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Home Health Company Filed a Class Action Complaint Against HHS and Advancemed

Press Release - April 9, 2019

A Chicago based home health company has filed a class action complaint in Federal Court in Chicago against the U.S. Department of Health and Human Services and federal Medicare contractor AdvanceMed. The complaint accuses the contractor of wrongly continuing the suspension of the home health company’s Medicare reimbursement payments when responding to its rebuttal letter and then illegally computing past debt to Medicare based on a false documentation error rate it had calculated.

Simply Home Healthcare LLC alleged in Friday’s filing that AdvanceMed Corporation, a subsidiary of NCI corporation and a contractor for CMS (Centers for Medicare and Medicaid Services), misapplied federal laws and regulations “for the sole purpose of inflating billable hours and winning additional contracts” with CMS.

AdvanceMed is tasked by CMS to use data mining techniques to identify possible patterns of fraud in Medicare claims. After examining a small batch of patient charts that Simply sent to AdvanceMed in August of 2016, 9 months later without any warning it had Simply’s Medicare payments suspended allegedly due to overpayments resulting from clerical errors it had found. At the same time all payments to Simply were suspended, AdvanceMed requested a much higher volume of medical records from Simply for further examination and told the company that it had only 15 days to submit both these records and a rebuttal letter.

Simply cooperated and within the requested 15-day period provided more than 20,000 pages of additional medical records and a rebuttal letter with 24 pages of supportive information. When AdvanceMed responded to the rebuttal letter they informed Simply that unnamed parties at CMS had decided to continue the suspension and that the reason for the continuation of the suspension had now changed from overpayment to fraud. In a follow up conference call, AdvanceMed refused to identify who at CMS made this decision and also confirmed that the consultation with law enforcement that is required by law before making an accusation of fraud never took place. Based on this admission by AdvanceMed, the payment suspension should have stopped at this point, but the payments continued to be suspended thereby illegally denying Simply funding.

Simply kept seeing patients and paying employees with borrowed cash anticipating that the suspension would end, but after several months Simply was forced to lay off all therapists and transfer over 100 patients to other providers. After 160 days, AdvanceMed lifted the suspension in September 2017 but at the same time informed Simply that it now owed Medicare $5.4 million dollars based on applying the alleged error rate it found against Simply’s previous 4 years of Medicare payments. Although an appeal by Simply to another CMS contractor reduced this to $4.8 million, Simply was forced out of business in August 2018, “faced with millions of dollars in alleged debt" according to the filing.

Robert Kunio, the president of Simply, stated that over 100 other home health agencies and hospices were also put out of business by AdvanceMed’s use of these same illegal methods which creates the class of injured parties. Kunio also stated that if the annual revenues and profits of the other 100 members of the class were comparable to Simply’s, then AdvanceMed and its parent company NCI could easily be liable for over $1 billion in direct and punitive damages if found guilty in Federal Court.

Simply is represented by George S. Bellas of Bellas & Wachowski (847.823.9032) and Michael J. Raiz and Lesley R. Arca of Jurisprudence Health Law Group PC (630-995-9220).

The case is Simply Home Healthcare LLC v. AdvanceMed Corp. et al., Case Number 1:19-cv-02313, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

George S. Bellas (george@bellas-wachowski.com)
847.823.9032