Judges Skewer VA Over Medical Reimbursement Regs

By RJ Vogt | May 19, 2019, 8:02 PM EDT

In a hearing last week over what could become the first ever certified class action at the Court of Appeals for Veterans Claims, a panel of three judges lambasted the U.S. Department of Veterans Affairs for "doing everything it could" to limit emergency medical care reimbursements to veterans.

Judge William S. Greenberg in particular skewered the administration for failing to comply with the Emergency Care Fairness Act, a 2010 law that expanded veteran eligibility for emergency medical care reimbursements at non-VA hospitals.

During a May 14 hearing at the Court of Appeals for Veterans Claims, Judge William S. Greenberg skewered the Veterans Administration for reimbursement regulations that he said don't match the letter of the law. (CAVC)

Two years after the law took effect, the government began denying any reimbursements to veterans if their third-party insurance covered part of the care. But a precedential 2016 court decision struck down that practice by interpreting the law to mean, as Judge Greenberg said Tuesday, "if you go to the emergency room, you're entitled to reimbursement ... no exceptions."

Government counsel Christopher Bader responded that the ECFA actually did have one exception: the 2010 law states that the VA "may not reimburse a veteran ... for any co-payment or similar payment."

When he was VA secretary, Robert Shulkin interpreted the phrase "similar payment" to include reimbursements for coinsurance and deductibles, inserting new regulatory language after the April 2016 ruling known as Staab v. Shulkin.

That change will push "billions of dollars in medical expenses" onto veterans simply because they have health insurance, according to the suit at issue in Thursday's hearing.

As Bader attempted to explain that the VA added coinsurance and deductibles into the "cost-share exclusion" because both are "qualitatively" similar to copayments, Judge Greenberg cut him off and cited the letter of the law.

"[It says] the 'co-payment.' Not this 'co-insurance,'" the judge said angrily, pointing out that coinsurance tends to be much more expensive than copayments. "Congress didn't add co-insurance. 'Co-payment' — $20, not $20,000, or $48,000!

"This is an important concept," he went on, his voice rising. "Congress didn't put that in, you people put it in!"

The vitriol seemed to signal good news for Amanda Wolfe, the Coast Guard veteran who sued the VA in October after it denied reimbursing $2,559 in coinsurance and deductibles incurred by an emergency appendectomy that her third-party insurance mostly covered.

She appealed the denial, but according to her petition, the VA responded by saying it "anticipated an unspecified delay" due to its volume of other appeals. The backlog partly stems from the VA's decision, after the 2016 ruling, to hold hundreds of thousands of reimbursement claims in limbo while drafting the new regulatory language, which took effect in January 2018.

As a result, Wolfe alleges it could be five years — the average wait time for a Board of Veterans Appeals decision — before she gets reimbursed, and that's only if the BVA agrees.

To leapfrog the bureaucratic hurdles, Wolfe's petition seeks a special order called a writ of mandamus from the court to the VA that would strike down the new regulation and open the door to reimbursement for her and "hundreds of thousands" of others.

The class action aspect of the suit is new to the Court of Appeals for Veterans Claims, which has refused to handle collective actions for most of its 30-year history due to a long-held belief that statutory constraints limited it to reviewing appeals on an individual basis. However, the Federal Circuit ruled in 2017 that Congress included class protection for veterans when it created the court.

About a dozen proposed class actions have been filed in the wake of that ruling, but Bart Stichman, executive director and co-founder of the National Legal Services Program and Wolfe's attorney, told Law360 that none have yet been certified to proceed as class rather than individual lawsuits.

He added that Tuesday's hearing suggested Wolfe has a good shot at becoming lead plaintiff of a first-ever class.

"Nothing guarantees we're going to win," he said, "But I think the judges asked good questions and indicated a willingness to entertain a class action in this circumstance. I like our chances."

One such question came from Judge Michael P. Allen when he grilled Bader on why the VA secretary added an exception for reimbursements after the court had clarified the underlying statute.

"So the [VA] took the opportunity to do everything it could to make the payment to veterans as low as possible?" he said. "By adding coinsurance, you will have to agree that simply as a matter of insurance math, the payment to veterans will be dramatically less."

While Bader acknowledged at the hearing that "coinsurance can often represent a very large figure," he maintained that this regulation really only affects reimbursements for a narrow group of people: insured people who needed emergency care for non-service connected conditions at non-VA hospitals.

"But Congress said they get that!" Judge Allen retorted.

Also at issue in Thursday's hearing was the status of veterans like Peter Boerschinger, a 79-year-old sailor who sought reimbursement for $1,340 incurred from an emergency congestive heart failure treatment that Medicare partly covered.

In November, the VA sent him a denial letter, saying that reimbursement required that "the veteran has no coverage under a health plan."

Boerschinger joined Wolfe's suit weeks later, alleging that denying his claim because Medicare covered some of the treatment was a direct violation of the appeals court's 2016 decision.

In March, the VA admitted in a court filing that it had misled tens of thousands of veterans with denial letters similar to Boerschinger's. During Thursday's hearing, VA attorney Debra Bernal said that new letters have been drafted with correct language that takes into the Staab decision into account.

By the end of May, Bernal said the VA will have mailed 42,000 such letters to people like Boerschinger who were wrongly denied due to third-party insurance. She did not have a deadline by which nearly 570,000 corrected letters would be mailed to those who were also told third-party insurance would bar reimbursement but ultimately denied for other reasons.

She added that the new letters should take care of the controversy Boerschinger raised and moot his class claim, but Mark Blocker, a Sidley Austin LLP attorney who argued on behalf of Wolfe and Boerschinger, said certifying the class would enable closer court supervision of the VA.

"There's no deadline on when the letters must be sent by," he pointed out. "We really don't know anything about the efforts being made. We don't know what the new letters look like."

Attorneys for the VA declined to comment after the hearing.

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