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U.S. Must Face Georgia’s Claim for $90M Refund

(CN) - Georgia should recover $90 million in Medicaid payments it incorrectly thought it owed the federal government, a federal judge ruled.

While preparing its 2005 financial statement, Georgia inadvertently misclassified more than $45 million as amounts to be credited back to Uncle Sam. A 2006 repeat of the mistake resulted in $90 million in overpayments.

After Georgia discovered the errors in 2008, it reclaimed the $90 million on its next quarterly report. The federal government cited a two-year statute of limitations, however, in rejecting the claim as untimely and later disallowing the adjustment.

Georgia brought a federal complaint in 2013 when its administrative appeal to the Medicaid Board failed.

U.S. District Judge Gladys Kessler in Washington, D.C., on Tuesday found it unfair to let an employee's administrative error benefit the federal government to the tune of $90 million.

"The population of the state of Georgia is roughly 9.8 million, and approximately 1.89 million of those people were enrolled in Medicaid in 2013," the opinion states. "Put in perspective, close to 20 percent of Georgia's population is enrolled in Medicaid. These are the people who will be hurt the most by Georgia's administrative errors and the subsequent crediting of $90 million of Georgia's Medicaid credits to CMS. It is Georgia's poor, elderly, disabled and pregnant populations that will suffer the most should these administrative errors stand uncorrected."

Because the state has no adequate remedies, it may recover the money based on its unjust-enrichment claim, Kessler said.

Although Georgia made a mistake and then failed to reclaim the money sooner, the federal government is not entitled to keep the $90 million, the court found.

Moreover, Georgia's errors resulted partly from its attempt to deal with a problematic Medicaid-processing system, which led it to make unusual advance payments to providers, with the federal government's approval, according to the ruling.

"Georgia's ineptitude in making errors and delay in discovering them is confounding, but does not justify permitting the federal government to keep the $90 million in credits to the detriment of Georgia's 1.89 million Medicaid recipients," Kessler wrote.

Kessler did agree with the board on other factors, saying that its interpretation was not arbitrary and that it correctly concluded that the $90 million claim was long past the two-year deadline.

Georgia also failed to show that the refund relates to downward adjustments of overpayments to medical providers, which would fall within an exception to the two-year limitation, the Feb. 10 opinion states.

Under the Medicaid program, the United States pays a share of states' costs in covering Medicare and Medicaid claims. States must submit quarterly reports showing how they spend the federal grants.

When a state determines that it overpaid a medical provider, it must return the federal share of that overpayment to the Centers for Medicare & Medicaid Services (CMS) within 60 days, regardless of whether the state recovered the overpayment from the provider. The state may reclaim a portion of the refund if it determines that the overpayment was smaller than previously thought.

Georgia experienced significant delays in Medicaid payments to providers after it began using a new claims-processing system in 2003. In response to providers' complaints, Georgia made $2 billion in advance payments to providers between April 2003 and June 2005. When advance payments were not matched with actual claims for service within 60 days, they were treated as overpayments for which Georgia had to refund the federal share of the payments to CMS.

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