Heart to Heart Hospice of Texas Ltd et al v. Kennedy

1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
HEART TO HEART HOSPICE OF
TEXAS LTD,
Plaintiff,
§
§
§
§
§
§
§
§
§
§
§
§
§
v. Case No. 3:23-cv-02704-X
ROBERT F. KENNEDY, JR., in his
official capacity as Secretary,
United States Department of Health
and Human Services,1
Defendant.
(Consolidated with 3:23-CV-
2707-X, 3:23-CV-2711-X, 3:23-
CV-2714-X, 3:24-CV-0032-X,
3:24-CV-0034-X, 3:24-CV-
0035-X, and 3:24-CV-0036-X)
MEMORANDUM OPINION AND ORDER
Before the Court are eight Motions to Compel Completion of the
Administrative Record (ECF Nos. 68, 72, 76, 80, 88, 93, 98, 103) brought by
Plaintiffs Heart to Heart Hospice of Texas Ltd. and Heart to Heart Hospice of Fort
Worth, LLC.2 The District Judge referred these Motions to the undersigned for
determination. See Order (ECF No. 107). Having reviewed the Parties’ briefing and
the applicable law, the Court DENIES Plaintiffs’ Motions.
1 Pursuant to Fed. R. Civ. P. 25(d), where a public officer is a named party in their
official capacity, their successor is automatically substituted as the named party.
Robert F. Kennedy Jr. succeeded Xavier Becerra as the Secretary of Health and
Human Services on February 13, 2025.
2 Plaintiffs are wholly owned subsidiaries of Heart to Heart Hospice Holdings, LLC,
a holding company of established hospice providers throughout Texas, Indiana,
and Michigan. See Compl. ¶¶ 2–4 (ECF No. 1)
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 1 of 27 PageID <pageID>

2
Background
This consolidated action arises out of administrative determinations in favor
of Defendant, the Secretary of the United States Department of Health and Human
Services (HHS). Plaintiffs—Texas-based hospice providers—assert federal due
process claims related to Defendant’s extrapolated overpayment demands
following audits of Plaintiffs’ Medicare claims. See generally Compl. (ECF No. 1).3
Plaintiffs ultimately appealed these overpayment demands through the
administrative appeals process, receiving favorable decisions in some, but not all
the individual appeals. See, e.g., id. ¶¶ 224–64.
Plaintiffs move to compel completion of the Administrative Record for the
administrative decisions under review. See ECF Nos. 68, 72, 76, 80, 88, 93, 98,
103.4 Defendant argues that the Court lacks jurisdiction over Plaintiffs’ claims and
3 There are eight live complaints on file—one for each of the consolidated cases.
See, e.g., ECF Nos. 1, 39, 40, 41. Plaintiffs have not suggested or argued that the
allegations in any particular live pleading are inconsistent such that any of these
Motions should be treated differently than any other. To the contrary, and as
discussed in note 4, infra, Plaintiffs’ counsel represented that the Court’s
resolution of the legal issues in any Motion will determine the outcome for all eight
Motions. The Court has reviewed the live pleadings but has identified no
distinctions relevant to its resolution of the pending Motions—in fact, many of the
allegations are identical. Accordingly, the Court cites only to Heart to Heart of
Texas Ltd.’s Complaint in 3:23-cv-02704-X (ECF No. 1), for convenience.
4 As Plaintiffs note, “[t]he eight Motions to Compel Completion of the
Administrative Record . . . all present the same legal issues; consequently, how this
Court rules on these legal issues will determine the outcome of all eight Motions to
Compel now pending before this Court.” Br. Mot. Compel 9 (ECF No. 69).
Accordingly, the Court will cite to Plaintiffs’ brief in support of the first Motion to
Compel, for convenience. Additionally, Defendant’s legal arguments in each of its
separate Responses are substantively identical and will therefore be addressed
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 2 of 27 PageID <pageID>

3
that the administrative record is complete. See ECF Nos. 122, 123, 124, 125, 126,
127, 128, 129. The Motions have been fully briefed and are ripe for determination.
A. Medicare Provider Appeals
Plaintiffs are enrolled as providers in the Medicare program, which is
administered by Centers for Medicare & Medicaid Services (CMS), a federal agency
within HHS. See, e.g., Compl. ¶¶ 9–11 (ECF No. 1). Defendant has delegated to
CMS authority to determine whether Medicare covers particular medical services.
See id. ¶¶ 11–12, 62. CMS processes over a billion claims annually. And because it
is not feasible to pre-audit all the claims submitted, CMS operates on an “honor
system,” whereby CMS pays providers first, subject to the right to audit those
payments later. See id. ¶¶ 62–63; Resp. 3–4 (ECF No. 122).
CMS contracts with third-party Medicare Administrative Contractors
(MACs) to administer claims and manage operational aspects of the Medicare
Program. See Compl. ¶¶ 53, 61 (ECF No. 1); Resp. 3 (ECF No. 122). And MACs, in
turn, utilize contractors known as Unified Program Integrity Contractors (UPICs)
to conduct post-payment audits to identify fraud and waste. See Compl. ¶¶ 63–70
(ECF No. 1). In an audit, a UPIC typically reviews a random sample of the
provider’s Medicare claims over a certain period and calculates an error rate (i.e.,
the percentage of claims that were improperly paid) based on that review. See 42
U.S.C. § 1395ddd(f)(8). If the error rate is sustained or high enough, the UPIC
together. See ECF Nos. 122, 123, 124, 125, 126, 127, 128, 129. For clarity, when
citing the Responses, the Court will cite to the first Response, ECF No. 122.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 3 of 27 PageID <pageID>

4
extrapolates that error rate across the provider’s other Medicare claims to
determine the total overpayment. See 42 U.S.C. § 1395ddd(f)(3). If the provider
disputes the UPIC’s initial determination regarding overpayment, it can follow a
four-step administrative appeal process:
1. Redetermination. The provider can seek redetermination by the
MAC. Compl. ¶¶ 132–133 (ECF No. 1); 42 U.S.C. § 1395ff(a)(3). A
redetermination is “considered to be part of the initial
determination.” 42 U.S.C. § 1395ff(a)(3)(D).
2. Reconsideration. If the redetermination is unfavorable, the
provider can then seek reconsideration by a different contractor, a
Qualified Independent Contractor (QIC), which can consider
additional evidence. See Compl. ¶¶ 134–136; 42 U.S.C. §1395ff(c)
3. Administrative Law Judge Hearing. A party that is dissatisfied with
the QIC’s reconsideration can request a hearing by an
Administrative Law Judge (ALJ). Compl. ¶ 137; 42 U.S.C.
§1395ff(d)(1). The ALJ issues a decision based on evidence
presented at the hearing or otherwise admitted into the
administrative record. 42 C.F.R. § 405.1046(a)(1).
4. Medicare Appeals Council Review. A provider can appeal from the
ALJ’s decision to the Medicare Appeals Council of HHS. See
Compl. ¶¶ 140–141; 42 U.S.C. § 1395ff(d)(2)(A). The Council has
90 days to issue a decision, which becomes the final decision of the
Secretary. 42 U.S.C. § 1395ff(d)(2). If the Council does not issue a
decision within the 90-day period, the provider can file suit to
obtain judicial review, in which case the ALJ decision becomes the
Secretary’s final decision. 42 U.S.C. § 1395ff(d)(3)(B); 42 U.S.C. §
1395ff(b)(1)(A); Compl. ¶¶ 143–145.
Plaintiffs allege they filed this action “after receiving a final decision of the
Secretary denying coverage of [their] Medicare claims and affirming the
extrapolated overpayments.” See, e.g., Compl. ¶ 18 (ECF No. 1).
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 4 of 27 PageID <pageID>

5
B. The Administrative Record
By their Motions, Plaintiffs assert that the following four categories of
documents are necessary to “complete” the Administrative Record:
1. eight “target universes” containing “zero-paid claims”;
2. eight sets of documents used by the agency in recalculating
overpayment demands after favorable adjudications of individual
claims;
3. accounting records related to the eight overpayment demands
showing alleged debts paid by Plaintiffs as well as interest owed to
Plaintiffs for amounts withheld and refunded; and
4. other documentation associated with the statistical samplings and
extrapolations, recalculations, or accounting.
See, e.g., Mots. Compel 2 (ECF Nos. 68, 72, 76, 80, 88, 93, 98, 103); Consol. Reply
9 (ECF No. 134). The Target Universes and certain “Findings Letters” were created
by UPICs in initially assessing Plaintiffs’ overpayment disputes. See Mots. Compel
at 2 (ECF Nos. 68, 72, 76, 80, 88, 93, 98, 103); Br. Mot. Compel 9–10 (ECF No.
69); Compl. ¶ 196 (ECF No. 1); Consol. Reply 9 (ECF No. 134). The remaining
documents appear to have been created by a UPIC or the MAC following
determinations from agency decision makers regarding Plaintiffs’ administrative
appeals. See, e.g., Consol. Reply 9 (ECF No. 134).
Legal Standards
A. Completion Versus Supplementation of the Administrative Record
A motion to complete the administrative record seeks to add evidence that
the agency actually considered but failed to include, while a motion to supplement
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 5 of 27 PageID <pageID>

6
the record seeks the admission of evidence outside the record that the agency did
not consider. See Skoro Ent., LLC v. Becerra, No. 3-24-CV-433-B (BK) (N.D. Tex.
Jul. 18, 2025) (Toliver, J.), Order at 4 (ECF No. 47) (citing Texas Gen. Land Off. v.
Biden, No. 7:21-CV-00272, 2023 WL 2733388, at *1 (S.D. Tex. Mar. 31, 2023)).
When a party seeks to compel completion of the administrative record, it
must demonstrate that there is a “reasonable basis to believe that materials
considered by the agency decisionmakers are not in the record.” City of Dallas,
Tex. v. Hall, No. CIV.A. 307CV0060-P, 2007 WL 3257188, at *8 (N.D. Tex. Oct.
29, 2007) (Solis, J.). This requires more than just alleging that the record is
incomplete. Id. Instead, a party must provide “reasonable, non-speculative
grounds to believe that materials considered in the decision-making process are
not included in the record.” Id. To prove that the record designated by the agency
is incomplete, a party must “clearly set forth in their motion: (1) when the
documents were presented to the agency; (2) to whom; (3) and under what
context.” See BBX Cap. Corp. v. Fed. Deposit Ins. Corp., No. 17-62317-CIV, 2018
WL 6531601, at *1 (S.D. Fla. Aug. 15, 2018) (citing Ctr. for Native Ecosystems v.
Salazar, 711 F. Supp. 2d 1267, 1275 (D. Colo. 2010). Completion of the record may
be granted only if additional materials “were actually considered by the agency, yet
omitted from the administrative record.” BBX Cap. Corp., 2018 WL 6531601, at *1
(citation omitted).
In contrast, a motion to supplement the administrative record argues that
the court should consider extra-record evidence on top of the record that the
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 6 of 27 PageID <pageID>

7
agency decision makers considered. See Texas v. Biden, No. 2:21-CV-067-Z, 2021
WL 4552547, at *1 (N.D. Tex. July 19, 2021) (Kacsmaryk, J.). “Supplementation of
the administrative record is not allowed unless the moving party demonstrates
‘unusual circumstances justifying a departure’ from the general presumption that
review is limited to the record compiled by the agency.” Id. (quoting Medina Cnty.
Env’t Action Ass’n v. Surface Transp. Bd., 602 F.3d 687, 706 (5th Cir. 2010)).
Indeed, “[m]atters not considered by the agency are generally outside the record,
are legally irrelevant, and therefore not discoverable.” Id. at *4. Although deviation
from the record rule is limited, supplementation may be appropriate when:
(1) the agency deliberately or negligently excluded documents that
may have been adverse to its decision, (2) the district court needed to
supplement the record with background information in order to
determine whether the agency considered all of the relevant factors,
or (3) the agency failed to explain action so as to frustrate judicial
review.
Texas, 2021 WL 4552547, at *1. (cleaned up). Additionally, supplementation may
be allowed where extra-record documents are “necessary” for the court “to resolve
any statutory or constitutional contention that the agency did not, or cannot,
decide.” Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 23–24
(2000).
B. Standard of Review under the Medicare Act (42 U.S.C. § 405(g))
Although the Medicare Act refers to the “Commissioner of Social Security,”
its provisions apply to the Secretary of HHS as well. See 42 U.S.C. § 1395ff(b)(1)(A)
(“[A]ny reference to the ‘Commissioner of Social Security’ or the “Social Security
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 7 of 27 PageID <pageID>

8
Administration’ . . . shall be considered a reference to the ‘Secretary’ or the
‘Department of Health and Human Services,’ respectively.”). The Medicare Act
provides that the decision of the Secretary must be upheld if “supported by
substantial evidence.” 42 U.S.C. § 405(g). Section 405(g) sets forth the standard
for judicial review of a “final decision” of the Secretary. Id. Such review must be
based on “a certified copy of the transcript of the record[,] including the evidence
upon which the findings and decisions complained of are based,” to be filed by the
Secretary. Id. This statute also allows additional evidence to be included in the
administrative record if a party can show that “there is new evidence which is
material and that there is good cause for the failure to incorporate such evidence
into the record in a prior proceeding.” Id. If the standard for additional evidence is
met, then the Court may remand to the Secretary “for further action.” Id.
C. Standard of Review under the APA
The Parties disagree on which section of the APA defines the administrative
record in this case. Defendant argues that, because Plaintiffs seek judicial review
of formal agency adjudications, the administrative record is defined by 5 U.S.C.
§ 556(e), and thus “[t]he transcript of testimony and exhibits, together with all
papers and requests filed in the proceeding,” constitute the exclusive
administrative record. See Resp. 25 (ECF No. 122). Plaintiffs argue, however, that
§ 706 of the APA defines the administrative record in this case. See Br. Mot.
Compel 1, 2, 10 (ECF No. 69). Under § 706, the record consists of “all documents
and materials that the agency ‘directly or indirectly considered’ and nothing more
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 8 of 27 PageID <pageID>

9
or less.” BBX Cap. Corp., 2018 WL 6531601, at *1 (quoting Pac. Shores
Subdivision, California Water Dist. v. U.S. Army Corps of Eng’rs, 448 F. Supp. 2d
1, 4 (D.D.C. 2006)) (cleaned up). This includes evidence contrary to the agency’s
decision. See Exxon Corp. v. Dep’t of Energy, 91 F.R.D. 26, 33 (N.D. Tex. 1981)
(Higginbotham, J.) (citations omitted). On the other hand, “matters not
considered by the agency are generally outside the record, are legally irrelevant,
and therefore not discoverable.” City of Dallas, Tex., 2007 WL 3257188, at *4
(Solis, J.) (citing Exxon Corp., 91 F.R.D. at 33).
Under either section, “the focal point for judicial review should be the
administrative record already in existence, not some new record made initially in
the reviewing court.” Texas General Land Office, 2023 WL 2733388, at *1 (quoting
Camp v. Pitts, 411 U.S. 138, 142 (1973)); see also Citizens to Pres. Overton Park,
Inc. v. Volpe, 401 U.S. 402, 420 (1971). And “where an agency has presented a
certified copy of the complete administrative record, ‘the court assumes the agency
properly designated the Administrative Record absent clear evidence to the
contrary.’” City of Dallas, Tex., 2007 WL 3257188, at *8 (citing Bar MK Ranches
v. Yuetter, 994 F.2d 735, 740 (10th Cir. 1993)). The presumption of administrative
regularity in the designation of the record is “strong.” See Am. Petroleum Tankers
Parent, LLC v. United States, 952 F. Supp. 2d 252, 260–61 (D.D.C. 2013) (quoting
Pacific Shores Subdivision, California Water Dist., 448 F. Supp. 2d at 5).
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 9 of 27 PageID <pageID>

10
Analysis
A. The Court has jurisdiction to address the Plaintiffs’ Motions.
Defendant argues that the Court lacks jurisdiction to adjudicate Plaintiffs’
Motions. Resp. 15–19 (ECF No. 122). As Defendant correctly notes, § 405 limits
the power of federal courts to hear claims arising under the Medicare Act. D&G
Holdings, L.L.C. v. Becerra, 22 F.4th 470, 475 (5th Cir. 2022) (citing 42 U.S.C.
405(g)). First, § 405(h) “strips the district courts of the most obvious sources of
federal jurisdiction” for claims under the Medicare Act” and “‘channels’ the class
of available claims ‘into § 405(g).’” See id. Section 405(g), “in turn, grants
jurisdiction to district courts to review final agency decisions made after a
hearing.” Id.
Section 405(g) “contains two separate elements: first, a jurisdictional
requirement that claims be presented to the agency, and second, a waivable
requirement that the administrative remedies prescribed by the Secretary be
exhausted.” Id. (quoting Smith v. Berryhill, 587 U.S. 471, 476–477 (2019)). The
requirements of § 405 apply to claims arising under the Medicare Act through 42
U.S.C. § 1395ff(b)(1)(A), which provides that an “any individual dissatisfied with
any initial determination . . . shall be entitled . . . to judicial review of the Secretary’s
final decision after such hearing as is provided in section 405(g).” 42 U.S.C. §
1395ff(b)(1)(A).
Defendant does not dispute that the extrapolated overpayment demand was
an initial determination. See Resp. 17 (ECF No. 122). Rather, Defendant argues
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 10 of 27 PageID <pageID>

11
that Plaintiffs did not raise “statistical sampling or extrapolation issues” in their
appeals and that ALJs “repeatedly noted” their lack of jurisdiction over these
issues. Id. at 16–17 (ECF No. 122). Thus, Defendant argues that this court lacks
jurisdiction to consider issues related to statistical sampling and extrapolation
under 405(g) because those issues were not considered or decided by agency
decision makers. See id. at 17–19.
But the Fifth Circuit and the Supreme Court have identified circumstances
in which a particular contention that was not strictly presented or exhausted
through the administrative process was reviewable under § 405(g). D&G Holdings,
L.L.C. v. Becerra, 22 F.4th 470, 475 (5th Cir. 2022) (citing Illinois Council, 529
U.S. at 19–20, 23). “In Illinois Council, the [Supreme Court] acknowledged that
certain contentions relevant to the action arising under the Medicare Act are
reviewable by the courts, even if those contentions themselves were not subject to
a hearing.” Id. (cleaned up) (citing Illinois Council, 529 U.S. at 23). The Supreme
Court went on to say:
The fact that the agency might not provide a hearing for that
particular contention, or may lack the power to provide one is beside
the point because it is the “action” arising under the Medicare Act that
must be channeled through the agency. After the action has been so
channeled, the court will consider the contention when it later reviews
the action. And a court reviewing an agency determination under §
405(g) has adequate authority to resolve any statutory or
constitutional contention that the agency does not, or cannot, decide,
including, where necessary, the authority to develop an evidentiary
record.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 11 of 27 PageID <pageID>

12
Id. (quoting Illinois Council, 529 U.S. at 23–24 (2000)) (noting first emphasis in
original, second emphasis added by the Fifth Circuit). Thus, the Court “must focus
on the action arising under the Medicare Act and not on other related
‘contentions.’” See id.
Defendant asserts that the issues of statistical sampling and extrapolated
overpayment were not raised or considered during the administrative appeals
process. See Resp. 15–16 (ECF No. 122). Plaintiffs, however, allege that these issues
were raised in appeals before various ALJs. See, e.g., Compl. ¶¶ 247, 249, 251, 252
(ECF No. 1). Even so, whether these particular contentions were raised is not
dispositive of the threshold question. Instead, the question is whether Plaintiffs
have “channeled” their actions through the appropriate administrative process,
thereby authorizing judicial review.
Indeed, where an action is appropriately channeled through the agency, the
Court has the authority to review “any statutory or constitutional contention that
the agency does not, or cannot, decide.” D&G Holdings, L.L.C., 22 F.4th at 475–
76. This includes the authority to “develop an evidentiary record” to resolve this
dispute, if necessary. See id. at 476 n.7 (noting that where claims are “inextricably
intertwined with a claim for benefits,” they cannot be divorced for purposes of
federal question jurisdiction). Defendant does not dispute that Plaintiffs have
obtained final agency determinations with respect to the underlying overpayment
demands. See Resp. 17 (ECF No. 122). Thus, Plaintiffs have sufficiently channeled
their actions through the appropriate administrative process. The Court is not
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 12 of 27 PageID <pageID>

13
deprived of authority to review Plaintiffs’ due process claims simply because those
contentions were not decided by the Defendant. And with respect to any alleged
due process violations occurring after agency decisions were rendered, such
conduct related to “effectuations” which were inextricably intertwined with the
initial exhausted agency actions. See D&G Holdings, L.L.C., 22 F.4th at 476–77.
Accordingly, this Court has jurisdiction to adjudicate Plaintiffs’ Motions.
B. Plaintiffs’ Motions fail under the Medicare Act and the APA.
The Parties disagree on the applicable legal standards governing Plaintiffs’
Motions. Plaintiffs assert that only the Administrative Procedure Act (APA)
applies, arguing that the Medicare Act, § 405(g), provides “no express mechanism
or legal standard for completing the administrative record.” Br. Mot. Compel 13
(ECF No. 69). Defendant argues that Plaintiffs’ Motions are exclusively reviewable
under the Medicare Act, and that § 405(g) restricts the court to the existing
administrative record presented to agency decision makers. See Resp. at 22–23
(ECF No. 122). The Parties acknowledge that neither the Fifth Circuit nor district
courts within this Circuit have decided which standard applies. See id. at 2; Br.
Mot. Compel 14 (ECF No. 69) And those few courts in other Circuits that have
addressed the question are divided. See Resp. 2; Br. Mot. Compel 14. This Court
need not decide which standard applies because Plaintiffs’ Motions fail under both
the Medicare Act and the APA.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 13 of 27 PageID <pageID>

14
i. The Documents to be Added
The administrative record filed by the Secretary comprises 57 separate
volumes and includes hundreds of thousands of pages, including dozens of audio
files and spreadsheets. See Index (ECF No. 45). By their Motions, Plaintiffs seek
inclusion of the following four categories of documents into the record:
1. eight “target universes” containing “zero-paid claims”;
2. eight sets of documents used by the agency in recalculating
overpayment demands after favorable adjudications of individual
claims;
3. accounting records related to the eight overpayment demands
showing alleged debts paid by Plaintiffs as well as interest owed to
Plaintiffs for amounts withheld and refunded; and
4. other documentation associated with the statistical samplings and
extrapolations, recalculations, or accounting.
See generally, ECF Nos. 68, 72, 76, 80, 88, 93, 98, 103; Consol. Reply 9 (ECF No.
134). Except for certain UPIC Findings Letters, Plaintiffs do not assert that any of
these documents were considered by the ALJs or the Medicare Appeals Council in
connection with their appeals of the overpayment demands. See Br. Mot. Compel 7
(ECF No. 69). Thus, although Plaintiffs style their Motions as seeking “completion”
of the administrative record, virtually all the documents sought to be added are
extra-record evidence which would “supplement” the existing record filed in this
case. See id.
First, Plaintiffs move to admit documents purportedly containing statistical
data used to initially calculate the overpayment demands. See, e.g., Mot. Compel 2
(ECF No. 68). Specifically, Plaintiffs assert that the “Target Universes” are
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 14 of 27 PageID <pageID>

15
incomplete because they do not include “all zero-paid claims.” See Br. Mot. Compel
1, 23 (ECF No. 69). Plaintiffs define “zero-paid claims” as claims which “are fully
adjudicated claims for which the payment amount was zero.” See Compl. ¶ 183
(ECF No. 1). But the universe of claims need not include zero-paid claims. Instead,
“[t]he universe shall consist of all fully and partially paid claims submitted by the
provider.” Medicare Program Integrity Manual (MPIM) Ch. 8 § 8.4.3.2.1 (Pub. No.
100-08, Rev. 377) (2011);5 see also Compl. ¶ 185 (citing the MPIM). A “zero-paid
claim” is neither a fully nor partially paid claim because no payment was made
whatsoever. Indeed, the Medicare Appeals Council has consistently held that zero-
paid claims “can and should be excluded from the sample because the MPIM
contemplates and allows that a valid statistical sample may exclude
underpayments and zero payments without affecting sample validity.” See
Compass Lab’y Servs., LLC v. Becerra, No. 2:22-CV-2770-SHL-ATC, 2024 WL
1289696, at *5 (W.D. Tenn. Mar. 26, 2024) (quoting Open Arms Home Care, Inc.,
No. M–11–2605, 2013 WL 8913143, at *12 (Medicare Appeals Council Sept. 17,
2023)) (emphasis added and internal quotation marks omitted). Although the
Fifth Circuit has not spoken on this issue, another judge in this District, as well as
four other district courts, have rejected similar attempts to admit zero-paid claims
data into the administrative record.6 The Court finds these opinions to be well-
5 The MPIM is a detailed manual issued by CMS containing guidance on audits,
sampling, and overpayment extrapolations. MPIM Ch. 8 § 8.4.1.2.
6 See Skoro Ent., LLC v. Becerra, No. 3-24-CV-433-B (BK) (N.D. Tex. Jul. 18, 2025)
(Toliver, J.) (collecting cases and refusing to admit recalculation data and zero-
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 15 of 27 PageID <pageID>

16
reasoned, and Plaintiffs’ briefing does not attempt to distinguish these cases or
explain why their reasoning should not be applied here. See generally
Consol. Reply (ECF No. 134) (not addressing the cases raised by Defendant).
Plaintiffs also allege that, in several administrative hearings, the ALJs “refused to
address” the statistical sampling methodology (i.e., the exclusion of zero-paid
claims) during the appeal process. See, e.g., Compl. ¶¶ 249, 251 (ECF No. 1). As
Defendant notes, however, another district court has found such an assertion to be
“logically inconsistent” with the agency having actually considered these materials.
See Resp. 24 (ECF No. 122) (citing Ashli Healthcare, Inc., 2024 WL 3890104, at
*2).
paid claims under either the APA or the Medicare Act); Calvary Hosp., Inc. v.
Becerra, 762 F. Supp. 3d 360 (S.D.N.Y. 2025), objections overruled sub nom.
Calvary Hosp., Inc. v. Kennedy, No. 1:23-CV-8479-GHW, 2025 WL 2106156
(S.D.N.Y. July 25, 2025) (denying plaintiff’s request to supplement administrative
record with several documents, including the “universe” of claims); Compass
Laboratory Services, LLC, 2024 WL 1289696 (affirming agency’s exclusion of
zero-paid claims in administrative record); MedEnvios Healthcare, Inc. v.
Becerra, No. 1:23-CV-20068, 2023 WL 9692087 (S.D. Fla. Nov. 27, 2023), aff'd
sub nom. MedEnvios Healthcare, Inc. v. United States Dep't of Health & Hum.
Servs., No. 23-20068-CIV, 2024 WL 551837 (S.D. Fla. Feb. 12, 2024) (declining
plaintiff’s motion to compel completion of the administrative record because it
sought to obtain materials never considered by the ALJ and was designed to
convince the court “that the contractors used a flawed statistical protocol for their
calculations,” which was best suited for a merits-based motion); Ashli Healthcare,
Inc. v. Becerra, No. 1:23-CV-01443 WBS BAM, 2024 WL 3890104 (E.D. Cal. Aug.
21, 2024) (denying plaintiff’s motion to compel completion of the administrative
record because it failed to provide clear evidence to overcome the presumption of
regularity); but see Goose Creek Physical Med., LLC v. Becerra, No. 2:22-CV-
03932-DCN, 2024 WL 942918, at *9–11 (D.S.C. Mar. 5, 2024) (granting motion to
compel competition of administrative record).
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 16 of 27 PageID <pageID>

17
Second, with respect to recalculation data, Plaintiffs seek to add documents
related to UPIC’s “recalculation of the alleged overpayment(s) following the
favorable redetermination, reconsideration, and ALJ decisions.” See e.g., Mot.
Compel 2 (ECF No. 68). But, as is evident from Plaintiffs’ description of these
documents, such documents are relevant to the recalculation process after
favorable rulings were made. See id.; see also Br. Mot. Compel 26 (ECF No. 69).
And “matters not considered by the agency are generally outside the record, are
legally irrelevant, and therefore not discoverable.” City of Dallas, Tex., 2007 WL
3257188, at *4.
Third, Plaintiffs seek to include certain accounting records “to determine
whether the Secretary’s current overpayment demand(s) . . . were calculated
correctly.” See Br. Mot. Compel 9, 30 (ECF No. 69). But as with the recalculation
data, Plaintiffs do not suggest that these records were considered during the
administrative appeals process. See id. Instead, Plaintiffs assert that they were not
provided these documents until after the administrative decisions were
rendered. See id.
Fourth, Plaintiffs seek inclusion of various other documents which are
purportedly necessary to “help the Court resolve” their constitutional claims. See
Br. Mot. Compel 31–32 (ECF No. 69). This category of documents also includes
certain “Qlarant Findings Letters” purportedly issued by a UPIC, which detail the
initial findings related to the overpayment demands as well as “Notice of
Termination” letters. See id. at 10. Plaintiffs assert that these documents were not
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 17 of 27 PageID <pageID>

18
included in the administrative record but were created and relied upon by a UPIC.
See id. at 10, 31–32. Defendant argues that such documents were “generated after
the ALJ decisions were issued” and that such documents were not considered by
agency decision makers. Resp. 24 (ECF No. 122).
ii. Plaintiffs’ Motions fail under the Medicare Act.
Plaintiffs argue that § 405(g) provides “no express mechanism or legal
standard” for completing the administrative record where evidence has been
omitted. See Br. Mot. Compel 13 (ECF No. 69). Although Plaintiffs assert that
“several courts” have acknowledged this fact, Plaintiffs cite only one case from the
District of South Carolina. Id. at 13 n.9 (citing Goose Creek Physical Med., LLC v.
Becerra, No. 2:22-CV-03932-DCN, 2024 WL 942918 (D.S.C. Mar. 5, 2024)).
Defendant, however, points to five cases, including one from a judge in this
District, applying the standards of § 405(g) to motions to complete the
administrative record. See Resp. 19–22 (ECF No. 122). Without deciding whether
this standard is the exclusive means for completing the record, the Court finds the
cases cited by Defendant are persuasive and will apply § 405(g) to Plaintiffs’
Motions.
Section 405(g) provides an “on point” definition of what the administrative
record is when a court reviews a decision by the Secretary. Yale-New Haven Hosp.
v. Leavitt, 470 F.3d 71, 78 (2d Cir. 2006). The default “record” is the “closed
administrative record” that the Secretary certifies to the Court when a party seeks
judicial review of the Secretary’s determination. See Mathews v. Weber, 423 U.S.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 18 of 27 PageID <pageID>

19
261 (1976). Section 405(g) provides that, as part of the Secretary’s “answer” to a
party seeking judicial review of its determination, the Secretary “shall file a
certified copy of the transcript of the record including the evidence upon which the
findings and decision complained of are based.” 42 U.S.C. § 405(g). The reviewing
court makes its decision “upon the pleadings and the transcript of the record”
certified by the Secretary. Id. Once the record is filed, additional evidence may only
be taken upon remand to the Secretary and “upon a showing that there is new
evidence which is material and that there is good cause for the failure to
incorporate such evidence into the record in a prior proceeding.” Id.7 Thus, Section
405(g) specifies what constitutes the administrative record and provides a
mechanism to add to that record.
7 Although Plaintiffs assert that § 405(g) does not apply—in their Reply, Plaintiffs
argue that, upon finding that the administrative record is incomplete, § 405(g)
presents the Court with a choice: either (i) remand to the Secretary, or (ii) order
the additional evidence into the record. See Consol. Reply at 8–9 (ECF No. 134).
But Plaintiffs’ reading is not supported by § 405(g)’s plain text; In short, if the
Court finds that additional evidence should be included in the record, § 405(g)
requires that the Court remand for such evidence to “be taken before the
Secretary.” See id. (emphasis added). The sentence immediately following
confirms this reading, providing that “after the case is remanded” the Secretary
shall hear “such additional evidence,” modify or affirm its prior decision, and file
“such additional or modified findings” with the Court. See id. (emphasis added);
see also Sutton v. United States, 819 F.2d 1289, 1293 (5th Cir. 1987) (“Specific
words within a statute may not be read in isolation of the remainder of that section
or the entire statutory scheme.”) (cleaned up); King v. St. Vincent Hosp., 502 U.S.
215, 221 (1991) (“[A] statute is to be read as a whole since the meaning of statutory
language, plain or not, depends on context.”). Thus, the Medicare Act requires
remand where additional evidence is to be added to the record.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 19 of 27 PageID <pageID>

20
Plaintiffs do not seek remand to the Secretary. And Plaintiffs do not argue
that, under the Medicare Act, “there is new evidence which is material and there is
good cause for the failure to incorporate such evidence into the record.” See Br.
Mot. Compel 11–13 (ECF No. 69) (arguing that § 405(g) does not apply to the
Motions and only briefing the Motions under the standards in the APA).
Furthermore, the Secretary’s certification of the record is entitled to a
presumption of regularity, which is not rebutted absent “clear evidence to the
contrary.” Nat’l Archives & Recs. Admin. v. Favish, 541 U.S. 157, 174 (2004). To
rebut this presumption, a movant must show that the materials sought to be added
were before agency decision makers. See Comprehensive Cmty. Dev. Corp. v.
Sebelius, 890 F. Supp. 2d 305, 309 (S.D.N.Y. 2012) (recognizing that “before
agency decision makers” means documents that were actually considered and
noting that “interpreting the word ‘before’ so broadly as to encompass any
potentially relevant document existing within the agency . . . would render judicial
review meaningless.”). Plaintiffs point to nothing in the record demonstrating that
any of these documents were considered, reviewed, relied on, or “before” an ALJ
or the Medicare Appeals Council. The mere existence of these documents is not
“clear evidence” that such documents were “before” agency decision makers. See
id. (“To rebut the presumption of administrative regularity, [a plaintiff] must show
that the materials sought to be added were before the agency decision maker. It is
not enough to show that these materials were somewhere within the agency,
because ‘interpreting the word “before” so broadly as to encompass any potentially
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 20 of 27 PageID <pageID>

21
relevant document existing within the agency . . . would render judicial review
meaningless.”). And, as Plaintiffs tacitly concede, many of these documents were
not created until after the agency decisions were rendered. See, e.g., Br. Mot.
Compel 26 (arguing that the record is missing documents from “after the favorable
redetermination, reconsideration, and ALJ decisions”); Br. Mot Compel 27–32
(ECF No. 69) (same).
Further, the Court disagrees with Plaintiffs’ assertion that independent
contractors are agency decision-makers under the Medicare Act. See Calvary
Hosp., Inc. v. Kennedy, No. 1:23-CV-8479-GHW, 2025 WL 2106156, at *8
(S.D.N.Y. July 25, 2025) (overruling objections to magistrate judge’s order denying
a motion to complete the administrative record and rejecting the argument that
the applicable regulations consider CMS contractors to be “agency decision
makers”); see also MedEnvios Healthcare, Inc., 2024 WL 551837, at *4 (accord)
(recognizing that the administrative record does not “contain every document
created by an agency and its contractors at any point during the course of the
matters on appeal, regardless of whether they were part of the record on which the
final agency decision was made”). But even assuming contractors are decision
makers, Plaintiffs fail to argue that the documents should be admitted under the
standards in § 405(g). Accordingly, Plaintiffs’ Motions fail under the Medicare Act.
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 21 of 27 PageID <pageID>

22
iii. Plaintiffs’ Motions fail under the APA.
a. Plaintiffs have not shown that the administrative record is
incomplete.
To resolve a case brought under the APA, the agency must prepare a
reviewable administrative record for the court. As discussed, the Parties disagree
on whether 5 U.S.C. § 556 or 5 U.S.C. § 706 of the APA defines the complete
administrative record in this case. The Court need not decide which section
applies, because Plaintiffs have failed to rebut the presumption of the
administrative regularity.
In all cases, the designation of the administrative record, like any established
administrative procedure, is entitled to a strong presumption of administrative
regularity. See Nat’l Archives & Recs. Admin., 541 U.S. at 174; City of Dallas, Tex.,
2007 WL 3257188, at *8 (citing Bar MK Ranches v. Yuetter, 994 F.2d 735, 740
(10th Cir. 1993)). The Court must presume HHS properly designated the
administrative record absent clear evidence to the contrary. See City of Dallas,
Tex., 2007 WL 3257188, at * 4.
Further, Plaintiffs must “provide the court with reasonable, non-speculative
grounds to believe that materials considered in the decision-making process are
not included in the record.” See City of Dallas, Tex., 2007 WL 3257188, at *8. And,
as Plaintiffs acknowledge, they must do “more than just alleg[e] or theoriz[e] that
the record is incomplete.” Br. Mot. Compel 21 (ECF No. 69) (citing Exxon Mobil
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 22 of 27 PageID <pageID>

23
Corp. v. Mnuchin, No. 3:17-CV-1930-B, 2018 WL 10396585, at *3 (N.D. Tex. June
26, 2018), objections overruled, 2018 WL 4103724 (N.D. Tex. Aug. 29, 2018)).
Plaintiffs have not met their burden here. Plaintiffs do not argue that the
agency prepared the record negligently or in bad faith. And Plaintiffs point to
nothing in the record itself showing that the documents it seeks to admit were
considered by agency decision makers—ALJs or the Medicare Appeal Council. See,
e.g., Mot. Compel (ECF No. 68); Br. Mot. Compel. (ECF No. 69). Showing the
Court that certain purportedly relevant documents exist is not enough. See City of
Dallas, Tex., 2007 WL 3257188, at *4; Cf. BBX Cap. Corp., 2018 WL 6531601, at
*1 (to prove the administrative record is incomplete, a party must clearly set forth
when, to whom, and under what context, the documents sought to be added were
presented to the ALJs or Medicare Appeals Council). Further, virtually all of these
documents were not created until after the agency decisions were rendered and
relate to post-decision recalculations and accounting. And as Plaintiffs allege, in
some cases, agency decisionmakers refused to consider Plaintiffs’ arguments
related to the method of statistical sampling. See, e.g., Compl. ¶¶ 247, 249, 251
(ECF No. 1).
Because Plaintiffs have not shown the documents sought to be added were
considered by agency decision makers, they “are outside the record, are legally
irrelevant, and are therefore not discoverable.” See City of Dallas, Tex., 2007 WL
3257188, at *4. Plaintiffs failed to present clear evidence showing that the agency
did not properly designate the record. Thus, Plaintiffs failed to overcome the
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 23 of 27 PageID <pageID>

24
presumption of regularity necessary to show that the administrative record is
incomplete.
b. Supplementation of the record is not warranted.
In their Motions and opening briefs, Plaintiffs do not argue that the record
should be “supplemented,” instead expressly asserting that the Motions should be
analyzed under the standards relevant to “completion” of the record only. See, e.g.,
Mot. Compel (ECF No. 68); Br. Mot. Compel. (ECF No. 69); see also Calvary
Hosp., Inc., 2025 WL 2106156, at *6 n. 2. Accordingly, the Court declines to order
supplementation of the record where Plaintiffs have not requested or argued for
such relief. Even so, supplementation is not warranted here.
Motions to supplement the record seek to establish circumstances
warranting departure from the “record rule” discussed above. Comprehensive
Cmty. Dev. Corp., 890 F. Supp. 2d at 309 (noting that supplementation of the
record is “the exception, not the rule”) (citing State of Delaware Dep’t of Nat. Res.
& Env’t Control v. U.S. Army Corp. of Eng’rs, 722 F. Supp. 2d 535, 542 (D. Del.
2010); Pac. Shores Subdivision, California Water Dist. v. U.S. Army Corps of
Eng’rs, 448 F. Supp. 2d 1, 5 (D.D.C. 2006)).
Generally, supplementation is not allowed unless a plaintiff shows “unusual
circumstances justifying a departure from the general presumption that review is
limited to the record compiled by the agency.” See Texas, 2021 WL 4552547, at *1–
3 (citing Medina County Environmental Action Ass’n, 602 F.3d at 706).
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 24 of 27 PageID <pageID>

25
Such unusual circumstances may be present when:
1. the agency deliberately or negligently excluded documents that
may have been adverse to its decision,
2. the district court needed to supplement the record with
“background information” to determine whether the agency
considered all the relevant factors, or
3. the agency failed to explain administrative action so as to frustrate
judicial review.
Id. (also recognizing that the 8 “Davis Mountain” circumstances generally fit
within the three categories above). But deviation from the record rule is limited,
and a party must provide a strong showing “of bad faith or improper behavior on
the part of agency decision makers” or that “the absence of administrative findings
makes [supplementation] necessary in order to determine the reasons for the
agency’s choice.” See Calvary Hosp., Inc., 2025 WL 2106156, at *6.
Here, Plaintiffs do not argue or suggest that Defendant compiled the
Administrative Record in bad faith or that any of the above circumstances are
present in this case. See, e.g., Mot. Compel (ECF No. 68); Br. Mot. Compel. (ECF
No. 69).
To be sure, Plaintiffs also assert that the record should be “completed” with
certain documents “necessary to resolve [their] constitutional claims.” See, e.g., Br.
Mot. Compel 31–32 (ECF No. 69). And courts have noted that supplementation of
the record may be warranted where a constitutional challenge is raised, and “there
was such failure to explain administrative action as to frustrate judicial review” of
those constitutional claims. See Cavalry Hosp., Inc., 2025 WL 2106156, at * 6
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 25 of 27 PageID <pageID>

26
(citing Est. of Landers v. Leavitt, 545 F.3d 98 (2d Cir. 2008), as revised (Jan. 15,
2009). Plaintiffs also cite Illinois Council, 529 U.S. at 23–24, to assert that the
Court may “complete” the administrative record pursuant to the Court’s authority
to “resolve . . . constitutional contentions that the agency does not, or cannot
decide.” See Br. Mot. Compel 2 (ECF No. 69) (citing Illinois Council, 529 U.S. at
23–24). But Illinois Council did not discuss the Court’s authority to “complete” the
administrative record, only to supplement it. See Illinois Council, 529 U.S. at 23–
24. And, in any event, Plaintiffs have not demonstrated that the materials it seeks
to add to the record are “necessary” for the Court’s evaluation of Plaintiffs’
constitutional claims.
Further, there is no “bright line or categorical rule” requiring the Court to
supplement the administrative record with evidence purportedly relevant to
constitutional claims. See Texas, 2021 WL 4552547, at *3–4. Indeed, even when
constitutional claims are presented, courts commonly refuse to include additional
evidence when the “constitutional challenge to agency action required evaluating
the substance of an agency’s decision made on an administrative record.” Id.
(emphasis added)
Plaintiffs’ briefing does not address whether their due process claims will
require the Court to evaluate the substance of Defendant’s decisions. But a review
of Plaintiffs’ pleadings suggests that Plaintiffs’ claims would require such an
evaluation. See, e.g., Compl. 268–314 (ECF No. 1) (seeking an invalidation of the
extrapolated overpayments for Counts 1-3, seeking to prevent recoupment of the
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 26 of 27 PageID <pageID>

27
overpayments in Count 4, and seeking an accounting related to the payments made
and interest accrued with respect to the overpayments). Nor have Plaintiffs shown
that the administrative record is insufficient to shed light on the rationale for the
Defendant’s decision or that the Court’s review of their due process claims would
be frustrated without the inclusion of these documents. See Cavalry Hosp., Inc.,
2025 WL 2106156, at * 6 (citing Leavitt, 545 F.3d 98). Thus, Plaintiffs have not
shown that they are entitled to supplement the record.
Conclusion
For the reasons stated, Plaintiffs’ Motions (ECF Nos. 68, 72, 76, 80, 88, 93,
98, 103) are DENIED.
In so ruling, the Court finds only that Plaintiffs have not shown that the
materials sought to be added should be included in the administrative record on
which their claims will be evaluated.
SO ORDERED. March 31, 2026.
________________________
REBECCA RUTHERFORD
UNITED STATES MAGISTRATE JUDGE
Case 3:23-cv-02704-X Document 135 Filed 03/31/26 Page 27 of 27 PageID <pageID>