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District Court Ruling – Medicare Contractors Can Reopen Claims Regardless of “Good Cause”

On July 28 the U.S. District Court of the Southern District of California granted the Department of Health and Human Services’ (HHS) motion for summary judgment in the case, Palomar Medical Center v. Sebelius.  The case, filed on May 26, 2010, challenged a magistrate judge’s recommendation that HHS is correct in its position that a decision to reopen a Medicare audit claim is not subject to appeal, regardless of whether “good cause” was given for the audit.

Palomar Medical Center originally alleged that the Centers for Medicare and Medicaid Services (CMS) unlawfully reopened a claim without showing “good case” for the reopening as required by Medicare regulations.  In addition, Palomar argued that CMS was incorrect in its position, that Administrative Law Judges (ALJs) may not review whether Medicare contractors, such as recovery audit contractors (RACs), have followed federal regulations when reopening claims.

This case has important consequences for Medicare providers because there appears to be no recourse when a Medicare contractor does not abide by CMS’ reopening rules.

For more information on recovery audit contractors and other Medicare appeals, please visit or contact a Wachler & Associates attorney at 248-544-0888.

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