Government Seeks Dismissal of Competitive Bidding Lawsuit; VGM Says No. 2 on the Way

DALLAS–In a move described by a VGM Group executive as expected
but discouraging, the government has filed a motion to dismiss a
lawsuit that challenges the constitutionality of competitive
bidding. But the Waterloo, Iowa-based buying group says a second
suit is on the way.

The first lawsuit, filed in June on behalf of three Dallas-area
beneficiaries and three small HME companies, argues that
competitive bidding violates due process and equal protection under
the U.S. Constitution. The 19-page document points out that
beneficiaries in competitive bidding areas will receive “a
different, lower level of product and/or service quality,” and that
small HME businesses will be unable to compete under the program.
(See HomeCare Monday, June 18.)

The government’s motion, filed Sept. 12, alleges three
jurisdictional grounds for dismissal: standing, ripeness and
statutory preclusion of review, according to Amarillo, Texas-based
Brown & Fortunato. The law firm filed the suit with support
from VGM’s Last Chance for Patient Choice, a non-profit formed to
fight competitive bidding.

“The standing argument focuses on the idea that the plaintiffs’
injuries are merely speculative,” attorney Jeff Baird, chairman of
Brown & Fortunato’s health care group, explained in a
statement. “The ripeness argument is similar to the standing
argument in that it argues that the plaintiffs’ case is not ripe
because bids are yet to be awarded (or denied), so there is nothing
for the court to adjudicate. Third, the government argues that the
provision of [the Medicare Modernization Act] that bars
‘administrative and judicial review’ precludes the lawsuit.”

Jim Walsh, president and general counsel for VGM, said the
motion to dismiss the suit was not a surprise. “It was expected,
but it is always discouraging to see your own government admit that
it doesn’t have to be fair,” he said.

Walsh said the government was trying to short-circuit the
process. “The motion basically is asking the court to peremptorily
dismiss the suit because the government has the right to
discriminate if it wants to in dealing out Medicare benefits,”
Walsh said. “Our suit asks that the court find it is illegal to
deny full benefits via full reimbursement to some beneficiaries in
some arbitrarily selected locations.”

In his statement, Baird said that a response to the motion would
be filed. “If the court denies the motion, then the plaintiffs will
likely request a preliminary injunction hearing, in which the
plaintiffs will ask the court to enjoin competitive bidding until a
final judgment is rendered at a subsequent trial.”

Walsh said Last Chance for Patient Choice, financed primarily by
VGM member contributions, would continue to resist the government’s
motion. “Depending on the ruling, either party could appeal the
matter to a higher court,” he said. “Time will tell, but our
position has always been that this is just one tool that we are
[using] to convince someone that this competitive acquisition
system is an unfair abomination that will decimate fair
competition, quality of care and access to care in the HME
area.”

It isn’t the last of the lawsuits, either. Walsh said Last
Chance is assisting with the filing of another lawsuit in
Cleveland, Ohio, that also challenges the constitutionality of
competitive bidding. That suit, which will be handled by a
Cleveland law firm, could be filed as early as this week, he
said.