United States District Court, District of Columbia
N. McFADDEN, U.S.D.J.
Care Health Plan, Inc. sued the Secretary of the Department
of Health and Human Services because the Administrator of an
agency within the Department found that Choice Care Health
Plan claimed several million dollars of Medicare
reimbursements to which it was not entitled. Choice Care
Health Plan argues that the decision violates the
Administrative Procedure Act because it is arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law. The parties' Cross-Motions for
Summary Judgment are now before me. Because substantial
evidence supports the Administrator's determination,
Choice Care Health Plan's Motion for Summary Judgment
will be denied and the Defendant's Cross-Motion for
Summary Judgment will be granted.
he is not a named party, Dr. Subhash Thareja is a ubiquitous
and central figure in the case. In 2004 and 2005, Dr. Thareja
was the owner and CEO of Choice Care Health Plan, or CCHP.
Compl. ¶ 17. He was also the owner and CEO of Quality
Medical Care, or QMC. Id.; id. Ex. A at 10.
And he worked for QMC as a cardiologist. Pl.'s Mot.
Summary J. 5. Dr. Thareja provided clinical services to QMC
patients who were members of the CCHP health care prepayment
plan. Compl. ¶ 19.
2004 to 2005, CCHP paid Dr. Thareja a salary of over $5.5
million, including bonuses, for his services as a
cardiologist and CEO. Id. Ex. A at 10. CCHP included
this pay in cost reports that it submitted to Medicare for
reimbursement. Id. For 2004, CCHP claimed $2, 420,
063 in Medicare reimbursements for Dr. Thareja's
salary-$300, 00 for his work as CEO of CCHP, $300, 000 for
his work as CEO of QMC, $300, 000 as a bonus for his work as
CEO, and just over $1.5 million for his cardiology services.
Id. Ex. A at 10. For 2005, CCHP claimed $3, 128, 208
in Medicare reimbursements-$435, 00 for his work as CEO of
CCHP, $300, 000 for his work as CEO of QMC, $300, 000 as a
bonus for his work as CEO, and nearly $2.1 million for his
cardiology services. Id. Initially, CCHP also sought
Medicare reimbursement for other benefits that it provided
Dr. Thareja, such as a car, life insurance, travel,
entertainment, donations, gifts, meals, and exercise
equipment. Id. at 10, 11 n.4; AR 865; see
also Pl.'s Mot. Summary J. 22.
2008, an auditor for the Centers for Medicare & Medicaid
Services, or CMS, questioned these reimbursement claims.
Compl. ¶ 20. The auditor determined that Dr.
Thareja's total compensation from CCHP in 2004 and 2005
should have been less than $1 million. Id. It found
that it was unreasonable to pay Dr. Thareja multiple
full-time salaries based on CCHP's assertion that he
worked about 127 hours a week for two years when CCHP had no
auditable, contemporaneous documentation of Dr. Thareja's
hours. AR 80. Instead, it credited testimony offered by CCHP
that Dr. Thareja spent about 55% of his work time performing
cardiology services and 45% of his work time working as a
CEO. See AR 81. Thus, the auditor recommended that
Medicare reimburse Dr. Thareja 55% of the salary of a
top-paid, full-time cardiologist and 45% of the salary of a
top-paid, full-time CEO. Id. CMS adopted the
auditor's recommendation without modification and
directed CCHP to return nearly $5.75 million of the Medicare
reimbursements that it had received for payments to Dr.
Thareja in 2004 and 2005. Id. ¶ 23; AR 79. CCHP
filed an administrative appeal, and a CMS hearing officer
determined that CCHP could keep nearly $2.5 million-more than
the roughly $1 million CMS had recommended. AR 92.
sides requested that the CMS Administrator review the hearing
officer's determination. Compl. ¶ 30. The
Administrator reversed the hearing officer's
determination and reinstated CMS's initial determination
that CCHP owed Medicare nearly $5.75 million. Id.
¶ 31. The Administrator determined that CMS had
“correctly apportioned Dr. Thareja's salaries
between his various roles, using [CCHP's] own estimate of
his time spent on his cardiology practice and on his
administrative duties.” Id. Ex. A at 15.
then took its claims to federal court, arguing that the
Administrator's decision violated the Administrative
Procedure Act, or APA, by disallowing reimbursement of over
$3.1 million paid to Dr. Thareja for his services as a
cardiologist. See Compl. ¶ 22-23, 31, 52-54.
CCHP has chosen not to contest the disallowance of other
claimed reimbursements. Reply ISO Pl.'s Mot. Summary J.
1. The parties filed Cross-Motions for Summary Judgment.
authorizes courts to review agency decisions. 5 U.S.C. §
702. A court's review is limited to the administrative
record, and the court must determine if that record supports
the agency's decision. Coe v. McHugh, 968
F.Supp.2d 237, 239 (D.D.C. 2013). The court will grant
summary judgment to the agency if the agency action is
“supported by the administrative record and otherwise
consistent with the APA standard of review.”
Id. at 240. On the other hand, if the agency
decision is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law, ”
the court will grant summary judgment to the plaintiff.
See 5 U.S.C. § 706. In resolving this question,
the court asks whether “the agency acted within the
scope of its legal authority, whether the agency has
explained its decision, whether the facts on which the agency
purports to have relied have some basis in the record, and
whether the agency considered the relevant factors.”
Fulbright v. McHugh, 67 F.Supp.3d 81, 89 (D.D.C.
2014), aff'd sub nom. Fulbright v. Murphy, 650
Fed.Appx. 3 (D.C. Cir. 2016).
touchstone for Medicare reimbursements to health care
prepayment plans like CCHP is “reasonable cost.”
42 C.F.R. § 417.800(c). Medicare reimbursement for a
physician's clinical work should be “commensurate
with the compensation paid for similar services performed by
similar physicians practicing in the same or a similar
locality.” 42 C.F.R. § 417.544(a)(1). A provider
claiming Medicare reimbursement “must provide adequate
cost data, ” meaning that the provider must provide
accurate documentation with enough detail to support its
reimbursement claim. 42 C.F.R. 413.24(a), (c).
“Adequate data capable of being audited is consistent
with good business concepts [and] is a reasonable expectation
on the part of any agency paying for services on a
cost-reimbursement basis.” 42 C.F.R. 413.24(c).
The Administrator's Treatment of Dr. Thareja as a
Part-Time Cardiologist Does Not Violate the Administrative
Administrator affirmed CMS's determination that a
reasonable cost for Dr. Thareja's cardiology services
would be 55% of the pay that a full-time cardiologist in his
area would have received. Compl. Ex. A 12-13, 17. CMS based
this determination on a statement to the CMS auditor by Janet
Cody, QMC's CFO, that she thought Dr. Thareja spent about
55% of his time practicing cardiology and 45% of his time
performing managerial and administrative tasks. Id.
at 12. Recall that Dr. Thareja was employed as QMC's CEO,
presumably as Ms. Cody's boss. See Compl. ¶
17. The ...