Medicare can halt payments to overpaid provider awaiting appellate court decision

Medicare can halt payments to a Missouri doctor who was allegedly overpaid millions while awaiting an administrative law judge’s decision, ruled the 8th U.S. Circuit Court of Appeals.

Judge Michael J. Melloy wrote the June 17 opinion regarding a case in which the government alleges that Medicare overpaid an approximate $5.3 million to Gurpreet Padda and his Missouri medical practice.

While a third ALJ decision was pending, Medicare began recovering the funds by withholding ongoing reimbursements to Padda. He sued, claiming that recovering funds before a final decision violated his procedural due process.

Scott R. Grubman of Chivilis Grubman in Atlanta represented Padda, and did not respond to an email requesting comment by press time. According to the opinion, Padda had claimed that monthly $99,000 Medicare payments were about 30 percent of his revenue.

“Loss of this income, he stated, would force him to significantly reduce his workforce and the number of patients he treats, and may cause him to close his business,” Melloy wrote.

The 8th Circuit opinion did not favor Padda’s appeal to approve his preliminary injunction with the U.S. District Court for the Eastern District of Missouri.

“He has not shown that he is likely to prevail on the merits of his procedural due process claim nor that he is likely to suffer irreparable harm,” Melloy wrote.

Judges Steven Colloton and Raymond W. Gruender concurred.

According to the opinion, Padda’s counsel challenged an initial Medicare contractor’s audit of Padda’s past payments through the first two levels of administrative review, arguing that “the services were medically necessary” and the initial audit determining his overpayment contained errors.

A panel of experts reviewed this and a new audit was conducted, as well as a 37-page decision addressing each of Padda’s arguments from his counsel and experts.

“These procedures were a meaningful opportunity for Dr. Padda to be heard before the government began recoupment,” Melloy wrote.

Padda had requested an ALJ hearing outside of the 90-day time limit according to the statute. He sued in federal court with a month left to escalate his case to the Appeals Council and seek judicial review. According to the opinion, Padda’s counsel couldn’t cross-examine government witnesses during the ALJ hearing because Medicare did not participate.

“Because the protections he sought were not available at the ALJ hearing, Dr. Padda has not demonstrated that the hearing added sufficient protections as to be constitutionally required,” Melloy wrote.

Joshua M. Salzman from the U.S. Department of Justice Civil Division represented Xavier Becerra, secretary of the U.S. Department of Health and Human Services; Liz Richter, who is acting administrator for the Centers for Medicare and Medicaid Services; and Wisconsin Physician Service Insurance Corporation. The public affairs office of the U.S. Department of Justice declined to comment.

The case is Gurpreet Padda et al. v. Xavier Becerra et al., 21-2823.