Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

CLIENT ALERT: Prohibition on Recoupment Prior to Exhaustion of Administrative Remedies

Client Alert

In April, the Fifth Circuit Court of Appeals, in Family Rehabilitation, Inc. v. Azar No. 17-11337 (5th Cir. 2018), held that district courts are authorized to enjoin the Centers of Medicare & Medicaid Services (“CMS”) and its contractors from recouping alleged overpayments prior to the completion of the administrative appeal process.

As many people who routinely handle government claim appeals know, recoupment on the alleged overpayment cannot be stayed after a decision is rendered at the reconsideration level (Level 2). Meaning, recoupment can begin while three (3) additional stages of appeal remain to be exhausted. See MLN Matter Number: MM6183, as revised.  This rule significantly impacts providers subject to recoupment because it often takes three (3) to five (5) years before the Administrative Law Judge (“ALJ”) (Level 3) renders a decision on appeal.  Meaning, if the claims were correctly billed, the government will have already recouped the reimbursement on the claims by the time the case presents itself to the ALJ.

For many providers, including Family Rehabilitation, Inc., by the time the ALJ renders a decision, the negative impact of the recoupment will have significantly affected the operation budget of the practice. This may result in a practice or provider closing the business and/or filing for bankruptcy before the final decision on the overpayment is ultimately rendered.

The potential impact on providers from the ALJ’s backlog preventing timely decisions on appeal is demonstrated from Family Rehabilitation, Inc.’s allegations. Family Rehabilitation, Inc. is a provider in Texas that receives approximately 94% of its revenue from Medicare claims. In 2016, the Zone Program Integrity Contractor (“ZPIC”) audited claims and determined that Family Rehabilitation, Inc. had been overpaid on 93% of the 43 claims submitted for review.  The ZPIC extrapolated this amount and rendered an ultimate overpayment decision of $7.89 million. Family Rehabilitation, Inc. timely appealed to the Medicare Administrative Contractor (“MAC”), which denied the request for redetermination, and the request for reconsideration was subsequently denied. This outcome at the first two levels of appeal is not uncommon as contractors are routinely paid based on the amount of overpayments that they determine.

Thereafter, Family Rehabilitation, Inc. timely appealed the denials to the Administrative Law Judge who, because of an enormous backlog of appealed claims, determined that it would be at least three (3) to (5) years before Family Rehabilitation, Inc.’s appeal could be heard and decided. In the interim, Medicare was authorized to begin recoupment on the $7.89 million, essentially preventing any payment to Family Rehabilitation, Inc. by Medicare.

By the time the ALJ would hear the case and render a decision, Family Rehabilitation, Inc. would likely be bankrupt or shutdown because of the lack of payments from Medicare. Therefore, Family Rehabilitation, Inc. filed for a restraining order and preliminary injunction. The District Court for the N.D. of Texas decided that it did not have jurisdiction to hear the case because Family Rehabilitation, Inc. did not yet exhaust its administrative remedies, which would take at least another three (3) to five (5) years.

On appeal, the Fifth Circuit decided that Family Rehabilitation, Inc. could proceed with its motion for injunctive relief, staying the overpayment recoupment, under the “collateral-claim” judicial exception, ultimately waiving the requirement to exhaust administrative remedies.

Although the Fifth Circuit’s decision does not require the District Court to grant the injunctive relief on overpayment recovery,[1] this decision does give providers a path to seek injunctive relief while they wait for their claims to be heard by the ALJ. If injunctive relief is granted, it may stop the recoupment of claims while appeals are pending before the ALJ.

If you are a provider or practice facing recoupment while your claims are stalled in the administrative appeal process, please contact us, and we discuss your options for appeal and to apply for injunctive relief to enjoin further recoupment efforts.

Should you have any questions concerning the recoupment process and the administrative appeal process in general, please contact Amanda L. Waesch, Esq. (alwaesch@bmdllc.com) or Bryan E. Meek, Esq. (bmeek@bmdllc.com), who are attorneys in Brennan, Manna & Diamond’s Provider Relations, Audits, and Appeals Unit, a division of BMD’s Healthcare Department.

 

[1] As of May 18, 2018, the U.S. District Court for the N.D. of Texas has yet to rule on Family Rehabilitation, Inc.’s Motion for Temporary Restraining Order and Injunctive Relief.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.