Monthly Archives: June 2015
Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!
Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state. Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states. The Health and Human Services (HHS) is now our 51st state.
Today the Supreme Court decided the King v. Burwell case.
If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld. According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).
“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”
“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”
In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”
However, the majority disagrees.
Apparently, HHS is now our 51st state.
The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails. Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.” Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.
In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd. In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
NCTracks Lawsuit Dismissed! Judge Finds Providers Failed to Exhaust Their Administrative Remedies!
Remember July 1, 2013? Providers across North Carolina probably still suffer PTSD at the mention of the “go-live” date for NCTracks. If you remember July 1, 2013, you probably also remember that my former firm filed a class action lawsuit on behalf of the physicians in NC who suffered losses from NCTracks’ inception.
There was oral argument at the NC Business Court.
Judge McGuire, of the NC Business Court, dismissed the NCTracks class action lawsuit stating the providers failed to exhaust the administrative remedies. The Order reads, in part:
“Ultimately, the burden of proving that administrative remedies are inadequate in this action rests on Plaintiffs. Jackson, 131 N.C. App. at 186. Although sympathetic to the apparently difficult administrative process, the Court concludes that, particularly in light of the fact that not a single Plaintiff has attempted to use the available administrative procedures to resolve their Medicaid reimbursement claims, Plaintiffs have simply failed to satisfy this burden. Accordingly, Defendants’ Motions to Dismiss pursuant to Rule 12(b)(1) should be GRANTED.”
While I understand the logic applied to come to this decision, I do not necessarily agree with the outcome. There are exceptions to the exhaustion of administrative remedies, which, in my humble opinion, are present here.
(This blog contains my own opinions as to the NCTracks ruling and not those of my present or former firms. It is not intended to claim any ruling was incorrect or inconsistent with case law, rules, and statutes).
(Try to read the foregoing sentences in a fast-paced, tiny, whispery voice, like a pharmaceutical commercial).
Regardless, where does this decision leave the physicians in NC who suffered under an, admittedly, botched, beginning of NCTracks? (Even DHHS recognized the imperfections at the beginning).
First, what is the doctrine of failure of administrative remedies? (I was going to start with what is NCTracks, but you do not know what NCTracks is, you probably should begin reading some of my earlier blog posts: blog; and blog; and blog).
In a nutshell, the exhaustion doctrine dictates that if a party disagrees with an adverse action of a state agency that the party must exhaust its administrative remedies before asking for relief from a civil court judge.
Law 101: The Office of Administrative Hearings (OAH) has limited jurisdiction. It only has jurisdiction over those matters specifically granted to it by statute. If you have an issue with a final adverse decision of a state agency, you sue at OAH. In other words, if you want to sue a state agency, such as DHHS, or any of its agents, like an MCO, you sue at OAH, not Superior Court. An Administrative Law Judge, or ALJ, presides over the court. While OAH is more informal than Superior Court, OAH follows the rules of civil procedure unless an administrative rule exists.
If a Superior Court were to find that the party failed to exhaust its administrative remedies, then the court would find that the party lacked subject matter jurisdiction; i.e., the court is holding that it does not have the authority to determine the legal question at issue.
You would be back to square one, and, potentially, miss an appeal deadline.
In the Medicaid world this is similar to a managed care organization (MCO) having an informal review process internally which would be required prior to bringing a Petition for Judicial Review at OAH.
Were you to bring a Petition for Judicial Review at OAH prior to attending an informal reconsideration review at the MCO, the ALJ would, most likely, dismiss the case for failure to exhaust your administrative remedies.
But in the NCTracks case, the Plaintiffs sued DHHS and Computer Science Corporation (CSC). CSC is, arguably, not a state agency. The only way in which you could sue CSC at OAH would be for an ALJ to determine that CSC is an agent of a state agency. And, who knows? Maybe CSC is an agent of DHHS. Judge McGuire does not address this issue in his Order.
Many of you may wonder why I opine that CSC is not an agent of the state, yet surmise that the MCOs are agents of DHHS. Here is my reasoning: DHHS, in order to bestow or delegate its powers of administering behavioral health to the MCOs, was required to request a Waiver from the federal government. Unlike with CSC, DHHS merely contracted with CSC; no Waiver was required. That Waiver (two Waivers, really, the 1915(b) and 1915(c)) allow the MCOs to step into the shoes of DHHS….to a degree…and only as far as was requested and approved by CMS…no more. I view CSC as a contractor or vendor of DHHS, while the MCOs are limited agents.
Going back to NCTracks…
One can surmise that, because Judge McGuire dismissed the entire lawsuit and did not keep CSC as a party, Judge McGuire opined that CSC is an agent of DHHS. But there is a possibility that the providers sue in OAH and an ALJ determines that OAH is not a proper venue for CSC. Then what? Back to Superior Court and/or Business Court?
Why do you have to exhaust your administrative remedies? It does seem too burdensome to jump through all the hoops.
The rationale behind requiring parties to exhaust their administrative remedies is that those entities (such as OAH) that hear these specialized cases over and over and develop an expertise to decide the certain esoteric matters that arise under their jurisdiction. Also, the doctrine of separation of powers dictates that an agency created by Congress should be allowed to carry out its duties without undue interference from the judiciary.
For example, Judges Don Overby and Melissa Lassiter, ALJs at the NC OAH have, without question, presided over more Medicaid cases than any Superior Court Judge in the state (unless a Superior Court is a former ALJ, like Judge Beecher Gray). The thinking is that, since Overby and Lassiter, or, ALJs, generally, have presided over more Medicaid cases than the average judge, that the ALJs have formed expertise in area. Which is probably true. It cannot be helped. When you hear the same arguments over and over, you tend to research the answers and form an opinion.
So there is the “why,” what about the exceptions?
There are exceptions to the general rule of having to exhaust your administrative remedies that may or may not be present in the NC tracks case. If you ask me, exceptions are present. If you ask Judge McGuire vis-à-vis his Order, there are no exceptions that were applicable.
One such exception to the general rule that you must exhaust your administrative remedies is if bringing a case at the informal administrative level would be futile. If you can prove futility, then you are not required to exhaust your administrative remedies. Another exception is if you are requesting monetary damages that cannot be awarded at the administrative law level.
Where the administrative remedy is inadequate, a plaintiff is not required to exhaust that remedy before turning to the courts. Shell Island, 134 N.C. App. at 222. The burden of establishing the inadequacy of an administrative remedy is on the party asserting inadequacy. Huang v. N.C. State Univ., 107 N.C. App. 110, 115 (1992).
What DHHS argued, in order to have the case dismissed for lack of subject matter jurisdiction, and Judge McGuire agreed with, is:
that adequate administrative remedies exist for all health care providers when NCTracks improperly denies claims.
This holding is not without questions.
Some providers re-bill denied claims over and over. There is a question as to when do you appeal? The first denial? The second? The Fourteenth? At which point do you accept the denial from NCTracks as a “final agency decision?” Do you use the “3 strikes and you’re out” rule? Do you give NCTracks a mulligan? Or do you wait until NCTracks “fouls out” with a 6th denial?
Another question that remains hanging in the wake of the NCTracks dismissal is how will providers handle the sheer volume of denials. Some providers receive voluminous denials. Some RAs can be hundreds of pages long.
Let’s contemplate this argument in a hypothetical. You run a nephrology practice. The bulk of your patients are Medicaid (90% Medicaid, although 50% are dual eligible with Medicaid/Medicare). You have approximately 500-700 patients, who come see your doctors because they are in need of dialysis. You know that if a person does not receive dialysis that there is a chance that the person can enter Stage 5 (end stage renal disease) and die quickly. However, upon July 1, 2013, when NCTracks went live, you stopped receiving Medicaid payments completely. Do you stop accepting and treating your Medicaid patients? Obviously you do not stop accepting Medicaid patients? But your practice cannot sustain itself. Even if you continue to treat Medicaid patients, at some point, you will be out of business, failing to meet payroll, and being forced to involuntarily not treat your patients.
Your patients in need of dialysis come to the office 3x per week. A single hemodialysis treatment typically costs up to $500 or more — or, about $72,000 or more per year for the typical three treatments per week.
Let’s approximate with 500 patients. 500 patients multiplied by 3x per week is 1,500 per week. That is 1,500 denials per week. What Judge McGuire is saying is that your office is burdened with appealing 1,500 denials per week. Or 6,000 denials per month. Or 72,000 appeals per year.
Which of your office staff will be charged with appealing at OAH 72,000 denials per year? The physicians? You, the office manager (because you obviously have nothing else to do)? The receptionist? Hire someone new? For how much? How will you recoup the cost of appealing 72,000 denials per year? How many hours does it cost to appeal one? Hire an attorney?
Obviously, my example is one of an extreme case with 100% denials. But the sentiment holds true even for 30%, 40%, or 50% of denials. The sheer volume would be overwhelming.
And you can imagine the backlog that would be created at OAH.
Judge McGuire’s decision that plaintiffs failed to exhaust their administrative remedies issue appears to be based, in part, that because no plaintiff had tried to go to OAH, plaintiffs could not convince him that the administrative remedy was non-functional.
“Significantly, none of the Plaintiffs even attempted to use the administrative procedures to address the failure to pay claims and other issues they allegedly encountered in attempting to use NCTracks. Instead, Plaintiffs allege that the administrative process would have been futile and inadequate to provide the relief they seek.” See Abrons Family Practice v. DHHS and CSC, ¶ 36 (emphasis added).
Well, first of all, when I moved to Gordon & Rees, I left this case in the capable hands of my former partners, so I have no special intelligence, but I wager that this is not the end.
There are choices. They could:
(1) Appeal the decision to the Court of Appeals;
(2) File an insurmountable number of petition’s at OAH; or
(3) Do nothing.
For some reason, I have my doubts that #3 will occur.
What do you think??? What should the Plaintiffs do now in the wake of this dismissal?
Liability Insurance for Health Care Providers: Is It Adequate?
When you, as a health care provider, undergo a regulatory Medicare or Medicaid audit, your liability insurance could be your best friend or your worst enemy. It is imperative that you understand your liability coverage prior to ever undergoing an audit.
There are two very important issues that you need to know about your liability insurance:
1. Whether your liability insurance covers your choice of attorney; and
2. Whether your liability insurance covers settlements and/or judgments.
I cannot express the importance of these two issues when it comes to regulatory audits, paybacks and recoupments. Let me explain why…
Does your liability insurance cover attorneys’ fees for your choice of provider?
I have blogged numerous times over the past years about the importance of knowing whether your liability insurance covers your attorneys’ fees. I have come to realize that whether your liability insurance covers your attorneys’ fees is less important than knowing whether your liability insurance covers your choice of attorney. Believe it or not, when it comes to litigating regulatory issues in the Medicare/Medicaid, attorneys are not fungible.
A client of mine summed it up for me today. She said, “I wouldn’t go to my dentist for a PAP smear.”
Case in point, here are some examples of misconceptions that attorneys NOT familiar with the Office of Administrative Hearings (OAH) might think:
• Myth: Getting the case continued is a breeze, especially if all the parties consent to it.
• Reality: Generally, OAH is reluctant to continue cases, except for good cause, especially when a case has pended for a certain amount of time. (This has been a more recent trend and could change in the future).
• Myth: When my case is scheduled for trial on X date, it will be a cattle call and we will only determine when the case will be actually heard, so I don’t need to prepare for trial. (This is true in superior court).
• Reality: Incorrect. Most likely, you will be heard. OAH has a number of administrative law judges (ALJs) who are assigned cases. Generally, they only schedule one case per day, although there are exceptions.
• Myth: Since we are going to trial next week, the other side must not intend to file a motion to dismiss or motion for summary judgment. I don’t need to prepare any counter arguments.
• Reality: The administrative rules allow attorneys to orally file motion the day of trial.
You can imagine how devastating attorney misconceptions can be to your case. An attorney with these misconceptions could very well appear unprepared at a trial, which could have catastrophic consequences on you and your company.
Review your liability insurance. Determine whether your liability insurance covers attorneys’ fees. Then determine whether it covers your choice of attorney.
Does your liability insurance cover settlements and/or judgments?
Recently, a client was informed that the agency allegedly owes over $400,000 to the auditing agency. We will call him Jim. Jim came to me, and I instructed him to determine whether his liability insurance covers attorneys’ fees. It turned out that his insurance did cover attorneys’ fees, but only a certain attorney. Jim had overlooked our first issue.
Despite the fact that his insurance would not cover my fees, he opted to stick with me. (Thanks, Jim).
Regardless, once settlement discussions arose between us and the auditing entity, which in this particular case was Palmetto, I asked Jim for a copy of his liability insurance. If his liability insurance covers settlements, then we have all the incentive in the world to settle and skip an expensive hearing.
I was shocked at the language of the liability insurance.
According to the contract, insurance company would pay for attorneys’ fees (just not mine). Ok, fine. But the insurance company would contribute nothing to settlements or judgments.
What does that mean?
Insurance company could provide Jim with bargain basement attorneys, the cheapest it could find, with no regard as to whether the attorney were a corporate, litigation, real estate, tax, bankruptcy, or health care lawyer BECAUSE…
The insurance company has no skin in the game. In other words, the insurance company could not care less whether the case settles, goes to trial, or disappears. Its only duty is to pay for some lawyer.
Whereas if the insurance company were liable for, say, 20% of a settlement or judgment, wouldn’t the insurance company care whether the hired lawyer were any good?
Print off your liability insurance. Read it. Does your liability insurance cover attorneys’ fees for your choice of provider?
Does your liability insurance cover settlements and/or judgments?
New Mexico AG clears third agency of Medicaid billing fraud!!!
Here is the article (my opinions will be forthcoming):
SANTA FE – The Attorney General’s Office has cleared a third behavioral health agency of Medicaid fraud, and it’s reaching out to audit firms for help in investigating the remaining dozen referred by the Human Services Department two years ago.
Attorney General Hector Balderas said Wednesday that he has issued requests for proposals from audit firms to help with the investigations, to speed up the process.
A spokesman for Balderas, meanwhile, said the AG’s Office has completed its investigation into Raton-based Service Organization for Youth and found no Medicaid fraud on the part of the agency, although there was overbilling.
The AG’s Office referred the case back to the Human Services Department to pursue the overbilling, according to spokesman James Hallinan. The alleged amount was not immediately available.
As an outgrowth of the SOY investigation, a former therapist for the agency was charged six weeks ago by the AG’s Office with Medicaid fraud. She allegedly provided false billing information to SOY.
The Human Services Department in 2013 referred to the attorney general 15 nonprofits that provided services to the mentally ill and addicted, saying an audit it commissioned had found $36 million in overbilling, mismanagement and possible fraud.
Two of the providers – The Counseling Center of Alamogordo and Santa Fe-based Easter Seals El Mirador – had previously been cleared of fraud by the AG’s Office and are in disputes with HSD about what, if anything, they owe for alleged overbilling.
Former Attorney General Gary King, who left office at the end of December, had said it could take up to six years to complete the probes. Balderas said that was too long and got approval from the Legislature during the regular session to shift $1.8 million out of a consumer protection fund to hire extra help.
The request for proposals “is a critical infusion of resources to expedite the behavioral health Medicaid fraud investigations,” Balderas said Wednesday in a statement. He said expanding the pool of experts to work with his staff “will allow our investigation to proceed even more quickly and efficiently, which has always been my priority.”
The request for proposals, issued last week, requires that bidders respond by June 30.
After the Human Services Department cut off Medicaid funding to the providers and referred them to the AG’s Office, it brought in five Arizona companies to take over a dozen of them. SOY, however, had its Medicaid funding restored by HSD and continued to operate, with technical assistance from one of the Arizona firms.
The report on the SOY investigation was not immediately available from Balderas’ office. Hallinan said it was being reviewed before release to ensure that it didn’t affect the criminal proceedings against the former SOY therapist.
Knicole Emanuel Interviewed by ABC: SOME MEDICAID PROVIDERS OWE DHHS BIG BUCKS
Jon Camp, journalist for ABC11, interviewed me yesterday about a durable medical equipment client. In case you missed it, here is the link:
NC State Auditor Finds Eastpointe Guilty of Accepting Kickbacks!
Last week I traveled to Houston, Dallas, and Denver to meet with other health care attorneys of Gordon & Rees. It was a great trip and I met some wonderful colleagues. But I was happy to get home to my family, including our new addition of 9 peacock eggs.
Yes, 9 peacock eggs!!
Here is a pic:
(I know that there are 10 eggs in the picture, but we will not talk about the 10th. Just know that we have high hopes that the other 9 are viable and survive!! As of today, at 1:00 pm, all 9 eggs are chirping, but no cracks yet!!)
Oh, and, before I forget…Watch ABC news tonight. I was interviewed for a story about one of my clients.
Anyway, while I was gone, I was unable to post a blog regarding the State Auditor’s most recent audit report regarding Eastpointe. So here it is…
As the managed care organizations (MCOs) continue to accuse health care providers of fraud, waste, and abuse (FWA), it seems from a recent State Auditor report that, at least, one of the MCOs itself is guilty of the very accusation that they are alleging against providers. See blog. And blog.
There is an old story:
A wolf, passing by, saw some shepherds in a hut eating for their dinner a haunch of mutton. Approaching them, he said: What a clamor you would raise, if I were to do as you are doing!
Men are too apt to condemn in others the very things they practice themselves
The audit findings beg the questions…Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients? Beth Wood only audited Eastpointe. Is this only the tip of the iceberg?
According to our State Auditor, Eastpointe former executive has lined his pockets with $547,595+…
Here are the key findings from the NC State Auditor’s report regarding Eastpointe:
- Former CFO facilitated apparent kickbacks totaling $547,595 from two Eastpointe contractors
- Former CFO purchased three vehicles totaling $143,041 without a documented business purpose
- Former CFO purchased $18,600 of equipment for personal use
- Former CFO, Chief Executive Officer (CEO), and other employees used Eastpointe credit cards to make $157,565 of questionable purchases
- Inadequate CEO and area board oversight contributed to operational failures
Eastpointe is one of 9 MCOs in NC charged with managing and supervising Medicaid behavioral health care services. So what do we do when the entity IN CHARGE of managing Medicaid money is mismanaging tax dollars???
Where is the supervision??
Over the last few years, since the MCOs went live across the state, I have seen the MCOs terminate Medicaid providers for no cause, claim providers owed money, penalties, plans of corrections (POC), and/or refuse to contract with providers for reasons as silly as:
- Failing to put shoes on a paraplegic (no feet), because the assessment included that the patient required help dressing;
- Using green ink (a personal favorite) on a service note;
- Having signatures on service notes that are difficult to read (so the auditors assume that the person doesn’t have the correct licenses).
Here, we have the State Auditor finding that Eastpointe’s former CFO unilaterally hired two contractors to improve Eastpointe’s building (paid for with Eastpointe’s funding), but the former CFO accepting over half a million dollars. This is no green ink! This is no insignificant finding!!
What is Eastpointe’s funding?
As you can see, 72.7% of Eastpointe’s funding is pure Medicaid money. When Eastpointe’s former CFO received $547,595 in kickbacks, 72%, or $394,268.40, should have been used to provide Medicaid behavioral health care services.
These are our tax dollars, people!! These are our tax dollars budgeted to aid our most needy population with behavioral health care services!! These are our tax dollars budgeted to provide psychiatric services, substance abuse services, and services for those with developmental disabilities!!!!
Our State Auditor states in her report, “The former CFO may have violated several state laws including fraud, misrepresentation, and obtaining property by false pretenses.”
Let’s look at a couple of those statutes that may have been violated:
42 U.S. Code § 1320a–7b imposes criminal penalties for acts involving Federal health care programs, and federal dollars pay a portion of our Medicaid program.
North Carolina General Statute § 14-234 states: “No public officer or employee who is involved in making or administering a contract on behalf of a public agency may derive a direct benefit from the contract except as provided in this section, or as otherwise allowed by law.”
The question becomes was the former CFO of Eastpointe, at the time of the receipt of kickbacks a “public officer” or “employee who is involved in making or administrating a contract on behalf of a public agency?” I believe the answer is yes, at least as to the latter.
Here is the point in this blog that my personal views will be aired. I find the former CFO’s behavior significantly opprobrious and reprehensible.
Here we have an MCO which is in charge of behavioral health care for our most vulnerable and needy populations…not just those in poverty, but those in poverty suffering from mental illness, substance abuse, and/or developmental disabilities (MH/SA/DD). Obviously, those Medicaid recipients suffering from MH/SA/DD will not have the means to hire a private attorney to defend their interests. When they receive denials for authorizations or reductions in services, they are defenseless. Sure, some children have strong advocate parents, but, on the whole, those suffering from MH/SA/DD have little to no advocates.
Juxtapose someone sitting in the role of a CFO…a chief financial officer of a company. Think he or she can hire a private attorney?? Think he or she has advocates or means to hire advocates??
How can someone in power abuse that power to the detriment of the under-privileged and sleep at night? I find the State Auditor’s audit findings repugnant beyond comprehension.
We are left with a former CFO who may or may not have committed criminal activity, but, who, at least according to the State Auditor, has received kickbacks. We are left with questions.
Is it only Eastpointe? Or all 9 MCOs? How much Medicaid money is lining the pockets of MCO executives, instead of paying for medically necessary services for Medicaid recipients? Will there be justice?
We can only hope that this audit is a catalyst to consequences.