Supreme Court Denied Review to Medicare Contractor Claims Challenge

The Supreme Court denied a petition for certiorari which challenged a Medicare contractor’s handling of over 15,000 individual medical claims submitted for inpatient rehabilitation services by one provider. This denial was announced without comment after the rehabilitation provider challenged 6,200 adverse decisions and another 8,900 claims that had not proceeded beyond the first level of administrative review for the past 11 years. The provider challenged the lower courts’ decision to foreclose the provider’s opportunity to pursue judicial review of those claims in conjunction with constitutional, federal, and state law claims against the Medicare contractor. The provider also presented the issue of an alleged procedural gap in the Medicare appeals process that resulted in the 11-year delay of the review of his claims.

Factual Background

Dr. James P. Little provides care at the HEALTHSOUTH Rehabilitation Hospital, which is classified as an inpatient rehabilitation facility (IRF) (collectively Southern Rehab.) pursuant to the Medicare program. According to the petition, CIGNA Government Services, LLC began to improperly deny Southern Rehab’s claims for Medicare reimbursement in 2001. Between 2001 and 2006, CIGNA continued to wrongly deny claims. While 6,200 of these claims were carried through to the Medicare Appeals Council and were ultimately denied, Southern Rehab asserted that 8,900 claims “remain stuck at the first level of administrative review,” due to a procedural gap.

Questions and Issues Presented

While Southern Rehab admitted in its petition that this action arises out of “a single provider’s claims for reimbursement,” it also asserted that “the case involves questions of exceptional public importance,” as it has the potential to impact “virtually every Medicare provider and beneficiary, now and hereafter, who traverses the administrative review process.” Specifically, in addition to highlighting the issue of the alleged 11-year procedural gap in the review process, Southern Rehab also presented questions to the Court in the following areas: (1) whether the Medicare statute allows providers to raise “inextricably intertwined” constitutional, federal, and state law violations against Medicare contractors; (2) whether non-Medicare reimbursement claims need to be presented to a government agency; and (3) whether the Medicare statute waives immunity for Medicare contractors in suits by providers claiming constitutional, federal, and state violations.