Precise Diagnostics Sues HHS Over Suspended Medicare Payments

Precise Diagnostics, LLC filed suit on Friday in the Northern District of Texas against the Department of Health and Human Services (HHS) and the department’s secretary, Xavier Becerra. The complaint for injunctive and declaratory relief alleges that the defendants violated the plaintiff’s right to due process when they suspended their Medicare payments.

The plaintiff is “an Independent Clinical Laboratory participating in the federal Medicare program,” according to their complaint. On May 13, the defendants allegedly issued a suspension on Medicare payments pertaining to services rendered by the plaintiff, stating that the payments would go towards a Medicare overpayment in the event that one was subsequently determined by HHS. The complaint notes that this decision was not accompanied by any administrative appeal, right to hearing, or dispute option for the plaintiff.

Court documents say that the Medicare payment suspension was brought by Qlarant, a government contractor who the defendant claimed had brought a credible allegation of fraud against the plaintiff. Specifically, Qlarant reportedly alleged that the plaintiff had misrepresented services billed to the Medicare program when they “did not submit records that showed the results were reviewed, considered in the treatment plan, or assisted in the management/treatment of the beneficiary per Local Coverage Determination (LCD) guidelines.” Following the suspension, the plaintiff reportedly had no option to dispute or challenge the allegations.

Precise explains that the action taken by the defendants violates the rights that patients have to federal Medicare services and that it is an “abuse of discretion to impose the suspension during the pandemic and COVID 19 emergency,” since the suspension could last for more than a year. The complaint claims that the defendant’s misconduct also violates the plaintiff’s due process rights under the fifth amendment of the United States Constitution.

The plaintiff is seeking to enjoin the defendant’s suspension of their Medicare payments pending a government hearing “on the adverse action in conformance with Due Process of Law.” Precise contends that federal regulations provide that CMS may find good cause to refrain from suspending Medicare payments when their suspension may place Medicare recipient access in jeopardy in a way that may cause a danger to life or health.

Precise asserts that without an injunction, the suspension of Medicare payments will “irreparably harm Plaintiff by forcing it out of business and into bankruptcy, and it jeopardizes the health and safety of the laboratory’s patients by disrupting their services and requiring that they obtain them elsewhere.”

The complaint cites a violation of procedural due process of law, a violation of a patients’ due process right of access to healthcare under Medicare, that the suspension of payments is arbitrary and capricious, and ultra vires. The plaintiff is seeking a preliminary injunction resuming payments, a permanent injunction, favorable judgment on each count, litigation fees, court costs, and any other relief deemed appropriate by the Court.

The plaintiff is represented by Mark Kennedy Law.