PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MACKENZIE MEDICAL SUPPLY,
INCORPORATED,
Plaintiff-Appellant,
v.
MICHAEL O. LEAVITT, in his capacity
as Secretary of Health and Human
Services,
Defendant-Appellee, No. 06-1630
and
TOMMY G. THOMPSON, in his
capacity as Secretary of the United
States Department of Health and
Human Services,
Defendant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(1:04-cv-02807-AMD)
Argued: September 25, 2007
Decided: October 31, 2007
Before TRAXLER, Circuit Judge,
HAMILTON, Senior Circuit Judge, and
Robert J. CONRAD, Jr., Chief United States District Judge for the
Western District of North Carolina, sitting by designation.
Affirmed by published opinion. Senior Judge Hamilton wrote the
opinion, in which Judge Traxler and Judge Conrad joined.
2 MACKENZIE MEDICAL SUPPLY v. LEAVITT
COUNSEL
ARGUED: David C. Frederick, KELLOGG, HUBER, HANSEN,
TODD, EVANS & FIGEL, P.L.L.C., Washington, D.C., for Appel-
lant. Howard S. Scher, UNITED STATES DEPARTMENT OF JUS-
TICE, Civil Division, Appellate Section, Washington, D.C., for
Appellee. ON BRIEF: Derek T. Ho, KELLOGG, HUBER, HAN-
SEN, TODD, EVANS & FIGEL, P.L.L.C., Washington, D.C., for
Appellant. Peter D. Keisler, Assistant Attorney General, Rod J.
Rosenstein, United States Attorney, Anthony J. Steinmeyer, UNITED
STATES DEPARTMENT OF JUSTICE, Civil Division, Appellate
Section, Washington, D.C., for Appellee.
OPINION
HAMILTON, Senior Circuit Judge:
In this action, MacKenzie Medical Supply, Inc. (MacKenzie) seeks
to set aside the Secretary of the United States Department of Health
and Human Services’ (the Secretary) determination that it overpaid
MacKenzie $508,747.57 in Medicare reimbursement payments for
135 power wheelchairs that MacKenzie provided to Medicare recipi-
ents between September 1, 1998 and February 28, 1999. According
to the Secretary, MacKenzie is liable for the overpayment because a
post-payment audit revealed that insufficient medical documentation
existed to establish the medical necessity of providing each power
wheelchair at issue. In its defense, MacKenzie argued that the docu-
mentation that it submitted for reimbursement, in the form of certifi-
cates of medical necessity (CMN), as the term CMN is defined in 42
U.S.C. § 1395m(j)(2)(B), sufficed to qualify for reimbursement.
Rejecting MacKenzie’s argument, the district court granted summary
judgment in favor of the Secretary. MacKenzie appealed, and we
affirm.
I.
The Medicare Act (the Medicare Act), 42 U.S.C. § 1395 et seq.,
establishes a federally subsidized health insurance program for eligi-
MACKENZIE MEDICAL SUPPLY v. LEAVITT 3
ble aged and disabled persons. Akin to private health insurance pro-
grams, the Medicare Act and its implementing regulations
promulgated by the Secretary set forth conditions and limitations on
the coverage of medical services and equipment. See 42 U.S.C.
§§ 1395k, 1395l, 1395x(s), 1395y(a)(1)-(22), 1395ff(a); 42 C.F.R.
§ 411.15(a)-(r). Of relevance on appeal, Part B coverage under the
Medicare Act extends to durable medical equipment (DME), includ-
ing power wheelchairs used in the medicare recipient’s home (includ-
ing institutions used as his home other than hospitals or skilled
nursing facilities). 42 U.S.C. §§ 1395k(a)(2)(B), 1395x(n), and
1395x(s)(6); 42 C.F.R. § 410.38(a)-(c).
The Medicare program is administered by the Center for Medicare
& Medicaid Services (CMS), a division of the United States Depart-
ment of Health and Human Services (HHS) supervised by the Secre-
tary. Gulfcoast Medical Supply, Inc. v. Secretary, HHS, 468 F.3d
1347, 1349 (11th Cir. 2006). At all times relevant to this appeal, in
administering Part B, CMS, under the authority of the Secretary,
acted through private fiscal contractors called "carriers."1 42 U.S.C.
§ 1395u. Carriers performed a variety of functions, such as making
coverage determinations in accordance with the Medicare Act and
agency guidance. 42 C.F.R. §§ 405.803, 421.200. Carriers also con-
ducted audits of the claims submitted for payment, and adjusted pay-
ments and payment requests. Id.; 42 C.F.R. § 421.214. Carriers paid
Medicare suppliers on the basis of assignments of benefits executed
by the Medicare beneficiaries. 42 U.S.C. § 1395u(b)(3)(B); 42 C.F.R.
§§ 424.55, 802.
During the relevant time period, certain carriers, called DME
Regional Carriers (DME Regional Carriers), processed DME claims
within designated regions of the country. 42 U.S.C. § 1395u; 42
C.F.R. § 421.210. During the relevant time period, the DME Regional
Carrier for Region C, which includes Maryland, was Palmetto Gov-
1
Pursuant to § 911 of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066
(Dec. 8, 2003), with an effective date of October 1, 2005, most of the
carrier responsibilities have been transferred to entities now labeled med-
icare administrative contractors. See 42 U.S.C. § 1395kk-1 and Historical
and Statutory Notes for such section. See also 42 U.S.C. § 1395u(a).
4 MACKENZIE MEDICAL SUPPLY v. LEAVITT
ernment Benefits Administrators (Palmetto). Notably, the Region C
DMEPOS2 Supplier Manual (Autumn 1998) included the following
guidelines for coverage of the power wheelchairs at issue here:
1. The patient’s condition is such that without the use of
a wheelchair the patient would otherwise be bed or
chair confined; and,
2. The patient’s condition is such that a wheelchair is med-
ically necessary and the patient is unable to operate a
wheelchair manually; and,
3. The patient is capable of safely operating the controls
for the power wheelchair.
(J.A. 156-57). The same manual further provided that "[a] patient who
requires a power wheelchair usually is totally nonambulatory and has
severe weakness of the upper extremities due to a neurologic or mus-
cular disease/condition." (J.A. 157). In all cases, Medicare Part B cov-
erage is limited to services that are medically "reasonable and
necessary" for the diagnosis or treatment of illness. 42 U.S.C.
§ 1395y(a)(1)(A).
Pursuant to 42 U.S.C. § 1395l(e), payment on a DME claim under
Part B cannot be made "unless there has been furnished such informa-
tion as may be necessary in order to" support payment of the claim.
To facilitate claims processing for DME, the Medicare Act permits
DME suppliers to distribute CMNs to physicians. 42 U.S.C.
§ 1395m(j)(2)(A); Gulfcoast Medical Supply, Inc., 468 F.3d at 1349.
The Medicare Act defines CMN as "a form or other document con-
taining information required by the carrier to be submitted to show
that an item is [medically] reasonable and necessary for the diagnosis
or treatment of illness or injury . . . ." 42 U.S.C. § 1395m(j)(2)(B).
CMS has approved a one-page CMN specifically for power wheel-
chairs, on which the DME supplier is permitted to provide the follow-
2
DMEPOS refers to the category of DME in the form of prosthetics or
orthotics.
MACKENZIE MEDICAL SUPPLY v. LEAVITT 5
ing information: (1) identification of the supplier and the beneficiary;
(2) a description of the medical equipment; (3) the product code iden-
tifying such equipment; and (4) "[a]ny other administrative informa-
tion (other than information relating to the beneficiary’s medical
condition) identified by the Secretary." 42 U.S.C.
§ 1395m(j)(2)(A)(i). Section B of the form also asks a series of ques-
tions related to the mobility and medical condition of the beneficiary,
which the beneficiary’s treating physician or a third party, but not the
DME supplier, is permitted to answer. The only part of the form
required to be completed by the treating physician is the attestation
portion of the form whereby the treating physician certifies via his
signature and date that "the medical necessity information in Section
B is true, accurate and complete, to the best of my knowledge, and
I understand that any falsification, omission, or concealment of mate-
rial fact in that section may subject me to civil or criminal liability."
(J.A. 222).
Of relevance in the present appeal, the Secretary has issued a direc-
tive advising Region C DME suppliers that medical documentation in
addition to a physician’s order for DME may be necessary in order
to substantiate compliance with the "reasonable and necessary"
requirement of the Medicare Act. Specifically, Region C’s Medicare
Advisory (September 1996) advised Region C suppliers that:
It is the primary responsibility of those supplying beneficia-
ries with durable medical equipment, prostheses, orthoses
and supplies (DMEPOS) to assure claims billed to Medicare
have the proper documentation accurately reflecting the
beneficiary’s medical condition as it relates to the Medicare
coverage criteria by which claims are adjudicated by the
Durable Medical Equipment Regional Carrier (DMERC).
Even if a supplier has a physician order on file, failure of
the patient’s medical records to substantiate the condition
for which Medicare approves reimbursement subjects the
supplier to liability for repayment of that reimbursement to
the Medicare program, and possibly to civil and criminal
penalties. Therefore, it is to the benefit of suppliers, Medi-
care beneficiaries and the Medicare Trust Fund that physi-
cians be well informed about their role in evaluating,
ordering and documenting the need of DMEPOS for their
6 MACKENZIE MEDICAL SUPPLY v. LEAVITT
Medicare patients. The better informed the physician about
DMERC Regional Medical Review Policies (RMRPs) and
Medicare’s coverage criteria for DMEPOS, the less likely
the supplier’s frustration at filling orders for items that will
not be, or should not have been, reimbursed.
(J.A. 249) (emphasis added).
During the period at issue, September 1, 1998, through February
28, 1999, MacKenzie submitted to Palmetto, for reimbursement,
claims for a total of 135 power wheelchairs. MacKenzie supported
each claim solely with a completed CMN, which claims Palmetto ini-
tially approved and made payment.
In April 1999, Palmetto initiated a post-payment audit because: (1)
MacKenzie had submitted an extremely high volume of claims for
power wheelchairs; (2) more than 30% of the Medicare payments
received by MacKenzie during the time period used the same refer-
ring physician; and (3) of the 135 beneficiaries receiving power
wheelchairs from MacKenzie during the relevant time period, 115 did
not previously have any prior wheelchair, such as a manual wheel-
chair, which failed to indicate a progression of a medical condition
that might medically lead to the use of a power wheelchair. These
concerns resulted in an audit by a medical investigator of a random
sample of thirty out of the 135 claims, twenty-nine of which failed to
satisfy the requirements for medical necessity.
The medical investigator requested all relevant medical records
from MacKenzie and the treating physicians and concluded that for
twenty-one of the beneficiaries, "the information and progress notes
supplied are not sufficiently specific to warrant powered mobility
within the confines of a home or apartment. While powered mobility
might help extend the distance the beneficiary might be able to travel
beyond the boundaries of the home, it must be needed for mobility
within the home to be considered medically necessary by Medicare."
(J.A. 198-99). The audit report further noted that no physicians’ sur-
veys or progress notes were received with respect to eight beneficia-
ries as requested during the audit, and those claims were denied since
"medical necessity could not be established." (J.A. 293).
MACKENZIE MEDICAL SUPPLY v. LEAVITT 7
Based on these findings, CMS approved a request by Palmetto to
suspend payment to MacKenzie effective July 20, 1999. Palmetto
determined the total overpayment for the sample to be $114,448.96
and, from that sample, projected the total amount of overpayment to
be $508,747.57. On November 2000, Palmetto notified MacKenzie by
letter that it had been overpaid by $508,747.57.
MacKenzie then proceeded to exhaust its administrative remedies
in challenge to the overpayment notice. 42 U.S.C. § 1395ff(b)(1)(A).
First, MacKenzie requested reconsideration by a hearing officer
through Palmetto’s internal appeal process, arguing the Secretary
lacked the authority to deny any DME claim supported by a com-
pleted CMN. The hearing officer rejected MacKenzie’s argument and
upheld the overpayment determination. MacKenzie then appealed to
an administrative law judge (ALJ), who upheld the hearing officer.
The ALJ also determined that, because MacKenzie ignored guidelines
provided in various Palmetto issuances "which advised suppliers that
if clinical records were not available to support a CMN, payment
could be denied," (J.A. 79), MacKenzie was not without fault, and,
therefore, was not entitled to a waiver of liability under Medicare Part
B’s safe harbor provision. MacKenzie subsequently appealed the
ALJ’s decision to the Medicare Appeals Council, which upheld the
ALJ’s decision.
Having exhausted its administrative remedies with the Secretary,
MacKenzie filed the present action in federal court, seeking judicial
review of the Secretary’s final overpayment determination. See 42
U.S.C. § 1395ff(b)(1)(A) (providing for judicial review of final deci-
sions by the Secretary regarding reimbursement claims under Medi-
care Part B upon exhaustion of administrative remedies). MacKenzie
challenged the Secretary’s final decision on three grounds: (1) the
Secretary’s position was erroneous that he could condition approval
of a DME claim upon the provision of medical documentation beyond
a completed CMN; (2) requiring it to provide any documentation in
addition to a CMN in order to support a DME claim violated the
Paperwork Reduction Act of 1995, 44 U.S.C. § 3501 et seq.; and (3)
42 U.S.C. §§ 1395gg(c) and 1395pp(a) entitled it to waiver of repay-
ment.
8 MACKENZIE MEDICAL SUPPLY v. LEAVITT
On cross-motions for summary judgment, the district court granted
summary judgment in favor of the Secretary, thereby upholding the
Secretary’s final decision. This timely appeal followed.
II.
Our review of the Secretary’s final decision in this case, like the
district court, is to be based solely on the administrative record, and
the Secretary’s findings of fact, if supported by substantial evidence,
shall be conclusive. 42 U.S.C. § 1395ff(b)(1)(A) (incorporating 42
U.S.C. § 405(g) by reference). Moreover, because the Secretary is
charged with administering the Medicare Act, we substantially defer
to the Secretary’s construction of any ambiguous language in the Act,
if the Secretary’s construction "is based on a permissible construction
of the statute." Chevron U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984).
MacKenzie first argues that the plain language of Part B of the
Medicare Act provides that a completed CMN is always sufficient to
entitle a DME supplier to reimbursement on a DME claim under Part
B. Thus, because MacKenzie submitted a completed CMN for each
of the power wheelchair claims at issue, MacKenzie contends the
Secretary lacked the authority to reject those claims on the basis of
the additional medical records procured and those requested but not
procured. MacKenzie argues that 42 U.S.C. § 1395m(j)(2)(A)(i) and
(j)(2)(B), when read in combination, unambiguously dictate this
result. Moreover, MacKenzie argues that any other reading would
undermine Congress’ purpose in creating the CMN to streamline the
DME claim process.
The first of the statutory subsections relied upon by MacKenzie
provides:
(2) Certificates of medical necessity
(A) Limitation on information provided by sup-
pliers on certificates of medical necessity.
(i) In general
MACKENZIE MEDICAL SUPPLY v. LEAVITT 9
Effective 60 days after October 31, 1994, a sup-
plier of medical equipment and supplies may
distribute to physicians, or to individuals enti-
tled to benefits under this part, a certificate of
medical necessity for commercial purposes
which contains no more than the following
information completed by the supplier:
(I) An identification of the supplier and the
beneficiary to whom such medical equipment
and supplies are furnished.
(II) A description of such medical equipment
and supplies.
(III) Any product code identifying such med-
ical equipment and supplies.
(IV) Any other administrative information
(other than information relating to the benefi-
ciary’s medical condition) identified by the
Secretary.
42 U.S.C. § 1395m(j)(2)(A)(i) (underscore emphasis added). The sec-
ond of the two statutory subsections relied upon by MacKenzie sup-
plies the definition of the term "certificate of medical need" as found
in the just quoted passage:
(B) Definition
For purposes of this paragraph, the term "certificate of medi-
cal need" means a form or other document containing infor-
mation required by the carrier to be submitted to show that
an item is reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the functioning
of a malformed body member.
42 U.S.C. § 1395m(j)(2)(B) (emphasis added).
10 MACKENZIE MEDICAL SUPPLY v. LEAVITT
With respect to case law in support of its position, MacKenzie
relies upon a district court case from the Eastern District of Califor-
nia, Maximum Comfort, Inc. v. Thompson, 323 F. Supp. 2d 1060
(E.D.Cal. 2004). The Maximum Comfort court held that "[t]he Secre-
tary’s contention that Congress provided him with the authority to
decide what documentation may be required to determine the medical
necessity of DME conflicts with the plain meaning of
§ 1395m(j)(2)(B)." Id. at 1067-68. According to the Maximum Com-
fort court, § 1395m(j)(2)(B) "plainly specifies that Congress intended
that whatever information may be required by carriers from suppliers
to show the medical necessity and reasonableness of DME must be
contained in a CMN." Id. at 1068.
We disagree. Contrary to MacKenzie’s position and the similar
holding of Maximum Comfort, 42 U.S.C. § 1395m(j)(2)(A)(i) and
(j)(2)(B), when read in combination, do not unambiguously provide
that a completed CMN is always sufficient to entitle a DME supplier
to reimbursement on a DME claim. While the use of the permissive
"may" in § 1395m(j)(2)(A)(i) certainly grants a DME supplier permis-
sion to distribute a partially completed CMN to a physician treating
a Medicare patient, such language in no way mandates a DME suppli-
er’s entitlement to reimbursement on a DME claim solely upon the
DME supplier’s submission of such claim supported only by a fully
completed CMN. See Lopez v. Davis, 531 U.S. 230, 241 (2001)
(describing statute’s use of "may" as permissive and contrasting it
with Congress’ use of a mandatory "shall" elsewhere in statute to
impose discretionless obligations). The same holds true for the defini-
tion of CMN in § 1395m(j)(2)(B). In the words of the Eleventh Cir-
cuit, which has had occasion to address the same argument
MacKenzie makes with respect to the statutory definition of CMN:
First and foremost, § 1395m(j)(2)(B) does not state unequiv-
ocally that a CMN is the only documentation that may be
required of suppliers to show medical necessity. Section
1395m(j)(2)(B) simply defines a CMN as "a form or other
document" containing information showing medical neces-
sity. On its face, the section simply does not contain any
explicit or unambiguous words of exclusivity-Section
1395m(j)(2)(B) does not define a CMN as "the form" or "the
MACKENZIE MEDICAL SUPPLY v. LEAVITT 11
only form" containing "all information" or "exclusive infor-
mation" of medical necessity.
Gulfcoast, 468 F.3d at 1351 (emphasis in original). Given our analy-
sis and MacKenzie’s failure to point us to any other section of the
Medicare Act even suggesting that the Secretary’s hands are tied with
respect to requiring additional medical documentation to establish the
medically "reasonable and necessary" standard set forth in 42 U.S.C.
§ 1395y(a)(1)(A) in the case of a DME claim supported only by a
fully completed DME, we reject MacKenzie’s plain language argu-
ment.
Moreover, it follows that even if the Medicare Act were ambiguous
on this issue, the Secretary’s interpretation of § 1395m(j)(2)(A)(i) and
(j)(2)(B) as not mandating that a completed CMN is always sufficient
to entitle a DME supplier to reimbursement on a DME claim under
Part B "is based on a permissible construction of the statute." Chev-
ron, 467 U.S. at 843. This is especially so given that 42 U.S.C.
§ 1395ff(a) affords the Secretary discretion to make determinations
with respect to DME claims under Part B of the Medicare Act, and
42 U.S.C. §§ 1395u(p)(4) and 1395ddd afford the Secretary (or the
fiscal agent of the Secretary) auditing powers with respect to such
claims under Part B.
Furthermore, the Secretary’s reading of 42 U.S.C.
§ 1395m(j)(2)(A)(i) and (j)(2)(B) does not, as MacKenzie asserts,
undermine Congress’ legislative goal of standardization in creating
the CMN. We agree with the Eleventh Circuit that the CMN is best
viewed as "an optional pre-payment tool designed primarily to reduce
paperwork and to streamline the processing of claims," Gulfcoast, 468
F.3d at 1352, not as a complete standardization of the DME-claim-
process which eliminates all flexibility of the Secretary to require fur-
ther support for DME claims initially made via a CMN. In short,
MacKenzie could not overcome the deference we would owe to the
Secretary’s interpretation under Chevron.
In conclusion, the plain language of the Medicare Act does not sup-
port MacKenzie’s position that a DME claim accompanied solely by
a completed CMN is always sufficient to support payment. Moreover,
even if the Medicare Act is ambiguous on this point, the Secretary’s
12 MACKENZIE MEDICAL SUPPLY v. LEAVITT
reading of the statute is reasonable, and therefore, would be entitled
to Chevron deference. Accordingly, the district court did not err in
rejecting MacKenzie’s plain language argument.
III.
We next address MacKenzie’s challenge to the district court’s
rejection of its argument that, under the waiver mechanism set forth
in 42 U.S.C. §§ 1395gg(c) and/or 1395pp(a), it is exempt from liabil-
ity to repay any and all monies that it received for the power wheel-
chairs at issue in this case. MacKenzie’s challenge is without merit.
First, MacKenzie cannot avail itself of the waiver mechanism pro-
vided in 42 U.S.C. § 1395gg(c), because § 1395gg(c) explicitly
applies only to the waiver of "adjustment[s] as provided in subsection
(b) of this section," id., and the only adjustment contemplated by
§ 1395gg(b) is an adjustment of payments to individuals not suppliers
or providers. Visiting Nurses Ass’n of Southwestern Indiana, Inc. v.
Shalala, 213 F.3d 352, 355-59 (7th Cir. 2000) (holding overpayment
waiver mechanism in § 1395gg(c) applies only to individual Medicare
beneficiaries, not Medicare providers, in view of statutory and regula-
tory distinctions between individuals and providers). Rather, Mac-
Kenzie must proceed on its waiver argument under 42 U.S.C.
§ 1395pp(a), which statutory section allows a DME supplier such as
itself to obtain a waiver of liability for overpayment receipt when
coverage is later denied and the individual beneficiary of the DME at
issue and the DME supplier both "did not know, and could not rea-
sonably have been expected to know, that payment would not be
made for such items . . . ."3 Id. See also Kraemer v. Heckler, 737 F.2d
214, 216 (2d Cir. 1984) (noting individual/provider distinction
between §§ 1395gg(b)-(c) and 1395pp(a)).
MacKenzie contends that it is entitled to a waiver of overpayment
for the entire amount sought to be recovered by the Secretary, because
it could not have known that reimbursement would be denied for lack
of medical documentation in addition to the respective CMNs that it
3
Apparently also aware of the distinction, the district court only specif-
ically addressed MacKenzie’s waiver of liability argument under 42
U.S.C. § 1395pp(a).
MACKENZIE MEDICAL SUPPLY v. LEAVITT 13
submitted. According to MacKenzie, its interpretation of 42 U.S.C.
§ 1395m(j)(2)(A)(i) and (j)(2)(B) as providing that a completed CMN
is always sufficient to entitle a DME supplier to reimbursement was
objectively reasonable at the time of reimbursement given the lan-
guage of § 1395m(j)(2)(B) and the then lack of case law to the con-
trary.
None of MacKenzie’s arguments warrant reversal on this issue. As
our analysis in Part II demonstrates, the plain language of
§ 1395m(j)(2)(A)(i) and (j)(2)(B) in no way states that a CMN alone
is sufficient to establish medical reasonableness and necessity under
Part B. Moreover, Region C’s Medicare Advisory Manual (1996)
explicitly put MacKenzie on notice that medical documentation in
addition to a physician’s order (which is the nature of a CMN) may
be required to support a DME claim. In light of these circumstances,
the fact that no case law had been issued on the subject is beside the
point. Finally, the ALJ, as the trier of fact, had the opportunity to
judge the credibility of the witnesses on this point not us or the dis-
trict court. In sum, there is no basis upon which to reverse the district
court’s upholding of the administrative denial of MacKenzie’s claim
that it is entitled to a waiver of liability for the overpayment that it
received in connection with the power wheelchairs at issue.
IV.
MacKenzie argued below and argues on appeal that the Paperwork
Reduction Act of 1995 (PRA), 44 U.S.C. § 3501 et seq., prevents the
Secretary from requesting medical records in addition to CMNs to
substantiate its DME claims for the power wheelchairs at issue. We
reject MacKenzie’s argument as without merit on the reasoning of the
district court.
Under the PRA, the government is prohibited from sponsoring a
collection of information unless certain procedures are followed,
including an opportunity for public comment, approval from the
Office of Management and Budget, and the display of a control num-
ber on the request. 44 U.S.C. §§ 3506(c)(2), 3507(a), (c). However,
the government is exempted from the requirements of the PRA "dur-
ing the conduct of—(ii) an . . . investigation involving an agency
14 MACKENZIE MEDICAL SUPPLY v. LEAVITT
against specific individuals or entities . . . ." 44 U.S.C.
§ 3518(c)(1)(B)(ii).
The district court concluded that this investigation exception
applied to exempt the Secretary from the requirements of the PRA in
investigating DME claims under Part B. Specifically, the district court
reasoned:
For one thing, although the word "audit" is not mentioned
specifically in the exception to the PRA, an audit certainly
must be considered to be a subset of an "investigation." See
Shell Oil Co. v. Babbitt, 945 F. Supp. 792, 807 (D.Del.
1996) ("The PRA specifically exempts activities such as an
[Minerals Management Service] audit from its require-
ments.").
In addition, contrary to MacKenzie’s argument, the Sec-
retary has not issued an information request "to an entire
class of individuals." Pl.’s Reply in Opp. to Def.’s Mot. for
Summ. J. at 24. Rather, here the audit explicitly targeted
MacKenzie because MacKenzie was submitting an unusu-
ally high rate of requests for power wheelchairs. A.R. 20,
1073-77. In addition, about 30 percent of payments from
those requests come from a single doctor’s referrals. Id. This
request certainly falls under the investigatory exception to
the PRA.(J.A. 303). We agree. Accordingly, we hold the
investigatory exception to the requirements of the PRA
squarely applies.
V.
For the above stated reasons, we affirm the district court’s grant of
summary judgment in favor of the Secretary.
AFFIRMED