GEORGIA DEPARTMENT OF COMMUNITY HEALTH v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES et al, No. 1:2013cv01281 - Document 27 (D.D.C. 2015)
Court Description: MEMORANDUM OPINION to the Order on the Motions for Summary Judgment. Signed by Judge Gladys Kessler on 2/10/15. (CL, )
Download PDF
<![CDATA[
GEORGIA DEPARTMENT OF COMMUNITY HEALTH v. UNITED STATES DEPARTMENT OF HEAL...ND HUMAN SERVICES et al Doc. 27 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA GEORGIA DEPARTMENT OF COMMUNITY HEALTH, Plaintiff, Civil Action No. 13-1281 (GK) v. UNITED STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, et al., Defendants. MEMORANDUM OPINION Plaintiff ("Georgia") Georgia brings Department of this Health Department suit and against Human Medicare & Medicaid Services Defendants Services ("CMS"), official capacity "Defendants."), as United ("HHS"), Health States Centers Kathleen Sebelius, official capacity as Secretary of HHS, her Community of in her and Marilyn Tavenner, Administrator for CMS for in (collectively, to recover $90,050,230 that Georgia erroneously credited to CMS in 2005 and 2006. This matter Summary Judgment Motions, & 19], below, is [Dkt. Oppositions the before Nos. [ Dkt. the Court 13 & 14]. Nos. on record herein, Plaintiff's Motion for and Summary for Upon consideration of the 15 & 16] , entire Cross-Motions Replies for the Judgment [ Dkt. reasons is Nos. 18 stated granted in Dockets.Justia.com •· part and denied in part and Defendants' Cross-Motion for Summary Judgment is granted in part and denied in part. I. BACKGROUND A. Statutory Background 1. Medicaid Expenditures Title XIX of the Social referred to as Medicaid, that provides medical individuals. 42 administered by C.F.R. § eligible to assistance u.s.c. If and certain ( "SSA") , low-income seq. et commonly federal families The overseen by CMS. requirements funds Medicaid program expenditures. a to 1396 § states receive Act is a cooperative federal-state program the 430.0. Security are for 42 U.S.C. a § met, and program is See id.; 42 a state is of its percentage 1396(a). The bulk of state's Medicaid expenditures consist of payments to medical providers for health care beneficiaries. 42 C.F.R. The federal § portion participation" ( "FFP") basis. U.S.C. See 42 start of each quarter, services provided to program 430.0. of the "Federal funds financial is paid to the states on a quarterly § 1396b(a). Forty-five the state submits a days before form CMS-37, the which contains the state's estimated Medicaid funding expenses for the upcoming quarter. through CNS, 42 C.F.R. 430.30(b). The federal government, provides the state with a "grant award," which is -2- similar state to a line of credit. to draw federal quarter to pay funds the The as federal grant award authorizes needed over the share of the the course of the state's Medicaid disbursements. Id. at 430.30(d). Within 30 days after the end of the quarter, the state must submit to CMS a Quarterly Statement also known as a form CMS-64. CMS-37, which "accounting Id. at § contains of actual Id. 430.30 (c) (2). Expenditures at§ 430.30(c)(l). predicted recorded of expenditures, expenditures" the for ("QSE"), Unlike the QSE the is an quarter. The QSE details and reconciles how the federal grant award monies were spent. In addition to the most recent quarter's expenditures, QSE contains several entries for "increasing" adjustments to claims from prior quarters. necessary because, for a number of always able to present a complete, or the "decreasing" Such adjustments are reasons, accurate, a state is not or o-therwise final accounting within 30-days of the end of the most recent quarter. In such adjust circumstances, retroactively, reported in the a state either earlier uses up or quarter's a later down, QSE or quarter's expenditure the federal QSE amounts share claimed with respect to those expenditures. 42 U.S.C. 1396b(d). -3- to 2. Two-year Limitations Period Section 2 (a) ) 1132 provides of for the a SSA (codified two-year window at during permitted to file claims for expenditures. has also issued implementing Regulations. .34. They state that "[CMS] expenditure . that 42 U.S. C. which 2 1320b- states are The Secretary of HHS See 45 C.F.R. §§ 95.1- will pay a State for a State agency only if the State files a claim with expenditure within § years after the [CMS] for calendar quarter which the State agency made the expenditure." Id. in 95.7. Claims § made for expenditures after the two-year period has expired are "disallowed" and not paid. There are exceptions to ordered retroactive payments, to prior year costs, the two-year period audit exceptions, 42 U.S.C. 1320b-2 (a), § for court- and adjustments as well as "[a]ny claim for which the Secretary decides there was good cause." 45 C.F.R. part § of 95.19. a "[N]eglect or administrative inadequacy" on the state does not constitute good cause. 45 C.F.R. § 95.22. 3. An Overpayments "overpayment" is defined as "the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowable required to be for services " refunded -4- and furnished 42 C.F.R. § which 433.304. is Stated differently, an overpayment is a payment by a state to a medical provider that is impermissible and therefore not eligible for FFP under the state's Medicaid plan. When a state has claimed FFP for a medical provider payment I i that is later determined to constitute an overpayment, the state must return to CMS the federal share of the amount overpaid. The state has sixty days 1 in which to return the federal share of the overpayment recovered C. F. R. to the the regardless overpayment 433.312. listing CMS, from of the whether medical the state provider. See has 42 The return of an overpayment is effectuated by credit in the QSE (line lO.C). See 42 C.F.R. § 433.320. This is considered a "decreasing adjustment." If, after a state has credited CMS with the federal share of an overpayment, that overpayment is later adjusted downward, the state may reclaim the amount of the downward adjustment on the next QSE. state later provider therefore is 42 C.F.R. realizes less § that than over-credited 433.320(c). In other words, the it it CMS, amount previously it may overpaid thought, reclaim the a and if the medical that it appropriate portion of the credit. The two-year filing limit does not apply 1 When the events at time to return the date of discovery of modified so that the issue in this case occurred, the period of federal share to CMS was 60 days from the the overpayment. The statute has since been period is now one year. -5- to downward adjustment adjustments is not of overpayments, considered a as the "downward retroactive claim but rather a reclaiming of costs previously claimed." Id. B. Factual Background The parties have no disagreement about the facts that led to Georgia's inadvertent credit of $90,050,230 to CMS and CMS's subsequent refusal to refund the launched a new Medicaid Management money. 2003, Georgia Information System ("MMIS") In to process claims submitted by providers. Georgia Dep't of Cmty. Health, No. new HHS 2521, Departmental Appeals 5-6 system (Jun. 28, suffered significant delays 2013) from in Board ("DAB" or "the [hereinafter DAB No. severe paying problems providers. that Board") 2521]. resulted The in received Georgia numerous complaints from providers that they could not continue to operate without payment. Id. In response to this crisis and to ensure the availability of medical services proposed, and CMS resolved, Georgia for Georgia's Medicaid recipients, agreed, could that make until "advance" the MMIS payments Georgia issues to were providers prior to the submission and processing of payment claims for the services. Id. at 6. It was understood that the advance payments would later be matched and reconciled with actual payment claims once MMIS could process them. -6- Between April 1, 2003, and June 30, 2005, Georgia made approximately $2 billion in advance payments to providers under this arrangement. Id. For its own internal Georgia purposes, accounting classified the advance payments as "provider receivables" money to be recouped from Medicaid providers). the QSE, Georgia reported the advance (i.e. For purposes of payments as current- quarter expenditures. DAB No. 2521 at 6; Georgia Mot. at 7. Advance payments that were not matched and reconciled with provider Just as claims with within 60 days were standard overpayments, treated as overpayments. Georgia had to refund the federal share of the advance payments to CMS after 60 days. The refund to CMS was listed as a decreasing adjustment on line 10.C of the QSE (along with any other overpayments unrelated to Georgia's MMIS problems). DAB No. 2521 at 6. If, the after Georgia had refunded the advance claims, payments were reconciled federal with share to medical CMS, provider Georgia would report the reconciled amounts as "other" expenditures on its current-quarter QSE. Id. This procedure allowed Georgia to receive payment for the federal share of the reconciled expenditures, which it had previously and erroneously refunded back to CMS. This procedure was how reported Georgia routinely also consistent with reconciliations 60-day provider receivables. Dubberly Decl. -7- 8. of the routine In 2005, its Georgia decided to provider receivables liability ("SFY") on its 2005. balance financial DAB No. include the federal share of as $45,025,115.09 statement for State 2521 at 6. Of this amount, fiscal a year $37,402,375.33 represented the federal share of provider receivables that had already to been adjustments majority advance Georgia's refunded on QSEs of CMS (as required) decreasing submitted between 1989 and June the $37.4 million related payments made between 2003 MMI S as problems. Id. The to and refunds 2005 2005. CMS of response in to The to $7,622,739.76 remaining represented provider receivables that were less than 60 days old and for which there was not yet any obligation to refund the federal share. Id. at 7. In Georgia the process of preparing inadvertently ("$45 million") included provider receivables its SFY 2005 the balance statements, $45,025,115.09 in its decreasing adjustment on the QSE for the quarter ended September 30, ("September 2005 QSE"). Id. 2005 This mistake had the effect of re- crediting to CMS $37.4 million that had been previously credited from 1989 to June 2005. It was also premature to credit the $7.6 -8- as the receivables were less than 60 days old. 2 million to CMS, Georgia Mot. at 9. While Georgia preparing again its financial inadvertently statements credited the $45 for SFY million this time on the QSE for the quarter ended June 30, 2006, to 2006 CMS, ("June 2006 QSE"). Georgia Mot. at 9; DAB No. 2521 at 7-8. Combined, Georgia between 2005 and 2006 its errors until 2008, erroneously credited ("$90 million"). when issues CMS $90,050,230 Georgia did not realize identified by its external auditor triggered an in-depth internal review of its financial records and prior QSEs. review that DAB No. 2521 at Georgia discovered the two 8. It was during this $45 million credits it had made to CMS. C. Procedural Background Once Georgia discovered the errors, it attempted to reclaim the $90 million by including the amount on the "other" expenditures line of the QSE for the quarter ended June 30, 2009 ("June 2009 QSE"). Id. Georgia included a "footnote" on the first page of the QSE stating that a "significant adjustment of 2 To the extent those receivables remained outstanding after 60 days, they would have been credited on later QSEs as required; if they were reconciled, Georgia would not have had to repay the federal share. Georgia Mot. at 9. -9- approximately $ 90M is being claimed this quarter. The basis is as an adjustment to 60 day receivables." AR 410 [Dkt. No. 20-1]. On December 11, 2009, CMS deferred 3 Georgia's claim for the $90 million, 416-17. letters, asserting that Georgia's request was untimely. Georgia responded to the deferral with two AR separate arguing why the two-year limitation was not applicable in this circumstance. AR 420-28. On June 30, 2011, CMS notified Georgia disallowing the $90 million adjustment. acknowledged that Georgia was DAB No. attempting to that it 2521 at 8. reverse the was CMS two inadvertent $45 million payments, and did not dispute that they were that erroneous, but concluded the request should be disallowed "because it was submitted more than two years after the quarter in which 'the original State payment was made." Id. (citing June 30, 2011 Letter from CMS to Georgia, AR 431-32). Georgia appealed CMS' s decision parties submitted their briefs, and on February rejecting the 8, 2013, arguments to the Board. After the the Board heard oral argument, issued a of both parties "Preliminary Analysis" and setting forth its view of the case. DAB No. 2521 at 9. Both parties then submitted 3 CMS may issue a "deferral," or temporary withholding of FFP, if the CMS Administrator "questions [the] allowability [of a claim] and needs additional information to resolve the question." 42 C.F.R. § 430.40. -10- written comments 2 013, to the Preliminary Analysis. Id. On June 28, the Board sustained the entire $90 million disallowance. See generally DAB No. 2521. Georgia 2013 filed its Complaint with the filed their [Dkt. No. Cross-Motion 13] for May 5, 2014. Opposition to On 4, Defendants' Plaintiff's Motion 2014, June Defendants on March Summary Opposition to Georgia's Motion 2014. Mot.") Georgia 23, Defendants and [Dkt. Combined No. filed' its 14] on Combined Cross-Motion and Reply in Support of ("Georgia's Reply") filed 4, Judgment ("Defs.' 2014, their Cross-Motion ("Defs.' Reply") Reply [ Dkt. No. 17] . On July 7, in Support of Defendants' [Dkt. No. 19]. STANDARD OF REVIEW The Administrative to on August [Dkt. No. 1]. It then filed its Motion for Summary Judgment ("Georgia's Mot.") II. Court hold an capricious, accordan6e agency an with Procedure Act action abuse of law." 5 ( "APA") unlawful discretion, U.S.C. if it or is The a court "arbitrary, otherwise 706(2). § requires not in arbitrary and capricious standard of the APA is a narrow standard of review. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). It review is is well established highly in our Circuit deferential" -11- and that the "court's "we are 'not to substitute [our] judgment for that of the agency' 'consider whether the decision was based on a but must consideration of the relevant factors and whether there has been a clear error of judgment.'" Bloch 2003) (D.C. Cir. 504, 514 cannot Powell, 348 Co. (quoting S. v. Servs., Inc. 2002)); (D.C. permit Cir. 1987). courts "merely to 2000), be Corp. v. used to "thorough, United FCC, However, Def. Council v. undergoing a v. 1060, probing, States, 857 the Cir. 579-80 Paddack, 825 F.2d standard stamp agency Daley, 209 F.3d 747, shield (D.C. deferential this rubber 1070 313 F.3d 574, see also United States v. Natural Res. nor F.3d agency's actions," 755 (D.C. Cir. decision from in-depth review." Midtec Paper F.2d 1487, 1499 (D.C. Cir. 1988) (internal citations and quotations omitted). An if agency it satisfies "examine[s] satisfactory the the _relevant explanation for connection between the facts Vehicle Mfrs. Ass'n v. 29, 43 (1983) 371 U.S. Comm'n, not 156, its data action and capricious and 168 including to [an] 775 a a 'rational found and the choice made.'" Motor State Farm Mut. Auto. (1962)); standard articulate[s] Ins. (quoting Burlington Truck Lines v. 606 F.3d 769, defer arbitrary Lichoulas ,v. (D.C. Cir. agency's -12- Fed. 2010). Co., United States, Energy Regulatory Finally, conclusory 463 U.S. or courts "do unsupported suppositions." McDonnell Douglas Corp. v. U.S. Dep't of the Air Force, 375 F.3d 1182, 1186-87 (D.C. Cir. 2004). Summary judgment will be granted when there is no genuine issue as Because to any this decision, material case fact. involves Fed. R. challenge Civ. to a P. 56(c). final agency the Court's review on summary judgment is limited to the Administrative Record. v. Ashcroft, Pitts, a See 411 1173, 1177 procedure Holy Land Found. 333 F.3d 156, 160 U.S. 138, 142 (1973)); (D.C. Cir. 1977) for resolving administrative (D.C. Cir. for Relief and Dev. 2003) Richards (citing Camp v. v. INS, 554 F.2d ("Summary judgment is an appropriate a decision challenge when to review a is federal based agency's upon the administrative record."). III. ANALYSIS A. The Board Decision 1. The $90 Million Request Is a Claim Subject to the Claiming Limit Under SSA § 1132, states must file claims for expenditures with CMS within a two-year period. See supra, U.S.C. define 1320b-2(a); see also 45 C.F.R. § a "claim" participation," participation" 45 is as C.F.R. "the "request a § 95.4, Federal -13- § Section I.A.2; 42 95.7. The Regulations for where Federal financial "Federal financial government's share of an expenditure made by a State agency." Id. Therefore, a claim is a request for the Federal government's share of an expenditure. "Expenditure" is not explicitly defined in the Regulations. Georgia argues that this two-year limit is inapplicable because its request foT $90 million is neither a "claim" nor a request at 15. made "with Instead, respect Georgia recovery of state funds of any an describes expenditure." its request Georgia as one Georgia argues, "expenditures" by the Mot. for inadvertently credited to CMS. were to pay it $90 million, account to the If CMS it would not be on State, but in order to remedy a bookkeeping error. Id. at 15-16. In further support of its argument, Georgia notes that it had already timely claimed and received FFP with respect to the 1988-2005 expenditures underlying the erroneous credits. Because it had already been paid for that it was not seeking the expenditures, reimbursement for Georgia those states expenditures, only repayment of the inadvertent re-crediting to CMS. The Board disagreed with Georgia, request to be a claim Board limitation. The "expressly and stated covers respect to' Accordingly, a 'any' state's under the therefore that request finding the subject the for expenditures." Board's -14- to $90 million the two-year federal DAB reasoning, No. if two-year limitation funding 'with 2521 at 10. Georgia's $90 •. million request expenditures, is it funding necessarily for Medicaid within federal for the two-year falls limitation statute. The Board reasoned that "[a]mounts reported as expenditures on the QSE are those which a state asks to be charged against the FFP award" 430.30 (c)- (d); for that State found that Georgia, quarter. Medicaid Id. Manual § (citing 42 C.F.R. 2500 (A) (1). The § Board by reporting the $90 million request on a QSE, was representing to CMS that it was requesting FFP. Because FFP is "available only for expenditures on medical assistance or Medicaid program administration," the Board concluded that any request FFP · must for relate to Therefore, expenditures. Georgia's FFP request was a claim and was made with respect to expenditures. DAB No. 2521 at 10 (citing SSA 1903 (a) (1)- (2); § 42 C.F.R. § 435.1000 et seq.; 45 C.F.R. § 95.13(d)). The Georgia Board's conclusion supported its showing, as a prior is bolstered request for period adjustment, by the fact $90 million with a the $90 that schedule million as expenditures for inpatient hospital services. AR 528. Given that the statutes is reasonable Georgia has failed Board's and to interpretation of the rationally connected to demonstrate -15- that the relevant the facts, Board acted arbitrarily and capriciously when it found the $90 million request to be a claim with respect to an expenditure. 2. The $90 Million Request Is Outside Claiming Limit the Two-Year Having determined that Georgia's $90 million request was a claim with respect to expenditures, and therefore subject to the two-year limit in 42 U.S.C. 1320b-2, the Board then evaluated § whether the claim was made within two years of the expenditures. In order to do so, were that it needed to identify what the expenditures application of the two-year limitation. As noted earlier, "expenditure" is not specifically defined in the context, SSA. the See generally Board defined 42 U.S.C. § "expenditure" 1396 et seq. to mean "a In this Medicaid payment by the state to a health care provider." DAB No. 2521 at 11 (citing 45 C.F.R. 95.13(b)). To identify the expenditures, history of the payments at issue. the Board reviewed the It explained that Georgia had timely requested and received FFP for the provider payments it made between 1988 and 2005. A large percentage of those payments were considered to be overpayments, for which Georgia had also credited share back to CMS According to the Board, the federal on a timely basis. when Georgia made the two $45 million credits, it was merely adjusting those prior claims for FFP. The -16- $45 million Similarly, credits the were stated Board not that themselves. "expenditures" when Georgia· made its $90 million claim on the June 2009 QSE, it "was the last in a series of prior-period payments concerning adjustments (expenditures)" made between Medicaid 1988 and 2005. provider DAB No. 2521 at 13. Having characterized the mistaken payments and the request for the Board $90 million concluded provider that payments expenditures as refund the made as prior-period "expenditures" between 1988 in and adjustments, question the were the Viewing the and 2005, the 2005. having taken place between 1988 Board concluded that Georgia's claim for $90 million on the June 2009 QSE was long past the two-year deadline and untimely. Georgia does not directly contest the Board's determination that the "expenditures" at issue were the underlying payments to the medical providers, but instead reiterates its arguments for why its request was not a claim. an alternative expenditures definition are that does note Georgia also does not suggest or triggered description the what for two-year statute the of limitations. Georgia that the Board's conclusion that the expenditures took place between 1988 and 2005 creates unworkable result. Georgia points out that because the Board concluded the -17- expenditures took statutes limitations of Therefore, even place if between began Georgia and 1988 running had the 2005, between immediately 1988 two-year and realized 2005. its $45 million mistake on the September 2005 QSE and tried to recover the $45 million on the next QSE would have already been (or even the very next day), time barred many for it the of expenditures. Defendant's only response is that CMS may allow a state to revise error Mot. a QSE to "within a at 22. correct short an error if time" after submitting Defendants do not cite the any state discovers the QSE. authority the Defs.' for this position or define what constitutes a "short time." It appears that, under state's the ability Board's to interpretation recover erroneous of credits "expenditure", to CMS is a left completely to the discretion of CMS if the errors are in any way derivative of provider payments more than two years old. Though the Court urges CMS to issue guidance to the states on 0hen it will permit them to revise QSEs, so as to avoid being immediately time-barred from correcting their errors, the Court finds the Board's interpretation of the statutes and regulations to be reasonable. The Board did not act arbitrarily or capriciously when it found the expenditures underlying Georgia's request for $90 million to be the 1988-2005 medical provider expenditures. It was also reasonable when it concluded that Georgia's $90 million request was a claim for FFP outside of the statutorily required two-year period CMS's affirmed and disallowance. 3. The $90 Million Request Adjustment of Overpayments While Georgia disputes constitutes a claim, that Is its Not $90 a Downward million request it argues in the alternative that, should the request be found to constitute a claim, then the request was a downward adjustment to prior overpayment credits to CMS and therefore not subject to the two-year limitation. As explained above in Section I. A. 3, made to a Medicaid provider, if an overpayment is the state must refund the federal share of the amount overpaid to CMS within a specified period of time. Section 433.320(c) credited the federal adjusted downward, downward share was For overpaid assistance percentage refund to CMS, $100 $62 from the to CMS, the after the state has overpayment amount is then the state may reclaim the amount of the adjustment. provider provides that if, example, by for $100, the regardless provider. if If it it and state is of whether is later is determined the federal 62%, the it has that a medical state must recouped the determined that the provider was only overpaid by $75, the $100 overpayment would be -19- adjusted downward and the state may reclaim the relevant federal share of the $25 downward adjustment (62%, or $15.50). Such reclaimings of downward adjustments are not subject to the two-year regulation filing further limit. states 42 C.F.R. that the 433.320 (c). § downward The adjustment "is allowed only if it is properly based on the approved State plan, Federal law and regulations governing Medicaid, resolution processes and the appeals specified in State administrative policies and procedures." Id. The bulk represented of the Georgia's federal provider receivables been outstanding refunded credits back were the federal "downward to share over CMS. 60 cumulative credits total of which to Georgia that the had $45 the already million refund amount due to and that the $90 million request was a government, Ga. million going back to 1988 that had argues "upward adjustments" adjustment of the days, Georgia those to overpayment amounts." DAB No. Comments of (overpayments) for $45 erroneous Dept. of same 2521 at 17 Cty. credited previously (quoting Feb. 27, 2013 Health on Prelim. Analysis, 8) argument on several grounds. The (emphasis omitted) . . The first Board rejected ground was overpayment that refunds on this Georgia did not the QSEs. -20- Id. classify the Given that credits both as parties acknowledge that limited weight the $45 million should be given to credits were inadvertent, their classification on the QSE when determining the nature of the credits. The Board's was no "downward provider second, more persuasive, adjustment" overpayments. (or The Id. ground is that there reduction) Board to the of· defined reasonably amount a "downward adjustment" as "a finding or determination by a state that a provider is entitled to receive a Medicaid payment portion of a Medicaid payment) (or a that the state earlier identified as improper, excessive, or otherwise unallowable under the state plan or federal requirements." Id. In other words, because more of the provider payment is found to be permissible, of the impermissible overpayment is reduced, the amount or adjusted downward. Although Georgia's $90 million request relates generally to overpayments overpayments) , (specifically, erroneously re-credi ting refunds it is not a result of downward adjustments. of The Board found no evidence that Georgia determined that any of the overpayments CMS, to providers, "were in fact which were allowable under the previously refunded to state plan and federal requirements." Id. at 18. That is to say, the amounts determined to have been overpayments have not changed, is no downward adjustment. -21- and therefore there Section 433.320(c) addresses disputes to overpayment determinations, the resolution of which may take longer than two years, and provides an exception to the two-year limit in circumstances where the overpayment amount is adjusted downward. The Court indicate agrees that 433. 320 (c) (2) every the was transaction correctly held downward with the Board two-year intended that that adjustments, the as that limit to be to two-year defined expansive a nothing in as overpayments. exception as is exception so relates there only reclaiming section to include The Board applies of to to refunded amounts due to a determination that the overpayment itself was reduced. did Georgia's not providers. involve attempt to a Therefore, Board's it overpaid to CMS reduction in overpayments there no "downward overpayments as defined by The reclaim what finding § was to medical adjustment" of 433.320. that Georgia's request was not a downward adjustment and therefore not exempt from the two-year filing was not arbitrary, capricious, or an abuse of discretion. -22- B. Equitable Claims In addition to its statutory claim, Georgia makes equitable While claims for money had and received and unjust enrichment. Georgia asked the Board to consider equitable principles when interpreting the two-year limit, it brought no equitable claims before the the Board. Therefore, Court evaluates Georgia's equitable claims de novo. 1. Before Adequate Legal Remedy the Court may consider equitable remedies, Georgia must show that it did not have an adequate remedy at law. "It is a basic doctrine of equality jurisprudence that courts of equity should not remedy at 504 U.S. its when 'the act law 374, . " Morales v. 381 Regulations "therefore no moving (1992). to has an adequate Trans World Airlines, Inc., Defendants argue that the statute and provide resort party an adequate equitable remedy remedies is at law, necessary." and CMS Mot. at 3. The mere existence of a remedy at law is not sufficient to warrant denial Blind of 1550 equitable Delaware Cnty. n.76 States, of 928 (D.C. F.2d both in respect relief. Valley, Cir. 1983); 221, 223 to the v. Interstate (7th final Inc. See Cir. Council of Regan, 709 Cigar Co. 1991). The relief and the mode -23- & for the F.2d 1521, v. United legal remedy, of obtaining it, must be "as efficient as the remedy which afford under the same circumstances." Regan, n.76 (citing Therefore, Gormley the v. Court Clark, must 134 would 709 F. 2d at 1550, U.S. evaluate equity 338, whether 349 (1890)). Georgia's legal remedy in this situation is adequate. The renders Board's any erroneous credits. interpretation attempt credits by of the to recover Georgia facts time-barred the moment Under the Board's interpretation, erroneous credits to CMS a and regulations portion it made of the the mistaken requests to recover are prior-period adjustments and are evaluated for purposes of the two-year limitation based on the underlying expenditure. Therefore, any erroneous credits that relate to expenditures that occurred more than two years prior are time-barred the moment the erroneous credit is made. Defendants barred does counter not make a that simply because remedy inadequate. relief Defs.' is time- Mot.· at 31. The Court agrees as a general matter that equitable remedies are not meant to be used as an end-run around statutes of limitation. However, in the case at hand, there was literally no time window portion credits, of in the which Georgia erroneous could have credits. For the limitations period was, two years contemplated by the statute. -24- sought another to recover portion in practice, of a the less than the When arises, a claim is effectively time-barred the moment it it cannot be said that the legal remedy is "adequate to meet the ends of justice." Regan, 709 F.2d 1550, n. 76 (internal citation and quotation omitted). Similarly, there is no adequate remedy at law when the two-year period provided by Congress is truncated, as it was for many of the expenditures that had taken place less than two years before the mistaken credits were made. Therefore, law the Court finds that there is no adequate remedy at available for Georgia that prevents the from Court considering equitable remedies. 2. Unjust Enrichment Georgia's claims for unjust enrichment and money had and received rely on the same principles of restitution, namely that a "person who is unjustly enriched at the expense of another is subject to liability in restitution." Restitution and Unjust Enrichment § similar and the parties conflate Restatement 1. (Third) of Though the remedies are their arguments for each at times, they will be addressed separately. Recovery under a theory of unjust enrichment equity belongs Elec., Inc. v. to Ideal another." Elec. Sec. United Co., States 81 F. 3d ex 2 40 rel. Modern (D.C. Cir. 1996). Plaintiff's claim fits squarely within this definition. -25- a . which in justice showing that "a person retains a benefit and requires Measured against many metrics, Georgia is not considered a wealthy state. Approximately 18.2% of Georgia's population lives in poverty, giving it the undesirable distinction of having the See U.S. eighth highest poverty level in the 50 United States. Census Bureau 2009-2013 Estimates [hereinafter household income personal income for per "ACS the Community American Estimates"] . state capita, is Georgia The estimated $49,179. again Survey With has the distinction of ranking 40th out of all 50 states. Economic Analysis, State Personal It that was projected Georgia would Medicaid and PeachCare 4 in 2017, state's Committee revenue. See DCH Income 2013 spend median regard to undesirable Id.; Bureau of (Mar. $2.85 25, 2014). billion on or approximately 15.57% of the Presentation on Medicaid Reform, 5-Year 11 (Aug. to 2013 28, 2013) Joint Study [hereinafter "DCH Presentation"]. The loss of $90 million in credits due to the mistakes of one Georgia employee, 5 Georgia Mot. at 14-15, will harm hundreds of thousands of Georgia's most population of the State of Georgia approximately 4 5 1.89 million of vulnerable those citizens. roughly 9.8 million, people were The and enrolled PeachCare is Georgia's Children's Health Insurance Program. Georgia refers several times to "a State employee" and does not mention the involvement of any other employees. -26- in Medicaid in 2013. Put in See ACS perspective, close enrolled in Medicaid. most by Georgia's Estimates; to 20% DCH of Presentation at Georgia's 11. population is These are the people who will be hurt the administrative errors and the subsequent crediting of $90 million of Georgia's Medicaid credits to CMS. It is Georgia's populations poor, will that elderly, suffer disabled, the pregnant and should most these administrative errors stand uncorrected. Defendants do million in not credits, claim that but CMS rather that is entitled to Georgia the $90 is precluded from recovering the credits. Defendants timely file argue its that claim for Georgia's the negligence return of the in failing to $90 million in credits is relevant to the evaluation of its unjust enrichment claim because the "good cause" exception to the two-year filing limit explicitly inadequacies do states not that neglect constitute good and cause. administrative See Defs.' Mot. at 34. First, statutes and the Court has already determined that the regulations do not provide an adequate relevant remedy at law, and therefore the Court's unjust enrichment analysis is not bound by their contours, including the good cause exception. -27- •· Second, Defendants' argument focuses on the incompetence of Georgia in failing to file for the return of the $90 million in credits within the two year statute of limitations. discussed previously, under the Board's interpretation, statute of limitations had already run for expenditures the moment Georgia However, as the a portion of those established each of the at fault inadvertent $45 million credits. While making fact it the is is two of not $45 limited conferred by mistake, disputed that Georgia million payments relevance. In in the cases was first where a place, in that benefit is "the fact that the claimant may have acted negligently in making a mistaken payment is normally irrelevant to the [unjust enrichment] claim." Restatement Restitution and Unjust Enrichment § 6 cmt. a (Third) of (2011). Defendants contend that Georgia's claim that the erroneous credits "resulted in unjust enrichment fails because CMS has not been any more unjustly enriched than it would have been had Georgia failed to claim the $90 million in expenditures within the two-year limit." Defs.' Mot. at 32-33. The two situations are totally different and therefore not comparable. In the case of time-barred reimbursements for expenditures, a state would have had to have failed to make any timely filing for the expenditures. Here, Georgia -28- did timely file for reimbursement for all the expenditures, only to, years later, inadvertently refund to CMS a portion of the reimbursements. In addition, the statutes and regulations clearly provide for how a state can and Significantly, must there seek is no reimbursement comparable expenditures. for guidance for recovering mistaken payments. The foundation of Georgia's unjust enrichment claim is that the credits are in essence the equivalent of money rightfully belonging to the State and should never have been given to CMS. While it is not disputed that Georgia is in its current position as a result of the very egregious errors it made, that does not change the fact that CMS is now in possession of $90 million of Georgia's credits to which it is not entitled. While the Court does not lose sight of Georgia's predicament is one of its own making, mind the distressing financial environment the fact that it also bears in Georgia Medicaid faced that led to the $90 million in erroneous credits. The bulk of the $90 million was the result of Georgia making advance payments to its providers in 2003-2005 who were threatening to stop treating Moreover, making their Medicaid patients with CMS's knowledge, advance payments normally permitted). unless they and its approval, to Medicaid providers DAB No. 2521 at 6. -29- (a were paid. Georgia began practice not This "required complex reconciliation claims" and of advance greatly payments inflated to providers Georgia's provider with actual receivables. Georgia Reply at 18. In this uncharted terri tory, with CMS' s provider accurately Georgia was trying to comply. overpayment represent the situation in the well as regulations, State's as internal financial statements. Id. Taking concludes Georgia that and Georgia's claim, into account the that balance Defendants crediting nor rightfully has all of it belongs of considerations, equities have it. that the While importance of timeliness and CMS' s weighs been $90 million to shown, to these $90 the in unjustly CMS. CMS Court favor of enriched by does million Court the not in even credits recognizes the ability to plan its budget, as well as Georgia's role in causing the mistake, the reality is that the credits are Georgia's and the United States Government would be unjustly enriched if permitted to keep them. ineptitude confounding, in making but errors does not and delay justify in discovering permitting the Georgia's them is federal government keeping the $90 million in credits to the detriment of Georgia's 1.89 million Medicaid recipients. -30- Because Georgia prevails . on its claim unjust for enrichment, the Court need not address its second claim of money had and received. IV. CONCLUSION For all of the foregoing reasons, Georgia's Motion shall be granted and Defendants' Cross Motion shall be denied. An Order shall accompany this Memorandum Opinion. February 10, 2015 Gladys Ke sler • United States District Judge Copies via ECF to all counsel of record -31-
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
