• CMS Appeals District Court Decision Overturning CMS's Disallowance of Hospital's Bad Debt Reimbursement
  • August 11, 2008 | Author: Christopher L. Keough
  • Law Firm: King & Spalding LLP - Washington Office
  • On July 24, 2008, the Government appealed the district court’s decision on the Medicare bad debt moratorium in Foothill Hospital - Morris L. Johnston Memorial v. Leavitt. On May 30th, the federal district court in DC overturned CMS’s categorical disallowance of reimbursement for all bad debts that have been referred to an outside collection agency after reasonable in-house collection efforts.

    The district court concluded that CMS’ current position constitutes a change in agency policy in effect as of August 1, 1987, and the application of the agency’s new policy, therefore, violates the bad debt moratorium established in section 4008 of the Omnibus Budget Reconciliation Act of 1987. If the Government follows through on its appeal, it is likely that the Court of Appeals for the D.C. Circuit will issue a decision next summer.