New Court Decision on Recoupments Before ALJ Hearings

Beth Noyce

New Court Decision on Recoupments Before ALJ Hearings

Awaiting a hearing before an Administrative Law Judge just got potentially much more expensive. "Now . . . providers have a much tougher “roe to hoe” in order to stop recoupments before ALJ hearings," says Elizabeth E. Hogue, Esq.  in her article below. 

The Court reversed its previous decision in Adams EMS, Inc. v. Azar [No. H-18-1443 (S.D. Tex. July 11, 2018)] and decided that Adams EMS was not entitled to a hearing before an ALJ before recoupment of an overpayment by the Centers for Medicare and Medicaid Services (CMS) Adams EMS, Inc. v. Azar [Civil Action No. H-18-1443, United States District Court, S.D. Texas, January 6, 2021]. The Court’s reversal was based upon a decision by the Fifth Circuit Court in a very similar case, Sahara Health Care, Inc. v. Azar [975 F. 3d 523, (5th Cir. 2020)]. 
In the Sahara Health case, the Court considered arguments regarding due process and other claims by a healthcare provider very similar to claims made by Adams EMS and rejected them. The Court decided that providers are not entitled to ALJ hearings before recoupments.
Like the provider who filed suit in the Sahara case, Adams EMS completed step two of the four-step administrative review process and faced recoupment while waiting for three to five years for an ALJ hearing. Like Sahara Health, Adams declined to exercise its option to escalate its appeal directly from step two to step four, i.e., review by the Department of Health and Human Services (HHS) Appeals Board.
Also like Sahara Health, Adams EMS claimed that HHS violated its statutory and constitutional due process rights when it recouped a Medicare overpayment before an ALJ hearing was held. A statute requires a hearing within ninety days of filing a request for a hearing before an ALJ.
The Court in the Sahara case acknowledged that, like Adams EMS, recoupments would likely cause Sahara to go out of business. Nonetheless, the Court found that Sahara received all of the due process to which it was entitled. The Court said that HHS had not acted outside the bounds of its authority under the Medicare Act by failing to provide ALJ hearings before recoupments.
The Court also based its decision on the fact that Sahara Health failed to demonstrate any additional value of live hearings. The Court pointed out that “Sahara Health did not argue that it could demonstrate good cause to present additional evidence. It also did not identify a single point of inquiry it would pursue or a single dispute of material fact that it would address if given the opportunity to cross-examine the governments’ witnesses.”
Adams EMS argued that its case was different from Sahara Health’s claims because it would present live testimony to challenge the overpayment calculation that would not be allowed before the Appeals Board. The Court rejected Adams’ argument on the basis that Adams had not demonstrated how the hearing from the ALJ would meaningfully differ from the review available through escalation to the Appeals Council.
Now that Courts in Texas have guidance from the higher appellate Court about how similar cases should be decided, providers have a much tougher “roe to hoe” in order to stop recoupments before ALJ hearings.
©2021 Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.

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