On December 5, 2016, the United States District Court for the District of Columbia ordered the Secretary of Health and Human Services (HHS) to eliminate the backlog of hundreds of thousands of Medicare claim appeals currently pending before HHS Administrative Law Judges (ALJs).1 The court's ruling is a victory for lead plaintiff, the American Hospital Association (AHA), and three of its member hospitals in their longstanding challenge to HHS's failure to render ALJ decisions within the 90-day statutory deadline. The court's order also spells relief for all providers and suppliers with delayed Medicare claim appeals currently pending before ALJs.

The court adopted the plaintiffs' suggested timetable for the backlog's elimination. Each calendar year for the next four years, HHS must meet mandatory-percentage reductions. And by December 31, 2020, the backlog must be eliminated. If HHS fails to meet the court's deadlines, a default judgment could be ordered in all qualifying appeals as early as January 1, 2021. The court, however, declined to order a default remedy on a prospective basis.

Background

According to the plaintiffs, the appeal backlog is largely the result of overreach by Recovery Audit Contractors (RACs), because they are paid on a contingency basis. The AHA, represented by a litigation team led by Sheree Kanner and Cate Stetson, filed suit in 2014 seeking a writ of mandamus to compel HHS to act within the statutorily-imposed timeframe for resolving administrative appeals. On appeal of the district court's dismissal of the case on jurisdictional grounds, because the delay was not sufficiently unreasonable to constitute an "extraordinary circumstance[]" that would warrant the court's taking mandamus jurisdiction, the United States Court of Appeals for the District of Columbia Circuit reversed. In February 2016, the D.C. Circuit held that the threshold requirements for mandamus jurisdiction were satisfied and said that "compelling equitable grounds" may exist to warrant the issuance of a writ of mandamus. The appeals court then remanded the case for the district court to "consider the problem as it now stands — worse, not better" than when the litigation began—and to determine whether mandamus relief was warranted.2

On remand, HHS moved to stay the proceeding until September 2017 to allow more time for administrative and legislative efforts to resolve the backlog of appeals. The district court denied the motion, reiterating that the backlog and delays had only worsened since the AHA first sought relief.

The District Court's Order Ending the Backlog

On October 14, 2016, the AHA moved for summary judgment, again seeking mandamus relief ordering HHS to comply with its statutory obligations and proposing specific measures to relieve the backlog of Medicare appeals. In the alternative, the AHA proposed that HHS meet numerical targets that would lead to the complete elimination of the current backlog by December 31, 2020. HHS cross-moved for summary judgment, arguing that the court should not issue a writ of mandamus and that the AHA's proposed remedies were inappropriate.

On December 5, 2016, the district court granted the AHA's motion for summary judgment and denied HHS's cross-motion. The court declined to "direct[] the particulars of the Secretary's backlog-reduction efforts."3 Instead, it adopted the AHA's alternative proposal that HHS be ordered to meet mandatory-percentage reductions over the next four years:

  • a 30 percent reduction in the current backlog of cases pending at the ALJ-level by December 31, 2017;
  • a 60 percent reduction by December 31, 2018;
  • a 90 percent reduction by December 31, 2019; and
  • a 100 percent reduction by December 31, 2020.

HHS also must submit status reports to the court every 90 days communicating its progress in reducing the backlog.

The Future

The district court's order is a significant victory for providers and suppliers with Medicare reimbursement appeals currently pending before ALJs. Although the precise reforms HHS will choose to make are unclear, HHS is likely to have to make changes to its processes in order to satisfy the aggressive numeric targets and deadlines adopted by the court. Providers and suppliers may ultimately benefit if the reforms reduce the likelihood of inappropriate claim denials or of delays in the appeals process for claims that have not yet been appealed.

HHS has 60 days after the entry of judgment to appeal the district court's ruling.