Medicare provider files suit over recommendation for repayment of $1.2 million

SHERMAN - An independent diagnostic testing facility and certified Medicare provider in Southern California has filed a lawsuit against a Medicare Program Integrity Contractor after the contractor stated it was recommending recoupment of more than $1.2 million from the facility.

Claiming the audit violated standards, Fidelis Diagnostics Inc. filed suit against Safeguard Services, Kathleen Sebelius as Secretary of the U.S. Department of Health and Human Services; Dr. Donald Berwick, as administrator of the Centers for Medicare and Medicaid Services; and Palmetto GBA on Nov. 17 in the Eastern District of Texas, Sherman Division.

According to the lawsuit, Fidelis employs technicians to perform diagnostic tests, including nerve conduction studies, on Medicare patients. The tests are only performed after being ordered by the patient's primary physician.

Fidelis states it received a letter from defendant SafeGuard regarding a post-payment review of certain claims in 2007. SafeGuard determined that the services provided by Fidelis were not medically necessary and informed the plaintiff that it intendeds to recommend a recoupment of $1,279,324.37 from Fidelis, if Fidelis cannot provide evidence that the services were medically necessary.

The plaintiff states it has requested the documents SafeGuard used to make its determination but SafeGuard has refused to provide information.

Fidelis Diagnostics is asking the court to declare SafeGuard's actions as arbitrary and capricious and in violation of law. It is also seeking and an award of court costs and attorneys' fees.

The plaintiff is represented by Scott B. Aston, Patrick D. Souter and Joshua M. Weaver of Looper Reed & McGraw in Dallas.

Jury trial is requested.

U.S. District Judge Michael H. Schneider is assigned to the case.

Case No. 4:10-cv-00638