Eleventh Circuit Mandates Strict Particularity in Medicare Appeals Council Requests for Review under 42 C.F.R. § 405.1112(b)

Introduction

In Rehabilitation Hospital of Phenix City, LLC v. Secretary, U.S. Department of Health & Human Services, No. 25-10017 (11th Cir. Aug. 5, 2025) (unpublished), the Eleventh Circuit confronted a recurring administrative-law dilemma: how specific must a Medicare provider’s request for review be when it asks the Medicare Appeals Council (“MAC”) to overturn an administrative law judge (“ALJ”) decision?

The appellant, an inpatient rehabilitation facility (“IRF”) operating as Regional Rehabilitation Hospital, sought Medicare reimbursement for services furnished to 22 beneficiaries. After losing at three administrative tiers, the hospital filed 22 virtually identical one-sentence MAC review requests. The MAC dismissed each request for failure to comply with 42 C.F.R. § 405.1112(b) and adopted the ALJ decisions. The district court affirmed, and the hospital appealed.

The Eleventh Circuit likewise affirmed, announcing a clear rule: a request for MAC review that does not pinpoint the specific portions of the ALJ decision challenged and explain why they are erroneous will not be considered. Generic statements that “we disagree” or that “the beneficiary met coverage criteria” are insufficient.

Summary of the Judgment

Compliance with § 405.1112(b): The Court held that § 405.1112(b) unambiguously requires appellants to identify the disputed portions of the ALJ decision and explain why they are wrong. The hospital’s boiler-plate language failed that test.
No Arbitrary or Capricious Action: The MAC’s refusal to reach the merits and its adoption of the ALJ decisions were neither arbitrary nor capricious.
No Disparate Treatment Shown: The hospital cited two prior Council decisions, but the Court found no meaningful difference in treatment.
Issue Exhaustion Applied: Because the hospital never raised its “clear legal error” arguments before the MAC, those arguments were forfeited in federal court.
Result: Denial of Medicare coverage for the 22 claims affirmed.

Analysis

Precedents Cited and Their Influence

Florida Medical Center of Clearwater, Inc. v. Sebelius, 614 F.3d 1276 (11th Cir. 2010) – supplied the “arbitrary and capricious” review standard for agency decisions under the Administrative Procedure Act (“APA”).
Dotson v. United States, 30 F.4th 1259 (11th Cir. 2022) – articulated the Eleventh Circuit’s plain-language approach to regulatory interpretation. The Court used Dotson to frame its textual reading of § 405.1112(b).
Sarasota Memorial Hospital v. Shalala, 60 F.3d 1507 (11th Cir. 1995) – reiterated the prohibition against disparate treatment of similarly situated parties without rational basis.
Carr v. Saul, 593 U.S. 83 (2021) – explained the general doctrine of issue exhaustion in administrative proceedings; the Court used it to underscore why new arguments could not be raised for the first time in federal court.
Palm Valley Health Care, Inc. v. Azar, 947 F.3d 321 (5th Cir. 2020) – although not binding, its holding that § 405.1112 requires issue exhaustion supported the Eleventh Circuit’s view.

Legal Reasoning

Textual Interpretation of § 405.1112(b)

“A party must identify the parts of the decision with which it disagrees and explain why… Review is limited to those exceptions raised.”
The Court applied a plain-language reading, reinforced by the preamble to the 2002 regulation (67 Fed. Reg. 69,312), which criticized vague requests that force the MAC to re-litigate entire records.
Application to Facts
The hospital’s statement—“the beneficiary met criteria for admission … we reserve the right to supplement”—was equated with the disfavored examples in the Federal Register (“I disagree with the ALJ”). Because the hospital never pinpointed errors regarding the four IRF coverage criteria, the MAC properly limited its review and adopted the ALJ findings.
Rejection of Arbitrary-and-Capricious Claim
The Court compared the challenged disposition to the MAC’s handling in All Care Home Health and Jefferson Surgical Clinic, concluding that any differences in narrative detail did not amount to disparate outcomes.
Issue Exhaustion and the “Clear Error of Law” Safety Valve
The appellant urged that a “clear error on the face of the decision” exception excused its vagueness. The Court disagreed, reasoning that the exception does not relieve a party of its obligation to assert the alleged error to the MAC.

Impact of the Judgment

This decision cements a strict-particularity standard for MAC review requests within the Eleventh Circuit. Its practical and doctrinal consequences include:

Providers must draft MAC requests with pinpoint citations to ALJ findings, regulations, or portions of the record; failure to do so will likely forfeit substantive review.
The MAC can summarily adopt ALJ decisions without a merits discussion when § 405.1112(b) is not met, alleviating administrative burden.
Courts will enforce issue exhaustion rigorously; new legal theories or record-completeness arguments will be barred if not first presented to the MAC.
Other circuits may look to the Eleventh Circuit for guidance, potentially creating a nationally uniform approach to § 405.1112(b).
Advocates should expect increased malpractice exposure if they file perfunctory review requests: the window for supplementation (“we reserve the right…”) will not preserve issues.

Complex Concepts Simplified

42 C.F.R. § 405.1112(b): The Medicare regulation that tells appellants exactly what must appear in a request for MAC review—identify disputed findings and explain why they are wrong.
Administrative Law Judge (ALJ): Neutral adjudicator who conducts hearings in Medicare claim disputes after initial contractor reviews.
Medicare Appeals Council (MAC): The final administrative tribunal within the Department of Health & Human Services (HHS); its decisions are subject to judicial review under 42 U.S.C. § 405(g).
Arbitrary and Capricious Standard: A court’s deferential review that asks whether an agency decision lacked a rational basis, ignored important factors, or ran counter to the evidence.
Issue Exhaustion: The rule that parties must raise all arguments before the agency to preserve them for court review, unless a statute or regulation provides otherwise.

Conclusion

The Eleventh Circuit’s ruling in Rehabilitation Hospital of Phenix City crystallizes an administrative procedural point with outsized real-world consequences: a Medicare appellant who fails to articulate pinpoint objections in a MAC review request effectively forfeits merits review. By marrying textual fidelity to regulatory history, the Court rejected arguments grounded in equity and administrative convenience. The decision thus strengthens the integrity and efficiency of the Medicare appeals process while placing a premium on precise lawyering. Future providers—and their counsel—ignore § 405.1112(b)’s particularity mandate at their peril.