The Center for Medicare Advocacy (CMA) filed a complaint last week on behalf of five Medicare beneficiaries in federal district Court in Connecticut requesting a court order requiring the Secretary of HHS to clear a massive backlog of administrative law judge (ALJ) appeals. Because of the ALJ appeal backlog, the complaint alleges that it now takes an average of 489 days for an ALJ to issue a decision—well in excess of the 90-day maximum prescribed by statute and regulation. As described in greater detail below, each of the named plaintiffs have waited well over 90-days from the filing of their ALJ hearing requests without having received an ALJ decision. The plaintiffs allege, therefore, that the Secretary has violated the Medicare statute and the Due Process Clause of the Fifth Amendment and seek declaratory, injunctive, and mandamus relief from the court, as well as class status. As discussed in an above Health Headline, CMS has recently proposed to settle provider ALJ appeals of denials of inpatient coverage at a discounted rate. In assessing that offer, providers will need to consider the possibility that their appeals may be further delayed if CMS dedicates additional resources to beneficiary appeals in response to this lawsuit.

The plaintiffs argue that ALJ review is especially critical because the prior two levels of review are little more than rubber stamps as evidenced by the fact that denials of coverage were reversed at those level of review less than 5% of the time. Meanwhile, at the ALJ review level, “denial of coverage is generally reversed at least half the time.” In addition, it is only at the ALJ level of review that a beneficiary has the right to a live hearing where, e.g., witnesses can be called.  While appellants have the right to “escalate” their appeals to a Medicare Appeals Council (MAC) if the ALJ does not meet his or her 90-day decision deadline, the plaintiffs cite CMS’s own warning that “escalating would deprive the appellant of an oral hearing, would cause the forfeiture of the 90-day deadline for the MAC’s decision-making, and would result in a less well developed record.” Citing 67 Fed. Reg. 69312, 69329 (Nov. 15, 2002).

HHS’s Office of Medicare Hearing and Appeals (OMHA) has previously acknowledged that ALJ appeals exceed the statutorily prescribed time limits and announced earlier in the year a two-year suspension of new ALJ appeal assignments. While that suspension is not supposed to apply to appeals initiated by beneficiaries, it appears from the facts alleged in the complaint that beneficiaries appeals are nonetheless subject to significant delay as well. CMA’s suit is in addition to a suit filed by the American Hospital Association on May 22, 2014 in the U.S. District Court for the District of Columbia also challenging the legality of the ALJ backlog of appeals.

The facts surrounding each of the five beneficiaries’ appeals illustrate the extent of the backlog and the beneficiary health implications of that backlog. One beneficiary filed a request for an ALJ hearing on December 19, 2013 to review a denial of skilled nursing services. Another two beneficiaries requested ALJ hearings, on February 22, 2013, and May 28, 2013, respectively, of denials of coverage for ambulance services they received. A fourth beneficiary requested ALJ review on May 14, 2014, of a denial of Medicare coverage of her stay in an acute rehabilitation unit. None of these beneficiaries have received even an ALJ hearing date as of the date the complaint was filed. The fifth beneficiary filed a request for ALJ review on December 27, 2013, of a denial of coverage for dental services and had an ALJ hearing on July 30, 2014. No decision was issued in his case, however, as of the date the complaint was filed.