D.C. Federal District Court Rules in Favor of Sentara Hospitals in Medicare Bad Debt Payment Case

On March 29, 2022, the U.S. District Court for the District of Columbia issued a favorable decision for Ropes & Gray client Sentara Hospitals, ordering that the Centers for Medicare and Medicaid Services must reimburse Sentara for the Medicare bad debt expense it incurred between fiscal years 2010 and 2013.  

In reaching this decision, the Court found that Sentara had properly determined that the patients in question were not able to pay their debts and had complied with all of the agency’s guidelines contained in a Medicare manual provision that the hospitals had challenged.  In particular, the Court held that under the applicable rules, Sentara may use financial reports from a private credit reporting agency to help it make determinations of patient indigence. 

Sentara had sued the U.S. Department of Health and Human Services after the agency rejected its request for reimbursement of bad debt incurred between 2010 and 2013, arguing that the agency’s decision was arbitrary and capricious, unsupported by substantial evidence, and contrary to law under the Administrative Procedure Act. The court granted Sentara’s motion for summary judgment and denied the government’s cross-motion for summary judgment. 

The Ropes & Gray team was led by health care partner Stephanie Webster and counsel Harry Richards (both of Washington, D.C.).