A federal court has ordered discovery regarding the circumstances of a Medicare payment suspension by CMS only one week after failed settlement negotiations between a cardiology practice and the Department of Justice (DOJ) to resolve a pending False Claims Act (FCA) lawsuit. A copy of the order is available here. The provider petitioned the court for a preliminary injunction following what it claims was a retaliatory suspension of its Medicare payments, after an impasse in settlement talks with the DOJ. Arguing that the DOJ improperly coordinated with CMS to implement the payment suspension, the provider alleged it was being penalized for exercising its Fifth Amendment right to defend itself against the government's accusations of fraud. The federal court found that the temporal proximity of the suspension decision and the breakdown of settlement discussions "raises the index of suspicion of concerted action between the DOJ and CMS." The judge then ordered limited discovery regarding the CMS decision to suspend payment.
The key takeaway from this decision is that providers who reach an impasse in FCA settlement negotiation with the DOJ might have payment suspended by CMS, if CMS can establish that a "credible allegation of fraud" exists. Despite the court's receptivity to the provider's arguments and its order to allow discovery regarding the circumstances of the CMS decision to suspend payment, this decision may also signal a new and troubling prospect of increased coordination between CMS and the DOJ in active FCA matters.
Medicare and Medicaid Payment Suspensions
CMS and its contractors (in consultation with the OIG and the DOJ), have the authority to suspend Medicare payments to providers based on a "credible allegation of fraud," unless good cause exists not to suspend payment.1 The government's burden in meeting this standard is relativity low, and a suspension can be triggered by billing patterns identified by audits, FCA cases, law enforcement investigations, hotline complaints and claims data mining, so long as the allegations have some indicia of reliability.2 CMS can suspend payments for up to 18 months, but suspensions in excess of 6 months require a formal request from the OIG or the DOJ.3 In addition, state Medicaid programs are required to suspend payments to providers based on a "credible allegation of fraud" unless the Medicaid program has good cause not to do so. Medicaid payment suspensions do not require notice to the provider for a period of up to 90 days, and Medicaid programs have substantial discretion in determining the length of the suspension.4
Key Takeaways for Healthcare Providers
-
CMS and state Medicaid programs have wide latitude in their ability to suspend payments to providers based on a "credible allegation of fraud."
-
FCA investigations or litigation can trigger a payment suspension, even before the DOJ prevails or proves a provider has committed fraud. Accordingly, providers facing FCA investigations or litigation should be aware of the possibility that a payment suspension by CMS or state Medicaid program may occur.
-
Even in situations where a provider who is subject to an FCA investigation or litigation has continued to receive federal reimbursement, if settlement negotiations reach an impasse, the DOJ may coordinate with CMS to suspend Medicare payments as long as CMS can establish a "credible allegation of fraud."
