Golden Home Health Care, LLC v. Verma

GOLDEN HOME HEALTH CARE, LLC, et al., Plaintiffs, v. SEEMA VERMA, et al., Defendants.

Case No. 2:20-cv-2954

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

August 26, 2020

JUDGE EDMUND A. SARGUS, JR.

Magistrate Judge Chelsey M. Vascura

OPINION AND ORDER

The matters before the Court are Plaintiffs' Golden Home Health Care, LLC, Hari Puri and Hema Sanyasi (collectively "Plaintiffs") Amended Motion for a Preliminary Injunction¹ (ECF No. 9) and Defendant Seema Verma's Motion to Dismiss (ECF No. 12). The parties have responded and replied to the motions. Thus, the motions are ripe for review. For the following reasons, the Amended Motion for a Preliminary Injunction (ECF No. 9) is DENIED and the Motion to Dismiss (ECF No. 12) is GRANTED.

I. BACKGROUND

Plaintiff Golden Home Health Care, LLC ("Golden Home") filed this suit, along with a Motion for a Preliminary Injunction, on June 9, 2020. (See ECF Nos. 1-2.) On June 11, 2020, Golden Home filed an Amended Motion for a Preliminary Injunction. (See Am. Mot. Prelim. Inj., ECF No. 9.) Next, Defendant Seema Verma, sued in her official capacity as the Administrator of the Centers for Medicare and Medicaid Services (the "CMS Administrator"), filed a Motion toDismiss. (See Mot. Dismiss & Mem. Opp'n Pls.' Am. Mot. Prelim. Inj., ECF No. 12.) Subsequently, Golden Home filed an Amended Complaint which included two new plaintiffs, Hari Puri and Hema Sanyasi. (See Am. Compl., ECF No. 16.) Finally, both the CMS Administrator and Defendant Maureen Corcoran, sued in her official capacity as the Director of the State of Ohio Department of Medicaid, (the "ODM Director"), moved to dismiss the Amended Complaint. (See Mots. Dismiss, ECF Nos. 23-24.) In this Order the Court will address the Amended Motion for a Preliminary Injunction and the CMS Administrator's first Motion to Dismiss.

On August 3, 2020, in a telephone conference, the parties agreed that because they largely agreed on the facts of the case and the issues were of law, they did not need a hearing. (See Am. Mot. Prelim. Inj. at 28; Mot. Dismiss & Mem. Opp'n Pls.' Am. Mot. Prelim. Inj. at 41-42.) Instead, the parties agreed the Court could rely on their briefs. See Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 552 (6th Cir. 2007) (indicating "a hearing [on a motion for a preliminary injunction] is only required when there are disputed factual issues, and not when the issues are primarily questions of law." (citing Lexington-Fayette Urban Cnty. Gov't v. Bellsouth Telecomm., Inc., 14 F. App'x 636, 639 (6th Cir. 2001)). Thus, the facts as relayed are undisputed unless otherwise indicated.

1. Statutory and Regulatory Background

In 1965, Congress created Medicare, the federally funded and administered health insurance program for certain disabled persons under the age of 65 and for individuals aged 65 and over. 42 U.S.C. §§ 1395, et seq. Congress gave the Secretary of Health and Human Services (the "Secretary") the authority to enter into participation agreements with providers of services and to establish a process for which those providers could enroll in the Medicare program and obtain Medicare billing privileges. Id. § 1395cc(a), (j). The Secretary delegated this responsibilityto the CMS Administrator. Id. § 1395kk-1. As part of such authority, the CMS Administrator now contracts with Medicare Administrative Contractors, such as Palmetto GBA ("Palmetto") to perform certain functions such as processing enrollment applications. See id.

Additionally, in 1965 Congress established Medicaid through which the federal government gives money to the States for purposes of paying the medical costs of people whose income and resources are insufficient to meet the costs of necessary medical services. 42 U.S.C. § 1396, et seq. In 2013, the Ohio General Assembly created the Ohio Department of Medicaid ("ODM") which assumed responsibility and authority over Ohio's Medicaid program. Ohio Rev. Code Chapter 5162.

a. The Enrollment Process

In order to receive payment for Medicare covered services, a provider of services, such as a home health agency ("HHA"), must enroll in the Medicare program and enter into a participation agreement with CMS. Id. §§ 1395x(u), 1395cc(a); 42 C.F.R. §§ 424.505, 489.10. A provider of services must meet the Medicare conditions of participation applicable to that provider. 42 C.F.R. §§ 488.3(a), 489.10(a); 42 C.F.R. Part 424; 42 C.F.R. Part 484 (basic enrollment requirements). Compliance with such conditions is generally verified through a survey by the state survey agent. See id. §§ 488.4, 488.24, 489.13(a)(1).

If CMS determines a provider meets the requirements for participating in the Medicare program as an HHA, CMS approves the provider agreement and notifies the HHA of the effective date of the agreement. Id. § 489.11(a), (c)(2). If CMS determines the provider does not meet all of the federal requirements, the application is denied. Id. § 424.530(a), 489.12. If the HHA's request to participate in the Medicare program is denied, or the HHA's request is approved but the HHA disagrees with the effective date determination, it may request reconsideration of thatdetermination. Id. §§ 498.3(b)(1), (15), (17), 498.22. If the HHA is dissatisfied with the reconsideration decision, it may request a hearing before an Administrative Law Judge ("ALJ"). Id. §§ 498.5(c), (1), (3), 498.83. If the HHA disagrees with the ALJ's decision, it may request review by the Departmental Appeals Board (the "Board"). Id. § 498.83. The Board's decision is subject to judicial review. See id. §§ 498(c), (1), (3), 498.90(n); 42 U.S.C. § 1395cc(h)(1).

Additionally, once an HHA is certified for Medicare participation, in order to participate in Ohio's Medicaid program, the HHA must enter into a provider agreement with ODM. See Ohio Admin. Code §§ 5160-12-03(A), (B)(1), (B)(5), 5160-12-01(E). "Home health services" in Ohio, including home health nursing, home health aide services, and skilled therapies, may only be provided by HHA's that are Medicare-certified and meet Ohio's requirements. See Id. § 5160-12-01(A), (E). ODM shall terminate an HHA's provider agreement if "[a]ny license, permit, or certification that is required in the provider agreement or department rule has been denied, suspended, revoked, or otherwise limited and the provider has been afforded the opportunity for a hearing." Id. at § 5160-1-17.6(I)(1).

b. Deactivation of Medicare Billing Privileges

A deactivation "means that the provider or supplier's billing privileges were stopped but can be restored upon the submission of updated information." Id. § 424.502. A deactivation "is considered an action to protect the provider or supplier from misuse of its billing number to protect the Medicare Trust Funds from unnecessary overpayments." Id. § 424.540(c). A deactivation does "not have any effect on a provider or supplier's participation agreement or any conditions of participation." Id. No payment may be made, however, for services furnished to a Medicare beneficiary if the provider's billing privileges are deactivated. Id. § 424.555(b). The Secretary has authorized CMS to deactivate a provider's Medicare billing privileges for three reasons:

(1) The provider or supplier does not submit any Medicare claims for 12 consecutive calendar months. The 12 month period will begin the 1st day of the 1st month without a claims submission through the last day of the 12th month without a submitted claim.

(2) The provider or supplier does not report a change to the information supplied on the enrollment application within 90 calendar days of when the change occurred. Changes that must be reported include, but are not limited to, a change in practice location, a change of any managing employee, and a change in billing services. A change in ownership or control must be reported within 30 calendar days as specified in §§ 424.520(b) and 424.550(b).

(3) The provider or supplier does not furnish complete and accurate information and all supporting documentation within 90 calendar days of receipt of notification from CMS to submit an enrollment application and supporting documentation, or resubmit and certify to the accuracy of its enrollment information

Id. § 424.540(a).

In order to reactivate billing privileges, the provider must complete a new enrollment application or certify the information on file is correct. Id. § 424.540(b)(1), (2). Additionally, the HHA must obtain a state survey. Id. § 424.540(b)(3)(i).

A deactivation is not an initial determination subject to review under the appeal procedures. Id. § 498.3(b) (not listing a deactivation as an initial determination). A provider whose billing privileges are deactivated, however, may file a rebuttal. Id. § 424.545(b). The CMS's decision in response to a rebuttal statement is not appealable. Id. § 405.375(c).

c. Changes in Ownership

A provider enrolled in Medicare must report certain changes in its enrollment information, such as a change in ownership, to CMS within 30 days. Id. §§ 424.516(e)(1), 489.18(b) ("A provider who is contemplating or negotiating a change of ownership must notify CMS."). Before completing the change in ownership, the current owner and the prospective new owner must submit enrollment applications. Id. § 424.550(b). The provider agreement is assigned to the newowner unless the new owner indicates he or she does not wish to accept the agreement. Id. § 489.18(c).

CMS has imposed restrictions on the transfer of an HHA agreement and Medicare billing privileges to a new owner when a change in majority ownership occurs within 36 months of the HHA's initial enrollment or most recent change in majority ownership (the "36-Month Rule"). Id. §§ 424.550(b)(1). A change in majority ownership occurs when "an individual or organization acquires more than a 50 percent direct ownership interest in an HHA during the 36 months following the HHA's initial enrollment into the Medicare...