Question of Fact About Whether Private Entity Managing Public Funds Can Recoup Payments Which Were Above Minimum Fees Required by the Medicare Fee Schedule

Plaintiffs, emergency and ambulance service-providers, brought an action in response to defendant’s reduction in Medicare payments made to recoup alleged overpayments in prior years.  In finding plaintiffs had raised a question of fact about whether defendant was entitled to recoup the alleged overpayments, the Fourth Department wrote:

We agree with plaintiffs that the applicable Medicare fee schedule set a minimum payment, but not a maximum payment, for the services that plaintiffs provided (see 42 USC § 1395w-22 [a] [2] [A]).  On the one hand, if defendant had paid plaintiffs the minimum fees required by the applicable Medicare fee schedule, then plaintiffs would not be entitled to object to those payments as being insufficient (see 42 CFR 422.214 [a] [1]).  On the other hand, however, while defendant paid plaintiffs more than the minimum amount required by the fee schedule for a period of time, defendants have failed to establish that defendant is entitled as a matter of law to recoup any or all of those funds from plaintiffs.  Although the common law right of a governmental agency to recoup erroneously distributed public funds is well established … , that right does not necessarily extend to defendant, a private entity managing public funds… . Canandaigua Emergency Squad, Inc. … v Rochester Area Health Maintenance Organization, Inc…, 632, 4th Dept 7-19-13