Category Archives: Monetary Damages
HIPAA and Football
By Ashley Thomson, Partner at Practus, LLP. A Virtual Law Firm.
On rare occasions a Court can issue an opinion that is so logical and on-point you want to stand up and cheer. Maybe you’re only cheering if you’re a HIPAA-nerd, like me. My name is Ashley and I work with Knicole. I was the assistant GC for Truman Medical Center for 17 years. As AGC at Truman, I was inundated with so many various issues.
Here’s what got me standing up in my home office as if Patrick Mahomes just threw a pass to Tyreek Hill and the KC Chiefs scored the winning touchdown in the Super Bowl—the 5th Circuit Court of Appeals held that a lost or stolen unencrypted device containing protected health information (“PHI”)[1] does not automatically result in a violation of the HIPAA Disclosure Rule or Encryption Rule. If you want to do your own touchdown dance check out Univ. of Texas M.D. Anderson Cancer Ctr. v. United States Dep’t of Health & Human Servs., No. 19-60226, 2021 WL 127819, at *5 (5th Cir. Jan. 14, 2021).
Unless you’ve spent the last 20 years living under a rock, you are generally aware that HIPAA is a law that protects your health information from public disclosure. Most people don’t spell it correctly and even less people know what the acronym means.[2] In 2009, HIPAA was supplemented with the HITECH Act.[3] Together, these laws govern how health care providers handle your medical information and what to do if there is a breach of the information. HIPAA and HITECH’s implementing regulations (the “Regulations”) require all covered entities[4] “implement a mechanism to encrypt” all PHI that is stored electronically. 45 C.F.R. Section 164.312(a)(2)(iv). Second, the Regulations prohibit unpermitted disclosure of PHI. 45 C.F.R. Sec. 164.502(a). These two regulations are referred to as the Encryption Rule and the Disclosure Rule respectively. These requirements are enforced by the Department of Health and Human Services (“HHS”) in conjunction with the Office for Civil Rights (“OCR”).
Whew, that was a quick history lesson. Now, back to the story.
In 2012 and 2013 MD Anderson Cancer Center (“MD Anderson”) had three (3) events happen involving unencrypted devices containing PHI. First, a laptop was stolen. Second, a thumb drive was lost during someone’s commute home. Third, a visiting researcher misplaced a thumb drive. Pursuant to the regulations, MD Anderson reported these events to HHS.
HHS concluded that MD Anderson violated the Regulations and imposed a fine over $4,000,000 (let me spell that out for you. . . FOUR MILLION DOLLARS).
You may be wondering, what in the world did they violate that would result in such an outrageous fine? So did MD Anderson!
MD Anderson threw its proverbial, red challenge flag and pursued its appeal rights and ended up, finally, in Federal Court where they succeeded on establishing that the mere loss of unencrypted PHI does not violate the Disclosure Rule and that the Encryption Rule does not require that a covered entity sit down and force each and every person to encrypt their devices.
Let’s look first at the Disclosure Rule. As a general rule, HIPAA prohibits the disclosure of PHI without permission from the patient.[5] 45 C.F.R. Sec. 164.502(a). HIPAA defines disclosure as “the release, transfer, provision of access to, or divulging in any manner of information outside the entity holding the information.” 45 C.F.R. Sec. 164.103. Prior to reaching the 5th Circuit, MD Anderson had been told the mere fact that the unencrypted laptop and thumb drives were lost or stolen resulted in the conclusion the PHI had been improperly disclosed to someone outside of the covered entity. Thank goodness, the Court stepped in with the reasonable statement that many of us in the health care field have been saying for years. . . just because a device is lost or stolen doesn’t mean the PHI was improperly disclosed.[6] “It defies reason to say an entity affirmatively acts to disclose information when someone steals it.” Univ. of Texas M.D. Anderson Cancer Ctr.,2021 WL 127819, at *5.
HHS claimed that it would be difficult for them to enforce the Disclosure Rule if it had to show that the PHI was disclosed to someone outside of the covered entity. Well, go complain to the referees HHS “that’s precisely the sort of policy argument that HHS could vet in a rulemaking proceeding. It’s not an acceptable basis for urging us to transmogrify the regulation HHS wrote into a broader one.” Id. And with that, the Court unceremoniously stated the obvious and provided some reason in the rather unreasonable world of HIPAA enforcement.
Next up? The Encryption Rule where HHS argued that MD Anderson’s desire to do more to encrypt their devices was an admission of non-compliance with the regulations. Not so fast, said the Court. The rule requires that a covered entity have a mechanism for the encryption PHI not that it implements an iron clad, hacker proof, 100% guaranteed encryption system. MD Anderson had an encryption mechanism which is enough to satisfy the regulation, even if HHS now “wishes it had written a different” regulation. Id.at *4.
I feel like this is the SUPERBOWL of HIPAA decisions. You may not be as excited about this opinion as I was. That’s ok. . . I’m a HIPAA and privacy nerd and I’m ok with that.
Let’s hope I have many touchdowns to stand up and celebrate on Sunday! Go Chiefs!
The legal fine print: As exciting as this opinion is, please remember that devices should be encrypted and PHI should be protected to the maximum extent possible. While this is a great decision, it doesn’t remove the obligation to comply with the Regulations.
[1] PHI contains 18 different identifiers. 42 C.F.R. § 164.514(a)(2)(i).
[2] It’s the Health Insurance Portability and Accountability Act of 1996.
[3] HITECH stands for the Health Information Technology for Economic and Clinical Health Act of 2009.
[4] Later, we can delve into what qualifies as a covered entity. Let’s just all agree that MD Anderson is a covered entity.
[5] This is a very simple overstatement, but it works for the purposes of this article.
[6] Let’s face it, most of these devices are lost or stolen and (1) never found or (2) thrown out as the thieves take what they really wanted . . . cold hard cash or credit cards. An old janky laptop or a random thumb drive is not at the top of the most wanted list for kleptomaniacs.
$1.68 million. That’s what company controlling millions in taxpayer dollars wants back from fired CEO
Article in the Winston Salem Journal today:
Cardinal Innovations filed a lawsuit Monday in Mecklenburg Superior Court against fired chief executive Richard Topping.
The state’s largest managed care organization – which controls hundreds of millions in taxpayer dollars – is suing to recoup $1.68 million in severance from Topping, as well as prevent him from collecting any further payments approved by the former board that was disbanded Nov. 27.
The lawsuit says Topping’s severance represents “excessive and unlawful payments.”
Cardinal oversees providers of services for mental health, developmental disabilities and substance abuse for more than 850,000 Medicaid enrollees in 20 counties, including Forsyth and five others in the Triad. It handles more than $675 million in annual federal and state Medicaid money.
An investigation by McGuireWoods LLP was requested by a reconstituted board, formed in January and approved by state health Secretary Mandy Cohen, along with interim chief executive Trey Sutten. It was conducted by McGuireWoods partner Kurt Meyers, a former federal prosecutor.
The lawsuit represents a new action by Cardinal, and is not in response to the previous board’s lawsuit against the state to allow for executive salaries, including for Topping, that exceeded those permitted by state law.
However, it does represent a follow-up on the temporary restraining order and then preliminary injunction won against Topping and the former board filed in the same court.
The injunction prevents Topping and the former board from interfering with N.C. Department of Health and Human Services’ regulatory actions versus Cardinal that began when Cohen ordered the takeover of the organization on Nov. 27.
The former board took action against Topping’s employment at its Nov. 17 meeting by terminating his contract without cause. The board, at Topping’s request, would have been allowed to stay on through Dec. 1.
Cardinal said in the lawsuit that “Topping’s motive in asking the board to allow him to remain CEO was so that he could use his position as CEO to ensure that Cardinal Innovations paid him the lump-sum severance before his departure.”
_______________________________________________________________________________
Now to my opinion:
Disclosure: I have not read the Complaint and would love someone to send it to me. But, on the face of this article, my experience in the legal world, and my limited knowledge about the whole Topping debacle:
While we can all agree that Topping’s salary, plus bonuses and perks, was absolutely repugnant and offensive to taxpayers (like me), Topping did not get there all by himself. The Board of Directors met, discussed Topping’s salary, and voted to give him that salary. The Board of Directors, essentially, is the heart and the brain of Cardinal Innovations.
Is Cardinal Innovations going to sue itself for bestowing such an outrageous salary, plus benefits, to Topping?
Because if I am Topping and I get sued for having a high salary, I am going to point at the Board of Directors and say, “I couldn’t have gotten paid without your votes, Board. So have fun and sue yourself.”
BTW: Isn’t this lawsuit a conflict of interest?? It was only last year that Cardinal filed a lawsuit asking the court to ALLOW TOPPING TO CONTINUE TO RECEIVE SUCH OUTRAGEOUS SALARY THAT NOW – SAME COMPANY – IS SUING BECAUSE IT GAVE THIS SALARY TO IT CEO…which is it, Cardinal? Or is it just a matter of following the wind of public opinion?
Not to mention – HOW IS CARDINAL FUNDING THE LAWSUIT (ATTORNEYS’ FEES) – WITH OUR TAX DOLLARS!!!!!!! I mean, good for Womble Carlyle, the law firm hired with our tax dollars to spend more money on a losing case (my opinion) because Cardinal mismanaged our tax dollars! Winner, winner, chicken dinner! Last year it got paid to file a lawsuit to keep Topping’s salary and perks. Five months later it’s hired to sue for giving Topping’s salary and perks. See blog.
Does anyone else not see how screwed up this is?????
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.
What?
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).
What now?
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?
NC Medicaid Audits: Is There a Silver Lining? (Maybe Even Two!)
Normally I am “silver lining” type of person. You know…the whole, “The sun will come out tomorrow, bet your bottom dollar that tomorrow, there’ll be sun,” mentality…
But when it comes to North Carolina Medicaid audits conducted by Public Consulting Group (PCG) or HMS, I have failed to find the silver linings. You, as a health care provider, receive a Tentative Notice of Overpayment (TNO) for $1 million and go through various stages of acceptance: surprise, horror, anger, befuddlement, and fear. In order to defend yourself, you have to shell out tens of thousands of dollars for an attorney (hopefully one that understands Medicaid audits). Then spend countless hours compiling all the documents for the attorney to review and use at the reconsideration review. Then take off a day to attend the reconsideration review, losing even more clinical hours, only to disagree with the Department of Health and Human Services (DHHS) Hearing Officer’s decision. Spend more money in legal fees to appeal the DHHS decision to the Office of Administrative Hearings (OAH). Possibly hire an extrapolation expert at even more expense. Only to prove, finally, that the PCG and/or HMS audit was erroneous and you owe nothing. Or $100. Or $1000.
Where is the silver lining in that process?
That you owe nothing in the end? But you paid exhorbent amounts to the attorney.
Well, there could be a silver lining… (maybe even two)…
Recently, the IRS released a couple private letter rulings as to whether paid overpayments could be tax-deductible.
OK, what the heck is a private letter ruling?
According to Wikipedia, private letter rulings “(PLRs), in the United States, are written decisions by the Internal Revenue Service (IRS) in response to taxpayer requests for guidance. A private letter ruling binds only the IRS and the requesting taxpayer. Thus, a private ruling may not be cited or relied upon as precedent.”
The most important part of the above-referenced definition of a PLR is that the PLR is binding only on the IRS and the requesting taxpayer. Obviously, this means that if the IRS wrote 2500 PLRs saying that paid overpayments in Medicaid audits are tax-deductible, those 2500 PLRs are not binding as to you (unless you were one of the 2500 taxpayers asking for a PLR).
Regardless, PLRs are demonstrative as to how the IRS determines [whatever is determines in the PLR]. Because, despite the fact that PLRs are not binding on all taxpayers, I would find it odd if the IRS issued 2500 PLRs stating that the paid overpayments are tax-deductible, then the IRS turn around and refuse to allow you to treat the overpayment as a tax deduction. Although, I am sure stranger things have happened.
In the first PLR, which, BTW, is not fun to read. Who uses all this legalese??? Taxpayer B asks whether (1) the money he paid to the insurance company could be deducted as a loss incurred in a trade or business; and (2) the money paid to a Government Entity E and Government Entity F in the tax years in which the installment payments are made under the settlement agreement can be deducted. (I made Taxpayer B a male because the PLR makes him a male. I have no idea as to the gender of Taxpayer B).
In Year 1, the Insurance Company sued … Taxpayer B for insurance fraud, demanding both compensatory and punitive damages. In the second year, the state of New Jersey indicted Taxpayer B… for insurance fraud. Taxpayer B agreed to pay $X in restitution to Government Entity E and Government Entity F.
Taxpayer B has represented (a) that he previously included in his gross income in prior tax years the amounts he now seeks to deduct and (b) that he and all other defendants in [both] lawsuits are jointly and severally liable for the amounts due under the settlement agreement because the language of the settlement agreement imposes joint liability upon the defendants and New Jersey law imposes joint and several liability upon members of a limited liability company.
So…can Taxpayer B deduct the money paid to the insurance company and the government as a business loss????
Or, in other words, could you (a health care provider who accepts Medicaid) deduct any money paid to PCG or HMS arising our of a regulatory audit as a business loss?
According to the PLR:
We conclude that Taxpayer B may deduct the payments he made to the Insurance Company and to Government Entity E and Government Entity F in the years the payments were made or will be made, provided that he received or will receive no contribution from any other party and included the amounts he paid or will pay in his gross income in prior tax years.
Yes!
The second PLR is basically identical to the first, except that Taxpayer A is at issue. For the PLR, click here.
So what does this mean? Why should North Carolina Medicaid providers care that 2 taxpayers were able to deduct the monies paid to the government/insurance companies as a business loss?
Because, these PLRs are demonstrative that, perhaps, the IRS would view regulatory audit paybacks to PCG or HMS as an allowable tax deduction as a business loss.
So, you receive a TNO in the amount of $1 million. You spend $20,000 litigating the $1 million to $1000. I know, it sucks, right?? (Not that the amount was decreased by $999,000, but that it cost $20,000 to reduce the amount $999,000).
The silver lining? Maybe you can deduct the $1000 paid as a business loss.
But what about the $20,000 attorneys’ fees???
Let me preface this with:
I am no tax expert. I know Medicaid, not tax. If you want real tax advice, go to a real tax attorney. But, I did find…Publication 529, which states the following:
Legal Expenses
You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.
You can also deduct legal expenses that are:
- Related to either doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business,
- For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or
- To collect taxable alimony.
A definitive answer?
No.
But…a possible two silver linings! The sun will come out tomorrow, bet your bottom dollar that tomorrow, there’ll be sun!!!!
Lawsuit Against Public Consulting Group: Allegations That Public Consulting Group is Inept and Malicious!
It seems that Public Consulting Group’s unscrupulous behavior has no bounds.
On June 6, 2013, LDP, Inc. d/b/a Leader Services sued Public Consulting Group in the Eastern District of Pennsylvania. (Case No.: 2:13-cv-03128-AB).
According to the Complaint, Leader and Public Consulting Group are direct competitors. Leader was the Pennsylvania’s Department of Education (DOE) contractor responsible for executing Medicaid claims for the school-based ACCESS program. In 2011, the Pennsylvania DOE requested bids from companies. Public Consulting Group won the bid by submitting a bid at less than half the amount paid under previous years. (Already fishy).
Many school agencies were concerned about the switch from Leader’s computer program to Public Consulting Group’s program. Leader offered to serve as an intermediary during the switch.
Leader alleges that Public Consulting Group took active steps to thwart Leader’s intermediary role, such as changing its data formatting and not paying claims submitted by Leader. The biggest allegations is that Public Consulting Group failed to process hundreds of thousands of claims for Medicaid payments submitted by Leader, which resulted in tens of millions of dollars of health-related services provided by school agencies to go unpaid.
The press got wind and some stories were written about Public Consulting Group doing a “poor job.”
Public Consulting Group turned around and began disparaging Leader. Public Consulting Group held conference calls and meetings asserting that the schools were not paid because of Leader, not Public Consulting Group. Leader confronted Public Consulting Group and Public Consulting Group provided (for the first time) error logs (basically a log of why the claims were unpaid and as a basis for the disparaging remarks that the claims were not paid because of Leader).
Leader reviewed the error logs, only to discover that the majority of “errors” were errors because of Public Consulting Group!!! (Hmmmm..sound familiar?).
What???? Public Consulting Group erroneously auditing something? Say it is not so!! (This is sarcasm, people).
After seeing how Public Consulting Group conducted itself in New Mexico (auditing 15 behavioral health care providers at the request of HSD, but after flying to Arizona to determine which companies should take over the 15 providers, and never showing the providers the claim audit findings) and how Public Consulting Group is conducting itself in North Carolina (sending providers Tentative Notices of Overpayment saying the provider owes hundreds of thousands, if not millions of dollars, only to discover that the PCG auditors were wrong and the provider really owes a $100), I cannot say I am surprised that PCG would fail to process claims, blame Leader, and produce a report supposedly showing Leader’s errors, but, in reality, the errors being on PCG shoulders.
No. Not surprising.
Although, remember, this is a Complaint. The courts have not rendered a decision. There is a chance that Leader made all this up….there is also a chance that Public Consulting Group is inept and malicious.
Leader sued Public Consulting Group for
1. Tortious interference with contract;
2. Unfair competition;
3. Commercial disparagement; and
4. Defamation.
Coincidentally, some of the causes of action would be the very same causes of action I would advise the NM behavioral health care providers to assert.
Watch WRAL 6pm News Tonight! NCTracks: Potential Lawsuit…
I was interviewed by WRAL’s Bruce Mildwurf today. Be sure to watch WRAL at 6pm for the NCTracks story to air.
Meanwhile, also see the Channel 9 Charlotte story that was aired a couple of days ago.
NCTracks, Monetary Damages, and Kudzu
So many providers in North Carolina who accept Medicaid have contacted me asking whether they have a legal case to bring a lawsuit against Computer Sciences Corporation (CSC), the company who created and is running NCTracks, for monetary damages.
In order to determine whether grounds for a lawsuit exist, you need to determine, generally: (a) Did CSC have a duty to timely pay Medicaid reimbursements to you; (b) Did CSC breach that duty; (c) Did you suffer monetary damages?
42 C.F.R. 447.45 states, in pertinent part, (a) Basis and purpose. This section implements section 1902(a)(37) of the Act by specifying—(1) State plan requirements for—(i) Timely processing of claims for payment…”
What does “timely” mean?
- The agency must pay 90 percent of all clean claims from practitioners, who are in individual or group practice or who practice in shared health facilities, within 30 days of the date of receipt.
- The agency must pay 99 percent of all clean claims from practitioners, who are in individual or group practice or who practice in shared health facilities, within 90 days of the date of receipt.
90%….within 30 days. Let’s see…last payments were June 20, 2013. It is July 26, 2013. No payments have been rendered to many providers in 36 days, and, according to one provider, he was told that he will receive reimbursement for at least another 2 weeks.
Hmmmmm….I do not think NCTracks is adhering to the 30 day rule. That said, if I were the attorney for NCTracks, I would argue that the providers not receiving payments within 30 days were not submitting “clean claims,” to which I, as myself, would say, “Prove it.”
I don’t think the Department of Health and Human Services (DHHS) is intentionally not paying providers Medicaid reimbursements for services rendered. I don’t think that DHHS meant for NCTracks to not pay some providers.
Regardless of intent, it is correct to say that DHHS went “live” with NCTracks without a “live” trial run and without conducting proper tests necessary prior to going “live.”
According to the May 2013 State Auditors’ Performance Audit of NC DHHS’ Implementation of NCTracks:
The Department has failed to fully test the system, and the production testing process has flaws.
• Key decisions about the addition of 1,500 user accounts and privacy and security procedures have yet to be made, increasing uncertainty about project readiness.
• A vendor hired to oversee the project did not conduct independent verifications as expected by the federal agency that administers Medicaid, and another vendor was permitted to set its own guidelines for whether its work was acceptable.
• No formal criteria exists to determine whether the new system is ready to go-live.
Why DHHS pushed NCTracks to go “live” on July 1, 2013, despite obvious concerns cited by the State Auditor, we may never know. It reminds me, somewhat, of kudzu and the fact that humans like to think that everything is controllable.
Kudzu is not native to America. Kudzu was originally introduced to America from Japan at the Japanese pavilion in the 1876 Centennial Exposition in Philadelphia. Kudzu was touted as a high-protein content cattle fodder and as a cover plant to prevent soil erosion. So people planted kudzu, thinking that kudzu would be an asset to our environment. Instead, kudzu had drastic negative effects on our environment. Kudzu is often dubbed “The Vine That Ate the South.” It has spreads at the rate of 150,000 acres (61,000 ha) annually.
The problem with kudzu is that kudzu kills or damages other plants by smothering them under a blanket of leaves, encompassing tree trunks, breaking branches, or even uprooting entire trees. Kudzu’s ability to grow quickly, survive, and acquire resources quickly allows it to out-compete native species.
So, think about it, we wanted kudzu because we thought kudzu would be a good thing. We did not research kudzu’s growth rate or kudzu’s interactions with American foliage. We did not perform test sites of kudzu to analyze the effects of kudzu on our environment. We didn’t even grow kudzu in a controlled environment to determine whether kudzu’s rate of growth would negatively impact our plants. Oh no, we saw kudzu, and, like a kid in a candy store, we said, “Oooohhhh….we want kudzu!” So we planted kudzu. We thought we could control kudzu.
I don’t think the Japanese, who introduced kudzu, nor the Americans, who accepted the kudzu, intentionally planted kudzu in order to kill plants and trees. I don’t think that the people who planted the kudzu meant for kudzu to have drastic negative consequences to our environment.
Regardless of intent, people who planted kudzu did so without fully testing kudzu’s impact on our environment.
In reality, kudzu is estimated to have lost us approximately $100–500 million per year in forest productivity…as in what we could have made by trees actually growing. In addition, it takes about $5,000 per hectare (2.5 acres) per year to control kudzu. For power companies, it costs about $1.5 million per year to repair damage to power lines. See Forseth. Jr., I.N. and Innis, Anne F.“Kudzu (‘‘Pueraria montana’’): History, Physiology, and Ecology Combine to Make a Major Ecosystem Threat” Critical Reviews in Plant Sciences, Vol. 23, 401-413, 2004.
Similarly, DHHS (regardless which administration) saw a new computer system, NCTracks, and like the kid in the candy store, said, “Ooooohhhh…we want NCTracks!” So we purchased NCTracks. We thought we could control NCTracks.
We certainly did not perform all necessary tests on NCTracks before going “live.”
Now, due to the failure to fully test NCTracks and the “glitches” surrounding NCTracks, NCTracks, like kudzu, is producing drastic negative effects on our health care providers. Some providers are losing hundreds of thousands of dollars per week due to NCTracks. One provider told me that he already closed one location and terminated 6 staff due to NCTracks.
NCTracks is not, at least for many, many health care providers, timely paying Medicaid reimbursements.
But what are the monetary damages? What if you file a lawsuit against CSC and the day after you file a lawsuit you are paid in full? Do you still have any damages?
It depends.
I got an email from a pediatric physician; we will call her Amy. For the past few weeks, Amy has been unable to sleep. She has not been paid since June 20, 2013. Unlike most providers, she does not limit the number of Medicaid recipients at her practice, and Medicaid is 85% of her income.
Amy spent her one-week-long vacation on-hold with NCTracks 70% of the time. She is behind on work. She has decreased her clinical hours. Amy was forced to ask her parents for a loan to make payroll, and still has not paid all her staff completely.
Last week, Amy and her husband did not have enough money for groceries until her husband was paid on Friday.
Yesterday, when Amy contacted NCTracks, she was told that, according to NCTracks’ records, Amy was paid. But no money is in Amy’s bank account.
Even if Amy were paid tomorrow by NCTracks, don’t you think that Amy suffered additional damages?
Maybe we should just plant a bunch of kudzu around NCTracks and CSC.
REGISTER TODAY: NC Medicaid Lawsuit: Telephone Conference Friday
Join the June 14 Teleconference on NC Medicaid Audit Multi-Party Lawsuit to Recoup Monetary Damages
VERY IMPORTANT: YOU MUST REGISTER FOR FRIDAY’S PHONE CALL IF YOU ARE INTERESTED IN THIS LAWSUIT.
Thank you so much for coming to the presentations on May 11 in Durham and June 1 in Charlotte. We had a great turnout at both and most attendees have confirmed they plan to join in the multi-party lawsuit against the state. To view a copy of the original presentation, please click here.
On Friday, June 14, 2013 from 12 noon to 1:00 p.m., we will hold a teleconference call for health care providers interested in joining the suit and learning more about the next step. To sign up for the teleconference, please click the Register Now link and enter your information. Once we receive your registration, we will email you the dial-in information directly.
To date, we have approximately 30-40 interested health care providers, so we are close to our goal of at least 40! We will continue to add interested providers to this case up to 30 days after our teleconference. Therefore, you have from June 14 to July 14 to register and join in. Registration for the multi-party lawsuit will close July 14.
We look forward to moving forward with this lawsuit to seek monetary damages for all the providers. Thank you and please contact me directly if you have any questions!
Knicole Emanuel
June 1st: Medicaid Behavioral Health Provider Meeting!! Recovering Monetary Damages!!!
This is a solicitation. (This is an effort to thwart any possible assertions that my disclaimer is not enough. I have put my warning. See also my disclaimer).
In fact, this is a group of providers meeting together who have been wronged monetarily by the Medicaid system, whether by DMA, the MCOs, and/or the RACs, to discuss future options. We had a similar group session May 11, 2012, in Raleigh and it was met with great success! Many providers attended. We were able to share stories. At the end of the meeting, everyone was excited for the future. So we wanted to host one more meeting in the western portion of the state to invite additional providers. June 15th will be our cut-off. If you are interested in this cause, please come to our June 1st meeting!!!
WHEN: 06.01.2013
WHERE: The Cornwell Center at Myers Park Baptist Church, 2001 Selwyn Avenue, Charlotte, NC
WHO: (Any provider that answers “Yes” to the following questions)
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Have you been placed on Pre-Payment Status and been unable to meet the standards to get off of Pre-payment Status?
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Have you been told that you are not in good standing with DMA and have been unable to receive assistance restoring your standing?
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Have you been wrongly denied access to one of the new MCO provider networks?
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Have you been told that your Medicaid number is being terminated or has been terminated?
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Have your Medicaid payments been wrongly suspended?
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Have these actions resulted in loss of income, your business closing, emotional stress, or other negative consequences?
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Have you received a Tentative Notice of Overpayment stating that you must pay back money to the State?
If so, please join us!
Speaker:
Knicole C. Emanuel
Lunch will be provided so please RSVP to by clicking the REGISTER NOW link.
Questions? Please contact Caitlin Williamson at cwilliamson@williamsmullen.com or 804.420.6267.
Knicole C. Emanuel – 919.981.4031 – kemanuel@williamsmullen.com
