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Kenneth R. Marcus represents hospital clients from around the country in historic Medicare litigation settlement

March 20, 2008

Kenneth R. Marcus, senior partner in the health law practice of Honigman Miller Schwartz and Cohn LLP,  has successfully represented a group of hospitals located in Michigan and throughout the United States and played a lead role in achieving what is believed to be the largest single settlement in Medicare payment appeals history.  

The settlement was finalized on March 13, 2008, when the Secretary of Health and Human Services (HHS) and the plaintiff hospitals in the consolidated case In Re Medicare Litigation, (D.DC. 03-0090 (PLF)) entered into a settlement agreement to pay $666 million to more than 660 hospitals for Medicare back payments.  The Medicare payment in dispute related to the Disproportionate Share Hospital (DSH) Adjustment, which rewards hospitals that serve a specified percentage of indigent persons.   

"Various aspects of the DSH Adjustment have been litigated for over 20 years," said Marcus.   "At issue here was whether all Medicaid patients should be counted in the computation, regardless of whether Medicaid payment was made for Medicaid patients with other coverage.  Although the Secretary of HHS ruled in February of 1997 that all Medicaid patients, whether paid or unpaid, must be included in the DSH Adjustment, relief was not granted retroactively," Marcus continued.  "The purpose of this litigation was for the hospitals that serve the neediest patients to benefit from that eleven year old ruling."

Judge Paul J. Friedman, of the U. S. District Court for the District of Columbia, appointed Marcus and four other attorneys to serve as "Plaintiffs' Coordinating Counsel" in March 2003.  The judge assigned Marcus and his colleagues the daunting, unprecedented task of managing several hundred cases represented by 14 law firms and nearly that number of consulting firms.  

The settlement was the culmination of nearly two years of negotiations between representatives of the Secretary of HHS and the plaintiffs.  Negotiations began in April 2006 after the U.S. Supreme Court denied the Secretary's petition for certiorari to review the lead "test case," Baystate Health System v Leavitt. The settlement provided for a global, lump sum payment to settle all but three claims. The plaintiffs, led by Marcus and the other members of the Plaintiffs' Coordinating Counsel, were required to determine the hospital-specific allocation of the settlement, without the involvement of the HHS Secretary.  

"The hospital claims varied," said Marcus.  "The negotiations among the hospitals, their attorneys and their consultants regarding the allocation methodology at times proved to be more challenging than negotiations with the government attorneys regarding the magnitude of the global settlement."  

Marcus worked in tandem with the national consulting firm Quality Reimbursement Services, Inc., headquartered in Santa Ana, Calif., which provides reimbursement consulting services for many of the hospitals in this litigation.  

Marcus, from Honigman's Detroit office, has practiced health law for 24 years, with a concentration in health care provider payment issues.  He holds the degree Masters of Health Services Administration from the University of Michigan School of Public Health. He is vice chairman of the American Health Lawyers Association Regulation Accreditation and Payment Practice Group, a member of the Board of Directors of the Eastern Michigan Chapter of Healthcare Financial Management Association, and serves on the Advisory Board of BNA's Medicare Report.  He is a frequent author and speaker on provider payment topics.