Advice: Get it in writing

Sunday, April 30, 2006

Q. Is my company protected if I relied on a wrong answer provided by the DMERC?

A. Probably not. It is common practice for suppliers to request guidance from their Medicare carriers. However, reliance on the carrier's advice may not be enough to protect suppliers in a Medicare audit or investigation. Courts hold that the government cannot guarantee the reliability of every bit of informal advice given by its agents. Therefore, although a supplier received information from a carrier and relied on it, the government may not be prohibited from recovering any unauthorized payments made to the supplier. The legal theory behind the supplier's argument against the government recouping the payments is called equitable estoppel.
A supplier asserting equitable estoppel must prove that the carrier, by word or conduct, induced the supplier to believe the information received was correct; the inducement was made by an "affirmative misconduct" of the carrier; and the supplier detrimentally relied upon the facts.
If the supplier can meet the required elements, then the government would be barred from recovering the money. However, this is a difficult standard for suppliers to demonstrate and courts have made it increasingly clear that equitable estoppel is rarely applied against Medicare carriers. Most of the cases in which the estoppel argument has failed involve statements made by carriers. Courts are more likely to apply the estoppel argument against CMS directly. Consequently, suppliers should contact CMS directly and receive written advice for important issues. If the carrier is the only contact, suppliers should still obtain written responses. They can be useful in appeals and prosecutions.


Lester Perling is a partner with Broad and Cassel in Fort Lauderdale, Fla. Reach him at (954) 745-5261 or