We Won! A Reconsideration Success Story

I’d like to begin today with a quick shout-out to North Carolina State University, my undergraduate alma mater, for their stunning upset win over rival University of North Carolina in the Atlantic Coast Conference (ACC) Tournament Final, sending them dancing into March Madness.

I love legal success stories, too. Because when my team wins, healthcare providers win.

Well, my firm and I had a recent success that I must mention here.

One of my clients, a substance abuse facility, which provides substance abuse intensive outpatient program (SAIOP) and substance abuse comprehensive outpatient treatment (SACOT) services to the underserved in Idaho, is under civil and/or criminal investigation. The investigation began over two years ago, which is a material fact in this case. The substance abuse facility was being accused of healthcare fraud because it gave out gift cards and allegedly billed for services not rendered.

As for billing for services not rendered, we disagree, and the government has not provided any proof for the last two years. As for the gift cards, many of you may not know that in March 2022, the Office of Inspector General for the U.S. Department of Health and Human Services (HHS OIG) published an Advisory Opinion in support of such activity.

OIG stated that patient incentives (e.g. gift cards or cash equivalents) given as part of patients’ treatment plans are favorable and allowable. Though the OIG reiterated its concern that cash and cash equivalents given to patients can present substantial fraud and abuse risks, the OIG concluded that the arrangement presented a minimal level of risk.

For over two years, this company and its CEO have known that they are under civil and/or criminal investigation. The facility has continued to provide medically necessary services throughout the investigation. Then, unexpectedly, right before Christmas 2023, the facility received a notice that the state Division of Health Benefits had suspended the company’s Medicaid reimbursements. The company relies 100 percent on Medicaid.

The State does have the authority to suspend reimbursements. 42 CFR 455.23 states:

“The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.”

The owner contacted me and explained that the company could not last a month without receiving Medicaid reimbursements for services rendered. It was catastrophic. His two facilities constitute over 24 percent of Idaho’s substance abuse facilities. There would be a serious access-to-care issue, especially in southern Idaho.

I reviewed the notice of suspension, and appeal rights appeared there. And at this point I was astonished.

I have never seen appeal rights given for “credible allegations fraud” under 42 CFR 455.23.
We appealed.
We won!

I argued threefold: 1) there is no credible allegation of fraud because the allegations that services were billed but not rendered is wrong, and presenting gift cards is not illegal when dealing with substance abuse; 2) nothing has changed since the investigation over two years ago; the provider has been rendering services during his investigation. Why now arbitrarily invoke a penalty on the facility when the government has been investigating for over two years? Why two years later suspended when seemingly nothing has changed? And 3) the suspension was a violation of due process.

Specifically, the court held that the State has had two years to investigate any allegations, but for two years no action was taken, and no findings were provided. Now, the State has decided to arbitrarily and capriciously suspend Medicaid payments to the provider. The suspension of Medicaid payments should be reversed, being as it was improper due to an absence of any credible allegation of fraud. Additionally, the provider did not receive adequate notice, or a chance for a hearing, before the suspension action was taken. The suspension of payment was causing irreparable harm that would have led to the provider having to close their business of providing mental health and substance abuse services.

But just like that, the suspension was lifted and the provider remains in business. I call that a win! And congratulations again to the NCSU Wolfpack! They were seeded 10^th, but would up No. 1 in the ACC.