349 F. Supp. 3d 587
S.D. Tex.2018Background
- Infinity Healthcare, a Medicare-certified home health provider, was notified of an overpayment based on a ZPIC audit that extrapolated from a 30-claim sample to $648,843 (actual sample overpayment ~$65k).
- Infinity exhausted two administrative levels (MAC redetermination and QIC reconsideration), both issuing detailed unfavorable decisions; recoupment was set to begin after the QIC decision.
- Infinity sought an ALJ hearing, but widespread ALJ backlogs mean a 3–5 year delay; statute allows escalation to the DAB and then federal court if ALJ deadlines are missed.
- Plaintiff sued seeking to enjoin recoupment until it receives an ALJ hearing, claiming statutory and constitutional (due process) violations; the court retained jurisdiction under the collateral-claims exception and converted a TRO request into a preliminary injunction motion.
- At the preliminary-injunction hearing the court found Infinity had presented (and been represented by counsel for) all evidence available at the prior two levels, and had not shown good cause to introduce new evidence at ALJ stage.
- The court concluded that under Mathews v. Eldridge and the statutory scheme Congress provided (including escalation), Plaintiff failed to show a likelihood of success on a due process claim and denied the preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an evidentiary ALJ hearing is required before the Secretary may begin recoupment after an unfavorable QIC decision | Recoupment without an ALJ hearing violates procedural due process because ALJ hearing is required within 90 days | Mathews balancing and the statutory escalation scheme provide sufficient process; Congress allowed recoupment after QIC decision | Denied — no constitutional right to an ALJ hearing pre-recoupment given the administrative process and Mathews factors |
| Whether statutory deadlines (90-day ALJ rule) entitle provider to suspension of recoupment when backlog prevents timely ALJ decision | Failure to meet the 90‑day ALJ deadline entitles provider to injunctive relief (suspension of recoupment) | Statute provides remedies (escalation to DAB and judicial review); Congress anticipated missed deadlines and did not condition recoupment on ALJ timing | Denied — statutory scheme’s escalation remedy is adequate; no authority showing suspension of recoupment is mandated |
| Whether Plaintiff demonstrated irreparable harm and that equities/public interest favor an injunction | Recoupment will force provider to shut down, causing irreparable business harm | Injunction would force Medicare to continue payments to an allegedly overpaid provider for years, harming public fisc and beneficiaries | Denied — harms to government/public outweigh plaintiff’s asserted irreparable injury; plaintiff failed to meet all preliminary injunction factors |
Key Cases Cited
- Mathews v. Eldridge, 424 U.S. 319 (1976) (procedural‑due‑process balancing test: private interest, risk of erroneous deprivation, government interest)
- Goldberg v. Kelly, 397 U.S. 254 (1970) (welfare recipients require pre‑termination evidentiary hearings due to subsistence risk)
- Family Rehab., Inc. v. Azar, 886 F.3d 496 (5th Cir. 2018) (describing Medicare appeals process and collateral‑claims jurisdiction)
- Cumberland Cty. Hosp. Sys., Inc. v. Burwell, 816 F.3d 48 (4th Cir. 2016) (statutory escalation to DAB and district court is Congress’s chosen remedy for missed ALJ deadlines)
- Am. Hosp. Ass'n v. Burwell, 812 F.3d 183 (D.C. Cir. 2016) (discussing adequacy of statutory deadlines and judicial review alternatives)