California Court Rules CMN Is Enough

Redding, Calif.

It tells like a John Grisham novel. A small-town provider and a local lawyer with no legal experience in HME bring a case against the federal government and, through sheer tenacity, last longer than anyone expects.

During the past several years, Tom Lambert, president of Maximum Comfort, has sold his house and put his company through bankruptcy reorganization to pay for a drawn-out legal battle over exactly what documentation is required for Medicare DME claims reimbursement. And in late June, a federal judge in California issued a preliminary ruling in Lambert's favor, stating that a properly completed certificate of medical necessity (CMN) is the only proof necessary for claims payment.

In his ruling, Judge Lawrence Karlton of the U.S. District Court for the Eastern District of California said the government cannot require suppliers to obtain beneficiaries' medical records or to make a judgment about whether DME is medically necessary.

The decision is the latest bout in a fight that began in late 1999, when, after an audit of the company's 1998 and 1999 claims, the Region D DMERC began investigating Lambert's business for K0011 over-utilization. While CMNs were provided with the claims, post-payment reviewers said the supplier had failed to submit the additional documentation necessary to establish medical necessity for the power wheelchairs, and concluded that Medicare had overpaid Maximum Comfort more than $785,000.

After the company appealed, two administrative law judges (ALJs) ruled in Lambert's favor, but the Medicare Appeals Council subsequently reversed the ALJs' decisions. Lambert then filed suit against the Department of Health and Human Services (HHS), and the case ultimately ended up in front of Judge Karlton in federal court.

Decision Sets Precedent

While Congress granted the HHS Secretary “broad discretion over the criteria required to prove medical necessity,” the judge wrote in his ruling, he continued that the existing statute “plainly specifies that Congress intended that whatever information may be required by carriers from suppliers to show the medical necessity and reasonableness of DME must be contained in a CMN.”

Once final, the ruling would have binding authority only in the district where the judge presides, but according to Jim Walsh, president of VGM Management, Ltd., and general counsel to The VGM Group, Waterloo, Iowa, the decision “has a huge psychological impact. Somebody has said the emperor has no clothes.”