Judge Orders State’s Termination of Provider’s Medicaid Contract To Be REVERSED, Despite the Unilateral Termination!!


[The names and services involved have been changed to protect the innocent. Lawyers have so many rules to follow…probably due to litigation].

Imagine that the State of North Carolina knocks on your office door and informs you that you are no longer allowed to accept Medicaid and/or Medicare reimbursement rates. That for whatever reason, you are no longer allowed to bill for Medicaid and/or Medicare services. You would expect a reason, right? You would expect the reason to be correct, right?

But what if the reason is invalid?

A North Carolina administrative judge recently held that the State’s reason for terminating a Medicaid provider’s contract must be accurate, and REVERSED the State’s decision to terminate its Medicaid contract with my client.  Here’s the story:

The State terminated my client’s contract to provide chiropractic services.

In this case it was a bit of a duress contract (as are most Medicaid contracts) – a “take or leave it” offer to the local service provider.  If you are a provider and want to continue to serve Medicaid recipients, you have no choice but to sign whatever contract the State gives you. You cannot negotiate. You’d be told to sign the contract “as is,” or you do not provide services. I know of a provider who, before he signed a contract with the State, crossed out a number of clauses. The State just sent him a clean, un-altered contract, same as the original, and told him sign it, no changes allowed.

Going back to my case…

My client is a provider that provides chiropractic services. In this case, the State inaccurately claimed that my client provided services without a proper license.

Upon the State’s termination of my client’s contract for chiropractic services, we filed a petition to the Office of Administrative Hearings in 2013 and asked the administrative law judge for a temporary restraining order, a motion to stay the termination, and a Preliminary Injunction to enjoin the State from terminating my client’s Medicaid provider contract.

The administrative law judge (ALJ) issued the temporary restraining order in May 2013. According to judge, we demonstrated a likelihood of success on the merits and that any failure to award the injunction would cause irreparable harm.

Obtaining an injunction, however, was not a complete victory. We had won an opening battle, but not the war.

A temporary injunction is exactly that…temporary. We had two additional hurdles to overcome: (1) a hearing at which we would have to prove to the judge that we were likely to succeed and the irreparable harm would be so irreparable that the judge should award us a longer injunction, at least until we could have a full hearing on the merits; and (2) a final hearing on the merits.

We received the Final Decision from the ALJ last week. The judge found that my client performed its contractual and legal obligations and that the State acted erroneously in determining that my client had breached its contract. The judge found the weight of the evidence sufficient to prove that my client provided services with a proper license.

If you think a 2 year injunction is pretty long, from May 2013 to now, you are right.

But think about this…from May 2013, through today and into the foreseeable future, as long as the contract is in effect, my client has been and will be able to provide medically necessary chiropractic services to those in need and receive reimbursements for those medically necessary services. This case shows why it is important for providers to assert their rights when those are violated.

And it shows also that the State is not allowed to arbitrarily violate those provider rights.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on March 16, 2015, in "Single State Agency", Accountability, Administrative Law Judge, Administrative Remedies, Agency, Appeal Rights, Chiropractors, Division of Medical Assistance, Due process, Health Care Providers and Services, Lawsuit, Legal Analysis, Legal Remedies for Medicaid Providers, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Contracts, Medicaid Reimbursements, Medicaid Services, NC, NC DHHS, North Carolina, Office of Administrative Hearings, Provider Medicaid Contracts and tagged , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 2 Comments.

  1. You did not mention whether this case was under managed care, but the word unilateral is definitely appropriate for those providers. Recently, providers in my area are suddenly receiving numerous Plans of Correction. A POC could be the result of a routine monitoring (and those are quarterly), an observation by someone at the MCO, an informal complaint mentioned off-handedly by a family member.

    Providers who have gone decades with zero POCs now get a dozen per year. The POCs are routinely accepted and pass implementation review (knock on wood), but they just keep coming. For every provider.

    At this point you may be thinking, “sounds like a hassle, but what’s the big deal?” Well, if you like at the provider contract, excessive POCs are justification for breach. So one organization decides when a POC is necessary and the number a provider receives. That same organization gets to decide if the number of POCs they have issued is excessive enough to revoke your contract.

    Sure, providers can appeal the POC to the organization that issued the POC, but what if next time it isn’t a POC. The same organization that can determine when a POC is warranted also gets to decide if a payback is warranted. Fight on POCs, maybe the next time you owe us $10,000. And if you think the payback is unfair, you can appeal, to the organization that issued the payback.

    A provider recently told me, and this is a direct quote, “I dream of the days of Medicaid audits.”

    Coordination of Care is a myth when one side wields all the power and uses it in this fashion. And the side with this authority is the side who knows least about the needs of the service recipients.

    Providers are helping people and saving the state a ton while doing so. The MCOs could provide needed support and assistance if so many of them would not put their role as regulators first.

  2. Anonymous, Thank you for your thoughtful comment. I cannot agree more that if a contractual relationship is completely lopsided, at some point, it is no longer a valid contract. A contract is intended to be a document that represents the meeting of the minds between the two parties. If one party has no say, who is to say the contract is valid?

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