A federal judge Friday ruled in favor of the Arkansas Department of Human Services, allowing the agency to cut off Medicaid payments to two companies suspended from the program because their owner has been accused of bribing a former state official.
U.S. District Judge Kristine Baker denied a motion by attorneys for Trinity Behavioral Health Care and Maxus Inc. that asked the judge to extend a restraining order that has allowed them to bill Medicaid for existing patient care provided over the past two weeks.
In a 19-page order issued after 5 p.m., Baker wrote that the two companies had failed to show that the Human Services Department "wrongfully suspended" Medicaid payments without proper authority, due process or concern for harming patients.
"To maintain the integrity of the Medicaid program and the public's trust in these types of government programs, agencies like ADHS must necessarily be able to withhold payments temporarily to providers until credible allegations of fraud are resolved," Baker wrote.
"It is precisely because the patients are in great need that ADHS must protect their interests by ensuring the integrity of their providers," she added.
The judge's order allows the Human Services Department to enforce the terms of the suspension handed down last month based on allegations made by a former agency deputy director, Steven Jones.
Jones admitted in federal court to accepting at least $10,000 in cash bribes or other items of value in exchange for inside information that benefited the owner of two mental-health companies.
The Human Services Department suspended Trinity and Maxus a few days after the agency determined that their owner, Ted Suhl, was the person Jones accused of paying the bribes. Suhl hasn't been charged with any crime and has denied wrongdoing
Late Friday, Human Services Department spokesman Amy Webb said the agency "appreciated" the judge's ruling because it preserves the agency's suspension authority when allegations of fraud surface.
"We want to do everything we can to protect the Medicaid program, and if somebody steps over that line, we want to be able to take action, and we think this supports us doing that," she said.
Charles Banks, who represents Trinity and Maxus, said he was disappointed but understood the judge's ruling.
"We're disappointed. It was a good fight. It was the fight worth having. We had an excellent judge. We just couldn't sustain ourselves on the law, but we're not through," Banks said. "We'll be looking at this order closely and doing all we can for the beneficiaries, these children, the employees and the professionals that work so hard for them."
Before the suspension, Trinity provided inpatient mental-health services to nearly 90 children who were in the Medicaid program. Maxus, which does business as Arkansas Counseling Associates, provided outpatient care to more than 2,700 adults and child program beneficiaries.
Both companies are almost entirely reliant on Medicaid payments for income, and their attorneys have said they will likely go out of business before they have a chance to appeal the suspension to an administrative law judge.
In the meantime, Suhl has allowed about 50 children on Medicaid to continue to receive care at Trinity's inpatient facility in Warm Springs for free. But Banks said Friday that he didn't know how long that would last.
"It's going to have a serious impact," he said of the judge's ruling.
The two companies had urged Baker to stop the suspension while they appealed. On Nov. 7, she issued a temporary restraining order allowing Trinity and Maxus to bill Medicaid for 14 days -- enough time for an administrative appeal hearing that was scheduled for Nov. 14. But the hearing has since been moved to Dec. 15.
In her latest order, Baker wrote that she granted the initial request for a restraining order to allow for consideration of both parties' arguments.
The order came after Baker held an hour-long hearing on the matter Thursday.
During the hearing, Banks argued that the Human Services Department didn't have the authority to suspend the companies. It issued the suspension without due process as part of a "draconian" administrative action that would likely result in the companies going out of business, regardless of whether they won the appeal, he said.
The Human Services Department is irreparably harming the companies, their more than 500 employees and the patients without due process, Banks argued.
"The caregivers are scared. The children are scared. I'm scared. There's a clear and present danger here. This court has the equitable power to put a stop to it," Banks said.
Banks also noted that the agency could allow the suspension to go on indefinitely because federal investigations can sometimes remain open for years without charges being filed.
"We believe, and I firmly believe, that you have the equitable power to right a wrong, and give this process a fair chance without disrupting and hurting," Banks told Baker on Thursday.
In response, Human Services Department chief counsel Mark White dismissed Banks' concerns about the suspension lasting indefinitely, saying that the department is required to check in with the agency conducting the investigation every quarter.
The agency must lift the suspension if it doesn't receive a response or if it is notified that the investigation is closed, he said.
White told the judge that his agency had no choice but to suspend the companies under federal regulations because it had received a "credible allegation of fraud. The agency does not have to conduct its own independent investigation and prove the allegations to make that decision, he noted.
White accused the two companies of "papering" the court with more than 400 pages of filings to obscure the allegations of misconduct against Suhl. He also said the companies' attorneys hadn't provided any specific information showing that a patient had been harmed by the suspension.
"The allegations of harm that the plaintiff have submitted, they are all vague and nonspecific," he said.
White warned that if Baker sided with the companies, she would set a precedent that would allow any company to go to her court and get a restraining order anytime they get suspended from the Medicaid program.
"Every provider will come to this court seeking injunctive relief ... and the federal regulation will in effect be rewritten," White said.
Metro on 11/22/2014