Texas Tech Physicians Assoc. v. US Department of Health and Human Services., No. 18-10620 (5th Cir. 2019)Annotate this Case
The Fifth Circuit affirmed the district court's grant of summary judgment to HHS in an action under the Administrative Procedure Act arising from a demonstration project deviating from the ordinary Medicare reimbursement rules. In this case Texas Tech could keep the additional fees it received for implementing the project only if its care management model achieved cost savings. When the government determined that Texas Tech failed to do so, it demanded return of about $8 million in fees.
As a preliminary matter, the court held that the demonstration agreement was not a procurement contract and the HHS Departmental Appeals Board had jurisdiction over this case. On the merits, the court held that it need not resolve whether the Board erred in suggesting that the common law of contracts never informs grant disputes, because, even if it did, the Board made valid findings justifying the rejection of Texas Tech's various contract theories. The court rejected Texas Tech's contention that CMS breached the demonstration agreement by failing to provide an appropriately matched control group; by refusing to allow Texas Tech to access relevant Medicare claims data; and by engaging RTI to evaluate whether differences between the intervention and control groups may have accounted for the apparent lack of cost savings. Finally, the court held that, although the Board did not expressly address two common law contract doctrines -- mistake and impracticability -- it did make findings that doom those two defenses.