Opinion ID: 798370
Heading Depth: 1
Heading Rank: 2

Heading: Dr. Handron's case

Text: Dr. Handron participated in the Medicare Part B program, treating nursing home patients and receiving reimbursement payments from Medicare. In August 2003, he received a letter from Empire Medicare Services, on CMS letterhead, informing him that he had been overpaid from the Medicare program in the amount of $604,038. The letter stated that the overpayment occurred because documentation did not support the services billed. (A100.) The letter was sent after an extensive review of Dr. Handron's requests for reimbursement from Medicare. Jana Clark, a nurse working for Eastern Benefits Integrity Center (EA-BISC), a government contractor, reviewed a sample of Dr. Handron's Medicare claims from November 1994 to January 2001 to determine whether payments made to him were appropriate given the documents supporting his bills. Clark prepared a 64-page spreadsheet listing the more than 2,500 claims she reviewed. She assigned each claim one or more of fourteen codes, each of which represented a decision either to allow or deny a claim, along with a brief explanation of the reason for denial. Clark explained the codes' meaning in a two-page printed legend. EA-BISC determined from this audit that Medicare overpaid Dr. Handron by $125,696.71 for the claims Clark reviewed. It was extrapolated from that sample that Medicare had overpaid Dr. Handron by a total of $604,038 over his entire claims history. Dr. Handron hired a lawyer and challenged the government's accusation. He first filed an administrative appeal, and a Fair Hearing Officer largely upheld the government's overpayment determination. He then requested a hearing before an ALJ pursuant to 42 C.F.R. § 405.1002(a), which took place on June 21-22 and July 24, 2007. Dr. Handron appeared at this hearing along with his attorney, and he testified on his own behalf. Dr. Handron also presented expert testimony from Christopher Barbrack, a psychologist, concerning the provision and documentation of psychological services. The ALJ requested that CMS or one of its contractors appear as a non-party participant in the hearing, but no one filed a brief or sent a representative to the hearing on behalf of the government. CMS did, however, provide the ALJ with documents he requested to explain the procedure its consultants used to sample Dr. Handron's claims and extrapolate findings therefrom. The ALJ reviewed Clark's spreadsheet and legend, which detailed the claims that EA-BISC reviewed and explained the reasons EA-BISC felt the claims should be disallowed. Also before the ALJ were twenty-five boxes of medical records from Dr. Handron's treatment of Medicare patients. The ALJ slashed the government's overpayment request, determining that the overpayment to Dr. Handron was actually only $5,434.48. He found that EA-BISC failed to meet its burden of establishing an overpayment as to some of the claims and that some of the claims were outside of the limitations period for an overpayment action. He then examined each of Clark's fourteen codes and analyzed whether EA-BISC had met its burden of showing that each claim in its sample should be disallowed. Of the $125,696.71 of supposed overpayments that EA-BISC found in the sample claims, the ALJ found that only $5,434.48 was properly deemed overpayment. As to EA-BISC's extrapolation from the claims sample it reviewed, the ALJ sought input from an expert statistician, who concluded that the sampling was skewed against Dr. Handron in a way that exaggerated the extent of any overpayment indicated by the sample. Accordingly, the ALJ held that the sampling procedures followed by EA-BISC in this case were unreliable and that the resultant extrapolation is invalid. (A80.) Therefore, the ALJ held that only the $5,434.48 of overpayment he found warranted in EA-BISC's sample of claims could be charged to Dr. Handron. Dr. Handron thereafter filed an application pursuant to the EAJA, 5 U.S.C. § 504, to collect from HHS the attorneys' fees and expenses he incurred in presenting his case against the overcharge claim. The ALJ denied this application, holding that the position of the government was not represented at the hearing and that, therefore, Dr. Handron did not qualify for fee reimbursement under the EAJA. Dr. Handron appealed the ALJ's decision regarding fees to HHS's Medicare Appeal Council (MAC), which adopted the ALJ's decision denying an EAJA fee award. In June 2008, Dr. Handron filed a complaint in the District Court for the District of New Jersey appealing MAC's decision disallowing EAJA fees. He moved for summary judgment in March 2009. The District Court denied Dr. Handron's motion and affirmed MAC's denial of EAJA fees. Handron v. Sebelius, 669 F.Supp.2d 490, 501 (D.N.J.2009). Recognizing that the government's position was not represented at the ALJ hearing by counsel, the District Court examined the meaning of the words or otherwise in the EAJA's definition of an adversary adjudication, 5 U.S.C. § 504(b)(1)(C), and found the statutory language ambiguous. 669 F.Supp.2d at 495. The District Court then looked to the statute's legislative history and concluded that Congress did not intend that the EAJA would apply simply because a person was fighting adverse government action[;] rather[,] Congress only intended that the EAJA would apply when the government participated in the proceeding. Id. at 496. The District Court examined out-of-circuit case law and found that it supported the position that a person representing the government must physically appear at the hearing for it to constitute an adversary adjudication under the EAJA. Id. at 497-99. The District Court found further support for its conclusion in the Administrative Conference's model rules, which state that a proceeding is adversarial if a government representative enters an appearance and participates in the proceeding. Id. at 499-500 (citing 46 Fed.Reg. 32,900, 32,912). Finally, the District Court reviewed the statute and concluded that [t]he word `represented' in [the] context of being coupled with `by counsel' suggests that the statute requires some level of advocacy. Id. at 500. The District Court then stated that [a]dvocacy, in turn, in the context of a live adjudication seems to impart some modicum of real-time interplay with the fact-finder. Id. Since the government did not send someone to physically represent it at Dr. Handron's ALJ hearing, the District Court concluded that the EAJA did not apply to his case. It therefore denied Dr. Handron's motion for summary judgment and dismissed his case. Dr. Handron appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of the District Court's interpretation of the EAJA is plenary. Kadelski v. Sullivan, 30 F.3d 399, 400 (3d Cir.1994).