In the case of Michael Reese Hospital v. Tommy Thompson, No. 03 C 6034 (N.D. Ill. 2004), District Court Judge James B. Zagel dismissed an action filed by Michael Reese Hospital (the "Hospital") to enforce an Administrative Resolution (the "AR") it had entered into with its fiscal intermediary (the "FI"). The AR had been entered into on December 16, 1994. The Hospital had entered into the AR to resolve, in part, certain adjustments related to its 1986-through-1991 fiscal years, and based on that AR, permitted its Provider Reimbursement Review Board ("PRRB") appeal to lapse. The FI never implemented the reimbursement changes for the 1986-1991 fiscal years. The Hospital filed its lawsuit in the Illinois Federal District Court to enforce the AR. The court held that it did not have jurisdiction to enforce a Medicare AR.
While the court viewed the AR as an agreement between the FI and the Hospital, it held that "…an Administrative Resolution carries with it neither the finality nor authority of a typical settlement agreement." It was the position of the court that a Medicare AR is enforceable by neither the PRRB nor the courts. According to the court, the Hospital should have never permitted its PRRB appeal to lapse. Rather, once the Hospital determined that the FI was not going to implement the AR as the Hospital believed it should be, and certainly before its PRRB appeal lapsed, the Hospital had one choice—press on with its PRRB appeal.
While pressing on with the appeal may not have been what the Hospital believed was necessary to preserve its appellate rights or its AR, the court felt it was the only way the Hospital could preserve further administrative or judicial review. Had the Hospital not permitted its PRRB appeal to lapse, it could have pressed that appeal forward in the absence of the FI implementing the AR. The PRRB would then have rendered a decision on the merits of the Hospital’s appeal. Importantly, the court found that the PRRB is also without jurisdiction to enforce the AR.
Certainly, there were things the Hospital might have done to assure that the AR was either implemented, as it believed it should have been, or that its right to appeal before the PRRB or seek judicial relief, were preserved. Only 20/20 hindsight would have required the conclusion that the hospital take those steps. Nevertheless, this case now informs all of us. What is Medicare AR worth? It appears that in certain cases, not much.
This article is presented for informational purposes only and is not intended to constitute legal advice.