On June 28, 2018, the U.S. District Court for the Northern District of Texas granted a motion for preliminary injunction which prevents CMS from recouping alleged overpayments of approximately $7.5 million from Family Rehabilitation, Inc. (Family Rehab), a Texas home health agency. Specifically, the preliminary injunction will prevent CMS from recouping the alleged overpayments while Family Rehab is waiting for an Administrative Law Judge (ALJ) hearing. The alleged overpayments of more than $7.5 million pertain to a Zone Program Integrity Contractor review that was performed in 2016 and alleged a 93-percent error rate.
Over the past several years, the Office of Medicare Hearings and Appeals has struggled under what HHS describes as an “unprecedented and sustained” increase in Medicare appeals. 81 Fed. Reg. 43790, 43792 (July 5, 2016). According to HHS, the number of requests for an ALJ hearing increased a staggering 1,222 percent from fiscal years 2009 through 2014. Id. Although 42 U.S.C. § 1395ff generally requires a 90-day adjudication timeframe for ALJs, many providers are currently waiting several years to receive an ALJ hearing date. Providers are unable to limit recoupment following the second-level appeal.
In granting the preliminary injunction, the court determined that Family Rehab “has established a substantial likelihood of success on the merits of its procedural due process claim . . . [and] [th]ere is a high risk that Family Rehab will be erroneously deprived of its property interest because CMS will continue recouping alleged overpayments from Family Rehab without providing the statutorily mandated ALJ hearing.” Importantly, the court acknowledged the significant Medicare appeals backlog and concluded that Family Rehab would not receive an ALJ hearing for three to five years.
Additionally, the court determined that Family Rehab established a substantial threat of immediate and irreparable harm for which no adequate remedy at law exists. The court further concluded that the “balance of harms in granting the preliminary injunction between Family Rehab and Defendants weighs in favor of granting the relief.” Specifically, the court reasoned that Family Rehab would be forced to close its doors if the preliminary injunction was not granted. Conversely, the court concluded that CMS would not similarly suffer harm because CMS will have the opportunity to recoup the alleged overpayments at a later point in time if Family Rehab’s ALJ appeal is unsuccessful.
The case is Family Rehabilitation, Inc. v. Azar, Case No. 3:17-cv-03008-K. The court’s order is available here.
