683 F. App'x 354
6th Cir.2017Background
- Southern Rehabilitation Group (SRG) and Dr. James Little submitted ~6,200 Medicare claims (2001–2006) that were placed under 100% prepayment medical review and were ultimately unpaid or down-coded after administrative appeals; plaintiffs sought reimbursement plus interest.
- The Secretary voluntarily paid plaintiffs $107,171.07 on those claims but did not pay interest; plaintiffs sued seeking interest under the Medicare “clean-claims” provision (42 U.S.C. § 1395u(c)(2)(B)-(C)).
- On first appeal this Court held the clean-claims provision applies if a claim is both “clean” and unpaid after the statutory window; it rejected the Secretary’s broad contention that the provision never applied to claims initially denied, and remanded for determination whether interest was due on the 6,200 claims. 732 F.3d 670.
- On remand the Secretary argued the claims were not “clean” because prepayment medical review is a “particular circumstance requiring special treatment that prevents timely payment”; the district court adopted that view and granted summary judgment for the Secretary.
- The Sixth Circuit affirmed: it interpreted the statute to mean claims subject to prepayment medical review are not “clean” as a matter of law because such review is atypical, special treatment that delays payment, so interest is not authorized.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court exceeded the remand scope by considering if claims were “clean” | Remand limited to whether interest was due; Secretary waived argument that claims were not clean | Remand invited district court to decide whether claims were clean; Secretary preserved the argument | Court: District court acted within mandate; Secretary had not waived the argument and could prove claims were not clean |
| Whether converting a Rule 12(b)(6) motion to summary judgment sua sponte denied notice/discovery | Conversion deprived plaintiffs of notice and opportunity for discovery | Conversion was permissible; plaintiffs had notice and actually prompted conversion by submitting an affidavit | Court: Conversion was not an abuse of discretion; plaintiffs had opportunity to respond and were not prejudiced |
| Statutory meaning of “clean claim” — does prepayment medical review make a claim unclean? | A claim is clean if it has no defects; plaintiffs argued prepayment review does not automatically render claims unclean; factual showing required | Prepayment medical review is a particular circumstance requiring special treatment that delays payment, so claims under such review are not clean as a matter of law | Court: Held prepayment medical review is atypical special treatment that delays payment; therefore such claims are not “clean” and interest is not authorized |
| Standard for summary judgment and allocation of burden | Plaintiffs: Secretary must show genuine absence of fact issue about cleanliness of claims | Secretary: May show claims were subject to prepayment medical review and thus unclean | Court: Applied summary judgment standard; Secretary met burden because all disputed claims had been subject to prepayment review |
Key Cases Cited
- S. Rehab. Grp. v. Sec’y of HHS, 732 F.3d 670 (6th Cir. 2013) (prior panel opinion holding clean-claims provision applies if claim is clean and unpaid after statutory window)
- Center for Dermatology & Skin Cancer, Ltd. v. Burwell, 770 F.3d 586 (7th Cir. 2014) (interpreting clean-claims provision to exclude claims subject to prepayment medical review)
- Library of Congress v. Shaw, 478 U.S. 310 (1986) (federal government owes interest only where Congress authorizes it)
- DePierre v. United States, 564 U.S. 70 (2011) (different statutory language implies different meanings)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting rules)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden-shifting framework noted in dissent)