Lab Fails in Bid to Get Medicare Payment Suspension Set Aside

Case: In 2017, CMS suspended 100% of Medicare payments to True Health Diagnostics (THD) based on what it called “credible allegations of fraud.” Two years later, while the suspension was still in place (although it had been reduced to 35%), CMS imposed a second suspension on the basis of “credible” fraud allegations. THD denied any wrongdoing and asked the Texas federal court to issue a temporary restraining order barring CMS from enforcing the suspensions until the underlying fraud allegations were resolved. But the court refused saying it had no jurisdiction, i.e., legal authority to adjudicate a Medicare appeal at this stage.

Significance: Federal courts generally do have jurisdiction to rule on claims “arising under” U.S. laws like the Medicare Act. But that jurisdiction kicks in only after the federal government agency in this case, HHS via CMS renders a final decision. That wasn’t the case in this situation because THD hadn’t “exhausted its administrative remedies,” i.e., gone through the CMS process for contesting suspensions due to overpayments [True Health Diagnostics, LLC v. Azar].