As a lawyer who has helped dozens of providers with audits, at some point in the appeals process every client asks me: “can’t we just sue the auditor?” Even though auditors sometimes use onerous tactics, suing them is rarely the prudent option. First and foremost, litigation against anyone, especially government contractors, is complex, time-consuming and expensive. Second, issues of law are often more important than issues of fact. Third, a bad lawsuit can establish bad legal precedent.
In order to prevent poor outcomes that will affect future lawsuits, it is important to understand why suing a government contractor is so complicated and strategic. This installment addresses three of the most common jurisdictional defenses that government contractors contend when sued.
Real Party in Interest: In any litigation involving the Medicare program, a government contractor will most likely argue that CMS is the real party in interest (42 C.F.R. § 421.5(b)). This regulation has been upheld by numerous cases around the country; however, it is fact specific.
Sovereign Immunity: In addition to the “real party in interest” defense, government contractors commonly assert sovereign immunity as a defense when faced with lawsuits by providers. One of the leading cases on this issue is Peterson v. Weinberger, 508 F.2d 45 (5th Cir. 1975). In that case, which dealt with Medicare overpayments and false claims, the court stated: “[w]e need not tarry long with respect to the asserted tort liability and the indemnity of the corporate defendants. They are Medicare fiscal intermediaries who act at the sole direction of the Secretary of Health, Education, and Welfare pursuant to 42 U.S.C. § 1395hh and § 1395u… Under the doctrine of sovereign immunity, the district court lacked jurisdiction over all these defendants, both governmental and private as agents of the Government.”