Moving the HME Industry Forward


ALJ Backlog Relief – HHS Appeals Court Ruling

February 27, 2017

AMARILLO, TX – In prior articles, I discussed a U.S. District Court ruling that ordered the Department of Health and Human Services (“HHS”) to reduce the backlog of ALJ cases by 30% by the end of 2017, by 60% by the end of 2018, by 90% by the end of 2019, and entirely by the end of 2020.

HHS appealed the District Court’s ruling to the D.C. Circuit, arguing that without increased funding from Congress, HHS cannot meet this schedule unless it settles large numbers of claims without vetting their credibility. In its brief, HHS said: “No principle of law authorized a district court to employ its equitable powers to effectively require settlement of claims regardless of their merit.” HHS is asking the appellate court to reverse the trial court’s order and let HHS work to reduce the backlog at its own pace.

HHS acknowledges that there is no dispute that cleaning out the backlog is a priority of HHS’ Office of Medicare Hearings and Appeals and that OMHA has dedicated all available funds to the job. “The backlog stems from inadequate appropriations and the agency has no lawful means of eliminating the backlog absent additional appropriations,” HHS said. “A writ of mandamus cannot properly issue where an agency has marshaled all its available resources to meet statutory requirements, and the district court erred in holding otherwise.”

OMHA, which oversees the nationwide ALJ hearing program for Medicare reimbursement appeals, is funded via a line-item appropriation in the federal budget each year. According to HHS, despite repeatedly asking for funding increases for itself and OMHA, HHS has been unsuccessful in obtaining the requested funding increases. According to HHS, it has undertaken a series of measures that has “significantly reduced” the number of pending cases but without increased funding it cannot do any more. Because the problem stems from a lack of resources, it is a problem for the political branches, the agency says.

In its appellate brief, HHS states that the combined outstanding claims are worth about $6.6 billion, and based on the 2016 success rate of providers in Medicare appeals hearings, the agency expects less than 30% of the backlog to meet payment requirements. Given these statistics, the agency says, the trial court is ordering HHS to ignore its statutory responsibility to only pay claims that deserve to be paid and to instead pay out hundreds of millions of dollars that HHS should not be paying.

HHS made the same argument before the trial court. The court rejected the argument, saying that the agency is dodging the fact that it is also legally bound to meet deadlines for how fast the appeals should be resolved … deadlines that are flagrantly being ignored.

And so this is the proverbial “chicken and egg” scenario. HHS is saying that the law requires it to carefully scrutinize claims and only pay those that HHS (or more specifically, its hired contractors) deems to be appropriate. HHS contends that it cannot meet its legal obligations unless Congress gives HHS more money. In other words, HHS is essentially saying: “It is not our fault. It is Congress’ fault.” On the other hand, the trial court is essentially saying: “Enough is enough. HHS, you cannot ignore your statutory duty to expeditiously process ALJ appeals by claiming a lack of funding.”

It is unfair to health care providers, including DME suppliers, for HHS to “kick the can down the road” and say “let us fix this in our own due time.” The trial court is forcing the issue. Hopefully, the appellate court will agree.

Attribution: A large part of this article is taken from an article entitled “Judge Botched Medicare Backlog Case, HHS Tells DC Circ.,” written by John Kennedy, and published on February 23, 2017 in Healthlaw360.

Jeff Baird and Mark Higley will be presenting the following webinar:

Competitive Bidding: “Buying Into” a Contract, Exiting a Contract, Meeting Capacity, and Other Important Issues

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Mark J. Higley, Vice President – Regulatory Affairs, VGM Group, Inc.
Tuesday, March 14, 2017
2:30-4:00 p.m. EASTERN TIME
Now that competitive bidding has … unfortunately … been in place for several years, a number of legal issues have arisen and have been addressed by CMS. This webinar will discuss these legal issues. In particular: (i) we will examine if the DME supplier can cease serving competitive bid patients if the supplier’s business has exceeded the capacity stated in the supplier’s bid package; (ii) we will look at the options the contract supplier has if it concludes that it simply cannot profitably continue to serving patients under the competitive bid contract; (iii) we will examine what the supplier must do if it discovers that it has not met the “physical location” requirements of a state; (iv) we will look at the requirements a contract supplier must follow in order to “carve out” a portion of its competitive bid contract; and (v) will examine how a contract supplier should prepare a Corrective Action Plan when CMS threatens to terminate the competitive bid contract.

Register for Competitive Bidding: “Buying Into” a Contract, Exiting a Contract, Meeting Capacity, and Other Important Issues on Tuesday, March 14, 2017, 2:30-4:00 pm ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC and Mark Higley, Vice President – Regulatory Affairs, VGM Group, Inc.

Please contact Ika Sukh at if you experience any difficulties registering.

Member: $99.00    
Non-Member: $129.00

Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or