CMS let off the hook in contempt case

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The Centers for Medicare & Medicaid Services is not guilty of contempt in a case over payments to a nursing facility facing Medicare termination, a U.S. appeals court recently ruled.

In April 2010, CMS sent a termination notice to Oaks of Mid City Nursing and Rehabilitation Center in Baton Rouge, LA. The owner of the for-profit facility, D&W Health Services, obtained a preliminary injunction against the termination.

The preliminary injunction expired in June 2011. The next month, CMS notified D&W that the facility was terminated from Medicare and Medicaid, effective May 9, 2010.

D&W then alleged that CMS had violated the injunction. A district court agreed, entering a contempt order against the government agency.

The injunction stated that CMS had to continue to make “status quo” Medicare payments while the injunction was in effect. Although CMS did pay the facility more than $2 million during the injunction period, these were interim payments based on estimated costs. Taking into account adjusted calculations, CMS owed D&W an additional $705,000 for services rendered during the injunction period, according to court documents. 

The district court ordered CMS to pay this amount. The agency appealed, stating that the adjusted payment would not have been made during the injunction period in the normal course of business; and therefore, withholding the payment would not violate the injunction.

Appeals Court Judge
Patrick E. Higginbotham wrote that CMS had in fact followed the injunction while it was in effect, and vacated the contempt finding.

CMS also was allowed to block D&W's access to the Medicare electronic billing system after the injunction expired, even though this prevented the facility from billing for services provided while the injunction was in effect, the appeals court ruled.