                   FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MAXIMUM COMFORT INC.,                    
                Plaintiff-Appellee,            No. 05-15832
               v.
                                                D.C. No.
                                             CV-03-01584-LKK
SECRETARY OF HEALTH AND HUMAN
SERVICES; MICHAEL O. LEAVITT,*                  OPINION
           Defendants-Appellants.
                                         
        Appeal from the United States District Court
            for the Eastern District of California
        Lawrence K. Karlton, Senior Judge, Presiding

                   Argued and Submitted
          June 13, 2007—San Francisco, California

                   Filed December 21, 2007

   Before: Mary M. Schroeder, William C. Canby, Jr. and
          M. Margaret McKeown, Circuit Judges.

                    Opinion by Judge Canby




  *Michael O. Leavitt is substituted for his predecessor, Tommy G.
Thompson, as Secretary of Health and Human Services. Fed. R. App. P.
43(c)(2).

                              16597
         MAXIMUM COMFORT v. SECRETARY OF HEALTH     16599


                       COUNSEL

Howard S. Scher, Assistant United States Attorney, Civil
Division, Washington, D.C., for the defendants-appellants.
16600       MAXIMUM COMFORT v. SECRETARY OF HEALTH
David C. Frederick, Kellogg, Huber, Hansen, Todd, Evans &
Figel, P.L.L.C., Washington, D.C., for the plaintiff-appellee.


                              OPINION

CANBY, Circuit Judge:

   Appellant, the Secretary of Health and Human Services,
administers the federal Medicare program. Appellee Maxi-
mum Comfort, Inc. supplies power-operated wheelchairs to
Medicare beneficiaries. The Secretary determined that Maxi-
mum Comfort was not entitled to reimbursement for equip-
ment it supplied to certain Medicare beneficiaries, because the
company did not establish sufficiently that the power wheel-
chairs were medically necessary. Maximum Comfort sought
judicial review of the Secretary’s determination, and the dis-
trict court reversed. The Secretary now appeals.

   The primary question before us is whether Maximum Com-
fort, by submitting for each wheelchair a “certificate of medi-
cal necessity”1 signed by a physician, established conclusively
that the wheelchair was medically necessary, thus precluding
the Secretary from requiring additional documentation. Like
the other two circuit courts that have addressed the question,
we conclude that the applicable provisions of the Medicare
Act do not make the certificate conclusive, and that the Secre-
tary may require additional documentation to establish medi-
cal necessity. See MacKenzie Medical Supply, Inc. v. Leavitt,
No. 06-1630, 2007 WL 3173302 (4th Cir. Oct. 31, 2007);
Gulfcoast Medical Supply, Inc. v. Secretary, HHS, 468 F.3d
  1
   The parties and the decisions under review all use the initials CMN in
place of “certificate of medical necessity.” For ease of comprehensible
reading, we will avoid use of the initials except where inclusion in quoted
material compels it. In the same spirit, we avoid entirely the use of DME
for “durable medical equipment.”
            MAXIMUM COMFORT v. SECRETARY OF HEALTH                   16601
1347 (11th Cir. 2006). We accordingly reverse the decision of
the district court.

I.       BACKGROUND: PART B OF THE MEDICARE ACT

   The Medicare Act, established under Title XVIII of the
Social Security Act, 42 U.S.C. §§ 1395-1395hhh, provides
coverage for certain medical services to eligible aged and dis-
abled people. The Medicare Program is administered by the
Centers for Medicare and Medicaid Services, on behalf of the
Department of Health and Human Services. Part B of the
Medicare Act provides supplementary medical insurance for,
inter alia, covered medical supplies, including durable medi-
cal equipment such as power-operated wheelchairs. 42 U.S.C.
§§ 1395j–1395w-4.

   In administering Part B, the Centers act through private
entities, such as insurance companies, called “carriers.”2
Claims for durable medical equipment are processed by desig-
nated regional carriers. See 42 U.S.C. §§ 1395m(a)(12),
1395u. Upon receipt of a claim for such equipment, the carrier
pays the Medicare beneficiary on the basis of an itemized bill,
or pays the Medicare supplier on the basis of an assignment
of benefits from the beneficiary. 42 U.S.C. § 1395u(b)(3)(B).

   In order for the beneficiary, and therefore the equipment
supplier, to be reimbursed for a claim, Medicare requires the
beneficiary’s physician to certify that the services provided
were medically required. 42 U.S.C. § 1395n(a)(2); see also 42
U.S.C. § 1395y(a)(1)(A) (Medicare coverage is limited to ser-
vices that are medically “reasonable and necessary”). In con-
nection with the processing of claims, an equipment supplier
“may distribute to physicians” a “certificate of medical neces-
sity,” which the statute defines as “a form or other document
     2
    These carriers also are referred to as “medicare administrative contrac-
tors” in recent amendments to the Medicare Act. See Pub. L. No. 108-173,
117 Stat. 2066, 2384 (2003).
16602     MAXIMUM COMFORT v. SECRETARY OF HEALTH
containing information required by the carrier to be submitted
to show that an item is reasonable and necessary for the diag-
nosis or treatment of illness or injury or to improve the func-
tioning of a malformed body member.” 42 U.S.C.
§ 1395m(j)(2). Suppliers may include on the certificate only
certain information, such as identifying information about the
supplier, the beneficiary, the equipment being supplied, and
other administrative information unrelated to the beneficiary’s
medical condition. Id. The remaining information is com-
pleted by the beneficiary’s physician. If the Secretary requires
a supplier of durable medical equipment to provide diagnostic
or other medical information in order for payment to be made,
the physician “shall provide that information to the entity at
the time that the item [ ] is ordered . . . .” 42 U.S.C.
§ 1395u(p)(4).

   “For reasons of administrative efficiency, carriers typically
authorize payment on claims immediately upon receipt of the
claims, so long as the claims do not contain glaring irregulari-
ties.” Gulfcoast, 468 F.3d at 1349. Carriers later may conduct
audits to ensure that payments were made in accordance with
Medicare criteria. If the carrier discovers that payments were
made for equipment not covered by the Medicare Act, it may
assess an overpayment and recoup the overpaid amount from
the supplier. 42 C.F.R. § 405.371(a). Suppliers, however, may
be excused from liability for repayments when they did not
have reason to know the equipment they supplied would not
be covered by Medicare. 42 U.S.C. § 1395pp. Suppliers also
may appeal carriers’ claim resolutions through a designated
administrative appeals process, 42 U.S.C. § 1395ff(b)(1)(A),
and, after exhausting the administrative appeals process, may
seek judicial review in federal court pursuant to the Adminis-
trative Procedure Act. Id.; 42 U.S.C. § 405(g).

                         II.   FACTS

  In 1998 and 1999, Maximum Comfort provided numerous
power-operated wheelchairs to Medicare beneficiaries in Cali-
              MAXIMUM COMFORT v. SECRETARY OF HEALTH                   16603
fornia, Oregon, and Nevada. CIGNA Healthcare, the desig-
nated regional carrier, initially approved the claims for these
power-operated wheelchairs, and Medicare accordingly reim-
bursed Maximum Comfort. CIGNA then conducted an audit
of 30 of the 236 power-operated wheelchair claims submitted
by Maximum Comfort in 1998 and early 1999. CIGNA con-
cluded that Maximum Comfort had failed to substantiate the
medical necessity of 22 of the 30 claims at issue, and con-
cluded from this sample that Maximum Comfort had been
overpaid $640,457.01. This amount was reduced to
$548,555.04 once Maximum Comfort provided CIGNA with
additional documentation. CIGNA then conducted a second
audit, examining 182 Medicare claims submitted by Maxi-
mum Comfort from mid-1998 to mid-1999. CIGNA con-
cluded that Maximum Comfort was overpaid $237,229.11,
again because it failed to provide documentation establishing
the medical necessity and reasonableness of the wheelchairs.3

   Maximum Comfort unsuccessfully appealed both overpay-
ment assessments through CIGNA’s in-house administrative
process. The examining officer upheld CIGNA’s overpay-
ment assessments, finding that the certificates submitted by
Maximum Comfort failed to demonstrate the medical neces-
sity of power wheelchairs, and that either Maximum Comfort
failed to seek additional documentation of medical necessity
  3
  The applicable regional supplier’s manual provides that a power
wheelchair is covered by Medicare when all of the following criteria are
met:
      1)   The patient’s condition is such that without the use of a
           wheelchair, he would be bed or chair confined . . . and;
      2)   The patient’s condition is such that a wheelchair is medically
           necessary and the patient is unable to operate the wheelchair
           manually, and;
      3)   The patient is capable of safely operating the controls for the
           power wheelchair.
DMERC Region D Supplier Manual, Ch. IX, p. 52.
16604        MAXIMUM COMFORT v. SECRETARY OF HEALTH
or the beneficiaries’ physicians had not responded to requests
for additional documentation.4

   Maximum Comfort then appealed CIGNA’s decisions to
two Administrative Law Judges (“ALJs”) pursuant to 42
C.F.R. § 405.855. The ALJs ruled in Maximum Comfort’s
favor, finding that (1) for each of the claims at issue, the bene-
ficiary’s treating physician had completed a valid certificate
of medical necessity certifying that a power wheelchair was
reasonable and necessary for the diagnosis or treatment of the
beneficiary’s injury or the functioning of a malformed body
member; and (2) the wheelchairs furnished by Maximum
Comfort were medically reasonable and necessary and met
the requirements for coverage under Part B of the Medicare
Act. In reaching finding (2), the ALJs concluded that a certifi-
cate of medical necessity alone sufficed to prove the medical
necessity of durable medical equipment.

   The Medicare Appeals Council sua sponte reviewed the
ALJs’ decisions and reversed both of them. The Council con-
cluded that Congress did not intend the certificate to be the
only mechanism through which suppliers could establish cov-
erage for durable medical equipment, and that nothing pre-
vented the Secretary from imposing additional documentation
requirements on equipment suppliers. The Council found that
the certificates in issue failed to establish medical necessity,
and that Maximum Comfort consequently was not entitled to
reimbursement.

   The Council also found that certain manuals and newslet-
ters issued by CIGNA instructed Maximum Comfort to retain
supporting documentation substantiating its equipment claims
in case of an audit. As a result, the Council concluded that
  4
    In other cases not at issue in this appeal, the officer found that both the
certificates of medical necessity and the additional medical documentation
submitted to CIGNA did not sufficiently demonstrate the medical neces-
sity of power wheelchairs.
          MAXIMUM COMFORT v. SECRETARY OF HEALTH           16605
Maximum Comfort knew or should have known that its
claims were deficient and therefore it was not entitled under
42 U.S.C. § 1395pp to a waiver of its repayment liability.

   Maximum Comfort then brought this action challenging the
Appeal Council’s decision pursuant to the Administrative
Procedure Act. See 42 U.S.C. §§ 405(g), 1395ff(b). On cross-
motions for summary judgment, the district court ruled in
favor of Maximum Comfort. The court found that the plain
language of § 1395m(j)(2)(A)(i) establishes that “any and all
information required from suppliers to make a medical neces-
sity determination must be contained in a CMN.” Maximum
Comfort, Inc. v. Thompson, 323 F. Supp. 2d 1060, 1075 (E.D.
Cal. 2004). The court further found that the Secretary could
not require suppliers of durable medical equipment to obtain
additional documentation of medical necessity. Id. at 1074-75.
As a result, the district court permanently enjoined the Secre-
tary from collecting overpayments from Maximum Comfort
in connection with the audited claims. Id. at 1075. This appeal
followed.

                     III.   DISCUSSION

A.   Whether the certificate of medical necessity is
     conclusive proof of medical necessity

   The first question before us is one of statutory construction:
whether the Medicare Act requires the Secretary to base his
decision that an item of durable medical equipment is or is not
“medically reasonable and necessary” solely on the contents
of a certificate of medical necessity, or whether the Secretary
may request additional documentation from a supplier of
durable medical equipment. The two-step approach of Chev-
ron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984), governs our inquiry. We first ask
whether the Medicare Act speaks directly to the question
presented. “If the intent of Congress is clear, that is the end
of the matter,” and this court must give effect to Congress’s
16606     MAXIMUM COMFORT v. SECRETARY OF HEALTH
expressed intent. Id. at 842-43. If, on the other hand, the Med-
icare Act is silent or ambiguous with respect to the question
presented, then this court asks “whether the [Secretary’s]
answer is based on a permissible construction of the statute.”
Id. at 843.

  We begin with the statute’s plain language. See Botosan v.
Paul McNally Realty, 216 F.3d 827, 831 (9th Cir. 2000). The
provisions on which Maximum Comfort (and the district
court) relied state:

    (2) Certificates of medical necessity

    (A) Limitation on information provided by sup-
    pliers on certificates of medical necessity

         (i) In general

         “[A] supplier of medical equipment and
         supplies may distribute to physicians . . . a
         certificate of medical necessity for com-
         mercial 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 equip-
         ment and supplies are furnished.

         (II) A description of such medical equip-
         ment and supplies.

         (III) Any product code identifying such
         medical equipment and supplies.

         (IV) Any other administrative information
         (other than information relating to the bene-
          MAXIMUM COMFORT v. SECRETARY OF HEALTH           16607
         ficiary’s medical condition) identified by
         the Secretary.

         ...

    (B) Definition

         For purposes of this paragraph, the term
         “certificate of medical necessity” means a
         form or other document containing infor-
         mation required by the carrier to be submit-
         ted to show that an item is reasonable and
         necessary for the diagnosis or treatment of
         illness or injury or to improve the function-
         ing of a malformed body member.

42 U.S.C. § 1395m(j)(2)(A) & (B).

   [1] Maximum Comfort draws from these provisions a com-
mand that the Secretary must accept the certificate of medical
necessity as conclusive for purposes of reimbursing the equip-
ment supplier. For reasons that parallel the reasoning of the
Fourth Circuit in MacKenzie, 2007 WL 3173302 at *6-7, and
the Eleventh Circuit in Gulfcoast, 468 F. 3d at 1351-52, we
reject this interpretation of § 1395m(j)(2). The language of the
statute contains no such command or limitation. The first pro-
vision, § 1395m(j)(2)(A)(I), states that “a supplier of medical
equipment and supplies may distribute to physicians, or to
individuals entitled to benefits under this part, a certificate of
medical necessity . . . .” (emphasis added). This subsection
permits (but does not require) the supplier to distribute certifi-
cates to physicians or patients. It also limits the information
suppliers may furnish in the certificate of medical necessity,
but does not purport to explain the effect to be given a com-
pleted certificate or suggest that a completed certificate is suf-
ficient and conclusive proof of medical necessity. See
MacKenzie, 2007 WL 3173302 at *6.
16608        MAXIMUM COMFORT v. SECRETARY OF HEALTH
   [2] The second subsection, § 1395m(j)(2)(B), provides that
“[f]or purposes of this paragraph, the term ‘certificate of
medical necessity’ means a form or other document contain-
ing information required by the carrier to be submitted to
show that an item is reasonable and necessary . . . .” (empha-
sis added). The most logical reading of this sentence is that it
is intended only to define the certificate of medical necessity
for the purposes of applying the restrictions outlined in
§ 1395m(j)(2)(A).5 The subsection does not state that the cer-
tificate of medical necessity is the sole vehicle for claims
reimbursement, nor does it state that a completed certificate
establishes, by itself, a right to reimbursement. See Mac-
Kenzie, 2007 WL 3173302 at *6; Gulfcoast, 468 F.3d at 1351.

   [3] We reject, therefore, Maximum Comfort’s view that
§ 1395m(j)(2) precludes the Secretary from requiring addi-
tional evidence, beyond the certificate, to establish medical
necessity for equipment supplied. Not only do the plain words
of § 1395m(j)(2) fail to impose any such restraint upon the
Secretary, but reading such a limitation on the Secretary’s
powers into that provision would be inconsistent with
§ 1395y(a), which states:

      Notwithstanding any other provision of this sub-
      chapter, no payment may be made under Part A or
      Part B of this subchapter for any expenses incurred
      for items or services —

      (1)(A) which . . . are not reasonable and necessary
      for the diagnosis or treatment of illness or injury or
      to improve the functioning of a malformed body
      member . . . .
  5
   The legislative history of this statute supports this interpretation. As the
Appeals Council noted in its decision, § 1395m(j) was added to the statute
to modify previous restrictions that, inter alia, prohibited suppliers from
completing any portion of the certificate of medical necessity. See Social
Security Amendments of 1994, Pub. L. No. 103-432, 108 Stat. 4398,
4416-19 (1994).
            MAXIMUM COMFORT v. SECRETARY OF HEALTH                  16609
(emphasis added). By the terms of this provision,
§ 1395m(j)(2) as an “other provision of this subchapter” can-
not limit the Secretary’s duty imposed by § 1395y(a) to
ensure that no payment is made for items that are not medi-
cally necessary.

   [4] We conclude, therefore, that the Secretary’s interpreta-
tion of the relevant provisions of the Medicare Act is correct,
and that the Secretary may require, as a condition of reim-
bursement to an equipment supplier, information in addition
to that provided by the certificate of medical necessity. If
there could be any doubt about the meaning of § 1395m(j)(2)
in light of § 1395y(a), however, the provision would at worst
be silent or ambiguous with regard to the Secretary’s power
to require additional information. In that case, for reasons that
should be apparent from our discussion of the statutory provi-
sions in issue, the interpretation of the Secretary is certainly
reasonable and entitled to deference under Chevron, 467 U.S.
at 842-43. See MacKenzie, 2007 WL 3173302 at *7; Gulf-
coast, 468 F.3d at 1352-53.

B.    Whether Maximum Comfort was on notice that
      payment would be denied

   [5] We now turn to whether Maximum Comfort is excluded
from liability for repayment under 42 U.S.C. § 1395pp(a)(2),
which provides that the company may not be denied reim-
bursement if it “did not know, and could not reasonably have
been expected to know, that payment would not be made” for
the durable medical equipment it supplied.6 We may set aside
  6
   Because the district court concluded that Maximum Comfort could rely
on the certificate alone to establish medical necessity, it did not address
Maximum Comfort’s eligibility for limitation of liability under 42 U.S.C.
§ 1395pp(a)(2). We reach the issue, however, because we review de novo
the district court’s decision, see Indep. Acceptance Corp. v. California,
204 F.3d 1247, 1251 (9th Cir. 2000), and because the § 1395pp(a)(2) issue
was decided by the Secretary and was presented to the district court for
review.
16610        MAXIMUM COMFORT v. SECRETARY OF HEALTH
the Secretary’s conclusion that Maximum Comfort is not
excused from liability under § 1395pp(a)(2) if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accor-
dance with law.” See Indep. Acceptance Corp. v. California,
204 F.3d 1247, 1251 (9th Cir. 2000) (quoting 5 U.S.C.
§ 706(2)(A), (E)) (internal quotation marks omitted). Our
review of the Secretary’s decision is “highly deferential.” Id.

   [6] Under Health and Human Services regulations, Maxi-
mum Comfort is deemed to have constructive notice of man-
ual issuances, bulletins, and other written guidelines and
directives indicating that certain items of durable medical
equipment will not be covered by Medicare. See 42 C.F.R.
§ 411.406(e). CIGNA’s Supplier Manual states that physi-
cians are required to maintain documentation of medical
necessity beyond the certificate of medical necessity.7 A
March 1997 CIGNA newsletter makes clear that, because
physicians are not subject to liability under the applicable
statutes and regulations, it is the responsibility of the supplier
to establish medical necessity “either through the ordering
physician or through some other means.” Region DMERC
Dialogue Mar. 1977 p. 8. An earlier CIGNA newsletter, in a
section entitled “Retaining CMN Records,” states that, in the
course of an audit, “[s]upporting documentation will be
requested and reviewed from the selected suppliers by the
CMN validation auditors.” Region DMERC Dialogue July
  7
   The manual states:
      The physician must be certain that the patient’s medical record
      contains sufficient documentation of the patient’s medical condi-
      tion to substantiate the need for the items ordered . . . Although
      it is recommended that a copy of the completed CMN be kept in
      the patient’s record, the CMN by itself does not provide suffi-
      cient documentation of medical necessity. There must be addi-
      tional clinical information in the medical record. The physician
      must also obtain a copy of the order or have equivalent informa-
      tion in the record.
DMERC Region D Supplier Manual, Ch. VII, p. 3 (emphasis in original).
          MAXIMUM COMFORT v. SECRETARY OF HEALTH          16611
1995 p. 8. These documents provided Maximum Comfort
with sufficient notice that the Secretary might require docu-
mentation of medical necessity in addition to the certificate of
medical necessity and would deny the claim if the additional
information were not forthcoming. See 42 U.S.C.
§ 1395pp(a)(2); MacKenzie, 2007 WL 3173302 at *7. We
accordingly uphold the Secretary’s conclusion that Maximum
Comfort cannot avail itself of the liability-limiting provisions
of § 1395pp(a)(2).

                    IV.   CONCLUSION

   The judgment of the district court is reversed, and the mat-
ter is remanded to the district court for further proceedings
consistent with this opinion.

  REVERSED AND REMANDED.
