Court says state owed feds $239.5 million

State officials confirmed Thursday they will ask an appellate court to overturn a federal judge’s order that says Louisiana owed the federal government $239.5 million for Medicaid overpayments between 1996 and 2007.

Officials with the Louisiana Department of Health and Hospitals contend in court filings that the Centers for Medicare and Medicaid Services should have forgiven the debt. State officials said Thursday they repaid the $239.5 million a year ago, but want it back with interest.

Baton Rouge attorneys Douglas L. Cade and Kimberly L. Humbles, representing DHH, noted that Hurricane Katrina caused the permanent shutdown in 2005 of one of two state hospitals at the Medical Center of Louisiana at New Orleans. Cade and Humbles said that shutdown caused a tremendous financial loss at the medical center, which they said had provided nearly 90 percent of health care services to the area’s uninsured patients in the years before Katrina.

Assistant U.S. Attorney General Tony West and U.S. Attorney Donald J. Cazayoux Jr., of Baton Rouge, countered that DHH “had been on notice for nearly a decade that (several state) hospitals were being overpaid.”

As for the shutdown of one of the state hospitals in New Orleans, the federal attorneys argued that state agencies receiving Medicaid funding must demonstrate their overpayments are unrecoverable.

Without that demonstration, West and Cazayoux argued, the New Orleans medical center’s debts cannot be written off as “uncollectable.”

Chief U.S. District Judge Brian A. Jackson, of Baton Rouge, agreed with the federal attorneys’ position last month.

“Louisiana would have the court believe that the federal government would agree to a plan that allows a state to claim additional funding if it is underpaid, yet pocket excess funds when overpaid,” Jackson wrote.

Jackson added that federal officials adopted limits on Medicaid payments to individual hospitals years ago. He said those limits were established “to combat the practices of states making (Medicaid) payments to state hospitals in excess of their actual costs, with the states later using the additional funds for other purposes.”

The judge granted the U.S. Department of Health and Human Services a summary judgment against Louisiana. The Centers for Medicare and Medicaid Services are agencies within Health and Human Services.

DHH attorneys told Jackson on Tuesday that they will ask the 5th U.S. Circuit Court of Appeals to overturn his decision.

And DHH Undersecretary Jerry Phillips said Thursday state officials remain committed to that plan.

Phillips said the state has nearly two months to send its appeal to the 5th Circuit in New Orleans.

“We still maintain that we are correct in our interpretation of the state plan,” Phillips said, “and we are going to exercise our due process rights to the fullest extent. We believe our case has merit.”

Phillips said the $239.5 million judgment was paid off by the state last spring. The state is trying to recover the funds, plus interest on the money, he explained.

DHH has argued that Medicaid expressly approved the state’s policy.