Bid lawsuit inches forward

One year after Cardiosom ruling, litigation and mediation still in play
Friday, June 26, 2015

WASHINGTON – The federal government on June 25 had its last chance to weigh in on whether or not a court ruling in favor of Cardiosom should be applied to other providers whose contracts were rescinded as part of the original Round 1 of competitive bidding. 

Following the filing of this fourth brief, Jerry Stouck, a shareholder with Greenberg Traurig, the law firm representing Cardiosom and three other providers, believes the judge will make a decision in a few months time.

“We’ll see,” he said. “The plaintiffs believe the cases are essentially identical and that the judge should apply the Cardiosom ruling.”

A U.S. Court of Federal Claims judge ruled in Cardiosom’s favor a year ago, saying the provider is entitled to damages for being awarded contracts and then having them rescinded as part of an 18-month delay to the program in 2008. There are now nine lawsuits, representing 15 providers.

In the Cardiosom case, the judge struck down the government’s argument that the contracts were subject to any changes in Medicare regulations. But the government has a new argument: When the contracts were terminated, the providers “were returned to the status quo,” meaning they were still able to do business with Medicare and at better reimbursement rates at that. 

“The government is saying, ‘What’s the problem? We did you a favor by terminating the contracts,’” Stouck said. “We’ve responded that the whole purpose of the contracts was to significantly reduce the number of suppliers, so that, while the reimbursement was lower, they’d get higher volumes of business.”

While litigation inches forward, the providers and the government are still pursuing mediation, as well. But it’s slow going, Stouck says, with the providers still waiting for sales volume data from CMS so they can put together damages claims.

“By fall, we hope we’ll have a much better idea of whether the cases can be settled, or whether they need to be litigated,” he said.