Calvary Hospital, Inc. v. Becerra

Background

Calvary Hospital, Inc. provides healthcare services to Medicare-eligible patients. A Unified Program Integrity Contractor audited Calvary’s Medicare claims and used a sample to estimate an overpayment. The sampling universe excluded claims that resulted in a zero-dollar bill. After administrative appeals, an administrative law judge upheld a revised overpayment assessment of $2,719,225.59. Calvary then sought judicial review, alleging that excluding zero-paid claims and withholding information about the calculations violated due process.

The certified administrative record filed with the district court did not contain eight documents that Calvary wanted to add. Those documents included a broader claims collection containing the zero-paid claims, worksheets about the sampling and calculation methods, letters allegedly sent by the Medicare contractors, and statistical files. Calvary acknowledged that none of the documents had appeared in the administrative hearing before the administrative law judge.

Issue and Standard of Review

Calvary objected to Magistrate Judge Henry J. Ricardo’s January 15, 2025 order denying its motion to compel the addition of the documents. Under Federal Rule of Civil Procedure 72(a), the district court could change the order only if it was clearly erroneous or contrary to law. The court reviewed the order under that deferential standard.

The court distinguished between two types of requests. A motion to complete an administrative record seeks materials that agency decision-makers actually considered but that were omitted from the record filed with the court. A motion to supplement seeks to add outside evidence that was not part of the agency record. A party seeking to complete a Medicare administrative record must overcome the presumption that the Secretary properly certified the record. Supplementation is allowed only in limited circumstances, including when it is necessary to evaluate a statutory or constitutional claim that the agency did not or could not decide.

Ruling

The court held that Calvary had not shown that the administrative record was incomplete. It concluded that 42 U.S.C. § 405(g), rather than the general Administrative Procedure Act provisions cited by Calvary, governed the record in this Medicare appeal. Section 405(g) generally limits judicial review to the pleadings and the certified transcript and record from the administrative proceeding. The court also stated that even if the Administrative Procedure Act applied, the formal administrative hearing’s exclusive record would not include materials that did not feature in the hearing.

The court further held that Calvary had not shown that supplementation was necessary to evaluate its due-process claims. The administrative law judge’s decision described the documents and explained why zero-paid claims were excluded from the sample and why the requested documentation was not required. Calvary did not dispute the adequacy or accuracy of those descriptions or explain why the court needed the underlying documents themselves.

The court therefore found no clear error or misapplication of law in Judge Ricardo’s order and overruled Calvary’s objections. The court did not decide the merits of Calvary’s underlying overpayment or due-process claims in this opinion. It also directed the Clerk to substitute Secretary Robert F. Kennedy, Jr. for former Secretary Xavier Becerra as the defendant because the action continued against the official’s successor.

Effect

The ruling leaves the certified administrative record unchanged for the judicial review proceeding. It concerns only whether the additional materials may be added to the record; it does not itself affirm or reverse the Medicare overpayment assessment.