On March 7, 2016, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal of  hospital system’s request for a mandamus order directing HHS to provide a hearing before an administrative law judge (“ALJ”) on $12.3 million in Medicare reimbursement claims, which had not occurred within the statutorily-required 90-day period after the system filed its appeal. 

Cape Fear Valley Health System (“CFVHS”) sought a mandamus order arguing HHS violated federal law by failing to have an ALJ conduct and conclude a hearing and render a decision within 90 days of the filing for a hearing request, as required by 42 U.S.C. 1395ff(d)(1).  The district court dismissed the case on the grounds that CFVHS did not have a clear and indisputable right to an ALJ hearing within a 90-day time frame.  The court concluded that Congress and the agency, rather than the courts, were better suited to address the backlog in the administrative process, which HHS conceded was 800,000 appeals as of February 2014 -- a ten-year backlog. 

The Fourth Circuit affirmed, noting that the appropriate remedy for HHS failing to meet the 90-day deadline was to escalate the appeal to the Departmental Appeals Board.  In other words, judicial review is appropriate only after completing the four-step administrative review process, the last step of which is the Departmental Appeals Board de novo review.

While CFVHS argued that bypassing the ALJ hearing would result in a denial of due process because it would deprive the health system of a full administrative record to present to the Departmental Appeals Board, the Fourth Circuit noted such a record could be created at the QIC stage and that  introducing  evidence that was not presented during the QIC was prohibited by 42 U.S.C. 1395ff(b)(3).  The Fourth Circuit further noted that judicial intervention into HHS’s administrative process would not improve the delay providers are experiencing overall, but would simply put one provider ahead of another in the queue; therefore, such a remedy should be avoided as a matter of equity.  Thus, it is up to the political branches to alleviate the delays that exist in the Medicare claims appeals process.

The Fourth Circuit’s opinion is available here.

Reporter, Lara Compton, Los Angeles,  +1 (213) 443-4369, lcompton@kslaw.com.