In the last few years, we have seen a growing and alarming trend of administrative law judges (“ALJ”) dismissing appeals solely based on purported lack of service to the hospice patient (the Medicare beneficiary).  A search of recent decisions shows over 150 such cases at the Medicare Appeals Council starting in 2012 and continuing to the present.  Administrative law judges appear to increasingly be using these grounds as a basis for dismissal.

These dismissals are akin to the sort of technical denials we have long seen at lower administrative review levels.  They are likely a byproduct of the overcrowded ALJ dockets and lack of time to devote meaningful review to appeals.

At bottom, CMS needs to properly fund the ALJ system.  And, in turn, ALJs need to continue to ensure, as our courts do in this country, that appellants receive meaningful, substantive review.

Regulations (42 C.F.R. § 405.1014(b)(2)) require that appellants send a copy of the “request for hearing” to other involved parties.  Parties is defined to include the beneficiary.  See 42 C.F.R. §§ 405.902, 405.906.

Of course this is a general rule that may make more sense in non-hospice context.  In the hospice context, we have never seen a beneficiary take an interest in the appeal.  Often, they are deceased.  And, given the lengthy delays to ALJ hearings, in almost any case, they are no longer even on service.  And, in any case, they face no liability regardless of what decision is made.  It is, in short, extremely unlikely that the decision would have any conceivable effect on the beneficiary.  ALJs apply this rule in the hospice context without considering these issues.

ALJ staff review the appeal letter to determine if the evidence of service of the beneficiary is sufficient, including service of all related papers.  If evidence of service is not deemed sufficient, ALJs will issue a warning to the provider that service has not been completed on the beneficiary.  If the provider thereafter does not satisfy the ALJ as to service, the appeal is simply dismissed in its entirety.

In dismissing appeals for insufficient service, the ALJs rely upon a set of MAC cases.  See e.g. Penn Presbyterian Medical Center, 2013 WL 7815416 (MAC Mar. 21, 2013) (dismissal upheld where provider “does not provide proof that it has provided a copy of the request for a hearing to all parties”); and Virtua West Jersey Hospital Voorhees, 2013 WL 7965726 * 3 (MAC Mar. 29, 2013) (dismissal upheld where “the appellant has not shown that it even sent the beneficiaries a copy of the hearing requests”); but see Mat-Su Regional Medical Center, 2013 WL 7965688 *2.  (MAC Mar. 26, 2013) (despite beneficiary allegedly failing to serve the “full request”, the Council vacated the dismissal, ordering a decision on the merits).  These cases demonstrate that the MAC will uphold a dismissal where no service whatsoever is made although a dismissal may not be merited where there is service of some, but not all, of the documents.

There are several problems with the way in which ALJs apply the service rule in the hospice context.

First, ALJ’s have come to define a “request for hearing” as including every document involved in an appeal, although nothing in the applicable statutes or regulations says so.  In many cases, ALJ appeals now relate to more than one beneficiary (for instance, appeals of probe edit, targeted medical review, or pre payment audits are now consolidated).  Providers must take care not to send personal health information of one beneficiary to another.

Secondly, the purpose of the service requirement in 405.1014(b) is to allow a beneficiary to decide whether to participate in the hearing.  See ATG Massachusetts, Inc., 2013 WL 9744697 *3 (MAC Oct. 8, 2013) (purpose of requirement “is to afford the other parties an opportunity to make an informed decision whether to participate in further review of an unfavorable QIC determination”).  This is the true reason for service – to advise them that a case is pending.  When a complaint is served in Federal Court, the plaintiff need not serve at that time every document related to the case.  The complaint puts the potentially interested party on notice to participate if they have an interest.

Third, the complete dismissal of an appeal without any substantive hearing is a severe outcome that should be a last resort only.  Dismissal deprives a provider of a hearing on the merits.  And, especially in cases where the denial is technical in nature (ie, failure to serve all documents), it is an extremely harsh result.  The Federal Courts rightly take a dim view when parties are denied a hearing on the merits.  To warrant dismissal, there must be a serious, willful, and clear failure to comply.  See Betty K Agencies, Ltc. v. M/V Monada, 432 F.3d 1333, 1339 (11th Cir. 2005) (vacating dismissal for technical service error, finding failure to perfect service did not warrant dismissal; noting that dismissal is “a drastic remedy”).  ALJ’s should refrain from taking such drastic steps where there is a minor technical violation.

Even though ALJs should not be dismissing these appeals so regularly, providers need to be cautious with respect to service.  Out of an abundance of caution, providers should serve all patient specific documents on that beneficiary.  Where exhibits or documents cover multiple patients, the provider should not serve those specific pages or documents.

Providers should also detail in their appeal letters their efforts to serve the beneficiary and give proof.  Examples of proof that the appellant had sent the beneficiaries copies of the request for a hearing include: (a) a copy of a signed certified mail receipt or FedEx delivery receipt; or (b) a statement with the name and address of the beneficiary, with documentation showing the date that the copy of the request for a hearing was sent to the beneficiary.

Given the case load pressure on the ALJ system, due to CMS’ refusal to properly fund the system, providers must now take care to ensure compliance with all technical rules.  Even though the Federal Courts will work hard to ensure hearings are held on the merits, ALJs with no time are presently taking shortcuts that put providers at risk.