Court Halts Overpayment Recoupment

The United States District Court for the Northern District of Florida entered an Order on June 25, 1997 enjoining the Secretary of Health and Human Services ("Secretary") from recouping alleged overpayments from a class of Florida podiatrists and members of the Florida Podiatric Medical Association. The alleged overpayments involved claims for services performed between January 1992 and June 1996. This class action lawsuit was brought by attorneys from Broad and Cassel on behalf of the class of audited podiatrists, the Florida Podiatric Medical Association and Dependable Protective Mutual Risk Retention Group, Inc., a trust which insured the podiatrists against the cost of defending themselves against overpayment liability.

The class action complaint has alleged that the Secretary through its Florida agent, Blue Cross and Blue Shield of Florida Medicare Part B ("Carrier"), engaged in an illegal action by failing to follow its own guidelines and regulations in assessing the overpayment liability of the class of Florida podiatrists. The podiatric procedures involved removal of lesions, corns and callouses involving pain and other symptoms. The Secretary and the Carrier had specifically authorized payment for such procedures in 1992, but later revised their policies in June, 1996 to narrow the scope of reimbursement for these procedures. The overpayment determination was essentially based on a retroactive application of the 1996 revised criteria with no consideration of waiver of liability and without fault during the audit of these claims. The class action complaint alleges that the class plaintiffs followed the correct billing procedures and that the retroactive application of new criteria, without taking into consideration waiver of liability and fault standards, constituted an illegal system-wide policy and practice by the government.

The Order entered by Judge Maurice Paul in the Northern District of Florida reflects a settlement reached between attorneys for Broad and Cassel and the United States Attorney for the Northern District of Florida that eliminated the necessity for a hearing. The terms of the Order and Stipulation are as follows:

1. The Secretary and its Carrier may not recoup payments from any currently filed claims and may not Payments from any currently filed claims and may not collect on repayment agreements or promissory notes which had previously been entered into between the government and individual podiatrists.

2. The administrative proceedings (i.e. fair hearing and hearing before an Administrative Law Judge) are stayed pending the ultimate outcome of the case.

3. There will be no accrual of interest on any remaining overpayment amount owed by a podiatrist during the effective period of the Order and Stipulation.

4. The Secretary will refrain from issuing any correspondence, publication or communication indicating that any of the class plaintiff podiatrists have engaged in any acts of misbilling, over-billing, fraudulent billing or other type of billing practice regarding the overpayment determinations which are the subject of the lawsuit.

There are very few decisions or court orders which have interrupted the Secretary's authority to recoup and recover amounts of money which have been determined to be overpayments prior to exhaustion of administrative remedies. The Court's Order implementing this relief is an important victory for the podiatrists and, perhaps, is a reflection of the extraordinary lengths to which the administration of the Medicare and Medicaid programs may extend in this era of zealous fraud enforcement. The case is expected to proceed to a final order and judgment by the Court. The class plaintiff podiatrists are expected to request a recovery of all monies recouped by the government prior to the issuance of the Court's Order of June 25, 1997.