Relief for original bid winners?

WASHINGTON - A recent ruling by a federal appeals court could pave the way for HME providers who were awarded contracts in the original Round 1 of competitive bidding to sue for damages.

CardioSom in 2008 filed a lawsuit for breach of contract in the Court of Federal Claims, after Congress delayed the competitive bidding program for 18 months and rescinded the contracts of winning suppliers. The Court of Federal Claims ruled CardioSom had no basis to sue, saying that when Congress terminated the contracts, it also barred lawsuits. But an appeals court has disagreed, saying that contract winners have the right to sue.

"Companies like CardioSom started spending money, hiring people and getting space," said attorney Jerry Stouck, a shareholder with Greenberg Traurig in Washington, D.C., which represents CardioSom. "They were expecting to be one of the exclusive providers in those areas for three years, which is worth something."

CardioSom, which won contracts for CPAP and oxygen in nine of the 10 competitive bidding areas is seeking damages, including lost profits for the three-year period of the contract.

Now CardioSom will go back to the lower court and press forward with its lawsuit. Ultimately, CardioSom's suit will serve as a test case for the more than 300 suppliers that were awarded contracts and who may want to sue for damages, said attorney Bill Eck, a shareholder with Greenberg Traurig.

"Each company will have its own damages and expenses," he said. "But in terms of the basic issues--did the government breach the contract? Is the government liable? Then the answer is the same for everyone."