Goffney v. Becerra

• Decision Date: 29 April 2021
• Docket Number: No. 19-56368,19-56368
• Citation: 995 F.3d 737
• Parties: Willie H. GOFFNEY, Jr., M.D.; Advanced Surgical Associates Medical Office, Inc., a California corporation, Plaintiffs-Appellants, v. Xavier BECERRA, Secretary of the United States Department of Health and Human Services, in his official capacity, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

995 F.3d 737

Willie H. GOFFNEY, Jr., M.D.; Advanced Surgical Associates Medical Office, Inc., a California corporation, Plaintiffs-Appellants,

v.Xavier BECERRA, Secretary of the United States Department of Health and Human Services, in his official capacity, Defendant-Appellee.

No. 19-56368

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 2, 2021 Pasadena, California

Filed April 29, 2021

Charles G. Smith (argued) and Dana M. Silva, Law Offices of Charles G. Smith, Sherman Oaks, California, for Plaintiffs-Appellants.

Daniel Aguilar (argued) and Mark B. Stern, Appellate Staff; Nicola T. Hanna, United States Attorney; Civil Division, United States Department of Justice, Washington, D.C.; for Defendant-Appellee.

Before: Susan P. Graber, Stephen A. Higginson,^* and Eric D. Miller, Circuit Judges.

MILLER, Circuit Judge:

Dr. Willie Goffney sought reimbursement from the Medicare program for services that he provided to covered patients. Applying its interpretation of the governing regulation, the Department of Health and Human Services (HHS) denied his claim. The Supreme Court recently reaffirmed that a reviewing court should defer to an agency's reasonable interpretation of ambiguous regulations. Kisor v. Wilkie , ––– U.S. ––––, 139 S. Ct. 2400, 204 L.Ed.2d 841 (2019). We agree with the district court that the governing regulation is genuinely ambiguous and that the agency's interpretation is reasonable. We also agree with the district court that its review was appropriately confined to the administrative record the agency produced and that the agency was not required to supplement the record. We therefore affirm.

I

Medicare is a federally subsidized medical insurance program for the elderly and disabled. See 42 U.S.C. § 1395 et seq. ; Thomas Jefferson Univ. v. Shalala , 512 U.S. 504, 506, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994). The Centers for Medicare & Medicaid Services (CMS), an agency within HHS, oversees the Medicare program. See Pharmaceutical Rsch. & Mfrs. of Am. v. Walsh , 538 U.S. 644, 650 n.3, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003). CMS contracts with private entities to administer the program. See 42 U.S.C. §§ 1395u(a), 1395kk-1(a) ; 42 C.F.R. § 421.5(b). Each Medicare contractor is responsible for a particular region of the country. 42 C.F.R. § 421.404(b)(1), (c)(1).

To be paid for performing Medicare services, healthcare providers must enroll in the program, at which point they receive billing privileges and a billing number. 42 C.F.R. § 424.505. (The statute distinguishes between hospitals, which it calls "providers," and physicians, whom it calls "suppliers," but because nothing in this case turns on that distinction, we will refer to both as providers. 42 U.S.C. § 1395x(d), (u).) Billing privileges are not permanent—once approved, they may be revoked or deactivated. 42 C.F.R. § 424.555(b). A revocation "means that ... billing privileges are terminated." Id. § 424.502. A deactivation "means that ... billing privileges were stopped, but can be restored upon the submission of updated information." Id . Deactivation exists "to protect the provider ... from misuse of its billing number and to protect the Medicare Trust Funds from unnecessary overpayments." Id. § 424.540(c).

Goffney is a surgical oncologist in Long Beach, California, who has provided services to Medicare patients since 1991. In 2005, Goffney stopped receiving payments for his Medicare claims, but he nonetheless continued to provide services to Medicare patients for the next decade. It is not clear—at least to us—exactly what happened during that period. The record suggests that Goffney provided services, received no payments, and made only occasional efforts to remedy the situation. But the exact sequence of events is not relevant to the legal issue before us.

In 2012, Goffney was informed that his Medicare billing privileges had been deactivated in 2008 because he had not submitted a claim for more than a year. See 42 C.F.R. § 424.540(a)(1). Goffney argues that the deactivation was erroneous, but although the regulations provide a mechanism for a provider to challenge a deactivation, Goffney did not invoke that mechanism. See 42 C.F.R. §§ 405.374(a), 405.375(a), 424.545(b).

Instead, in 2015, Goffney attempted to reactivate his billing privileges. To do so, he submitted documents to Noridian Healthcare Solutions, the Medicare contractor in his region, verifying that his enrollment information had not changed. Specifically, he submitted portions of Forms CMS-855B, CMS-855I, and CMS-855R—entitled "Medicare Enrollment Application"—which providers use for initial enrollment in the program, reactivation, and various other purposes. Goffney checked the box stating that he was "revalidating [his] Medicare enrollment."

Goffney hoped—and, he says, a Noridian employee represented—that by recertifying the accuracy of his information, he could keep his original effective billing date and be paid for the services he had provided while his privileges were inactive.

But when Noridian approved Goffney's request, it assigned him a new effective date of August 31, 2015—the date on which he had submitted the forms to reactivate his billing privileges. That effective date precluded Goffney from obtaining compensation for services he had performed in the preceding decade.

Goffney sought reconsideration, but Noridian denied his request. It relied on 42 C.F.R. § 424.520(d), which provides that "[t]he effective date for billing privileges for physicians" is "[t]he date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor." Reasoning that what Goffney filed on August 31, 2015 was an "enrollment application," Noridian concluded that section 424.520(d) made that date the effective date of his reactivated billing privileges.

Goffney then petitioned for review before an HHS administrative law judge, arguing that a certification attesting to the accuracy of existing enrollment information does not constitute an "enrollment application" under section 424.520(d). The administrative law judge denied Goffney's petition.

The HHS Departmental Appeals Board affirmed. The Board concluded that Goffney had filed a qualifying "enrollment application" and that the effective-date provision of section 424.520(d) controlled. The Board emphasized that no other regulation sets the effective date for Medicare billing privileges. The Board also determined that it lacked authority to consider the circumstances surrounding Goffney's initial deactivation, the Medicare claims he submitted while his billing privileges were inactive, or his equitable arguments about Noridian's representations to him.

Having exhausted his administrative remedies, Goffney sought review of the agency's decision in federal district court. See 42 U.S.C. §§ 405(g), 1395cc(h)(1)(A). Goffney asked the district court to order the agency to supplement the administrative record to include additional materials related to the agency's decision. The district court denied the motion.

The district court granted summary judgment to the Secretary of HHS. The court reasoned that HHS regulations contain "a pretty obvious silence ... about whether a past ‘effective date’ is warranted following reactivation," and therefore the "regulations are ‘genuinely ambiguous’ in this area." It concluded that the agency's interpretation of the regulations was entitled to deference and that the agency had "provided a reasonable basis for applying the Section 424.520 effective date to [Goffney's] circumstance."

II

In this appeal, Goffney does not challenge the agency's conclusions about the scope of its authority, nor does he dispute that the agency correctly identified August 31, 2015 as the date on which he submitted his reactivation request. He also does not dispute that under section 424.520(d), "[t]he effective date for billing privileges for physicians [is] the date of filing of a Medicare enrollment application that was subsequently approved." The sole question before us is whether Goffney's reactivation request constituted a "Medicare enrollment application" within the meaning of section 424.520(d), such that its filing date of August 31, 2015 is the effective date of his billing privileges. More specifically, the question before us is whether to accept the Departmental Appeals Board's interpretation of section 424.520(d) ’s phrase "Medicare enrollment application."

The Supreme Court has held that an agency's interpretation of its own regulation is entitled to deference when, among other things, the regulation is "genuinely ambiguous." Kisor , 139 S. Ct. at 2415. With that in mind, we first "exhaust all the ‘traditional tools’ of construction" in an effort to interpret the regulation by examining its "text, structure, history, and purpose." Id. (quoting Chevron, U.S.A. Inc. v. NRDC, Inc. , 467 U.S. 837, 843 n.9, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ); see Minnick v. Commissioner , 796 F.3d 1156, 1159 (9th Cir. 2015) (per curiam) ("Regulations are interpreted according to the same rules as statutes, applying traditional rules of construction."). Because we conclude that the regulation is ambiguous, we then consider what principles of deference apply.

A

Section 424.520(d) itself does not specify whether a certification submitted to reactivate billing privileges constitutes a "Medicare enrollment application" that triggers a new effective date. The parties direct us to various other provisions of the regulations. One supports Goffney's reading and others support the government's, and they do not clearly resolve the ambiguity.

The regulations contain a definitional section, and because an express textual definition would be controlling, we begin there. See Burgess v. United States , 553 U.S. 124, 129–30, 128 S.Ct. 1572, 170 L.Ed.2d 478 (2008). Unfortunately, "Enrollment application" is defined unhelpfully, for our purposes, as "a CMS-approved paper enrollment application or an...