FAIR DME Appeals Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5062 Introduced in Senate (IS)]

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119th CONGRESS
  2d Session
                                S. 5062

  To amend title XVIII of the Social Security Act to require medicare
administrative contractors, unified program integrity contractors, and
  qualified independent contractors to pay the legal fees for certain
   durable medical equipment suppliers that were incorrectly denied
                                payment.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 22, 2026

  Mr. Cassidy introduced the following bill; which was read twice and
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

  To amend title XVIII of the Social Security Act to require medicare
administrative contractors, unified program integrity contractors, and
  qualified independent contractors to pay the legal fees for certain
   durable medical equipment suppliers that were incorrectly denied
                                payment.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fee Awards for Incorrect Reviews DME
Appeals Act'' or the ``FAIR DME Appeals Act''.

SEC. 2. PAYMENT OF LEGAL FEES FOR CERTAIN DURABLE MEDICAL EQUIPMENT
              SUPPLIERS INCORRECTLY DENIED PAYMENT.

    (a) In General.--Section 1869 of the Social Security Act (42 U.S.C.
1395ff) is amended by adding at the end the following new subsection:
    ``(j) Payment of Certain Legal Fees for Certain Durable Medical
Equipment Suppliers Incorrectly Denied Payment.--
            ``(1) In general.--
                    ``(A) Payment of fees.--Notwithstanding section 504
                of title 5, United States Code and section 2412 of
                title 28, United States Code (commonly known as the
                `Equal Access to Justice Act'), subject to the
                succeeding subparagraphs of this paragraph, in the
                event a supplier of durable medical equipment wins a
                favorable final appeal of an initial determination (and
                at the time of such initial determination, such
                supplier was a small business concern, as defined in
                section 3 of the Small Business Act (15 U.S.C. 632)) by
                a covered contractor arising from or relating to the
                claims administration process involving durable medical
                equipment under this title, such appeal was heard by
                the Office of Medicare Hearings and Appeals, and the
                administrative law judge hearing such appeal determines
                that such initial determination was clearly erroneous,
                was not supported by substantial evidence, or failed to
                follow applicable provisions of law, regulation, or
                instruction issued by the Secretary in effect at the
                time of the initial determination, such contractor
                (regardless of whether such contractor is a named party
                in the appeal) shall pay the reasonable attorney fees
                (as applicable) and litigation costs of such supplier
                resulting from the appeal of the initial
                determination--
                            ``(i) at each stage of the appeal up to and
                        including the hearing before the Office of
                        Medicare Hearings and Appeals; and
                            ``(ii) including any stage of the appeal at
                        which such supplier did not receive a favorable
                        decision.
                    ``(B) Splitting of fees.--If, during the claims
                administrative process under this title, a covered
                contractor affirmed an initial determination that
                resulted in a favorable final appeal described in
                subparagraph (A), such covered contractor and the
                covered contractor who made the initial determination
                shall evenly split the reasonable attorney fees and
                litigation costs described in such subparagraph.
                    ``(C) Application.--A supplier of durable medical
                equipment seeking the payment of reasonable attorney
                fees and litigation costs under subparagraph (A) shall,
                by not later than 30 days after the date the favorable
                final appeal was issued--
                            ``(i) submit an application for such fees
                        and costs with evidence of such fees and costs
                        to the administrative law judge who heard such
                        appeal; and
                            ``(ii) serve such application on each
                        covered contractor that made the initial
                        determination or affirmed such initial
                        determination.
                    ``(D) Contractor response.--A covered contractor
                shall have 30 days after the date on which such
                contractor is served an application under clause (ii)
                of subparagraph (C) to submit a response to the
                administrative law judge described in clause (i) of
                such subparagraph.
                    ``(E) Determination.--
                            ``(i) In general.--Not later than 60 days
                        after the end of the 30-day period described in
                        subparagraph (D), an administrative law judge
                        described in subparagraph (C)(i) shall issue a
                        determination as to the amount (if any) of
                        reasonable attorney fees and litigation costs
                        that shall be awarded to a supplier of durable
                        medical equipment pursuant to subparagraph (A).
                        In making such determination, the
                        administrative law judge shall--
                                    ``(I) consider evidence submitted
                                in the application described in
                                subparagraph (C)(i) and any response
                                submitted under subparagraph (D);
                                    ``(II) with respect to reasonable
                                attorney fees, use the lodestar method;
                                and
                                    ``(III) if more than 1 covered
                                contractor was served under
                                subparagraph (C)(ii), specify the
                                amount owed by each covered contractor.
                            ``(ii) Non-appealable decision.--Any
                        determination made pursuant to clause (i) shall
                        not be appealable.
            ``(2) Ineligibility of certain payments.--Paragraph (1)
        shall not apply to a favorable final appeal of an initial
        determination by a covered contractor won by a supplier of
        durable medical equipment when the initial unfavorable
        determination resulted from--
                    ``(A) such supplier failing to provide any required
                documentation;
                    ``(B) such supplier failing to comply with any
                billing or submission requirement; or
                    ``(C) a covered contractor--
                            ``(i) applying current law or guidance
                        issued by the Secretary in effect at the time
                        the initial determination was made, and such
                        law or guidance had changed at the time of the
                        favorable final appeal; or
                            ``(ii) applying a local coverage
                        determination in effect at the time of the
                        initial determination.
            ``(3) Clawback.--If, after any reasonable attorney fees or
        litigation costs have been awarded to a supplier of durable
        medical equipment under this subsection, a court or other
        adjudicator determines that such supplier obtained a favorable
        final appeal through fraud, misrepresentation, or bad-faith
        conduct, such supplier shall be required to return such fees or
        costs to each covered contractor who was required to pay such
        fees or costs to such supplier.
            ``(4) Definitions.--In this subsection:
                    ``(A) Covered contractor.--The term `covered
                contractor' means--
                            ``(i) an eligible entity with a contract
                        under section 1893;
                            ``(ii) a qualified independent contractor
                        (as defined in subsection (c)(2)); or
                            ``(iii) a medicare administrative
                        contractor (as defined in section 1874A(a)(3)).
                    ``(B) Favorable.--The term `favorable' means, with
                respect to an appeal of a decision arising from or
                relating to the claims administration process under
                this title, a decision that is decided in the
                appellant's favor with respect to every issue related
                to coverage and payment rules or the application of
                eligibility, entitlement, or premium rules.
                    ``(C) Final appeal.--The term `final appeal' means
                the last stage of review available within the claims
                administration process under this title in which--
                            ``(i) the only appeal available is a review
                        by the Medicare Appeals Council; and
                            ``(ii) an administrative law judge enters a
                        binding determination of the rights or
                        obligations of the parties.
                    ``(D) Litigation costs.--The term `litigation
                costs' means, with respect to a favorable final appeal
                by a supplier of durable medical equipment, out-of-
                pocket expenses (not including reasonable attorney
                fees) incurred in the course of litigation that are
                traditionally taxable or recoverable by a prevailing
                party under statute, rule, or contract.
                    ``(E) Reasonable attorney fees.--The term
                `reasonable attorney fees' means, with respect to a
                favorable final appeal by a supplier of durable medical
                equipment, compensation for the reasonable time
                expended by an attorney or paralegal on legal work
                necessary to litigation.''.
    (b) Medicare Administrative Contractors.--Section 1874A(d)(4) of
the Social Security Act (42 U.S.C. 1395kk-1(d)(4)) is amended--
            (1) in subparagraph (A), by striking ``(B) and (D)'' and
        inserting ``(B), (C), and (D)''; and
            (2) in subparagraph (C)--
                    (A) by striking ``Indemnification.--
                Indemnification'' and inserting ``Indemnification.--
                            ``(i) In general.--Subject to clause (ii),
                        indemnification''; and
                    (B) by adding at the end the following new clause:
                            ``(ii) No indemnification for legal fees.--
                        No reasonable attorney fees or litigation costs
                        awarded to a supplier of durable medical
                        equipment under section 1869(j) shall be
                        subject to indemnification by the Secretary
                        under subparagraph (A).''.
    (c) Unified Program Integrity Contractors.--Section 1893(e) of the
Social Security Act (42 U.S.C. 1395ddd(e)) is amended--
            (1) by striking ``Liability.--The Secretary'' and inserting
        ``Liability.--
            ``(1) In general.--Subject to paragraph (2), the
        Secretary''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Payment of certain legal fees.--Any regulation
        promulgated by the Secretary under paragraph (1) shall not
        include any limitation of a contractor's liability for any
        reasonable attorney fees or litigation costs awarded to a
        supplier of durable medical equipment under section 1869(j).''.
    (d) Qualified Independent Contractors.--Section 1869(c)(5) of the
Social Security Act (42 U.S.C. 1395ff(c)(5)) is amended--
            (1) by striking ``liability.--No qualified'' and inserting
        ``liability.--
                    ``(A) In general.--Subject to subparagraph (B), no
                qualified''; and
            (2) by inserting at the end the following new subparagraph:
                    ``(B) Payment of certain legal fees.--Subparagraph
                (A) shall not apply to any reasonable attorney fees or
                litigation costs awarded to a supplier of durable
                medical equipment under subsection (j).''.
    (e) Implementation.--Not later than 2 years after the date of
enactment of this Act, the Secretary shall promulgate regulations to
carry out the amendments made by this section.
    (f) Effective Date.--The amendments made by this section shall
apply to contracts entered into on or after January 1 of the year
following the year in which the Secretary promulgates the regulations
described in subsection (e).
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