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From Health Law Daily, July 14, 2015

State court is good enough for provider termination case

By Kayla R. Bryant, J.D.

According to established case law, a federal court should abstain from exercising its jurisdiction when state administrative proceedings have already begun. The U.S. District Court for the District of Columbia dismissed Vizion One, Inc.’s claims for injunctive and declaratory against the District of Columbia following the suspension of its Medicaid payments. Vizion One claimed that its due process rights were violated and that the federal regulations were overboard and unconstitutionally vague (Vizion One, Inc. v. District of Columbia, July 13, 2015, Collyer, R.).

Suspension. Vizion One was licensed to provide personal care aide services to Medicaid enrollees. The D.C. Department of Health Care Finance (DHCF), the local Medicaid agency, received two fraud complains about Vizion One in March 2010. These claims alleged that one of Vizion’s employees had attempted to recruit someone to “join Vizion” and that two Medicaid recipients were paid $40 each week in exchange for signing time sheets indicating that they were receiving personal care aide services, which were not rendered. DHCF began investigating these claims and notified Vizion One that it would be withholding payments for personal care aide services. Under 42 C.F.R. section 455.23, amended following the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) as required by section 6402 of the ACA, a state Medicaid agency must suspend payments to a provider when there is a credible allegation of fraud, and an investigation of that fraud is pending. DCHF converted Vizion One’s Medicaid license to provisional on March 25, 2014, and then terminated its Medicaid provider agreement on March 23, 2014.

Younger abstention. In the complaint filed in district court, Vizion One alleged that DHCF failed to provide prior notice or disclosure of the facts surrounding the fraud allegations prior to suspending payments, which destroyed its $46 million business and violated its rights to procedural and substantive due process. During the time surrounding the filing of this action in federal court, Vizion One also pursued administrative cases through state proceedings regarding the notice of suspension and the termination of the provider agreement. After receiving unfavorable decisions, Vizion appealed the administrative decisions to the D.C. Court of Appeals while this suit was in progress in federal court.

The District of Columbia made several arguments in its motion to dismiss for failure to state a claim. The district court did not address these arguments because of the application of the Younger v. Harris doctrine, in which the Supreme Court held that “a federal court should not enjoin a pending state proceeding (including an administrative proceeding) that is judicial in nature and involves important state interests.” The court found that the doctrine applied, as Vizion One would have an opportunity to litigate its constitutional claim in the state proceedings. Although the district court had jurisdiction over this case, it declined to exercise this jurisdiction and dismissed the claims for declaratory judgment and injunctive relief, and stayed the claims of money damages pending a final ruling in state court.

The case is Civil Action No. 14-883 (RMC).

Attorneys: Donald M. Temple (Donald M. Temple, PC) for Vizion One, Inc. Keith David Parsons, Office of the Attorney General for the District of Columbia for District of Columbia

Companies: Vizion One, Inc.

MainStory: TopStory ProviderNews MedicaidPaymentNews EnforcementNews HomeNews CMSNews DistrictofColumbiaNews

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