Jurisdiction

Palomar Medical Center v. Sebelius – Update

Published on: September 11, 2012 | by David S. Dessen, Esq.

In a July 21, 2012 post I discussed the case of Palomar Medical Center v. Sebelius which raised the question of whether the “good cause” requirement set forth in 42 CFR § 405.986(a) governing a RACs reopening of a claim paid more than one year earlier could be challenged by a provider during the administrative appeal process or in federal court. The answer, at least in the Ninth Circuit, is no.

In a unanimous decision filed on September 11, 2012, the Ninth Circuit held that CMS correctly interpreted its regulations that preclude an appeal of a RAC’s decision to reopen a paid claim, that the regulations were reasonable and that because the decision to reopen cannot be appealed, federal courts do not have jurisdiction to review a RAC’s decision to reopen a paid claim. In sum, the Court rejected every argument advanced by Palomar.

In my July 24th post I discussed the decision in St. Francis Hospital v. Sebelius in which a District Court in the Eastern District of New York came to a contrary result. According to the Ninth Circuit, the different result in St. Francis Hospital is based on the Constitutional due process argument advanced by St. Francis but abandoned by Palomar at an earlier stage of the litigation.

Is the “GOOD CAUSE” Fight Over?

As I suggested in my earlier post, I think the argument that the regulations permit a provider to litigate the question of good cause is extremely weak and expect that other Courts that consider the issue will come to the same conclusion as the Ninth Circuit. At this point, I believe that any hope of raising this issue is dependent upon a finding that by denying a provider the right to litigate the good cause requirement, the regulations deny the provider due process, a question not considered or decided by the Ninth Circuit.

A Court Agrees to Consider the GOOD CAUSE Issue – St. Francis Hospital v. Sebelius

Published on: July 24, 2012 | by David S. Dessen, Esq.

In an earlier post, I discussed the case of Palomar Medical Center v. Sebelius presently pending before the Ninth Circuit Court of Appeals. In Palomar, the District Court agreed with CMS that pursuant to the regulations governing administrative appeals, Palomar could not raise and an ALJ could not decide whether “good cause” existed for the RAC to reopen a claim paid more than one year earlier. After hearing oral argument, the Ninth Circuit issued an order inviting the submission of amicus (friend of the court) briefs on the questions of (1) whether the regulations bar administrative review of a RACs compliance with the “good cause” standard and (2) if the regulations do bar administrative review, may the federal courts enforce RAC compliance with the “good cause” requirement. According to CMS, the response to the second question is no because a federal court can only review a “final decision” of an agency and there has been not yet been a final decision on this question. The amicus brief submitted by the AMA and supplemental briefs submitted by the parties may be found on this webpage established by the Ninth Circuit.

St. Francis Hospital v. Sebelius

As part of the RAC demonstration project, Connolly Consulting reopened 225 paid claims submitted by St. Francis Hospital and then demanded, through St. Francis’ fiscal intermediary, Empire Medical Services (now NGS), repayment of $1.2 million dollars. St. Francis appealed each claim and as of the time it filed its Complaint in federal court, had won 104 of its appeals with 15 appeals still pending before an ALJ. Like Palomar, St. Francis sought to raise before the ALJ and the Medicare Appeals Council the RAC’s compliance with the “good cause” standard and like in Palomar, the ALJ and Medicare Appeals Council refused to consider this issue based on 42 CFR 926(l).

Does “GOOD CAUSE” mean anything? – Palomar Medical Center v. Sebelius

Published on: July 21, 2012 | by David S. Dessen, Esq.

Palomar Medical Center v. Sebelius involves a claim paid more than one year before it was reopened during a RAC audit. After losing the first two appeals, the hospital convinced an ALJ that the RAC had not shown it had good cause to reopen the claim. However, when the Medicare Appeals Counsel (MAC) reviewed the ALJ’s decision, it concluded, based on its interpretation of the relevant regulations, that the ALJ had no authority to review the RAC’s decision to reopen the claim.

The relevant regulations, which are not easy to make sense of, appear in Title 42 of the Code of Federal Regulations (CFR). 42 CFR § 405.980(b) provides that:
A contractor may reopen an initial determination or redetermination on its own motion–

(1) Within 1 year from the date of the initial determination or redetermination for any reason.
(2) Within 4 years from the date of the initial determination or redetermination for good cause as defined in §405.986.
(3) At any time if there exists reliable evidence as defined in §405.902 that the initial determination was procured by fraud or similar fault as defined in § 405.902

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According to 42 CFR § 405.986(a), “good cause” is established when:

(1) There is new and material evidence that–
&nbsp&nbsp&nbsp(i) Was not available or known at the time of the determination or decision; and
&nbsp&nbsp&nbsp(ii) May result in a different conclusion; or
(2) The evidence that was considered in making the determination or decision clearly shows on its face that an obvious error was made at the time of the determination or decision.

42 CFR § 405.980(a)(5) provides that:

The contractor’s, QIC’s, ALJ’s, or MAC’s decision on whether to reopen is binding and not subject to appeal.