by substantial evidence. The Decision relied on two coverage 11 articles Noridian had issued—LCAs A53145 and A53084—where it specifically instructed 12 “[w]hen using the ClariVein device in the treatment of varicose veins[,] Noridian recommends 13 billing with CPT code 36299.” Decision 6; see also Opp. 6 n.7 (emphasis added). Regardless of 14 the amount of legal deference these articles are entitled to, they reflect enough evidence that “a 15 reasonable mind might accept as adequate to support [the Council’s] conclusion,” on the correct 16 CPT code for ClariVein. Int’l Rehab., 688 F.3d at 1000. The Court may not probe further into the 17 Council’s factual findings once it has confirmed the presence of substantial evidence. 18 19 Accordingly, the Court will DENY Dr. Gamboa’s motion for summary judgment to reverse the Council’s findings on this point. Council’s Determination that Plaintiff Was Not “Without Fault” 20 B. 21 In addition to challenging the Council’s CPT code determination, Dr. Gamboa also takes 22 issue with the Council’s determination that he was not “without fault” and, therefore, financially 23 liable for the overpayment between CPT codes 37241 and 36299. Pl. MSJ 18–23. 24 25 1. Availability of § 1395gg(c) Waiver to Providers Dr. Gamboa invokes the exception at 42 U.S.C. § 1395gg(c), which purportedly allows the 26 government to waive its right to overpayment recovery where the service provider was “without 27 fault” for the overpayment. Pl. MSJ 18 (citing Action All. of Senior Citizens v. Leavitt, 483 F.3d 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 8 1 852, 860 (D.C. Cir. 2007) (“[B]y its plain terms, 1395gg applies to overpayments to a ‘provider of 2 services’ for ‘items or services furnished an individual.’”)). Defendant notes, however, that the 3 Fourth and Seventh Circuits have interpreted the § 1395gg(c) waiver to only be available to 4 individual beneficiaries, i.e., unavailable to Medicare providers. Opp. 16 n.11; see MacKenzie 5 Med. Supply, Inc. v. Leavitt, 506 F.3d 341, 349 (4th Cir. 2007) (holding “§ 1395gg(c) explicitly 6 applies only to the waiver of ‘adjustment[s] as provided in subsection (b) of this section,’ and the 7 only adjustment contemplated by § 1395gg(b) is an adjustment of payments to individuals not 8 suppliers or providers”) (internal citation omitted); Visiting Nurses Ass’n of Sw. Indiana, Inc. v. 9 Shalala, 213 F.3d 352, 359 (7th Cir. 2000) (holding that “the regulations confirm that waiver of 10 United States District Court Northern District of California 11 overpayment liability for providers is not contemplated by § 1395gg(c)”). For the purpose of the present review, the Court will not address the continuing viability of 12 § 1395gg(c) to providers. The subject of the Court’s review—i.e, the Council’s Decision—does 13 not rest any of its reasoning on such an argument, and the Court may not affirm the Decision on 14 post hoc arguments that were not raised below. See, e.g., LivinRite, Inc. v. Azar, 386 F. Supp. 3d 15 644, 667 n.18 (E.D. Va. 2019). The Court, however, will note that the Ninth Circuit has not 16 directly opined on this particular interpretative question, but it has resolved § 1395gg(c) waivers 17 against providers on substantive grounds without considering whether providers were entitled to 18 them in the first place. See, e.g., Garcia v. U.S. Sec’y of Health & Hum. Servs., 542 F. App’x 648 19 (9th Cir. 2013); Gary Gibbon, M.D., Inc. v. Thompson, 121 F. App’x 703, 705 (9th Cir. 2005). In 20 short, the Court will accept without deciding the Council’s and parties’ premise that Dr. Gamboa 21 may be eligible for the “without fault” waiver provided by § 1395gg(c). 22 23 2. Analysis Assuming the applicability of § 1395gg(c) to Medicare providers, both Dr. Gamboa and 24 Defendant Secretary appear to agree that the Medicare Financial Management Manual (the 25 “Manual”), Ch. 3, § 90 provides the relevant agency guidance for evaluating whether a provider is 26 “without fault.” See Pl. MSJ 19; Opp. 16–17 (citing Manual, Ch. 3, § 90). The Manual states that 27 a provider is without fault for an overpayment “if it exercised reasonable care in billing for, and 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 9 United States District Court Northern District of California 1 accepting, the payment” and “[o]n the basis of the information available to it . . . it had a 2 reasonable basis for assuming that the payment was correct.” Manual, Ch. 3, § 90. The Manual 3 also lists several situations where providers are liable for overpayments, one of which is when the 4 provider billed or Medicare paid for “Services that the Provider . . . Should Have Known Were 5 Noncovered.” Manual, Ch. 3, § 90.1(H).2 6 In reversing the ALJ’s determination that Dr. Gamboa was “without fault” as to the 7 overpayment, the Council cited three facts: (1) Dr. Gamboa had access to coverage authorities that 8 indicated CPT code 36299 was the proper code for ClariVein; (2) Dr. Gamboa had the burden to 9 show that no overpayment occurred per § 1833(e) of the Social Security Act; and (3) although Dr. 10 Gamboa alleged he was reimbursed at equivalent rates under both CPT codes 36299 and 37241, 11 he did not provide payment records to substantiate that statement. Decision 9. Based on the 12 Decision’s reasoning, the Court finds both that the Council failed to properly apply the Manual’s 13 standards and that its factual finding of fault is not supported by substantial evidence. First, although the Council was correct to decline Dr. Gamboa’s invitation to consider 14 15 overpayment in reviewing the ALJ’s decision on the correct CPT code for ClariVein, it was error 16 to ignore the quantum of payment in assessing Dr. Gamboa’s fault. The Manual’s guidance on 17 evaluating providers’ fault in overpayments repeatedly emphasizes the salience of the payment’s 18 reasonableness. See Manual, Ch. 3, § 90 (stating a provider is “without fault, if it exercised 19 reasonable care in billing for, and accepting, the payment”; “had a reasonable basis for assuming 20 that the payment was correct”; and “if it had reason to question the payment; it promptly brought 21 the question to the contractor’s attention”). These instructions clarify that, although the provider’s 22 reasonable care in billing is relevant, the primary subject of the reasonableness inquiry is the 23 payment the provider received. Similarly, to the extent the Council’s finding of fault turned on Dr. 24 25 26 27 28 Per CMS’ website, the Manual contains “CMS’ program issuances, day-to-day operating instructions, policies, and procedures that are based on statutes, regulations, guidelines, models, and directives. The CMS program components, providers, contractors, Medicare Advantage organizations and state survey agencies use the IOMs to administer CMS programs.” InternetOnly Manuals (IOMs), Centers for Medicare & Medicaid Services, https://www.cms.gov/medicare/regulations-guidance/manuals/internet-only-manuals-ioms. Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 10 2 1 Gamboa’s § 1833(e) obligations to furnish information in the first instance when he submitted 2 claims for reimbursement (Decision 9), those obligations are relevant but cannot be determinative 3 of a fault finding without considering the payments received. Here, the Council failed to make 4 any affirmative findings as to the reasonableness or unreasonableness of the payments Dr. 5 Gamboa received for ClariVein procedures billed under CPT Code 37241, which was error under 6 the Manual’s guidance. United States District Court Northern District of California 7 Second, the Court also finds that the Council’s finding of fault is unsupported by 8 substantial evidence. As noted above, the Decision is generally bereft evidence or factual findings 9 as to the reasonableness of the payments that Dr. Gamboa received. The only pertinent evidence 10 cited by the Decision is Dr. Gamboa’s access to the LCAs that suggested CPT code 37241 should 11 not be used for ClariVein. Decision 9. However, the Council itself recognized that the applicable 12 LCDs—which are typically entitled to the most substantial deference—“did not directly address 13 the ClariVein procedure or CPT Code 37241.” Opinion 6. As a result, the Council was required 14 to rely on LCAs, which it acknowledged “are not entitled to substantial deference.” Id. Although 15 the LCAs are indeed relevant evidence, the Court cannot determine that they present “more than a 16 mere scintilla” or “such relevant evidence as a reasonable mind might accept as adequate to 17 support” a finding of fault as required by the Manual. Int’l Rehab., 688 F.3d at 1000. Because the 18 only evidence cited is a publication not entitled to deference that only speaks to the reasonableness 19 of Dr. Gamboa’s billing practices but not the reasonableness of payments received, the Court finds 20 this evidence insufficient to support the Council’s factual finding of fault. 21 Both the Council and Defendant rely on § 90.1.H of the Manual for support, which states 22 that providers are at fault if they were paid for services that the providers should have known were 23 not covered by Medicare. Decision 9; Opp. 16 n.12. Here, however, there is no dispute that 24 ClariVein procedures were covered by Medicare, nor is there any dispute that the procedures were 25 medically necessary. Separate Statement, Fact 23 (undisputed). Consequently, Section 90.1.H— 26 which expressly addresses only situations where the provider was paid for services that he should 27 have known were not covered—does not fully control in situations where the services were 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 11 1 indisputably covered and only the amount of reimbursement is disputed. Moreover, Section 2 90.1.H also contains a caveat that, in addition to a provider’s subjective ignorance of coverage 3 provisions, “there may be other circumstances that justify a finding that the provider, physician, or 4 other supplier was not at fault,” such as “whether and to what extent a coverage rule is spelled out 5 in regulations, instructions, or in a CMS notice.” Manual, Ch. 3, § 90.1.H. Here, although the 6 Council cited the fact that Dr. Gamboa had “access to the coverage authorities and coding 7 guidance,” it did not appear to have considered “whether and to what extent a coverage rule is 8 spelled out in regulations, instructions, or in a CMS notice.”3 See Decision 9. Accordingly, the 9 Court concludes that Defendant’s reliance on the exemplar set forth in § 90.1.H of the Manual is 10 largely misplaced, as this case does not involve a provider being paid for non-covered services. Because the Council erroneously applied the standards set forth in the Manual and its United States District Court Northern District of California 11 12 finding of fault is unsupported by substantial evidence, the Court will not affirm the Council’s 13 Decision as requested by the Defendant. Accordingly, the Court may modify or reverse the 14 Council’s Decision, with or without remanding for a rehearing. 42 U.S.C. § 405(g); 42 U.S.C. 15 § 1395ff(b)(1)(A). Here, the Court finds that further proceedings are warranted. In addition to the 16 infirmities noted above, the Decision acknowledged that Dr. Gamboa had alleged he was 17 reimbursed at equivalent rates under both CPT code 37241 and 36299, but ultimately rejected this 18 allegation because Dr. Gamboa had “provided no payment records to substantiate the provider’s 19 declaration” and further denied him the opportunity to submit written briefs.4 Decision 9. Dr. 20 Gamboa strenuously rebuts this characterization, arguing that he had appended overpayment 21 invoices from CMS that reflect the amounts that CMS had adjusted and, correspondingly, he had 22 23 24 25 26 27 28 3 Indeed, the Council had flagged the ambiguity surrounding ClariVein coding at the time Dr. Gamboa submitted his claims for reimbursement. See Decision 6 (remarking that “[d]uring the dates of service at issue, various applicable versions of LCD L33497 and 34209 did not directly address the ClariVein procedure or CPT Code 37241”) (internal parentheticals omitted), 7–8 (noting the mixed ClariVein coding recommendations from CPT Assistant). Although the Council found this evidence unpersuasive in its analysis of the proper coding, this evidence appears to carry different weight as to the assessment of Dr. Gamboa’s fault for the overpayments. 4 This, too, appears to run afoul of the Manual’s directives, which instructs that “[w]here it is not clear [whether the provider was without fault in causing the overpayment], the contractor shall develop the issue.” Manual, Ch. 3, § 90 (emphasis added). Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 12 1 previously been paid. See Pl. MSJ 20–21 (citing Gamboa Decl., Ex. B, A.R. 4894–95)). It is 2 unclear whether the Council had reviewed or considered this evidence in representing that there 3 was no evidence substantiating Dr. Gamboa’s allegations, but the Decision’s language suggests 4 that such evidence would be pertinent to and could impact the Council’s ultimate decision- 5 making. The Court finds that further factual development as to the amounts Dr. Gamboa had 6 received for his ClariVein services would benefit the administrative record and will therefore 7 REMAND this matter for further administrative proceedings and, if necessary, rehearing. 8 IV. 9 10 United States District Court Northern District of California 11 12 13 14 15 16 CONCLUSION Based on the foregoing, the Court will GRANT IN PART and DENY IN PART both parties’ motions for summary judgment, as follows: 1. The Council’s Decision is AFFIRMED as to its determinations on the correct CPT code for billing ClariVein procedures; 2. The Council’s Decision is VACATED as to its finding that Plaintiff was not “without fault” in causing overpayments; 3. The matter is REMANDED for further proceedings consistent with this Order on the issue of Plaintiff’s fault; 17 4. Plaintiff’s remaining arguments are DENIED WITHOUT PREJUDICE. 18 IT IS SO ORDERED. 19 Dated: September 29, 2023 20 21 EDWARD J. DAVILA United States District Judge 22 23 24 25 26 27 28 Case No.: 5:22-cv-02865-EJD ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT 13

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