Lawsuit Filed to Foil Competitive Bidding

DALLAS

In a move to halt competitive bidding, a lawsuit filed last month on behalf of three Medicare beneficiaries and three small HME companies asks for a permanent injunction that would stop CMS from implementing the program.

Filed June 12 in the United States District Court for the Northern District of Texas, Dallas division, the suit challenges the constitutionality of competitive bidding, claiming that it illegally discriminates against both beneficiaries and providers.

The Amarillo, Texas, law firm of Brown & Fortunato filed the lawsuit — supported by VGM and its Last Chance for Patient Choice, a non-profit formed to fight the bidding system — on behalf of plaintiffs in the Dallas competitive bidding area.

Those listed on the suit include beneficiaries Gregory Hewitt, Jose M. Salas Jr. and Charles W. Bell, and HME companies Oxyonly (dba Procair), M.S.B. and Cardiorespiratory Home Systems. The suit names HHS Secretary Michael Leavitt and acting CMS Administrator Leslie Norwalk as defendants.

“The theories set out in the complaint are that competitive bidding violates due process and equal protection under the U.S. Constitution,” said Jeffrey S. Baird, chairman of Brown & Fortunato's Health Care Group.

According to the 19-page document, the suit argues that beneficiaries in CBAs will receive “a different, lower level of product and/or service quality,” and that small HME businesses will be unable to compete under the program.

“The bidding system is built to reward the characteristics of large DME providers by basing its ultimate decision on the bidder's ability: 1) to make the lowest bid, and 2) to service an entire metropolitan area … the requirement that the DME bidder must be able to cover the entire metropolitan area will clearly exclude smaller outfits,” the suit reads.

“An area of service constrained by an artificial bidding system which rewards bidders who reduce quality of service and product and punishes providers who demand a price sufficient to maintain acceptable and equal service levels … is inherently unjust, unequal and unnecessary.”

The suit also alleges that the bid program creates two classes of beneficiaries.