Chalk Up Another Win for Providers!

A U.S. Court in Texas has prohibited the government from recouping an alleged overpayment from a provider pending a hearing before an Administrative Law Judge (ALJ) [MedCert Home Care v. Azar, No. 3:18-CV-02372-E (N.D. Tex. Mar. 11, 2020)]. Med-Cert, a Medicare-certified home health agency, was subject to a Zone Program Integrity Contractor (ZPIC) audit in 2017. The overpayment rate for audited claims was extrapolated to all Medicare claims for the period audited, resulting in an alleged overpayment of $1,787,063.39.

 

Med-Cert appealed. Both the Medicare Administrative Contractor (MAC) and the Qualified Independent Contractor (QIC) upheld the ZPIC’s determination, so Med-Cert appealed to the ALJ. Due to a massive backlog of appeals no ALJ hearings have been held, despite the fact that a statute requires an ALJ hearing within ninety days of the date on which appeals are filed.

 

Med-Cert said that it could not pay approximately $33,000 per month toward repayment of the overpayment. The Court issued a preliminary injunction prohibiting the government from recouping alleged overpayments until after a decision by the ALJ. The Court also ordered the government to return any funds recouped to Med-Cert.

 

Med-Cert then sought permanent injunctive relief on three grounds:

  • The government violated its right to procedural due process by failing to comply with the requirement to hold a hearing within ninety days.
  • The government engaged in “ultra vires” actions against it.
  • Injunctive relief is appropriate under the Administrative Procedure Act.

In response to Med-Cert’s request, the Court decided that Med-Cert does not need to show that the outcome of ALJ hearings will likely be favorable. It’s sufficient to show that ALJ hearings are required before recoupment.

 

The Court also decided that Med-Cert had a valid property interest in receiving Medicare payments for services rendered to patients.

 

The Court then sided with courts that have decided that the ability to escalate appeals to the Appeals Council if hearings are not held within ninety days does not adequately protect due process rights because the Appeals Council could rely on records from the QIC only.

 

Finally, the Court said that Med-Cert established that the failure to grant a permanent injunction will result in irreparable injury for which no adequate remedy at law exists. Going out of business outweighs the burden of delayed recoupment. If an ALJ rules against Med-Cert, the government can begin recoupment of the alleged overpayment.

 

While there are court decisions that reach various conclusions on the issue of recoupment before ALJ hearings are held, providers facing severe hardship and/or closure should certainly consider seeking assistance from the courts.

 

 

©2020 Elizabeth E. Hogue, Esq.  All rights reserved.

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