Accident, Injury & Rehab., PC v. Azar

• Decision Date: 21 November 2019
• Docket Number: No. 18-2409,18-2409
• Citation: 943 F.3d 195
• Parties: ACCIDENT, INJURY AND REHABILITATION, PC, d/b/a Advantage Health & Wellness, Plaintiff - Appellee, v. Alex M. AZAR, II, Secretary of the United States Department of Health and Human Services; Seema Verma, Administrator for the Centers for Medicare and Medicaid Services, Defendants - Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

943 F.3d 195

ACCIDENT, INJURY AND REHABILITATION, PC, d/b/a Advantage Health & Wellness, Plaintiff - Appellee,

v.Alex M. AZAR, II, Secretary of the United States Department of Health and Human Services; Seema Verma, Administrator for the Centers for Medicare and Medicaid Services, Defendants - Appellants.

No. 18-2409

United States Court of Appeals, Fourth Circuit.

Argued: September 18, 2019

Decided: November 21, 2019

ARGUED: Joshua Marc Salzman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellants. Robert Bruce Wallace, Stephen Daniel Bittinger, NEXSEN PRUET, LLC, Charleston, South Carolina, for Appellee. ON BRIEF: Joseph H. Hunt, Assistant Attorney General, Mark B. Stern, Rachel F. Homer, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Sherri A. Lydon, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Columbia, South Carolina; Robert P. Charrow, General Counsel, Janice L. Hoffman, Associate General Counsel, Susan Maxson Lyons, Deputy Associate General Counsel for Litigation, Greg Bongiovanni, UNITED STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, Washington, D.C., for Appellants.

Before WILKINSON, NIEMEYER, and AGEE, Circuit Judges.

Preliminary injunction vacated by published opinion. Judge Niemeyer wrote the opinion, in which Judge Wilkinson and Judge Agee joined.

NIEMEYER, Circuit Judge:

According to the Department of Health and Human Services ("HHS"), healthcare provider Accident, Injury and Rehabilitation, P.C., d/b/a Advantage Health & Wellness ("Advantage Health"), was improperly paid over $6 million for Medicare claims it submitted over a four-year period that did not qualify for reimbursement. HHS began recouping the overpayments from current Medicare reimbursements payable to Advantage Health, even as Advantage Health pursued appeals of HHS’s initial overpayment determination through the administrative process. Because hearings before administrative law judges ("ALJs") — the third level of review in the administrative process provided by the Medicare Act — are currently severely backlogged, Advantage Health contends that HHS’s continuing recoupment of overpayments before completion of the severely delayed administrative process is denying it procedural due process.

Advantage Health commenced this action in the district court, seeking injunctive relief prohibiting HHS from pursuing recoupment efforts until Advantage Health could challenge the recoupment amounts in a hearing before an ALJ. On Advantage Health’s motion, the district court granted a preliminary injunction, enjoining HHS "from withholding Medicare payments to [Advantage Health] to effectuate recoupment of any alleged overpayments."

On HHS’s appeal, we conclude that the injunction entered in this collateral proceeding, which prohibits HHS from recouping overpayments in accordance with applicable law, was inappropriately entered because the delay of which Advantage Health complains could have been and still can be avoided by bypassing an ALJ hearing and obtaining judicial review on a relatively expeditious basis, as Congress has provided. See Cumberland County Hosp. Sys., Inc. v. Burwell , 816 F.3d 48, 52–53, 55 (4th Cir. 2016) (noting that the "comprehensive" and "coherent" administrative process afforded by Congress includes mechanisms by which, in the event of a delay, healthcare providers may bypass certain levels of administrative review and obtain judicial review in "a relatively expeditious time frame"). Because we conclude that this administrative review process does not deny Advantage Health procedural due process, we vacate the district court’s preliminary injunction.

I

Advantage Health is a South Carolina professional corporation that provides medical, chiropractic, and holistic care for patients in the Florence and greater Piedmont areas of South Carolina. Prior to 2015, it earned gross revenues of close to $6.8 million per year, with approximately one-third of that sum derived from Medicare reimbursements.

Based on an analysis of Advantage Health’s Medicare billings, the Medicare Program Integrity Coordinator for South Carolina, AdvanceMed, opened an investigation in September 2012 into Advantage Health’s Medicare claims for reimbursement. That analysis indicated that Advantage Health had become "the top paid provider in South Carolina for physical therapy codes," but it did not appear to have sufficient growth in its patient population to justify its growth in reimbursement claims. Specifically, AdvanceMed found that "[f]rom 2010 to 2011, ... the number of services [that Advantage Health] billed to Medicare increased 332%, and the amount paid to [it] increased 592% for a patient population that only increased by an additional 35 beneficiaries." A follow-up analysis conducted months later showed that nurse practitioner "Judy Rabon ... a member of [Advantage Health], was paid more than $1.5 million for the years 2012 and 2013, averaging more than $5,000 per beneficiary and billing more than 160 dates of service wherein more than 24 hours were billed in a day. A time study conducted on ... Rabon indicated that the fewest hours billed by her on any given day was 15.8, with a maximum billed hours on any given day totaling 83.22."

In further pursuit of its investigation, AdvanceMed conducted an unannounced audit of an Advantage Health facility on July 1, 2013, during which it collected records relating to claims submitted during the period from June 2012 to April 2013 for services provided to 15 Medicare beneficiaries. After reviewing the records, AdvanceMed found that most of those claims should have been denied and that Advantage Health was accordingly overpaid $2,507.91 in reimbursements.

Following that audit, on November 3, 2014, AdvanceMed issued a notice to Advantage Health suspending its Medicare reimbursements and requesting that it provide "a statistically valid random sample of medical records" relating to claims for services provided to 80 Medicare beneficiaries during the four-year period between September 2010 and September 2014. On receipt and review of the requested documents, AdvanceMed determined that 93.26% of the claims should have been denied and that Advantage Health had been overpaid a total of $36,218.31. The reasons given for finding the claims ineligible for reimbursement included that the services provided by Advantage Health were not medically necessary, lacked documentation, were performed by unauthorized persons, or were not covered by Medicare. From these data relating to the 80 Medicare beneficiaries, AdvanceMed extrapolated overpayments for the entire four-year period as to all claims that Advantage Health had submitted on behalf of Medicare beneficiaries, determining that Advantage Health had been overpaid a total of $6,648,877.92 for Medicare services. It notified Advantage Health of this determination on June 8, 2015.

In accordance with the specified administrative review process, Advantage Health appealed AdvanceMed’s overpayment determination to a Medicare Administrative Contractor. But in September 2015, the Medicare Administrative Contractor rejected Advantage Health’s arguments for a redetermination of the overpayment amount. The Contractor also informed Advantage Health that it would seek to recoup the assessed overpayments through offsets to reimbursements for future Medicare claims submitted by Advantage Health.

Next, Advantage Health appealed further to the Medicare Qualified Independent Contractor ("QIC") for South Carolina, and that appeal automatically suspended HHS’s recoupment efforts. After considering all records and other documents submitted by the parties, the QIC agreed with Advantage Health in part and overturned the denials of 13 individual claims, but it affirmed the vast majority of the denials. As a result of the QIC’s ruling, AdvanceMed recalculated the total overpayment amount for which it was seeking recoupment on behalf of HHS.

From the QIC’s ruling, Advantage Health appealed to the Office of Medicare Hearings and Appeals ("OMHA"), requesting a hearing before an ALJ. That hearing has yet to be scheduled, and, according to HHS, cannot be conducted before 2022 because of the large backlog within OMHA. HHS attributes this backlog to the more than one billion Medicare claims per year that it must process.

As allowed by law, see 42 U.S.C. § 1395ddd, HHS had begun recouping funds overpaid to Advantage Health prior to 2015 by withholding payments for ongoing Medicare services. Even though it suspended collection during the pendency of Advantage Health’s appeals to the Medicare Administrative Contractor and the QIC, it recovered over $200,000 per year in 2014 and 2015. And after the QIC’s decision was issued, when recoupment was no longer subject to suspension, HHS recouped over $700,000 per year in 2016 and 2017. In total, it has recouped over $1.8 million.

Advantage Health commenced this action against HHS and its agents on August 7, 2018, seeking injunctive relief to suspend HHS’s recoupment efforts pending completion of the administrative process. The complaint alleges that "[t]he extraordinary amount (over $6.6 million) that [HHS] is trying to recoup, coupled with the excessive backlog of claims before the OMHA, effectively strips Advantage Health of the administrative appeals due process to which it is entitled by statute." According to the complaint, the withholding of payments without providing a prompt ALJ hearing constitutes a denial of procedural due process, ultra vires action, and a violation of the Administrative Procedure Act. The complaint alleges further that, without interim relief from recoupment, Advantage Health will be "irreparably harmed before any meaningful opportunity for the administrative and judicial review to which it is entitled." According to its Chief Financial Officer, as a result of recoupment efforts, Advantage Health’s gross revenues declined 50% in 2015, 48% in 2016, and 63% in 2017. In addition, it was...