Three Administrative Law Judges, in various orders issued on various dates, have acted on requests for hearing in connection with an overpayment assessed against the appellant provider and the individual claims making up the sample from which the overpayment was projected. By requests dated November 5, 1999, and December 9, 1999, the provider has asked the Medicare Appeals Council to review the actions issued by Administrative Law Judges Rivera and Kohler.

Summary of Issues on Appeal

The Medicare Appeals Council has granted the requests for review pursuant to 20 CFR 404.967 and 404.970 because the various orders before us contain errors of law. The above-referenced cases arose from a statistical sampling of 100 of the provider's claims. Specifically before us are three individual claims dismissed for reasons described below as well as orders remanding to the fiscal intermediary the provider's challenge to the sampling methodology. For the reasons given below, we have concluded not only that all of the orders must be vacated, but that they should also be assigned to one Administrative Law Judge who will resolve both the issues raised in the appeal of the individual claim adjudications and the challenge to the sampling methodology.

Accordingly, the Council hereby vacates the Administrative Law Judges' orders, as further detailed herein, and remands this matter to the Hearing Office Chief Administrative Law Judge for assignment to one Administrative Law Judge for further proceedings consistent with this opinion. (See 42 CFR 405.724 and 20 CFR 404.977). In addition, pursuant to 42 CFR 405.750, we reopen the April 1, 1999, dismissal order issued by Judge Marcus in the case of ***, because of an error on the face of the evidence and similarly vacate and remand.

Procedural History

We have requested the files related to this matter from the intermediary, but have not received them. Accordingly, this remand order is necessarily based on the information we have gleaned from the requests for review and subsequent submissions from the appellant. For ease of identification, we refer herein to tabs affixed to these documents.

The proceedings leading to this point appear to have been somewhat complicated. The claims at issue were originally paid. After conducting a comprehensive medical review of a statistical sample of 100 of the provider's home health claims for 1997, the fiscal intermediary reopened and revised the initial payment determinations in 22 of the claims. Projecting from this sample, the intermediary calculated an overpayment of $689,281.61 for 1997 and notified the appellant of the overpayment on August 20, 1998 (Tab 2A). Upon reconsideration, the intermediary issued favorable determinations concerning two of the beneficiaries whose claims were included in the sample. ⁽¹⁾ On or about December 15, 1998, the intermediary issued reconsidered determinations in the other individual appealed claims, a single example of which has been provided to the Council (Tab 3A). It appears from this and other information that the intermediary affirmed the revised initial determinations in most or all of these other claims (Tab 4).

In a separate reconsidered determination dated January 22, 1999, the intermediary affirmed its finding that the sampling methodology was correct and that recovery of the overpayment from the provider could not be waived (Tab 2B).

The provider filed numerous requests for hearing in connection with the overpayment, disputing both the validity of the statistical sample and the revised determinations in many of the individual claims. Information available to the Council indicates that hearings were requested in the individual claims on or about January 15, 1999 (Tabs 1A and 4). (The provider has informed us that Administrative Law Judges have issued decisions on most of these individual claims.) A separate request for aggregation and restated request for hearing was filed with regard to the three claims before us on February 12, 1999 (Tab 1C). In a separate action, on March 2, 1999, the appellant requested a hearing on the January 22 reconsidered determination on the sampling methodology issue (Tab 2C).

The Administrative Law Judges' Dispositions of the Requests for Hearing

As stated above, the Medicare Appeals Council has only some of the relevant material in connection with the requests for hearing. The available material indicates that the following actions have been taken by Administrative Law Judges in the Ft. Lauderdale, FL hearing office:

Dismissal Orders Issued by Judge Marcus and Judge Rivera

° On April 1, 1999, Judge Marcus dismissed the January 15, 1999, request for hearing in the case of ***, on the grounds that the $100 amount in controversy requirement was not met (Tab 1E). On May 29, 1999, Judge Rivera dismissed the January 15, 1999, requests for hearing in the claims of ***, on the same grounds (Tab 1H).

° The appellant subsequently again requested that these three cases be aggregated to meet the amount in controversy. (Tab 1F, 1K). On September 18, 1999, Judge Rivera denied a request that he aggregate claims for multiple beneficiaries for the purpose of reaching the jurisdictional threshold for the amount in controversy and reconsider his dismissal orders in the *** claims. On September 24, 1999, Judge Marcus denied a similar request regarding his dismissal of the *** claim (Tab 1K). In denying the requests, Judges Rivera and Marcus both found that the provider did not have a right to a hearing in these cases, citing 42 CFR 473.12(b)(2) from the Peer Review Organization (PRO) regulations.

Remand Orders Issued by Judge Kohler

° In late October and early November 1999, Judge Kohler issued multiple orders of remand to the intermediary (Tab 2, Attachment A). The orders arose from the March 2, 1999 request for hearing regarding the sampling methodology and addressed all 100 claims in the sample, including the individual appealed claims which had been the subjects of decisions and dismissals by Judges Marcus and Rivera. Judge Kohler noted that the 22 denied claims had not been processed together by the intermediary, and thus that the "integrity of the denial pool has been breached." Judge Kohler concluded that the issue of the validity of the sampling methodology was not ripe for review until the administrative review of individual claims had been completed. ⁽²⁾ Judge Kohler stated that "once the appellant has been afforded administrative due process for all of the contested denied unit claims in the overpayment sampling on an individual basis, the intermediary must determine whether to proceed with a revised reconsideration determination and again bring this matter forward for hearing disposition as an aggregate claim."

Judge Kohler's orders cited 20 CFR 404.948(c) as the basis for his action, and the cover letter advised the provider that any appeal should be made to the Administrative Law Judge. On November 5, 1999, the provider filed such an appeal, which Judge Kohler denied on November 19, 1999 (Tabs 2E and 2F). Judge Kohler's November 19, 1999, action agreed with the appellant that both the individual claims and the statistical methodology were appealable, but affirmed his previous conclusion that the sampling issue was not ripe until the appeals of individual claims had finished. Judge Kohler stated that, with the remand, he was trying to lessen the potential confusion caused by multiple outstanding individual overpayment decisions sought simultaneously with the aggregate overpayment claim in which individual sample claim findings must also be made.

The Requests for Review

On November 5, 1999, the appellant's attorney submitted a timely request for review with regard to the two dismissal actions issued by Judge Rivera (Tab 1). On December 9, 1999, the appellant's attorney submitted a timely request for review of Judge Kohler's October and November 1999 remand orders concerning the challenge to the sampling methodology and of his November 19, 1999, denial of the request to vacate the orders (Tab 2). We are disposing of the requests for review as follows:

The Dismissals

The Medicare Appeals Council grants the November 5, 1999, request for review with regard to the dismissal actions issued by Judge Rivera. The Council notes that only the *** claims, and not ****, were listed on the November 5, 1999 request for review; however, given the reference to all three cases in the other correspondence (Tabs 1C, 1F, 1J, and 1K), we have reviewed the evidence in the light most favorable to the appellant and have reopened Judge Marcus' action in *** sua sponte. The September 1999 orders by both judges which denied requests to reopen the dismissals on grounds not originally decided were erroneous inasmuch as these claims did not involve prior determinations by a Peer Review Organization, and, consequently, the cited regulations do not apply.

Further, neither the original dismissals nor the denials of reopening addressed the provider's February 12, 1999 request for aggregation or the two follow-up letters (Tabs 1C, 1F, and 1J). Pursuant to 42 CFR 405.720(d) and 405.740(a), a provider appellant may aggregate claims for one or more beneficiaries to meet the $100 amount in controversy requirement if: the claims have previously been reconsidered, a request for hearing has been made within 60 days after receipt of the reconsideration determination, and the request identifies the specific claims to be aggregated. The provider's February 12, 1999 letter amended the earlier requests for hearing for the *** cases and fulfills all the requirements for a valid aggregation request outlined in §405.740(a): reconsidered determinations had apparently all been issued on December 15, 1998, the February 12, 1999 letter was within 60 days of the reconsidered determinations, and the letter identified the specific claims to be aggregated (Tabs 4 and 1C). The Council therefore concludes that dismissal without assessing the request for aggregation was incorrect in these cases.

More importantly, considering that the appeals in this case arose in the context of a statistical sample post-payment review, the Council concludes that the amount in controversy question for the *** claims must be considered in relation to the extrapolated overpayment amount. Section 3940 of the Medicare Intermediary Manual (MIM) details the procedures for comprehensive medical review using statistical sampling for overpayment estimation; at § 3940.10.1.b, the manual states the following:

b. Administrative Law Judge (ALJ), Appeals Council, Judicial review.-If the reconsidered determination affirms the revised determination in full or part the next level of administrative appeal is an ALJ hearing, provided the amount remaining in controversy is $100 or more (See 42 CFR 405.720 and 405.745.) The amount in controversy is based on the extrapolated amount. (Emphasis added).

The *** claims each involved a prior payment amount of $72.48 (Tabs 1E and 1H). Referring to the projection worksheet at Attachment 1 of the intermediary's August 20, 1998 overpayment notice (Tab 2A), we can calculate that a reduction by one in the number of denied $72.48 units yields a net decrease in the final overpayment assessment of at least $5900. For the ***claims, this means that the $72.48 prior payment in each case translates to at least $5900 in the context of the extrapolated overpayment. Accordingly, the amount in controversy requirement of 42 CFR 405.720(d) is met (even if aggregation were not available) because the extrapolated amount in each claim exceeded $100. Therefore, the three claims must be adjudicated on the merits.

The Remands Concerning the Sampling Methodology

The Medicare Appeals Council also grants the December 9, 1999, request for review with regard to the sampling methodology issue. The cited authority for these remands, 20 CFR 404.948(c), is inapposite as it provides that an Administrative Law Judge may remand a case to a lower adjudicative level only where there is reason to believe that a revised determination would be fully favorable. The regulations note, for example, that this could happen if the Administrative Law Judge has received new and material evidence. There is no such evidence here.

At this point, and on this fragmentary record, we are unable to determine how and when these cases were split into individual determinations and appeals on the merits of individual cases, and a separate adjudication and appeal of the sampling methodology. We are mindful of the concerns expressed in Judge Kohler's November 19, 1999 letter (Tab 2F) that piecemeal adjudication of the numerous claims and issues involved here is inefficient and inconsistent with HCFA Ruling 86-1. In the Council's view, however, the remand to the intermediary without resolution of all appealable issues was not an appropriate exercise of the discretion afforded an Administrative Law Judge by 20 CFR 404.948(c), and did not effectively advance the collective disposition of these cases.

The regulations at 20 CFR 404.946 provide that the issues before an Administrative Law Judge include all issues brought out in the determinations below that were not decided entirely in the appellant's favor. There were several issues raised in the single August 20, 1998, overpayment determination that should have been considered together on appeal. As noted in HCFA Ruling 86-1, the provider may challenge both the sampling methodology and the individual determinations in the sample cases, including any waiver of liability and overpayment determinations. There is nothing in the manual instructions at MIM §§ 3940 to suggest that appeals of the methodology and of the individual determinations should not proceed together, and indeed these instructions provide no clear authority for splitting the issues at the intermediary level, as occurred here. Particularly relevant to this case situation, § 3940.10.C details a number of options for changing the sampling results depending on whether the Administrative Law Judge ⁽³⁾ reversed with regard to one or more claims or the methodology or both. Clearly, the manual guidelines anticipate that an Administrative Law Judge will resolve all issues on appeal in a comprehensive way and that the intermediary will effectuate the Judge's rulings in like fashion. ⁽⁴⁾

Under the regulations, the Associate Commissioner of the Office of Hearings and Appeals, or her designate, is responsible for appointing an Administrative Law Judge to conduct a hearing (20 CFR 404.929). We believe that when presented with related claims which had become separated, it is appropriate for the Office of Hearings and Appeals to undertake, in conjunction with the intermediary, to consolidate all the pending hearing requests, and to determine the outcome of the individual adjudicated claims and proceed with the consideration of the methodology issue as part of a consolidated proceeding. At a minimum, fragmentation of related issues and claims makes it less likely that the fiscal intermediary will, or even can, absent administratively final decisions on all issues, recalculate an overpayment when several individual denials are reversed at different levels. ⁽⁵⁾ Moreover, as this case amply demonstrates, piecemeal disposition and interlocutory appeals of related cases and issues is not efficient, creates confusion, and raises significant questions with respect to the exhaustion of administrative remedies.

Actions to be Taken on Remand:

As stated initially, we vacate all of the above-described dismissal and remand orders and remand to the Hearing Office Chief Administrative Law Judge for consolidation and assignment to one Administrative Law Judge for further proceedings consistent with this opinion.

On remand, the Administrative Law Judge will offer the provider the opportunity for a hearing on the individual claim issues as well as the sampling methodology issue. The Administrative Law Judge will retrieve the *** claims from the intermediary, and will proceed with consideration of the merits of those individual claims. ⁽⁶⁾ With regard to the individual claims, the Administrative Law Judge will rule on coverage of the item or service, and as appropriate will also address section 1879 limitation of liability and section 1870 waiver of recovery. (See HCFA Ruling 95-1, MIM § 3940.5.)

With regard to the sample methodology, the Administrative Law Judge will retrieve the complete record related to the 100-claim statistical sample. The Administrative Law Judge will consider the provider's arguments in view of the sampling record obtained from the intermediary, and make specific rulings on the provider's challenges to the conduct of the sample. As appropriate, the Administrative Law Judge shall determine whether the intermediary modified or recalculated the original $689,281.61 overpayment after consideration of individual claims reversed at the reconsideration and Administrative Law Judge level, and if that occurred, ask the intermediary to supply documentation of any recalculation.

As necessary upon completion of the above-described proceedings, the Administrative Law Judge may refer the case(s) to the intermediary for recalculation of the overpayment and any necessary cost report adjustment only after ruling on the provider's challenges to the sampling methodology and the unresolved individual claims. ⁽⁷⁾

The Administrative Law Judge may take any further action not inconsistent with this remand order.

Date: July 26, 2001

Clausen Krzywicki
Administrative Appeals Judge

M. Susan Wiley
Administrative Appeals Judge

1. A fully favorable determination was issued on December 2, 1998, for ***. A partially favorable determination was issued on December 4, 1998, for ***.

2. On August 26, 1999, Judge Marcus issued a fully favorable decision in the case of ***. Administrative Law Judge decisions were apparently issued on some of the other individual appealed claims around this time (Tab 5). Also, as noted in footnote 1, the intermediary had issued some favorable determinations on reconsideration.

3. Or Medicare Appeals Council

4. We observe that the use of sampling by fiscal intermediaries for Part A providers is a relatively recent phenomena, and that the pertinent Manual section was published in final only in March 1999. Over the course of years, we have seldom, if ever, seen in carrier Part B cases fragmentation of issues and determinations similar to those raised in this case. This may be due, in part, to the differences in the reimbursement schemes. See FN 6 also.

5. According to the appellant's statement on January 11, 2000 (Tab 3) and subsequent representations by counsel, the intermediary has not recalculated the overpayment to take into account the several claims that had been reversed on appeal or taken any other action consistent with the course contemplated in Judge Kohler's remand orders.

6. The Administrative Law Judge need not obtain the files of the other sample claims unless necessary to resolve the appellant's challenge to the sampling methodology.

7. Final settlement and appeal of a Part A cost report, adjusted after a postpay sample, would lie within the jurisdiction of the Provider Reimbursement Review Board (MIM § 3940.11).