Health Law Daily Failure to exhaust administrative remedies bars home health payment suit
Tuesday, October 9, 2018

Failure to exhaust administrative remedies bars home health payment suit

By David Yucht, J.D.

The federal Sixth Circuit Court of Appeals determined that a home health care provider failed to exhaust its administrative remedies and consequently failed to establish subject matter jurisdiction. Accordingly, the appellate court upheld the dismissal of a mandamus claim brought by the home health care provider against Medicare contractors that allegedly failed to pay Medicare reimbursements. The Sixth Circuit also found that the lower court properly applied the same jurisdictional standard when dismissing the home health care provider’s constitutional and state law tort claims (New Vision Home Health Care, Inc. v. Anthem, Inc., October 3, 2018, Bush, J.).

Background. New Vision Home Health Care, Inc. (New Vision) is a home healthcare provider that is reimbursed by Medicare for qualifying services provided to patients. A Medicare contractor audited payments made to New Vision between 2003 and 2006 and determined that some of the services previously reimbursed had not, in fact, qualified for Medicare coverage. It estimated that New Vision had been overpaid over $4 million. New Vision appealed through the Medicare appeals process to an administrative law judge (ALJ) who found that the formula used by the contractor to extrapolate the overpayment was faulty and therefore the amount calculated was invalid. After a remand from the Medicare Appeals Council, the ALJ agreed that some of the disputed claims were, in fact, not eligible; however, most were. The overpayment amount determined by the ALJ was approximately $36,000.00. The ALJ ordered that any amounts recovered from New Vision over this amount be returned.

Medicare contractors added an interest charge to the ALJ’s determined overpayment amount and deducted the money already repaid by New Vision. They determined that New Vision owed nearly $42,000.00. These proceedings occurred over a decade ago. New Vision never paid. According to New Vision, the Medicare contractors have since withheld reimbursements for approved claims of over $200,000 in Medicare payments. New Vision sued in federal district court seeking a writ of mandamus to enforce the ALJ decision and a declaratory judgment. New Vision also made state law tort claims and asserted a violation of procedural due process rights. The Sixth Circuit upheld the district court’s dismissal of these claims for lack of subject matter jurisdiction.

Mandamus. The Sixth Circuit agreed with the lower court’s opinion that New Vision had not established subject matter jurisdiction for mandamus because it had failed to exhaust its administrative remedies. For mandamus jurisdiction, New Vision needed to show both that it had exhausted all other avenues of relief and that the Medicare contractors owed it a clear nondiscretionary duty. The Medicare statute’s exhaustion requirement calls for a "final decision" from HHS. Although New Vision described the 2013 ALJ order as "final and binding," the statute, regulations and case law, demonstrated that the Medicare Council’s decisions, not the ALJ’s, are the final decisions of HHS. Even if New Vision had obtained a final decision from the ALJ, the court did not have subject matter jurisdiction for mandamus here because the terms of the ALJ’s decision concerning Medicaid overpayment did not place the Medicaid contractors under a clear duty to pay New Vision for post 2006 claims. The ALJ’s 2013 decision was clear only in reference to claims arising between 2003 and 2006. The order required the processing of "claims and claim lines at issue." The claims at issue in the original dispute were only those that arose between 2003 and 2006. Moreover the ALJ order at issue did not provide instructions regarding payment of the amount owed.

Other claims. The appellate court also determined that the district court reached the correct result in dismissing New Vision’s other claims. The lower court applied the same exhaustion analysis it applied to New Vision’s mandamus claims and correctly held that to acquire subject matter jurisdiction in federal court for its state tort and federal constitutional claims, New Vision needed first to pursue its tort and constitutional claims through the four-step Medicare appeals process. Medicare contractors, acting within the scope of their authority, were "agents" of the US government and therefore enjoyed the same immunity as the government. The New Vision tort and constitutional claims all arose under the Medicare statute and were "inextricably intertwined" with the claim for review of HHS action. These claims needed to be fully presented to HHS before the federal courts could exercise jurisdiction.

The case is No. 17-2165.

Attorneys: Lance O'Neal Leider (Health Law Firm) for New Vision Home Health Care, Inc. Thais-Lyn Trayer, U.S. Department of Justice, for Anthem, Inc., TrustSolutions, LLC and National Government Services, Inc.

Companies: New Vision Home Health Care, Inc.; Anthem, Inc.; TrustSolutions, LLC; National Government Services, Inc.

MainStory: TopStory CaseDecisions CMSNews AuditNews CoPNews HomeNews MedicaidNews MedicaidPaymentNews ProgramIntegrityNews ProviderNews KentuckyNews MichiganNews OhioNews TennesseeNews

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