Opinion
Case No. 6:19-cv-148-JDK
2020-01-09
ARTHRITIS AND OSTEOPOROSIS CLINIC OF EAST TEXAS, P.A., Plaintiff, v. Alex M. AZAR II, Secretary of the United States Department of Health and Human Services and Seema Verma, Administrator of the Centers for Medicare and Medicaid Services, Defendants.
Patrick D. Souter, William Nelson Drabble, Kenneth Charles Stone, Gray Reed & McGraw LLP, Dallas, TX, for Plaintiff. Edmond Dante Anderson, III, Pro Hac Vice, Rama T. Lagadapati, Pro Hac Vice, U.S. Department of Health and Human Services Office of the General Counsel, Texas, TX, Robert Austin Wells, U.S. Attorney's Office, Tyler, TX, for Defendants.
Patrick D. Souter, William Nelson Drabble, Kenneth Charles Stone, Gray Reed & McGraw LLP, Dallas, TX, for Plaintiff.
Edmond Dante Anderson, III, Pro Hac Vice, Rama T. Lagadapati, Pro Hac Vice, U.S. Department of Health and Human Services Office of the General Counsel, Texas, TX, Robert Austin Wells, U.S. Attorney's Office, Tyler, TX, for Defendants.
ORDER GRANTING PRELIMINARY INJUNCTION
JEREMY D. KERNODLE, UNITED STATES DISTRICT JUDGE
Before the Court is Plaintiff Arthritis and Osteoporosis Clinic of East Texas' Application for a Preliminary Injunction (Docket No. 11). In its application, A&O Clinic asks the Court to enjoin Defendants from recouping alleged Medicare overpayments by withholding Medicare payments and receivables until the Court can determine what, if anything, is actually owed. For the reasons explained below, the Court GRANTS the application.
I.
A&O Clinic is a Medicare services provider treating patients who suffer from bone and joint conditions such as arthritis and osteoporosis. In 2015, a Medicare audit determined that A&O Clinic had received more than $4.6 million in Medicare overpayments for intravenous infusion treatments between December 2012 and November 2014. Docket No. 33 ¶ 31. The Clinic disputed the finding—in part because the audit was based only on a set of 42 claims, which the auditor then extrapolated to "inflate[ ] the actual overpayment amount." Id. A&O Clinic thus appealed under "Medicare's Byzantine four-stage administrative appeals process." See Family Rehab., Inc. v. Azar , 886 F.3d 496, 498 (5th Cir. 2019).
A.
The Fifth Circuit recently summarized the four-step administrative appeals process to challenge an overpayment determination:
First, [a provider] may submit to the MAC [Medicare Administrative Contractor] a claim for redetermination of the overpayment. Second, it may ask for reconsideration from a Qualified Independent Contractor ("QIC") hired by CMS [the Department of Health and Human Services' Centers for Medicare and Medicaid Services] for that purpose. If the QIC affirms the MAC's determination, the MAC may begin recouping the overpayment by garnishing future reimbursements otherwise due the provider.
Third, the provider may request de novo review before an ALJ within the Office of Medicare Hearings and Appeals (OMHA), an agency independent of CMS. The ALJ stage presents the opportunity to have a live hearing, present testimony, cross-examine witnesses, and submit written statements of law and fact. The ALJ "shall conduct and conclude a hearing ... and render a decision ... not later than" 90 days after a timely request. Fourth, the provider may appeal to the Medicare Appeals Council ("Council"), an organization independent of both CMS and OMHA. The Council reviews the ALJ's decision de novo and is similarly required to issue a final decision within 90 days.
Id. at 499 (footnotes and citations omitted).
The statutes governing this process also provide the option of "escalation" if OMHA or the Council fail to meet the mandatory deadlines. If OMHA does not issue an ALJ decision within 90 days of a request, the provider may bypass ALJ review and appeal directly to the Council. 42 U.S.C. § 1395ff(d)(3)(A). In that scenario, the Council may hold any additional proceedings deemed necessary, including a hearing. 42 C.F.R. § 405.1108(d)(2). If the Council fails to render a decision within 180 days of a request, the provider may again escalate by seeking judicial review in federal district court. 42 U.S.C. § 1395ff(d)(3)(B) ; 42 C.F.R. § 405.1100(d).
Currently, the Department of Health and Human Services ("HHS") faces a severe backlog at the ALJ and Council review levels. As of February 2014, the average wait time for an appeal even to be assigned to an ALJ docket was 28 months. Docket No. 16 ¶ 28. According to the HHS website, the average time for an ALJ to decide an appeal in fiscal year 2019 was 1,372 days—or almost 46 months—far longer than the required 90 days. Average Processing Time by Fiscal Year , HHS.GOV (Dec. 10, 2019), https://www.hhs.gov/about/agencies/omha/about/current-workload/average-processing-time-by-fiscal-year/. At the Council level, almost 23,000 appeals were pending at the end of fiscal year 2016, and the Council was receiving more appeals than it could process in a year every ten weeks. HHS Primer: The Medicare Appeals Process at 3, 7, HHS.GOV , https://www.hhs.gov/sites/default/files/omha/files/medicare-appeals-backlog.pdf (last visited Jan. 8, 2020). HHS indicated that it would take eight years to clear the ALJ backlog and ten years to clear the Council backlog if no additional appeals were filed. Id. at 3.
HHS's appellate backlog leaves countless providers facing a difficult choice: a provider may either wait several years for an ALJ hearing and Council review—all while HHS continues to recoup alleged overpaid funds—or it may escalate to the district court, forego the right to de novo ALJ review, and hope for a speedier adjudication.
B.
A&O Clinic faced that difficult choice. It first sought redetermination by the MAC, which rejected its appeal. The MAC found the services provided were not covered because the documentation submitted was "insufficient to support the medical reasonableness and necessity of the injections." Docket No. 33 ¶ 34. A&O Clinic then sought reconsideration by the QIC, which issued a partially favorable decision. The QIC determined that payment for the injections should be denied, but for a different reason than the MAC. Id. ¶ 36. The QIC also required the MAC to "recalculate the overpayment using a more conservative method." Id. Following the required recalculation, in August 2016, Medicare began recouping the alleged overpayment of $4.2 million from A&O Clinic. Id. ¶ 52.
That same month, A&O Clinic sought ALJ review. Id. ¶ 37. Despite the 90-day statutory deadline to decide the appeal, OMHA did not even acknowledge receipt of the Clinic's appeal request until January 2017—more than five months later. Id. ¶ 39. After waiting more than a year for an ALJ hearing and with no hearing in sight, in September 2017, A&O Clinic escalated its appeal to the fourth administrative appeals level, the Medicare Appeals Council. Id. ¶ 39. There, the Clinic encountered another setback. In December 2017, because of a subpoena request by the Clinic, the Council remanded the Clinic's appeal to the ALJ level and directed that the appeal "be expeditiously docketed in order to minimize any further potential delay." Id. ¶ 42.
After waiting almost seven additional months for an ALJ hearing, A&O Clinic withdrew its subpoena request in July 2018 and again escalated to the Council. Id. ¶ 43. Nothing happened. So A&O Clinic escalated its appeal to the district court, filing this suit on April 16, 2019. Id. ¶¶ 44-45.
A&O Clinic now seeks judicial review of the original overpayment decision or, alternatively, a remand to the ALJ level for an evidentiary hearing. The Clinic also asserts a procedural due process claim, arguing that continued recoupment while denying the Clinic a timely independent review of the overpayment decision violates the Clinic's procedural due process rights. Based on that claim, the Clinic seeks a preliminary injunction barring continued recoupment of the Clinic's Medicare payments until a final decision is reached on the underlying overpayment issue.
II.
As an initial matter, Defendants challenge the Court's subject matter jurisdiction over A&O Clinic's due process claim—the basis of the Clinic's request for injunctive relief. Defendants contend that the due process claim is both moot and barred by sovereign immunity.
A.
Defendants assert that the due process claim is moot because A&O Clinic escalated its appeal to the district court, thereby relinquishing the very procedural due process it seeks—namely, an ALJ hearing. Docket No. 13 at 7. Because the Clinic escalated its appeal, Defendants argue, "there is no longer a nexus between the controversy (i.e., the delayed ALJ hearing) and the ongoing recoupment Plaintiff seeks to enjoin." Id.
Defendants mischaracterize A&O Clinic's due process claim. The claim is based not only on Defendants' failure to provide an ALJ hearing, but on the continued "deprivation of Medicare payments to the Clinic" without any review by "an independent and impartial adjudicator." Docket No. 33 ¶ 63. Escalation did not moot that claim because Defendants continue to recoup payments while A&O Clinic continues to seek review from an independent and impartial adjudicator, specifically, this Court. And the relief sought by the Clinic is a pause in recoupment until it receives the independent review it is entitled to. A claim "becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party." Chafin v. Chafin , 568 U.S. 165, 172, 133 S.Ct. 1017, 185 L.Ed.2d 1 (2013) (quoting Knox v. Serv. Emps. , 567 U.S. 298, 307, 132 S.Ct. 2277, 183 L.Ed.2d 281 (2012) ). That is clearly not the case here.
The due process claim, moreover, alleges that Defendants failed to provide the Clinic with timely review. By statute, HHS was entitled to recoup overpaid funds once the QIC affirmed the MAC's determination. 42 U.S.C. § 1395ddd(f)(2)(A). But the statute also required the ALJ to render a decision within 90 days and the Council within another 90 days (or 180 days once escalated). 42 U.S.C. § 1395ff(d). That did not happen. A&O Clinic asserts that Defendants "failed and refused" to provide ALJ or Council review—but nevertheless recouped payments for years, "caus[ing] the Clinic devastating harm" and potentially "forc[ing] the Clinic out of business before any decision on the merits of its appeal can be made." Docket No. 33 ¶¶ 62, 66. Escalation did not moot this claim because Defendants have continued recouping payments without providing A&O Clinic with timely review. By the time the Secretary permitted the Clinic to file this lawsuit, the Clinic had already waited more than a year for an ALJ hearing that never occurred, waited almost three months for the Council to dismiss and remand its appeal due to the subpoena, waited another seven months for an ALJ hearing that never occurred before escalating again, and waited the required 180 days at the Council before escalating to the district court. In all, A&O Clinic waited more than nine hundred days—while recoupment continued—before the Secretary allowed the Clinic to seek judicial review. It is this nine-hundred-day delay, while recoupment continues, that gives rise to A&O Clinic's due process claim.
Finally, even if the Clinic's due process claim were based only on Defendants' failure to provide an ALJ hearing, escalation did not moot the claim because it did not provide the same procedural protections available in an ALJ hearing. In an ALJ hearing, the provider may present oral argument, proffer testimony, cross-examine witnesses, and submit written statements of law and fact. § 1395ff(d)(1)(A) ; 42 C.F.R. § 405.1036. The ALJ stage is the only appellate level at which those protections are statutorily guaranteed. Courts have therefore held that escalation does not solve the due process problem. See Am. Hosp. Ass'n v. Burwell , 812 F.3d 183, 191 (D.C. Cir. 2016) ("[N]othing suggests that Congress intended escalation to serve as an adequate or exclusive remedy where, as here, a systemic failure causes virtually all appeals to be decided well after the statutory deadlines."); Family Rehab., Inc. v. Azar , No. 3:17-cv-3008-K, 2018 WL 3155911, at *5 (N.D. Tex. June 28, 2018) ("Escalation does not provide a remedy to the backlogged ALJs because it does not provide adequate procedural due process.").
In any event, an ALJ hearing remains a possibility here. As the parties acknowledged at the December 18, 2019 hearing on the Clinic's injunction request, the Court may remand the substantive determination of the overpayment issue to the Secretary, potentially triggering an ALJ hearing. E.g. , 42 C.F.R. §§ 405.1138, 405.1140(a). And A&O Clinic has specifically requested remand to an ALJ as an alternative to this Court deciding the merits of the underlying overpayment dispute. Docket No. 33 at 21.
Accordingly, the relief sought by A&O Clinic under its due process claim—i.e., a pause in recoupment until it receives substantive review before an independent adjudicator—remains available. The Court therefore rejects Defendants' mootness argument.
B.
Defendants also argue that the Court lacks subject matter jurisdiction over the due process claim because 42 U.S.C. § 405(g), as made applicable by 42 U.S.C. § 1395ff, does not provide an exception to sovereign immunity. Docket No. 13 at 8-9. Again, Defendants' argument is misplaced.
Section 405(g) vests federal courts with jurisdiction "over only a ‘final decision’ of HHS when dealing with claims ‘arising under’ the Medicaid Act." Family Rehab., Inc. v. Azar , 886 F.3d 496, 500 (5th Cir. 2018) (quoting 42 U.S.C. § 405(g) and (h) and citing, e.g., Shalala v. Ill. Council on Long Term Care, Inc. , 529 U.S. 1, 12-13, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000) ). In Matthews v. Eldridge , the Supreme Court held that jurisdiction under section 405(g) is determined by a two-prong test. 424 U.S. 319, 328, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) ; see also Affiliated Prof'l Home Health Care Agency v. Shalala , 164 F.3d 282, 285 (5th Cir. 1999). First, there must have been a presentment to the Secretary, an element that "can never be waived." Eldridge , 424 U.S. at 328, 96 S.Ct. 893 ; Affiliated Prof'l , 164 F.3d at 285. And, second, the claimant must have exhausted administrative review. Eldridge , 424 U.S. at 328, 96 S.Ct. 893 ; Affiliated Prof'l , 164 F.3d at 285.
Defendants argue only that A&O Clinic failed step one—that it did not present its procedural due process claim to the Secretary. But Eldridge held that a claimant satisfies this step with respect to a collateral due process claim like A&O Clinic's by presenting "a claim for benefits" to the Secretary. Eldridge , 424 U.S. at 328, 96 S.Ct. 893. "The fact that Eldridge failed to raise with the Secretary his constitutional [due process] claim to a pretermination hearing is not controlling." Id. Indeed, the Fifth Circuit recently stated that there was "no dispute" a health care provider asserting a procedural due process claim satisfied the presentment prong by challenging the merits of an overpayment decision in the administrative appeals process. See Family Rehab. , 886 F.3d at 501 n.7. In that case, the provider—like A&O Clinic here—did not present its due process claim to the agency but nevertheless fulfilled the presentment requirement by "completing the first two levels of the Medicare appeals process and timely requesting a hearing before an ALJ." Br. for Appellant at 22, Family Rehab. , 886 F.3d 496, (No. 17-11337), 2017 WL 6496262, at *22; see also Dole v. Azar , No. 1:18-cv-1198, 2019 WL 5784144, at *2-3 (W.D. La. Nov. 5, 2019) (finding the presentment prong met where a provider presented its substantive claim in the administrative appeals process).
Ignoring this authority, Defendants argue that Shalala v. Illinois Council on Long Term Care, Inc. requires A&O Clinic to channel all its claims through the Secretary, including presenting its due process claim. Docket No. 13 at 8-9 (citing 529 U.S. 1, 13, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000) ). But Illinois Council did not address presentment based on the collateral exception of Eldridge. Illinois Council involved the presentment of a facial constitutional challenge to the Secretary's promulgated regulations. See 529 U.S. at 10, 120 S.Ct. 1084 (addressing whether a district court had jurisdiction where "one who might later seek money or some other benefit from ... the agency challenges in advance (in a § 1331 action) the lawfulness of a policy, regulation, or statute that might later bar recovery of that benefit"). Here, A&O Clinic is not challenging the constitutionality of the statutory Medicare appeals system. It merely requests that benefits—payment for services properly rendered—be maintained until an independent adjudicator reviews the overpayment decision. See Family Rehab. , 886 F.3d at 503 (citing Eldridge , 424 U.S. at 330-32, 96 S.Ct. 893 ; Bowen v. City of New York , 476 U.S. 467, 483, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986) ). Accordingly, Illinois Council does not apply.
Because there is no question here that A&O Clinic presented its claim for benefits to the Secretary, the Court has jurisdiction under section 405(g).
Although Defendants do not challenge A&O Clinic's due process claim based on the exhaustion requirement, the Court also finds that requirement satisfied for the reasons stated by the Fifth Circuit in Family Rehab. , 886 F.3d at 501-04.
III.
Having determined that it has jurisdiction over A&O Clinic's due process claim, the Court turns to the merits of the Clinic's request for an injunction.
A.
"The purpose of a preliminary injunction is to preserve the status quo and thus prevent irreparable harm until the respective rights of the parties can be ascertained during a trial on the merits." Exhibitors Poster Exch., Inc. v. Nat'l Screen Serv. Corp. , 441 F.2d 560, 561 (5th Cir. 1971) (citing Miami Beach Fed. Sav. & Loan Ass'n v. Callander , 256 F.2d 410, 415 (5th Cir. 1958) ). "The decision to grant or deny a preliminary injunction is discretionary with the district court." Miss. Power & Light Co. v. United Gas Pipe Line Co. , 760 F.2d 618, 621 (5th Cir. 1985). The Court applies a four-factor test when deciding whether to issue a preliminary injunction: (1) there is a substantial likelihood of success on the merits; (2) there is a substantial threat that the plaintiff will suffer irreparable injury if the injunction is denied; (3) the threatened injury outweighs any damage that the injunction might cause the defendant; and (4) granting the injunction will not disserve the public interest. Sugar Busters LLC v. Brennan , 177 F.3d 258, 265 (5th Cir. 1999). B.
1.
The Court considers the "standards provided by the substantive law" to determine likelihood of success on the merits. Janvey v. Alguire , 647 F.3d 585, 596 (5th Cir. 2011) (quoting Roho, Inc. v. Marquis , 902 F.2d 356, 358 (5th Cir. 1990) ). Here, the substantive question is whether Defendants afforded A&O Clinic constitutionally adequate process before depriving it of properly earned Medicare payments. Three factors govern that question:
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal administrative burdens that the additional or substitute procedural requirement would entail.
Mathews v. Eldridge , 424 U.S. 319, 335, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).
Applying these factors here, the Court finds that A&O Clinic has shown a substantial likelihood of success on the merits of its procedural due process claim.
First , A&O Clinic has "a valid property interest in receiving Medicare payments for services rendered." Angels of Care Home Health, Inc. v. Azar , No. 3:18-cv-3268, 2019 WL 1101286, at *2 (N.D. Tex. Feb. 13, 2019) ; see also Med-Cert Home Care, LLC v. Azar , 365 F. Supp. 3d 742, 751 (N.D. Tex. 2019) (collecting cases); Adams EMS, Inc. v. Azar , No. H-18-1443, 2018 WL 5264244, at *10 (S.D. Tex. Oct. 23, 2018) (finding that a Medicare provider had "a property interest in receiving and retaining the Medicare payments it has earned"); Family Rehab., Inc. v. Azar , No. 3:17-cv-3008-K, 2018 WL 3155911, at *4 (N.D. Tex. June 28, 2018) (same). Defendants argue that A&O Clinic has no property interest in an overpayment. But the Clinic is not claiming an interest in the overpayment. Its interest is in the properly billed claims Defendants are withholding to recoup the overpayment. See, e.g., Angels of Care Home Health , 2019 WL 1101286, at *2.
Second , A&O Clinic has demonstrated a high risk of erroneous deprivation. As numerous courts have already held in nearly identical cases, recouping funds while requiring a healthcare provider to wait years for review creates a high risk of erroneous deprivation. See Angels of Care Home Health , 2019 WL 1101286, at *2-3 ("[F]orcing Plaintiff to wait years while Defendant recoups payments creates a high risk of erroneous deprivation of Plaintiff's property interest."); Med-Cert Home Care , 365 F. Supp. 3d at 751-54 ("[F]orcing Med-Cert to wait two to four years for a hearing before an ALJ while CMS recoups Med-Cert's Medicare payments creates a high risk of erroneous deprivation of Med-Cert's property interest."); Family Rehab. , 2018 WL 3155911, at *5 ("The Court finds that forcing Family Rehab to wait three to five years for a hearing while overpayments are in recoupment creates a high risk of erroneous deprivation of Family Rehab's property interest."); see also Eldridge , 424 U.S. at 340, 96 S.Ct. 893 ("The possible length of wrongful deprivation of ... benefits ... is an important factor in assessing the impact of official action on the private interests.") (quoting Fusari v. Steinberg , 419 U.S. 379, 389, 95 S.Ct. 533, 42 L.Ed.2d 521 (1975) ).
Indeed, despite the statutorily mandated 90-day deadline for ALJ review, A&O Clinic has already waited more than three years since it appealed the redetermination decision to the ALJ. Docket No. 11 at 12. And while a provider "may be able to float its expenses and survive for the statutorily imposed 90-day period for an ALJ to hear and decide the appeal even while its alleged overpayments are in recoupment[,] it is unreasonable to expect a healthcare agency to scrape by for three to five years waiting for a hearing and decision while CMS recoups the alleged overpayments." Family Rehab. , 2018 WL 3155911, at *5. The fact that A&O Clinic escalated its appeal, rather than wait an indeterminate period for an ALJ hearing, moreover, does not change this analysis because the Clinic's escalation did not significantly speed up the process. See infra , Section I.B. In fact, Dr. William G. Brelsford, the operator of A&O Clinic, explained the hardships the Clinic has faced due to the extended period of recoupment and testified that the Clinic would go out of business if the recoupment is not stopped immediately. Docket No. 34.
Further, escalation "does not provide adequate procedural due process." Family Rehab. , 2018 WL 3155911, at *5 ; see also Angels of Care Home Health , 2019 WL 1101286, at *3 ; Med-Cert Home Care , 365 F. Supp. 3d at 753-54 ; Adams EMS , 2018 WL 5264244, at *10. By escalating its appeal to avoid waiting out the ALJ backlog, A&O Clinic has potentially given up its right to an evidentiary hearing, where A&O Clinic could present testimony, submit written statements of law and fact, and cross-examine witnesses. See Angels of Care Home Health , 2019 WL 1101286, at *3 ; Med-Cert Home Care , 365 F. Supp. 3d at 753-54 ; Adams EMS , 2018 WL 5264244, at *10 ; Family Rehab. , 2018 WL 3155911, at *5. District court review, moreover, must be deferential, "hardly an adequate substitute for a de novo hearing before an administrative law judge." Am. Hosp. Ass'n v. Burwell , 812 F.3d 183, 191 (D.C. Cir. 2016). Finally, "nothing suggests that Congress intended escalation to serve as an adequate or exclusive remedy where, as here, a systemic failure causes virtually all appeals to be decided well after the statutory deadlines." Id.
The risk of erroneous deprivation is compounded here by "the high rate of reversals of QIC's reconsideration decisions." Docket No. 11 at 12-13. As of 2014, at least "43% of ALJ appeals ... succeed[ed]." Id. at 13 (quoting Am. Hosp. Ass'n , 812 F.3d at 188 ). At the hearing on the Clinic's motion, Defendants argued that the reversal rate has decreased since 2014, but also conceded that the decrease is likely the result of providers giving up—either by dismissing their appeals or agreeing to settle them on less favorable terms. HHS statistics support this. While the percentage of decisions that are "Fully Favorable" to providers has decreased recently, the number of "Unfavorable" decisions has also decreased. Decision Statistics , HHS.GOV (Sept. 30, 2019), https://www.hhs.gov/about/agencies/omha/ about/current-workload/decision-statistics/. Conversely, the percentage of appeals that are "Dismissed" has increased significantly. Id. ; see also, e.g., Family Rehab. , 2018 WL 3155911, at *5 (noting that "alleged overpayments are overturned at the ALJ level 60%-72% of the time").
Third , A&O Clinic has shown that Defendants' interest in recouping the alleged overpayments will not be adversely affected by delaying recoupment until a substantive decision on the billing dispute. As other courts have held, Defendants will have the same right to recoup the overpayment amount, with interest, if the substantive decision is in their favor. See Angels of Care Home Health , 2019 WL 1101286, at *3 ; Med-Cert Home Care , 365 F. Supp. 3d at 754-55 ; Family Rehab. , 2018 WL 3155911, at *6.
Accordingly, the Court finds that A&O Clinic has demonstrated a substantial likelihood of success on the merits of its due process claim, which weighs in favor of an injunction. 2.
The Court next considers whether A&O Clinic will suffer an irreparable injury absent a preliminary injunction.
"An irreparable injury is one that cannot be remedied by an award of economic damages." Deerfield Med. Ctr. v. City of Deerfield Beach , 661 F.2d 328, 338 (5th Cir. 1981). To establish irreparable injury, the movant must establish "a significant threat of injury from the impending action, that the injury is imminent, and that money damages would not fully repair the harm." Family Rehab. , 2018 WL 3155911, at *6 (quoting Humana, Inc. v. Jacobson , 804 F.2d 1390, 1394 (5th Cir. 1986) ). "In the Medicare withholding context, going out of business can be sufficient evidence of irreparable injury." Id. (quoting MaxMed Healthcare, Inc. v. Burwell , No. SA:14-CV-988-DAE, 2015 WL 1310567, at *3 (W.D. Tex. Mar. 23, 2015) ).
The Court finds that A&O Clinic has demonstrated irreparable injury here. If recoupment continues, the Clinic will be forced to declare bankruptcy and close its doors before the Court can determine the merits of the overpayment dispute. Docket No. 11 at 14; Docket No. 14 at 7. Before recoupment began in August 2016, the Clinic treated approximately 225 patients per week, at least seventy-five percent of whom were Medicare beneficiaries. Docket No. 33 ¶ 52. Now, the Clinic treats around eighty patients per week. Id. The Clinic's staff has been reduced by half due to recoupment. Id. ¶ 53. And the Clinic's annual Medicare payments have decreased from around $3 million to essentially nothing. Id. ¶ 54. In 2018, the Clinic's costs exceeded its income by approximately $200,000. Id. ¶ 55. The Clinic has avoided bankruptcy up to this point only by borrowing from savings, retirement accounts, and the cash reserves of life insurance policies. Id. Dr. Brelsford, A&O Clinic's operator, verified the truth of these statements in a sworn affidavit and testified to these facts at a December 18, 2019 evidentiary hearing. Docket No. 33 at 24; Docket No. 34. Dr. Brelsford further testified that the Clinic is now on the brink of closing and, absent an injunction, will close before receiving independent review of the overpayment determination. Docket No. 34; see also Docket No. 33 ¶ 55.
Defendants respond that the Clinic's option of requesting a payment plan mitigates any irreparable injury. Docket No. 13 at 26. But Dr. Brelsford testified that a payment plan was not a feasible alternative. The Medicare statute limits a repayment plan to sixty months. Thus, A&O Clinic would have had to pay more than $70,000 per month to repay the approximately $4.2 million in alleged overpayments under a repayment plan. Dr. Brelsford testified that such a payment was impossible based on the Clinic's financial status. Docket No. 34.
Defendants also argue that "economic threat does not constitute irreparable harm." Docket No. 13 at 26. But the economic threat facing the Clinic will force it to close its doors long before any damages could be awarded. As other courts have held in similar cases, this is "a substantial threat of immediate and irreparable harm for which no adequate remedy at law exists." Family Rehab. , 2018 WL 3155911, *6-7 ; see also Angels of Care Home Health , 2019 WL 1101286, at *4 (finding "a substantial threat of immediate and irreparable harm" where provider faced a "risk of closure and bankruptcy while it awaits an ALJ hearing and decision"); Med-Cert Home Care , 365 F. Supp. 3d at 756-57 (same where provider showed that it would be "forced out of business if recoupment continues in this manner"); Adams EMS, Inc. , 2018 WL 5264244, *10-11 (same where provider showed that permitting recoupment for "the next three to five years will cause [provider] to close its doors").
The Court therefore finds that the second preliminary injunction factor weighs in favor of granting injunctive relief.
3.
The Court now turns to whether the potential injury to A&O Clinic absent an injunction outweighs the injury to Defendants if an injunction is granted. Without an injunction, A&O Clinic argues that it will be forced to close, its employees will lose their jobs, and its patients will lose access to their preferred healthcare provider. Docket No. 11 at 14. Defendants argue that an injunction will threaten the integrity of the Medicare program and increase the odds that A&O Clinic will never pay back the alleged overpayments. Docket No. 13 at 28-29.
The equities here favor A&O Clinic. Absent an injunction, the Clinic will be forced into bankruptcy and cease operations. Conversely, waiting for a substantive decision will not prejudice Defendants. A substantive decision for Defendants merely delays potential recoupment, while interest continues to accrue. And recoupment is not easily dischargeable in bankruptcy. See Med-Cert Home Care , 365 F. Supp. 3d at 754-55 (citing In re Fischback , No. 1:12-cv-00513, 2013 WL 1194850, at *2 (D.S.C. Mar. 22, 2013) ). Thus, the risk of A&O Clinic not paying the debt in the future based on a substantive decision in the Government's favor, is no greater than the risk of the Clinic defaulting on the debt if forced to close its door in the short-term.
4.
Finally, the Court considers whether an injunction will disserve the public interest. A&O Clinic argues that, if anything, "the public would benefit from having continued access to the Clinic's services." Docket No. 11 at 15. Defendants counter that an injunction would "contradict the explicit statutory scheme developed by Congress" and "encourage other providers, even those with frivolous appeals, to request a hearing to benefit from the length suspension of recoupment." Docket No. 13 at 29. Additional appeals, Defendants argue, will result in an even greater backlog, harming both providers and the public. Id.
The Court does not find Defendants' arguments persuasive. Congress's "explicit statutory scheme" requires ALJ review in 90 days, not several years. Further, Defendants cannot shift the blame for the backlog to providers who are merely exercising their statutory rights under the system Congress established. It is up to Congress and the Secretary to address the backlog, not A&O Clinic.
Further, A&O Clinic asserts that it is one of only three providers in the area of comparable arthritis and osteoporosis treatments. Docket No. 33 ¶ 52. As indicated by affidavits submitted by A&O Clinic, losing access to this provider has caused and will cause a significant hardship on at least some of the Clinic's patients. Docket No. 11, Exs. A, B, C. Accordingly, this factor weighs in favor of an injunction.
C.
A&O Clinic has shown that all four factors weigh in favor of granting a preliminary injunction. Accordingly, the Court GRANTS A&O Clinic's Application for Preliminary Injunction (Docket No. 11). The Court ORDERS the parties to submit a joint proposed order of preliminary injunction within ten days of this Order. So ordered and signed on this Jan 9, 2020.