Cap Placed on Number of Plaintiffs in Virginia Medicaid Lawsuit

Original story posted on: October 9, 2019

Although capped, more plaintiffs are expected to be included in a second lawsuit.

EDITOR’S NOTE: Virginia Gov. Ralph Northam, along with six managed care organizations (MCOs), have been named as defendants in a federal lawsuit filed on Sept. 25, claiming that more than a dozen of the state’s Medicaid behavioral and mental healthcare providers had their agreements terminated by the MCOs without cause. The following is an update on this exclusive RACmonitor story.

An amended verified complaint is expected to be filed in federal court this week, superseding a skeleton complaint filed on Sept. 25 – the date dozens of Virginia-based behavioral healthcare provider plaintiffs had their Medicaid contracts terminated by half a dozen defendant MCOs.

When attorneys obtain an injunction, they are asking the judge to maintain the status quo. So it was imperative that the filing occurred on Sept. 25, regardless of the incompleteness of the skeleton complaint.

The plaintiffs began as 10 providers. But as the word got out, more and more providers came out of the woodwork. In fact, this past week, we called it: we had to shut down the number that could continue to join. It was a simple balancing act between filing the injunction and obtaining relief for those providers that already joined, versus waiting for additional aggrieved providers.

Interestingly, 31 providers are black. One is Indian-American. The remaining three to five providers are all white-owned. Who would’ve thought that would be the case, in 2019?

We capped the number of providers there. But it is important to understand that we are also representing Medicaid recipients on a pro bono basis, because they bring us the extremely strong argument of freedom of choice of provider and access to care. Federal law dictates that Medicaid recipients can choose any qualified provider. By terminating qualified providers, the MCOs are violating the Medicaid recipients’ freedom of choice of provider.

Another important fact is that this is not a class-action lawsuit. We did not file this lawsuit on behalf of all terminated behavioral healthcare providers in Virginia. It is a “pay to play” scenario. This is important to know, because the federal injunction will help the named plaintiffs, not all similarly situated providers.

Since this past week, more than 10 providers have contacted us to join the lawsuit. Sadly, and for the sake of time and in the best interests of the named plaintiffs, as mentioned, we had to cut off the ability to join. However, all is not for naught. If we are successful, the late-joining providers can join together to bring a second lawsuit. Think how easy it will be to win a second lawsuit if we win the first. It may actually be cheaper for them.

The Medicaid terminations become effective at different times. For example, some are effective Oct. 31, some Nov. 2, others Sept. 25. Theoretically, the providers should be able to provide mental health services up to the day the contract is actually terminated. However, despite this logical and legal understanding, I have had multiple providers complain that the MCOs are already informing Medicaid recipients that the providers are going out of business and that they need to choose new providers from the three to five providers who are still allowed to participate.

We received feedback from a few Medicaid recipients who want to testify on behalf of the recipients losing their providers. We have heard that a Medicaid recipient in need of mental health services called one of the three to five providers for an appointment. There was a nine-month wait.

Once we file the amended complaint, we will serve the defendants. Once the defendants have been served, we will file the motion and brief for the Injunction. Because we filed in the “rocket docket,” (the Eastern District of Virginia), we expect that we will be before a judge assigned within two days of filing the injunction.

Knicole C. Emanuel Esq.

Knicole C. Emanuel is a partner at the Potomac Law Group, PLLC.

For more than 16 years, Ms. Emanuel has maintained a litigation practice, concentrating on Medicare and Medicaid litigation, healthcare regulatory compliance, administrative law, and regulatory law. She understands the intricate Medicare and Medicaid payment system, the unique business of healthcare providers, the overlay of federal and state Medicare and Medicaid rules and regulations, and actions of state agencies that affect the way healthcare entities operate. She has tried over 1,000 administrative cases and has appeared before arbitration panels and in various appellate forums. Knicole is a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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