The case, which arose on April 1, demonstrates an exhaustion of administrative remedies.
In Guidry v. CMS, Guidry was a pro se medical doctor. This plaintiff should not have been so keen to jump into District Court, especially unrepresented. Guidry sued the Centers for Medicare & Medicaid Services (CMS) and asked the Court to order CMS to return recouped funds and to stop new recoupment efforts. CMS moved to dismiss this suit, because the plaintiff hasn’t completed the administrative appeals process.
Recoupment is how the federal government accounts for overpayment of Medicare funds made to medical providers like the plaintiff. Generally, 42 CFR 405.370(a) dictates how the government recoups its losses: by withholding from future Medicare payments made to a provider.
Guidry went through an administrative law judge (ALJ) appellate level, but jumped the gun and filed the ALJ appeal in District Court, instead of filing with the Medicare Appeals Council, which is the fourth level of Medicare provider appeals.
Of course, the case was dismissed for failure to exhaust administrative remedies.
In another case from February 2022, the District Court in the Southern District of Texas upheld the waiver of liability defense in a recoupment matter. 42 USC 1395pp(a)(2) holds that if a provider did not know and could not reasonably have been expected to know that payment would not be made for such items or services under Medicare, the provider cannot be liable. In Angelitos Health Care, Inc. v. Becerra, the government attempted to argue that the home health facility had constructive knowledge of the coverage criteria for home health services in effect on the dates of service at issue, but ultimately failed.
The provider also tried to raise issue with the extrapolation and get it thrown out. But because the extrapolation defenses were not raised at the lower levels of appeal, the Court would not contemplate it. This goes to show you: bring all your defenses at the first level. Failure to bring up defenses can cause you to waive them, which is what happened here. However, the facility lucked out with the waiver of liability defense.
The three big legal defenses for providers are the waiver of liability, providers without fault, and the treating physician rule, if medical necessity is questioned. Lessons learned from these two cases: one, exhaust your administrative remedies, and two, know your defenses.
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