Ashli Healthcare, Inc. v. Kennedy

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8 UNITED STATES DISTRICT COURT

9 EASTERN DISTRICT OF CALIFORNIA

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12 ASHLI HEALTHCARE, INC., No. 1:23-cv-1443 WBS BAM

13 Plaintiff,

14 v. MEMORANDUM AND ORDER RE:

MOTIONS FOR SUMMARY JUDGMENT

15 ROBERT F. KENNEDY, JR.,1 in his

official capacity as Secretary,

16 United States Department of

Health and Human Services,

17

Defendant.

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20 Plaintiff Ashli Healthcare, Inc. (“Ashli” or

21 “plaintiff”) brought this action seeking judicial review of the

22 final decision of the United States Department of Health and

23 Human Services (“defendant” or “Secretary”). (First Amended

24 Compl. (“FAC”) (Docket No. 23).) Both parties have moved for

25 summary judgment. (Docket Nos. 39-40.) The court held hearings

26

1 Pursuant to Federal Rule of Civil Procedure 25(d),

27 Secretary of Health and Human Services Robert F. Kennedy, Jr.,

has been substituted for former Secretary of Health and Human

28 Services Xavier Becerra. (Docket No. 56.)

1 on the motions on January 21 and February 20, 2025.

2 I. Medicare Payment and Review

3 “Medicare is a federally funded program that reimburses

4 healthcare providers for delivering medical care to qualifying

5 elderly and disabled individuals.” New LifeCare Hosps. of N.C.,

6 LLC v. Becerra, 7 F.4th 1215, 1219 (D.C. Cir. 2021). The

7 Department of Health & Human Services (“HHS”) administers

8 Medicare via the Centers for Medicare and Medicaid Services

9 (“CMS”). Id. The federal government spends about “half a

10 trillion dollars” per year on Medicare.2 Palm Valley Healthcare

11 v. Azar, 947 F.3d 321, 323-24 (5th Cir. 2020). This is in part

12 due to providers and beneficiaries filing “over 1 billion claims”

13 with Medicare every year. MedEnvios Healthcare, Inc. v. Becerra,

14 725 F. Supp. 3d 1343, 1348-50 (S.D. Fla. 2024), reconsideration

15 denied, No. 23-20068-Civ, 2024 WL 3251329, at *2-3 (S.D. Fla.

16 July 1, 2024).3

17 Medicare pays about 98% of these claims with minimal

18 review. United States v. Bergman, 852 F.3d 1046, 1054 (11th Cir.

19 2017); Gulfcoast Med. Supply, Inc. v. Sec’y, Dep’t of Health &

20 Human Servs., 468 F.3d 1347, 1349 (11th Cir. 2006). A provider

21

22 2 The court uses the term “Medicare” to refer

collectively to the various government agencies and contractors

23 involved with administering the Medicare program, including the

Department of Health and Human Services, the Centers for Medicare

24 and Medicaid Services, and the various contractors involved in

processing, reviewing, paying, and auditing claims and appeals.

25

26

3 Because of the similarities between this action and the

MedEnvios action in the Southern District of Florida (which

27 involves the same counsel for plaintiff in this action and many

of the same claims), the court will refer to the multiple

28 decisions issued by the court in MedEnvios in this opinion.

1 or supplier dissatisfied with Medicare’s resolution of a

2 particular claim may appeal the decision through an

3 administrative appeals process, and then, after exhausting the

4 administrative process, may seek review by a federal district

5 court. Gulfcoast, 468 F.3d at 1349 (citing 42 U.S.C. § 405,

6 1395ff(b)(1)(A); 42 C.F.R. § 405.801). A provider or supplier

7 has 120 days to appeal Medicare’s initial decision as to a

8 particular claim, and one year to “reopen” a claim to provide new

9 evidence and get a new determination. 42 C.F.R. §§ 405.942(a),

10 405.980(c).

11 Because prepayment review of all of the over 1 billion

12 annual Medicare claims would be unfeasible, Medicare relies in

13 part on post-payment audits to ensure the claims are medically

14 necessary and meet the requirements of the Medicare program.

15 MedEnvios, 725 F. Supp. 3d at 1346. To review Medicare claims,

16 Congress created the Medicare Integrity Program, through which

17 Medicare contracts with private entities “for the purpose of

18 identifying underpayments and overpayments, and recouping

19 overpayments.” 42 U.S.C. §§ 1395ddd(a), (h)(1). When Medicare

20 determines via these audits that a provider or supplier has been

21 overpaid for its claims, it may assess an “overpayment” against

22 it. See 42 U.S.C. § 1395ddd(b).4 In other words, Medicare

23

4 Under Medicare, a “provider of services” or “provider”

24 is “a hospital, critical access hospital, skilled nursing

facility, comprehensive outpatient rehabilitation facility, home

25

health agency, hospice program, or . . . a fund.” 42 U.S.C.

§ 1395x(u). A “supplier” is “a physician or other practitioner,

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a facility, or other entity (other than a provider of services)

27 that furnishes items or services” to Medicare beneficiaries. 42

U.S.C. § 1395x(d). For purposes of this order, the court uses

28 the terms provider and supplier interchangeably.

1 demands that the provider repay the amount it received in excess

2 of Medicare’s allowed reimbursement.

3 To determine overpayments, federal law authorizes

4 Medicare to investigate a sample of a provider’s Medicare claims.

5 See 42 U.S.C. § 1395ddd(f). If the audit of that sample reveals

6 “a sustained or high level of payment error,” Medicare may take

7 the sample’s overpayment rate and apply to it to a “universe,” or

8 larger number of similar claims, to extrapolate a total

9 overpayment amount. Medicare may then demand that overpayment

10 amount from the Medicare provider. See 42 U.S.C.

11 § 1395ddd(f)(3).

12 II. Ashli’s Audit and Administrative Appeals

13 Ashli is a California corporation which supplies

14 medical equipment, including ventilators and other respiratory

15 equipment, to Medicare beneficiaries. (Administrative Record

16 (“R.”) at 1615.)5 In 2022, a Medicare contractor performed an

17 audit of Ashli’s claims from November 19, 2019, and November 19,

18 2020.6 (R. at 999-1000.) The contractor took a sample of 90

19 claims out of the universe of the 5,545 claims submitted by Ashli

20 that Medicare fully or partially paid during that date range,

21 excluding the “zero-paid” claims, meaning those claims for which

22 Ashli received no payment. (Id.) The contractor determined that

23 some of those 90 claims did not meet Medicare requirements, and

24 then extrapolated the amount that plaintiff was overpaid on those

25

5 Defendant lodged the full administrative record with

the court instead of filing it via the court’s electronic case

26

management system. (See Docket No. 24.)

27

6 The audit was performed by Unified Program Integrity

28 Contractor Qlarant Integrity Solutions, LLC. (R. at 999-1002.)

1 90 claims to the universe of 5,545 total claims to calculate a

2 total overpayment amount of $1,354,864.00. (R. at 3877-4150

3 (initial determinations of claims); id. at 999-1002, 3785-808

4 (statistical extrapolation).)

5 After Medicare informed plaintiff of the overpayment

6 assessment on March 28, 2022, plaintiff requested redetermination

7 of the demanded amount. (R. at 3746.) On this first level of

8 the appeals process, in a lengthy decision, the Medicare

9 Administrative Contractor7 found that some of the disallowed

10 claims from the 90-claim sample met Medicare requirements but

11 upheld the contractor’s sampling method on June 22, 2022,

12 resulting in a reduced overpayment demand.8 (R. at 3745-84.)

13 Ashli then sought reconsideration of the demand from

14 the appropriate Qualified Independent Contractor9 on August 18,

15 2022. On this second level of the appeals process, through

16 another lengthy decision, the contractor upheld the sampling

17 method used below but allowed some previously disallowed claims

18

7 The Medicare Administrative Contractor who issued the

19 decision on the first level of appeal was Noridian Healthcare

Solutions, LLC. (R. at 3745.)

20

8 As explained by one court, “[f]ollowing partially

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favorable decisions on appeal, the relevant contractor must

22 ‘effectuate’ the decision by recalculating the extrapolated

overpayment amount to be recouped from the supplier based upon

23 the revised decisions on individual sampled Medicare claims.”

MedEnvios, 725 F. Supp. 3d at 1350. Based on this recalculated

24 amount, after each administrative appeal, plaintiff received a

partial refund. However, plaintiff did not always receive a new

25

demand letter with the recalculated overpayment amount after each

appeal decision.

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27 9 The Qualified Independent Contractor who issued the

decision on the second level of appeal was Maximus DME QIC. (R.

28 at 6113.)

1 from the 90-claim sample, which ultimately reduced defendant’s

2 overpayment demand to $1,209,103.00, on October 17, 2022. (R. at

3 991-92, 6113-69.)

4 Ashli then requested a hearing before an Administrative

5 Law Judge (“ALJ”), the third level of the appeals process, and

6 the hearing was held on April 5, 2023. (R. at 3246-50, 7281.)

7 Plaintiff once again challenged the statistical methodology which

8 the Medicare contractor used to extrapolate its overpayment rate

9 and also challenged some of the determinations as to some of the

10 90 claims in the sample. (R. at 3246-50.) On May 2, 2023, the

11 ALJ issued a lengthy and thorough decision upholding defendant’s

12 statistical methodology but allowing some of the previously

13 disallowed claims for various elaborated reasons, resulting in a

14 further reduced overpayment demand of $1,091,621.86. (See R. at

15 353-87.)

16 After the Medicare Appeals Council declined to act on

17 Ashli’s request for review of the ALJ decision (R. at 2-3), Ashli

18 filed the instant action bringing five procedural due process

19 claims against the Secretary in his official capacity.

20 (See FAC ¶¶ 4-6.) Ashli does not challenge the ALJ’s

21 determinations as to any of the individual claims within the 90-

22 claim sample, including those claims which the ALJ held were

23 properly denied.

24 III. Standard of Review

25 The Social Security Act authorizes judicial review of a

26 “final decision” of the Secretary of Health and Human Services

27 “made after a hearing.” See 42 U.S.C. §§ 405(g)-(h). The

28 Medicare Act incorporates this provision of the Social Security

1 Act. See 42 U.S.C. § 1395ff(b). The ALJ decision constitutes

2 the “final decision” of the Secretary where the Medicare Appeals

3 Council has declined to review it. See 42 C.F.R.

4 §§ 405.1048(a)(1), 405.1132.

5 A party may move for summary judgment to seek judicial

6 review of an administrative agency’s final decision. Nw.

7 Motorcycle Ass’n v. USDA, 18 F.3d 1468, 1471-72 (9th Cir. 1994).

8 Since the court “sits as an appellate tribunal” when reviewing an

9 appeal from an ALJ’s decision, it does not apply the ordinary

10 summary judgment standard of Federal Rule of Civil Procedure

11 56(a). California v. HHS, 473 F. Supp. 3d 992, 1000-01 (N.D.

12 Cal. 2020). Here, the court evaluates whether defendant’s

13 decision is “arbitrary, capricious, an abuse of discretion, or

14 otherwise not in accordance with law;” “contrary to

15 constitutional right, power, privilege, or immunity;” “in excess

16 of statutory jurisdiction, authority, or limitations, or short of

17 statutory right;” or “without observance of procedure required by

18 law” under the Administrative Procedure Act. 5 U.S.C. § 706(2).10

19 IV. Discussion

20 Plaintiff argues that the procedures used throughout

21 the overpayment calculation and appeals processes violated its

22 procedural due process rights and brings five related due process

23 claims. The first claim concerns the exclusion of claims where

24 plaintiff did not receive any payment or reimbursement, or “zero-

25

10 In addition, courts reviewing an ALJ’s decision

typically evaluate whether “substantial evidence” supports the

26

ALJ’s factual findings under 42 U.S.C. § 405(g). Because

27 plaintiff is not challenging any of the ALJ’s factual

determinations as to the 90 individual claims within the sample,

28 § 405(g) does not apply to any issue before this court.

1 paid” claims, from the universe of claims reviewed by the audit.

2 The second claim concerns defendant’s disclosure of a computer

3 file containing the universe of claims, where the universe

4 excluded zero-paid claims. The third claim concerns defendant’s

5 failure to provide recalculation worksheets after each level of

6 administrative review that resulted in reduced overpayment

7 amounts. The fourth claim alleges improper recoupment of funds,

8 and the fifth claim alleges improper accounting for payments made

9 by plaintiff.

10 The Fifth Amendment provides that a person will not “be

11 deprived of life, liberty, or property, without due process of

12 law.” U.S. Const. amend. V, cl. 4. “A procedural due process

13 claim has two distinct elements: (1) a deprivation of a

14 constitutionally protected liberty or property interest, and (2)

15 a denial of adequate procedural protections.” Brewster v. Bd. of

16 Educ. of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir.

17 1998).

18 A. Protected Property Interest

19 Neither the Supreme Court nor the Ninth Circuit has

20 addressed whether a Medicare provider has a protected property

21 interest in funds paid by Medicare that are subject to

22 overpayment recoupment. Some lower courts have reasoned that

23 providers “have no property interest in Medicare overpayments,”

24 which constitute “a level of benefits that is greater than

25 Congress has provided.” See, e.g., Sahara Health Care, Inc. v.

26 Azar, 349 F. Supp. 3d 555, 571–72 (S.D. Tex. 2018), aff’d on

27 other grounds, 975 F.3d 523, 533-34 (5th Cir. 2020) (quoting

28 Greater Dallas Home Care All. v. United States, 10 F. Supp. 2d

1 638, 646 (N.D. Tex. 1998)); In Touch Home Health Agency, Inc. v.

2 Azar, 414 F. Supp. 3d 1177, 1190 (N.D. Ill. 2019); Alpha Home

3 Health Sols., LLC v. Sec’y of U.S. Dep’t of Health & Hum. Servs.,

4 340 F. Supp. 3d 1291, 1303 (M.D. Fla. 2018); see also Pers. Care

5 Prods., Inc. v. Hawkins, 635 F.3d 155, 159 (5th Cir. 2011) (there

6 is no “property right in Medicaid reimbursements to a provider

7 that is the subject of a fraud investigation”).

8 However, that reasoning oversimplifies the issue

9 presented here. Plaintiff is not claiming a property interest in

10 any funds it received in violation of Medicare requirements.

11 Rather, plaintiff “claims an interest for properly billed claims

12 that are now being recouped by the government.” See Med-Cert

13 Home Care, LLC v. Azar, 365 F. Supp. 3d 742, 750-51 (N.D. Tex.

14 2019) (emphasis added). In other words, plaintiff claims that

15 because of defendant’s alleged sampling and extrapolation errors,

16 defendant has overestimated plaintiff’s overpayment and is

17 therefore demanding recoupment of funds that plaintiff was

18 entitled to receive.

19 A party possesses a protected property interest in a

20 “government benefit” where it has a “legitimate claim of

21 entitlement to it” based on an “independent source” such as a

22 statute or regulation, rather than merely an “abstract need or

23 desire” or “unilateral expectation.” See Gerhart v. Lake County,

24 637 F.3d 1013, 1019 (9th Cir. 2011) (quoting Bd. of Regents of

25 State Colls. v. Roth, 408 U.S. 564, 577 (1972)). Such interest

26 has been characterized as “new” property, as contrasted with

27 “old” property such as land or chattels. See Johnson v. Ryan, 55

28 F.4th 1167, 1191-92 (9th Cir. 2022).

1 The court finds that plaintiff in this case reasonably

2 had such a claim of entitlement to retain the sums at issue here.

3 Specifically, the extensive regulations and guidance promulgated

4 by Medicare establish that if providers comply with the

5 substantive and procedural requirements set out by the agency,

6 they will receive reimbursement for services provided to

7 beneficiaries. See, e.g., 42 U.S.C. §§ 1395k-1395n; 42 C.F.R.

8 § 410.38; Ctrs. for Medicare & Medicaid Servs., No. 100-04,

9 Medicare Claims Processing Manual, https://www.cms.gov/

10 regulations-and-guidance/guidance/manuals/internet-only-manuals-

11 ioms-items/cms018912.

12 This court’s conclusion is consistent with the

13 decisions of several other courts which have held that Medicare

14 providers possess “a legitimate claim of entitlement to

15 reimbursement at the rate as established under the law.” See,

16 e.g., Rock River Health Care, LLC v. Eagleson, 14 F.4th 768, 774

17 (7th Cir. 2021) (citing Am. Soc’y of Cataract & Refractive

18 Surgery v. Thompson, 279 F.3d 447, 455 (7th Cir. 2002)); Furlong

19 v. Shalala, 156 F.3d 384, 393 (2d Cir. 1998) (“professionals who

20 provide services under a federal program such as Medicaid or

21 Medicare have a property interest in reimbursement for their

22 services at the ‘duly promulgated reimbursement rate’”);

23 Accident, Inj. & Rehab., PC v. Azar, No. 18-cv-02173, 2018 WL

24 4625791, at *7 (D.S.C. Sept. 27, 2018) (a provider “certainly has

25 a property interest in the ongoing Medicare payments for services

26 rendered to patients”), vacated on other grounds, 943 F.3d 195,

27 204-05 (4th Cir. 2019); Morrison v. Sebelius, No. 11-cv-1002,

28 2013 WL 3288167, at *4 (S.D. Ohio June 28, 2013) (Medicare

1 provider possessed a property interest in “payment for services

2 she actually rendered”).

3 Medicare providers possess this property interest

4 because “the statutes and regulations governing the distribution

5 of benefits ‘meaningfully channel official discretion by

6 mandating a defined administrative outcome.’” See Barrows v.

7 Burwell, 777 F.3d 106, 113 (2d Cir. 2015) (quoting Kapps v. Wing,

8 404 F.3d 105, 113 (2d Cir. 2005)) (holding that Medicare

9 beneficiaries may possess a property interest in inpatient

10 hospital admission where “the Secretary -- acting through CMS --

11 has effectively established fixed and objective criteria for when

12 to admit Medicare beneficiaries as ‘inpatients’”); see also Doyle

13 v. City of Medford, 606 F.3d 667, 673–74 (9th Cir. 2010) (“a

14 statute may create a property interest if it mandates a benefit

15 when specific non-discretionary factual criteria are met”);

16 Mustafa v. Clark Cnty. Sch. Dist., 157 F.3d 1169, 1178 (9th Cir.

17 1998) (quoting Stiesberg v. California, 80 F.3d 353, 356 (9th

18 Cir. 1996)) (a property interest exists where “‘procedural

19 requirements are intended to be a significant substantive

20 restriction on . . . decision making’”).

21 In contrast, some courts have expressed the view that

22 “health care providers ‘are not the intended beneficiaries of the

23 federal health care programs’” and they do not themselves have a

24 property interest in Medicare participation. See Shah v. Azar,

25 920 F.3d 987, 997–98 (5th Cir. 2019) (quoting Parrino v. Price,

26 869 F.3d 392, 398 (6th Cir. 2017)) (collecting cases). In none

27 of those cases, however, does it appear that the providers were

28 seeking to recover as assignees of the beneficiaries; rather, the

1 providers in those cases asserted a far more general interest in

2 participation in federal health care programs.

3 One such case was Guzman v. Shewry, in which the Ninth

4 Circuit held, in the context of a provider challenging wholesale

5 suspension from the Medicaid program, that a provider “does not

6 possess a property interest in continued participation in

7 Medicare, Medicaid, or the federally-funded state health care

8 programs.” 552 F.3d 941, 953 (9th Cir. 2009) (citing Erickson v.

9 U.S. ex rel. Dep’t of Health & Hum. Servs., 67 F.3d 858, 861 (9th

10 Cir. 1995)). Similarly, in Parrino, the Sixth Circuit held that

11 there is no property interest in “being a provider in all federal

12 health care programs,” 869 F.3d at 397; in Koerpel v. Heckler,

13 the Tenth Circuit held that there was “no property interest in [a

14 provider’s] continuing eligibility for Medicare reimbursement”

15 where the provider had been excluded entirely from the program,

16 797 F.2d 858, 865 (10th Cir. 1986); and in Cervoni v. Secretary

17 of Health, Education & Welfare, the First Circuit held that

18 “physicians do not have a protectable property interest in their

19 continuing eligibility to bill for reimbursement” under a

20 particular Medicare classification scheme, which “d[id] not

21 affect specific bills which [the provider] may submit for

22 payment,” 581 F.2d 1010, 1018-19 (1st Cir. 1978).

23 Unlike the providers in those cases, Ashli is not

24 merely asserting a general interest in eligibility for the

25 Medicare program, but rather is acting as the assignee of the

26 individual beneficiaries on whose behalf it submitted specific

27 claims for reimbursement. As the Ninth Circuit held in K.W. ex

28 rel. D.W. v. Armstrong, 789 F.3d 962, 972 (9th Cir. 2015),

1 beneficiaries of federally funded health insurance programs can

2 possess a property interest in those benefits. Because the

3 Medicare statute “permits . . . patients to assign their rights

4 to payment [to providers],” see Furlong, 156 F.3d at 392 (citing

5 42 U.S.C. §§ 1395u(b)(3)(B)(ii), (h)(1)), Ashli possesses a

6 property interest in its capacity as the assignee of individual

7 Medicare beneficiaries.

8 To be clear, this court does not go so far as to

9 conclude that plaintiff is in fact entitled to all the funds at

10 issue. The validity of the extrapolated overpayment demand is

11 the very subject of dispute between the parties. However, “the

12 Fifth Amendment Due Process Clause protects even disputed

13 interests in property.” Dominion Ambulance, L.L.C v. Azar, 968

14 F.3d 429, 441 (5th Cir. 2020). Indeed, “‘[a]n interest that

15 gives rise to an entitlement is always a conditional interest,’

16 because if the plaintiff possessed an absolute right there would

17 be no need for a hearing as there would be no issue to resolve.”

18 Rock River, 14 F.4th at 774-75 (quoting Geneva Towers Tenants

19 Org. v. Federated Mortgage Investors, 504 F.2d 483, 494 (9th Cir.

20 1974) (Hufstedler, J., dissenting)).

21 “The existence of procedures that would assess the

22 entitlement to that interest is not a basis to deny the existence

23 of the property interest,” nor does “defendant’s belief that the

24 plaintiff cannot succeed on that claim [] eliminate the need to

25 provide due process.” Id. at 775. “‘Property cannot be defined

26 by the procedures provided for its deprivation any more than can

27 life or liberty.’” Armstrong, 789 F.3d at 973 (quoting Cleveland

28 Bd. of Educ. v. Loudermill, 470 U.S. 532, 541 (1985)) (cleaned

1 up).

2 Plaintiff’s asserted claim to Medicare reimbursements

3 goes beyond the abstract. Plaintiff has successfully appealed

4 multiple disallowances of claims, resulting in a lower

5 overpayment amount at each level of review. Based on defendant’s

6 own multi-level review process which showed these erroneous

7 disallowances, plaintiff did, in fact, have a right to some of

8 the funds sought to be recouped based on defendant’s initial

9 overpayment demand.

10 Because the court finds that plaintiff has a protected

11 property right in the funds at issue, it next turns to the

12 question of whether plaintiff was afforded due process.

13 B. Due Process

14 In Mathews v. Eldridge, 424 U.S. 319, 333-35 (1976),

15 the Supreme Court set forth how a court should determine whether

16 a government procedure which deprives someone of a protected

17 property interest satisfies due process. “The fundamental

18 requirement of due process is the opportunity to be heard ‘at a

19 meaningful time and in a meaningful manner.’” Mathews, 424 U.S.

20 at 333 (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)).

21 Determining whether an administrative review process provides a

22 meaningful opportunity to be heard requires balancing “three

23 distinct factors.” Id. at 334-35. The factors are (1) “the

24 private interest that will be affected by the official action;”

25 (2) “the risk of an erroneous deprivation,” including “the

26 probable value, if any, of additional or substitute safeguards;”

27 and (3) “the government’s interest, including the function

28 involved and the fiscal and administrative burdens that the

1 additional or substitute procedural requirement would entail.”

2 Id.; see also Diamond S.J. Enter., Inc. v. City of San Jose, 10

3 F.4th 1059, 1068-69 (9th Cir. 2024) (applying same test).

4 With these factors in mind, the court now turns to each

5 of plaintiff’s claims.

6 1. Count 1: Exclusion of Zero-Paid Claims

7 Plaintiff argues that it was denied due process by

8 defendant’s practice of excluding zero-paid claims from both the

9 universe of claims from which it drew the 90-claim sample and the

10 sample itself, thus leading to a higher extrapolated overpayment

11 amount than if those claims had been included. Plaintiff does

12 not challenge generally the use of audits that examine a sample

13 of claims and then extrapolate the findings of that review to a

14 larger group of claims.11 Further, as mentioned above, plaintiff

15 does not challenge any of the ALJ’s findings with respect to any

16 claim within the 90-claim sample.

17 a. Interpretation of Regulatory Guidance

18

19 11 The Ninth Circuit has upheld “the use of sampling and

extrapolation as part of audits in connection with Medicare and

20 other similar programs.” See Ratanasen v. Cal. Dep’t of Health

Servs., 11 F.3d 1467, 1469-71 (9th Cir. 1993); see also United

21

States v. Rite Aid Corp., No. 2:12-cv-1699 KJM EFB, 2020 WL

22 3970201, at *6-7 (E.D. Cal. July 14, 2020) (“The Ninth Circuit

has generally permitted the practice [of statistical

23 extrapolation] when evaluating Medi-Care claims, for some

time.”). Every other federal court of appeals to consider the

24 issue has similarly found that CMS’ use of statistical

extrapolation is not constitutionally problematic. See, e.g.,

25

Ill. Physicians Union v. Miller, 675 F.2d 151, 155-56 (7th Cir.

1982); Chaves Cnty. Home Health Serv., Inc. v. Sullivan, 931 F.2d

26

914, 922–23 (D.C. Cir. 1991); Yorktown Med. Lab’y, Inc. v.

27 Perales, 948 F.2d 84, 89-90 (2d Cir. 1991); United States v.

Lahey Clinic Hosp., Inc., 399 F.3d 1, 18 & n.19 (1st Cir. 2005);

28 Dominion Ambulance, 968 F.3d at 438-42.

1 Initially, plaintiff argues that the exclusion of zero-

2 paid claims from the universe does not comply with the Medicare

3 Program Integrity Manual, which directs HHS how to choose a

4 subset of Medicare claims from which it extrapolates an

5 overpayment rate. See Ctrs. for Medicare & Medicaid Servs., No.

6 100-08, Medicare Program Integrity Manual (“Manual”)

7 § 8.4.3.2.1.B. (Apr. 21, 2023), https://www.cms.gov/ regulations-

8 and-guidance/guidance/manuals/downloads/pim83c08.pdf. The

9 instruction at issue reads: “The universe shall consist of all

10 fully and partially paid claims submitted by the

11 provider/supplier for the period selected for review and for the

12 sampling units to be reviewed.” Id. The instruction further

13 explains that “[s]ampling units with no final payment made at the

14 time of sample selection should not be included in the sampling

15 frame.” Id.

16 Notwithstanding this guidance, plaintiff contends that

17 the court should not give any deference to defendant’s

18 interpretation of the Manual because the Supreme Court’s recent

19 decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369

20 (2024), overruled Chevron U.S.A., Inc. v. Natural Resources

21 Defense Council, Inc., 467 U.S. 837 (1984), and its rule that

22 courts should defer to agency interpretations of ambiguous

23 statutes. However, Loper Bright does not apply to the Manual.

24 Chevron only required that a court defer to an agency’s

25 interpretation of an ambiguous statute. Loper Bright, 603 U.S.

26 at 377-80, 396-98. Because the Manual is not a statute,

27 defendant’s interpretation of an ambiguous statute is not at

28 issue here. See id. at 390-91 n.3. “Interpretations contained

1 in policy statements, agency manuals, and enforcement guidelines,

2 all of which lack the force of law -- do not warrant Chevron-

3 style deference.” GCIU-Emp. Ret. Fund v. Quad/Graphics, Inc.,

4 909 F.3d 1214, 1218-19 (9th Cir. 2018) (capitalization altered).12

5 Instead, an agency’s interpretation of its own

6 regulatory manual may receive a different kind of deference under

7 Auer v. Robbins, 519 U.S. 452 (1997). Under Auer, a court gives

8 deference to an administrative agency’s reasonable interpretation

9 of its own rule when that rule is ambiguous. See Kisor v.

10 Wilkie, 588 U.S. 558, 567-68, 572-73 (2019) (plurality opinion).

11 Although Loper Bright overruled Chevron, it did not overrule

12 Auer. See Rana v. Jenkins, 113 F.4th 1058, 1067 (9th Cir. 2024)

13 (stating the Supreme Court did not abrogate Auer when it could

14 have done so in Kisor or Loper Bright), cert. denied, No. 24-550

15 (U.S. Jan. 21, 2025).

16 Regardless, the court need not defer to defendant’s

17 interpretation of the Manual to resolve the instant action

18 because § 8.4.3.2.1.B of the Manual is not ambiguous in the first

19 place. It directs Medicare contractors to take a sample of

20 claims from a universe which includes only “fully and partially

21 paid claims.” Defendant reimburses these “fully and partially

22 paid” Medicare claims to at least some extent, which means that

23 they are not zero-paid claims. Accordingly, based on the

24 language of the Manual, the overpayment audit is not required to

25 include zero-paid claims in the universe or sample.

26

27 12 At the hearing held on January 21, 2025, Ashli’s

counsel could not give an example of ambiguous language contained

28 in any of the statutes the parties cited in the briefing.

1 Other district courts addressing this issue have come

2 to the same conclusion. The court in MedEnvios rejected

3 plaintiff’s interpretation of § 8.4.3.2.1.B of the Manual because

4 its language, as read in the context of the underlying statute,

5 “does not permit . . . the logical jump that all Medicare program

6 integrity contractors are required to include [zero-paid] claims

7 in all of their audits.” See MedEnvios, 725 F. Supp. 3d at 1349;

8 see also MedEnvios Healthcare, Inc. v. Becerra, No. 23-20068-Civ,

9 2024 WL 4894677, at *4-5 (S.D. Fla. Nov. 26, 2024) (reaching same

10 result after renewed cross-motions for summary judgment). The

11 court in Compass Laboratory similarly concluded that based on the

12 language of § 8.4.3.2.1.B of the Manual, “the universe of claims

13 need not include zero-paid claims.” Compass Lab’y Servs., LLC v.

14 Becerra, No. 22-cv-2770, 2024 WL 1289696, at *5 (W.D. Tenn. Mar.

15 26, 2024); see also John Balko & Assocs. v. Sebelius, No.

16 12cv0572, 2012 WL 6738246, at *9-10 (W.D. Pa. Dec. 28, 2012)

17 (decision to exclude zero dollar claims from sampling frame was

18 supported by substantial evidence), aff’d sub. nom. John Balko &

19 Assocs., Inc. v. HHS, 555 F. App’x 188, 192-94 (3d Cir. 2014);

20 Superior Home Health Servs., L.L.C. v. Azar, No. 15-cv-00636,

21 2018 WL 3717121, at *5-8 (W.D. Tex. Aug. 3, 2018) (upholding

22 sampling and extrapolation process excluding zero-paid claims).

23 Thus, Ashli’s interpretation of § 8.4.3.2.1.B is

24 contrary to the plain language of the Manual, and Medicare is not

25 required to include zero-paid claims in its statistical

26 analysis.13

27

13 The primary case which plaintiff uses to support its

28 argument that zero-paid claims must be included in the universe

1 b. Procedural Due Process

2 To determine whether the exclusion of zero-paid claims

3 violates plaintiff’s right to due process, the court must

4 consider the three factors set forth in Mathews, 424 U.S. at 333-

5 35.

6 First, defendant’s interest in excluding zero-paid

7 claims is twofold: increasing the efficiency of the claim review

8 process and minimizing waste of government funds. See MedEnvios,

9 725 F. Supp. 3d at 1349-50. HHS, “like every federal agency, has

10 ample reason to ensure that it does not waste the people’s money

11 . . . . Delayed recoupment of overbilling puts Medicare at risk,

12 and other government programs too.” A1 Diabetes & Med. Supply v.

13 Azar, 937 F.3d 613, 619-20 (6th Cir. 2019). Excluding zero-paid

14 claims allows Medicare to narrow the scope of its post-payment

15 audit and thus reduce the burden of that process.

16 Further, the inclusion of zero-paid claims would

17 contravene the purpose of an overpayment review, which aims to

18 “audit fully and partially paid claims -- not claims that the

19 Department never paid and by definition could not have resulted

20 of claims is inapposite. See Goose Creek Physical Med., LLC v.

Becerra, No. 22-cv-03932, 2024 WL 3992721, at *11 (D.S.C. Aug. 5,

21

2024), reconsideration denied, 2024 WL 3653639, at *1, *12

22 (D.S.C. Aug. 29, 2024). There, the court concluded that “the

‘target universe’ . . . includes ‘zero-paid’ claims,” but it only

23 did so as a discovery sanction against defendant before reaching

the merits of the provider’s procedural due process claims. Id.

24 Another case where a court ruled against the Secretary

under similar circumstances is Central Louisiana Home Health

25

Care, L.L.C. v. Price, No. 17-CV-00346, 2018 WL 7888523, at *20-

21 (W.D. La. Dec. 28, 2018), report and recommendation adopted,

26

2019 WL 1388773, at *1 (W.D. La. Mar. 27, 2019). But there, the

27 Secretary did not prevail because the agency did not produce a

statistical analysis with sufficient precision. See id. at *19-

28 20. Plaintiff does not raise such an argument here.

1 in overpayment” and therefore have no waste associated with them.

2 See MedEnvios, 725 F. Supp. 3d at 1349-50. Indeed, including

3 zero-paid claims in the sample would incentivize providers to

4 submit frivolous Medicare claims in order to dilute the universe

5 used to extrapolate overpayments, contributing to further

6 inefficiency and waste. See Compass Lab’y, 2024 WL 1289696, at

7 *5-6.

8 Second, plaintiff’s interest in including zero-paid

9 claims is to retain more of its money. See MedEnvios, 725 F.

10 Supp. 3d at 1347-48 (Providers “do have a property interest in

11 their own money.”) (emphasis omitted). If Medicare were to

12 include zero-paid claims in the universe and sample of claims,

13 this alternative process would decrease its extrapolated

14 overpayment demand. This is because “[t]he more total claims

15 that are considered, the less of an impact any overpaid claim

16 will have. The more claims included in the universe for the

17 eventual sample to be selected from, the better the odds of

18 diminishing the extrapolating impact of overpayments for the

19 provider seeking reimbursement.” See Compass Lab’y, 2024 WL

20 1289696, at *6 (cleaned up).

21 Third, plaintiff contends that if improperly denied

22 zero-paid claims are excluded, the sample would overestimate the

23 amount of overpayment, creating an alleged risk of erroneous

24 deprivation of plaintiff’s property. In other words, any alleged

25 underpayments would balance out some of the overpayments.

26 However, Medicare has already “provided for a separate

27 process for suppliers to challenge determinations that

28 incorrectly result in ‘zero-paid’ claims,” which is distinct from

1 defendant’s “own investigation and recoupment of its potentially

2 wasteful spending.” MedEnvios, 725 F. Supp. 3d at 1350

3 (citing 42 U.S.C. § 1395ff(a)(3)); see also Compass Lab’y,

4 2024 WL 1289696, at *6 (citing 42 C.F.R. § 405.921(b)) (same).

5 After receiving a claim, Medicare sends notice of a claim’s

6 initial determination to Ashli, and it must contain “the basis

7 for any full or partial denial determination of services or items

8 on the claim,” “information on the right to a redetermination if

9 the provider or supplier is dissatisfied with the outcome of the

10 initial determination,” and “all applicable claim adjustment

11 reason and remark codes to explain the determination.” 42 C.F.R.

12 § 405.921(b).

13 Thus, plaintiff has always had all the information it

14 needed to appeal the denial of a claim or seek reopening, and if

15 any claims received no payment, plaintiff either did not appeal

16 that denial, failed to get that denial overturned during the

17 administrative appeals process, or failed to seek reopening of

18 that claim.14 Given plaintiff’s ability to appeal initial

19 determinations on zero-paid claims, the exclusion of zero-paid

20 claims from the statistical sample creates little, if any, risk

21 of erroneous deprivation.15

22

14 The 120-day deadline to appeal any initial claim

23 denials appears to have passed well before defendant began its

audit.

24

15 Ashli argues that these appeal rights are inadequate

25

because an overpayment audit extinguishes its right to appeal

initial determinations. However, Ashli provides no authority

26

that supports this proposition, and it points to no particular

27 claim for which its appeal right was extinguished nor any claim

determination which it intended to appeal but was unable to

28 because of the audit.

1 For the above reasons, defendant’s exclusion of zero-

2 paid claims from the statistical universe did not violate

3 plaintiff’s procedural due process rights, and summary judgment

4 for defendant will be granted on Count 1.

5 2. Count 2: Failure to Provide Plaintiff with

“Universe” File with Zero-Paid Claims

6

7 As the court understands plaintiff’s second claim, it

8 is dependent on its first claim. Ashli argues that defendant

9 violated its procedural due process rights by not including zero-

10 paid claims in the spreadsheet it provided to Ashli during the

11 review process that listed all of the claims within the universe

12 of audited claims. It is hard to understand how including such

13 information in the spreadsheet would possibly serve either

14 Medicare’s or the plaintiff’s interests if, as the court has

15 held, the zero-paid claims were properly excluded from the

16 universe.

17 Applying the Mathews factors to this claim, defendant’s

18 interest in disclosing the instant universe of claims is to

19 accurately inform plaintiff of which claims it considered during

20 the sampling and extrapolation process. Plaintiff’s interest is

21 to receive notice of what defendant considered in drawing a

22 sample and conducting its extrapolation. The file provided did

23 precisely that by informing plaintiff which claims Medicare

24 audited, which claims are in the universe, and which claims are

25 in the sample for extrapolation.

26 Providing plaintiff with a list of zero-paid claims

27 would accomplish little. By virtue of the initial claims

28 submission and review process that already took place prior to

1 the audit, plaintiff already knew which of the claims it

2 submitted that were denied and therefore received no payment.

3 Indeed, providing a universe including zero-paid claims would

4 disserve plaintiff’s own interests. If defendant were to include

5 zero-paid claims in the disclosure made to plaintiff without

6 considering them, it would in fact mislead plaintiff, which is

7 contrary to procedural due process.

8 Finally, there was zero risk of erroneous deprivation

9 engendered by the government’s existing process of providing a

10 spreadsheet that accurately reflects the information it

11 considered. Accordingly, the government’s failure to include

12 zero-paid claims in the universe file did not violate procedural

13 due process, and summary judgment for defendant will be granted

14 on Count 2.

15 3. Count 3: Failure to Provide Recalculation

Worksheets16

16

16 The government contends that plaintiff’s claims

17

regarding the worksheets, recoupment, and accounting were not

18 properly presented below nor were they properly exhausted. The

court assumes, without deciding, that these claims were properly

19 presented and exhausted. See, e.g., D&G Holdings, L.L.C. v.

Becerra, 22 F.4th 470, 474-478 (5th Cir. 2022) (where overpayment

20 determination was overturned, district court had jurisdiction to

resolve dispute regarding amount of improper recoupment because

21

“effectuations” of the agency decision “are inextricably

22 intertwined with the initial exhausted agency action”); see also

Mathews, 424 U.S. at 329-30 (failure to raise a constitutional

23 claim at the agency level did not bar plaintiff from raising that

constitutional claim later in a district court). But see

24 Pinnacle Peak Neurology, LLC v. Noridian Healthcare Sols., LLC,

773 F. App’x 910, 910-11 (9th Cir. 2019) (amount of payment

25

determined by contractor after ALJ decision “is a new initial

determination” under 42 C.F.R. § 405.1046(a)(3) and claim

26

regarding such determination must be presented and exhausted)

27 (emphasis omitted). (See also Docket No. 34 (noting that “[t]he

topic of overpayment recalculations was entirely unaddressed by

28 the ALJ’s decision, nor did plaintiff raise it before the ALJ

1 In its third claim, Ashli argues that defendant

2 violated procedural due process by not providing it with

3 recalculation worksheets after each of its administrative appeals

4 where the government’s overpayment demand decreased. See

5 MedEnvios, 725 F. Supp. 3d at 1350-51. Plaintiff is not

6 requesting any worksheets in connection with the initial

7 overpayment demand, because it got those worksheets. Nor is it

8 directly claiming that defendant erred in recalculating the

9 overpayment demand after any of the appeals below.

10 In other words, as the court understands it, plaintiff

11 argues that the defendant should have expended public funds to

12 create a spreadsheet that does not already exist, using data that

13 plaintiff already has. Maybe that would have been of some help

14 to plaintiff, but it certainly was not required by the Due

15 Process Clause of the Constitution. Plaintiff had the

16 information at its disposal to check the recalculated demands

17 with the paperwork produced by the government after each

18 administrative appeal. Each of the three appeal decisions

19 discussed the various claims submitted on behalf of certain

20 beneficiaries on specific dates and listed “CPT codes” for those

21 services, thereby allowing plaintiff to identify which claims

22 within the 90-claim sample were disallowed or allowed in whole or

23 in part at each level.17

24

beyond a passing reference” and that the overpayment

25

recalculations “were not at issue in any of the decisions through

the relevant appeals process, which did not provide calculations

26

of the overpayment owed”).)

27

17 For illustration, the court provides one example of the

28 review process for one particular claim. Plaintiff received

1 Looking to the Mathews factors, defendant’s interest in

2 not providing recalculation worksheets for each recalculated

3 demand is in maintaining an efficient process to return any money

4 Ashli should have kept in the first place. Requiring defendant

5 to provide new recalculation worksheets with each appeal where

6 the demanded overpayment amount changes would slow down that

7 process and increase the administrative burden of the already

8 lengthy and complicated appeals process. On the other hand,

9 plaintiff’s interest in receiving the recalculation worksheets

10 consists simply in making it a little easier for it ensure that

11 the overpayment recalculations after each level of appeal were

12 correct. See Mathews, 424 U.S. at 333-35. And plaintiff’s

13 access to the underlying decisions that prompted the

14 recalculations, as well as its failure to challenge the ALJ’s

15 findings as to any individual claim, undercut the notion that

16 there is any risk of erroneous deprivation of plaintiff’s

17

payment for a portable ventilator under procedure code E0466,

18 prescribed to “Beneficiary 4” for “shortness of breath, chronic

obstructive pulmonary disease, and chronic respiratory failures,”

19 with a date of service of July 19, 2020. (R. at 3197.) The

claim was disallowed during the post-payment review process for

20 insufficient documentation, and on appeal, contractors Noridian

and then Maximus also found that there was insufficient

21

documentation of medical necessity and affirmed the disallowance

22 of that claim. (R. at 4460, 6121-22.) The ALJ ultimately

disagreed and reversed that disallowance after finding that there

23 was sufficient medical documentation for the ventilator under

Medicare regulations, based on his review of the documents. (R.

24 at 378-79.) (The ALJ’s opinion listed the beneficiary as

Beneficiary 4, though the decisions by the contractors listed the

25

patient’s actual name, as well as the beneficiary’s Medicare

identification number and the claim number.) If the court can

26

put that information together, plaintiff certainly could have

27 done so. The procedural history of this claim is one example

among many showing that plaintiff had full notice of which claims

28 were allowed or disallowed at every level of review.

1 property. Therefore, defendant’s failure to provide

2 recalculation worksheets did not violate procedural due process,

3 and summary judgment will be granted for defendant on Count 3.18

4 4. Count 4: Improper Recoupment

5 In essence, plaintiff’s fourth claim is that because of

6 defendant’s alleged due process violations in Counts One through

7 Three, it is entitled to a suspension of any ongoing recoupment

8 of the alleged overpayment by Medicare and a refund on all

9 improperly recouped amounts. (See FAC ¶¶ 268-72; Pl.’s Mot. for

10 Summ. J. (Docket No. 40-1) at 35-37 (arguing that the recoupment

11 was improper based on the procedures employed during the

12 overpayment calculation and appeals process).) To infer that

13 adds anything to the first three claims would be to give

14 plaintiff too much credit.

15 Because Counts One through Three fail, Count Four fails

16 for the same reasons. Further, even assuming this court had

17 determined that the overpayment demand was improper, plaintiff

18 “is adequately protected . . . because it is entitled to receive

19 back those funds, with interest,” under statute, and thus

20 defendant’s recoupment is not “a corresponding due process

21 violation.” See MedEnvios, 2024 WL 4894677, at *6 (citing 42

22 U.S.C. § 1395ddd(f)(2)(B)); see also Ramtin Massoudi MD Inc. v.

23 Azar, No. 218CV1087, 2018 WL 1940398, at *9 (C.D. Cal. Apr. 23,

24 2018) (“[T]he four-level administrative appeals process provides

25

18 Plaintiff relies in part on MedEnvios, 725 F. Supp. 3d

at 1350-51, for the proposition that it is entitled to the

26

recalculation worksheets. The court disagrees with the MedEnvios

27 court’s determination that a provider cannot challenge a

statistical sample and extrapolation without the recalculation

28 demand worksheets, for the reasons discussed above.

1 plaintiff with an adequate remedy because, should plaintiff

2 prevail in that process, it will be repaid any amounts that were

3 unnecessarily recouped plus interest.”) (citing 42 U.S.C. §

4 1395ddd(f)(2)(B)).

5 Accordingly, summary judgment will be granted for

6 defendant on Count 4.

7 5. Count 5: Accounting

8 Plaintiff’s fifth claim alleges that its due process

9 rights were violated because defendant failed to conduct a proper

10 accounting of the payments made by plaintiff towards the

11 overpayment demand. To the extent plaintiff alleges an

12 accounting is necessary because of the alleged violations

13 discussed in Counts 1 through 4, the claim fails because

14 plaintiff has not shown an underlying violation of its due

15 process rights, for the reasons discussed above.

16 The accounting claim also fails to the extent it seeks

17 to allege an independent due process violation. In terms of the

18 due process factors under Mathews, plaintiff’s private interest

19 is in ensuring that it paid the proper amount of overpayments and

20 that it could seek a refund if necessary. However, plaintiff has

21 its own records and knows how much it paid to Medicare in

22 overpayments and how much was refunded after each level of

23 administrative review. Plaintiff also has the documentation

24 provided by defendant and the administrative decisions

25 identifying which claims within the 90-claim sample were allowed

26 or disallowed, such that it may scrutinize the recalculated

27 overpayment demand, albeit not as conveniently as it would prefer

28 due to not having the worksheets or a formal accounting from

1 Medicare.

2 In contrast, the public interest weighs against the

3 unnecessary expenditure of public resources in providing an

4 accounting, since defendant already provided plaintiff with

5 multiple levels of administrative review and thousands of pages

6 of documentation. Providing an accounting would simply add to

7 the burden of this already extensive review process. The risk of

8 erroneous deprivation is also low because plaintiff does not

9 challenge defendant’s general use of statistical sampling and

10 extrapolation to determine overpayment amounts nor defendant’s

11 determinations as to any of its individual Medicare claims. Nor

12 is plaintiff claiming that the recalculated overpayment demand

13 was calculated incorrectly -- instead, it is simply hypothesizing

14 that defendant may have committed an error.

15 Thus, applying Mathews to the facts of this case, due

16 process does not require defendant to provide an accounting of

17 the payments made by plaintiff on the overpayment demand.19

18 Accordingly, summary judgment will be granted for defendant on

19 Count 5.

20 IV. Conclusion

21 From the time it received the original overpayment

22 demand, Ashli filed three written appeals and was afforded oral

23 argument before an ALJ in which it had the opportunity to stake

24

19 The court is only aware of one decision finding that a

25

similarly situated plaintiff was entitled to an accounting of

overpayments. However, in that case, the court granted summary

26

judgment for the plaintiff on the accounting claim with no

27 further discussion because the parties agreed at oral argument

that the plaintiff was entitled to an accounting. See MedEnvios,

28 2024 WL 4894677, at *6-7.

1 out its position. In response to those appeals, Ashli received

2 three lengthy and reasoned written decisions, each of which

3 represented a partial victory for Ashli. Beyond that, Ashli had

4 the separate opportunity to seek review of every single claim

5 determination it received, including the zero-paid claims. And

6 it is now exercising its right of further review by this court.

7 To be sure, the process Ashli received was not perfect.

8 But “[d]ue process does not require perfect process.” Thibodeaux

9 v. Bordelon, 740 F.2d 329, 338 (5th Cir. 1984); see also Newman

10 v. Massachusetts, 884 F.2d 19, 24 (1st Cir. 1989) (procedural due

11 process does not establish that a plaintiff is “entitled to

12 ‘perfect’ process”). All that is required is the right to be

13 “heard at a meaningful time and in a meaningful manner.” See

14 Mathews, 424 U.S. at 333 (cleaned up). Ashli has received that

15 several times over. The multiple layers of thorough

16 administrative proceedings gave plaintiff ample, even if

17 imperfect, process, “reasonably tailored to the aims of the

18 audit.” See MedEnvios, 725 F. Supp. 3d at 1350.

19 If Medicare were to undertake an overpayment

20 extrapolation and review process that went beyond the painstaking

21 procedures already provided to Ashli, it would not be long before

22 the costs of administration would, if they do not already, exceed

23 the costs of the care provided to the patients who are the

24 intended beneficiaries of the Medicare program. As the Supreme

25 Court so wisely observed, “the cost of protecting those whom the

26 preliminary administrative process has identified as likely to be

27 found undeserving may in the end come out of the pockets of the

28 deserving since resources available for any particular program of

IIE IIE IER III IDE EIEIO IIE OS IEE II IEEE

1 social welfare are not unlimited.” Mathews, 424 U.S. at 348.

2 For the foregoing reasons, the court finds that the

3 Secretary’s actions were lawful under the standard set forth in

4 5 U.S.C. § 706(2), and IT IS THEREFORE ORDERED that defendant’s

5 motion for summary judgment (Docket No. 39) be, and the same

6 | hereby is, GRANTED, and plaintiff’s motion for summary judgment

7 (Docket No. 40) be, and the same hereby is, DENIED. The Clerk is

8 directed to enter final judgment in favor of defendant and close

9 the case. . -

10 | Dated: April 16, 2025 atte A hh be

WILLIAM B. SHUBB

11 UNITED STATES DISTRICT JUDGE

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