Provider wants auditor to pay

PHILADELPHIA - An HME provider who fought an audit and won is now suing TriCenturion, the CMS contractor that conducted the audit, for $10 million in damages.

Nichole Medical Equipment & Supply's civil lawsuit was dismissed by the U.S. district court for the eastern district of Pennsylvania in March, but the provider has appealed and it must submit a brief to the U.S. court of appeals for the third district by Sept. 7.

“The Medicare Appeals Council ordered them to pay the money back to me with interest and penalties, but here's the problem: Yeah, I won, but I'm already out of business, my home went into foreclosure and my cars have been repossessed,” said Dominic Rotella, owner of Nichole Medical. “The money I was given back went right to my creditors, so what did I win for what they did?”

Nichole Medical's run in with TriCenturion began in 2002 when the contractor requested 60 patient records. TriCenturion notified Nichole Medical three years later, in 2005, that it had found evidence of overpayment and, based on an extrapolation of its sample, it requested about $500,000 in repayment. It also instructed CMS's regional carrier to institute a 100% offset against other payments until the provider settled its debt.

Nichole Medical appealed the overpayment and offset, and in 2006 the administrative law judge (ALJ) ruled in the provider's favor. TriCenturion appealed, but in 2008 the Medicare Appeals Council also ruled in the provider's favor.

“They threw out the entire audit as unjustified and unsubstantiated,” Rotella said. “They found no violations in any of the documents that they had reviewed that warranted an audit of this type and of this magnitude.”

Unfortunately, after years of receiving payments only in fits and spurts, Nichole Medical was forced to close its doors.

“They can't just put me out on the street and say, 'Sorry,'” Rotella said.

The U.S. district court for the eastern district of Pennsylvania ruled in March of this year that TriCenturion, as a government agency, has “official immunity” from Nichole Medical's claims.

“This essentially means these auditors contracted by CMS can do whatever they want, however they want, whenever they want,” Rotella said.

As part of Rotella's appeal, he is petitioning persons with strong interest in or views on his lawsuit to file amicus briefs with the court by Sept. 14. The VGM Group, for one, is considering it.

“We do not endorse or ratify any particular course of conduct or even the merits of the underlying claims,” said Jim Walsh, president and general counsel for The VGM Group. “We simply feel strongly that CMS's contractors have to be held to some decent standard of behavior. The ancient defense that 'The king can do no wrong' and that therefore CMS and its contractors can do no wrong is simply wrong.”

Rotella's story sends a strong message to HME providers that they must take audits seriously and they must deal with them aggressively, industry stakeholders say. That means trying to prevent them in the first place with appropriate records and documentation.

“I've always said that audits will create more problems for more providers in the short term than competitive bidding,” said Wayne Stanfield, executive director of NAIMES. “They've become overbearing.”

At the end of the day, however, it's hard to envision how, in this case, David will beat Goliath, stakeholders say.

“I feel for the man,” said Neil Caesar, president of the Health Law Center. “He seems to be a victim of bureaucratic indifference and he's fighting with every bit of energy he has. I just hope he's not tilting at windmills.”