A Mercedes ambulance company is at risk of shuttering after the federal government suspended Medicare payments while it investigates allegations of fraud.

The Department of Health and Human Services (DHHS) suspended Medicare payments to Acute Care Ambulance Services late last month after receiving what it calls a credible allegation of fraud.

In turn, the company, which primarily conducts scheduled and recurring non-emergency transports of elderly patients, has sued the government, alleging the payment suspension threatens the health and safety of its patients, violates both their and the company’s due process rights, and puts the provider at imminent risk of closing its doors — all amid the ongoing COVID-19 pandemic which is currently crushing healthcare services in the Rio Grande Valley.

“We believe that the government is abusing its discretion in not finding good cause to not impose suspension in these cases,” said Mark S. Kennedy, principal attorney at Kennedy Attorneys and Counselors at Law, the firm representing Acute Care in its suit.

“The government is failing to provide a hearing to allow the providers to challenge the basis for the alleged suspension itself, and that’s a denial of due process in violation of the 5th Amendment to the United States Constitution,” Kennedy said via phone Friday.

Kennedy said his firm is representing four healthcare service providers throughout South Texas — including home health and hospice providers — whose Medicare payments have been suspended at a time when healthcare systems are under the most strain.

According to Acute Care’s suit, which was filed at the McAllen federal courthouse on Aug. 7, the government suspended Medicare payments on July 22. The company received notification of the suspension on July 24, just one day before Hurricane Hanna struck the Valley.

The suspension came after the government received a “credible allegation of fraud” that “the ambulance supplier had failed to describe beneficiaries’ symptoms at the time of transport and that any other means of transportation would be contraindicated,” the suit reads, in part.

“The list of sample claims indicates a single incident where a patient’s transportation claim was denied due to deficient documentation. As a result, all Medicare payments owed to the ambulance company are being withheld pending resolution of the ongoing investigation,” it further reads.

Kennedy said withholding Medicare payments after supplying a single example of alleged fraud is an unusual step for the government to take. Typically, the government provides at least five examples of alleged irregularities in its notice of suspension, the attorney said.

A single example “is something that, in my estimation, does not rise to a proper allegation of fraud,” Kennedy said.

The suspension can last as long as six months, at which point the government can choose to extend it. The payment suspension may be discontinued if “it has been in effect for 18 months and there has not been a resolution of the investigation,” the suit reads.

But there are no outside time limits for how long the suspension can last. It can continue indefinitely if the Department of Justice anticipates filing criminal or civil litigation, the suit reads.

During that time, however, the service provider has no administrative recourse to challenge the suspension or reinstate Medicare payments while the investigation proceeds. And it’s that fact which puts Acute Care at risk of filing for bankruptcy and closing its doors, Kennedy said.

“All we’ve asked is to continue to pay this provider during the COVID-19 outbreak, or if you don’t, you’re going to force this particular ambulance company out of business and you endanger these patients,” Kennedy said.

Medicare will pay an ambulance service provider if the transport was due to an emergency, or if it was a non-emergency that has been deemed medically necessary, such as a patient who has a doctor’s order to be transported via ambulance for dialysis treatment.

Acute Care maintains a census of approximately 50 regular patients who require scheduled or non-emergency transportation. Some 90% of those patients are elderly who are insured by Medicare, according to the lawsuit.

The company employs 43 medics, according to the suit. Valued at approximately $2.1 million, Acute Care generated some $700,000 in revenues in 2019, the suit reads.

Earlier this summer, COVID-19’s straining of the Valley’s healthcare systems became so great that Gov. Greg Abbott deployed a strike team of 10 ambulances to the region to meet the heightened need for medical transport. That only serves to illustrate how dire the need for such services are, and how foolhardy it is for the government to put such a service provider at risk of shutting down, Kennedy said.

It’s especially reckless when federal regulations allow for the Centers for Medicare & Medicaid Services (CMS) to not impose a suspension if “a payment suspension in whole or in part … (would) cause a danger to life or health,” the suit reads.

The government has yet to respond to the suit, though Kennedy estimates service to DHHS Secretary Alex M. Azar, U.S. Attorney General William Barr and United States Attorney Ryan K. Patrick will be finalized within a week.

At that point, the company will move for the court to grant an emergency injunction to halt the suspension.

The lawsuit has landed in the court of U.S. District Judge Micaela Alvarez, who has ordered a scheduling conference for Oct. 14, court records show.