Palomar Medical Center v. Sebelius

Under the congressionally mandated Recovery Audit Contractor program, a decision regarding whether or not to reopen a case for overpayments to Medicare providers are final. They cannot be challenged after an audit and revised determination.

After the Recovery Audit Contractor (RAC) determined Palomar had been overpaid because the services it provided to a Medicare patient were not reasonable and necessary, the Court looked at whether a Medicare provider may challenge a lack of “good cause” for reopening the initial determination when appealing a revised determination of overpayment. After various levels of review, an Administrative Law Judge (ALJ) agreed the services were not medically reasonable and necessary, but gave relief on the ground that there was not good cause for the reopening by the RAC. The Medicare Appeals Council (MAC) reversed the decision. Palomar appealed, and the district court determined the RAC’s reopening of Palomar’s claim was not subject to administrative appeal. The contested regulations provide that the contractor’s, Qualified Independent Contractor’s, ALJ’s, or MAC’s decision on whether to reopen is final and not subject to appeal, but the regulations elsewhere provide that a revised determination or decision resulting from a reopening is appealable. When Congress established the RAC program aimed at recouping excessive Medicare payments, it said expressly that reopenings were to be permitted under guidelines set by the Secretary in regulations. The Secretary’s regulations are explicit that reopening decisions would not be appealable, and such a decision was “final.” After looking at the plain meaning of the regulations, the Court agreed with the district court that the question of good cause to reopen could not be litigated after a claim determinate was revised upon audit by a RAC. AFFIRMED.