A dispute over the denial of Medicare payments for hospice services has reached federal court, as a local provider seeks to overturn administrative decisions that it says threaten its ability to serve patients with terminal illnesses. The case centers on whether medical judgments made by physicians were properly considered in determining eligibility for hospice benefits under federal law.
Affinity Care of Virginia LLC filed a complaint on April 10, 2026, in the United States District Court for the Eastern District of Virginia against Robert F. Kennedy, Jr., in his official capacity as Secretary of the United States Department of Health and Human Services. The company is seeking judicial review of decisions made by an Administrative Law Judge (ALJ) and related actions taken by the Medicare Appeals Council regarding denied claims for hospice services provided between May 2021 and June 2023.
According to the filing, Affinity Care of Virginia is a Medicare-certified hospice provider operating in Newport News, Virginia. The dispute began when Noridian Healthcare Solutions, acting as a Supplemental Medical Review Contractor (SMRC) on behalf of the Centers for Medicare and Medicaid Services (CMS), audited 269 claims involving nineteen patients. After reviewing thousands of pages of records supplied by Affinity Care, Noridian concluded in March 2024 that there was an error rate of 15% and calculated an estimated overpayment amounting to $182,849.00.
Subsequent demand letters from the Medicare Administrative Contractor (MAC) requested refunds totaling more than $158,000 from Affinity Care. The hospice appealed these determinations through multiple stages: redetermination by MACs, reconsideration by Qualified Independent Contractors (QICs), and ultimately a hearing before ALJ Norman Jacobson, Jr., which took place on May 22, 2025.
During the ALJ hearing, Dr. Laura Patel—a board-certified hospice physician—testified as an expert witness on behalf of Affinity Care. Dr. Patel reviewed all relevant medical records and stated that “the medical records supported the certifications of terminal illness and demonstrated that the patients at issue had life expectancies of six months or less if their illnesses ran their normal course during the dates of service under review.” She further testified that previous denials were not supported by evidence and did not properly apply clinical or legal principles governing hospice care.
Despite this testimony being unrefuted at the hearing, ALJ Jacobson issued two decisions on August 8, 2025 upholding denial of all contested claims. Affinity Care then sought review from the Medicare Appeals Council but did not receive a final decision within ninety days; as permitted under federal regulations, it escalated its appeal to federal district court in February 2026.
The complaint argues that “the ALJ applied incorrect legal standards” when evaluating eligibility for hospice benefits—specifically citing alleged misapplication of statutory provisions requiring deference to physician clinical judgment about terminal illness prognosis. It asserts that neither lack of patient decline nor stabilization should automatically disqualify someone from receiving hospice care if physicians determine they have a life expectancy of six months or less.
Additionally, Affinity Care contends that Local Coverage Determinations (LCDs)—guidelines used by contractors—are not binding legal standards but rather tools meant to aid decision-making. The complaint states: “LCDs do not and cannot establish or change the substantive legal standard for hospice eligibility because LCDs have not gone through the notice-and-comment process.” It also alleges that “the unfavorable determinations in the ALJ’s Decisions are not supported by substantial evidence,” arguing that Dr. Patel’s expert opinions were disregarded without contrary admissible evidence.
Further claims include allegations that liability limitation provisions under Section 1879(a) and waiver provisions under Section 1870 of the Social Security Act were improperly ignored by the ALJ when determining financial responsibility for alleged overpayments.
Affinity Care requests several forms of relief from the court: reversal of all adverse administrative decisions; recognition that it is entitled to reimbursement for denied claims; waiver or limitation on recoupment demands; remand with instructions for payment including applicable interest; and any other relief deemed appropriate.
The case was filed by attorney Julia Kopcienski with Husch Blackwell LLP (Virginia Bar No.: 92346). The case identification number is Civil Action No. 4:26-cv-00060.
