Price

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

SHREVEPORT DIVISION

D & G HOLDINGS, LLC CASE NO. 17-cv-1045

-VS- JUDGE DRELL

ROBERT F. KENNEDY, JR. MAGISTRATE JUDGE HORNSBY

RULING

Before the court are D&G Holdings, LLC’s (D&G) motion for partial summary judgment

(Doc. 146) and the Secretary of the U.S. Department of Health and Human Services Robert F.

Kennedy Jr.’s (“the Secretary”) motion for summary judgment (Doc. 150). In the motion for

partial summary judgment, D&G Holdings contends it is owed interest on a reimbursement

provided by the Secretary for improperly recouped payments. The Secretary seeks dismissal of

this case arguing interest is not owed and all reimbursements owed to D&G have been paid.

For the following reasons, both motions are DENIED.

I, Background

From 1986 until April 2016, D&G was an independent medical laboratory in Pleasant Hill,

Louisiana that provided lab service to residential home-bound, nursing home, and hospice patients.

On October 19, 2011, October 29, 2011, and May 13, 2013, AdvanceMed, a Medicare Zone

Program Integrity Contractor, requested documentation from D&G for the purpose of conducting

a post-payment review of claims. In a letter dated December 19, 2014, AdvanceMed concluded

that D&G did not properly prorate mileage billed to Medicare, and based on a post-payment review

of 99 claims and a statistical analysis and extrapolation of those 99 claims, D&G received an

overpayment of $8,329,967.03.

On December 31, 2014, Novitas, the Medicare Administrative Contractor for Louisiana,

issued a demand letter to D&G ordering that it refund $8,329,967.03 to the Secretary, Recoupment

efforts were initiated in January 2014.

On January 28, 205, D&G submitted a request for redetermination to Novitas arguing the

extrapolation was fraught with errors and did not comply with the minimum requirements

established by the Centers for Medicare and Medicaid Services in the Medicare Program Integrity

Manual. On March 27, 2015, Novitas issued a letter directing that the alleged overpayment amount

be recalculated, and on April 22, 2015, Novitas advised that the overpayment actually totaled

$8,284,323.81, but interest was also owed in the amount of $222,641.21. On July 9, 2014, Novitas

resumed recoupment efforts.

On July 20, 2025, D&G initiated the next step in the appeals process and filed a request for

reconsideration with the Qualified Independent Contractor, C2C Solutions, Inc. Novitas was

notified of the filing, and continued to recoup the alleged overpayments. By mid-July, it had

recouped a total of $111,520.98.

On September 18, 2015, C2C Solutions, Inc. issued a letter to D&G advising D&G “should

receive a revised Medicare Summary Notice of Remittance Advice from Novitas Solutions, Inc.

within 60 days of this letter.”

On October 14, 2015, D&G took yet another step in the appeals process and requested

review by an Administrative Law Judge (“ALJ”). On October 20, 2015, D&G notified Novitas of

the same and requested it stay further recoupment efforts. Thereafter, D&G received a letter from

Novitas dated October 19, 2015 advising that Novitas recalculated the overpayment and

determined the new principal amount was $8,344,116.78, plus $677,923,59 in interest. Novitas

demanded D&G submit payment in the amount of $9,012,040.37 by November 4, 2015.

On March 4, 2016, the Secretary revoked D&G’s billing privileges. The revocation was

based on a finding that D&G submitted Medicare claims for beneficiaries subsequent to the

beneficiaries’ dates of death. D&G did not receive another Medicare payment and ceased doing

business in April 2016.

On May 10, 2016, the Office of Medicare Hearings and Appeals granted D&G’s request

for escalation of it appeal to the Medicare Appeals Council, and on November 14, 2016, the

Medicare Appeals Council ordered the matter remanded to the ALJ “for a timely hearing with

specific direction aimed at clarifying the existing substantive bases for the overpayment and related

issues.” A timely hearing was not conducted by the ALJ, so D&G again appealed to the Medicare

Appeals Council, and it issued a final decision on July 13, 2017 reversing C2C Solution, Inc’s

reconsideration noting the underlying bases for the overpayment were not sufficiently supported

by record evidence.

On August 17, 2017, the Secretary remitted a payment in the amount of $1,828,133.78 to

D&G. The parties now dispute whether this payment constitutes full and final payment and

whether interest is owed this payment and any future payments that might be due.

Il. Summary Judgment Standard

A court “shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R.

Civ. P. 56(a). A dispute of material fact is genuine if evidence is such that a reasonable jury could

return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). We consider “all evidence in the light most favorable to the party resisting the motion.”

Seacor Holdings, Inc, v. Commonwealth Ins, Co., 635 F.3d 680 (5th Cir. 2011) (internal citations

omitted), It is important to note that the standard for summary judgment is twofold: (1) there is no

genuine dispute as to any material fact, and (2) the movant is entitled to judgment as a matter of

law. Id.

The movant has the burden of pointing to evidence proving there is no genuine dispute as

to any material fact, or the absence of evidence supporting the nonmoving party’s case. Liberty

Lobby, 477 U.S. at 250. The burden shifts to the nonmoving party to come forward with evidence

which demonstrates the essential elements of his claim, Id. The nonmoving party must establish

the existence of a genuine dispute of material fact for trial by showing the evidence, when viewed

in the light most favorable to her, is sufficient to enable a reasonable jury to render a verdict in her

favor. Duffy v. Leading Edge Prods., Inc., 44 F.3d 308, 312 (Sth Cir, 1995) (citing Celotex Corp.

vy. Catrett, 477 U.S. 317, 321 (1986)). A party whose claims are challenged by a motion for

summary judgment may not rest on the allegations in the complaint and must articulate specific

factual allegations which meet his burden of proof. Id. “Conclusory allegations unsupported by

concrete and particular facts will not prevent an award of summary judgment.” Duffy, 44 F.2d at

312 (citing Liberty Lobby, 477 U.S. at 247),

When ruling on a motion for summary judgment, it is improper for a court to make a

credibility determination or weigh the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530

U.S. 133, 150 (2000). A court must also view the evidence in the light most favorable to the non-

movant and draw all reasonable inferences in that party’s favor. Clift v. Clift, 210 F.3d 268, 270

(Sth Cir. 2000). Under this standard, a genuine dispute of material fact exists when the evidence

would allow for a reasonable trier of fact to return a verdict for the nonmovant. Renfroe v. Parker,

974 F.3d 594, 599 (Sth Cir. 2020) (citing Austin v. Kroger Tex., L.P., 864 F.3d 326, 328 (Sth Cir.

2017)).

Unlike summary judgment, “{a] partial summary judgment order ... is not a final judgment

but is merely a pre-trial adjudication that certain issues are established for trial of the case.” Streber

v. Hunter, 221 F.3d 701, 737 (5" Cir. 2000). Partial summary judgment, like its more fulsome

counterpart, summary judgment, does serve “to root out, narrow, and focus the issues” argued at

trial. Calpetco 1981 v. Marshall Exp loration, 989 F.2d 1408, 1415 (5" Cir. 1993).

II. Analysis

A. The Secretary’s Motion for Summary Judgment

Although it is the latter filed motion, we first address the Secretary’s motion for summary

judgment in which he contends that not only have reimbursements been paid, but D&G was

overpaid by $107,523.66. The Secretary’s witness, Melissa Gusler, a Business Analyst in the Debt

Recovery Department at Novitas, issued an “Expert Lay Report” in which she opined that “D&G

has been properly reimbursed for the Medicare Appeals Council’s decision, they are not owed

interest, and the 1099s are properly reporting the gross payment [to the Internal Revenue Service],

Therefore, the Medicare prograin does not have any monies due and owing D&G Holdings, LLC.”

(Doc. 150-2).

In response, D&G argues that it was not paid the full amount of the money the defendants

recouped; it is owed interest pursuant to 42 U.S.C, § 1395ddd(f)(2)(B); and the defendants are

liable for damages related to tax overpayments made by D&G to the IRS because of inaccurate

1099s. In support, D&G provides an expert report prepared by R. Christoper Rosenthal,

CPA/ABV/CFF, ASA, AEP who reviewed and analyzed the parties’ financial data pertaining to

the recoupment and repayment. Rosenthal opined that: “Totaling recoupment, interest accrued on

amounts owed to D&G, the offset of the overpayment and interest, and damages resulting from

the income tax overpayment results in total damages of $1,615,381.45.” (Doc, 146-4).

As there is a genuine dispute as to the amount of money owed to D&G, there is no basis

upon which to grant summary judgment.

B. D&G’s Motion for Partial Summary Judgment

In its motion for partial summary judgment, D&G claims that it is owed interest on the

money that the defendants reimbursed on August 17, 2017. The Secretary states that it has not

paid interest as it does not owe interest. D&G argues that by admitting it has not paid interest,

there is no issue of fact, and the only question before the court, whether interest is owed, is a legal

issue which this court can and should decide at this juncture.

The legal issue is whether a statute in the Medicare Integrity Program or a regulation in the

CFR controls this situation. D&G argues that 42 U.S.C. § 1395ddd controls, and the Secretary

argues that the provisions of Section 1395ddd are curtailed by 42 C.F.R. 405.378.

The Medicare Integrity Program provides for “the Secretary [to] promote the integrity of

the Medicare program by entering into contracts in accordance with this section with eligible

entities, or otherwise to carry out the activities described in subsection (b).” 42 U.S.C. §

1395ddd(a). Among the activities set forth in subsection (b) is the “[d]etermination[] as to whether

payment should not be, or should not have been, made under this subchapter by reason of section

1395y(b) of this title, and recovery of payments that should not have been made.” 42 U.S.C, §

1395ddd(b)(3).

Subsection (f) pertains to the recovery of overpayments by the Secretary. 42 U.S.C. §

1395ddd(H(2)(B) provides:

Insofar as the determination on such appeal is against the provider of services or

supplier, interest on the overpayment shall accrue on and after the date of the

original notice of overpayment. Insofar as such determination against the provider

of services or supplier is later reversed, the Secretary shall provide for repayment

of the amount recouped plus interest at the same rate as would apply under the

previous sentence for the period in which the amount was recouped.

Id. It is the latter part of the provision which is at issue here.

D&G contends that this provision clearly establishes that it is owed interest, but the

Secretary argues that whether interest is owed under Section 1395ddd(f)(2)(B) is determined by

the process set forth in 42 C.F.R. § 405.378: “Interest charges on overpayment and underpayments

to providers, suppliers, and other entities.” The Secretary specifically notes Section 405.378(),

entitled “Special rule for provider or supplier overpayments subject to 405.379” which provides:!

If an overpayment determination subject to the limitation on recoupment under §

405.379 is reversed in whole or part by an Administrative Law Judge (ALJ) or at

subsequent administrative or judicial levels of appeal and if funds have been

recouped and retained by the Medicare contractor, interest will be paid to the

provider or supplier as follows:

(1) The applicable rate of interest is that provided in paragraph (d) of this

section.

(2) The interest rate in effect on the date the ALJ, the Medicare Appeals,

Council, the Federal district court or subsequent appellate court issues a

decision reversing the overpayment determination in whole or in part is the

rate used to calculate the interest due the provider or supplier.

(3) Interest will be calculated as follows:

(i) Interest will be paid on the principal amount recouped only.

(ii) Interest will be calculated on simple rather than a compound basis.

(iii) Interest will be calculated in fill 30-day periods and will not be

payable on amounts recouped for any periods of less than 30 days

in which the Medicare contractor has possession of the funds.

(iv) calculating the period in which the amount was recouped, days in

which the ALJ’s adjudication period to conduct a hearing are tolled

under 42 C.F.R. 405.1014 shall not be counted

(v) In calculating the period in which the amount was recouped, days in

which the Medicare Appeals Council’s adjudication period to

conduct a review are tolled under 42 C.F.R. 405.1106 shall not be

counted.

1 42 CFR 405.379 provides that “This section implements section 1893(f)(2)(A) of the Act which limits recoupment

of Medicare overpayments if a provider of services or supplier seeks a reconsideration until a decision is rendered

by a Qualified Independent Contractor (QIC). This section also limits recoupment of Medicare overpayments when

a provider or supplier seeks a redetermination until a redetermination decision is rendered.” Recoupment efforts

were not limited during D&G’s appeal,

(4) If the decision by the ALJ, Medicare Appeals Council, Federal district court

or a subsequent Federal reviewing court, reverses the overpayment

determination, as modified by prior levels of administrative or judicial

review, in part, the Medicare contractor in effectuating the decision may

allocate recouped monies to that part of the overpayment determination

affirmed by the decision. Interest will be paid to the provider or supplier or

recouped amounts that remain after this allocation in accordance with this

paragraph (j) of this section.

The Secretary then points to 42 C.F.R.§ 405.378(g), “Rules applicable to partial payments”

which provides:

If an overpayment is repaid in installments or recouped by withholding from several

payments due the provider or supplier of services —

(1) Each payment or recoupment will be applied first to accrued interest and

then to the principal; and

(2) After each payment or recoupment, interest will accrue on the remaining

unpaid balance.

We agree that the plain reading of 42 U.S.C. § 1395ddd(f)(2)(B) calls for the

reimbursement of all money wrongly recouped by the Secretary whether it was applied to interest

or principal. This is often referred to as 935 interest.? We also agree the Secretary implemented

a tule which directs for the payment of interest only when the recouped payments were applied to

principal. However, what we don’t know is whether D&G’s payments were applied only to

interest payments. In fact, we don’t even know whether D&G owed any interest. D&G argues

(without citing authority) that interest was never due because a debt was never owed, and the

Secretary argues (without proof of the matter) that only interest was recouped.

* Section 405.378 only applies to 405.379 and it “implements [1395ddd] which limits recoupment of Medicare

overpayments if a provider of services or supplier seeks a reconsideration until a decision is rendered by a Qualified

Independent Contractor (QIC),”

} After Section 935 of the Medicare Modernization Act.

To confuse things further, there are rules within rules which the Secretary promulgated.

For example, a rule, found in the “Internet Only Manual,” states that 935 interest is only applicable

to involuntary recoupments. We don’t know whether the payinents made during the time period at

issue were considered voluntary or involuntary recoupments.

Without answers to these and other questions not articulated herein, we cannot say that

interest is owed to D&G. Accordingly, we deny the motion for partial summary judgment.

Il. Conclusion

IT IS HEREBY ORDERED that the motion for partial summary judgment (Doc. 146) is

DENIED. It is further

ORDERED that the motion for summary judgment (Doc, 150) is DENIED

THUS DONE AND SIGNED at Alexandria, Louisiana this LN day of August-2026.

DEE D. DRELL, SENIOR JUDGE~-—.

UNITED STATES DISTRICT COURT □

4 We do not know what the “Internet Only Manual” is or where to obtain a copy of it. Nor do we know how it

applies to this matter,