Health Law Daily Wrap Up, HOSPICE—D. Del.: Hospice claim denial remanded to ALJ in absence of explanation, (Aug 4, 2025)

By Leah S. Poniatowski, J.D.

The ALJ’s decision upholding rejection was too sparse to be adequate under applicable law.

A hospice provider that was denied Medicare reimbursement for two patients was granted remand to the administrative law judge (ALJ) because the ALJ’s decision was without any reasoned discussion, which impaired review and suggested that the ALJ had used her lay assessment of the medical record, the federal district court in Delaware ruled (Seasons Hospice & Palliative Care of Delaware, LLC v. Kennedy, No. 24-175-GBW-LDH (D. Del. July 31, 2025)).

Background. The hospice provider had been reimbursed for services it provided in 2017 through 2020 by the relevant Medicare administrative contractor (MAC). However, a supplemental medical review contractor (SMRC) reviewed the payments and determined that the provider was overpaid by almost $500,000 for claims, including the care provided to two patients. The provider appealed the decision to seek reconsideration with the MAC and the qualified independent contractor (QIC).

The MAC upheld the decision, agreeing that the record did not show there was enough clinical evidence that the two patients were in terminal decline. The QIC affirmed the MAC’s determination, similarly, concluding that the record did not support the patient’s terminal prognosis. The provider proceeded to the next administrative level, seeking de novo review by an ALJ.

The ALJ held a hearing at which a medical expert testified on behalf of the provider. The ALJ issued a decision with minimal detail, affirming the denial of services for the two patients. The ALJ’s analysis was three sentences, stating that the “record does not include clinical support for the [b]eneficiary’s terminal status, nor a brief narrative that supports a determination of terminal illness.” The second sentence was similarly sparse, stating “[t]he clinical factors documented (weight loss and other measurements of declines) failed to meet the standard set by the [local coverage determination].” The final sentence of the analysis states “[t]he hospice services provided to the [b]eneficiary were not medically reasonable and necessary and are not covered by Medicare.” The same text was repeated for analysis of the second patient.

Insufficient analysis. The court agreed with the provider that the ALJ’s lack of an explanation of her reasoning in the decision was legally insufficient. The court found that the ALJ relied too heavily on the QIC’s decision to meet a de novo review standard. Additionally, the three sentences comprising the explanation of her decision only impliedly reject the expert’s testimony. The court explained that the lack of any reasoned discussion impaired judicial review. The court was not persuaded by HHS’s argument that the ALJ clearly considered and rejected evidence. Because there was no real discussion or analysis, the court held that the ALJ’s decision was not supported by substantial evidence.

In light of the lack of reasoning in the decision, the court stated that it was required to conclude that the ALJ substituted her lay assessment of the patients’ medical record against controlling precedent. Although the court agreed that the ALJ’s decision was not based on substantial evidence, instead of reversing the claim denials as sought by the provider, the court recommended remanding the matter to the ALJ for review consistent with the present analysis.

The case is No. 24-175-GBW-LDH.

Judge: Hatcher, L.

Attorneys: John Anderson Sensing (Potter Anderson & Corroon, LLP) for Seasons Hospice & Palliative Care of Delaware, LLC. William Edward Larosa, U.S. Attorneys' Offices, for Xavier Becerra.

Companies: Seasons Hospice & Palliative Care of Delaware, LLC

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