Court rules for HHS in overpayment case

By Michael P. Tremoglie | Apr 10, 2012

WASHINGTON (Legal Newsline) - A federal court has ruled against Gentiva Healthcare Corp. in a lawsuit it filed against the Department of Health Human Services.

Gentiva sued HHS in the U.S. District Court for the District of Columbia, claiming that HHS' allegation Gentiva was paid more than it deserved is false. The Court issued its ruling Wednesday in favor of HHS.

Gentiva provides home health services to Medicare. A Medicare contractor, Cahaba Safeguard Administrators, undertook a review of a subset of Gentiva's Medicare claims in 2007. It determined that there was a "sustained or high level of payment error" for Gentiva's claims. Specifically, Cahaba concluded that Gentiva's Salt Lake City location was responsible.

The contractor calculated Medicare's total overpayment to Gentiva "by extrapolating from a sample of 30 claims to the universe of 1,951 claims. After determining that 26 of the 30 claims in the sample had been overpaid, the contractor extrapolated that 85.64% error rate across the total number of claims and sought to recoup from Gentiva the sum of $4,242,452.10 in Medicare overpayments."

Gentiva asked for and received administrative review of the assessment and eventually succeeded in overturning the contractor's overpayment determination with respect to most of the claims in the sample. The total amount Gentiva owed was reduced to approximately $850,000. HHS, however, upheld the contractor's finding and method of calculation.

The plaintiff is claiming that the HHS decision upholding the contractor's method of calculation of the excess payment amount was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law in violation of the Administrative Procedure Act and the Medicare statute."

The court said in its opinion that the Medicare statute contains a broad authorization for the HHS Secretary to delegate responsibilities to contractors. It also said that HHS interpretations of its own statutes are entitled to deference by the courts.

Therefore, it ruled that the determination that a contractor may make the "sustained or high level of payment error" determination was "neither arbitrary and capricious nor contrary to law."

The court also said that "Congress expressly precluded judicial review of "sustained or high level of payment error" determinations. Therefore the court "lacks jurisdiction to consider Gentiva's challenge to the contractor's finding that such a level of payment error existed here."

Both HHS and Gentiva filed motions for summary judgment. The court granted HHS' and denied Gentiva's.

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