Third Circuit denies counsel fees in Medicare overbilling case

By Jessica M. Karmasek | Apr 23, 2012


PHILADELPHIA (Legal Newsline) - A federal appeals court last week upheld a lower court's decision to deny a psychologist -- who allegedly overbilled Medicare and owed the government hundreds of thousands in overpayments -- his request for attorneys' fees.

On Friday, the U.S. Court of Appeals for the Third Circuit said it sympathized with Dr. John Handron's "plight," but was "constrained to agree with the determination that his request was properly denied."

Handron appealed from the denial of his request for counsel fees following his challenge to the government's claim that he owed it more than $600,000 in overpayments.

At an administrative law judge hearing to contest the government's claim, Handron presented extensive evidence. However, the government neither appeared nor presented argument or advocacy, either written or in person.

The ALJ concluded that the overpayment was actually $5,434.48.

Handron then moved, pursuant to the Equal Access to Justice Act, to recoup the tens of thousands of dollars in attorneys' fees and expenses he incurred in fighting the overpayment demand.

His request for fees was denied by an administrative appeals council and the U.S. District Court for the District of New Jersey, based on their conclusion that the hearing before the ALJ was not an "adversary adjudication," as is required for an award of fees under the EAJA.

The district court ruled that a person representing the government must physically appear at the hearing for it to constitute an adversary adjudication under the act.

Judge Marjorie O. Rendell, who wrote the Third Circuit's 24-page ruling, said given the statutory definition of an "adversary adjudication," Handron's request was properly denied.

However, the Third Circuit disagreed with the district court's ruling that the "mere fact" that the government did not appear in person at the hearing was a sufficient basis to conclude that the adjudication was not adversary in nature.

"If Congress wanted to limit the EAJA's applicability to cases in which an individual representing the government physically appeared at an agency proceeding, it could have so stated," Rendell wrote.

"The statute does not say that the government's position must be represented 'by counsel or other individual appearing on its behalf.' Such language would indicate the necessity of the actual presence at the hearing of someone representing the government, but that was not the language Congress chose.

"Instead, Congress chose language that left open the possibility that the government's position could be represented in some other manner and by someone other than a lawyer."

Unlike the district court, the Third Circuit said it does not believe that an adversary adjudication, under the EAJA, requires the government to send a human being to the relevant agency proceeding.

"This indicates Congress's recognition that the position of the United States can be represented in many ways and its desire to grant judges some discretion in determining whether particular action 'represents' the government's position," Rendell wrote.

"It does not suggest that the government's position can only be represented at a hearing if a government representative physically stands before the decision-maker."

The judge added, "Moreover, the fact that the statute speaks of the government's position being represented, rather than the government itself, further suggests that a physical appearance at an agency hearing is not necessary to implicate the EAJA."

The act was passed, in large part, to allow individuals and small businesses to fight back against unjustified government action, without fear that the high cost of doing so would make victory ultimately more expensive than acquiescence, Rendell explained.

Rather, the EAJA requires that the government direct some "purposeful advocacy" at the decision-maker, whether written or in person, the judge said.

"A written statement is often an effective way to advocate one's position. We frequently decide cases in which the parties' respective positions are represented solely by written submissions," Rendell wrote.

However, that requirement also was not met in this case, the Third Circuit said.

"The government did not file a brief with the ALJ, let alone make an appearance to urge that its position be adopted," Rendell wrote.

"While the government did provide the ALJ with a description of the statistical methodology it used to arrive at its figure, this did not rise to the level of purposeful advocacy directed at the decision-maker that would render Dr. Handron's hearing an adversary adjudication under the EAJA.

"Therefore, although we disagree with the test the district court applied, we agree with its conclusion that Dr. Handron's ALJ hearing was not an adversary adjudication and that he is not entitled to collect his fees under the EAJA."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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