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Senior Life Enrichment Inc. v. Shalala

April 29, 1998


The opinion of the court was delivered by: Thomas F. Hogan, United States District Judge.

Defendants' Motion for Summary Judgment granted and case dismissed without prejudice.


Pending before the Court is Defendants' Motion for Summary Judgment. After considering the briefs and materials submitted by the parties, the Court will grant Defendants' motion, and will dismiss the case without prejudice.


This case concerns Plaintiff Senior Life Enrichment, Inc. ("Senior Life"), a Medicare provider who furnishes psychotherapy services to Medicare beneficiaries under Part B of the Medicare program; Senior Life submits payment for such services to Connecticut General Life Insurance Company ("CIGNA"). In 1993, the Program Integrity Unit of CIGNA noticed that Senior Life billed group psychotherapy services at a rate that was significantly higher than the national average and consequently, began investigating Senior Life for suspected fraud and abuse of the Medicare program.

After conducting a three-year investigation, CIGNA notified Senior Life that, pursuant to 42 C.F.R. sections 405.370 and 405.371(b), all payments to Senior Life would be suspended as of August 27, 1996. On September 12, 1996, CIGNA referred the Senior Life investigation to the Office of the Inspector General for the Department of Health and Human Services ("HHS").

On October 23, 1996, the parties reached a settlement agreement whereby Senior Life agreed to post a $250,000 bond in exchange for CIGNA lifting the payment suspension. Pursuant to the October 23, 1996 settlement agreement, a CIGNA representative, Dr. Price, undertook a comprehensive review of the 2,000 to 3,000 claims submitted by Senior Life from August 23, 1996 to October 23, 1996. Dr. Price also attended a group therapy session conducted by Senior Life at a nursing home in North Carolina.

As the result of this review, Dr. Price concluded that the group psychotherapy services rendered by Senior Life did not meet Medicare's coverage criteria, and that Senior Life was routinely inappropriately billing the Medicare Program for these services. Dr. Price drafted a letter dated December 20, 1996 to inform Senior Life that the group psychotherapy services were not covered by Medicare and that Senior Life could not bill for these services.

Senior Life now claims that its business has been closed as a direct result of the December 20, 1996 letter from Dr. Price. Plaintiff asserts that the services that were denied under the December 20, 1996 letter were "substantially identical" to those that were performed, billed, audited, and approved by Defendants as appropriate under the Medicare Act. Plaintiff alleges that HHS violated Plaintiff's Fifth and Fourteenth Amendment rights and breached the Administrative Procedures Act by "arbitrarily, capriciously, and unreasonably" denying reimbursement. Moreover, Plaintiff states that HHS breached the October 23, 1996 agreement and violated the Paperwork Reduction Act of 1995.

In September 1996, Plaintiff moved for a Temporary Restraining Order and a Preliminary Injunction. The Court denied both of those motions on January 27, 1997 and February 11, 1997, respectively. On June 19, 1997 the Court also declared that the Paperwork Reduction Act is not applicable to this case.

The Summary Judgment Standard

In order to withstand a motion for summary judgment, the opposing party must set forth specific facts showing that there is a genuine issue of material fact in dispute. Fed. R. Civ. P. 56(e). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1968). In the absence of such facts, "the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

In opposing a motion for summary judgment, a party is not entitled to rely on the allegations of its complaint. Rule 56 provides that "when a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or otherwise as provided in this rule, ...

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