PHA Negotiates Successful Client Settlement Against Department of Veterans Affairs


McLean, Virginia. Scott Honiberg, President and Founder of Potomac Health Associates, Inc. (PHA), reports that his company negotiated a successful settlement on behalf of his client, Universal Health Services (UHS), in litigation against the Department of Veterans Affairs (VA).

PHA was first retained in 2008 by South Texas Health System (STHS), a division of UHS, to advise it in conjunction with preparation and negotiation of a competitive proposal to provide hospital and emergency room services to veterans in South Texas. The proposal resulted in the award of a five-year contract for UHS valued at approximately $100 million. Shortly after award, STHS began to experience underpayments for services provided under the contract. PHA initially filed claims with the VA under the Contract Disputes Act for underpayments on services rendered in 2009 and 2010. After the claims were denied, PHA initiated an appeal before the Civilian Board of Contract Appeals (CBCA). The case was handled by Scott Honiberg as the expert consultant/subject matter expert, and Jeff Weinstein, Of Counsel to PHA and Managing Director of The Weinstein Law Group. STHS alleged that VA did not reimburse it according to the terms of the contract, which called for VA to pay STHS in accordance with official Medicare reimbursement policy, subject to certain adjustments. One category of underpayments were those associated with admissions specifically for inpatient rehabilitation. A key issue before the Board involved whether STHS was entitled to be paid Case Management Groups (CMGs) for admissions to its Medicare-certified Inpatient Rehabilitation Facility (IRF), rather than Diagnostic Related Groups (DRGs). A second general category of underpayments were those attributable to errors from the use of VA’s internal claims processing system, the Fee Based Claims System (FBCS). While initially agreeing to Alternative Dispute Resolution, the VA ultimately rejected the judge’s belief that STHS would prevail if the case proceeded to formal litigation. The case proceeded to formal litigation in February of 2013. In October of 2014, the Board ruled in favor of STHS’s interpretation of the contract (CBCA 2774, 2775), but dismissed a portion of the appeal, and also ruled that additional documentation was needed in order to calculate damages. PHA successfully re-introduced the portion of the appeal that was dismissed and submitted hundreds of pages of damages calculations. VA initially rejected STHS’s calculations, claiming that it could not locate original hospital and medical claims submitted years earlier. After STHS filed a Motion for Summary Relief (MSR) requesting that the judge decide the amount of damages, VA made an informal settlement offer, which STHS rejected as unacceptable. Just days before the VA was to respond formally to STHS’s MSR, the VA made a second unexpected settlement offer, which STHS accepted in September of 2015. PHA continues to represent STHS on several other matters related to this contract, including a second appeal before the CBCA.

About South Texas Health System




South Texas Health System is a network of six acute care hospitals and one behavioral health hospital that together provide care for patients throughout South Texas. The hospitals are accredited by The Joint Commission and offer a comprehensive range of healthcare services including cardiovascular, maternity and women’s health, neuroscience, emergency and surgical care, along with specialty programs in stroke, chest pain, asthma, pediatrics, diabetes, wound care, bariatrics and rehabilitation.





About Potomac Health Associates, Inc.
Founded by Scott Honiberg in 1992, Potomac Health Associates, Inc. specializes in federal healthcare contracting, business development and market research. PHA provides its clients with services that encompass the full spectrum of federal procurement, including policy development, opportunity identification, proposal preparation, development and negotiation, handling protests against awards with the agency or with the Government Accountability Office (GAO), and dispute resolution. Since the firm’s inception, its clients have been awarded in excess of $4.0 billion in competitive and con-competitive awards from various federal agencies, and in excess of $500 million from the VA alone.


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