Total Medical Management, Inc. v. United States

Total Medical Management, Inc. (TMM) (defendant), a private healthcare provider, entered into a facilities-sharing contract with Ireland Army Hospital to provide healthcare services to dependents of uniformed military servicemembers (military dependents). After TMM provided healthcare to a military dependent, TMM billed The Associated Group, Ireland Army Hospital’s fiscal intermediary, which processed and paid the claims. The Associated Group approved the terms of TMM’s contract with Ireland Army Hospital on behalf of the federal government (plaintiff). The contract was implemented through the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). Under CHAMPUS payment rules, reimbursement for private healthcare providers was capped at the lower of (1) the billed charge; (2) 80 percent of the average billed rate for the provided service in the relevant locality; or (3) the Medicare Economic Index (MEI) prevailing charge for the provided service. However, TMM’s contract with Ireland Army Hospital stated that TMM would be reimbursed for up to 80 percent of the prevailing charge for the provided service. After the contract was executed, The Associated Group notified TMM that reimbursement would be paid in accordance with CHAMPUS payment regulations. TMM sued the federal government under the Contract Disputes Act (CDA) seeking reimbursement of the difference between what The Associated Group paid TMM under the CHAMPUS rules and what TMM should have been paid under the payment terms in the contract. The trial court granted TMM summary judgment, holding that the payment terms in the contract controlled and that TMM was entitled to reimbursement. The government appealed.