Heckler v. Community Health Services

Under the Medicare program, the United States Government reimburses health care providers for the reasonable cost of services rendered to Medicare beneficiaries. The Secretary of Health and Human Services (Secretary) (defendant) may reopen any reimbursement determination within a three year period and make appropriate adjustments. Community Health Services of Crawford County, Inc. (Community Health) (plaintiff) entered into a contract with the Government to provide home health care services to Medicare beneficiaries. Pursuant to the contract, Community Health received reimbursement through a fiscal intermediary, the Travelers Insurance Cos. (Travelers). Unsure about its eligibility to receive reimbursement for certain expenses, Community Health contacted Travelers for guidance. Although the correct administrative practice was for Travelers to refer such a question to the Department of Health and Human Services (HHS), the Medicare manger at Travelers orally informed Community Health that it was eligible for the reimbursement without making the referral. After Travelers informed Community Health that the expenses were reimbursable, the company asked for and obtained reimbursement. After subsequently contacting HHS about the expenses, Travelers notified Community Health that the expenses in question were not reimbursable. Travelers then determined that the government had overpaid the company $71,480 over the last three years, and made a formal demand for repayment. Community Health filed suit and obtained a temporary injunction against Travelers and the Secretary. Administrative review confirmed that Community Health should not have been reimbursed for the expenses. After Community Health sued HHS, the district court affirmed the administrative decision. Community Health appealed, and the appellate court reversed. The case was further appealed to the United States Supreme Court.