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US District Court Denies an Ambulance Services’ Request for Preliminary Injunction Against a Medicare PSC

On October 7, 2011, the United States District Court of New Jersey, made a ruling denying an ambulance services’ request for a preliminary injunction against a Medicare program safeguard contractor (PSC). National Ambulance Services, Inc. (“Nationwide”) sought a preliminary injunction to restrain SafeGuard Services, LLC (“Safeguard”) from continuing its pre-payment audit of the ambulance service Part B claims for non-emergency ambulance transportation to patients. On January 13, 2011, the Centers for Medicare and Medicaid Services (CMS) had notified Nationwide that the PSC for its district would conduct a pre-payment process to ensure that all payments to Nationwide were consistent with Medicare policies. Subsequently, Safeguard conducted a pre-payment audit and recommended that 92.1% of Nationwide’s claims should be denied Medicare reimbursement. At the time of the request for preliminary injunction, Nationwide had only appealed a portion of the total claims to an Administrative Law Judge and none of the claims had reached the Medicare Appeals Counsel level of appeal.

The district court began its analysis by holding that it does not have the authority to make a ruling that involves the interpretation of the Medicare statute in regards to the evidentiary standard for coverage. Judicial review over matters arising under the Medicare statute was not available to the plaintiff until all available administrative remedies were exhausted. The court stated that without a final judgment of the Medicare Appeals Council, the plaintiff had not exhausted its administrative remedies, and consequently, the court lacked the authority to review any claims arising under the Medicare statute.

The court next moved to the issue of awarding Nationwide a preliminary injunction. In order to issue this type of emergency relief, the court stated it must consider the following four factors: (1) the likelihood that Nationwide would succeed on the merits; (2) the extent to which Nationwide will suffer irreparable harm without injunctive relief; (3) the extent to which SafeGuard will suffer irreparable harm if the injunction is issued; and (4) the public interest in the matter.

As to the first factor, the court held that since success on the merits depended on whether or not Nationwide’s services were covered by the Medicare statute, the court did not have the authority to address this claim. In regards to the second factor, the court held that the harm to Nationwide was not irreparable within the meaning of the statute. Although the court expressed its sympathies regarding Nationwide’s “financial dependence on Medicare payments,” it explained that a preliminary injunction could not be granted based purely on monetary harm because monetary harm may be remedied only by compensatory damages. Finally, the court held that the public interest factor weighed heavily against Nationwide. The court emphasized several times throughout the opinion that Congress intended that discretion to determine Medicare coverage is held by the Secretary of Health and Human Services, and plaintiffs are afforded several ways to challenge claims through the Medicare appeals process. Therefore, the court found that the public interest weighed against its ability to interpret the Medicare statute before the administrative remedies had been exhausted.

For more information on pre-payment review audits and the most effective audit defense strategies, please contact a Wachler & Associates attorney at 248-544-0888.