CardioSom's bid lawsuit moves forward

WASHINGTON - A federal court judge has denied a motion by the government to dismiss a lawsuit filed by CardioSom seeking damages for breach of contract as part of the original Round 1 of competitive bidding.

In an April 30 opinion, Chief Judge Patricia Campbell-Smith of the U.S. Court of Federal Claims ruled that the court has jurisdiction to review CardioSom's lawsuit.

“She ruled, in essence, that CMS could not limit the jurisdiction of the court using regulation,” said attorney Jerry Stouck, a shareholder with Greenberg Traurig, which represents CardioSom. “Only Congress can do that.”

In its motion to dismiss, the government argued that a CMS regulation outlining an administrative claims process for terminated contractors precludes lawsuits for breach of contract. Campbell-Smith suggested, however, that the regulation was not the result of fair and impartial rulemaking by CMS, according to Stouck.

CardioSom won contracts for CPAP and oxygen in nine of the 10 competitive bidding areas included in Round 1 in 2008. When Congress delayed the program for 18 months, it rescinded the contracts of CardioSom and approximately 300 other providers. CardioSom filed a lawsuit immediately, but there have been several delays in the case along the way, says Stouck.

The next step: Campbell-Smith will issue a ruling on whether a breach of contract was committed. If she finds that it has, the case will go to trial, says Stouck.

“We'll seek the damages for the business that would have been obtained in those territories that we did not get, only because of this wrongful conduct by the government,” he said.

Stouck said the six-year statue of limitations on CardioSom's claims expires in July.