Another Court Refuses to Block Recoupment by the Medicare Program Before ALJ Hearing

A U.S. District Court in Arizona refused to issue an injunction to prevent the U.S. Department of Health and Human Services (HHS) from recouping $2.8 million from Angel’s Touch, a Medicare certified home health agency, before a hearing was held before an Administrative Law Judge (ALJ) [Angel’s Touch Inc. v. Becerra, No. CV-21-08026-PCT-MTL (D. Ariz. May 26, 2021)].

The Court first noted that a statute requires hearings to be held before ALJs with ninety days after providers ask for them. If providers don’t receive decisions within this period of time, they may bypass steps in the administrative process by “escalating” their appeals. If ALJs fail to issue decisions within ninety days, for example, providers can bypass this level of review and appeal directly to the Appeals Council. If the Appeals Council does not make a decision with ninety days, providers can ask for judicial review in federal Court of the most recent determination. 

In 2019, the UPIC, Qlarant Integrity Solution, reviewed a sample of forty-two claims submitted by Angel’s Touch to the Medicare Program. Qlarant denied twenty-three of the forty-two claims on the basis that services provided were not reasonable and necessary. The amount owed for these claims was $76,470.56. Qlarant extrapolated this amount to $3,974,669.

The Agency requested redeterminations from the MAC for all denied claims. The MAC reduced the overpayment by more than $700,000 and applied a previously withheld amount that reduced the remaining overpayment to $2,821,653.60. The QIC affirmed this amount in response to the Agency’s requests for reconsideration. The Agency then requested an ALJ hearing on December 23, 2020.

The Agency filed a lawsuit on February 9, 2021, while its appeal to the ALJ was still pending. The Agency claims that recoupment before ALJ hearings violates procedural due process under the Fifth Amendment of the U.S. Constitution and the Social Security Act. Specifically, the Agency argued that recoupment before ALJ hearings deprives providers of protected property and liberty interests. 

In order to obtain a preliminary injunction to prevent recoupment before an ALJ hearing, according to the Court, providers must show that:

• Providers are likely to succeed on the merits
• Providers are likely to suffer irreparable harm in the absence of preliminary relief
• The balance of equities is in providers’ favor
• An injunction is in the public interest

The Court then noted that the Agency did not request a stay of recoupment or seek an extended repayment plan from the Secretary of HHS.

The Agency argued that there is no mechanism available to bring constitutional challenges before the Secretary. The Court rejected this argument. It pointed to sections of the Medicare Redetermination Request Form and the Medicare Reconsideration Request Form that allow for a written response to the following open-ended statements: “I do not agree with the determination decision on my claims because:…” and “Additional information Medicare should consider:…” Both parties also agreed that providers may submit additional materials in addition to these Forms.

The Court also pointed to the rebuttal process included in the notice of overpayment to the Agency as an avenue to raise constitutional challenges. Providers must submit rebuttal requests within fifteen days of receipt of letters from MACs demanding repayment of overpayments. 

The Court concluded by saying that Congress intended to ensure that HHS has:

“…greater opportunity to apply, interpret, or revise policies, regulations, or statutes without possibly premature interference by different individual courts applying ‘ripeness’ and ‘exhaustion’ exceptions case by case. But this assurance comes at a price, namely, occasional individual, delay-related hardship. In the context of a massive, complex health and safety program such as Medicare, embodied in hundreds of pages of statutes and thousands of pages of often interrelated regulations, any of which may become the subject of a legal challenge in any of several different courts, paying this price may seem justified.”

Certainly not from providers’ point of view! The flip side of this argument is that providers must also navigate a “massive, complex health and safety program” and are deserving of the same consideration! Nonetheless, in light of the Court’s decision, providers should raise constitutional challenges to recoupment before ALJ hearings on the Forms referenced above. They should also use the rebuttal process described above to raise constitutional issues.

©2021 Elizabeth E. Hogue, Esq. All rights reserved.

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