SAN ANTONIO--The Scooter Store has filed suit against the Department of Health and Human Services, seeking payment for denied Medicare claims that the company says has cost it hundreds of thousands of dollars.

According to the suit, filed Jan. 25 in federal district court, Medicare failed to reimburse The Scooter Store for 101 power wheelchairs and scooters delivered to Medicare beneficiaries from 2000 to 2003. The New Braunfels, Texas-based company also charges HHS with violating the law by demanding documentation to prove a patient's need for the equipment, in addition to a physician-signed Certificate of Medical Necessity (CMN).

In an effort to crack down on fraud, CMS has routinely requested additional records from providers--particularly in the Houston area--to prove medical necessity. The Scooter Store says these requests cause a delay in payment for equipment after delivery and make it more costly and difficult to supply equipment to patients. Furthermore, the company claims the CMN is all that is needed by law.

"The CMN is defined by Congress as a formal document to establish medical necessity," said Stephen Azia, an attorney representing The Scooter Store. "If you're a medical supplier, you have the right to rely on a document completed by the physician to establish medical necessity. We feel the claims were medically necessary, and we think the company complied fully with the rules."

In a similar case in California, a judge issued a ruling last year stating that a properly completed CMN was enough for supplier reimbursement. The case involved Redding, Calif.-based Maximum Comfort, which received a favorable ruling last year from the Eastern District of California.

"We felt the federal judge [in California] followed the law in that case, and that's all we ask," Azia said.

Other DME companies nationwide are facing similar dilemmas, Azia continued. "If a supplier is relying on the professional medical judgment of a physician and delivering equipment to people with real medical needs, and if those claims continue to be denied, you will see more suppliers take their cases to court."

During 2004, The Scooter Store laid off 400 employees and, by the end of the year, announced it would no longer provide power wheelchairs and scooters to Medicare beneficiaries in the Houston area, citing "drastically more restrictive interpretations of coverage guidance than anywhere else in the country."

Although CMS did not comment on the pending litigation, the allowed-charges figures in Harris County (Houston), Texas--the epicenter for the government's Operation Wheeler Dealer crackdown on wheelchair fraud--still show only a small percentage of claims being paid.

According to Steve McAdoo, associate regional administrator for the Division of Medicare Financial Management in CMS' Dallas regional office, in December about $372,000 out of $1.1 million in submitted charges were paid. In November, Harris County providers submitted $3.9 million in K0011 charges, while only $137,000 was paid. Since Wheeler Dealer, all K0011 claims from the county have been "personally and individually approved" by members of a special CMS task force.

McAdoo explained that the Region C DMERC uses "an automated process of requesting medical records" for Harris County power chair claims. "If [the DMERC] doesn't get anything back, those claims are automatically denied," he said.

The CMS official added that the DMERC began sending letters to providers describing the number of claims denied and giving "a person in the medical review area for suppliers to contact if they have specific questions on coverage." McAdoo said the agency hopes this "educational effort will improve the situation."

According to a recent HomeCare magazine survey of mobility providers throughout the country, 52 percent said they have experienced no change in their company's level of power chair claim denials since Operation Wheeler Dealer took effect in the fall of 2003. Another 11 percent indicated that denials had increased at first but then returned to normal levels, while 19 percent said their denials for these products have increased.