Medicaid Suspension Lifted Due to Lack of Evidence of Intent

Happy 2021! I have great news to share. I’m fairly sure that everyone reading is educated about what a preliminary injunction is, and how important it can be for a healthcare provider falsely accused of fraud to lift the mandatory suspension of reimbursement.

Over the holidays, a judge found that an indication of intent is required for an accusation of credible allegations of fraud, unlike in past cases, in which a mere accusation results in suspensions (42 CFR §455.23 mandates that a healthcare provider’s reimbursements be suspended based on “credible allegations of fraud,” which is a low bar.) My client, an oral surgeon, had a disgruntled employee complaint and a baseless audit of $6,000: a double threat.

For those not in the know: an injunction is an extraordinary legal tool that allows the judge to suspend whatever inappropriate action the government or one of its auditors take.

You have to prove the following:

• Likelihood of success on the merits;
• Irreparable harm;
• Balance of equities; and
• Public Interest.

I would guestimate that only 10-20 percent of requests for temporary restraining orders (TROs) and preliminary injunctions (PIs) are granted. Last week, however, we won for the oral surgeon. Everyone can learn from his success. This is how we won; let me set the stage. We have an oral surgeon who underwent an infamous audit resulting in an alleged $6,000 overpayment. Concurrently, the surgeon’s data was sent to program integrity, and one month later and without any notice, his reimbursements were suspended based on a “credible allegation of fraud.” Concurrently, he had a disgruntled employee threatening him.

Remember that the bar to demonstrate a “credible allegation of fraud” is amazingly low. It is an “indicia of reliability.” An inaccurate audit and a disgruntled employee, in this case, were the catalyst for the oral surgeon’s Medicaid reimbursements being placed at risk. His practice is comprised of 80 percent Medicaid, so the suspension would have caused irreparable harm to the practice.

We filed a TRO, PI, and motion to stay. The day before Christmas, we had our trial.

The judge ruled that the U.S. Department of Health and Human Services (HHS) cannot just blindly rely on an anonymous accusation. There has to be some sort of investigation. It is not OK to accept accusations at face value without any sort of independent fact-checking. The judge created an additional burden for the Department, in cases of accusations of fraud, that is not present in the regulation. But it is logical and reasonable to expect the Department to explore the accusations. The judge emphasized that fraud requires intent. He also pointed out that fraud is not defined in the regulations. He further emphasized that billing errors are not inherently intentional acts.

The judge held that “[i]n light of the large number of Medicaid beneficiaries treated by the Petitioner’s practice, the rarity of the physician’s skills, and the apparent demand for those services, the relatively small amount of money now or formally in controversy, the lack of evidence of actual fraud and the contrary indications, the high probability that good cause exists for not suspending Petitioner’s Medicaid payments, and the near certainty of irreparable harm to the Petitioner if the relief is not granted, a TRO should be granted.”

Even better, the judge ordered that the surgeon did not have to put up a bond, which is normally required by law. By the stroke of the judge’s pen, the surgeon could go back to work performing medically necessary services to Medicaid recipients (and by the way, it is rare for an oral surgeon to accept Medicaid).

This is a success for healthcare providers everywhere. Accusations of fraud should require independent corroboration and evidence of intent.

Programming Note: Listen to Knicole Emanuel’s live reporting everyday Monday on Monitor Mondays, 10 a.m. Eastern.