Category Archives: Lawsuit
Medicare Provider Appeals: Premature Recoupment Is Not OK!
A ZPIC audited a client of mine a few years ago and found an alleged overpayment of over $7 million. Prior to them hiring my team, they obtained a preliminary injunction in federal court – like I always preach to do – remember, that between the levels 2 and 3 of a Medicare provider appeal, CMS can recoup the alleged overpayment. This is sheer balderdash; the government should not be able to recoup funds that the provider, most likely, doesn’t owe. But this is the law. I guess we need to petition Congress to change this tomfoolery.
Going back to the case, an injunction stops the premature recoupments, but it does nothing regarding the actual alleged overpayments. In fact, the very reason that you can go to federal court based on an administrative action is because the injunction is ancillary to the merits of the contested case. Otherwise, you would have to exhaust your administrative remedies.
Here, we asserted, the premature recoupments (1) violated its rights to procedural due process, (2) infringed its substantive due-process rights, (3) established an “ultra vires” cause of action, and (4) entitled it to a “preservation of rights” injunction under the Administrative Procedure Act, 5 U.S.C. §§ 704–05. We won the battle, but not the war. To date, we have no date for an administrative law judge (“ALJ”) – or level 3 – hearing on the merits.
For those of you who have participated in a third-level, Medicare provider appeal will know that, many times, no one shows for the other side. The other side being the entity claiming that you owe $7million. For such an outlandish claim of $7 million, would you not think that the side protesting that you owe $7 million would appear and try to prove it? At my most recent ALJ hearing, no one appeared for the government. Literally, my client – a facility in NJ that serves the MS population – me and the ALJ were the only participants. Are the auditors so falsely confident that they believe their audits speaks for itself?
In this particular case, the questionable issue was whether the MS provider’s consumers met the qualifications for the skilled rehabilitation due to no exacerbated physical issues. However, we all know from the Jimmo settlement, that having exacerbated issues or improvement is not a requirement to requiring skilled rehab versus exercising with your spouse. The ALJ actually said – “I cannot believe this issue has gotten this far.” I agree.
Medicare Provider Appeals: “Get Thee to an ALJ!”
“Get thee to a nunnery!” screamed Hamlet to Ophelia in frustration of his mother marrying Claudius so quickly after his father’s death. Similarly any provider who has undergone a Medicare appeal understands the frustration of getting the appeal to the administrative law judge level (the 3rd level). It takes years to do so, and it is the imperative step instead of the lower level rubber stamps. “Get thee to an ALJ!”
Per regulation, once you appeal an alleged Medicare overpayment, no recoupment of the disputed funds occurs until after you receive the second level review, which is usually the QIC upholding the overpayment. It is no secret that the Medicare provider appeals’ level one and two are basically an automatic approval process of the decision to recoup. “Something is rotten in the state of Denmark.” Hence, the importance of the ALJ level.
There are 5 levels of Medicare appeals available to providers:
- Redetermination
- Reconsideration
- Administrative Law Judge (ALJ)
- Departmental Appeals Board (DAB) Review
- Federal Court (Judicial) Review
The third level is the level in which you present your case to an ALJ, who is an impartial independent tribunal. Unfortunately, right now, it takes about five years between levels two and three, although with CMS hiring 70 new ALJs, the Office of Medicare Hearings and Appeals (OMHA) is optimistic that the backlog will quickly dissipate. Last week, I attended an ALJ hearing for a client based on an audit conducted in 2016. Five years later, we finally presented to the ALJ. When the ALJ was presented with our evidence which clearly demonstrated that the provider should not pay anything, he actually said, “I’m shocked this issue got this far.” As in, this should have been reversed before this level. “O what a noble mind is here o’erthrown!”
In many cases, a premature recoupment of funds in dispute will financially destroy the health care provider, which should not be the purpose of any overpayment nor the consequence of any fraud, waste, and abuse program. We are talking about documentation nit-picking. Not fraud. Such as services notes signed late, according to best practices. Or quibbles about medical necessity or the definition of in patient and the two-midnight rule.
You have all probably read my blogs about the Family Rehab case that came out in TX in 2019. A Court found that Family Rehab, a health care facility, which faced a $7 million alleged overpayment required an injunction. The Judge Ordered that CMS be enjoined from prematurely recouping Medicare reimbursements from Family Rehab. Now, be mindful, the Judge did not enjoin CMS the first time Family Rehab requested an injunction; Superior Court initially dismissed the case for lack of jurisdiction based on failure to exhaust its administrative remedies. But instead of giving up, which is what most providers would do when faced with a dismissed injunction request due to emotional turmoil and finances. “To be, or not to be: that is the question:” Instead, Family Rehab appealed the dismissal to the Court of Appeals and won. The 5th Circuit held that Superior Court does have jurisdiction to hear a collateral challenge on both procedural due process grounds as well as an ultra vires action. On remand, Family Rehab successfully obtained a permanent injunction.
The clinical issues supposedly in support of the overpayment are silly. In Family Rehab’s case, the ZPIC claims homebound criteria was not met when it is clearly met by a reasonable review of the documents.
Homebound is defined as:
Criteria One:
The patient must either:
- Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence
OR
- Have a condition such that leaving his or her home is medically contraindicated.
If the patient meets one of the Criteria One conditions, then the patient must ALSO meet two additional requirements in Criteria Two below:
Criteria Two:
- There must exist a normal inability to leave home;
AND
- Leaving home must require a considerable and taxing effort.
In one of the claims that the ZPIC found no homebound status, the consumer was legally blind and in a wheelchair! The injunction hinged on the Court’s finding that because the ALJ stage is critical in decreasing the risk of erroneous deprivation, an injunction was necessary. I look forward to the ALJ hearing. “The rest is silence.”
Medicare/caid Contracts: When the Contract Can Benefit the Provider
Today I pose a very important question for you. Do your participation contracts that you sign with Medicare/caid, MCOs, MACs – do they even matter? Are these boilerplate contracts worth the ink and the paper? The answer is yes and no. To the extent that the contracts are written aligned with the federal and State regulations, the contracts are enforceable. To the extent that the contracts violate the federal regulations, those clauses are unenforceable. The contract can even, at times, be more stringent or contain more limitations than the federal regulations. One thing is for sure, these contracts can be your worst enemy or your savior, depending on the clauses.
An Idaho client-provider of mine has been the victim of Optum-“black-hole-ism.” In this case, the “black-hole-ism” will save my client from paying $500k it does not owe. My client is the leading substance abuse (SA) provider in Idaho. Optum is managing Medicaid dollars, which makes it the Agent of the “single State agency,” the Department of Health of Idaho. 42 C.F.R. 431.10. See blog.
The Optum provider contract states that – “It is agreed that the parties knowingly and voluntarily waive any right to a Dispute if arbitration is not initiated within one year after the Dispute Date.” What a great clause. If only all contracts had this limiting clause.
In our dispute, Optum avers we owe $500k. The first demand we received was dated December 2018 for DOS 2016-2017. Notice Optum was timely back in 2018. That was when the client hired my team, and we submitted a rebuttal and initiated the informal appeal to Optum. Here’s where Optum gets sloppy. Months pass. A year passes. I hear crickets in the background. A year and a half passes. Who knows why Optum took a year and a half to respond? COVID happened. Black-hole-ism? Bureaucracy and red tape? Apathy? Ineptness?
Finally, we get a response in September 2020. We respond in October 2020. Our new response included a novel argument that was not included in the 2018 rebuttal. Our argument went something like: “Na Na Na Boo Boo, you’re too late per 7.1 Optum contract.” If we could have included a raspberry, we would done so.
Remember the clause? “It is agreed that the parties knowingly and voluntarily waive any right to a Dispute if arbitration is not initiated within one year after the Dispute Date.”
Well, 2020 is 3-4 years after the initial DOS at issue: 2016-2017. This time, the boilerplate contract is our friend.
Since there is also an arbitration clause, which is not your friend, we will be wholly dependent on an arbitrator to interpret the one-year, limiting clause as a logical, reasonable person. But I will be shocked if even an arbitrator doesn’t throw out this case with prejudice.
Premature Recoupment of Medicare Reimbursements Defies Due Process!
Who knows that – regardless your innocence –the government can and will recoup your funds preemptively at the third level of Medicare appeals. This flies in the face of the elements of due process. However, courts have ruled that the redetermination and the reconsideration levels afford the providers enough due process, which entails notice and an opportunity to be heard. I am here to tell you – that is horse manure. The first two levels of a Medicare appeal are hoops to jump through in order to get to an independent tribunal – the administrative law judge (“ALJ”). The odds of winning at the 1st or 2nd level Medicare appeal is next to zilch, although often you can get the alleged amount reduced. The first level is before the same entity that found you owe the money. Auditors are normally not keen on overturning themselves. The second level is little better. The first time that you present to an independent tribunal is at the third level.
Between 2009 and 2014, the number of ALJ appeals increased more than 1,200 percent. And the government recoups all alleged overpayments before you ever get before an ALJ.
In a recent case, Sahara Health Care, Inc. v. Azar, 975 F.3d 523 (5th Cir. 2020), a home health care provider brought an action against Secretary of Department of Health and Human Services (“HHS”) and Administrator for the Centers for Medicare and Medicaid Services (“CMS”), asserting that its statutory and due process rights were violated and that defendants acted ultra vires by recouping approximately $2.4 million in Medicare overpayments without providing a timely ALJ hearing. HHS moved to dismiss, and the provider moved to amend, for a temporary restraining order (“TRO”) and preliminary injunction, and for an expedited hearing.
The case was thrown out, concluding that adequate process had been provided and that defendants had not exceeded statutory authority, and denied provider’s motion for injunctive relief and to amend. The provider appealed and lost again.
What’s the law?
Congress prohibited HHS from recouping payments during the first two stages of administrative review. 42 U.S.C. § 1395ff(f)(2)(A).
If repayment of an overpayment would constitute an “extreme hardship, as determined by the Secretary,” the agency “shall enter into a plan with the provider” for repayment “over a period of at least 60 months but … not longer than 5 years.” 42 U.S.C. § 1395ddd(f)(1)(A). That hardship safety valve has some exceptions that work against insolvent providers. If “the Secretary has reason to believe that the provider of services or supplier may file for bankruptcy or otherwise cease to do business or discontinue participation” in the Medicare program, then the extended repayment plan is off the table. 42 U.S.C. § 1395ddd(f)(1)(C)(i). A provider that ultimately succeeds in overturning an overpayment determination receives the wrongfully recouped payments with interest. 42 U.S.C. § 1395ddd(f)(2)(B). The government’s interest rate is high. If you do have to pay back the alleged overpayment prematurely, the silver lining is that you may receive extra money for your troubles.
The years-long back log, however, may dwindle. The agency has received a funding increase, and currently expects to clear the backlog by 2022. In fact, the Secretary is under a Mandamus Order requiring such a timetable.
A caveat regarding this grim news. This was in the Fifth Circuit. Other Courts disagree. The Fourth Circuit has held that providers do have property interests in Medicare reimbursements owed for services rendered, which is the correct holding. Of course, you have a property interest in your own money. An allegation of wrongdoing does not erase that property interest. The Fourth Circuit agrees with me.
Goodbye, 2020: New Resolutions for Health Care Providers
By Ashley Thomson. (Knicole Emanuel‘s law partner. See below for a bio).
As 2020 ends and we look forward to starting a new chapter in 2021, we offer you this little nugget of advice—a resolution that sounds deceptively easy—read your mail. Yes, friends you heard it here first. . . the best thing you can do to protect yourself, your business, your patients, and your loved ones is to read the dang mail. Email, text messages, real mail, carrier pigeon or messages in a bottle. READ THEM!
2020 brought us a lot of curve balls and unexpected events but some of those events could have been avoided had mail been opened and read.
CMS and its third party contractors hold a lot of power in the healthcare world and can cause your practice to come crashing down by hitting send or putting a forever stamp on a letter. A regular practice of reading your mail can avoid that CMS avalanche of doom. [1]
You may be reading this and thinking, you’ve got to be crazy I always read my mail. Or perhaps you are thinking, this is the easiest new year’s resolution yet—all I have to do is read the mail.
Don’t be too hasty with your self-confidence. This is a hard practice to establish and an even harder one to maintain.
First, you have to actually read the mail. All of the mail. Even the mail you think will contain bad news. Constitutional due process requires only notice NOT successful notice. If successful notice were required, “then people could evade knowledge, and avoid responsibility for their conduct, by burning notices on receipt—or just leaving them unopened.” See Ho v. Donovan, 569 F.3d 677, 680 (7th Cir. 2009). “Conscious avoidance of information is a form of knowledge.” Id.
Second, you need a policy or procedure regarding the opening and reading of mail. One client we worked with did not have a system for logging mail once it was received in the office. Mail was lost. Deadlines were missed. Payments from the largest payer were suspended. The cost – too much to print.
It’s like that old Mastercard ad, yes, I’m talking to those of you out there who were around in the late 90s.[2]
The cost of establishing a policy for logging in mail. . . zero.
The cost of reading mail. . . zero.
The cost of neglecting your mail, missing deadlines, and losing your practice. . . priceless.
So, as this year ends and you contemplate ways to improve your practice in 2021, please, please, please take our advice and READ YOUR MAIL.
[1]It’s not just CMS that has holds the mailbox power. Just ask the City of North Charleston, SC. A motorist’s emailed complaint to the city over injuries sustained in an accident was not forwarded to the insurance carrier resulting in a multi-million dollar default judgement against the city. See Campbell v. City of North Charleston, 431 S.C. 454,459 (SC Ct. App. 2020) (holding that “the failure to forward an email did not amount to good cause shown for failure to timely file an answer).
[2] For those of you who have no idea what we are talking about see https://www.aaaa.org/timeline-event/mastercard-mccann-erickson-campaign-never-got-old-priceless/
Click for past blogs with other helpful tips to avoid Medicare and Medicaid recoupments. medicaidlaw-nc.wordpress.com – Tip #2. 4. 6.
Ashley Thomson brings 20 years of extensive in-house, hospital counsel and law firm experience to our team. Well-versed in a variety of disciplines, her emphasis is in health care, insurance and compliance, specifically medical malpractice, employment, healthcare and privacy law compliance and defense, including matters involving HIPAA. Ashley has also been heavily involved in risk management, patient safety, corporate governance, contract and policy drafting, negotiations and healthcare management. Prior to joining Practus, Ashley served as Associate General Counsel for Truman Medical Center (TMC) where she oversaw litigation, managed all aspects of their corporate compliance matters, including governmental audits and investigations, cybersecurity issues, HIPAA enforcement, 340B compliance and provider-based billing. As their Staff Litigation Counsel, she defended and litigated medical malpractice and general liability matters on behalf of the hospital, its employees, physician group and residents. Prior to joining TMC, Ashley was an Associate Attorney for Husch Blackwell.
Ashley is an outdoors woman at heart. When she’s not working, she’s hiking, walking, working in her yard, or playing with her kids. She’s also an avid reader and a football fan especially when she’s watching her favorite team, the Kansas City Chiefs!
Knicole Emanuel Appears on the Hospital Finance Podcast – Suspension of Audits
To listen, please click here.
Highlights of this episode include:
- Background on why CMS will forego all audits unrelated to the coronavirus.
- What types of audits will CMS continue during the coronavirus pandemic?
- What providers need to know about complying with current audits, such as TPE audits.
- How providers can protect themselves by documenting exceptions such as two-day admissions.
- And more…
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®.
As a result of the COVID-19 crisis, the government has suspended most auditing activities for providers. To sort out what that means for hospitals, I’m joined by Knicole Emanuel. Knicole is an attorney at Potomac Law Group in Raleigh, North Carolina, where she concentrates on Medicare and Medicaid regulatory compliance litigation. Knicole, welcome to the show.
Knicole Emanuel: Thank you and thank you for having me.
Mike: Knicole, the government announced that it is suspending survey activities. Practically what does that mean for providers?
Knicole: Well, so right now because of the Coronavirus, CMS has decided to forego audits that are unrelated to the coronavirus. So actually effective April 3, 2020. The only audits that will be conducted will be those audits that are germane to all immediate Jeopardy complaints. Those kind of cases that represent a situation in which an entities non-compliance has placed the health and safety of recipients in its care at risk for serious injury. So we’re talking about potential serious injury or serious harm.
Another audit that’s going to continue would be complaints alleging infection control concerns because that would obviously be impacted by the coronavirus. Any sort of statutorily required recertification surveys are going to be conducted. I would assume that they’re going to be conducted telephonically. They’re not going to be going on-site and revisits necessary to resolve current enforcement actions. That’s important because when this Coronavirus all came about, there were hundreds and hundreds and hundreds, perhaps thousands upon thousands of healthcare providers already in the middle of TPE audits or RAC audits or MAC audit. And they’d already had on-site visits, they’d already had maybe perhaps a lower accuracy rating. And they’re going to be stuck in this cycle of being stuck in the audit until they can get a resurvey because with this coronavirus the penalties that they’re enduring, whether it’s a suspension of admission, or whether it’s a monetary penalty. These penalties are being administered even if they cannot have a secondary or a revisit of the audit to get them off of the penalty that they’re currently on. So it’s really important that people who are in the middle of audit and when all this came down to get them off of the audit cycle so they can go back to providing care.
Mike: So essentially, there are a number of activities that are suspended. But it’s important for providers to know that there is a subset of activities that will continue even during this period.
Knicole: Correct. But they’re all going to be activities that are of the utmost importance. The items that take lower priority are going to be pushed down.
Mike: Okay, and you mentioned the TPE audits a second ago. So that’s the targeted probe and education. Are they going to continue during this time period as far as you know?
Knicole: Well, so as far as I know, they are not going to continue as in they’re not going to start new TPE audit. Now the question then becomes, “Well, I received a document request a month ago for a TPE audit. Do I need to comply now?” And the conservative safe answer is to go ahead and keep complying with these document requests. Although the deadlines for these document requests, those are going to be extended. I’m sure you’ll be able to get extensions for trying to comply with those. And in reality, if you contact the people who are conducting the audit, you may find that the entire audit in general is put on pause. But don’t assume it’s put on pause. Try to make sure you comply, unless you find out it’s on pause. And if you get something over the email or over a phone that says that your TPE audit is paused currently, follow up with an email and get it in writing. Because future audit, they’re not going to remember that your particular audit was with pause during the coronavirus.
Mike: That’s great advice, Knicole. Do you have any other recommendations for providers as they’re navigating through this time?
Knicole: Yes, I do. There are a number of providers right now that are asking for exceptions, and I can give examples. So for example, in the hospital setting, there are hospitals that are asking for waivers for the inpatient admission standards or the two-day admission, or the moon rules. All those kind of things are asking for exceptions, and a lot of the hospital, A lot of the providers are getting the exceptions they need to allow people to have to stay longer in their hospitals because they have nowhere to discharge them. They can’t go back to their nursing homes where the coronavirus may or may not be. And so, because they’re getting all these exceptions, five years from now when you’re undergoing an audit, no one is going to remember that you had this exception that this particular consumer can stay in my hospital for two extra days or five extra days. And five years from now, you may get audited and say, “Well, you got to recoup all this money because you let them stay in for too long of a time.” When in reality, you are given an exception, write all the exceptions down. Keep one place, keep a computer program, keep a hard copy, whatever you want to do, and notebook, if that you want to get down to not having any technology involved. But keep track of all of these exceptions that you get as little as they may be because if you’re getting an exception for one person, and that one person can stay longer than the two-day allowance for the outpatient stays, and you multiply that by, okay, well, now you’ve got to take that exception and extrapolate it again, 200 people over the course of a year, that’s a lot of money we’re talking about. So you need to make sure you keep track of all the exceptions, no matter how small. And keep track of them somewhere that you’re not going to lose them. If your attrition rate is high with executives, you need to make sure that the next people in line had that knowledge so that in future audit, you can explain that you did not abide by the regulations for good reason. You had an exception, but no one’s keeping track of all these exceptions.
Mike: And so, it’s great advice, Knicole. And I know you’ve got a great blog of your own that people can follow. If people wanted to read more about what’s going on here on that blog or get in touch with you, how can they do that?
Knicole: Well, you’re more than welcome to go onto my blog, which is Medicare and Medicaid law. It is at medicaidlawnc.com. You can also contact me at any time. I’m at Potomac Law Group. I help providers across the country and not only in North Carolina, but in 33 states. And so, I am pretty well versed on all the exceptions that I’m seeing. It’s really fast-paced right now. It’s scary. It’s surreal. But it is really important to make sure that everything is written down because in the future– I mean, that old saying that old adage for nurses, if it’s not written, it doesn’t exist, is really going to matter in the future years.
Mike: Knicole, thanks for adding some clarity around this very complex issue. We appreciate you coming back to the show today.
Knicole: Absolutely. Thank you.
Suspension of Audits During the Coronavirus?
Effective immediately, survey activity is limited to the following (in Priority Order):
- All immediate jeopardy complaints (cases that represents a situation in which entity noncompliance has placed the health and safety of recipients in its care at risk for serious injury, serious harm, serious impairment or death or harm) and allegations of abuse and neglect;
- Complaints alleging infection control concerns, including facilities with potential COVID-19 or other respiratory illnesses;
- Statutorily required recertification surveys (Nursing Home, Home Health, Hospice, and ICF/IID facilities);
- Any re-visits necessary to resolve current enforcement actions;
- Initial certifications;
- Surveys of facilities/hospitals that have a history of infection control deficiencies at the immediate jeopardy level in the last three years;
- Surveys of facilities/hospitals/dialysis centers that have a history of infection control deficiencies at lower levels than immediate jeopardy.
See CMS QSO-20-12-ALL.
Obviously, there are so many questions. Providers across the country are asking whether they need to comply with document requests. Are TPE audits continuing? Do they need to comply with ongoing ADRs?
Every bulletin that CMS publishes instigates more detailed and complex questions. With all these relaxed guidelines, won’t RACs, etc. have a field day when this is all over? Of course they will.
General Recommendations:
- Be proactive.
- Document everything.
- Deadlines will be extended.
- Exceptions will be made.
- Keep all email correspondence.
- Maintain copies of everything that you submit. (Do not rely on electronic computer software programs).
- Keep track of CMS updates.
Email me questions, and I will try to respond.
Also, feel free to reach out to the government: QSOG_EmergencyPrep@cms.hhs.gov.
Effective date: 30 days from the memo, which equals April 3, 2020.
Why Auditors Can’t be Unbiased
Last week on Monitor Mondays, Knicole Emanuel, Esq. reported on the case of Commonwealth v. Pediatric Specialist, PLLC, wherein the Recovery Audit Contractors’ (RACs’) experts were prohibited from testifying because they were paid on contingency. This means that the auditor (or the company for which they work) is paid some percentage of the overpayment findings it reports.
In this case, as in most nowadays, the overpayment estimate was based upon extrapolation, which means that the auditor extended the overpayment amount found in the sample to that of all claims within the universe from which the sample was drawn. I have written about this process before, but basically, it can turn a $1,500 overpayment on the sample into a $1.5 million overpayment demand.
The key to an effective extrapolation is that the statistical process is appropriate, proper, and accurate. In many audits, this is not the case, and so what happens is, if the provider believes that the extrapolation is not appropriate, they may choose to challenge the results in their appeal. Many times, this is when they will hire a statistician, like me, to review the statistical sampling and overpayment estimate (SSOE), including data and documentation to assist with the appeal. I have worked on hundreds of these post-audit extrapolation mitigation appeals over the years, and even though I am employed by the provider, I maintain a position as an independent fact-finder. My reports are based on facts and figures, and my opinion is based on those findings. Period.
So, what is it that allows me to remain independent? To perform my job without undue influence or bias? Is it my incredibly high ethical standards? Check! My commitment to upholding the standards of my industry? Check! Maybe my good looks? Well, not check! It is the fact that my fees are fixed, and are not contingent on the outcome. I mean, it would be great if I could do what the RACs do and cash in on the outcomes of a case, but alas, no such luck.
In one large class-action case in which I was the statistical expert, the defendant settled for $122 million. The law firm got something like a quarter or a third of that, and the class members all received some remuneration as well. Me? I got my hourly rate, and after the case was done, a bottle of Maker’s Mark whiskey as a thank you. And I’m not even sure that was appropriate, so I sent it back. I would love to be paid a percentage of what I am able to save a client in this type of appeal. I worked on a case a couple of years ago for which we were able to get the extrapolation thrown out, which reduced the payment demand from $5.9 million to $3,300. Imagine if I got paid even 2 percent of that; it would be nearly $120,000. But that can’t happen, because the moment my work product is tied to the results, I am no longer independent, nor unbiased. I don’t care how honest or ethical you are, contingency deals change the landscape – and that is as true for me, as an expert, as it is for the auditor.
In the pediatric case referenced above, the RAC that performed the audit is paid on a contingency, although I like to refer to it as a “bounty.” As such, the judge ruled, as Ms. Emanuel reported, that their experts could not testify on behalf of the RAC. Why not? Because the judge, unlike the RAC, is an independent arbiter, and having no skin in the game, is unbiased in their adjudication. But you can’t say that about the RAC. If they are being paid a “bounty” (something like 10 percent), then how in the world could they be considered independent and unbiased?
The short answer is, they can’t. And this isn’t just based on standards of statistical practice; it is steeped in common sense. Look at the appeal statistics; some 50 percent of all RAC findings are eventually reversed in favor of the provider. If that isn’t evidence of an overzealous, biased, bounty-hunting process, I don’t know what is. Basically, as Knicole reported, having their experts prohibited from testifying, the RAC was unable to contest the provider’s arguments, and the judge ruled in favor of the provider.
But, in my opinion, it should not stop here. This is one of those cases that exemplifies the “fruit of the poisonous tree” defense, meaning that if this case passes muster, then every other case for which the RAC did testify and the extrapolation held should be challenged and overturned. Heck, I wouldn’t be surprised if there was a class-action lawsuit filed on behalf of all of those affected by RAC extrapolated audits. And if there is one, I would love to be the statistical expert – but for a flat fee, of course, and not contingent upon the outcome.
And that’s the world according to Frank.
Frank Cohen is a frequent panelist with me on RACMonitor. I love his perspective on expert statistician witnesses. He drafted based off a Monitor Monday report of mine. Do not miss both Frank and me on RACMonitor, every Monday.
New Mexico Settlement…Six Years Later!
For the full press release.
This New Mexico settlement…What a long strange trip it’s been!
The litigation started in 2013 (six years ago). I was a partner at another Raleigh, NC law firm. Out of the blue, a woman called me from New Mexico and asked whether I would be willing to fly to New Mexico to testify before the General Assembly regarding Public Consulting Group (PCG) and the company’s extrapolation and audit history.
I did. I testified before the NM General Assembly’s subcommittee for behavioral health care. Sitting next to me was a gentleman from PCG. He happened to be the team leader (not sure what his exact title was) for PCG’s audits in NM and NC. In his defense, he graciously sat there and testified against me while I told some horror stories of PCG audits. See blog.
I met the 15 behavioral health care providers’ CEOs who were accused of credible allegations of fraud. Their stories were so emotional and heart-tugging. These people had dedicated their lives and careers to New Mexico’s most needy population – those on Medicaid and suffering from mental health, substance abuse, and/or developmental disabilities – not for money, but because they cared. Then June 24, 2013, the State of New Mexico accused them all of credible allegations of fraud. NM’s proof? A PCG audit that found no credible allegations of fraud. But Human Services Department (HSD) instructed PCG to remove “no credible allegations of fraud,” and HSD referred the audits to the Attorney General (AG) claiming that credible allegations of fraud existed. Sound like a movie? It could be; it is a conspiracy theory story along the lines of Area 51. Is it a coincidence that Area 51 and the NM behavioral health care debacle both occurred in NM?
“I’d like to get some sleep before I travel
But if you got a warrant, I guess you’re gonna come in.” – Grateful Dead
A timeline of the events, starting in 2013, has been memorialized by multiple news organizations. See Timeline.
“June 24 — An audit paid for by the New Mexico Human Services Department and conducted by Public Consulting Group (PCG) finds that nearly $33.8 million in Medicaid overpayments were made to 15 behavioral health providers in the state.
June 24 — New Mexico Human Services Department notifies the 15 behavioral health providers that there is a “credible allegation of fraud for which an investigation is pending,” and immediately suspends all Medicaid payments.
June 25 — Officials with the New Mexico Human Services Department send initial contracts to five Arizona companies: Agave Health Inc., Valle Del Sol, La Frontera Inc., Southwest Network Inc., and Turqouise Health and Wellness, Inc., to temporarily take over New Mexico behavioral health organizations for a combined price tag of $17.85 million. It’s estimated the move will impact about 30,000 patients. From a July 18 email: “I am following up on the proposed contract between HSD and Open Skies Healthcare (affiliated with Southwest Network, located in Phoenix). On July 3, 2013, I responded to Larry’s [Heyeck, Deputy General Counsel for HSD] June 25 email concerning the contract…”
July 17 – Eight agencies go to U.S. District Court to restore funding.
July 25 – A memo generated by one of the 15 affected providers, TeamBuilders, indicates it will stop taking new clients.
July 25 – A state district judge turns the PCG audit over to New Mexico State Auditor Hector Balderas, and orders the audit protected from public disclosure.
Aug. 21 – In a 15-1 vote New Mexico’s Legislative Finance Committee objects to the Human Services Department moving $10 million from it’s budget to pay Arizona agencies to take over New Mexico providers due to concerns over secrecy surrounding the process.
Aug. 27 – New Mexico In Depth and the Las Cruces Sun-Newsfile a lawsuit demanding the public release of the PCG audit.
Aug. 28 – Federal officials hold conference call to hear about widespread disruptions to clients of behavioral health providers in transition.
Aug. 29 – An Inspection of Public Records Act request filed by KUNM reveals contract communications between New Mexico Human Services Department officials and Arizona providers as early as May 29, a full month before the audit was released by Public Consulting Group.
Sept. 3 – Public Consulting Group representative Thomas Aldridge tells the New Mexico Legislative Behavioral Health Subcommittee that he helped state officials vet at least one Arizona firm before it even began its audit of agencies in the state.
Sept. 3 — Lawyer Knicole Emanuel testifies to ongoing problems with PCG audits conducted in North Carolina as well as lawsuits triggered by PCG activities. “In some of the PCG audits that I have encountered, PCG has said the Medicaid provider owes $700,000, $800,000, $1.5 million, these exorbitant amounts, and at the end of the day when they look at all the documents, it goes down to like $200 or $300.”
Sept. 10 – The Santa Fe New Mexican reports that political ads defending Gov. Susana Martinez have begun rolling out, framing the behavioral health takeover as a crackdown on Medicaid fraud.”
I litigated 4 administrative appeals. Even after the NM AG came out and stated that there was no fraud, HSD accused the providers of owing alleged overpayments, some upwards of $12 million. These amounts were extrapolated.
In the very first administrative appeal, for The Counseling Center, the extrapolation expert was one of HSD’s attorneys. Upon questions regarding his extrapolation and statistical experience and the foundation for his expertise, he testified that took a class on statistics in college. I guess I could be a bowling expert.
PCG only testified in the first two administrative appeals. I guess after PCG testified that they were never given the opportunity to finish their audit due to HSD and that PCG found no fraud, but HSD removed that language from the report, HSD smartened up and stopped calling PCG as a witness. PCG certainly was not bolstering HSD’s position.
For three of the administrative appeals, we had the same administrative law judge (ALJ), who appeared to have some experience as an ALJ. For one of the appeals, we had a younger gentleman as the ALJ, who, according to LINKEDIN, was a professional photographer.
About 5 years after the accusations of fraud, the AG came out and exonerated all the providers. Apparently, there never was any fraud. Only accusations. These exonerations, however, did not stop the allegations of overpayments to HSD. The exonerations also did not stop these companies from going out of business, being tried as fraudsters in the eyes of the public, losing their companies, firing staff, closing their doors, and losing everything.
This was all done under the administration of Susana Martinez – not saying that politics played a huge role in the act of overthrowing these providers.
The providers all appealed their alleged overpayments and filed a lawsuit against HSD and the State for damages suffered from the original allegation of fraud that was found to be meritless.
After an election and a new administration took control, the State of New Mexico settled with the providers, as you can see from the above press release.
During the long journey over the past 6 years, one of the CEOs, Jose Frietz, passed away. He had started his company Families & Youth, Inc. in 1977. A month before he died on March 2, 2016, the AG exonerated FYI.
In 2013, Larry Heyeck was one of the attorneys for HSD. Multiple times during the witch hunt for Medicaid fraud, it appeared that Heyeck had some sort of personal vendetta against the 15 providers. According to one article, “Heyeck singled out Roque Garcia, former acting CEO of Southwest Counseling Services (Las Cruces), who was a recipient of the payments and asked legislators, “What does this mean? How can this money be accounted for to ensure that it isn’t used for private benefit?” Heyeck then asserted that Garcia had abused agency travel funds largely paid for by Medicaid through lavish travel to resort destinations in a private aircraft.”
Garcia wasn’t the only provider accused of misappropriating Medicaid funds. Shannon Freedle and his wife Lorraine were ostracized for having their abode in Hawaii.
Larry Heyeck, had an article published in the December 2012’s American Bar Association’s “The Health Lawyer” discussing the effect of 42 CFR 455.23 on Medicaid fraud and suspensions of Medicaid reimbursements. It was entitled, “Medicaid Payment Holds Due to Credible Allegations of Fraud.” Seem apropos?
By 2016, all 15 providers were cleared of allegations of fraud, but most were out of business.
Now – December 4, 2019 – a press release is disseminated to show that the last of the providers settled with the State of New Mexico. What the press release fails to express is the struggle, the financial and non-financial damages, the emotional turmoil, and the devastation these companies have endured over the past 6 years. No amount of money could ever right their catastrophic, past 6-years or the complete demise of their companies based on erroneous allegations of fraud.
“Sometimes the light’s all shinin’ on me; Other times, I can barely see; Lately, it occurs to me; What a long, strange trip it’s been.” – Grateful Dead
