Articles Posted in U.S. 3rd Circuit Court of Appeals

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Medicare (42 U.S.C. 1395ww) reimbursement includes an adjustment for “disproportionate share hospitals” (DSH), that serve high numbers of low-income patients. The calculation formula takes into account the number of patient days for those patients eligible for Medicaid, and may also include patient days for those patients ineligible for Medicaid, but who received benefits under a Medicaid “demonstration project,” 42 U.S.C. 1315. The Medicare DSH formula was initially regarded by intermediaries, at least in some states, as including days covered under state general assistance (GA) and charity care programs. In 1999 the Centers for Medicare and Medicaid Services clarified that the DSH formula only permitted the inclusion of patient days wherein the patients were eligible for Medicaid, excluding state general assistance and charity plan patient days, but, under the final rule hospitals could count patient days for individuals covered under a Section 1115 waiver project. The Deficit Reduction Act of 2005 essentially ratified the rule. The district court concluded that the regulation was arbitrary and capricious and a violation of the Equal Protection Clause, reasoning there was no rational basis to exclude from reimbursements patients covered by Pennsylvania’s General Assistance plan, while including patients covered under a federal statutory waiver program. The Third Circuit reversed. View "Nazareth Hosp. v. Sec'y, U.S. Dep't of Health & Human Servs." on Justia Law

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E attended kindergarten and first grade in the Ridley School District, 2006-2008, receiving special services for learning disabilities and health problems. After first grade, her parents concluded that the school was not meeting E’s needs, and enrolled her at a private school, Benchmark, that specializes in educating students with learning disabilities, then filed a complaint with the Pennsylvania Department of Education claiming violation of the Individuals with Disabilities Education Act, 20 U.S.C. 1415(j), and the Rehabilitation Act, 29 U.S.C. 794(b)(2), by failing to provide a suitable Individualized Education Program. A hearing officer found no violations during kindergarten year, but awarded compensatory education for first grade and ordered Ridley to reimburse tuition and transportation costs for 2008-2009. Two years later, a federal district court reversed, finding the proposed IEP adequate. The Third Circuit affirmed. Meanwhile, the parents sought payment for Benchmark costs from the date of the hearing officer’s decision forward pursuant to the IDEA, which states that a disabled child shall remain in the child’s current educational setting pending resolution of a dispute over the child‘s placement. The district court ruled in favor of the parents, rejecting the district’s timeliness contentions and awarded costs for three years, $57,658.38. The Third Circuit affirmed. It is impossible to protect a child‘s educational status quo without sometimes taxing school districts for private education costs that ultimately will be deemed unnecessary. View "M. R. v. Ridley Sch. Dist." on Justia Law

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Under the Individuals with Disabilities Education Act (IDEA), states that provide special education funds are eligible for federal funds to implement state-wide special education programs that guarantee a free appropriate public education (FAPE) to eligible disabled children, 20 U.S.C. 1412(a)(1)(A). Pennsylvania enacted 24 P.S. 25-2509.5, its special education funding formula, under which each school district receives a base supplement, calculated by apportioning the total amount of base supplement money available among all districts based on the average daily membership of the district from the prior year under the assumption that 16% of students in each district are disabled. Plaintiffs, disabled students who attend schools in districts with a 17% or greater enrollment of special needs students and with a market value/personal income ratio of .65 or greater, claimed that Pennsylvania’s method violates IDEA, the Americans with Disabilities Act, and the Rehabilitation Act The district court found that the formula did not deprive the class of a FAPE as required by the IDEA and did not discriminate in violation of either the ADA or RA. The Third Circuit affirmed, noting that there was no evidence that any class member was deprived of a service available to nonclass members. View "CG v. PA Dep't of Educ." on Justia Law

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The U.S. Department of Health and Human Services approved a 2008 amendment to Pennsylvania’s state plan for administering its Medicaid program. Private nursing facilities that provide services to Medicaid recipients challenged the amendment as violating Title XIX of the Social Security Act, 42 U.S.C. 1396, by adjusting Pennsylvania’s method for determining Medicaid reimbursement rates to private nursing facilities for the 2008-09 fiscal year without considering quality of care, which they claim violates 42 U.S.C. 1396a(a)(30)(A) and without satisfying the public process requirements of 42 U.S.C. 1396a(a)(13)(A). The district court rejected the claims on summary judgment. The Third Circuit affirmed in part, finding the state immune from the requested relief under the Eleventh Amendment. The district court erred in granting summary judgment to the federal defendants. By approving the amendment without any assurance that the amended plan would produce payments that are consistent with quality of care, HHS acted arbitrarily. View "Christ the King Manor, Inc. v. Sec'y, U.S. Dep't of Health & Human Servs." on Justia Law

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Zizic is the former CEO of BioniCare, which sold the BIO-1000, a medical device designed to treat osteoarthritis of the knee. BioniCare attempted to bill Medicare for the BIO-1000, but many claims were denied as not medically necessary. Q2A contracted with the government to review such claim denials across the nation. Q2A’s denials were reached without physician review, which is required by the Medicare Act, 42 U.S.C. 1395, HHS regulations, and its contract. A former Q2A employee testified that it implemented an internal policy to deny all BIO-1000 claims, which were reviewed by a single nurse rather than a panel of physicians; later allowed non-physician subcontractors to prepare BIO-1000 appeals for review by a single physician; and finally developed a mail merge letter that automatically denied BIO-1000 claims without any review. BioniCare’s trustee in bankruptcy became aware of and disclosed these practices. Zizic filed a qui tam suit under the False Claims Act, 31 U.S.C. 3729-33. The district court dismissed, concluding that it lacked jurisdiction because the allegations against Q2A and RTS were based on prior public disclosures and because Zizic was not an original source of that information. The Third Circuit affirmed. View "Zizic v. Q2Adm'rs LLC" on Justia Law

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A 2010 fire at an apartment in Erie, Pennsylvania took the lives of a tenant and her guest. The third-floor bedroom purportedly lacked a smoke detector and an alternate means of egress, both of which are required under the Section 8 housing choice voucher program (42 U.S.C. 1437f) in which Richardson participated. The district court rejected a defense of qualified immunity in a suit under 42 U.S.C. 1983 by the estates of the deceased. The Third Circuit reversed. State officials’ approval and subsidization of the apartment for the Section 8 program, even though the apartment allegedly failed to comply with Section 8’s standards, did not constitute a state-created danger toward the apartment’s tenant and her guest in violation of their constitutional substantive due process rights. View "Henry v. City of Erie" on Justia Law

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After leaving coal mining, Eckman sought benefits under the Black Lung Benefits Act, 30 U.S.C. 901, in 1985. An ALJ awarded benefits in 1993; the Benefits Review Board affirmed the decision. Marmon paid benefits to Eckman until his 2002 death; his widow, Ethel, sought benefits as a dependent survivor. An ALJ denied the claim in 2005, finding that although Eckman had pneumoconiosis, Ethel failed to prove that his death was due to the disease. The Board affirmed. After Congress enacted the 2010 Patient Protection and Affordable Care Act, 124 Stat. 119, and amended the BLBA, Ethel filed a new claim. A Department of Labor district director awarded benefits. An ALJ upheld the award, finding that Ethel satisfied the familial relationship and dependency criteria for survivors under the BLBA and that, based on Eckman’s lifetime disability award and the filing date of Ethel’s claim, Ethel was entitled to benefits under section 932(l), as amended by the ACA. The Board affirmed. The Third Circuit denied the coal company’s petition for review, noting that in Ethel’s second claim, the cause of death was not at issue, her entitlement to benefits turned primarily on an administrative fact: whether her husband had been awarded benefits. View "Marmon Coal Co. v. Dir. Office of Workers Comp. Programs, U.S. Dep't of Labor" on Justia Law

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Munir sent his son, O.M., to a private residential facility and a private boarding school after multiple suicide attempts, and sought reimbursement for the cost of the placements from the school district under the Individuals with Disabilities Education Act (IDEA), which requires that states receiving federal education funding ensure that disabled children receive a free appropriate public education, 20 U.S.C. 1412(a)(1) or pay for their education elsewhere if a child require specialized services that the public institution cannot provide. The district court denied the request, reasoning that O.M. had emotional problems, but that those problems were not affecting his ability to learn. The Third Circuit affirmed, finding that O.M.’s placement was to meet his mental health needs; any educational benefit he received from the placement was incidental. O.M. was an above-average student, without serious attendance problems, and socialized well in the district school. An individualized education plan offered by the district satisfied its IDEA obligations. View "Munir v. Pottsville Area Sch. Dist." on Justia Law

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States participating in Medicaid in a managed care environment are required to make, at least every fourth month, supplemental “wraparound” payments to federally-qualified health centers (FQHCs) equal to the difference between a rate set by statute multiplied by the number of Medicaid patient encounters, and the amount paid to FQHCs by managed care organizations (MCOs) for all Medicaid-covered patient encounters, 42 U.S.C.1396. Concerned that gaps in FQHC claim verification led to overpayments, the New Jersey Department of Human Services changed its calculation: instead of basing wraparound payments solely on the number of Medicaid encounters and total MCO receipts as self-reported by FQHCs, the state would rely on data reported by MCOs absent receipt of certain additional data from the FQHCs. Because MCOs report only encounters that they have approved and paid, prior MCO payment would be a prerequisite to wraparound reimbursement under the new system. An association of FQHCs sued, claiming that the change violated their due process rights as well as state and federal law, resulting in budget shortfalls. The district court granted the association summary judgment and a preliminary injunction. The Third Circuit affirmed the holding that the requirement that wraparound payments be contingent on prior MCO payment violated the Medicaid statute’s requirement that FQHCs receive timely full wraparound payment for all Medicaid-eligible claims. View "NJ Primary Care Assoc. v. NJ Dep't of Human Servs." on Justia Law

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Until 2003, Hagans worked as a security guard and as a sanitation worker. At 44 years old, Hagans required open-heart surgery. Hagans claims additional medical problems relating to his cerebrovascular and respiratory systems, hypertension and dysphagia, insomnia, and back pain. He has been diagnosed with depression. Hagans began receiving disability benefits as of January 30, 2003. In September, 2004, pursuant to an updated Residual Function Capacity assessment showing his condition had improved, SSA determined that Hagans was no longer eligible for benefits. The ALJ considered several evaluations of Hagans’s condition, most of which were completed in mid-2004, and found that he was capable of engaging in substantial gainful activity, although he could not perform his past relevant work. The Appeals Council denied review; the district court affirmed. The Third Circuit affirmed, after determining that “relatively high” deference should be afforded to SSA’s Acquiescence Ruling interpreting the cessation provision of 42 U.S.C. 423(f) as referring to the time of the SSA’s initial disability determination. SSA correctly evaluated Hagans’s condition as of the date on which the agency first found that Hagans’s eligibility for disability benefits ceased. Substantial evidence supported the conclusion that Hagans was not fully disabled as of that date. View "Hagans v. Comm'r of Soc. Sec." on Justia Law