Government flubbed own rules in Medicare ruling against KCK company, appeals court finds

A federal appeals court ruled Tuesday that the “furious pace of its own rulemaking” led a government agency to apply the wrong law against a Kansas City, Kan., home health care provider.

The 10th U.S. Circuit Court of Appeals found that the government’s $800,000 judgment against Caring Hearts Personal Home Services was based on the erroneous application of its own rules.

“This case has taken us to a strange world where the government itself — the very ‘expert’ agency responsible for promulgating the ‘law’ no less — seems unable to keep pace with its own frenetic lawmaking,” the court wrote in Tuesday’s opinion. “One thing seems to us certain: An agency decision that loses track of its own controlling regulations and applies the wrong rules in order to penalize private citizens can never stand.”

The case stemmed from a ruling by the Centers for Medicare & Medicaid Services (CMS) that Caring Hearts owed the government $800,000 it had received for providing services to homebound patients.

But the law in place at the time the services were provided was not the law the government relied on when it ordered that the money be paid back, the appeals court found.

“Instead, it applied considerably more onerous regulations the agency adopted only years later — regulations that Caring Hearts couldn’t have known about at the time they were rendered,” the opinion stated.

In its opinion, the appeals court pointed out that there are about 37,000 guidance documents on the CMS website that providers must follow if they provide health care services under the Medicare umbrella.

The court noted that Caring Hearts “can make out a pretty good case” that the services in question were “entirely consistent” with the law in place at the time.

“So this isn’t (and never was) a case about willful Medicare fraud,” the court said in its opinion.

Donald M. McLean, attorney for Caring Hearts, said Tuesday that his client was very pleased with the decision.

“I think that the court sensed that a wrong was done,” he said.

This story was originally published May 31, 2016 at 2:08 PM with the headline "Government flubbed own rules in Medicare ruling against KCK company, appeals court finds."