Padda v. Becerra
| Decision Date | 17 June 2022 |
| Docket Number | 21-2823 |
| Citation | 37 F.4th 1376 |
| Parties | Gurpreet S. PADDA, M.D.; Interventional Center for Pain Management, P.C., Plaintiffs - Appellants v. Xavier BECERRA, in his official capacity as Secretary of the United States Department of Health and Human Services; Chiquita Brooks-LaSure, in her official capacity as Administrator for the Centers for Medicare and Medicaid Services; Wisconsin Physician Insurance Corporation, doing business as WPS Government Health Administrators, Defendants - Appellees |
| Court | U.S. Court of Appeals — Eighth Circuit |
Christian Dennis, Scott R. Grubman, Andrew D. Mason, Chilivis & Grubman, Atlanta, GA, for Plaintiffs-Appellants.
Kyle T. Edwards, Joshua Marc Salzman, Mark B. Stern, U.S. Department of Justice, Civil Division, Appellate Staff, Washington, DC, Joshua Michael Jones, Suzanne J. Moore, Assistant U.S. Attorneys, U.S. Attorney's Office, Eastern District of Missouri, Saint Louis, MO, for Defendants-Appellees.
Before COLLOTON, MELLOY, and GRUENDER, Circuit Judges.
The government alleges that Medicare overpaid Dr. Gurpreet Padda and his medical practice, Interventional Center for Pain Management (collectively, "Dr. Padda"), approximately $5.31 million. Reviewing contractors substantially affirmed the overpayment decision at two levels of administrative review. While the third level of administrative review, a hearing before an Administrative Law Judge ("ALJ"), was pending, Medicare began to recover the overpaid funds by withholding new reimbursements from Dr. Padda.
Dr. Padda sued, arguing that recovery prior to an ALJ hearing and decision violates procedural due process. He moved for a preliminary injunction to prevent Medicare from recovering payments prior to the ALJ decision. The district court2 denied the preliminary injunction and Dr. Padda appealed.
Dr. Padda has not shown that he satisfies the requirements for a preliminary injunction. He has not shown that he is likely to prevail on the merits of his procedural due process claim nor that he is likely to suffer irreparable harm. Therefore, we affirm the denial of the preliminary injunction.
This case involves the administrative review process for Medicare appeals and how a backlog in that process has affected review of Dr. Padda's alleged overpayments.
Medicare provides a health insurance program for the elderly and disabled. See 42 U.S.C. § 1395 et. seq. Medicare regularly pays medical providers for the services they perform for Medicare beneficiaries. Id. § 1395g. When Medicare pays providers, it usually does not review the claim. Instead, Medicare "generally pays facially valid claims, and conducts post-payment audits to detect overpayments." Sahara Health Care, Inc. v. Azar, 975 F.3d 523, 525 (5th Cir. 2020) ; see 42 U.S.C. § 1395ddd.
Medicare contractors perform these audits. See 42 U.S.C. § 1395ddd. When a contractor conducts an audit, it must give written notice of the audit to the provider. Id. § 1395ddd(f)(7). The contractor collects a sample of past payments and reviews them for accuracy. See id. §§ 1395ddd(f)(4), (8). If the contractor finds overpayments in the sample and finds "a sustained or high level of payment error," it may use statistical extrapolation to calculate the total amount that the provider was overpaid. Id. § 1395ddd(f)(3). The contractor must give the provider a full explanation of the audit's findings. Id. § 1395ddd(f)(7).
If an audit shows that a provider has been overpaid, Medicare may seek to recover the overpaid funds. One way Medicare recovers overpaid funds is through recoupment. Recoupment is "[t]he recovery by Medicare of any outstanding Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness." 42 C.F.R. § 405.370(a). Thus, under recoupment, a provider does not directly repay Medicare. Instead, the money the provider owes is withheld from future payments. If the overpayment is so high that immediate repayment in full would constitute a "hardship" for the provider, Medicare may permit the provider to enter into a repayment plan. 42 U.S.C. § 1395ddd(f)(1)(A). Under a repayment plan, Medicare only recoups a portion of the amount owed from each of the provider's future payments. A repayment plan extends repayment for at least six months, but no more than three years, or, in cases of extreme hardship, no more than five years. Id. "Hardship" means that the recouped payments would be greater than 10% of the amount Medicare paid to the provider in either the last year, or the last reporting period, depending on the nature of the provider. Id. § 1395ddd(f)(1)(B)(i).
If a Medicare contractor determines a provider has been overpaid, the provider may challenge that decision through administrative and judicial review. See id. § 1395ff. The administrative review process has four steps: (1) redetermination by the contractor; (2) reconsideration by a Qualified Independent Contractor; (3) a hearing before an Administrative Law Judge; and (4) review by the Appeals Council. Id. At the first and second steps, the provider may submit evidence and must provide a written explanation for its disagreement with the original decision. Sahara Health Care, 975 F.3d at 526 ; 42 C.F.R. §§ 405.946(a), 405.966(a). Both steps 1 and 2 are to result in a written, reasoned decision. 42 U.S.C. §§ 1395ff(a)(5), (c)(3)(E).
At step 3, the provider is entitled to a hearing before an ALJ. Id. § 1395ff(d)(1)(A). At this hearing, the parties may submit new evidence only if "there is good cause which precluded the introduction of such evidence at" the first or second steps. Id. § 1395ff(b)(3). This means that generally a provider cannot introduce new evidence for the first time at an ALJ hearing. The provider may examine the evidence in the record and may question and cross examine witnesses. 42 C.F.R. § 405.1000(b). The ALJ must issue a decision within 90 days of the request for hearing. 42 U.S.C. § 1395ff(d)(1)(A). If the ALJ's decision is adverse to the provider, the provider may appeal to the Appeals Council. Id. § 1395ff(d)(2)(A) ; 42 C.F.R. § 405.1100(a). If the ALJ does not issue a decision within the statutory period, the provider may escalate the case—that is, the provider may choose to skip review by the ALJ and proceed directly to review by the Appeals Council. 42 U.S.C. § 1395ff(d)(3)(A).
The Appeals Council has 90 days (or 180 days, if the case was escalated), to review the case and issue a decision. 42 C.F.R. §§ 405.1100(c), (d). If the Appeals Council issues an adverse ruling, or if the statutory period expires without any decision, the provider may seek judicial review. 42 U.S.C. §§ 1395ff(b)(1)(A), 1395ff(d)(3)(B), 405(g). Medicare may not recoup payments during the first two steps of the administrative process—redetermination and reconsideration. Id. § 1395ddd(f)(2)(A). Medicare may, however, recoup payments while the provider appeals to an ALJ, the Appeals Council, or to federal court. 42 C.F.R. §§ 405.379(d)(4)–(5).
In recent years, Medicare has been overwhelmed by appeals. Sahara Health Care, 975 F.3d at 527. "Between 2009 and 2014, the number of ALJ appeals increased more than 1,200 percent" without a corresponding increase in budget to resolve those appeals. Id. This resulted in a years-long backlog of pending appeals. Id. Although Congress and the Centers for Medicare and Medicaid Services have taken steps to alleviate the backlog, the overwhelming number of appeals resulted in a significant period during which Medicare was not able to provide ALJ hearings within the statutory period. Id. Medicare reports that it is on track to eliminate the backlog by the end of fiscal year 2022.
Based on a post-payment audit, the government alleges that it overpaid Dr. Padda for services he provided to Medicare patients. The Medicare auditor used extrapolation to calculate a total overpayment of approximately $5.96 million. Dr. Padda, through counsel, challenged that decision through the first two levels of administrative review—redetermination and reconsideration. At both levels, Dr. Padda exercised his right to submit evidence and written argument. He argued the services were medically necessary and the Medicare contractor's statisticians made errors in performing the extrapolation.
At the reconsideration stage, Dr. Padda's case was reviewed by a panel of experts, including a physician and a statistician. After this review, the Qualified Independent Contractor issued a partially favorable decision to Dr. Padda. His overpayment was adjusted down to approximately $5.31 million, plus interest. After the reconsideration decision, Medicare was entitled by statute to begin recouping the overpayment. There is no evidence Dr. Padda requested an extended repayment plan. See Padda Br. at 19; Reply Br. at 6. If he had requested one, it appears Dr. Padda would have been eligible for a repayment plan. Dr. Padda stated that he received approximately $99,000 per month from Medicare, or approximately $1.188 million per year. The alleged overpayment—$5.31 million—was more than 10% of his annual Medicare payments. See 42 U.S.C. § 1395ddd(f)(1)(B)(i).
Dr. Padda requested an ALJ hearing on March 30, 2021. That hearing was not held within the 90-day time frame permitted by statute. When the time limit expired, Dr. Padda did not invoke his right to escalate his case to the Appeals Council. Instead, within one month of requesting the hearing, Dr. Padda sued in federal court. He alleged that recoupment prior to an ALJ hearing is a violation of procedural due process. Dr. Padda moved for a preliminary injunction from the district court to prevent Medicare from recouping until after he received an ALJ hearing. The district court denied the injunction, finding Dr. Padda was not likely to succeed on the merits of his procedural due process claim and had not demonstrated he was likely to suffer irreparable harm. Dr. Padda appealed.
Dr....
To continue reading
Request your trial