Temporary Restraining Order Prevents CMS from Recouping Alleged Medicare Overpayment from Hospice

In the Press · October 1, 2015

With the backlog to receive a hearing before an Administrative Law Judge (ALJ) as long as 3 to 5 years, health care providers facing significant recoupments of alleged overpayments should consider whether to pursue additional remedies.

The United States District Court for the Southern District of Georgia recently issued a temporary restraining order enjoining the Centers for Medicare and Medicaid Services (CMS) from collecting an alleged Medicare overpayment from a hospice pending a hearing before an ALJ.  Hospice Savannah, Inc. v. Burwell, 4:15-cv-00253-JRH-GRS, September 21, 2015.  The hospice was a not-for-profit organization that provided services to terminally ill patients and their families.  It had filed appeals through the two initial levels of administrative review.  The next level of administrative appeal involved an ALJ hearing, but due to the administrative backlog, it was likely that the hospice would not receive a hearing for 3 to 5 years, instead of the 90 day period provided by statute.  In the meantime, CMS intended to recoup 100% of the hospice’s current and future Medicare payments (approximately 80% of the hospice’s total revenues), amounting to $8.6 million dollars.  The amount was the result of an extrapolation based on a review of a sample of 100 claims for 95 beneficiaries, for which there was an alleged overpayment of $152,000.

Applying the standards for granting a temporary restraining order, the District Court found:

  • There was a substantial likelihood that the hospice would succeed on the merits because of a “questionable extrapolation” across the universe of patient claims that led CMS to conclude the hospice owed $8.6 million dollars and the fact that the services corresponding to the payments CMS intended to recoup had never been challenged by CMS.
  • The hospice would suffer irreparable harm without the proposed temporary restraining order by being forced to close and by being unable to provide ongoing care to its current hospice patients who were terminally ill and disabled. The risk of  harm of not granting immediate relief to the hospice and its patients was great.
  • There was little or no risk of harm to CMS since, at worst, CMS would be deferred in its ability to pursue collection efforts pending resolution of the hospice’s administrative appeals. CMS had not alleged fraud or any facts to suggest that the hospice was diverting or secreting assets or would do so pending resolution of its administrative appeals.
  • The public had an interest in terminally ill patients being able to continue to have access to the hospice’s services.

If you have questions about Medicare overpayments or require any assistance in responding to a notice of overpayment or determining whether to pursue additional remedies, please contact Rochelle H. Zapol, a partner in Prince Lobel’s Health Care Practice and the author of this Alert.  You can reach Rochelle at 617 456 8036 or rzapol@PrinceLobel.com