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A Story of Three Medicaid Providers’ Erroneous Terminations
I have a story for you today that affected three, Medicaid, behavioral health care providers back in 2013. Instead of me spouting off legal jargon that no one understands, I am going to tell you a nonfictional story.
Since both stories occurred in NC, we will use DHHS, the Department of Health and Human Services, which is the acronym for NC’s Medicaid agency.
In 2013, a Residential Level IV facility was shut down overnight by the managed care organization (“MCO”), Alliance, which was one of many MCOs that managed all behavioral health care for NC Medicaid recipients within their respective, catchment areas. The facility, we will call Alpha, housed 5-6, at-risk, teenage, African American, males, who could not reside in their family’s home due to mental illness, substance abuse, legal trouble, and/or violence. The owners of Alpha, themselves were large, muscular, African American males, which, I can only imagine, was to their benefit.
Alliance terminated Alpha from its catchment area, but since Alpha only provided Medicaid services in Alliance’s catchment area, Alliance’s decision would close a business immediately, terminate all staff, cause the owners to lose their careers, and the residents would have no home.
Alpha hired me. We were successful in obtaining an injunction. Click on “injunction” to read my blog about this exact situation in 2013, written by me in 2013. I have written numerous blogs on the topic of erroneous terminations of Medicaid providers over the years. Here are a couple: blog and blog.
An Administrative Law Judge (“ALJ”) ruled in our favor that Alliance does not have the legal authority to terminate a provider for no reason or any erroneous reason. The ALJ Stayed the termination and Ordered Alliance to reverse the termination and continue to contract with Alpha.
Whew! We thought. Then, Alliance flat-out ignored the ALJ’s Order.
We brought a Motion for Contempt and/or Sanctions; however, we were instructed, at the time, that a Writ of Mandamus was the appropriate venue in Superior Court. This too was unsuccessful.
During our legal battle for Alpha, we were successful in obtaining injunctions for two other provider also terminated without cause.
Alpha did close. But the bright side of the story is what happened in the future. Those 3 injunctions, which were ignored by MCOs to the detriment of the three providers, were the last ones to be ignored. In the years that followed, OAH ALJs routinely held MCOs accountable for erroneous terminations and without cause terminations.
My team has witnessed successful injunctions across the country that protect providers from arbitrary and capricious terminations. We have litigated many of these successful injunctions.
Managed Care Ruins Medicaid and Terminates Providers at Whim!
If you receive a letter from CMS or your State Department terminating your Medicare or Medicaid contract, would that affect you financially? I ask this rhetorical question because providers’ rights to a Medicare or Medicaid contract or to reimbursements for services rendered is a split in the Circuit Courts. Thankfully, I reside in the 4th Circuit, which has unambiguously held that providers and recipients have a property right in reimbursements for services rendered, a Medicare/caid contract and the right to the freedom of choice of provider. If you live in the 8th Circuit Court of Appeals, I am sorry. You have no rights.
Usually when there is split decision among the Circuit Courts, the Supreme Court weighs in. But, it has not. In fact, it declined to opine. Timing is everything. A 4th Circuit court of Decision giving providers property rights requested the Supreme Court to weigh in and finally end this rift amongst the Circuits. But, sadly, Justice Ginsburg died on September 18, 2020. The Supreme Court declined to review the Fourth Circuit decision on October 13, 2020. Justice Barrett was confirmed by the Senate on October 26, 2020 and was sworn in on October 27, 2020. So, the certiorari was denied – I assume – due to the vacant seat at the time.
In 40 States, managed care manages Medicaid. The contracts they write are Draconian, saying that either party may terminate at will for no cause but for convenience. Termination at will is all fine and good in the private sector. However, Medicare and Medicaid are highly regulated, and when tax dollars and access to care are at issue, property rights are created.
In NC State Court, against the judgment of the 4th Circuit, a November 5, 2021, unpublished case determined that providers have no property rights to a Medicaid contract and an MCO can terminate at whim. Family Innovations v. Cardinal Innovations Healthcare Solutions, No. COA20-681 (June 1, 2021). Unpublished decisions are supposed to carry no weight. Unpublished decisions are not supposed to be controlling. Citation is disfavored.
Yet, in a strange turn of events, our State administrative courts have rendered, in the last week and in violation of 4th Circuit and administrative case law, that the termination-at-will clause in the MCO contract that a provider is forced to sign stands and is enforceable. These were new Judges and obviously were not well-versed in Medicaid law. Both came from employment law backgrounds, which is completely different than the health care world. But their rash and uneducated decisions bankrupt companies and shut down access to care for medically necessary behavioral health care services.
The upshot? If you have managed care companies in charge of your Medicaid or Medicare contracts, review your contracts now. Is there a termination-at-will clause? Because if there is, you too could lose your contract at any time. Depending on where you reside, you may or may not have property rights in the Medicare Medicaid contract. This is an issue that the Supreme Court must decide. Too many providers are getting erroneously and discriminatorily terminated for no reason and given no due process.
We must bring litigation to thwart the Courts that uphold termination-at-will clauses. Especially, in the era of COVID, we need our health care providers. We certainly do not need the MCOs, which kill access to care.
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.”
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.
