Articles Posted in U.S. 3rd Circuit Court of Appeals

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Medicare (42 U.S.C. 1395ww) reimbursement includes an adjustment for “disproportionate share hospitals” (DSH), that serve high numbers of low-income patients. The calculation formula takes into account the number of patient days for those patients eligible for Medicaid, and may also include patient days for those patients ineligible for Medicaid, but who received benefits under a Medicaid “demonstration project,” 42 U.S.C. 1315. The Medicare DSH formula was initially regarded by intermediaries, at least in some states, as including days covered under state general assistance (GA) and charity care programs. In 1999 the Centers for Medicare and Medicaid Services clarified that the DSH formula only permitted the inclusion of patient days wherein the patients were eligible for Medicaid, excluding state general assistance and charity plan patient days, but, under the final rule hospitals could count patient days for individuals covered under a Section 1115 waiver project. The Deficit Reduction Act of 2005 essentially ratified the rule. The district court concluded that the regulation was arbitrary and capricious and a violation of the Equal Protection Clause, reasoning there was no rational basis to exclude from reimbursements patients covered by Pennsylvania’s General Assistance plan, while including patients covered under a federal statutory waiver program. The Third Circuit reversed. View "Nazareth Hosp. v. Sec'y, U.S. Dep't of Health & Human Servs." on Justia Law

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The U.S. Department of Health and Human Services approved a 2008 amendment to Pennsylvania’s state plan for administering its Medicaid program. Private nursing facilities that provide services to Medicaid recipients challenged the amendment as violating Title XIX of the Social Security Act, 42 U.S.C. 1396, by adjusting Pennsylvania’s method for determining Medicaid reimbursement rates to private nursing facilities for the 2008-09 fiscal year without considering quality of care, which they claim violates 42 U.S.C. 1396a(a)(30)(A) and without satisfying the public process requirements of 42 U.S.C. 1396a(a)(13)(A). The district court rejected the claims on summary judgment. The Third Circuit affirmed in part, finding the state immune from the requested relief under the Eleventh Amendment. The district court erred in granting summary judgment to the federal defendants. By approving the amendment without any assurance that the amended plan would produce payments that are consistent with quality of care, HHS acted arbitrarily. View "Christ the King Manor, Inc. v. Sec'y, U.S. Dep't of Health & Human Servs." on Justia Law

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Zizic is the former CEO of BioniCare, which sold the BIO-1000, a medical device designed to treat osteoarthritis of the knee. BioniCare attempted to bill Medicare for the BIO-1000, but many claims were denied as not medically necessary. Q2A contracted with the government to review such claim denials across the nation. Q2A’s denials were reached without physician review, which is required by the Medicare Act, 42 U.S.C. 1395, HHS regulations, and its contract. A former Q2A employee testified that it implemented an internal policy to deny all BIO-1000 claims, which were reviewed by a single nurse rather than a panel of physicians; later allowed non-physician subcontractors to prepare BIO-1000 appeals for review by a single physician; and finally developed a mail merge letter that automatically denied BIO-1000 claims without any review. BioniCare’s trustee in bankruptcy became aware of and disclosed these practices. Zizic filed a qui tam suit under the False Claims Act, 31 U.S.C. 3729-33. The district court dismissed, concluding that it lacked jurisdiction because the allegations against Q2A and RTS were based on prior public disclosures and because Zizic was not an original source of that information. The Third Circuit affirmed. View "Zizic v. Q2Adm'rs LLC" on Justia Law

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After leaving coal mining, Eckman sought benefits under the Black Lung Benefits Act, 30 U.S.C. 901, in 1985. An ALJ awarded benefits in 1993; the Benefits Review Board affirmed the decision. Marmon paid benefits to Eckman until his 2002 death; his widow, Ethel, sought benefits as a dependent survivor. An ALJ denied the claim in 2005, finding that although Eckman had pneumoconiosis, Ethel failed to prove that his death was due to the disease. The Board affirmed. After Congress enacted the 2010 Patient Protection and Affordable Care Act, 124 Stat. 119, and amended the BLBA, Ethel filed a new claim. A Department of Labor district director awarded benefits. An ALJ upheld the award, finding that Ethel satisfied the familial relationship and dependency criteria for survivors under the BLBA and that, based on Eckman’s lifetime disability award and the filing date of Ethel’s claim, Ethel was entitled to benefits under section 932(l), as amended by the ACA. The Board affirmed. The Third Circuit denied the coal company’s petition for review, noting that in Ethel’s second claim, the cause of death was not at issue, her entitlement to benefits turned primarily on an administrative fact: whether her husband had been awarded benefits. View "Marmon Coal Co. v. Dir. Office of Workers Comp. Programs, U.S. Dep't of Labor" on Justia Law

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Conestoga and individuals who own 100 percent of the voting shares of Conestoga and who practice the Mennonite religion, alleged that regulations promulgated by the Department of Health and Human Services, which require group health plans and health insurance issuers to provide coverage for contraceptives, violated the Religious Freedom Restoration Act, 42 U.S.C. 2000bb (RFRA) and the Free Exercise Clause of the First Amendment. The Mennonite Church teaches that taking of life, including anything that terminates a fertilized embryo, is intrinsic evil and a sin against God to which they are held accountable. Plaintiffs specifically object to two “morning after” drugs that must be provided under the mandate that may cause the demise of an already conceived, unattached embryo. The District Court denied a preliminary injunction. The Third Circuit affirmed, holding that a for-profit, secular corporation cannot to engage in religious exercise under the Free Exercise Clause and RFRA. Nor do the owners have viable claims; the law does not impose any requirements on them. Compliance and penalties are placed squarely on Conestoga. View "Conestoga Wood Specialties Corp. v. Sec'y U.S. Dep't of Health & Human Servs." on Justia Law

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States participating in Medicaid in a managed care environment are required to make, at least every fourth month, supplemental “wraparound” payments to federally-qualified health centers (FQHCs) equal to the difference between a rate set by statute multiplied by the number of Medicaid patient encounters, and the amount paid to FQHCs by managed care organizations (MCOs) for all Medicaid-covered patient encounters, 42 U.S.C.1396. Concerned that gaps in FQHC claim verification led to overpayments, the New Jersey Department of Human Services changed its calculation: instead of basing wraparound payments solely on the number of Medicaid encounters and total MCO receipts as self-reported by FQHCs, the state would rely on data reported by MCOs absent receipt of certain additional data from the FQHCs. Because MCOs report only encounters that they have approved and paid, prior MCO payment would be a prerequisite to wraparound reimbursement under the new system. An association of FQHCs sued, claiming that the change violated their due process rights as well as state and federal law, resulting in budget shortfalls. The district court granted the association summary judgment and a preliminary injunction. The Third Circuit affirmed the holding that the requirement that wraparound payments be contingent on prior MCO payment violated the Medicaid statute’s requirement that FQHCs receive timely full wraparound payment for all Medicaid-eligible claims. View "NJ Primary Care Assoc. v. NJ Dep't of Human Servs." on Justia Law

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Johnson, a Louisiana citizen, and Lucier, a Pennsylvania citizen, suffer from birth defects allegedly caused by their mothers’ use of thalidomide. They claim that newly-accessible evidence revealed that the defendant companies were aware of the drug’s risks while marketing it to pregnant women, and that they have been engaged in a 60-year cover-up to avoid liability. After defendants removed their suit for damages to federal court, the plaintiffs moved to remand the action to state court because four of the defendants are Pennsylvania citizens. The district court denied the motion. The Third Circuit affirmed, concluding that the district court correctly analyzed the citizenship of the companies, examining the principal place of business of one company and the fact that a limited liability company assumes the citizenship of its owner. View "Johnson v. SmithKline Beecham Corp." on Justia Law

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Between 1994 and 1997 Wyeth’s predecessor sold fenfluramine and dexfenfluramine, prescription weight loss drugs. After the drugs were linked to valvular heart disease and an FDA public health advisory, Wyeth withdrew the drugs from the market in 1997. Thousands of individuals filed suit; the cases were consolidated. In 1999, Wyeth entered into a Settlement Agreement; in 2000, the court certified the class, approved the Agreement, and retained jurisdiction. The Agreement enjoins class members from suing Wyeth for diet drug-related injuries, but allows class members to sue Wyeth if they can demonstrate that they developed PPH (a condition that deprives the lungs of oxygen) at a specified level through the use of the diet drugs. In 2011, Cauthen sued, alleging that she developed PPH. She produced a pulmonary consultation prepared by Fortin, a cardiologist. Because Cauthen’s report showed that lung capacity of less than 60 percent of predicted at rest, Wyeth sought to enjoin the state court lawsuit for failing to satisfy the precondition provided by the Agreement. Dr. Fortin asserted that comparing individual lung capacity with average capacity of persons having a similar demographic profile is not determinative in diagnosing PPH. The district court enjoined the suit. The Third Circuit affirmed. View "In Re: Diet Drugs Prod. Liab. Litig." on Justia Law

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Named plaintiffs are five individuals with mental retardation who are institutionalized in intermediate care facilities (ICFs/MR) operated by the Pennsylvania Department of Public Welfare; they allege violation of the Americans with Disabilities Act and Rehabilitation Act by failing “to offer and provide the opportunity to receive services in integrated, community settings that are most appropriate settings to meet their needs. Plaintiffs claimed that there are approximately 1,272 individuals who reside in five ICFs/MR. The district court certified the class, denied a motion to dismiss, denied a motion to intervene brought by nine institutionalized individuals who oppose community placement, and granted final approval to a settlement agreement. The Third Circuit vacated in part, holding that the court abused its discretion by denying intervention as of right pursuant to Federal Rule of Civil Procedure 24(a)(2) in the remedy stage of this litigation as well as with respect to final approval of the settlement agreement. The intervenors may also challenge certification of the class. View "Benjamin v. PA Dep't of Pub. Welfare" on Justia Law

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AdvancePCS is a prescription benefits manager for plans sponsored by employers, unions, and others and is retained to achieve savings by negotiating discounts from drug manufacturers, providing mail order service, contracting with retail pharmacies, and electronic processing and paying of claims. Plaintiffs are retail pharmacies that entered into agreements with AdvancePCS that include an agreed reimbursement rate and an arbitration clause. In 2003, plaintiffs filed suit, asserting that AdvancePCS engaged in an unlawful conspiracy with plan sponsors to restrain competition in violation of the Sherman Act, 15 U.S.C. 1; that AdvancePCS used the economic power of its sponsors to reduce the contractual amount it pays below levels prevailing in a competitive marketplace; and that the agreements impose other limitations. For almost a year, AdvancePCS litigated without mentioning arbitration. After denial of a motion to dismiss and reconsideration, AdvancePCS filed an answer with affirmative defenses, then sought to compel arbitration. The court granted the motion. Plaintiffs did not initiate arbitration, but sought dismiss pending appeal. A different judge vacated the order compelling arbitration. The Third Circuit remanded with directions to reinstate the order compelling arbitration. On remand, a third judge granted dismissal. The Third Circuit ruled in favor of plaintiffs, holding that AdvancePCS waived its right to arbitrate. View "In Re: Pharmacy Benefit Mgrs. Antitrust Litig." on Justia Law