Appeals court sides with CMS contractor

Friday, November 16, 2012

PHILADELPHIA – The U.S. Court of Appeals for the Third Circuit has rebuffed a former HME provider who fought an audit and won, then filed a $10 million lawsuit against the CMS contractor that conducted the audit.

Dominic Rotella, the owner of Nichole Medical Equipment, which was improperly audited by TriCenturion and subsequently went out of business, says the outcome of the case threatens not only the HME industry, but any industry that contracts with CMS.

“This is no longer about TriCenturion and Nichole Medical, or about auditors,” Rotella said. “This is about whether or not we want to give CMS absolute, total power to do whatever they want, without fear of civil litigation.”

On Sept. 13, the U.S. Court of Appeals for the Third Circuit upheld a ruling by the U.S. District Court of the Eastern District of Pennsylvania that CMS contractors, as “government agents,” are entitled to “official immunity.” On Oct. 11, the court denied Rotella’s request for a rehearing.

Rotella and his lawyer, David Hollar, dispute the court’s invocation of “official immunity” on multiple fronts. They believe TriCenturion was negligent in its duties, and that this makes the case legally actionable for tort damages. Moreover, they do not believe CMS contractors should be entitled to immunity if it is not in writing, or if they do not adhere to the rules.

“You cannot have immunity if you don’t abide by the statute you’re required to uphold,” Rotella said.

Rotella’s next step, he hopes, is the Supreme Court—provided he can marshal the support he needs. Rotella and Hollar both concede that taking the case to the Supreme Court, which selects very few cases for review, will be costly and time-consuming, but the case could galvanize industry support because it speaks to the anxieties many providers have about audits.

“I’m never one to say there aren’t mistakes, fraud or even abuse in many places,” Hollar said. “But at some point in time you have to step back and see that you’re throwing out the baby with the bathwater. If you make this so draconian that you’re going to drive good people out of business, all you’ll have left is bad people.”

To read previous stories by HME News on Rotella, go to and