Akin Gump Brokers $666 Million Medicare Settlement With Federal Government

(Washington, D.C.) – After more than five years of litigation and 22 months of negotiations, the federal government has agreed to pay $666 million to more than 660 hospitals that sued for back payments related to Medicare disproportionate share hospital funds. Akin Gump Strauss Hauer & Feld LLP represented 70 of the hospitals and served as one of four court-appointed counsel in negotiating with the government.

“This is, I believe, the single, largest Medicare reimbursement settlement in the history of the program since it was established in 1965, and we are pleased that the hospitals have finally obtained these long overdue DSH payments,” said John R. Jacob, the lead attorney for Akin Gump.

The settlement involved hospitals nationwide and stemmed from changes to Medicare reimbursement policy made more than 20 years ago. At issue was a controversial reimbursement policy employed by Medicare in the 1990s.

The litigation began in early 2003, when Akin Gump filed multiple cases in the U.S. District Court for the District of Columbia on behalf of 70 hospitals across the country challenging the calculations of their Medicare payment add-ons for treating a disproportionate share of low-income patients (the so-called DSH adjustment). During that time period, nearly 20 other law firms filed more than 200 other cases in district court on the same issue. In March 2003, District Judge Paul Friedman consolidated the cases into a single action, In re Medicare Reimbursement Litigation, Misc. No. 03-90, and appointed John Jacob of Akin Gump as one of four Plaintiffs’ Coordinating Counsel (PCC) responsible for negotiating with the government the management, course of litigation and potential settlement of the consolidated cases. Pursuant to an agreement between the PCC and the government, all of the cases were stayed before the district court, except for the lead case, Baystate Health System v. Thompson, which went on to litigate the core issue common to all of the cases.

The district court ruled in favor of the hospitals in March 2004 and the U.S. Court of Appeals for the District of Columbia Circuit affirmed in July 2005. With the Supreme Court’s denial of the government’s Petition for Certiorari in April 2006, the Department of Justice and the Department of Health and Human Services Office of General Counsel agreed to enter into settlement discussions with the PCC, and did so in late April 2006. Akin Gump spearheaded these negotiations, and nearly two years later, the government agreed to pay 660 hospitals more than $660 million in overdue Medicare DSH payments, thus resolving 257 cases. The Settlement Agreement was executed on March 11, 2008, and the government sent payments to the hospitals during the first week in April.

Founded in 1945, Akin Gump Strauss Hauer & Feld LLP, a leading international law firm, numbers more than 1,000 lawyers and advisors in the United States, Europe and Asia.

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