Marko & Magolnick News

The article quotes dMML partner Daniel Leyton.

Lawsuit Labels Government Actions 'Arbitrary, Capricious and an Abuse of Discretion'

WASHINGTON--CMS may be held accountable for what 18 providers in the Miami-Ft. Lauderdale CBA are calling “wrongful disqualification” from the competitive bidding process pending a lawsuit alleging the government's actions were “arbitrary, capricious and an abuse of discretion.”

The suit, brought on behalf of the All Florida Network, charges CMS' claims that the network failed to submit proper financial documentation for bidding are erroneous. Further, the suit says CMS' refusal to allow the network to participate in competitive bidding resulted in the loss of contracts for some of the bid items. Without those contracts, the All Florida Network contends many of its members may have to shut their doors.

The suit was filed June 16 in the U.S. Court of Federal Claims--a court that hears actions against the government--by Miami law firms de la O, Marko, Magolnick & Leyton and Kravitz & Talamo LLP. The action was supported by the efforts of the American Association for Homecare, Waterloo, Iowa-based VGM and the Accredited Medical Equipment Providers of America.

“As industry observers and commentators have noted in overwhelming numbers, the entire process behind this new system has been riddled with errors; e.g., suppliers' associations being disqualified for failing to provide financial documentation, when those suppliers, in fact, submitted everything that they were supposed to,” the lawsuit reads.

“This is precisely what happened to [the All Florida Network], a bidding group whose members face total financial ruin as a result of CMS' error and whose (often elderly) customers face uncertainty and confusion in acquiring the DME products they cannot live without. It is urgently necessary that round one be enjoined to correct the error.”

Daniel L. Leyton of de la O, Marko, Magolnick & Leyton, said All Florida's problems with CMS began when the group was initially disqualified March 20 based on CMS' contention that the network included an ineligible company and also failed to provide the proper documentation for bidding. But Leyton said All Florida contacted CMS immediately to dispute the claims, as the ineligible company had notified CMS months prior to submission of the bid that it would not be participating with All Florida.

“The company that was ineligible had been withdrawn from the network. There was a letter [both to and from CMS] to prove this--all of this was done five months before the disqualification letter came out,” Leyton said.

“And,” he continued, “we were certain from the beginning that we weren't missing these financial documents. [All Florida Network] had a lawyer … go over the documents and then VGM went over it and then it was sent [to CMS]. So we called CMS promptly and let them know all of this and they took it under investigation. Roughly 30 days later they came back and said 'You are disqualified,' but this time they did not say anything about the ineligible provider or the previously identified missing financial documents. This time they identified new missing financial documents.”

The All Florida Network received its second disqualification notice April 21 and CMS has since refused to reconsider its decision, Leyton said, despite the network's contention that the “missing documentation”--mostly income tax statements--were, in fact, submitted.

The types of documents CMS said were missing “were documents that would raise red flags with anyone," according to Leyton. "Balance sheets, income tax statements--these are the types of items that would set off red flags for anyone who was doing even a cursory examination and certainly would set off alarms for anyone who was heavily invested in making sure that the financial documentation was complete,” he said.

Based on the winning bids, All Florida would have been awarded contracts in five of the 10 bid product categories and might have been awarded a contract in three additional categories, according to the court filing. The denial of these contracts, All Florida contends, could put its members out of business.

“These are critical decisions for all of the providers in the network. They rely on Medicare reimbursements … if they are excluded from the Medicare program beginning July 1, very quickly their businesses are going to wither and many of them may have to shut their doors,” Leyton said.

The suit requests a preliminary injunction “requiring that the United States offer [All Florida] the same standardized contract it offered winning bidders in [several] product categories.” In addition, the suit seeks “a declaratory judgment that [All Florida] should not have been disqualified from consideration in the round one DMEPOS competitive bidding program” and “an appropriate award of damages.”

“The first alternative for us would be to have the standardized contracts extended to round one winners extended to us as well until a decision can be made. The alternative is a postponement of round one until these issues can be resolved,” Leyton said.

Leyton said his firm has asked the court for an expedited hearing before July 1, the day round one contracts become effective.

“I can't emphasize enough how pressing the issue is for DME providers across the country, and we are hopeful the court will give us the opportunity … to see a final decision made,” Leyton said.

The lawsuit makes five that have been filed disputing various aspects of the process and implementation involved with competitive bidding. For more, see HomeCare Monday, June 16.