7 Investigates: VA’s promise to reimburse veterans billions for improper medical bills may not be kept

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ST. CLOUD, Minn. (WSAW) – More than seven months after Veterans Affairs Secretary David Shulkin promised to reimburse $2 billion of veteran medical bills, including more than 5,000 Wisconsin veterans’ claims, the Minnesota lawyer behind the national lawsuit says she’s still not sure that promise will be kept.

“I’m a little troubled by the fact they’re now going to review all of these claims in light of what should’ve been the right criteria the first time around,” St. Cloud, Minn. attorney Jacqueline Schuh said. “They should’ve reviewed them properly then issued proper determinations.”

In June, VA Secretary Shulkin testified in front of congress, saying 370,000 claims were going to be reimbursed at a total cost of $2 billion. The House Veterans Affairs Committee spokeswomen says as of Jan. 10, 2018 VA leaders told the committee 1,005,479 claims are actually pending.

VA spokesperson Randal Noller told 7 Investigates the agency only anticipated reimbursing between $165 million-$298 million over the next five calendar years, not the $2 billion Secretary Shulkin suggested. It appears the reimbursement estimate reflects the VA’s intent to only reimburse claims filed after April 8, 2016, when an appeals court ruled in favor of Suhuh’s client, instead of Feb 1, 2010 when the Veterans Emergency Care Fairness Act of 2009 was signed into law.

“The cost estimate for this project was adjusted as VA developed the payment methodology for the Interim Final Rule and applied it to the anticipated volume of claims,” Noller said. “At this time, VA does not anticipate requesting additional funding to pay these claims.”

Schuh, who is also a veteran, has represented 85 year old Air Force veteran Richard Staab for free for since 2011. In 2010, the then 77 year old suffered a heart attack followed by a stoke. He was dying. Emergency medical workers rushed him to the closet hospital to his home, St. Cloud Hospital. The Korean War veteran needed open-heart surgery to survive. But St. Cloud Hospital is not a VA hospital.

When Staab asked the VA to pay the bill, they told him and Schuh they did not view his claim as an emergency.

"Has a heart attack followed by a stroke. He's not communicative for six months. And for the VA to call that non-emergent? That's just a ridiculous argument when you look at those facts,” Schuh said.

Staab’s years of appeals show the VA repeatedly citing an internal rule to deny emergency treatment reimbursement or payment because the veteran had “other coverage.” Since Medicare had already paid part of his bill, the VA said they would not pay any of his remaining $48,000 balance.

"I don't want to say ruin. Because veterans are hard to ruin. They have a spirit. And they've lived a lot to go through a lot,” Schuh said soberly. “It took all of his money. So he was living literally paycheck to paycheck and had no cushion to fall back on."

By the next appeal, records show the VA had a new reason for denial. They said Staab had not called them within 72 hours about where to go for emergency care they would pay for.

"And the next time around we went back and said no,” Schuh said. “He was unable to communicate for six months. He couldn't talk. He couldn't write. He couldn't do any of those things to coordinate that care. And so the next time around was we have this internal rule. And so that's the problem."

Denial after denial was followed by appeal after appeal. Until, as 7 investigates was first to report in 2016, the US Court of Appeals for Veterans Claims sided with Staab. Saying the rule the VA had been citing as a reason not to pay violated the Veterans Emergency Care Fairness Act of 2009, which clarified that congress wanted veterans’ emergency treatment reimbursement expanded to non-VA facilities.

The federal law instructs the VA secretary to cover emergency medical bills for which veterans are "personally liable." But the VA appealed again.

"He's losing some of his health over the time,” Schuh recalled. “And like him I wonder is he actually going to live to see the payment."

But then, last year, six years of disappointment turned into a summer surprise.

"I have decided to voluntarily withdraw the appeal to the Staab case,” Shulkin testified before the Senate Veterans Affairs Committee in June.

"Elated,” Schuh remember about the day. “We were jumping up and down in our office here. And, of course, when we called the client. We were just elated by the decision."

Elated not just for Staab, but because the VA estimates the new emergency medical payment rule, named after Staab, means 217,000 veterans including 5442 in Wisconsin, with a total of 370,000 claims nationwide, should be reimbursed for their emergent care.

But all the excitement quickly turned into more heartache, as it became clear Staab and the hundreds of thousands of other veterans’ cases would not be closed quickly. The bureaucratic process meant the Staab rule Sec. Shulkin promised was coming soon, was not actually published until Jan. 9, 2018, nearly seven months after the hearing.And with the public now allowed to comment on the rule through March 12, 2018 it’s unclear what the final version will look like.

"Now that we've gotten through the rule making, we can start moving forward with paying those bills,” Sec. Shulkin said during a January interview. “And we're resubmitting those bills. And veterans will get notified. But first we're going to the providers that the money is owed to. And so there's a process that's going to happen so that we can resolve all these bills."

By going to the hospitals first, the secretary says that will more quickly relieve the burden for the veteran who still owes money to the facility where they were treated. After that, Shulkin said veterans will be notified, and will not have to complete any reimbursement paperwork on their own.

"We're trying to take the veteran out of the middle of this,” Shulkin said. “That's what we're trying to do. We're trying to resolve this. This has been many years that this has been delayed. And my administration has said that we're not going to put the veteran in the middle anymore."

In the past, once a veteran died, their benefit died with them and their husbands or wives could be left to handle unpaid bills. But in Noller’s statement, there appears to be a change in how VA policy will now work.

“If a Veteran claimant passes away before VA adjudicates his or her claim and confirms eligibility for reimbursement, VA may pay the Veteran’s estate, if requested,” Noller said. “The estate would then distribute the funds in accordance with the Veteran’s will or state law. In addition, VA also may be able to reimburse any successor, dependents, or survivors if they paid for the emergency treatment, or if it was clear under applicable state law that they were the lawful heirs.”

“I am shocked too, that they claim the estate may make a claim. Of course, that assumes the estate is aware of the claim, which is a huge responsibility. But that is a huge substantive change,” Schuh responded.

7 Investigates asked, but the VA could not answer how many veterans have died, waiting for refunds.

"We're talking about a bunch of veterans that are older,” Schuh said. “And they're already at risk in those ages where a common cold or the flu can take them. Or one fall. And their health declines. Or in my client’s case, a stroke."

16 days after Shulkin's June testimony, Staab survived another stoke. Despite the secretary’s statement, the VA is again refusing to pay Staab's emergency room bill. On Feb. 9, 2018, Schuh added another appeal for Stabb, who was too sick to comment for this story.

"Is he going to get his review and reimbursement this month? Next month? Two years from now? Will he be around again? He's not going to be around forever. Nor are a lot of other veterans," Schuh said, with frustration in her voice.

The interim Staab rule was published Jan. 9, 2018. 7 Investigates conducted our interview with Schuh on Jan 19, 2018. But it was not until Jan. 24, 2018 when 7 Investigates discovered the Stabb rule had been published, only after submitting a freedom of information request to the VA. The VA did not inform Schuh or Stabb the rule had been printed. 7 Investigates first asked the VA for comment on Jan. 25, 2018 and was provided a detailed response on Feb. 12, 2018.

Because the VA is no longer fighting the appeal court’s April 8, 2016 decision in favor of Staab, if he survives, Schuh expects he will eventually receive his reimbursement. But that does not apply to all veterans who filed a claim for their emergency services.

Both Sen. Tammy Baldwin, D-WI, and the House Veterans Affairs Committee spokeswoman say any other veteran who had an improper medical bill between Feb. 1, 2010 when the Veterans Emergency Care Fairness Act of 2009 was signed into law, and April 7, 2016 is considered void. That’s because the VA considers the April 8, 2016 appeals court ruling date as the date to start reimbursement.

“My reaction is that it’s not fair,” Baldwin said. “And that’s not what we understood from the secretary when he announced that they weren’t going to appeal the Staab decision. And when they estimated the initial amount of money that it would cost to settle unsettled disputes and claims.”

The Staab rule’s public comment period ends March 12, 2018. On Friday, Senator Baldwin joined a bipartisan group of senators who have signed a letter, which has been included in those comments. It puts pressure on the VA to make the final Staab rule effective as of Feb. 1, 2010.

“I believe at this point it’s still possible to alter the rule that the VA put on January 9th. To make it retroactive. To essentially to say so in the rule,” Baldwin said. “I am joining a bipartisan group of senators this week to make it clear to the secretary, and as importantly Mr. (Mick) Mulvaney, the head of OMB (Office of Budget and Management) which has significant influence over the final rule as it’s going through his shop. And we’re asking for it to be applied retroactively.”

If the VA fails to implement the lawmakers comment, Baldwin says senators are prepared to introduce legislation forcing the VA to make the rule’s effective date Feb. 1, 2010.

“Sen. Johnson supports the VA’s decision to pay for emergency treatment at non-VA facilities, and also supported of the 2014 VA Choice Act and its extension, aimed at improving and expanding veterans’ access to care,” a Johnson, R-WI, spokesman said to 7 Investigates in a statement. “Our staff has spoken with the VA and pressed them to more aggressively promote their new regulation that will help more veterans get the care they need at a convenient medical provider.”

“It’s no secret the VA still has problems,” Rep. Sean Duffy said in a statement to 7 Investigates. “That’s why I have fought for and continue to fight for reforms at the VA like improving and extending the VA Choice Program, providing high-quality wheelchair equipment to Veterans, extending grants to homeless veteran shelters in Wisconsin, revamping the VA’s electronic health records systems, hiring more hearing aid specialists to decrease VA wait times, and honoring the memory of Tomah VA Dr. Chris Kirkpatrick by increasing protections for VA whistleblowers.”

Duffy spokesperson Mark Bednar tells 7 Investigates Duffy has voted in favor of more than a dozen bills in 2017 the congressman feels will improve VA care, coordination, and reimbursement.

Complete answers to 7 Investigates from VA spokesperson Randal Noller:

1. The amended rule’s effective date was January 9. However, public comments are being taken through March 12. Can you explain how the rule can be in effect if public comments are still being taken? And what will be done with those comments after March 12. (Staab’s lawyer says the VA is effectively buying more time under this scenario not to have to make the payments.)

As stated in VA’s Interim Final Rule 2900-AQ08, VA will collect comments until March 12, 2018, consider those comments, and make changes, if and as appropriate, when it publishes the Final Rule. Having issued this Rule as an Interim Final Rule effective upon publication, VA was able to begin processing claims immediately.

2. Since it is our understanding Congress must still allocate an estimated $2 billion to fund previously denied claims, how is the VA moving forward with reimbursements? Or has the funding already been allocated?

The cost estimate for this project was adjusted as VA developed the payment methodology for the Interim Final Rule and applied it to the anticipated volume of claims.

The total cost for this rulemaking is now anticipated to be between approximately $165M - $298M over the course of the next five calendar years. At this time, VA does not anticipate requesting additional funding to pay these claims.

3. The VA’s press release says it is applying the amended regulations to claims pending since April 18, 2016. However some claims, such as Mr. Staab’s, date back as far as 2010. Are claims from 2010 to April 2016 void? Or does the April 18, 2016 date have a different significance.

We are continuing to review the legal authorities that govern how a liberalizing change in the law is applied to claims that previously were denied and for which the appeals period has passed. We will provide further guidance regarding the applicability of the new regulations to such claims once that review is completed.

4. If a veteran’s claim was denied between 2010 and the secretary’s statement on June 22, 2017 – is it now up to the veteran to resubmit their claim. Or will previously denied claims automatically be reimbursed? Staab’s lawyer’s initial read is this means the veteran must 1. Know about the VA’s rule change – and she’s worried there’s been no outreach 2. Submit all the correct paperwork on their own and 3. Cite the Staab rule for the appeal not to be considered void on arrival.

We are continuing to review the legal authorities that govern how a liberalizing change in the law is applied to claims that previously were denied and for which the appeals period has passed. We will provide further guidance regarding the applicability of the new regulations once that review is completed. For all other claims affected by the decision, VA is reviewing the records to determine if additional supporting evidence is needed. When additional information is needed, VA will contact the claimant.

5. Of the 370,000 estimated claims to be reimbursed, does data exist for veterans who have died since their claims were denied? If so – how many veterans whose claims were denied died during between 2010 and the time the rule went into effect on Jan. 09, 2018.

VA is unable to determine how many Veterans with denied claims since 2010 have died.

6. In 2016, the VA said 7,000+ Wisconsin veterans would be impacted if the Staab rule was approved. Out of the current estimated 370,000 veterans, is the correct number of Wisconsin vets still approx. 7,000? Do you have the exact number? The significance here is the benefit dies if the improperly billed veteran dies.

As of February 9, 2018, the total number of unique Veterans with claims that were suspended or new claims is approximately 217,000. The number of unique Veterans in Wisconsin with such claims is 5,442. If a Veteran claimant passes away before VA adjudicates his or her claim and confirms eligibility for reimbursement, VA may pay the Veteran’s estate, if requested. The estate would then distribute the funds in accordance with the Veteran’s will or state law. In addition, VA also may be able to reimburse any successor, dependents, or survivors if they paid for the emergency treatment, or if it was clear under applicable state law that they were the lawful heirs.

7. Does the VA have enough staff to be able to complete reimbursements in a quick manor? And what timeline should veterans expect to receive a reimbursement?

Yes, the staff are in place to process reimbursements for claims that were suspended as a result of this ruling and new claims. For a majority of these claims, some additional information will have to be submitted to VA by the community providers or Veteran claimants before VA can process the claims. An initial request for additional information will be sent to affected claimants. Claims will be processed as the supporting information is received.

8. Moving forward, does the amended emergency treatment reimbursement rule only apply if the VA is the secondary payer, such as the veteran having Medicare and VA Care? Or can the veteran who only has VA care as their sole provider now go to any ER if they believe they need emergency care -- without prior VA approval and coordination of care. I’m referencing the part of the rule that says, “contacting VA is not required for VA to adjudicate and pay emergency care claims.” In other words, are all veterans now covered at any emergency department in the country without prior approval, even if they only have VA Care?

Section 1725 of title 38, United States Code, establishes specific administrative and clinical eligibility criteria that must be met before VA may reimburse or pay a claimant for the reasonable costs of a Veteran’s unauthorized non-VA emergency treatment for a non-service-connected disability. Those requirements continue to apply, and so it is not the case for purposes of § 1725 and this rulemaking that “all veterans are now covered at any emergency department in the country without prior approval, even if they only have VA Care.” Because § 1725 is a reimbursement authority (versus an authorization or contract authority), no requirement exists for VA to have been notified or contacted in advance about the Veteran’s admission to the community hospital for emergency evaluation or treatment. This has always been the case; the rulemaking simply reiterated this point.

The law still requires VA to reimburse eligible Veterans who have no other source of payment for their non-VA emergency treatment, and the revised rulemaking does not change this obligation. The payment methodology for these types of claims remains the same. When a claim is approved for reimbursement, payment may instead be made directly to the provider of the emergency treatment or to the person or entity who paid these expenses on behalf of the Veteran.

The Interim Final Rule establishes payment methodologies applicable to claims where the eligible Veteran has a source of payment for the emergency treatment expenses through a responsible third party payer, including a health plan contract, but the third party payment does not fully extinguish the Veteran’s personal liability to the emergency provider, excluding copayments, cost shares or other similar payments required by the health plan contract. Section 1725 defines the terms “third party” and “health-plan contract.”

9. Can you clarify, in the most basic way, if all ambulance care will now be considered part of all emergency care?

Until the publication of the Interim Final Rule, VA’s implementation of § 1725, pursuant to 38 C.F.R. § 17.1003, always included reimbursement for the reasonable costs of emergency transportation if, among other things, the Veteran’s associated claim for emergency treatment had been approved for reimbursement and actual payment had been made. This meant that under the previous regulations, VA denied claims for reimbursement for the costs of emergency transportation when a third party payment satisfied the associated claim for emergency medical treatment, even if the transportation claim met the other criteria for reimbursement under § 1725. VA’s revised regulations authorize VA to consider emergency transportation claims even if a third party payment has fully extinguished the Veteran’s liability for the emergency medical treatment. Again, the other substantive criteria for reimbursement set forth in 38 C.F.R. § 17.1003 must still be met.

10. Has the VA taken it upon themselves to reach out to vets – or will it be a vets responsibility to know about the Staab rule and complete any appeal on their own without outreach from the VA.

Since the date of the Interim Final Rule’s publication, VA has been processing pending claims; we will contact claimants only if additional information is needed to process their claims. As noted, we are continuing to review the legal authorities that govern how a liberalizing change in the law is applied to claims that previously were denied and for which the appeals period has passed. We will provide further guidance regarding the applicability of the new regulations once that review is completed and will communicate additional information to Veterans and providers as appropriate.