On January 3, 2022, the U.S. Court of Appeals for the Fifth Circuit Court reversed the decision of the District Court for the Western District of Louisiana dismissing for lack of jurisdiction a Medicare provider’s suit seeking a determination of the repayment amount to the provider by HHS in connection with a prior initial determination that HHS erroneously recouped overpayment amounts from the provider. Applying the U.S. Supreme Court’s decision in Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000), the Fifth Circuit concluded that the district court had jurisdiction over the provider’s repayment suit where, as here, the suit is a continuation of the initial determination by the Medicare Appeals Council (MAC) that HHS had erroneously recouped overpayment amounts from the provider. The Fifth Circuit held that suits by Medicare providers seeking repayment of amounts erroneously recouped by HHS are reviewable by district courts under 42 U.S.C. 405(g) as continuous aspects of the initial, properly exhausted, administrative decision.
The Medicare provider in this case provided medical laboratory testing services to nursing homes and homebound Medicare beneficiaries. In 2014, a Medicare integrity contractor found that HHS had overpaid the Medicare provider by over $8 million, and the contractor started recouping the overpaid amount on behalf of HHS. The Medicare provider administratively appealed the contractor’s overpayment determination. Several years later, at the end of a lengthy administrative appeal process, the MAC issued a decision in favor of the provider and reversed the contractor’s initial overpayment determination. However, the MAC failed to specify the repayment amount owed by HHS to the provider based on the contractor’s erroneous overpayment finding. The provider filed a federal district court action, seeking repayment of the amount improperly recouped by HHS.
HHS moved to dismiss the provider’s suit for lack of jurisdiction, arguing, among other things, that the Medicare provider had not administratively exhausted its repayment claim. The district court agreed and dismissed the suit, reasoning that the provider’s action seeking to “effectuate” the repayment of recouped funds constituted a separate agency action that the provider must first administratively exhaust.
On appeal, the Fifth Circuit reversed. According to the Fifth Circuit, under the Supreme Court’s decision in Illinois Council, “certain ‘contentions’ relevant to the ‘action arising under the Medicare Act’ are reviewable by the courts, even if those ‘contentions’ themselves were not subject to a hearing.” Specifically, federal courts have jurisdiction to review “any statutory or constitutional contention that the agency does not, or cannot, decide.” HHS argued “effectuating” the repayment of recouped funds was a decision the agency could decide because the Medicare provider could seek redetermination of the agency’s decision. However, the Fifth Circuit rejected HHS’s argument noting that redetermination only applies to “initial determinations” and an “initial determination” is a decision regarding an individual’s entitlement to benefits. Quantifying the required repayment is “inextricably intertwined with the initial exhausted agency action,” and could only occur after the Appeals Council had reversed the overpayment decision (i.e., after reversing the initial determination). Therefore, there could be no redetermination and quantifying the amount HHS owed to the provider was a question HHS “[did] not, and cannot, decide.”
The Court also added, “it would be unconscionable to require a party to exhaust administrative remedies in order to prove that Medicare erroneously collected recoupment, and then to spend several more years of administrative appeals simply to determine the amount it is owed.”
The case is D&G Holdings, L.L.C. v. Becerra, No. 20-cv-30732, 2022 WL 18979 (5th Cir. Jan. 3, 2022). The full opinion is available here.
