Credible allegations of fraud is a low standard to meet.

If you are accused of Medicare fraud, your Medicare reimbursements will be immediately cut off without any due process or ability to defend yourself against the allegations. If you accept Medicare and Medicaid, then you are held to strict regulations, some of which are highly draconian in nature, without much legal recourse for providers. Many, many a provider has gone bankrupt and been forced out of business due to “credible allegations of fraud.” You see, legally, “credible allegations of fraud” is a low standard to meet.

The definition of “credible” is “an indicia of reliability.” “Indicia is defined as signs, indications, circumstances which tend to show or indicate that something is probable.”

It is used in the form of “indicia of title” or “indicia of partnership,”  particularly when the “signs” are items like letters, certificates, or other things that one would not have unless the facts were as the possessor claimed (see: circumstantial evidence). It can be a disgruntled worker. I am sure that none of our readers have ever dealt with a disgruntled employee. Yes, that is sarcasm.

The regulation outlining the requirements for suspending Medicare payments is 42 CFR § 405.372 . However, 42 CFR § 455.23 is the regulation mandating suspension of Medicaid payments upon credible allegations of fraud.

Pursuant to Medicare regulations, the Centers for Medicare & Medicaid Services (CMS) must suspend Medicare reimbursements to a healthcare provider “in whole or in part” if it has been “determined that a credible allegation of fraud exists against a provider or supplier,” pursuant to 42 C.F.R. § 405.371(a)(2). A credible allegation of fraud is “an allegation from any source, including … civil fraud claims cases, and law enforcement investigations,” pursuant to 42 C.F.R. § 405.370(a). The decision to suspend Medicare payment or continue a payment suspension is made at the discretion of CMS – not the Medicare Administrative Contractor (MAC). If you receive a letter from a MAC alleging fraud, be sure to check whether it states that the decision was made in collaboration with CMS. The MACs do not have the authority.

The suspension, however, is not indefinite, although the length is normally a year, which is financially devastating. The regulations allow CMS to maintain the suspension until a “legal action is terminated by settlement, judgment, or dismissal, or when the case is closed or dropped because of insufficient evidence to support allegations of fraud,” pursuant to 42 C.F.R. §§ 405.370(a) and .372(d)(3); see also § 405.371(b)(3)(ii), noting that CMS may extend the suspension of payment if the Department of Justice submits a written request that “suspension of payments be continued based on the ongoing investigation and anticipated filing of criminal or civil action or both or based on a pending criminal or civil action or both.”)

When you receive a fraud accusation of any type, it is imperative to send it to your counsel. If you opt to litigate the suspension by asking the court to enjoin the suspension, your first legal obstacle will be to argue that you do not have to exhaust your administrative remedies before appearing for the injunction. Cases have been decided both in the favor of providers (resulting in their suspensions being lifted) and against them. These cases usually win or lose on the argument that the suspension of reimbursements is an ancillary subject from the actual investigation of fraud. It is a jurisdictional argument.

It is my opinion that federal regulations that allow for suspension of payments upon credible allegations of fraud need to be revised. Any of you with lobbyists, we need to revise the regulations to require due process – notice and an opportunity to be heard – prior to the government suspending Medicare and Medicaid reimbursements based on a spurious accusation from an anonymous source.

Back in 2015, I am sure that you all recall the case in New Mexico where the state accused 15 behavioral healthcare providers of credible allegations of fraud. The providers constituted 87.5 percent of all such providers in the state. I was one of the attorneys representing the larger systems. Prior to my involvement, all 15 providers requested good cause. All were denied. Lawmakers think that the good-cause exception written into the regulation is enough defense for providers. But when the good cause is almost always denied, it isn’t much help.

Write to your Congress, people. Amend the regulations to require due process.

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