U.S. v. Robert's Nursing Home, Inc., 82-2459
| Decision Date | 30 June 1983 |
| Docket Number | No. 82-2459,82-2459 |
| Citation | 710 F.2d 1275 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. ROBERT'S NURSING HOME, INC. and Robert W. Burton, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Harold R. Bickham, Asst. U.S. Atty., Sarah Evans Barker, U.S. Atty., Indianapolis, Ind., for plaintiff-appellant.
Sydney L. Berger, Berger & Berger, Evansville, Ind., for defendants-appellees.
Before POSNER, NICHOLS * and COFFEY, Circuit Judges.
This action was filed pursuant to 28 U.S.C. Sec. 1345 by the United States on February 23, 1978, to recover amounts allegedly overpaid to appellees, defendants below, Robert's Nursing Home, Inc., and Robert W. Burton (appellees), from January 1, 1967 through May 31, 1970, while appellees were participating as a provider of services in the Medicare program. 42 U.S.C. Sec. 1395 et seq. The district court entered judgment in favor of the appellees, concluding that the United States was barred from recovery in this matter by the statute of limitations. We affirm.
Under the Medicare program, appellees agreed to provide services to the elderly in return for reimbursement by the Department of Health and Human Services (Department) (formerly the Department of Health, Education and Welfare) for the reasonable costs of such services. 42 U.S.C. Sec. 1395f(b). Pursuant to an agreement under 42 U.S.C. Sec. 1395h, appellees were reimbursed by Mutual Hospital Insurance, Inc., a/k/a Blue Cross and Blue Shield of Indiana, the designated fiscal intermediary. In order to alleviate possible cash flow problems for a provider, the intermediary is required to make interim payments to a provider "not less often than monthly" and prior to any audit of the cost reports of the provider. 42 U.S.C. Sec. 1395g; 20 C.F.R. Sec. 405.454 (). Although these interim payments are intended to "approximate the actual costs as nearly as is practicable," overpayments and underpayments by the intermediary to the provider are anticipated.
A provider of services is required to submit annual cost reports to the intermediary. 20 C.F.R. Sec. 405.406. On the evidence of such reports, the intermediary compares the total amount of reimbursement due the provider with the total interim payments made, and determines the amount of overpayment or underpayment made to the provider, if any, for the period reflected in the cost report. After this comparison, an initial retroactive adjustment is made "as soon as the cost report is received," subject to later audit. "When an audit is made and the final liability of the program is determined, a final adjustment will be made." 20 C.F.R. Sec. 405.454(f). Thus, this regulatory scheme allows interim payments to be made based on estimated costs but provides that the final liability of the provider and the government under the program will not be determined until an audit of the cost reports of the provider is completed.
Appellees filed cost reports for periods ending December 31, 1967, June 30, 1968, and June 30, 1969. No cost reports were filed for periods ending December 31, 1969, and May 30, 1970. Appellees assert that the intermediary and its accountants informed them that they did not have to file cost reports for the latter two periods, thus waiving the filing requirement. By letter dated December 14, 1970, however, the intermediary notified appellees that all interim payments received during the periods for which no cost reports were filed were now deemed overpayments and immediately due and payable. The text of this letter states:
We have not received your cost reports for the periods ending December 31, 1969, and May 31, 1970.
On September 28, 1970, * * * you agreed to submit the reports to our office by October 31, 1970.
Since the reports have not been received, and in accordance with Social Security Administration regulations, all payments you have received from Medicare since the first day of the prior reporting period are now deemed overpayments. This gives an aggregate total due the program of $218,094.99 and is arrived at as follows:
Claims Overpayments $ 62,997.99
Audited 12/31/67 Cost Report 84,768.00
Audited 6/30/68 Cost Report 25,431.00
(includes $10,167.00 T.S. never
received)
Tentative Settlement 12/31/68 C.R. 44,898.00
-----------
Total Due Program $218,094.99
Please make your check payable to Mutual Hospital Insurance, Inc., and forward it to my attention.
If it becomes necessary for the Federal Government to sue in a court of law to collect this amount, interest at the legal rate will be assessed and collected as part of the judgment rendered by the court.
If you cannot comply with this request, please contact us immediately.
Audits of the periods for which cost reports were on file were undertaken by the accounting firm of Ernst & Ernst on behalf of the intermediary. An audit completed July 16, 1970, determined an overpayment of $84,768 for the period ending December 31, 1967, and an overpayment of $25,431 for the period ending June 30, 1968. The audit of the cost report for the period ending June 30, 1969, was completed by Ernst & Ernst on December 31, 1970, and determined that an overpayment of $41,640 was made. These overpayment figures are based on the accountants' computation of reimbursement due the intermediary, plus the effect on reimbursement of owners' compensation. Each of the accountants' reports stated that the audits were subject to the determination of the reasonableness and allowability of owners' compensation by the intermediary.
According to the evidence before us, the intermediary first notified appellees of the aggregate total allegedly due the Medicare program in the aforementioned letter of December 14, 1970.
The government concedes that the letter of December 14, 1970 was an initial demand for payment, but argues that the computations were subject to a determination of the allowability of owners' compensation by the intermediary. Apparently due to a lack of sufficient guidelines from the Department, this determination of allowability was not made by Ernst & Ernst, as it noted in its audit reports. The letter to the providers, however, demands payment of a definite sum and does not mention any subsequent adjustment after a determination of allowability of owners' compensation. The government also notes that the amount listed as owing for the period ending December 31, 1968, was a "tentative settlement" and was computed prior to the Ernst & Ernst audit for that period. This tentative settlement amount was approximately $3,200 more than the amount Ernst & Ernst later found due for this period.
On January 14, 1971, the intermediary notified appellees by letter that their file would be referred to the Bureau of Health Insurance (BHI) (now the Health Care Financing Administration) for collection of the $218,094.99 due the program in accordance with Social Security regulations. The file was referred to BHI on March 11, 1971.
In April 1971, the Department issued new guidelines for determining owners' compensation.
On February 29, 1972, the intermediary completed what the government refers to as a "post-audit." According to the government, this post-audit consisted of an examination of the Ernst & Ernst audit report and the proposed adjustments, a determination that those adjustments were in accordance with federal regulations and policies, and a resolution of all unsettled issues. Since such a post-audit did not involve returning to the provider books and records, it could not tell the intermediary any facts it did not already know. On April 22, 1972, the General Accounting Office certified appellees' indebtedness to the United States for the sum of $203,568.99. On April 27, 1972, the intermediary mailed demand letters to the provider stating that the post-audit review had been completed and the following amounts were due: $79,140 for periods ending December 31, 1967; $13,173 for periods ending June 30, 1968; and $2,919 for periods ending June 30, 1969. On May 15, 1972, the intermediary sent a revised letter stating the amounts due for the latter two periods were $23,340 and $47,817, respectively. After the provider failed to pay the amounts due, this suit was filed in district court.
The parties agree that 28 U.S.C. Sec. 2415 is applicable in this case. In relevant part, the statute reads:
(a) Subject to the provisions of section 2416 * * * every action for money damages brought by the United States or an officer or agency thereof which if founded upon any contract express or implied in law or in fact, shall be barred unless the complaint is filed within six years after the right of action accrues. * * *
The district court found that the government's cause of action was barred as it accrued on December 14, 1970, when a demand for payment was made by the intermediary, or by March 11, 1971, when the provider's file was referred to the Bureau of Health Insurance for collection. The government contends, however, that its cause of action did not accrue until February 29, 1972, when the intermediary completed its post-audit, or alternatively on April 27, 1972, when the intermediary made its final determination of an overpayment.
In cases brought to recover overpayments to providers under the Medicare program, this court has held that the government's right to action accrues with the completion of...
To continue reading
Request your trial
-
US v. Carell
...additional payment or reimbursement); United States v. Pisani, 646 F.2d 83, 89 (3d Cir.1981) (same). Accord United States v. Robert's Nursing Home, 710 F.2d 1275 (7th Cir.1983) (holding under the particular facts of that case that the statute began to run when the fiscal intermediary made a......
-
US v. Home Health Agency, Inc.
...sound and consistent with the majority of the courts which have addressed this subject. Defendant relies upon United States v. Robert's Nursing Home, 710 F.2d 1275 (7th Cir.1983). Defendant asserts that Robert's holds that the government's claim in Medicare overpayment cases accrues when th......
-
PNL Asset Management Co., LLC v. Brendgen & Taylor Partnership
...Co., 546 F.Supp. 643, 644 (N.D.N.Y.1982)(partial payment with letter claiming that it was payment in full); U.S. v. Robert's Nursing Home, Inc., 710 F.2d 1275, 1280 (7th Cir.1983)(letter specifically denied validity of the claims); John W. Masury & Son v. Bisbee Lumber Co., 49 Ariz. 443, 47......
-
United States v. Estate of Cole
...of limitations for actions to recover alleged overpayments of money under Government grant programs. See United States v. Roberts Nursing Home, Inc., 710 F.2d 1275 (7th Cir.1983). The alleged overpayments to the veteran's estate began on April 28, 1977, and this action was commenced on Octo......
-
CHAPTER 7 APPLICABILITY OF SIX-YEAR FEDERAL CONTRACT STATUTE OF LIMITATIONS TO DEPARTMENT OF INTERIOR'S FEDERAL AND INDIAN ROYALTY AUDIT AND COLLECTION PROCEDURES
...United States v. Gravette Manor Homes, Inc., 642 F.2d 231 (8th Cir. 1981); and [Page 7-70] United States v. Robert's Nursing Home, Inc., 710 F.2d 1275 (7th Cir. 1983). These cases dealt with Veterans Administration benefits and medicare payments. In each case, the court held that the statut......
-
Avoiding traps for the unwary: understanding U.S. government reimbursement rights.
...the cause of action accrues at the time of the breach, which is the time of overpayment. United States v. Robert's Nursing Home Inc., 710 F.2d 1275 (7th Cir. 1983). The statute of limitations in Medicare overpayment cases is six Penalty Provisions Health Insurance Ass'n of America, supra. T......