Home Health & Hospice Week

HHA loses out on $127,000 repayment in recent court decision. If your home care organization falls on hard times, you shouldn't expect bankruptcy to be a cure-all for your problems.
 
Medicare doesn't have to follow the usual bankruptcy rules, notes attorney E. Michael Flanagan with Weil Gotshal & Manges in Washington, DC. That's a lesson home health agency Excel Home Care Inc. learned the hard way in a recent court decision.
 
Under the privations of the interim payment system, Excel filed for Chapter 11 bankruptcy in November 2001, President Diane Porter tells Eli. In February 2003, the bankruptcy court confirmed a reorganization plan that had Excel making a monthly payment of $7,000 over seven years to pay back nearly $440,000 to the Department of Health and Human Services, according to an Oct. 29 decision in Excel Home Care v. HHS (D. Mass., Civil Action No. 03-CV-11767-GAO).
 
But in May 2003, Excel's fiscal intermediary found Medicare had underpaid the Tewksbury, MA-based HHA by $127,000 in 2000. Instead of handing over the sum to Excel, the FI withheld the funds, deducting the money from the total the HHA owed under its bankruptcy plan.
 
Excel cried foul, demanding the underpayment be returned to the agency because it wasn't part of the reorganization plan. When the FI didn't respond, the HHA filed suit in federal district court.
 
The court had one main issue to resolve - whether it could rule on the underpayment's fate under bankruptcy rules, or whether the funds were subject to Medicare's authority under separate Medicare rules.
 
The finding: The court said Medicare has its own authority over the payment that supersedes bankruptcy rule jurisdiction. Therefore, Excel would have to exhaust all administrative remedies within HHS before turning to the courts for help - something the agency hadn't done before filing suit.
 
"Medicare providers want more independent review" of payment practices and often turn to the courts seeking that review, notes bankruptcy attorney Mark Bossi with Thompson Coburn in St. Louis. But in most cases, jurisdiction over the dispute will go to HHS and not the federal courts, Bossi notes.
 
"Bankruptcy is often not the safe haven for Medicare providers as it is for other types of companies," Flanagan points out. Medicare nearly always has a "right of recoupment that transcends court jurisdiction," he notes. In other words, FIs can withhold pretty much any underpayments that come along for a provider in bankruptcy and apply the sum to the provider's outstanding balance.
 
Put simply, Medicare authority trumps bankruptcy authority, Bossi says.
 
In its argument, Excel did note some cases where courts had intervened in Medicare bankruptcy issues. But the district court noted circuit court cases that precluded such intervention, and said the cases Excel cited "are in error."
 
The court "hammers the [...]