Medicare/caid Contracts Terminatations: “With” or “Without Cause. You May Need an Injunction

How is it already the second month of 2016? My how the time flies. As you can see below, I have started 2016 with my “best foot forward.”

image

Here’s the story (and why it’s been so long since I’ve blogged):

Santa Claus, whom I love, brought our 10-year-old daughter a zip line for Christmas. (She’s wanted one forever). My wonderful, exceedingly brilliant husband Scott miscalculated the amount of brakes needed for an adult of my weight for a 300-foot zip line. The brakes stopped, albeit suddenly, but adequately, for our 10-year-old.

However, for me…well…I went a bit faster than my 45-pound daughter. The two spring brakes were not adequate to stop my zip line experience and my out-thrown feet broke my crash…into the tree. (It was a miscalculation of basic physics).

On the bright side, apparently, my right leg is longer than my left, so only my right foot was injured.  Or my right foot is overly dominate than my left, which could also be the case.

Also, on the bright side, the zip line ride was AWESOME until the end.

On the down side, I tore the tendon on the bottom of my foot which, according to the ER doctor, is very difficult to tear. Embarrassingly, I had to undergo a psych evaluation because my ER doctor said that the only time he had seen someone tear that bottom tendon on their foot was by jumping off a building. So I have that going for me. I informed him that one could tear such tendon by going on zip line with inadequate brakes. (I passed the psych evaluation, BTW).

Then, while on crutches, I had a 5-day, federal trial in Fort Wayne, Indiana, the week of Martin Luther King, Jr., Tuesday through the next Monday. Thankfully, the judge did not make me stand to conduct direct and cross examinations.

But, up there, in the beautiful State of Indiana, I thought of my next blog (and lamented that I had not blogged in so long…still on crutches; I had not graduated to the gorgeous boot you saw in the picture above).

As I was up in Indiana, I thought, what if someone at the State Medicaid agency doesn’t like you, personally, and terminates your Medicaid contract “without cause?” Or refuses to contract with you? Or refuses to renew your contract?

Maybe you wouldn’t find it important whether your termination is “for cause” or “without cause,” but, in Indiana, and a lot of other states, if your termination is for “without cause,” you have no substantive appeal right, only a procedural appeal right. As in, if you are terminated “without cause,” the government never has to explain the reason for termination to you or a judge. If the government gave you the legally, proper amount of notice, the government can simply say, “I just do not want to do business with you.”

Many jurisdictions have opined that a Medicaid provider has a property right to their Medicaid contract. A health care provider does not have a property right to a Medicaid contract, but, once the state has approved that provider as a Medicaid provider, that provider has a reasonable expectation to continue to provide services to the Medicaid population. While we all know that providing services to the Medicaid population is not going to make you Richy Rich, in some jurisdictions, accepting Medicaid is necessary to stay solvent (despite the awful reimbursement rates).

Here in NC, our Administrative Law Judges (ALJs) have held a property right in maintaining a Medicaid contract once issued and relied upon, which, BTW, is the correct determination, in my opinion. Other jurisdictions concur with our NC ALJs, including the 7th Circuit.

Many times, when a provider is terminated (or not re-credentialed) “without cause,” there is an underlying and hidden cause, which makes a difference on the appeal of such purported “without cause” termination.

Because as I stated above, a “without cause” termination may not allow a substantive appeal, only procedural. In normal-day-speak, for a “without cause,” you cannot argue that the termination or refusal to credential isn’t “fair” or is based on an incorrect assumption that there is a quality of care concern that really does not exist. You can only argue that the agency did not provide the proper procedure, i.e., you didn’t get 60 days notice. Juxtapose, a “for cause” termination, you can argue that the basis for which the termination relies is incorrect, i.e., you are accusing me that my staff member is not credentialed, but you are wrong; she/he is actually credentialed.

So, what do you do if you are terminated “without cause?” What do you do if you are terminated “for cause?”

For both scenarios, you need an injunction.

But how do you prove your case for an injunction?

Proving you need an injunction entails you proving to a judge that: (a) likelihood of success on the merits; (b) irreparable harm; (c) balance of equities; and (d) impact on the community.

The hardest prongs to meet are the first two. Usually, in my experience, irreparable harm is the hardest prong to meet. Most clients, if they are willing to hire my team and me, can prove likelihood of success.  Think about it, if a client knows he/she has horrible documentation, he/she will not spring for an expensive attorney to defend themselves against a termination.

Irreparable harm, however, is difficult to demonstrate and the circumstances surrounding proving irreparable harm creates quite a quandary.

Irreparable, according to case law, cannot only be monetary damages. If you are just out of money and your company is in financial distress, it will not equate to irreparable harm.

Irreparable harm differs slightly from state to state.

Although, most jurisdictions agree that irreparable harm does equate to an imminent threat of your business closing, terminating staff, loss of goodwill, harm to reputation, patients not receiving medically necessary services, unfathamable emotional distress, the weights of loans and credit, understanding that you’ve depleting all savings and checkings, and understanding that you’ve exhausted all possible assets or loans.

The Catch-22 of it all is by the time you meet the prongs of irreparable harm, generally, you do not have the cash to hire an attorney. I suggest to all Medicare and Medicaid health care providers that you need to maintain an emergency fund account for unforeseen situations, such as audits, suspensions, terminations, etc. Put aside money every week, as much as you can. Hope that you never need to use it.

But you will be covered, just in case.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on February 3, 2016, in Administrative Law Judge, Administrative Remedies, Appeal Rights, Audits, Credible Allegations of Fraud, DHHS, Due process, Extrapolations, Health Care Providers and Services, Indiana, Injunctions, Jurisdiction, Knicole Emanuel, Lawsuit, Legal Analysis, Legislation, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Audits, Medicaid Recoupment, Medicaid Reimbursements, Medicaid Services, Medicare, Medicare Attorney, Medicare Audits, North Carolina, Petitions for Contested Cases, Physicians, Post-Payment Reviews, Preliminary Injunctions, Prepayment Review, Program Integrity, RAC Audits, Uncategorized and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 2 Comments.

  1. “A health care provider does not have a property right to a Medicaid contract, but, once the state has approved that provider as a Medicaid provider, that provider has a reasonable expectation to continue to provide services to the Medicaid population.”

    If a Medicaid managed care company doesn’t want to offer a physician or other provider a contract then they do not have to provide the physician with any reason for the denial. Is that correct? For instance, one managed care company in Illinois, when responding to a request for a provider contract keeps saying – check back in a few months, we are evaluating our network.

  1. Pingback: CMS Ramps Up Medicare Audits: A Pig and Pony Show? | medicaidlaw-nc

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