Cases & Deals

Family Rehab can seek injunction against ongoing recoupments

Clients Family Rehabilitation, Inc.

Jones Day represented Family Rehabilitation, Inc. ("Family Rehab"), a home health provider, in a matter regarding the recoupment of alleged extrapolated Medicare overpayments. On March 27, 2018, the Fifth Circuit Court of Appeals ruled that the district court had jurisdiction to determine whether an injunction should issue in favor of Family Rehab to suspend the recoupment of $7.6 million in alleged extrapolated Medicare overpayments pending Family Rehab's appeal to an administrative law judge ("ALJ").

The court held that the stay of recoupment sought by Family Rehab was collateral to any substantive agency decision and that given the likelihood of shuttering and the disruption of services to Medicare patients, Family Rehab met the collateral-claim exception under Mathews v. Eldridge, 424 U.S. 319, 326-32 (1976). The court referenced the "Byzantine four-stage administrative appeals process" and pointed out that the "colossal" backlog of appeals meant that Family Rehab would not receive an ALJ hearing within the 90 days required by statute, nor even "within 900 days." The court noted that the current backlog, which is now at 600,000 pending appeals resulting in three- to five-year delays, presented a collateral challenge that could not be remedied after the exhaustion of administrative review, thereby allowing the courts to deem exhaustion waived. Although the court's decision simply confers jurisdiction and is not a decision on the merits, it provides health care providers with the opportunity to seek suspension of alleged Medicare extrapolated overpayments while awaiting an ALJ appeal. This decision is important toward reestablishing procedural due process for providers in a system that is plagued by long delays in which ALJs are not even being assigned for three to five years.

Family Rehab., Inc. v. Azar, No. 17-11337 (5th Cir. Mar. 27, 2018); Family Rehabilitation Inc. V. Hargan et al., No. 3-17-cv-03008 (N.D. Tex.)