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New Vision Home Health Care, Inc. v. Anthem, Inc.

United States District Court, E.D. Michigan, Southern Division

August 28, 2017

NEW VISION HOME HEALTH CARE, INC., et al., Plaintiffs,
ANTHEM, INC., et al., Defendants.


          Victoria A. Roberts United States District Judge

         This matter is before the Court on Defendants' Motion for Reconsideration. The Court finds there was a palpable defect by which it and the parties were misled in issuing its first Order. By addressing it, a different outcome is warranted. Loc. Civ. R. 701(h)(3). Accordingly, the Court GRANTS Defendant's Motion for Reconsideration and GRANTS Defendants' Motion to Dismiss. This revised order addresses the issues raised by both defense motions.


         New Vision Home Health Care, Inc., and Saleem Shakoor, the owner of New Vision (collectively, “New Vision”), filed suit against National Government, Inc., TrustSolutions, LLC, and Anthem, Inc. (collectively “Defendants”). New Vision's Second Amended Complaint (“SAC”) contains eight claims: Count I - writ of mandamus for enforcement of the ALJ's September 4, 2013 decision (Contractors Within Course and Scope); Count II - writ of mandamus for enforcement of the ALJ's September 4, 2013 decision (Contractors Outside of Course and Scope and Failed to Exercise Due Care); Count III - negligence; Count IV - gross negligence; Count V - tortious interference with business relationships and expectancies; Count VI - violation of right to procedural due process; Count VII - declaratory judgment; and, Count VIII - injunction.

         Defendants are government contractors for the Medicare program administered by the U.S. Department of Health and Human Services (“HHS”). New Vision submits Medicare claims to Defendants; they determine how much Medicare must pay New Vision for home health care services.

         In 2007, Defendants initiated an audit of New Vision's Medicare claims for dates of service from May 8, 2003 through October 3, 2006. Defendants paid these disputed claims, from January 1, 2004 to December 10, 2006. Subsequently - through an audit sample - Defendants concluded that it overpaid New Vision $672, 493.57 for claims for dates of service May 8, 2003 through October 6, 2006. Defendants then used a statistical extrapolation formula to calculate an estimated total overpayment to New Vision of $4, 155, 239.00 (“Disputed Amount”) for that period.

         In its Second Amended Complaint, New Vision says from October 2010 to the present, Defendants have not paid any claims New Vision has submitted, and that Defendants have withheld payments in order to recoup the Disputed Amount. (SAC ¶ 42 and 43). However, in papers filed in connection with Defendants' motions, New Vision says Defendants have withheld payments since 2006 (Doc. # 36; Pg ID 1145). For purposes of this Opinion, the Court will use the 2006 date.

         In 2008, New Vision filed a claim through the Medicare Appeal Process over the Disputed Amount for 2003-2006. The Administrative Law Judge (“ALJ”) ruled in its favor. Defendants appealed the decision through the Medicare Appeals Council (“MAC”). The MAC remanded for a new ALJ hearing. On June 7, 2012, the ALJ conducted a hearing. New Vision presented arguments contesting the validity of the methodology the Defendants used to determine the estimated overpayment. It also presented reports from a statistical expert who analyzed Defendants' data and methodology. Defendants' evidence included medical records and an analysis of each medical claim submitted by New Vision between 2003 and 2006.

         In his decision, the ALJ set forth the issue before him: “whether New Vision received and retained the total overpayment amount identified by [Defendants] …, and if so, whether [New Vision] is liable for return of the amount the [Defendants] calculated by extrapolation based upon its findings from its medical reviews of the claims in a statistical sample it had drawn.” [Doc. 18-1; Pg ID 451]. To resolve this issue, the ALJ went through each of the 228 claims at issue and listed the amount of overpayment amount, if any, for that claim.

         The ALJ entered a decision on September 4, 2013 that was partially favorable to New Vision; instead of being required to pay the entire Disputed Amount, the ALJ concluded that New Vision was overpaid only $35, 872.28; this is the amount New Vision had to return to Defendants.

         The ALJ stated these conclusions of law:

1. Some of the claims New Vision submitted to Defendants met the Medicare coverage criteria.
2. The reimbursements Defendants made for those claims to New Visions were appropriate and did not constitute overpayments.
3. Other home care services New Vision provided did not meet Medicare coverage criteria and/or condition for payment, and New Vision was overpaid for those claims.
4. The statistical sampling and methodology Defendants used to calculate the overpayment had numerous defects, which diminished the reliability and probative value of the evidence.
5. Because the sample was not valid, the resulting amount of the overpayment, calculated by extrapolation for the universe of claims, was not valid.
6. The overpayment amount subject to recovery was limited to the actual overpayment amounts based upon the ALJ's dispositions after conducting individual reviews of the medical records related to the episode claims in the sample and the claim lines there.

[Doc. #18-1; Pg ID 739].

         The ALJ made no findings of fact or conclusions of law pertaining to the amounts Defendant withheld after 2006. Nor were there findings concerning the claims made by New Vision in Counts III-VIII.

         The decision ended with this order:

“The Medicare contractors are hereby DIRECTED to process the claims and claim lines at issue in accordance with this decision. Any amounts recouped or otherwise recovered from the Provider based upon the invalid overpayment demands herein shall be returned to the Appellant.”

[Doc. #18-1; Pg ID 740].

         This order required Defendants to return to New Vision any amounts it had “recouped” from New Vision based on the Disputed Amount.

         Neither party appealed the ALJ's decision to the MAC.

         After the ALJ decision issued, Defendants sent New Vision a letter demanding $41, 676.65. Defendants calculated that amount by reducing the $35, 872.28 to $29, 989.11 (reflecting New Vision earlier payments), and adding $11, 686.54 interest. New Vision has not paid anything in response to Defendants' letter.

         Since 2006, New Vision says it has not received any reimbursements for services from Defendants. New Vision claims Defendants did not pay reimbursements on new claims New Vision submitted, because Defendants were still attempting to collect on the Disputed Amount, most of which the ALJ said New Vision did not owe. New Vision relies on the ALJ's language in his one paragraph ...

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