Appeals court revives lawsuit over ALJ delays

A federal appeals court Feb. 9 reversed a lower court’s dismissal of a lawsuit brought by the AHA and several hospitals, which sought to compel the Department of Health and Human Services (HHS) to meet its congressionally mandated deadlines for reviewing Medicare claims denials. The AHA said the decision moves hospitals closer to getting relief.

 Saying that the backlog of delays has gotten “worse, not better,” the appeals court sent the case back to the lower court, noting that, “in all likelihood,” the lower court should order the administration to comply with the appeals deadlines if HHS or Congress fails to make meaningful progress toward solving the problem within a reasonable period of time, pointing to the close of the next appropriations cycle as the deadline for resolution.

In December 2013, HHS imposed a two-year moratorium on assigning new appeals of claim denials. The department had a backlog of about 800,000 appeals in July 2014 when it gave its last official tally – and it’s likely to have grown since.

The court’s opinion observed that the department “has the capacity to process only about 72,000 appeals per year, a far cry from the almost 400,000 appeals it received in fiscal year 2013, or from the more than 800,000 appeals that composed its backlog in July 2014. These figures suggest that at current rates, some already filed claims could take a decade or more to resolve.” That administrative logjam delays billions of dollars in Medicare reimbursements to hospitals, the AHA noted. 

The AHA and several hospitals sued HHS in May 2014 over the backlog at the administrative law judge (ALJ) level, the third levels of appeals. An ALJ has 90 days to decide an appeal.

“The appeals court affirms that hospitals simply cannot afford to have billions of dollars that are needed for patient care tied up indefinitely in the appeals process,” said Melinda Hatton, the AHA’s senior vice president and general counsel. She said the decision “confirms that the agency has a clear duty to comply with the congressionally mandated deadlines and that the statute gives hospitals a corresponding right to demand compliance. And, it refutes attempts by the agency to excuse compliance because of the Recovery Audit Contractor program, noting that congressional mandates trump discretionary decisions.”

Hatton said the AHA expects the lower court to rule in favor of the hospitals unless HHS and Congress can make meaningful progress toward a solution.