Bello v. Azar (In re Bello)
| Decision Date | 20 December 2018 |
| Docket Number | Case No. 18-30456-dof,Adversary Proceeding Case No. 18-3042-dof |
| Citation | 596 B.R. 41 |
| Parties | IN RE: JOSEPHINE C. BELLO, M.D., PLC, Debtor. Josephine C. Bello, M.D., PLC, Plaintiff, v. Alex Azar, in His Capacity as Secretary of the United States Department of Health and Human Services and Centers for Medicare and Medicaid Services, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
596 B.R. 41
IN RE: JOSEPHINE C. BELLO, M.D., PLC, Debtor.
Josephine C. Bello, M.D., PLC, Plaintiff,
v.
Alex Azar, in His Capacity as Secretary of the United States Department of Health and Human Services and Centers for Medicare and Medicaid Services, Defendants.
Case No. 18-30456-dof
Adversary Proceeding Case No. 18-3042-dof
United States Bankruptcy Court, E.D. Michigan, Southern Division.
Signed on December 20, 2018
Michael D. Lieberman, Farmington Hills, MI, for Plaintiff.
Kevin Erskine, Detroit, MI, for Defendant.
OPINION GRANTING DEFENDANTS' MOTION TO DISMISS
Daniel S. Opperman, United States Bankruptcy Judge
The Plaintiff, Josephine C. Bello, M.D., PLC ("Plaintiff"), filed this adversary proceeding seeking the turnover of funds held by Defendants, Alex Azar, the Secretary of the United States Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and the Wisconsin Physicians Service ("Defendants")1 by virtue of certain recoupment rights claimed by Defendants. Defendants seek dismissal of Plaintiff's complaint because this Court lacks jurisdiction in that Plaintiff has not exhausted its administrative remedies. Plaintiff argues this Court does have jurisdiction because of an exception. After careful review of the pleadings and consideration of arguments of counsel in open Court, the Court grants Defendants' Motion to Dismiss because it lacks jurisdiction to consider this case, at this time.
Factual Background 2
Plaintiff Josephine C. Bello, M.D., PLC ("Plaintiff" or "Debtor"), is a family medicine practice in Michigan. Dr. Josephine Bello is its owner and director. Under the Medicare Supplier Agreement, Debtor agreed to accept assignment of Medicare Part B payments. This means Debtor agreed to request direct Part B payments from the Medicare program.
On January 14, 2015, the Centers for Medicare & Medicaid Services ("CMS"), the agency within the U.S. Department of
Health and Human Services ("HHS") that administers the Medicare program, through a contractor, sent a letter to Debtor requesting information for an audit to ensure that Medicare claims had been billed and paid in an appropriate manner. On August 12, 2016, CMS notified Debtor of the results of a post-payment program integrity review, resulting in several claims being reopened based on data analysis showing that it was aberrant in billing and reimbursement as compared to its peers. The reopening led to further reviews and data analysis, and in a letter dated September 9, 2016, WPS, a Medicare contractor, notified Debtor of an overpayment in the amount of $1,000,844.00.
In that letter, WPS informed Plaintiff about payment withholding or recoupment, interest assessment, and appeals procedures, all consistent with the supplier agreement. On September 20, 2016, Plaintiff filed a request for redetermination with WPS. WPS issued an unfavorable redetermination decision to Plaintiff on November 7, 2016. WPS found that Plaintiff's records did not support the medical necessity for billed services, did not support the level of billed services, did not substantiate the medical need for home visits, and did not substantiate the medical need for diagnostic tests.
On February 1, 2017, Plaintiff filed a request for reconsideration with a different Medicare contractor known as a qualified independent contractor ("QIC"). On October 3, 2017, the QIC issued a partially favorable decision and the principal amount of the overpayment was reduced from $1,000,844.00 to $732,456.00 with interest (at that time) of $73,532.53.
Plaintiff then filed a third level of appeal on November 10, 2017, by making a request for an ALJ hearing with the Office of Medicare Hearings and Appeals. The appeal is pending and not yet completed.
On March 5, 2018, Plaintiff filed for bankruptcy under Chapter 11 of the Bankruptcy Code and, on May 21, 2018, filed this Adversary Complaint. In its Complaint, Plaintiff alleges that, on an annual basis, its Medicare Receivables represent approximately 35% of Plaintiff's revenues, averaging about $250,000.00 to $350,000.00 per year. Complaint, para. 12. Plaintiff asks for, among other things, the United States to be compelled to turn over the recouped Medicare Receivables and to "end the suspension of payments."
Defendants filed the instant motion to dismiss (the "Motion") on September 14, 2018, arguing the Complaint should be dismissed under Federal Rule of Civil Procedure 12(b)(1) as the Court lacks jurisdiction to decide an unexhausted Medicare dispute. Alternatively, Defendants argue that the complaint should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, as there is an absolute right to offset overpayments notwithstanding the bankruptcy, and where Plaintiff has failed to establish the necessary elements to support issuance of an injunction. Plaintiff filed an objection to the Motion on November 2, 2018, in which Plaintiff argues there is no jurisdictional bar that would preclude a bankruptcy court from hearing a Medicare dispute. Moreover, Debtor argues that it should not be required to exhaust remedies as it has already waited for over a year for a hearing date in front of an administrative law judge, and it will be forced out of business if Defendants can continue to offset future payments to recoup the past alleged overpayments. On November 30, 2018, Plaintiff filed a reply brief.
Statutory and Regulatory Background
A. Medicare Part B
Congress created the Medicare program, under Title XVIII of the Social Security
Act, to pay for the medical care of the aged and disabled. 42 U.S.C. § 1395 et seq. Title XVIII establishes, among other things, hospital insurance programs (Part A), and supplementary medical insurance (Part B). Many tasks of the government's administration of Part B is conducted through Medicare administrative contractors. 42 U.S.C. § 1395u(a) ; 42 C.F.R. § 405.370. This matter involves Part B payments.
Medicare Part B is a voluntary program of supplementary medical insurance covering physician services and some other medical and health services such as outpatient hospital services, x-rays, and durable medical equipment. When a Part B beneficiary receives covered services or goods from a provider, the beneficiary is responsible for paying the service provider and Part B payment can be made to the beneficiary. 42 U.S.C. § 1395u(b)(6) ; 1395u(h). However, the service provider may also execute a Medicare Participating Physician or Supplier Agreement ("Supplier Agreement"). This agreement sets forth many rights and corresponding responsibilities for the supplier. "Supplier" refers to a physician or other practitioner, a facility, or other entity (other than a provider of services) that furnishes items or services under Part B. 42 U.S.C. § 1395x(d).
First, the supplier receives the right to directly bill Medicare for Part B payments and, in return, receive direct and timely reimbursement from Medicare rather than having to seek payment directly from the beneficiary/patient. 42 U.S.C. §§ 1395u(b)(3)(B)(ii), (b)(6) ; 1395u(h). The supplier agrees to accept the Medicare payment as payment in full and may not charge the beneficiary any additional amounts apart from applicable deductibles and copayments. See Supplier Agreement; see also 42 U.S.C. § 1395u(b)(3)(B)(ii). However, the participating supplier agrees that, "payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws" and on the supplier's compliance with all applicable conditions of Medicare. The supplier explicitly agrees that Medicare may recoup past overpayments from future payments. The Medicare enrollment application requires the supplier to certify that "I agree that any existing or future overpayment made to the supplier by the Medicare program may be recouped by Medicare through the withholding of future payments." The Supplier Agreement renews automatically each year unless either the supplier or CMS terminates it.
1. The Payment of Claims
Medicare covers only services and items that are medically "reasonable and necessary." See 42 U.S.C. § 1395y(a), § 1395u. There are numerous exclusions to coverage and a supplier such as Debtor must furnish to the Medicare contractor sufficient information to determine whether payment is due and in, if so, in what amount. 42 C.F.R. § 424.5(a)(6) ; see also generally 42 C.F.R. Subchapter B, Part 414; 42 U.S.C. §§ 1395l(e), 1395u, 1395y(a).
To be paid for covered services and items, a supplier must file a claim for payment ("claim" or "Medicare claim"). Upfront payment through Part B does not necessarily mean the matter is concluded because a Medicare claim remains potentially subject to post-payment review and recoupment of Medicare payments, in whole or in part. Further, contractors can conduct reviews and audits for the purposes of ensuring the integrity of the Medicare program. 42 U.S.C. § 1395ddd ; 42 C.F.R. Subchapter B, Part 420.
Claims can also be reopened. See 42 U.S.C. § 1395ff(b)(1)(G) (statutory authorization for reopening Medicare claims);
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